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SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015 AND INDEPENDENT AUDITORS REPORT

SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

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Page 1: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCIETY OF PLASTICS ENGINEERS, INC.

FINANCIAL STATEMENTSFOR THE YEARS ENDED

DECEMBER 31,2016 AND 2015AND INDEPENDENT AUDITORS REPORT

Page 2: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCIETY OF PLASTICS ENGINEERS, INC.

INDEX TO FINANCIAL STATEMENTS

DECEMBER 31,2016 AND 2015

Page

INDEPENDENT AUDITOR'S REPORT 1 -2

FINANCIAL STATEMENTS

Statements of Financial Position, June 30, 2016 and 2015 3

Statement of Activities and Changes in Net Assets for the YearEnded June 30, 2016 4

Statement of Activities and Changes in Net Assets for the YearEnded June 30,2015 5

Statements of Cash Flows for the Years Ended June 30, 2016 and 2015 6

Notes to Financial Statements 7-15

Page 3: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

INDEPENDENT AUDITOR'S REPORT

To the Board of DirectorsSociety of Plastics Engineers, Inc.6 Berkshire Boulevard, Suite 306Bethel, Connecticut

We have audited the accompanying financial statements of Society of Plastics Engineers, Inc. (a nonprofitorganization), which comprise the statements of financial position as of December 31, 2016 and 2015, andthe related statements of activities and cash flows for the years then ended, and the related notes to thefinancial statements.

Management's Responsibility for the Financial Statements

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

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. Weconducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor's judgment, including theassessment 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 preparationand fair presentation of the financial statements in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity'sinternal control. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimatesmade 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 forour audit opinion.

Page 4: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Society of Plastics Engineers, Inc. as of December 31, 2016 and 2015, and thechanges in its net assets and its cash flows for the years then ended in accordance with accountingprinciples generally accepted in the United States of America.

April 21,2017East Haven, CT

Page 5: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCIETY OF PLASTICS ENGINEERS, INC.

STATEMENTS OF FINANCIAL POSITIONDECEMBER 31,2016 AND 2015

ASSETSTotal

2016

ASSETSCashCash equivalents, restrictedInvestmentsAccounts receivableInventoryPrepaid expenses and other assetsProperty and equipment, net

Total Assets

LIABILITIES AND NET ASSETSLIABILITIES

Accounts payable and other liabilities $ 295,397 $ 163,891Line of credit 372,772 262,847Due to related parties 319,237 309,565Deferred revenue 802,472 795,575

2016

$ 543,51156,795

3,711,660342,941

7,507184,115

19,346

$ 4,865,875

2015

$ 568,15355,759

3,674,697252,339

12,907137,09233,985

$ 4,734,932

Total Liabilities 1,789,878 1,531,878NET ASSETS

Unrestricted:UndesigaatedDesignated for future activities

Temporarily restricted

Total Net Assets

Total Liabilities and Net Assets $ 4,865,875 $ 4,734,932

936,13633,510

969,646

2,106,351

3,075,997

823,05133,510

856,561

2,346,493

3,203,054

See Notes to Financial Statements.

Page 6: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCI

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Page 7: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCIETY OF PLASTICS ENGINEERS, INC.STATEMENT OF ACTIVITIES

AND CHANGES IN NET ASSETS

YEAR ENDED DECEMBER 31,2015

CHANGES IN NET ASSETS

NET ASSETS, beginning of year

NET ASSETS, end of year

(118,206)

974,767

$ 856,561

150,649

2,195,844

$ 2,346,493

OPERATING SUPPORTAND REVENUEMembershipEventsPublicationsPlastiVan programContributionsAdvertisingOtherSPE storeAmounts released from restrictions

Total operating supportand revenue

EXPENSESOperatingConferencesRebates to Sections and DivisionsPublicationsPlastivanScholarshipsMembershipEducation grants

Total expenses

Changes in net assets fromoperations

OTHER CHANGESInterest and dividendsNet (depreciation) on investments

Unrestricted

$ 1,306,5521,186,690

795,045196,99620,43017,87511,198

921206,316

3,742,023

2,489,562440,523179,919171,308169,857170,31689,34335.944

3,746,772

(4,749)

176,663(290,120)

TemporarilyRestricted

$ 356,965

_ (206,316)

150,649

150,649

Total

$ 1,306,5521,186,690

795,045196,996377,395

17,87511,198

921

3,892,672

2,489,562440,523179,919171,308169,857170,31689,34335,944

3,746,772

145,900

176,663(290,120)

32,443

3,170,611

$ 3,203,054

See Notes to Financial Statements.

Page 8: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCIETY OF PLASTICS ENGINEERS, INC.

STATEMENTS OF CASH FLOWSYEAR ENDED DECEMBER 31,2016 AND 2015

2016CASH FLOWS FROM OPERATING ACTIVITIES

Changes in net assetsAdjustments to reconcile changes in net assets to net cash (used in)

provided by operating activities:Depreciation and amortizationNet (appreciation) depreciation on investmentsNet loss on disposal of property and equipment(Increase) decrease in:

Accounts receivableInventoryPrepaid expenses

Increase (decrease) in:Accounts payable and other liabilitiesDeferred revenue

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIESAdditions to property and equipmentWebsite costsInvestments purchasedInvestments sold

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIESRelated party transactionsNet line of credit advances

Net cash provided by financing activities

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of year

CASH AND CASH EQUIVALENTS end of year

SUPPLEMENTAL DISCLOSURE OF CASHINFORMATIONCash paid during the year for:

Interest expense

2015

$ (127,057) $ 32,443

71,167(133,974)

(90,602)5,400

(14J39)

131,5066,897

(151>402)

(12,454)(76,358)

(1,253,616)1,350,627

8,199

9,672109,925119,597

(23,606)623,912

$ 600,306

88,102290,120

19,549

103,0883,398

(8,977)

(230,734)48,621

345,610

(8,310)

(372,895)195,259

(185,946)

17,45111,17128,622

188,286

435,626

$ 623,912

9,925 $ 11,171

See Notes to Financial Statements.

Page 9: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

SOCIETY OF PLASTICS ENGINEERS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2016 AND 20151. Nature of Organization and Significant Accounting Policies

Nature of Organization

The Society of Plastics Engineers, Inc. (the "Organization") is a non-profit organization locatedin Bethel, Connecticut.

The Organization is engaged in national and international continuing educational activities in thefield of plastics. These activities include publishing state-of-the-art technical journals, producingtechnical conferences, seminars, webinars and other online learning. The Organization alsoprovides books, CDs, DVDs and professional development to plastics professionals.

At the beginning of 2009, the Organization merged with the SPE Foundation (the "Foundation")and continues to conduct the activities of the Foundation. The Foundation was formed topromote knowledge and education of plastics and polymers worldwide through improvededucational tools and programs. In addition, scholarships and fellowships are granted to personsinterested in expanding their knowledge of plastics engineering and performing research inrelated areas.

The Organization has a number of Sections and Divisions that operate as affiliates of theOrganization in either geographical regions or technical areas of expertise. Sections andDivisions are separate legally incorporated entities with their own independent Boards ofDirectors.

Basis of Presentation

The financial statements have been prepared in accordance with accounting principles generallyaccepted in the United States of America (GAAP).

Under FASB ASC 958, the Organization is required to report information regarding its financialposition and activities according to three classes of net assets: unrestricted, temporarily restrictedand permanently restricted net assets.

Net Asset Categories

To ensure the observance of limitations and restrictions on the use of resources available to theOrganization, the accounts of the Organization are maintained in the following net assetcategories:

Unrestricted Net Assets

Unrestricted net assets represent available resources other than donor-restrictedcontributions.

Temporarily Restricted Net Assets

Temporarily restricted net assets represent contributions that are restricted by the donoreither as to purpose or as to time of expenditure.

Page 10: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

Permanently Restricted Net Assets

Permanently restricted net assets represent contributions that are received with the donorrestriction that the principal be invested in perpetuity and only the income earned thereonis available for operations. The Organization has no permanently restricted net assets.

Expenses

In accordance with FASB ASC 958-205, expenses by functional classification are as follows:

2016 2015

Program $3,147,243 $2,904,471Management and general 848,658 774,917Fundraising 73.796 67,384

Total expenses $4.069.697 S3J46^22

Cash and Cash Equivalents

For the purpose of the statement of cash flows, the Organization considers its liquid investmentswith an original maturity of ninety days or less to be cash equivalents.

Inventory

Inventory, consisting primarily oft-shirts, books, CDs and DVDs, are stated at the lower of cost,determined by the first-in, first-out method, or market.

Recognition of Support and Revenue

Grants and Contracts

Grants and contracts are generally considered to be exchange transactions in which thegrantor or contractor requires the performance of specified activities. Accordingly, revenueis recognized at the time grant expenditures are incurred.

Contributions

Contributions are defined as voluntary, nonreciprocal transfers.

Unrestricted and unconditional contributions are recognized as support when received orpledged, if applicable. Contributions are reported as temporarily restricted support if theyare received with donor stipulations that limit the use of such assets.

When a restriction expires, that is, when a stipulated time restriction ends or a purposerestriction is accomplished, temporarily restricted net assets are reclassified to unrestrictednet assets and reported in the statement of changes in net assets as net assets released fromrestrictions. The Organization's policy is to present temporarily restricted net assetsreceived during the year whose restrictions are also met during the current year asunrestricted net assets. Contributions received with donor-imposed conditions are presentedas deferred support until such conditions are substantially met, at which time they arerecognized as support.

Page 11: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

The Organization's policy is to recognize the expiration of donor restrictions forcontributions of property and equipment or the use of contributions restricted for propertyand equipment in the year the property and equipment is placed in service. Contributionsmade for construction activities are recognized in the year construction activities areperformed. An exception to this policy is when a grantor places a lien on property orequipment purchased or constructed with grant funds. In this situation, grant revenue isrecognized utilizing the straight-line method over the life of the asset.

Royalty Revenue

The Organization has agreements with a publisher whereby the publisher has an exclusive,worldwide license to use the name, logo and seal of the Organization in connection with thepublication, sale and marketing of specific journals. The publisher pays the Organization aroyalty for the license which is recognized during the period in which the royalties areearned.

Other Revenue

Revenue from publications, memberships, seminars, registration fees, conferences andadvertising are recognized in the periods to which they apply. Amounts received in advanceof being earned are recorded as deferred revenue.

Accounts Receivable and Allowance for Doubtful Accounts

The Organization's accounts receivable (unsecured) were due from various customers(principally in the U.S.). Management provides for probable uncollectible amounts through aprovision for bad debt expense and an adjustment to an allowance for doubtful accounts basedon its assessment of the current status of accounts receivable. Balances still outstanding aftermanagement has used reasonable collection efforts are written off through a charge to theallowance for doubtful accounts and a credit to accounts receivable. Changes in the allowancefor doubtful accounts have not been material to the financial statements. Managementdetermined that a 2016 and 2015 provision for bad debts and an allowance for doubtful accountsat December 31, 2016 and 2015, respectively were unnecessary.

Deferred Income and Prepaid Expense

Advanced billings for registration and exhibition space and related prepaid expenses for annualconferences are deferred and recognized upon completion of the trade shows.

Use of Estimates

Management uses estimates and assumptions in preparing financial statements in accordancewith accounting principles generally accepted in the United States of America. Those estimatesand assumptions affect the reported amounts of assets and liabilities, the disclosure of contingentassets and liabilities, and the reported revenues and expenses. Actual results could vary from theestimates that were used.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Property and equipment with an acquisitioncost in excess of $ 1,500 with a useful life of more than two years are capitalized. Depreciationis provided utilizing straight-line and accelerated methods over the estimated useful lives of theproperty as follows:

Building and additions 3 to 50 yearsFurniture and equipment 3 to 5 years

Page 12: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

Maintenance and repair costs are charged to operations as incurred; major renewals andbetterments are capitalized. The costs relating to assets sold or retired are removed from theaccount balance at the time of disposition and the related gains and losses are included in thechange in net assets.

The Organization performs a test for impairment whenever events or changes in circumstancesindicate that the carrying amount of an individual asset or asset group may not be recoverable.Should projected undiscounted future cash flows be less than the carrying amount of the asset orasset group, an impairment charge reducing the carrying amount to fair value is required. Fairvalue is determined based on the most appropriate valuation technique, including discountedcash flows.

Depreciation expense for the years ended December 31, 2016 and 2015 amounted to $27,093and $47,777, respectively.

Other Assets

Website development costs are capitalized as Other Assets and amortized over three years.Amortization of website development costs amounted to $44,074 and $40,325 for the yearsended December 31, 2016 and 2015, respectively.

Income Taxes

The Organization is exempt from income taxes as a charitable organization under Section50l(c)(3) of the Internal Revenue Code.

The Organization files tax returns in the United States and has not taken any tax positions thatmanagement believes would result in additional tax liabilities upon examination of the taxreturns by a tax jurisdiction. The Organization has no open tax years prior to 2013.

Advertising

The Organization's policy is to expense all advertising costs as incurred.

Concentrations of Credit Risk Due to Temporary CashInvestments and Accounts Receivable

Financial instruments that potentially subject the Organization to concentrations of credit riskconsist principally of cash, investments and accounts receivable. The Organization places itscash investments with substantial financial institutions to limit the amount of credit exposure.At times cash may exceed federally insured limits. Concentrations of credit risk with respect toaccounts receivable are limited due to the financial stability of the customers and memberscomprising the Organization's revenue base.

The Organization maintains money market account balances at various U.S. financialinstitutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000.The Organization also maintains non-interest bearing checking accounts which are fully insured.At December 31, 2016 and 2015 balances in excess of FDIC insurance in U.S. accountsapproximated $397,000 and $84,000.

Subsequent Events

FASB ASC 855, Subsequent Events, establishes general standards of reporting and disclosurerequirements for subsequent events, which are events that occur after the balance sheet date butbefore the financial statements are issued. The Organization evaluated subsequent eventsthrough April 21, 2017, the date at which the financial statements were available to be issuedand has determined that no events have occurred that would require adjustment to or disclosurein the financial statements.

10

Page 13: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

Reclassifications

Certain amounts in the prior-year financial statements have been reclassified for comparativepurposes to conform to the presentation in the current-year financial statements with no effecton net assets.

2. Investments

The Organization records investments using the fair value provisions of Financial AccountingStandards Board (FASB) ASC 820. These provisions establish a fair value hierarchy organizedinto three levels based upon the input assumptions used in pricing assets. Realized andunrealized investment gains and losses are reported in the statement of activities as increases ordecreases in unrestricted net assets unless their use is temporarily or permanently restricted byexplicit donor stipulations or by law.

Investments are managed by independent fund managers under guidelines established by theOrganization's Executive and Finance Committees. The intent of the Organization's investmentpolicy is to achieve diversification across capital markets and risk adjusted long term returnsconsistent with an emphasis on preservation of principal.

Investment securities are exposed to various risks, such as interest rate, market and credit. Dueto the level of risk associated with certain investment securities and the level of uncertaintyrelated to changes in value of investment securities, it is at least reasonably possible that changesin risks in the near term would materially affect amounts reported in the statement of financialposition and statement of activities and changes in net assets.

Fair Value Measurements

FASB ASC 820 prioritizes the inputs to valuation techniques used to measure fair value. Afinancial instrument's categorization within the fair value hierarchy is based upon the lowestlevel of input that is available and significant to the fair value measurement.

Level 1 -- Quoted prices in active markets for identical assets or liabilities. The fairmarket value of marketable securities is based upon quoted prices in active markets.

Level 2 - Observable inputs other than quoted prices in active markets for identical assetsand liabilities, quoted prices for identical or similar assets or liabilities in inactivemarkets, or other inputs that are observable or can be corroborated by observable marketdata for substantially the full term of the assets or liabilities. The Organization has noLevel 2 fair value measurements.

Level 3 - Inputs that are generally unobservable and typically reflect management'sestimates of assumptions that market participants would use in pricing the asset orliability. The Organization has no Level 3 fair value measurements.

Investments at December 31,2016 consisted of:

(Level 1)Fair Unrealized

Market AppreciationMarketable Securities Value Cost (Depreciation)

Equity mutual funds $1,899,128 $1,702,510 $ 196,618Fixed income mutual funds 1,812.532 1,936.576 C124.044)

$3.711.660 $3.639.086 $ $72.574

11

Page 14: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

Investment income in 2016 is summarized as follows;

Interest and dividend incomeRealized loss on sales of investmentsUnrealized gain on investment holdings

Investments at December 31, 2015 consisted of:

$116,286(152,880)286.854

$ 250.260

Marketable SecuritiesEquity mutual fundsFixed income mutual funds

(Level 1)Fair

MarketValue

$2,085,5651,589,132

$3.674.697

Cost$2,021,625

1,867,352

$3.888.977

UnrealizedAppreciation

(Depreciation)$ 63,940

f278,220)

$ (-214.280^

Investment income in 2015 is summarized as follows;

Interest and dividend incomeRealized loss on sales of investmentsUnrealized loss on investment holdings

$ 176,663(17,919)

r272.2on

SU 13.457^

3. Property, Plant and Equipment

Property, plant and equipment at December 31, 2016 and 2015 consisted of:

2016 2015

Furniture, equipment and softwareAccumulated depreciation

Net property, plant and equipment

4. Line of Credit

$ 240,912 $ 224,639(-221.566) (190.654)

$ 19346 $ 33.985

The Organization has a line of credit secured by certain investments, the availability of which dependson the market value of such investments. The interest rate is the brokerage's base rate plus or minus apercentage dependent on the total assets invested with the broker. At December 31, 2016 and 2015,the rate amounted to 3.75% and 4.00%, respectively, and the outstanding balance was $372,772 and$262,847, respectively. Interest expense for the years ended December 31, 2016 and 2015 was $9,925and $11,171, respectively.

5. Retirement Plan

The Society of Plastics Engineers, Inc. Employee Savings Plan for all eligible employees provides foran annual employer contribution of 5% of eligible compensation plus a 3% matching of employeecontributions. At December 31, 2016 and 2015 employer contributions to the plan were $51,816 and$44,195, respectively.

6. Temporarily Restricted Net Assets

The Organization maintains funds for the following purposes:

12

Page 15: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

Plastivan Fund: for transporting educational programs to various schools regarding the disseminationof plastics related information.

Educational Grants Fund: for general Foundation related purposes which includes funding forprograms such as exhibits at museums, attendance at educational training courses, books andequipment for classroom use, and the development ofclassroom-relevant educational programs.

Scholarship Fund: to provide college scholarships to students who have shown a career interest inplastics.

At December 31, 2016 net assets consisted of the following:

UnrestrictedUndesignated $ 927,484Designated for future activities 33.510

Total 960.994

Temporarily RestrictedPlastivan 200,000Educational Grants Fund 572,930Scholarship Fund 1,333.421

2,106,351

Total $3.067.345

At December 31, 2015 net assets consisted of the following;

UnrestrictedUndesignated $ 823,051Designated for future activities 33,510

Total 856.561

Temporarily RestrictedPlastivan 200,000Educational Grants Fund 653,238Scholarship Fund 1,493,255

2,346.493

Total $3.203.054

7. Due to Related Parties and Section and Division Rebates

The Organization handles transactions for related Special Interest Groups ("SIG") which have yet toattain Section and Division status. Like Sections and Divisions, SIG are separate organizations withindependent directors. The Organization held $63,609 and 68,641 for SIG at December 31, 2016 and2015, respectively.

In addition, at December 31, 2016 and 2015, the Organization held $95,170 and $56,958, respectivelyon behalf of several Sections and Divisions that were on provisional status as well as a small amountof other miscellaneous funds.

13

Page 16: SOCIETY OF PLASTICS ENGINEERS, INC. FINANCIAL STATEMENTS · SOCIETY OF PLASTICS ENGINEERS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2016 AND 2015 1. Nature of Organization

The Organization also maintained investments for one Section amounting to $159,458 and $155,923at December 31, 2016 and 2015, respectively.

Transactions for conferences and similar events held by certain Sections and Divisions areadministered by the Organization in exchange for an administrative fee. Amounts due the sectionsand divisions, net of the administrative fee, are remitted to those organizations. At December 31,2016 and 2015 the Organization held $1,000 and $28,043, respectively, from such events on behalf ofthese affiliates.

Rebates of a portion of member's dues are paid to Sections and Divisions based on an agreed uponformula and are subject to the Sections and Divisions meeting certain requirements each year.Rebates paid to Sections and Divisions during 2016 and 2015 were $59,372 and $179,919,respectively.

8. Deferred Revenue

Deferred revenue consisted of the following at December 31,2016 and 2015:

2016 2015

Membership fees $673,643 $571,020Exhibit, conference and sponsorship 128.829 224,555

802,472 795,575Less current portion 608,665 (228^574)Long term portion of membership fees $191a§22 ^ 17.0Q1

9. Operating Lease

The Organization has a five year lease for office space which expires in June 2019 for which it isresponsible for its pro-rata share of common area maintenance, taxes and utilities. The lease issubject to annual CPI increases. Rent expense was $72,537 and $70,440 years ended December 31,2016 and 2015, respectively.

The following is a schedule of future minimum lease payments under the non-cancelable operatinglease (including common area maintenance, taxes and utilities) at December 31. 2016:

2017 $73,7522018 73,7522019 73,7522020 43,022

$264.278

The Organization leases certain office equipment under non-cancelable operating lease agreementsexpiring through January, 2019. Equipment lease expense under those agreements was $4,166 and$4,928 for the year ended December 31,2016 and 2015, respectively.

The following is a schedule of future minimum lease payments for equipment at December 31. 2016:

2017 $3,4102018 3,2062019 80

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10. Litigation

In April 2016, an entity filed a "Complaint and Jury Demand" against SPE seeking to recover certainalleged damages relative to a contractual dispute with the SPE Foundation. The dispute was settled,effective October 17, 2016, whereby SPE transferred $100,000 from one of its scholarship trust fundsto be used for a certain scholarship program. In addition, SPE agreed to fund two other scholarshipsof $3,000 each in the years 2017-2020.

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