WESTWOOD COMMUNITY CHURCH
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 31, 2013 AND 2012
WESTWOOD COMMUNITY CHURCH
TABLE OF CONTENTS
YEARS ENDED JULY 31, 2013 AND 2012
INDEPENDENT AUDITORS’ REPORT
1 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
3 CONSOLIDATED STATEMENTS OF ACTIVITY
4 CONSOLIDATED STATEMENTS OF CASH FLOWS
5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6 INDEPENDENT AUDITORS’ REPORT
Leadership Board
Westwood Community Church
Chanhassen, Minnesota
We have audited the accompanying consolidated financial statements of Westwood Community Church
(the Church), which comprise the consolidated statements of financial position as of July 31, 2013 and
2012, and the related consolidated statements of activity and cash flows for the years then ended, and
the related notes to the consolidated financial statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated 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 audit to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
An independent member of Nexia International
(1)
Leadership Board
Westwood Community Church
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Westwood Community Church as of July 31, 2013 and
2012, and the changes in its net assets and its cash flows for the years then ended in accordance with
accounting principles generally accepted in the United States of America.
CliftonLarsonAllen LLP
Minneapolis, Minnesota
November 21, 2013
(2)
WESTWOOD COMMUNITY CHURCH
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JULY 31, 2013 AND 2012
2013
2012
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents
Cash and Cash Equivalents - Open Hands Foundation
Total Cash and Cash Equivalents
Accounts Receivable
Prepaid Expenses
Total Current Assets
$
$
1,808,630
25,260
1,833,890
103,941
1,937,831
22,198,606
22,808,938
33,155
57,193
$ 24,699,061
$ 24,803,962
$
$
PROPERTY AND EQUIPMENT, NET
OTHER ASSETS
Loan Closing Costs - Net of Accumulated Amortization of
$1,005 and $183,163 in 2013 and 2012, Respectively
Total Assets
2,146,049
21,317
2,167,366
174
299,760
2,467,300
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Current Portion of Long-Term Debt
Current Portion of Capital Lease
Accounts Payable
Accrued Payroll and Benefits
Deferred Revenue
Total Current Liabilities
LONG-TERM LIABILITIES
Long-Term Debt
Long-Term Capital Lease
Total Long-Term Liabilities
Total Liabilities
NET ASSETS
Unrestricted Net Assets
Temporarily Restricted Net Assets
Total Net Assets
Total Liabilities and Net Assets
See accompanying Notes to Consolidated Financial Statements.
(3)
647,338
63,569
116,565
275,444
30,919
1,133,835
543,053
32,320
140,662
230,988
41,337
988,360
10,143,323
132,383
10,275,706
10,811,163
10,811,163
11,409,541
11,799,523
12,493,276
796,244
13,289,520
12,486,315
518,124
13,004,439
$ 24,699,061
$ 24,803,962
WESTWOOD COMMUNITY CHURCH
CONSOLIDATED STATEMENTS OF ACTIVITY
YEARS ENDED JULY 31, 2013 AND 2012
Unrestricted
SUPPORT AND REVENUE
Contributions:
General
Land and Building
Donated Materials and Services
Open Hands Foundation
Events and Program Revenue
Interest Income
Gain on Sale of Investments
Loss on Disposal of Fixed Assets
Other Income
Net Assets Released from Restrictions
Total Support and Revenue
EXPENSE
Program
General and Administrative
Fundraising
Total Expense
CHANGE IN NET ASSETS
Net Assets - Beginning
NET ASSETS - ENDING
$
4,398,318
2,725
720,914
6,532
(81)
652
31
1,481,536
6,610,627
2013
Temporarily
Restricted
$
173,863
1,585,793
(1,481,536)
278,120
Total
Unrestricted
$ 4,572,181
1,585,793
2,725
720,914
6,532
(81)
652
31
6,888,747
$ 3,879,835
2,559
25,000
650,529
5,985
(28,501)
812
1,881,660
6,417,879
5,166,104
1,395,203
42,359
6,603,666
-
5,166,104
1,395,203
42,359
6,603,666
6,961
278,120
285,081
12,486,315
518,124
13,004,439
12,822,510
796,244
$ 13,289,520
$ 12,486,315
$ 12,493,276
$
See accompanying Notes to Consolidated Financial Statements.
(4)
2012
Temporarily
Restricted
$
5,233,268
1,420,744
100,062
6,754,074
(336,195)
$
419,129
1,979,021
1,634
(1,881,660)
518,124
Total
$ 4,298,964
1,979,021
4,193
25,000
650,529
5,985
(28,501)
812
6,936,003
-
5,233,268
1,420,744
100,062
6,754,074
518,124
181,929
-
12,822,510
518,124
$ 13,004,439
WESTWOOD COMMUNITY CHURCH
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JULY 31, 2013 AND 2012
2013
CASH FLOWS FROM OPERATING ACTIVITIES
Change in Net Assets
Adjustments to Reconcile Change in Net Assets
to Net Cash Used by Operating Activities:
Depreciation and Amortization
Loss on Sale and Transfer of Property and Equipment
Contributions Restricted for Long-Term Purposes
(Increase) Decrease in Current Assets:
Accounts Receivable
Prepaid Expenses
Increase (Decrease) in Current Liabilities:
Accounts Payable
Accrued Payroll and Benefits
Deferred Revenue
Net Cash Used by Operating Activities
$
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Property and Equipment
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on Long-Term Debt
Assumption of Assets through Capital Lease Obligation
Payments on Capital Lease
Loan Closing Costs
Payments on Assessment
Proceeds from Contributions Restricted for Long-Term Purposes
Net Cash Provided by Financing Activities
INCREASE IN CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents - Beginning of Year
2012
285,081
$
181,929
1,063,649
652
(1,585,793)
1,080,624
28,501
(1,979,021)
(174)
(195,819)
2,364
(1,067)
(24,097)
44,456
(10,418)
(422,463)
(110,890)
13,292
(1,432)
(785,700)
(152,421)
(256,359)
(560,106)
(79,718)
(34,160)
(3,449)
1,585,793
908,360
(569,767)
17,043
(40,280)
(3,449)
1,979,021
1,382,568
333,476
340,509
1,833,890
1,493,381
CASH AND CASH EQUIVALENTS - END OF YEAR
$
2,167,366
$
1,833,890
SUPPLEMENTAL INFORMATION
Cash Paid for Interest
$
582,341
$
695,306
Transfer of Capital Lease to Westbrook Church
$
-
$
13,477
Fixed Assets Financed with Capital Leases
$
243,350
$
-
See accompanying Notes to Consolidated Financial Statements.
(5)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Reporting
During 2011, Westwood Community Church (Westwood) established a new church plant,
Westbrook Community Church (Westbrook), which was incorporated on June 23, 2011.
Although Westwood did not control the Board of Directors of Westbrook, the two churches
had the same Leadership Board in 2011 and a portion of 2012. As such, the operations of
Westbrook have been included in these financial statements through July 31, 2012 when
Westbrook began functioning independently and all assets and liabilities of Westbrook were
transferred from Westwood to Westbrook. As such, the 2012 financial statements included
operations of Westbrook but there were no longer any balances associated with Westbrook
at July 31, 2013.
The consolidated financial statements include the activities of Open Hands Foundation (the
Foundation). Westwood Community Church exercises control over the Foundation’s Board
of Trustees.
All intercompany transactions and balances between Westwood, Westbrook, and the
Foundation have been eliminated. The organizations are collectively referred to as “the
Church” in these financial statements.
Westwood Community Church
Westwood Community Church began in January 1995 as a church plant of Wooddale
Church in Eden Prairie. The Westwood church plant was part of a bold city-wide church
planting strategy designed to attract unchurched people.
Joel Johnson, who was the Outreach Pastor at Wooddale at the time, was asked to start a
church in Chanhassen, an area underserved by churches. A core group of 90 met with the
Johnsons in February and March for worship and training in ministry to prepare for the
church launch. The group stepped out in faith and opened the doors to Westwood
Community Church on Easter Sunday, 1995. Two worship services were offered in the
intimate Fireside Theatre at the Chanhassen Dinner Theatres, but the church grew so
quickly that just five months later, a move was made to the main Dinner Theatre, seating
450 at round tables. The tables, first seen as a detriment, facilitated wonderful interaction as
church members began to get to know one another. Hundreds of new families came as
news about Westwood’s informal atmosphere, wonderful worship and caring biblically-based
messages began to spread. The Church experienced a boom in growth when it held its first
public service on Easter Sunday - April 16, 1995.
Westwood faced another challenge in the fall of 1997. The children’s ministry had grown so
large that the current facilities could no longer accommodate their needs. By this time the
new District 112 High School was built in Chaska, eight miles southwest of the Chanhassen
Dinner Theatre. It was the only facility in the immediate region that could accommodate
Westwood’s growing needs, though moving there raised costs significantly. After careful
consideration, the decision was made and in December of 1997, Westwood relocated to the
new high school. Rapid growth continued and a third service was soon added.
(6)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Westwood Community Church (Continued)
In January 1999, a Purchase Agreement was signed for 57 acres of land on the northwest
corner of Cty Rd 5 and State Hwy 41. A member of the congregation identified this parcel of
land which was owned by a friend, but not for sale. The land had been earmarked for
construction of 80 luxury homes, but the landowner agreed to sell the land to Westwood as
long as a church was constructed on the site. In August 1999, the architectural firm of
Hammel Green and Abrahamson, Inc. (H.G.A.) of Minneapolis was selected to design and
develop Westwood’s future facility. Witcher Construction was selected as the general
contractor. The groundbreaking service for the 69,000 square foot Phase I was held on
April 21, 2002. The facility, which includes worship space for 1,000, parking for 500 cars, 15
classrooms, kitchen, conference room and office space, was completed on schedule and
under budget. The first services were held on July 13, 2003, with four services throughout
the day. In the year following the move, attendance increased nearly 40%. Late in 2004, a
second access road was added, providing a south access off of Highway 41 and increased
visibility for Westwood with the additional of a beautiful monument sign at the intersection of
Highway 41 and W. 78th Street. 135 parking spaces were also added at this time. The
second access road was a condition of the city for any additional campus development.
On Easter Sunday 2005, we celebrated our 10th anniversary as a church. To commemorate
10 years of God’s blessing, Westwood stepped out in faith and planted our first daughter
church, Emmaus Road Church, which began services on Easter Sunday at the Hopkins
Fine Arts Center. Westwood leadership had anticipated that planning and fund raising for a
student center, the second building in our master plan, would also begin in 2005.
The Lord directed differently, however, and the focus of the “Ground Work” capital
campaign, which concluded successfully in the spring of 2005, was on reducing our short
and long-term debt in order to strengthen our financial foundation.
Having a campus has been a great blessing, which has facilitated the expansion of ministry,
broadened our reach into additional communities and increased the age diversity of our
congregation.
In February of 2008, a special business meeting was held where the Westwood
congregation approved, pending approval of a funding plan, to construct a Phase 2 facility
(to the east of the current building) with additional space for children, students and adults.
The congregation also approved spending funds for architectural and other planning costs
as well as to conduct a capital campaign. The “Nothing Less Than Extraordinary” campaign
was held in the spring of 2008 with the goals of building Phase 2, expanding local ministry
and expanding our work in Malawi Africa (5% of funds raised will go to the Malawi work, up
to $500,000). Funds from the campaign will also be applied to Phase 1 and 2 mortgage
principal and interest and be used to help with additional operating costs for the new facility.
Westwood leadership determined the scope and finance plan for Phase 2 which was
approved by the congregation at a special business meeting in March of 2009. The plan is
to build a 44,000 square foot facility on two floors but finish only a portion of that space: the
two connecting/commons spaces on both floors, and student classrooms on the lower level
and restrooms. A spring, 2009 capital campaign raised additional funds for the project.
(7)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Westwood Community Church (Continued)
A Groundbreaking Ceremony was held in June 2009 with construction beginning in late
summer and continuing for the next year. Financing was secured on the project in October
of 2009. The Phase 2 facility opened for ministry use in September of 2010, finished as
described above. The remainder of the interior will be completed as funds allow.
Highlights of 2010 included celebrating 15 years of ministry as a church and baptizing a
record number of people during the year.
Westwood has continued to grow in worship attendance, membership and giving. New
service initiatives included a Service of Hope and Healing, Family services at Christmas Eve
and a third off-site service at Easter to accommodate all those that wanted to worship with
us.
At the Annual Meeting in September of 2011, the congregation approved moving forward
with a church plant. Kevin Sharpe, our Pastor of Community Life and Learning, leads the
church plant, Westbrook Church, which opened its doors at Chaska’s Clover Ridge
Elementary School on September 18, 2011, under Westwood’s umbrella. Also in the fall of
2011, Westwood held the “All In” capital campaign to raise funds over the next two years to
reduce debt, service our existing mortgage and support ministry expansion. Participation in
the campaign was the highest in the church’s history.
With worship space now an issue on Sunday mornings, “Worship in the Link” was created,
using technology to transmit the worship service and message to space in the Phase 2
building both on Sundays and, especially, on holidays. In February, Westwood also
responded to our growth by adding a Saturday evening service, giving people an additional
option and relieving some of the crowding on Sunday morning.
Two task forces, created by the Leadership Board, reported findings that will shape our
future. A Membership Task Force recommended raising awareness of membership and
restructuring the membership process to ensure that more people that begin the process
see it through to completion and active involvement in the mission and vision of the Church.
A Vision2020 Task Force looked ten years ahead to discern needs and potential changes in
the community around us and examined potential areas for Westwood ministry to intersect
those needs.
On September 16, 2012, Westbrook Church held its first Annual Meeting as a healthy,
growing independent congregation. Westwood will continue to support Westbrook financially
through 2014.
(8)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Westwood Community Church (Continued)
In 2013, a multi-site consultant was brought in to help Westwood leadership explore the
option of better accomplishing our mission by expanding Westwood’s reach into the Twin
Cities through establishing additional campuses within our sphere of influence. The multisite strategy is being used very effectively by churches in the Twin Cities and around the
country by leveraging the brand strengths of the church, establishing campuses 15 miles or
so away from the original campus, in communities where they are already known.
A Multi-site Task Force was created by the Leadership Board to develop a proposed plan for
multi-site implementation. Based on the consultant’s recommendation, the first step was to
significantly upgrade our video technology to allow us to do “image magnification” in the
main worship space. This was accomplished during the summer of 2013 and, beginning in
the fall, the sermon portion of the service was projected on to the large screens in the
current Worship Center, thereby showing people that watching sermons via screen is an
effective and meaningful way to take in the message. Leadership also affirmed that prior to
actual multi-site campuses; we would complete the shelled-in space on campus, and utilize
the largest room as an alternate worship space, with live worship and the message relayed
by video. This new space would also be used by students on Wednesday nights as growth
in this ministry exploded in 2013, effectively filling up the expanded space built just three
years ago.
The timeline for completing the Phase 2 space included fundraising in the fall and early
winter; with construction commencing in January, with the hopeful use of the space by
Easter 2014. If this timeline is accomplished, the first multi-site could conceivably open by
January of 2015, launching Westwood into an exciting new chapter of growth and expanded
ministry.
Organization
The Church is organized to promote spiritual, educational and other interests of its
members. The Church’s programs are as follows:
Church – Promotes spiritual, educational and other interests of its members
Ministry Groups – Ministers to youth, men, women and other identifiable groups within
the Church
Preschool – Serves a total of approximately 160 preschool students and their families
with 2-day, 3-day and 4-day options throughout the normal school year
Open Hands Foundation – Enhances community involvement in support opportunities
(9)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial Statement Presentation
Net assets and revenues, gains, and losses are classified based on donor imposed
restrictions. Accordingly, net assets of the Church and changes therein are classified and
reported as follows:
Unrestricted – Resources over which the Leadership Board has discretionary control.
Designated amounts represent those revenues which the board has set aside for a
particular purpose. All furniture and equipment are considered unrestricted.
Temporarily Restricted – Those resources subject to donor imposed restrictions which
will be satisfied by actions of the Church or passage of time.
Permanently Restricted – Those resources subject to a donor imposed restriction that
they be maintained permanently by the Church.
The Church had temporarily restricted net assets of $797,878 and $518,124 at July 31,
2013 and 2012, respectively, relating to building fund contributions. The Church has no
permanently restricted net assets.
Cash and Cash Equivalents
The Church places its cash deposits with a financial institution and a money market mutual
fund. At times, the balances on deposit with the financial institution may exceed Federal
Deposit Insurance Corporation insurance limits.
For the purposes of the statement of cash flows, cash and cash equivalents include all cash
balances and highly liquid investments with an original maturity of three months or less.
Property and Equipment
Property and equipment purchases are stated at cost. Contributed items are recorded at fair
market value at date of donation. If donors stipulate how long the assets must be used, the
contributions are recorded as restricted support. In the absence of such stipulation,
contributions of property and equipment are recorded as unrestricted. The Church uses the
straight-line method of depreciation over the estimated useful lives of the asset.
Depreciation expense was $1,005,451 and $1,058,608 for the years ended July 31, 2013
and 2012, respectively.
Loan Closing Costs
Loan closing costs included loan origination fees and loan modification fees that may be
incurred during the life of the loan. Fees are recorded at cost and are amortized using the
straight-line method over the remaining term of the loan. Amortization was $58,198 and
$22,016 for the years ended July 31, 2013 and 2012, respectively.
(10)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Contribution Pledges
Revenue is recognized at the time an irrevocable pledge is made. No pledge receivables
have been recognized for “All In” or “Nothing Less than Extraordinary” campaigns at July 31,
2013 or 2012 as the pledge agreements allow the donor to alter or revoke the pledge
amount at any time.
Deferred Revenue
The deferred revenue at July 31, 2013 and 2012 consists primarily of preschool tuition and
event registrations.
Donated Materials and Services
Contributions of noncash assets and materials are recorded at their fair values in the period
received. Contributions of donated services that create or enhance nonfinancial assets or
that require specialized skills, are provided by individuals possessing those skills, and would
typically need to be purchased if not provided by donations, are recorded at their fair values
in the period received.
Fair Value Measurements
In accordance with the standard on fair value measurement, the Church has categorized its
financial instruments, based on the priority of the inputs to the valuation technique, into a
three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted
prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall
within different levels of the hierarchy, the categorization is based on the lowest level input
that is significant to the fair value measurement of the instrument.
Financial assets and liabilities recorded on the consolidated statements of financial position
are categorized based on the inputs to the valuation techniques as follows:
Level 1 – Financial assets and liabilities whose values are based on unadjusted quoted
prices for identical assets or liabilities in an active market that the Church has the ability
to access.
Level 2 – Financial assets and liabilities whose values are based on quoted prices in
markets that are not active or model inputs that are observable either directly or
indirectly for substantially the full term of the asset or liability. Level 2 inputs include the
following:




Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in non-active markets;
Pricing models whose inputs are observable for substantially the full term of the
asset or liability; and
Pricing models whose inputs are derived principally from or corroborated by
observable market data through correlation or other means for substantially the
full term of the asset or liability.
(11)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value Measurements (continued)
Level 3 – Financial assets and liabilities whose values are based on prices or valuation
techniques that require inputs that are both unobservable and significant to the overall
fair value measurement. These inputs reflect management’s own assumptions about the
assumptions a market participant would use in pricing the asset or liability.
The Church follows a policy allowing the option of valuing certain financial instruments at fair
value. This accounting policy allows entities the irrevocable option to elect fair value for the
initial and subsequent measurement for certain financial assets and liabilities on an
instrument-by-instrument basis. The Church has not elected to measure any existing
financial instruments at fair value, however may elect to measure newly acquired financial
instruments at fair value in the future.
Functional Allocation of Expense
Salaries and related expenses are allocated based on job descriptions and the best
estimates of management. Expenses, other than salaries and related expenses that are not
directly identifiable by program or supporting service are allocated based on the best
estimates of management.
Income Tax Status
The Church and Open Hands Foundation are organized and operated as nonprofit, taxexempt religious organizations under Section 501(c)(3) of the Internal Revenue Code. They
have been classified as organizations that are not private foundations under the Internal
Revenue Code and charitable contributions by donors are tax deductible. As religious
organizations they are exempt for filing a Form 990.
The Church follows the income tax standard for recognition of uncertain tax positions. Under
this standard, they have not identified any uncertain tax positions as of July 31, 2013.
Generally, their position on the taxability of transactions is open for review for up to 6 years.
Estimates
Management uses estimates and assumptions in preparing financial statements in
accordance with accounting principles generally accepted in the United States of America.
Those estimates and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and expenses.
Actual results could vary from the estimates that were used.
Reclassifications
Certain reclassifications have been made to the July 31, 2012 financial statements in order
to present them in conformity with the July 31, 2013 financial statements. These
reclassifications had no impact on net assets as previously reported.
(12)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Subsequent Events
The Church has evaluated events and transactions for potential recognition or disclosure in
these consolidated financial statements through November 21, 2013, the date the
consolidated financial statements were available to be issued.
NOTE 2
PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of July 31, 2013 and 2012:
2013
4,702,613
2,680,229
22,576,910
29,959,752
(7,761,146)
$ 22,198,606
Land and Land Improvements
Furniture and Equipment
Building and Building Improvements
$
Less: Accumulated Depreciation
Property and Equipment, Net
2012
4,702,613
2,609,807
22,496,441
29,808,861
(6,999,923)
$ 22,808,938
$
Included in property and equipment is a road the Church constructed and put in service
during 2005 to provide additional access to its property. Legal title to the road was
transferred to the City of Chanhassen in 2006. Because the Church will continue to derive
significant value from the road in future years, the road costs are included in property and
equipment and are depreciated over 20 years, the expected economic useful life of the road.
The Church substantially completed construction and occupied Phase II of the Church
building in September 2010.
NOTE 3
CAPITAL LEASE
The Church entered into two new capital leases in 2013 for copiers and a phone system.
Assets under capital leases included in equipment are as follows at July 31:
Capital Leases
Accumulated Depreciation
Total
$
$
(13)
2013
243,350
(42,950)
200,400
$
$
2012
109,727
(73,151)
36,576
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 3
CAPITAL LEASE (CONTINUED)
Future minimum payments under capital leases at July 31, 2013 are as follows:
Year Ending July 31,
2014
2015
2016
2017
2018
Total Minimum Lease Payments
Imputed interest at .5% to 5%
Less: Current Portion
Long-Term Capital Lease
NOTE 4
$
$
Amount
68,059
68,059
33,559
26,659
11,110
207,446
(11,494)
(63,569)
132,383
OPERATING LEASES
The Church has entered into various operating lease agreements as a lessee for a vehicle
and for office equipment. Future minimum lease payments under those agreements are as
follows:
Year Ending July 31,
2014
2015
2016
2017
2018
Total
$
$
Amount
19,265
19,265
8,748
1,764
441
49,483
Rent expense for these leases amounted to $20,473 and $22,406 of the years ended
July 31, 2013 and 2012, respectively.
Additionally, during the year ended July 31, 2012, the Church paid $45,155 on behalf of
Westbrook for expenses relating to their facility lease and copier lease.
NOTE 5
RETIREMENT PLAN
The Church participates in a Section 403(b) retirement investment plan which covers
substantially all employees who meet eligibility requirements. Employees may elect to defer
a portion of their salary under the 403(b) portion of the plan. The plan provides that eligible
employees receive Church contributions up to a maximum 5% of their annual compensation.
Church contributions for the years ended July 31, 2013 and 2012 were $68,911 and
$65,006, respectively.
(14)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 6
LONG-TERM DEBT
Long-term debt consists of the following at July 31, 2013 and 2012:
Description
2013
Note payable with monthly payments of principal and
interest of $64,772 at a fixed rate of 3.79% through April
1, 2018 with subsequent interest rates set annually based
on the 5-year LIBOR Swap Rate plus 388 basis points.
The Note matures December 1, 2023 at which time it is
payable in full.
$
Note payable with monthly payments of principal and
interest of $72,272 at a fixed rate of 5.9% effective
through December 1, 2013 at which time the loan was
refinanced.
Note payable with monthly payments of principal and
interest of $22,615 at a fixed rate of 3.79% through April
1, 2018 with subsequent interest rates set annually based
on the 5-year LIBOR Swap Rate plus 388 basis points.
The Note matures December 1, 2023 at which time it is
payable in full.
2012
6,617,946
$
-
-
7,087,936
4,136,664
-
-
4,226,780
Note payable of up to $6,000,000, with interest-only
payments of 5.84% due monthly from October 1, 2009
through August 1, 2011. Effective September 1, 2011,
principal and interest payments are $27,489 per month
through maturity, August 1, 2024, with a balloon payment
due at maturity. The loan was refinanced March 29, 2013.
Land assessment payable due in equal biannual
installments over 10 years and bears interest of 6%.
Total Long-Term Debt
Current Portion of Long-Term Debt
Net Long-Term Debt
$
36,051
39,500
10,790,661
11,354,216
(647,338)
10,143,323
(543,053)
10,811,163
$
The above notes payable are secured by the assets of the Church and are subject to
various covenants. As of July 31, 2013 and 2012, the Church was not in compliance with
certain debt covenants for which waivers were received from the bank.
(15)
WESTWOOD COMMUNITY CHURCH
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 2013 AND 2012
NOTE 6
LONG-TERM DEBT (CONTINUED)
Estimated maturities of long-term debt as of July 31, 2013 are as follows:
Year Ending July 31,
2014
2015
2016
2017
2018
Thereafter
Total Debt
Less: Current Portion
Long-Term Debt
NOTE 7
$
$
Amount
647,338
672,605
697,892
726,098
751,144
7,295,584
10,790,661
647,338
10,143,323
LINE OF CREDIT
The Church has a $250,000 line of credit with a maturity of January 31, 2014. The line of
credit bears an interest rate of 5%. There were no amounts outstanding on the line of credit
as of July 31, 2013 and 2012.
(16)