abc 2015 2011 opinion & financial statements

SPECIAL-PURPOSE FINANCIAL SCHEDULES

OF

POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER

January 31, 2015, 2014, 2013, 2012, and 2011

Special-Purpose Financial Schedules

POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTER

January 31, 2015, 2014, 2013, 2012, and 2011

TABLE OF CONTENTS

Auditor’s Opinion on the Special-Purpose Financial Schedules .............................................................. 1 - 2 Special-Purpose Schedules of Financial Position ......................................................................................... 3 Special-Purpose Schedules of Changes in Net Assets ................................................................................ 4 Special-Purpose Schedules of Cash Flows .................................................................................................. 5 Notes to the Special-Purpose Financial Schedules ............................................................................... 6 - 13

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To the Constituents Potomac Conference Corporation of Seventh-day Adventists Staunton, Virginia We have audited the accompanying schedules of Potomac Adventist Book and Health Food Center (ABC), a department of Potomac Conference Corporation of Seventh-day Adventists (Conference), which comprise the schedules of financial position as of January 31, 2015, 2014, 2013, 2012, and 2011, and the related schedules of changes in net assets and schedules of cash flows for the years then ended, and the related notes to the schedules. Management’s Responsibility for the Schedules Management is responsible for the preparation and fair presentation of these schedules in accordance with United States of America accounting principles generally accepted by the Seventh-day Adventist denomination. This includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of schedules that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these schedules based on our audit. We conducted our audit in accordance with United States of America auditing standards generally accepted by the Seventh-day Adventist denomination. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the schedules are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the schedules. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the schedules, 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 schedules 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 schedules. 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, as internal auditors of the General Conference of Seventh-day Adventists, the schedules referred to above present fairly, in all material respects, the assets, liabilities, and net assets of Potomac Adventist Book and Health Food Center, a department of Potomac Conference Corporation of Seventh-day Adventists, as of January 31, 2015, 2014, 2013, 2012, and 2011, and the changes in its net assets and the cash flows of this department for the years then ended in conformity with United States of America accounting principles generally accepted by the Seventh-day Adventist denomination.

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Emphasis of Matter We draw attention to Note 13 to the schedules, which describes the basis of special presentation. The accompanying schedules were prepared to present only the accounts and activity of the ABC, which is a department of the Conference. Our opinion is not modified with respect to this matter. Other Matter Our report is intended solely for the information and use of the officers of the Conference and the ABC, their financial audit review committee, their governing committee, the delegates to its constituency meetings, and the officers and their designees of higher denominational organizations. This report is not intended to be and should not be used by anyone other than these specified parties. July 23, 2015

The accompanying notes are an integral part of the financial statements.

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ASSETSCurrent Assets 2015 2014 2013 2012 2011Cash & Cash Equivalents (Note 2) 865,375 359,150 489,965 511,425 459,495 Accounts Receivable, Net (Note 3) 192,583 206,212 213,472 214,130 215,552 Inventories (Note 4) 945,832 1,100,216 1,077,845 973,530 988,909 Prepaid Expense 41,361 28,548 37,067 45,516 36,837 Prepaid Lease Expense, Current (Note 5) - 21,025 21,040 21,029 21,029 Notes Receivable, Current (Note 6) 122,545 121,025 318,433 312,518 304,073 Total Current Assets 2,167,696 1,836,176 2,157,822 2,078,148 2,025,895

Property, Plant & Equipment, Net (Note 7) 5,666,996 5,748,127 5,800,917 5,794,007 5,866,999

Other AssetsPrepaid Lease Expense, Long-term (Note 5) - 3 21,002 42,041 63,077 Total Other Assets - 3 21,002 42,041 63,077 Total Assets 7,834,692 7,584,306 7,979,741 7,914,196 7,955,971

LIABILITESCurrent LiabilitiesAccounts Payable, Current (Note 8) 408,726 478,051 616,294 476,844 450,969 Unearned Income 77,770 73,718 67,283 62,347 56,312 Notes Payable, Current (Note 9) 162,000 464,236 408,057 408,057 388,208 Total Current Liabilities 648,495 1,016,005 1,091,634 947,248 895,489

Other LiabilitiesAccounts Payable, Long-term (Note 8) 30,581 30,074 26,806 26,657 20,808 Notes Payable, Long-term (Note 9) 2,598,300 2,532,418 3,038,094 3,461,566 3,893,729 Total Other Liabilities 2,628,881 2,562,492 3,064,900 3,488,223 3,914,537 Total Liabilities 3,277,376 3,578,497 4,156,534 4,435,471 4,810,026

NET ASSETSUnrestricted: unallocated 1,055,093 (1,278,322) (1,064,674) (979,914) (980,399) Unrestricted: allocated - 240 697 1,837 8,864 Unrestricted: net invested in plant 3,502,223 5,283,891 4,887,184 4,456,803 4,117,480 Total net assets 4,557,316 4,005,809 3,823,207 3,478,726 3,145,945 Total liabilities and net assets 7,834,692 7,584,306 7,979,741 7,914,196 7,955,971

POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTERSpecial-Purpose Schedules of Financial Position

January 31, 2015, 2014, 2013, 2012, and 2011


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For the Years Ended January 31, 2015, 2014, 2013, 2012, and 2011

CHANGES IN UNRESTRICTED NET ASSETSRevenues From Operations 2015 2014 2013 2012 2011Total Sales 6,750,009 6,810,401 7,061,841 7,395,217 7,257,132 Less: Cost of Goods Sold (4,847,506) (4,854,327) (4,926,700) (5,221,383) (5,033,443) Gross Profit on Sales 1,902,503 1,956,074 2,135,141 2,173,834 2,223,689 Shipping & Handling Income 51,739 51,845 50,014 51,798 54,229 Finance Charge Income 3,969 5,148 7,810 11,434 8,710 Rent Income 407,240 402,861 403,566 402,188 397,705 Other Income 3,783 26,205 11,113 857 29

Gross Revenue from Operations 2,369,234 2,442,133 2,607,644 2,640,111 2,684,362

OPERATING EXPENSEProgram Function: Advertising & Selling Expense (Note 10) 1,506,054 1,689,897 1,679,804 1,669,383 1,570,431 Rental Expense 151,634 154,441 165,546 185,667 206,786 Supporting Services Function: General & Administrative Expense (Note 11) 401,569 440,072 448,468 433,017 412,863

Total Operating Expense 2,059,258 2,284,410 2,293,818 2,288,067 2,190,080

Net Revenue from Operations 309,977 157,723 313,826 352,044 494,282

Donation Income - - - - 1,012 Subsidies 888,992 113,971 147,071 155,638 164,080 Contributed Services Income (Note 14) 28,710 30,837 31,232 24,704 25,413 Interest Expense (676,171) (119,929) (147,645) (199,605) (223,664) Net Nonoperating Activity 241,531 24,879 30,658 (19,263) (33,159)

Increase (Decrease) in Net Assets 551,507 182,602 L 344,481 332,781 461,123

Net Assets, Beginning of Year 4,005,809 3,823,207 3,478,726 3,145,945 2,684,822 Net Assets, End of Year 4,557,316 4,005,809 3,823,207 3,478,726 3,145,945

POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTERSpecial-Purpose Schedules of Changes in Net Assets


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CASH FLOWS FROM OPERATING ACTIVITIES 2015 2014 2013 2012 2011

Increase (Decrease), Net Assets 551,507 182,602 344,481 332,781 461,123Adjustments to reconcile change in net assets to net cash provided: Depreciation Expense (Note 7) 87,282 94,386 95,277 83,615 78,355

Amortization Expense 21,039 - - - - (Increase) Decrease, Accounts Receivable 12,109 7,260 658 1,422 279(Increase) Decrease, Inventories & Prepaid Expense 141,571 (13,852) (95,876) 6,699 (45,877)Increase (Decrease), Current Accounts Payable and Unearned Income (65,274) (131,808) 144,386 31,910 105,971(Increase) Decrease, Agency Fund Cash - - - - 848 Increase (Decrease), Agency Fund Liability - - - - (848) Net Cash Provided (Used) by Operating Activities 748,234 138,588 488,926 456,427 599,851

CASH FLOWS FROM INVESTING ACTIVITIES

Long-term Operating Lease - 20,999 21,039 21,036 21,036New Notes Receivable Issued - 197,408 (5,915) (8,445) (304,080)Purchases of Plant Assets (6,163) (41,594) (102,187) (10,623) (80,910) Net Cash Provided (Used) by Investing Activities (6,163) 176,813 (87,063) 1,968 (363,954)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds (Payments), Long-Term Accounts Payable 507 3,268 149 5,849 4,174Proceeds from External Borrowing (Interest Paid) 2,211,681 29,249 55,261 93,952 129,600Principal Payments on Notes Payable (2,448,034) (478,733) (478,733) (506,266) (623,246) Net Cash Provided (Used) by Financing Activities (235,847) (446,216) (423,323) (406,465) (489,472)

Increase (Decrease) Cash for the Year 506,225 (130,815) (21,460) 51,930 (253,574)Cash & Cash Equivalents, Beginning of Year 359,150 489,965 511,425 459,495 713,069 Cash & Cash Equivalents, End of Year 865,375 359,150 489,965 511,425 459,495

Supplemental Cash Flow Data:Cash paid during 2015, 2014, 2013, 2012, and 2011 for interest was $327,693, $478,733, $147,645, $199,605, and $223,664 respectively.

POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTERSpecial-Purpose Schedules of Cash Flows

For the Years Ended January 31, 2015, 2014, 2013, 2012, and 2011

POTOMAC ADVENTIST BOOK AND HEALTH FOOD CENTERNotes to the Special-Purpose Financial Schedules

Years Ended January 31, 2015, 2014, 2013, 2012, and 2011

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(f) Fair value of financial instruments: The methods and assumptions used to estimate fair values are:

Investment securities are valued at quoted market price or reasonable obtainable market value estimate at the reporting date for those or similarsecurities. The difference between aggregate market value and cost for each type of security is recorded in a valuation account. The change in thisaccount at the close of each year is recognized as gain or loss.

Short-term financial instruments are valued at their carrying amounts in the financial schedules, which are reasonable estimates of fair value due tothe relatively short period to maturity of the instruments. This applies to cash, cash equivalents, accounts receivable and certain current liabilities.

The ABC reports gifts of land, buildings and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets mustbe used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used, and gifts of cash or other assets that must beused to acquire long-lived assets, are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets mustbe maintained, the ABC reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service.

(c) Restricted resources: The ABC reports gifts of cash and other assets as restricted support if they are received with donor stipulations that limit theuse of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished,temporarily restricted net assets are reclassified to unrestricted net assets and reported in the schedule of activities as net assets released fromrestrictions.

(e) Cash equivalents: Cash equivalents are highly-liquid assets held for operating, which are readily convertible to cash and have a maturity date ofless than three months from date of acquisition. Cash and investments held for other than operating are not classified as cash and cash equivalents.The increase or decrease in non-operating cash and investments is reported in the schedule of cash flows as proceeds from or purchases ofinvestments.

(d) Equipment and depreciation: Uses of funds for equipment acquisitions and debt service payments are accounted for as cash flows from investingand financing activities. Restricted proceeds from the sale of equipment and restricted income from plant related investments are recorded asrestricted gains. Interest payments made to retire plant indebtedness are recorded as non-operating expense. Equipment is recorded at cost whenpurchased or at fair market value at date of gift. Furniture and equipment purchases $1,000 and larger are capitalized. Purchases below $1,000 maybe capitalized at management's discretion. Depreciation of equipment is provided over the estimated useful lives of the respective assets, building 60-75 years, equipment 3-5 years, vehicles 5-10 years, and electronics 3-5 years, on a straight-line basis. Depreciation expense is recorded as operatingexpense in the schedule of changes in net assets.

Note 1 – Organization description and summary of significant accounting policies

Summary of significant accounting policies

(a) Basis of accounting: The significant accounting policies of the ABC are essentially the same as generally accepted accounting principles for not-for-profit ABCs as promulgated by the Financial Accounting Standards Board. These significant policies are described below to enhance theusefulness of the financial schedules. The financial schedules of the ABC have been prepared on the accrual basis of accounting. In conformity withthe accrual basis of accounting, the ABC has evaluated events that occurred subsequent to the financial schedule date, up to July 23, 2015, which isthe date the financial schedules were available to be issued.

Potomac Adventist Book and Health Food Center (ABC) is a department of the Potomac Conference Corporation of Seventh-day Adventists(Conference) whose objectives are to sell and distribute Christian literature and related merchandise to its constituents and congregations, and toserve as a witness and outreach to the community.

The ABC receives most of its revenue in the form of sales of its merchandise.

The ABC is a religious not-for-profit organization, and is exempt from federal, state and local income taxes under the provisions of Section 501(c)(3)of the Internal Revenue Code, and corresponding sections of applicable state and local codes, except for taxes on unrelated business income asdescribed in sections 511-514 of the Internal Revenue Code.

(b) Use of estimates: The preparation of financial schedules in conformity with generally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at thedate of the financial schedules and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from thoseestimates.



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2015 2014 2013 2012 2011Imprest Cash 4,310 4,310 4,310 4,310 4,779 Checking Accounts 505,266 325,856 466,804 501,594 436,410 Savings Accounts - - 5,525 5,521 5,498 Money Market Accounts 355,799 28,984 13,326 - 12,808 Total Cash & Cash Equivalents 865,375 359,150 489,965 511,425 459,495

2015 2014 2013 2012 2011Trade 1,318 3,882 5,417 5,336 7,090 Higher Organizations 3,867 4,249 10,023 4,855 1,530 Potomac Conference - 481 858 7,702 3,988 Other Conferences 12,115 2,496 1,805 320 6,466 Churches 158,694 163,522 171,063 172,929 180,880 Schools 2,272 7,308 3,566 3,208 3,982 Individuals 13,510 14,095 13,823 13,722 9,891 Other Adventist Book Centers 3,545 2,179 1,981 5,349 996 Accounts Payable Debit Balances 8,861 19,598 16,698 12,307 17,769 Allowance for Doubtful Accounts (11,598) (11,598) (11,762) (11,598) (17,040) Total Accounts Receivable, Net 192,583 206,212 213,472 214,130 215,552

2015 2014 2013 2012 2011Books 304,967 354,173 443,675 372,142 425,942 Food 409,022 495,757 415,004 366,088 368,515 Other 231,842 250,286 219,166 235,300 194,452 Total Inventories 945,832 1,100,216 1,077,845 973,530 988,909

Note 4 – Inventories

(j) Inventory: Inventory is stated at the lower of cost or fair value under the first-in, first-out method.

(h) Concentrations of Risk: The ABC receives most of its revenue from sales of merchandise. It is subject to the effect of economic trends that maydecrease the ability of customers to purchase its merchandise. Also, it purchases most of its inventory from three major suppliers: Pacific PressPublishing Association, Review & Herald Publishing Association and Sunbelt Natural Foods. There is a risk that suppliers' pricing and productdecisions could conflict with the ABC's sales objectives. Cash, which at times exceeds amounts covered by FDIC insurance, is deposited in high-quality financial institutions.

(g) Current Assets and Liabilities: Assets and liabilities are classified as current or long-term, depending on their characteristics. This excludes fromcurrent assets the cash and claims to cash that are restricted to use for other than current operations, committee allocated for the acquisition orconstruction of plant assets or for the liquidation of plant fund debt, or held as agent for others. This excludes from current liabilities the long-termportion of all debt, plant fund debt payable within the next fiscal year to the extent covered by designated plant fund liquid assets, or amounts held asfiscal agent for others. Working capital (current assets less current liabilities) for the ABC usually reflects operating working capital, since usually noplant-related assets or liabilities are classified as current.

(i) Provision for Uncollectible Accounts: An allowance for uncollectible accounts is provided through routine additions based on sales, historical baddebt experience and aging of receivables. Accounts deemed to be uncollectible are charged to the allowance.

Inventory is pledged as collateral for the Columbia Union Revolving Fund note payable set forth in Note 9.

Note 3 – Accounts Receivable

(k) Investment Income: Investment Income is accounted for as unrestricted non-operating income.

Note 2 – Cash & Cash Equivalents

Note 1 – Summary of significant accounting policies (continued)



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Note 5 – Prepaid Lease ExpenseGross Accumulated Net

Prepaid Lease Expense: Amount Amortization Amount Lease - Commission Fees 155,846 (155,846) - Lease - Attorney Fees 54,439 (54,439) - Total Prepaid Lease Expense 210,285 (210,285) - Current Portion - Long-term Portion -

Gross Accumulated NetPrepaid Lease Expense Amount Amortization Amount Lease - Commission Fees 155,846 (140,265) 15,581 Lease - Attorney Fees 54,439 (48,992) 5,447 Total Prepaid Lease Expense 210,285 (189,257) 21,028 Current Portion (21,025) Long-term Portion 3

Gross Accumulated NetPrepaid Lease Expense Amount Amortization Amount Lease - Commission Fees 155,846 (124,680) 31,166 Lease - Attorney Fees 54,439 (43,563) 10,876 Total Prepaid Lease Expense 210,285 (168,243) 42,042 Current Portion (21,040) Long-term Portion 21,002



2015 2014 2013 2012 2011

122,545 121,025 318,433 312,518 304,073

122,545 121,025 318,433 312,518 304,073

January 31, 2015

January 31, 2014

January 31, 2013

January 31, 2011

January 31, 2012

Note 6 – Notes Receivable

Columbia Union Revolving Fund @1.25%, on demand



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Total Accumulated Net DepreciationCost Depreciation Value Expense

Land 2,243,016 - 2,243,016 - Building 4,019,441 737,612 3,281,829 54,378 Electronics 6,018 6,015 3 - Vehicles 21,581 21,580 1 - Mountain View Campmeeting 19,359 18,446 913 910 Equipment: Store, Office & Computer 643,794 502,569 141,225 31,994 Silver Spring 130,403 130,394 9 - Total Plant Assets at 1/31/15 7,083,613 1,416,616 5,666,996 87,282

Land 2,243,016 - 2,243,016 - Building 4,019,441 683,234 3,336,207 54,378 Electronics 6,018 6,015 3 - Vehicles 21,581 21,580 1 - Mountain View Campmeeting 19,359 17,535 1,824 910 Equipment: Store, Office & Computer 637,631 470,564 167,067 39,098 Silver Spring 130,403 130,394 9 - Total Plant Assets at 1/31/14 7,077,449 1,329,322 5,748,127 94,386

Land 2,243,016 - 2,243,016 - Building 4,019,441 628,857 3,390,584 54,367 Electronics 6,018 6,015 3 - Vehicles 21,581 21,580 1 - Mountain View campmeeting 19,359 16,625 2,734 910 Equipment: Store, office, and computer 596,036 431,466 164,570 40,000 Silver Spring 130,403 130,394 9 - Total Plant Assets at 1/31/13 7,035,854 1,234,937 5,800,917 95,277

Land 2,243,016 - 2,243,016 - Building 4,019,441 574,490 3,444,951 54,384 Electronics 6,018 6,015 3 - Vehicles 21,581 21,580 1 - Mountain View campmeeting 19,359 15,715 3,644 910 Equipment: Store, office, and computer 493,849 391,466 102,383 28,321 Silver Spring 130,403 130,394 9 - Total Plant Assets at 1/31/12 6,933,667 1,139,660 5,794,007 83,615

Land 2,243,016 - 2,243,016 - Building 4,019,441 520,106 3,499,335 54,378 Electronics 6,018 6,015 3 - Vehicles 21,581 21,580 1 4,315 Mountain View campmeeting 19,359 14,805 4,554 - Equipment: Store, office, and computer 483,226 363,145 120,081 16,965 Silver Spring 130,403 130,394 9 2,697 Total Plant Assets at 1/31/11 6,923,044 1,056,045 5,866,999 78,355

Property, Plant & Equipment are pledged as collateral for the Columbia Union Revolving Fund note payable set forth in Note 9.

Note 7 – Property, Plant & Equipment

2015

2014

2013

2012

2011



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2015 2014 2013 2012 2011Trade 227,242 216,255 220,845 286,712 225,711 Wages - - - - 43,209 Accrued Payroll 27,340 42,692 29,088 58,223 101,935 Potomac Conference 99,038 172,569 324,143 83,407 10,182 Sales Taxes 9,445 8,812 8,795 11,838 24,574 Miscellaneous 7,888 211 207 4,522 4,167 Accounts Receivable Credit Balances 37,773 37,512 33,216 32,142 41,191 Total Accounts Payable, Current 408,726 478,051 616,294 476,844 450,969

Accrued Retirement Allowance Payable 30,581 30,074 26,806 26,657 20,808 Total Accounts Payable, Long-term 30,581 30,074 26,806 26,657 20,808

Note 9 – Notes Payable2015 2014 2013 2012 2011Total Total Total Total Total

Potomac Conference, 1.25%** 2,164,773 464,236 913,733 1,337,204 1,749,519 Total Notes Payable, 2015 595,527 2,532,418 2,532,418 2,532,418 2,532,418

2,760,300 2,996,654 3,446,151 3,869,623 4,281,937

Principal amounts due in each of the next five years are: 2016 162,0002017 74,5812018 77,8142019 81,1862020 84,704

Future 2,280,015 Total 2,760,300

Note 10 – Advertising & Selling Expense2015 2014 2013 2012 2011

Salary & Allowances 935,936 1,023,278 1,053,529 1,039,944 969,470 Retirement Contribution 146,636 151,760 146,794 153,673 145,898 Advertising 47,061 53,017 60,256 80,626 63,878 Bad Debts (68) 1,882 - (5,151) (5,280) Bank Fees 7,079 8,284 6,883 5,479 5,103 Campmeeting 8,789 11,240 9,192 11,002 13,780 Credit Card Discounts 98,213 95,497 91,581 100,866 95,479 Depreciation 35,045 39,779 40,386 32,608 29,086 Freight & Postage 52,927 48,403 45,335 51,844 51,553 Insurance 10,805 17,354 21,321 13,600 17,709 Office & Computer 31,506 38,004 42,284 38,764 32,462 Orchard Center CAM 3,771 1,639 4,181 6,569 9,111 Repairs & Maintenance 35,151 37,930 38,614 37,470 33,916 Sales Tax Adjustment 293 128 - 33 - Telephone 12,744 14,935 13,996 13,455 13,455 Truck Expense 461 474 531 527 479 Unrelated Business Income Taxes 12,425 32,893 15,865 19,490 18,211 LivingWell Program 3,155 38,575 20,756 - - Food Demonstration 1,121 328 - 219 (997) Utilities 63,002 74,497 68,300 68,365 77,118 Total Advertising & Selling Expense 1,506,054 1,689,897 1,679,804 1,669,383 1,570,431

Note 8 – Accounts Payable

**The Potomac Conference of Seventh-day Adventists made appropriations equal to the interest charged on the loan for the fiscal years endedJanuary 31, 2015.

Columbia Union Revolving Fund (4.25%), $13,500 monthly, 240 months



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2015 2014 2013 2012 2011Salary & Allowances 233,984 255,820 263,382 259,986 242,368 Retirement Contribution 36,659 37,940 36,698 38,418 36,475 Contributed Services 28,710 30,837 31,233 24,704 25,413 Depreciation 17,496 19,859 20,162 16,280 14,521 Insurance 5,395 8,664 10,645 6,790 8,841 Miscellaneous 2,944 - - - 2,018 Office & Computer 15,518 18,974 21,111 19,353 15,989 Orchard Center CAM 1,858 819 2,087 3,280 4,488 Real & Personal Property Taxes 4,384 3,575 2,785 4,650 1,435 Repairs & Maintenance 17,313 18,936 19,278 18,707 16,705 Telephone 6,277 7,456 6,988 6,718 6,627 Utilities 31,031 37,192 34,099 34,131 37,983 Total General & Administrative Expense 401,569 440,072 448,468 433,017 412,863

1.

2.

Required contributions from the Organization: NADRP RAHAP TOTAL 101,693 40,142 141,835 90,596 35,761 126,357 81,825 32,299 114,124 114,124 123,346 237,470 123,347 124,926 248,273

Total contributions received from all employers:

101,806,557 37,344,915 91,820,841 35,959,775 88,114,315 32,072,730 88,687,413 32,212,355 86,381,495 31,037,165

less than less than less than less than less than less than less than less than

The defined benefit pension plan known as the Seventh-day Adventist Retirement Plan of the North American Division (NADRP). This plan,which covers substantially all employees of the Organizations, is administered by the General Conference of Seventh-day Adventists, NorthAmerican Division (NAD), in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a "multiple-employer" plan of a church-related agency. This plan provides primarily monthly pension benefits based on years of service and other factors.

Defined benefit plans

The defined benefit health care plan known as the General Conference of Seventh-day Adventist North American Division Retiree AuxiliaryHealthcare Assistance and Death Benefit Plan (RAHAP). This plan, which covers substantially all employees of the Organization, is administeredby NAD in Silver Spring, Maryland, and is exempt from the Employee Retirement Income Security Act of 1974 as a “multiple-employer” plan of achurch-related agency. This plan provides primarily health-care benefits which supplement Medicare benefits. The extent of these benefits isbased on years of service and the beneficiary’s monthly contribution.

Accounting standards define these plans as “multiemployer” plans. As such, it is not required, nor is it possible, to determine the actuarial value ofaccumulated benefits or plan net assets for employees of the Organization apart from other plan participants.

Information about the required contributions to these plans, the actuarial obligation for future benefits, and the funded status of these plans, ispresented in the tables below.

Because the following information is not publicly available, it is required to be disclosed onthe basis of information received from each plan.

The Organization participates in the following non-contributory, defined benefit plans:

For the plan year ended January 31, 2012

For the year ended January 31, 2014

Note 12 – Pension & Other Post-Retirement Benefits

Note 11 – General & Administrative Expense

The NAD Committee voted to freeze accrual of service credit in NADRP effective December 31, 1999, except for employees who chose the careercompletion option, and to start a new defined contribution plan effective January 1, 2000. Certain employees will continue to be eligible for futurebenefits under this plan. The Organizations continue to make contributions to this plan, at rates determined annually by the plan.

Whether the Organization’s contributions were more than or less than 5% of the total contributions received by each plan:

For the plan year ended January 31, 2013For the plan year ended January 31, 2012For the plan year ended January 31, 2011

For the year ended January 31, 2015

For the plan year ended January 31, 2015*For the plan year ended January 31, 2014


For the year ended January 31, 2013For the year ended January 31, 2012For the year ended January 31, 2011

For the plan year ended January 31, 2015*For the plan year ended January 31, 2014For the plan year ended January 31, 2013



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NADRP RAHAP

218,023,700 66,446,449 209,924,999 71,035,285 193,148,475 62,771,811 185,118,134 59,165,497 198,283,923 62,164,536

Date of plan year-end for latest actuarial information 12/31/2013 12/31/2012Actuarial liability for future benefits 1,481,982,124 1,013,326,701 Value of net assets available for benefits 209,924,999 62,771,811 Plan funded status as of date of last actuarial data Less than 65% Less than 65%

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Note 14 – Contributed Services

The accompanying special-purpose schedules include only the accounts and activity of the ABC, which is a department of the Conference.Compliance with Statement of Financial Accounting Standards No. 117 of the Financial Accounting Standards Board would require the wholeorganization to be included in general-use financial statements. The Conference believes this special presentation is useful to analyze thisdepartment apart from the rest of the entity.

Under provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 116, contributions of services shall berecognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessingthose skills, and would typically need to be purchased if not provided by donation. The ABC has received the services of the General ConferenceAuditing Service who have audited the financial statements for the years ended January 31, 2015, 2014, 2013, 2012, and 2011. The amount ofcontributed services recognized as revenues for the periods are $28,710, $30,837, $31,232, $25,704, and $25,413 for the years then ended,respectively. These amounts are product of the number of person-hours spent in performing the audit and the cost-recovery rate established by theGeneral Conference of Seventh-day Adventists.

For the plan year ended January 31, 2012For the plan year ended January 31, 2011

Note 13 – Basis of Special Presentation

*Data for January 31, 2015 not yet available.

No minimum contribution for future periods has been determined or required of the Organization.

Defined contribution plan

Effective January 1, 2000, the Organization participates in a defined contribution retirement plan known as "The Adventist Retirement Plan." Thisplan, which covers substantially all employees of the Organization, is administered by NAD in Silver Spring, Maryland, and is exempt from theEmployee Retirement Income Security Act of 1974 as a multiple-employer plan of a church-related agency. The Organization contributed $52,454,$60,074, $65,720, $62,896, and $53,270 to the plan for the years ended January 31, 2015, 2014, 2013, 2012, and 2011 respectively, based on astated percentage of each employee’s earnings and a stated matching percentage of certain employee voluntary contributions. Investmentmanagement of the accumulated contributions designated for each employee is provided under an agreement between NAD Corporation and Great-West Life & Annuity Insurance Company.

Information about the plans is not publicly available, so no “certified zone status” has been determined.The Organization's required contributions are not the subject of any collective bargaining agreement.No funding improvement plans or rehabilitation plans had been implemented or were pending.The Organization has not paid any “surcharge” to either of the plans.

Plan net assets available for benefits:

Actuarial obligation and funded statusBecause the following information is not publicly available, it is required to be disclosed on the basis of information received from each plan.

Note 12 – Pension and other post-retirement benefits (continued)

Other information about risks and contingencies related to these plans are as follows:

Risks and other informationThe risks of participating in multiemployer plans are different from single-employer plans, in the following aspects:

Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.If a participating employer stops contributing to a plan, the unfunded obligations of the plan may be borne by the remaining participatingemployers.If the Organization chooses to stop participating in a multiemployer plan, the Organization may be required to pay the plan an amount based onthe underfunded status of the plan, referred to as a withdrawal liability.


For the plan year ended January 31, 2015*For the plan year ended January 31, 2014



13

Year ended January 31, Amount2016 365,2062017 365,2062018 365,2062019 - 2020 -

Future - Total 1,095,619

Working Capital 2015 2014 2013 2012 2011Current Assets 2,167,696 1,836,176 2,157,822 2,078,148 2,025,895Current Liabilities (648,495) (1,016,005) (1,091,634) (947,248) (895,489) Actual Working Capital 1,519,200 820,171 1,066,188 1,130,900 1,130,406Recommended Working Capital* 1,138,415 1,306,428 1,291,317 1,187,660 1,213,325

Working Capital Surplus (Deficit) 380,785 (486,257) (225,129) (56,760) (82,919)

Percent of Recommended Working Capital Available 133.45% 62.78% 82.57% 95.22% 93.17%

Current Ratio 3.34:1 1.81:1 1.98:1 2.19:1 2.26:1

Liquidity StatementCash & Cash Equivalents 865,375 359,150 489,965 511,425 459,495 Total Liquid Assets 865,375 359,150 489,965 511,425 459,495

Current Liabilities 648,495 1,016,005 1,091,634 947,248 895,489 Total Commitments 648,495 1,016,005 1,091,634 947,248 895,489

Liquid Assets Surplus (Deficit) 216,880 (656,855) (601,669) (435,823) (435,994)

Percent of Liquid Assets to Commitments 133.44% 35.35% 44.88% 53.99% 51.31%

*Calculation of Recommended Working CapitalAccounts Receivable, Net 192,583 206,212 213,472 214,130 215,552 Inventories 945,832 1,100,216 1,077,845 973,530 988,909 Allocated Net Worth (Reserve) - - - - 8,864 Total Recommended Working Capital 1,138,415 1,306,428 1,291,317 1,187,660 1,213,325

Note 16 – Working Capital & Liquidity

Minimum future rentals to be received on the non-cancelable lease as of January 31, 2015 for each of the next five years and in the aggregate are:

Note 15 – Operating Lease

The ABC is the lessor of 19,181 square feet of its store space (approximately 48% of the property) at Cherry Hill Road to Staples, the OfficeSuperstore East, Inc., an operating lease with an initial term of three years expiring January 31, 2018 with two options for five additional lease yearseach. Cost and accumulated depreciation of the whole building and land is disclosed in Note 7. The cost or fair value of the portion of the propertyunder lease is not objectively determinable. Commissions and legal fees related to the signing of the lease have been treated as Other Assets in thefinancial statements and will be amortized by the ABC over the life of the lease, as disclosed in Note 7.

abc 2015 2011 opinion & financial statements

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