SPCA of Texas

SPCA of Texas Auditor’s Report and Financial Statements

December 31, 2014 and 2013

SPCA of Texas December 31, 2014 and 2013

Contents

Independent Auditor’s Report .............................................................................................. 1

Financial Statements Statements of Financial Position ........................................................................................................ 3

Statements of Activities ...................................................................................................................... 4

Statements of Cash Flows .................................................................................................................. 6

Notes to Financial Statements ............................................................................................................ 7

Supplementary Information

Statements of Functional Expenses .................................................................................................. 20

Independent Auditor’s Report

Board of Directors SPCA of Texas Dallas, Texas We have audited the accompanying financial statements of the SPCA of Texas (SPCA) which comprise the statements of financial position as of December 31, 2014 and 2013, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the SPCA’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the SPCA’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Board of Directors SPCA of Texas Page 2

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of SPCA as of December 31, 2014 and 2013, 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. Other Matters Supplementary Information Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. The statements of functional expenses listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

Dallas, Texas June 12, 2015

SPCA of Texas Statements of Financial Position

December 31, 2014 and 2013

See Notes to Financial Statements 3

Assets2014 2013

Cash and cash equivalents 1,338,246$ 1,933,469$ Accounts receivable, net 25,628 11,427Grants receivable 18,729 15,295Inventories 334,559 365,808Prepaid expenses 63,956 106,388Investments 12,936,959 15,284,669Annuities receivable 1,839,139 2,004,424Contributions receivable, net 1,129,520 11,475Property and equipment, net 18,678,931 17,342,599

Total assets 36,365,667$ 37,075,554$

Liabilities and Net Assets

LiabilitiesAccounts payable 424,931$ 143,954$ Accrued expenses 435,436 418,210Deferred revenue 30,986 390,852

Total liabilities 891,353 953,016

Net Assets Unrestricted

Board designated 10,951,828 13,548,125 Undesignated 21,765,492 21,066,205

Temporarily restricted 1,577,209 328,423 Permanently restricted 1,179,785 1,179,785

Total net assets 35,474,314 36,122,538

Total liabilities and net assets 36,365,667$ 37,075,554$

SPCA of Texas Statement of Activities

Year Ended December 31, 2014


UnrestrictedTemporarily Restricted

Permanently Restricted Total

Revenues, Gains and Other SupportReceiving 19,612$ -$ -$ 19,612$ Adoption 603,764 - - 603,764 Surgery and patient care 2,311,426 - - 2,311,426 Merchandise sales 129,031 - - 129,031 Contributions 2,704,059 1,978,706 - 4,682,765 In-kind services and materials 1,947,809 - - 1,947,809 Direct mail programs 1,683,537 - - 1,683,537 Special events, gross 813,364 - - 813,364 Memorials and bequests 1,845,378 - - 1,845,378 Investment return 372,278 11,477 - 383,755 Miscellaneous revenues 133,900 - - 133,900 Net assets released from restrictions 741,397 (741,397) - -

Total revenues, gains and other support 13,305,555 1,248,786 - 14,554,341

ExpensesRees-Jones Animal Care Center 2,565,499 - - 2,565,499 Martin Spay/Neuter & Wellness Clinic 1,443,504 - - 1,443,504 Perry Animal Care Center 1,690,094 - - 1,690,094 Perry Spay/Neuter & Wellness Clinic 1,199,006 - - 1,199,006 Spencer Spay/Neuter & Wellness Clinic 1,392,356 - - 1,392,356 Community relations (volunteer) 572,116 - - 572,116 Customer care center 270,111 - - 270,111 Rescue and investigations 959,240 - - 959,240 Education 149,563 - - 149,563 Animal behavior 393,760 - - 393,760 Communications 2,069,792 - - 2,069,792 Special events costs of direct benefits to donors 85,590 - - 85,590 Development 1,109,517 - - 1,109,517 Management and general 1,284,932 - - 1,284,932 Loss on disposal of fixed assets 17,485 - - 17,485

Total expenses and losses 15,202,565 - - 15,202,565

Change in Net Assets (1,897,010) 1,248,786 - (648,224)

Net Assets, Beginning of Year 34,614,330 328,423 1,179,785 36,122,538

Net Assets, End of Year 32,717,320$ 1,577,209$ 1,179,785$ 35,474,314$

2014

SPCA of Texas Statement of Activities



UnrestrictedTemporarily Restricted

Permanently Restricted Total

Revenues, Gains and Other SupportReceiving 28,793$ -$ -$ 28,793$ Adoption 562,489 - - 562,489 Surgery and patient care 2,476,916 - - 2,476,916 Merchandise sales 158,374 - - 158,374 Contributions 2,856,053 30,291 - 2,886,344 In-kind services and materials 2,391,299 - - 2,391,299 Direct mail programs 1,714,400 - - 1,714,400 Special events, gross 824,265 - - 824,265 Memorials and bequests 3,229,811 - 25,000 3,254,811 Investment return 1,808,387 7,014 - 1,815,401 Miscellaneous revenues 72,329 - - 72,329 Net assets released from restrictions 1,290,769 (1,290,769) - -

Total revenues, gains and other support 17,413,885 (1,253,464) 25,000 16,185,421

ExpensesRees-Jones Animal Care Center 2,499,981 - - 2,499,981 Martin Spay/Neuter & Wellness Clinic 1,274,289 - - 1,274,289 Perry Animal Care Center 1,573,962 - - 1,573,962 Perry Spay/Neuter & Wellness Clinic 1,088,338 - - 1,088,338 Spencer Spay/Neuter & Wellness Clinic 1,369,258 - - 1,369,258 Community relations (volunteer) 649,860 - - 649,860 Customer care center 271,646 - - 271,646 Rescue and investigations 829,871 - - 829,871 Education 98,006 - - 98,006 Animal behavior 275,651 - - 275,651 Communications 2,729,327 - - 2,729,327 Special events costs of direct benefits to donors 78,460 - - 78,460 Development 1,193,453 - - 1,193,453 Management and general 945,555 - - 945,555

Total expenses 14,877,657 - - 14,877,657

Change in Net Assets 2,536,228 (1,253,464) 25,000 1,307,764

Net Assets, Beginning of Year 32,078,102 1,581,887 1,154,785 34,814,774

Net Assets, End of Year 34,614,330$ 328,423$ 1,179,785$ 36,122,538$

2013

SPCA of Texas Statements of Cash Flows

Years Ended December 31, 2014 and 2013


2014 2013Operating Activities

Change in net assets (648,224)$ 1,307,764$ Items not requiring (providing) cash

Depreciation and amortization 990,723 902,680 Loss on disposal of fixed assets 17,485 - Net realized and unrealized (gain) loss on investments 137,913 (1,361,027) Net interest and dividends reinvested (521,668) (454,374) Bad debt expense 14,727 15,330 Contributions received restricted for long-term investment - (25,000)

Changes inContributions and accounts receivable (1,146,973) 373,761 Grants receivable (3,434) (15,295) Annuities receivable 165,285 (2,004,424) Inventories 31,249 (200,742) Prepaid expenses 42,432 (101,127) Accounts payable 280,977 (163,738) Accrued expenses 17,226 (119,803) Deferred revenue (359,866) (561,888)

Net cash used in operating activities (982,148) (2,407,883)

Investing ActivitiesPurchase of property and equipment (2,354,540) (489,898) Proceeds from sale of property and equipment 10,000 - Proceeds from sale of investments 3,037,948 2,578,870 Purchase of investments (306,483) (645,530)

Net cash provided by investing activities 386,925 1,443,442

Financing ActivitiesContributions received restricted for long-term investment - 25,000

Net cash provided by financing activities - 25,000

Decrease in Cash and Cash Equivalents (595,223) (939,441)

Cash and Cash Equivalents, Beginning of Year 1,933,469 2,872,910

Cash and Cash Equivalents, End of Year 1,338,246$ 1,933,469$

Supplemental InformationNoncash Activity

Contributions of in-kind goods and contributed services 1,947,809$ 2,391,299$

SPCA of Texas Notes to Financial Statements December 31, 2014 and 2013

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Note 1: Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

The SPCA of Texas (SPCA) was incorporated by the Texas State Charter on September 22, 1938. The SPCA is over 75 years old but traces its roots to the late nineteenth century. In 1993, the Dallas SPCA, based in Dallas County, and the Humane Society of Texas, based in Collin County, merged to become the SPCA of Texas. The mission of the SPCA of Texas is to provide every animal exceptional care and a loving home.

The SPCA is the leading animal welfare agency in North Texas. The SPCA is a not-for-profit organization that operates two animal shelters, located near downtown Dallas and in McKinney, which, together with community partners for offsite adoptions, finds homes for more than 6,000 animals each year. The SPCA does not euthanize animals for lack of space and does not place time limits on animals housed in SPCA shelters. The SPCA also operates three public veterinary clinics in the Dallas metropolitan area to provide high-quality pet care at affordable prices and collaborates with community partners to spay or neuter tens of thousands of animals each year. Other services include investigations of animal abuse and educational programs.

The SPCA is an independent not-for-profit agency and is not affiliated with the American Society for the Prevention of Cruelty to Animals or any other humane society.

Use of Estimates

The preparation of financial statements in conformity 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, expenses gains, losses and other changes in net assets during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

SPCA considers all liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2014 and 2013, cash equivalents consisted primarily of money market accounts with brokers and certificates of deposit.

At December 31, 2014, SPCA’s cash accounts exceeded federally insured limits by approximately $815,000.


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Investments and Investment Return

Investments in all debt securities and equity securities having a readily determinable fair value are carried at fair value. Other investments are valued at lower of cost or fair value. Investment return includes dividends and interest and realized and unrealized gains and losses on investments carried at fair value.

Contributions and Other Receivables

Receivables are due primarily from foundations and individuals related to gift pledges and are stated at the amount management expects to collect from outstanding balances. The SPCA provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Receivables outstanding more than 90 days are generally considered past due. The SPCA writes off receivables when deemed uncollectible. The allowance for doubtful accounts at December 31, 2014 and 2013, were $13,000 related to accounts receivable and $15,000 related to contributions receivable, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is charged to expense using the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the lease term or their respective estimated useful lives.

The estimated useful lives for each major depreciable classification of property and equipment are as follows:

Buildings 7 – 31.50 yearsLeasehold improvements 7 – 31.50 yearsEquipment 5 – 15 yearsMotor vehicles 5 – 7 years

Long-lived Asset Impairment

The SPCA evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds it fair value. No asset impairment was recognized during the years ended December 31, 2014 and 2013.


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Temporarily and Permanently Restricted Net Assets

Temporarily restricted net assets are those whose use by the SPCA has been limited by donors to a specific time period or purpose. Permanently restricted net assets have been restricted by donors to be maintained by the SPCA in perpetuity.

Contributions

Gifts of cash and other assets received without donor stipulations are reported as unrestricted revenue and net assets. Gifts received with a donor stipulation that limits their use are reported as temporarily or permanently restricted revenue and net assets. When a donor stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Gifts having donor stipulations which are satisfied in the period the gift is received are reported as unrestricted revenue and net assets.

Gifts of land, buildings, equipment and other long-lived assets are reported as unrestricted revenue and net assets unless explicit donor stipulations specify how such assets must be used, in which case the gifts are reported as temporarily or permanently restricted revenue and net assets. Absent explicit donor stipulations for the time long-lived assets must be held, expirations of restrictions resulting in reclassification of temporarily restricted net assets as unrestricted net assets are reported when the long-lived assets are placed in service.

Unconditional gifts expected to be collected within one year are reported at their net realizable value. Unconditional gifts expected to be collected in future years are initially reported at fair value determined using the discounted present value of estimated future cash flows technique. The resulting discount is amortized using the level-yield method and is reported as contribution revenue.

Conditional gifts depend on the occurrence of a specified future and uncertain event to bind the potential donor and are recognized as assets and revenue when the conditions are substantially met and the gift becomes unconditional.

Contributed Services

Contributions of services are recognized as revenue at their estimated fair value only when the services received create or enhance nonfinancial assets or require specialized skills possessed by the individuals providing the service and the service would typically need to be purchased if not donated. For the years ended December 31, 2014 and 2013, contribution revenue recognized from contributed legal services was $158,320 and $131,562, respectively.


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In-kind Contributions

In addition to receiving cash contributions, the SPCA receives in-kind contributions from various donors. It is the policy of the SPCA to record the estimated fair value of certain in-kind donations as an expense in its financial statements, and similarly increase contribution revenue by a like amount. For the years ended December 31, 2014 and 2013, $1,789,489 and $2,259,737, respectively, were received as in-kind contributions.

Deferred Revenue

Revenue from reimbursable costs on contracts are deferred and recognized over the periods when the contracted services are performed.

Income Taxes

The SPCA is exempt from income taxes under Section 501 of the Internal Revenue Code and a similar provision of state franchise tax law. However, the SPCA is subject to federal income tax on any unrelated business taxable income.

The SPCA files tax returns in the U.S. federal jurisdiction. With a few exceptions, the SPCA is no longer subject to U.S. federal examinations by tax authorities for years before 2011.

Functional Allocation of Expenses

The costs of supporting the various programs and other activities have been summarized on a functional basis in the accompanying statements of activities. Certain costs have been allocated among the program, management and general and fundraising categories based on the relative payroll, headcount, square footage occupied and other methods.

Reclassifications

Certain reclassifications have been made to the 2013 financial statements to conform to the 2014 financial statement presentation. These reclassifications had no effect on the change in net assets.


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Note 2: Investments and Investment Return

Investments at December 31 consisted of the following:

2014 2013

Certificates of deposit 1,125,697$ 1,239,586$ Equities 1,235,684 1,460,157 Bond mutual funds 4,809,513 4,126,994 Equity mutual funds 5,766,065 8,457,932

12,936,959$ 15,284,669$

Total investment return is comprised of the following:

2014 2013

Interest and dividend income 598,939$ 533,349$ Management fees (77,271) (78,975) Net realized and unrealized gains (losses)

on investments reported at fair value (137,913) 1,361,027

383,755$ 1,815,401$

Note 3: Annuities Receivable

During 2013, SPCA became the beneficiary of two structured settlement annuities. The payment terms under the annuities are as follows:

• Monthly payments of approximately $12,700 through June 30, 2020 • Lump-sum payment of $500,000 on July 30, 2015 • Lump-sum payment of $500,000 on July 30, 2020

The annuities cannot be assigned or used as collateral on a loan.

At December 31, 2014 and 2013, an annuities receivable of $1,839,139 and $2,004,424, respectively is recorded in the accompanying statements of financial position related to these two arrangements.


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Note 4: Contributions Receivable

Contributions receivable consisted of the following:

Temporarily Permanently Unrestricted Restricted Restricted Total

Due within one year -$ 576,320$ -$ 576,320$ Due in one to five years - 553,200 - 553,200

-$ 1,129,520$ -$ 1,129,520$


Due within one year 5,600$ 20,875$ -$ 26,475$ Less allowance for uncollectible

contributions - (15,000) - (15,000)

5,600$ 5,875$ -$ 11,475$

December 31, 2014

December 31, 2013

Discounting to net present value is not material to the accompanying financial statements as a whole.

Note 5: Property and Equipment

Property and equipment at December 31 consisted of:

2014 2013

Land 2,047,816$ 1,464,821$ Buildings and leasehold improvements 19,274,720 18,005,572Equipment 2,154,710 2,565,565Motor vehicles 916,652 993,932

24,393,898 23,029,890 Less accumulated depreciation and amortization (5,714,967) (5,687,291)

18,678,931$ 17,342,599$


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Note 6: Net Assets

Temporarily Restricted Net Assets

Temporarily restricted net assets at December 31 are available for the following purposes:

2014 2013

Puppy mill campaign 1,405,196$ 77,344$ Rescue center improvements 102,706 - Operational improvements 4,106 159,984 Miscellaneous 65,201 91,095

1,577,209$ 328,423$

Permanently Restricted Net Assets

Permanently restricted net assets at December 31 are restricted to:

2014 2013

David Ivan Perry Fund 765,000$ 765,000$ Baggarly Fund 414,785 414,785

1,179,785$ 1,179,785$

Net Assets Released from Restrictions

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors.

2014 2013Purpose restrictions accomplished

Puppy mill program expenses 515,585$ 222,061$ Operational improvement program expenses 155,878 140,016 Capital campaign program expenses 17,675 128,773 Spay/neuter clinic program expenses - 584,098 Miscellaneous program expenses 52,259 215,821

741,397$ 1,290,769$


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Note 7: Endowments

The SPCA’s endowments consist of funds established for a variety of purposes. The endowments include both donor-restricted endowment funds and funds designated by the board of directors to function as endowments (board-designated endowment funds). As required by accounting principles generally accepted in the United States of America (GAAP), net assets associated with endowment funds, including board-designated endowment funds, are classified and reported based on the existence or absence of donor-imposed restrictions.

The board of directors has interpreted the State of Texas Prudent Management of Institutional Funds Act (SPMIFA) as requiring preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the SPCA classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of donor-restricted endowment fund is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the SPCA in a manner consistent with the standard of prudence prescribed by SPMIFA. In accordance with SPMIFA, the SPCA considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

• Duration and preservation of the fund • Purposes of the SPCA and the fund • General economic conditions • Possible effect of inflation and deflation • Expected total return from investment income and appreciation or depreciation of

investments • Other resources of the SPCA • Investment policies of the SPCA


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The composition of net assets by type of endowment fund at December 31, 2014 and 2013, was:


Donor-restricted endowment funds -$ -$ 1,179,785$ 1,179,785$ Board-designated endowment funds 10,951,828 - - 10,951,828

10,951,828$ -$ 1,179,785$ 12,131,613$


Donor-restricted endowment funds -$ -$ 1,179,785$ 1,179,785$ Board-designated endowment funds 13,548,125 - - 13,548,125

13,548,125$ -$ 1,179,785$ 14,727,910$

2014

2013

Changes in endowment net assets for the years ended December 31 was:


Endowment net assets, beginning of year 13,548,125$ -$ 1,179,785$ 14,727,910$ Investment return

Investment income 477,381 19,076 - 496,457 Net depreciation (116,970) (7,599) - (124,569)

Total investment return 360,411 11,477 - 371,888

Appropriation of endowment assets for expenditure (4,418,311) (11,477) - (4,429,788) Board appropriations from unappropriated

unrestricted net assets 1,461,603 - - 1,461,603

10,951,828$ -$ 1,179,785$ 12,131,613$

2014


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Endowment net assets, beginning of year 13,977,716$ -$ 1,154,785$ 15,132,501$ Investment return

Investment income 414,449 22,781 - 437,230 Net appreciation (depreciation) 1,334,114 (15,767) - 1,318,347

Total investment return 1,748,563 7,014 - 1,755,577

Contributions - - 25,000 25,000 Appropriation of endowment assets for expenditure (2,833,338) (7,014) - (2,840,352) Board appropriations from unappropriated

unrestricted net assets 655,184 - - 655,184

13,548,125$ -$ 1,179,785$ 14,727,910$

2013

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level the SPCA is required to retain as a fund of perpetual duration pursuant to donor stipulation or SPMIFA. There were no such deficiencies as of December 31, 2014 or 2013.

The SPCA has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs and other items supported by its endowment while seeking to maintain the purchasing power of the endowment. Endowment assets include those assets of donor-restricted endowment funds the SPCA must hold in perpetuity or for donor-specified periods, as well as those of board-designated endowment funds. Under the SPCA’s policies, as approved by the board of directors, endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the S&P 500 index while assuming a moderate level of investment risk. The SPCA expects its endowment funds to provide an average rate of return of approximately 8% annually over time. Actual returns in any given year may vary from this amount.

To satisfy its long-term rate of return objectives, the SPCA relies on a total return strategy in which investment returns are achieved through both current yield (investment income such as dividends and interest) and capital appreciation (both realized and unrealized). The SPCA targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints.

The SPCA’s policy permits additions to or drawdowns of board-designated funds to achieve target cash balances in operating accounts. In establishing this policy, the SPCA considered the long-term expected return on its endowments. The SPCA’s objective is to maintain the purchasing power of endowment assets held in perpetuity or for a specified term or purpose, as well as to provide additional real growth through new gifts and investment return.


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Note 8: Defined Contribution Plan

The SPCA has a defined contribution plan for all employees meeting certain eligibility requirements. The SPCA will match employees’ contributions up to 3% of employees’ wages. The SPCA made contributions of $59,582 and $62,922 for the years ended December 31, 2014 and 2013, respectively.

Note 9: Disclosures About Fair Value of Assets

Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets

Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets

Recurring Measurements

The following tables present the fair value measurements of assets recognized in the accompanying statements of financial position measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2014 and 2013:

Quoted Prices in Active Significant

Markets for Other SignificantIdentical Observable Unobservable Assets Inputs Inputs(Level 1) (Level 2) (Level 3)

December 31, 2014Corporate equities $ 1,235,684 $ 1,235,684 $ - $ - Bond mutual funds 4,809,513 4,809,513 - - Equity mutual funds 5,766,065 5,766,065 - -

11,811,262$ 11,811,262$ $ - $ -

Fair Value Measurements Using

Fair Value


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Quoted Prices in Active Significant

Markets for Other SignificantIdentical Observable Unobservable Assets Inputs Inputs(Level 1) (Level 2) (Level 3)

December 31, 2013Corporate equities $ 1,460,157 $ 1,460,157 $ - $ - Bond mutual funds 4,126,994 4,126,994 - - Equity mutual funds 8,457,932 8,457,932 - -

14,045,083$ 14,045,083$ $ - $ -

Fair Value Measurements Using

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying statements of financial position, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the year ended December 31, 2014.

Investments

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. The SPCA has no Level 3 investments at December 31, 2014 and 2013.

Other Financial Instruments

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying statements of financial position at amounts other than fair value.

Cash, Cash Equivalents and Certificates of Deposit

The carrying amount approximates fair value.

Annuities and Contributions Receivable

The carrying amount approximates fair value.


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Note 10: Significant Estimates and Concentrations

GAAP requires disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Those matters include the following:

Contributions

Approximately 22% of all contributions, direct mail and memorials and bequests were received from one donor in 2014.

Litigation

The SPCA is subject to claims and lawsuits that arose primarily in the ordinary course of its activities. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the financial position, change in net assets and cash flows of the SPCA. Events could occur that would change this estimate materially in the near term.

Investments

The SPCA invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such change could materially affect the amounts reported in the accompanying statements of financial position.

Note 11: Subsequent Events

Subsequent events have been evaluated through June 12, 2015, which is the date the financial statements were available to be issued.

Supplementary Information

SPCA of Texas Statement of Functional Expenses


Rees-Jones Community Customer CareAnimal Care Martin S/N Perry Animal Perry S/N Spencer S/N Relations Center (Call

Center Wellness Clinic Care Center Wellness Clinic Wellness Clinic (Volunteer) Center)

Salaries and wages 1,059,119$ 600,598$ 815,562$ 470,999$ 593,197$ 390,065$ $ Employee benefits 193,268 93,781 145,611 73,405 84,659 60,384 Contract labor 34,146 23,175 1,888 76,888 43,586 - Payroll taxes 79,320 44,409 59,773 34,866 42,497 28,742

Total salaries and related expenses 1,365,853 761,963 1,022,834 656,158 763,939 479,191

Professional fees 22,862 18,737 17,065 17,469 19,309 4,785 Operating supplies 256,649 337,273 228,198 374,089 338,001 11,343 Postage and printing 644 14,398 136 4,980 8,441 966 Occupancy costs 88,472 21,187 61,554 6,245 20,065 1,649 Telephone/communications 13,018 8,466 14,236 6,276 16,347 4,276 Equipment rental 14,771 6,419 5,918 6,058 17,797 973 Insurance 58,879 14,081 41,019 14,636 16,736 10,947 Bank charges and service fees 29,111 16,990 20,717 15,755 18,219 5,775 Staff expenses 24,190 8,604 9,118 4,196 4,986 18,072 Repairs and maintenance 94,705 27,672 32,326 4,728 15,530 1,766 Vehicle expenses 2,519 1,613 8,080 5,635 3,122 1,072 Promotion, exhibit and other - - - - - 1,237 Training and seminars 1,773 3,284 194 2,435 1,375 141 Advertising 3,184 2,610 2,377 2,433 2,689 666 Computer costs 24,172 14,649 10,255 6,592 10,255 5,860 Merchandise 43,870 9,862 8,327 4,138 12,195 - Dues and subscriptions 445 9,868 - 7,278 5,664 1,309 Supplies 15,161 9,728 12,978 573 6,933 1,520 Bad debt expense - - - - - - Mail solicitation 54,681 44,816 40,817 41,783 46,184 11,445 Miscellaneous 422 3,495 502 1,980 1,272 731

Total expenses other than salariesand related expenses 749,528 573,752 513,817 527,279 565,120 84,533

Total expenses before depreciation and amoritzation 2,115,381 1,335,715 1,536,651 1,183,437 1,329,059 563,724

Depreciation and amortization 450,118 107,789 153,443 15,569 63,297 8,392

Total expenses before loss ondisposal of fixed assets 2,565,499$ 1,443,504$ 1,690,094$ 1,199,006$ 1,392,356$ 572,116$ $

Loss on disposal of fixed assets

Total expenses and losses

SPCA of Texas Statement of Functional Expenses


Rees-Jones Community Customer CareAnimal Care Martin S/N Perry Animal Perry S/N Spencer S/N Relations Center (Call

Center Wellness Clinic Care Center Wellness Clinic Wellness Clinic (Volunteer) Center)

Salaries and wages 1,122,803$ 553,250$ 772,553$ 460,014$ 578,151$ 443,311$ $ Employee Benefits 200,172 91,006 133,953 74,435 80,259 73,589 Contract labor 13,582 29,165 8,400 75,612 69,067 - Payroll taxes 83,799 39,900 56,259 32,817 42,007 31,246

Total salaries and related expenses 1,420,356 713,321 971,165 642,878 769,484 548,146

Professional fees 18,434 13,559 12,539 14,040 16,278 4,413 Operating supplies 193,750 273,792 176,252 293,978 326,514 1,284 Postage and printing 1,471 8,345 579 4,792 6,768 1,809 Occupancy costs 96,746 23,168 56,987 5,782 16,090 1,804 Telephone/communications 24,241 4,542 15,064 891 12,519 2,586 Equipment rental 17,341 6,077 11,693 - 16,289 579 Insurance 50,047 10,524 39,323 11,330 14,705 6,990 Bank charges and service fees 32,989 18,553 22,202 18,866 22,528 7,250 Staff expenses 15,383 2,757 10,387 5,780 4,964 19,427 Repairs and maintenance 1,270 28,940 36,756 5,419 21,517 2,965 Vehicle expenses 5,872 1,127 10,969 2,431 3,300 2,526 Promotion, exhibit and other 324 - - 681 - - Training and seminars 2,917 2,896 1,097 4,228 2,865 19,501 Advertising 14,853 10,925 10,103 11,312 13,115 3,555 Computer costs 15,436 9,355 6,548 4,210 6,548 3,742 Merchandise 19,996 6,307 13,199 544 1,541 - Dues and subscriptions 1,444 4,756 - 4,007 4,113 604 Supplies 21,958 5,794 13,760 229 7,815 1,959 Bad debt expense - - - - - - Mail solicitation 58,163 42,781 39,562 44,299 51,359 13,923 Miscellaneous 18,669 164 2,491 132 89 54

Total expenses other than salariesand related expenses 611,304 474,362 479,511 432,951 548,917 94,971

Total expenses before depreciationand amortization 2,031,660 1,187,683 1,450,676 1,075,829 1,318,401 643,117

Depreciation and amortization 468,321 86,606 123,286 12,509 50,857 6,743

Totals 2,499,981$ 1,274,289$ 1,573,962$ 1,088,338$ 1,369,258$ 649,860$ $

Date post:	14-Feb-2017
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SPCA of Texas

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