SUMMER INSTITUTE OF LINGUISTICS, INC. …In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial

SUMMER INSTITUTE OF LINGUISTICS, INC. Consolidated Financial Statements With Independent Auditors’ Report September 30, 2018 and 2017

Page

Independent Auditors’ Report 1

Consolidated Financial Statements

Consolidated Statements of Financial Position 3

Consolidated Statement of Activities–2018 4

Consolidated Statement of Activities–2017 5

Consolidated Statements of Cash Flows 6

Notes to Consolidated Financial Statements 7

Supplementary Data

Independent Auditors’ Report on Supplemental Data 25

Consolidating Statement of Financial Position–2018 26

Consolidating Statement of Financial Position–2017 27

Consolidating Statement of Activities–2018 28

Consolidating Statement of Activities–2017 29

Table of Contents

SUMMER INSTITUTE OF LINGUISTICS, INC.

INDEPENDENT AUDITORS’ REPORT

Audit Committee of the Board of Directors

Summer Institute of Linguistics, Inc.

Dallas, Texas

We have audited the accompanying consolidated financial statements of Summer Institute of Linguistics, Inc.,

which comprise the consolidated statements of financial position as of September 30, 2018 and 2017, and the

related consolidated statements of activities and cash flows for the years then ended, and the related notes to the

consolidated financial statements.

Management ’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in

accordance with accounting principles generally accepted in the United States of America; this includes the design,

implementation, and maintenance of internal control relevant to the preparation and fair presentation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors ’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We

conducted our audits in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the

consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation

and fair presentation of the consolidated financial statements in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

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

opinion.

1000 Texan Trail, Suite 125Grapevine, TX 76051

817.328.6510capincrouse.com



Dallas, Texas

Emphasis of Matter

Grapevine, Texas

May 9, 2019

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the

consolidated financial position of Summer Institute of Linguistics, Inc. as of September 30, 2018 and 2017, and the

changes in its net assets and cash flows for the years then ended in conformity with accounting principles generally

accepted in the United States of America.

Summer Institute of Linguistics, Inc. has adopted Financial Accounting Standards Board (FASB) Accounting

Standards Update (ASU) No. 2016-14, Presentation of Financial Statements of Not-for-Profit Entities , as

described in Note 2. This has had a material effect on the presentation of the September 30, 2018 and 2017

consolidated financial statements.

-2-

2018 2017

ASSETS:

Cash 19,517$ 16,009$

Accounts receivable 1,995 1,970

Notes receivable (Note 4) 177 448

Amounts due from related entities (Note 8) 1,384 1,205

Inventory (Note 2) 2,365 2,734

Investments (Note 3) 36,192 33,436

Other assets (Note 2) 3,146 3,003

Property and equipment–net of accumulated depreciation (Note 5) 34,193 35,738

Total Assets 98,969$ 94,543$

LIABILITIES AND NET ASSETS:

Liabilities:

Accounts payable and accrued expenses 4,780$ 4,362$

Amounts due to staff and affiliated entities (Note 8) 15,208 12,797

Other liabilities (Note 2) 994 978

20,982 18,137

Net assets:

Net assets without donor restrictions:

Undesignated 20,578 18,556

Board designated (Note 9) 14,478 14,330

Equity in property and equipment–net 33,199 34,760

68,255 67,646

Net assets with donor restrictions:

Restricted by purpose or time (Note 9) 9,339 8,372

Restricted in perpetuity (Note 9) 393 388

9,732 8,760

77,987 76,406

Total Liabilities and Net Assets 98,969$ 94,543$


Consolidated Statements of Financial Position

(in thousands of dollars)

September 30,

See notes to consolidated financial statements

-3-

Total

OPERATING SUPPORT AND REVENUE:

Support from affiliates (Note 8) 93,165$ To train linguists17,111$ 110,276$

Contributions 2,469 4,124 6,593

Donated goods and services 1,270 115 1,385

Program service revenue (Note 2) 1,557 - 1,557

Sales and service income, net (Note 2) 2,782 - 2,782

Other loss (116) - (116)

Net assets released from restrictions:

Satisfaction of program restrictions 20,378 (20,378) -

Total operating support and revenue 121,505 972 122,477

OPERATING EXPENSES:

Program services:

Language development and training 96,597 - 96,597

Supporting services:

General and administrative 26,331 - 26,331

Fund-raising 1,004 - 1,004

27,335 - 27,335

Total operating expenses 123,932 - 123,932

Change in net assets from operating activities (2,427) 972 (1,455)

NON-OPERATING ACTIVITIES:

Interest and dividends (Note 3) 396 - 396

Net realized/unrealized gain on investments (Note 3) 2,407 - 2,407

Gain on sale of fixed assets 233 - 233

Change in net assets from non-operating activities 3,036 - 3,036

Change in Net Assets 609 972 1,581

Net Assets, Beginning of Year 67,646 8,760 76,406

Net Assets, End of Year 68,255$ 9,732$ 77,987$


Consolidated Statement of Activities


Year Ended September 30, 2018

Without Donor

Restrictions

With Donor

Restrictions


-4-

Total


Support from affiliates (Note 8) 92,452$ To train linguists16,847$ 109,299$

Contributions 1,967 3,359 5,326

Donated goods and services 1,635 119 1,754

Program service revenue (Note 2) 1,305 - 1,305

Sales and service income, net (Note 2) 2,260 - 2,260

Other income 260 - 260

Net assets released from restrictions:

Satisfaction of program restrictions 20,871 (20,871) -

Total operating support and revenue 120,750 (546) 120,204

OPERATING EXPENSES:

Program services:

Language development and training 97,104 - 97,104


General and administrative 24,295 - 24,295

Fund-raising 853 - 853

25,148 - 25,148

Total operating expenses 122,252 - 122,252

Change in net assets from operating activities (1,502) (546) (2,048)


Interest and dividends (Note 3) 562 - 562

Net realized/unrealized gain on investments (Note 3) 2,198 - 2,198

Gain on disposal of fixed assets 635 - 635

Gain on sale of fixed assets 580 - 580

Change in net assets from non-operating activities 3,975 - 3,975

Change in Net Assets 2,473 (546) 1,927

Net Assets, Beginning of Year 65,173 9,306 74,479

Net Assets, End of Year 67,646$ 8,760$ 76,406$


Consolidated Statement of Activities



Without Donor

Restrictions

With Donor

Restrictions


-5-

2018 2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Change in net assets 1,581$ 1,927$

Adjustments to reconcile change in net assets

to net cash provided (used) by operating activities:

Depreciation 3,360 3,565

Gain on sale of fixed assets (233) (580)

Gain on disposal of fixed assets - (635)

Noncash grant expense of property and equipment - 628

Net realized/unrealized gain on sale of investments (1,769) (1,385)

Gain on investment in captive insurance company (638) (813)

Contributions restricted for capital expenditures - (100)

Contributions restricted for endowment (6) (124)

Changes in assets and liabilities:

Accounts receivable (25) (686)

Amounts due from staff and affiliated entities (179) (24)

Inventory 369 (467)

Other assets (143) (500)

Accounts payable, accrued expenses and other liabilities 434 296

Amounts due to staff and affiliated entities 2,411 1,909

Net Cash Provided by Operating Activities 5,162 3,011

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of investments (349) (730)

Purchase of property and equipment (1,931) (3,685)

Proceeds from sale of investments - 481

Proceeds from sale of property and equipment 349 1,083

Issuance of notes receivable - (8)

Payments on notes receivable 271 -

Net Cash Used by Investing Activities (1,660) (2,859)

CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions restricted for capital expenditures - 100

Contributions restricted for endowment 6 124

Net Cash Provided by Financing Activities 6 224

Net Change in Cash 3,508 376

Cash, Beginning of Year 16,009 15,633

Cash, End of Year 19,517$ 16,009$

SUPPLEMENTAL DISCLOSURE:

Note receivable from the sale of property and equipment -$ 360$

Year Ended September 30,


Consolidated Statements of Cash Flows



-6-

1. NATURE OF ORGANIZATION:

• To train linguists

• To sponsor such linguists in their study of languages, especially less known and unwritten languages.

• To make available the data gathered by linguists through publication or other means.

• To publish resource materials for persons engaged in linguistic research.

• To prepare literature, both by original composition and by translation into the languages studied.

• To promote literacy among the people who speak the languages studied.

• To train people to promote literacy and prepare literature in their own languages.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

SIL’s work is carried out primarily by over 4,000 individuals, many of whom are recruited and supported by

member organizations of the Wycliffe Global Alliance (The Alliance). The organizations contribute to the

holistic transformation of all peoples through Bible translation and compassionate services. This support is

SIL’s primary source of revenue. The Alliance is not included in these consolidated financial statements

because it is financially and administratively independent of SIL.

The consolidated financial statements of SIL include SIL, its field offices, and JAARS, Inc. (JAARS), because

they are under the control of SIL. Significant transactions and balances between the organizations and offices

have been eliminated for consolidated financial statement purposes.

JAARS, Inc. exists to make Bible translation and language development possible, especially in the most remote

and difficult places on earth, by enabling locally-appropriate and sustainable solutions in transportation,

technology, media, and training.


Notes to Consolidated Financial Statements

September 30, 2018 and 2017

The Summer Institute of Linguistics, Inc. (dba SIL International) (SIL) is a Texas non-profit educational

corporation. SIL seeks to carry out, and to encourage and train others to carry out, the following activities with

the assistance and cooperation of governmental and private agencies engaged in similar activities:

SIL is exempt from income tax under Section 501(c)(3) of the U.S. Internal Revenue Code (Code) and

comparable state law. It is classified as a publicly supported organization, which is not a private foundation

under Section 509(a)(1) of the Code.

These consolidated financial statements include the activities and balances of SIL field offices located overseas.

As of September 30, 2018, assets held overseas, including cash, accounts receivable, inventory and other assets,

totaled $9,227,000 and property and equipment, net of accumulated depreciation, amounted to $24,572,000. As

of September 30, 2017, assets held overseas, including cash, accounts receivable, inventory and other assets,

totaled $9,775,000 and property and equipment, net of accumulated depreciation, amounted to $25,373,000.

-7-




2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

PRINCIPLES OF CONSOLIDATION, continued

•

•

•

•

•

•

BASIS OF ACCOUNTING

ESTIMATES

Related entities, not included in these consolidated financial statements due to their financial and administrative

independence, are listed below:

SIL LEAD, Inc. exists to serve minority language communities and support the purposes and ends of SIL. It

does so through advocacy, educational programs, development programs and linking communities with

humanitarian and other multi-sectoral forms of assistance.

The preparation of consolidated financial statements in accordance 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, the disclosure of contingent assets and liabilities at the date of the

consolidated financial statements and the reported amounts of revenue and expenses during the reporting

period. Actual results could differ from those estimates.

SC works with local translators and international partner organizations as well as financial and prayer

partners in a concentrated effort to make God’s Word readily available for faster church planting, effective

discipleship and greater community transformation. These partnerships ensure the Scriptures are translated

accurately and provided in the most accessible forms for maximum impact in the local communities.

Wycliffe Bible Translators, Inc. (Wycliffe USA) is an interdenominational, nonprofit, missionary

organization with the goal of forwarding, in every way possible, the translation of the Word of God into all

those languages of the world where it is needed. Wycliffe USA controls and has an economic interest in

Wycliffe Foundation (WF) and The Wycliffe Seed Company, Inc. (SC).

Wycliffe Bible Translators International (dba Wycliffe Global Alliance), (the Alliance) promotes the efforts

of organizations (over 100 Alliance Organizations) as they engage the worldwide Church in providing

resources for Bible translation and related ministry around the globe.

RIA Charitable Investments Inc. (RIACII) exists to provide a pooled investment opportunity for SIL, and

Wycliffe Global Alliance member organizations.

Dallas International University (DIU) is a graduate professional institute that provides training and research

opportunities and equips students with the skills to train and serve others.

The consolidated financial statements of SIL have been prepared on the accrual basis of accounting in

accordance with accounting principles generally accepted in the United States of America.

-8-





CASH

INVESTMENTS

Investments in money market funds are reported at fair market value. The investment in the captive insurance

company is accounted for using the equity method. Other investments are carried at cost on the consolidated

statements of financial position. Realized and unrealized gains and losses are included in non-operating

activities in the consolidated statements of activities. Investment income consist primarily of interest.

RIA Charitable Investments, Inc. (RIACII) operates as an investment pool available to SIL and certain Alliance

organizations. Funds deposited with RIACII are invested in a variety of fixed income securities including U.S.

Treasury issues, corporate bonds and mortgage backed bonds, which borrow and pay in U.S. dollars. RIACII

carries two investment pools. The short-term portfolio pays interest at a stated rate as determined from time to

time by the board of directors (2.00% for both years ended September 30, 2018 and 2017) to participants in

proportion to the amount they have on deposit in the pool. The short-term portfolio is carried at the value of

actual deposits made plus accrued interest. The long-term pool does not pay out interest, but allocates all net

income or loss to the participants deposit in the pool. The long-term pool also invests in equity securities,

mutual funds, and exchange traded funds. SIL’s interest in the long-term pool is carried at Net Asset Value.

Cash consists primarily of checking accounts deposited with financial institutions. Deposits in excess of FDIC

insurance limits (including cash held outside the U.S.) at September 30, 2018 and 2017, were approximately

$18.7 million and $15.4 million, respectively. Due to the diverse locations and financial cycles of SIL,

management does not believe there is significant unmitigated risk.

SIL operates a system that facilitates the financial interaction between SIL and Wycliffe Global Alliance

member organizations. As part of that system, SIL holds deposits from these organizations, which are included

in cash and amounts due to staff and affiliated entities, in the amounts of approximately $11 million and $8

million at September 30, 2018 and 2017, respectively.

Interest income and dividends recorded in the consolidated statements of activities for 2018 and 2017, was

approximately $396,000 and $356,000 respectively. As of September 30, 2018 and 2017, RIACII reported total

assets with a fair value of approximately $95,592,000 and $91,867,000 and respectively, of which SIL holds

approximately $32,156,000 (34%) and $30,013,000 (33%), respectively. Credit risk is the failure of another

party to perform in accordance with the contract terms. SIL is exposed to credit risk for the amount invested in

the pool, which management believes is mitigated because the RIACII investment pool is only available to a

small closed-group of affiliated entities with common missional purposes and RIACII has a limited scope of

business as a supporting organization to the small closed-group of affiliated organizations.

Dividend income from the captive insurance company recorded in the consolidated statements of activities for

the years ended September 30, 2018 and 2017, was approximately $0 and $180,000 respectively.

-9-





ACCOUNTS RECEIVABLE

INVENTORY

MUSEUMS AND COLLECTIONS

PROPERTY AND EQUIPMENT

Buildings 10 to 40 years

Equipment 3 to 10 years

Furniture & Fixtures 7 to 10 years

Property and equipment expenditures in excess of $5,000 are capitalized at cost. SIL allows its smaller offices

to set a capitalization limit lower than $5,000 based on office size and expected impact of larger purchases on

the local financial statements. Depreciation is provided using the straight-line method over the estimated useful

lives of the depreciable assets as follows:

Accounts receivable are primarily related to amounts due from mission organizations and other local

organizations and individuals and an aircraft lease. Past collection experience has been that essentially 100% of

receivables have been collected. As of September 30, 2018 and 2017, an allowance of $35,000 and $0,

respectively, has been recorded.

Inventory consists primarily of books, publications, construction materials, aviation and other parts, supplies

and consumer goods that are held for sale. Inventory is stated at the lower of cost or net realizable value. Cost is

determined using the weighted-average method, the retail method, or the first-in, first-out method, depending on

the type of inventory. 62% and 55% of inventories are held at overseas locations as of September 30, 2018 and

2017, respectively.

The organization classifies certain aviation parts and materials with other assets. These items are maintained for

future use as replacement parts because there are limited supply sources for such parts.

JAARS established the Mexico Museum and the Museum of the Alphabet (Museums) on its campus. The

collections of the Museums at JAARS, which were acquired through purchases and contributions since the

organization’s inception, are not recognized as assets on the statements of consolidated financial position and,

thus, are not reflected on the consolidated financial statements. Purchases of collection items are recorded as

decreases in net assets without donor restrictions in the year in which the items are acquired or as net assets

with donor restrictions if the assets used to purchase the items are restricted by donors. Proceeds for

deaccessions or insurance recoveries are reflected as increases in the appropriate net asset classes.

-10-





OTHER ASSETS

OTHER LIABILITIES

NET ASSETS

REVENUE

Prepaid expenses: $1,019,000 and $963,000 at September 30, 2018 and 2017, respectively.

Revenue is recognized when earned and support when contributions are made, which may be when cash is

received, unconditional promises are made, or ownership of donated assets is transferred to the organization.

Beneficial interest in split-interest agreements: At September 30, 2018 and 2017, the Wycliffe Foundation

holds charitable gift annuities in the amount of $690,000 and $529,000 for JAARS, respectively. The

amount represents the beneficial interest JAARS has in those charitable gift annuities.

Other liabilities consists primarily of Asset Retirement Obligations (ARO) for SIL and JAARS. As of

September 30, 2018, the balances were $400,000 and $594,000, respectively, for SIL and JAARS. As of

September 30, 2017, the balances were $384,000 and $594,000, respectively, for SIL and JAARS.

The net assets of SIL are classified into net asset categories according to externally (donor or legal) imposed

restrictions as follows:

Net assets without donor restrictions are those available for the general operations of SIL, funds designated for

specific uses by the board of directors (including designations by the executive committees of overseas offices),

and equity in property and equipment. Equity in property and equipment is reported net of related notes payable

and asset retirement obligations.

Net assets with donor restrictions are stipulated by donors for specific operating purposes or for the acquisition

of property and equipment or are time restricted. These include donor restrictions requiring the net assets be

held in perpetuity or for a specified term with investment return available for operations or specific purposes.

Other assets of $3,146,000 and $3,003,000 as of September 30, 2018 and 2017, respectively, consist of the

following:

Aviation parts held for internal use (rather than those held for sale, which are included in

Inventory): $1,437,000 and $1,511,000 at September 30, 2018 and 2017, respectively.

-11-





SALES AND SERVICE INCOME

DONATED GOODS AND SERVICES

PROGRAM SERVICE INCOME

ALLOCATION OF EXPENSES

FOREIGN CURRENCY TRANSLATION

Expenses are recorded when incurred in accordance with the accrual basis of accounting. The consolidated

financial statements report certain categories of expenses that are attributable to one or more program or

supporting functions of SIL. These expenses included depreciation, information technology, and facilities

operations and maintenance. Depreciation is allocated based on square footage. Costs of other categories were

allocated based on estimates of time and effort.

Program service income is generated from the sale of inventory and use of services provided by JAARS, net of

related expense.

SIL has offices in over 40 countries. The U.S. Dollar is the functional currency throughout the organization.

Transactions made in other currencies are translated into U.S. Dollars at an average exchange rate during the

month of the transaction. For the year ending September 30, 2018 and 2017, exchange gains and losses were

($139,000), and $191,000, respectively, which is reported in consolidated statements of activities as other

income.

Donated goods and services are recorded at fair market value at the time of donation. Donated services are

recognized as contributions if the services (a) create or enhance non-financial assets or (b) require specialized

skills, are performed by people with those skills and would otherwise be purchased by SIL. Donated goods and

services does not include the value of labor contributed by affiliates which is recorded at the cost recognized by

the affiliates for the personnel providing those services and is included in Support from Affiliates as discussed

in Note 8.

SIL provides items for sales and services for use by staff whose work requires them to reside in remote

locations and the local economy does not provide what is needed for either staff personal needs or work needs.

This includes aviation services, housing and maintenance as well as more personal needs such as groceries or

basic medical services. Sales and services income is presented net of expenses of $12,500,000 and $12,800,000

for the years ended September 30, 2018 and 2017, respectively. Since these sales and services are provided to

assist staff in accomplishing programs, there is no profit motive and these operations result in a very small net

income margin which could easily slip into a loss position. In cases where staff used to provide these sales and

services are staff assigned from Wycliffe Global Alliance organizations, the value of those staff are not included

in the expenses netted against income, but are included in program services. See Note 8.

-12-





RECLASSIFICATIONS

As Member Sales and

previously labor reclass- service reclass-

classified ification ification Reclassified

Sales and service income, net $ 418 $ - $ 1,842 $ 2,260

Total operating support and revenue $ 118,362 $ - $ 1,842 $ 120,204

Language development and training $ 113,297 $ (18,035) $ 1,842 $ 97,104

General and administrative $ 6,260 $ 18,035 $ - $ 24,295

Total operating expenses $ 120,410 $ - $ 1,842 122,252

RECENTLY ISSUED ACCOUNTING STANDARDS

Reclassifications in the consolidated statement of activities for the year ended September 30, 2017, were as

follows (in thousands):

In 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2016-14, Presentation of Financial Statements of Not-for-Profit Entities . SIL adopted the provisions of this

new ASU during the year ended September 30, 2018. In addition to changes in terminology used to describe

categories of net assets throughout the consolidated financial statements, new disclosures were added regarding

liquidity and the availability of resources (Note 14), and disclosures related to functional allocation of expenses

were expanded (Note 6).

Certain prior period amounts have been reclassified to confirm with current year presentation. $18,035,000 of

salaries and wages provided by staff assigned to SIL were reclassified from program expenses to general and

administrative expenses. Additionally, $1,842,000 of sales and service income and related expenses, which

were netted during the year ended September 30, 2017, were reclassified as revenue and expenses. Both of these

reclassifications were made to conform to current year presentation.

These reclassifications had no effect on net asset balances or the change in net assets for the year ended

September 30, 2017.

-13-




3. INVESTMENTS:

SIL’s investments consist of the following (in thousands):

2018 2017

Investments held at other than fair value:

Deposits with RIA Charitable Investments, Inc. 32,156$ 30,013$

Investment in captive insurance company 3,577 2,939

Certificates of deposit 457 474

Other 2 10

36,192$ 33,436$

SIL’s investments consist of the following (in thousands):

2018 2017

Investments to be held in perpetuity 393$ 388$

Investments available for general

operations and restricted purposes 35,799 33,048

36,192$ 33,436$

September 30,

September 30,

SIL and eight other not-for-profit organizations are members of an offshore captive insurance holding company

entitled Stewardship Insurance, Ltd. (Stewardship). There is one wholly-owned subsidiary of Stewardship,

Stewardship Reinsurance, Ltd (SRL). SIL accounts for its investments based on the equity method of

accounting.

Stewardship captive insures claims relating to workers’ compensation, property, general liability, and auto

liability. Stewardship reinsures the first $1,000,000 of any claim. Of that $1,000,000 Stewardship pays the first

$250,000 and SRL pays the next $750,000. The next $1,000,000 is reinsured with a primary insurance carrier.

The policy limits are $2,000,000 with statutory workers’ compensation benefits. Umbrella insurance coverage is

purchased for claims exceeding $2,000,000. Claim experience will be identified to each participating entity and

subsequent premiums will be modified based on an entity’s experience.

Included within investments is $3,577,000 (cost basis $330,000) and $2,939,000 (cost basis $330,000), which

represents SIL’s investment in captive insurance as of September 30, 2018 and 2017, respectively, representing

11% and 10%, respectively, of Stewardship. Investment balances are measured as of October 31, which

represent the most recent data available. SIL is not aware of any material differences to these balances as of

September 30. SIL has paid $372,000 and $357,670 in premiums to the captive during the years ended

September 30, 2018 and 2017, respectively.-14-




3. INVESTMENTS, continued:

Investment income consists of the following (in thousands):

2018 2017

Interest and dividends 396$ 562$

Net realized/unrealized gain 1,769 1,385

Gain on investment in captive insurance company 638 813

2,803$ 2,760$

4. NOTES RECEIVABLE:

Notes receivable consist of the following (in thousands):

2018 2017

-$ 88$

177 360

177$ 448$

Secured non-interest bearing note receivable from Youth with a Mission for land

sold in Mozambique, balance of $700,000 purchase price was paid in fiscal year

2018 upon transfer of title.


Secured non-interest bearing note receivable from Cameroon Baptist Convention

for land sold in Cameroon, balance due is expected to be paid in fiscal year 2019.

September 30,

-15-




5. PROPERTY AND EQUIPMENT:

Property and equipment at September 30, 2018, consist of the following (in thousands):

Domestic International Total

Land and land improvements 2,073$ 2,856$ 4,929$

Buildings 23,052 31,390 54,442

Furniture and equipment 8,671 4,336 13,007

Vehicles 296 3,682 3,978

Aircraft 4,029 9,312 13,341

Utilities 371 598 969

38,492 52,174 90,666

Less accumulated depreciation (29,253) (28,180) (57,433)

9,239 23,994 33,233

Construction in progress 380 580 960

9,619$ 24,574$ 34,193$

Property and equipment at September 30, 2017, consist of the following (in thousands):

Domestic International Total

Land and land improvements 2,073$ 2,812$ 4,885$

Buildings 23,098 30,514 53,612

Furniture and equipment 8,314 4,881 13,195

Vehicles 274 3,548 3,822

Aircraft 4,029 9,428 13,457

Utilities 371 811 1,182

38,159 51,994 90,153

Less accumulated depreciation (28,164) (27,423) (55,587)

9,995 24,571 34,566

Construction in progress 371 801 1,172

10,366$ 25,372$ 35,738$

SIL believes the above assets are properly stated as of September 30, 2018 and 2017, respectively. However, the

political situation in many countries is subject to rapid change which could adversely affect the realizable value

of the assets. In addition, the carrying value of assets may not be representative of the amount that would be

realized should the assets be sold. For the years ended September 30, 2018 and 2017, 43% and 42%,

respectively, of the international property and equipment is in Papua New Guinea and 11% for both years is in

Australia.

-16-




6. NATURAL CLASSIFICATION OF EXPENSES:

Functional expenses by natural classification for the year ended December 31, 2018, (in thousands):

Language Language Support and Admin- Total

Development Services Logistics istration Fund-

raising

Expenses

Salaries, benefits and

donated labor 46,587$ 13,469$ 15,847$ 21,078$ 710$ $ 97,691

Travel 2,907 1,441 - 2,014 25 6,387

Facilities, equipment

and maintenance 1,101 597 2,680 692 6 5,076

Grants/contributions 1,522 255 269 1,309 - 3,355

Depreciation 69 7 2,310 245 - 2,631

Publications and

printing 471 1,384 7 36 - 1,898

Professional services 196 835 275 456 - 1,762

Training 994 311 126 310 - 1,741

Other 2,211 726 - 191 263 3,391

$ 56,058 $ 19,025 $ 21,514 $ 26,331 $ 1,004 $ 123,932

The following table reflects the natural classification of expenses (in thousands):

2018 2017

Salaries, benefits and

donated labor $ 97,691 $ 96,275

Travel 6,387 5,656

Facilities, equipment and maintenance 5,076 4,309

Grants/contributions 3,355 4,802

Depreciation 2,631 3,325

Publications and printing 1,898 1,353

Professional services 1,762 1,392

Training 1,741 1,872

Other 3,391 3,268

$ 123,932 $ 122,252

Program expenses

Year ended September 30,

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7. OPERATING LEASES:

Year Ending September 30,

$ 314

223

202

183

659

Thereafter 657

2,238$

Future minimum rental payments that are required under the annual or long-term leases are presented below (in

thousands):

Many SIL offices lease property or have been granted the use of property by the local government. For most of

those offices, the leases are on a month-to-month basis and the amounts are immaterial. Others have terms of

one year or longer. In addition, JAARS has entered into several leases for equipment.

2019

2020

2021

2022

2023

Total rental expense for the years ending September 30, 2018 and 2017, was $1,101,000 and $1,291,000,

respectively.

-18-




8. TRANSACTIONS WITH RELATED ENTITIES:

2018 2017

RIACII 32,156$ 30,013$

2018 2017

Staff 443$ 487$

The Alliance organizations 916 713

SIL LEAD 25 5

1,384$ 1,205$

2018 2017

Staff 3,601$ 3,634$

The Alliance organizations 208 750

The Alliance organizations cash deposits 11,399 8,413

15,208$ 12,797$

September 30,

SIL had investments with related entities as follows (in thousands):

September 30,

September 30,

SIL had amounts due from related entities as follows (in thousands):

SIL had amounts due to related entities as follows (in thousands):

-19-




8. TRANSACTIONS WITH RELATED ENTITIES, continued:

2018 2017

Received support from the Alliance organizations 110,276$ 109,299$

Provided support and revenue to the Alliance organizations 1,480$ 1,215$

Grant to SIL LEAD 135$ 120$

9. NET ASSETS:

Board designated net assets consist of the following (in thousands):

2018 2017

Repair/replacement funds 530$ 1,327$

Aviation overhaul funds 4,904 5,143

Stewardship Insurance, LTD. 3,577 2,939

International conference travel fund 1,033 1,355

Insurance reserves 2,628 2,628

Operating reserve 250 -

Language development/Publishing 1,435 820

Scholarships 121 118

14,478$ 14,330$

SIL LEAD has an unsecured revolving line of credit with SIL in the amount of $400,000, monthly payments of

principal and interest vary based on outstanding balance, rate is determined at the date of the draw, no set

maturity date. During the year ended September 30, 2018, there were no draws on the line of credit.

September 30,

Of the total amounts received from the Alliance organizations during the year ended September 30, 2018,

$87,191,000 are non-cash contributions consisting of the value of labor of staff assigned to SIL. Of these

amounts, $67,202,000 is included in program expenses, $19,538,000 is included in general and administrative

expenses, and $451,000 is included in fundraising.

Of the total amounts received from the Alliance organizations during the year ended September 30, 2017,

$86,247,000 are non-cash contributions consisting of the value of labor of staff assigned to SIL. Of these

amounts, $63,118,000 is included in program expenses and $22,989,000 is included in general and

administrative expenses, and $140,000 is included in fundraising.


SIL received support from and provided support and revenue to related entities as follows (in thousands):

-20-




9. NET ASSETS, continued:

Net assets with donor restrictions consist of the following (in thousands):

2018 2017

Restricted by purpose or time:

Language and literacy support projects 6,779$ 6,196$

Aviation and aircraft support projects 892 882

Beneficial interest in charitable gift annuities 690 529

Strategic support initiative projects 808 588

Logistical support projects 170 177

9,339 8,372

Restricted in perpetuity: 393 388

Endowment funds

9,732$ 8,760$

2018 2017 2018 2017

Beginning net assets 1,150$ 1,255$ 592$ 513$

Change in net assets (19) (18) (10) (7)

Ending net assets 1,131$ 1,237$ 582$ 506$

10. ENDOWMENT FUNDS:

SIL’s endowment assets consist of two individual funds established for a variety of purposes restricted in

perpetuity. Net assets associated with endowment funds are classified and reported based on the existence or

absence of donor-imposed restrictions. The disclosures required by the Reporting Endowment Funds topic of

the FASB ASC have not been included in these consolidated financial statements due to immateriality.

As of September 30, 2018 and 2017, $4,618 and $15,200, respectively, are included in net assets with donor

restrictions.

September 30,

Minority interest: SIL operates a school overseas in which partners hold a minority interest of 34% and 29%,

respectively, for the years ended September 30, 2018 and 2017. SIL has an interest of 66% and 71%,

respectively, in the school as of September 30, 2018 and 2017. SIL’s majority interest and the minority interest

in the school are included in SIL’s net assets and change in net assets as follows (in thousands):

SIL Interest Minority Interest

September 30, September 30,

-21-




11. FAIR VALUE MEASUREMENTS:

Changes in methods and assumptions : None.

Fair values of assets measured on a recurring basis are as follows (in thousands):

September 30, 2018

Total Level 1 Level 2

Other assets:

Beneficial interest in split-interest agreements 690$ -$ 690$

September 30, 2017

Total Level 1 Level 2

Other assets:

Beneficial interest in split-interest agreements 529$ -$ 529$

The following table presents the fair value measurements of assets and liabilities recognized in the

accompanying consolidated 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.

SIL uses appropriate valuation techniques to determine fair value based on inputs available. When available,

SIL measures fair value using Level 1 inputs because they generally provide the most reliable evidence of fair

value. Level 3 inputs are only used when Level 1 or Level 2 inputs are not available. Level 1 inputs consist of

unadjusted quoted market prices in active markets for identical assets and have the highest priority, Level 2

inputs consist of observable inputs other than quoted prices for identical assets, and Level 3 inputs have the

lowest priority.

SIL follows the provisions of the Fair Value Measurements and Disclosure topic of the FASB ASC. These

provisions define fair value, establish a framework for measuring fair value, and enhance disclosures about fair

value measurements. Fair value is defined under the standards 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 between

market participants on the measurement date.

WF holds certain charitable gift annuities for JAARS. This amount represents the beneficial interest JAARS has

in those charitable gift annuities. The annuity assets held at WF are reported at fair value based on observable

inputs other than quoted prices for identical assets, which is Level 2 of the fair value hierarchy. The fair value

for the beneficial interest in split-interest agreements is determined by calculating the present value of the future

distributions expected to be received, using published life expectancy tables and an appropriate discount rate.

-22-




12. EMPLOYEE RETIREMENT PLAN:

13. SEVERANCE LIABILITY:

SIL has a 403(b) retirement plan for qualifying US employees, meaning those employees who normally work

more than 20 hours per week. Eligible employees may make deferral contributions up to limits set by law,

which may be matched by employer contributions equal to 100% of the first 2.5% of compensation deferred.

Employer matching contributions as of September 30, 2018 and 2017, were $35,000 and $37,000, respectively.

As of September 30, 2018 and 2017, SIL had accrued approximately $1,634,000 and $1,695,000, respectively,

which is made up entirely of severance liabilities required by local laws in many countries around the world in

which SIL employs local citizens as staff. This amount is included in accounts payable and accrued expenses on

the consolidated statements of financial position.

-23-




14. LIQUIDITY AND FUNDS AVAILABLE:

Financial assets:

Cash $ 19,517

Notes receivable 177

Amounts due from related entities 1,384

Accounts receivable 1,995

Investments 36,192

Beneficial interest in split interest agreements 690

Financial assets, at year-end 59,955

Less those unavailable for general expenditure within one year, due to:

Contractual or donor-imposed restrictions:

Investments to be held in perpetuity (393)

Beneficial interest in split interest agreements (690)

Equity in offshore captive insurance company (3,577)

Investments not available (50)

Funds held for Alliance Organizations (11,399)

Board designated funds:

Board designated for aviation overhaul reserves (4,904)

Board designated for international conference 2020 (1,033)

Board designated for operating reserve (250)

Board designated for insurance reserves (2,628)

(24,924)

$ 35,031

15. SUBSEQUENT EVENTS:

Subsequent events have been evaluated through May 9, 2019, which represents the date the consolidated

financial statements were available to be issued. Subsequent events after that date have not been evaluated.

The following reflects SIL's financial assets (in thousands) as of September 30, 2018, reduced by amounts not

available for general use within one year because of contractual or donor-imposed restrictions. Amounts not

available include amounts set aside for reserves designated by the board that could be drawn upon if the

governing board approves that action.

-24-

SUPPLEMENTARY DATA

INDEPENDENT AUDITORS’ REPORT

ON SUPPLEMENTARY DATA



Dallas, Texas

Grapevine, Texas

May 9, 2019

We have audited the consolidated financial statements of Summer Institute of Linguistics, Inc. as of and for the

years ended September 30, 2018 and 2017, and our report thereon dated May 9, 2019, which expressed an

unmodified opinion on those consolidated financial statements, appears on page 1. Our audits were conducted for

the purpose of forming an opinion on the consolidated financial statements as a whole. The consolidating

statements of financial position and activities are presented for purposes of additional analysis of the consolidated

financial statements, rather than to present financial position, results of operations, and cash flows of the individual

organizations, and are not a required part of the consolidated 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 consolidated financial statements. The consolidating information has been subjected to

the auditing procedures applied in the audit of the consolidated financial statements and certain additional

procedures, including comparing and reconciling such information directly to the underlying accounting and other

records used to prepare the consolidated financial statements or to the consolidated 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

consolidated financial statements as a whole.

1000 Texan Trail, Suite 125Grapevine, TX 76051

817.328.6510capincrouse.com

Summer Institute

of Linguistics JAARS, Inc. Eliminations Total

ASSETS:

Cash 19,256$ 261$ -$ 19,517$

Accounts receivable 1,827 168 - 1,995

Notes receivable 177 - - 177

Amounts due from related entities 1,461 - (77) 1,384

Inventory 1,808 557 - 2,365

Investments 36,240 4,220 (4,268) 36,192

Other assets 2,012 1,134 - 3,146

Property and equipment–net of

accumulated depreciation 29,261 4,932 - 34,193

Total Assets 92,042$ 11,272$ (4,345)$ 98,969$


Liabilities:

Accounts payable and accrued expenses 4,364$ 416$ -$ 4,780$

Amounts due to staff and

affiliated entities 19,488 15 (4,295) 15,208

Other liabilities 400 594 - 994

24,252 1,025 (4,295) 20,982

Net assets:


Undesignated 19,981 597 - 20,578

Board designated 11,776 2,752 (50) 14,478

Equity in property and equipment–net 28,861 4,338 - 33,199

60,618 7,687 (50) 68,255


Restricted by purpose or time 6,779 2,560 - 9,339

Restricted in perpetuity 393 - - 393

67,790 10,247 (50) 77,987

Total Liabilities and Net Assets 92,042$ 11,272$ (4,345)$ 98,969$


Consolidating Statement of Financial Position


September 30, 2018

-26-

Summer

Institute of

Linguistics JAARS, Inc. Eliminations Total


Support from affiliates 110,090$ To train linguists8,016$ (7,830)$ 110,276$

Contributions 4,001 2,592 - 6,593

Donated goods and services 854 773 (242) 1,385

Program service revenue - 1,557 1,557

Sales and service income 15,742 169 (13,129) 2,782

Other income (loss) (139) 88 (65) (116)

Total operating support and revenue 130,548 13,195 (21,266) 122,477

OPERATING EXPENSES:

Program services:

Bible translation and related programs 103,533 10,735 (17,671) 96,597


General and administrative 28,475 1,387 (3,531) 26,331

Fund-raising 451 768 (215) 1,004

28,926 2,155 (3,746) 27,335

Total operating expenses 132,459 12,890 (21,417) 123,932

Change in net assets from operating activities (1,911) 305 151 (1,455)


Interest and dividends 396 - - 396

Net realized/unrealized gain/(loss) 2,410 (3) - 2,407

Gain on sale of fixed assets 233 - - 233

Change in net assets from non-operating

activities 3,039 (3) - 3,036

Change in Net Assets 1,128 302 151 1,581

Net Assets, Beginning of Year 66,662 9,945 (201) 76,406

Net Assets, End of Year 67,790$ 10,247$ (50)$ 77,987$


Consolidating Statement of Activities



-27-

Summer Institute

of Linguistics JAARS, Inc. Eliminations Total

ASSETS:

Cash 15,671$ 338$ -$ 16,009$

Accounts receivable 1,631 339 - 1,970

Notes receivable 448 - - 448

Amounts due from related entities 1,218 1 (14) 1,205

Inventory 2,253 481 - 2,734

Investments 33,476 3,529 (3,569) 33,436

Other assets 2,285 718 - 3,003

Property and equipment–net of

accumulated depreciation 30,434 5,304 - 35,738

Total Assets 87,416$ 10,710$ (3,583)$ 94,543$


Liabilities:

Accounts payable and

accrued expenses 4,052$ 160$ 150$ 4,362$

Amounts due to staff and

affiliated entities 16,318 11 (3,532) 12,797

Other liabilities 384 594 - 978

20,754 765 (3,382) 18,137

Net assets:


Undesignated 18,072 635 (151) 18,556

Board designated 11,956 2,424 (50) 14,330

Equity in property and equipment–net 30,050 4,710 - 34,760

60,078 7,769 (201) 67,646


Restricted by purpose or time 6,196 2,176 - 8,372

Restricted in perpetuity 388 - - 388

66,662 9,945 (201) 76,406

Total Liabilities and Net Assets 87,416$ 10,710$ (3,583)$ 94,543$


Consolidating Statement of Financial Position


September 30, 2017

-28-

Summer

Institute of

Linguistics JAARS, Inc. Eliminations Total


Support from affiliates 109,198$ To train linguists7,432$ (7,331)$ 109,299$

Contributions 2,815 2,511 - 5,326

Donated goods and services 1,004 1,044 (294) 1,754

Program service revenue - 1,305 - 1,305

Sales and service income* 15,513 489 (13,742) 2,260

Other income 205 111 (56) 260

Total operating support and revenue 128,735 12,892 (21,423) 120,204

OPERATING EXPENSES:

Program services:

Bible translation and related programs* 104,338 10,098 (17,332) 97,104


General and administrative* 27,226 1,056 (3,987) 24,295

Fund-raising 140 853 (140) 853

27,366 1,909 (4,127) 25,148

Total operating expenses 131,704 12,007 (21,459) 122,252

Change in net assets from operating

activities (2,969) 885 36 (2,048)


Interest and dividends 749 - (187) 562

Net realized/unrealized gain/(loss) 2,204 (6) - 2,198

Gain on disposal of fixed assets 635 - - 635

Gain on sale of fixed assets 580 - - 580

Change in net assets from non-operating

activities 4,168 (6) (187) 3,975

Change in Net Assets 1,199 879 (151) 1,927

Net Assets, Beginning of Year 65,463 9,066 (50) 74,479

Net Assets, End of Year 66,662$ 9,945$ (201)$ 76,406$

*See Note 2 for prior period reclassifications to conform with current year presentation.


Consolidating Statement of Activities



-29-

Documents

SUMMER INSTITUTE OF LINGUISTICS, INC. …In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial