scc inc. financial statement fy 2011 - 2012

7/30/2019 SCC Inc. Financial Statement FY 2011 - 2012

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SUNSET CULTURAL CENTER, INC.

FINANCIAL STATEMENTS

FOR THE YEAR ENDEDJUNE 30, 2012

AND INDEPENDENT AUDITORS REPORT


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SUNSET CULTURAL CENTER, INC.

Table of Contents

Page

Independent Auditors Report 2

Financial Statements:

Statement of Financial Position 3

Statement of Activities and Changes in Net Assets 4

Statement of Cash Flows 5

Notes to Financial Statements 6 10

Supplemental Schedule:

Exhibit B Summary Financial Information and Grant Requirements 11

Notes to Supplemental Schedule 12

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H A Y A S H 'Ill& W A YL AN L.xccot:NTTNG & C:ONSIJLTT\G. LU'

INDEPENDENT AUDITORS' REPORT

To the B oard of DirectorsSunset Cultural Center, Inc.

We have audited the accompanying statement of financial position of Sunset Cultural Center,Inc. (a nonprofit organization) as of June 30, 2012, and the related statement of activities andchanges in net assets and cash flows for the year then ended. These financial statements are theresponsibility of Sunset uitural Center, Inc. 's management. Our responsibility is to express anopinion on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in the UnitedStates of America. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statementpresentation. 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 Sunset Cultural Qnter, Inc. as of June 30, 2012 and the changes in itsnet assets and its cash flows for the year then ended in conformity with accounting principlesgenerally accepted in the United States of A merica.Our audit was conducted for the purpose of forming an opinion on the fmancial statements as awhole. l'he supplementary information is presented for purposes of additional analysis and is nota required part of the financial statements. Such information is the responsibility of managementand was derived from and relates directly to the underlying accounting and other records used toprepare the financial statements. The information has been subjected to the auditing proceduresapplied in the audit of the financial statements and certain additional procedures, includingcomparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the financial statements or to the financial statements themselves, andother additional procedures in accordance with auditing standards generally accepted in theUnited States of America. In our opinion, the information is fairly stated in all material respectsin relation to the fmanciai. statements as a whole.October 25, 2012

21188 Pdrc Drive, Sour: 101 P.O. Bo 1S79 Shnas, CA93902 Id: (831) 759-6300 Fax: (83I 759-6380P.O. Box 22205 Catrud, CA 93923 Ic!: (831) 621 -5333 or (831 6253374 Fax: (831) 626.9113104 South Vanderhi,rxt Avenue, SiitcA P.O. Box 927 lung : . o y . CA 93930 'FeE- (831) 3855426 Fax: (11,31) 385-5156660 CatriinoApuajuo, Ste. 300 IMoitcice, (;A 93910 rfd: (831) 647-6055 Fax: (831) 647-846511(11 Rivcrxide .Axriiic. Suite C Pa , Rubles, CA 93446 Ic!: (805) 2267375 Fax: (805) 221-3131


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SUNSET CULTURAL CENTER, INC.STATEMENT OF FINANCIAL POSITION

JUNE 30, 2012

ASSETS

Cash and cash equivalents $ 548,657Accounts receivable net 9,272Prepaid expenses 11,926Certificates of deposit 314,410Note receivable 22,200Property and equipment net 328,760

TOTAL ASSETS $ 1,235,225

LIABILITIES AND NET ASSETS

Liabilities:Accounts payable $ 82,544Accrued expenses 107,739Deferred revenue 118,433Lease payable 1,823

Total liabilities 310,539

Net Assets:Unrestricted 697,745Temporarily restricted 226,941

Total net assets 924,686

TOTAL LIABILITIES AND NET ASSETS $ 1,235,225

See Notes to Financial Statements.

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SUNSET CULTURAL CENTER, INC.STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS

FOR THE YEAR ENDED JUNE 30, 2012

TemporarilyUnrestricted Restricted Total

REVENUE AND PUBLIC SUPPORT:Revenue:

Ticket sales $ 712,305 $ $ 712,305Theater rental 186,396 186,396Facility use and other fee income 179,859 179,859Reimbursed expenses 181,274 181,274Investment income 1,841 683 2,524Rental and other income 125,934 125,934

Total revenue 1,387,609 683 1,388,292

Public support:Enabling grant 650,000 650,000Friends of Sunset 30,527 30,527Foundations 38,637 38,637Fundraising 29,282 29,282Other grants and donations 204,057 186,341 390,398Show sponsorships 5,700 16,500 22,200In-kind donation 25,500 25,500Net assets released from restrictions 278,975 (278,975)

Total public support 1,193,514 (6,970) 1,186,544

Total revenue and public support 2,581,123 (6,287) 2,574,836

EXPENSES:Theater services 1,602,735 1,602,735Community services 246,899 246,899Management and general 292,970 292,970Fundraising 42,780 42,780

Total expenses 2,185,384 2,185,384

CHANGES IN NET ASSETS 395,739 (6,287) 389,452

NET ASSETS, BEGINNING 302,006 233,228 535,234

NET ASSETS, ENDING $ 697,745 $ 226,941 $ 924,686


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SUNSET CULTURAL CENTER, INC.STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30, 2012

CASH FLOWS FROM OPERATING ACTIVITIES:Changes in net assets $ 389,452Adjustments to reconcile increase in net assets

to net cash used by operating activities:Depreciation 35,138(Increase) decrease in:Accounts receivable net 32,161Grants receivable net 19,724Prepaid expenses 9,814

Increase (decrease) in:Accounts payable (23,494)Accrued expenses (4,805)Deferred revenue 62,252

NET CASH PROVIDED BY OPERATINGACTIVITIES 520,242

CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of equipment (255,156)Change in certificates of deposit 227

NET CASH USED BYINVESTING ACTIVITIES (254,929

)

CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on capital leases (2,977

)

NET CASH USED BY FINANCINGACTIVITIES (2,977

)

NET INCREASE IN CASH 262,336

CASH AT BEGINNING OF YEAR 286,321

CASH AT END OF YEAR $ 548,657

SUPPLEMENTAL DISCLOSURES Interest paid $ 971


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SUNSET CULTURAL CENTER, INC.NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED JUNE 30, 2012

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations Sunset Cultural Center, Inc. (SCC) is a California nonprofitpublic benefit corporation that was formed to operate and manage the Sunset Communityand Cultural Center (the Center), owned by the City of Carmel-by-the-Sea, (the City),for the benefit of the City, its residents and visitors, and the users of the Center.

The Center includes a 718 seat theater with stage, rehearsal rooms, dressing rooms andrelated facilities. The theater is rented to third party presenters and is used for eventsproduced by SCC. In addition, there are meeting rooms and office space unrelated to thetheater that are used by SCC, tenants and many other outside community groups.

Basis of Presentation The accompanying financial statements are presented using theaccrual basis of accounting in accordance with generally accepted accounting principles.The net assets, revenues, gains and losses, and other support, expenses and other charges inthe accompanying financial statements are classified based on the existence or absence ofdonorimposed restrictions. Accordingly, for reporting purposes, net assets of SCC andchanges therein are classified as follows:

Unrestricted Net Assets Net assets that are not subject to donor-imposedstipulations. This includes any amounts designated by the Board for certain purposes.

Temporarily Restricted Net Assets Net assets subject to donor-imposedstipulations that may or will be met either by actions of SCC and/or the passage oftime.

Cash and Cash Equivalents For the purpose of the financial statements, SCC considersall liquid investments having initial maturities of three months or less to be cashequivalents.

Certificates of Deposit Certificates of deposit consist of certificates with initialmaturities of more than three months and are stated at cost, which equates fair marketvalue.

Fair Value of Financial Instruments The carrying value of cash and cash equivalents,accounts receivable, and accounts payable approximates fair value due to the short maturityof these instruments. The recorded value of the note receivable reflects cost whichmanagement believes approximates fair value.

Recognition of Donor Restrictions Support that is restricted by the donor is reported asan increase in temporarily or permanently restricted net assets, depending on the nature ofthe restriction. When a restriction expires (that is, when a stipulated time restriction endsor purpose restriction is accomplished), temporarily restricted net assets are reclassified tounrestricted net assets and reported in the Statement of Activities as net assets releasedfrom restrictions.

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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued

)

Unconditional Promises to Give Unconditional promises to give that are expected to becollected within one year are recorded at net realizable value. Unconditional promises to

give that are expected to be collected over periods in excess of one year are recorded at thepresent value of the estimated cash flows beyond one year. The discounts on thoseamounts are computed using risk-free interest rates applicable to the years in which thepromises are received. Amortization of the discounts is included in contribution revenue.

Concentrations of Credit Risk SCC maintains bank accounts at several banks. Accountsat each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to$250,000 for the year ended June 30, 2012. Cash at these institutions exceeds Federallyinsured limits at various times. The amount in excess of the FDIC limits totaled $197,665 asof June 30, 2012.

Accounts Receivable Accounts receivable are recorded using the allowance method andare presented net of the allowance for uncollectibility. At June 30, 2012, the allowance is

estimated to be $800.

Property and Equipment The City owns the Center and the related property, plant andequipment. SCC purchases certain tangible assets to support managing the facility. TheCity has reversionary rights to any assets purchased by SCC. Property and equipment witha useful life of more than one year and an acquisition cost of $1,000 or more are recognizedat cost. Donated property is recorded at fair market value on the date received. Suchdonations are reported as unrestricted support unless the donor has restricted the donatedasset to a specific purpose. Assets donated with explicit restrictions regarding their use andcontributions of cash that must be used to acquire property and equipment are reported asrestricted support. Absent donor stipulations regarding how long those donated assets mustbe maintained, SCC reports expirations of donor restrictions when the donated or acquiredassets are placed in service. Depreciation is computed using the straight-line method over

the estimated useful lives of the assets ranging from three to seven years.

Income Taxes SCC is exempt from federal income tax under Section 501(c)(3) of theInternal Revenue Code and from state franchise tax under California Revenue and TaxationCode 23701(d), but is subject to taxes on unrelated business income when earned. Withfew exceptions, SCC is no longer subject to income tax examinations by the U.S. federal,state or local tax authorities for years before 2007.

Deferred Revenue Reservation fees are recognized as revenue in the fiscal year whichincludes the related performance. Amounts received in advance are reported as deferredrevenue. At June 30, 2012, deferred revenue was $118,433.

Contributed Services and Facilities No amounts have been reflected for donated

services because they do not meet the criteria for recognition in the financial statements.However, volunteers have donated significant amounts of their time to SCC. SCC receivesthe use of office space at no cost, the in-kind donation is recognized at the fair value of rentfor similar nonprofit organizations in the area. The amount recorded for the year endedJune 30, 2012 was $25,500, which is reflected in the financial statements as in-kinddonation with an offsetting charge to rent.

Advertising It is the policy of SCC to expense advertising costs as incurred. Advertisingexpense totaled $137,225 for the year ended June 30, 2012.

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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued

)

Functional Allocation of Expenses The costs of providing program services and otheractivities have been presented on a functional basis in the Statement of Activities.

Accordingly, certain costs have been allocated among the programs and supportingservices benefited.

Use of Estimates The preparation of financial statements in accordance with generallyaccepted accounting principles requires management to make estimates and assumptionsthat affect the amounts reported. Actual results could differ from those estimates.

Subsequent Events Subsequent events have been evaluated through October 25, 2012,which is the date the financial statements were available to be issued.

NOTE 2. NOTE RECEIVABLE

At June 30, 2012, SCC held a $22,200 non-interest bearing note receivable from CarmelBach Festival, Inc. The receivable relates to services performed by SCC for the 2009 BachFestival held at the Sunset Cultural Center. The outstanding balance is due June 30, 2015.

NOTE 3. PROPERTY AND EQUIPMENT

At June 30, 2012, property and equipment consisted of the following:

Office equipment and software $ 233,683Building improvements 231,399Theater equipment 73,034

Total 538,116

Less accumulated depreciation and amortization 209,356

Net property and equipment $ 328,760

Depreciation expense was $35,138 for the year ended June 30, 2012.

NOTE 4. LEASING ARRANGEMENTS

SCC leases a copier under a capital lease. The gross amount of the asset recorded underoffice equipment is $10,622 and accumulated amortization is $9,559. The asset is

amortized over the lease terms. Amortization expense is included in depreciation expense.

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NOTE 4. LEASING ARRANGEMENTS (Continued)

Future minimum lease payments under the capital lease as of June 30, are as follows:

2013 $ 1,974Less amount representing interest

Present value of minimum lease payments $ 1,823

151

In addition, SCC as lessor, leases office space to eight tenants under operating leases. Fourare rented on a month-to-month basis. The other four are rented under a one year leaseagreement, three expire December 31, 2012, and one expires January 2013. Rental incomefor these leases for the year ended June 30, 2012 was $79,368. Future minimum rentalpayments to be received on the operating leases amounted to $24,132 as of June 30, 2012.

NOTE 5. TEMPORARILY RESTRICTED NET ASSETS

As of June 30, 2012, temporarily restricted net assets are restricted for the followingpurposes:

Producers Guild $ 100,288Art Education 60,691Performance Carmel 27,958Leadership, audience development, and fundraising 16,550Facility 11,454Show sponsorship

Total $ 226,941

10,000

The City produced a performance series, Performance Carmel, and under the terms of theAgreement, SCC is to continue producing this series. The City transferred all funds heldfor Performance Carmel to SCC. The Producers Guild is a fund established to supportevents produced by Sunset Presents.

During the year ended June 30, 2012, net assets were released from donor restrictions whenexpenses satisfying the restricted purpose were incurred, or by occurrence of other eventsspecified by donors. These assets are shown in the Statement of Activities as Net assetsreleased from restrictions.

Purpose restriction accomplished:Facility $ 195,883Art Education 39,050Leadership, audience development, and fundraising 22,552Producers Guild 14,990Show sponsorship

Total $ 278,975

6,500

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NOTE 6. RETIREMENT PLAN

During 2005, the Board of Trustees approved the creation of the Sunset Cultural Center,Inc. 403(b) Plan (the Plan), a defined contribution plan. Employees voluntarily make

contributions to the Plan in amounts based upon the limits established by Sections 402(g)and 414(v) of the Internal Revenue Code. The Plans assets are invested in certain self-directed income, money market and mutual funds.

The Board of Trustees may approve a discretionary employer contribution to be allocatedin proportion to the participants total annual compensation. The Board of Trustees has notapproved a contribution for the year ended June 30, 2012.

NOTE 7. MANAGEMENT AGREEMENT

A management agreement (the Agreement) was signed by SCC and the City andaccepted by the City Council on June 8, 2004. Responsibility for management of the

Center was transferred to SCC on July 1, 2004 for a term of 3 years with the option toextend the term for two additional three-year terms. The renewal option has been exercisedfor the period July 1, 2010 through June 30, 2013. The Agreement sets performancecriteria and provides remedies in the event SCC fails to meet such criteria, including earlytermination of the Agreement. The City is committed to providing an Enabling Grant of$600,000 for the year ended June 30, 2013. SCC is economically dependent on theEnabling Grant received from the City.

NOTE 8. COMMITMENTS

SCC has entered into a contract for HVAC services. The contract began on April 1, 2010for a period of five years and totals $274,200. At June 30, 2012, the remaining commitment

was $150,810.

NOTE 9. FRIENDS OF SUNSET FOUNDATION

The Friends of Sunset Foundation (Foundation) is a 501(c)(3) organization with its ownBoard that was formed to support the mission and goals of the Sunset Community andCultural Center through fundraising activities, gifts and grants. During the year endedJune 30, 2012, SCC received $30,527 from the Foundation for various equipment and forthe Art Education program. The assets, liabilities, and activities of The Foundation arenot included in these financial statements.

NOTE 10. COMMUNITY FOUNDATION

The Community Foundation for Monterey County holds an endowment fund for SCCknown as the Sunset Theater Endowment Fund in the amount of $107,323 as of June 30,2012. The balance is not reflected in the accompanying financial statements as SCC has noownership rights to the fund. No distributions were received from the Fund for the yearended June 30, 2012.

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SUPPLEMENTAL SCHEDULE


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SUNSET CULTURAL CENTER, INC.SUPPLEMENTAL SCHEDULE

EXHIBIT B SUMMARY FINANCIAL INFORMATION AND GRANT REQUIREMENTSFOR THE YEAR ENDED JUNE 30, 2012

REVENUE:Rentals:

Theater $ 162,425Rooms 55,034Offices 79,368Other 22,977

Facility fees 104,818Grants/sponsorships 514,831

Total revenue 939,453

Sunset Presents net 42,954

Box Office net (40,357 )

Adjusted revenue 942,050

COSTS:Direct costs:

All personnel 709,875All other 215,090

Total direct costs 924,965

Indirect costs 494,341

Total costs 1,419,306

SHORTFALL (477,256)

ENABLING GRANT 650,000

EXCESS OF REVENUE AND GRANTS OVER COSTS $ 172,744

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SUNSET CULTURAL CENTER, INC.NOTES TO SUPPLEMENTAL SCHEDULE

EXHIBIT B SUMMARY FINANCIAL INFORMATION AND GRANT REQUIREMENTSFOR THE YEAR ENDED JUNE 30, 2012

NOTE 1. The supplemental schedule presents the results of operations as defined in the Agreementin Article 4 Expenses, Section 4.2, for the year ended June 30, 2012. The financial resultsshown in Exhibit B Summary Financial Information and Grant Requirements differ fromthe preceding financial statements as follows:

1) The supplemental schedule does not reflect the in-kind donation and expenserelated to Sunset Cultural Centers use of administrative offices owned by the City.

2) The supplemental schedule shows as expenditures the costs of acquired assets withuseful lives in excess of one year. In the accompanying financial statements theseassets have been capitalized and depreciation and amortization expense has beenrecorded for the period.

3) The supplemental schedule shows as expenditures certain lease payments related toa capital lease. In the accompanying financial statements this asset has beencapitalized and future lease payments have been recorded as a liability, anddepreciation expense has been recorded for the period.

4) The supplemental schedule does not include donations of temporarily restricted netassets which remain restricted as of June 30, 2012, but does include temporarilyrestricted net assets, which have been released from restriction.

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scc inc. financial statement fy 2011 - 2012

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