Bellas Artes 20038 - presupuesto.gobierno.pr€¦ · Corporación del Centro de Bellas Artes de...
Transcript of Bellas Artes 20038 - presupuesto.gobierno.pr€¦ · Corporación del Centro de Bellas Artes de...
CORPORACION DEL CENTRO DE BELLAS
ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
FINANCIAL STATEMENTS WITH AUDITORS' REPORT
YEARS ENDED JUNE 30, 2003
AND 2002
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
YEARS ENDED JUNE 30, 2003
AND 2002
CONTENTS
Page
Independent auditors' report
1
Required supplementary information
Management's discussion and analysis
2-6
Basic financial statements:
Statements of net assets
7
Statements of revenues, expenses and
changes in fund net assets
8
Statements of cash flows
9-10
Notes to financial statements
11-21
INDEPENDENT AUDITORS' REPORT
Board of Directors
Corporación del Centro de Bellas Artes
de Puerto Rico
San Juan, Puerto Rico
We have audited the accompanying basic financial statements of Corporación del Centro de BellasArtes de Puerto Rico
(a component unit of the Commonwealth of Puerto Rico) as of and for the yearsended June 30, 2003
and 2002
as listed in the accompanying table of contents. These basic financialstatements are the responsibility of the Corporation's management. Our responsibility is to express anopinion on these basic financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the basic financial statements. An audit alsoincludes assessing the accounting principles used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, thefinancial position of Corporación del Centro de Bellas Artes de Puerto Rico
(a component unit of theCommonwealth of Puerto Rico)
as of June 30, 2003
and 2002, and the results of its operations and cashflows for the years then ended in conformity with accounting principles generally accepted in the UnitedStates of America.
The Management's Discussion and Analysis included in pages 2 through 6, is not a required part of thebasic financial statements but is supplementary information required by the Governmental AccountingStandards Board. We have applied certain limited procedures, which consisted principally of inquiries tomanagement regarding the methods of measurement and presentation of the supplementary information.However, we did not audit the information and express no opinion on it.
September 9, 2003
Stamp number 1927306 was
affixed to the original of this
report.
1
MANAGEMENT'S DISCUSSION AND ANALYSIS
This section of Corporación del Centro de Bellas Artes' annual financial report presents our discussionand analysis of the corporation's financial performance during the fiscal years ended on June 30, 2003 and2002.
FINANCIAL HIGHLIGHTS
1) The corporation net assets increased $ 563,475 or 2.99% during the course of this year'soperations. This change was occasioned by the new norms of facilities agreement established inthe corporation.
2) During the year, the non-operating government grants increased in 108,569
or 4.10% incomparison with the previous year.
3) During the year, the corporation expenses increased in $373,975 or 8.07%. This increase wasmotivated by the implementation of the Plan of Reclassification and Remuneration of thecareer's employees. Although the salary increase of $100 monthly by government legislationand the Christmas Bonus increase in $150 by the government decision. Other factors, whichcontributed to the increase, was the payment liquidation of accumulated vacation and sick to theemployees discharged and the increase in insurance policy cost.
4) The operating loss decrease $64,260 or 2.31% during the present year in comparison with theprevious fiscal year.
OVERVIEW OF THE FINANCIAL STATEMENTS
Management's Discussion and Analysis introduces the Corporation's basic financial statements. The basicfinancial statements include: 1) Statement of net assets, 2) Statements of revenues, expenses and changein net assets, 3) Statement of cash flows and 4) Notes to the financial statements.
1) Statement of net assets.
This statement includes all of the Corporation's assets an liabilities,with the difference reported as net asset. Over time, increases or decreases in net assets mayserve as a useful indicator of whether the financial position of the Corporation as a whole isimproving or deteriorating.
2) Statements of revenues, expenses and changes in net assets. This statement reports how theCorporation's net assets changed during the current fiscal year. All current year revenues andexpenses are included regardless of when cash is received or paid.
3) Statement of cash flows.
This statement provides information about transactions resulting inthe flows of cash or equivalents.
4) Notes to financial statements. The accompanying notes to the financial statements provideinformation essential to a full understanding of the Corporation's financial statements.
2
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
FINANCIAL ANALYSIS OF THE CORPORATION
Net assets - The corporation's net assets were $19,396,511 and $18,833,036 for fiscal years 2003 and2002 respectively. (See Table I).
TABLE I
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
NET ASSETS
Total %
2003
2002
Change
Current assets
885,556
$
2,821,570
%( )68.61
Capital assets
17,994,364
18,145,584
%( )0.83
Other assets
3,211,851
408,181
%
686.87
Total assets
22,091,771
21,375,335
%
3.35
Current liabilities
2,478,990
2,196,656
%
12.85
Non-current liabilities
216,270
345,643
%( )37.43
Total liabilities
2,695,260
2,542,299
%
6.02
Net assets
Invested in capital assets, net of related debt
17,974,064
18,115,372
%( )0.78
Restricted
1,097,614
949,674
%
15.58
Unrestricted (deficit)
324,833
( )232,010
%( )240.01
Total net assets
$ 19,396,511
$ 18,833,036
% 2.99
Operating Revenues
- The corporation's total revenues (excluding non-operating items) increased by23.60% . (See table II). Most of the corporation's revenues come from rental of facilities, parking, sale oftickets and services to producers. Mostly the increase in revenues is due to the application of the newrental policies approved by Management.
3
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
FINANCIAL ANALYSIS OF THE CORPORATION (CONTINUED)
The total expenses increased by $373,975 or 8.07%. The most significant expenses variances areexplained as follows:
Professional and consulting services - During this fiscal year the Corporation obtained the services of anarchitecture firm to help in the impermeabilization of the roof. Also the services of a marketing firm wereacquired to promote the image of the center.
Insurance - The increase in this account is due to the increase in the insurance policy cost by the marketinflation.
Bad debts expense - During this year, no increase in the allowance for bad debts was needed to cover forthe possible loss on doubtful accounts receivable.
The non-operating revenues increased by 7.92%, because the Corporation received more interest incomethan in prior year due to high interest rate in deposits because of the economy. Legislative grants weredeferred because capital projects will be completed in future years.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
FINANCIAL ANALYSIS OF THE CORPORATION (CONTINUED)
TABLE II
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
Changes in Net Assets
Total %
2003
2002
Change
Operating revenues:
Rental of facilities
$ 941,934
$
347,447
%
171.10
Food and beverage
207,906
181,902
%
14.30
Parking
449,542
407,806
%
10.23
Sale of tickets
490,931
364,836
%
34.56
Services to producers
124,672
284,911
%( )56.24
Assessments for special activities
33,630
173,293
%( )80.59
Other
46,181
96,366
%( )52.08
Total operating revenues
2,294,796
1,856,561
%
23.60
Operating expenses:
Salaries, payroll taxes and fringe benefits
2,643,469
2,426,211
%
8.95
Professional and consulting services
250,050
190,860
%
31.01
Water, electricity and telephone
557,111
513,270
%
8.54
Repairs and maintenance
218,309
231,636
%( )5.75
Food and beverage
73,687
72,234
%
2.01
Security
156,234
133,573
%
16.97
Insurance
271,432
245,825
%
10.42
Depreciation and amortization
680,223
648,555
%
4.88
Bad debts expense
-
22,623
%( )100.00
Advertising
59,254
52,034
%
13.88
Cultural contributions to producers
22,816
8,340
%
173.57
Other
74,577
88,026
%( )15.28
5,007,162
4,633,187
%
8.07
Operating loss
( )2,712,366
( )2,776,626
%( )2.31
Other non-operating revenues (expenses):
Interest income
142,340
48,831
%
191.50
Governmental grants
2,753,569
2,645,000
%
4.10
Interest expense
( )3,394
( )13,481
%( )74.82
Total other nonoperating revenues
2,892,515
2,680,350
% 7.92
Gain (Loss) before contributions
180,149
( )96,276
%( )287.12
Capital contributions
383,326
163,397
%
134.60
Changes in net assets
563,475
67,121
%
739.49
Total net assets, beginning as restated
18,833,036
18,765,915
%
0.36
Total net assets, ending
$ 19,396,511
$ 18,833,036
% 2.99
5
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
FINANCIAL ANALYSIS OF THE CORPORATION (CONTINUED)
Capital assets
- The corporation had no significant change in capital assets during the current year, butas mentioned in non-operating revenues, the amount deferred refers to various projects which will beimplemented during future years, such as a sound system for the shows in the facilities for $132,000,impermeability of the roof through a procurement for approximately $200,000, a cooling system and airconditioning system and construction of rehearsal rooms. See note 4 to the basic financial statements foradditional information about changes in capital assets during the fiscal year.
Long-term debt - No significant transactions occurred during the year. See note 5 to the basic financialstatements for additional information about changes in long-term debts during the fiscal year.
CONTACTING THE CORPORATION'S FINANCIAL MANAGEMENT
This financial report is designed to provide a general overview of the corporation 's finances for all thosewith an interest in the government's finances. Questions concerning any of the information provided inthis report or requests for additional financial information should be addressed to the Office of theFinance Director, Corporación Centro de Bellas Artes, PO Box 41287 Minillas Station, San Juan, PuertoRico 00940-1287.
6
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
STATEMENTS OF NET ASSETS - JUNE 30, 2003
AND 2002
ASSETS
2003
2002
Current assets:
Cash and cash equivalents
$ 466,868
$
2,666,151
Accounts receivable
235,731
38,427
Other assets, principally prepaid insurance
182,957
116,992
Total current assets
885,556
2,821,570
Noncurrent assets:
Property and equipment
17,708,492
17,859,712
Art work
285,872
285,872
Certificates of deposit
3,211,851
408,181
Total noncurrent assets
21,206,215
18,553,765
22,091,771
21,375,335
LIABILITIES
Current liabilities:
Accounts payable:
Operational
177,120
163,507
Government entities
2,630
18,223
Compensated absences
109,000
61,000
Accrued expenses
53,563
50,543
Deposits from clients
485,378
174,533
Collections on behalf of producers
21,062
143,328
Deferred income
1,585,762
1,408,089
Current portion of capital lease obligations
11,104
9,912
Current portion of long-term debt
33,371
167,521
Total current liabilities
2,478,990
2,196,656
Noncurrent liabilities
Capital lease obligations
9,196
20,300
Long-term debt
-
33,371
Compensated absences
207,074
291,972
Total liabilities
2,695,260
2,542,299
NET ASSETS
Investment in capital assets, net of related debt
17,974,064
18,115,372
Restricted for capital acquisitions
1,097,614
949,674
Unrestricted (deficit)
324,833
( )232,010
$ 19,396,511
$ 18,833,036
See notes to financial statements.
7
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
STATEMENTS OF REVENUES, EXPENSES AND
CHANGES IN FUND NET ASSETS
YEARS ENDED JUNE 30, 2003
AND 2002
2003
2002
Operating revenues:
Rental of facilities
$ 941,934
$
347,447
Food and beverage
207,906
181,902
Parking
449,542
407,806
Sale of tickets
490,931
364,836
Services to producers
124,672
284,911
Assessments for special activities
33,630
173,293
Other
46,181
96,366
Total operating revenues
2,294,796
1,856,561
Operating expenses:
Salaries, payroll taxes and fringe benefits
2,643,469
2,426,211
Professional and consulting services
250,050
190,860
Water, electricity and telephone
557,111
513,270
Repairs and maintenance
218,309
231,636
Food and beverage
73,687
72,234
Security
156,234
133,573
Insurance
271,432
245,825
Depreciation and amortization
680,223
648,555
Bad debts expense
-
22,623
Advertising
59,254
52,034
Cultural contributions to producers
22,816
8,340
Other
74,577
88,026
Total operating expenses
5,007,162
4,633,187
Operating loss
( )2,712,366
( )2,776,626
Nonoperating revenues (expenses):
Interest income
142,340
48,831
Governmental grants
2,753,569
2,645,000
Interest expense
( )3,394
( )13,481
Total nonoperating revenues
2,892,515
2,680,350
Income (loss) before contributions
180,149
( )96,276
Capital contributions
383,326
163,397
Change in net assets
563,475
67,121
Total net assets,
beginning
18,833,036
18,765,915
Total net assets,
ending
$ 19,396,511
$ 18,833,036
See notes to financial statements.
8
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2003
AND 2002
2003
2002
Cash flows from operating activities:
Receipts from customers
$ 2,193,492
$
1,838,462
Payments to suppliers
( )1,694,648
( )1,523,596
Payments to employees
( )2,166,552
( )2,036,193
Other payments
( )378,984
( )456,594
Net cash used in operating activities
( )2,046,692
( )2,177,921
Cash flows from non-capital financing activities:
Governmental grants for operations
2,753,569
2,645,000
Governmental grants for betterments
465,000
1,000,000
Principal paid on debt
( )167,521
( )262,865
Interest paid on debt
( )3,394
( )9,477
Net cash provided by non-capital financing activities
3,047,654
3,372,658
Cash flows from capital and related financing activities:
Purchase of capital assets
( )529,003
( )223,843
Principal paid on debt
( )9,912
( )8,847
Interest paid on debt
-
( )4,005
Net cash used in capital and related financing activities
( )538,915
( )236,695
Cash flows from investing activities:
Interest received
142,340
48,831
Purchases of certificates of deposit
( )2,803,670
( )408,181
Net cash used in investing activities
(2,661,330)
( )359,350
Net increase (decrease) in cash and cash equivalents
(2,199,283)
598,692
Cash and cash equivalents at beginning of year
2,666,151
2,067,459
Cash and cash equivalents at end of year
$ 466,868
$ 2,666,151
Continued.
9
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
2003
2002
Reconciliation of operating loss to net cash used in
operating activities:
Operating loss
$( )2,712,366
$( )2,776,626
Adjustments to reconcile operating loss to net cash
used in operating activities:
Depreciation and amortization expense
680,223
648,555
Change in assets and liabilities:
Decrease (increase) in:
Accounts receivable
( )101,304
4,525
Other assets
( )65,965
( )6,482
Increase (decrease) in:
Accounts payable
( )1,980
12,202
Accrued expense
( )33,879
( )100,323
Deposits from clients
310,845
33,808
Collections on behalf of producers
( )122,266
6,420
Total adjustments
665,674
598,705
Net cash used in operating activities
$( )2,046,692
$( )2,177,921
See notes to financial statements.
10
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2003
AND 2002
1.
ORGANIZATION:
The Corporación del Centro de Bellas Artes de Puerto Rico (the Corporation) was created by LawNo. 43 of May 12, 1980 of the Commonwealth of Puerto Rico to manage the Centro de BellasArtes. The Corporation is a public corporation and an instrumentality of the Commonwealth ofPuerto Rico. The Corporation commenced operations in April 1981, as part of the Arts and CulturalDevelopment Administration. On July 1st, 1985, the Corporation was transferred to the Instituto deCultura Puertorriqueña under Law No. 1 of July 31, 1985, which amended Law No. 43 of May 12,1980.
Financial reporting entity:
The Corporation is a component unit of the Commonwealth of Puerto Rico.
Financial independence:
The Corporation is responsible for its debts and has the right to its surplus. No governmentalagency receives the benefit nor can impose financial strains on the Corporation.
Board of Directors:
The Board of Directors is appointed by the Governor of the Commonwealth of Puerto Rico, withthe counsel and approval of the Senate of Puerto Rico. The Board has the power to make decisionsand is responsible for them.
Designation of management:
The Board of Directors appoints a General Manager. The General Manager selects the othermembers of management. The powers and functions of management reside within the legal limitsof the Corporation, and they are responsible to the Board of Directors.
Capacity to manage operations:
The Corporation has the legal capacity to make significant decisions in the management of itsoperations. This legal capacity includes, but not limited, to the control of the assets, which includefacilities and properties, make short-term loans, and contract and develop programs.
11
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Measurement focus, basis of accounting and financial statement presentation:
The financial statements are presented on the accrual basis of accounting in conformity withaccounting principles generally accepted in the United States applicable to an enterprise fund.Revenues are recorded when earned and expenses are recorded when a liability is incurred,regardless of the timing of related cash flows. Legislative grants and similar items are recognized asrevenue as soon as all eligibility requirements imposed by the provider have been meet. Thelegislative grants and donations for permanent betterments or for any specific activity not used inthe fiscal year are credited to a deferred income account and income when used.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operatingrevenues and expenses generally result from providing services in connection with a proprietaryfund's principal ongoing operations. The principal operating revenues of the Corporation are rentalof facilities, parking and sales of tickets. Operating expenses for enterprise funds include salaries,utilities and depreciation on capital assets. All revenues and expenses not meeting this definition arereported as nonoperating revenues and expenses.
The Governmental Accounting Standard Board (GASB) issued in September 1993 Statement No.20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entitiesthat Use Proprietary Fund Accounting. This Statement requires that proprietary activities apply allapplicable GASB pronouncements as well as Statements and Interpretations issued by the FinancialAccounting Standards Board (FASB), Accounting Principles Board (APB) Opinions, andAccounting Procedures issued on or before November, and ARBs issued on or before November30, 1989, a proprietary activity may also elect to apply all FASB Statements and Interpretationsissued after November 30, 1989, except those that conflict with or contradict GASBpronouncements. The Corporation has elected to apply FASB Statements and Interpretations issuedafter November 30, 1989.
Use of estimates in the preparation of financial statements:
The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assetsand liabilities and related disclosures at the date of the financial statements, and the reportedamounts of revenues and expenses during the reporting period. Actual results could differ fromthose estimates.
12
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Concentration of credit risk:
The Corporation maintains cash on deposit with high credit financial institutions. The laws of theCommonwealth of Puerto Rico require that public funds deposited in commercial banks becollateralized when funds exceed the amount insured by the Federal Government. The securitiespledged by the banks as collateral for those deposits are under the custody of the Secretary of theTreasury in the name of the Commonwealth of Puerto Rico.
Cash and cash equivalents:
Represent petty cash, checking and savings accounts, and certificates of deposit with originalmaturities of less than three months. At June 30, 2003 $1,097,614
was restricted for the realizationof permanent work and betterments.
Capital assets:
Capital assets, which include land, building, betterments, and equipment donated to the Corporationby agencies of the Commonwealth of Puerto Rico are stated at estimated fair market value at thedate those assets were donated; other purchased assets are stated at historical cost.
The costs of normal maintenance and repairs that do not add to the value of the asset or materiallyextend assets lives are not capitalized. Major outlays for capital assets, renewals and betterments arecapitalized. Depreciation is computed on a straight-line basis over the following estimated usefullives:
Assets
Years
Buildings and betterments
50
Furniture and equipment
10
Musical instruments
20
Recording equipment
5
Motor vehicles
5
Computer equipment
5
Telephone equipment
5
13
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Art work:
The Corporation records donated art work at its fair market value at donation date, or at cost whenit is purchased and is a nondepreciable capital asset.
Compensated absences:
The Corporation's employees accrue vacation benefits of 2.5 days per month, up to a maximum of60 days, and sick leave benefits of 1.5 days per month, up to a maximum of 90 days. Accumulatedvacations and sick leave amounted to $316,074
at June 30, 2003.
Cultural contributions:
As part of the commitment of the Corporation in the development of the arts, the Corporation grantscultural contributions. During the years ended June 30, 2003
and 2002 the Corporation grantedcontributions to producers of $22,816
and $ 8,340
respectively.
3.
ACCOUNTS RECEIVABLE:
2003
2002
Trade
$ 212,857
$ 110,654
Governmental entities
100,498
5,397
313,355
116,051
Less allowance for doubtful accounts
( )77,624
( )77,624
$ 235,731
$ 38,427
14
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
4.
CAPITAL ASSETS:
Beginning
Ending
Balance
Increases
Decreases
Balance
Capital assets, not being depreciated:
Land
$
2,593,000
$ -
$ -
$
2,593,000
Capital assets, being depreciated:
Buildings and betterments
23,979,874
150,485
-
24,130,359
Construction in Process
-
50,498
-
50,498
Furniture and equipment
4,107,508
328,020
-
4,435,528
Musical instruments
250,400
-
-
250,400
Recording equipment
213,621
-
-
213,621
Motor vehicles
78,043
-
-
78,043
Total capital assets, being depreciated
28,629,446
529,003
-
29,158,449
Less accumulated depreciation for:
Buildings and betterments
9,333,735
500,321
-
9,834,056
Furniture and equipment
3,504,319
167,382
-
3,671,701
Musical instruments
233,016
12,520
-
245,536
Recording equipment
213,621
-
-
213,621
Motor vehicles
78,043
-
-
78,043
Total accumulated depreciation
13,362,734
680,223
-
14,042,957
Total capital assets, net
$17,859,712
$( )151,220
$ -
$ 17,708,492
15
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
5.
CAPITAL LEASE:
The Corporation has entered into a lease agreement as lessee for financing the acquisition oftelephone equipment. These lease agreement qualify as capital lease for accounting purposes and,therefore, have been recorded at the present value of their future minimum payments as of theinception date. Obligation under capital lease, due in monthly installments of approximately $1,071,including interest of 10.95% due until March 2005.
The asset acquired through capital lease is as follows:
2003
2002
Asset, Equipment
$ 56,683
56,683
Less accumulated amortization
36,363
23,530
Total
$ 20,320
$ 33,153
The future minimum lease payments obligation and the net present value of the minimum lease
payments as of June 30, 2003, were as follows:
Year ending
June 30,
Amount
2004
12,852
2005
9,639
Total lease payments
22,491
Less amounts representing interest
2,191
Present value of future minimum
lease payments
20,300
Less current portion
11,104
$ 9,196
16
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
6.
LONG-TERM DEBT:
2003
2002
Unsecured note payable to the Puerto Rico Electricityand Power Authority, due in 21 monthly installmentsof $10,000 and 39 monthly installments of $11,475,including interest at 8% annually
$ -
$
33,973
Payment plan with Treasury Department for publicinsurance, paid in a lump sum of $217,493 inSeptember, 2000 and 36 monthly installments of$11,129 thereafter, non-interest bearing
33,371
166,919
$ 33,371
$ 200,892
Future scheduled maturities of long-term debt are as follows:
Years ending
June 30,
Amount
2004
$ 33,371
Changes in long-term liabilities:
Long-term liability activity for the year ended June 30, 2003 was as follows:
Beginning
Ending
Due within
Balance
Additions
Deductions
Balance
one year
Note payable
$
33,973
$ -
$
33,973
$ -
$ -
Payment plan
166,919
-
133,548
33,371
33,371
Total
200,892
-
167,521
33,371
33,371
Capital leases
30,212
-
9,912
20,300
9,196
Compensated absences
352,792
85,937
122,655
316,074
109,000
Long-term liabilities
$ 583,896
$ 85,937
$ 300,088
$ 369,745
$ 151,567
17
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
7.
PENSION PLAN:
The Corporation is a participant of the Retirement System of the Commonwealth of Puerto Ricoand its instrumentalities, a cost sharing multiple-employer defined benefit retirement system. Theplan covers substantially all governmental employees. This retirement system provides benefits forretirement, disability, death and an annuity to the employees of the Commonwealth of Puerto Ricothat are not covered by any other retirement system.
The retirement and related benefits provided by the system and the contributions required from theemployees are stated in Law No. 447 of May 15, 1951, as amended. Members' contributions are5.775% or 8.275% and the Corporation's contributions are 9.275% of the gross salary.
The participants who reach the age of 55 and who have completed at least 25 years of creditedservice or the participants who reached the age of 58 years (65 years for employees who areparticipants after March 31, 1990) and who have completed at least 10 years of credited service,have the right to an annual benefit payable monthly for life.
The amount of the annuity is 1 1/2% of the average compensation by the number of years ofcredited service up to 20 years, plus 2% of the average compensation multiplied by the number ofyears of credited service in excess of 20 years. For those participant employees after March 31,1990, the amount of the annuity is 1 1/2% of the compensation multiplied by the number of yearsfor credited services. The annuity should not be less than $2,400 in any case.
On September 24, 1999, an amendment to Act No. 447 of May 15, 1951, which created the System,was enacted with the purpose of establishing a new pension program (System 2000).
System 2000 became effective on January 1, 2000. Employees participating in the current system asof December 31, 1999, elected either to stay in the defined benefit plan or transfer to the newprogram. Persons joining the government on or after January 1, 2000, were only allowed to becomemembers of System 2000.
18
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
7.
PENSION PLAN (CONTINUED):
System 2000 is a hybrid defined contribution plan, also known as a cash balance plan. Under thisnew plan, there will be a pool of pension assets, which will be invested by the System, together withthose of the current defined benefit plan. Benefits at retirement age will not be guaranteed by theCommonwealth. The annuity will be based on a formula which assumes that each year theemployee's contribution (with a minimum of 8.275% of the employee's salary up to a maximum of10%) will be invested in an account which will either: (1) earn a fixed rate based on the two-yearConstant Maturity Treasury Note or, (2) earn a rate equal to 75% of there turn of the System'sinvestment portfolio (net of management fees), or (3) earn a combination of both alternatives.Participants will receive periodic account statements similar to those of defined contribution plansshowing their accrued balances. Disability pensions will not be granted under System 2000. Theemployers' contribution (9.275% of the employee's salary) will be used to fund the deficiency of thedefined benefit plan.
System 2000 will reduce the retirement age from 65 years to 60 for those employees who joined thecurrent plan on or after April 1, 1990.
The pension expense for the years ended June 30, 2003, 2002 and 2001 was $ 140,365 , $137,310and $125,514, respectively.
The amount of the total pension benefits obligation is based on a standardized measurementestablished by general accepted accounting principles that, with some exceptions, must be used by apublic employee retirement system. The standardized measurement is the actuarial present value ofcredited projected benefits. This pension valuation method reflects the present value of estimatedpension benefits that will be paid in future years as a result of employee services performed to dateand is adjusted for the effects of projected salary increases. The significant actuarial assumptionsused to determine the standardized measure of the pension benefits obligation are summarizedbelow:
Interest rate
8.5% a year
Salary increases
5.0% a year
Mortality
GAM'83 Mortality table set forward two years
Termination
Medium Turnover Table commensurate withanticipated experience
19
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
7.
PENSION PLAN (CONTINUED):
Disability
65% of Third Railroad Retirement Table Rates
Retirement age
Graded scale of retirement ages commensuratewith anticipated experience
Proportion of Participants with Spouses
80% of participants assumed to be married,with wives assumed to be four years youngerthan husbands
Number of Employees Electing Higher
15% of retiring employees assumed to pay
Contributions
retroactive contributions at retirement
Cost-of-Living adjustment
3% every third year
The required and realized contribution by the employees and the employer for the years ended June
30, is as follows:
2003
2002
2001
Required and realized contribution by the
employees
$ 122,209
$ 118,500
$
103,544
% that represents the total of payroll covered
5.74%
7.75%
7.47%
Required and realized contribution by the employer
$ 139,888
$ 135,921
$
119,159
% that represents the total of payroll covered
6.57%
8.89%
8.59%
The financial statements and required supplementary information for the pension plan are availableat the administration office of the Employees' Retirement System of the Government of PuertoRico, P.O. Box 42003 Minillas Station, San Juan, Puerto Rico 00940.
20
CORPORACION DEL CENTRO DE BELLAS ARTES DE PUERTO RICO
(A Component Unit of the Commonwealth of Puerto Rico)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JUNE 30, 2003
AND 2002
8.
LEGISLATIVE GRANTS:
The legislative grants represent the budgeted amounts approved by the Legislature of Puerto Ricofor the operations of the Corporation. In addition to the budgeted grants of operational character,the Corporation received the following special grants during the years ended June 30, 2003
and2002:
2003
2002
Special grants for betterments
$ 561,000
$
1,000,000
Operating grants
2,753,569
2,645,000
Total governmental grants received
3,314,569
3,645,000
Less amount recorded as deferred income
( )558,120
( )861,209
Add amount previously recorded as deferred
revenue and reclassified to revenue this year
380,446
24,606
Less amount recorded as capital contributions
( )383,326
( )163,397
Recorded as nonoperating revenues
$ 2,753,569
$ 2,645,000
9.
CONTINGENCIES:
The Corporation is currently subject to claims and suits arising in the ordinary course of itsbusiness. The claims and litigation in which the Corporation is currently involved are notreasonably likely to have a material adverse effect on the Corporation's financial position. However,no assurance can be given as to the ultimate outcome with respect to such claims and litigation
21