2019-11-15T07:11:00-06:00 2018-12-31 410746749 CLIFTONLARSONALLEN LLP 227 WEST TRADE STREET SUITE 800 CHARLOTTE NC 28202 990 2018-01-01 581598135 THE PINES AT DAVIDSON INC PINE 7048961100 400 AVINGER LANE DAVIDSON NC 28036 DAVID C RAINEY VICE PRESIDENT AND CFO 7048961100 2019-11-14 1 JOHN NORMAN P01506766 7049985200 2019-11-14 67.137.57.251 2019-11-14 15:23:22 ES P 64AF3659F43F5CC98B56C00B2A895DE9C1B7BC1E 7FA111DA1DF952C3932DE9B02872546115851591 2018 2020-04-17 16:48:07Z STEVEN H JEWELL 400 AVINGER LANE DAVIDSON NC 28036 24484687 0 X WWW.THEPINESATDAVIDSON.ORG X 1983 NC PROVIDE TO OLDER ADULTS HIGH QUALITY HOUSING, HEALTHCARE, AND OTHER SERVICES TO EXCEED RESIDENTS' EXPECTATIONS 20 20 383 120 0 0 313039 2166775 20181735 21198658 985111 1056111 36245 44722 21516130 24466266 580029 443069 0 0 9083200 9367110 0 0 100163 10237338 10066888 19900567 19877067 1615563 4589199 98678332 101140020 63044770 62545311 35633562 38594709 X THE MISSION OF THE PINES AT DAVIDSON IS TO PROVIDE (TO OLDER ADULTS) HIGH QUALITY HOUSING, HEALTH CARE AND OTHER SERVICES THAT EXCEED RESIDENTS' EXPECTATIONS IN PURSUING ITS MISSION. THE PINES AT DAVIDSON WILL SET ITSELF APART BY THE FOLLOWING: BEING EVER MINDFUL OF THE NEEDS OF RESIDENTS, ATTRACTING AND RETAINING A PROFESSIONAL AND CARING STAFF COMMITTED TO THE SERVICE AND WELL-BEING OF RESIDENTS, LEVERAGING COLLABORATIVE OPPORTUNITIES, EXHIBITING INNOVATION THROUGH BOLD INVESTMENTS IN TECHNOLOGIES AND FACILITIES, AND MAINTAINING ITS IDENTITY AS A NONPROFIT COMMUNITY ESTABLISHED BY MEMBERS AND FRIENDS OF DAVIDSON COLLEGE PRESBYTERIAN CHURCH AND THE TRUSTEES OF DAVIDSON COLLEGE. 0 0 6592546 10916499 PROVISION OF HOUSING AND RELATED SERVICES TO RESIDENTS 4833212 5533021 PHYSICIAN SERVICES AND NURSING CARE - PROVIDES MEDICAL CARE TO RESIDENTS INCLUDING SERVICES DESIGNED TO ENHANCE THE QUALITY OF OLDER ADULTS' LIVES 3119751 103450 CULINARY AND DINING SERVICES - PROVIDES WELL-BALANCED, NUTRITIOUS MEALS TO RESIDENTS AND THEIR GUESTS 3411220 443069 3645688 ALL OTHER SERVICES TO MEET THE PHYSICAL, EMOTIONAL, INTELLECTUAL AND SPIRITUAL NEEDS OF RESIDENTS INCLUDING MAINTENANCE, SECURITY, HOUSEKEEPING AND LAUNDRY 3411220 443069 3645688 17956729 1 1 0 1 0 0 0 0 0 0 1 1 0 0 1 1 0 1 0 0 0 0 0 0 0 0 0 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 61 0 383 1 0 0 0 0 0 0 0 0 0 0 0 0 X 20 20 0 0 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X X DAVID C RAINEY 7048961100 400 AVINGER LANE DAVIDSON NC 28036 BARBARA I NEIDINGER CHAIRPERSON 1.00 X X 0 0 0 EDWARD A KANIA VICE CHAIRPERSON 1.00 X X 0 0 0 HARRISON L MARSHALL JR SECRETARY 1.00 X X 0 0 0 JAMES E HARRIS JR TREASURER 1.00 X X 0 0 0 THOMAS A BATCHELOR DIRECTOR 1.00 X 0 0 0 SARAH P BOEHMLER DIRECTOR 1.00 X 0 0 0 STEPHEN D BRADLEY JR DIRECTOR 1.00 X 0 0 0 JANET U CROOK MD DIRECTOR 1.00 X 0 0 0 LACY WOODS DICK DIRECTOR 1.00 X 0 0 0 JOHN FRANK FESPERMAN II DIRECTOR 1.00 X 0 0 0 JOHN N GILBERT III DIRECTOR 1.00 X 0 0 0 RAYMOND JACOBSON DIRECTOR 1.00 X 0 0 0 LINDA NEED DIRECTOR 1.00 X 0 0 0 KATHY L PILKINGTON DIRECTOR 1.00 X 0 0 0 CARRANZA M PRYOR DIRECTOR 1.00 X 0 0 0 JAMES LEWIS SIGMON JR DIRECTOR 1.00 X 0 0 0 NEWTON ALEX SMITH III DIRECTOR 1.00 X 0 0 0 JOSEPH L TRASK MD DIRECTOR 1.00 X 0 0 0 EDWIN H WADSWORTH DIRECTOR 1.00 X 0 0 0 MAYLENG S WATSON DIRECTOR 1.00 X 0 0 0 CAROL E QUILLEN DIRECTOR (EX OFFICIO) 1.00 X 0 0 0 STEVEN H JEWELL EXECUTIVE DIRECTOR 50.00 X 215847 0 25698 DAVID C RAINEY VICE PRESIDENT/CFO 50.00 X 184225 0 23932 SCOTT S CHINERY DIRECTOR OF PLANT SERVICES 50.00 X 116972 0 50839 CAROLYN R PICTON DIRECTOR OF MARKETING 50.00 X 110811 0 46335 JUDY L GREEN DIRECTOR OF NURSING 50.00 X 117324 0 21708 CHAD D LAUDERBAUGH DIRECTOR OF CULINARY SERVICES 50.00 X 104969 0 14558 850148 0 183070 6 0 1 0 SFCS INC 305 S JEFFERSON ST ROANOKE VA 24011 ENGINEERING SERVICES 1249020 THE RBA GROUP 122-B W BLAND ST DAVIDSON NC 28203 ARCHITECTURE & DESIGN 581708 COLE JENEST & STONE 200 S TRYON ST DAVIDSON NC 28203 ARCHITECTURE & DESIGN 381609 CLIFTONLARSONALLEN LLP 101 N TRYON ST SUITE 1000 CHARLOTTE NC 28246 ACCOUNTING & FORECAST SERVICES 226063 CHAMBERS 1800 WASHINGTON BLVD SUITE 111 BALTIMORE MD 21230 ARCHITECTURE & DESIGN 183283 8 2166775 2166775 HOUSING & RELATED 721310 10916499 10916499 PHYSICIAN & NURSING 713990 5533021 5533021 CULINARY & DINING 722100 103450 103450 4645688 4645688 21198658 1074532 1074532 44722 0 44722 44722 44722 18421 -18421 -18421 -18421 24466266 21198658 0 1100833 280000 280000 163069 163069 449702 114095 335607 6853261 6289615 513545 50101 263294 211522 51772 1262794 1116417 146377 538059 461768 72523 3768 432556 317353 115203 676387 536958 139429 38794 6743 32051 249369 190509 50143 8717 36148 36148 2465812 2465812 28953 15119 13834 17558 12330 5228 657744 652460 5284 3568708 3540038 28670 163593 162279 1314 UNIFORMS, LINEN & LAUND 200905 200905 PHYSICIAN SERVICES 127000 127000 CABLE TV, BEAUTY PARLOR 121959 121959 MINOR EQUIP 57725 55763 1962 1223677 878867 307233 37577 19877067 17956729 1820175 100163 6105790 6187518 858988 1187811 74159 89170 226848 215909 78896063 37966643 40723581 40929420 47514771 44416616 2935440 7898827 238755 214749 98678332 101140020 3167642 3373604 30366434 29240638 23933547 22810371 5577147 7120698 63044770 62545311 X 17815748 21547839 17817814 17046870 35633562 38594709 98678332 101140020 X 4589199 -1088805 -539247 X X 0 1 X 1 0 X 280370 332419 281937 313039 2166775 3374540 17538871 20149036 19284493 20181735 21198658 98352793 17819241 20481455 19566430 20494774 23365433 101727333 6150 6445 7050 9775 48015 77435 0 6150 6445 7050 9775 48015 77435 101649898 813072 810928 901797 983264 1119254 4628315 813072 810928 901797 983264 1119254 4628315 18632313 21292383 20468227 21478038 24484687 106355648 0.95580 0.94380 0.04350 0.04440 X RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 0 0 0 0 0 0 0 0 1 300 300 0 PART II-B, LINE 1: THE PINES IS A MEMBER OF AND PAYS DUES TO LEADINGAGE NORTH CAROLINA. A PORTION OF ITS DUES PAID ARE ATTRIBUTABLE TO LOBBYING EXPENDITURES. 6452610 6452610 50267810 27191676 23076134 6757835 2942867 3814968 12015363 7832100 4183263 3402445 3402445 40929420 CASH EQUIVALENT - UNRESTRICTED 4639753 C SHORT TERM INVESTMENTS 255492 C BOND FUND 94 - INTEREST ACCOUNT 137 C '15 BONDS INTEREST ACCT 138622 C '15 BONDS PRINCIPAL ACCT 685000 C INTEREST ACCT 2013 BONDS 187251 C SINKING FUND 2013 BONDS 450000 C 2018 ESCROW FUND 1436438 C DEBT SERV RESERVE FUND 94 BONDS 106134 C 7898827 INTEREST PAYABLE 328870 REFUNDABLE ENTRANCE FEES AND DEPOSITS 6791828 7120698 X PART X, LINE 2: THE PINES IS EXEMPT FROM FEDERAL INCOME TAX UNDER SECTION 501(C)(3) OF THE INTERNAL REVENUE CODE. THE PINES QUALIFIES FOR THE CHARITABLE CONTRIBUTION DEDUCTION UNDER SECTION 170 AND HAS BEEN CLASSIFIED AS AN ORGANIZATION THAT IS NOT A PRIVATE FOUNDATION UNDER SECTION 509(A)(2). THE PINES FILES AS A TAX-EXEMPT ORGANIZATION. MANAGEMENT IS NOT AWARE OF ANY ACTIVITIES THAT WOULD JEOPARDIZE TAX-EXEMPT STATUS OF THE ORGANIZATION. MANAGEMENT IS NOT AWARE OF ANY SIGNIFICANT ACTIVITIES THAT ARE SUBJECT TO TAX ON UNRELATED BUSINESS INCOME OR EXCISE OR OTHER TAXES FOR THE ORGANIZATION. THE PINES FOLLOWS GUIDANCE ON THE INCOME TAX STANDARD REGARDING THE RECOGNITION AND MEASUREMENT OF UNCERTAIN TAX POSITIONS. THE IMPLEMENTATION HAS HAD NO IMPACT ON THE PINES' CONSOLIDATED FINANCIAL STATEMENTS. 1 TOWN OF DAVIDSON PO BOX 579 DAVIDSON NC 28036 566001212 120000 VOLUNTARY CONTRIBUTION MECKLENBURG COUNTY PO BOX 34486 CHARLOTTE NC 28234 566000319 160000 VOLUNTARY CONTRIBUTION 2 RESIDENT SUPPORT 5 163069 BOOK DISCOUNTED MONTHLY FEE PART I, LINE 2: NOTWITHSTANDING THE FACT THAT THE PINES IS EXEMPT FROM PROPERTY TAXES, THE PINES MAKES VOLUNTARY CONTRIBUTIONS TO THE TOWN OF DAVIDSON AND MECKLENBURG COUNTY TO HELP OFFSET THE COST OF SERVICES PROVIDED TO THE PINES BY SUCH GOVERNMENTAL ENTITIES. AS A GENERAL RULE SUCH CONTRIBUTIONS ARE UNRESTRICTED AND REQUIRE NO MONITORING. IN THE EVENT SUCH CONTRIBUTIONS ARE RESTRICTED FOR A SPECIFIC PURPOSE OR USE, SUCH AS BY THE FIRE DEPARTMENT, THE ORGANIZATION RELIES UPON COMMUNICATIONS WITH APPROPRIATE GOVERNMENT OFFICIALS TO VERIFY SUCH CONTRIBUTIONS ARE USED FOR THE RESTRICTED PURPOSE. A RESIDENT MAY MAKE APPLICATION FOR ASSISTANCE WITH MONTHLY FEES. THE PINES RECONCILES A RESIDENT'S NET WORTH AS REPORTED AT THE TIME OF ADMISSION TO THE PINES TO CONFIDENTIAL FINANCIAL STATEMENT SUBMITTED AT THE TIME OF APPLICATION FOR ASSISTANCE TO THE PINES TO DETERMINE IF THE DEPLETION OF THE RESIDENT'S FINANCIAL RESOURCES HAS BEEN FOR REASONABLE AND JUSTIFIABLE REASONS. DOCUMENTATION REQUIRED MAY INCLUDE BUT IS NOT LIMITED TO PAST AND PRESENT TAX RETURNS, STATEMENTS FROM BROKERAGE/INVESTMENT ACCOUNTS, BANK ACCOUNT STATEMENTS, SETTLEMENT STATEMENT FOR SALE OF RESIDENCE. ALL APPLICANTS GO THROUGH THIS PROCESS AND ARE TREATED CONSISTENTLY. 1 X X X X X X 0 1 0 0 0 0 0 1 0 STEVEN H JEWELL EXECUTIVE DIRECTOR 164419 0 51428 0 0 0 6418 0 19280 0 241545 0 0 0 DAVID C RAINEY VICE PRESIDENT/CFO 139090 0 43451 0 1684 0 14303 0 9629 0 208157 0 0 0 SCOTT S CHINERY DIRECTOR OF PLANT SERVICES 79341 0 37631 0 0 0 31724 0 19115 0 167811 0 0 0 CAROLYN R PICTON DIRECTOR OF MARKETING 51938 0 58873 0 0 0 20170 0 26165 0 157146 0 0 0 PART I, LINE 4B STEVE JEWELL PARTICIPATED IN A 457(B) DEFERRED COMPENSATION PLAN, BUT NO AMOUNTS WERE PAID OR ACCRUED DURING 2018. PART I, LINE 7 ALL BONUSES ARE DISCRETIONARY AND BASED ON INDIVIDUAL AND OVERALL COMPANY PERFORMANCE. FOR FURTHER INFORMATION ABOUT HOW THE PINES SETS COMPENSATION, SEE PAGE 2 OF SCHEDULE O UNDER THE HEADING "FORM 990, PART VI, SECTION B, LINE 15". A NC MEDICAL CARE COMMISSION 521309402 2013-09-17 14645000 FACILITY EXPANSION 0 0 0 B NC MEDICAL CARE COMMISSION 521309402 2015-10-07 11125000 REFUNDING 0 0 0 A 1270000 14645000 512324 292900 13839776 2014 0 0 1 1 B 1465000 11125000 171586 10953414 1 0 1 1 A 0 0 1 1 0 0 0 1 B 0 0 1 1 0 0 0 1 A 0 0 0 1 1 0 0 0 1 B 0 0 1 0 1 0 0 0 1 A 1 B 1 DATE REBATE COMPUTATION PERFORMED ISSUER NAME: NC MEDICAL CARE COMMISSION DATE THE REBATE COMPUTATION WAS PERFORMED: 12/31/2017 ISSUE A, PART IV, LINE 2C PFM PERFORMED THE REBATE CALCULATION FOR THE PINES IN JUNE, 2018. FORM 990, PART VI, SECTION A, LINE 1 EX OFFICIO MEMBERS DO NOT HAVE VOTING RIGHTS FORM 990, PART VI, SECTION B, LINE 11B THE BOARD OF DIRECTORS OF THE PINES AT DAVIDSON MAINTAINS AN AUDIT COMMITTEE AS ONE OF ITS STANDING COMMITTEES. ALL MEMBERS OF THE AUDIT COMMITTEE ARE VOLUNTEER DIRECTORS WHO ARE INDEPENDENT OF MANAGEMENT. ALL MEMBERS OF THE AUDIT COMMITTEE ARE EXPERIENCED BUSINESS PEOPLE OR CPAS AND THE CHAIRPERSON IS A CPA. THE CHAIRPERSON ALSO SERVES AS A MEMBER OF THE EXECUTIVE COMMITEE OF THE ORGANIZATION'S BOARD OF DIRECTORS AND REPORTS AS NEEDED DIRECTLY TO THE BOARD OF DIRECTORS. THE AUDIT COMMITTEE MEETS AT LEAST ANNUALLY IN EXECUTIVE SESSION WITH THE AUDITORS WITHOUT MANAGEMENT PRESENT. CLIFTONLARSONALLEN AUDITS THE ORGANIZATION AND ALSO PREPARES ITS FORM 990 BASED ON INFORMATION PROVIDED BY THE PINES' MANAGEMENT. PRIOR TO FILING THE FORM 990 TAX RETURN THE FORM 990 IS REVIEWED BY THE AUDIT COMMITTEE. A COPY OF THE FORM 990 IS ALSO PROVIDED TO ALL DIRECTORS PRIOR TO FILING. FORM 990, PART VI, SECTION B, LINE 12C THE ORGANIZATION MONITORS THE CONFLICT OF INTEREST POLICY BY SENDING A QUESTIONNAIRE PREPARED BY THE ORGANIZATION'S ATTORNEY AT LEAST ANNUALLY TO ALL DIRECTORS. THE DIRECTORS RETURN THE SIGNED QUESTIONNAIRES. MANAGEMENT OF THE PINES WORKS CLOSELY WITH ITS LEGAL AND TAX ADVISORS IN THE EVENT ANY DIRECTORS INDICATE POTENTIAL CONFLICTS AND PROVIDE ASSISTANCE IN DETERMINING PROPER TREATMENT AND DISCLOSURE. THE EXECUTIVE COMMITTEE OF THE BOARD OF DIRECTORS AND/OR THE BOARD OF DIRECTORS IS ALSO APPRISED OF ANY POTENTIAL CONFLICTS OF INTEREST. FORM 990, PART VI, SECTION B, LINE 15 THE EXECUTIVE COMMITTEE OF THE PINES' BOARD OF DIRECTORS ("BOARD") SERVES AS THE COMPENSATION COMMITTEE, EVALUATING PERFORMANCE AND SETTING COMPENSATION FOR THE PRESIDENT/EXECUTIVE DIRECTOR AND VICE PRESIDENT/CFO OF THE PINES. THE EXECUTIVE COMMITTEE IS COMPRISED OF THOSE DIRECTORS OF THE CORPORATION WHO ARE THE CHAIRPERSON, VICE CHAIRPERSON, TREASURER, AND SECRETARY OF THE CORPORATION AND THE CHAIRPERSONS OF THE COMMITTEES OF THE BOARD OF DIRECTORS. THE COMPENSATION COMMITTEE MEETS AT LEAST ANNUALLY. THE COMMITTEE ASSESSES JOB PERFORMANCE AGAINST OBJECTIVES ESTABLISHED BY THE BOARD AS PART OF THE CORPORATION'S STRATEGIC PLAN, WHICH FOR 2017 INCLUDED EIGHT KEY STRATEGIC GOALS: (1) DELIGHTED RESIDENTS; (2) HIGH QUALITY HEALTHCARE AND OTHER SERVICES; (3) A CARING, TALENTED AND LOYAL STAFF; (4) STATE-OF-THE-ART FACILITIES; (5) STRONG COMMUNITY RELATIONS; (6) AN INNOVATIVE CULTURE AND A SPIRIT OF INQUIRY; (7) EFFECTIVE BOARD GOVERNANCE; AND (8) FINANCIAL STRENGTH. THE BOARD ALSO ADOPTED QUANTIFIABLE, MEASUREABLE OBJECTIVES FOR EACH OF THESE EIGHT KEY GOALS TO HELP MEASURE PERFORMANCE OF THE PINES' MANAGEMENT TEAM. SOME EXAMPLES OF SUCH OBJECTIVES INCLUDE (NUMBERS IN PARENTHESES REFER TO THE RELATED STRATEGIC GOAL): MAINTAINING A PASSING HEALTH DEPARTMENT RATING ON THE POOLS (4); ACHIEVING A COUNTY HEALTH DEPARTMENT RESTAURANT SANITATION SCORE OF 93 OR BETTER (2); HAVING NO INCIDENTS OF RESIDENT ABUSE OR NEGLECT (2); MEETING EMPLOYEE TURNOVER AND SATISFACTION OBJECTIVES (3); MEETING RESIDENT SATISFACTION OBJECTIVES (1); ANSWERING NURSING CALL BELLS WITHIN THREE MINUTES 95% OF THE TIME (1); STRIVING TO RESPOND TO ALL LIFE SAFETY RELATED AND HIGH PRIORITY WORK ORDERS IN A TIMELY MANNER (1); RAISING GIFTS TO GROW THE ENTRY ASSISTANCE FUND (5); SCORING AT THE MEDIAN OR BETTER ON 17 KEY FINANCIAL RATIOS CALCULATED ANNUALLY ON APPROXIMATELY 109 SINGLE-SITE, NONPROFIT, ACCREDITED CONTINUING CARE RETIREMENT COMMUNITIES (8); STRIVING TO MAINTAIN AN 'A-' FITCH RATING OR BETTER (IN 2019, THIS OBJECTIVE CHANGED TO STRIVE TO MAINTAIN A FITCH INVESTMENT GRADE RATING OF 'BBB+ OR BETTER THROUGH DECEMBER 31, 2028, AND THEREAFTER STRIVE TO ACHIEVE AND MAINTAIN A FITCH INVESTMENT GRADE RATING OF 'A- OR BETTER) (8); OPERATING THE FACILITY AT AN OPERATING MARGIN OF 3% TO 5% OR BETTER (8); MAINTAINING POSITIVE CASH FLOW EACH YEAR AS MEASURED BY CASH USED OR PROVIDED FROM OPERATIONS (8); AND MAINTAINING 95% OCCUPANCY OR BETTER IN INDEPENDENT LIVING (6). THE COMPENSATION COMMITTEE CONSIDERS COMPENSATION FOR SIMILAR POSITIONS AT OTHER NONPROFIT ORGANIZATIONS IN THE SAME INDUSTRY WITH COMPARABLE TOTAL REVENUES. THE PINES' INDEPENDENT COMPENSATION CONSULTANT GATHERS SUCH INFORMATION ON APPROXIMATELY 45 OTHER NONPROFIT CONTINUING CARE RETIREMENT COMMUNITIES (MAINLY IN NC, SC, VA & MD). SIMILAR INFORMATION IS GATHERED ON 21 NONPROFIT CCRCS (PRIMARILY ON THE EAST COAST). THE COMPENSATION COMMITTEE ALSO CONSIDERS A NATIONAL COMPENSATION SURVEY DONE FOR LEADING AGE THAT PROVIDES REGIONAL AND NATIONAL COMPENSATION DATA FOR SIMILAR POSITIONS AT APPROXIMATELY 520 NONPROFIT CONTINUING CARE RETIREMENT COMMUNITIES. THE PRESIDENT AND VICE PRESIDENT RANK BELOW THE 75TH PERCENTILE WHEN THEIR COMBINED ANNUAL COMPENSATION IS COMPARED TO THE COMPENSATION SURVEY INFORMATION REFERRED TO ABOVE. FORM 990, PART VI, SECTION C, LINE 19 FORM 990 AS WELL AS THE CONFLICT OF INTEREST POLICY AND THE CORPORATE BYLAWS ARE AVAILABLE ON REQUEST AT THE BUSINESS OFFICE OF THE PINES. THE AUDITED FINANCIAL STATEMENTS ARE ALSO AVAILABLE ON REQUEST AND A COPY IS KEPT IN THE LIBRARY OF THE PINES AT DAVIDSON. THE ORGANIZATION FILES A DISCLOSURE STATEMENT ANNUALLY WITH THE NORTH CAROLINA DEPARTMENT OF INSURANCE AND IS AVAILABLE ON THE NCDOI WEBSITE. SUCH DISCLOSURE STATEMENT CONTAINS SIGNIFICANT INFORMATION ABOUT THE STATUS AND OPERATIONS OF THE PINES. SUCH DISCLOSURE STATEMENT IS ALSO AVAILABLE IN THE LIBRARY OF THE PINES AND IS DISTRIBUTED TO ALL APPLICANTS FOR RESIDENCE. FORM 990, PART XI, LINE 9: NET ASSET RELEASED FROM RESTRICTION FOR OPERATIONS 2,333,459. CHANGE IN VALUE OF TEMP RESTRICTED PLEDGES -112,140. NET ASSETS RELEASED FROM DONOR RESTRICTIONS -2,760,566. FORM 990, PART XII, LINE 2C: NO CHANGE IN METHOD SINCE THE PRIOR YEAR. FORM 990, PART I, LINE 19 RECONCILIATION THE REVENUE LESS EXPENSES FOR THE FISCAL YEAR 2018, AS REPORTED ON PART I, LINE 19 OF THE FORM 990, RECONCILES TO THE ORGANIZATION'S AUDITED FINANCIAL STATEMENTS IN THE FOLLOWING MANNER: TOTAL OPERATING REVENUE AND SUPPORT 21,810,079 TOTAL OPERATING EXPENSES 19,877,067 INCREASE IN UNRESTRICTED NET ASSETS 1,933,012 FORM 990, PART I, LINE 19 -- REVENUE LESS EXPENSES 4,589,199 RESTRICTED CONTRIBUTIONS (2,166,175) UNRESTRICTED CONTRIBUTIONS (600) RESTRICTED INTEREST INCOME (489,412) PER AUDITED FINANCIAL STATEMENTS 1,933,012 THE INCREASE IN UNRESTRICTED NET ASSETS OF $1,933,012 FOR FISCAL YEAR 2018 REPRESENTS 8.9% OF TOTAL OPERATING REVENUE OF $21,810,079 FOR SUCH YEAR. THIS RATIO IS REFERRED TO AS THE OPERATING MARGIN RATIO. AN OPERATING RATIO OF 8.9% MEANS THAT $8.90 OUT OF EVERY $100 IN OPERATING REVENUES REMAINED AFTER ACCOUNTING FOR OPERATING EXPENSES. BY WAY OF COMPARISON, THE 75TH PERCENTILE OPERATING MARGIN RATIO FOR A GROUP OF APPROXIMATELY 109 SINGLE SITE ACCREDITED CONTINUING CARE RETIREMENT COMMUNITIES WAS 4.75% FOR 2018 (SOURCE: 2019 FINANCIAL RATIOS TREND ANALYSIS OF CARF-CCAC ACCREDITED ORGANIZATIONS). A POSITIVE OPERATING MARGIN OVER TIME IS AN INDICATION THAT THE PINES CAN PRUDENTLY MANAGE ITS COSTS AND EXPENSES FROM YEAR TO YEAR, AND THAT THE PINES IS FINANCIALLY STABLE ENOUGH TO SUPPORT ITS SERVICES. THE OPERATING MARGIN INCREASED FROM 4.4% IN 2017 TO 8.9% IN 2018 BECAUSE TOTAL OPERATING REVENUE BETWEEN YEARS INCREASED APPROXIMATELY 4.7% (MAINLY DUE TO FAVORABLE CHANGES IN OCCUPANCY AND UNIT MIX) AND TOTAL OPERATING EXPENSES DECREASED 0.1%. THE PINES BEGAN PLANNING FOR A MAJOR EXPANSION OF ITS FACILITIES AND SERVICES IN 2016 THAT EXTENDED THROUGH 2018 ("PROJECT"). THE PROJECT INCLUDES ADDING A TWO STORY ADDITION TO THE NURSING UNIT (NET INCREASE OF 24 NURSING BEDS); RENOVATING ASSISTED LIVING DINING; ADDING A NEW TWO STORY LARGE MEETING ROOM; ADDING NEW FITNESS EQUIPMENT SPACE; RENOVATING THE DINING FACILITIES TO INCLUDE A MARKETPLACE, COFFEE/GELATO KIOSK, PUB AND WAITED TABLE SERVICE; ADDING TWO NEW APARTMENT BUILDINGS CONTAINING 38 NEW VILLA APARTMENTS; AND ADDING PARKING AND A NEW SECOND ENTRANCE. IN JANUARY 2019, THE PINES' CONSTRUCTION MANAGER BEGAN SITE WORK IN CONNECTION WITH THE PROJECT. IN DECEMBER OF 2017 THE PINES' CREDIT RATING WAS REVISED BY FITCH FROM AN 'A-' TO AN 'A' CREDIT RATING. IN FEBRUARY 2019, AS EXPECTED THE PINES' CREDIT RATING WAS REVISED BY FITCH FROM AN 'A' TO A 'BBB+' CREDIT RATING IN RESPONSE TO THE PROJECTED CHANGES IN THE PINES' FINANCIAL POSITION AS A RESULT OF UNDERTAKING THE PROJECT. AN ORGANIZATION WITH AN INVESTMENT GRADE RATING (CONSIDERED TO BE 'BBB- OR HIGHER) CAN TYPICALLY BORROW FUNDS AT LOWER, MORE FAVORABLE INTEREST RATES. IN ITS REPORT ENTITLED "2019 MEDIAN RATIOS FOR NOT-FOR-PROFIT LIFE PLAN COMMUNITIES," FITCH REPORTS THAT OUT OF 151 RATED LIFE COMMUNITIES (I.E. CONTINUING CARE RETIREMENT COMMUNITIES) ONLY 60 WERE RATED 'BBB+ OR HIGHER. IN MARCH 2019, THE PINES BORROWED $46 MILLION IN TAX EXEMPT PUBLIC DEBT AND ARRANGED TO BORROW AN ADDITIONAL $12 MILLION IN TAX EXEMPT BANK DEBT. THE PINES' INVESTMENT BANKING FIRM (ZIEGLER) ESTIMATES THAT THE PINES' "BBB+" CREDIT RATING RESULTED IN A COST OF BORROWING THAT WAS 0.65% LOWER THAN IF THE TRANSACTION WERE NON-RATED, RESULTING IN A GROSS CASH FLOW SAVINGS OF $9,768,326. IN ADDITION, THE "BBB+" CREDIT RATING ENABLED THE PINES TO BORROW FUNDS WITHOUT MAINTAINING A DEBT SERVICE RESERVE FUND, WHICH REDUCED THE BORROWING NEED BY APPROXIMATELY $3.5 MILLION. IN SUMMARY, THE PINES PROFITABILITY (REFLECTED IN THE 8.9% OPERATING MARGIN FOR 2018) IS BEING USED TO HELP FINANCE IMPROVEMENTS IN THE PINES' FACILITIES AND SERVICES IN 2019 AND BEYOND. MECKLENBURG REAL ESTATE HOLDINGS LLC PO BOX 33429 CHARLOTTE NC 28233 471154878 REAL ESTATE INVESTMENTS NC 183806 THE PINES AT DAVIDSON INC