Glen Arden 2017 Audited Financial Statements

27 Pages·2017·0.49 MB·English

GLEN ARDEN, INC.

FINANCIAL STATEMENTS
AND AUDITOR’S REPORT

DECEMBER 31, 2017
GLEN ARDEN, INC.

TABLE OF CONTENTS

Independent Auditor’s Report

Exhibit

A - Balance Sheet

B - Statement of Operations and Changes in Net Asset

C - Statement of Cash Flows

Notes to Financial Statements
Independent Auditor’s Report

The Board of Directors
Glen Arden, Inc.

Report on the Financial Statements
We have audited the accompanying financial statements of Glen Arden, Inc., which comprise
the balance sheet as of December 31, 2017 and the related statements of operations and
changes in net assets, and cash flows for the year 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 audit.
We conducted our audit 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 entity’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
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 financial statements.

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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 financial statements referred to above present fairly, in all material respects,
the financial position of Glen Arden, Inc. as of December 31, 2017, and the results of its
operations, the changes in its net assets and its cash flows for the year then ended in
accordance with accounting principles generally accepted in the United States of America.
Uncertainty Regarding Continuing as a Going Concern
The accompanying financial statements have been prepared assuming Glen Arden, Inc. will
continue as a going concern. Glen Arden, Inc. has sustained recurring operating losses, and
has a working capital deficiency and a net asset deficit. These factors raise substantial doubt
about Glen Arden, Inc.’s ability to continue as a going concern. Management’s plans
concerning these matters are discussed in Note 16. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty. Our opinion is not
modified with respect to this matter.

April 30, 2018
EXHIBIT A
GLEN ARDEN, INC.
BALANCE SHEET
DECEMBER 31, 2017
ASSETS
Current assets
Cash and cash equivalents $ 445,731
Accounts receivable (net of allowance for
doubtful accounts of $55,000) 461,769
Entrance fees receivable (Note 3) 421,470
Due from third-party payors 136,913
Resident deposits - held in trust 4,137
Assets limited as to use (Note 4) 1,528,966
Prepaid expenses and other current assets 300,926
Total current assets 3,299,912
Assets limited as to use (Note 4) 2,366,711
Fixed assets - net (Note 5) 17,031,651
Total assets $ 22,698,274
LIABILITIES AND NET ASSETS
Current liabilities
Line of credit (Note 6) $ 820,000
Refundable fees 1,058,775
Accounts payable and accrued expenses 1,003,614
Accrued salaries and related benefits 537,000
Accrued interest payable 477,141
Pension liability (Note 11) 63,177
Resident deposits - held in trust 4,137
Deferred revenue from advance fees 1,127,822
Due to Elant, Inc. (Note 10) 190,523
Capital leases payable (Note 7) 25,087
Bonds payable (Note 8) 1,005,000
Total current liabilities 6,312,276
Long-term liabilities
Capital leases payable (Note 7) 31,189
Bonds payable (Note 8) 15,533,214
Refundable fees 17,076,309
Deferred revenue from advance fees 2,342,453
Pension liability (Note 11) 479,318
Total long-term liabilities 35,462,483
Total liabilities 41,774,759
Unrestricted net assets (deficit) (Exhibit B) (19,076,485)
Total liabilities and net assets $ 22,698,274
See independent auditor's report.
The accompanying notes are an integral part of these statements.
EXHIBIT B
GLEN ARDEN, INC.
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 2017
Operating revenue
Resident service revenue (net of contractual allowances
and discounts) $ 9,060,737
Provision for bad debts (49,527)
Net resident service revenue less provision for bad debts 9,011,210
Other operating income 111,868
Interest and dividends 64,883
Contributions 1,150
Total operating revenue 9,189,111
Operating expenses
Salaries 3,857,169
Employee benefits 1,603,473
Supplies and other expenses 3,923,321
Depreciation 1,492,432
Interest 1,049,451
Total operating expenses 11,925,846
Operating loss (2,736,735)
Other changes in net assets (deficit)
Unrealized losses on assets limited as to use (37,922)
Transfer from Elant Foundation, Inc. (Note 10) 1,000,000
Adjustment to minimum pension liability (Note 11) 136,427
Total other changes in net assets (deficit) 1,098,505
Change in unrestricted net assets (deficit) (Exhibit C) (1,638,230)
Net assets (deficit) - beginning of year (17,438,255)
Net assets (deficit) - end of year (Exhibit A) $ (19,076,485)
See independent auditor's report.
The accompanying notes are an integral part of these statements.
EXHIBIT C
GLEN ARDEN, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2017
Cash flows from operating activities
Change in net assets (deficit) (Exhibit B) $ (1,638,230)
Adjustments to reconcile change in net assets
to net cash used by operating activities
Unrealized losses on assets limited as to use 37,922
Depreciation 1,492,432
Amortization of debt issuance costs included
in interest expense 33,348
Amortization of deferred revenue from advance fees (1,258,627)
Decrease (increase) in assets
Accounts receivable (137,745)
Entrance fees receivable 240,837
Due from third-party payors 1,747
Due from affiliate 49,216
Prepaid expenses and other current assets 12,807
Increase (decrease) in liabilities
Accounts payable and accrued expenses 353,465
Accrued salaries and related benefits (91,164)
Accrued interest payable (26,864)
Refundable fees (2,019,188)
Deferred revenue from advance fees 1,756,280
Due to affiliates 183,863
Pension liability (94,357)
Net cash used by operating activities (1,104,258)
Cash flows from investing activities
Acquisition of fixed assets (528,163)
Increase in assets limited as to use (158,432)
Net cash used by investing activities (686,595)
-continued-
EXHIBIT C
-2-
GLEN ARDEN, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2017
Cash flows from financing activities
Payments on loan payable $ (1,651)
Principal payments on capital leases (23,455)
Principal payments on bonds (945,903)
Refunds of refundable fees (3,105,452)
Additions to refundable fees 4,537,095
Net cash provided by financing activities 460,634
Net change in cash and cash equivalents (1,330,219)
Cash and cash equivalents - beginning of year 1,775,950
Cash and cash equivalents - end of year $ 445,731
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 1,042,967
Supplemental disclosure of noncash information
Equipment financed with capital lease $ 19,580
See independent auditor's report.
The accompanying notes are an integral part of these statements.
GLEN ARDEN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017

NOTE 1 - NATURE OF ORGANIZATION
Glen Arden, Inc. (“Glen Arden”) located in Goshen, New York, is a nonprofit organization that
operates a continuing care retirement community. Glen Arden is incorporated under the State of
New York not-for-profit corporation law and is exempt from income taxes under Section 501(c)(3)
of the Internal Revenue Code. Glen Arden offers a 40-bed skilled nursing health care center (the
“HCC”), 148 independent living units and a 28-bed enriched housing units. The units consist of
one and two-bedroom apartments and provide various amenities such as an indoor swimming pool
and health club, restaurant-style dining room, pub, cafe, private dining rooms, hair salon, wellness
center, billiards room, library, greenhouse, post office, bank and guest suites.
Elant, Inc. (“Elant”) is the sole member of Glen Arden. Elant, Inc. is a healthcare delivery system
comprised of Glen Arden, one nursing home and Elant Foundation, Inc. that deliver healthcare
services in the Hudson Valley region of New York State. Under New York State Public Health
Law Section 2801-a, Elant, Inc. was approved as the active parent of Glen Arden. This approval
grants Elant, Inc. authority to approve strategic plans, capital and operating budgets, debt, and the
authority to combine and centralize administrative and support functions.
Glen Arden shares certain common board members with Elant, Inc., Elant at Brandywine, Inc.
(“Brandywine”), and Elant Foundation, Inc. (“Foundation”). Collectively these entities are known
as the Elant affiliates in these financial statements. The financial statements of the affiliated
organizations are not included in Glen Arden’s financial statements.
Glen Arden derives its revenues primarily from fees charged to its residents.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation - The financial statements are prepared on the accrual basis of accounting.
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. Estimates also affect the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Cash and cash equivalents - Cash and cash equivalents include certain investments in highly
liquid debt instruments with maturity dates of three months or less at the time of purchase. Cash
balances with financial institutions at times may exceed federally insured limits.

-continued-
2.
GLEN ARDEN, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2017

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounts receivable - Accounts receivable from third-party payor programs, specifically
Medicare and Medicaid, for which Glen Arden will receive payment under reimbursement formula
are stated at the estimated net amount receivable from such payors. Accounts receivable are
recorded based on established rates or contracts for services provided. Interest is not charged on
outstanding receivables.
At December 31, the mix of gross accounts receivable for services to residents are as follows:
Medicaid 27%
Medicare 34
Private 39

100%
Allowance for uncollectible receivables - Glen Arden determines whether an allowance for
uncollectibles should be provided for its receivables. Such estimates are based on management’s
assessment of the aged basis of its sources, current economic conditions, subsequent receipts and
historical information. Accounts and entrance fees receivable are written off against the allowance
for doubtful accounts when all reasonable collection efforts have been exhausted.
Resident deposits - Resident deposits are maintained in a bank account separate from Glen Arden’s
accounts. Interest earned on resident deposits is credited to the resident accounts.
Fair Value Measurements
Fair Value Measurements establishes a framework for measuring fair value. The framework
provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below.
Level 1 inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets that Glen Arden has the ability to access. Level 2 inputs to the valuation
methodology include:
 Quoted prices for similar assets or liabilities in active markets;
 Quoted prices for identical or similar assets or liabilities in inactive markets;
 Inputs other than quoted prices that are observable for the asset or liability;
 Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
-continued-