Offshore Rig Museum, Inc. dba Offshore Energy Center

Transcription

1 Financial Statements For the Years Ended

2 Table of Contents Independent Auditor s Report... 1 FINANCIAL SECTION Statements of Financial Position... 2 Statements of Activities... 3 Statements of Cash Flows

3 Seefeld Lawson Moeller LLP Certified Public Accountants Office Location: 1610 Woodstead Court, Suite 455 The Woodlands, Texas Mailing Address: P.O. Box The Woodlands, Texas Telephone: Facsimile: INDEPENDENT AUDITOR S REPORT To the Board of Directors Offshore Rig Museum, Inc. Houston, Texas We have audited the accompanying financial statements of Offshore Rig Museum, Inc. (a nonprofit organization), which comprise the statements of financial position as of, and the related statements of activities 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 of 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Offshore Rig Museum, Inc. as of, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Seefeld Lawson Moeller LLP Seefeld Lawson Moeller LLP Certified Public Accountants The Woodlands, Texas July 28, 2014 Page 1

4 Statements of Financial Position ASSETS Cash and Cash Equivalents $ 6,956,839 $ 6,044,353 Accounts Receivable 110,175 74,087 Inventory 41,281 27,929 Prepaid Insurance 59,552 52,440 Other Assets 2,500 2,500 Pledges Receivable, Net 120, ,000 Property and Equipment, Net 2,419,945 2,754,197 TOTAL ASSETS $ 9,710,292 $ 9,075,506 LIABILITIES AND NET ASSETS LIABILITIES Accounts Payable and Accrued Expenses $ 52,079 $ - Deferred Revenue 40,000 26,512 TOTAL LIABILITIES 92,079 26,512 NET ASSETS Unrestricted Undesignated 5,606,883 5,262,256 Designated 1,362,506 1,358,656 Total Unrestricted Net Assets 6,969,389 6,620,912 Temporarily Restricted 2,447,574 2,226,832 Permanently Restricted 201, ,250 TOTAL NET ASSETS 9,618,213 9,048,994 TOTAL LIABILITIES AND NET ASSETS $ 9,710,292 $ 9,075,506 The accompanying notes are an integral part of these financial statements. Page 2

5 Statement of Activities For the Year Ended December 31, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES AND OTHER SUPPORT Contributions $ 190,041 $ 903,353 $ - $ 1,093,394 Event Proceeds 1,704, ,704,627 Ocean Star Admissions and Gift Shop 474, ,959 Interest Income 7,243 4,135-11,378 Other Income 8, ,194 Net Assets Released from Restrictions 686,746 (686,746) - - TOTAL REVENUES AND OTHER SUPPORT 3,071, ,742-3,292,552 EXPENSES General and Administrative 554, ,611 Event Expenses 481, ,176 Ocean Star 816, ,472 Educational Expenses 506, ,322 Depreciation 364, ,752 TOTAL EXPENSES 2,723, ,723,333 CHANGES IN NET ASSETS 348, , ,219 NET ASSETS, beginning of year 6,620,912 2,226, ,250 9,048,994 NET ASSETS, end of year $ 6,969,389 $ 2,447,574 $ 201,250 $ 9,618,213 The accompanying notes are an integral part of these financial statements. Page 3

6 Statement of Activities For the Year Ended December 31, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total REVENUES AND OTHER SUPPORT Contributions $ 172,154 $ 651,672 $ - $ 823,826 Event Proceeds 1,305, ,305,950 Ocean Star Admissions and Gift Shop 427, ,131 Interest Income 14, ,092 Other Income 2, ,190 Net Assets Released from Restrictions 784,223 (784,223) - - TOTAL REVENUES AND OTHER SUPPORT 2,705,740 (132,551) - 2,573,189 EXPENSES General and Administrative 528, ,450 Event Expenses 432, ,026 Ocean Star 999, ,236 Educational Expenses 500, ,802 Depreciation 398, ,141 TOTAL EXPENSES 2,858, ,858,655 CHANGES IN NET ASSETS (152,915) (132,551) - (285,466) NET ASSETS, beginning of year 6,773,827 2,359, ,250 9,334,460 NET ASSETS, end of year $ 6,620,912 $ 2,226,832 $ 201,250 $ 9,048,994 The accompanying notes are an integral part of these financial statements. Page 4

7 Statements of Cash Flows For the Years Ended CASH FLOWS FROM OPERATING ACTIVITIES Change in Net Assets $ 569,219 $ (285,466) Adjustments to Reconcile Change in Net Assets to Net Cash Provided in Operating Activities: Depreciation 364, ,141 (Increase) Decrease in Operating Assets Accounts Receivable (36,088) (44,087) Inventory (13,352) 504 Prepaid Insurance (7,112) (861) Other Assets - 11,500 Pledges Receivable - (60,000) Increase (Decrease) in Operating Liabilities Accounts Payable and Accrued Expenses 52,079 - Deferred Revenue 13,488 (4,976) Net Cash Provided in Operating Activities 942,986 14,755 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Property and Equipment (30,500) (80,735) Net Cash Used by Investing Activities (30,500) (80,735) NET INCREASE (DECREASE) IN CASH 912,486 (65,980) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6,044,353 6,110,333 CASH AND CASH EQUIVALENTS, END OF YEAR $ 6,956,839 $ 6,044,353 Supplemental Cash Flow Information In-Kind Donations $ 97,183 $ 111,815 There were no cash flows from financing activities for the years ended. The accompanying notes are an integral part of these financial statements. Page 5

8 NOTE 1 Description of Organization Offshore Rig Museum, Inc. doing business as Offshore Energy Center ( the Center and OEC ), is a not-for-profit organization that was incorporated on January 25, 1989, to promote the educational awareness of the general public of the history and current technology in the offshore energy arena. The Center receives donations primarily from various energy corporations in order to sponsor and operate the Ocean Star Offshore Drilling Rig and Museum in Galveston, Texas (the Ocean Star ), the Offshore Energy Center Hall of Fame, the Educational Outreach Program and Offshore Energy Center SOCIETY. The initiatives of these entities are as follows: The Center The goal of the Center is to promote the offshore energy industry through its Educational Outreach programs and the Ocean Star Drilling Rig and Museum. In addition, it provides a speakers bureau for business, civic and private groups. The Ocean Star The goal of the Ocean Star is to provide a museum housing interactive exhibits and displays of the history and technological advances of offshore exploration, drilling and production, including an authentic marine drilling rig to further display the scope and sense of adventure inherent in the offshore energy industry. The Ocean Star was opened in April 1997 and operation will continue to be funded on an as-needed basis from ongoing operations and fund-raising events. OEC also collects membership fees through its program, Ocean Star Memberships. The Hall of Fame The Hall of Fame was established to recognize those innovators and leaders who distinguish themselves in such a way that they stand out clearly in the industry. These leaders are recognized as Industry Pioneers. Certain technologies stand out as milestones in the development of our offshore resources. The Center honors the organizations and individuals as Technology Pioneers. Pioneers are inducted into the Hall of Fame at the annual Ocean Star Gala. Education Outreach The purpose of the outreach program is to enhance science and technology curriculums for school children from K 12 th grade through teacher workshops, field trips, overnight and summer camps at the Ocean Star, utilization of the Playing with Petroleum (K 5 th grade) and Knowledge Box (6 12 th grade) traveling trunks, and for 5 th grade and higher, the traveling exhibit known as the Mobile Oilfield Learning Unit (MOLU). All education outreach programs are aligned to National and State curriculums. The program is also designed to ensure awareness of the industry s contribution to and continued improvement of the environment. Page 6

9 Offshore Energy Center (OEC) SOCIETY The purpose of the OEC SOCIETY is to support the education and public service objectives of the Center through developing community participation and financial support. Following is the information on the governing of the above initiatives and their board relationship: The OEC Board of Directors controls the activities of the OEC and its initiatives. All officers, at large directors and committee chairs are eligible for reelection to the same position for two additional terms; after one year s absence from that position, they are again eligible for reelection. The chairman is an ex-officer member of all committees except the nominating committee. All staff reports to the executive director. The Ocean Star has a staff, led by the Operations Director, who reports to the Executive Director. The Hall of Fame has a volunteer committee who chooses the Pioneers to be inducted into the Hall of Fame, from nominations from the energy industry. The chairman of the Hall of Fame committee has two sub-committee chairs reporting to him; the Chairman of the Industry Pioneers and the Chairman of the Technology Pioneers. The Hall of Fame committee chair attends board meetings, reporting its nominees to the OEC Board of Directors. The Education Outreach Program has an advisory board that meets quarterly to discuss the activities of the program. The Education Director reports directly to the Executive Director and is on the Education Outreach Advisory Board. The vice chairman of Educational Outreach heads up the committee and reports back to the OEC Board or Directors. The vice chairman of Educational Outreach is a permanent officer position on the OEC Board of Directors. The OEC SOCIETY has its own by-laws and its own self-perpetuating board of directors, comprising of the chairman, vice chairman, secretary/treasurer, immediate past chairman, two members at large and other chairs as needed, e.g. membership chair and events chair. Their terms are two years, renewable for two more years. Each position is elected. The chairman of the OEC SOCIETY has a permanent position on the OEC Board of Directors. NOTE 2 Summary of Significant Accounting Policies Basis of Accounting The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents The Center considers all highly liquid financial instruments purchased with an original maturity of three months or less to be cash equivalents. The Center maintains cash balances in bank accounts Page 7

10 which, at times, exceed federally insured amounts. The Center monitors the financial condition of the bank and has experienced no losses associated with these accounts. Allowance for Uncollectible Receivables The Center provides an allowance for pledges receivable that it believes may not be fully collectible. At there were no allowances. Net Asset Categories Financial reporting standards for not-for-profit organizations require that resources be classified for reporting purposes into three net asset categories according to donor-imposed restrictions or by law. A description of the Center s three net asset categories is as follows: Unrestricted net assets include net assets that are not subject to donor-imposed stipulations. Temporarily restricted net assets include gifts for which donor-imposed restriction have not been met and pledges receivable for which the ultimate purpose of the proceeds is not permanently restricted. Permanently restricted net assets include gifts and pledges that require, by donor stipulation, for the corpus to be invested in perpetuity and only the income be made available for program operations. Inventory Inventory is valued at the lower of cost or market utilizing the first-in, first-out method ( FIFO ) and primarily consists of oil industry souvenirs, arts and crafts and educational materials. Property and Equipment The Organization capitalizes all expenditures in excess of $5,000 for property and equipment at cost. Contributed property and equipment is recorded at fair value at the date of donation. In the absence of donor stipulations regarding how long the contributed assets must be used, the Organization has adopted a policy of implying a time restriction on contributions of such assets that expires over the assets useful lives. As a result, all contributions of property and equipment, and of assets contributed to acquire property and equipment, are recorded as restricted support. Depreciation is provided over the estimated useful lives of the respective assets on a straight-line basis. Routine repairs and maintenance are expensed as incurred. Contributed Services and Facilities A number of unpaid volunteers have made significant contributions of their time and services to the Center. The value of these contributions is not reflected in the accompanying financial statements since it is not susceptible to objective measurement or valuation. Page 8

11 Additionally, sponsoring firms and individuals have provided office facilities and support, administrative and professional services, advertising and printing support and other forms of assistance. The value of these services in 2013 and 2012 were $48,000 and $48,000, respectively and is included in unrestricted contributions and general and administrative expenses in the accompanying statements of activities. Ocean Star Revenue and Expenses The Ocean Star charges admission fees to tour the museum and sells various items in the gift shop. These revenues are included in Ocean Star admission and gift shop revenues in the accompanying statement of activities. The costs incurred to operate the Ocean Star are included in Ocean Star expenses in the accompanying statement of activities. The OEC SOCIETY is a volunteer organization that supports the missions of the Offshore Energy Center. From time to time, the members of the OEC SOCIETY may hold special events to raise funds for the Offshore Energy Center. The revenue and costs incurred to operate the OEC SOCIETY are included in the OEC SOCIETY revenues and expenses captions, respectively, in the accompanying statement of activities. In 2012, the membership portion of the OEC SOCIETY program was modified and renamed to Ocean Star memberships and is reported in the Ocean Star revenues and expenses. The OEC SOCIETY continues to organize and run various fundraising events to raise funds for the Offshore Energy Center. Impairment of Long-Lived Assets The carrying values of long-lived assets, which include property and equipment, are evaluated periodically for impairment. Impairment losses are recognized when indicators of impairment are present and undiscounted cash flows estimated to be generated by the Center s investments is less than the carrying amount of such investments. The amount of the impairment loss, if any, is determined by comparing the carrying amount of the Center s investments to its estimated fair value. No impairment losses have been recognized for the years ended. Taxes The Center is classified as an organization that is not a private foundation under Section 509(a) of the Internal Revenue Code. Therefore, no provision for federal income taxes is included in the accompanying financial statements. The Center is subject, however, to federal income taxes on unrelated business income as stipulated in Internal Revenue Section 511. To date, the Center has not incurred any tax liability from unrelated business income. The Center s federal Return of Organization Exempt from Income Tax (Form 990) for 2010, 2011, and 2012 are subject to examination by the IRS, generally for three years after they are filed. 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 Page 9

12 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 these estimates. Advertising Costs All advertising costs are expensed when incurred. Advertising cost for the years ended December 31, 2013 and 2012 were $80,835 and $60,273, respectively. Date of Management Review The Center has evaluated subsequent events through July 28, 2014, the date which the financial statements were available to be issued. NOTE 3 Pledges Receivable Under the provisions of Financial Accounting Standards (FASB) Accounting Standards Codification (ASC) , Not-for-Profit Entities Revenue Recognition, pledges receivable are reflected as pledge revenue and temporarily restricted net assets in the years in which the unconditional promises to give are made. When an unconditional promise is collected and the donor restriction, if any, is met, the net assets are released from restricted funds and classified as unrestricted support in the accompanying statement of activities. The Center accounts for the pledges receivable as temporarily restricted net assets in the year in which the pledges are made in accordance with FASB ASC Unconditional promises to give that are expected to be collected within one year are recorded at net realizable value. Unconditional promises to give that are expected to be collected in future years are recorded at the present value of their estimated future cash flows. The discounts on those amounts are computed using risk-free interest rates applicable to the years in which the promises are received. Amortization of the discounts is included in contribution revenue. The Center s pledges receivable are summarized as follows as of December 31: Unrestricted pledges $ 120,000 $ 120,000 Less: Discounts on pledges receivable - - Less: Allowance for uncollectible receivables - - Net pledges receivable $ 120,000 $ 120,000 Amounts due in: Less than one year $ 50,000 $ 40,000 One to five years 70,000 80,000 Total $ 120,000 $ 120,000 Page 10

13 All contributions to the Center are considered to be available for unrestricted use unless specifically restricted by the donor. During 2002, the Center initiated an education excellence campaign through which companies and individuals made contributions that will be used for educational purposes. Contributions that have been temporarily restricted for education for the years ended are $846,269 and $604,910, respectively. In addition to monetary donations, companies and individuals have donated exhibits and equipment to the Center (equipment gifts in-kind). These donations are recognized as revenue on the date of contribution at estimated fair market value and are included in contributions in the accompanying statement of activities. NOTE 4 Property and Equipment Rig and exhibits include the cost to purchase the rig and equipment and preparing the rig for its intended purpose and the estimated value of any donations in-kind. The rig and exhibits are being depreciated on the straight-line method from the date the Ocean Star was opened for operation, April 27, The estimated useful lives for computing depreciation are 20 years for the rig and 5 years for the exhibits. The components of property and equipment at December 31 are as follows: Buildings $ 130,020 $ 130,020 Furniture and Fixtures 66,904 66,904 Machinery and Equipment 60,827 60,827 Rig and Exhibits 8,484,287 8,453,787 Total Property and Equipment 8,742,038 8,711,538 Accumulated Depreciation (6,322,093) (5,957,341) Property and Equipment, Net $ 2,419,945 $ 2,754,197 Depreciation expense for the years ending was $364,752 and $398,141, respectively. Page 11

14 NOTE 5 Endowments Balances of the funds included in permanently restricted and designated net assets at December 31: Endowment Funds: Use of income is unrestricted $ 1,563,756 $ 1,559,906 Use of income is restricted - - Total Endowment Funds $ 1,563,756 $ 1,559,906 The Center s endowments consist of funds established for a variety of purposes. Its endowments include donor-restricted funds. As required by accounting principles generally accepted in the United States of America, net assets associated with endowment funds are classified and reported on the existence or absence of donor-imposed restrictions. The Center s Board has interpreted the UPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Center classifies as permanently restricted net assets the original value of gifts donated to the permanent endowment, the original value of subsequent gifts to the permanent endowment, and accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Center in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Center considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: the duration and preservation of the fund, the purposes of the Center and the donor-restricted endowment fund, general economic conditions, the possible effect of inflation and deflation, the expected total return from income and the appreciation of investments, other resources of the Center, and the investment policies of the Center. The endowment net asset composition by type of fund as of December 31: December 31, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ - $ - $ 201,250 $ 201,250 Board-designated endowment funds 1,362, ,362,506 $ 1,362,506 $ - $ 201,250 $ 1,563,756 Page 12

15 December 31, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ - $ - $ 201,250 $ 201,250 Board-designated endowment funds 1,358, ,358,656 $ 1,358,656 $ - $ 201,250 $ 1,559,906 The changes in endowment net assets as of December 31 are as follows: December 31, 2013 Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning $ 1,358,656 $ - $ 201,250 $ 1,559,906 Investment return: Investment income 3, ,900 Total investment return 1,362, ,250 1,563,806 Appropriation of endowment assets for expenditure (50) - - (50) Endowment net assets, ending $ 1,362,506 $ - $ 201,250 $ 1,563,756 December 31, 2012 Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, beginning $ 1,352,762 $ - $ 201,250 $ 1,554,012 Investment return: Investment income 5, ,944 Total investment return 1,358, ,250 1,559,956 Appropriation of endowment assets for expenditure (50) - - (50) Endowment net assets, ending $ 1,358,656 $ - $ 201,250 $ 1,559,906 From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or UPMIFA requires the Center to retain as a fund of perpetual duration. In accordance with accounting principles generally accepted in the United Page 13

16 States of America, there were no deficiencies of this nature reported in unrestricted net assets, as of. The Center has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Center must hold in perpetuity or for a donor-specified. The Center invests endowment funds in money market accounts and certificates of deposits to maintain a low risk portfolio. NOTE 6 Commitments and Contingencies The Center leases a portion of Pier 19 in Galveston, Texas, which is the site of the Ocean Star, from the board of trustees of the Galveston Wharves under a lease agreement that expires in October Future minimum lease payments are as follows: Year Ending December 31 Amount 2014 $ 15, ,793 Total $ 28,840 Additionally, the Center is subject to pay a sum equal to 10% of the Center s monthly net revenues, as defined in the lease agreement. The Center has never been subject to pay this amount as the Center has always operated at a loss. NOTE 7 Concentrations and Credit Risk The Center is subject to geographic and donor concentrations. Because of the nature of its nonprofit purpose, its contributors are located primarily in the Houston metropolitan area. Also, due to the Center s purpose, it relies heavily on contributions from energy industry related companies. From time to time, the Center maintains cash and cash equivalent balances at certain institutions in excess of the federally insured limit of $250,000. The Center monitors the financial condition of these institutions and has experienced no losses on these accounts. Page 14

17 NOTE 8 Event Proceeds and Expenses Event contributions represent monies received in conjunction with the Center s annual golf tournament, fishing tournament, gala, speaker series, salute to industry interns, and sporting clay events. December 31, 2013 Revenues Expenses Net Revenues Golf Tournament $ 135,250 $ 36,344 $ 98,906 Fishing Tournament 241,067 73, ,687 Gala 1,057, , ,967 Speaker Series 66,800 25,512 41,288 Salute to Industry Interns 66,500 46,767 19,733 Sporting Clay 137,260 45,346 91,914 Total $ 1,704,627 $ 456,132 $ 1,248,495 December 31, 2012 Revenues Expenses Net Revenues Golf Tournament $ 123,500 $ 34,431 $ 89,069 Fishing Tournament 191,900 80, ,320 Gala 864, , ,989 Speaker Series 64,550 21,513 43,037 Salute to Industry Interns 61,500 45,706 15,794 Total $ 1,305,950 $ 406,741 $ 899,209 NOTE 9 Employment Benefit Plans Retirement Plan Beginning December 1, 2008, the Center made available to its employees a 401(k) retirement plan to replace the existing 403(b) retirement plan. All employees having attained age 21, completed 1 year of service and satisfied working 1,000 hours during a consecutive 12 month period, can elect to enter the Plan. Employees are able to enter the Plan January 1 st or the date 6 months later. Under the Plan, participating employees can contribute up to the maximum allowed by the Internal Revenue Service. The Center matches up to 4% of employees contribution for the employees retirement accounts. There is a vesting schedule for employer matching. Employees become fully vested after 6 years of employment with the Center; however, employees already participating in the former 403(b) retirement plan with 6 years or more investment automatically become fully vested. Total contributions for the years ended were $22,960 and $22,985, respectively. Page 15

18 Employee Benefits The Center provides group health and life/ad&d insurance to all full-time, permanent employees. In addition, the Center also offers group dental insurance to all full-time and permanent employees. The insurance contributions were $179,788 and $127,551 for the years ended December 31, 2013 and 2012, respectively. Page 16