LYMPHOMA RESEARCH FOUNDATION Financial Statements June 30, 2012 and 2011 (With Independent Auditors’ Report Thereon)
KPMG LLP 345 Park Avenue New York, NY 10154-0102
Independent Auditors’ Report
The Board of Directors Lymphoma Research Foundation: We have audited the accompanying balance sheets of the Lymphoma Research Foundation (the Foundation) as of June 30, 2012 and 2011, and the related statements of activities, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of the Foundation’s management. 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 of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Foundation’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Lymphoma Research Foundation as of June 30, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
November 14, 2012
KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity.
LYMPHOMA RESEARCH FOUNDATION Balance Sheets June 30, 2012 and 2011 Assets
2012
Cash and cash equivalents (note 4) Contributions and grants receivable (note 3) Prepaid expenses and other assets Investments (note 4) Property and equipment, net Total assets
2011
$
3,481,028 958,409 234,497 10,357,074 94,483
5,946,557 939,397 475,505 6,611,844 72,068
$
15,125,491
14,045,371
$
291,037 224,595 434,850 6,356,174
251,151 192,968 311,550 5,642,582
7,306,656
6,398,251
4,119,806 3,699,029
4,132,005 3,515,115
7,818,835
7,647,120
15,125,491
14,045,371
Liabilities and Net Assets Liabilities: Accounts payable and accrued expenses (note 7) Accrued salaries and vacation Refundable advances Research grants payable (note 5) Total liabilities Commitments (note 7) Net assets: Unrestricted Temporarily restricted (note 8) Total net assets Total liabilities and net assets
$
See accompanying notes to financial statements.
2
LYMPHOMA RESEARCH FOUNDATION Statements of Activities Years ended June 30, 2012 and 2011 2012 Change in unrestricted net assets: Contributions and revenues: Contributions: Special events revenue and related contributions Less costs of direct benefits to donors Contributions and grants
$
2011
3,471,482 (173,970) 1,461,957
3,245,335 (269,014) 1,950,844
4,759,469
4,927,165
58,627 413,217
73,408 104,879
471,844
178,287
5,231,313
5,105,452
6,117,145
6,596,045
11,348,458
11,701,497
3,537,082 4,536,703 1,147,244
2,962,321 5,231,797 758,834
9,221,029
8,952,952
351,765 1,787,863
441,115 1,557,595
2,139,628
1,998,710
11,360,657
10,951,662
(12,199)
749,835
6,301,059 (6,117,145)
4,962,610 (6,596,045)
Increase (decrease) in temporarily restricted net assets
183,914
(1,633,435)
Increase (decrease) in net assets
171,715
(883,600)
7,647,120
8,530,720
7,818,835
7,647,120
Total contributions Revenues: Investment income (note 4) Other revenue Total revenues Total contributions and revenues before net assets released from restrictions Net assets released from restrictions (note 8) Total contributions and revenues Expenses: Program services: Educational programs and patient services Research Communications and advocacy Total program services Supporting services: Administration Fundraising Total supporting services Total expenses (Decrease) increase in unrestricted net assets Change in temporarily restricted net assets: Contributions and grants Net assets released from restrictions (note 8)
Net assets at beginning of year Net assets at end of year
$
See accompanying notes to financial statements. 3
LYMPHOMA RESEARCH FOUNDATION Statement of Functional Expenses Year ended June 30, 2012 Program services Educational programs and patient services Grants (note 5) Salaries Payroll taxes and employee benefits Conferences and events Costs of direct benefits to donors Dues and subscriptions Insurance Licenses and permits Marketing and promotion Processing fees and other Office equipment Office supplies Postage and shipping Printing and publications Professional fees Rent (note 7) Repairs and maintenance Telecommunications Travel Depreciation and amortization
$
Subtotal
$
Communications and advocacy
Administration
Fundraising
Total supporting services
Total 2012
152,470 899,892
3,731,845 355,700
— 566,993
3,884,315 1,822,585
— 182,410
— 668,359
— 850,769
3,884,315 2,673,354
205,354 965,343
81,171 57,154
129,387 10,289
415,912 1,032,786
41,626 7,593
154,975 221,847
196,601 229,440
612,513 1,262,226
— 2,670 7,512 2,210 93,006 8,925 15,937 14,859 75,054 142,705 382,406 120,081 31,005 224,534 181,204 11,915
— 31,747 2,970 873 10,154 1,694 2,786 2,876 11,622 32,323 12,186 47,464 12,115 5,527 131,787 4,709
— 24,884 4,733 1,392 20,514 4,642 4,440 5,096 4,024 18,801 214,280 75,659 19,312 8,811 26,480 7,507
— 59,301 15,215 4,475 123,674 15,261 23,163 22,831 90,700 193,829 608,872 243,204 62,432 238,872 339,471 24,131
— 253 1,523 268 2,056 6,022 1,429 1,399 257 561 66,767 24,341 6,213 2,835 3,797 2,415
173,970 4,548 5,926 27,588 56,009 91,742 54,431 23,846 56,119 95,817 113,619 89,452 23,736 14,231 76,742 8,876
173,970 4,801 7,449 27,856 58,065 97,764 55,860 25,245 56,376 96,378 180,386 113,793 29,949 17,066 80,539 11,291
173,970 64,102 22,664 32,331 181,739 113,025 79,023 48,076 147,076 290,207 789,258 356,997 92,381 255,938 420,010 35,422
3,537,082
4,536,703
1,147,244
9,221,029
351,765
1,961,833
2,313,598
11,534,627
Less direct donor benefit expenses Total expenses
Research
Supporting services Total program services
—
—
—
—
—
(173,970)
(173,970)
(173,970)
3,537,082
4,536,703
1,147,244
9,221,029
351,765
1,787,863
2,139,628
11,360,657
See accompanying notes to financial statements.
4
LYMPHOMA RESEARCH FOUNDATION Statement of Functional Expenses Year ended June 30, 2011 Program services Educational programs and patient services Grants (note 5) Salaries Payroll taxes and employee benefits Conferences and events Costs of direct benefits to donors Dues and subscriptions Insurance Licenses and permits Marketing and promotion Processing fees and other Office equipment Office supplies Postage and shipping Printing and publications Professional fees Rent (note 7) Repairs and maintenance Telecommunications Travel Depreciation and amortization
$
Subtotal Less: direct donor benefit expenses Total expenses
$
Research
Supporting services
Communications and advocacy
Total program services
Administration
Fundraising
Total supporting services
Total 2011
78,599 811,787 177,299 825,720 — 1,277 — 4,671 63,358 14,267 5,086 14,856 151,376 194,076 139,683 121,804 42,778 135,097 175,703 4,884
4,322,500 420,772 78,227 77,861 — 15,339 — 2,038 10,962 2,140 1,671 2,615 6,858 19,000 77,653 53,942 15,880 11,048 111,136 2,155
— 408,059 88,532 11,823 — 14,299 — 2,279 23,960 2,473 1,783 4,175 3,947 12,150 88,856 61,130 17,069 6,561 9,439 2,299
4,401,099 1,640,618 344,058 915,404 — 30,915 — 8,988 98,280 18,880 8,540 21,646 162,181 225,226 306,192 236,876 75,727 152,706 296,278 9,338
— 214,292 46,594 6,129 — 140 28,593 1,223 94 1,284 1,003 1,502 724 719 85,867 38,508 9,528 3,560 62 1,293
— 545,000 135,901 72,148 269,014 3,832 2,854 37,522 30,677 101,859 35,044 17,540 57,625 145,860 171,166 93,905 28,450 18,356 56,120 3,736
— 759,292 182,495 78,277 269,014 3,972 31,447 38,745 30,771 103,143 36,047 19,042 58,349 146,579 257,033 132,413 37,978 21,916 56,182 5,029
4,401,099 2,399,910 526,553 993,681 269,014 34,887 31,447 47,733 129,051 122,023 44,587 40,688 220,530 371,805 563,225 369,289 113,705 174,622 352,460 14,367
2,962,321
5,231,797
758,834
8,952,952
441,115
1,826,609
2,267,724
11,220,676
—
—
—
—
—
(269,014)
(269,014)
(269,014)
2,962,321
5,231,797
758,834
8,952,952
441,115
1,557,595
1,998,710
10,951,662
See accompanying notes to financial statements.
5
LYMPHOMA RESEARCH FOUNDATION Statements of Cash Flows Years ended June 30, 2012 and 2011 2012
2011
171,715
(883,600)
35,422 — (203) (173,389)
14,367 (285,000) 250 —
(19,012) (43,992) 39,886 31,627 123,300 713,592
(428,022) (70,329) (130,794) 44,543 81,350 1,863,071
878,946
205,836
4,774,799 (8,519,826) 458,389 (57,837)
4,259,111 (2,960,387) — (67,878)
Net cash (used in) provided by investing activities
(3,344,475)
1,230,846
Net (decrease) increase in cash and cash equivalents
(2,465,529)
1,436,682
5,946,557
4,509,875
3,481,028
5,946,557
Cash flows from operating activities: Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization Contributed assets Realized (gain) loss on investments Realized gain on sale of contributed assets Changes in operating assets and liabilities: Contributions and grants receivable Prepaid expenses and other assets Accounts payable and accrued expenses Accrued salaries and vacation Refundable advances Research grants payable
$
Net cash provided by operating activities Cash flows from investing activities: Proceeds from investment sales Purchases of investments Proceeds from sale of contributed assets Purchase of equipment
Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year
$
See accompanying notes to financial statements.
6
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
(1)
Organization The Lymphoma Research Foundation (the Foundation) is a nonprofit corporation, which is exempt from Federal income taxes under Internal Revenue Code Section 501(c)(3) and similar provisions at the state and local level. The Foundation is the nation’s largest non-profit organization devoted to funding innovative lymphoma research and providing patients and their families and healthcare professionals with up-to-date education about this type of cancer. The Foundation’s mission is to eradicate lymphoma and serve those touched by this disease. The Foundation’s primary sources of income are contributions and grants. To help ensure that the money the Foundation raises is directed toward cutting-edge lymphoma-related research, decisions of what research will be funded are made by the deliberations of the Foundation’s Scientific Advisory Board (SAB). The SAB is comprised of a volunteer group of scientists and clinicians distinguished in the fields of lymphoma research and treatment. They make their judgments on applications for funding based on the scientific and innovative merits of the projects proposed, the demonstrated ability of the researcher and sponsor, and the suitability of the institution. The members of the SAB review the applications independently and then meet to discuss the proposals at periodic meetings scheduled throughout the year. In addition to evaluating grant applications, the SAB counsels the Foundation’s Board of Directors and staff on the direction of its overall strategic scientific agenda in order to remain current with the pace and direction of the rapidly evolving area of blood cancer research. The Board of Directors studies the recommendations of the SAB. Their aim is to select those recommended grant applications and projects which seem most likely to have an impact on lymphoma-related research and treatments, and therefore most likely to help the Foundation achieve its overall goals. The Foundation funds research projects submitted by individuals associated with accredited academic institutions, Joint Commission on Accreditation of Healthcare Organizations (JCAHO), accredited research hospitals, and other research organizations that have national and international reputations for excellence. The Lymphoma Research Foundation is also dedicated to serving those touched by lymphoma. To accomplish this, the Foundation provides national, regional and local educational conferences and symposiums, advocacy programs, online webcast educational programming, telephone educational workshops, and educational publications. The Foundation’s educational programs and publications provide lymphoma patients and their loved ones with current and comprehensive information about the disease, its treatments, promising research in lymphoma, and how to better manage the psycho/social issues associated with living with lymphoma. The Foundation also offers a Lymphoma Helpline and Clinical Trials Information Service, a nationwide peer support program and financial assistance to lymphoma patients receiving treatment.
7
(Continued)
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
(2)
Summary of Significant Accounting Policies (a)
Basis of Presentation The Foundation’s financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles. Net assets and the changes therein are classified and reported as follows: Unrestricted – Net assets that are not subject to donor-imposed restrictions. Temporarily Restricted – Net assets subject to donor-imposed restrictions that will be met by actions of the Foundation and/or the passage of time. Revenues are reported as increases in unrestricted net assets unless their use is limited by explicit donor-imposed restrictions or by law. Expenses are reported as decreases in net assets.
(b)
Accounting Estimates The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingencies at the date of the financial statements and revenues and expenses recognized during the reporting period. Significant estimates made in the preparation of the financial statements include the net realizable value of contributions and grants receivable and functional expense allocations. Actual results could differ from those estimates.
(c)
Fair Value Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three levels of the fair value hierarchy are as follows:
(d)
•
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that a reporting entity has the ability to access at the measurement date.
•
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
•
Level 3 inputs are unobservable inputs for the asset or liability.
Contributions Contributions, including unconditional promises to give (pledges), are recognized as revenue upon receipt and are considered to be unrestricted unless they are received with donor stipulations that limit their use through either purpose or time restrictions. Contributions with donor stipulations that limit their use are considered to be temporarily restricted until the donor restrictions expire, that is, when a time restriction ends or purpose restriction is fulfilled. Upon the expiration of donor stipulations, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying statements of activities as net assets released from restrictions. 8
(Continued)
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
During the year ended June 30, 2011, the Foundation received $52,648 in contributions in-kind that are reported as contributions in the accompanying statements of activities and functional expenses. There were no contribution in-kind received during the year ended June 30, 2012. (e)
Cash and Cash Equivalents The Foundation considers all highly liquid investments with an original maturity of 90 days or less when acquired to be cash equivalents available for operations, with the exception of cash and those short-term investments that are maintained in the Foundation’s investment portfolio.
(f)
Investments Investments are reported at fair value based upon quoted market prices, except certificates of deposit that are carried at cost but approximate fair value.
(g)
Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets ranging from 2 to 5 years. Leasehold improvements are amortized on a straight-line basis over the lesser of their useful lives or the term of the lease. Remaining property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets. The Foundation capitalizes all property and equipment having a cost of $1,000 or more and a useful life of at least two years.
(h)
Donated Services A substantial number of volunteers have donated significant amounts of their time and incurred incidental expenses in supporting the Foundation’s research, education, support, public policy, and fundraising activities. No amounts have been reflected in the accompanying financial statements for these donated services since they do not meet the criteria for recognition.
(i)
Refundable Advances Amounts received by the Foundation for certain special events are reflected as refundable advances until the event occurs. The majority of these monies are characterized by the Foundation as an exchange transaction.
(j)
Functional Expense Allocations The costs of providing the various programs and other activities have been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited.
(k)
Income Taxes The Foundation recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Income generated from activities unrelated to the Foundation’s exempt purpose is subject to tax under Internal Revenue Code Section 511. The Foundation did not recognize any unrelated business income tax liability for the years ended June 30, 2012 and 2011. 9
(Continued)
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
(l)
Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation.
(3)
Contributions and Grants Receivable Contributions and grants receivable are scheduled to be collected as follows at June 30, 2012 and 2011: Amount due in one year or less Amount due in five years
(4)
2012
2011
$
914,909 43,500
842,942 96,455
$
958,409
939,397
Investments The following tables present the Foundation’s fair value hierarchy for investments measured at fair value as of June 30, 2012 and 2011:
Total Investments: Money market fund Mutual funds – U.S. Treasury funds Certificates of deposit Total investments
Total investments
Level 2
$
531,097 145,977 9,680,000
531,097 145,977 —
— — 9,680,000
$
10,357,074
677,074
9,680,000
Total Investments: Money market fund Mutual funds – U.S. Treasury funds Certificates of deposit
2012 Level 1
2011 Level 1
Level 2
$
40,896 370,948 6,200,000
40,896 370,948 —
— — 6,200,000
$
6,611,844
411,844
6,200,000
10
(Continued)
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
Investment income consists of the following for the years ended June 30, 2012 and 2011: 2012 Interest and dividends Realized gain (loss) on investments
2011
$
58,424 203
73,658 (250)
$
58,627
73,408
The Foundation maintains cash and cash equivalents in major financial institutions. Investments that are described above include certificates of deposit (CDs) having original maturities greater than 90 days. The CDs are maintained at a number of financial institutions. As of June 30, 2012, there was no exposure of credit risk that exceeded the Federal Deposit Insurance Corporation insurance limits for both cash and cash equivalents, and CDs. (5)
Research Grants Payable Grant expense is recorded when the grant is approved by the Foundation and the grantee is notified of the award. Research grants are generally awarded for a two to three-year period, with payments made quarterly. Grants payable are scheduled to be paid as follows as of June 30, 2012 and 2011: 2012 Amount payable in one year or less Amount payable in more than one year
(6)
2011
$
2,868,840 3,487,334
3,702,784 1,939,798
$
6,356,174
5,642,582
Pension Plan The Foundation maintains a retirement plan pursuant to Internal Revenue Code Section 403(b) for its employees. Employees are eligible to participate immediately. Under the terms of the plan, employees are entitled to defer a portion of their annual compensation, within limitations established by the Internal Revenue Code. During 2006, the Foundation started a matching program whereby it contributes an amount equal to 5% of annual compensation for eligible employees provided that the employees contributes at least 3% to the plan. Retirement expense under the plan amounted to $75,000 and $52,000 for the years ended June 30, 2012 and 2011, respectively.
11
(Continued)
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
(7)
Commitments The Foundation has lease agreements for the rental of its New York, California, Arizona, and Illinois offices. Minimum annual rentals related to these leases are approximately as follows for the years ended subsequent to June 30, 2012:
2013 2014 2015 2016 2017 Thereafter
$
389,000 358,000 347,000 356,000 367,000 424,000
$
2,241,000
The Foundation leases its New York City office whereby the landlord has provided periods of free rent. The Foundation recorded a liability for this free rent that it amortizes on a straight-line basis over the life of the lease, which expires in 2017. Included in accounts payable and accrued expenses is deferred rent of $18,815 and $26,395 as of June 30, 2012 and 2011, respectively. Rent expense for the years ended June 30, 2012 and 2011 amounted to approximately $357,000 and $369,000, respectively.
12
(Continued)
LYMPHOMA RESEARCH FOUNDATION Notes to Financial Statements June 30, 2012 and 2011
(8)
Temporarily Restricted Net Assets Temporarily restricted net assets are available for the following as of June 30, 2012 and 2011: 2012 Research grants Educational programs and patient services Patient aid
2011
$
1,889,939 1,652,798 156,292
2,083,859 1,406,821 24,435
$
3,699,029
3,515,115
Net assets were released from restrictions during the years ended June 30, 2012 and 2011 by incurring expenses or the passage of time, thus satisfying the restricted purposes as follows: 2012 Research grants Educational programs and patient services Patient aid
(9)
2011
$
3,731,845 2,266,830 118,470
4,310,875 2,133,888 151,282
$
6,117,145
6,596,045
Subsequent Events In connection with the preparation of the financial statements, the Foundation evaluated subsequent events after the balance sheet date of June 30, 2012 through November 14, 2012 which was the date the financial statements were available to be issued and determined that there were no additional matters that are required to be disclosed.
13
