FILM ACTION OREGON. Audited Financial Statements

Transcription

1 Audited Financial Statements For the Year Ended

2 Jake Jacobs, CPA INDEPENDENT AUDITOR'S REPORT Susan J. Marks, CPA Mark A. Clift, CPA Karin S. Wandtke, CPA Sang Ahn, CPA Jill Oswald Principal Dennis C. Johnson, CPA of counsel James R. McDonald, CPA of counsel The Board of Directors Film Action Oregon Portland, Oregon We have audited the accompanying statement of financial position of Film Action Oregon (a nonprofit corporation) as of, and the related statements of activities, functional expenses, and cash flows for the year then ended. These financial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Organization s 2011 financial statements which were audited by us and in our report dated December 21, 2011, we expressed an unqualified opinion on those statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Film Action Oregon as of, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. December 13, 2012 Strength in Numbers ACCOUNTANTS & CONSULTANTS McDonald Jacobs, PC 520 SW Yamhill Suite 500 Portland, Oregon P: F: mail@mcdonaldjacobs.com

3 STATEMENT OF FINANCIAL POSITION (With comparative totals for 2011) ASSETS Cash and cash equivalents $ 132,299 $ 63,468 Accounts receivable 18,962 16,244 Grants receivable 128,000 - Prepaid expenses and other assets 9,661 7,311 Property and equipment, net 1,126, ,079 TOTAL ASSETS $ 1,415,818 $ 1,000,102 LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses $ 62,190 $ 67,905 Deferred revenue 21,358 18,055 Sponsored film projects 2,249 11,235 Unearned rent revenue 47,574 - Notes payable 372, ,343 Total liabilities 505, ,538 Net assets (deficit): Unrestricted: Undesignated 4,335 (59,012) Net property and equipment 706, ,736 Total unrestricted 711, ,724 Temporarily restricted 198,790 48,840 Total net assets 910, ,564 TOTAL LIABILITIES AND NET ASSETS $ 1,415,818 $ 1,000,102 See notes to financial statements

4 STATEMENT OF ACTIVITIES For the year ended (With comparative totals for 2011) 2012 Temporarily 2011 Unrestricted Restricted Total Total Revenue and support: Tickets and concession revenue $ 788,260 $ - $ 788,260 $ 559,946 Contributions and grants 52, , ,529 83,100 Donated materials and services 142, ,039 16,991 Rent income 82,758-82,758 59,629 Program management fees and tuition 11,992-11,992 14,552 Business sponsorships 4,675-4,675 13,270 Dues and memberships 14,935-14,935 20,335 Other income 28,402-28,402 4,787 Net assets released from restrictions: Satisfaction of purpose restrictions 87,768 (87,768) - - Total revenue and support 1,213, ,950 1,363, ,610 Expenses: Program: Theater programs 736, , ,780 Building operation 125, , ,713 Total program expenses 862, , ,493 Supporting services: General and administrative 65,273-65,273 51,912 Fundraising 20,448-20,448 15,375 Total expenses 948, , ,780 Change in net assets 265, , ,464 (15,170) Net assets: Beginning of the year 445,724 48, , ,734 End of the year $ 711,238 $ 198,790 $ 910,028 $ 494,564 See notes to financial statements

5 STATEMENT OF FUNCTIONAL EXPENSES For the year ended (With comparative totals for 2011) Program Supporting Services 2011 Theater Building General and Total Total Programs Operation Administrative Fundraising Expenses Expenses Salaries and related expenses $ 255,669 $ 16,220 $ 32,351 $ 17,052 $ 321,292 $ 307,024 Professional fees 33,113-25,209 1,208 59,530 53,895 Film and facility rental 202, , ,917 Production expenses 3, ,113 - Advertising 37, ,772 30,992 Building repairs and maintenance 14, ,567 7,315 Equipment and maintenance 13, ,819 11,591 Utilities - 37, ,128 36,081 Telephone 4, ,915 6,284 Depreciation and amortization - 36, ,706 44,009 Insurance - 9,597 1,260-10,857 12,658 Concessions and supplies 124, ,166 57,767 Postage 5, ,803 5,139 Printing 2, ,880 1,534 Conferences and travel 8, ,063 4,473 Property taxes and fees 1, ,907 1,861 Bank fees 21, ,245 10,550 Interest - 27,549-27,549 26,387 Miscellaneous 8,158-1, ,799 8,303 Allocation of building expenses - (2,566) 1,283 1, $ 736,672 $ 125,733 $ 65,273 $ 20,448 $ 948,126 $ 787,780 See notes to financial statements

6 STATEMENT OF CASH FLOWS For the year ended (With comparative totals for 2011) Cash flows from operating activities: Change in net assets $ 415,464 $ (15,170) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation and amortization 37,706 44,009 Donated property and equipment (116,597) - (Increase) decrease in: Accounts receivable (2,718) 8,739 Grants receivable (128,000) 10,000 Other assets (3,127) 10,204 Increase (decrease) in: Accounts payable and accrued expenses (5,715) (26,175) Deferred revenue 3,303 13,528 Sponsored film projects (8,986) (3,005) Unearned rent revenue (5,286) - Net cash provided by operating activities 186,044 42,130 Cash flows from investing activities: Purchase of property and equipment (81,289) (9,485) Net cash used in investing activities (81,289) (9,485) Cash flows from financing activities: Principal payments on notes payable (35,924) (32,120) Net cash used in financing activities (35,924) (32,120) Net increase in cash and cash equivalents 68, Cash and cash equivalents - beginning of year 63,468 62,943 Cash and cash equivalents - end of year $ 132,299 $ 63,468 See notes to financial statements

7 NOTES TO THE FINANCIAL STATEMENTS 1. THE ORGANIZATION Film Action Oregon (the Organization) is a nonprofit organization founded in 1992 to support independent Oregon film and video. In 1997 the Organization purchased the Hollywood Theater (the Theater). At that time, the Organization's goal was to immediately preserve and gradually rehabilitate this nationally recognized historic venue. Since reopening under Organization management, the Theater has once again become a vital part of the neighborhood that bears its name. In addition to serving as a movie house for classic, family and art films, the Hollywood Theater is also a venue for concerts, theatrical performances, and community events. The Theater screens over 300 independent, foreign and documentary films each year and continues to assist the Oregon film community by serving as a venue for the world premieres of locally produced films and videos. In 2003, the Organization implemented a sponsored project program to nurture noncommercial film production by local independent filmmakers. In 2004, the Organization began Project Youth Doc, a summer educational program to teach documentary film production to teenagers. In 2012, in partnership with neighboring Grant High School, the organization launched Hollywood Theatre Studio, a state of the art media lab able to accommodate up to 40 students. The Studio serves as an extension of their longstanding Film and Literature curriculum, with students splitting their time between the classroom where they learn critical theory, and the Lab where they focus on their own productions. Other organization educational programs include Animate It!, fun, educational, and affordable animation workshops for youth; Music In Motion, music video production workshops at DaVinci Middle School; and Digital Pathfinders, a film camp where youth produce short films about the history, culture and ecology at Lewis & Clark National Park. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Net assets and all balances and transactions are presented based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Organization and changes therein are classified and reported as unrestricted or restricted net assets. Unrestricted net assets are those that are not subject to donor-imposed stipulations. Temporarily restricted net assets are subject to donor-imposed stipulations that will be met, either by actions of the Organization and/or the passage of time

8 NOTES TO THE FINANCIAL STATEMENTS, Continued 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Cash and Cash Equivalents For purposes of the statement of cash flows, the Organization considers all highly liquid investments available for current use with maturities of three months or less at the time of purchase to be cash equivalents. Accounts Receivable Accounts receivable are reported at the amount management expects to collect on balances outstanding at year-end. Management writes off account balances at the time accounts are determined to be uncollectible. Based on an assessment of the credit history with those having outstanding balances and current relationships with them, management has concluded that realization losses on balances outstanding at year-end will be immaterial. Accounts receivable are unsecured and include accounts over 90 days past due of approximately $200 and $2,600 at and 2011, respectively. Grants Receivable Grants and contributions, which include unconditional promises to give (pledges), are recognized as revenues in the period the Organization is notified of the commitment. Conditional promises to give are not recognized until they become unconditional, that is when the conditions on which they depend are substantially met. Grants receivable at are expected to be collected within one year. Management believes grants receivable are fully collectible and that no allowance is deemed necessary. Property and Equipment Additions to property and equipment of $500 and greater are capitalized. Property and equipment purchased are recorded at cost. Depreciation is provided on a straight-line basis over the estimated useful lives of the respective assets, which is generally 39 years for buildings and building improvements and 3 to 7 years for furniture and equipment. Income Tax Status Film Action Oregon is a nonprofit corporation exempt from federal and state income tax under section 501(c)(3) of the Internal Revenue Code and applicable state law. No provision for income taxes is made in the accompanying financial statements, as the Organization has no activities subject to unrelated business income tax. The Organization is not a private foundation. The Organization s information returns for years ended June 30, 2008 and prior are generally no longer subject to examination by taxing authorities in its major tax jurisdictions

9 NOTES TO THE FINANCIAL STATEMENTS, Continued 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Ticket Sales, Concession Revenue and Group Rent Ticket sales and concession revenue are recognized as revenues in the period earned as the related films are presented. Additionally, all or a portion of the Theater is periodically rented out to private groups. Income from group rentals is recorded in the period in which the space is rented. Payments received in advance for tickets and group rentals are recorded as deferred revenue. Restricted and Unrestricted Revenue and Support Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Donor-restricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donated Assets and Services Donations of property, equipment, materials and other assets are recorded as support at their estimated fair value at the date of donation. Such donations are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. During the year ended, the Organization received donated property and equipment approximating $116,600. The Organization recognizes donated services that create or enhance nonfinancial assets or that require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. During the year ended, the Organization received donated services of approximately $25,440 included in expenses as follows: $18,390 in program for design and accounting services, $7,050 in general and administrative for legal and accounting services. During the year ended June 30, 2011, the Organization received donated services of approximately $17,000 included in expenses as follows: $11,200 in program for design and accounting services, $5,600 in general and administrative for legal and accounting services, and $200 in fundraising for accounting services

10 NOTES TO THE FINANCIAL STATEMENTS, Continued 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued Agency Transactions Sponsored Film Projects The Organization holds funds on behalf of the film partners as part of the sponsored film projects. The Organization receives and disburses funds as agreed upon by the Organization and film partners. No contribution revenue or expense is reported in the financial statements for these transactions. Instead, the activity is accounted for in a liability account. Total funds received through the film partners program approximated $16,100 and $39,300, and related disbursements approximated $25,100 and $42,300 for the years ended June 30, 2012 and 2011, respectively. Advertising The Organization expenses advertising costs in the year in which the advertising first takes place. Advertising expenses approximated $37,800 and $31,000 during the years ended and 2011, respectively. Expense Allocation The costs of providing various programs and other activities have been summarized on a functional basis in the statements of activities and functional expenses. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Summarized Financial Information for 2011 The financial information as of June 30, 2011 and for the year then ended is presented for comparative purposes and is not intended to be a complete financial statement presentation. Reclassifications Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements. Subsequent Events The Organization has evaluated all subsequent events through December 13, 2012, the date the financial statements were available to be issued. See Note 7 for details on an operating lease that was entered into subsequent to 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 the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates

11 NOTES TO THE FINANCIAL STATEMENTS, Continued 3. PROPERTY AND EQUIPMENT Property and equipment consist of the following at and 2011: Land $ 84,650 $ 84,650 Building and improvements 1,086,338 1,031,785 Furniture and equipment 455, ,736 1,626,917 1,376,171 Less accumulated depreciation 500, ,092 Property and equipment, net $ 1,126,896 $ 913, NOTES PAYABLE Notes payable at and 2011 consist of the following: Note payable to the State of Oregon, Department of Energy in monthly installments of $2,254 including interest at 6.5% through November 30, The note is secured by real and personal property. $ 173,314 $ 189,889 Note payable to the State of Oregon, Department of Energy in monthly installments of $2,614 including interest at 6.5% through November The note is secured by real and personal property. 199, ,454 Total notes payable $ 372,419 $ 408,343 Future principal payments on notes payable are as follows: For the year ending June 30, 2013 $ 34, , , , ,278 Thereafter 172,816 $ 372,

12 NOTES TO THE FINANCIAL STATEMENTS, Continued 5. UNEARNED RENT REVENUE The Organization entered into a leasing arrangement to lease space to an unrelated party beginning January 1, The tenant incurred all costs for building improvements in exchange for rent payments over the term of the lease through December 31, Improvements totaling $52,860 were capitalized by the Organization with an offset to unearned rent revenue. The Organization will recognize rent revenue equal to the total costs of the improvements over the term of the lease, which equates to $881 of rent revenue per month. For the year ended June 30, 2012, $5,286 of rent revenue was recognized relating to this leasing arrangement. 6. TEMPORARILY RESTRICTED NET ASSETS Temporarily restricted net assets at and 2011 are as follows: Purpose restricted: Seat campaign $ - $ 6,663 Project Youth Doc 133,000 17,310 Women's Film Initiative 2,702 2,702 Fundraising consultant - 21,765 Sponsorship for fiscal year Marque restoration 35,000 - DCI conversion 18,500 - Sponsorship for fiscal year ,588 - Total temporarily restricted net assets $ 198,790 $ 48, LEASE COMMITMENTS The Organization leases a color copier for $229 per month under an operating lease agreement for through April Lease expense for the years ended and 2011, approximated $3,940 and $3,400, respectively. The Organization began leasing office space subsequent to year end under a lease agreement expiring August Monthly base rent is $1,671 with annual rent increases. The lease agreement includes rent concessions of $684 per month for the entire term of the lease

13 NOTES TO THE FINANCIAL STATEMENTS, Continued 7. Lease Commitments, Continued Future annual minimum lease payments are as follows: For the year ending June 30, 2013 $ 13, , , ,090 $ 45, SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Noncash operating and investing activities for the year ended included donated property and equipment totaling $116,597 and building improvements totaling $52,820 received in exchange for future rent payments. Cash paid for interest totaled $27,549 and $26,387 for the years ended and 2011, respectively. 9. CONCENTRATIONS OF CREDIT RISK The Organization maintains its cash balances in several financial institutions located in Portland, Oregon. Balances in each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. The balances, at times, may exceed the federally insured limit. Cash balances at and 2011 are fully insured. Credit risk for contributions, grants and other receivables is concentrated as well because at, 80% of the combined balance was from one organization. 10. RELATED PARTY DISCLOSURE A board member provided in-kind legal services approximating $6,050 and $4,700 during the years ended and 2011, respectively. An employee in charge of programming is contracted for various independent programs throughout the year. The employee received approximately $15,600 and $11,000 in ticket sales for independent programming for the years ended and 2011, respectively