HomeMy WebLinkAbout2016 Studebaker National Museum NATIONAL MUSEUM
Filed io, Cefe Ws Office
f ce
FN 0 2017
June 28, 2017 �-. _
CIT 'CL.ERK,SOUTH BEND, IN
Ms. Kareemah Fowler
South Bend City Clerk
County-City Building
227 W. Jefferson Blvd. Suite 400S
South Bend, IN 46601
Dear Ms. Fowler:
Enclosed please find a copy of our 2016 Annual Financial Statement as prepared by our
accounting firm Aranowski & Company CPAs. If you have any questions, please contact me.
Sincerely,
Bonnie L. Oswald
Business Manager
201 SOUTH CHAPIN STREET
SOUTH BEND,INDIANA 46601-2521
PHONE•574.235.9714
TOLL FREE•888.391.5600
FAX•574.235.5522
W W W.STU DE BAKER MUS EUM.ORG
EMAIL•INFOOSTUDEBAKERMUSEUM.ORG
Filed in Clerk's Office
JUN 0 2017
KAREENiAH FOWLER
CITY CLERK,SOUTH BEND, IN
ARANOWSKI & COMPANY
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STUDEBAKER NATIONAL MUSEUM, INC.
South Bend, Indiana
Annual Report Filed in Cfark's ice
December 31, 2016 JUN '
� 0 2017
' KAREEMAH FOWLER
CITY CLERK,SOUTH BEND, IN
CONTENTS
INDEPENDENT AUDITORS'REPORT 1
' FINANCIAL STATEMENTS
' Statements of Financial Position 3
Statements of Activities and Changes in Net Assets 4
' Statements of Cash Flows 5
' Notes to Financial Statements 6
Supplementary Information
Schedules of Management and General Expenses 16
1
1
ARANOWSKI & COMPANY
CPAs and Business Advisors
' 212 EAST LaSALLE AVENUE,SUITE 220
SOUTH BEND,INDIANA 46617
' (574)289-4821 FAX(574)289-6007
INDEPENDENT AUDITORS'REPORT
' Board of Directors
Studebaker National Museum,Inc.
South Bend,Indiana
' We have audited the accompanying financial statement of Studebaker National Museum, Inc. (a nonprofit organization),
which comprise the statement of financial position as of December 31, 2016, and the related statement of activities and
changes in net assets, and the statement of cash flows for the year then ended, and the related notes to the financial
' statements.
Management's Responsibility for the Financial Statements
' Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are
' free from material misstatement,whether due to fraud or error.
Auditor's Responsibility
' Our responsibility is to express an opinion on these financial statements based upon our audit. 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 from material
' misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
' statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
' effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management,as well as evaluating the overall presentation of the financial statements.
' We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit
opinion.
' Basis for Qualified Opinion
The Museum has elected to prepare its financial statements separate from those of Studebaker National Museum
Foundation, Inc., an entity in which it has both a majority voting interest and an economic interest. Accounting principles
' generally accepted in the United States of America require that consolidated financial statements be issued when entities are
so related. The effects of this departure on the financial statements are disclosed in Note 9 to the financial statements.
' Qualified Opinion
In our opinion, except for the effects of not including the accounts of Studebaker National Museum Foundation, Inc. in the
accompanying financial statements as explained in the Basis for Qualified Opinion paragraph, the financial statements
' referred to above present fairly, in all material respects, the financial position of Studebaker National Museum, Inc. as of
December 31,2016, and the changes in its net assets and its cash flows for the year then ended in conformity with generally
accepted accounting principles in the United States of America.
1
Prior Period Financial Statements
The financial statements of Studebaker National Museum, Inc. as of December 31, 2015, were audited by other auditors
whose report dated May 3,2016,expressed a qualified opinion on those statements.
Report on Supplementary Information
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The Schedule of
' Management and General Expenses on page 16 is presented for purposes of additional analysis and is not a required part of
the financial statements. Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the financial statements. The information has been subjected to
the auditing procedures applied in the audit of the financial statements and certain additional procedures, including
' comparing and reconciling such information directly to the underlying accounting and other records used to prepare the
financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion,the information is fairly stated in all material
' respects in relation to the financial statements taken as a whole. The 2015 Management and General Expenses on page 17
was subjected to the auditing procedures applied in the 2015 audit of the basic financial statements by other auditors,whose
report on such information stated that it was fairly stated in all material respects in relation to the 2015 financial statements
as a whole.
4A NOWSKI&COMPAN
SOUTH BEND,INDIANA
May 2,2017
' 2
STUDEBAKER NATIONAL MUSEUM, INC.
Statements of Financial Position
December 31,2016 with Comparative Totals for 2015
' Assets 2016 2016 2016 2015
Temporarily
Unrestricted Restricted Total Total
Current Assets:
Cash $ 487,738 $ 167,634 $ 655,372 $ 669,496
Accounts receivable(after allowance for doubtful accounts
of$0) 38,150 38,150 60,696
Accounts receivable-related entity 470 470
Gift shop inventory 62,592 62,592 45,711
Prepaid expenses 20,304 20,304 16,252
Total Current Assets 609,254 167,634 776,888 792.155
' Property and equipment,net 1,345,730 1,345,730 1,361.318
' Long-Term Assets:
Beneficial interests in assets held by the Community
Foundation of St.Joseph County 29,981 29,981 28,442
Capitalized trademark,(net of accumulated amortization of
' $1,339-2016 and $1,246-2015 93
Total Long-Term Assets 29,981 29,981 28,535
Total Assets $ 1,984,965 $ 167,634 $ 2,152,599 $ 2,182.008
' Liabilities and Net Assets
Current Liabilities:
Accounts payable $ 48,148 $ 48,148 $ 45,388
Accounts payable-related entity 12,404 12,404 10,951
Deferred revenue 2,725 2,725 2,825
Accrued expenses 30,843 30,843 77.760
' Total Current Liabilities 94,120 94,120 136,924
Net Assets
Unrestricted 1,850,845 1,850,845 1,833,220
Board designated-unrestricted 40,000 40,000 30,000
Temporarily restricted $ 167,634 167,634 181,864
' Total Net Assets 1,890,845 167,634 2,058,479 2,045,084
Total Liabilities and Net Assets $ 1,984,965 $ 167,634 $ 2,152,599 $_2,182,008
' (See auditors'report and notes to financial statements.)
3
STUDEBAKER NATIONAL MUSEUM, 1NC.
' Statements of Activities and Changes in Net Assets
For the Year Ended December 31,2016 with Comparative Totals for 2015
' 2016
2016 Temporarily 2016 2015
Unrestricted Restricted Total Total
' Revenue and Other Support $ 250,857 $ 250,857 $ 245,938
Management fees
Admissions 150,893 150,893 145,855
Memberships 29,978 29,978 26,588
109,174 $ 23,114 132,288 333,430
2,894 2,894 15,820
Contributions in-kind 178455 178,455 188,522
' Gift shop revenue '24,389 24,389 28,715
Rental income
216,408 68,350 284,758 301,451
Special events,net of direct donor benefits
Investment income 2,573 16,694 19,267 20,187
' 106,766 106,766 114,860
Other income
Net assets released from restrictions 122,388 122 388
Total Revenue and Other Support 1,194,775 (14,230) 1,180,545 1,421,366
1 Program Services Expenses 26,153 26,153 20,958
Advertising
10,404 10,404 244,020
Exhibits and restoration 2,958 2,958 5,385
' Museum development 89,105 89,105 101,747
Special events
' Support Services Expenses 856,808 856,808 924,987
Management and general 2,894 2,894 15,820
Contributions in-kind 65,998 65,998 67,399
Depreciation 112,830 112,830 112,200
' Cost of gift shop sales
1,167.150 1,167,150 492.516
Total Expenses
' Change in net assets 27,625 (14,230) 13,395 (71,150)
' Net Assets-Beginning 1,863,220 181,864 2,045,084 2,116,234
' $ 1.890,845 $__167 634 $ 2,058.479 $2,045,084
Net Assets-Ending
' (See auditors' report and notes to financial statements.)
4
STUDEBAKER NATIONAL MUSEUM, 1 C.
' Statements of Cash Flows
For the Years Ended December 31,2016 and 2015
' 2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
' Change in net assets $ 13,395 $ (71,150)
Depreciation and amortization 66,091 67,488
' (Increase)decrease in
Accounts receivable 22,076 (46,496)
Gift shop inventory (16,881) 9,854
Prepaid expenses (4,052) 1,656
' Increase(decrease)in
Accounts payable 5,074
(100
Deferred revenue (100) 2,825
' Accrued expenses (46,917) 22,836
Total adjustments 24,430 63,237
' Net Cash Provided(Used)by Operating Activities 37,825 (7,913)
CASH FLOWS FROM INVESTING ACTIVITIES:
' Proceeds(purchase)of investments,net (1,539) 2,556
Purchase of property and equipment (50,410) (10286)
' Net Cash(Used)by Investing Activities (51,949) (7,730)
' NET(DECREASE)IN CASH (14,124) (15,643)
Cash - beginning of year 669,496 685,139
CASH- END OF YEAR $ 655,372 $ 669,496
' (See auditors' report and notes to financial statements.)
5
STUDEBAKER NATIONAL MUSEUM, INC.
' Notes to Financial Statements
December 31,2016
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
' Business Activity and Presentation
Studebaker National Museum, Inc. (the Museum) operates a historical museum in South Bend,
' Indiana, which provides housing and display, for a collection of Studebaker vehicles, archives,
and related items of the Studebaker Company and collection of South Bend artifacts.
The Museum receives support and revenue primarily from a management agreement with the
City of South Bend, admissions, gifts and grants, special events, and the operation of a gift
shop.
Method o Accounting
Studebaker National Museum, Inc. is accounted for on the accrual basis of accounting in
accordance with accounting principles generally accepted in the United States of America.
Fund Accounting
' To ensure observance, limitations and restrictions placed on the use of resources available to
the Museum, the accounts are maintained in accordance with the principles of fund accounting.
This is the procedure by which resources for various purposes are classified for accounting and
' reporting purposes into funds established according to their nature and purpose.
Net Asset Classes
The Museum reports its activities and financial position by the following classes of net assets:
' • Unrestricted net assets are those currently available for use by the Museum.
Temporarily restricted net assets are those received with donor stipulations that limit
the use of the donated assets. When stipulated time restrictions expire or purpose
' restrictions are accomplished, these net assets are reclassified to unrestricted net assets
and reported in the statement of activities and changes in net assets as net assets
' released from restrictions.
• Permanently restricted net assets represent interests in assets held by others that are
permanently restricted by the donors. Investment earnings available for distribution are
' recorded in unrestricted or temporarily restricted net assets.
Functional Allocation offxpenses
The costs of providing the various programs and other activities have been summarized on a
' functional basis in the Statements of Activities. Accordingly, certain costs have been allocated
between the program and supporting service expense.
Consolidation of Variable Interest Entity
The Museum has transactions with the Studebaker National Museum Foundation, Inc.,an entity
in which it has both a majority voting interest and an economic interest. The financial
' statements of the variable interest entity have not been consolidated with these financial
statements.
(See auditors' report.)
6
STUDEBAKER NATIONAL MUSEUM, INC.
' Notes to Financial Statements
December 31,2016
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect certain reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported period. Accordingly, actual results could differ
from those estimates. Significant estimates used in the accompanying financial statements
include the allocations of costs among program and supporting services.
' Cash and Cash Equivalents
The Museum is required to have a separate bank account for the car raffle fund as this fund is
maintained with donor stipulations.
The Museum considers all highly liquid investments with a maturity of three months or less to
be cash equivalents. The Museum has cash and cash equivalents in high quality financial
institutions, which at times may exceed the $250,000 FDIC insurance limitations at each
institution. The Museum has not experienced any losses in such securities and believes it is not
exposed to any significant credit risk.
1 Accounts Receivable
As of December 31, 2016 and 2015, the Museum's management believes all outstanding
balances to be fully collectible. Therefore, no allowance for doubtful accounts has been
' recorded. The Museum does not accrue interest on any of its past due receivable balances.
Gift Shop Inventories
Gift shop inventories of merchandise, clothing and collectibles are stated at cost as determined
on a first-in, first-out(FIFO)basis.
Collections
As of December 31, 2016 and 2015,the Museum has in its possession the following categories
of vehicles and artifacts:
' The original collection of forty-three vehicles on loan from the City of South Bend.
A collection of fifty-eight vehicles from individual donors.
A collection of sixteen vehicles on loan from individual donors.
' A collection of ten vehicles on loan for a special exhibit until June 2017.
Other artifacts on loan from the City of South Bend and individual donors.
In conformity with the practice followed by many museums, vehicles and other artifacts
donated or purchased are not included in the Statements of Financial Position; expenditures or
receipts are included in exhibits and restoration expense. Purchases of collection items are
recorded as decreases in temporarily restricted net assets as net assets released from
' restrictions. Proceeds from deaccessions are reported as increases in temporarily restricted net
assets, as the funds are to be used in a manner similar to the original restriction.
(See auditors' report.)
7
1
STUDEBAKER NATIONAL MUSEUM, INC.
' Notes to Financial Statements
December 31,2016
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
' Contributions and Grants
The Museum reports gifts and grants of cash and other assets as restricted support if they are
received with donor stipulations that limit the use of the donated assets. 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 activities and changes in net assets as net assets released from
' restrictions.
Unconditional promises to give that are expected to be collected within one year are recorded at
' net realizable value. Unconditional promises to give that are expected to be collected in future
years are recorded at the present value of their estimated future cash flows. Amortization of the
discounts is included in contributions revenue. Conditional promises to give are not recognized
' as revenue until the conditions are substantially met.
Contributions of services are required to be recognized if the services received required
specialized skills, and are provided by individuals possessing those skills, and would typically
' need to be purchased if not provided, or services that create or enhance a non financial asset.
However, a substantial number of unpaid volunteers make significant contributions of their
time to the Museum. The value of this time is not reflected in the accompanying financial
' statements, because the services are not susceptible to objective measurement or valuation. As
of December 31, 2016 and 2015, no amounts for contributed services were recognized in the
accompanying financial statements.
' Compensated Absences
The employees of the Museum are entitled to paid absences depending on length of service and
other factors. It is impractical to estimate the amount of compensation for future absences, and
accordingly, no liability has been recorded in the accompanying statement of financial position.
The Museum's policy is to recognize costs of compensated absences when actually paid.
'
Beneficial Interests in Assets
The Museum recognizes its beneficial rights in assets held by others (by community
foundations)unless the donor has granted the recipient organization variance power. However,
' if the Museum is both the donor and the beneficiary of the assets, those rights are recognized
even if the recipient organization has been granted variance power.
Beneficial interests in assets held by others are stated at fair value, based on the value of the
' underlying assets, as provided by the Community Foundation that hold the assets. The fair
value approximates the present value of expected future distributions. Changes in the value of
beneficial interests are included in investment income in the statement of activity and changes
' in net assets.
Membership Revenue
' Membership revenues are collected and accounted for by the Northern Indiana Historical
Society and submitted on a monthly basis to the Museum. Therefore, no deferred membership
' revenue is recognized on the Statement of Financial Position.
' (See auditors'report.)
8
1
STUDEBAKER NATIONAL MUSEUM, INC.
' Notes to Financial Statements
December 31,2016
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
' Property Equipment and Depreciation
Property and equipment are stated at cost. Donations of property and equipment are recorded
at fair market value as of the date received and are reported as unrestricted support unless the
' donor has restricted the donated asset to a specific purpose. Assets donated with explicit
restrictions regarding their use and contributions of cash that must be used to acquire property
and equipment are reported as restricted support. Absent donor stipulations regarding how long
' those donated assets must be maintained, the Museum reports expirations of donor restrictions
when the donated or acquired assets are placed in service. The Museum reclassifies
temporarily restricted net assets to unrestricted net assets at that time. Major improvements and
' betterments are capitalized; maintenance and repairs are charged to expenses as incurred.
When items of property and equipment are sold or retired, the related cost and accumulated
depreciation are removed from the accounts and any gain or loss is included in the results of
operations. Property, equipment, improvements and betterments are depreciated for both
financial and income tax reporting purposes using the straight-line method over the estimated
useful lives of the assets as shown below:
1 YEARS
Equipment 3-7
Leasehold improvements 15
' Building 39
Depreciation expense was$65,998-2016 and $67,399 -2015.
Income Taxes
The Museum's policy is to record an unrecognized tax benefit from an uncertain tax position
' only if it is more likely than not that the tax position will be sustained upon examination by the
tax authorities. Interest and penalties related to gross unrecognized tax benefits would be
included within the provision for income taxes. To the extent accrued interest and penalties do
not ultimately become payable, amounts accrued would be reduced in the period that such
' determination is made and reflected as a reduction of the overall income tax provision. The
Museum does not have any uncertain tax positions at December 31,2016.
' The Museum is incorporated as a not-for-profit organization under the laws of Indiana, and is
exempt from federal and state income taxes pursuant to provisions of Internal Revenue Code
Section 501(c)(3) and a similar section of the Indiana tax law. Accordingly, federal and state
' income taxes are not reflected in the Statements of Activities.
The Museum is no longer subject to examination by the federal and Indiana tax jurisdictions for
' income tax returns filed for the years ended prior to December 31, 2013.
Fair Value of Financial Instruments
' Financial instruments consist of cash and cash equivalents, investments, accounts receivable,
accounts payable and accrued liabilities. The carrying amounts reported in the statements of
financial position for these assets and liabilities approximate fair value.
(See auditors' report.)
9
STUDEBAKER NATIONAL MUSEUM, INC.
' Notes to Financial Statements
December 31,2016
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED
Advertising Costs
The Museum expenses all advertising costs when incurred. For the year ended December 31,
' adverting expense was $26,153 - 2016 and$20,958 -2015.
Contributed Materials and Services
' A number of unpaid volunteers have made significant contributions of their time to develop the
Museum's programs principally in collection development and educational programs. The
value of this contributed time is not reflected in the accompanying financial statements since it
' is not susceptible to objective measurement or valuation, and does not meet the requirements
for recognition under ASC 958.
The Museum records various types of in-kind contributions, including honorarium fees, storage
space and facility rental, marketing and advertising expense and special event food and
entertainment expense. Contributions of tangible assets are recognized at fair market value
' when received. The amounts reflected in the accompanying financial statements as in-kind
contributions are offset by like amounts included in expenses.
' Reclassifications
Certain items in the prior year amounts have been reclassified to conform to the current year
presentation. The reclassifications did not affect the change in net assets or fund balances.
NOTE 2 -PROPERTY AND EQUIPMENT
' Property and equipment consist of the following at December 31:
' 2016 2015
Land $ 7,000 $ 7,000
Building 1,575,422 1,552,622
' Leasehold improvements 148,688 148,688
Equipment 1,099,445 1,132,070
Total cost 2,830,555 2,840,380
Less accumulated depreciation !1,484,825) 1,479,062)
Property and equipment, net $ 1,345,730 $1,361,318
' NOTE 3-CONCENTRATIONS
The Museum's members, donors and activities are concentrated in the St. Joseph County,
' Indiana area. Accordingly, its membership, gifts, and other sources of support and revenue,
and collection of contributions receivable, may be affected by economic conditions in the area.
In addition, for the year ended December 31, management fees collected from the City of South
' Bend comprised approximately 21.25%-2016 and 17.30%-2015 of total revenue.
' (See auditors'report.)
10
STUDEBAKER NATIONAL MUSEUM, INC.
Notes to Financial Statements
December 31, 2016
NOTE 4-MANAGEMENT AGREEMENT
Effective January 1, 2011, the Museum entered into a five year management agreement with
the City of South Bend. The agreement provides that the Museum shall have well and
faithfully performed in a timely manner all of the terms, covenants and conditions under the
' Management Agreement and is not material default under the lease or Management Agreement,
either on the date such rights are exercised or on the date of the renewal period, the Museum
shall have the option to renew the term of the Management Agreement for up to six(6)renewal
' periods each of which shall be five (5) years in duration ending December, 2040. The second
Management Agreement renewal period is effective January 1, 2016 through December 31,
2020. The original Management Agreement provided for monthly payments of$18,750 with a
' 2% increase per year for the Museum to maintain the City's collection of Studebaker vehicles,
archives, and artifacts. For the years ended December 31,the Museum's management fees were
$250,857-2016 and $245,938-2015.
The future aggregate annual minimum Management Agreements commitments with initial
agreement terms greater than one year, for the years ending December 31, 2016 over the next
' four years are as follows:
2017 $ 255,874
2018 260,992
2019 266,211
2020 271,536
S 1 054,613
' NOTE 5-ASSETS HELD BY THE COMMUNITY FOUNDATION
' For the years ending December 31, 2016 and 2015, any donations received by the Community
Foundation of St. Joseph County, Inc. (the Community Foundation) on behalf of the Museum
from donors other than the Museum are not reflected as an asset on the Museum's financial
statements as the donor granted the Community Foundation variance power, which precludes
' recognition of expected cash flows by the beneficiary. As of December 31, the fair value of
donations received from other donors on behalf of the Museum were $0 - 2016 and $11,785 -
2015.
The Community Foundation's spending policy is to distribute a percentage of each fund's
market values. The objectives of the Community Foundation's spending policy are to allocate
total earnings from the portfolio between current spending and reinvestment for future
earnings, and to provide a predictable and growing stream of income to beneficiaries of
Community Foundation grants. The Community Foundation's spending policy may be adjusted
' at their discretion depending upon market conditions. Distributions received during the years
ended December 31 were $16,694 - 2016 and $16,632 - 2015, and are included in gifts and
grants revenue on the Statement of Activities and Changes in Net Assets.
1 (See auditors' report.)
] l
STUDEBAKER NATIONAL MUSEUM,INC.
' Notes to Financial Statements
December 31,2016
NOTE 6-BENEFICIAL INTEREST IN ASSETS
The fair value of assets measured on a recurring basis at year end are as follows:
' 2016 2015
Fair Value Fair Value
Leve13 Leve13
' Beneficial interests in assets held by others:
Community Foundation Fund $ 29,981 $ 28.442
' Fair value for the beneficial interest in assets held by The Community Foundation of St. Joseph
County, Inc. (Community Foundation) is based on the fair value of the underlying assets, as
provided by the Community Foundation that holds the assets, which approximates the present
value of expected future distributions.
The Museum and other donors have made contributions to the Community Foundation for the
use and benefit of the Museum. Total contributions made by the Museum for the years ended
' December 31 were $0 -2016 and $1,250-2015. Aggregate contributions made by the Museum
to this fund as of December 31 are$26,250 -2016 and $26,250-2015.
' The following is a reconciliation of beginning and ending balances of the fair value of assets
measured by Level 3 inputs for the years ended December 31:
' 2016 2015
Beneficial interests in assets held by others:
Beginning fair value $ 28,442 $ 29,997
' Contributions 21,285
Distributions (16,285)
Change in value 1,539 ----L6,5-5-5)
' Ending Fair Value $ 29.981 $ 28,442
The change in value of the beneficial interests in assets held by others is included in investment
1 income in the accompanying statement of activities and changes in net assets.
1
' (See auditors'report.)
12
STUDEBAKER NATIONAL MUSEUM, INC.
' Notes to Financial Statements
December 31,2016
NOTE 7-TEMPORARILY RESTRICTED ASSETS
' Temporarily restricted net assets as of December 31, 2016 are available for the following
purposes:
' 2016 2015
Restoration and purchase of Studebaker vehicles $ 72,323 $ 64,293
Education fund 45,915 50,748
City of South Bend maintenance fund 49,396 39,396
$ 167,634 $ 154,437
' Net assets released from restrictions by the expiration of time and by incurring expenses
satisfying restricted purposes for the year ended December 31 are as follows:
' 2016 2015
' Restoration and purchase of Studebaker vehicles $ 4,139 $ 6,989
Education fund 6,433 67
City of South Bend maintenance fund 0 0
$_10,572 $ 7,056
NOTE 8-OPERATING LEASES
Effective January 2004, the Museum entered into a twenty year lease agreement with the
Northern Indiana Historical Society (NIBS) until December 2024 for shared use of common
' facilities. The monthly payments until December 2016 were $1,617. The monthly payments
from January 2017 to December 2018 are $1,698, from January 2019 to December 2020 are
$1,793, January 2021 to December 2022 are $1,883 and January 2023 to December 2024 are
' $1,965. The Museum pays all insurance, repairs and improvements.
On July 1, 2004 the Museum also entered into a twenty year ground lease agreement for
connection property with NIHS. The lease calls for an annual payment of $1. The ground
' lease allowed the Museum to construct improvements on land owned by NIHS.
The Museum leases outside facilities and storage space on an as needed basis.
' For the years ended December 31,total rent expense was $19,404 -2016 and $19,404 -2015.
1
' (See auditors'report.)
13
STUDEBAKER NATIONAL MUSEUM,INC.
' Notes to Financial Statements
December 31, 2016
NOTE 8- OPERATING LEASES-CONTINUED
tThe future aggregate annual minimum lease commitments, for leases with initial lease terms
greater than one year, for the years ending December 31, 2016 over the next five years are as
' follows:
2017 $ 20,376
2018 20,376
2019 21,516
2020 21,516
2021 22,596
After 2021 70.048
' $ 176,428
The Museum leases conference rooms and other Museum space to groups, businesses,
' organizations and individuals. For the year ended December 31, total rental income was
$24,389-2016 and$28,715 -2015.
At times,the Museum receives rent deposits on conference rooms and Museum space for future
use. The deposits are recorded as deferred revenue on the Statement of Financial Position.
Total rent deposits as of December 31,was $2,725 -2016 and $2,825 -2015.
There are no aggregate minimum rental income agreements in excess of one year as of
December 31, 2016.
NOTE 9-RELATED PARTY TRANSACTIONS
As more fully discussed in Note 1 to the financial statements, the Museum is related through
' voting control and economic interest with the Studebaker National Museum Foundation, Inc.
(the Foundation). Members of the Museum's Board of Trustees appoint a majority of the
Foundation's governing board and the Foundation's sole purpose is to solicit donations and
' administer funds for the benefit of the Museum. For the years ended December 31, 2016 and
2015,the Museum and Foundation have elected not to issue consolidated financial statements.
' The effect of not consolidating the financial statements of the variable interest entity,which is a
departure from accounting principles generally accepted in the United States of America has
not been determined.
' The Museum had the following transactions with related parties as of December 31:
2016 2015
' Professional fees $ 470
Net payments(proceeds)from transactions
with the Foundation 983
' Asset and Liability Balances
Accounts receivable 470
Accounts payable 12,404 $ 10,951
' (See auditors'report.)
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STUDEBAKER NATIONAL MUSEUM, INC.
Notes to Financial Statements
December 31,2016
NOTE 10-BOARD DESIGNATED NET ASSETS
The Museum has established disclosure requirements for collection and restoration repairs and
maintenance funds, donor restricted and board designated endowment funds.
' The Museum classifies as permanently restricted net assets (a) the original value of gifts
donated to the permanent endowment, (b) the original value of subsequent gifts to the
permanent endowment and(c) accumulations to the permanent endowment made in accordance
' wit the direction of the applicable donor gift instrument at the time the accumulation is added
to the fund less appropriate expenditures.
The Museum considers the following factors when making a determination to appropriate or
accumulate donor restricted funds, collection and restoration repairs and maintenance funds
and board designated endowment funds:
' 1) The duration and preservation of the fund.
2) The purposes of the Association and the donor restricted endowment fund.
3) General economic conditions.
4) The possible effect of inflation and deflation.
' 5) The expected total return from income and change in value of investments.
6) Other resources of the Museum.
' The donor restricted funds, collection and restoration repairs and maintenance funds and board
designated endowment funds by type of fund for the years ended December 31 are as follows:
2016 2015
' Unrestricted:
Board designated funds $ 40,000 $ 30,000
' NOTE 11 - SUBSEQUENT EVENTS
' The Museum has evaluated subsequent events for recognition and disclosure through
May 2, 2017,which is the date the financial statements were available to be issued.
(See auditors'report.)
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STUDEBAKER NATIONAL MUSEUM, 1NC.
' Schedules of Management and General Expenses
For the Years Ended December 31,2016 and 2015
' 2016 2015
Salaries and wages $ 407,174 $ 470,006
Payroll taxes 35,720 34,668
Employee benefits 1,302 1,555
Contract labor 30,027 46,282
Insurance 40,802 38,728
' 115,990 129,765
Utilities
Telephone 19,827 16,854
'
Rent 19,404 19,404
Facility rental expense 5,129 6,626
Janitorial supplies 2,953 2,471
' Repairs and maintenance 80,219 61,983
Small equipment and tools 3,907 4,856
Office supplies and expense 7,462 12,286
' Postage 2,215 2,562
Miscellaneous supplies and services 6,789 7,079
Fundraising 1,211 1,122
' Stationary and printing 1,240 1,508
Grant expenditure 2,415 51
Membership 1,752 1,757
' Bank fees 10,238 9,852
Amortization expense 93 89
Travel,conference and entertainment 11,647 12,396
' Dues and subscriptions 2,254 2,469
Professional services 19,779 11,692
Bad debt expense 1,000
' Cafe expenses 7,297 6,945
Education and public programs 4,196 941
Archive and research 14,372 13,272
' Miscellaneous 1,394 6,768
$ 856.808 $ 924,987
(See auditors' report.)
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