ROCKEFELLER BROTHERS FUND, INC. Financial Statements and Supplemental Schedule December 31, 2017 and 2016 (With Independent Auditors’ Report Thereon)
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ROCKEFELLER BROTHERS FUND, INC. Financial Statements and Supplemental Schedule December 31, 2017 and 2016 (With Independent Auditors’ Report Thereon) KPMG LLP 345 Park Avenue New York, NY 10154-0102 Independent Auditors’ Report The Board of Trustees Rockefeller Brothers Fund, Inc.: We have audited the accompanying financial statements of Rockefeller Brothers Fund, Inc. (the Fund), which comprise the statements of financial position as of December 31, 2017 and 2016, and the related statements of activities and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Rockefeller Brothers Fund, Inc. as of December 31, 2017 and 2016, and the changes in its net assets and its cash flows for the years then ended, in accordance with U.S. generally accepted accounting principles. KPMG LLP is a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Other Matter Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The supplementary information included in the schedule of functional expenses for the year ended December 31, 2017 is presented for purposes of additional analysis and is not a required part of the 2017 financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the 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 2017 financial statements taken as a whole. July 31, 2018 2 ROCKEFELLER BROTHERS FUND, INC. Statements of Financial Position December 31, 2017 and 2016 Richard David Rockefeller Rockefeller Principal Pocantico Pocantico II Fellowship Global Development 2017 2016 Assets Fund Fund Fund Fund Fund RBF Funds RBF Funds Cash and cash equivalents $ 3,733,437 500 — — — 3,733,937 1,931,432 Accounts receivable and other current assets 1,722,092 24,489 — — — 1,746,581 1,992,181 Contributions receivable 25 — 12,751,680 — 250,000,000 262,751,705 19,643,705 Investments 843,377,827 79,972,817 14,795,330 334,330 — 938,480,304 832,212,218 Program-related investment – real estate 510,000 — — — — 510,000 510,000 Fixed assets, net 2,937,252 3,458,282 — — — 6,395,534 6,065,019 Interfund 2,513,151 (7,617,785) 1,972,485 3,132,149 — — — Total assets $ 854,793,784 75,838,303 29,519,495 3,466,479 250,000,000 1,213,618,061 862,354,555 Liabilities and Net Assets Liabilities: Accrued expenses and other liabilities $ 1,806,476 669,641 — — — 2,476,117 2,144,180 Grants payable 10,543,627 — — — — 10,543,627 6,809,362 Taxes payable 5,723,717 716,806 101,012 15,208 — 6,556,743 3,971,826 Accrued pension and postretirement benefits 9,083,120 2,586,386 — — — 11,669,506 11,068,664 Total liabilities 27,156,940 3,972,833 101,012 15,208 — 31,245,993 23,994,032 Commitments Net assets: Unrestricted 826,519,015 71,865,470 — 3,451,271 — 901,835,756 807,895,677 Temporarily restricted: Time restricted — — — — — — 2,684,070 Purpose restricted 1,117,829 — 19,290,481 — 250,000,000 270,408,310 17,711,599 Total temporarily restricted net assets 1,117,829 — 19,290,481 — 250,000,000 270,408,310 20,395,669 Permanently restricted — — 10,128,002 — — 10,128,002 10,069,177 Total net assets 827,636,844 71,865,470 29,418,483 3,451,271 250,000,000 1,182,372,068 838,360,523 Total liabilities and net assets $ 854,793,784 75,838,303 29,519,495 3,466,479 250,000,000 1,213,618,061 862,354,555 See accompanying notes to financial statements. 3 ROCKEFELLER BROTHERS FUND, INC. Statements of Activities Years ended December 31, 2017 and 2016 Richard David Rockefeller Rockefeller 2017 2016 Principal Pocantico Pocantico II Fellowship Global Development RBF RBF Fund Fund Fund Fund Fund Funds Funds Changes in unrestricted net assets: Operating revenues: Investment income $ 1,942,418 165,554 — 7,751 — 2,115,723 2,952,032 Other income 15,973 — — — — 15,973 5,542 Contributions 2,036,711 — — 9,000 — 2,045,711 2,596,711 Net assets released from restrictions 4,939,061 — 107,360 — — 5,046,421 4,980,386 8,934,163 165,554 107,360 16,751 — 9,223,828 10,534,671 Operating expenses: Direct charitable activities 1,069,712 3,524,595 — — — 4,594,307 4,356,187 Program and grant management 39,888,993 — — — — 39,888,993 35,951,015 Investment management 3,799,469 280,863 58,911 12,549 — 4,151,792 3,568,827 General management 5,298,057 500,774 — — 5,798,831 5,387,989 Federal excise and other taxes 4,253,271 297,475 48,449 10,321 — 4,609,516 1,620,258 54,309,502 4,603,707 107,360 22,870 — 59,043,439 50,884,276 Deficiency of operating revenues over operating expenses (45,375,339) (4,438,153) — (6,119) — (49,819,611) (40,349,605) Nonoperating activities: Net realized and unrealized gain on investments 131,779,460 11,306,645 — 525,891 — 143,611,996 39,468,520 Amounts not yet recognized as a component of net periodic benefit cost 221,395 (73,701) — — — 147,694 479,705 132,000,855 11,232,944 — 525,891 — 143,759,690 39,948,225 Increase (decrease) in unrestricted net assets 86,625,516 6,794,791 — 519,772 — 93,940,079 (401,380) Changes in temporarily restricted net assets: Investment income — — 76,378 — — 76,378 36,757 Contributions 2,393,919 — 120,000 — 250,000,000 252,513,919 6,753,352 Net realized and unrealized gain on investments — — 2,468,765 — — 2,468,765 491,509 Net assets released from restrictions (4,939,061) — (107,360) — — (5,046,421) (4,980,386) Other — — — — — — 705,082 (Decrease) increase in temporarily restricted net assets (2,545,142) — 2,557,783 — 250,000,000 250,012,641 3,006,314 Changes in permanently restricted net assets: Contributions — — 58,825 — — 58,825 39,325 Other — — — — — — 315,084 Increase in permanently restricted net assets — — 58,825 — — 58,825 354,409 Increase in net assets 84,080,374 6,794,791 2,616,608 519,772 250,000,000 344,011,545 2,959,343 Net assets: Beginning of year 743,556,470 65,070,679 26,801,875 2,931,499 — 838,360,523 835,401,180 End of year $ 827,636,844 71,865,470 29,418,483 3,451,271 250,000,000 1,182,372,068 838,360,523 See accompanying notes to financial statements. 4 ROCKEFELLER BROTHERS FUND, INC. Statements of Cash Flows Years ended December 31, 2017 and 2016 2017 2016 Cash flows from operating activities: Increase in net assets $ 344,011,545 2,959,343 Adjustments to reconcile increase in net assets to net cash used in operating activities: Net realized and unrealized gain on investments (146,080,761) (39,960,029) Amount not yet recognized as a component of net periodic benefit cost (147,694) (479,705) Depreciation and amortization 815,581 762,319 Changes in operating assets and liabilities: Accounts receivable and other current assets 245,600 630,408 Contributions receivable (243,108,000) (3,519,061) Accrued expenses and other liabilities 331,937 111,929 Accrued pension and postretirement benefits 748,536 771,099 Grants payable 3,734,265 (1,207,151) Taxes payable 2,584,917 732,784 Net cash used in operating activities (36,864,074) (39,198,064) Cash flows from investing activities: Proceeds from sales of investments 443,108,475 473,579,310 Purchases of investments (403,295,800) (434,326,499) Purchases of fixed assets (1,146,096) (774,250) Net cash provided by investing activities 38,666,579 38,478,561 Net increase (decrease) in cash and cash equivalents 1,802,505 (719,503) Cash and cash equivalents at beginning of year 1,931,432 2,650,935 Cash and cash equivalents at end of year $ 3,733,937 1,931,432 Supplemental disclosure of cash flow information: Cash paid for other taxes $ 1,848,138 514,671 See accompanying notes to financial statements.