Southern Rep D/B/A Southern Repertory...

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REPORT

SOUTHERN REPi D/B/A SOUTHERN REPERTORY THEATRE

JUNE 30,2011

Under provisions of state law, this report is a public document. Acopy of the report has been submitted to the entity and other appropnate public officials. The report is available for public inspection at the Baton Rouge office of the Legislative Auditor and, where appropnate, at the office of the pahsh clerk of court.

Release Date MAR 0 7 2012

SOUTHERN REP. D/B/A SOUTHERN REPERTORY THEATRE

JUNE 30,2011

INDEX TO REPORT

PAGE

INDEPENDENT AUDITOR'S REPORT 1

FINANCIALSTATEMENTS:

Statement of Financial Position 2

Statement of Activities 3

Statement of Cash Flows 4

Notes to Financial Statements 5-10

SUPPLEMENTARY INFORMATION:

Statement of Functional Expenses 11

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 12

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS '. 13

.WILLIAM C. STAMM, C.Pj\ . CLIFFORD J. G i m N , JR, C.P.A. LINDSAY J. CALUB, C.P.A., L.L.C. GUY L. DUPLANTIER,C.P.A. MICHELLE H. CU.NNINGHAM, C.P.A DENNIS W. DILLON, C.P.A. GRADY C. LLOYD, lU. C.P.A,

ANN H. HEBERT, C.?Ji. HENRY L. SILVIA, CPA. .

DUPLANTIER, H R A P M A N N , H O G A N & M A H E R , L.L.P. mmmmmmmmmmmmmmmmmmmmmmm̂ CERTlFiED PUBLiC ACCOUNTANTS

MEMBERS AMERICAN INSTITUTE OF

CERTlFiED PUBLIC ACCOUNTANTS SOCIETY OF LA C.P.A.'S

MICHAEL J. O'ROURKE. C.P.A. DAVID A. 8URGARD, C P A .

A J . DUPLANTIER JR, C.P.A. (I9I9-1985)

FELIX J. HRAP\UNN, JR, C P A . (1919-1990)

WILLIAM R. H0G.4N, JR.. CPA (1920-1996)

JAMES MAKER, JR, C.P.A. (1921-1999)

INDEPENDENT AUDITOR'S REPORT January 26,2012

To the Board of Directors of Southern Rep. dib/di Southem Repertory Theatre

New Orleans, Louisiana

We have audited the accompanying statement of financial position of Southem Rep. d/b/a Southem Repertory Theatre (a nonprofit organization) as of June 30,2011, and the related statement of activities 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.

We conducted oiu: 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 fi"ee 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 Southem Rep., d/b/a Southem Repertory Theatre as of June 30, 2011 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.

Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The schedule of functional expenses on page 11 is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived fi'om and relates directly to the underlying accounting and other records used to prepare the fmancial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole.

S)up£aiUiefc, MHopnuuut, StaganJi JliMe^c, ££9* 1615 Poydras Street, Suite 2100 New Orleans, LA 70112 • (504) 586-8866 • Fax (504) 525-5888

1670 Old Spanish Trail Slidell, LA 70458 - (985)649-9996- Fax (985)649-9940 247 Corporate Drive Houma, LA 70360 • (985) 868-2630 • Fax (985) 872-3833

wwvv.dhhmcpa.com

PAGE 2


STATEMENT OF FINANCIAL POSITION JUNE 30.2011

ASSETS

CURRENT ASSETS: Cash $ 29,137 Grants receivable 1,500 Tax credit receivable 117,754 Prepaid expenses 14,047

Total current assets 162,438

PROPERTY AND EQUIPMENT: Leasehold improvements 196,950 Equipment 25,886 Fumiture, fixtures and equipment 61,512 Computers and software 10,750

295,098 Less: Accumulated depreciation 198,874

Net property and equipment 96,224

TOTAL ASSETS $ 258,662

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES: Accounts payable $ 48,212 Accrued habilities 934 Deferred revenue 34,259 Note payable 60,000 Line of credit 80,000

Total current liabilities 223,405

NET ASSETS: Unrestricted 35,257 Temporarily restricted

Total net assets 35,257

TOTAL LIABILITIES AND NET ASSETS $ 258,662

See accompanying notes.


STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30. 2011

PAGE 3

REVENUE AND OTHER SUPPORT: Admissions Membership and subscriptions Tuition Concessions Contributions and grants Special events Miscellaneous

Total revenue and other support

Temporarily Uiu'estricted Restricted Total

, 158,065 $ 53,346 12,434 9,358

525,674 28,249 20,389

807,515

- $ 158,065 53,346 12,434 9,358

525,674 28,249 20,389

807,515

EXPENSES: Program services Supporting services:

Administrative and general Fundraising

592,589

224,170 7,848

592,589

224,170 7,848

Total expenses 824,607 824,607

CHANGE IN NET ASSETS (17,092) (17,092)

Net assets: Begirming of year 52,349 52,349

End of year $ 35,257 $ $ 35,257


SOUTHERN REP. D/B/A SOUTHERN REPERTORY THEATRE STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED JUNE 30,2011

PAGE 4

CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets Adjustments to reconcile change in net assets to net cash flows used in operating activities:

Depreciation Decrease in grants receivable Increase in tax credit receivable Increase in prepaid expenses Increase in accounts payable Decrease in accmed liabilities Increase in deferred revenue

$ (17,092)

14,563 15,454

(117,754) (4,017) 14,403 (3,750) 23,340

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds fi^om note payable Proceeds fi'om line of credit Payments on line of credit

(74,853)

0>n9)

(l>n9)

60,000 38,043 30,000

Net cash provided by financing activities 68,043

Net decrease in cash and cash equivalents

Cash and cash equivalents - begirming of year

CASH AND CASH EQUIVALENTS - END OF YEAR

(7,929)

37,066

29,137

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year: Interest Income taxes

2,948


PAGE 5


NOTES TO FINANCL\L STATEMENTS JUNE 30, 2011

1. ORGANIZATION:

Southem Rep. d^/a Southem Repertory Theatre (the 'Theatre") was incorporated in September 1986 in the State of Louisiana as a non-profit corporation to develop and perform professional theatre in New Orleans, Louisiana. It was organized for charitable and educational purposes in promoting professional theatre. The Theatre derives its primary revenue fi'om admissions, membership, contributions and grants.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting and Financial Statement Presentation

The Theatre prepares its financial statements on the accrual basis in accordance with accounting principles generally accepted in the United States of America.

The Theatre reports information regarding its financial position and activities according to three classes of net assets according to externally (donor) imposed restrictions. A description of the three net asset categories follows:

Unrestricted Net Assets - Net assets which are not subject to donor-imposed restrictions.

Temporarily Restricted Net Assets - Net assets which are subject to donor-imposed restrictions that may or will be met by actions of the Theatre and/or the passage of time.

Permanently Restricted Net Assets - Net assets which are subject to donor-imposed restrictions that are required to be maintained permanently by the Theatre. Generally, the donors of these assets permit the Theatre to use all or part of the income eamed on any related investments for general or specific purposes.

The Theatre reports restricted contributions whose restrictions are met in the same reporting period as unrestricted support.

Cash and Cash Equivalents

For the purposes of the Statement of Cash Flows, the Theatre considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents.

PAGE 6


NOTES TO FINANCIAL STATEMENTS JUNE 30,2011

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)

Revenue Recognition

Contributions, subscriptions and membership income, and grants for which the donor receives no material benefit in exchange, are recorded as revenue in the Statement of Activities when received.

Contributions

The Theatre accounts for contributions received as increases in unrestricted, temporarily restricted or permanently restricted net assets, depending on the absence or existence and nature of any donor restrictions.

All donor-restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomphshed), temporarily restricted net assets are reclassified to imrestricted net assets and reported in the Statement of Activities as net'assets released from restrictions.

Ticket Sales

Ticket sales received prior to the fiscal year to which they apply are not recognized as revenue until the year eamed.

Advertising Costs

The Theatre uses advertising to promote its programs among the audiences it serves. Advertising costs are expensed as incurred. Advertising expense for the year ended June 30, 2011 was $59,095.

Receivables

The Theatre considers accounts receivable to be fiilly collectible. If amoimts due become uncollectible, tiiey will be charged to operations when tiiat determination is made. Use of this method does not result in a material difference from the valuation method required by accounting principles generally accepted in tiie United States of America. In tiie current year, a significant amount of contributions and grants were provided by a few major contributors and grantors. Given the current economic environment it is considered reasonably possible that certain benefactors, grantors or contributors might be lost completely or otiierwise forced to reduce fimding to tiie Theater in tiie near term. The Theatre's market is concentrated in tiie New Orleans, Louisiana, geographical area.

PAGE 7



SUMMARY OF SIGMFICANT ACCOUNTING POLICIES: (Continued)

Functional Expenses

The costs of providing the various programs and other activities of the Theatre have been summarized on a fimctional basis in the Statement of Activities. Accordingly, certain costs have been allocated among the programs and supporting services benefited.

Propertv, Plant and Equipment

Property, plant and equipment are recorded at cost or, in the case of donated property, at their estimated fair value at the date of receipt. Depreciation is calculated by the straight-line method over the estimated usefiil Ufe of the assets, which: range from five to thirty-one and a half years. Expenditures for repairs and maintenance are charged to operating expenses as incurred.

The Theatre has adopted a policy of capitahzing property and equipment with a cost of greater tiian $1,000.

The Theatre incurred depreciation expense of $14,563 for the year ended June 30, 2011, of which $14,376 and $187 was included in program services and supporting services, respectively.

Subsequent Events

The Theatre has evaluated subsequent events through the date these financial statements were available to be issued, January 26, 2012. See Note 11 for subsequent events noted as part of that review.

Estimates

The preparation of financial statements in conformity with accoimting principles generally accepted in the United States of America requires management to make estimates and assumptions tiiat affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Income Tax

The Theatre is exempt from Federal income taxes on income other than unrelated business income under ttie provisions of Section 509(a)(1), witiiin Section 501(c)(3) regulations, of tiie Intemal Revenue Code. There was no unrelated business income during tiie year.

PAGE 8


NOTES TO FINANCL\L STATEMENTS JUNE 30,2011

3. DONATED SERVICES:

Significant services are donated to the Theatre by various organizations and are recorded at fair value on the date of donation. There were no donated services during the fiscal year ended June 30,2011.

4. NOTE PAYABLE:

The Theatre has received various short-term operating loans from related parties throughout the year. On April 1, 2011, the Theatre entered into a promissory note with a board member in which the board member loaned the Theatre $60,000 bearing no interest. The principal on the note will become due on or prior to April 1, 2012. As of June 30, 2011, the amount outstanding under the loan was $60,000, On January 21, 2012, the Theatre was notified by the lender that the note would be converted to a donation. See Note 11 for additional disclosure.

5. OPERATING LEASES:

The Theatre leases production space for a monthly rent of $1,500. Rental expense under the lease was $18,000 for the fiscal year ended June 30, 2011. The lease ends on December 31, 2011 and extends on a month-to-month basis thereafter. On December 29,2011, the Theatre was notified by the leaser that it would not be renewing the production space lease. See Note 11 for additional disclosure.

The Theatre entered into a lease for office space during the year ended June 30, 2010. The lease commenced on January 1, 2010 and extends for a period of 60 months, ending on December 31, 2014. The lease calls for escalating rent payments ranging from $54,144 to $60,912 armually. Rental expense under the lease was $59,423 for the year ended June 30, 2011. On October 26, 2011, the Theatre renegotiated the terms if its office lease. See Note 11 for additional disclosure.

The Theatre leases its operating facilities from third parties. The future minimum lease payments as of June 30,2011 for the above leases were as follows:

2012 2013 2014 2015 Total

$ 64,836 59,220 60,912 30,456

$215.424

6. LINE OF CREDIT:

The Theatre has a $90,000 unsecured revolving line of credit witii Whitney Bank. Interest payments are payable montiily and tiie outstanding principal is due on June 22, 2012. The interest rate is at tiie bank's variable prime rate, witii a 4% floor. The Theatre had $80,000 m outstanding borrowings under this line of credit as of June 30,2011. Total interest expense paid during tiie year ended June 30,2011 was $2,948, and tiie interest rate as of June 30,2011 was 4.5%.

PAGE 9



7. TEMPORARILY RESTRICTED:

The Theatre had no temporarily restricted net assets as of June 30,2011.

8. PROFIT SHARING PLAN:

The Theatre maintains a defined contribution retirement plan covering all full-time and part-time employees. The Theatre contributes to the plan based upon employee contributions. The Theatre made no contributions to the plan during the year ended June 30, 2011. The Theatre does not sponsor any defined benefit retirement plans or postretirement benefit plans.

9. LE PETIT THEATRE CO-PRODUCTION AGREEMENT:

On April 21,2010, the Theatre entered into a co-production agreement with Le Petit Theatre ("LPT") for the collaborative production of a certain play which was presented at LPT and occurred during the year ended June 30, 2010. The co-production agreement called for the Theatre and LPT to ratably share all expenses associated with the production and marketing of the play and also to ratably share in all proceeds generated from tiie performance of the play. Upon execution of the agreement, LPT was required to make an initial payment of $19,885 to the Theatre in order to offset any shared expenses incurred by the Theatre. Based on the terms of the agreement, tickets for the play were to be sold through LPT's ticketing program and LPT would reimburse the Theatre for its ratable share of proceeds generated from the play. During the year ended June 30, 2010, the Theatre received $41,134 from LPT for its ratable share of revenue generated from the play. The ratable share of proceeds received from the play and the reimbursement of expenses incurred were recognized as revenue during the year ended June 30,2010. All expenses incurred as a result of the play were expensed during tiie year ended June 30,2010. There were no co-production agreements witii LPT for tiie year ended June 30,2011.

10. LE CHAT NOIR MANAGEMENT AGREEMENT:

During the year ended June 30, 2010, tiie Theatre entered into an artistic management agreement with Le Chat Noir ("LCN") which allows for the Theatre to present and produce content during certain weeks of operations at the LCN venue for a period not to exceed one year. The agreement became effective July 1, 2010 and extends tiirough June 30, 2011, with an option to terminate tiie agreement at any time by eitiier party. In connection with tiie agreement, tiie Theatre is required to compensate LCN at $1,500 per week, payable on a bi-montiily basis. The Theatre is responsible for costs incurred in connection with the content that it presents and produces at the LCN venue and is also entitled to the proceeds generated from these productions less tiie aforementioned fees to LCN. On October 4, 2010, tiie Theatre received notice from LCN tiiat it would be exercising its right to terminate tiie agreement witii an effective date of January 4, 2011, due to LCN's intent to sell its venue and retire tiie name Le Chat Noir. Amounts paid to LCN for tiie year ended June 30, 2011 was $21,000. Based on tiie terms of tiie management agreement and subsequent notice of termination, there were no remaining contractual costs for producing content at tiie Le Chat Noir venue for tiie year ended June 30,2012 and tiiereafter.

PAGE 10



11. SUBSEOUENT EVENTS:

On October 26, 2011, the Theatre renegotiated the terms of its office lease. The renegotiated lease calls for new monthly lease payments of $1,333, retroactive to August 1, 2011. The new terms of the lease will significantly reduce the Theatre's future minimum lease payments for the fiscal year ended June 30, 2012 and thereafter. The fiiture minimum lease payments for the renegotiated office lease were as follows:

2012 2013 2014 2015 Total

$ 15,996 15,996 15,996 7,998

S 55,986

On December 29,2011, the Theatre was notified that its lease for production space would not be renewed effective January 31, 2012. As of the date these financial statements were available to be issued, the Theatre did not have production space beyond January 31,2012.

On January 21, 2012, the Theatre was notified that the promissory note payable to a board member in the amount of $60,000 as of June 30, 2011 would be converted to a donation effective on the date of notification. The amount payable on the note as of the date of the conversion was $60,000 and was recorded as contribution revenue during the fiscal year ended June 30,2012.

SUPPLEMENTARY INFORMATION


STATEMENT OF FUNCTIONAL EXPENSES FOR THE YEAR ENDED JUNE 30. 2011

PAGE 11

Accounting Advertising Bank charges Communications Concession expenses Contractual services Copying Credit card fees Depreciation Employee benefits General insurance Interest Meetings and conferences Membership fees Miscellaneous Parking Payroll taxes Postage Professional fees Rent Repairs and maintenance Royalties and commissions Salaries Special events Supplies Travel Utilities Workers* compensation

Total expenses

Program Services

$

59,095 -

11,293 6,583

178,728 10,062

-

14,376 15,396 9,117

-

1,911 4,724 1,156 2,014

11,417 3,713

-

57,927 363

10,819 106,331

-

32,973 45,282

3,501 5,808

$ 592,589

Administrative and General

$ 28,169 $ -

619 4,840

-

-

4,312 6,630

187 6,598

-

2,948 819

2,024 496 863

4,893 1,591

265 41,596

-

- '

103,245 -

6,008 4,078 1,500 2,489

$ 224.170 $

Fund-raising

-

-

-

-

-

-

-

-

-

--

-

-

-

-

-

-

-

-

-

-

-

-

7,848 -

-

-

-

7,848

Total

$ 28,169 59,095

619 16,133 6,583

178,728 14,374 6,630

14,563 21,994

9,117 2,948 2,730 6,748 1,652 2,877

16,310 5,304

265 99,523

363 10,819

209,576 7,848

38,981 49,360

5,001 8,297

$ 824,607

PAGE 12


SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30. 2011

SECTION I: FINDINGS WHICH ARE REOUIRED TO BE REPORTED:

FILING OF AUDIT REPORT: (2011-01)

Condition and Criteria: The Theatre did not submit the audit report for the year ended June 30, 2011 by

the statutory due date authorized by the State of Louisiana Legislative Auditor.

Effect: The audit report was not filed within six months of the close of the Theatre's fiscal year.

Cause: This was an oversight due to the recent increase of state fimding.

Recommendation: We recommend that the Theatre submit the audit report to the Louisiana Legislative Auditor by the required report deadline.

Management's Response: We will submit the audit to the Louisiana Legislative Auditor by the due date.

PAGE 13


SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS JUNE 30, 2011

NO PRIOR YEAR AUDIT FINDINGS.

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