THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT
PUBLIC BENEFIT CORPORATION)
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR’S REPORT
DECEMBER 31, 2013
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
FINANCIAL STATEMENTS
DECEMBER 31, 2013
TABLE OF CONTENTS
Page
Independent Auditor’s Report
1
Financial Statements:
Statement of Financial Position
2
Statement of Activities and Changes in Net Assets
3
Statement of Cash Flows
4
Notes to Financial Statements
5 – 12
Independent Auditor’s Report
To the Board of Trustees of
The Samueli Foundation:
We have audited the accompanying financial statements of The Samueli Foundation (the “Foundation”), a
California nonprofit public benefit corporation, which comprise the statement of financial position as of
December 31, 2013, and the related statements of activities and changes in net assets and cash flows for the
year then ended, 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 audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from 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 entity’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 The Samueli Foundation as of December 31, 2013 and the changes in its net assets and its cash
flows for the year then ended in accordance with accounting principles generally accepted in the United States
of America.
Long Beach, California
June 18, 2014
11444 W. Olympic Boulevard, 11th Floor, West Los Angeles, CA 90064 ● 4550 E. Thousand Oaks Boulevard, Suite 100, Westlake Village, CA 91362
100 Oceangate, Suite 800, Long Beach, CA 90802 ● 117 East Colorado Boulevard, 6th Floor, Pasadena, CA 91105
555 Anton Boulevard, Suite 700, Costa Mesa, CA 92626 ● 15760 Ventura Boulevard, Suite 1700, Encino, CA 91436
400 W. Ventura Boulevard, Suite 250, Camarillo, CA 93010
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
STATEMENT OF FINANCIAL POSITION
DECEMBER 31, 2013
ASSETS
Current assets:
Cash and cash equivalents
Prepaid expenses
Due from related party
Short term contributions receivable
Total current assets
$
Property and equipment, net
Long term contributions receivable
Total assets
$
162,114
5,670
2,598
6,647,975
6,818,357
15,244
10,122,185
16,955,786
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable and accrued liabilities
Short term grants payable
Total current liabilities
$
Long term grants payable
Total liabilities
14,043
6,647,975
6,662,018
10,122,185
16,784,203
Commitments and contingencies (notes 2, 5, 6, 8, 9, 10 and 12)
Net assets - unrestricted
Total liabilities and net assets
$
See accompanying notes and independent auditor's report.
2
171,583
16,955,786
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2013
Unrestricted
Revenues and support:
Contributions
Gain on sale of investments
Interest income
Total revenues and support
$
Expenses:
Program services:
Grants
Direct charitable expenses
Total program services
Supportive services:
Management and general
Excise tax
Total supportive services
Total expenses
Change in net assets
Net assets, at beginning of year
Net assets, at end of year
$
9,591,984
2,930
193
9,595,107
Temporarily
Restricted
$
75,000
75,000
$ 9,666,984
2,930
193
9,670,107
9,228,818
95,899
9,324,717
75,000
75,000
9,228,818
170,899
9,399,717
448,784
9,010
457,794
-
448,784
9,010
457,794
9,782,511
75,000
9,857,511
(187,404)
-
(187,404)
358,987
171,583
-
358,987
171,583
$
See accompanying notes and independent auditor's report.
3
Total
$
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2013
Cash flows from operating activities:
Change in net assets
Adjustments to reconcile change in net assets to
net cash used in operating activities:
Depreciation
Gain on sale of investments
Changes in operating assets and liabilities:
Prepaid expenses
Due from related party
Contributions receivable
Accounts payable and accrued liabilities
Grants payable
$
(187,404)
4,668
(2,930)
(331)
(2,598)
(5,845,170)
(29,119)
4,600,000
Net cash used in operating activities
(1,462,884)
Cash flows from investing activities:
Purchase of property and equipment
Proceeds from sales of investments
(12,221)
1,248,100
Net cash provided by investing activities
1,235,879
Cash flows from financing activities:
Advances from related party
Repayments to related party
Net cash from financing activities
700,000
(700,000)
-
Net change in cash and cash equivalents
(227,005)
Cash and cash equivalents at beginning of year
389,119
Cash and cash equivalents at end of year
Supplemental disclosure of cash flow information:
Cash paid during the year for excise tax
Noncash contributions received from related party
in the form of marketable securities
Grants paid directly from related parties on behalf of
the Foundation
See accompanying notes and independent auditor's report.
4
$
162,114
$
15,600
$
1,245,170
$
13,598,715
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 1.
ORGANIZATION AND NATURE OF BUSINESS
The Samueli Foundation (the “Foundation”) is a tax exempt private foundation established by
Henry and Susan Samueli in 1998. The Foundation strives to create societal value by
investing in innovative, entrepreneurial, and sustainable ideas. The Foundation supports
endeavors that embody the following objectives: promote scholastic, technical and creative
exploration and achievement; build a community of sharing, acceptance and altruism;
increase awareness, knowledge and opportunities; and enhance the quality of life of the
underserved.
NOTE 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Foundation maintains its accounting records on an accrual method in conformity with
accounting principles generally accepted in the United States of America (“US GAAP”).
Use of Estimates
The preparation of these financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities at the
date of the financial statements. Actual results may differ from those estimates.
Classification and Reporting of Funds
In accordance with the Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 958, Not-for-Profit Entities (“ASC 958”), the Foundation
presents its net assets under three separate classifications: unrestricted, temporarily restricted and
permanently restricted.
Unrestricted net assets – Net assets that are not subject to any donor-imposed stipulations.
Temporarily restricted net assets – Net assets subject to donor-imposed restrictions on their
use that may be met either by actions of the Foundation or the passage of time.
Permanently restricted net assets – Net assets subject to donor-imposed or other legal
restrictions requiring that the principal be maintained permanently by the Foundation.
Generally, the donors permit the Foundation to use all or part of the income earned for either
general or donor-specified purposes.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Foundation considers all highly liquid
unrestricted investments with an original maturity of three months or less to be cash equivalents.
5
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and Equipment
Property and equipment is recorded at cost. Depreciation of property and equipment is
computed using the straight-line method over the estimated useful lives of the related assets,
ranging from three to five years for financial reporting purposes. Betterments, renewals and
extraordinary repairs that extend the life of the asset are capitalized. Repair and maintenance
expenditures that increase the efficiency of the assets are expensed as incurred. As assets are
retired or sold, the cost and related accumulated depreciation are removed from the accounts
and any gain or loss on disposition is recognized in the statement of activities and changes in
net assets for that period.
Impairment of Long-lived Assets
The Foundation accounts for its long-lived assets in accordance with FASB ASC Topic 360,
Property, Plant and Equipment – Impairment or Disposal of Long Lived Assets. This
statement requires that long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is measured by
a comparison of the carrying amount of an asset to undiscounted future cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the impairment to
be recognized is measured by the amount by which the carrying amount of assets exceeds the
fair value of the assets. For the year ended December 31, 2013, there were no impairments of
long-lived assets recorded by the Foundation.
Marketable Securities
In accordance with FASB ASC Subtopic 958-320, Not-for-Profit Entities – Investments –
Debt and Equity Securities, investments in equity securities with readily determinable fair
values and all investments in debt securities are reported at fair value with realized and
unrealized gains and losses included in the statement of activities and changes in net assets.
Funding from the donors in the form of marketable securities are sold upon receipt. At
December 31, 2013, the Foundation has no marketable securities.
Concentrations of Business and Credit Risk
Financial instruments that potentially subject the Foundation to concentrations of credit risk
consist primarily of cash and cash equivalents and contributions receivable.
The Foundation’s cash and cash equivalents are maintained in various bank accounts. At
times, the Foundation has exposure to credit risk to the extent that its cash and cash
equivalents exceed amounts insured by the Federal Deposit Insurance Corporation. The
Foundation has not experienced any losses in these accounts and believes that its credit risk is
not significant.
The Foundation’s entire contributions receivable balance is owed from one related party (see
notes 3 and 9). The Foundation believes that its credit risk is not significant.
6
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Contributions Revenue
The Foundation is funded by several related entities (“Donors”) created by Henry and Susan
Samueli (see note 3). In accordance with the Promise to Give agreement dated September 25,
2008 between Henry and Susan Samueli and the Foundation, the Foundation records
contribution revenue and a contribution receivable when the Foundation records large grant
commitments. As the grants become due, the Donors fund the Foundation or the charitable
organization designated by the Foundation.
In accordance with FASB ASC Subtopic 958-605, Not-for-Profit Entities – Revenue
Recognition (“ASC 958-605”), contributions receivable are recorded at fair value. Amounts
due more than one year later are recorded at the present value of expected future cash flows.
At December 31, 2013, contributions receivable were discounted using the prime rate at the
time of the commitment, which ranged between 3.25 to 3.50 percent.
Grant Expense
Grant expenses are recognized at the date of a formal, unconditional promise to give
commitment. Conditional grants are recognized as expense in the period in which the grantee
meets the terms of the conditions. Grants that are expected to be paid in future years are
recorded at the present value of expected future payments in accordance with ASC 958-605.
At December 31, 2013, grants were discounted using the prime rate at the time of the
commitments, which ranged between 3.25 to 3.50 percent.
Income Taxes
The Foundation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue
Code and a similar provision of the state code. Therefore, no provision for income tax has
been recorded in the accompanying financial statements. However, the Foundation is subject
to federal excise tax based on taxable investment income as well as federal and state
unrelated business income tax (see note 8).
The Foundation follows the provisions of uncertain tax positions as addressed in FASB ASC
Subtopic 740-10, Income Taxes. The Foundation recognized no increase in the liability for
unrecognized tax benefits. The Foundation has no tax positions at December 31, 2013 for
which the ultimate deductibility is highly certain but for which the timing of such
deductibility is uncertain. The Foundation recognizes interest accrued related to unrecognized
tax benefits in interest expense and penalties in operating expenses. No such interest or
penalties were recognized during the period presented. The Foundation had no accruals for
interest and penalties at December 31, 2013. The Foundation is subject to examination by
U.S. federal tax authorities for returns filed for the prior three years and by state tax
authorities for returns filed for the prior four years.
7
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 3.
CONTRIBUTIONS RECEIVABLE
As of December 31, 2013, one related party donor promised to fund $18,317,704, or
$16,770,160 net of $1,547,544 discount, of the Foundation’s grant commitments (see notes 6
and 9).
Future minimum payments under these contributions receivable, net of discount, are as
follows:
Years ending December 31,
2014
2015
2016
2017
2018
Thereafter
Less: short term contributions receivable
Long term contributions receivable
$
6,647,975
2,763,085
1,275,054
1,309,950
1,054,294
3,719,802
16,770,160
(6,647,975)
$ 10,122,185
For the year ended December 31, 2013, contribution revenue includes $418,813 representing the
net change in accumulated amortization of the discount.
NOTE 4.
PROPERTY AND EQUIPMENT
At December 31, 2013, property and equipment consist of the following:
Computer software
Computer equipment
$
Less: accumulated depreciation
$
58,110
8,234
66,344
(51,100)
15,244
Depreciation expense amounted to $4,668 for the year ended December 31, 2013.
NOTE 5.
DUE TO RELATED PARTY
In 2013, the Foundation entered into four promissory note agreements with a related party for a
total amount of $700,000 (see note 9). The promissory notes were non-interest bearing and were
contractually due in full on various dates through October 2014. There were no guarantees or
collateral held against the notes. As of December 31, 2013, the notes were paid in full.
8
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 6.
GRANTS PAYABLE
As of December 31, 2013, the Foundation’s grants payable totaled $18,317,704, or
$16,770,160 net of $1,547,544 discount. The net change in accumulated amortization for the
discount of $418,813 for the year ended December 31, 2013 has been recorded to grant
expenses, and allocated to each respective program.
At December 31, 2013, unconditional promises to give consist of the following:
Education
Health/Medical
Social
Total
Less: discount
Net promises to give
$
$
12,317,704
4,000,000
2,000,000
18,317,704
(1,547,544)
16,770,160
Future minimum payments under these unconditional promises to give, net of discount, are as
follows:
Years ending December 31,
2014
2015
2016
2017
2018
Thereafter
Less: short term promises to give
Long term promises to give
NOTE 7.
$
$
6,647,975
2,763,085
1,275,054
1,309,950
1,054,294
3,719,802
16,770,160
(6,647,975)
10,122,185
ALLOCATION OF PROGRAM SERVICES
For the year ended December 31, 2013, the Foundation’s program services were concentrated in
the following program areas:
Art
Education
Health/Medical
Religious
Social services
Total
$
$
9
60,200
2,987,427
1,537,738
789,100
4,025,252
9,399,717
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 8.
FEDERAL EXCISE TAX
The Foundation is subject to federal excise taxes imposed on private foundations at 2.00 percent
or at 1.00 percent if certain conditions are met. The excise tax is imposed on net investment
income, as defined under federal law, which includes interest, dividends and taxable net realized
gains on sale of investments. The Foundation provided for excise taxes at a 2.00 percent excise
rate for the year ended December 31, 2013. Excise tax expense for the year ended December 31,
2013 was $9,010. As of December 31, 2013, the outstanding balance of $9,010 was included in
accounts payable and accrued liabilities in the accompanying statement of financial position.
NOTE 9.
RELATED PARTY TRANSACTIONS
On December 30, 2008, the Foundation entered into a pledge agreement of $25,000,000 to
Samueli Institute for Information Biology (“SIIB”), to be paid over a five-year period. SIIB is a
not-for-profit organization founded by Henry and Susan Samueli. During the year ended
December 31, 2013, two related party donors contributed $4,000,000 to SIIB on behalf of the
Foundation which was applied against the original $25,000,000 pledge. The Foundation
granted an additional of $1,167,500 to SIIB during the year ended December 31, 2013. As of
December 31, 2013, the Foundation’s grants payable includes $3,961,906 payable to SIIB,
net of $38,094 discount.
During the year ended December 31, 2013, related party donors contributed $13,598,715
directly to charitable organizations to satisfy the Foundation’s grant commitments. In
addition, the Foundation contributed $81,000 to the Anaheim Ducks Foundation, a related
party, during the year ended December 31, 2013.
During the year ended December 31, 2013, contributions revenue totaling $9,591,984, net of the
change in accumulated amortization for the contributions receivable discount in the amount of
$418,813 (see note 3), was earned from related parties. Included in contributions revenue is
$1,245,170 of contributed marketable securities (see note 2). These securities were immediately
sold and the Foundation recognized a gain of $2,930 for the year ended December 31, 2013.
As discussed in note 3, as of December 31, 2013, a related party donor promised to fund
$16,770,160 of the Foundation’s pledge commitments.
The Foundation borrows money as needed from a related party to fund its gifts and
operational expenses. The Foundation repays the amounts upon the receipt of contributions of
cash or marketable securities from related parties. During the year ended December 31, 2013,
the Foundation borrowed $700,000 from a related party, which was paid off as of December
31, 2013 (see note 5).
10
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 9.
RELATED PARTY TRANSACTIONS (Continued)
The Foundation pays a management fee to a related party that provides executive, accounting
and administrative services to the Foundation. The related party is owned by the CoChairmen of the Foundation. Management fees for the year ended December 31, 2013 were
$106,571 and are included in management and general expenses in the accompanying
statement of activities and changes in net assets.
As discussed in further detail in note 11, the Foundation’s Participation Agreement for its
401(k) profit sharing plan is with a related party.
Each of the Foundation’s board members also serve as board members to several charitable
organizations to which the Foundation contributes.
NOTE 10.
GUARANTEE OF THIRD PARTY INDEBTEDNESS
On October 31, 2008, the Foundation entered into a guarantee agreement for a loan belonging
to a third party charitable organization. The guarantee agreement matures on October 31,
2019. The maximum potential amount payable by the Foundation under the guarantee is
equal to the outstanding principal loan amount of $1,000,000 plus interest and fees of
$36,964 as of December 31, 2013. In conjunction with the guarantee agreement, the
Foundation entered into a promise to give a grant agreement pledging to fund the third party
charitable organization for the amount of the loan guarantee.
NOTE 11.
RETIREMENT PLAN
The Foundation entered into a Participation Agreement with H&S Ventures LLC, a related
party (see note 9), to adopt its 401(k) profit sharing plan (the “Plan”). Each participant may
elect to defer a portion of compensation up to the maximum allowable amount as determined
by the Internal Revenue Service. The Plan is a safe harbor plan, which provides for matching
100% of the participant’s contribution up to 3%, plus 50% of the participant’s contributions
that exceed 3% but do not exceed 5%. Matching contributions made by the Foundation
totaled $2,238 for the year ended December 31, 2013.
NOTE 12.
SUBSEQUENT EVENTS (UNAUDITED)
The Foundation has evaluated subsequent events that have occurred from January 1, 2014
through June 18, 2014, which is the date that the financial statements were available to be
issued, and determined that there were no subsequent events or transactions that required
recognition or disclosure in the financial statements except as disclosed below.
On March 19, 2014 the Foundation entered into a promissory note payable agreement with a
related party for a total of $200,000. The promissory note is non-interest bearing and is due in
March 2015. There were no guarantees or collateral held against the note.
11
THE SAMUELI FOUNDATION
(A CALIFORNIA NONPROFIT PUBLIC BENEFIT CORPORATION)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 12.
SUBSEQUENT EVENTS (UNAUDITED) (Continued)
On March 28, 2014, a related party donor funded $6,209,500 to charitable organizations on
behalf of the Foundation, of which $3,779,000 related to grants payable as of December 31,
2013.
On June 6, 2014 the Foundation entered into a promissory note payable agreement with a
related party for a total of $200,000. The promissory note is non-interest bearing and is due in
June 2015. There were no guarantees or collateral held against the note.
12