TRUSTEES OF THE BERKSHIRE MusEUM FINANCIAL STATEMENTS, Tune 30, 2006TRUSTEES OF THE BERKSHIRE MUSEUM FINANCIAL STATEMENTS INE 30, 2006 Table of Contents Independent Auditors’ Report Exhibit A Exhibit B Exhibit C Exhibit D ‘Statement of Financial Position Statement of Activities Statement of Changes in Net Assets Statement of Cash Flows Notes to Financial StatementMoynihan & Kowalczyk, RC. Certified Public Accountants and Consultants 128 South Street # P.O, Box 2861 Pitsfiold, MA Q1202 + Te: (413) 448-2479 # Fax: (413) 445-7165, 21 Mechanic Steet * Great Barrington, MA 01230 * Tel (613) 526-5699 « Fax (813) 528-5626 Website: ww mandcpas.com INDEPENDENT AUDITORS’ REPORT To the Board of Trustees of the Berkshire Museum Pittsfield, Massachusetts We have audited the accompanying statement of financial position of Trustees of the Berkshire Museum (a not-for-profit organization) as of June 30, 2006, and the related statements of activities, changes in net assets, and cash flows for the year then ended. These financial statements are the responsibility of the Museum's management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from the Museum's 2005 financial statements and, in our report dated December 18, 2005 we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. ‘Those standards require that we plan and perform the audit 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 audit provides reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Trustees of the Berkshire Museum as of June 30, 2006, and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America Yoprben ad feodyl Ue Moynihan and KowaleZyk, PC. October 25, 2006 ‘Member: American Institute of Certified Public Accountants * Massachusetts Society of Certified Public Accountants‘TRUSTEES OF THE BERKSHIRE MUSEUM 2 ‘STATEMENT OF FINANCIAL POSITION 7 JUNE 30, 2006 5 WITH ComParaTIVE TOTALS FOR JUNE 30, 2005, ’ Assets: i 2006 005 Current Assets Cash $ 188,863 $139,167 Investments ~ Cash Equivalents 158,829 11,692 Accounts Receivable 85,244 49,888 Pledges Receivable, Current 467,016 91,000 Grants Receivable 8,769 184,482 Museum Shop Inventory 38,690, 44,786 Prepaid Expenses 29,995 35,089 Total Current Assets 977.406 556,104 Property and Equipment Land 56,971 56,971 Equipment 271,154 269,074 Aquarium Tank 16,049 16,049, Building and Improvements 2,269,080 1,840,794 Auditorium Improvements 56,234 36,234 Galleries and Exhibits 685,831 650,831 Universal Access 306,770 306,770 Campaign Feasibility Study 16,000 16.000 Total Cost 3,678,089 3,212,723 Less: Accumulated Depreciation (1:433.296) (1.270.081) Net Property and Equipment 2.244.793 1,942,642 Other Assets Investments — Long Term 3,686,447 3,839,038 Pledges Receivable, Long Term (net) 1,117,274 387,092, Deferred Compensation Annuity 87,493 85,163 Total Other Assets 4,891,214 4.311.293 Total Assets $8,113,413 36,810,039a EXHIBIT A ‘TRUSTEES OF THE BERKSHIRE MUSEUM STATEMENT OF FINANCIAL POSITION JuNE 30, 2006 HW COMPARATIVE TOTALS FOR JUNE 30, 2005, Liabilities and Net Assets " 2006 2005 Current Liabi Line of Credit - TD Banknorth $ 115,701 $90,972 Accounts Payable 155,265 419,273 Current Portion of Long-term Notes Payable 10,274 35314 Sales Tax Payable 605 389 Accrued Salaries 54,942 26,007 Deferred Income 76.821 163.205 ‘Total Current Liabilities 413,609 _735.160 Long-Term Liabilities Deferred Annuity Payable 87,493 85,163 Notes Payable Net of Current Portion 14,584 24.888 ‘Total Long-Term Liabilities 102.077 110, Total Liabilities 515,686 845.211 Net Assets Unrestricted ~ Board Designated Net Assets Operating Investment Acquisitions Total Unrestricted — Board Designated Net Assets 1,606,617 Temporarily Restricted Net Assets Total Net Assets (Exhibit C) 1,597,221 5,964,828 ‘Total Liabilities and Net Assets $8,113,413 $6,810,039 See Accompanying Notes to Financial Statementsa Exuisit B ‘TRUSTEES OF THE BERKSHIRE MUSEUM 2 STATEMENT OF ACTIVITIES For THE YEAR ENDED JUNE 30, 2006, WITH ComPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2005 ‘Temporarily Total Total () Unrestricted _Restrieted 2006 2005" Contributed Income Government $ 366,910 § - $366,910 $649,732 Foundations and Corporations 287,566 287,566 196.240 Special Events 164,095 164,095 302,539 Major Individual Gifts 15,000 100,000 115,000 71,084 Memberships 202144 _ 202,144 193,882 Annual Appeal 130,737 - 130,737 96,902 Capital Campaign Donations -- ‘1,745,728 1,745,728 Other Contributions 12,114 = 12.114 In-Kind Contributions 295373 - 29373 Reclassifications from Temporarily Restricted Net Assets 1,020,047 (1,020,047) - = Total Contributed Income 2.227.986 825.081 3,053,667 2.116.969 Earned Income Endowment Dividend and Interest 107,747 - 107,747 117,685 Realized Gains 150,558 - 50558 213,364 Change in Unrealized Gains 122,417 - 122417 101.187 Admissions 128,405 7 128,405 204,264 Museum Shop ~ net of discounts 128,982 - 128,982 178,628 Facility Rental 5.696 - 5,696 7,367 Adult Programs 99,238 7 99,238 108,293 Education Programs 90,611 90,611 92,905 Traveling Exhibitions 256.678 258,678 162,692 Other Earned Income 5.078 3357 Tog74io0 1,189,742 Total Earned Income 825,081 = 415.077 3,306,711 Total Income Expenses (Note 11) Personnel 922,709 924,472 Executive Search - - 18,669 Administration - 320,320 297,091 Finance ~ 84,326 78,830 Capital Campaign 351,826 239,936 Building and Grounds 34,218 37.273 Development - 76,228 362,602 Marketing, - 196,285, 233,129 Museum Shop - 67,404 95,003 Exhibitions - 281,230 226,269 Registrar - 16,800 8,082 Aquarium and Natural Science ~ 14,666 18,030 Education - 39,695 48,731 IMLS Climate Control 780 31,939 LOG Grant 1,539 114,722 GE. Foundation Grant 48,644 21544 Adult Programs 61,508 __56-408 Total Expenses Z5w178 = —_ 7,612,790 Total Increase (Decrease) in Net Assets $_825.68 SL632.899 $_693.921 See Accompanying Notes to Financial Statements‘TRUSTEES OF THE BERKSHIRE MUSEUM STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED JUNE 30, 2006 Wire Comparative TOTALS FOR THE YEAR ENDED JUNE 30, 2005 Net Assets, June 30, 2004 Increase (Decrease) In Net Assets ‘Net Surplus (Deficit) from Operations Endowment Dividend and Interest Realized Gains Changes in Unrealized Gains Endowment Transfers for Operations Interfund Loan Transfers for Capital Campaign Contributed Securities ‘Transfers for Sales of Contributed Securities Investment Fees Total Increase (Decrease) In Net Assets (Exhibit B) Net Assets, June 30, 2005 (Exhibit A) ExuiarrC Unrestricted - Total Temporarily Board Designated Net Assets Unrestricted Restricted Total Operating Investment Acquisition Net Assets Net Assets Net Assets $1,229,053 $2,570,923 $1,470,931 $5,270,907 S___=: $5,270,907 (258,544) - ~ (258,544) 507481 248,937 7 73,896 43,789 117,685 = 117,685 159,324 54,040 213,364 213,364 - 37,074 64,113 101,187, i 101,187 403,126 ( 314,524) (88,602) ~ - ~ 210,000 (210,000) - ~- - 22,348 22,348 22,348 22,982 (22,982) a - 7 = (6600) (__3.000) (__9,600) (9.600) 377.564 (261.464) __70340 _186.440 807,481 __693,921 $1,006,617 $2,309,459 SL,541,271 $5,457,347 SSO7A81 $5,964,828Exniprt C (CONTINUED) TRUSTEES OF THE BERKSHIRE Museum STATEMENT OF CHANGES IN NET ASSETS For The YEAR ENDED JUNE 30, 2006 WITH Comparative TOTALS FOR THE YEAR ENDED JUNE 30, 2005 Unrestricted - Total Temporarily Board Designated Net Assets Unrestricted Restricted _Total Operating Investment Acquisition Net Assets Net Assets Net Assets Net Assets, June 30, 2005 $1,606,617 $2,309,459 $),541,27 $§,457,347, $507.48) $5,964,828 Increase (Decrease) In Net Assets Net Surplus from Operations 266,416 - — 266,416 825,681 1,092,097 Endowment Dividends and Interest 62,335 45,412 107,747 107,747 Realized Gains (Losses) 32,348 18,210, 150,558 150,558 Changes in Unrealized Gai 26517 95.900 122,417 122,417 Transfers for Operations 400,000 (400,000) - - ~ Transfers for Capital Renovation Expenses 96.250 (70,000) (26,250) - 7 Collection Acquisitions (35,000) ( 35,000) (35,000) Contributed Securities oH 104,680 - 104,680, 104,680 Transfers for Sales of Contributed Securities 50,004 (50,004) 7 - a Contribution for Children’s Fund Deposited to Investment Fund until Endowment Account is Established oH 100,000, ~ 100,000 100,000 Investment Fees = ¢ 6.600) ( 3,000) (, 9,600) ¢ 9,600) Subrotals ( 100,724) 95,272 807,218 825,681 1,632,899 Interfund Loans Receivable (Payable) re 225,324 26.250 = = - Total Increase In Net Assets (Exhibit B) 361,096 _124,600 _121,522 _807,.218 _ 825.681 1,632,899 Net Assets, June 30, 2006 (Exhibit A) $2,167, $2,434,059 $1,662,793 $6,264,565 $1,333,162 $7,597,727 Sce Accompanying Notes to Financial StatementsTRUSTEES OF THE BERKSHIRE MUSEUM ‘STATEMENT OF Casi FLows For THE YEAR ENDED JUNE 30, 2006 WITH CoMPARATIVE TOTALS FOR THE YEAR ENDED JUNE 30, 2005, 2006 Cash Flows from Operating Activities Increase in Net Assets (Exhibit B) $1,632,899 Adjustments to Reconcile Change in Net Assets to Net Cash Provided by Operating Activities: Depreciation 163,216 Realized (Gains) (150,558) Unrealized (Gains) (122417) Forgiveness of Long-term Notes Payable (23,718) Contributions of Marketable Securities (104,680) (Increase) Dectease in: ¢ ( ‘Accounts Receivable 35,356) Pledges Receivable 1,106,198) Grants Receivable 175,713 Inventories 6,096 Prepaid Expenses 5,094 Increase (Decrease) in: Accounts Payable (264,008) Accrued Salaries 28,935 Accrued Expenses 217 Deferred Income (86.384) Net Cash Provided by Operating Activities T18.851 Cash Flows from Investing Activities Purchase of Property and Equipment (465,366) Purchase of Investments ( 161,150) Proceeds from Sale of Investments Net Cash Provided (Used) by Investing Acti Cash Flows from Financing Activ Payments on Long-term Notes Payable ‘Net Increase (Decrease) in Line of Credit Net Cash Provided (Used) by Fi cing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning 150,859 Cash and Cash Equivalents - Ending $_347,692 Summary of Cash Accounts: Cash in Banks $ 188,863 Investments - Cash Equivalents 158829 ‘Total Cash and Cash Equivalents $347,672 Supplemental Disclosure of Cash Flow Information: Cash Paid During the Year for Interest $14,261 See Accompanying Notes to Financial Statements Exhibit D 2005 $ 693,921 142,155 213,364) 101,187) 23,718) 22;347) 10,697) 478,092) 171,787) 2,165) 15,683 319,790 (13.217) ($90,605) 57.227 $_150,8: $ 139,167 11,692 59 8,578‘TRUSTEES OF THE BERKSHIRE MUSEUM NOTES TO FINANCIAL STATEMENTS JUNE 30, 2006 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Trustees of the Berkshire Museum (Museum) is a not-for-profit organization exempt from taxes under Section 501(c)(3) of the Internal Revenue Code and is not classified as a private Foundation, The Museum acquires, exhibits and preserves: art; natural science; and, local history collections; plus provides: special performances of the arts; concerts; lectures; educational movies; classes; bus trips; and, various special events to patrons and benefactors primarily from the Berkshire Region of Massachusetts. Ba of Accounting The financial statements of the Museum have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Net assets, revenues and expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets of the Museum and changes therein are classified and reported as follows: Unrestricted Net Assets - Represents resources over which the Board of Trustees has discretionary control and are used to carry out the operation and management of the Museum’s primary programs in accordance with its bylaws. Unrestricted net asset groups are described as follows: Operating - Funds available for and used in day-to-day operations. Investment - Funds available for and used in day-to-day operations as specified by the Museum's Board of Trustees. Acquisition - Funds to be used as specified by the Museum’s Board of Trustees for the acquisition of collections, library materials, birds, and capital items Temporarily Restricted Net Assets - Represents resources subject to donor-imposed stipulations that may, or will be met, either by actions of the Museum, and/or the passage of time. When a restriction expires, temporarily restricted net assets ate reclassified to unrestricted net assets and are reported in the statement of activities as assets released from restrictions. Contributions Contributions, including unconditional promises to give, are recognized when made. All contributions are available for unrestricted use unless specifically restricted by the donor. Contributions restricted by the donor are reported as increases in unrestricted net assets if the restrictions expire in the fiscal year in which the contributions are recognized. Alll other donor- restricted contributions are reported as increases in temporarily or permanently restricted net assets depending on the nature of the restrictions. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets,‘TRUSTEES OF THE BERKSHIRE MUSEUM NOTES TO FINANCIAL STATEMENTS. JUNE 30, 2006 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Cash Equivalents For purposes of the statement of cash flows, the Museum considers short-term, highly liquid investments that have original maturities of three months or less when purchased to be cash equivalents. Investments ‘The Museum accounts for investments in accordance with SFAS 124, Accounting for Certain Investments Held by Not-for-Profit Organizations. Under SFAS 124, investments in marketable securities with readily determinable fair values and all investment in debt securities are reported at their fair values in the statement of financial position. Fair value is determined by using quoted market prices, where available, Where not available, another reasonable method is used Unrealized gains and losses are included in the change in net assets. Sce Note 2 for additional information related to investments Financial Instruments ‘The carrying amount for cash and short-term vestments approximates fair value because of the short term maturities of those investments. The fair values of some long-term investments are estimated based on quoted market prices for those or similar investments. Allowance for Bad Debts The Museum uses the allowance method to determine uncollectible accounts receivable. Management believes all receivables at June 30, 2006 to be collectible. Invento Inventories, consisting of general shop merchandise, are stated at the lower of cost (first-in, first- out method) or market value. Property and Equipment Amounts expended for equipment or other capital additions utilized in carrying out the Museum's activities and having an original cost of $300 or more are capitalized at cost. Depreciation expense is computed using the straight-line method in a manner that is intended to amortize the cost of such assets over their estimated useful lives.‘TRUSTEES OF THE BERKSHIRE MUSEUM NOTES TO FINANCIAL STATEMENTS, JUNE 30, 2006 ‘SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Advert ig The Museum follows a policy of charging the costs of advertising to expense as incurred Advertising expense was $97,712 and $149,283 for 2006 and 2005 respectively. Donated Services and Mater Is A substantial number of unpaid volunteers have made significant contributions of their time to development of all the Museum's programs. ‘The value of this contributed time is not reflected in these statements since the criteria for recognition under SAS No, 116 have not been satisfied. Contributions of donated non-cash assets are recorded at their fair values in the period received. For the fiscal years ended June 30, 2006 and 2005, the value of donated materials amounted to $26,800 and $55,850 respectively. The value of donated services amounted to $2,573 and $580 for fiscal years ended 2006 and 2005 respectively and included professional services used for administrative purposes. Pledges Unconditional promises to give (pledges) are recorded as received. Unconditional promises to give due in the next fiscal year are reflected as current promises to give and are recorded at their net realizable value. Unconditional promises to give due afier one year are reflected as long-term promises to give and are recorded at their net realizable present values. An allowance for uncollectible promises is provided based on management's evaluation of potential uncollectible promises receivable. Management believes that all amounts will be received when due, therefore no allowance for uncollectible pledges has been provided. ‘See Note 3 for additional information related to Pledges Receivable Deferred Compensation Deferred compensation represents an insurance contract purchased in 1991 for an active employee. Upon retirement, disability or death, title to the annuity contract will transfer to the employee or his designated beneficiaries. Accordingly, the Museuin has recorded an asset and @ related liability for the fair value of the insurance contract Comparative Totals The financial statements include certain prior-year summarized, comparative information. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Museum’s financial statements for the year ended June 30, 2005, from Which the summarized information was derived. Reelassifications Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform to the presentation in the current-year financial statements.