Orlando Repertory Theatre, Inc.

Transcription

1 Financial Statements Years Ended June 30, 2015 and 2014 The report accompanying these financial statements was issued by BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited, a UK company limited by guarantee.

2 Financial Statements Years Ended June 30, 2015 and 2014

3 Contents Independent Auditor s Report 3-4 Financial Statements Statements of Financial Position 6 Statements of Activities 7 Statements of Cash Flows 8 Notes to Financial Statements

4 Tel: Fax: South Orange Ave., Suite 800 Orlando, FL Independent Auditor s Report Board of Directors Orlando Repertory Theatre, Inc. Orlando, Florida We have audited the accompanying financial statements of Orlando Repertory Theatre, Inc., which comprise the statement of financial position as of June 30, 2015, and the related statements of activities and cash flows for the year 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 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 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. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 3

5 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Orlando Repertory Theatre, Inc. as of June 30, 2015, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matter The 2014 financial statements of Orlando Repertory Theatre, Inc. were audited by Cross, Fernandez & Riley, LLP ( CFR ) whose partners and professional staff joined BDO USA, LLP as of August 1, 2015, and has subsequently ceased operations. CFR s report dated January 19, 2015, expressed an unmodified opinion on those statements. BDO USA, LLP January 20,

6 Financial Statements

7 Statements of Financial Position June 30, Assets Current assets: Cash and cash equivalents $ 568,193 $ 614,831 Accounts receivable 44,535 29,302 Prepaid expenses 80,055 71,668 Total current assets 692, ,801 Property and equipment, net (Note 2) 2,784,830 3,043,949 Liabilities and Net Assets $ 3,477,613 $ 3,759,750 Current liabilities: Accounts payable $ 6,500 $ 2,533 Accrued expenses 28, ,982 Deferred revenue 475, ,993 Total liabilities 510, ,508 Net assets: Unrestricted 101, ,731 Unrestricted property and equipment 2,784,830 3,043,949 Unrestricted board designated endowment 10,539 10,437 Unrestricted board designated capital projects 42,125 42,125 Temporarily restricted (Note 7) 27,935 Total net assets 2,966,897 3,227,242 $ 3,477,613 $ 3,759,750 See accompanying notes to financial statements. 6

8 Statements of Activities Year Ended June 30, Temporarily Unrestricted Restricted Total Unrestricted Support and revenue: Grants and contributions operating (Note 4) $ 1,062,644 $ 27,935 $ 1,090,579 $ 876,964 Grants capital 12,000 12, ,000 Productions 654, , ,336 Educational programs 547, , ,918 Management fees (Notes 4 and 5) 252, , ,297 Theatre rental 95,064 95, ,890 In-kind contributions 171, , ,826 Other income Total support and revenue 2,796,568 27,935 2,824,503 2,887,367 Expenses: Program services 2,257,243 2,257,243 2,171,485 Supporting services: General and administrative (Note 6) 330, , ,212 Fundraising 86,322 86,322 91,869 Total expenses 2,674,443 2,674,443 2,521,566 Change in net assets before depreciation and amortization 122,125 27, , ,801 Depreciation and amortization 410, , ,272 Change in net assets (288,280) 27,935 (260,345) (60,471) Net assets, beginning of year 3,227,242 3,227,242 3,287,713 Net assets, end of year $ 2,938,962 $ 27,935 $ 2,966,897 $ 3,227,242 See accompanying notes to financial statements. 7

9 Statements of Cash Flows Year Ended June 30, Cash flows from operating activities: Change in net assets $ (260,345) $ (60,471) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 410, ,272 Receipt of donated property and equipment (11,000) Increase (decrease) in cash due to changes in: Accounts receivable (15,233) (14,075) Prepaid expenses (8,387) 14,862 Accounts payable 3,967 (2,467) Accrued expenses (86,645) 97,757 Deferred revenue 60,886 55,386 Net cash provided by operating activities 104, ,264 Cash flows used in investing activities: Purchases of property and equipment (151,286) (341,022) (Decrease) increase in cash and cash equivalents (46,638) 165,242 Cash and cash equivalents, beginning of year 614, ,589 Cash and cash equivalents, end of year $ 568,193 $ 614,831 See accompanying notes to financial statements. 8

10 Notes to Financial Statements 1. Summary of Significant Accounting Policies Nature of Operations Orlando Repertory Theatre, Inc. (the Organization ) is a not-for-profit corporation incorporated in 1969 that produces and presents theatrical performances and related educational programs in partnership with the University of Central Florida ( UCF ). The Organization s facilities are used to house a portion of the UCF Masters of Fine Arts program. The Civic Theatre Foundation, Inc. (the Foundation ) was established by the Organization s Board of Directors as a support organization for the Organization. The Foundation s Board of Directors includes the officers and executive committee of the Organization, thus placing it under common control. The Foundation did not have any revenues or expenses, assets, liabilities, or net assets as of or for the year ended June 30, Cash and Cash Equivalents For purposes of the statements of cash flows, the Organization considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Property and Equipment Property and equipment is recorded at cost, if purchased and at fair market value on the date received, if donated. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the short of the estimated useful life of the asset and the remaining lease term. Impairment of Long-Lived Assets The Organization reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairments of long-lived assets during the years ended June 30, 2015 or Contributions and Donor-Imposed Restrictions Contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Amounts received that are designated for future periods or are restricted by the donor for specific purposes are reported as temporarily or permanently restricted support that increases those net asset classes. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and are reported in the statements of activities as net assets released from restrictions. If a temporary restriction is fulfilled in the same time period in which the contribution is received, the Organization reports the support as unrestricted. 9

11 Notes to Financial Statements The Organization received donated goods in the form of supplies and promotional materials. These items have been recorded as in-kind contributions and program expenses at their fair market value in the statements of activities. Contributed Services Contributed services are recognized and recorded at fair market value only to the extent they create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills and would typically need to be purchased if not provided by donations. The Organization received contributed services of $91,995 and $106,000 during the years ended June 30, 2015 and 2014, respectively, for advertising, printing, photography and building maintenance, which are included in in-kind contributions and the expense categories in which they relate in the statements of activities. Revenue Recognition and Deferred Revenue Grants are considered exchange transactions in which each party receives and sacrifices commensurate value. Funds from these exchange transactions are not considered contributions and, as such, are deemed to be earned and reported as revenue when such funds have been expended towards the designated purposes. Revenue is recognized for productions and educational programs when the related event is held. Management fees are recognized as the services are provided. Deferred revenue consists of grants, sponsorships, tuition for educational programs, and production ticket sales received for programs and events that relate to and/or will take place during subsequent fiscal years. Advertising Costs Advertising costs are expensed as incurred. Total advertising costs were approximately $278,000 and $189,900 for the years ended June 30, 2015 and 2014, respectively. Functional Expenses The cost of providing the program and other activities of the Organization have been summarized on a functional basis in the statements of activities. Salaries and related benefits are allocated among functional categories based upon the estimated proportion of time spent for each function. All other expenses are distributed based upon management s estimate of the relative functional activity. Use of 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 10

12 Notes to Financial Statements Income Taxes The Organization is exempt from Federal income tax under provisions of Section 501(c)(3) of the Internal Revenue Code and from state income taxes under similar provisions of the Florida Income Tax Code. The Organization identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the statements of financial position. The Organization has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Organization would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Organization s tax years subject to examination by the Internal Revenue Service generally remain open for three years from the date of filing. Fair Value of Financial Instruments The Organization reports its financial instruments at fair value using a three-tier hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: Level 1 Valuation based on unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Valuation based on observable quoted prices for similar assets and liabilities in active markets. Level 3 Valuation based on inputs that are unobservable and are supported by little or no market activity, therefore requiring management s best estimate of what market participants would use as fair value. A financial instrument s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management. The respective carrying value of certain financial instruments approximate their fair values due to the short-term nature of these instruments. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued expenses. The Organization did not have any Level 1, 2 or 3 financial assets or liabilities. Concentration of Credit Risks Financial instruments which potentially subject the Organization to concentration of credit risk consist principally of cash and cash equivalents. Cash and cash equivalents are maintained at highly rated financial institutions and, at times, balances may exceed federally insured limits. The Organization has never experienced any losses related to these balances. 11

13 Notes to Financial Statements Reclassifications Certain amounts on the 2014 financial statements have been reclassified to conform to the 2015 presentation. 2. Property and Equipment, Net Property and equipment consists of the following: June 30, Estimated Useful Lives Leasehold improvements yrs $ 7,457,039 $ 7,117,145 Theatrical equipment 5-35 yrs 496, ,705 Office equipment 5-10 yrs 180, ,805 Furnishings 5-10 yrs 17,749 17,749 Construction in process - 341,165 8,151,855 8,000,569 Less accumulated depreciation and amortization (5,367,025) (4,956,620) Total property and equipment, net $ 2,784,830 $ 3,043,949 Construction in process at June 30, 2014, were for dressing rooms and theatre renovations which were completed in October Line of Credit On July 1, 2011, the Organization entered into a line of credit agreement with a financial institution providing for maximum borrowings of $150,000. Interest on the line is payable monthly at a floating rate per annum equal to prime (as defined) plus 2.5%. The line is collateralized by substantially all of the Organization s assets and matured on July 1, On that date, the line of credit was renewed until July 1, 2016, with a one-year automatic renewal subject to certain limitations and the interest rate was changed to prime plus 1.75%. There was no activity on the line during the years ended June 30, 2015 and Economic Dependence The Organization receives a majority of its support through grants and management fees (see Note 5) from the University of Central Florida ( UCF ). The Organization received grants of $321,000 and management fees of $252,297 from UCF for both years ended June 30, 2015 and 2014, representing 20% of total support and revenue for each year. 5. Leased Facility and Assignment The Organization s operating facility is leased from the City of Orlando (Loch Haven Park). The lease agreement stipulates an annual lease payment in the nominal amount of $1 and expires on March 1, 2041, as amended. The Organization, as permitted under the terms of the lease with the City of Orlando, constructed a building on the leased land in Loch Haven Park which is included in leasehold improvements (see Note 2). The lease stipulates that, upon expiration of the lease, the 12

14 Notes to Financial Statements Organization will yield the property, including any improvements made by the Organization, to the City of Orlando free of all liens and encumbrances. The fair value of the use of the land for this facility has not been reflected in the accompanying financial statements, as management has determined the fair rental value of the land is not material to the financial statements. During 2001, the Organization assigned the lease to UCF for a period of 18 months, giving UCF the option to renew the assignment every 18 months thereafter until the termination of the lease. The assignment, which can be terminated without cause with a 60-day written notice, has been renewed through February The Organization has retained a residual interest in the lease, so that they will reassume the obligations under the lease if the assignment is terminated. On July 1, 2004, in connection with the lease assignment, the Organization entered into a Lease Management Services Agreement with UCF to manage and operate the building and real property, including building and grounds maintenance, repairs and custodial services. For both years ended June 30, 2015 and 2014, the Organization received $252,297 in management fees in accordance with this agreement, which is recorded as management fees revenue on the accompanying statements of activities. 6. General and Administrative General and administrative expenses consisted of the following: Year ended June 30, Personnel costs $ 190,243 $ 148,765 Professional services 61,731 77,112 Office expenses 68,490 21,925 Building utilities and maintenance 9,333 9,435 Travel 1, Temporarily Restricted Net Assets and Commitment $ 330,878 $ 258,212 During the year ended June 30, 2015, the Organization received a contribution in the amount of $50,000, which was restricted by the donor to be used for the use of various web-based software applications, including box office ticketing, donation management and credit card transactions and processing. At June 30, 2015, the Organization had not expended $27,935 of this contribution, which is shown as temporarily restricted on the accompanying financial statements. In connection with the use of the software applications, on April 24, 2015, the Organization entered into a 5- year contract with the software provider whereby the Organization will pay $28,000 per year on the anniversary date of the contract, with the last payment being made on April 22, Subsequent Events The Organization has evaluated events and transactions occurring subsequent to June 30, 2015 as of January 20, 2016, which is the date the financial statements were available to be issued. Subsequent events occurring after January 20, 2016, have not been evaluated by management. 13