FILM ACTION OREGON
__________
Audited
Financial Statements
__________
For the Year Ended
June 30, 2012
INDEPENDENT AUDITOR'S REPORT
Jake Jacobs, CPA
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 June 30, 2012, 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 June 30, 2012,
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
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McDonald Jacobs, PC
520 SW Yamhill Suite 500 Portland, Oregon 97204
P: 503 227 0581 F: 503 274 7611
[email protected] www.mcdonaldjacobs.com
FILM ACTION OREGON
STATEMENT OF FINANCIAL POSITION
June 30, 2012
(With comparative totals for 2011)
2012
2011
ASSETS
Cash and cash equivalents
Accounts receivable
Grants receivable
Prepaid expenses and other assets
Property and equipment, net
TOTAL ASSETS
$
132,299
18,962
128,000
9,661
1,126,896
$ 1,415,818
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable and accrued expenses
$
Deferred revenue
Sponsored film projects
Unearned rent revenue
Notes payable
Total liabilities
62,190
21,358
2,249
47,574
372,419
505,790
Net assets (deficit):
Unrestricted:
Undesignated
Net property and equipment
Total unrestricted
Temporarily restricted
Total net assets
4,335
706,903
711,238
198,790
910,028
TOTAL LIABILITIES AND NET ASSETS
See notes to financial statements.
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$ 1,415,818
$
63,468
16,244
7,311
913,079
$ 1,000,102
$
67,905
18,055
11,235
408,343
505,538
(59,012)
504,736
445,724
48,840
494,564
$ 1,000,102
FILM ACTION OREGON
STATEMENT OF ACTIVITIES
For the year ended June 30, 2012
(With comparative totals for 2011)
2012
Temporarily
Unrestricted Restricted
Revenue and support:
Tickets and concession revenue
Contributions and grants
Donated materials and services
Rent income
Program management fees and tuition
Business sponsorships
Dues and memberships
Other income
Net assets released from restrictions:
Satisfaction of purpose restrictions
Total revenue and support
$
788,260 $
52,811
142,039
82,758
11,992
4,675
14,935
28,402
87,768
1,213,640
Expenses:
Program:
Theater programs
Building operation
Total program expenses
Supporting services:
General and administrative
Fundraising
Total expenses
237,718
-
2011
Total
Total
$
(87,768)
149,950
788,260
290,529
142,039
82,758
11,992
4,675
14,935
28,402
$
559,946
83,100
16,991
59,629
14,552
13,270
20,335
4,787
1,363,590
772,610
736,672
125,733
862,405
-
736,672
125,733
862,405
595,780
124,713
720,493
65,273
20,448
948,126
-
65,273
20,448
948,126
51,912
15,375
787,780
Change in net assets
265,514
149,950
415,464
(15,170)
Net assets:
Beginning of the year
445,724
48,840
494,564
509,734
End of the year
$
711,238
$
198,790
See notes to financial statements.
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$
910,028
$
494,564
FILM ACTION OREGON
STATEMENT OF FUNCTIONAL EXPENSES
For the year ended June 30, 2012
(With comparative totals for 2011)
2012
Supporting Services
Salaries and related expenses
Professional fees
Film and facility rental
Production expenses
Advertising
Program
Theater
Building
General and
Total
Programs Operation Administrative Fundraising Expenses
$ 255,669 $
16,220 $
32,351 $
17,052 $ 321,292
33,113
25,209
1,208
59,530
202,015
202,015
3,113
3,113
37,772
37,772
Building repairs and maintenance
Equipment and maintenance
Utilities
Telephone
Depreciation and amortization
Insurance
Concessions and supplies
Postage
Printing
Conferences and travel
Property taxes and fees
Bank fees
Interest
Miscellaneous
Allocation of building expenses
$
14,455
13,769
4,915
-
37,461
36,929
9,597
124,112
5,460
2,940
8,772
-
1,179
21,230
8,158
-
543
27,549
(2,566)
736,672
$
125,733
112
50
667
777
1,260
-
337
745
291
54
6
195
-
185
15
1,991
1,283
$
65,273
See notes to financial statements.
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650
1,283
$
20,448
$
2011
Total
Expenses
$ 307,024
53,895
161,917
30,992
14,567
13,819
38,128
4,915
37,706
10,857
7,315
11,591
36,081
6,284
44,009
12,658
124,166
5,803
3,880
9,063
57,767
5,139
1,534
4,473
1,907
21,245
27,549
10,799
-
1,861
10,550
26,387
8,303
-
948,126
$
787,780
FILM ACTION OREGON
STATEMENT OF CASH FLOWS
For the year ended June 30, 2012
(With comparative totals for 2011)
2012
Cash flows from operating activities:
Change in net assets
Adjustments to reconcile change in net assets to net
cash provided by operating activities:
Depreciation and amortization
Donated property and equipment
(Increase) decrease in:
Accounts receivable
Grants receivable
Other assets
Increase (decrease) in:
Accounts payable and accrued expenses
Deferred revenue
Sponsored film projects
Unearned rent revenue
Net cash provided by operating activities
$
415,464
2011
$
(15,170)
37,706
(116,597)
44,009
-
(2,718)
(128,000)
(3,127)
8,739
10,000
10,204
(5,715)
3,303
(8,986)
(5,286)
186,044
(26,175)
13,528
(3,005)
42,130
Cash flows from investing activities:
Purchase of property and equipment
Net cash used in investing activities
(81,289)
(81,289)
(9,485)
(9,485)
Cash flows from financing activities:
Principal payments on notes payable
Net cash used in financing activities
(35,924)
(35,924)
(32,120)
(32,120)
Net increase in cash and cash equivalents
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of year
See notes to financial statements.
-5-
$
68,831
525
63,468
62,943
132,299
$
63,468
FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS
June 30, 2012
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.
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FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS, Continued
June 30, 2012
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
June 30, 2012 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 June 30, 2012 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.
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FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS, Continued
June 30, 2012
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 June 30, 2012, 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 June 30, 2012, 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.
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FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS, Continued
June 30, 2012
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 June 30, 2012 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.
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FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS, Continued
June 30, 2012
3.
PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30, 2012 and 2011:
2012
Land
Building and improvements
Furniture and equipment
4.
$
2011
$
Less accumulated depreciation
84,650
1,086,338
455,929
1,626,917
500,021
84,650
1,031,785
259,736
1,376,171
463,092
Property and equipment, net
$ 1,126,896
$
913,079
NOTES PAYABLE
Notes payable at June 30, 2012 and 2011 consist of the following:
2012
Note payable to the State of Oregon, Department
of Energy in monthly installments of $2,254
including interest at 6.5% through November 30,
2020. The note is secured by real and personal
property.
$
Note payable to the State of Oregon, Department
of Energy in monthly installments of $2,614
including interest at 6.5% through November
2020. The note is secured by real and personal
property.
Total notes payable
173,314
372,419
Future principal payments on notes payable are as follows:
$
$
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$
199,105
$
For the year ending June 30, 2013
2014
2015
2016
2017
Thereafter
2011
34,915
37,260
39,761
42,389
45,278
172,816
372,419
189,889
218,454
$
408,343
FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS, Continued
June 30, 2012
5.
UNEARNED RENT REVENUE
The Organization entered into a leasing arrangement to lease space to an unrelated
party beginning January 1, 2012. The tenant incurred all costs for building
improvements in exchange for rent payments over the term of the lease through
December 31, 2017. 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 June 30, 2012 and 2011 are as follows:
2012
Purpose restricted:
Seat campaign
Project Youth Doc
Women's Film Initiative
Fundraising consultant
Sponsorship for fiscal year 2012
Marque restoration
DCI conversion
Sponsorship for fiscal year 2013
Total temporarily restricted net assets
7.
2011
$
133,000
2,702
35,000
18,500
9,588
$
6,663
17,310
2,702
21,765
400
-
$
198,790
$
48,840
LEASE COMMITMENTS
The Organization leases a color copier for $229 per month under an operating lease
agreement for through April 2015. Lease expense for the years ended June 30, 2012
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 2015. 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.
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FILM ACTION OREGON
NOTES TO THE FINANCIAL STATEMENTS, Continued
June 30, 2012
7.
Lease Commitments, Continued
Future annual minimum lease payments are as follows:
For the year ending June 30, 2013
2014
2015
2016
$
$
8.
13,600
15,090
15,250
1,090
45,030
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Noncash operating and investing activities for the year ended June 30, 2012
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 June 30, 2012
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 June 30, 2012 and
2011 are fully insured.
Credit risk for contributions, grants and other receivables is concentrated as well
because at June 30, 2012, 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 June 30, 2012 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 June 30, 2012
and 2011, respectively.
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