LAKEWOOD CHURCH AND SUBSIDIARIES. 1 CONSOLIDATED FINANCIAL STATEMENTS. . i .- AND 2016- - HARPER PEARSON - COMPANY, Poms INDEPENDENT REPORT To the-Board of Directors Lakewood Church - Houston, Texas 'Wehave audited the accompanying consolidated ?nancial stat'ement's'o?f Lakewood Church and Subsidiaries . (the Church), a non- profit organization, which comprise the consolidated statements of ?nanciai position as - of March 31, 2017 and 2016, and the related consolidated statements of activities and cash ?ows for the. years then ended, and the related notes to the COnSOIidamd ?nancial statements,- Management?s Responsibility for the Financial Statements Management is responsible for the preparation and fair- presentation of these consolidated. financial . statements in accordance With accounting principles generally accepted in the United States; this inciudes the design, implementation, and maintenance of internal control relevant to the preparation and fair ?presentatiOn of consolidated financial statements that are free from material misstatement, whether due to fraud or error. - - Auditor' 5 Responsibility Our responsibility is to express an opinion on these consolidated ?nancial statements based on our audits. 'We did not audit the ?nancial statements of the foreign subsidiaries: JoIel Osteen Ministries UK, Joel Osteen Ministries Canada and Joel Osteen Ministries Australia, which statements collectively re?ect total assets of $979, 437 and $850, 676 as of March 31,, 2017 and 2016, respectively and total revenues Of -,108 902 and . 394, 715,- respectively for the years then ended. Those statements Were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to ?the amounts included fer the foreign subsidiaries is based solely on the reports of the other auditors. We Conducted our audits in' accordance IWith auditing standards generally. accepted in the United States. Those standards require that I we plan and perform the audits to obtain reasonable assurance about whether the consolidated ?nancial - statements are free from material misstatement. - - An audit invalves performing procedures to obtain audit evidence about the amounts and disclosiures in the consolidated ?nancial statements. The procedures seiected depend on the auditors judgment, including the assessment of the risks of material misstatement of the consolidated ?nancial statements, whether due to fraud or; error. In making those risk aSSessments, the auditor considers internal control relevant to. the entity 5 preparation and fair presentatiOn of the consolidated ?nancial statements in order to design aUdit' procedIIre's that are appropriate in_ the circumstances, but not for the purpose of expressing an. opinion on - the effectiveness of the entity? internal contrOI. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateneSS Of scoounting policies used and the reasonableness of signi?cant accounting estimates made by management, as well as the overall presentation of the consolidated ?nancial statements. - - . 3We believe that the audit evidence we have obtained is SUf?cient and appropriate to provide a basis for our -aUdi_t opinion. - - One Riverway- Suite 1900- Houston, Texas 77056- 1973- 7-13. 622 .2310- 713 622.5613 fax - harperpearson. corn Opinion In our opinion, based On Our audits and the reports of. the other auditors, the consolidated ?nancial statements referred to above present fairly, in all material respects the ?nancial position of Lakewood ChL1rch and Subsidiaries as of March 31 2017 and 2016 and the changes in their nets assets and cash flows for the . years then ended' 1n attordanoe with accounting principles generally accepted In the- United States. Houston, Texas July 26, 2017 LAKEWOOD CHURCH AND SUBSIDIARIES I CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 3 .MARCH. 31, 2017 AND 2016 ASSETS CURRENT ASSETS - Cash and cash equivalents Contributions and tradeaccounts receivable: Investments in marketable securities InventOry Prepaid expenses and other assets TOTAL CURRENT ASSETS PROPERTY AND EQUIPMENT Building and improvements FurnitUre and ?xtures Of?ce-equipment Computer equipment Television audio and music equipment vehicle's Construction in pragress Artwork - Accumulated depreciation and-amortization . OTHER ASSETS Contribution receivable from charitable remainder trust Restricted cash - 2017 8,377,919 158,5413 . 1,735,575 - 1,174,190 2,072,480 13,518,705 119,366,295 3,119,806. 1,087,698 3,173,185 15,385,446. 397,609 2,628,395 610,500 145,768,934 . (67,666,483) 78,102,451. 154,000 - 174,497 - - - "328,497 9 91,949,653 (Restated) 2016 8,662,696 719,063 1,480,876 1,480,023 1,997,487 119,366,287 3,119,806 1,087,698 3,151,079. 15, 362, 482 397, 609 1,635,928 144,181,389 - (62,497,890) 81,683,499 . 154,000 . 331,256 485,256 . $196,508,900 - LAKEWOOD CHURCH AND SUBSIDIARIES STATEMENTS OF FINANCIAL POSITION LIABILITIES AND NET ASSETS. CURRENT. LIABILITIES Accounts payable II .- Accrued liabilities I I . Royalties payable I I Current portion of long-term notes payable Current portion of deferred compensation I TOTAL CURRENT LIABILITIES OTHER LIABILITIES . Notes payable I Deferred cempensation COMMITMENTS NET ASSETS Temporarily restricted Unrestricted I I MARCH. S1, 2017 AND 2016 I (Restated) 2017 2016 . 3,714,331 3, 550,890 - 1,357,026 1,332 143 i 14,243 4,650 1,956,036 2,337,827 1,237,279 - 1,127,862 . 8,268,915 8,353,372 23,769,077 26,825,536 3.3. 554,057 . 622,931.15 24,323,134 5. 27,448,447 3126110 1,659,492 . 56,231,494 59,047,589 . 59,357,604 60,707,081 $91,949,653. -I 96,508,900 LAKEWOOD CHURCH AND SUBSIDIARIES CONSOLIDATED STATEMENT OF ACTIVITIES FOR THE YEAR ENDED MARCH 31,2017 f. Temhdrarily . - Unrestricted Restricted Total SuppOrt and Other Revenues -, . - .Contributions $78,684,092 3,925,435 $8,2 609 ,527 Ministry product sales - 2,808,049 - - 2, 808,049 Touring events 7 1,751,794. -- . 1,751,794 Net realized and unrealized gain on marketable - . - . securities . ,1 205, 822 ., - 205,822 Registrations and special events 799, 881 - - 799,881- Otherincome 1,150,588 - 1,150,588 .Net assets released from 'restriCtions . 2 ,458, 817 . . - - Total supptin andOther Revenues 87 859, 043 1,466,618 89,325,661 Program Services . . - . - - Weekly services and programs '3 - _f - 31,721,435 - 31 ,721, 435: Tour events . - . 5 6,690,636 - 6, 690, 636 TVmInIstry - - . -. - 25146357 Mission and outreach . . 1,188,494 - 1 ,188, 494 sales of ministry rescurCes; 1 2,401,120 - - . 2,401,120 .Total Program Services . I .- 67,148,042- . - . 767,148,042 . Support Activities .. . . General and administrative 11,482,930 - 11,482,930 Fundraising . 3 11,966,386 - 11,966,386 TotaIEkpenses . -- 90,597,358 . .- 90,597,358 - Change In net assets before foreign currency . - - - translation adjustment - -. -. . 1,466,618 (1,271,697.) Foreign currency translation adjustment . (77,780) . - . ?77,780} Total Change in Net Assets i (2,816,095)? 1,466,618 . -- (1,349,477) .- onear' - - 59,047,589 1,659,492 :i 60,707,081 .INetAssets, End etvear . "j $56,231,494 8 3,126,110 859,357,604 -. LAKEWOOD CHURCH AND CONSOLIDATEDSTATEMENT OF ACTIVITIES FOR THE YEAR ENDED MARCH 31,2016 . (Restated) (Restated) Temporarily (Restated) Unrestricted "Restricted - . Total . I Support and Other Revenues?. . . Contributions .j . 5 'g . $81,595,727 3,845,703 $85,441,430 Ministry product sales 1 - 3,531,682 . - 3,531,682 - Touring events -. . 2,117,938 2,117,938 3 Net realized and unrealized gain on marketable . - - . 3 . . securities - - - - 108,319 - - 5 -3- 108,319 Registrations and special events 7 1 696,800- -.: 696,800. . Other Income . - . 1,907,833. - - - 1,907,833 Net assets released from restrictions . 3,307,684- (3,307,684) . - Total Supportand Other Revenues I 93255383 5331019 . 93,304,002 Pr09ram Sewices - i. - f' .: - Weekly services and programs - - - 30,524,115 . . -- 30,524,115 .- Tour events 7,406,757 7, 406, 757 TVministry - 25,929,327 - 25, 929, 327 Missionand outreach . .1,364,234. . 3. - 1-, 364,234 Sales of ministry resources" - - 2,809,944 - - - . - 2,809,944 Total Program Services 5' 68,034,377 -, 31 j- - 68,034,377 Support Activities - . . General and administrative 1 12,799,094 . {12,799,094 FundraiSing - -. 13,194,404 - 13,194,404 Total Expenses . 3 94,027,875 -. I 94,027,875 Change ininet assets before foreign-currency . - .. .: - - . . - - translation adjustment (761,892) 538,019 (223,873) translation adjustment (24,104} I - (24,104) Total Change in Net Assets I I - (785,996) 538, 019 (247,977) Net Assets, Beginning otY'ear 1 759,833,585 1,121,473 60,955,058 Net Assets, End of'Year' I $59,047,589 51,659,492 '4 60,707,081 . LAKEWOOD CHURCHAND SUBSIDIARIES . CONSOLIDATED STATEMENTS OF CASH FLOWS FORTHE YEARS ENDED MARCH 31, 32017 AND 2016 CASH FLOWS FROM OPERATING ACTIVITIES: Change In net assets . Adjustments to reconcile ChangeI' In net assets to - net cash provided by operating actiVities: Net realized and unrealized gain on marketable securities - Contributions of. marketable securities Contribution of artwork Depreciation and amortization expense Deferred compensation Change In operating assets and liabilities: COntributions and trade accounts receivable - Inventory I Prepaid expenses and other asSets Accounts payable and accrued liabilities Royalties payable TOtal adjustments. Net operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Change in restricted cash I Purchase Of property and equipment Net cash used by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Payments on notes payable Net cash used by ?nancing activities - NET DECREASE IN CASH AND CASH EQUIVALENTS CASH BEGINNING OF CASH AND CASH END OF YEAR -.3.2017: 5 (1,349,477) I (205,822) I (48,877) (550,000) -. 5,168,593 - 40,563 560,522 5 305,833 (74,993) [188,324 407.- 5,383,736 -- I 4,034,259 - 156, 759- 3 - (880,786) - (3,438,250) (3,438,250) (284,777) 8,662,696 - 3 . '5 8,377,919 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: I I Cash paid during the year fOrI interest 788,285 (Restated) 2016' (247,977) (108.319) (537,575) - (486,670) (80,182) (513,506) (159,504) (1,094,644) I I (3,984) . - 2,434,065 . 2,186,088 127,094 . (2,444,523) (2,317,429) (5,726,759) . 5726759 (5,858,100) 14,520,796 83,662,696 .- .725 335