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HomeMy WebLinkAbout1945_VILLAGE OF EDINA_AUDIT REPORTp • 0 0 MT EFOR For the Tear Envied December 31., 1945 COUST� S CLUB DISVIJCT SERVICE COMPANY (A Corporation) Minneapolis,. Minnesota ,; ��`� ��: �� �� �ti 0 M n Country Club District Service Company TABLE OF CONTENTS PAGES 1 TO 7 — Letter of Transmittal and Comments PAGE 6 — Certifieato F�fffEIT A — Balance Shea n, As at D acwWber 31, 1945 ESHISIT B — Analysis of turned Buurplue, For the Year 1hded December 31, 1945 EM IT C — Profit and Lose Statement, For the Year Ended December 31, 1945 SCHEDULE 0-1 — Operating Costs and Expenses, For the Year Ended December 310 1945 SCHEDULE A-1 - -Fixed Assets and Depreciation, For the Year Ended December 31, 1945 I: AuSTTN 8c COMPANY CERTIFIED PUBLIC ACCOUNTANTS ROANOKE BUILDING MINNEAPOLIS ALBERT B.AUSTIN,C.P.A. 1tc. Oscar Caarden, President Country Club District Service Company Minneapolis 10, Minnesota Dear Sir: gay 21, 1946 We have made an examination of the books and records of the COUNTRY CLUB DISTRICT SERVICE COMPANY, a Minnesota corporations,MIENEHOLIS, „MINNESOTA, for the year ended December 31, 1945, and we are pleased to submit our report in the following comments and in the.Exhibits and Schedule@ as listed in the preceding Table of Contents. HISTORICAL A complete history of the company was set forth in our.report, for the year ended December 31, 1940,._ and,suboequent_`data is included in our reports for the years ended /,b ceiber' 319_1941, 1942;, 194, s and 1944. Anyone Interested in the history of the ,company psfor to the beginning of this year may refer' to these reports. There has been no change during the current year as to the status of the company in regard to the question of the ownership -of certain water mains and storm sewers, and until such time as there is a complete. clarification of the interpretation of the court's intention, the values as.stated in this report do not necessarily represent the true values of the properties of the company, and in view of the above, we have not disturbed the values as they • appear on the books of the company, FINANCIAL POSITION We are submitting as Exhibit A and supporting Schedule A-1 the financial position of the company in detail as of December 31, 1945, subject. however to the preceding comments under.the caption "Historicalu and further comments in this report. For ''your convenience we are itubmitting in summarized: form this Balance Sheet in comparison with the one for December 31, 1944, THE PUBLICATION OF ANY CONDENSATION OR MODIFICATION OF STATEMENTS HEREIN CONTAINED OR THE USE OF OUR CERTIFICATE DETACHED FROM ITS CONTEXT. OR THE USE OF OUR NAME IN CONNECTION WITH THE SALE OF SECURITIES OR OTHER PUBLICITY WILL NOT BE SANCTIONED UNLESS FIRST SUBMITTED FOR OUR APPROVAL. -2- Country Club District Service Company together with increases and decreasse as folloass TOTAL LIABILITIES & NET WORTH 62 • Due to conditions still existing as a result of the war and the fact that there has been practically no new construction during the year under review, there are no substantial,ch�q»ges in the BAlance Sheet of the company. The Surplus account, totaling $339,138.02, is classified as follows: Capital Surplus $ 117,494.77 Contributions in aid of construction 140776.53 Earned Surplus 6.866.72 TOTAL 139.138.02 For a fall explanation of the Capital Surplus, please refer to our report of December 31, 1940. Contributions in aid of construction in the amount of $141,776.53 represents money contribtted to the company for the extension of service facilities that become the property of the company and therefore are included in its plant values, The Earned Surplus totaling $60866.72 is set forth in detail in Exhibit B, which shows an increase over the previous year in the amount of $266.931, all of which has resulted from net profit for the year. OPERATIONS The Operations for the year ended December 311, 1945, are shown in DECEMBER 310 DSCMEB 310 INCREASE ASSETS 1 9 4 5 19 44 DECREM Fixed Assets 164,972.88 $168,368.07 $ 3095419 Current Assets 14,956.80 13,167.74 1,789.06 Deferred Charges 18.00 39,60 21.60 TOTAL ABETS $ 179,47 l 1$1.575 dl � 627. ICI 13I,,AITIES & NET WORTH Fixed Liabilities $ 18,103.85 $ 200228.46 $ 2,124.61 Current Liabilities 40005.81 3,875.86 129.95 Net Worth 1,57,838.02 _157,471.09 366.93 TOTAL LIABILITIES & NET WORTH 62 • Due to conditions still existing as a result of the war and the fact that there has been practically no new construction during the year under review, there are no substantial,ch�q»ges in the BAlance Sheet of the company. The Surplus account, totaling $339,138.02, is classified as follows: Capital Surplus $ 117,494.77 Contributions in aid of construction 140776.53 Earned Surplus 6.866.72 TOTAL 139.138.02 For a fall explanation of the Capital Surplus, please refer to our report of December 31, 1940. Contributions in aid of construction in the amount of $141,776.53 represents money contribtted to the company for the extension of service facilities that become the property of the company and therefore are included in its plant values, The Earned Surplus totaling $60866.72 is set forth in detail in Exhibit B, which shows an increase over the previous year in the amount of $266.931, all of which has resulted from net profit for the year. OPERATIONS The Operations for the year ended December 311, 1945, are shown in detail in Exhibit C and supporting Schedule C-1, and shows a net profit of $266.93 after providing for interest charges and depreciation. In arriving at these figures, depreciation in the amount of $4,771.58 has been included. In order that you may have a better understanding of the operations for the year, we submit a condensed comparison for the current year and for,the year ended December 31, 1944, together with increases and decreases in both amounts and percentages as follows: YEAR ENDED YEAR ENDED DECO 1 1-945 MEMBER 1 1 INCREAS§:EL�R�+SE - TO TO % TO AMOUNT SAIM MUNT . SALES MUNT -_ S��ALES SALES 19,fl 6.27 100. OO 6 19.332.33 100.00 296.06 - OPERATING COSTS AND FXPENSES a Water Purchased for Resale 335.84 1.76 4 311.52 1.61 ! 24.32 .15 Power and Pumping 59662.85 .29.75 59805.90 30.03 143.05 .28 Distribution Expense 4„964.04 2.6.07 41656.50 24.09 307.54 1.98 Accounting & Conectien 39331.66 17.50 3,342.66 17.29 11.20 •21 Administrative and General 3,623.29 _22.11 2.SlL37 14.56 1.016.92 5.59 TOTAL OPM TING COSTS AND EB&ENSFS 95.23 3 16,931.15 87.58 1.196.53 7.65 NET PROFIT BEFORE INCOME w TAXES AND INTEREST 908.59 4.77 $ 20401.18 12.42 1,492.59 7.65 INCOME TAXES - - - 6.08 .20 38.G8, X20 906.59 4.77 $ 21363. 12.22 #6 19454.51 7.45 INT_ E _ 641..66 3.37 691.67 3.55 5J.01 .'. NET PROFIT OR LOSS 266a 1.40 6 1.671.43 8. 1 fly. 2 It will be noted from the foregoing comparison that there was a decrease in revenue which is mainly brought about by an increase in operating costs and expenses over the previous year. Due to the small, amount of net profit for the year, the company was not required to pay either Federal or State income taxes. The operating profit for the year before provision for interest shows a reduction from the previous year of $1,492.59. COM MTS ON BALANCE PART FIXED ASSETSt We are showing the fixed assets in summarised form on the Balance Sheet, 0 0 r- -I ►._j r -4- Country Club District Service Company Exhibit A,, and in still further detail on Schedule A-1. Nee expenditures during the year amount to $1076.39, all being additions to the water distri- bution system. Depreciation to the extent of X4,771.55 has been taken into operating edpensses. The Fixed Assets of the company are pledged to the Sty Paul Fire and Marine insurance Company for a loan in the original mount of $20,000.00, with a present balance of $12,000.009 bearing interest at 5 %. The interest is payable on May 1 and November 1 of each year, and the principal is payable at the rate of $1,000.00 per year on November 10 up to November 1, 1951s and the balance of $60000.QO remaining at that time is Payable on November 1, 1952. Deering the past, the company has extended service into the nearly developed subdivisions, and agreements were made whereby the promoters of theft subdivisions furnished the money for the extending of the water mains without interest. The company agreed to repay ,these advances by returning to the sub- dividers one -half of the revenue received from the .usero of these mains until paid for, but in no event are repayments mEde for a period to exceed ten years. The company now has advances for construction. repayable out of revenue as of December 31, 1945, as follows t ADVANCED BY THORPE BADS., 1ACa Wooddale Section $ 3,653.96 Brucewood Addition 11491.64 Portion of East Sunnyslope 1,267.35 ADVANCED BY WHITE INVESTMENT COMPANY Hidden Valley 690.90 TOTAL A W-0245 Of these advances, the one made by Thorpe Bros. for the Wooddale Section with a present balance of $3,653.96 is repayable by diverting to Thorpe Bros, one -half of the revenue received from this section up to March 31, 1948,, and the amount remaining unpaid, if any, at that date becomes payable in full by the company to Thorpe Bros. The other advances are payable only by Country Club District Service Comgaan9 the diversion of 50% of the revenues from the subdivisione.for the first ten years, unless they are ful;,y.peid up prior.to that time, and any balance 0 remaining at the end of ten years becomes a contribution to the company in aid of construction. In addition to the above amounts referred to, the company has received contributions in aid of construction for specific extensions which certain customers Ranted. Theae contributions were outright gifts to the company in order to secure grater service, end we have taken them in as part.of the surplus. The extensions covered by these contributions become the property d' the company and are included in their fixed assets. CURRENT. _ASSETS: The Cash in Bank in the amount of ,$11,768.139 is all deposited with the Northwestern Rational Bank of Milraneapol.is, and we have reconciled this amount and verified the balance by direct correspondence. We have also made . a detailed check of all depooits and withdrawals frog+ the bank and found them 0 to be properly recorded and in order. The Accounts Receivable in the amount of $2,168.51 have been classi- fied on the Balance Sheet as to their nature We have made a detailed check of these accounts and.have reviewed the methods used to handle them and found them to be in good order. However, we did not verify the balances by direct correspondence with the debtors. The Inventories amounting to $1, 02 0.20 are classified on.the Balance Sheet. We were not present when the inventories were taken, but we have examined the records of the company with regard to these inventories, and they 0 appear to be proper. Certain of the meters were listed as secondhand, but were carried at a much reduced cost ko that the values appeared to be conservative. MED LIABTLITIES& The company negotiated a first mortgage loan on its operating properties 40 00untjZ Club. ftstri,ct Service Company as of November 1, 1937, with the St. Paul. Fire and Marine Insurance Company in the total, amount of $200000.00, bearing interest at 5%, which interest is payable on May 1 snd November 1 of each year. The principal is payable $1,000,00- dually up to November 1, 1951, and the remaining $6,000.00 becomes dice and payable on November 1, 1952. The present unpaid balance of this ti mortgage is $12,000.00, and of this amount we have shown 81,000.00 among the Current Liabilities, as it becomeb due on November 1, 19!46. The balance of Fixed Liabilities totaling (17,1(03,45 is made up of advances for construction, which is repayable out of revenues over a period of years as explained in a previous paragraph, MRRNNT LIABILITIES: The accounts payable are classified as followst Refund of Construction Advannen 8 1,121.61 Income Tax Withheld can Wages 257.75 Miscellaneous 20.70 TOTAL .w03.06 There were no trade accounts unpaid as of the end of the year. The refund of construction advances are the payments due out of revenues to sub- dividers for the period ended December 31, 1945' as explained in a previous paragraph. We have made an analysis of this account and found it to be correct. Accrued takes in the amount of $1,494.43 are all applicable to 1945, but payable in 1946. The accrued interest payable in the amount of 8100.00 is the amount of interest accrued to December 31, 1945, on the mortgage loan to the $t. Paul Fire and Marine Insurance Company. The notpe payable in the amount of $1,000100 is the current portion of,irhe mortgage loan which is due on November-1, 1946. -7.. Country, Clgb District Service ComRm NET WORTHt The particulars of Net Worth are set forth on the Balance Sheet, 40 Exhibit A, and the changes.in earned surplus are set forth in Exhibit B. Net Forth is subject to revision to give effect to the final decisions as to the ownership of certain of the.properties as discussed elsewhere in this report and in our previous reports. All of the capital stock outstanding is hold by Mr. Oscar Ga.arden. The preferred stock provides for 6% annual cumulative dividends, and these dividends are seven years in arrears, which makes a total of $42.00 per Ahare, or $5,040.00 in all. The Surplus account has been classified on the Balance Sheet, and totals $139,138.02. These * classifications are explained in a previous paragraph. We found that the cohi)any.h-eepa very accurate and complete records so that full information on all of the activities is readily available. We wish to express our appreciation of the courtesies extended and the cooperation afforded us during the course of this engagement. Respectfully submitted, Certified Public Accountants 0 Ll Ab AUSTIN & COMPANY CERTIFIED PUBLIC ACCOUNTANTS ROANOKE BUILDING MINNEAPOLIS ALBERT B.AUSTIN,C.P.A. CERTIFICATE We have made an examination of the Balance Sheet of the COUNTRY CLUB DISTRICT SERVICE COMPANY, MINNEAPOLIS# MINNESOTA, as at December 31, 1940, and of the Statement of Income and Surplus for the calendar year ended December 31, 194% In connection therewith, we have eaemined or tested accounting records of the company and other supporting evidence and obtained information and GXplsnationa firm officers of the company, but we did not make a detailed audit of the transactions. In our opinion, based upon such exammination and subject to the comments contained in this report, the aacnommp :Hying Balance Sheet and related Statement of Income and Surplus fairly present, in accordance with accepted principles of accounting consistently maintained by the COUNTRY CLUB DISTRICT SERVICE COMPANY.during the calendar year under review, its position at December 31, 1945, and for results of the operations for the year. 1ky 210, 1946 Respectfully submitted, Certified Public Accountants THE PUBLICATION OF ANY CONDENSATION OR MODIFICATION OF STATEMENTS HEREIN CONTAINED OR THE USE OF OUR CERTIFICATE DETACHED FROM ITS CONTEXT. OR THE USE OF OUR NAME IN CONNECTION WITH THE SALE OF SECURITIES OR OTHER PUBLICITY WILL NOT BE SANCTIONED UNLESS FIRST SUBMITTED FOR OUR APPROVAL. AMMS. IT10 ASSETS: Note A - Schedule A-1 Land Wells, Building, Tank, Distribution System, Tools and Equipment Less: Accumulated Depreciation (Including $29,178.19 accrued at date of appraisal) TOTAL FIXED ASSETS (NET) a Country Club District Service Company BALANCE SHEET As at December 31, 1945 $ 3,000.00 232,671.46 70.698.58 161,972.88 The above valuations were based on Independent appraisal as of January 1, 1937, plus Subsequent additions at cost. The above assets are pledged to secure a 5% First Mortgage originally $20,000.00, now $12,000:00. CURRENT ASSETS: Cash on. Hand and in Banks Accounts Receivable - Water Construction Contributions Miscellaneous Inventories - Heters Miscellaneous TOTAL CURFMT ASSETS DEFERRED CHARGES: Unexpired Insurance $ 53.84 1, 884.67 230.00 $ -11,768.09 2,168.51 $ 822.00 195.20 1,020.20 $ 164,972.88 NOTE A - In a Minnesota Supreme Court decision handed down and filed on January 2, 1943, the court held that the water mains and sewers serving the lots in the Brown and Fairway sections of the Country Club District sold prior to October 1, 1935, were the property of the village of Edina for the benefit of the lot ovmers. However, the decision is not clear, and until such times as the values are definitely determined and segregated, we are not disturbing the values as they appear on the books of the company, and the values as stated in this report do not necessarily represent the trace values of the properties of the company. However, any property installed prior to the present ownership not covered by the decision and all additions and installations made subsequently are included in the capital accounts and are the property of the company. NOTE B - Accumulated dividends on Preferred Stock to the extent of $42.00 per ' share or a total of $5,040.00 as at December 31, 1945, are unpaid. 14,956.80 18.00 Q- -hi.bit A LIABILITIES AND NET WORTH FIXED LIAB=TIES: 5% First Mortgage dated November 1, 1937, to St. Paul Fire and Marine Insurance Company due $1,000.00 annually on November 1 of each year to November 1, 1951, and $6,000.00 on November 1, 1952• Secured by all operating properties. Original rmount $20,000.00, now Less: Due within one year, shown in Current Liabilities Advances for Construction - Payable from Revenues - Due March 31, 1948 Payable only to extent of 50% of revenues during 10 years after construction TOTAL FIXED LIABILITIES CURRENT LMILITIEM Accounts Payable - Refund of Construction Advances Income Tax Withheld on Wages Miscellaneous Accounts Receivable - Credit Balances Accruals - Interest Payable Taxes - Real Estate and Personal Property Social Security Notes Payable - Current Maturity - first Mortgage Due November 4 1946 (See above) TOTAL CUE MT- LIABILITIES $ 121,000.00 11000.00 $ 113,000.00 $ 3,653.96 3=449.89 7,103.85 1,124.61 257.75 20.70 1.,481-47 12.96 NET NORTH: Capital Stock - Authorized - 6% Cumulative Preferred, $100.00 par value, Callable at Par - 300 Share8j, 30,000.00 Common No Par Value - 200 Shares d Outstanding - Preferred - 120 Shares (See Note-B) $ 120000.00 Common - 200 Shares 6,700.00 Surplus - CapAtal Surplus $ 117,494.7 Contributions in aid of Construction 14,776,5 Earned Surplus - Exhibit B 6,866.72 TOTAL NET WORTH $ 1,403.06 8.32 100,00 1,,494.43 1,000.00 $ 18,103.85 4,005.81 139,138.02 157,838.02 TOTAL ASSETS $ 172,94,m 7 TOTAL LIABILITIES AND NET WORTH 1 17'4947.68 fthibit B r Country Club District Service Company ANALYSIS OF ZMED SUWUS For the Year Ended December 31, 1949 • BALANCE PER , AUDIT REPORT,, DECEMBER 31. 191 $ 6,,599-79 pl Ab Net Profit for Year 266.93 TOTAL EAR= SMLUS, PER EMBIT A "w 6�Sb6.72 r 0 4 0 Country Club District Service Company PROFIT AND LOSS SWEIM For the Year Ended December 31, 1945 OPTING MMES Sales and Services.to Customers Miscellaneous Revenues (Net) GROSS REVENUES OPSRHIM COSTS AND EXPENSES: — Scbedulc 0-1 Water Purchased for Resale 0 335.84 Poorer and Pumping 50662.85 Distribution Expensoo 4,964.04 Accounting and Collection 30.31.66 Administrative and Genere? 3.f�33.29 TOTAL OPERATING COSTS AND MUSES NICT OPER4TING INCOME INTEREST CHARGES NET PROFIT TO MU41BIT 8 Provision for Depreciation Included Above *-- ab it 0 $ 15,993.93- $ 19,036.27 15,,127.68 $ 908.59 266. .S z • Country Club District Servieg Company OPERATING COSTS AND J EMM For the Year Ended Decembbr 31, 191+5 WATER PURCHASM FOR RESALE POWER AND PUMPINGi Power Purchased Operating Labor - ^✓' epreciation ' 4cal Taxes Supplies and Expenaes .Maintenance TOTAL POWER. AND PUMPING DISTRIBUTION EXPENSE: Depreciation V4intenance of Pains Service,on Consumer Frami.ses Operation of Distribution Lines TOTAL DTOTRIBrJTION EX ERSES ACCOUNTING AND COLLECTIONs • Meter Reading Billing and Accounting Miscellaneous TOTAL ACCOUNTING AND COLLECTION ADMINISTRATIVE AND GENERAL: Salaries and Wages Office Supplies and ftjpense Legal and Audit Insurance Miscellaneous Federal Capital Stock Tax Payroll Taxes Depreciation on Office Equipment TOTAL ADMINISTRATIVE AND GEN0AL TOTAL OPERATING COSTS AND EXPENSES Per Exhibit C $ 2,242.85 616.25 1,046.00 1,481.47 152.83 123.45 3,708.03 20.00 924.73 11,28 339.05 2,175.00 w 817.61 1S191.50 9.38 1,J75.00• 21.60 20.00 56.25 42.01 17.55 Schedule 0-1 $ 335.84 50662.85 4,964.01+ 3,331.66 3,833.29 Lg 12 .68 Schedule A-1 Country Club District Service Company FIXED ASSETS AND DEPRECIATION Year Ended December 31, 1945 NOTE A - The above assets mortgaged to the St. Paul Fire and Marine Insuramce Company to secure a loan bearing interest at 5% in an original amount of $20,000.00, now $12,000.00. NOTE B The values as shovin above are subject to amendments to give effect to the Supreme Court decision as referred to elsewhere in this report. A S S E T S _ D E P RE C I AT I ON BALAVCE 1-1-45 ADDI TIONS DEDUCTIONS BALANCE 12 -31 -45 RATE B9Jd10E 1 -1-45 CST DEDUCTIONS BALANCE 12-31m46 DEPRECISTED VALUE WATER DIVISION: Land Buildings 3,000600 2,109.40- - - - - - 35000.00 2,109.40 - ,. 4% - - 721.36 - - 84.38 $ - - - - - 805.74 $ 3,000.00 1,303.66 Well $1 Well '' 2,57€3.27 1,950.00 - - - - - - - - 2,578.27 1,950.00 1 2/3% 1 2/3% 386.74 243.75 42.97 32.50 - - - - 429.71 276.25 1,148.56 1,673.75 Elevated Tank and Piping Pumping Equipment 10,053.34 8,709.28 - - - - - - - - 10053.34 S, 709.28 4% 5% 6019.37 402.13 - -- 6,721.50 3031.84 Water Distribution System 121081.76 1076.39 - - 122,958.15 1 2/3% 31274.13 26,541.89 435.46 29034.00 - i - 3,709.59 28,575.59 4,999.69 94,332.26 Meters 49.44 - - - 49.44 4% .65 1.98 - 2.63 46.51 TOTAL WATER DIVISION 150.031049 ` 151. - 407.58 37.1.47.89 3.033.42 - #40.521.31 15 17.0.586.57 SEWES DIVISION: Sanitgry Sewer System. 51,522.79 - - - -. $ 51,522.79 2% 162925.95 19030.46 - - 17,956.47. 33,565.38 Storrs Seger System .3,, 32.079.63 - - 32.079.63 2% 11.099.67 641.59 - - 110741.26 20.335.42 TOTAL SEWER DIVISION 83,602.47 -- - - -_ $3 28,025.0 a6 2.0 - - -6. 77.67 ate- -zt� $ 53.904.E MISCELLANEOUSt Toole and Equipment Office Furniture & Equipment 485.61 175.50 - - - - - - - 485.61 175.50 10% 10% 306.74 106.75 48.56 17.55 $ 355.30 �. 130.31 _ - 124.30 51.20 TOTAL MISCELLANEOUS .,661.17: - - - - ' 661.11 l .l $ 66.11 & g2.60 8 181.51 TOTALS TOTALS, PEE MIBIT A 235,671.46 70 6.6. 9 1 972.58 NOTE A - The above assets mortgaged to the St. Paul Fire and Marine Insuramce Company to secure a loan bearing interest at 5% in an original amount of $20,000.00, now $12,000.00. NOTE B The values as shovin above are subject to amendments to give effect to the Supreme Court decision as referred to elsewhere in this report.