scc inc. financial statement fy 2009 - 2010

7/30/2019 SCC Inc. Financial Statement FY 2009 - 2010

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HAYASHIII&\JVAYLANDACCOUNTI NG & CONSULTING, LLP

SUNSET CULTURAL CENTER, INC.FINANCIAL STATEMENTS

FOR THE YEAR ENDEDJUNE 30, 2010AND INDEPENDENT AUDITORS' REPORT


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SUNSET CULTURAL CENTER, INC.

Independent Auditors' Report

Financial Statements:Statement ofFinancial PositionStatement ofActivitiesStatement ofCash FlowsNotes to Financial Statements

Supplemental Schedule:

Table ofContents

Exhibit B Summary Financial Information and Grant RequirementsNotes to Supplemental Schedule

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Page

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345

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INDEPENDENT AUDITORS' REPORT

To the Board of DirectorsSunset Cultural Center, Inc.

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We have audited the accompanying statement of financial position of Sunset Cultural Center,Inc. (a nonprofit organization) as of June 30, 2010, and the related statement of activities andcash flows for the year then ended. These financial statements are the responsibility of themanagement of Sunset Cultural Center, Inc. Our responsibility is to express an opinion onthese 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 fmancial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the accompanying financial statements present fairly, in aU material respects, thefinancial position ofSunset Cultural Center, Inc. as of June 30, 2010 and the changes in its netassets and its cash flows for the year then ended, in confonnity with accounting principlesgenerally accepted in the United States ofAmerica.Our audit was made for the purpose of forming an opinion on the basic financial statements ofSunset Cultural Center, Inc. taken as a whole. The supplementary information listed in thetable of contents is presented for purposes of additional analysis and is not a required part of hebasic financial statements. Such infonnation has been subjected to the auditing proceduresapplied in the audit of the basic fmancial statements and, in our opinion, is fairly stated in allmaterial respects in relation to the basic financial statements taken as a whole.October 26, 2010

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11 88 Padre Drive, Suite lOl l P. O. Box 18791Salina,, CA Tel: (831) 759-6300 I Fax: (83 1) 759-6380~ ( , 4 ( , 5 Carmel Rancho Bou levard, Suire IICarmel, CA 93'!23 Td : (H3 1) 5 3 . ~ 3 f'.tx: {!!3 1) 626-') 11 3I04 Sourh Vandcrhurst Avenu e, Suire AI PO. !:lox 927 1King Ciry, CA 93930 ITd : (83 1) 385-5426 Fax: (83 1) 385-5 I il i


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ASSETSCashAccounts receivable - netPledges receivableGrants receivablePrepaid expensesInvestmentsNote receivable

SUNSET CULTURAL CENTER, INC.STATEMENT OF FINANCIAL POSITIONJUNE 30, 2010

Property and equipment - netTOTAL ASSETS

LIABILITIES AND NET ASSETSLiabilities:Accounts payableAccrued expensesDeferred revenueLease payable

Total liabilitiesNet Assets:

UnrestrictedTemporarily restrictedTotal net assets

TOTAL LIABILITIES AND NET ASSETS

See Notes to Financial Statements.3

$ 229,90628,0957,500109,18037,851336,29422,20025.661$ 126_&81

$ 71495,11126,7197.062129,606232,405434.676667.08 1

$ :Z26.._6]J_


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SUNSET CULTURAL CENTER, INC.STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2010TemporarilyThrestricted Restricted Total

REVENUE AND PUBLIC SUPPORT:Revenue:Ticket sales $ 612,398 $ $ 612,398Theater rental 180,409 180,409Facilityuse and other fee income 110,703 110,703Reimbursed expenses 155,736 155,736Investment income 2,393 1,378 3,771Rental and other income 111,552 111.552Total revenue 1,173.191 1.378 1,174.569

Public support:Enabling grant 680,000 680,000Friends ofSunset 5,869 5,869Foundations 3,641 3,641Fundraising 40,549 40,549Other grants and donations 2,884 33,475 36,359Show sponsorships 7,000 16,875 23 ,875In-kind donation 14,250 14,250Net assets released from restrictions 136.368 (136.368)Total public support 884.692 (80.149) 804.543

Total revenue and public support 2,057,883 (78, 771) 1.979,112EXPENSES:Theater services 1,409,252 1,409,252Community services 231,504 231,504Management and general 316,844 316,844Fundraising 33.708 33,708

Total expenses 1.991,308 1,991,308CHANGES IN NET ASSETS 66,575 (78,771) (12,196)NET ASSETS, BEGINNING 165.830 513.447 679.277NET ASSETS, ENDING L_232.405 $ 434,Q26 $__6_67,081



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SUNSET CULTURAL CENTER, INC.STATEMENT OF CASH FLOWSFOR THE YEAR ENDED JUNE 30, 2010CASH FLOWS FROM OPERATING ACTIVITIES:Changes in net assetsAdjustments to reconcile increase in net assets $ (12,196)to net cash used by operating activities:Depreciation 9,993(Increase) decrease in:Accounts receivable - net 13,940Grants receivable 126,990Prepaid expenses (14,601)Note receivable (22,200)Increase (decrease) in:Accounts payable (30,298)Accrued expenses 2,032Deferred revenue 8 171

NET CASH PROVIDED BY OPERATINGACTIVITIES 81,831CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of equipment (6,61 0)Changes in investments (3.401)

NET CASH USED BYINVESTING ACTIVITIES (10.011)CASH FLOWS FROM FINANCING ACTIVITIES -Principal payments on capital leases (1,720)

NET CASH USED BY FINANCINGACTIVITIES (1,720)NET INCREASE IN CASH 70,100CASH AT BEGINNING OF YEAR 159.806CASH AT END OF YEAR $ 22.2..906SUPPLEMENTAL DISCLOSURES -Interest paid $ 2,221



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SUNSET CULTURAL CENTER, INC.NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDED JUNE 30, 2010

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESNature 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 ofthe 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 COirununity 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 ofdonor-imposed 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 sec and/or the passage oftime.

Fair Value of Financial Instruments - The carrying value of cash, contributionsreceivable, notes receivable and accounts payable approximates fair value due to the shortmaturity of these instruments. The recorded value of note receivable reflects cost whichmanagement believes approximates fair value.Recognition of Donor Restrict ions - 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."Unconditional Promises to Give -Unconditional promises to give that are expected to becollected within one year are recorded at net realizable value. Unconditional promises togive that are expected to be collected over periods in excess of one year 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.Investments - Investments consist of certificates of deposit stated at cost, which equatesfair market value.

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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Accounts Receivable - Accounts receivable are recorded using the allowance method andare presented net of the allowance for uncollectibility. At June 30, 2010, the allowance isestimated to be zero.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, sec reports expirations of donor restrictions when the donated or acquiredassets are placed in service. Depreciation is computed using the straight-line method overthe estimated useful lives of he 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 23 701 (d) but is subject to taxes on unrelated business income when earned.The Financial Accounting Standards Board issued new guidance on accounting foruncertainty in income taxes. sec adopted this new guidance for the year ending June 30,2010. Management evaluated SCC' s tax positions and concluded that SCC had taken nouncertain tax positions that require adjustment to the financial statements to comply withthe provisions of this guidance. With few exceptions, SCC is no longer subject to incometax examinations by the U.S . federal, state or local tax authorities for years before 2006.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, 2010, deferred revenue was $26,719.Contributed Services and Facilities- Volunteers contribute services that have not beenrecorded in the accompanying financial statements because the criteria for recognitionunder ASC 454 have not been met. SCC receives the use of office space at no cost, the inkind donation is recognized at the fair value of rent for similar nonprofit organizations inthe area. The amount recorded for the year ending June 30, 2010 was $14,250, which isreflected in the financial statements as in-kind donation with an offsetting charge to rent.Advertising - Advertising costs are expensed as incurred.

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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 26, 2010,which is the date the financial statements were available to be issued.

NOTE 2. GRANTS RECEIVABLEGrants receivable consist of gifts to be received over a number of years. The outstandingbalance at June 30, 2010 was as follows:Due in less than one yearDue in one to five years

TotalLess discounts to net present value

TotalNOTE 3. INVESTMENTS

$

$

100,00010 000110,000

820

At June 30, 2010, investments consisted ofthe following:Certificates of deposit $ 336.294The following schedule summarizes the investment return and its classification in thestatement of activities for the year ended June 30, 2010:

Interest/dividends $NOTE 4. NOTE RECEIVABLE

Unrestricted TemporarilyRestricted Total2_.3_9_3 $ 1, i l l = =='3". 4 : , !

At June 30, 2010, SSC held a $22,200 non-interest bearing note receivable from CarmelBach Festival, Inc. The receivable relates to services performed by SSC for the 2009 BachFestival held at the Sunset Cultural Center. The outstanding balance is due June 30, 2015.

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NOTE 5. PROPERTY AND EQUIPMENTAt June 30, 2010, property and equipment consisted ofthe following:Office equipment and softwareBuilding improvementsTheater equipment

TotalLess accumulated depreciation and amortizationNet property and equipment

NOTE 6. LEASING ARRANGEMENTS

$

$

128,99334,55820.223

183,774158.11325,.6_6_1

SCC leases a copier under a capital lease. The gross amount of the asset recorded underoffice equipment is $10,622 and accumulated amortization is $5,311. The asset isamortized over the lease terms. Amortization expense is included in depreciation expense.Future minimum lease payments under the capital lease as of June 30, are as follows:201120122013

TotalLess: amount representing interest

Present value ofminimum lease payments

$

$

3,9473,9471 9749,8682 8067.062

In addition, SCC as lessor, leases office space to eight tenants under operating leases, six ofwhich expire December 31,2010 and the other two January 31,2010. Rental income forthese leases as of June 30, 2010 was $67,860. Future minimum rental payments to bereceived on the operating leases amounted to $40,883 as of June 30, 2010.

NOTE 7. TEMPORARILY RESTRICTED NET ASSETSAs of June 30, 2010, temporarily restricted net assets are restricted for the followingpurposes:Leadership, audience development, and fundraisingProducers GuildAr t EducationPerfonnance CannelFacility

Total

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$

$

185,299144,82465,14127,95811.454434..61_6


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NOTE 7. TEMPORARILY RESTRICTED NET ASSETS (Continued)The City produced a performance series, Performance Cannel, and under the terms of theAgreement, SCC is to continue producing this series. The City transferred all funds heldfor Performance Cannel to SCC. The Producers Guild is a fund established to supportevents produced by Sunset Presents.During the year ended June 30, 2010 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 :Leadership, audience development, and fundraisingProducers GuildFacilityShow sponsorshipInternational SeriesArt Education

TotalNOTE 8. RETIREMENT PLAN

$

$

53,92029,25019,7796,87510,00016 544

During 2005, the Board of Trustees approved the creation of the Sunset Cultural Center,Inc. 403(b) Plan (the Plan), a defmed contribution plan. Employees voluntarily makecontributions to the Plan in amounts based upon the limits established by Sections 402(g)and 414(v) of the Internal Revenue Code. The Plan's assets are invested in certain selfdirected 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 ofTrustees has notapproved a contribution for the period ended June 30, 2010.

NOTE 9. MANAGEMENT AGREEMENTA management agreement ('' the Agreement") was signed by SCC and the City andaccepted by the City Council on June 8, 2004. Responsibility for management of theCenter 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 tenns. 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$680,000 for the fiscal year ending June 30, 2011. sec is economically dependent on theEnabling Grant received from the City.

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NOTE 10. COMMITMENTSSCC has entered into various contracts for services. The contracts range from a period ofthree years to five years and total $1,318,680. At June 30, 2010, the remainingcommitments were $491 ,056.

NOTE 11. FRIENDS OF SUNSET FOUNDATIONThe 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 ended June30, 2010, SCC received $5,869 from the Foundation for various equipment and ArtEducation program. The assets, liabilities, and activities, of The Foundation are notincluded in these financial statements.

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SUPPLEMENTAL SCHEDULE


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SUNSET CULTURAL CENTER, INC.SUPPLEMENTAL SCHEDULEEXHIBIT B SUMMARY FINANCIAL INFORMATION AND GRANT REQUIREMENTSFOR THE YEAR ENDED JUNE 30, 2010

REVENUE:Rentals:TheaterRoomsOfficesOtherFacility feesGrants/sponsorshipsTotal revenue

Sunset Presents - netBox Office - netAdjusted revenue

COSTS:Direct costs:All personnelAll otherTotal direct costs

Indirect costsTotal costs

SHORTFALLENABLING GRANTEXCESS OF REVENUE AND GRANTS OVER COSTS

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$ 161,96646,83967,86021,31768,622164.165530,769

84,880(47.469)568.180

679,258215.1 21894,379293.587

l , 187.966(619,786)680.000

$ 6Q!?14


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SUNSET CULTURAL CENTER, INC.NOTES TO SUPPLEMENTAL SCHEDULEEXHIBITB - SUMMARY FINANCIAL INFORMATION AND GRANT REQUIREMENTSFOR THE YEAR ENDED JUNE 30, 2010

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, 2010. 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 Center's 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 ne tassets for Producers Guild grants and facilities which remain restricted as of June30, 2010.

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scc inc. financial statement fy 2009 - 2010

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