Download THE YORK THEATRE COMPANY, INC. FINANCIAL

THE YORK THEATRE COMPANY, INC.
FINANCIAL STATEMENTS
AUGUST 31, 2009 and 2008
THE YORK THEATRE COMPANY, INC.
Table of Contents
Page
INDEPENDENT AUDITORS’ REPORT
1
FINANCIAL STATEMENTS
Statement of Financial Position
2
Statement of Changes in Net Assets/(Deficit)
3
Statement of Cash Flows
4
Statement of Functional Expenses
5
Notes to Financial Statements
6 –14
Michael Williams, CPA, PC
Independent Auditors’ Report
We have audited the accompanying statement of financial position of The York Theatre
Company, Inc. as of August 31, 2009 and the related statements of activities and net assets and
net deficit, cash flows, and functional expenses for the years then ended. These financial
statements are the responsibility of the Organization’s management. Our responsibility is to
express an opinion on these statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States. Those standards require that we plan and perform our audit to obtain reasonable
assurance that 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of The York Theatre Company, Inc. as of August 31, 2009 and its
activities, changes in nets assets, cash flows and functional expenses for the year then ended, in
conformity with accounting principles generally accepted in the United States.
Michael Williams, CPA, P.C.
November 5, 2009
THE YORK THEATRE COMPANY, INC.
STATEMENT OF FINANCIAL POSITION
AUGUST 31, 2009 and 2008
2009
2008 Total
for informational
purposes only
(See Note 1)
ASSETS
Current assets
Cash and cash equivalents
Unconditional promises to give
Prepaid expenses and other current assets
Total current assets
$
Unconditional promises to give, over one year
Property and equipment, net of accumulated
depreciation of $106,625 and $103,180 at
August, 31, 2009 and 2008, respectively
Security deposits
Total assets
$
48,455
92,650
41,405
182,510
$
125,257
106,682
49,575
281,514
-
-
2,784
5,833
5,918
5,833
191,127
$
293,265
$
61,870
9,353
50,033
13,949
11,263
62,484
3,400
212,352
LIABILITIES AND NET ASSETS/(DEFICIT)
Current liabilities
Accounts payable
Accrued expenses
Current portion of bank loans
Deferred revenues
Current portion of loans from related parties
Loans and advances
Loans and advances from officers
Total current liabilities
$
Bank loans payable
Related party loans
Total liabilities
Net assets
Total liabilities and net assets/deficit
$
54,682
4,336
15,628
249
12,102
39,000
125,997
25,958
7,766
41,144
19,836
159,721
273,332
31,406
19,933
191,127
$
293,265
Page 2
See independent auditors’ report and notes to financial statements
THE YORK THEATRE COMPANY, INC.
STATEMENTS OF ACTIVITIES AND NET ASSETS/(DEFICIT)
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
Temporarily
Unrestricted
2009
Restricted
2009
Total
2009
Total
2008
for informational
purposes only
(See Note 1)
Support:
Contributions and grants
Government grants
Total support
Revenues:
Box office income
Theater license fees
Royalties
Other services
Concessions, net of costs
$
$8,724 and $6,743 for the
years ended in 2009 and 2008,
respectively
Events, net of direct costs, $47,588
and $40,983 for the years ended
in 2009 and 2008, respectively
Loss on sale of investments
Interest and dividends, net of
investment fees of $40 for
the year ended in 2008
Total revenues
269,331 $
269,331
549,134 $
44,800
593,934
822,065 $
44,800
866,865
645,114
40,300
685,414
720,727
18,310
368
840
-
720,727
20,045
368
-
198,180
66,340
326
950
19,362
-
19,362
8,782
91,569
(621)
-
91,569
(621)
168
850,723
Net assets released from restrictions:
Satisfaction of program
restriction
578,934
-
(578,934)
158,462
(663)
168
850,723
4
432,381
-
-
Total support and revenue
1,698,988
15,000
1,713,988
1,117,795
Expenses:
Program
General and administrative
Fundraising
Total expenses
1,316,998
220,380
165,134
1,702,512
-
1,316,988
220,380
165,134
1,702,512
722,805
215,461
97,814
1,036,080
Increase/(decrease) in net assets
Net assets/ (deficit), September 1
Net assets/ (deficit), August 31 $
(3,254)
(30,067)
(33,591) $
15,000
50,000
65,000 $
11,476
19,933
31,409 $
Page 3
See independent auditors’ report and notes to financial statements
81,715
(61,782)
19,933
THE YORK THEATRE COMPANY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
2009
2008
for informational
purposes only
(See Note 1)
Cash flows from operating activities:
Decrease in net deficit
$
Adjustments to reconcile increase/ (decrease)
in net assets to net cash provided by
operating activities:
Depreciation
Realized losses on security transactions
Non-cash gifts of securities
(Increase) decrease in unconditional promises
to give
(Increase) decrease in prepaid expenses and
other current assets
Increase (decrease) in accounts payable
and accrued expenses
Increase (decrease) in deferred revenues and support
Net cash flows from operating activities
11,476
$
81,715
3,445
622
(30,159)
3,641
663
(34,394)
14,032
90,918
8,170
(27,869)
(12,205)
(13,700)
(18,319)
10,223
(13,039)
111,858
(311)
29,534
29,223
33,731
33,731
Cash flows from financing activities:
Proceeds from advances and loans from officer
Proceeds from bank loans
Proceeds from advances from others
Repayment of bank loans
Repayment of loans from related parties
Repayment of advances and loans from officer
Repayment of lease payable
Repayment of advances from others
Net cash flows from financing activities
(12,070)
(49,591)
839
(26,884)
(87,706)
21,884
(49,673)
(10,907)
(13,600)
(52,296)
Net increase (decrease) in cash
Cash, beginning of year
Cash, end of year
$
(76,802)
125,257
48,455
$
93,293
31,964
125,257
Supplemental disclosure of cash flow information
Cash paid for interest in the year
$
$
10,406
Cash flows from investing activities:
Cash payments for purchase of property
Deposits received
Sale of securities
Net cash flows from investing activities
7,024
Page 4
See independent auditors’ report and notes to financial statements
THE YORK THEATRE COMPANY, INC.
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
2009
Program
Services
Salaries of employees and fees to
independent contractors
Payroll taxes
Employee and union benefits
Advertising and promotion
Repair and maintenance
costs
Rent and utilities
Legal and professional fees
Postage and delivery costs
Printing costs
Music and sound
Costumes and wardrobe
Other costs of production
Cast album costs and fees
Royalties
Office supplies and
expenses
Credit card processing and
banking fees
Dues
Insurance
Telephone costs
Benefit, opening night
and other fundraising expenses
Sets and props
Sound and lighting
equipment, rentals and
upkeep
Travel and entertainment
State mandated fees
$
Total expenses before depreciation
and interest
Depreciation
Bad debt
Interest
Total expenses
$
2009
Management
and general
2008 Total for
informational
purposes only
(See Note 1)
2009
Total
2009
Fund raising
669,512 $
101,114
126,793
133,766
73,739
9,927
4,422
5,900
474
123,258
604
6,154
5,930
19,701
2,728
47,098
51,217
1,745
14,266
1,221
-
1,311
282
-
2,219
123,258
14,266
3,136
6,154
5,930
19,983
2,728
47,098
51,217
3,505
115,847
17,612
7,104
2,158
2,178
392
5,460
1,625
4,572
7,057
45,869
20
52,946
19,898
18
-
16,240
866
24,787
7,458
-
16,240
884
24,787
7,458
8,505
1,675
13,393
5,857
12,810
-
20,364
-
20,364
12,810
8,364
1,252
20
8,744
-
3,348
125
170
-
20
12,262
125
3,285
8,187
75
1,109,614
559,626
22,803
1,692,043
962,033
-
3,445
7,024
-
3,445
7,024
3,641
60,000
10,406
1,316,998 $
220,380
$
$
119,112
16,383
7,273
208
165,134
$
$
Page 5
See independent auditors’ report and notes to financial statements
862,372
127,424
138,488
139,874
1,702,512
$
$
582,676
39,957
63,777
44,679
1,036,080
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a – Financial Statement Presentation
The classification of an organization’s net assets and its support, revenue
and expenses is based on the existence or absence of donor imposed
restrictions. The amounts are required to be classified as one of three
classes of net assets: permanently restricted, temporarily restricted, and
unrestricted. Net assets are required to be displayed in a statement of
financial position. The amounts of change in each of the classes of net
assets are required to be displayed in a statement of activities.
The three classes are defined as:
Permanently restricted – Net assets resulting from contributions and
other inflows of assets whose use by the Organization is limited by
donor imposed stipulations that neither expire by the passage of time
nor can be fulfilled or otherwise removed by actions of the Board of
Directors.
Temporarily restricted – Net assets resulting from contributions and
other inflows of assets whose use by the Organization is limited by
donor imposed stipulations that either expire by the passage of time or
can be fulfilled or removed by actions of the Board pursuant to those
stipulations, including contributions to be used for specific
productions. When stipulations are fulfilled, such temporarily
restricted net assets are reclassified to unrestricted net assets and
reported in activities and changes in net assets.
Unrestricted – The part of net assets that is neither permanently nor
temporarily restricted by donor-imposed stipulations.
b - Basis of Accounting
The accompanying financial statements are prepared on the accrual basis
of accounting, in accordance with accounting principles generally
accepted in the United States.
c - Cash and Cash Equivalents
For the proposes of the financial statements, the Organization considers all
investment instruments, including money market accounts, with initial
maturity of three months or less as cash equivalents.
Page 6
See independent auditors’ report
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
d - Grants and Contributions
Grants and contributions received are recorded as unrestricted, temporarily
restricted, or permanently restricted support depending upon the existence
and or nature of donor restrictions. When a donor restriction expires, that
is, when the stipulated purpose restriction is accomplished, temporarily
restricted net assets are reclassified to unrestricted net assets and reported
in the statement of activities as net assets released from restrictions.
Unconditional promises to give cash or other assets are recorded as
contributions when the unconditional promise is made. Unconditional
promises to give due in subsequent years are reported at the present value
of their net realizable value, using risk-free interest rates applicable to the
years in which the promises are to be received.
e - Fixed Assets
Fixed assets are recorded at historical cost and are being depreciated using
the straight-line method over the estimated useful life of the assets at ten
years for theater improvements and costs, and five years for equipment.
Major expenditures for property and equipment and expenditures that
substantially increase the useful lives of existing property and equipment
are capitalized. Maintenance, repairs and minor renewals are expensed
when incurred.
f - Tax Status
The Organization is exempt from federal income taxes under Section 501
(c) (3) of the Internal Revenue Code and has been designated as an
Organization that is not a private foundation.
g - Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
h – Functional Allocation of Expenses
Expenses are classified to the program for which they were incurred and
are summarized on a functional basis in the Statement of Functional
Expenses. Accordingly, certain costs have been allocated between the
program and the supporting services in reasonable ratios determined by
management.
Page 7
See independent auditors’ report
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
Management and general – involves the direction of the overall affairs of
the Organization, which include accounting, personnel, administration and
related areas.
Fundraising – involves the development of funding sources to aid the
Organization in the raising of funds for its programs.
i – Bad Debt Policy
The Organization considers all contributions and miscellaneous
receivables at August 31, 2009 to be fully collectible; accordingly, no
allowance for doubtful accounts required.
Based on the experience of management, the specific charge-off method is
used to deduct bad debt expenses related to contribution and
miscellaneous receivables when collection efforts have been exhausted
and the receivable is deemed worthless.
j. – Deferred revenues
Deferred subscription revenue and deferred enhancement fees represent
payments received in advance of performance dates.
k. – Reclassifications and Presentation of Certain 2008 Financial Information
Certain financial information from the 2008 financial statements has been
presented for informational purposes only. Such information does not
include sufficient detail to constitute a presentation in conformity with
generally accepted accounting principles. Accordingly, such information
should be read in conjunction with the Organization’s financial statements
for the year ended August 31, 2008, from which the summarized
information was derived.
Certain reclassifications have been made to the 2008 financial statements
to conform to the 2009 financial statement presentation. Such
reclassifications had no effect on the change in net assets as previously
reported.
NOTE 2 - GENERAL INFORMATION
The York Theatre Company, Inc. (the “Organization”) is a nonprofit organization
originally founded in 1969. The current Organization was incorporated under the
laws of the State of New York on August 28, 1990. The Organization has a theater
facility and an office in the city of New York. The Organization’s major function is
to evaluate, initiate, develop, produce and fund theatrical and musical events with a
particular emphasis on the musical genre through new and classical works in theater
Page 8
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THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
and making educational programming available to under-served communities and
educational institutions. The Organization sponsors various fundraising activities
each year.
NOTE 3 - UNINSURED CASH BALANCES
The Organization maintains cash balances at one financial institution in New York.
Accounts there are insured by the Federal Deposit Insurance Corporation for up to
$250,000. From time to time balances exceed these amounts. Management
periodically reviews the financial stability of the financial institution.
NOTE 4 - FIXED ASSETS
Property and equipment at August 31, 2009 consist of the following:
Theater improvements, furniture and equipment
Less accumulated depreciation
Net property and equipment
$
$
109,098
(103,180)
5,918
Depreciation expense for the year ended August 31, 2009 totaled $3,445.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Grants require the fulfillment of certain conditions as set forth in the instrument of the
grant. Failure to fulfill the conditions could result in the return of the funds to
grantors. Although that is a possibility, the Board deems the contingency remote,
since by accepting the gifts and terms; it has accommodated the objectives of the
organization to the provisions of the gift.
From time to time, the Organization receives gifts and grants that are specifically
dedicated to specific productions.
As shown in the accompanying financial statements, the Organization’s statement of
financial position reflects total net assets of approximately $31,500 comprised of an
unrestricted net deficit of approximately $33,500 and $65,000 in temporarily
restricted assets associated with productions and a cast album that have yet to be
produced. Management of the Organization is continuing to develop and implement
plans to increase revenues and support, control expenses, and reduce debt.
Page 9
See independent auditors’ report
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
The Organization occupies an office and theater space under a real property license
on a month-to-month basis, as has occurred on several other occasions, pending the
finalization of on-going negotiations to extend the present arrangement. The
Organization has occupied this space since 1995.
For the year ended August 31, 2009 the Organization incurred rental expense of
approximately $123,000, which has been included in the Statement of Functional
Expenses for the year ended August 31, 2009.
The Organization contributes to various defined benefit and defined contribution
multi-employer pension plans and various health and welfare benefit plans under
terms and provisions of various labor contracts. The contributions to these plans
cover substantially the entire unionized workforce within the Organization. For the
year ended August 31, 2009 the total of these contributions approximated $118,000.
On September 1, 2008, the State of New York changed its sales and use tax law
requiring most not for profit organizations, who sell what would otherwise be taxable
items to charge sales tax to their customers. As of August 31, 2009 the Organization
has yet to register with the State or charge sales tax on taxable items, as is now
required. As at August 31, 2009, the amount of tax that is due to the state for tax has
not been determined.
NOTE 6 - NET ASSETS RELEASED FROM RESTRICTIONS
Net assets were released from donor restrictions by incurring expenses satisfying the
restricted purposes including funding for specific theatrical productions, or by
occurrence of other events specified by the donors. During the year ended August 31,
2009 the following program restrictions were released:
Related to the development
and presentation theatrical
and related productions
$
578,934
During the year ended August 31, 2009 the Organization received approximately
$260,000 of contributions and gifts that were restricted to be used for specific
theatrical productions.
Page 10
See independent auditors’ report
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
NOTE 7 – NET ASSETS TEMPORARILY RESTRICTED
Temporarily restricted net assets include the following at August 31, 2009:
Related to the production of a
cast recording
Related to the development and
presentation a specific anticipated
theatrical production
Total
$
15,000
$
50,000
65,000
NOTE 8 – ADVERTISING COSTS
Advertising is expensed as incurred. For the year ended August 31, 2009 advertising
expense totaled approximately $139,900.
NOTE 9 – DONATED SERVICES AND FACILITIES
Pursuant to SFAS No. 116, “Accounting for Contributions Received and
Contributions Made,” contributions of donated non-cash assets are recorded at their
fair values in the period received. Contributions of donated services that create or
enhance non-financial assets or that require specialized skills, that are provided by
individuals possessing those skills and would typically need to be purchased if not
provided by donation, are recorded at their fair values in the period services are
provided.
During 2009 a professional organization contributed income tax consulting and
business advisory services approximating $2,300 to the Organization. Such has been
included in the Statements of Activities and Functional Expenses.
Various theater professionals and a management professional donated their services
to the Organization. The value of these services was not determinable and
accordingly not reflected in the financial statements, as the rules under SFAS were
not met.
The City of New York Department of Cultural Affairs has supported the Organization
through an indirect capital expenditure. As a result of the City’s investment the
Organization has operated its facility for the benefit of the people and visitors of the
City of New York for cultural, educational and artistic uses approved by the City.
Page 11
See independent auditors’ report
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
NOTE 10 – FINANCIAL INSTRUMENTS
All financial instruments are held for other than trading purposes. The Organization
estimates that the fair value of all financial instruments at August 31, 2009 does not
differ materially from the aggregate carrying values of its financial instruments recorded
on the accompanying balance sheet. The Organization using available market
information and appropriate valuation methodologies has determined the estimated fair
value amounts. Considerable judgment is necessarily required in interpreting market
data to develop the estimate of fair value, and, accordingly the estimates are not
necessarily indicative of the amounts that the Organization could realize in a current
market exchange.
NOTE 11 – THEATRICAL PRODUCTIONS AND EVENTS
During the year the Organization sponsored and produced or co-produced various
theatrical events.
During 2009 a co-produced event resulted in gifts and contributions being made to
the Organization of approximately $333,000.
From time to time, after the Organization has developed a theatrical event it may
retain certain original producer rights in future exploitations of rights. During the
year ended August 31, 2009 the Organization received approximately $370 in such
amounts that were treated as royalties.
An officer and an employee have an investment in the commercial production of a
theatrical production originated at the Organization.
NOTE 12 – INVESTMENTS
The organization holds no investments at August 31, 2009, but during the course of
the year it was given from various contributors common stock in various public
companies. Management currently liquidates such as soon as practicable for current
operations.
During the year ended August 31, 2009, the Organization realized approximately
$620 in capital losses from the sale of these publicly traded stocks.
Page 12
See independent auditors’ report
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
NOTE 13 – ADVANCES FROM OFFICERS
During the year ended August 31, 2009 officers and directors were repaid
approximately $3,400. This officer and director simultaneously made a gift to the
Organization for the same. At August 31, 2009 no amounts were owed by the
Organization officers and directors.
NOTE 14 – OTHER LOANS AND ADVANCES
From time to time, the Organization receives advances and loans from independent
producers, directors and other individuals to help finance the production and running
costs of a particular theatrical production or event. In many instances the agreements
call for repayment after recoupment of the shows initial and on going costs. During
the year ended August 31, 2009 the Organization repaid $23,000 to such individuals.
At August 31, 2009 $39,000 remains outstanding under these arrangements. No
interest has been or is expected to be paid to these individuals and accordingly, no
interest has been recorded in the financial statements.
NOTE 15 – LOANS FROM RELATED PARTIES
During the year ended August 31, 2009 two individuals who are employees, had
outstanding loans made to the Organization in an aggregate amount totaling $55,500
during 2008. The outstanding amounts of the loans are as follows:
$25,500 loan from employee dated May 17, 2007 at
7.49% with interest and principal payments monthly
totaling $500. Due in 2011
$
8,728
$30,000 loan from employee dated April 4, 2007 at
7% with interest and principal payments monthly
totaling $595. Due in 2011
11,140
Total
Less portion due in over one year
Current portion of loans from related parties
19,868
(7,766)
12,102
$
The future annual principal payments due under such loan agreements:
Due in the fiscal year ended August 31:
2010
2011
Total
12,102
7,766
$
Page 13
See independent auditors’ report
19,868
THE YORK THEATRE COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED AUGUST 31, 2009 and 2008
NOTE 16 – CO-PRODUCED THEATRICAL EVENTS
From time to time, the Organization accepts, in a co-production arrangement,
amounts from unrelated parties, to capitalize the cost of a theatrical event taking place
in the Organization’s theater facility. The investor group shares a portion in the net
results of the operations of the production while the Organization maintains
managerial control of the production.
During the year ended August 31, 2009 the Organization entered into a co-production
arrangement with an unrelated party and was paid a portion of the proceeds from the
production company.
As provided in Internal Revenue Code Regulation 1.501(c) (3)-1(e), the results of
these joint ventures are not subject to unrelated business taxable income and are a
permitted transaction.
NOTE 17 – LOANS PAYABLE
The Organization is obligated under various installment loans payable to a
Commercial Bank. The agreements call for interest at between five and nine tenths
and eight and one quarter percent per annum and principal to be paid monthly totaling
$1,588.
The future annual principal payments due under such loan agreements:
Due in the fiscal year ended August 31:
2010
2011
2012
Total
$
15,628
16,831
9,127
$
41,586
These loans have been collateralized by various property and equipment of the
Organization. In addition, certain directors and officers have made certain guarantees
to the banking institution.
NOTE 18 – RECEIVABLES FROM UNCONDITIONAL PROMISES TO GIVE
Unconditional promises to give are due to the Organization as follows at August 31,
2009:
Total due in one year or less
Page 14
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$
92,650