FINANCIAL STATEMENTS May 31, 2016 and 2015
Table of Contents May 31, 2016 and 2015 TAB: REPORT Accountant s Compilation Report 1 TAB: FINANCIAL STATEMENTS Statement of Financial Position 2 Statement of Activities 3 Statement of Cash Flows 4 Notes to Financial Statements 5 10 Supplementary Information Statement of Revenues and Expenses Administrative 11 Statement of Revenues and Expenses Restaurant and Bar 12 13 Statement of Revenues and Expenses Golf Course 14 Statement of Revenues and Expenses Tennis 15 Statement of Revenues and Expenses Pool and Fitness 16 Statement of Revenues and Expenses Clubhouse 17 Statement of Revenues and Expenses Pro Shop 18
Accountants Compilation Report Board of Directors and Stockholders New Bern Golf & Country Club, Inc. New Bern, North Carolina Management is responsible for the accompanying financial statements of New Bern Golf & Country Club, Inc. (a nonprofit organization), which comprise the statement of financial position as of May 31, 2016 and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. New Bern, North Carolina August 4, 2016 1
Statement of Financial Position May 31, 2016 and 2015 Assets Current assets: Cash $ 511,309 $ 518,369 Accounts receivable, net 467,838 495,287 Inventory 51,975 52,052 Prepaid expenses 8,466 9,417 Total current assets 1,039,588 1,075,125 Property and equipment, net 4,739,288 4,780,508 Total assets $ 5,778,876 $ 5,855,633 Liabilities and net assets Current liabilities Accounts payable $ 47,988 $ 28,348 Accrued expenses 97,346 89,267 Current maturities of long term debt 262,857 236,157 Unearned income 203,553 213,294 Deferred capital fund assessment 148,775 149,825 Total current liabilities 760,519 716,891 Long term debt 1,149,340 1,362,682 Total liabilities 1,909,859 2,079,573 Unrestricted net assets: Undesignated 3,760,463 3,653,712 Board designated 108,554 122,346 Total unrestricted net assets 3,869,017 3,776,058 Total liabilities and net assets $ 5,778,876 $ 5,855,631 See accompanying notes and independent accountants compilation report. 2
Statement of Activities Revenue Administrative $ 2,323,052 $ 2,373,375 Restaurant and Bar 1,320,415 1,306,480 Tennis 3,105 3,274 Pool and Fitness 25,077 13,099 Pro Shop 183,458 199,297 Total Revenue 3,855,107 3,895,525 Operating expenses: Administrative 852,811 908,293 Restaurant and Bar 1,603,128 1,586,975 Golf course 553,736 493,281 Tennis 117,406 120,374 Pool and Fitness 85,711 78,948 Clubhouse 375,287 389,311 Pro Shop 175,969 173,264 Total Operating expenses 3,764,048 3,750,446 Income (loss) from operations 91,059 145,079 Other income (expense) Loss on disposal of fixed assets 0 (427) Total other income (expense) 0 (427) Revenues over/under expenses before other changes in unrestricted net assets 91,059 144,652 Other changes in unrestricted net assets: Issuance of common stock 3,600 3,000 Redemption of common stock (1,700) (4,500) Increase (Decrease) in unrestricted net assets 92,959 143,152 Unrestricted net assets, beginning of year 3,776,058 3,632,906 Unrestricted net assets, end of year $ 3,869,017 $ 3,776,058 See accompanying notes and independent accountants compilation report. 3
Statement of Cash Flows Cash flows from operating activities Net income $ 91,059 $ 144,652 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 273,817 322,367 Amortization 811 0 (Gain) loss on sale of asset 0 427 (Increase) decrease in accounts receivable 27,449 (3,446) (Increase) decrease in inventory 77 809 (Increase) decrease in prepaid expenses 951 1,584 Increase (decrease) in accounts payable 19,640 (71,086) Increase (decrease) in accrued expenses 8,079 1,828 Increase (decrease) in unearned income (9,741) 10,975 Increase (decrease) in other current and accrued liabilities (1,050) 5,800 Net cash provided by operating activities 411,092 413,910 Cash flows from investing activities Purchase of property and equipment (233,408) (134,967) Net cash used by investing activities (233,408) (134,967) Cash flows from financing activities Net borrowings (repayments) of long term debt (186,642) (226,755) Proceeds from issuance of common stock 3,600 3,000 Redemption of common stock (1,700) (4,500) Net cash provided by financing activities (184,742) (228,255) Net increase (decrease) in cash (7,058) 50,688 Cash, beginning of year 518,367 467,679 Cash, end of year $ 511,309 $ 518,367 Supplemental disclosure Interest paid $ 53,441 $ 64,909 See accompanying notes and independent accountants compilation report. 4
Notes to Financial Statements NOTE 1 ACCOUNTING POLICIES This summary of significant accounting policies of New Bern Golf and Country Club, Inc. is presented to assist in understanding the Organization s financial statements. The financial statements and notes are representations of the Organization s management, who are responsible for the integrity and objectivity of the financial statements. Organization The New Bern Golf and Country Club, Inc. is a nonprofit organization. Its activities and services consist of a golf course, swimming pool, fitness room, tennis courts and dining facilities. Basis of Accounting The Club records its transactions using the accrual basis method of accounting, whereby revenue and the related assets are recognized when earned and expenses are recognized when the obligation is incurred. Membership dues and capital fund assessments billed in advance are shown as unearned income. Accounts Receivable Member accounts receivable are stated at the amount management expects to collect from balances outstanding at year end. The Club establishes an allowance for doubtful accounts based on management's assessment of the credit history with members having outstanding balances and current relationships with them. Inventories Inventories are valued at cost. Cost is determined by the first in, first out method. Income Taxes The Club is exempt from federal and state income taxes under Section 501(c)(7) of the Internal Revenue Code, except on net income derived from unrelated business activities. The Club s unrelated business activity is any revenue or fees collected from nonmembers. At May 31, 2016 the Club had no tax liability on this unrelated business activity. The Club believes that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax positions that are material to the financial statements. The Club s federal Exempt Organization Business Income Tax Returns (Form 990 and Form 990T) for 2015, 2014, and 2013 are subject to examination by the IRS, generally for three years after they were filed. Cash Equivalents For purposes of the statement of cash flows, the Club considers all short term instruments with a maturity of three months or less when purchased to be cash equivalents. 5
Notes to Financial Statements Property and Equipment Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their service lives on the straight line method. Total depreciation expenses for the years ended May 31, 2016 and 2015 were $273,817 and $322,367, respectively. Furniture and fixtures Machinery and equipment Vehicles Leasehold improvements Buildings 10 years 10 years 10 years 40 years 40 years The cost of assets sold or otherwise disposed of and the accumulated depreciation thereon are eliminated from the accounts, and the resulting gain or loss is reflected in the income for the period. Expenditures for maintenance and repairs are charged to income as incurred; replacements and betterments that extend the useful lives are capitalized. 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. Compensated Absences There is no carryover of vacation time year to year and employees are not compensated for unused sick leave at termination of employment. Therefore, there is no accrued liability for compensated absences. Basis of Presentation Financial statement presentation follows the recommendations of FASB Accounting Standards Codification (ASC) 958, Presentation of Financial Statements of Not for Profit Entities. Under ASC 958, the Club is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. The Club does not have any temporarily or permanently restricted net assets. Fair Value of Financial Instruments The Company s financial instruments consist of cash, accounts receivable, and accounts payable. The recorded values of cash, accounts receivable, and accounts payable approximate their fair values based on their short term nature. 6
Notes to Financial Statements NOTE 2 INVENTORY Inventories consisted of the following: Food and beverages $ 51,975 $ 52,052 NOTE 3 OPERATING LEASE COMMITMENTS The Club is obligated under three operating leases. The lease for golf carts is $3,020 per month which expires November 2018. The lease for utility vehicles is $179 per month which expires November 2018. The lease for the greens mower is $752 per month which expires November 2020. The minimum rental commitments with initial terms in excess of one year as of May 31,2016 are as follows: May 31, 2017 $ 47,412 May 31, 2018 47,412 May 31, 2019 28,218 May 31, 2020 4,512 $ 127,554 Rental expense for all operating leases except those with terms of a month or less that were not renewed for the year ended May 31 are as follows: 2016 2015 $ 42,900 $ 38,390 NOTE 4 CONCENTRATION OF CREDIT RISKS The Company maintains cash balances in one financial institution. At May 31, 2016 and 2015, the Organization's cash and cash equivalents exceeded the federally insured limit of $250,000 by $272,173 and $296,350, respectively. The Club grants credit without collateral to its members. 7
NOTE 5 RETIREMENT PLAN New Bern Golf & Country Club, Inc. Notes to Financial Statements On May 16, 2001, the Club established a Simple IRA pension plan covering all employees who earn $5,000 or more per year during any prior year of employment. The Club will contribute a matching contribution to each eligible employee's Simple IRA equal to the employee's salary reduction contributions up to a limit of 3% of the employee's compensation for the year. The Club's contributions for the years ending May 31, 2016 and 2015 were $19,367 and $17,588, respectively. NOTE 6 LONG TERM DEBT Long term debt consists of two note payables to two financial institutions. The balances at May 31, 2016 and 2015 were $1,412,197and $1,598,839, respectively. The Club signed a new loan agreement on June 27, 2005 in the amount of $3,900,000, and a note modification agreement on October 15, 2015 in the amount of $1,517,986. The terms of the loan are interest at a fixed rate of 3.34%. The loan also calls for 71 equal consecutive monthly payments of $24,300 commencing on November 22, 2015 and one final payment of the balance due on October 22, 2021. Collateral consists of a first lien deed of trust on the Club s property. The Club also entered into a capital lease for a copier on September 12, 2012 in the amount of $15,591. The lease calls for 48 equal consecutive monthly payments, including taxes, of $324.81. The Club also entered into a capital lease for a mower on May 5, 2016 in the amount of $37,467. The lease calls for 36 equal consecutive monthly payments, including taxes, of $1,040.76. Interest paid for the years ending May 31, 2016 and 2015 was $53,441 and $64,909, respectively. The future principal payments on the note payable are summarized as follows: 2017 $ 262,857 2018 270,341 2019 275,167 2020 275,640 2021 284,988 Thereafter 43,204 $ 1,412,197 NOTE 7 CAPITAL RESERVE FEES A capital reserve fee was instituted in 2007 to be used for capital expenditures. The capital reserve fee is $250 per member, payable each June 15. The balances of the capital reserve at May 31, 2016 and 2015 were $108,554 and $122,346, respectively. 8
Notes to Financial Statements NOTE 8 ACCOUNTS RECEIVABLE Accounts receivable consist primarily of member dues. At May 31, 2016 and 2015, the allowances for doubtful account balances were $6,241 and $22,600 respectively. NOTE 9 FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used by the Organization in estimating the fair value of its financial instruments: Cash and cash equivalents The carrying amount reported in the statement of financial position approximates fair value because of the short maturity of those instruments. Loan payable The carrying amount reported in the statement of financial position approximates fair value because the Organization can obtain similar loans at the same terms. The estimated fair values of the Organization s financial instruments are as follows: Carrying Amount Fair Value Cash and cash equivalents $ 511,309 $ 511,309 Loan payable 1,412,197 1,412,197 NOTE 10 PROPERTY AND EQUIPMENT Property and equipment consisted of the following: Land and improvements $ 2,001,991 $ 1,893,074 Buildings 5,500,949 5,458,573 Furniture and fixtures 592,872 625,825 Equipment 1,655,464 1,598,023 Intangibles 11,800 7,000 9,763,076 9,582,495 Less: accumulated depreciation and amortization 5,023,788 4,801,987 Property and equipment, net $ 4,739,288 $ 4,780,508 9
Notes to Financial Statements NOTE 11 SUBSEQUENT EVENT The Company has evaluated subsequent events through August 4, 2016, which is the date the financial statements were available to be issued. No significant events were identified that would require adjustment of or disclosure in the financial statements. 10
Statement of Revenues and Expenses Administrative Revenues Dues $ 2,036,927 $ 2,083,744 User fees 98,435 105,448 Penalties 8,840 7,695 Application fees 3,200 0 Initiation fees 20,250 16,350 Capital Reserve assessment 155,400 160,138 Total Revenues 2,323,052 2,373,375 Expenses Salaries 105,618 105,328 Payroll taxes 8,350 8,769 Employee meals 1,560 1,560 Simple Plan expense 19,367 17,588 Accounting fees 9,274 9,219 Computer maintenance and repair 12,616 12,523 Bad debts 19,500 15,163 Depreciation 273,817 322,367 Amortization 811 0 Equipment rental 2,575 2,575 Group insurance 165,579 157,480 Interest 53,295 64,909 Service charges 4,302 4,222 Member relations 48,914 59,864 Office supplies 13,040 13,597 Postage and shipping 6,381 6,186 Property and casualty insurance 59,912 58,931 Taxes 47,900 48,010 Total Expenses 852,811 908,291 Revenues over expenses $ 1,470,241 $ 1,465,084 See independent accountants compilation report. 11
Statement of Revenues and Expenses Restaurant & Bar Revenues Member food sales $ 505,594 $ 525,424 Banquet food sales 223,297 186,372 Snack bar food sales 121,499 118,278 Miscellaneous banquet rentals 55 0 Dining minimum forfeitures 54,683 51,988 Room rental fee 9,392 7,437 Member beer sales 34,665 39,914 Banquet beer sales 21,638 16,826 Snack bar beer sales 8,572 10,440 Member wine sales 77,500 84,655 Banquet wine sales 46,282 40,195 Member liquor sales 107,327 102,445 Banquet liquor sales 38,005 37,252 Member non alcoholic sales 5,867 6,166 Banquet non alcoholic sales 364 163 Snack bar non alcoholic sales 23,109 23,640 Golf event 42,566 55,285 Total Revenues 1,320,415 1,306,480 Cost of sales Food costs 447,968 435,287 Beer costs 22,254 21,688 Wine costs 49,843 51,090 Liquor costs 43,200 42,482 Non alcoholic beverage costs 19,483 20,452 Total costs of sales 582,748 570,999 Gross Profit $ 737,667 $ 735,481 See independent accountants compilation report. 12
Statement of Revenues and Expenses Restaurant & Bar continued Gross Profit $ 737,667 $ 735,481 Expenses Salaries 683,180 672,280 Payroll taxes 91,680 94,769 Employee meals 12,480 12,480 Employee meals kitchen 14,040 14,040 Credit card fees 4,775 3,626 Computer maintenance and repair 1,578 1,559 Computer/POS supplies 1,881 1,694 Golf event expense 42,566 55,285 Dues and subscriptions 2,050 2,010 Flowers/decorations 465 2,902 Garbage collection/recycle 1,657 1,541 Licenses and permits 3,060 3,060 General supplies 59,586 59,197 Linens 47,281 45,415 Maintenance and repairs 44,271 37,891 Office supplies 3,265 3,219 Smallwares 2,538 242 Travel and education 0 479 Uniform/clothing 4,027 4,287 Total Expenses 1,020,380 1,015,976 Revenues under expenses $ (282,713) $ (280,495) See independent accountants compilation report. 13
Statement of Revenues and Expenses Golf Course Salaries $ 289,487 $ 276,308 Payroll taxes 28,295 26,701 Employee meals 3,120 3,120 Chemicals 46,524 41,310 Equipment rental 1,879 43 Equipment lease 4,510 0 Testing 1,169 107 Divot sand 5,031 2,288 Dues and subscriptions 400 965 Fertilizer 29,963 36,225 Gas and oil 18,588 22,189 Golf course supplies 3,080 5,187 Interest 146 0 Irrigation repairs and maintenance 19,730 12,792 Licenses and permits 40 225 Maintenance and repairs 54,643 36,986 Plants and landscaping supplies 4,059 3,463 Recruitment 2,770 0 Seed and sod 7,676 1,977 Shop supplies 5,035 2,551 Telephone 3,262 4,177 Top dressing 9,227 5,515 Travel and education 0 449 Tree cutting 10,431 6,710 Truck expense 1,085 143 Uniform/clothing 3,586 3,850 Total expenses $ 553,736 $ 493,281 See independent accountants compilation report. 14
Statement of Revenues and Expenses Tennis Revenues Guest fees $ 510 $ 640 Ball machine rental income 2,595 2,270 Tennis Beer 0 364 Total Revenues 3,105 3,274 Expenses Salaries 79,764 82,080 Payroll taxes 8,344 8,960 Employee meals 2,340 2,340 Tennis court resurfacing 12,801 13,140 Computer maintenance and repair 0 851 Dues and subscriptions 450 858 General supplies 4,102 5,396 Linens 3,353 2,960 Maintenance and repairs 4,390 2,588 Office supplies 415 159 Plants/Landscaping 348 0 Recruitment 0 145 Tennis Beer cost 0 250 Travel and education 1,099 647 Total Expenses 117,406 120,374 Revenues under expenses $ (114,301) $ (117,100) See independent accountants compilation report. 15
Statement of Revenues and Expenses Pool & Fitness Revenues Guest fees $ 1,911 $ 2,259 Pool camp revenue 16,616 7,465 Pool Party revenue 1,800 1,125 Paddle Board storage 4,750 2,250 Total Revenues 25,077 13,099 Expenses Salaries 46,764 44,895 Payroll taxes 5,951 5,276 Employee meals 2,750 2,750 Equipment rental expense 575 575 Licenses and permits 200 200 Linens 6,806 6,005 Maintenance and repairs 4,913 4,969 General supplies 8,266 8,288 Pool Party expense 8,424 4,797 Uniform/clothing 1,062 1,193 Total Expenses 85,711 78,948 Revenues under expenses $ (60,634) $ (65,849) See independent accountants compilation report. 16
Statement of Revenues and Expenses Clubhouse Salaries $ 27,250 $ 26,979 Payroll taxes 2,552 2,740 Employee meals 780 780 Plants/Landscaping 3,411 0 Flowers/decoration 8,373 14,163 Garbage collection 5,692 4,968 Licenses and permits 1,358 1,313 Linens 5,101 5,205 Janitorial services 38,589 34,480 Janitorial supplies 17,319 17,147 Website expense 5,400 5,400 Maintenance and repairs 53,861 59,500 General supplies 16,355 15,230 Telephone 7,365 7,951 Truck expense 248 69 Utilities 181,633 193,386 Total expenses $ 375,287 $ 389,311 See independent accountants compilation report. 17
Statement of Revenues and Expenses Pro Shop Revenues Cart priviledge fee $ 34,260 $ 32,220 Cart storage 7,280 7,560 Greens fees 8,440 15,625 Family greens fees 19,345 18,705 Cart rental 87,856 97,328 Single monthly cart lease 6,913 8,025 Family monthly cart lease 2,542 3,295 Locker rental 4,760 4,590 Golf club storage fee 1,147 1,360 Handicap fees 6,460 6,840 Golf event revenue 4,250 3,539 Pull cart storage 205 210 Total Revenues 183,458 199,297 Expenses Salaries 106,466 96,315 Payroll taxes 10,290 10,093 Employee meals 3,120 3,120 Cart lease 38,390 38,390 Cart repairs and maintenance 1,979 1,112 Computer maintenance and repair 0 195 Dues and subscriptions 1,177 1,447 General supplies 2,309 1,258 Maintenance and repairs 380 290 Office supplies 573 868 Tournament entry fees 585 0 Travel and education 0 168 Handicap fees 5,778 6,156 Golf event 2,596 8,094 Credit card fees 642 701 Telephone 1,200 1,200 Recruitment 0 3,519 Uniform/clothing 484 338 Total Expenses 175,969 173,264 Revenues over expenses $ 7,489 $ 26,033 See independent accountants compilation report. 18