Cedar Rapids Country Club. Financial Statements. January 31, 2018 and 2017

Transcription

1 Financial Statements January 31, 2018 and 2017

2 Table of Contents Independent Auditor's Report 1 Financial Statements Balance Sheets 3 Statements of Activities 5 Statements of Changes in Membership Equity 6 Statements of Cash Flows 7 Notes to Financial Statements 9

3 Independent Auditor's Report Board of Directors Cedar Rapids, Iowa We have audited the accompanying financial statements of, which comprise the balance sheets as of January 31, 2018 and 2017, and the related statements of activities, changes in membership equity, 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 accounting principles generally accepted in the United States of America; 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. Auditor's 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 auditor s 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. 1

4 Opinion In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the financial position of as of January 31, 2018 and 2017, and the changes in its membership equity and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Cedar Rapids, Iowa May 9,

5 Balance Sheets As of January 31, 2018 and Assets Current assets Cash $ 298,454 $ 818,903 Receivables Members, net 437, ,359 Other 63, Inventories 60,079 84,939 Prepaid expenses 52,825 28,900 Total current assets 912,307 1,392,401 Property and equipment Land and land improvements 2,982,717 2,886,066 Buildings 10,407,414 10,116,639 Equipment 5,199,450 4,859,560 Total 18,589,581 17,862,265 Less accumulated depreciation 9,450,404 8,875,511 9,139,177 8,986,754 Construction in progress 34,089 42,071 Net property and equipment 9,173,266 9,028,825 Total assets $ 10,085,573 $ 10,421,226 See notes to financial statements. 3

6 Balance Sheets As of January 31, 2018 and Liabilities and Membership Equity Current liabilities Current maturities of long-term debt $ 133,952 $ 729,574 Current portion of capital lease obligation 16,859 10,841 Current portion of deferred compensation obligations - 1,983 Accounts payable 196, ,504 Accrued expenses Wages and vacation 216, ,465 Payroll taxes and employee benefits 15,325 17,016 Property taxes 228, ,288 Interest 4,124 4,313 Other 40,180 27,741 Dues and fees collected in advance 310, ,705 Total current liabilities 1,162,238 1,677,430 Long-term liabilities Long-term debt 2,164,317 1,954,831 Capital lease obligations 33,615 25,720 Total long-term liabilities 2,197,932 1,980,551 Membership equity Unrestricted Membership certificates, $1 stated value, 400 certificates authorized Contributed capital 217, ,769 Cumulative excess of revenue over expenses 6,508,031 6,531,209 Total membership equity 6,725,403 6,763,245 Total liabilities and membership equity $ 10,085,573 $ 10,421,226 See notes to financial statements. 4

7 Statements of Activities Years Ended January 31, 2018 and Unrestricted revenue Membership dues $ 3,075,174 $ 2,710,438 Initiation fees 90,725 39,500 Golf program 528, ,791 Food and beverage 2,089,564 2,482,973 Locker room and fitness center 40,668 40,215 Other 168, ,493 Total unrestricted revenue 5,992,690 5,972,410 Expenses Operating departments Golf program 1,385,187 1,469,798 Food and beverage 2,046,728 2,390,771 Swimming program 111, ,294 Tennis program 184, ,991 Locker room and fitness center 29,434 75,038 Entertainment, sports, pastimes and other 89,556 74,131 Total operating departments 3,846,880 4,325,023 Administrative and unallocated expenses 2,530,784 2,322,375 Total operating expenses 6,377,664 6,647,398 Excess of expenses over revenues before other additions and other changes in membership equity (384,974) (674,988) Other additions Capital improvement assessments - 526,070 Debt service assessments 347,129 1,083,933 Total other additions 347,129 1,610,003 Membership activity Issuance of membership certificates Redemption of membership certificates (15) (48) Total other changes 3 (29) Increase (decrease) in membership equity $ (37,842) $ 934,986 See notes to financial statements. 5

8 Statements of Changes in Membership Equity Years Ended January 31, 2018 and 2017 Cumulative Excess of Total Membership Contributed Revenue Over Membership Certificates Capital Expenses Equity Balance, January 31, 2016 $ 296 $ 268,700 $ 5,559,263 $ 5,828,259 New memberships Terminated memberships (48) (36,931) 36,931 (48) Unrestricted expenses over revenues - - (674,988) (674,988) Membership assessments - - 1,610,003 1,610,003 Balance, January 31, ,769 6,531,209 6,763,245 New memberships Terminated memberships (15) (14,667) 14,667 (15) Unrestricted expenses over revenues - - (384,974) (384,974) Membership assessments , ,129 Balance, January 31, 2018 $ 270 $ 217,102 $ 6,508,031 $ 6,725,403 See notes to financial statements. 6

9 Statements of Cash Flows Years Ended January 31, 2018 and Cash Flows - Operating Activities Change in membership equity $ (37,842) $ 934,986 Adjustments to reconcile change in membership equity to net cash flows - operating activities Net membership activity (3) 29 Membership assessments (347,129) (1,610,003) Depreciation 644, ,976 Gain on disposal of property and equipment (11,187) (107,374) Principal payments on deferred compensation obligation (1,983) (5,786) Changes in operating assets and liabilities Receivables (41,290) 25,610 Inventories 24,860 (3,024) Prepaid expenses (23,925) 31,435 Accounts payable 12,649 19,680 Accrued expenses and deferred revenue 63,746 (17,903) Total adjustments 319,774 (1,076,360) Net cash flows - operating activities 281,932 (141,374) Cash Flows - Investing Activities Purchases of property and equipment (415,693) (536,336) Proceeds from disposal of property and equipment 13, ,780 Net cash flows - investing activities (402,570) (410,556) Cash Flows - Financing Activities Principal payments under long-term borrowings (736,102) (442,478) Principal payments under capital lease obligations (10,841) (10,331) Proceeds from issuance of membership certificates Purchase of membership certificates for retirement (15) (48) Proceeds from membership assessments 347,129 1,610,003 Net cash flows - financing activities (399,811) 1,157,165 Net change in cash (520,449) 605,235 Cash Beginning of year 818, ,668 End of year $ 298,454 $ 818,903 See notes to financial statements. 7

10 Statements of Cash Flows Years Ended January 31, 2018 and 2017 Supplemental Disclosures of Cash Flow Information Cash paid during the year for Interest $ 90,314 $ 102,241 Income taxes $ 19,890 $ - Supplemental Schedule of Noncash Investing and Financing Activities Property and equipment purchases financed by capital leases $ 24,754 $ 4,284 Property and equipment purchases financed by long-term debt $ 349,966 $ - See notes to financial statements. 8

11 Notes to Financial Statements NOTE 1 BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Business Activity The (the Club) operates a private golf course and clubhouse serving members primarily from the Cedar Rapids community and surrounding areas. Accounting 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Basis of Presentation The Club is required to report information regarding its financial position and activities according to three classes of membership equity: unrestricted membership equity, temporarily restricted membership equity and permanently restricted membership equity. The Club had only unrestricted membership equity as of January 31, 2018 and Concentrations of Credit Risk Financial instruments which potentially subject the Club to concentrations of credit risk consist principally of cash. The Club places its cash with high credit quality financial institutions. At times, the Club s cash is in excess of the FDIC insurance limit. Member Receivables Member receivables are carried at original invoice amounts less an estimate made for doubtful receivables based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual member receivables. The allowance for doubtful accounts was $7,500 as of January 31, 2018 and A member s receivable is considered to be past due if a portion of the receivable balance is outstanding for more than 30 days past the date the member was billed. Member s privileges can be suspended if the member s account is over 60 days past due. Suspensions are determined by the Board of Directors. Inventory Valuations Inventories are valued at the lower of cost (first-in, first-out method) or net realizable value, and consist of food and beverages. Property and Equipment Property and equipment are carried at cost with depreciation computed under the straight-line method over the economic useful lives of the assets. The Club follows the practice of capitalizing all expenditures for property and equipment in excess of $1,000. Long-Lived Assets The Club records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. There were no impairment losses for the years ended January 31, 2018 and

12 Notes to Financial Statements NOTE 1 BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenues From Membership Dues and Initiation Fees Membership dues are recognized as revenues on a pro rata basis over the membership period. Initiation fees are recorded as revenue in the period the member is elected. Membership Assessments Regular members pay a $90 monthly assessment for debt service. Monthly amounts assessed against other classes of membership are prorated based on the type of membership held. For 2017, regular members paid a $100 monthly assessment for debt service and a $100 monthly assessment for capital improvements, with other classes of membership assessed based on a prorated portion based on the type of membership held. During 2017, an option related to debt service assessments was presented to all members, allowing prepayment of the assessments at discounted rates. This prepayment arrangement resulted in the collection of $567,796 of debt service assessments related to future years being collected during the year ended January 31, These additional assessment collections were used to make an additional, principal only payment on outstanding debt during Income Taxes The Club is exempt from paying income taxes under Section 501(c)(7) of the Internal Revenue Code (the Code) and a similar section of the state code as evidenced by a letter from the District Director of Internal Revenue, dated July 22, Revenue Ruling 81-69, however, provides that the Club may not offset nonmember losses against investment income; therefore, the Club must pay taxes on any investment income. The related expense for these taxes is included in other administrative and general expenses on the statements of activities and is not material to the financial statements. Recently Adopted Accounting Pronouncement The Club adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No , Inventory (Topic 330), in its 2018 financial statements. This guidance requires an entity to measure inventory at the lower of cost or net realizable value, rather than at the lower of cost or market. The adoption of this guidance did not have an impact on the Club s financial statements. Recently Issued Accounting Pronouncement In May 2014, the FASB issued ASU No , Revenue from Contracts with Customers (Topic 606). This update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard will affect companies that enter into contracts with customers and provides a five step process for determining when revenue should be recognized to match the transfer of goods or services. In August 2015, the FASB issued ASU No which defers the effective date one year making it effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Club is currently evaluating the impact this standard will have on its financial statements. Subsequent Events Management has evaluated subsequent events through May 9, 2018, the date which the financial statements were available for issue. 10

13 Notes to Financial Statements NOTE 2 OPERATING NOTE The Club has available a $700,000 bank line of credit which expires September 1, There were no amounts outstanding under this line of credit as of January 31, 2018 and NOTE 3 LONG-TERM DEBT % bank note, payable in monthly installments of $15,247, plus interest to February 2022, collateralized by substantially all business assets. (A) $ 1,958,112 $ 2,628, % bank note, payable in monthly installments of $505, including interest to April 2018, secured by equipment. 1,501 7, % bank note, payable in monthly installments of $1,592, including interest to August 2022, collateralized by substantially all business assets. 297, % dealer note, payable in monthly installments of $1,668, including interest to March 2020, collateralized by equipment. 41,546 - Non-interest bearing (imputed interest of 3.35%) note payable to vendor in monthly installments of $7,083 to August 2017, unsecured. - 49,034 2,298,269 2,684,405 Less current maturities 133, ,574 The annual maturities of long-term debt are as follows: Year ending January $ 133, , , , ,771,484 $ 2,164,317 $ 1,954,831 $ 2,298,269 11

14 Notes to Financial Statements NOTE 3 LONG-TERM DEBT (CONTINUED) Interest expense for the years ended January 31, 2018 and 2017, was $90,125 and $101,585, respectively. (A) This note contains, among other provisions, requirements for maintaining various financial ratios, some of these ratios have not been met, however, the bank has waived such noncompliance. NOTE 4 RETIREMENT PLAN The Club has a 401(k) profit-sharing plan that covers all employees who are at least 21 years of age and have worked at least six months and at least 500 hours. Participants in the plan may contribute a percentage of their compensation, but not in excess of the maximum allowed under the Internal Revenue Code. Annual matching contributions to the plan are made at the discretion of the Board of Directors. For the years ended January 31, 2018 and 2017, the Club charged against income $9,138 and $13,937, respectively, under this plan. NOTE 5 RENTAL INCOME The Club owns real estate adjacent to the Club for purposes of future expansion. The Club currently leases the real estate under short-term leases (one year or less). The total cost and related accumulated depreciation of rental properties as of January 31, 2018 and 2017, is as follows: Land $ 266,012 $ 171,812 Buildings 528, , , ,204 Accumulated depreciation 137, ,842 $ 657,052 $ 372,362 Total rental income received for the years ended January 31, 2018 and 2017, was $48,290 and $41,850, respectively. NOTE 6 RECLASSIFICATIONS Certain reclassifications have been made to the 2017 financial statements, as previously reported, in order to conform to the current year s presentation. 12