Ronald McDonald House
of Scranton, Inc.
December 31, 2012 and 2011
Financial Statements and Independent Auditors’ Report
RONALD McDONALD HOUSE OF SCRANTON, INC.
DECEMBER 31, 2012 AND 2011
CONTENTS
Page(s)
Independent Auditors’ Report
2
Financial Statements
Statements of Financial Position
3
Statement of Activities
4
Statement of Functional Expenses
5
Statements of Cash Flows
6
Notes to Financial Statements
7-13
INDEPENDENT AUDITORS' REPORT
Board of Directors
Ronald McDonald House of Scranton, Inc.
Scranton, PA
Report on the Financial Statements
We have audited the accompanying financial statements of Ronald McDonald House of Scranton, Inc.
(“Organization”) which comprise the statements of financial position as of December 31, 2012 and 2011, and
the related statements of cash flows for the years then ended and the related statements of activities and
functional expenses for the year ended December 31, 2012, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation and maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the Organization’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of Ronald McDonald House of Scranton, Inc. as of December 31, 2012 and 2011, its cash
flows for the years then ended, and the change in net assets for the year ended December 31, 2012 in
conformity with accounting principles generally accepted in the United States of America.
Report on Summarized Comparative Information
We have previously audited the Organization’s 2011 financial statements, and our report dated
November 5, 2012, expressed an unqualified opinion on those financial statements. In our opinion, the
summarized comparative information presented herein as of and for the year ended December 31, 2011, is
consistent, in all material respects, with the audited financial statements from which it has been derived.
Bethlehem, PA
November 4, 2013
-21525 Valley Center Parkway, Suite 300, Bethlehem, PA 18017-2285
Phone 610-433-5501 Fax 610-433-5001 Web www.concannonmiller.com
Member of AICPA Division for CPA Firms • Private Companies Practice Section • AGN International – North America
RONALD McDONALD HOUSE OF SCRANTON, INC.
STATEMENTS OF FINANCIAL POSITION
December 31,
2012
2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Contributions receivable
Other receivables
Investments, at fair value
Prepaid expenses
Total Current Assets
$
$
$
1,940,620
4,047,238
542,851
14,725
1,338
194,045
3,861
756,820
1,445,516
1,413,768
PROPERTY AND EQUIPMENT, NET
INVESTMENTS, RESTRICTED, AT FAIR VALUE
Total Assets
448,640
24,866
0
218,202
1,142
692,850
$
2,207,260
4,409,596
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable and accrued expenses
Deferred revenue
Total Liabilities
NET ASSETS
Unrestricted
Temporarily restricted
Permanently restricted
Total Net Assets
Total Liabilities and Net Assets
$
$
10,056
5,530
15,586
2,091,032
1,409,370
531,250
4,031,652
4,047,238
$
$
The accompanying notes are an integral part of the financial statements.
-3-
27,796
12,590
40,386
2,161,950
1,676,010
531,250
4,369,210
4,409,596
RONALD McDONALD HOUSE OF SCRANTON, INC.
STATEMENT OF ACTIVITIES
YEAR ENDED DECEMBER 31, 2012
(WITH SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2011)
REVENUE AND SUPPORT
Special events
Contributions
Contributed services and supplies
Contributed assets
Miscellaneous income
Interest and dividend income
Net unrealized (losses) gains on investments
Net realized gains (losses) on investments
Total Revenue and Support
Unrestricted
Temporarily
Restricted
$
$
140,874
138,349
5,310
14,296
4,747
70,404
14,462
3,904
392,346
EXPENSES
Program services
Management and general
Fund-raising
Total Expenses
324,546
59,253
79,465
463,264
(DECREASE) INCREASE IN NET ASSETS
(70,918)
NET ASSETS, JANUARY 1
NET ASSETS, DECEMBER 31
0
Totals
Permanently
Restricted
$
0
2012
$
0
140,874
138,349
5,310
14,296
4,747
70,404
(252,178)
3,904
125,706
0
324,546
59,253
79,465
463,264
303,084
55,875
84,542
443,501
0
(337,558)
505,608
(266,640)
(266,640)
0
(266,640)
2011
$
125,859
240,330
2,599
1,400
4,480
63,746
513,484
(2,789)
949,109
2,161,950
1,676,010
531,250
4,369,210
3,863,602
$ 2,091,032
$ 1,409,370
$ 531,250
$ 4,031,652
$ 4,369,210
The accompanying notes are an integral part of the financial statements.
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RONALD McDONALD HOUSE OF SCRANTON, INC.
STATEMENT OF FUNCTIONAL EXPENSES
YEAR ENDED DECEMBER 31, 2012
(With Summarized Financial Information for the Year Ended December 31, 2011)
Program
Services
Salaries
Payroll taxes
Employee benefits
House administration
Food service and supplies
Housekeeping and linens
Insurance
Utilities
Maintenance and repairs
General and administrative
Travel
Telephone
Advertising
Professional fees
Volunteer recognition
Depreciation
Miscellaneous
Interest
Family room at MTH
Family room at GWV
Transportation
Fund-raising
$
67,272
5,199
14,235
8,568
18,946
6,704
17,068
18,220
18,830
Management
and
General
$
31,092
2,987
8,177
4,613
Fundraising
$ 27,788
2,876
7,874
353
898
959
991
4,823
4,089
17,286
19,836
11,847
78,676
932
603
876
2,161
1,044
603
876
2,161
4,141
358
143
59,253
37,144
$ 79,465
4,333
3,228
4,454
$ 324,546
$
Totals
2012
2011
$ 126,152
11,062
30,286
13,181
18,946
7,057
17,966
19,179
19,821
0
6,029
5,841
21,608
20,880
11,847
82,817
1,433
0
4,333
3,228
4,454
37,144
$ 463,264
$ 104,706
8,637
28,282
15,705
19,485
7,800
10,870
21,379
33,113
913
6,780
8,370
8,780
22,828
5,574
79,159
5,639
14
1,120
0
8,412
45,935
$ 443,501
The accompanying notes are an integral part of the financial statements.
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RONALD McDONALD HOUSE OF SCRANTON, INC.
STATEMENTS OF CASH FLOWS
Years Ended
December 31,
2012
2011
CASH FLOWS FROM OPERATING ACTIVITIES
Change in net assets
Adjustments to reconcile change in net assets to net
cash (used in) provided by operating activities
Depreciation
In-kind contribution of property and equipment
Unrealized loss (gain) on investments
Realized (gain) loss on investments
Changes in assets and liabilities
Contributions receivable
Other receivables
Prepaid expenses
Accounts payable
Deferred revenue
Net Cash (Used in) Provided by Operating Activities
$ (337,558)
$ 505,608
82,817
(14,296)
252,178
(3,904)
79,159
(1,400)
(513,484)
2,789
(10,141)
1,338
2,719
(17,740)
(7,060)
(51,647)
(6,449)
(1,338)
(3,861)
5,981
(2,809)
64,196
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investments
Purchases of investments
Purchases of property and equipment, net
Net Cash Used in Investing Activities
0
(5,791)
(36,773)
(42,564)
150,731
(5,694)
(149,552)
(4,515)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(94,211)
59,681
CASH AND CASH EQUIVALENTS, JANUARY 1
542,851
483,170
448,640
$ 542,851
CASH AND CASH EQUIVALENTS, DECEMBER 31
$
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
NON CASH OPERATING ACTIVITIES
In-kind contribution of property and equipment
In-kind contribution of services and supplies
ADDITIONAL CASH FLOW INFORMATION
Cash paid for interest
$
$
14,296
5,310
19,606
$
1,400
2,599
3,999
$
0
$
14
The accompanying notes are an integral part of the financial statements.
-6-
$
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2012 AND 2011
NOTE 1
Nature and Purpose of the Organization
The Ronald McDonald House of Scranton, Inc. (the “Organization”) is a
nonprofit organization which provides temporary lodging, accommodations and
other assistance to patients and their families during treatment at the Community
Medical Center (CMC) and various local hospitals in Scranton, Pennsylvania. The
Organization also manages a family room at CMC as well as family rooms at
Moses Taylor Hospital (MTH) and Geisinger Wyoming Valley Medical Center
(GWV).
NOTE 2
Summary of Significant Accounting Policies
Prior Year Information
The financial statements include certain prior year summarized
comparative information in total but not by net asset class. Such information does
not include sufficient detail to constitute a presentation in conformity with
generally accepted accounting principles. Accordingly, such information should
be read in conjunction with the Organization’s financial statements for the year
ended December 31, 2011, from which the summarized information was derived.
Basis of Accounting
The financial statements of the Organization are prepared on the accrual
basis of accounting, in accordance with FASB ASC 958, Not-for-Profit Entities.
Basis of Presentation
Under ASC 958, the Organization is required to report information about
its financial position and activities according to three classes of net assets:
unrestricted net assets, temporarily restricted net assets, and permanently
restricted net assets.
• Unrestricted – Net assets which are free of donor-imposed restrictions;
all revenues, expenses, gains, and losses that are not changes in
permanently or temporarily restricted net assets.
• Temporarily Restricted – Net assets whose use by the Organization is
limited by donor-imposed stipulations that either expire by passage of
time or that can be fulfilled or removed by actions of the Organization
pursuant to those stipulations.
• Permanently Restricted – Net assets held in perpetuity, the income of
which is to be used for unrestricted purposes.
Revenue and Expense Recognition
Revenue from contributions and fund-raising events is recorded when cash
is received or an unconditional promise to give is made. In-kind contributions are
recognized as income when the donated asset is actually received. Expenses are
recorded when incurred.
-7-
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2012 AND 2011
NOTE 2
Summary of Significant Accounting Policies (Continued)
Contributions and Promises to Give
Donor restricted contributions whose restrictions are met within the same
year as received are reported as unrestricted contributions in the accompanying
financial statements. All contributions are considered to be available for
unrestricted use unless specifically restricted by the donor. Amounts received
that are designated for future periods or restricted by the donor for specific
purposes are reported as temporarily restricted or permanently restricted support
that increases those net asset classes. When a temporary restriction expires,
temporarily restricted net assets are reclassified to unrestricted net assets and
reported in the statements of activities as net assets released from restrictions.
Unconditional promises to give that are expected to be collected within
one year are recorded at net realizable value. Unconditional promises to give that
are expected to be collected in future years are recorded at the present value of
their estimated future cash flows. All contributions receivable at December 31,
2012 and 2011 are expected to be collected within one year. Conditional
promises to give are not included as support until the conditions are substantially
met.
The Organization uses the allowance method to determine uncollectible
contributions. Any allowance would be based on management’s analysis of
specific promises made and the historical activity of such contributions. In the
opinion of management, all of the contributions receivable are considered to be
realizable at the amounts stated in the accompanying statements of financial
position and no allowance for uncollectible accounts was considered necessary.
Expense Allocation
The costs of providing various programs and other activities have been
summarized on a functional basis in the statement of functional expenses.
Accordingly, certain costs have been allocated among the programs and
supporting services benefited.
Property and Equipment
Donations of property and equipment are recorded as support at their
estimated fair value. Such donations are reported as unrestricted support unless
the donor has restricted the donated asset to a specific purpose.
Purchased property and equipment are recorded at cost. Maintenance and
repairs which neither materially add to the value of the property nor appreciably
prolong its life are charged to expense. The cost of assets retired or otherwise
disposed of and the related accumulated depreciation are eliminated from the
accounts in the year of disposal. Related gains or losses from such transactions
are credited or charged to income.
-8-
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2012 AND 2011
NOTE 2
Summary of Significant Accounting Policies (Continued)
Property and Equipment (Continued)
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets ranging from 5 to 40 years.
Valuation of Investments in Securities at Fair Value
The Organization complies with the provisions of FASB ASC 820, Fair
Value Measurement and Disclosures. Under ASC 820, fair value is defined as the
price that would be received to sell an asset or paid to transfer a liability (i.e., the
“exit price”) in an orderly transaction between market participants at the
measurement date.
ASC 820 establishes a fair value hierarchy for inputs used in measuring
fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when
available. Observable inputs are those that market participants would use in
pricing the asset or liability based on market data obtained from sources
independent of the Organization. Unobservable inputs reflect the Organization’s
assumption about the inputs market participants would use in pricing the asset or
liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as
follows:
Level 1 – Valuations based on unadjusted quoted prices in active markets
for identical assets or liabilities that the Organization has the ability to access.
Valuation adjustments and block discounts are not applied to Level 1 securities.
Since valuations are based on quoted prices that are readily and regularly
available in an active market, valuation of these securities does not entail a
significant degree of judgment.
Level 2 – Valuations based on quoted prices in markets that are not active
or for which all significant inputs are observable, either directly or indirectly.
Level 3 – Valuations based on inputs that are unobservable and significant
to the overall fair value measurement.
Contributed Services and Supplies
In-kind contributions of services and supplies meeting the requirements
for recognition in the financial statements are recorded as income at their fair
market value on the date of receipt.
-9-
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2012 AND 2011
NOTE 2
Summary of Significant Accounting Policies (Continued)
Contributed Services and Supplies (Continued)
Contributed services and supplies are for the operation of the Ronald
McDonald House and in support of its programs. Such contributions totaled
$5,310 and $2,599 for the years ended December 31, 2012 and 2011, respectively.
A substantial number of volunteers have donated significant amounts of
their time to the Organization primarily for the operation of its various programs.
No amounts have been included in the financial statements for these services
since the recognition criteria are not met.
Cash and Cash Equivalents
Cash and cash equivalents include checking accounts, certificates of
deposit, and money market mutual funds which are maintained at several
financial institutions and major brokerage firms.
Concentration of Credit Risk
The Organization may be subject to credit risk on its cash and cash
equivalent assets, which are placed with high credit-quality financial institutions.
The Federal Deposit Insurance Corporation (“FDIC”) coverage has been
$250,000 for substantially all depository accounts and unlimited coverage for
certain qualifying and participant non-interest bearing transaction accounts. The
coverage was reduced on January 1, 2013 and the FDIC limit will return to
$250,000 for all accounts. From time to time, the Organization may have
amounts on deposit in excess of the FDIC limits. Management believes the
Organization is not exposed to any significant credit risk on its’ cash and cash
equivalents.
Income Taxes
No provision for income taxes has been made in the financial statements
since the Organization is exempt from federal and state income taxes under
Section 501(c)(3) of the Internal Revenue Code and similar state provisions.
However, income from activities not directly related to the Organization’s taxexempt purpose, if any, would be subject to taxation as unrelated business
income.
The Organization complies with guidance for uncertainty in income taxes
using the provisions of FASB ASC 740, Income Taxes. Using that guidance, tax
positions initially need to be recognized in the financial statements when it is
more-likely-than-not the position will be sustained upon examination by tax
authorities.
As of December 31, 2012 and 2011, the Organization had no uncertain tax
positions that qualify for either recognition or disclosure in the financial
statements. The Organization’s tax years 2009 and forward remain open for
examination by federal and state taxing authorities.
-10-
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2012 AND 2011
NOTE 2
Summary of Significant Accounting Policies (Continued)
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Advertising
Advertising costs are charged when incurred. Total advertising costs for
the years ended December 31, 2012 and 2011 were $21,608 and $8,780,
respectively.
NOTE 3
Property and Equipment
December 31,
2012
2011
Land
Land improvements
Building
Building improvements
Furnishings and equipment
Vehicle
Less accumulated depreciation
$ 134,000 $ 134,000
74,647
50,220
158,800
158,800
1,521,319 1,521,319
112,835
86,193
15,000
15,000
2,016,601 1,965,532
602,833
520,016
$1,413,768 $1,445,516
Depreciation expense was $82,817 and $79,159 for the years ended
December 31, 2012 and 2011, respectively.
NOTE 4
Investments
The Organization’s investments are recorded at fair value and have been
categorized based upon a fair value hierarchy, in accordance with FASB ASC 820
(see Note 2). All investments held at December 31, 2012 and 2011 are considered
Level 1 investments and are summarized as follows:
2012
Unrestricted:
Mutual Funds
2011
$ 218,202 $ 194,045
Temporarily restricted:
McDonald’s Corporation stock
1,409,370
1,676,010
Permanently restricted:
McDonald’s Corporation stock
531,250
531,250
$2,158,822 $2,401,305
-11-
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
DECEMBER 31, 2012 AND 2011
NOTE 4
Investments (Continued)
Investment securities are exposed to various risks such as interest rate,
market and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes in the value of
investment securities will occur in the near term and that such change could
materially affect the amounts reported in the statements of financial position.
NOTE 5
Endowment
The Organization received a contribution of 10,000 shares of McDonald’s
Corporation stock in 1993. The contribution was recorded at $531,250, the fair
market value at the date of acquisition. In accordance with the donor’s
restriction, which requires the principal to be held in perpetuity for the benefit of
the Ronald McDonald House, the original value of the stock is reported as
permanently restricted net assets. Gains and losses on the stock are restricted for
House operating expenses and therefore, reported as temporarily restricted net
assets until expended. Dividend income derived from the stock is reported as
unrestricted net assets in accordance with the terms of the donor’s gift.
Following are the changes in the endowment net assets for the years ended
December 31, 2012 and 2011:
Endowment net assets at December 31,
2010
Temporarily
Restricted
Permanently
Restricted
$
$
1,310,990
Total
531,250
$
1,842,240
Investment income
Dividends
Appreciation
Loss on sale
50,600
518,540
(2,789)
Total investment income
Appropriation of endowment assets for
expenditure
Released from restrictions
Endowment net assets at
December 31, 2011
50,600
518,540
(2,789)
566,351
0
566,351
(50,600)
(50,600)
(150,731)
$
1,676,010
0
$
531,250
(150,731)
$
2,207,260
Investment income
Dividends
Depreciation
Total investment income
Appropriation of endowment assets for
expenditure
Endowment net assets at December 31,
2012
57,400
(266,640)
57,400
(266,640)
(209,240)
0
(209,240)
(57,400)
$
-12-
1,409,370
(57,400)
$
531,250
$
1,940,620
RONALD McDONALD HOUSE OF SCRANTON, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6
DECEMBER 31, 2012 AND 2011
Restrictions on Net Assets
All temporarily restricted net assets represent gains and losses on
investments that are restricted for House operating expenses.
NOTE 7
Reclassifications
Certain amounts in the 2011 financial statements have been reclassified to
conform to the current year’s presentation. These reclassifications had no effect
on the prior year change in net assets.
NOTE 8
Subsequent Events
In accordance with FASB ASC 855, Subsequent Events, the Organization
has evaluated events and transactions for potential recognition or disclosure in the
financial statements through November 4, 2013, the date on which the financial
statements were issued. No events or transactions have occurred that would
require recognition or disclosure in the financial statements.
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