THE AMERICAN NATIONAL RED CROSS

THE AMERICAN NATIONAL RED CROSS

Consolidated Financial Statements

June 30, 2018 (with summarized information for the year ended June 30, 2017)

(With Independent Auditors' Report Thereon)

KPMG LLP 1676 International Drive McLean, VA 22102

Independent Auditors' Report

The Board of Governors The American National Red Cross:

We have audited the accompanying consolidated financial statements of The American National Red Cross (the Organization), which comprise the consolidated statement of financial position as of June 30, 2018, and the related consolidated statements of activities, functional expenses and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated 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 consolidated financial statements based on our audit. We conducted our audit 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of The American National Red Cross as of June 30, 2018, and the changes in their net assets, their functional expenses and their cash flows for the year 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.

Report on Summarized Comparative Information We have previously audited The American National Red Cross 2017 consolidated financial statements, and expressed an unmodified audit opinion on those audited consolidated financial statements in our report dated October 6, 2017. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2017 is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived. McLean, Virginia October 24, 2018

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THE AMERICAN NATIONAL RED CROSS Consolidated Statement of Financial Position

June 30, 2018 (with comparative information as of June 30, 2017)

(In thousands)

Assets

Current assets: Cash and cash equivalents Investments (Note 4) Trade receivables, including grants, net of allowance for doubtful accounts of $1,564 in 2018 and $2,284 in 2017 (Note 11) Contributions receivable (Note 2) Inventories, net of allowance for obsolescence of $141 in 2018 and $154 in 2017 Other current assets

Total current assets

Noncurrent assets: Investments (Note 4) Contributions receivable (Note 2) Land, buildings, and other property, net (Note 3) Assets held for sale, net (Note 3) Other assets (Note 9)

Total noncurrent assets

Total assets

Liabilities and Net Assets

Current liabilities: Accounts payable and accrued expenses Current portion of debt (Note 5) Postretirement benefits (Note 10) Other current liabilities (Note 9 and 11)

Total current liabilities

Noncurrent liabilities: Debt (Note 5) Pension and postretirement benefits (Note 10) Other liabilities (Notes 5 and 9)

Total noncurrent liabilities

Total liabilities

Net assets (Notes 7 and 8): Unrestricted cash available for operations, net investment in land, buildings and other property, and other net assets Pension and postretirement benefits and other long term liabilities

Total Unrestricted net assets (deficit)

Temporarily restricted net assets Permanently restricted net assets

Total net assets

Commitments and contingencies (Notes 4, 5, 6, 10, 11)

Total liabilities and net assets

2018

$

129,488

645,064

204,631 40,150 38,826 58,799

1,116,958

1,022,435 9,170

828,445 12,081

251,158

2,123,289

$

3,240,247

$

286,654

40,452

3,730

136,924

467,760

571,260 492,884 126,191

1,190,335

1,658,095

1,090,755 (1,137,205)

(46,450)

768,545 860,057

1,582,152

$

3,240,247

See accompanying notes to consolidated financial statements.

2017

122,115 291,923

196,593 69,511 40,708 37,658

758,508

1,238,862 17,135

844,567 26,078

257,430 2,384,072 3,142,580

237,508 138,745

3,723 149,155 529,131

506,867 779,975 130,684 1,417,526 1,946,657

1,102,256 (1,352,041)

(249,785) 608,304 837,404 1,195,923

3,142,580

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THE AMERICAN NATIONAL RED CROSS Consolidated Statement of Activities

Year ended June 30, 2018 (with summarized information for the year ended June 30, 2017)

(In thousands)

Operating revenues and gains: Contributions: Corporate, foundation and individual giving United Way and other federated Legacies and bequests Services and materials Products and services: Biomedical Program materials Contracts, including federal government Investment income (Note 4) Other revenues Net assets released from restrictions

Total operating revenues and gains

Operating expenses: Program services: Services to the Armed Forces Biomedical Services Community Services Domestic Disaster Services Health and Safety Services International Relief and Development Services

Total program services

Supporting services: Fund raising Management and general

Total supporting services

Total operating expenses

Change in net assets from operations

Nonoperating investment gains (losses) (Note 4) Pension-related gains other than net periodic

benefit cost (Note 10)

Change in net assets

Net assets, beginning of year

Net assets, end of year

Unrestricted

$

197,728

10,363

58,020

60,413

1,714,669 134,666 68,412 49,667 60,019

1,022,702

3,376,659

69,319 1,806,665

22,416 766,800 135,998

87,507

2,888,705

198,541 113,608 312,149 3,200,854 175,805 (34,531)

62,061

203,335

(249,785)

$

(46,450)

Temporarily restricted

1,039,360 40,049 17,613 51,267

-- -- -- 142,118 -- (1,022,702) 267,705

-- -- -- -- -- -- --

-- -- -- -- 267,705 (107,464)

-- 160,241 608,304 768,545

Permanently restricted

74 -- 21,433 --

-- -- -- -- -- -- 21,507

-- -- -- -- -- -- --

-- -- -- -- 21,507 1,146

-- 22,653 837,404 860,057

See accompanying notes to consolidated financial statements.

2018

Totals

2017

1,237,162 50,412 97,066

111,680

1,714,669 134,666 68,412 191,785 60,019 --

3,665,871

422,716 55,455

114,624 67,930

1,712,031 133,517 74,578 39,958 93,380 --

2,714,189

69,319 1,806,665

22,416 766,800 135,998

87,507 2,888,705

198,541 113,608 312,149 3,200,854 465,017 (140,849)

62,061 386,229 1,195,923 1,582,152

69,335 1,831,520

25,367 372,139 139,303

99,760 2,537,424

189,623 119,736 309,359 2,846,783 (132,594)

82,241

260,603 210,250 985,673 1,195,923

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