Financial Report 2017
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2017 FINANCIAL REPORT CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017 Auditors’ Report to the Board of Governors of The Jewish Agency for Israel We have audited the accompanying consolidated balance sheets of the Jewish Agency for Israel (hereafter - The Agency), as of December 31, 2017 and 2016, and the consolidated statements of operations, changes in net assets and cash flows, for each of the years ended on such dates. These financial statements are the responsibility of The Agency’s Board of Governors and Management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We did not audit the financial statements as of December 31, 2016 of certain consolidated subsidiaries whose assets constitute approximately 17.87% of the total consolidated assets as of December 31, 2016, and whose revenues included in consolidation constitute approximately 17.41% of the total consolidated revenues for the year ended on that date. The financial statements of the above entities were audited by other auditors, whose reports have been furnished to us. Our opinion, insofar as it relates to amounts included for those entities, is based on the reports of the other auditors. We conducted our audit in accordance with generally accepted auditing standards in Israel, including standards prescribed by the Auditors Regulations (Manner of Auditor’s Performance) - 1973. Such standards require that we plan and perform the audit to obtain reasonable assurance that 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 The Agency’s Management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and on the reports of the abovementioned other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of The Agency as of December 31, 2017 and 2016 and its consolidated results of operations, changes in net assets and cash flows, for each of the years ended on such dates, in accordance with generally accepted accounting principles in Israel (Israeli GAAP). Somekh Chaikin Certified Public Accountants (Isr.) May 31, 2018 THE JEWISH AGENCY FOR ISRAEL 2017 FINANCIAL REPORT 5 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, Amounts in US$ thousands Assets Note 2017 2016 Current assets Cash and cash equivalents 3 154,231 156,422 Short-term deposits in banks 4 1,088 1,171 Investment in marketable securities 2g 7,879 6,583 Accounts receivable 5 68,436 60,012 Current maturities of long-term loan 6f 5,000 5,000 Total current assets 236,634 229,188 Investments and other assets 6 138,136 131,010 Fixed assets 7 185,428 182,103 Total assets 560,198 542,301 May 31, 2018 David Breakstone David Silvers Moshe Ashirie Date of approval Deputy Chair, Executive Chair, Budget & Finance Committee Chief Financial Officer of Financial Statements The accompanying notes are an integral part of the financial statements. 6 CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, Amounts in US$ thousands Liabilities and net assets Note 2017 2016 Current liabilities Accounts payable 8 119,609 92,661 Short-term deposits and other payables 27c 7,515 5,775 Liability to Pension Fund - current maturity 10c 4,000 4,000 Current maturities of long-term bank loans 9 391 353 Total current liabilities 131,515 102,789 Long-term liabilities Bank loans 9 2,847 2,890 Liabilities for employee rights upon retirement, net 10 159,618 192,373 Other liabilities 11 46,828 45,231 Total long-term liabilities 209,293 240,494 Minority interest 2,067 1,819 Commitments and contingent liabilities 12 Net assets Surplus in unrestricted net assets 72,414 44,930 Temporarily restricted net assets 13 143,433 150,924 Permanently restricted net assets 1,476 1,345 Total net assets 217,323 197,199 Total liabilities and net assets 560,198 542,301 THE JEWISH AGENCY FOR ISRAEL 2017 FINANCIAL REPORT 7 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, Amounts in US$ thousands Revenues Note 2017 2016 Unrestricted donations and contributions: United Israel Appeal, Inc. 82,279 86,295 Keren Hayesod - United Israel Appeal 30,359 32,649 Direct donations & Spirit of Israel 2,525 410 Net assets released from restrictions: United Israel Appeal, Inc. 80,370 89,115 U.S. Government grant 7,514 9,394 Keren Hayesod - United Israel Appeal 8,438 8,070 Direct donations & Spirit of Israel 33,159 36,042 Other income: Israel experience programs (operated by subsidiaries) 67,944 62,671 Rental income 41,157 *38,712 Program participations and service fees 82,125 68,395 Collection of doubtful debts 2h 2,440 1,705 Subsidiaries’ income 28,943 23,042 Total revenues 467,253 456,500 Cost of activities and other expenses Israel experiences 14 73,741 72,002 Aliyah, absorption and special operations 15 56,185 55,162 Social activism 16 42,063 39,450 Activities with Russian speaking Jews 17 24,357 22,829 Partnerships 18 18,903 18,823 Shlichim and Israel Fellows 19 23,711 22,408 Community services (not including FSU) 20 24,380 19,523 Allocations and social programs 21 69,678 69,540 Agency-wide projects and organizational activities 22 99,700 *101,648 Support units and executive offices 23 24,108 23,711 FRD, marketing and communications 24 10,564 9,134 Cost of activities 467,390 454,230 Income (deficit) from ordinary operations (137) 2,270 Financial income, net 25 399 203 Income from activities 262 2,473 Non-operational income Property related costs, net of income from asset realization 26 (5,033) *(17,881) Income arising from Board designated endowment, net 6b 14,483 4,217 Decrease in Pension Fund liability, net 10e 40,995 47,344 Early retirement program expenses 28 (29,726) (1,268) Non-operational income, net 20,719 32,412 Net income for the year 20,981 34,885 The accompanying notes are an integral part of the financial statements. 8 * Reclassified THE JEWISH AGENCY FOR ISRAEL 2017 FINANCIAL REPORT 9 STATEMENT OF CHANGES IN NET ASSETS Unrestricted in use Amounts in US$ thousands Board For designated operations endowment Total Balance at December 31, 2015 (86,420) 90,105 3,685 Changes during 2016 Temporarily restricted donations and contributions received: United Israel Appeal, Inc. - - - U.S. Government grant - - - Keren Hayesod - United Israel Appeal - - - Direct donations & Spirit of Israel - - - Total received - - - Released from restriction - - - Net income for the year 34,885 - 34,885 Changes in endowments, net - note 6(b) (1,524) 1,524 - Release of fixed assets and restricted assets depreciation expense - see note 2(a)2 6,360 - 6,360 Net change during 2016 39,721 1,524 41,245 Balance at December 31, 2016 (46,699) 91,629 44,930 Changes during 2017 Temporarily restricted donations and contributions received: United Israel Appeal, Inc. - - - U.S. Government grant - - - Keren Hayesod - United Israel Appeal - - - Direct donations & Spirit of Israel - - - Total received - - - Released from restriction - - - Net income for the year 20,981 - 20,981 Changes in endowments, net - note 6(b) (11,474) 11,474 - Release of fixed assets and restricted assets depreciation expense - see note 2(a)2 6,503 - 6,503 Net change during 2017 16,010 11,474 27,484 Balance at December 31, 2017 (30,689) 103,103 72,414 The accompanying notes are an integral part of the financial statements. 10 Permanently Temporarily restricted restricted For For projects allocations Total Endowment Total 153,837 10,803 164,640 664 168,989 30,818 57,699 88,517 - 88,517 9,394 - 9,394 - 9,394 7,968 712 8,680 - 8,680 19,945 8,729 28,674 - 28,674 68,125 67,140 135,265 - 135,265 (73,081) (69,540) (142,621) - (142,621) - - - - 34,885 - - - 681 681 (6,360) - (6,360) - - (11,316) (2,400) (13,716) 681 28,210 142,521 8,403 150,924 1,345 197,199 25,756 58,268 84,024 - 84,024 7,514 - 7,514 - 7,514 11,143 258 11,401 - 11,401 17,070 8,509 25,579 - 25,579 61,483 67,035 128,518 - 128,518 (59,828) (69,678) (129,506) - (129,506) - - - - 20,981 - - - 131 131 (6,503) - (6,503) - - (4,848) (2,643) (7,491) 131 20,124 137,673 5,760 143,433 1,476 217,323 THE JEWISH AGENCY FOR ISRAEL 2017 FINANCIAL REPORT 11 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, Amounts in US$ thousands 2017 2016 Cash flows from operating activities: Net income for the year 20,981 34,885 Adjustments required to reflect the cash flows from operating activities (see Appendix) (13,814) (19,575) Net cash provided by operating activities 7,167 15,310 Cash flows from investing activities: Purchase of fixed assets (18,094) (20,497) Redemption (investment in) of short-term deposits in banks and other investments (1,213) 3,802 Proceeds from long-term investments and other assets 10,626 7,202 Net cash used in investing activities (8,681) (9,493) Cash flows from financing activities: Deposits (repayment) - (300) Long-term loans received - 40 Receipt (repayment) of long-term deposits 180 (988) Decrease in temporarily restricted assets, net (see Note 2c) (988) (7,356) Increase in permanent restricted assets, net 131 681 Net cash used in financing activities (677) (7,923) Decrease in cash and cash equivalents, net (2,191) (2,106) Balance of cash and cash equivalents at beginning of year 156,422 158,528 Balance