2011-2010 june 30 florida bar financial statement

8/10/2019 2011-2010 June 30 Florida Bar Financial Statement

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The Florida Bar and Subsidiaries

Financial Statements and

Supplemental

Information

June

30, 2011

and

2010


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Carr

Ritga

I .r_.

UC

1713

Mahan

Drive

Tallahassee.

L 32308

850) 878-8777

850) 878-2344 (fax)

www.cricpa.com

Independent Auditors Report

Board of Governors

The Florida Bar

Tallahassee, Florida

e

have audited the accompanying consolidated financial statements

of

the business

type activities of The Florida Bar and Subsidiaries (The Florida Bar) as of and for the

years ended June 30,

2011

and 2010, which comprise The Florida Bar s basic financial

statements as listed in the table of contents. These financial statements are the

responsibility of The Florida Bar s management. Our responsibility is to express an

opinion on these financial statements based on our audits.

e conducted our audits in accordance with auditing standards generally accepted in the

United States

of

America and the standards applicable to financial audits contained in

Government Auditing Standards issued by the Comptroller General of the United States.

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

assurance about whether the financial statements are free

of

material misstatement. An

audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting

principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audits provide a reasonable

basis for our opinion.

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

material respects, the financial position of the business-type activities of The Florida Bar

and Subsidiaries as of June 30, 2011 and 2010, and the changes in financial position and

cash flows thereof for the years then ended in conformity with accounting principles

generally accepted in the United States of America.

In accordance with Government Auditing Standards we have also issued our report dated

November 9, 2011, on our consideration of The Florida Bar and Subsidiaries internal

control over financial reporting and on our tests

of

its compliance with certain provisions

of

laws, regulations, contracts, and grant agreements and other matters. The purpose

of

that report is to describe the scope

of

our testing

of

internal control over financial reporting

and compliance and the results of that testing, and not to provide an opinion on the

internal control over financial reporting or on compliance. That report is an integral part of

an audit performed in accordance with Government Auditing Standards and should be

considered in assessing the results

of

our audit.


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Board of Governors

The Florida Bar

Page 2

Accounting principles generally accepted in the United States of America require that the

management s discussion and analysis on pages 3 through 7 be presented to supplement the

basic financial statements. Such information, although not a part of the basic financial

statements, is required

by

the Governmental Accounting Standards Board, who considers it to

be an essential part o financial reporting for placing the basic financial statements in an

appropriate operational, economic, or historical context. We have applied certain limited

procedures to the required supplementary information in accordance with auditing standards

generally accepted in the United States o America, which consisted of inquiries o management

about the methods of preparing the information and comparing the information for consistency

with management s responses to our inquiries, the basic financial statements, and other

knowledge we obtained during our audit of the basic financial statements. We do not express an

opinion or provide any assurance on the information because the limited procedures do not

provide us with sufficient evidence to express an opinion or provide any assurance.

Our audits were conducted for the purpose of forming an opinion on the consolidated financial

statements that collectively comprise The Florida Bar and Subsidiaries basic financial

statements. The supplementary information as listed in the table of contents, is presented for

the purposes of additional analysis and is not a required part of the basic consolidated financial

statements of The Florida Bar. Such information is the responsibility

o

management and was

derived from and relates directly to the underlying accounting and other records used to prepare

the financial statements. The information has been subjected to the auditing procedures

applied in the audit of the basic 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 financial statements or to the 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 financial statements as a whole.

L ~ ~ I-- C

~ ~ r r ~

November 9

2011


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Management s Discussion and Analysis


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Management's Discussion and Analysis

The Florida Bar is the statewide professional and regulatory organization for lawyers with more

than 91,000 members. Headquartered in Tallahassee, The Florida Bar

is

a unified state bar by

rule

o

the Supreme Court

o

Florida. Membership in The Florida Bar is a necessary component

o

Supreme Court

o

Florida regulation

o

all lawyers licensed to practice law

in

Florida (Article IV

Section 15, Florida Constitution). The foundation for the organization is built on a philosophy

o

equity and ethics. Through its programs and services, the Bar supports this philosophy with four

pillars that function as the mission o The Florida Bar: providing public service, protecting rights,

promoting professionalism and pursuing justice.

Overview

o

the Financial Statements

This annual report consists

o

three parts - management's discussion and analysis, the basic

consolidated financial statements, and an optional section that presents supplementary

information. The supplementary information includes consolidating statements and comparisons

o

actual results to budgeted results. The basic consolidated financial statements present the

consolidated financial position, results of operations, and cash flows

o

the Florida Bar and its

subsidiaries. The Florida Bar performs tvv overall activities as the statewide regulator

o

the

practice

o

law and the professional association of lawyers. Its activities are accounted for as a

proprietary type enterprise fund because it charges fees to provide its services similar to a

business enterprise.

The Statement o

Net Assets includes all

o

The Florida Bar's assets and liabilities. The net assets

are the difference between The Florida Bar's assets and liabilities. The Statement o Revenues,

Expenses, and Changes in Net Assets include all

o

The Florida Bar's revenues and expenses

regardless o when the cash is received or paid. The change in net assets is one way to measure

The Florida Bar's financial health or position. A Statement

o

Cash Flows provides additional

information regarding the change in The Florida Bar's cash position.

Summary

o

Operations

At June 30 2011 and 2010, The Florida Bar had 71,075,955 and 64,135,939, respectively in

total assets. f this amount 60,432,750 and 53,623,921 was held in cash and investments and

9,555,406 and 7,564,589 was invested in capital assets at June 30, 2011 and 2010,

respectively. The primary liability at June 30,

2011

and 2010 was deferred revenue

o

11,375,450

and 10,981,981, respectively, resulting from advance collection

o

member fees and prepayments

for Continuing Legal Education registrations. Our net assets were 51,783,307 and 44,428,657

at June 30,2011 and 2010, respectively.

These amounts are in line with the prior year's balances given the current changes in net assets.

The original operating budgets for the General Fund (excluding the wholly-owned subsidiary and

controlled entities) for the years ended June 30, 2011 and 2010 approved by the Florida Supreme

Court, planned on an increase

in

net assets

o

340,381 and 21,760, respectively. After Board

o

Governor amendments, the planned decrease became ( 1,128,194) and ( 636,885), respectively.

See the Independent Auditors' Report.


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The Florida ar and Subsidiaries


General Fund actual operations resulted in a change in net assets of 8,481,783 and 6,489,783,

respectively. The increase in net assets for both years resulted primarily from the effects of a

favorable investment climate. Included in the supplemental information is an actual to budget

comparison for each department.

For the year ended June 30,

2011

and 2010, The Florida Bar's budget funded most departments at

a continuation level.

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

CONDENSED CONSOUDATED STATEMENTS

OF NET

ASSETS

June 30 2011

2010

Change

Assets

Current assets

61,520,549 54,878,359 6,642,190

Capital assets, net

9,555,406

7,564,589 1,990,817

Restricted assets

1,692,991 (1,692,991 )

Total assets

71,075,955 64,135,939

6,940,016

Liabilities

Current liabilities

16,975,110

15,599,098

1,376,012

Other liabilities

2,317,538 4,108,184 1 ,790,646)

Total liabilities

19,292,648

19,707,282

(414,634)

Net assets

Invested in capital assets, net of related debt

9,555,406

7,564,589 1,990,817

Restricted for scholarships

45,921 38,682

7,239

Unrestricted

42,181,980 36,825,386

5,356,594

Total net assets

51,783,307 44,428,657

7,354,650

Total liabilities and net assets

71,075,955

64,135,939

6,940,016


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CONDENSED CONSOLIDATED STATEMENTS OF NET ASSETS

une

30

2010 2009 Change

Assets

Current assets 54,878,359

46,351,133 8,527,226

Capital assets, net 7,564,589 7,226,645

337,944

Restricted assets 1,692,991

1,692,991

Total assets 64,135,939

55,270,769

8,865,170

Liabilities

Current liabilities 15,599,098

11,922,237

3,676,861

Other liabilities 4,108,184

4,100,174

8,010

Total liabilities 19,707,282

16,022,411

3,684,871

Net assets

Invested in capital assets, net

of

related debt 7,564,589

5,775,010

1,789,579

Restricted for scholarships 38,682

32,405

6,277

Unrestricted

36,825,386

33,440,943

3,384,443

Total net assets 44,428,657

39,248,358

5,180,299


64,135,939

55,270,769

8,865,170

For more detailed information, see the accompanying Consolidated Statements of Net Assets.

CONDENSED CONSOLIDATED STATEMENTS OF REVENUES, EXPENSES

ND

CHANGES IN

NET

ASSETS

une 30

2011

2010 Change

Operating revenues

42,477,814 4 ,356,998

1,120,816

Operating expenses

(40,982,582) (40,021,048)

(961,534)

Net operating revenues

1,495,232 1,335,950 159,282

Non-operating revenues

5,917,596

3,925,155

1,992,441

Non-operating expenses

(58,178) (80,806) 22,628

Net non-operating revenues

5,859,418

3,844,349

2,015,069

(Decrease) Increase in net assets

7,354,650

5,180,299 2,174,351

Net assets, beginning

44,428,657 39,248,358

5,180,299

Net assets, ending

51,783,307 44,428,657 7,354,650

See the Independent Auditors Report.

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CONDENSED CONSOLIDATED STATEMENTS OF REVENUES, EXPENSES

AND CHANGES IN N T ASSETS

une 3D

2010 2009

Change

Operating revenues

$

41,356,998

$

41,102,989 $ 254,009

Operating expenses

(40,021,048) (41,761,770) 1,740,722

Net operating revenues

1,335,950

(658,781)

1,994,731

Non-operating revenues

3,925,155 3,925,155

Non-operating expenses

(80,806) (4,578,366) 4,497,560

Net non-operating revenues 3,844,349

(4,578,366) 8,422,715

(Decrease) Increase in net assets

5,180,299 (5,237,147)

10,417,446

Net assets, beginning

39,248,358

44,485,506

(5,237,148)

Net assets, ending $

44,428,657 $ 39,248,359 $

5,180,298

For more detailed information, see the accompanying Consolidated Statements

of

Revenues,

Expenses, and Changes in Net Assets.

CAPITAL ASSETS

The Florida Bar had invested the following in Capital Assets:

une

3D

2011

2010 Change

Land

1,306,690

$ 1,306,690

$

Building and improvements

10,728,573

9,615,208

1,113,365

Landscaping and parking

120,318 120,318

Equipment and furnishings

4,684,035

4,562,368

121,667

Software

1,680,573

1,231,757

448,816

Software in development

817,692 142,237

675,455

Construction in progress

14,683 60,763 (46,080)

Total, prior to depreciation

19,352,564 17,039,341 2,313,223

Accumulated depreciation

(9,797,158)

(9,474,752)

(322,406)

Net capital assets

9,555,406

$

7,564,589

$

1,990,817


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CAPITAL

ASSETS

une 3D

2010 2009

Change

Land

1,306,690 1,306,690

Building and improvements

9,615,208 9,630,046 (14,838)


120,318 120,318


4,562,368 4,792,884

(230,516)

Software

1,231,757

491,534 740,223

Software n

development 142,237

142,237

Construction

n

progress 60,763

6,243

54,520

Total, prior to depreciation

17,039,341 16,347,715 691,626


(9,474,752)

(9,121,070)

(353,682)

Net capital assets

7,564,589 7,226,645 337,944

Presently, The Florida Bar has no plans to significantly alter its investment in capital assets

other than to continue to add costs

of

developed software.

Future Financial Plan

The Florida Bar was created by the Supreme Court

of

Florida to assist the Supreme Court in

regulating the practice

of

law in Florida. The Florida Bar is primarily funded through payments

by lawyers

of

their required annual fees, sales

of

continuing education programs to lawyers, and

other fees for regulation

of

attorneys

or

sales

of

legal related products and services. There is no

plan to materially change these revenue streams

for

the next two years. Accordingly, there are

no present plans to materially increase the scope

or

nature

of

the services provided to the

citizens of Florida and the lawyers authorized to serve them.

See the Independent Auditors Report.

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inancial Statements


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Consolidated Statements of Net Assets

une 30

Assets

2011

2010

Current assets

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Prepaid expenses and

other

assets

Total current assets

14,502,362

45,930,388

494,844

592,955

61,520,549

16,539,915

37,084,006

678,105

576,333

54,878,359

Capital assets, net

Land

Buildings and improvements



Software

Software development in progress



Total capital assets, net

1,306,690

10,728,573

120,318

4,684,035

1,680,573

817,692

14,683

9,797,158)

9,555,406

1,306,690

9,615,208

120,318

4,562,368

1,231,757

142,237

60,763

(9,474,752)

7,564,589

Restricted assets

Client Security Fund recovery receivable

1,692,991

Total assets

71,075,955 64,135,939

Liabilities and Net Assets

Current liabilities

Accounts payable

Client Security Fund claims payable

Accrued expenses

Deferred revenues

Security deposits

Total current liabilities

1,745,073

2,568,189

1,237,482

11,375,450

48,916

16,975,110

1,185,251

2,245,484

1,137,469

10,981,981

48,913

15,599,098

Non-current liabilities

Compensated absences payable

Deferred revenue for CSF recovery

Total non-current liabilities

2,317,538

2,317,538

2,415,193

1,692,991

4,108,184

Total liabilities

19,292,648

19,707,282

Net assets

Invested in capital assets, net

of

related

de t


Unrestricted

Total net assets

9,555,406

45,921

42,181,980

51,783,307

7,564,589

38,682

36,825,386

44,428,657


71,075,955

64,135,939

See accompanying notes to the consolidated financial statements.

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The Florida

ar

and

Subsidiaries

Consolidated Statements

of

Revenues, Expenses and Changes in Net Assets

Years ended June 30 2011

2010

Operating revenues

Annual fees

23,094,112

22,559,757

Other fees from members 6,253,705

6,123,246

Sales

of

products and services

9,512,668

9,607,272

Advertising 1,730,692

1,807,323

Young lawyers 903,972

691,921

Grants and other 982,665

567,479

Total operating revenues

42,477,814

41,356,998

Operating expenses

Regulation

of

the practice

of

law

Cost

of

products and services provided to members

Unauthorized practice

of

law

Public service programs

Communications with members and the public

Administration

Legislation

Young lawyers

Depreciation and amortization

Other programs and costs

Total operating expenses

16,534,580

10,218,814

1,440,549

3,609,484

3,589,399

2,407,751

720,736

685,739

931,560

843,970

40,982,582

16,009,178

10,622,494

1,396,252

3,298,382

3,995,938

2,050,296

428,137

576,058

864,894

779,419

40,021,048

Operating income

1,495,232

1,335,950

Non-operating revenues expenses)

Investment earnings

Interest expense

Loss on disposal of capital assets

Total non-operating revenues expenses)

5,917,596

(58,178)

5,859,418

3,925,155

35,855)

44,951 )

3,844,349

Change in net assets 7,354,650

5,180,299

Total net assets, beginning of year

44,428,657

39,248,358

Total net assets, end of year

51,783,307

44,428,657


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The Florida ar and Subsidiaries

Consolidated Statements

of

Cash Flows

Years ended une

30

2011 2010

Cash flows from operating activities:

Receipts from members, customers and other sources

Payments to employees, suppliers and other vendors

Net cash provided by operating activities

43,098,254

39,230,201 )

3,868,053

47,352,268

(40,343,225)

7,009,043

Cash

flows from

non-capital and related financing activities:

Reduction of debt

Interest paid

Net cash (used in) non-capital and related financing activities

(1,451,635)

(35,855)

(1,487,490)

Cash flows

from

capital and related

financing

activities:

Acquisition

of

capital assets

Net cash (used in) capital and related financing activities

2,976,820)

2,976,820)

(1,247,789)

(1,247,789)

Cash flows from investing activities:

Redemption of investments

Purchase of investments

Investment income, net

Net cash (used in) investing activities

29,550,168

35,476,755)

2,997,801

2,928,786)

18,175,941

(23,744,976)

3,925,155

(1,643,880)

(Decrease) increase in cash and cash equivalents:

2,037,553)

2,629,884

Cash and cash equivalents, beginning of year

16,539,915

13,910,031

Cash and cash equivalents, end of year 14,502,362

16,539,915


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The Florida

ar

and Subsidiaries

Consolidated Statements of Cash Flows Continued)

Years ended June 30

2011

2010

Reconciliation

of

operating income

to

net cash

provided y operating activities:

Operating income

1,495,232

1,335,950

Adjustments to reconcile operating income to net cash

provided by operating activities:

Depreciation and amortization 931,560

864,894

Increase) decrease in:


179,526

110,939)

Prepaid expenses and other assets (16,622) 217,368)

CSF recovery receivable

1,692,991

Increase decrease) in:

Accounts payable

559,822

483,613)

Claims payable

322,705 2,165,838

Accrued expenses

100,013

135,134

Deferred revenues

393,469

3,311,130

Deferred revenues - CSF recovery

(1,692,991)

Security deposits

3 7

Compensated absenses payable

(97,655)

8,010

Net cash provided by operating activities

3,868,053 7,009,043

Non-cash investing, capital, and financing acitivities

Chan e in the fair value

of

investments

2,294,078

2,502,176

Loss on disposal

of

assets

58,178

44,951

Supplemental information

Cash paid

for

interest

-

35,855


-


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Notes to Consolidated Financial Statements

NOTE 1 - NATURE OF BUSINESS

The Florida Bar and Subsidiaries (The Florida Bar) is the statewide professional organization

of

lawyers. It serves as an advocate and intermediary for attorneys, the court and the public. The

Florida Bar was established as a unified state bar by rule of the Supreme Court of Florida. The

Florida Bar regulates lawyers in Florida, investigates the unauthorized practice of law, offers

continuing legal education, publishes law journals and offers other member services.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Florida Bar is a unified state bar organized as an arm of the Supreme Court of the State of

Florida. It is considered a govemmental entity because it was established

by

and has the

potential to be dissolved

by

the Supreme Court

of

Florida. Therefore, The Florida Bar adopted the

provisions of Statement No. 34 ("Statement No. 34") of the Governmental Accounting Standards

Board (GASB) IIBasic Financial Statements - and Management's Discussion nd Analysis - for

State and Local Governments, as amended by Statement No. 37.

In evaluating The Florida Bar as a reporting entity, management has considered all potential

component units for which The Florida Bar may be financially accountable and if found to be

financially accountable, be required to be included in The Florida Bar's financial statements. The

Florida Bar is financially accountable if it appoints a voting majority

of

an organization's governing

board and (1) it is able to impose its will on an organization or (2) there is a potential for an

organization to provide specific financial benefit to or impose specific financial burden on The

Florida Bar. Additionally, The Florida Bar

is required to consider other organizations for which the

nature and significance of

their relationship with The Florida Bar are such that exclusion would

cause the reporting entity's financial statements to be misleading or incomplete. Management's

analysis has disclosed no component units that should be included in The Florida Bar's financial

statements.

Basis ofPresentation

The Florida Bar is accounted for as a proprietary type enterprise fund. The Florida Bar applies all

applicable pronouncements of the Financial Accounting Standards Board (FASB) issued on or

before November 30 1989 that are not in conflict with applicable GASB pronouncements.

Enterprise funds are used to account for activities that are financed and operated in a manner

similar to private business enterprises: (1) where the costs

of

providing goods and services to the

general public on a continuing basis are to be financed through user charges; or (2) where the

periodic determination

of

net income is considered appropriate. Proprietary funds distinguish

operating revenues and expenses from non-operating items. Operating revenues and expenses

generally result from providing goods and services in connection with a proprietary fund's ongoing

operations. Operating expenses for The Florida Bar include the costs

of

personnel, contractual

services, supplies, utilities, repairs and maintenance, and depreciation on capital assets. All

revenues and expenses not meeting this definition are reported as non-operating revenues and

expenses.

-


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Notes

to

Consolidated Financial Statements

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

asis of ccounting

Basis of accounting refers to when revenues and expenses are recognized in the accounts and

reported in the financial statements. These financial statements have been prepared on the

accrual basis of accounting in accordance with accounting principles generally accepted in the

United States of America. Under this method, revenues are recognized when they are eamed and

expenses are recognized when they are incurred. The measurement focus of proprietary fund

types is on a flow of economic resources method, which emphasizes the determination

of

net

income, financial position, and cash flow. All fund assets and liabilities, current and non-current,

are accounted for in the Consolidated Statements of Net Assets.

Cash

and

Cash Equivalents

All demand deposit accounts and short-term highly liquid investments with original maturities

of

three months or less are reported as cash equivalents.

Investments

Investments are reported at fair values. Fair values for securities traded on national or intemational

exchanges or over-the-counter are valued at quoted market prices. Fair values of securities not

traded on an exchange or over-the-counter are estimated based on the net asset values provided

by the investee calculated in accordance with FASB Topic 946.

Capital ssets

Capital assets are stated at cost less accumulated depreciation. The value of software developed

for The Florida Bar's use includes all direct and indirect costs that are related to development

activities. The cost of capital assets is depreciated over the estimated useful lives of the related

assets, ranging from 5 to 40 years, using the straight-line method. When capital assets are retired

or otherwise disposed of, the costs and related accumulated depreciation are removed from the

accounts and any resulting gain or loss is reflected in the Consolidated Statements

of

Revenues,

Expenses and Changes in Net Assets, in the period of disposal.

Claims Payable

The Florida Bar voluntarily created the Clients' Security Fund (the Fund) to provide possible

compensation to people who have suffered financial losses due to misappropriation

of

funds by

errant Florida Bar members. The Fund is financed by 25

of

the annual fees due from each

Florida Bar member who is in good-standing (including inactive members). Claims payable

represent amounts that have been approved for payment from the Fund.

Deferred Revenues

Deferred revenues consist primarily

of

membership fees collected in advance, prepaid advertising

and prepaid legal education courses.

- 3-


18/55

The Florida

Bar

and Subsidiaries


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

llocation ofExpenses

The costs

of

providing the various programs, services, and other activities have been summarized

on a functional basis in the Consolidated Statement

of

Revenues, Expenses and Changes in Net

Assets. Accordingly, certain costs have been allocated among the programs and supporting

services benefited.

Principles ofConsolidation

The accompanying consolidated financial statements include the accounts

of

The Florida Bar and

its wholly-owned subsidiary, The Florida Bar Building Corporation, and its other controlled entities,

Florida Lawyers Association for the Maintenance

of

Excellence, Inc., and The Florida Attorneys

Charitable Trust. All significant intercompany transactions and accounts have been eliminated in

consolidation.

Income Taxes

The Florida Bar is an administrative agency

of

the Supreme Court and is not subject to federal or

state income tax. The Florida Bar Building Corporation, Florida Lawyers Association for the

Maintenance

of

Excellence, Inc., and The Florida Attorneys Charitable Trust have been granted

exemption from federal and state income taxes except on unrelated business income under

Sections 501 (c)(25), 501(c)(6), and

501

(c)(3), respectively,

of

the Internal Revenue Code.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted

in the United States

of

America requires management to make estimates and assumptions that

affect the reported amounts

of

assets and liabilities and disclosure

of

contingent assets and

liabilities at the date

of

the financial statements and the reported amounts

of

revenues and

expenses during the reporting period. Actual results could differ from those estimates.

Concentration

The Florida Bar receives the majority

of

its revenue from lawyers licensed to practice in the State

of

Florida.

Net ssets

Net assets are categorized as invested in capital assets, restricted for scholarships, and

undesignated. Invested in capital assets is intended to re flect the portion

of

net assets that are

associated with non-liquid, capital assets. Restricted for scholarships consists

of

monies restricted

for the annual G Kirk Haas fund scholarships. Undesignated assets consist

of

all other assets not

included in the previous categories.

- 4-


19/55

.



NOTE 3 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents are subject to custodial credit risk. Custodial credit risk is the risk that

in

the event

of

a bank or other counterparty failure, The Florida Bar's cash and cash equivalents

may not be returned. The Florida Bar's policy with respect to custodial credit risk is that The Florida

Bar will only maintain demand deposit accounts with financial institutions in which management

believes the risk to be limited because the financial institutions are large with strong financial

positions.

Cash and cash equivalents are held at three financial institutions. The operating cash balance held

in demand deposit accounts was 6,054,449 and additional cash and money market funds was

8,447,913 at June

30 2011.

Operating cash in the amount

of

5,804,686 was insured by the

Federal Deposit Insurance Corporation (FDIC) as of June 30, 2 11 and 249,763 was uninsured.

The additional cash and money market funds are held at a financial institution insured by the

Securities Investor Protection Corporation (SIPC). The SIPC provides up to 250,000 in coverage

for uninvested cash balances as

of

June 30,2011.

NOTE 4 - INVESTMENTS

nvestment Objectives nd Policies

Investments are made for the sole interest and exclusive purpose of providing investment

returns for The Florida Bar. The Florida Bar's investment objectives and policies are achieved

through a short-term account portfolio and a long-term account portfolio.

Investment guidelines for both portfolios are defined by written Investment Policies (the Policies)

approved by the Florida Bar's Board

of

Governors. The Policies establish diversified investment

strategies, both by types

of

investment and by manager, minimum credit qualities, and duration

limits. An Investment Committee has oversight, within Policy limits, to implement and direct the

investment strategies. The policies are reviewed at least annually

for

any adjustments required

due to changes

or

developments within the investment markets that may provide enhanced

investment and/or risk management opportunities, and recommendations for changes are

submitted for approval by the Board

of

Governors.

The purpose

of

the short-term portfolio is to provide

for

The Florida Bar's short-term working

capital needs. The short-term portfolio possesses a short-term time horizon (one to three years)

and within this horizon, the primary objectives are to preserve capital and provide liquidity for

short-term cash flow needs and to achieve attractive short-term yields consistent with

preservation

of

capital.

The purpose

of

the long-term investment portfolio is to provide for The Florida Bar's operating

needs and to fund The Florida Bar's programs both today and into the future. The long-term

portfolio possesses an intermediate to long-term horizon (five to seven years) and within this

horizon, the primary objectives are to provide long-term growth

of

capital and income. The

secondary objectives are high current income and liquidity.

-15


20/55

.

The Florida

Bar

and Subsidiaries

Notes

to


NOTE 4 - INVESTMENTS (CONTINUED)

Investment Objectives nd Policies

The Policies require the risk adjusted returns

of

an investment over a full market cycle to rank in

the top

500/0 of

universal comparisons with similar objectives and the investment should

outperform the target policy index. The Policies establish asset allocation guidelines with regard

to acceptable asset classes and prohibited investments, the overall targeted asset mix, and the

representative indices for each asset class. The asset allocation guidelines as compared to

actual investment balances were as follows as of June 30, 2011 :

Short Term

Target Representative

Asset

Classes

Minimum

Mix

Maximum Actual

Index

Short-Term Fixed income

35.00/0 50.00/0 65.00/0 60.00/0

Barclay's Capital Intermediate Government/Credit Bond Index

Cash and

Equivalents

35.00/0 50.00/0 65.00/0

40.0

0

Citigroup

U.S. gO-Day

Treasury

Bills Index

Long Term

Target

Representative

Asset Classes

Minimum

Mix

Maximum Actual

Index

U.S. Large Cap Equity 9.0% 14.0% 19.0%

19.0%

Standard

Poo(s

500 Index

U.S. Mid Cap Equity

0.0% 2.0%

7.0%

3.0%

Russell

Mid Cap

Index

U.S.

Sma

Cap

Equity

0.0% 2.0% 7.0%

3.0%

RusseH 2000 Index

International Equity

10.0% 15.0% 20.0% 11.0%

MSCI EAFE Index

Inri SmaU Cap Equity

0.0%

2.0% 7.0%

2.0%

MSCI EAFE Small Cap Index

Emerging

Markets Equity

0.0% 5.0% 10.0% 9.0% MSCI Emerging Markets

ndex

Commodities 0.0% 3.0%

8.0%

6.0%

Dow Jones

UBS Commodity Index

RElTs

0.0% 3.0% 8.0% 4.0%

NAREIT Equity

Index

or Dow Jones

Global

Seled REIT

Inflation-linked Securities

0.0%

3.0%

8.0% 4.0%

Barclays

Capital

U.S. TIPS

Index

Emerging

Market

Fixed

Income

0.0% 3.0%

8.0% 3.0%

JP Morgan Emerging Markets Bond Index

U.S. Fixed Income

20.3% 29.0%

37.7%

21.0%

Barclay's Capital Intermediate

GovtlCredit

Bond Index

U.S. High Yield Fixed

Income

0.00% 4.00% 9.00% 5.00%

Barclay's Capital U.S. Corporate High Yield Index

Hedge Funds

0.00%

6.00% 9.00%

5.00%

HFRI

Conservative Index

or Hedge

Fund of

Funds

Index

Managed

Futures 0.00% 4.00% 7.00% 4.00% Barclay's CTA Index

Cash

Equivalents 0.0% 5.0% 10.0% 1.0%

Citigroup U.S. 9O Day Treasury Bills

Performance and compliance reports are submitted to the Investment Committee quarterly. The

Florida Bar employs an investment consultant who provides performance and compliance

reporting at both the portfolio level and by individual investment manager.

-

6-


21/55


Notes

to



Investments

At June 30, The Florida Bar's investment balances were as follows:

June 30

US Treasuries

Federal Agencies

Municipal Bonds

Corporate Bonds &Other Fixed Income

Mutual Funds - debt securities (ST)

Mutual Funds - equity securities

Equities

Managed Futures

Hedge Funds

Total investments

2011

2,969,136

1,868,073

597,718

3,140,379

13,524,632

4,075,142

16,374,713

1,334,948

2,045,647

45,930,388

2010

3,117,964

2,339,271

1,112,604

4,518,691

8,177,376

3,217,164

14,600,936

37,084,006

The Florida Bar's investment securities are exposed to various risks, such as custodial credit

risk, interest rate risk, credit quality risk, foreign currency risk, concentration

o

credit risk, and

market conditions. Due to the level

o

risk associated with certain investment securities, it is at

least reasonably possible that changes in the value o investment securities will occur in the

near term and that such changes could materially affect investment balances.

ustodial redit Risk

Custodial credit risk is the risk that in the event

o

the failure

o

the custodial entity, The Florida

Bar's deposits may not be returned to it. The Policies state that The Florida Bar will only hold

investment securities that are insured

or

registered and held by The Florida Bar,

or

its

designated agent, in the name

o

The Florida Bar. Investments held through its agent, Morgan

Stanley Smith Barney, LLC have Securities Investor Protection Corporation (SIPC) coverage up

to $500,000 per customer for cash and securities as

o

June 30, 2011

o

which $250,000 may

e

in uninvested cash. Morgan Stanley Smith Barney, LLC also has purchased Excess SIPC

protection above the SIPC limits. This excess coverage is subject to a firmwide cap

or

Morgan

Stanley

o

1 billion with no per-client limit for securities and a $1.9 million per-client limit for the

cash portion

o

any remaining shortfall. Investments in PIMCO mutual funds are held by a third

party trust company.

7-


22/55

The Florida

Bar

and Subsidiaries

Notes

to



Interest Rate Risk

Interest rate risk arises from investments in debt instruments and is defined as the risk that

changes in interest rates will adversely affect the fair value of an investment. The Florida Bar's

investments in U.S. Treasuries, federal agencies, municipal bonds, corporate bonds, and other

bonds are directly subject to interest rate risk. The interest rate risk is managed by requiring the

duration of the fixed income portfolio to average between plus or minus 200 0 of the duration of

the representative benchmark for the investment. As of June 30 2011, The Florida Bar's debt

investments had the following maturities:

Investment Matur ities (In Years)

Less than 1

June

3D Fair Value Year

1 5 Years

5

1

Years

Over 10 Years

US

Treasuries 2,969,136

-

922 212 1 574 716 472 208

Federal Agencies 1,868,073

133 927 1 652 591

81 555

Municipal Bonds

597,718

24 998

572 720

Corporate Bonds

&

Other Fixed

Income

3,140,379 260 659 2 354 000

525 720

Total

investments

8,575,306

419 584

5 501 523 2 181 991 472 208

The Florida Bar is not directly subject to interest rate risk for its investment in mutual funds that

purchase debt instruments, as The Florida Bar

is

able to sell their interest in these mutual funds

at will (subject to potential redemption fees). At June

30

2011, the weighted average life

reported

by

the mutual fund managers for the mutual funds invested

in

debt instruments was 2.7

to 6.8 years.

redit Quality Risk

The Policies require investments in fixed income debt securities to meet an average quality

rating of A or higher for the long-term portfolio and M or higher for the short-term portfolio by

either Standard Poor's, Moody's or Fitch Investors Service at the time of purchase.

Investments in corporate holdings must be rated investment grade or better by either Standard

Poor's, Moody's or Fitch Investors Service at the time of purchase.

In

the event a bond's

credit rating is downgraded to a level below investment grade by two of the three ratings

agencies, the Investment Manager must notify the Investment Committee and provide the

Committee with the Manager's outlook on the investment. The Investment Committee must

approve continuing to hold the downgraded investment. The Manager must regularly update

the committee on the downgraded investment's status.

- 18-


23/55

.

The Florida

Bar

and

Subsidiaries



As of June 30 2011, The Florida Bar holds three corporate debt securities with a total market

value of 54,709

in

the long term portfolio that have been downgraded below the investment

grade rating. The Investment Committee has approved continuing to hold these securities.

The Florida Bar's debt investments by rating at June 30

2011

are presented below:

Corporate

Mutual Funds

U.S.

Federal Municipal Bonds & Debt

Quality Rating

Treasuries Agencies

Bonds

Other Securities

Total

U.S. Government

Agencies

-

1 868 073

-

728 295

-

2 596 368

Aaa 2 969 136

208 886 905 970 4 083 992

Aa1

80 563 80 563

Aa2

182 401

43 749

226 150

Aa3

175 783

175 783

A1

67 229

37 629

104 858

A2

58 639 486 228

544 867

A3

320 563 320 563

Baa1 131 553 131 553

Baa2

243 501

243 501

Baa3

12 399

12 399

Below Investment

Grade

54 709

54 709

Unrated

13 524 632

13 524 632

Total

investments

2 969 136

1 868 073 597 718 3 140 379 13 524 632 22 099 938

Because mutual funds are listed and valued as a whole, not individual holdings, information

about specific ratings cannot be obtained however the mutual funds do have exposure to non

investment grade securities. Investments

in

mutual funds are with the understanding that the

investment policies stated in the mutual fund's prospectus supersedes the guidelines

established by The Florida Bar.

Foreign urrency Risk

Investments

in

international equity securities are limited to SEC-Registered, U.S. exchange

listed, U.S. dollar-denominated securities

in

foreign domiciled issuers. Investments in

international debt securities are limited to SEC-registered, U.S. dollar-denominated, U.S.

government backed securities issued

by

foreign governments. The Florida Bar invests

in

international securities through American Depository Receipts (ADRs). ADRs represent

investments in shares of foreign companies traded on the U.S. financial markets and are

denominated in U.S. dollars and, thus, are not exposed to foreign currency risk. Investments in

foreign currency-denominated government bonds, any type of foreign corporate bond, or any

- 9-


24/55

The Florida Bar and

Subsidiaries



other type

of

foreign currency are not allowed. Securities

of

foreign companies traded on

foreign stock exchanges may be purchased only with the written permission

of

The Florida Bar's

Investment Committee. Additionally, the investment policies approve the use

of

mutual funds,

which may include foreign securities, with the understanding that the investment policies stated

in the mutual fund's prospectus supersede the guidelines set forth in The Florida Bar's

investment policy.

oncentration

o

redit Risk

The Investment Policies require investments to be diversified such that there is not an undue

concentration in a single industry sector except for its Concentrated Portfolios. Investments in

equity securities are subject to a maximum

50 0

commitment at cost and 10

weighting at

market of the account's total market value for any individual security or single issuer.

Investments in fixed income securities are subject to no more than 5

%

of

the account's market

value invested in a single issue (at cost) or in direct obligations of a single issuer (at market)

with the exception of the U.S. Government and its agencies so long as any such government or

agency issue shall be backed with the full faith and credit of the U.S. Government. In addition,

no more than 150 0

of

the fixed income securities may be invested in mortgage backed or asset

backed securities of a single issuer, with the exception of those issued by the U.S. Government,

its agencies, or its sponsored agencies.

Investments in cash and cash equivalents are limited to no more than 100 0 of the account's

market value in a single issue (at cost), with the exception

of

issues backed by the U.S.

Government and its agencies and diversified money market funds.

Derivative Instruments

As

of

June 30, 2011, the Florida Bar's investment policy states that investments

in

options,

derivatives and financial futures are prohibited in separately managed accounts other than its

Alternative Investment assets. Additionally, the investment policy approves the use of mutual

funds, which may include derivative instruments, with the understanding that the investment

policies stated in the mutual fund's prospectus supersede the guidelines set forth in The Florida

Bar's investment policy.

NOTE 5 - ACCOUNTS RECEIVABLE, NET

The following is a summary

of

accounts receivable, net:

June

3D 2011

2010

Accounts receivable 519,744 703,005

Allowance for doubtful accounts

(24,900)

(24,900)

Accounts receivable, net 494,844

678,105

-

2 -


25/55

toO


Notes t Consolidated Financial Statements

NOTE 6 - CAPITAL ASSETS, NET

Capital assets

not

being depreciated:

Land

Software

development

n

progress


July 1, 2010

1,306,690

142,237

60,763

Additions

-

725,084

14,683

Deletions

June

30, 2011

-

1,306,690

(49,629) 817,692

(60,763) 14,683

Total capital assets not depreciated

1,509,690

739,767 (110,392)

2,139,065

Capital assets being depreciated:


Landscaping and

parking

Equipment

and furnishings

Software

Total capital assets

being

depreciated

9,615,208

120,318

4,562,368

1,231,757

15,529,651

1,113,365

788,999

448,816

2,351,180

(667,332)

(667,332)

10,728,573

120,318

4,684,035

1,680,573

17,213,499

Less

accumulated

depreciation for:

Buildings

and

improvements

Landscaping and

parking

Equipment

and furnishings

Software

(5,439,833)

(120,318)

(3,492,021 )

(422,580)

(344,702)

(428,280)

(158,578)

609,154

5,784,535)

120,318)

3,311,147)

581,158)

Total accumulated

depreciation

(9,474,752)

(931,560) 609,154

9,797,158)

Total capital assets being depreciated, net 6,054,899 1,419,620

(58,178) 7,416,341

Total capital

assets,

net 7,564,589 2,159,387 (168,570) 9,555,406

Depreciation expense for the years ended

June 30,

2011

and 2010 was 931,560 and

864,894, respectively.

NOTE 7 - LONG-TERM LIABILITIES

Compensated

bsences

Payable

Compensated absences payable consisted of the following:

une

30

2011

2010

Accrued vacation

1,333,310 1,447,838

Accrued sick leave

984,228 967,355

Total compensated absences

2,317,538

2,415,193

-

21


26/55


Notes

to


NOTE 7 - LONG-TERM LIABILITIES (CONTINUED)

Changes in Long Term Liabili ties

Additions

Changes in long-term liabilities are summarized as follows:

Balance

July

1,2010

Reductions

Balance

June 30, 2011

Accrued vacation

1,447,838 1,003,820 (1,118,348)

1,333,310

Accrued sick leave

967,355 643,235 (626,362)

984,228

Deferred revenue for CSF recovery

1,692,991 (1,692,991 )

Total long-term liabilities

4,108,184

1,647,055 (3,437,701) 2,317,538

NOTE 8 - REVENUE AND EXPENSE CLASSIFICATION

The significant revenue and expense accounts presented in the consolidated financial

statements are described as follows:

OtherFees from Members

Includes revenues from members other than annual fees such as advertising approval fees,

certification fees and section dues.

Sales

of

Products and Services

Includes revenues from sources such as Continuing Legal Education (CLE) registrations, sales

of

publications and meeting revenues.

Grants and Other

Includes grants received from The Florida Bar Foundation, cost recoveries from discipline

cases, rents received in The Bar Center Building Fund and other sources of revenue.

Regulation of the Practice of

aw

Includes expenses incurred

for

Lawyer Regulation, Lawyer Advertising, Ethics, Continuing Legal

Education Rules (CLER), Membership Records and Certi'fication.

Cost ofProducts

and

Services Provided

to

Members

Includes expenses such as the cost

of

CLE courses and publications, Legal Office Management

Advisory Services (LOMAS), voluntary member assistance programs, meetings, committee

activity and section activity.

-

-


27/55

0



NOTE 8 - REVENUE AND EXPENSE CLASSIFICATION (CONTINUED)

Communication

with

Members

nd

the Public

Includes the expenses of the Public Information Department and The Florida Bar Journal and

News

Administration

Includes board and officer expenses, the cost of the Executive Director's office, General

Counsel, Research, Planning and Evaluation, and liability and property insurance.

NOTE 9 - RETIREMENT PLANS

The Florida Bar sponsors a defined contribution pension plan, The Florida Bar Employees'

Pension Plan (the Plan), which is available to all salaried personnel having completed six

months of service. The Plan is administered by The Florida Bar Retirement Committee. The

Plan may be amended at any time by The Florida Bar. Employer contributions are discretionary

and are currently made for all eligible employees employed on December

31

based on a

formula which was 15 of covered compensation for the years ended June 30,

2011

and 2010,

respectively, and 4.30/0 on covered compensation exceeding 80 of the Social Security wage

base. The employer contributions are allocated to separate participant accounts and invested

by the Trustee in the funds selected by the employee from those offered by the Plan

Administrator. Participant accounts vest based on the following schedule:

Less than 3 years

0

3 4 years

40

4 - 5 years

60

5 - 6 years

80

greater than 6 years

100

Forfeited contributions are held in a separate account and are used to reduce future employer

contributions. The plan has been amended to comply with all applicable Federal tax

laYJ5.

The

pension contribution made equaled the contribution required during the years ended June 30,

2011

and 2010 for the Plan years ended December 31, 2010 and 2009 and was 2,236,636

and 2,133,962, respectively.

The Florida Bar also has a deferred compensation plan. The plan is for the benefit of all eligible

employees who elect to participate.

- 3-


28/55

.

The Florida

ar

and

Subsidiaries


NOTE

1

RETIREE POSTEMPLOYMENT HEALTH BENEFITS

Plan Description. The Florida Bar Retiree Health Plan (TFBRHP) is a single-employer defined

benefit healthcare plan administered by The Florida Bar. TFBRHP provides health insurance

benefits to eligible employees at early retirement, disability or full retirement. The Florida Bar

has the authority to establish and amend benefit provisions

of

TFBRHP. TFBRHP issues a

stand-alone financial report that includes the financial statements and required disclosures.

This report may be obtained by writing to The Florida Bar,

651

East Jefferson Street,

Tallahassee, Florida 32399-2300.

Funding Policy. TFBRHP is funded through contributions made by The Florida Bar. The

contribution requirements are established and may be amended by The Florida Bar. Currently,

there are no required contributions by active or retired employees. The required contribution

from the Florida Bar is based on an actuarially determined percentage of total active payroll. For

fiscal years ended June 30, 2011 and 2010, The Florida Bar contributed $85,511 and $268,980,

respectively, to the plan.

Annual OPES Cost and Net OPES Obligation. The Florida Bar's annual other postemployment

benefit (OPEB) cost (expense) is calculated based on the annual required contribution o the

employer ARC),

an amount actuarially determined in accordance with the parameters

of GASB

Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is

projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or

funding excess) over a period not to exceed thirty years. Based on the January

1,

2010,

actuarial valuation, the ARC is

0.58

of active payroll payable for the calendar years 2010

through 2011. The following table shows the components of The Florida Bar's annual OPEB

cost for the year, the amount actually contributed to the plan, and changes in The Florida Bar's

net OPEB obligation to TFBRHP:

Annual required contribution

$

85,511

Interest on net

OPES

obligation

Adjustments

to

annual required contribution

Annual

OPES

cost (expense)

$

85,511

Net

OPES

obligation - July

1, 2010

$

Annual

OPES

cost (expense) for

2011 85,511

Contributions made during

FY 2011

(85,511 )

Net

OPES

obligation - June

30,

2011

$

-

-


29/55



NOTE

1

- RETIREE POSTEMPLOYMENT HEALTH BENEFITS (CONTINUED)

The Florida Bar's annual OPEB cost, the percentage of annual OPEB cost contributed to 'the

plan, and the net OPEB obligation for 2011 and the preceding three years were as follows:

Annual Percentage of

Annual

OPEB Cost

NetOPEB

Fiscal Year Ended

OPEB

Cost

Contribtued Obligation

6/30/2009

58,733 90

0

k

6/30/2010

268,980

100

0

k

6/30/2011

85,511 100%

Funded Status and Funding Progress

As

of

January 1, 2010, the most recent actuarial

valuation date, the plan was 82 funded. The actuarial accrued liability for benefits was

calculated to be $1,584,797 and the actuarial value of the assets was $1,293,906, resulting in a

funding deficit of $290,891. The covered payroll (annual payroll of active employees covered by

the plan) was $14,557,008, and the ratio of the unfunded actuarial accrued liability (UAAL) to

the covered payroll was 2.00%.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and

assumptions about the probability of occurrence of events far into the future. Examples include

assumptions about future employment, mortality, and the healthcare cost trend. Amounts

determined regarding the funded status of the plan and the annual required contributions of the

employer are subject to continual revision as actual results are compared with past expectations

and

new

estimates are made about the future.

Actuarial Methods and Assumptions

Projections of benefits

for

financial reporting purposes are

based on the substantive plan (the plan as understood by the employer and the plan members)

and include the types

of

benefits provided at the time

of

each valuation and the historical pattern

of

sharing

of

benefit costs between the employer and plan members to that point. The actuarial

methods and assumptions used include techniques that are designed to reduce the effects of

short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent

with the long-term perspective of the calculations.

The projected unit credit actuarial cost method was used for the January 1, 2010 actuarial

valuation. The actuarial assumptions included a 7.50 investment rate of return, which is the

rate of the expected long-term investment returns on plan assets and an annual healthcare cost

trend rate of 10

%

initially, reduced by decrements to an ultimate rate of

5

in the year 2016 and

beyond. Both rates included a

3

in'flation assumption. TFBRI-IP holds plan assets in trust

solely to provide benefits to retirees and their beneficiaries. The UAAL is being amortized as a

level percentage

of

projected payroll on an open basis.

The

remaining amortization period

at

January 1, 2010 was 30 years.

- 25-


30/55

.



NOTE 10 - RETIREE POSTEMPLOYMENT HEALTH BENEFITS (CONTINUED)

REQUIRED SUPPLEMENTARY INFORMATION

Schedule ofFunding Progress

Actuarial

Accrued

Liability UAAL as a

Actuarial (AAL)

Unfunded

Percentage

Actuarial Value Projected AAL Funded

Covered of

Covered

Valuation

of Assets

Unit Credit (UAAL)

Ratio Payroll

Payroll

Date

(a) (b)

(b - a)

(alb) (c)

b

- a)

I c)

1/1/06

-

1,203,784 1,203,784

0.00

12,946,872 9.300/0

1/1/08 1,288,476 1,216,209 (72,267)

105.94

14,296,752 0.510/0

1/1/10 1,293,906 1,584,797 290,891

81.64

14,557,008 2.000/0

NOTE

11

- LEASES

The Florida Bar is the lessee

of

office space under operating leases expiring in various years

through the year 2018, with escalation clauses.

The Florida Bar also leases office space from its wholly-owned subsidiary,

The

Florida Bar

Building Corporation. The intercompany rental income and rental expense have been

eliminated in consolidation.

Future minimum rental payments to unrelated entities are as follows:

Years ending June 30

Amount

2012

692,742

2013

714,702

2014

737,079

2015

760,227

2016

711,048

Thereafter

821,147

Total minimum future rental payments

4,436,945

Total rental expense for the fiscal year ended June 30, 2011 and 2010 was 721,505 and

794,110, respectively.

The Florida Bar is also the lessor of certain office space in a building owned by The Florida Bar.

The space is rented to unrelated entities under operating leases expiring in various years

through the year 2014. Rental income for the fiscal years ended June 30, 2011 and 2010 was

279,790 and 272,966, respectively.

- 26-


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0


Notes

to


NOTE LEASES CONTINUED)

Future minimum rental receipts are as follows:

Years ending June 30

2012

2013

2014

Amount

286,784

293,818

73,894

Total minimum future rental receipts 654,496

NOTE 12 - CONTINGENCIES

The Florida Bar is involved in several actions as defendant and/or co-defendant. The majority

of the actions are expected to be settled with little or no financial impact to The Florida Bar. An

accurate assessment

of

any significant liability is not determinable although management of The

Florida Bar believes that the possibility

of

any significant liability arising from current litigation is

extremely remote.

NOTE 13 - COMMITMENTS

The Florida Bar has contracted with various hotels or convention centers to reserve facilities,

rooms, and food and beverage services for various meetings and seminars to be held through

fiscal year 2015. If The Florida Bar should choose to cancel the contracts, liquidating damages

would be due to the hotels or convention centers. Generally, liquidating damages are

graduated based on the time between cancellation and the scheduled arrival date of the

meeting and are calculated based on a percentage

of

anticipated revenues by the particular

hotel

or

convention center.

The following is a schedule

of

estimated liquidating damages that The Florida Bar would incur

should they cancel all the contracts as of June 30, 2011:

Estimated

liquidating

Event

damages

Annual

Meeting

718 855

Board of Governors

Meetings

77 966

General Meeting

125 491

Section Meetings

694 000

Continuing Legal Education Seminars 101 019

Total

commitment

1 717 331

- 27-


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The Florida

Bar

and

Subsidiaries


NOTE 4 - DESIGNATED FUND BALANCES

The Florida Bar has designated certain net assets to

be

used for specific program purposes. As

of June

30 2011

and 2010, the designated net assets were 15,009,718 and 12,645,267,

respectively.

NOTE 5 - RISK MANAGEMENT PROGRAMS

The Florida Bar is exposed to various risks of loss related to torts; theft of, damage to, and

destruction of assets; errors and omissions; injuries to employees; and natural disasters.

Workers' compensation, property, and general liability coverage are provided through

commercial insurance carriers. Management continuously reviews the limits of coverage and

believes that current coverage is adequate. There were

no

significant reductions

in

insurance

coverage from the previous year.

- 28-


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.

Supplementary nformation


34/55

The Florida ar and

Subsidiaries

Consolidating Statement of Net Assets

June 30 2011

General

Fund

Bar Center

Fund

Clients

Security

Fund

Certification

Fund

Sections

Fund

Eliminating

Entries

Total

All Funds

Assets

Current assets

Cash and cash equivalents

Short-term investments


Due from other funds

Prepaid expenses and other assets

Total u rrent assets

14,058,181

45,930,388

534,672

-

617,369

61,140,610

444,181

-

-

5,808,730

703

6,253,614

-

-

-

6,662,500

-

6,662,500

-

-

-

803,503

-

803,503

-

-

-

5,104,031

-

5,104,031

-

(39,828)

(18,378,764)

(25,117)

(18,443,709)

14,502,362

45,930,388

494,844

592,955

61,520,549

Capital assets, net

Land




Software

Software development in process

Construction

in

progress


Total capital assets, net

-

-

-

-

1,680,573

817,692

-

(581,158)

1,917,107

1,306,690

10,728,573

120,318

4,684,035

-

-

14,683

(9,216,000)

7,638,299

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

1,306,690

10,728,573

120,318

4,684,035

1,680,573

817,692

14,683

(9,797,158)

9,555,406

Restricted assets

Investment in The Florida Bar

Building Corporation

Total restricted assets

1,611,647

1,611,647

-

-

-

-

-

-

-

(1,611,647)

(1,611,647)

Total assets

64,669,364

13,891,913

6,662,500 803,503 5,104,031 (20,055,356)

71,075,955

See Independent Auditors Report.

29


35/55


Consolidating Statement

of

Net Assets

(Continued)

Clients'

General

Bar Center Security Certification Sections

Eliminating

Total

une

3D

2011

Fund

Fund

Fund

Fund Fund

Entries

All Funds

Liabilities and Net Assets

Current liabilities

Accounts payable

1,729,932

54,969 (39,828)

1,745,073

Client security fund claims payable

2,568,189

2,568,189

Accrued expenses 1,286,399

(48,917)

1,237,482

Due to other funds 18,329,847

(18,329,847)

Deferred revenues 11,375,450 11,375,450

Security deposits - J4 033 -

_ - - _

j25,117

48,916

Total current liabilities 32,721,628 129,002 2,568,189 - - (18,443,709) 16,975,110

Non-current liabilities

Compensated absences payable

2,317,538

2,317,538

Total non-current liablities

2,317,538

2,317,538

Total liabilities

35,039,166 129,002 2,568,189 (18,443,709) 19,292,648

Net assets

Invested

in

capital assets, net of related debt

1,917,107

7,638,299

9,555,406


45,921

45,921

Unrestricted

Designated 494,908

4,512,965

4,094,311

803,503

5,104,031

15,009,718

Undesignated 27,172,262 27,172,262

Contributed capital - 161J - - _ L611,64J)

Total net assets 29,630,198 13,762,911 4,094,311 803,503 5,104,031 (1,611,647)

51,783,307


64,669,364 13,891,913 6,662,500 803,503 5,104,031 (20,055,356) 71,075,955

See Independent Auditors' Report.

- 30-


36/55



of

Revenues, Expenses and Changes in Net Assets

Clients

General Bar

Center Security

certification Sections

Eliminating

Total

Year ended June 30 2 11

Fund Fund Fund Fund

Fund Entries

All

Funds

Operating revenues

Annual fees 23,094,112

23,094,112

Other fees from members 3,740,158

1,254,491

1,259,056

6,253,705

Sales of products and services 7,015,157

4,065

2,493,446

9,512,668

Advertising

1,730,692

1,730,692

Young lawyers

903,972 903,972

Grants and other

403,263 1,073,817 382,775 - - (877,190)

982,665

Total operating revenues

36,887,354 1,073,817 382,775 1,258,556 3,752,502 (877,190)

42 4n 814

Operating expenses

RegUlation

of

the practice of law

15,609,699

1,303,981

(379,100) 16,534,580

Cost of products and services provided to members 6,862,981

3,522,508 (166,675)

10,218,814

Unauthorized practice of law 1,476,405 (35,856)

1,440,549

Public service programs 610,263

3,014,042

(14,821) 3,609,484

Communication lJith members and the pUblic 3,678,742 (89,343) 3,589,399

Administration 2.467,681 (59,930) 2,407,751

Legislation 738,676

(17,940)

720,736

Young lawyers 702,807

(17,068)

685,739

Depreciation and amortization 154,843 772,982 3,538 197

931,560

Other programs and costs 516,320 _

424-,

- - - (96,457) 843,970

Total operating expenses 32,818,417 1 1 ~ ~ 9 3,Q17,?80_ 1 3 4 ~ 1 7 8 _ ~ 5 2 ~ 5 8 (877,190) 40,982,582

Operating

Income

(loss) 4,068,937

1l3,212) ~ ~ 3 4 ~ 5 1

_ _ 4 5 - - - - 6 2 ~

229,994

1,495,232

Non-operatlng revenues (expenses)

Investment earnings

Loss on disposal

of

capital assets

Total non-operating revenues

4,412,846

-

4,412,846

476,932

(58,178)

418,754

406,841

-

406,841

66,686

-

66,686

554,291

-

554,291

-

-

-

5,917,596

(58,178)

5,859,418

Change In net assets

8,481,783 295,482 (2,227,964) 21,064 784,285

7,354,650

Net assets. beginning

of

year

24,773,108 12,009,811

4,155,200

782,439 4,319,746 (1,611,647)

44,428,657

Transfers (to) from

other

funds (3,624,693)

1,457,618

2,167,075

Net assets. end of yea r 29,630,198 13,762,911 4,094,311 803,503 5,104,031 (1,611,647) 51,783,307


- 31


37/55



of

Cash Flows

Clients'

General Bar Center Security Certification

Sections Eliminating

Total

Year ended June 30 2011

Fund Fund Fund Fund

Fund Entries

All Funds

Cash flows from operating activities:

Receipts from members, customers and other sources 37,459,322 249,861 382,775 1,258,556 3,752,502 (4,762) 43,098,254

Payments to employees, suppliers and other vendors (32,380,674) (432,638) (789,616) (1,325,242) (4,306,793) 4,762 (39,230,201)

Net cash provided by (used in) operating activities 5,078,648 (182,717) (406,841) (66,686) (554,291) - 3,868,053

Cash flows from capital and related financing activities:

Acguisitionofcapitalassets

Net cash (used in) capital and related financing activi ies _

(1,929,713) (1,047,107)

_ 1 , 9 2 9 , ~ - - - - - h 0 4 7 , 1 0 7 )

-

-

_ _

-

-

-

-

-

-

(2,976,820)

(2,976,820)

Cash flows from investing activities:

Redemption of investments

Purchase of investments

Investment income, net

Net cash (used in) provided by investing activities

29,550,168 - -

(35,476,755) - -

1,493,051 476,932 406,841

_

4 4 3 3 ~

_476 932 4 6 8 ~

-

-

66,686

6 , 6 8 ~

-

-

554,291

554,291

-

-

-

-

29,550,168

(35,476,755)

2,997,801

(2,928,786)

(Decrease) in cash and cash equivalents

(1,284,601 ) (752,952)

(2,037,553)

Cash and cash equivalents, beginning of year

15,342,782 1,197,133

16,539,915

Cash and cash equivalents, end of year

14,058,181 444,181

14,502,362

See Independent Auditors' Report

- 32-


38/55


Consolidating Statement of Cash

Flows

(Continued)

Year ended June

30

2 11

General

Fund

Bar Center

Fund

Clients'

Security

Fund

Certification

Fund

Sections

Fund

Eliminating

Entries

Total

ll

Funds

Reconciliation

of

operating income (loss)

to

net cash provided

by (used in) operating activities:

Operating income (loss)

4,068,937 (123,272)

Adjustments to reconcile operating income (loss) to

net cash provided by (used in) operating activities

Depreciation and amortization

154,843 772,982

Transfers (to) from other funds

(3,624,693)

1.457,618

(Increase) decrease in:

Accounts receivable, net 178.499

Due from other funds

(2,281,574)

CSF recovery receivable

Prepaid expense and other assets

(17,506) 884

Increase (decrease) in:

Accounts payable

574,002 (9.418)

Claims payable

Accrued expenses

100,018

Deferred revenues

393.469

Deferred revenues - CSF recovery

Security deposits - 3

Due to other funds 3,348,734

Compensated absences payable (97,655)

(2,634,805) (45,622)

229,994

1.495,232

3,538

2,167,075

197

931,560

(3,538)

(261,816)

1,692,991

(197)

(21,064) (784,285)

4,762

3,348,739

179,526

1,692,991

(16,622)

322,705

(1,692,991)

-

-

-

-

-

-

(5)

(4,762)

(3,348,734)

-

559,822

322,705

100,013

393.469

(1,692,991 )

3

(97,655)

Net cash provided by (used in) operating activities 5,078,648 (182,777) (406,841)_ (66,686) (554,291)

-

3,868,053

Non-cash investing, capital and financing acti vities:

Change in the fair value

of

nvestments 2,294,078 2,294,078

Loss on disposal of assets -

58,178

58,178

See Independent Auditors'

Report

-


39/55

The Florida Bar and

Subsidiaries

General Fund Schedule of Budgeted and Actual Revenues and Expenses

Variance

Favorable

Year ended June 30 2011

Actual

Budgeted (Unfavorable)

Revenues - budgetary basis

Annual fees

Investments

Authorized house counsel

Lawyer regulation

Florida registered paralegal program

Professional enhancement program

Division director - ethics, UPL and professionalism

Unlicensed practice of law

Ethics

Lawyer advertising

Professionalism

Multijurisdictional practice

Meetings and conventions

Addressing services

Continuing legal education program

Continuing legal education rule

Course approval center

Public service programs

Foreign legal consultants

Law office management advisory services

Member benefits program

Legal publications

Section administration

Young lawyers division

Committtee expenses

Public information

Journal

ews

Directory

Building and grounds

Other revenue

G. Kirk Haas Fund (restricted revenue)

23,094,112

4,407,941

294,728

733,263

853,420

103,485

9,274

564,021

28,364

548,300

510,263

198,749

3,177,676

665,435

169,003

551,173

10,640

172,230

771,400

793,532

751,895

903,972

7,238

79,249

529,969

1,200,399

324

83,914

37,127

7,239

Total revenues - budgetary basis

41,258,335

23,102,230

(8,118)

1,500,000 2,907,941

273,250

21,478

739,729

(6,466)

639,376 214,044

113,525

(10,040)

153

(153)

2,538

6,736

275

(275)

549,850 14,171

31,279

(2,915)

550,000 (1,700)

600,140

(89,877)

198,749

3,772,946

(595,270)

622,128

43,307

144,634

24,369

645,050 (93,877)

9,675

965

190,891

(18,661 )

682,362 89,038

737,800 55,732

795,131

(43,236)

813,650

90,322

10,000

(2,762)

128,263

(49,014)

585,820

(55,851)

1,104,943

95,456

324

68,900

15,014

5,000

32,127

1,000

6,239

38,420,538

2,837,797


- 4-


40/55


General Fund Schedule

o

Budgeted and Actual Revenues and Expenses

Continued)

Variance

Favorable

Year

en e

June 30 2011

Actual

Budgeted

(Unfavorable)

Expenses - budgetary basis

General administration

Staff and office expense

Travel

Internal service and administration

Other operating expenses

856,227

52,976

4,164

28,387

Total general administration 941,754

Board and officer


Travel



Total board and officer

231,348

33,343

14,729

449,675

729,095

Legislation

Staff and office expense 134,025

Contract services 414,220

Travel

4,978

Internal service and administration 76,288


(2,794)

Total legislation 626,717

Authorized house counsel

Staff and office expense 9,185

Internal service and administration 1,392


2,974

Total authorized house counsel

13,551

821,766

69,553

2,385

40,118

933,822

238,223

24,356

13,599

478,443

754,621

(34,461 )

16,577

(1,779)

11 731

(7,932)

6,875

(8,987)

(1,130)

28,768

25,526

116,944

(17,081 )

417,000

2,780

3,140

(1,838)

52,713

(23,575)

1,273 4,067

591,070

(35,647)

9,129

(56)

2,389 997

2,997 23

14,515

964

General counsel


Contract services

Travel



Total general counsel

Division director - legal


Travel



Total division director - legal

123,072

491,328

2,536

331

556

617,823

(13,292)

12,432

586

269

(5)

155,842

32,770

625,576

134,248

3,140 604

6,479 6,148

396

(160)

791,433

173,610

(19,416) (6,124)

18,864 6,432

1,568 982

500 231

1,516

1,521


- -


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42/55


43/55


44/55


General Fund Schedule

o

Budgeted and Actual Revenues and Expenses

Year ended June 30 2 11

Expenses - b

2011-2010 june 30 florida bar financial statement

Documents