INDEPENDENT AUDITORS REPORT
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HARPER, VAN SOOIK & COMPANY, L.L.P.
GERTIFIED PUBLIC AOCOUNTANTS
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REX E. HARpeR, C.PA
WILBER G. VANSCOIK, C.PA
JOHN H. GRAHAM. JR., C.PA
OAVlO D. BURTON. JR., C.PA
CkARLfS W. WHETSTONE, c.P.A.
FflANK J. HANCOCK. C.P A
CHARLES 0, RIGGS. Ill, C,PA
2'11 DREW STREET
P. Q. BOX 4989
CLEARWATER, FLORIDA 34618-4989
MEMBERS
FlOR1OA INSTITUTE OF
CERTIFIED PUBUC ACCOUNTANTS
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FAX (813] 46,.,384
AMERICAN INSTITUTE OF
CERTIfIED PUBUC ACCOUNTANTS
see AND
PRIVATE COMPANIES
PRACTlCESECTlONS
TELEPHONE (813l446-<l504
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The Board of Directors
PACT, Inc,
Clearwater, Florida
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INDEPENDENT AUDITORS' REPORT
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We have audited the accompanying statement of financial posi1ion of PACT, lnc, ( a Florida not-for-profit
corpora1ion) as of September 30, 1996, and the related statements of ac1ivi1ies and cash flows for the year
then ended, These financial statements are the responsibility of management Our responsibility is to
express an opinion on these financial statements based on our audit
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We conducted our audit in accordance Vvith generally accepted audi1ing standards. 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 examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accoun1ing
principies used and significant es1imates made by management, as well as evalua1ing the overall financial
statement presenta1ion, We believe that our audit provides a reasonable basis for our opinion.
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In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
posi1ion of PACT, Inc. as of September 30, 1996, and the changes in net assets and its cash flows for the
year then ended in conformity Vvith generally accepted accoun1ing principles.
As discussed in Note 2 to the financial statements, in 1996 PACT, Inc, changed its method of financial
reporting and financial statement presenta1ion,
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November 22,1996
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A MEMBER OF
HLB INTEANATlONAL
A WORLDWIDE ORGANIZATION
OF ACCOUNTING FIRMS
Email: hvsinfo@hvs.mhS'\compuserve.com
Internet: http://www.hvs-<:pas.com.
oC
OFFICES IN CLEARWATER
AND
PORT RICHEY, FLORIDA
/,1)
\.} 1/
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PACT,INC,
STATEMENT OF FINANCIAL POSITION (CONTINUED)
September 30, 1996
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Liabilities and Net Assets
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Current liabilities:
Accounts payable and accrued expenses
Une of credit
Current portion of
long-term debt
Deferred program revenue
Advance from Foundation
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Total current liabilities
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Long-term debt, less current portion
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Total liabilities
Unrestricted Net assets
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Total liabilities and net assets
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See Notes to Financial Statements.
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$
361 ,436
600,000
303,554
1,229,268
37R R30
2,873,088
3 R06 461
6,679,549
971 707
$
7651 256
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PACT, INC.
STATEMENT OF ACTIVITIES
For the year ended September 3D, 1996
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Revenues:
Admission and rentals
Tuition
Grants
Other
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Total revenue
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Expenses:
Artisllees
Education
Operations
Other
Parking lease v.ith City of Clearwater
Programming - advertising and promotion
Programming - other
Rental production costs
Technical maintenance
Depreciation expense - furniture, fixtures and equipment
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Total expenses
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Change in net assets before other revenues
(expenses) and depreciation - building
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Other revenues (expenses):
Foundation grants
Interest
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Change in net assets before depreciation expense -
depreciation expense - building
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Depreciation expense.. building
Change in net assets
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Net assets, beginning of year
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Net assets, end of year
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See Notes to Financial Statements.
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$ 5,536,894
107,954
365,000
.d.~~ 76?
6,445,610
2,899,944
590,945
2,330,765
231,676
134,012
1,012,852
175,620
236,452
400,330
108 664
8 171 760
(1,675,650)
1,863,434
(380 893)
(193,109)
~'i04 894)
(698,003)
1 669710
$
971,707
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PACT, INC.
STATEMENT OF CASH FLOWS
For the year ended September 30,1996
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Cash flows from operating activities:
Cash received from patrons and government grants
Cash paid to artists, vendors and personnel
Cash received from the Foundation
Cash paid for interest expense
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Net cash provided by operating activities
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Cash flows from investing activities:
Acquisition of property and equipment
Sale of property and equipment
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Net cash used by investing activities
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Cash flows from financing activities:
Repayment of long-term debt
Proceeds from long-term debt
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Net cash provided by financing activities
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Net increase in cash
Cash and cash equivalents, beginning of year
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Cash and cash equivalents, end of year
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Reconciliation of changes in net assets
to net cash provided by operating activities:
Changes in net assets
Adjustment to reconcile changes in net assets
to net cash provided by operating activities:
Depreciation
Changes in assets and liabilities:
Accounts receivable
Inventory
Prepaid expenses
Accounts payable and accrued expenses
Deferred program revenue
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Net cash provided by operating activities
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See Notes to Financial Statements,
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$ 6,548,924
(7,955,674)
1,863,434
(~80 893)
75,791
(127,852)
? 770
(125,582)
(421,025)
480 000
58 975
9,184
8~ ~AA
$
99132
$(698,003)
613,558
(10,319)
78
(148,911)
94,057
??5331
$
75.791
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PACT, INC.
NOTES TO FINANCIAL STATEMENTS
September 30,1996
1. Comoanv Backaround and Reoraanization
PACT, Inc. (PACT) is a not-for-profit organization incorporated under the laws of Florida in 1978.
PACT was organized to support the establishment and operation of a performing arts center and theater
facility on property donated to the City of Clearwater (the City) for this purpose,
The performing arts center and the theater, named Ruth Eckerd Hall at the Richard B. Baumgardner
Center for the Performing Arts (the Center), opened its doors in October 1983, The Center, through year-
round programming, serves the local and regional community by offering a variety of activities which are both
educational and entertaining. The theater features Broadway shows, orchestral performances, opera, dance,
jazz, and popular music. The Performing Arts Center provides educational opportunities to the community
through performances and participatory ciasses in music, dance and theater. Community groups may rent
the facility, at reduced rates, through an arrangement between the Center and the City. The Center is also
available for private and commercial rental.
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Effective October 1, 1988, a recrganization, approved by the Internal Revenue Service, created the
Performing Arts Center Foundation, Inc. (Foundation). The Foundation was organized to perform all fund
raising activities and provide financial support to PACT operations and needed capital support for property and
equipment acquisition. PACT retained responsibility for the operations of the performing arts center and
theater. Certain assets and liabilities were transferred at net book value from PACT to the Foundation under
the plan of reorganization.
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2, Slanificant Accountina Policies
Accountina Method - In 1996, PACT implemented new accounting standards for not-for-profits,
FAS 116, "Accounting for Contributions Received and Contributions Made," and FAS 117, "Financial
Statements of Not-for-Profit Organizations." These accounting standards had no effect on changes in net
assets; however, the financial statement are presented in a different formal.
Revenue Recoanition - Program revenue is comprised primarily of ticket sales from PACT sponsored
events, children's shows and the rental of the facility to outside groups. Program revenue is recognized in the
period in which the related performance or rental takes place. Deferred program revenue consists primarily
of amounts collected on advance ticket sales,
Exoense Recoanition - Program expenses are comprised primarily of artist fees, technical
maintenance, and advertising and promotion costs. These expenses are recognized in the period in which
the related performance takes place, Prepaid expenses consist primarily of program expenses incurred in
advance of the performance date.
Inventorv - Inventory is recorded at the lower of cost, using specific identification, or market
Inventory consists of beverages held for resale.
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PACT, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
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2, Sianificant Accountina Policies (Continuedl
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Prooertv and Eauioment - Property and equipment is capitalized at cost or, if donated, at the fair
market value as of the date of receipt. Depreciation is computed using the straight-line method over the
following estimated useful lives of the related assets:
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Landscaping
Buildings
Furniture, fixtures and equipment
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20 - 25
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Contributed property and equipment is recorded at fair value at the date of donation. If donors
stipulate how long the assets must be used, the contributions are recorded as restricted support. In the
absence of such stipulations, contributions of property and equipment are recorded as unrestricted support,
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Estimates - The preparation of financial statements in conformity with generally accepted accounting
principles 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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Donated Services - A substantial number of unpaid volunteers have made significant contributions
of their time to assist in PACTs program and administrative services. No amounts have been reflected in the
accompanying finandal statemenls for the value of such donated services since they do not meet the criteria
to be recorded under FAS 116.
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Income Taxes - PACT has been granted tax-exempt status under Section 501 (c)(3) of the Internal
Revenue Code.
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Other Revenue and Other Exoenses - Other revenue includes revenues from food and beverage
sales, interest, ticketing service fees, and other miscellaneous revenue. Other expenses consist of food and
beverage expense, credit card fees, licensing fees and box office-related expenses, and other miscellaneous
programming expenses.
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Foundation Grant - The Foundation awards grants to PACT to help fund operations and capital
acquisitions. The revenue is recognized in the year declared by the Foundation's Board of Directors.
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Advances - Advances represent funds given to PACT during the year from the Foundation and are
to be repaid within the next year.
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Cash Eauivalenls - For purposes of the statement of cash flows, the Corporation considers all highly
liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
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PACT, INC.
NOTES TO FINANCIAL STATEMENTS
September 3D, 1996
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3, Accounts Receivable
Accounts receivable at September 30, 1996, included grants receivable from the State of Florida of
$35,000. Management feels that all accounts receivable are collectible; therefore, no allowance for doubtful
accounts has been established.
4. Line of Credit
PACT, Inc. has a $600,000 line of credit, which had borrowings of $600,000 outstanding at
September 30,1996. The interest, of bank prime (currently 8.25%), is payable monthly and the principal is
due on demand, The line of cred~ is guaranteed by the Foundation, and collateralized by Foundation's pledge
receivabl es.
5. Lona-Term Debt
Long-term debt at September 30, 1996, is summarized as follows:
6.673% mortgage note payable (adjusted at
June 1, 1996 and every five years thereafter
based on the Bond Buyer Twenty-Bond Index),
monthly principal and interest payments of $40,906
through June 1, 2008, collateralized by first
mortgage on 4.4 acres of property
$ 3,990,370
8.50% non-revolving term loan, principal and
interest payments of $6,605 through April 1998,
collateralized by computer equipment and
guaranteed by Foundation pledge receivables
119645
Current portion of long-term debt
4,110,015
303 554
Long-term debt, net of current portion
$ 3.806461
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PACT, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1996
5, Lona- Term Debt rContinuedl
Annual maturities of long-term debt are summarized as follows:
Year ending
Seotember 30
1998
1999
2000
2001
2002
Thereafter
$ 295,444
264,677
282,881
302,337
323,131
, 337 >l>l1
$ 3.806461
Total long-term debt, net of current poriion
The City of Clearwater (City) has a agreement with PACT whereby the City provides $400,000 of debt
service requirements per year in exchange for reduced facility rental rates to community groups. The
$400,000 is included in admissions and rental revenue. Under this agreement PACT agrees to make the
facility available for use by the City, and if the City chooses, the City has the right to take over the debt and
facilities of PACT while debt is still outstanding.
6, Commitment
Effective October 1993, PACT renewed the parking lot lease agreement with the City. The terms of the
lease require monthly payments to the City of $13,161 until October 1998, The payment amount is based on
the annual debt service and operating costs relating to the cost to the City of building PACTs parking lot and
is subject to annual adjustments. Future obligations under this agreement at current rates, are $157,936 per
year for the next two years,
7. Ooeratina leases
PACT leases certain vehicles and office equipment under noncancellable operating leases, Rent expense
under these leases was $30,751 for the year ended September 30, 1996, and is included in general and
administrative expenses. Future minimum annual lease payments under these leases are summarized as
follows:
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1997 $ 32,649
1998 35,599
1999 35,369
Thereafter 1445Q
$ 118,067
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PACT, INC.
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NOTES TO FINANCIAL STATEMENTS
September 3D, 1996
8, Tax Deferred Annuity Plan
A tax-deferred annuity plan was established on October 1,1988. PACT matches employees' contributions
to the tax deferred annuity (403[b]) plan for all full-time employees, Contributions to the Plan for the year
ended September 30, 1996 were $18,428, and are included in general and administrative expenses.
9. Credit Policv and Concentration of Credit Risk
The Organization extends credit for auditolium rentals, credit card sales, and block ticket sales to
individuals and organizations located in the Tampa Bay, Flolida area.
10. Related Parties
Grant revenue from the Foundation for the year ended September 30, 1996 is $1 ,863,434.
11, Grant from State of Florida
PACT was awarded a $350,000 grant from the State of Flolida which was administered by the Division
of Cultural Affairs within the Flolida Department of State. PACT used these funds in accordance with the
grant provisions, which is summalized as follows:
Fiscal year ended
September 30,
199B
General Program Support:
Classical
Dance
Jazz
Ethnic
Th eatre
Total general program support
Education
$
105,000
102,000
33,000
24,000
36 nnn
300,000
50 non
Total support $ 350 000
PACT received $315,000 from the Stale of FloIida in the year ended September 30, 1996. The remaining
$35,000 has been recorded as an "accounts receivable" on the balance sheet
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PACT. INC.
NOTES TO FINANCIAL STATEMENTS
September 30. 1996
12. PreDaid Advertisina EXDenses
PACT expenses advertising and promotional costs as they are incurred, except for the cost of
programming brochures. These brochures are used to generate future ticket sales. The cost of these
brochures are prorated over the number of performances and are expensed as the performances are
completed, The amount capitalized at September 30, 1996, was $136,605. These costs are included on the
balance sheet as .prepaid expenses:
13, Functional EXDenses
The expenses for the year ended September 30, 1996 are allocated to the functional categories described
below based on specific identification when possible, and by percentage of usage when necessary.
The functional expenses for the year ended September 30, 1996, are as follows:
Programming $ 5,748,986
General and administrative 2,095,674
Education 590,945
R ental of facility 571 44'
Total $ 9.007.047
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