The Dayton Ballet Association

Transcription

1 Financial Statements June 30, 2012 and 2011 with Independent Auditors' Report

2 TABLE OF CONTENTS Independent Auditors' Report 1 Financial Statements: Statements of Financial Position... 2 Statements of Activities.. 3 Statements of Cash Flows. 4 Notes to Financial Statements

3 INDEPENDENT AUDITORS' REPORT Board of Trustees Dayton, Ohio We have audited the accompanying statements of financial position of (a notfor-profit corporation) as of June 30, 2012 and 2011, and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Association's management. 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above presents fairly, in all material respects, the financial position of as of June 30, 2012 and 2011, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the financial statements, on July 1, 2012 the Dayton Ballet Association, Dayton Philharmonic Orchestra and Dayton Opera Association completed a merger of their operations into the Dayton Performing Arts Alliance. Our opinion on the financial statements is not modified with respect to that matter. Dayton, Ohio September 7, innovation drive, ste. 400 dayton, oh cincinnati cleveland columbus miami valley springfield toledo p f

4 Statements of Financial Position June 30, 2012 and Assets Current assets: Cash $ 105, ,213 Receivables: Contributions 173, ,220 Trade 10,357 3,915 Prepaid expenses and supplies 39,225 24, , ,404 Beneficial interest in perpetual trust 319, ,633 Property and equipment: Equipment, sets and costumes 510, ,756 Office and computer equipment 144, ,394 Construction in process 7, , ,150 Less accumulated depreciation 567, ,635 94, ,515 $ 742, ,552 Liabilities and net assets Current liabilities: Accounts payable $ 8,931 5,395 Accrued expenses 13,423 12,595 Deferred revenue 126, , , ,573 Net assets (deficit): Unrestricted (11,479) 67,491 Temporarily restricted 284, ,855 Permanently restricted 319, , , ,979 $ 742, ,552 See accompanying notes to financial statements. 2

5 Statements of Activities Unrestricted net assets: Revenues: Performance revenue $ 428, ,373 Tuition 181, ,117 less scholarships (22,578) (39,775) Investment income 12,275 13,196 Playbill - 22,980 Special events 78,248 58,074 Other 40,893 12, , ,640 Support: Corporate sponsorships 31,750 65,000 Governments 41,142 17,013 Foundations 26,910 23,480 Dayton Ballet Foundation 7,076 12,229 Annual giving 104,768 54,445 In-kind contributions 35,661 80,706 Net assets released from restrictions 244, , , ,723 Expense: Performance and production costs 887,521 1,029,301 Ballet School 156, ,482 General and administrative 214, ,771 Special events 20,081 26,979 Fundraising 11,338 7,550 Total unrestricted expenses 1,289,141 1,418,083 Changes in unrestricted net assets (78,970) (56,720) Temporarily restricted net assets: Support: Corporate sponsorships 25,000 37,500 Foundations 150, ,000 CultureWorks 97,879 98,880 Other contributions 5,550 6,475 Net assets released from restrictions (244,380) (387,850) Changes in temporarily restricted net assets 34,049 (136,995) Permanently restricted net assets: Gain (loss) on perpetual trust (20,146) 49,383 Changes in net assets (65,067) (144,332) Net assets - beginning of year 657, ,311 Net assets - end of year $ 592, ,979 See accompanying notes to financial statements. 3

6 Statements of Cash Flows Cash flows from operating activities: Changes in net assets $ (65,067) (144,332) Adjustments to reconcile changes in net assets to net cash provided by operating activities: Depreciation 30,034 26,962 Loss (gain) on perpetual trust 20,146 (49,383) Effects of change in operating assets and liabilities: Contributions receivable (52,121) 292,228 Accounts receivable - trade (6,442) (3,145) Prepaid expenses and supplies (15,169) 8,989 Accounts payable 3,536 (4,183) Accrued expenses 828 (8,429) Deferred revenue 4,183 (14,753) Net cash provided (used) by operating activities (80,072) 103,954 Cash flows from investing activities: Purchase of property and equipment (19,869) (5,701) Net cash used by investing activities (19,869) (5,701) Change in cash (99,941) 98,253 Cash - beginning of year 205, ,960 Cash - end of year $ 105, ,213 See accompanying notes to financial statements. 4

7 Notes to Financial Statements 1. NATURE OF THE ORGANIZATION:, (the "Association") is a not-for-profit corporation which performs classic and contemporary dance works and provides dance education for the general public. The Association s performance revenues and ticket receivables are primarily generated from subscribers in metropolitan Dayton, Ohio. The Association also obtains the majority of its contributions from patrons in the Dayton area. On July 1, 2012, the Dayton Ballet Association was merged with and into the Dayton Philharmonic Orchestra. The surviving corporation s name was changed to the Dayton Performing Arts Alliance. The merger of these entities will be accounted for under the acquisition method. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The following accounting principles and practices of the Association are set forth to facilitate the understanding of data presented in the financial statements: Revenue recognition The Association records contributions received as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Contributions that are restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the year in which the contributions are received. All other donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Permanently restricted net assets consist of a beneficial interest in a foundation endowment whose use is permanently restricted by the donor. Contributions of services, facilities and materials ( in-kind ) which meet the requirements for recognition are reported as revenues and expenses at estimated fair market values. These recorded amounts primarily relate to advertising and other professional services. In addition to the recorded contributions, a substantial number of volunteers have donated significant amounts of their time to the Association s program services and fund-raising activities. Since these services do not meet the requirements for recognition, the value thereof is not reflected in the accompanying financial statements. Sales of season ticket subscriptions and production fees for programs to be performed the following fiscal years are recorded as deferred revenue. Revenues from such sales will be recognized during the fiscal year the programs are presented. Receivables Contributions receivable are recorded at cost, and have been adjusted for all known uncollectible accounts. No allowance for doubtful accounts has been provided. On a periodic basis, the Association evaluates its trade accounts receivable and establishes an allowance for doubtful accounts based on current information known about each account. The majority of trade accounts receivable consists of grants and ticket sales, which are considered fully collectible. The remaining trade accounts receivable have been adjusted for all known uncollectible accounts. No allowance for doubtful accounts has been provided. Supplies Supplies consist of dancers shoes and equipment and are stated at the lower of cost or market. 5

8 Notes to Financial Statements Property and equipment Property and equipment are stated at cost, or if donated, at the estimated fair market value at the date of receipt. Depreciation of property and equipment is provided over the estimated useful lives of the assets using the straight-line method. Expenditures for maintenance and repairs are charged to expense when incurred. Income taxes The Association is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code. In addition, the Association qualifies for the charitable contribution deduction under Section 170(b)(1)(A)(vi) and has been classified as an organization that is not a private foundation under Section 509(a)(1). Uncertain income tax positions Accounting principles generally accepted in the United States of America require management to evaluate tax positions taken by the Association and recognize a tax liability if the Association has taken an uncertain position that more likely than not would fail to be sustained upon examination by the Internal Revenue Service. As discussed above, the Association is exempt from federal income taxes and management believes the Association has not engaged in any activities that would disqualify it from taxexempt status or incur a tax obligation for the years ended June 30, 2012 and The Association believes their estimates are appropriate based on current facts and circumstances. The Association is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Association believes it is no longer subject to income tax examinations for years ended prior to June 30, The Association s policy with regard to interest and penalty, if incurred, is to recognize interest through interest expense and penalties through other expense. Concentration of credit risk The Association s financial instruments that are exposed to concentrations of credit risk consist primarily of contributions receivable. For the year ended June 30, 2012, 3 donors accounted for approximately 52% of contribution revenue and two donors accounted for approximately 89% of contributions receivable at year end. For the year ended June 30, 2011, 3 donors accounted for approximately 62% of contribution revenue and one donor accounted for approximately 82% of contributions receivable at year end. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Subsequent events The Association evaluates events and transactions occurring subsequent to the date of the financial statements for matters requiring recognition or disclosure in the financial statements. The accompanying financial statements consider events through September 7, 2012, the date on which the financial statements were available to be issued. 3. BENEFICIAL INTEREST IN PERPETUAL TRUST: The Association is an income beneficiary of a perpetual trust. The assets of this trust are maintained by the Dayton Foundation, a local charitable foundation, and are not under the control of the Association. The trust provides that the Association has the irrevocable right to receive the income earned on the trust assets in perpetuity. Accounting principles generally accepted in the United States of America require the Association to record a permanently restricted net asset and related asset entitled "Beneficial interest in perpetual trust", representing the present value of the expected future cash flows of income from the trust. At June 30, 2012 and 2011, the present value of the expected future cash flows of income from the trust was equal to the fair market value of the assets held in the trust and amounted to $319,487 and $339,633, respectively. 6

9 Notes to Financial Statements 4. RELATED-PARTY TRANSACTIONS: The Dayton Ballet Foundation ( Foundation ) is a self-supporting nonprofit organization which raises funds to support the Association. The Association received $7,076 and $12,229, respectively, from the Foundation during the fiscal years ended June 30, 2012 and OPERATING LEASES: The Association rents its office, ballet studios, and warehouse space under various operating leases. The Association also leases space for instructional classrooms and theaters for performances based on a per usage rate. Future minimum rentals required under the noncancellable operating leases for the fiscal year ended June 30 are as follows: 2013 $ 32, , , , ,000 Thereafter $ 24, ,589 Rental expense under the above leases plus other short-term leases totaled $179,392 and $182,298 for the fiscal years ended June 30, 2012 and 2011, respectively. 6. SCHOLARSHIPS: The Association awards scholarships for its ballet school to dance students based on financial need and artistic ability. Scholarships awarded during the fiscal years ended June 30, 2012 and 2011 totaled $22,578 and $39,775, respectively. 7. FAIR VALUE MEASUREMENTS: Accounting principles generally accepted in the United States of America establish a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure 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 under accounting principles generally accepted in the United States of America are described as follows: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access. Level 2: Inputs to the valuation methodology include: Quoted prices for similar assets or liabilities; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. 7

10 Notes to Financial Statements The asset s or liability s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. Following is a description of the valuation methodologies used for assets measured at fair value: Beneficial interest in perpetual trust: The Association is the beneficiary of a perpetual trust managed by the Dayton Foundation. The fair value of beneficial interests is determined based upon the Association s proportional interest in the fair value of the underlying trust assets. The underlying trust assets are either readily marketable and have fair values which are determined by obtaining quoted market prices in active markets, or are determined by the trust using information provided by the related investment manager. There have been no changes in the methodologies used during 2012 and The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while management believes that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The fair value of the Association s beneficial interest in the perpetual trust is directly dependent upon the fair value of the trust s underlying investment securities. Such securities are exposed to various risks, such as interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain financial instruments, it is reasonably possible that a change in the value of investment securities will occur in the near term and that such change could materially affect the amounts reported in the financial statements. The following table summarizes the bases used to measure certain financial assets at fair value on a recurring basis as of June 30, 2012 and 2011: Total Level 1 Level 2 Level 3 At June 30, 2012: Beneficial interest in perpetual trust $ 319, ,487 At June 30, 2011: Beneficial interest in perpetual trust $ 339, ,633 8

11 Notes to Financial Statements Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3): Beginning of year $ 339, ,250 Purchases 5,120 5,822 Sales (13,687) (14,372) Net gain (loss) (11,579) 57,933 End of year $ 319, ,633 9