HomeMy WebLinkAboutCSD-08-032 - Theatre and Company Programming Plans
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Community Services
Report To:
Date of Meeting:
Submitted By:
Prepared By:
Ward(s) Involved:
Date of Report:
Report No.:
Subject:
Community Services Committee
March 31 , 2008
Pauline Houston
Ingrid Pregel
N/A
March 27, 2008
CSD-08-032
Theatre and Company Programming Plans
RECOMMENDATION:
That staff be directed to contact THEATRE & CO. requesting a progress report be presented to
Community Services Committee on programming decisions for the 2008-2009 season on June
16, 2008. Further, that staff be directed to continue monthly grant payments in the amount of
$4,250 for the months of May and June, 2008.
EXECUTIVE SUMMARY:
Theatre and Company (K-W Performing Arts Association) has been receiving grants from the
City of Kitchener since 1990. Recent articles in The Record (March 19 and 20, 2008) indicated"
The board pulled the plug this week on Theatre and Co.'s 2008-2009 season, blaming poor
ticket sales and a deficit of $400,000." The June 30, 2007 financial statements indicate an
accumulated deficit of $439,280. These statements are appended to this report. Staff has met
with Brad Hutton, the General Manager, to understand more fully the organization's plans. This
report summarizes the new information staff has garnered and recommends staff be directed to
contact Theatre & Co. requesting a progress report be presented to Community Services
Committee on programming decisions for the 2008-2009 season on June 16, 2008 and that
monthly grant payments be continued for May and June, 2008.
BACKGROUND:
Theatre and Company (K-W Performing Arts Association) has been receiving grants from the
City of Kitchener since 1990. At the June 18, 2007 Community Services Committee meeting
staff was instructed to provide Council additional information on the history of grants to three
organizations including the Social Planning Council, Homer Watson House and Theatre and
Company. Appendix I to the subsequent staff report dated June 22, 2007 provided details of
grants for Theatre and Company for the years 2002 through 2007 and is appended to this report
as well. A grant in the amount of $55,284 was subsequently approved comprising the amount
of the 2007 grant plus 20/0, the agreed formula for annual grants for the 2008 grants year, plus
$4,284 in kind parking. Theatre and Company subsequently provided the required financial
statements for the year ended June 30, 2007 on September 20, 2007 together with a letter
outlining the organization's programming plans.
REPORT:
Theatre and Co. has been operating both a performance facility (King Street Theatre Centre)
and theatre production company. Historically the production company has had priority access
to the use of the performance facility for set building, rehearsal and performance purposes. The
facility was also rented out to other arts groups as demand existed for the remaining weeks
each year. In the 2007 grants submission dated February 19, 2007 , Theatre and Co. indicates
that in addition to its own theatre productions, the theatre hosts youth programs, partnership
opportunities with The Registry Theatre and a variety of other festivals and special events. The
grants from the City of Kitchener in recent years have not been directly tied to a specific number
of performances or types of programming.
Management indicates the revenues and costs associated with operating both the performance
facility and the production company have historically been co-mingled in one set of financial
statements. Recent analysis of the sources of revenue and the costs associated with operating
both the performance facility and the production company separately, completed by
Management, indicates the combined operation has been generating a deficit for each of the
theatre productions the performance facility stages for the production company.
As a result of this analysis, the Board of Directors has decided to put the work of the theatre
production company on hold while it determines the best (both financially efficient and artistically
relevant) programming for the performance facility. The objective is to build on existing
community outreach and partnerships to identify a new program (perhaps comprising a
combination of art forms such as theatre, dance, music, narration) that generates a balanced
budget. The objective is to employ the performance facility to contribute to a vibrant downtown
within the context of a financially viable operation.
The organization plans to work with members, potential audiences and partners to develop the
new programming over a period of 12 months. Discussions about some programs have already
been underway and announcements about new programming are expected to begin soon after
the final theatre production is staged in the first half of April.
FINANCIAL IMPLICATIONS:
Monthly grant payments of $4,250 have been paid through April, 2008. The recommendation in
this report will result in further grant payments of $4,250 for each of the months of May and
June, 2008.
COMMUNICATIONS:
None.
CONCLUSION:
Theatre and Company has made a significant contribution to the life of the City of Kitchener for
many years. The organization has faced the challenges of change and transition for several
years as the new King Street production facility was acquired, artistic direction evaluated and
new staff joined the organization. This pause to rethink the most appropriate programming to
maximize the benefit derived from the facility seems sensible. A report to Community Services
Committee on the progress being made on developing that program on June 16, 2008 would
provide assurance that satisfactory progress is being made.
Ingrid Pregel
Manager Cultural Development
Appendix 1
K...W Performing Arts AssociationlTheatre & Company
As requested at the June 18, 2007 Community Services Committee meeting, the following
provides further details on grants provided to K-W Performing Arts Associationrrheatre &
Company~
Grant Summary:
Year
Grant Reauested
Grant ADDroved
2002
$13~OOO
$10,000
$2,561
$6,312
(with the proviso that thei r operating gra nt
retu rn to the base rate of $2 i 561, pi us any
inflationary increases approved, in 2004)
2003
2004
$6,812
($21612 cash;
$4,200 in kind parking)
$6,500
(2t500 cash;
$4,000 in kin d parki n g)
2005
$54,200
($50 I 000 cash;
$4,200 in kind parki ng)
$54)200
($50,000 cash one time;
$41200 in kind parki n9)
2006
$54,200
($50 J 000 cash;
$4,200 in kind pa rki ng)
$54,200
($501000 cash one time;
$4.200 in kind pa rking)
2007
$82,875
($75,000 cash;
$71875 in kind parking)
$54,200
($501000 cash one time;
$4.200 in kind parki ng)
Historv:
1990 to 2002 Grants
From 1990 to 2002, the City provided annual operating grants to K-W Performing Arts
AssociationlTheatre & Company of approximately $2.500 per year, to assist with printing
costs of the theatre's production programs~
In June 2001, Council approved one time general provision grants in the amount of $10,000
for 2001 and $10,000 for 2002 to assist with educational programs for youth and directed the
organization to explore other sources of funding.
~
Theatre & Company
Appendix 1 - Page 2
2003 Grant
Theatre & Company approached the City for an increase to their 2002 grant of $2,561 to
$10,000 to support its educational programming.
Council approved a 2003 grant of $6,312 with the proviso that the operating grant return to
the base rate of $2,561 (plus any inflationary increases approved) in 2004.
2004 Grant
Theatre & Company approached the City for an increase to their 2003 grant of $6,312 to
$6,812 ($2,612 cash; $4~200 in kind parking).
Council approved a 2004 grant of $6,500 ($2,500 cash; $4,000 in kind parking)~
2005 Grant
Theatre & Company approached the City for an increase to their 2004 grant of $6,500
($2,500 cash; $4,000 in kind parking) to $54,200 ($50,000 cash; $4,200 in kind parking). At
that time, the organization advised that they plan to request $50,000 in each of 200512006
and 2007 (total of $150,000) to eliminate their operating deficit.
Council approved a 2005 grant of $54,200 ($50,000 cash one time; $4,200 in kind parking).
2006 Grant
Theatre & Company approached the City for a grant of $54,200 ($50,000 cash; $41200 in
kind parking) for funding of year two of their 3-year operating deficit elimination plan.
Council approved a 2006 grant of $54,200 ($50,000 cash one time; $4,200 in kind parking).
2007 Grant
Theatre & Company approached the City for an increase to their 2006 grant of $54,200
($50,000 cash; $4,200 in kind parking) to $82,875 ($75,000 cash; $7.875 in kind parking),
The organization requested that their annual grant be increased to $82,875 to assist UKing
Street Theatre Centre's role in the revitalization of the downtown core", The organization did
not refer to their 3-year deficit reduction plan, but rather requested that the increase be
added to their base annual grant. Attached is a copy of the organization's financial plan
submitted to Council during budget deliberations in February 2007.
Council approved a 2007 grant of $54,200 ($50,000 cash one time; $4,200 in kind parking)~
~ ,
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MAR 1 '1 2008 lid)
COMMUNITY SERVtCE~t d-"
r
Financial statements of
K-W Performing Arts Association
(A not-for-profit organization) .
June 30, 2007
K- W Performing Arts Association
(A not-far-profit organization)
June 30, 2007
Table of contents
Au d it 0 r s' r e port .............................................................,......................... t . . . . . . . · · · · · · . · · · · · t · · · · · · · .. 1
5 ta te men t 0 fop e rati 0 ns ... ~ . . . . . , . . . . . . . . . ~ . . . ~ . . . . . _' . . . ~ . . . . . . . . T . . . . . . . . . . . . . . . . . . . ~ . . . . . . . ~ . · , · ·
· · · · · · · · · · · · · · . . . . . . . . · . · r.' 2
Statement of changes in fund balances...... ... ..~... t... ...... .... ..... ............ ..... ..~.... .,. t................ .... ... 3
5 ta t em e n t 0 f. fi n a n cia l po 5 i t j 0 n . . . . . . . . ~ . t . . . .. . . . . . . . r . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . L . . . . , . . . . . . . , · ~ · · · · · · · · tI 4
5 tate men t 0 f cas h f low S . . . . . . . . . ~ . . . t . . . . . . . . . . . . . , . . . . . r . . . . . . . . . . . . . . . . . . . . . . . . . . . . · . · t . . . . . . . . t .
. . . . t . t . . . . , · · · · · · · · · · · · t · · · .. 5
Notes to th e fi n a n ci a J 5 ta tern en ts H d .. to . .. . to .. . .. . . . . .. . . . . . . . . .. . . . . . . .. . . .. . .. . .. . . . . to to to . . . .. · · . . · . · It · ·
· · · .. .. .. · ~ 6 - 9
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Deloitte~
Detoitte & Touch e llP
4210 Ki ng Street East
Kitchener ON N2P 2G5
Canada
Tel; 5 19~650-7600
Fax; 519.650.7601
www.deloitte.ca
Auditors' report
To the Board of Directors of
K-W Performing Arts Association~
We have audited the statement of financial position ofK-W Performing Arts Association (the
"Association") as at June 30,2007 and the statements of operations, changes in fund balances and cash
flows for the year then ended. These financial statements are the responsibility of the Associationrs
management. OUf responsibility is to express an opinion on these [mancial statements based on our audit.
Except as explained in the following paragraph, we conducted our audit in accordance with Canadian
generally accepted auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of material misstateIpent. An audit
includes examining, on a test basis, evidence supporting the amount') and disclosures in the financIal
statements. An audit also includes assessing the accounting principles used and significant estimates
made by lnanagement, as well as evaluating the overall. financial statement presentation.
In common with many charitable organizations, the Association derives part of its revenue from the
general public in the form of fundraising) the cO,mpleteness of which is not susceptible to satisfactory .
audit verification. - Accordingly ~ our verification of the'se revenues was limited to the amounts recorded in
the records of the Association and we were not able to determine whether any adjustments might be
necessary to revenue, excess (deficiency) of revenue over expenses, assets and fund balances. ;
In our opinion, except for the effect of adjustments, if any) which we might have determined to be
necessary had we been able to satisfy ourselves concerning the co~pleteness of the fundraising revenue
referred to in the preceding paragraph, these financial statements present fairly t in all material respects,
the fmancial position of the Association as at June 30 J 2007 and the results of its operations, changes in
fund balances and its cash flows for the year then ended in accordance with Canadian generally accepted
accounting principles.
Lct>
Chartered Accountants
Licensed Public Accountants
January 14, 2008
Member of
Oe loitte louche to hmatsu
K-W Performing Arts Association
(A not-for-profit organization)
Statement of operations
year ended June 30, 2007
Theatre & 2007 2006
Company Endowment Total Total
$ $ $ $
Revenue
Government - Ontario Arts Council 70,000 70,000 70,000
Government - City of Kitchener operatin 50,000 SO,Of;)O 50,000
Government - other 750
Fu nd ra isi ng - 0 perati ng (Note 7) 489,564 489,564 475,482
Earned 153,171 153,171 247,696
Investment 32,698 32,698 391785
769,899 32,698 802,597 883/713
Expenses
pa tro n se rvi ces 85,317 85,317 27,234
Fu ndra ising 15,125 15,125 25,709
Artists 268,737 268,737 200,118
Su bscri pti 0 ns 36,802 36,802 28,579
Play development 931 931 2,998
M a rketi n 9 and pro moti 0 n 100,906 100,906 61,675
Genera I admi nistration 105,991 105,991 120,017
Production 120,383 120,383 27,714
Production personnel 54,227 54,227 43,362
'.
Education IB,831 18,831 31,555
Facil ities 61,145 61,145 58,583
Traini ng 5,252 5,252 10,124
Wages 178,533 178,533 294,075
Loan interest 12,035 12,035
11064,215 1,064,215 931,743
(Deficiency) excess of operating revenue over
expenses before other revenue/expense (294,316 ) 32,698 (261,618) ( 48,030)
De p re ci a ti on 128,406 128,406 116,143
Write-down of investments (Note 9) 49",256 49,256
Deficiency of revenue over expenses ( 422,722) ( 16,558) ( 439,280) ( 164,173)
Page 2
K-W Performing Arts Association
(A not-for-pofit organization)
Statement of changes in fund balances
year ended June 30, 2007
Theatre &. Invested in
Funds Company Endowment capital assets Total
-$ $ $ $
Ba I ancesj beg i n nfng of year ~ 171,239 500,000 2,556,283 3,233,522
Net investment in ca pita I assets 111,026 (1111026)
Deficiency of revenue over expenses ( 422,722) ( 16,558) ( 439,280)
I nterest transfer (Note 3) 32,698 (32,698)
Balances, end of year ( 101,759) 450,744 2,445,257 2,794,242
Pag e 3
K- W Performing Arts Association
(A not-for-profit organization)
Statement of financial position
as at June 30, 2007
Page 4
K-W Performing Arts Association
(A not-far-profit organization)
Statement of cash flows
year ended June 30, 2007
2007 2006
$ $
Net (outflow) inflow of cash related
to the following activites
Operating activities
Cash from operations
Deficiency of revenue over expenses ( 439,280) (164,173)
Non-cash items
De p recia tr on 128,406 116,143
Write-down of investments 49,256
Changes in non-cash working capital items
AceD un ts rece iv a b I e (16,367) (1~/458)
Prepa id expenses 9,361 (7,830)
Accou nts payable 36,283 (36,481)
Advance ticket sales 4,781 (81,354 )
, (227,560) ( 187,153)
Investing activities
P u rch ase of in vestm e n ts (49,734)
Proceeds on disposition of investments 81,859
Proceed on disposal of fixed assets 1,031
Purchase of capital assets ( 18,411) (7/491 )
(17,380) 241634
Financing activities
Increase (decrease) in ba n k indebtedness (204,609) 160,899
Proceeds from long-term debt 450,000
Repayment of lonq-term debt (3,141 ) (B,850)
242,250 152/049
Net change in cash and cash equivalents (2,690) (10,470)
Cash and cash equivalentsl beginning of year 5,000 15 j4 70
Cash and cash equivalents, end of year .2,310 5,000
5 upplemental disclosures
Interest pa id 35,386 15,837
Pag e 5
K- W Performing Arts Association
(A Not-For-Profit Organization)
Notes to the financial statements
June 30, 2007
1. Purpose of the organization
The Association is a non-profit organizatJon incorporated in Ontario without share capitar. The
purpose of the Association is to educate and promote the pu bli c's a ppreci ation of the performing
arts th rou 9 h thea tri ca I, d a n ce and m us i c a I p e rfo r ma nee s. Th e Assoc j a ti 0 n a ceo m p Ii she d th ese
objectives a nd records their activities throug h two fu nds as follows:
Theatre & Company
Th is fund records the activjttes of the acti ng com pa ny j nclud i ng its reg uta r season and its various
education programs~
Endowment fund
This fund was created with an initial donation of $500,000 and wHt be used at the discretion of
the board.
2.. Going concern and subsequent events
WhH e the fi nancial statements have been prepared on the basis of accounting pri nciples
appljcab1e to a going concern, as at June 30, 2007 and subsequent to year-end, several adverse
conditrons and events cast su bstantia I dou bt u po n the val idity of th is assu mption. .
The Association has incurred significant operating losses over the past two years. In addition,
there appear to have been no significant improvements in operations since July 1, 2007. As of
January 14, 2008, the operations appear to be insufficient and raise concerns about the financial
health of the Association in the future. The Association's continued existence is dependent upon
its ability to restore and maintain pro.fitable operations and the continued support of its lenders,
donors and sponsors.
If the going concern assumption were not appropriate for -these financ~al statements,
adjustments would be necessary in the carrying values of assets and liabi'ities, the reported
deficiency of reven ue over expenses and the bala nee sheet classifjcations used.
3. Sig n ifica nt accou nti ng policies
Fund accounting
The Association fa Ilows the restricted fu nd method of accounti ng for contributions.
Revenue recognition
Ticket receipts a re recognized as revenu e as the performance is given.
Gifts in kind are recorded at the fair market vaJue as both a revenue and expense or capitalized
as appropriate.
Restricted contri butions related to general operations a re recognized as revenue of the Th eatre
and Com pa ny Fu nd in the yea r in which the related expenses are incurred. All other restricted
contributions are recognized as revenue of the appropriate restricted fund.
Co ntri butjons from govern ment are recog nized when the gave rn ment body commits to the
funding.
Unrestricted contributions are recognized as revenue of the 'Theatre and Company fund in the
year received.
Pa ge 6
K- W Performing Arts Association
(A Not-For-Profit Organization)
Notes'to the financial statements
June 30, 2007
3.. Sig nificant accounting policies (conti nued)
Revenue recognition (continued)
Contri butions for endowment are recog nized as reven ue in the Endowment Fu nd.
Unrestricted investment income earned on Endowment Fund resources tS transferred to the
Theatre and Company Fund~
Cash and cash equivalents
Cash and cash equivalents inctude investments with a maturity date of three months or less
fro m date of acq uisition and tern para ry ba n k indebtedness,
Investments
I nvestments are represented by t ncome trust units wh ich a re val ued at cost except where there
has been a permanent decline in market va1ue in which case they are wrrtten down to market
val ue~
Fair value
The fa i r va lu e of cash and cash equiva tentst accounts receiva bl e, ban kind ebtedness t accounts
payab!e and accrued liabilities is approximately equal to their carrying values due to their short-
term maturity. The fair value of the tong-term debt payable approximates the book value as
these lia bi lities bear interest at rate approxfmati ng market.
Capital assets and depreciat;on
Ca pital assets are recorded at cost. Depreci ation is ca Iculated using the foll owing rates and
methods:
Building
Theatre eq ui pment
Offjce equ ipment
Computer equipment
2. 50/0 straight-~ine
100/0 straight-line
100/0 straight-line
330/0 straight-line
Leasehold improvements are a mort~zed over the term of the lease.
No depreciation is ca lcul ated on artwork.
Use of estimates
The preparation of financiaf statements in accordance with. Canadian generally ~ccepted
accounting principles requires management to make estimates and assumptions that effect the
reported a mou nts of assets and Ha bil ities and discJosu res of conti ngent assets and liabtl jties at
the date of the fj nancial statements a nd the reported a mounts of revenues a nd ex penses during
the reporting period. Significant estimates within these financiat statements include depreciation
a nd a ccrued I iabil itjes. Actua I results cau ld differ from those esti ma tes.
Page 7
K-W Performing Arts Association
(A Not-Far-Profit Organization)
Notes to the financial statements
June 30, 2007
Princip.a I repay ments in each of the next fou r yea rs are as. fo1lows:
$
2008
2009
2010
2011
Thereafter
7,417
7,926
8,470
. .9,052
414,769
447,635
Long-term debt is secured by accounts receivable, inventory, equipment, and intangibles.
I n accordance with the provis tons made on esta bl ishment of the Endowment Fu nd, the Theatre
& Company Fund has borrowed an amount from the Endowment Fund. This amount bears no
interest and has no fixed terms of repayment~
Page B
K-W Performing Arts Association
(A Not-For-Profit Organization)
Notes to the financial statements
June 30, 2007
6. Bank indebtedness
The Association has entered into a credit facitity agreement with a Canadian Chartered Bank
which prov;des a loan limit of $150,000 (2006 - $210,000). The amount bears interest at prime
plus 1.750/0, is unsecu red and due on dema nd. Included in pank indebted ness at June 301 2007
are outstanding cheques totaling $2,818 (2006 - $89/326).
7. Gifts in kind
Included in revenue are donations of goods and services totaling $12/483 (2006 - $14,872).
The recorded revenue on these 9 jfts a pproxi mates fa i r market value.
8a Commitments
The Association leases its off tee equipment under two operating teases/ exp~ring July 31/ 2009
and September 3D, 2009 respective~y. Future lease payments net of taxes amount to $21,407.
Amounts payable over the next three years are as follows:
$
2008
2009
2010
9",514
9,514
2,379
21,407
9~ Investments
Investments with a book value of $425,859 (2006 - $425/859) are comprised of units of income
trusts which are valued at cost except where there has been a permanent decline in market
value in which case they are written down to market value. The market value of investments
are $376,603 (2006 - $403,893). The decline in the market value of investments of $49,256 at
June 3D, 2007 _has been determined to be permanent in nature, and therefore the ~nvestments
were written down to their market vaJ ue of $376,603.
10. Arts endowment fund program
The Association receives ;ncome from an endowment fund established at the Ontario Arts
Council Foundation under the terms of the Arts Endowment Fund Program, a program that ran
from 1998 to 2004. The fund is an endowment fund held by the Ontario Arts Council
Fou ndation. Accardi ngly the fu nds have not been recorded in the accou nts i ncl uded in these
statements~ The capital amount held by the Ontario Arts Council Foundation is $75,034 with a
market vatue of $84,985 at June 3D, 2007. The funds wit~ be held in perpetuity with the income
from the funds being paid annually to the Association~ Income received for the year ended June
30, 2007 was $4,386 (2006 - $4,936) a nd has been indi rect'v recorded in the Theatre and
Company FundT
11. Economic dependence
The orga n ization ~s econom icalty dependent on the on -going recei pt of grants a nd donations
fro m donors and sponsors t
12. Comparative figures
Certa i n com parative ftgures have bee n reclassified to co nform to the curre nt yea r's presentation.
Page 9