audited financial statements - america's … · consolidated financial statements . years...

AMERICA’S BLOOD CENTERS

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED MARCH 31, 2016 AND 2015

AMERICA’S BLOOD CENTERS TABLE OF CONTENTS


INDEPENDENT AUDITORS’ REPORT 1 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 3 CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS 4 CONSOLIDATED STATEMENTS OF CASH FLOWS 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6

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CliftonLarsonAllen LLP CLAconnect.com

INDEPENDENT AUDITORS’ REPORT Board of Directors America’s Blood Centers Washington, DC We have audited the accompanying consolidated financial statements of America’s Blood Centers and its Subsidiary, which comprise the consolidated statements of financial position as of March 31, 2016 and 2015, and the related consolidated statements of activities and changes in net assets, and consolidated cash flows for the years then ended, and the related notes to the consolidated financial statements. Management's Responsibility for the 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 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 audits 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. Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of America’s Blood Centers and its Subsidiary as of March 31, 2016 and 2015, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

To the Members America’s Blood Centers

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Other Matter We also have audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated statements of financial position of America’s Blood Centers and Affiliate as of March 31, 2016 and 2015, and the related consolidated statements of activities and changes in net assets, and consolidated statements of cash flows for the years then ended (none of which is presented herein), and we expressed an unmodified opinion on those financial statements. Such consolidated financial statements are the general-purpose financial statements of America’s Blood Centers and Affiliate, and the financial statements of parent company presented herein are not a valid substitute for those consolidated financial statements.

a CliftonLarsonAllen LLP

Arlington, Virginia July 12, 2016

AMERICA’S BLOOD CENTERS CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

MARCH 31, 2016 AND 2015

See accompanying Notes to Consolidated Financial Statements. (3)

2016 2015

ASSETS

CURRENT ASSETSCash and Cash Equivalents 842,724$ 786,558$ Accounts Receivable 85,463 22,046 Due from FABC - 140,906Prepaid Expenses and Other Assets 58,105 56,291

Total Current Assets 986,292 1,005,801

INVESTMENTS 505,350 502,349

PROPERTY AND EQUIPMENT 1,433,956 1,228,224 Less: Accumulated Depreciation (860,052) (678,389)

Total Property and Equipment 573,904 549,835

DEFERRED COMPENSATION 528,699 878,757

Total Assets 2,594,245$ 2,936,742$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIESAccounts Payable and Accrued Expenses 230,445$ 294,354$ Due to FABC 310,486 - Due to Members 50,084 - Deferred Revenue 75,056 73,487

Total Current Liabilities 666,071 367,841

LEASE DEPOSIT 11,806 11,806

DEFERRED LEASE INCENTIVE 23,750 26,750

DEFERRED COMPENSATION PAYABLE 528,699 878,757

Total Liabilities 1,230,326 1,285,154

NET ASSETS Unrestricted - Undesignated 1,017,544 1,185,021 Unrestricted - Board Designated - AIM - 87,313 Unrestricted - Board Designated - Other 334,354 374,254 Temporarily Restricted 12,021 5,000

Total Net Assets 1,363,919 1,651,588

Total Liabilities and Net Assets 2,594,245$ 2,936,742$

AMERICA’S BLOOD CENTERS CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS



2016 2015

Temporarily Temporarily Unrestricted Restricted Total Unrestricted Restricted Total

REVENUEMembership Assessments 2,646,956$ -$ 2,646,956$ 2,665,339$ -$ 2,665,339$ Contributions - 130,000 130,000 - 92,150 92,150 AIM - - - 121,450 - 121,450 Administrative Support Services 55,000 - 55,000 73,441 - 73,441 Meetings and Workshops 381,148 - 381,148 402,958 - 402,958 Newsletter Income 47,108 - 47,108 40,545 - 40,545 Other Project Income 1,057 - 1,057 3,619 - 3,619 Sublease 74,863 - 74,863 71,636 - 71,636 Interest and Dividends 8,001 - 8,001 2,802 - 2,802 Realized Gain 54 - 54 - - - Unrealized (Loss) Gain (2,743) - (2,743) 2,543 - 2,543 Net Assets Released from Restrictions 122,979 (122,979) - 167,672 (167,672) -

Total Revenue 3,334,423 7,021 3,341,444 3,552,005 (75,522) 3,476,483

EXPENSESProgram Services 230,785 - 230,785 474,937 - 474,937 Member Services 266,415 - 266,415 366,340 - 366,340 Government Affairs - - - 76 - 76 Meetings and Workshops 445,673 - 445,673 389,011 - 389,011 Scientific, Medical, and Technical 831,164 - 831,164 809,063 - 809,063

Total Program Expenses 1,774,037 - 1,774,037 2,039,427 - 2,039,427 General and Administrative 1,855,076 - 1,855,076 1,709,662 - 1,709,662

Total Expenses 3,629,113 - 3,629,113 3,749,089 - 3,749,089

CHANGE IN NET ASSETS (294,690) 7,021 (287,669) (197,084) (75,522) (272,606)

Net Assets - Beginning of Year 1,646,588 5,000 1,651,588 1,843,672 80,522 1,924,194

NET ASSETS - END OF YEAR 1,351,898$ 12,021$ 1,363,919$ 1,646,588$ 5,000$ 1,651,588$

AMERICA’S BLOOD CENTERS CONSOLIDATED STATEMENTS OF CASH FLOWS



2016 2015

CASH FLOWS FROM OPERATING ACTIVITIESChange in Net Assets (287,669)$ (272,606)$ Adjustments to Reconcile Change in Net Assets to Net Cash Provided by (Used in) Operating Activities:

Depreciation and Amortization Expense 181,663 174,124 Realized Gain on Investments (54) - Unrealized Loss (Gain) on Investments 2,743 (2,543)

Changes in Assets and Liabilities:Accounts Receivable (63,417) 14,619 Due from GSABC - 534 Due from Related Party 140,906 (103,138) Prepaid Expenses and Other Assets (1,814) (584) Accounts Payable and Accrued Expenses (63,909) 14,049 Due to FABC 310,486 - Due to Members 50,084 - Deferred Revenue 1,569 12,403 Deferred Lease Incentive (3,000) (3,000)

Net Cash Provided by (Used In) Operating Activities 267,588 (166,142)

CASH FLOWS FROM INVESTING ACTIVITIESPurchases of Property and Equipment (205,732) (177,710) Proceeds from Sales of Investments 34,391 - Purchases of Investments (40,081) (499,806)

Net Cash Used in Investing Activities (211,422) (677,516)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 56,166 (843,658)

Cash and Cash Equivalents - Beginning of Year 786,558 1,630,216

CASH AND CASH EQUIVALENTS - END OF YEAR 842,724$ 786,558$

SUPPLEMENTAL INFORMATIONCash Paid for Taxes 4,160$ 6,600$

AMERICA’S BLOOD CENTERS NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2016 AND 2015

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization America’s Blood Centers (ABC) is a not-for-profit membership organization that was incorporated in Arizona in 1962. ABC’s primary goal is to provide a forum for blood center administrators, medical directors, and senior management to exchange information, discuss pertinent issues, and work together to improve the quality and efficiency of service to hospitals, patients, and blood donors. Its membership is composed entirely of non-profit blood banks located throughout the United States and Canada. Blood Counts LLC, was a wholly owned subsidiary of ABC and is considered a disregarded entity for tax purposes. Activity related to ABC’s AIM I software licensing agreement with NHS Blood and Transplant (“NHS”), is reported through Blood Counts LLC. As of March 31, 2016, this project was divested and all remaining assets were transferred to ABC- see Note 12 for details. ABC controls The Foundation for America’s Blood Centers (hereinafter referred to as “the Foundation or FABC”) by a majority voting interest of the Foundation’s Board of Directors, an economic interest, and inter-related management. In such circumstances, accounting principles generally accepted in the United States of America require that financial statements of the controlling organization be consolidated with the accounts of the controlled organization. The accompanying financial statements are for ABC alone, and do not include the accounts of the Foundation. Cash and Cash Equivalents For financial statement purposes, ABC considers all investments with an original maturity of 90 days or less to be cash equivalents. Accounts Receivable Accounts past due are individually analyzed for collectability. When all collection efforts have been exhausted, the account is written off against bad debt expense. Management estimates that all receivables are fully collectible. Therefore, no allowance for doubtful accounts has been recognized. Investments ABC’s investments are comprised of marketable securities and are reported at fair value. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in future statements of activities. Property and Equipment Property and equipment with a cost above $2,500 is capitalized as property and equipment. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective assets, which range from three to five years. Leasehold improvements are amortized over the shorter of the lease term or useful life of the asset.


MARCH 31, 2016 AND 2015

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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Assets Resources are classified for accounting and reporting purposes into net asset groups established according to their nature and purpose and based on the existence or absence of donor-imposed restrictions. The net assets groups are as follows:

Unrestricted Net Assets Undesignated: represents funds available at management’s discretion to fund ABC’s general operations. Designated: represents funds designated by ABC’s Board of Directors to be used for future uncertainties, contingencies and special projects. Temporarily Restricted Net Assets - represents resources received for member association programs (i.e., advertising campaigns, public awareness and marketing initiatives, awards, and scholarships) that are restricted as to their use. ABC classifies all such resources received as temporarily restricted and reports amounts released from restrictions when expenditures are incurred.

Revenue Recognition ABC recognizes newsletter subscription revenue on a monthly basis over the term of the subscription. Membership assessments are allocated to revenue on a monthly basis during the year. Advertising Costs All advertising costs are expensed as incurred. Advertising costs for the years ended March 31, 2016 and 2015, totaled $4,350 and $4,620, respectively. Allocation of Expenses ABC allocates salaries and benefits, travel, consulting fees, and certain other costs to each department based on actual resources used in each program area. Occupancy expense, depreciation and amortization, and other fixed expenses are considered to be supporting costs of the various programs of ABC and are classified as General and Administrative expenses. Basis of Accounting and Principles of Consolidation The financial statements of ABC and its subsidiary have been prepared on the accrual basis of accounting. Consequently, revenue is recognized when earned and expenses when obligations are incurred. The financial statements include the accounts of ABC and its subsidiary. All significant intra-entity transactions and accounts are eliminated in consolidation.


MARCH 31, 2016 AND 2015

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Income Tax Status ABC is exempt from the payment of federal income taxes on its exempt purpose activities under Section 501(c)(6) of the Internal Revenue Code. However, ABC is subject to income tax on unrelated business income activity. ABC had advertising revenue subject to unrelated business income tax for the year ended March 31, 2016 and 2015. ABC has adopted a policy that clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements. The policy prescribes a recognition threshold and measurement principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return that are not certain to be realized. The implementation of this policy had no impact on the ABC’s financial statements as of and for the years ended March 31, 2016 and 2015. Use of Estimates The preparation of financial statements in conformity of with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Fair Value Measurements Statement of Financial Accounting Standards, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and requires expanded disclosures about fair value measurements. ABC accounts for a significant portion of its financial instruments at fair value or considers fair value in its measurement. ABC accounts for certain financial assets and liabilities at fair value under various accounting literature, including, Accounting for Certain Investments Held by Not-for-Profit Organizations. ABC also accounts for certain assets at fair value under applicable industry guidance. Fair Value Hierarchy In accordance with Fair Value Measurements, ABC 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.


MARCH 31, 2016 AND 2015

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Fair Value Hierarchy (Continued) Financial assets and liabilities recorded on the 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 ABC 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 among others, quoted prices for similar assets or liabilities in active market or non-active market.

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.

Subsequent Events In preparing these financial statements, ABC has evaluated events and transactions for potential recognition or disclosure through July 12, 2016, the date the financial statements were available for issuance.

NOTE 2 PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of March 31:

2016 2015Furniture 23,053$ 23,053$ Leasehold Improvements 129,243 129,243 Office Equipment 1,281,660 1,075,928

1,433,956 1,228,224 Less Accumulated Depreciation and Amortization (860,052) (678,389) Total Property and Equipment 573,904$ 549,835$


MARCH 31, 2016 AND 2015

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NOTE 3 INVESTMENTS

Investments are stated at a fair value and consist of the following as of March 31:

Cost Fair Value Cost Fair Value

CDs and Bonds 440,150$ 439,950$ 415,010$ 417,553$ Money Market Funds 65,400 65,400 84,796 84,796

Total 505,550$ 505,350$ 499,806$ 502,349$

2016 2015

Investment income consists of the following for the years ended March 31:

2016 2015Interest and Dividends 8,001$ 2,802$ Realized Gain on Investments 54 - Unrealized (Loss) Gain on Investments (2,743) 2,543

Investment Income 5,312$ 5,345$

NOTE 4 FAIR VALUE MEASUREMENTS

ABC uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. For additional information on how ABC measures fair value refer to Note 1 – Summary of Significant Accounting Policies. The following table presents ABC’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of March 31, 2016:

Assets: Level 1 Level 2 Level 3 TotalInvestments

CDs and Bonds -$ 439,950$ -$ 439,950$ Money Market Funds 65,400 - - 65,400

Total Investments 65,400$ 439,950$ -$ 505,350$

Deferred Compensation PlanEquities 182,104$ -$ -$ 182,104$ Government Bonds 29,727 - - 29,727 Corporate Bonds - 27,237 - 27,237 Fixed Rate 289,631 - - 289,631

Total Deferred Compensation Plan 501,462$ 27,237$ -$ 528,699$

Liabilities: Deferred Compensation Plan 501,462$ 27,237$ -$ 528,699$

2016


MARCH 31, 2016 AND 2015

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NOTE 4 FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents ABC’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of March 31, 2015:

Level 1 Level 2 Level 3 TotalAssets:

InvestmentsCDs and Bonds -$ 417,553$ -$ 417,553$ Money Market Funds 84,796 - - 84,796

Total Investments 84,796$ 417,553$ -$ 502,349$

Deferred Compensation PlanEquities 386,530$ -$ -$ 386,530$ Government Bonds 118,574 - - 118,574 Corporate Bonds - 58,798 - 58,798 Mutual Funds 314,855 - - 314,855

Total Deferred Compensation Plan 819,959$ 58,798$ -$ 878,757$

Liabilities: Deferred Compensation Plan 819,959$ 58,798$ -$ 878,757$

2015

NOTE 5 DEFERRED COMPENSATION PLAN

ABC maintains a deferred compensation plan for certain highly compensated employees. To fund this obligation, ABC has purchased various investments that provide for the deferred compensation. ABC accrues as additional compensation investment earnings.

NOTE 6 TEMPORARILY RESTRICTED NET ASSETS

ABC’S temporarily restricted net assets consist of the following at March 31:

2016 2015cGMP 1,991$ 5,000$ Member Initiative Program/API 10,030 -

12,021$ 5,000$

NOTE 7 CONCENTRATION OF CREDIT RISK

Financial instruments that subject ABC to a concentration of credit risk consist of cash and cash equivalents deposited with financial institutions which may, at times, exceed federally insured limits.


MARCH 31, 2016 AND 2015

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NOTE 8 RELATED PARTY TRANSACTIONS

ABC shares personnel, office space, and partially subsidizes operating expenses of affiliated organization – The Foundation for America’s Blood Centers (the Foundation). The Foundation is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and is classified as an organization that is not a private foundation. ABC has a written service agreement with the Foundation whereby it reimburses ABC for certain expenses plus assessed overhead. Expenses paid by ABC on behalf of the Foundation for the years ended March 31, 2016 and 2015, were $175,226 and $168,708, respectively. The Foundation reimbursed ABC for the years ended March 31, 2016 and 2015, in the amount of $120,418 and $111,313, respectively.

For the years ended March 31, 2016 and 2015, the Foundation made grants to ABC in the amount of $130,000 and $92,150, respectively, which are initially recognized as temporarily restricted contributions and released from restrictions when expenditures occur. ABC has receivables and payables from the Foundation as a result of various transactions with the organization. The net payable balance was $310,486 as of March 31, 2016. The net receivable balance was $140,906 as of March 31, 2015. In conjunction with the close-out of the AIM project (see Note 12), a portion of the remaining assets transferred to ABC will be distributed to the members. The total amount due to members was $50,084 as of March 31, 2016. ABC provided a one-time contribution to the Foundation during the year ended March 31, 2016 for $281,920, the balance of the Foundation’s negative unrestricted net assets as of March 31, 2015.

NOTE 9 COMMITMENTS

Leases ABC is obligated under an operating lease for office space through May 31, 2017. It is management’s intent to renew the lease for a period up to 10 years. The lease contains provisions for a base rate to remain the same throughout the life of the lease and to share certain operating expenses at prorated 18.3%. Rent expense for the years ended March 31, 2016 and 2015, was $170,435 and $171,435, respectively. The following are the future minimum lease commitments under the lease as of March 31:

Years Ending March 31,2017 166,935$ 2018 27,823

194,758$


MARCH 31, 2016 AND 2015

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NOTE 9 COMMITMENTS (CONTINUED) Hotel Contracts ABC has committed to hotel space for future meetings and workshops. These contracts specify that, if canceled, ABC may be subject to cancellation penalties totaling approximately $345,000 as of March 31, 2016. Management believes the risk of loss due to cancellation is minimal.

Employment Contract On September 7, 2013, ABC signed an agreement of employment with its CEO for a term of thirty-six (36) months, which includes a severance clause.

NOTE 10 OFFICE SUBLEASE

ABC entered into a sublease agreement effective January 1, 2014 and expiring May 31, 2017 with a tenant for office space in the Headquarters building. Future minimum sublease payments under the sublease as of March 31:

Years Ending March 31,2017 78,234$ 2018 13,472

91,706$

NOTE 11 PENSION PLAN

ABC maintains a defined contribution 401(k) pension plan for its employees with one year of service. Employer contributions to the plan are at the discretion of the Board of Directors. Pension expense for the years ended March 31, 2016 and 2015, was $154,495 and $159,408, respectively.

NOTE 12 AIM PROJECT

ABC had a licensing agreement with NHS Blood and Transplant (“NHS”), a UK company, to have a non-transferable, royalty-free license to use, copy, and modify software (AIM I) and share its usage and related data with certain participants in North America and Europe. NHS retained the ownership of the AIM I software at all times. Activity for this project was reported as part of Blood Counts LLC, a wholly owned subsidiary of ABC. As of March 31, 2016, this project was divested and all remaining assets were transferred to ABC.

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