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HomeMy WebLinkAbout2006 Ski Ashland Financial Report MT. ASHLAND ASSOCIATION dba SKI ASHLAND FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2006 AND 2005 WITH ACCOUNTANTS' REVIEW REPORT MT. ASHLAND ASSOCIATION dba SKI ASHLAND Years ended June 30, 2006 and 2005 Contents Paqe Accountants' review report Financial statements: Statements of financial position 2 Statements of activities 3 Statements of cash flows 4 Notes to financial statements 5-10 Supplementary Information: Schedules of functional expenses 11-12 ~_..- ~ ISLE~MedfOrg I Certified Public Accountants and BllsJlless Advisors ACCOUNTANTS' REVIEW REPORT Board of Directors Mt. Ashland Association dba Ski Ashland Ashland, Oregon 97520 We have reviewed the accompanying statements of financial position of Mt. Ashland Association dba Ski Ashland (a non-profit corporation) as of June 30, 2006 and 2005, and the related statements of activities and cash flows for the years 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 dba Ski Ashland. A review consists principally of inquiries of Company 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. Our review was made for the purpose of expressing limited assurance that there are no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The information included in the accompanying Schedules of Functional Expenses are presented only for supplementary analysis purposes. Such information has not been subjected to inquiry and analytical procedures applied in the review of the basic financial statements, but was compiled from information that is the representation of management, without audit or review. Accordingly, we do not express an opinion or any other form of assurance on the supplementary information. This report is intended solely for the information and use of the Board of Directors, management, and others within the Association and is not intended to be and should not be used by anyone other than these specified parties. ~ ~~\, l.~C- Isler Medford, L.L.C. Medford, Oregon September 8, 2006 1555 E. McANDREWS, SUITE 301 . MEDFORD. OREGON 97504-5533 . (541) 779-7641 . FAX (541) 773-8001 medford@lslercom · www.lslermedford.com MT. ASHLAND ASSOCIATION dba SKI ASHLAND Statements of Financial Position June 30, 2006 and 2005 2006 2005 ASSETS Current assets: Cash and cash equivalents Cash restricted for childrens programs Investments Investments restricted for childrens programs Accounts receivable Prepaid rent and deposits Inventory $ 302,368 $ 263,399 14,349 728,512 649,675 12,080 4,120 7,416 76,892 2,250 17,117 18,007 1,129,009 967,176 3,337,410 3,380,915 (1,811,165) (1,691,758) 1,526,245 1,689,157 832,290 907,844 $ 3,487,544 $ 3,564,177 Total current assets Buildings and equipment Less accumulated depreciation Net buildings and equipment Contributed facilities lease - net Total assets LIABILITIES & NET ASSETS Current liabilities: Accounts payable - trade Accrued expenses Deferred revenue $ 5,164 $ 17,413 18,872 41,198 443,813 381,391 467,849 440,002 2,187,405 2,189,902 832,290 934,273 3,019,695 3,124,175 $ 3,487,544 $ 3,564,177 Total liabilities Net assets: Unrestricted Temporarily restricted Total net assets Total liabilities & net assets See accompanying notes to financial statements and accountants' report. 2 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Statements of Activities For the years ended June 30, 2006 and 2005 2006 2005 Changes in unrestricted net assets: Revenue and support: Service fees: Ski lifts $ 1,722,969 $ 1,612,228 Ski shop operations 323,321 264,679 Cafe 226,449 196,266 Lodge and bar 188,458 178,417 Ski school 196,441 136,854 Other income 40,045 30,072 Total service fees 2,697,683 2,418,516 Other support: Contributions 309,609 232,749 Investment Income 22,423 2,402 Unrealized gain on investments 16,757 27,605 Total other support 348,789 262,756 Total unrestricted revenue and support 3,046,472 2,681,272 Expenses: Program services: Ski lifts 1,449,400 1,310,205 Ski shop operations 205,429 170,891 Cafe 247,397 208,169 Lodge and bar 173,227 185,181 Ski school 123,032 119,992 Total program services 2,198,485 1,994,438 Supporting services: General and administrative 686,380 730,892 Marketing 164,104 1 34,152 Total supporting services 850,484 865,044 Total unrestricted expenses 3,048,969 2,859,482 Decrease in unrestricted net assets (2,497) (178,210) Temporarily restricted net assets Contributions 206,377 204,625 Net assets released from restriction (308,360) (265,831 ) Total decrease in temporarily restricted net assets (101,983) (61,206) Total decrease in net assets (104,480) (239,416) Net assets at the beginning of the year 3,124,175 3,363,591 Net assets at the end of the year $ 3,019,695 $ 3,124,175 See accompanying notes to financial statements and accountants' report. 3 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Statements of Cash Flows For the years ended June 30, 2006 and 2005 2006 2005 Cash flows from operating activities: Change in net assets $ (104,480) $ (239,416) Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation 225,766 256,037 Amortization of contributed lease facility 75,555 75,555 Unrealized gains on investments (16,757) (27,475) (Gain) Loss on disposition of buildings and equipment (159,760) 9,719 Decrease in accounts receivable 3,296 23,713 Increase in prepaid rent and deposits (74,642) (500) Decrease in inventory 890 709 Decrease in accounts payable - trade (12,249) (66,883) (Decrease) Increase in accrued expenses (22,326) 18,239 Increase in deferred revenue 62,422 117,941 Net cash (used) provided by operating activities (22,285) 167,639 Cash flows from investing activities: Cash payments for the purchase of investments (300,000) (200,000) Proceeds from sale of investments 250,000 430,000 Cash payments for the purchase of buildings and equipment (268,095) (211,836) Proceeds from the sale of buildings and equipment 365,000 Net cash provided by investing activities 46,905 18,164 Net increase in cash and cash equivalents 24,620 185,803 Cash and cash equivalents at the beginning of the year 277,748 91,945 Cash and cash equivalents at the end of the year $ 302,368 $ 277,748 See accompanying notes to financial statements and accountants' report. 4 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Notes to Financial Statements June 30, 2006 and 2005 Note 1 - Summary of siQnificant accountinQ policies Purpose of Orqanization Mt. Ashland Association dba Ski Ashland (the Association) is a nonprofit organization established under the laws of the State of Oregon to provide educational and recreational opportunities to the members of the general public in Jackson County, Oregon. The Association offers comprehensive winter recreation services and educational programs to residents of Southern Oregon and Northern California through the operation of the Mt. Ashland Ski Area. Mt. Ashland prides itself on being affordable to families and youth and is host to over 90,000 skier visits per season. Over 2,500 youths participate in Mt. Ashland's after-school programs. The Association provides and continues to develop new ways to contribute to our youth and many educational programs and related benefits to the communities of Southern Oregon and Northern California. The Association expects to continue the following programs and expand on the educational awareness programs; such as our after school youth ski and snowboard, ski/snowboard school, kids club, mountain geology/snow science and environmental/youth summer service. The approximate costs of providing these programs were $ 303,785 and $ 350,823 for the years ended June 30, 2006 and 2005 respectively. Basis of Accountinq The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Basis of Presentation The Association has adopted Statement of Financial Accounting Standards (SFAS) No. 116, "Accounting for Contributions Received and Contributions Made", and (SFAS) No. 117, "Financial Statements of Not-for-Profit Organizations." SFAS No. 117 establishes standards for external financial reporting by not-for-profit organizations and requires the Association to report information regarding its financial position and activities into three classes of net assets according to externally (donor) imposed restrictions. SFAS No. 116 requires that unconditional promises to give (pledges) be recorded as receivables and revenues, and requires the organization to distinguish between contributions for each net asset category in accordance with donor imposed restrictions. Descriptions of the three net asset categories as presented on the Statement of Activities are as follows: 1) Unrestricted net assets have no donor imposed restrictions. 2) Temporarily restricted net assets have donor-imposed restrictions that will expire in the future. 3) Permanently restricted net assets have donor-imposed restrictions, which do not expire. Unrestricted net assets consist of the general operating fund of the Association and are available for use at the discretion of the Board of Directors. 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 certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 5 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Notes to Financial Statements June 30, 2006 and 2005 Note 1 - Summary of si~nificant accountin~ policies (Continued) Income Tax Status The Association is a not-for-profit organization that is exempt from federal income taxes under Section 501 (c)(3) of the U.S. Internal Revenue Code. The Association has also been classified as an entity that is not a private foundation within the meaning of Section 509(a) and qualifies for deductible contributions as provided in Section 170 (b)( 1 )(A)(iii). There was no unrelated business income for the years ended June 30, 2006 and 2005. Buildinqs and Equipment The Association capitalizes all expenditures for buildings and equipment if they are considered to benefit future periods. Purchased buildings and equipment are carried at cost and are considered to be owned by the Association. Donated buildings and equipment are carried at the approximate fair value at the date of donation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value. Investments The Association has invested funds with Charles Schwab Mutual Fund and the State of Oregon Treasurer's Local Government Investment Pool (LGIP). Funds invested with Charles Schwab are held by Patten Investment Advisors, Inc. Funds invested with the LGIP are held by the City of Ashland. All 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. Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances at year-end. Inventorv Inventory consists of food, beverages and ski area related retail merchandise. Inventory is valued at cost. Cost is determined using a first-in, first-out method of inventory valuation. Advertisinq Advertising costs are expensed as incurred. Advertising expense for the years ended June 30, 2006 and 2005 totaled $51,303 and $44,906 respectively. 6 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Notes to Financial Statements June 30, 2006 and 2005 Note 1 - Summary of siQnificant accountinQ policies (Continued) Revenue The Association's revenue is derived primarily from ski operations including season pass sales, lift ticket sales, retail sales, lodge and bar sales, cafe sales, equipment rentals and ski school income. Sales revenue is recognized when purchases are made, with the exception of season pass sales. Season passes sold during the "Spring Pass" promotion cover the remaining spring portion of the current ski season as well as the entire following ski season. Management allocates this revenue relating to the following season based on skier visits during operating months and defers this revenue until earned. Deferred revenue for the years ended June 30, 2006 and 2005 was $443,813 and $381,391 respectively. Note 2 - BuildinQs and Equipment The following is a summary of equipment, ski rental equipment, furniture and fixtures, and leasehold improvements which comprise the buildings and equipment account, stated at cost less accumulated depreciation. Renewals and betterments are charged to the asset accounts while maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed in the current period. Depreciation of property and equipment is provided on the straight-line basis over the assets estimated useful life as follows: equipment - 5 to 15 years; buildings - 25 years; leasehold improvements - 5 to 39 years. 2006 2005 Equipment $ 1,326,761 $ 1,279,900 Buildings 42,000 42,000 Leasehold improvements 292,733 311,795 Expansion project - construction in progress 1,675,916 1,747,220 Total buildings and equipment 3,337,410 3,380,915 Less accumulated depreciation 1,811,165 1,691,758 Net buildings and equipment $ 1,526,245 $ 1,689,157 Depreciation expense for the years ended June 30, 2006 and 2005 was $225,766 and $256,037 respectively. Note 3 - OperatinQ Leases The Association leases space for its business office, which expires on July 1, 2007 with an option to renew for one three-year extension for $1,500 per month. For the year ended June 30, 2007 the lease commitment is $18,000 for the Associations business office. The Association also leases certain ski area assets that were purchased from donated funds to the City of Ashland. This lease term expires on June 30, 2017. Future minimum lease payments as of June 30, 2006 are $1 per year through 2017, for a total lease commitment of $11. 7 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Notes to Financial Statements June 30, 2006 and 2005 Note 3 . OperatinQ Leases (Continued) The City of Ashland received donations from the general public to purchase certain ski area assets on Mt. Ashland which are located on land leased from the U.S. Department of Agriculture/U.S. Forest Service. These ski area assets are leased by the City to the Association for $1 per year. Upon the lease expiration date, June 30, 2017, the Association has the option to extend the lease term for an additional 25 years ending June 30, 2042. This lease requires the Association to maintain the leased ski area assets at an agreed "Minimum Liquidation Value," which was stated at $200,000 in 1992. The "Minimum Liquidation Value" is subject to an escalation provision tied to the Consumer Price Index (CPI). If the Association fails to maintain the leased ski area assets at the "Minimum Liquidation Value," the Association is required to pay the deficiency into a trust fund maintained by the City of Ashland. As of June 30, 2006, no funds have been required to be transferred into this trust fund. In 1994 the Association recorded the lease as a contribution stated at the ski area assets fair value for the 25-year term of the lease. This fair value was estimated at $ 2,833,300 and capitalized. The lease is amortized as Facility Lease Expense over the assets economic life to reflect the relative value of the lease. Amortization expense for 2006 was $ 75,555. The following summarizes the remaining asset value related to the contributed facility lease: 2006 2006 Contributed Facility Lease $ 2,833,300 $ 2,833,300 Less: Accumulated Amortization 2,001,010 1 ,925,456 Net Contributed Lease Value $ 832,290 $ 907,844 The Association also records the approximate yearly value of the lease as temporarily restricted revenue and facility lease expense. The estimated yearly value of facility lease expense for 2006 was $ 178,920. 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 the ski area land for the construction, operation and maintenance of a winter sports area. This use permit provides for termination upon breach of any permit condition or termination at the discretion of the Regional Forester or the Chief of the U.S. Forest Service. The permit expires July 4,2017, with an annual fee based upon a weighted formula applied to various revenue classifications. The adjusted fee for the years ended June 30, 2006 and 2005 were $36,890 and $ 31,827 respectively. 8 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Notes to Financial Statements June 30, 2006 and 2005 Note 4 - Temporarilv Restricted Net Assets As described in Note 1, the Association reports financial information regarding its financial position and activities into three classes of net assets according to externally (donor) imposed restrictions. These classes consist of unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. Temporarily restricted net assets have donor-imposed restrictions that will expire in the future. Upon expiration of the donor-imposed restrictions, funds are released from restriction and expensed categorically in alignment with their functional category. The activity of these funds is represented on the Statement of Activities. Temporarily restricted net assets consisted of the following at June 30, 2006 and 2005: Net assets released from restriction Cash released from restriction Contributed facilities lease Contributed facilities lease amortization 2006 2005 $ 27,457 $ 25,705 178,920 178,920 206,377 204,625 53,885 11,356 178,920 178,920 75,555 75,555 308,360 265,831 $ (101,983) $ (61,206) Contributions Cash contributions Contributed facilities lease Temporarily restricted contributions Net assets released from restriction Total decrease in temporarily restricted net assets Note 5 - Functional Allocation of Expenses The costs of providing various program and supporting services have been summarized on a functional basis in the statement of activities. Accordingly, certain costs have been allocated among the program and supporting services benefited. Note 6 - Concentration of Credit Risk Mt. Ashland Association dba Ski Ashland provides educational and recreation opportunities to the members of the general public in Jackson County, Oregon. The Association relies heavily on public support and patronage of outdoor winter recreation which in turn is dependent upon the overall weather conditions of the Southern Oregon region. 9 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Notes to Financial Statements June 30, 2006 and 2005 Note 7 - Pension Plan Mt. Ashland Association dba Ski Ashland provides a 401 (k) retirement plan for its employees. Employees in Job Classifications 1, 2 and 3 are eligible upon the completion of one year of services and attainment of age 21. Employees may defer a percentage of their compensation up to the Code 402(g) deferral limit as described in the company's basic plan document. The Association makes a matching contribution of a minimum of 3% of gross pay per employee, and may make an additional matching contribution at the discretion of the Board of Directors. The contributions for the plan years ended June 30, 2006 and 2005 were $ 18,695 and $ 20,293 respectively. Note 8 - Deposits in Excess of Insured Limits At June 30, 2006 the Association had deposits in excess of FDIC insured limits of $ 249,278. 10 SUPPLEMENTAL INFORMATION MT. ASHLAND ASSOCIATION dba SKI ASHLAND Schedule of Functional Expenses For the year ended June 30, 2006 Ski Lift Ski Shop Cafe Lodge & Bar Ski School Operations Operations Operations Operations Operations TOTAL Revenues Sales $ 1,489,493 $ 150,399 $ 226,449 $ 173,065 $196,441 $ 2,235,847 Rental income 165,221 15,393 180,614 Repair income 7,701 7,701 Other income 73,716 73,716 Gain on sale of assets 159,760 159,760 Total revenues 1,722,969 323,321 226,449 188,458 196,441 2,657,638 Expenses Cost of goods sold 56,119 100,348 45,961 202,428 Salaries & wages 638,056 100,778 73,425 71,438 90,640 974,337 Payroll tax 70,176 11 ,595 8,394 6,069 10,694 106,928 Employee benefits 88,986 3,695 2,305 6,670 12,947 114,603 Occupancy 178,920 32,396 211,316 Maintenance & repair 196,922 8,943 13,272 19,557 4,595 243,289 Depreciation 226,944 24,299 17,257 23,532 4,156 296,188 Automobile expense 49,396 49,396 Total expenses 1,449,400 205,429 247,397 173,227 123,032 2,198,485 Increase (decrease) in net assets $ 273,569 $ 117,892 $ (20,948) $ 15,231 $ 73,409 $ 459,153 See accountants' report. 11 MT. ASHLAND ASSOCIATION dba SKI ASHLAND Schedule of Functional Expenses For the year ended June 30, 2005 Ski Lift Ski Shop Cafe Lodge & Bar Ski School Operations Operations Operations Operations Operations TOTAL Revenues Sales $ 1,537,552 $ 67,895 $ 196,266 $ 160,389 $ 136,854 $ 2,098,956 Rental income 190,190 18,028 208,218 Repair income 6,594 6,594 Other income 74,676 74,676 Total revenues 1,612,228 264,679 196,266 178,417 136,854 2,388,444 Expenses Cost of goods sold 35,984 59,130 37,675 132,789 Salaries & wages 601,909 83,230 80,961 86,164 87,492 939,756 Payroll tax 64,178 9,254 9,093 9,840 9,582 101,947 Employee benefits 82,456 3,266 3,989 4,268 12,514 106,493 Occupancy 178,920 27,043 205,963 Maintenance & repair 146,788 11,973 19,584 26,844 6,611 211,800 Depreciation 188,557 27,184 8,369 20,390 3,793 248,293 Automobile expense 39,803 39,803 Loss on disposition of assets 7,594 7,594 Total expenses 1,310,205 170,891 208,169 185,181 119,992 1,994,438 Increase (decrease) in net assets $ 302,023 $ 93,788 $ (11,903) $ (6,764) $ 16,862 $ 394,006 See accountants' report. 12