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Home My WebLink About2002 Ski Ashland Financial ReportMT. ASHLAND ASSOCIATION dba SKI ASHLAND ACCOUNTANT'S REVIEW REPORT and FINANCIAL STATEMENTS JUNE 30, 2002 Ski Ashland Financial Report CONTENTS Page ACCOUNT ANT'S.REVIEW REPORT 1 FINANCIAL STATEMENTS Statement of financial position Statement of activities Statement of cash flows Notes to financial statements 2 3-4 5 6-9 ACCOUNTANT'S REVIEW REPORT Board of Directors Mt. Ashland Association dba Ski Ashland We have reviewed the accompanying statement of financial position of Mt. Ashland Association dba Ski Ashland (a non-profit corporation) as of June 30, 2002, and the related statements of activities, and cash flows for the year then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Mt. Ashland Association. The prior year summarized information has been derived from Mt. Ashland Association's 2001 financial statements and in our report dated September 7, 2001 we issued an unmodified review report. A review consists principally of inquiries of association personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. Medford, Oregon September 4, 2002 A member of Moores Rowland An association of independent accountin§ firms throughout lhe world. 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ASHLAND ASSOCIATION dba SKI ASHLAND STATEMENT OF CASH FLOWS Year ended June 30, 2001 2002 Comparative Total total CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustment to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization Amortization ,of contributed lease facility Changes in Other receivables Inventories Deposits Accounts payable and accrued expenses Deferred revenue Net cash from operating activities $ (498,104) $ (531,743) 313,545 272,106 207,272 188,276 16,500 43,987 8,106 (10,415) 1,040 (1,405) 17,837 2,833 167,581 233,777 (36,361) 8,184 308,748 (201,550) (241,531) (193,366) 67,217 33,000 (48,595) (11,671) (48,595) 21,329 (8,184) 52,185 78,726 26,541 $ 70,542 $ 78,726 CASH FLOWS FROM INVESTING ACTIVITIES Decrease in board designated investments Capital asset acquisitions Net cash from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from capital lease obligation Payments on capital lease obligations Net cash from financing activities NET INCREASE (DECREASE) IN CASH CASH Beginning of year End 0 f year Supplemental schedule of non-cash investing and financing activities Capital asset acquisitions Debt incurred in exchange for property Capital asset acquisitions (net of non-cash items) $ 333,550 132,000 $ 201,550 $ $ See accountant's review report and accompanying notes. 5 MT. ASHLAND ASSOCIATION dba SKI ASHLAND NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - The Mt. Ashland Association, (the Association) dba Ski Ashland, is an Oregon non-profit corporation organized to provide educational and recreational opportunities in Jackson County, Oregon to members of the general public. The Association operates and manages the ski area on Mt. Ashland under the terms of a lease agreement with the City of Ashland, Oregon. The Association provides many educational programs and related benefits to the community. These educational programs include Ski Wee, After School Youth Ski, College Lesson, Ski School, Mountain Geology and Environmental. The approximate costs of providing these programs were in excess of $468,000 for the 2002 year. The Association expects to continue these programs and to offer new and expanded educational programs in the future. The Association is exempt from federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code. Contributions to the Association are tax deductible by the donor as provided in Section 170 of the Internal Revenue Code. Accordingly, these financial statements do not include a provision for income taxes. Basis of Accounting - The financial statements of the Association have been prepared on the accrual basis of accounting. The accounts are organized into three separate net asset classes depending on the limitations and restrictions placed on the use of these funds by the donor for the temporarily restricted fund and by the Board of Directors for the board designated unrestricted net assets. All donor-restricted support is reported as an increase in temporarily 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. The temporarily restricted net assets include contributions the donor restricts as to use or for a period of time. Included in contributions are donations of$67,763. The Association has established Board Designated Net Assets (reserve account) of $671,231 of which $500,000 has been designated as a contingency fund for future operations and $171,231 as a reserve fund to provide for future ski area improvements and programs. Investments - The Association has invested monies with a mutual fund and the City of Ashland, Oregon's short-term pooled investment account. These investments are recorded at market value. Investment income includes interest and dividend income plus realized gains or losses resulting from the sale of investments. Unrealized gains or losses resulting from the difference in the market value and the cost of investments are reported in the statement of activities. Inventories - Inventories are stated at the lower of cost or market, with cost determined using the first-in, first-out method. 6 MT. ASHLAND ASSOCIATION dba SKI ASHLAND NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Comparative Information - The Association presents comparative financial information for the prior year in total rather than by net asset class. Such summarized financial information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. The summarized prior year information should be read in conjunction with prior year's financial statements. Certain items have been reclassified in 2001 to conform to the current presentation. Capital Assets ~ Capital assets are stated at cost if purchased and at fair market value at time of contribution if donated. Depreciation of capital assets is provided on the straight- line method over their estimated useful lives. Equipment Property improvements Leasehold improvements Building June 30, 2002 $ 1,385,758 1,505,774 120,769 42,000 3,054,301 1,437,257 $ 1,617,044 Less accumulated depreciation During fiscal year 2002 significant capital asset additions included chair lift upgrades and slope improvements - $97,479; cafe equipment - $26,701; vehicles and slope grooming equipment - $136,380; new rental equipment - $31,394; ski shop improvements - $7,784; lodge improvements - $18,178; and various other projects totaling - $15,634. Contributions - The Association recorded $38,048 in various contributions during fiscal year 2002. The City of Ashland leases the ski area facilities to the Association for $1 per year. The present value of the estimated fair value of the facilities utilized is capitalized and being amortized to lease expense over the economic life of the assets being utilized. Use of Estimates - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fair Value of Financial Instruments - The fair value amounts of the Association's financial instruments approximate their carrying amounts. Cash and Cash Equivalents - For purposes of the statement of cash flows the Association considers cash and short-term investments with maturities of three months or less to be cash equivalents. Advertising - The Association expenses advertising costs as incurred. Advertising expense was $44,472 for the year ended June 30, 2002 and is included in marketing expenses. 7 ! ~ f f I f i , I- t ! f ,- ~ t ~ MT. ASHLAND ASSOCIATION dba SKI ASHLAND NOTES TO FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Revenue - Deferred revenue of $167,581 represents the pre-sale of season passes for the 2002-03 ski season, which was a new program this year. NOTE 2 - INVESTMENTS Investments are recorded at market value and consisted of the following at June 30, 2002: Market Unrealized Cost value loss City of Ashland short term investment account $ 342,773 $ 342,773 $ SEI mutual funds 371,924 328,458 (43,466) $ 714,697 $ 671,231 $ (43,466) NOTE 3 - INVENTORIES Inventories consisted of the following at June 30,2002: Ski shop merchandise Food and beverages $ 14,221 5,522 $ 19,743 NOTE 4 - PENSION PLAN In 1995, the Association adopted a defined contribution profit sharing plan, which covers all full time employees over 21 years of age with at least one year of service. Contributions to the plan are at the discretion of the Board of Directors. Contributions for the 2002 fiscal year were $13,106. NOTE 5-LEASES The City of Ashland, Oregon purchased the ski area assets on Mt. Ashland, which are located on land leased from the U.S. Department of Agriculture. The ski area assets are leased by the City to the Association for $1 per year. The lease with the City of Ashland expires December 31, 2017. The Association has an option to extend the lease for another 25 years to 2042. The lease requires the Association to maintain the leased ski area assets at an agreed "Minimum Liquidation Value," which was $200,000 for 1992. The "Minimum Liquidation Value" is subject to an escalation provision tied to the Consumer Price Index (CPI). If the Association does not maintain the leased ski area assets at the "Minimum Liquidation Value," the Association is required to pay the difference into a trust fund maintained by the City of Ashland. As of June 30, 2002, no funds have been required to be transferred to this trust fund. 8 I ~ I' ~. c f. MT. ASHLAND ASSOCIATION dba SKI ASHLAND NOTES TO FINANCIAL STATEMENTS NOTE 5 - LEASES (Continued) To record the contribution of the fair value of the use of the ski area assets for the 25 year term of the lease, the Association has recorded the contributed facility lease as a temporarily restricted net asset. The capitalized amount of the contributed facility lease is being amortized to facility lease expense over the economic life of the contributed assets. Facility lease expense for 2002 was $207,272. Facility lease expense for fiscal years 2003 through 2007 will be $178,920 per year. The Association assumed the underlying obligation of the City of Ashland's special use permit with the U.S. Department of Agriculture, Forest Service, for the use of land for the construction, operation and maintenance of a winter sports area. The permit expires July 4, 2017, with an annual fee based upon a weighted formula applied to various revenue and gross fixed asset classifications. The adjusted fee for the year ended June 30, 2002 was $34,628. The use permit provides for termination upon breach of any condition or at the discretion of the Regional Forester or the Chief of the U.S. Forest Service. The Association rents office space for $1,500 per month on a month-to-month lease. The Association leases equipment from Bombardier Capital under a capital lease agreement. The economic substance of the lease is that the Association is financing the acquisition and it is recorded in the Association's assets and liabilities. The following is an analysis of the leased assets included in capital assets at June 30, 2002: Equipment $ 165,000 Less accumulated depreciation 22,002 $ 142,998 Amortization of assets held under capital leases is included with depreciation expense. The following is a schedule of the present value of payments required under the leases: 2003 2004 $ Total lease payments 64,785 52,397 117,182 12,448 $ 104,734 Less amount representating interest Present value oflease payments 9 ~..<~...."",._"..,...~-",.,.,,-