07-64f
Resolution No. 07-64
RESOLUTION
AUTHORIZING EXECUTION OF A PURCHASE OF SERVICE AGREEMENT
WITH THE ELGIN SYMPHONY ORCHESTRA
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS,that
Olufemi Folarin, City Manager, and Dolonna Mecum, City Clerk,be and are hereby authorized and
directed to execute a Purchase of Service Agreement on behalf of the City of Elgin with the Elgin
Symphony Orchestra for youth programming and general operational support, a copy of which is
attached hereto and made a part hereof by reference.
s/Ed Schock
Ed Schock, Mayor
Presented: February 28, 2007
Adopted: February 28, 2007
Omnibus Vote: Yeas: 7 Nays: 0
Attest:
s/Dolonna Mecum
Dolonna Mecum, City Clerk
s/Jennifer Quinton
Jennifer Quinton, Deputy City Clerk
I
PURCHASE OF SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this a 0 day of e y p , 2007,
by and between the CITY OF ELGIN, Illinois, a municipal corporation (hereinafter referred to as
the "City"), and Elgin Symphony Orchestra, a not-for-profit corporation organized and existing
under the laws of the State of Illinois (hereinafter.referred to as the "Service Provider").
WHEREAS, the City has determined that it would serve a beneficial public purpose to
enter into an agreement with the Service Provider for the Service Provider to provide certain
contract services as described in this agreement; and
WHEREAS, the Service Provider represents that it has the necessary expertise and
experience to furnish the Subject Services upon the terms and conditions set forth in this
agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. The Service Provider shall provide all of the services pursuant to the terms and
conditions and on the dates and times as described in the document entitled Elgin Symphony
Orchestra - Scope of Services for 2007 Purchase of Service Agreement, attached hereto as
Exhibit A and made a part hereof(such services including the terms, conditions, dates and times
are hereinafter referred to as the "Subject Services"). In the event of any conflict between the
provisions of this agreement and the provisions in Exhibit A, the provisions of this agreement
shall control. The Service Provider represents and warrants that the Service Provider has the
skills and knowledge necessary to conduct the Subject Services provided for in Exhibit A and
that the Subject Services set forth in Exhibit A are integral parts of this agreement and may not
be modified, amended or altered except by a written amendment to this agreement agreed to and
executed by both parties hereto.
2. The Service Provider shall address all inquiries and requests made pursuant to this
agreement to the Assistant City Manager of the City or his designee.
3. In connection with the Subject Services to be performed on other than City
properties, the Service Provider warrants and agrees to maintain all facilities and equipment used
in the performing of the Subject Services in a clean, sanitary and safe condition and free from
defects of every kind whatsoever. Service Provider agrees and warrants that the Service
Provider will periodically inspect all of such facilities and equipment for such purposes. Service
Provider also warrants that the Service Provider and the Service Provider's facilities and
equipment used in the performing of the Subject Services are not now, nor shall be during the
term of this agreement in violation of any health, building, fire or zoning code or regulation or
other applicable requirements of law. In connection with the Subject Services on properties
owned or controlled by the City, Service Provider agrees and warrants to use, and to cause
persons participating in the Subject Services to use, through proper supervision and control, all
facilities with due care, and to report all defects in or damage to any such facilities, and the cause
thereof, if known, immediately to the Assistant City Manager of the City.
1
4. The City shall reimburse the Service Provider for the Subject Services under this
agreement the total amount of One Hundred Thirty-Five Thousand Six Hundred Eighty Dollars
($135,680). Such payment by the City to the Service Provider shall be made in a single
installment. The aforementioned installment payment shall be made within 30 days of the date
of this agreement.
5. The Service Provider shall apply the monies to be paid by the City to the Service
Provider pursuant to the proceeding paragraph hereof solely to operating expenses such as staff
salary and benefits, meeting expenses, and expenses associated with the Subject Services to be
provided by the Service Provider pursuant to this agreement.
6. The Service Provider shall complete, maintain and submit to the Assistant City
Manager of the City, or his designee, any and all records, reports and forms relating to the
Subject Services in this agreement as requested by the City. Without limiting the foregoing, the
parties further agree as follows:
A. The Service Provider shall provide a budget to the City which shall
reflect the projected distribution of funds received from the City
pursuant to this agreement during the term of this agreement. The
budget shall be submitted to the Assistant City Manager of the City
prior to any payment by the City.
B. The Service Provider shall provide written performance reports
detailing the disbursements of the monies to be paid by the City to
the Service Provider pursuant to this agreement. The reports shall
be provided to the City quarterly on March 31, 2007; June 30, 2007;
September 30, 2007; and December 31, 2007.
C. The City has the right to review all accounting records of the
Service Provider related to the use of the monies to be paid by the
City to the Service Provider pursuant to this agreement upon 72
hours advance notice from the City to the Service Provider.
D. The Service Provider shall have an audit performed on its financial
statements for the year ending December 31, 2006. The audit must
be performed by an independent certified public accountant
recognized in good standing by the American Institute of Certified
Public Accountants and licensed in the State of Illinois. The Service
Provider shall provide the City with two copies of the said audited
financial statement along with the management letter and any other
correspondence related to internal control matters on or before July
15, 2007. These statements shall be submitted to the Assistant City
Manager at City Hall, 150 Dexter Court, Elgin, Illinois 60120-
5555.
7. In the event this agreement is terminated, or in the event the Subject Services for
which the City funds provided herein are to be applied are discontinued, or the Service Provider
ceases its operations prior to December 31, 2007, the Service Provider shall refund to the City on
2
a prorated per diem basis the funds paid hereunder for the portion of the year remaining after any
such termination or for the portion of the year the Subject Services were not conducted.
8. Service Provider agrees and warrants that the Service Provider has procured all
licenses, permits or like permission required by law to conduct or engage in the Subject Services
provided for in this agreement, and that the Service Provider will procure all additional licenses,
permits or like permission hereinafter required by law during the term of this agreement, and that
the Service Provider will keep same in full force and effect during the term of this agreement.
Service Provider shall perform the Subject Services with due care and in compliance with all
applicable legal requirements.
9. The City of Elgin shall be recognized as a sponsor of the Service Provider and
shall receive the benefits of sponsorship consistent with the level of support provided in this
agreement. At a minimum, the City's support shall be acknowledged on all print materials
promoting the Service Provider's organization, press releases, radio advertising, web page
information and event program(s) through the following mandatory funding identification
statement: "Funding for the organization is provided in part through the City of Elgin". Three
samples of this acknowledgement shall be provided to the City. A logo provided by the City to
the Service Provider shall be used for this purpose.
10. In all printed materials in which a City seal or logo is deemed appropriate,
approval by the Public Information Officer of the City is required prior to printing.
11. The term of this agreement shall commence from the date of the execution hereof
and continue through December 31, 2007.
12. This agreement shall not be construed so as to create a partnership,joint venture,
employment or other agency relationship between the parties hereto. Service Provider
understands and agrees that the relationship of the Service Provider to the City arising out of this
agreement shall be that of an independent contractor. It is expressly agreed and understood that
the Service Provider and the Service Provider's officers, employees and agents are not
employees of the City and are not entitled to any benefits or insurance provided to employees of
the City.
13. If either party violates or breaches any term of this agreement, such violation or
breach shall be deemed to constitute a default, and the other party has the right to seek
administrative contractual or legal remedies as may be suitable to the violation or breach; and, in
addition, if either party by reason of any default, fails to within fifteen (15) days after notice
thereof by the other party to comply with the conditions of the agreement, the other party may
terminate this agreement. Notwithstanding the foregoing, or anything else to the contrary in this
agreement, no action shall be commenced by the Service Provider against the City for monetary
damages. In the event any legal action is brought by the City for the enforcement of any of the
obligations of the Service Provider in this agreement and the City is the prevailing party in such
action, the City shall also be entitled to recover from the Service Provider reasonable interest and
reasonable attorney's fees.
14. Notwithstanding any other provision hereof, the City may terminate this
agreement at any time upon thirty (30) days prior written notice to the Service Provider. In the
event this agreement is so terminated, the Service Provider shall be paid for services actually
3
performed, and reimbursable expenses actually incurred prior to termination, except that
reimbursement shall not in any event exceed the total amount set forth under paragraph 4 above.
Additionally, in the event this agreement is so terminated, the Service Provider shall immediately
cease the expenditure of any funds paid to the Service Provider by the City and shall refund to
the City any unearned or unexpended funds.
15. To the fullest extent permitted by law, Service Provider agrees to indemnify,
defend and hold harmless the City, its officers, employees, agents, boards and commissions from
and against any and all claims, suits, judgments, costs, attorney's fees, damages or other relief,
including but not limited to worker's compensation claims, in any way resulting from or arising
out of negligent actions or omissions of the Service Provider in connection herewith, including
negligence or omissions or agents of the Service Provider arising out of the performance of this
agreement and/or the Subject Services. In the event of any action against the City, its officers,
employees, agents, boards or commissions covered by the foregoing duty to indemnify, defend
and hold harmless, such action shall be defended by legal counsel of the City's choosing. The
provisions of this paragraph shall survive any expiration and/or termination of this agreement.
16. The Service Provider shall provide, pay for and maintain in effect, during the term
of this agreement, comprehensive automobile liability insurance covering all owned, non-owned
and hired motor vehicles used in connection with the Subject Services with limits of not less than
$500,000 per occurrence for damages to persons or property. The Service Provider shall also
provide, pay for and maintain in effect, during the term of this agreement, worker's compensation
insurance in amounts required under the laws of the State of Illinois. At the request of the City
the Service Provider shall provide to the City certificates of insurance regarding the insurance
required in this paragraph.
17. No official, director, officer, agent or employee of the City shall be charged
personally or held contractually liable under any term or provision of this Agreement or because
of their execution, approval or attempted execution of this Agreement.
18. In all hiring or employment made possible or resulting from this Agreement, there
shall be no discrimination against any employee or applicant for employment because of sex,
age, race, color, creed, national origin, marital status, of the presence of any sensory, mental or
physical handicap, unless based upon a bona fide occupational qualification, and this
requirement shall apply to, but not be limited to, the following: employment advertising, layoff
or termination, rates of pay or other forms of compensation and selection for training, including
apprenticeship.
19. No person shall be denied or subjected to discrimination in receipt of the benefit
of any services or activities made possible by or resulting from this Agreement on the grounds of
sex, race, color, creed, national origin, age except minimum age and retirement provisions,
marital status or the presence of any sensory, mental or physical handicap. Any violation of this
provision shall be considered a violation of a material provision of this Agreement and shall be
grounds for cancellation, termination or suspension, in whole or in part, of the Agreement by the
City.
20. The parties intend and agreed that, if any paragraph, sub-paragraph, phrase, clause
or other provision of this Agreement, or any portion thereof, shall be held to be void or otherwise
unenforceable, all other portions of this Agreement shall remain in full force and effect.
21. This Agreement and its exhibits constitutes the entire Agreement of the parties on
the subject matter hereof and may not be changed, modified, discharged or extended except by
4
I
written amendment duly executed by the parties. Each party agrees that no representations or
warranties shall be binding upon the other party unless expressed in writing herein or in a duly
executed amendment hereof.
22. This Agreement shall be deemed to have been made in, and shall be construed in
accordance with the laws of the State of Illinois. Venue for the resolution of any disputes or the
enforcement of any rights pursuant to this agreement shall be in the Circuit Court of Kane
County, Illinois.
23. The Service Provider certifies hereby that it is not barred from bidding on a public
contact as a result of a violation of 720 ILCS 5/33E et seq. or any similar state or federal statute
regarding bid rigging.
24. As a condition of this contract, the Service Provider shall have written sexual
harassment policies that include, at a minimum, the following information:
A. the illegality of sexual harassment;
B. the definition of sexual harassment under state law;
C. a description of sexual harassment, utilizing examples;
D. the vendor's internal complaint process including penalties;
E. the legal recourse, investigative and complaint process available through the
Illinois Department of Human Rights, and the Illinois Human Rights
Commission;
F. directions on how to contact the department and commission;
G. protection against retaliation as provided by Section 6-101 of the Human Rights
Act.
A copy of the policies must be provided to the Department of Human Rights upon
request (775 ILCS 5/2-105).
25. All notices, reports and documents required under this Agreement shall be in
writing and shall be mailed by First Class Mail, postage prepaid, addressed as follows:
As to the City: As to Service Provider:
City of Elgin Elgin Symphony Orchestra
150 Dexter Court 20 DuPage Court
Elgin, IL 60120-5555 Elgin, IL 60120
Attention: Sean Stegall Attention:Michael Pastreich
Assistant City Manager Executive Director
With a copy to:
William A. Cogley, Corporation Counsel
City of Elgin
150 Dexter Court
Elgin, IL 60120-5555
26. This agreement is and shall be deemed to construe to be a joint and collective
work product of the City and the Service Provider and, as such, this agreement shall not be
construed against the other party, as the otherwise purported drafter of same, by any court of
5
competent jurisdiction in order to resolve any inconsistency, ambiguity, vagueness or conflict, if
any, of the terms and provisions contained herein.
27. This agreement shall be binding on the parties hereto and their respective
successors and permitted assigns. This agreement and the obligations herein may not be
assigned by the Service Provider without the express written consent of the City which consent
may be withheld at the sole discretion of the City.
IN WITNESS WHEREOF, the undersigned have entered into executed this agreement on
the date and year first written above.
CITY OF ELGIN, a municipal Elgin Symphony Orchestra
corporation
�By B
� y
City M alter
Attest:
City Clerk
FAL.egal Dept\Agreement\PSA-DRAFT FORM 1-06 WAC.doc
6
EXHIBIT A
ELGIN SYMPHONY ORCHESTRA-SCOPE OF SERVICES FOR
2007 PURCHASE OF SERVICE AGREEMENT
1. The ESO shall apply $35,000 of the aforementioned $135,680 to Youth
Initiatives. The ESO shall provide youth programs, including but not limited to, Petite Musique,
Kids Konzerts, In-School Music Program, Apprentice Program, and the Homeschool
Subscription series.
2. The ESO shall apply $30,000 of the aforementioned $135,680 to office and salary
expenses related to their location at 20 DuPage Court, including their box office. In exchange,
ESO shall maintain and operate a box office in the Center City Area throughout the year.
3. The ESO shall apply $63,000 of the aforementioned $135,680 to general
operational expenses.
4. The ESO shall apply $5,000 to an Elgin Restaurant Reservation Program, through
which the ESO shall offer to make dinner reservations at Elgin restaurants for ESO patrons at the
conclusion of every telephone or walk-up sale.
5. The ESO will apply $2,680 of the aforementioned $135,680 to cover janitorial
services as outlined in section 4 of the Office Lease agreement made and entered into April 11,
1996.
6. ESO shall be granted an additional 10 percent discount on Hemmens usage fees,
including hall rates and equipment charges should it hold more than 15 performances in a
calendar year at the Hemmens Cultural Center.
7
/,,
i
/;
��
City of EI IC1 Agenda Item No. r �\
Y g
• s
z
February 9, 2007
TO: Mayor and Members of the City Council RECREATIONAL LEISURE
AND CULTURAL OPPORTUNITIES
FOR A LL CIT12 ENS
FROM: Olufemi Folarin, City Manager
Randy Reopelle, Parks and Rec eation Director
SUBJECT: Purchase of Service Agreement with Elgin Symphony Orchestra
PURPOSE
The purpose of this memorandum is to provide the Mayor and members of the City Council with
information to consider a Purchase of Service Agreement with the Elgin Symphony Orchestra
(ESO) for youth programming and general operational support.
RECOMMENDATION
• It is recommended that the City Council approve the Purchase of Service Agreement with the
Elgin Symphony Orchestra in the amount of$135,680.
BACKGROUND
For several years, the City of Elgin has provided financial support to the ESO for general
operation support This support has continued with acknowledgement that the presence of the
Symphony helps establish Elgin as a regional center for the performing arts, drawing over 49,000
ticketed patrons into the community each season. The City's 2007 Budget includes $135,680 to
fund this Purchase of Service Agreement.
The City also supports the ESO through the provision of office space at 20 DuPage Court, at an
estimated value of $40,181 per year. In addition, the ESO also receives a 45% discount on
rental fees and a 10%discount on equipment at the Hemmens Cultural Center. The total value of
these discounts in 2006 was $23,331.
In 2006, the City's PSA represented 5.8% of the ESO's unrestricted revenue (income) based
upon total revenue of$. The Symphony's audit report is attached. In addition, the ES0 has met
all the requirements of the 2006 Purchase of Service Agreement On annual basis, the total
support for ESO is over $200,000 once rent and Hemmens Rental subsidies have been
considered. These items are not associated with this agreement.
•
Purchase of Service Agreement with Elgin Symphony Orchestra
February 9, 2007
• Page 2
COMMUNITY GROUPS/INTERESTED PERSONS CONTACTED
Elgin Symphony Orchestra
Y&FINANCIAL IMPACT
-The cost of the Purchase of Service Agreement with ESO totals $135,680. There are sufficient
funds budgeted ($135,680) and available ($135,680) in the Riverboat Fund budget, account
number 275-0000-791.80-11, to enter into this agreement.
V*I,LI�GAL IMPACT
None
ALTERNATIVES
1. The Council may choose to approve the Purchase of Service Agreement with the Elgin
Symphony Orchestra as presented.
2. The Council may choose to modify the provisions of the Service Agreement with the
• Elgin Symphony Orchestra as presented.
3. The Council may choose to reject the Purchase of Service Agreement with the Elgin
Symphony Orchestra as presented.
Respectfully submitted for Council consideration.
RR
Attachment
J
•
i
ELGIN SYMPHONY ORCHESTRA
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED JUNE 30, 2006
1
•
m
•
•
CONTENTS
PAGE
Basic Consolidated Financial Statements
Independent Auditors' Report ........................................... .......................... 1
Consolidated Statements of Financial Position.................................................. 2
Consolidated Statements of Activities.......................................... .................. 3
Consolidated Statements of Cash Flows.......................................................... 4
Notes to Consolidated Financial Statements..................................................... 5-9
Pep MUELLER- & CO, LLP
MUELLER CONSULTING,LLC
2230 Point Blvd., Suite 700 ■ Elgin, Illinois 60123
847.888.8600 Fax:847.888.0635 www.mueUercpa.com
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Elgin Symphony Orchestra
Elgin, Illinois
We have audited the accompanying consolidated statements of financial position of Elgin
Symphony Orchestra as of June 30, 2006 and 2005, and the related consolidated
statements of activities and cash flows for the years then ended. These financial
statements are the responsibility of the Orchestra's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We-conducted our audits in accordance with auditing standards generally accepted in the
United States of America. These standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
• amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Elgin Symphony Orchestra as of June 30, 2006
and 2005 and the changes in its net assets and its cash flows for the years then ended, in
conformity with accounting principles generally accepted in the United States of America.
Elgin, Illinois
December 7, 2006
•
Certified Public Accountants a Management Consultants
Offices in Elgin,St.Charles and Oakbrook Terrace
1
ELGIN SYMPHONY ORCHESTRA
• CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
JUNE 30, 2006 AND 2005
2006 2005
ASSETS
Cash $ 1 ,579,545 318,676
Investments 1 ,165,850 1 ,053,762
Accounts receivable 4,184 8,765
Pledges and bequests receivable 230,725 347,836
Prepaid expenses 129,198 102,119
Capital assets; at cost, less accumulated
depreciation of 5137,835 in 2006
and $122,125 in 2005 56,680 37,456
Cost incurred for potential concert center 88,911 56,354
$ 3,2554093 1,924,968
LIABILITIES AND NET ASSETS
Liabilities:
Accounts payable $ 44,765 13,141
Accrued liabilities 40,276 26,328
Deferred revenue 785,103 844,654 -
870,144 884,123
Net assets:
.Unrestricted:
Undesignated (53,680) (56,458)
Designated for endowment 2,301 ,109 913,008
2,247,429 856,550
Temporarily restricted 131 ,774 178,549
Permanently restricted 5,746 5,746
2,384,949 1,040,845
$ 3,255,093 1 ,924,968
The accompanying notes are an integral part of the financial -statements.
-2-
ELGIN SYMPHONY ORCHESTRA
CONSOLIDATED STATEMENTS OF ACTIVITIES
YEARS ENDED JUNE 30, 2006 AND 2005
2006
UNRESTRICTED TEMPORARILY PERMANENTLY
OPERATING ENDOWMENT TOTAL RESTRICTED RESTRICTED TOTAL
Revenues, gains and other support:
Annual fund contributions:
Corporate sponsorships and.donations $ 323,259 323,259 - 323,259
Individual donations 461,616 461,616 461,616
Elgin Symphony League 12,000 12,000 12,000
Other 23,475 1,303,552 1,327,027 54,555 1,381,582
In-kind contributions 70,587 - 70,587 70,587
Foundations 79,250 79,250 79,250
Fees and grants from government agencies:
City of Elgin 135,680 135,680 135,680
Illinois Arts Council 40,250 40,250 8,050 48,300
Illinois Humanities Council 10,000 10,000 10,000
NEA 15,429 15,429 2,571 18,000
Other revenues:
Ticket sales 1,170,431 1,170,431 1,170,431
Program advertising 68,946 68,946 68,946
Performance fees - - -
Elgin Symphony Foundation 55,000 (55,000) - -
Investment income 6,833 71,345 78,178 78,178
Net assets released from restrictions-
Expiration of time restrictions 10,417 - 10,417 (10,417) -
Collection of unconditional promises - 101,534 101,534 (101,534)
2,483,173 1,421,431 3,904,604 (46,775) 3,857,829
Expenses: IMP
Artistic personnel 968,326 968,326 968,326
Management personnel 568,144 568,144 568,144
Operating costs 565,393 33,330 598,723 598,723
Printing and promotion 356,614 356,614 356,614
Telemarketing costs -
Fundraising costs 21,918 21,918 21,918
2,480,395 33,330 2,513,725 2,513,725
Change in net assets 2,778 1,388,101 1,390,879 (46,775) 1,344,104
Net assets, beginning of year (56,458) 913,008 856,550 178,549 5,746 1,040,845
Net assets, end of year $ (53,680) 2,301,109 2,247,429 131,774 5,746 2,384,949
The accompanying notes are an integral part of the financial statements.
-3-
•
2005
TEMPORARILY PERMANENTLY
UNRESTRICTED RESTRICTED RESTRICTED TOTAL
295,692 - 295,692
431,039 2,750 433,789
12,000 - 12,000
24,110 4,260 28,370
63,850 - 63,850
68,000 68,000
144,680 - 144,680
38,333 7,667 46,000
10,000 - 10,000
1,007,553 1,007,553
67,142 67,142
50,224 50,224
79,377 79,377
44,200 (44,200) -
2,336,200 (29,523) 2,306,677
928,425 928,425
484,372 _ = 484,372
598,377 598,377
• 337,081 = 337,081
3,836 3,836
2,352,091 2,352,091
(15,891) (29,523) - (45,414)
872,441 208,072 5,746 1,086,259
856,550 178,549 5,746 1,040,845
•
AdML
ELGIN SYMPHONY ORCHESTRA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 2006 AND 2005
•
2006 2005
Cash provided by (applied to) operating activities:
Change in net assets 5 1 ,344,104 (45,414)
Adjustments to reconcile change in net assets to net
cash provided by (applied to) operating activities:
Depreciation 15,710 12,827
Changes in:
Receivables 121 ,692 50,585
Prepaid expenses (27,079) 7,464
Accounts payable 31 ,624 10,291
Accrued liabilities 13,948 (42,291 )
Deferred revenue (59,551) (4,846)
1 ,440,448 (11 ,384)
Cash applied to investing activities:
Purchase of investments (112,088) (22,986)
• Purchase of capital assets (34,934) , (8,083)
'i Costs incurred for potential concert center (32,557) (56,354)
(179,579) (87,423)
Net increase (decrease) in cash 1 ,260,869 (98,807)
Cash, beginning of year 318,676 417,483
Cash, end of year S 1 ,579,545 318,676
is
The accompanying notes are an integral part of the financial statements.
-4-
ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Elgin Symphony Orchestra is an Illinois nonprofit corporation. The Orchestra provides
musical entertainment, training, education and performances of the arts in northern Illinois.
A summary of the significant accounting policies of the Orchestra is presented below to
s
assist the reader in evaluating the financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts of the Elgin Symphony
Orchestra Association (Orchestra) and the Elgin Symphony Orchestra Foundation
(Foundation). The Foundation was established to raise and invest funds for the benefit of
the Orchestra. Although these organizations are legally separate, there is significant
overlap among the Board of Directors of the two organizations.
Upon consolidation, all transactions and balances between the two organizations have
been eliminated.
The net assets of the Foundation totaled $2,422,264 and $1 ,081 ,139 as of June 30,
2006 and 2005, respectively.
Support and Expenses
• Contributions received and unconditional promises to give are measured at their fair values
and are reported as an increase in net assets. The Orchestra reports gifts of cash and
other assets as restricted support if they are received with donor stipulations that limit the
use of the donated assets, or if they are designated as support for future periods. When a
donor 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 activity as net_ assets released from
restrictions. Donor-restricted contributions whose restrictions are met in the same
reporting period are reported as unrestricted support.
i
The Orchestra reports gifts of goods and equipment as unrestricted support unless explicit
donor stipulations specify how the donated assets must be used. Gifts of long-lived assets
with explicit restrictions that specify how the assets are to be used and gifts of cash or
other assets that must be used to acquire long-lived assets are reported as restricted
support. Absent explicit donor stipulations about how long those long-lived assets must be
maintained, the Orchestra reports expirations of donor restrictions when the donated or
acquired long-lived assets are placed in service.
Expenses are recorded when incurred in accordance with the accrual basis of accounting.
' • -5-
r
ELGIN SYMPHONY ORCHESTRA
' NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Donated Services, Goods and Facilities
In addition to cash contributions, the Orchestra receives donations of goods and facility
use. Donated goods and facility use are recorded at their fair value.
The Orchestra also receives a substantial amount of volunteer services which do not meet
the criteria for inclusion in the financial statements.
Cash Equivalents
The Orchestra generally considers all highly liquid instruments with an original maturity of
three months or less to be cash equivalents. Certificates of deposit and amounts invested
through a brokerage firm are classified as investments.
Concentration of.Credit Risk
The Orchestra maintains substantially all of its cash balances in commercial banks. These
balances are insured by the Federal Deposit Insurance Corporation up to $100,000. During
the year, the Orchestra, at times, maintained bank deposits in excess of the insured
limitations.
Accounts Receivable
The Company carries its accounts receivable at the outstanding principal balance adjusted
for the allowance for doubtful accounts. The allowance for doubtful accounts is estimated
based on the Company's historical bad debt experience, the aging of the receivables and
based on management's judgment. Accounts deemed uncollectible are charged to the
allowance for doubtful accounts. There was no allowance for doubtful accounts recorded
at June 30, 2006 or 2005.
Financial Statement Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.
j
t
-6-
•
e
•
ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Capital Assets
Capital assets are recorded at cost when acquired, or their fair market value if donated.
Depreciation is provided using the straight-line method over the estimated useful lives of
the assets which range from three to seven years.
Advertising
The Orchestra expenses advertising costs as incurred. Advertising expense was $110,682
and $102,211 for the years ended June 30, 2006 and 2005, respectively.
NOTE 2 - CAPITAL ASSETS
Capital assets owned by the Orchestra at June 30, 2006 and 2005 included the following:
2006 2005
Office furniture and equipment $ 110,160 105,516
Musical instruments 56,985 26,695
Holiday set 27,370 27,370
194,515 159,581
Accumulated depreciation 137,835 122,125
$ 56,680 37,456
Depreciation expense for the years ended June 30, 2006 and 2005 was $15,710 and
$12,827, respectively.
NOTE 3 - DEFERRED REVENUE
The Orchestra defers the recognition of ticket sales and related revenue to the period in
which the concerts are performed. As of June 30, 2006 and 2005, such unearned
revenue amounted to $785,103 and $844,654, respectively.
NOTE 4 - IN-KIND SUPPORT
The Orchestra receives a significant amount of in-kind support in the form of services
provided free or at a reduced cost. The principal sources of in-kind support are office
space use, advertising and free or reduced travel for performing artists. The estimated
( value of these contributions which have been reflected in the financial statements totaled
• $70,5.87 and $63,850 for the years ended June 30, 2006 and 2005, respectively.
-7-
ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
• NOTE 5 - ELGIN SYMPHONY LEAGUE
The Elgin Symphony League is an auxiliary which conducts educational and fund-raising
activities. It has a separate Board of Directors, which annually approves a transfer of
funds to support the Orchestra.
The Board of Directors of the Elgin Symphony Orchestra does not directly or indirectly
control the Elgin Symphony League. These financial statements do not include the League.
NOTE 6 - TEMPORARILY RESTRICTED NET ASSETS
Temporarily restricted net assets are composed of the following:
2006 2005
Time restrictions:
Cash and investments restricted to
fiscal 2007 and 2006 $ 10,621 10,417
Unconditional promises expected to
be received within five years 71,153 168,132
81,774 178,549
10 Use restrictions - -
Restricted for building of new concert
hall and related expenses 50,000 -
$ 131 ,774 178,549
The above referenced promises to give are categorized below:
Pledges expected to be received within:
under one year $ 1 ,500 30,000
one to five years - 73,034
1 ,500 103,034
Present value of bequests received 69,653 65,098
$ 71 ,153 168,132
NOTE 7 - PERMANENTLY RESTRICTED NET ASSETS
Permanently restricted assets of $5,746 are restricted to investments in perpetuity, the
income from which is expendable for unrestricted purposes.
't
-8-
ELGIN SYMPHONY ORCHESTRA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)_
j •
NOTE 8 - INVESTMENTS
Investments consist of certificates of deposit, and mutual funds. These investments are
carried at fair market value as determined by quoted market price. Cost and fair market value
information as of June 30, 2006 and 2005 is summarized as follows:
2006 2005
Certificates of deposit S 75,000 190,000
Mutual funds 1 ,090,068 86.3,762
Total fair market value 1 ,165,068 1 ,053,762
Total cost 1 ,085,869 959,694
Excess of fair market value
over cost $ 79.199 94,068
Investment income at June 30, 2006 and 2005 is comprised of the following:
2006 2005
i
Dividends and interest 5 63,770 36,327
Unrealized gains (losses) ( 36,836) 31,160
f• Realized gains 51 ,244 11 ,890
5 78.178 79,377
NOTE 9 - TAX STATUS
The Elgin Symphony Orchestra is exempt from income taxes under Section 501 (c)(3) of the
Internal Revenue Code.
NOTE 10 - MUSICIANS COVERED BY COLLECTIVE BARGAINING AGREEMENT
All paid musicians are covered under a collective bargaining agreement with the Chicago
Federation of Musicians. This agreement expires in June 2008.
NOTE 11 - RETIREMENT PLANS
The Association maintains a profit sharing plan. All non-union full-time employees are covered
under this plan. The contribution for the years ended June 30, 2006 and 2005 amounted to
515,638 and $13,025, respectively.
Union employees (musicians) are covered by industry pension plans to which the Association
• contributes monthly, based upon hours worked by each eligible musician.
-9-