DCPA FY20 Audit

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Financial Statements and Supplementary Information July 31, 2020 and 2019

TABLE OF CONTENTS

Page No. Independent Auditor's Report

1-2

Consolidated Statements of Financial Position

3

Consolidated Statements of Activities

4-5

Consolidated Statements of Functional Expenses

6-7

Consolidated Statements of Cash Flows

8

Notes to Consolidated Financial Statements

9 - 27

Supplementary Information Consolidating Statement of Financial Position

29

Consolidating Statement of Activities

30

INDEPENDENT AUDITOR'S REPORT To the Board of Directors of Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Dallas, Texas We have audited the accompanying consolidated financial statements of Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary (the ''Foundation''), which comprise the consolidated statements of financial position as of July 31, 2020 and 2019, and the related consolidated statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated 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 consolidated financial statements based on our audits.

We conducted our audits 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 consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

1

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary as of July 31, 2020 and 2019, and the changes in their net assets and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter As discussed in Note 14 to the consolidated financial statements, on March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic an recommended containment and mitigation measures worldwide. The ultimate financial impact and duration of these events cannot be reasonably estimated at this time. Our opinion was not modified with respect to this matter.

Other Matter Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The information on pages 29 - 30 is presented for purposes of additional analysis and is not a required part of the consolidated 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 consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated 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 consolidated financial statements as a whole.

ArmaninoLLP Dallas, Texas December 22, 2020

2

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Statements of Financial Position July 31, 2020 and 2019 2020

2019

ASSETS Cash and cash equivalents Contributions and grants receivable, net Other receivables, net Prepaid expenses and other assets Investments held for endowment, at fair value Property and equipment, net Right of use asset, net Total assets

$

8,143,911 3,589,404 685,092 551,054 14,084,775 1,182,826 191,986,560

$

6,324,459 5,801,123 1,032,884 857,209 13,749,529 1,310,537 198,494,579

$ 220,223,622

$ 227,570,320

$

$

LIABILITIES AND NET ASSETS Liabilities Accounts payable and accrued liabilities Deferred revenue Agency funds Deferred sponsorship agreements Bank redemption note Bonds payable, net Total liabilities Net assets Without donor restrictions Operating Capital Total without donor restrictions With donor restrictions Total net assets Total liabilities and net assets

2,986,902 2,660,520 870,974 10,622,230 32,800,000 26,265,742 76,206,368

1,347,778 3,299,048 414,176 10,345,486 27,600,000 36,594,784 79,601,272

(12,882,160) (51,816,653) (64,698,813) 208,716,067 144,017,254

(14,311,372) (53,172,001) (67,483,373) 215,452,421 147,969,048

$ 220,223,622

$ 227,570,320

The accompanying notes are an integral part of these consolidated financial statements.

3

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Statement of Activities For the Year Ended July 31, 2020 Without Donor Restrictions Revenue, gains and other support Programming Education and community Facility City of Dallas Service Sponsorships Contributions and grants Contributions released from restriction Investment income, net Investment income released from restriction Total revenue, gains and other support

$

With Donor Restrictions

Operating

Capital

Total

Total

4,298,503 $ 11,241 1,226,993 2,657,580 3,539,190 3,549,825 4,421,920 220,000 6,525

- $ 1,500,000 7,749,318 2,343

4,298,503 $ - $ 11,241 1,226,993 4,157,580 3,539,190 3,549,825 4,421,920 908,737 7,969,318 (7,969,318) 8,868 844,104

4,298,503 11,241 1,226,993 4,157,580 3,539,190 3,549,825 5,330,657 852,972

519,877

-

519,877

(519,877)

-

20,451,654

9,251,661

29,703,315

(6,736,354)

22,966,961

Functional expenses Program services Programming Education & community engagement Facility Service Total program services Management & general Fundraising Total functional expenses

6,187,652 463,636 3,970,246 2,931,623 13,553,157 4,164,659 1,304,626 19,022,442

1,989 7,749,476 40,708 7,792,173 88,618 15,522 7,896,313

6,189,641 463,636 11,719,722 2,972,331 21,345,330 4,253,277 1,320,148 26,918,755

-

6,189,641 463,636 11,719,722 2,972,331 21,345,330 4,253,277 1,320,148 26,918,755

Change in net assets

1,429,212

1,355,348

2,784,560

(6,736,354)

(3,951,794)

(14,311,372)

(53,172,001)

(67,483,373)

215,452,421

147,969,048

$ (12,882,160) $ (51,816,653) $ (64,698,813) $208,716,067

$144,017,254

Net assets (deficit), beginning of year Net assets (deficit), end of year

The accompanying notes are an integral part of these consolidated financial statements.

4

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Statement of Activities For the Year Ended July 31, 2019 Without Donor Restrictions Operating Revenues, gains and other support Programming Education and community Facility City of Dallas Service Sponsorships Contributions and grants Contributions released from restriction Investment income, net Investment income released from restriction Total revenues, gains and other support Functional expenses Program services Programming Education & community engagement Facility Service Total program services Management & general Fundraising Total functional expenses Change in net assets Net assets (deficit), beginning of year Net assets (deficit), end of year

$

6,536,423 33,500 1,799,542 2,500,000 5,870,916 3,274,690 2,160,154 446,000 21,140

$

Capital

Total

- $ 1,500,000 2,606,712 8,900,916 4,845

6,536,423 33,500 1,799,542 4,000,000 5,870,916 3,274,690 4,766,866 9,346,916 25,985

$

With Donor Restrictions

Total

- $ 606,047 (9,346,916) 390,346

6,536,423 33,500 1,799,542 4,000,000 5,870,916 3,274,690 5,372,913 416,331

338,103

-

338,103

(338,103)

-

22,980,468

13,012,473

35,992,941

(8,688,626)

27,304,315

8,414,056 504,419 3,922,067 3,946,353 16,786,895 3,969,045 1,325,416 22,081,356

401,497 8,343,694 24,681 8,769,872 46,305 135,111 8,951,288

8,815,553 504,419 12,265,761 3,971,034 25,556,767 4,015,350 1,460,527 31,032,644

-

8,815,553 504,419 12,265,761 3,971,034 25,556,767 4,015,350 1,460,527 31,032,644

899,112

4,061,185

4,960,297

(8,688,626)

(3,728,329)

(15,210,484)

(57,233,186)

(72,443,670)

224,141,047

151,697,377

$ (14,311,372) $ (53,172,001) $ (67,483,373) $215,452,421

$147,969,048

The accompanying notes are an integral part of these consolidated financial statements.

5

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Statement of Functional Expenses For the Year Ended July 31, 2020

Programming Payroll, benefits and staffing Professional and contracted services Facility and equipment maintenance Occupancy and leasing costs Marketing, social media and sales Travel and administrative Performance costs In-kind Depreciation and amortization Interest and financing costs Amortization of right of use asset Grants to supported organizations

Program Services Education & community engagement Facility

$

389,244 $ 127,688 157,996 767,172 323,275 3,956,664 64,139 48,463 355,000

222,472 $ 104,124 8,231 94,408 19,072 14,186 1,143 -

$

6,189,641

463,636

$

Support Services Service

1,992,024 $ 825 1,105,481 2,515 1,923 58,117 369,040 3,832 324,407 1,353,539 6,508,019 -

$ 11,719,722

$

Management & general

841,585 $ 608,518 990,740 80,975 23,038 306,211 81,065 40,199 2,972,331

$

Fundraising

2,710,606 $ 330,453 44,188 305,532 144,134 627,080 2,815 88,469 4,253,277

The accompanying notes are an integral part of these consolidated financial statements.

6

$

Total

520,598 $ 274,087 2,924 318,476 68,196 73,654 62,213 1,320,148

6,676,529 1,445,695 2,309,560 389,022 1,349,151 1,401,951 4,494,609 134,142 501,538 1,353,539 6,508,019 355,000

$ 26,918,755

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Statement of Functional Expenses For the Year Ended July 31, 2019

Programming Payroll, benefits and staffing Professional and contracted services Facility and equipment maintenance Occupancy and leasing costs Marketing, social media and sales Travel and administrative Performance costs In-kind Depreciation and amortization Interest and financing costs Amortization of right of use asset Grants to supported organizations

Program Services Education & community engagement Facility

$

565,246 $ 97,702 50,693 1,306,893 440,924 5,757,636 19,962 401,497 175,000

189,398 $ 78,234 23,402 124,835 11,194 61,587 15,769 -

$

8,815,553

504,419

$

Support Services Service

1,952,978 $ 12,187 1,474,287 3,361 4,030 59,922 410,524 4,778 235,119 1,600,556 6,508,019 -

$ 12,265,761

$

Management & general

Fundraising

962,735 $ 1,016,658 1,088,709 68,140 49,519 346,469 414,123 24,681 -

2,371,690 $ 452,945 42,230 280,103 72,917 731,499 63,966 -

3,971,034

4,015,350

$

The accompanying notes are an integral part of these consolidated financial statements.

7

$

Total

703,629 $ 235,295 1,352 430,974 45,167 44,110 1,460,527

6,745,676 1,893,021 2,680,673 351,604 1,989,168 1,635,175 6,643,870 84,619 725,263 1,600,556 6,508,019 175,000

$ 31,032,644

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidated Statements of Cash Flows For the Years Ended July 31, 2020 and 2019 2020

2019

(3,951,794) $

(3,728,329)

501,538 70,958 6,508,019 (607,350) (705,000)

725,263 120,227 6,508,019 (171,899) (3,012,962)

1,779,443 347,461 306,155 1,639,124 (638,528) 456,798 276,744 5,983,568

100,000 50,772 (298,577) (1,031,750) 179,625 (613,991) 1,260,744 87,142

Cash flows from investing activities Purchases of investments Proceeds from sale of investments Purchases of property and equipment Net cash used in investing activities

(3,889,860) 4,162,295 (373,827) (101,392)

(5,057,120) 5,195,579 (332,377) (193,918)

Cash flows from financing activities Payments on bonds issued Issuance of redemption note Cash received for capital contributions Net cash used in financing activities

(10,400,000) 5,200,000 1,137,276 (4,062,724)

(17,200,000) 8,600,000 5,703,972 (2,896,028)

Net increase (decrease) in cash and cash equivalents

1,819,452

(3,002,804)

Cash and cash equivalents, beginning of year

6,324,459

9,327,263

Cash flows from operating activities Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization Amortization of debt issuance costs Amortization of right of use asset Net realized and unrealized gain from investments Capital contributions Changes in operating assets and liabilities Contributions and grants receivable, net Other receivables, net Prepaid expenses and other assets Accounts payable and accrued liabilities Deferred revenue Agency funds Deferred sponsorship agreements Net cash provided by operating activities

Cash and cash equivalents, end of year

$

$

8,143,911

$

6,324,459

345,684

$

747,250

Supplemental disclosure of cash flow information Cash paid during the year for interest

$

The accompanying notes are an integral part of these consolidated financial statements.

8

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 1.

NATURE OF OPERATIONS Dallas Center for the Performing Arts Foundation, Inc. (the "Foundation") is an independent notfor-profit foundation established to construct and to operate a performing arts center (AT&T Performing Arts Center or the "Center") in the Dallas Arts District. The Center consists of the Margot and Bill Winspear Opera House, a 2,200 seat opera house; the Dee and Charles Wyly Theatre, a 575 seat theatre; Annette Strauss Artist Square, an outdoor amphitheater that holds 2,500 people; the Elaine D. and Charles A. Sammons Park, a 10 acre urban park; and two underground parking areas, Lexus Red Parking and Lexus Silver Parking that hold in excess of 850 cars. In 2013, the Information Center located adjacent to the Winspear Opera House was completed and opened to the public, marking the completion of Center construction. The venues are operated under the name of the AT&T Performing Arts Center.

The Foundation provides programs that support its mission to provide a public gathering place that strengthens community, presents performing arts, and supports its resident companies in their missions to create art.

Dallas Center for the Performing Arts Endowment, Inc. (the "Endowment") is an independent not-for-profit charitable trust established to support and benefit the Dallas Center for the Performing Arts Foundation and small arts organizations that perform or display arts in the City of Dallas. The Endowment was founded in 2017 with a gift from the Moody Foundation, which created the Moody Fund for the Arts within the Endowment. The fund's purpose is to provide flexible grants designed to supply a source of funding to emerging artists and innovative arts organizations in Dallas.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of accounting and financial statement presentation The accompanying consolidated financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America (GAAP). These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The consolidated financial statements include the assets, liabilities, net assets and changes in net assets, and cash flows of the Foundation and the Endowment. The Endowment was organized in 2017 under the laws of the state of Texas as a supporting organization of the Foundation. The Endowment is included with the Foundation in the accompanying consolidated financial statements because the Foundation has an economic interest in the organization and controls the affiliated organization's Board of Directors. All significant inter-organization transactions have been eliminated. The Foundation and the Endowment are collectively referred to as the "Foundation" throughout these consolidated financial statements.

9

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Basis of accounting and financial statement presentation (continued) Net assets and changes therein are classified and reported as follows:  Net assets without donor restrictions - Net assets available for use in general operations and not subject to donor-imposed restrictions. The Foundation's governing board may designate net assets without restrictions for specific purposes.  Net assets with donor restrictions - Net assets subject to stipulations imposed by donors and grantors. Some donor restrictions are temporary in nature, such as those that will be met by the passage of time or other events specified by the donor. Other donor-imposed restrictions can be perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity.

Net assets with donor restrictions can also include the portion of donor-restricted endowment funds that are not required to be maintained in perpetuity, until such funds are appropriated for expenditure by the Foundation. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed or when the stipulated purpose for which the resource was restricted has been fulfilled.

Revenues are reported as increases in net assets without donor restrictions unless use of related assets are limited by donor-imposed restrictions. Expenses are reported as decreases in net assets without restrictions. Expirations of donor-imposed restrictions are reported as net assets released from restrictions. Contributions with restrictions received and expended in the same fiscal year are recorded as net assets without restrictions.

Cash and cash equivalents At July 31, 2020 and 2019 , cash and cash equivalents consists of cash on hand and all highly liquid investments with an initial maturity of three months or less from the date of purchase. Cash and cash equivalents are reported at cost which approximates fair value.

Investments and investment income The Foundation records investments in marketable securities at fair value. Fluctuations are recorded in the period in which they occur by adjusting the carrying value of such investments and recognizing a net unrealized gain or loss. Realized gains and losses are recognized in the period in which they are earned or incurred. Interest income is recorded as earned. Gain or loss on investments is reported in net assets without donor restrictions unless its use is restricted by explicit donor stipulation or by the law.

10

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Fair value measurements The Foundation currently records investments in marketable securities at fair value. The Foundation applies the U.S. GAAP authoritative guidance for fair value measurements and disclosures, which defines fair value, establishes a framework for measuring fair value, and requires certain disclosures about fair value measurements. U.S. GAAP describes three levels of inputs that may be used to measure fair value.

Level 1 - Quoted market prices in active markets for identical assets or liabilities. An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information.

Level 2 - Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities and reflect management's assumptions and best estimates based on available data.

The determination of where an asset or liability falls in the hierarchy requires significant judgment. All investments for the years ended July 31, 2020 and 2019 are held at level one per the fair value hierarchy.

Endowment The Foundation's endowment consist of numerous accounts established for a variety of purposes including donor-restricted endowment funds. The net assets of endowment funds are classified and reported based on the existence or absence of donor restrictions.

Interpretation of relevant law: The Board of Trustees of the Foundation has interpreted the Texas enacted version of the Uniform Prudent Management of Institutional Funds Act (Texas UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as net assets with donor restrictions (a) the original value of gifts donated to the endowment in perpetuity, (b) the original value of subsequent gifts to the endowment in perpetuity, and (c) accumulations to the endowment explicitly requested to be held in perpetuity in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund is classified within net assets with donor restrictions until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed

by Texas UPMIFA.

11

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Endowment (continued) In accordance with Texas UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: 1. The duration and preservation of the fund; 2. The purposes of the Foundation 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 the appreciation of investments; 6. Other resources of the Foundation; and 7. The investment policies of the Foundation.

Return objectives and risk parameters: The Foundation has adopted investment and spending policies that attempt to provide a predictable stream of funding to programs supported by the endowment while seeking to maintain the real purchasing power of the endowment. Endowment assets are invested to yield a level of return to meet the objectives of the fund while adhering to a prudent level of risk.

Funds with deficiencies: From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor requires the Foundation to retain as a fund of perpetual donation. Deficiencies of this nature are reported in net assets with donor restrictions.

These deficiencies typically result from unfavorable market fluctuations that occur shortly after the investment of new contributions restricted in perpetuity and continued appropriation for certain programs deemed prudent by the Board. Subsequent gains that restore the fair value of assets of the endowment fund to the required level are classified as an increase in net assets with donor restrictions. No deficiencies of this nature exist in donor-restricted endowment funds as of July 31, 2020 and 2019.

12

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Endowment (continued) Spending policy and how investment objectives relate to spending policy: The Foundation has a policy for appropriating for distribution each year, if requested, up to 4.5% of its endowment fund's trailing twelve-quarter average of the endowment's total asset value, with the expectation that, over time, the total real return (return net of inflation) from investments will exceed the endowment's pay-out rate, thus allowing real growth of the endowment assets. The Moody endowment fund has a separate spending policy to appropriate for distribution each year 4% of a rolling twelve-quarter average of the fair market value of the endowment. In establishing this policy, the Foundation considered the long-term expected return on its investments' assets, the nature and duration of the individual endowment funds, which must be maintained in perpetuity because of donor restrictions, and the possible effects of inflation. This is consistent with the Foundation's objective to maintain the purchasing power of the endowment assets as well as to provide additional real growth through new gifts and investment return.

Strategies employed for achieving objectives: The Foundation's investment objective is to earn inflation-offsetting returns that preserve the real value of the assets and, where possible, earn enhanced returns to achieve the spending objectives of the operations supported by the endowments. The endowment assets are invested in a diversified investment portfolio designed to achieve a balance of income and growth objectives within prudent risk constraints.

Other receivables, net Other receivables consist of amounts owed from customers and are included on the accompanying consolidated statements of financial position at the original invoice amount less an allowance made for doubtful accounts. Management determines the amount of the allowance for doubtful accounts based upon a review of outstanding receivables, historical collection information, existing economic conditions, and by identifying troubled accounts. Based on the information available, the Foundation believes the allowance for doubtful accounts of approximately $7,000 at July 31, 2020 and 2019 is adequate. Historically, the Foundation has not experienced significant losses on other receivables.

Property and equipment Expenditures for property and equipment are stated at cost or, if donated, at their estimated fair value at the date of donation. Such donations are recorded as net assets without donor restrictions unless the donor has restricted the donated asset to a specific purpose. Absent donor stipulations regarding how long those donated assets must be maintained, the Foundation reports expirations of donor restrictions when donated or acquired assets are placed in service.

13

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Property and equipment (continued) The Foundation capitalizes property and equipment with a cost greater than $5,000 and a useful life of greater than one year. Assets under capital lease obligations and leasehold improvements are amortized over the shorter of the lease term or their respective estimated useful lives.

Depreciation and amortization of property and equipment is computed using the straight-line method over the following estimated useful lives: Furniture, equipment, and software Leasehold improvements

3-15 years 5-40 years

The Foundation reviews the carrying value of long-lived assets to determine if facts and circumstances suggest that they may be impaired or that the depreciation or amortization period may need to be changed. The Foundation does not believe there are any indicators that would require an adjustment of the carrying value of its long-lived assets or their remaining useful lives at July 31, 2020 or 2019.

Facility lease On December 15, 2005, the Foundation entered into agreements with The City of Dallas (the City) for the use of certain parcels of land and together with any permanent buildings and other improvements thereafter erected on the land, collectively referred to as the Premises.

The initial term of the lease is 40 years, commencing on the date of the certificate of occupancy for the Premises and expiring on the last day of the month in which the 40 year anniversary occurs. The City granted the Foundation the right and option to renew and extend the term for 5 consecutive renewal terms of 10 years each. The annual base rent for the initial term is $1,000 and the same rent will be due for each renewal term.

The Foundation received this promise to use, manage and operate the Premises during the term beginning January 29, 2010 and the City retains legal title to the land, building and improvements. The fair value of the Premises is approximately $260,321,000 and is being amortized (approximately $6,508,000 in 2020 and 2019) over the remaining expected term of the lease of 40 years. The amortization is included in net assets released from restrictions and as part of facility expenses. The fair value of the Premises, net of accumulated amortization, is classified as right of use asset and net assets with donor restrictions in the accompanying consolidated statements of financial position.

14

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Agency funds The Foundation is the recipient of certain contributions or ticket sales receipts for which it is not the beneficiary. Accordingly, the proceeds collected from these activities are included in the accompanying consolidated statements of financial position included in cash and cash equivalents with a corresponding liability.

Bond issuance costs In accordance with the accrual basis of accounting, bond issuance costs that are attributable to loans with an expected maturity of one year or less are expensed immediately. Bond issuance costs associated with loans having terms in excess of one year are capitalized and amortized to interest expense using the straight-line method over the term of the loan. Unamortized bond issuance costs are a direct deduction from bonds payable on the accompanying consolidated statements of financial position.

Contributions and contributions receivables The Foundation recognizes contributions when they are received or unconditionally pledged and records these amounts as net assets without donor restrictions or net assets with donor restrictions according to donor stipulations that limit the use of these assets due to time or purpose restrictions. Contributions expected to be collected within one year are reported at their net realizable value. Contributions that are promised in one year but are not expected to be collected until after the end of the year are discounted to present value of estimated future cash flows using a discounted rate commensurate with the risks involved. Amortization of any such discounts is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. The Foundation records an allowance for doubtful accounts which is estimated based on management's analysis of the specific contributions receivable, in addition to a reserve based on historical collection experience, type of contribution, and nature of the fundraising activity.

Conditional promises to give are not included as revenue or contributions receivable until such time as the barriers and right of release/return have been overcome. The Foundation received various conditional promises to give which depend on the occurrence of future events that will bind the donor to pay on a particular date. Due to the uncertainty of the occurrence of the events, the contributions will not be recorded until the conditions are substantially met. The Foundation had approximately $4,200,000 and $4,400,000 at July 31, 2020 and 2019, of conditional promises to give upon settlement of the donor's estate or upon certain funding commitments related to the capital campaign. In addition, the cumulative matching bond redemption note is considered a conditional contribution as of July 31, 2020 and 2019. The barriers to overcome and the right of release of the liability are expected to be substantially met at bond maturity in 2025 for an amount up to $45,000,000 as discussed in Note 8.

15

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Contributions and contributions receivables (continued) In April 2020, the Foundation received a Paycheck Protection Program ("PPP") loan of $1,208,500 granted by the Small Business Administration under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The Foundation has elected to record this under ASU 2018-08, Clarifying the Scope and Accounting Guide for Contributions Received and Contributions Made, for which the PPP loan is considered a conditional contribution, with a right of return in the form of an obligation to be repaid if a barrier to entitlement is not met. The barrier is that PPP loan funds must be used to maintain compensation costs and employee headcount, and other qualifying expenses (mortgage interest, rent and utilities) incurred following the receipt of the funds. The Foundation recognized the amount received as contribution revenue as qualified expenses occurred and barriers to entitlement were met. Under the terms of the CARES Act, PPP loan recipients can apply for and be granted forgiveness for all or a portion of the loans granted under PPP. Application for forgiveness of the loan will be made, with inclusion of compliance substantiation and certification therein. However, at the time of issuance of the consolidated financial statements, notice of forgiveness had not been received from the lender. Management believes based on documentation supporting program compliance, all indications are that the loan will be forgiven. However, if a portion of the loan must be repaid, the terms (1% per annum, repayable over a maximum of five years with a six-month deferral period) are such that the Foundation has sufficient liquidity to repay the unforgiven portion.

Revenue recognition, deferred revenue and deferred sponsorship agreements The Foundation generates revenue and support from multiple sources. Programming generates revenue from the sale of tickets to scheduled shows and special events held at the Center and other venues. Education and community programs revenue primarily consists of ticket sales, commissions and parking fees. The Foundation receives revenue per an agreement with the City of Dallas for operating and maintenance expenses and additionally receives revenues for the Foundation offering and implementing programs as outlined by the City of Dallas. Facility revenue includes resident company office occupancy rental payments and rental income and other event fees collected from performances held at the Center. The Foundation also generates revenue from specific services including box office, parking, food and beverage, event rentals, and database administration.

Cash received related to performances or special events that have not occurred as of the end of the fiscal year are deferred. Such deferred revenue is subsequently recognized upon occurrence of the related performances or special events. Deferred revenue associated with specific shows or series of shows, including ticket sales, facility fees, and handling fees are recognized on an event basis in the month in which the show closes.

16

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Revenue recognition, deferred revenue and deferred sponsorship agreements (continued) Sponsorship revenue not associated with a specific presentation or event is recognized according to the schedule in each sponsorship agreement and is generally time specific. Sponsorships related to a single show or event are recognized during the month of closure of the specific presentation or event. Series sponsorships are amortized on a pro-rata basis across the series.

Sponsorship payments received before earned are recorded as a deferred sponsorship agreement liability until earned.

Sponsorship arrangements The Foundation has entered into several multi-year sponsorship agreements. In fiscal years 2020 and 2019, approximately $3,549,825 and $3,274,690, respectively, was recognized as revenue under the various agreements. The sponsorship agreements require certain annual performance standards including signage, program recognition, tickets and parking. The agreements also include termination provisions and, in one agreement, a refund obligation for funds already received in the amount of $10,447,230 and $10,142,153 at July 31, 2020 and 2019, respectively, if the agreement is terminated, which is included in deferred sponsorship agreements on the accompanying consolidated statements of financial position.

Donated goods and services Donated goods are recorded at their estimated fair value when received. Contributions of services are recognized if the services received create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing these skills and would typically need to be purchased if not provided by donation. Donated goods and services in fiscal years 2020 and 2019 relate primarily to the Foundation's holiday celebration and to year round artist/programming support and consist of décor, meals, travel expenses and advertising. During the years ended July 31, 2020 and 2019, the Foundation received donated goods and services with a recorded fair value of approximately $134,142 and $84,620, respectively. Such donated services are included within contribution revenue and in-kind expense in the accompanying consolidated statements of activities and statements of functional expenses.

Functional allocation of expenses The costs, including depreciation and amortization expense, of providing the various programs and supporting services have been summarized on a functional basis in the accompanying consolidated statements of activities. The consolidated statements of functional expenses presents the natural classification detail of expenses by function. Accordingly, certain costs have been allocated among the programs and supporting services benefited. Salaries and related payroll expenses are recorded based on actual segregation of personnel by program or supporting services benefited.

17

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Advertising costs The Foundation uses advertising to promote its programs. The production costs of advertising are expensed as incurred and include direct media, promotional items, and advertising contracts for public relations development. For the years ended July 31, 2020 and 2019, advertising costs were approximately $918,000 and $1,345,000, respectively. These expenses are included in marketing and sales expenses in the accompanying consolidated statements of functional expenses.

Income taxes The Foundation has been recognized by the Internal Revenue Service as a nonprofit corporation exempt from federal income tax on its income, under Section 501(c)(3) of the Internal Revenue Code. The Foundation does not believe there are any material uncertain tax positions and accordingly, it will not recognize any liability for unrecognized tax benefits. For the years ended July 31, 2020 and 2019, there were no interest or penalties recorded or included in the consolidated financial statements. The Foundation is relying on its tax-exempt status and its adherence to all applicable laws and regulations to preserve that status. However, the conclusions regarding accounting for uncertainty in income taxes will be subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analysis of tax laws, regulations, and interpretations thereof.

New accounting pronouncements and adoption In June 2018, the FASB issued ASU 2018-08, Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made, with the stated purpose of providing guidance in evaluating whether the transactions should be accounted for as contributions or exchanges. In addition, the update introduces the concept of barriers in providing additional guidance on identifying conditions that would preclude the recognition of a contribution as revenue. ASU 2018-08 is effective for annual reporting periods beginning after December 15, 2018. The Organization has adopted the standards as of August 1, 2019; the adoption had no impact on the consolidated financial statements.

Subsequent events The Foundation has evaluated its consolidated financial statements for subsequent events through December 22, 2020, the date the financial statements were available to be issued.

18

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 3.

GOING CONCERN The consolidated financial statements have been prepared on the going concern basis, which assumes that the Foundation will continue in operation. However, in the prior year, management identified the following conditions and events that created an uncertainty about the ability of the Foundation to continue as a going concern. The COVID-19 pandemic developed rapidly in 2020.

On March 13, 2020, Texas State Governor Abbott declared Texas a state of disaster due to COVID-19 and issued executive orders to mitigate the spread of COVID-19 in Texas. These orders advised that person-to-person contact heightens the risk of COVID-19 transmissions and ordered every person in Texas to avoid social gatherings in groups of more than 10 people. While many businesses in Dallas have reopened, capacity limits and social distancing requirements have kept many arts and cultural organizations from resuming live, in-person experiences. The resulting impact of COVID-19 on the performing arts industry, and the measures taken by various governments to contain the virus, have negatively affected the Foundation’s results for the reporting period. The currently known impacts include cancelled and postponed performances; a decrease in donor giving due to financial strain on the contributor base; and social distancing requirements that have limited the Foundation’s capacity to 35% of full capacity. The Foundation is continuing to monitor and assess the effects of the COVID-19 pandemic on the Foundation's operations. As of December 22, 2020, the Foundation cannot reasonably estimate when they will be able to reopen at full capacity.

The following describes management's plans to alleviate substantial doubt about the Organization's ability to continue as a going concern through December 22, 2021 (one year after the date that the financial statements are available to be issued). Management reached an agreement with its lenders to allow Foundation donors to convert upcoming capital pledge payments into operating cash as deemed necessary for continuing operational support.

Management also valuated and reduced operating expenses including payroll costs and other discretionary spending. To further mitigate the impact the pandemic has had on earned revenue, the Foundation has urged patrons to donate the value of their tickets for cancelled or postponed shows in lieu of a refund. The Foundation has also launched a COVID-19 specific fundraising campaign for funds earmarked toward operations. Additionally, the Foundation has obtained a Payroll Payment Protection Loan under the CARES Act, see Note 2, to fund payroll, rent and utility expenses for the designated 24-week period and the loan is expected to be fully forgiven.

The Foundation's ability to meet its obligations as they become due is dependent upon the success of management's plans, as described above.

19

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 4.

LIQUIDITY AND FUNDS AVAILABLE Financial assets available for general expenditure, that is without donor or other restrictions limiting their use, within one year of the balance sheet date, are comprised of the following: Financial assets: Cash and cash equivalents Contributions and grants receivable, net Other receivables, net Investments held for endowment, at fair value

$

Less amounts unavailable for general expenditure within one year: Original donor-restricted endowment gift amount and amounts required to be maintained in perpetuity by donor Unexpended endowment earnings on donor-restricted endowment Contributions and grants receivable, net due in greater than one year Net assets with donor restrictions

(12,600,000) (1,476,537) (2,492,546) (2,527,970) (19,097,053) $

5.

8,143,911 3,589,404 685,092 14,084,775 26,503,182

7,406,129

CONTRIBUTIONS RECEIVABLE Contributions receivable, net consisted of the following: 2020 Less than one year One to five years More than five years

$

Less: Discount for net present value Less: allowance for uncollectible receivables

1,096,858 1,183,384 1,500,000 3,780,242

2019 $

(61,088) (129,750) (190,838) $

3,589,404

2,928,497 1,086,000 2,048,323 6,062,820 (139,825) (121,872) (261,697)

$

5,801,123

Unconditional promises to give are primarily from individuals and corporations located in or near Dallas, Texas, and are reflected at present value of estimated future cash flows using discount rates ranging from 0.09% to 2.82% and 0.76% to 3.99%, as of July 31, 2020 and 2019, respectively.

20

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 6.

INVESTMENTS, AT FAIR VALUE Level one investments consists of the following 2020 Bond mutual funds US fixed income

$

Equity mutual funds US large cap equity US mid cap equity US small cap equity EAFE equity Japanese large cap equity Asia ex-Japan equity Emerging market equity Global equity Cash and cash equivalents held for investments $ 7.

4,073,484

2019 $

4,059,652

5,627,853 571,414 102,987 1,501,316 232,866 534,132 980,383 318,529 9,869,480

4,694,230 1,331,108 109,281 1,878,527 130,440 332,853 795,745 125,372 9,397,556

141,811

292,321

14,084,775

$

13,749,529

PROPERTY AND EQUIPMENT Property and equipment, net consisted of the following: 2020 Furniture, equipment and software Leasehold improvements Work in progress

$

Less: accumulated depreciation and amortization $ 8.

2019

11,123,603 $ 10,903,588 419,855 419,855 6,843 160,655 11,704,113 11,330,286 (10,019,749) (10,521,287) 1,182,826

$

1,310,537

BONDS PAYABLE In 2008 the Foundation issued $151,020,000 of variable rate, tax exempt demand bonds (the "2008 Bonds") payable to the Dallas Performing Arts Cultural Facilities Corporation. The proceeds were used to refund existing bonds payable and associated issuance costs. The 2008 Bonds mature on September 1, 2041, and bear interest at a weekly interest rate as determined by the remarketing agents. The interest rates on the outstanding bonds averaged 0.14% to 3.06% for Series 2008-A and 2008-B, respectively, at July 31, 2020 and 1.18% to 1.95% for Series 2008-A and 2008-B, respectively, at July 31, 2019.

21

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 8.

BONDS PAYABLE (continued) The 2008 bonds are backed by letters of credit issued by financial institutions which expire on December 31, 2021. The Foundation and the Banks responsible for the letters of credit associated with the 2008 bonds reached an agreement on May 14, 2018 to restructure the terms of the outstanding debt. The expiration date is automatically extended through December 31, 2025 if the Foundation meets a set of minimum redemption requirements through December 31, 2021.

The Foundation is required to make minimum redemptions of bonds outstanding each year ending December 31. Beginning in 2018, the Foundation may draw upon a separate letter of credit issued by financial institutions enabling matching redemptions starting with those amounts redeemed by the Foundation after December 1, 2017, up to a cumulative amount of $45,000,000.

The balance of the letter of credit is reflected as a long-term liability which accrues interest at a rate of 2.85% per annum. In the event that the Foundation produces excess cash from operations or capital activities for the five-year period following the final bond redemption, this cash will be used to repay the accrued principal and interest on the note. At the end of the five-year period, any outstanding principal and interest remaining will be forgiven by the banks. The outstanding balance of the bank redemption note at July 31, 2020 and 2019 is $32,800,000 and $27,600,000, respectively.

The Foundation's minimum redemption requirements and the financial institution's commitments to matching redemptions are detailed below:

Year ending July 31, 2021 2022 2023 2024 2025 Thereafter

Bank Commitment

Foundation

Total

$

2,400,000 2,200,000 1,800,000 1,600,000 3,200,000 3,020,000

$

2,400,000 2,200,000 1,800,000 1,600,000 1,600,000 2,600,000

$

4,800,000 4,400,000 3,600,000 3,200,000 4,800,000 5,620,000

$

14,220,000

$

12,200,000

$

26,420,000

At July 31, 2020, the redemptions have occurred for $124,600,000 of the Bonds, $62,300,000 each of the series 2008-A and 2008-B. The total remaining outstanding Bonds at July 31, 2020 is $26,420,000, net of unamortized debt issuance costs of $154,258.

At July 31, 2019, the redemptions had occurred for $114,200,000 of the Bonds, $57,100,000 each of the series 2008-A and 2008-B. The total remaining outstanding Bonds and July 31, 2019 was $36,820,000, net of unamortized debt issuance costs of $225,216.

22

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 9.

COMMITMENTS AND CONTINGENCIES The Foundation leases its office facilities under operating lease agreements expiring in various years through 2025. These leases are subject to building operating cost adjustments. In addition, the Foundation leases various equipment under operating leases expiring at various dates in the next five years.

Future maturities of capital lease obligations are as follows: Year ending July 31, 2021 2022 2023 2024 2025

$

365,485 375,246 385,008 390,609 400,370

$

1,916,718

Total office rental expenses of $389,022 and $351,604 for the years ended July 31, 2020 and 2019, respectively, are presented within the accompanying consolidated statements of functional expenses within occupancy and leasing costs.

From time to time, the Foundation is subject to certain claims and contingent liabilities that arise in the normal course of business. After consultation with legal counsel, management is of the opinion that liabilities, if any, arising from such litigation and examinations would not have a material effect on the Foundation's financial position.

10.

ENDOWMENT Endowment composition Endowment net asset composition by type of fund is as follows: 2020 Donor-restricted endowment funds: Original donor-restricted gift amount and amounts required to be maintained in perpetuity by donor Unexpended endowment earnings

23

2019

$

12,600,000 1,476,537 14,076,537

$

12,600,000 1,152,310 13,752,310

$

14,076,537

$

13,752,310

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 10.

ENDOWMENT (continued) Endowment composition (continued) Changes in endowment net assets for the fiscal years ended July 31, 2020 and 2019 is as follows: With donor restrictions Balance, July 31, 2018

$

171,899 218,447 (338,103)

Net realized and unrealized gains Interest and dividends, net Appropriation of endowment earnings Balance, July 31, 2019

$

13,752,310 607,350 236,754 (519,877)

Net realized and unrealized gains Interest and dividends, net Appropriation of endowment earnings $

Balance, July 31, 2020 11.

13,700,067

14,076,537

NET ASSETS WITHOUT DONOR RESTRICTIONS Net assets without donor restrictions showed a deficit of $64,698,813 and $67,483,373, respectively, at July 31, 2020 and 2019 . This deficit reflects the shortfall if all liabilities were immediately payable with existing net assets without donor restrictions. Furthermore, the deficit reflects the Foundation having transferred all facility assets to the City of Dallas, however having retained the bond debt associated with construction funding. Management believes the Foundation has sufficient funds to meet its current operating requirements as the bond principal payments are not due until maturity in 2041 and based upon the mitigation plans as outlined in Note 3.

24

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 12.

NET ASSETS WITH DONOR RESTRICTIONS Net assets with donor restrictions consisted of the following: 2020 Subject to the passage of time: Time restricted for specific use in future years Right of use asset

$

Subject to purpose restrictions: Bond redemptions Other

125,000 191,986,560 192,111,560

2019 $

226,250 198,494,579 198,720,829

1,830,597 697,373 2,527,970

2,569,638 409,644 2,979,282

1,459,349 793,835 1,422,000 10,401,353 14,076,537

1,427,508 776,535 1,391,048 10,157,219 13,752,310

$ 208,716,067

$ 215,452,421

Subject to the Foundation's spending policy and appropriations: Investments in perpetuity (including amounts above original gift amount of $12,600,000), the income from which is expendable to support: Center maintenance Center operations Promotion of arts in the community Moody Fund for the Arts

Net assets with donor restrictions released from restriction during the year were as follows:

Time restrictions expired Purpose restrictions accomplished Amortization of right of use asset Appropriation of endowment earnings

25

2020

2019

$

(226,250) $ (1,235,049) (6,508,019) (519,877)

(446,000) (2,392,897) (6,508,019) (338,103)

$

(8,489,195) $

(9,685,019)

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 13.

EMPLOYEE BENEFIT PLAN The Foundation has a defined contribution employee benefit plan under Section 403(b) of the IRC. The Plan covers all eligible employees on the first day of employment. Each eligible employee may contribute to the plan. Matching contributions are given by the Foundation to each eligible participant and are based on the employee's contributions up to $4,000. The matching contribution percentage, determined by management of the Foundation, was fifty percent for 2020 and 2019, with a maximum matching contribution of $2,000. Employer matching contributions paid under this plan for the years ended July 31, 2020 and 2019 were approximately $136,713 and $133,577, respectively.

14.

CONCENTRATIONS, CREDIT RISKS, AND UNCERTAINTIES The Foundation maintains its cash and cash equivalents in bank accounts which, at times, exceed federally insured limits. The Foundation has not experienced any such losses in such accounts and believes it is not exposed to significant credit risk on cash.

At July 31, 2020, contributions receivable from two donors equaled approximately 65% of the total contributions, receivable. At July 31, 2019, contributions receivable from two donors equaled approximately 76% of the total contributions receivable. For the year ended July 31, 2020, one donor provided support to the Foundation which equaled approximately 12% of the total contributions. For the year ended July 31, 2019 , two donors provided support to the Foundation which equaled approximately 36% of the total contributions.

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus ("COVID-19") a global pandemic and recommended containment and mitigation measures worldwide. The COVID-19 outbreak in the United States has caused business disruption through mandated and voluntary closings of businesses and shelter in place orders. In response, the U.S. Government enacted the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, which includes significant provisions to provide relief and assistance to affected organizations. As discussed in Note 3, the Foundation is continuing to monitor and assess the effects of the COVID-19 pandemic on the Foundation's operations. The ultimate impact of the COVID-19 outbreak, the CARES Act and other governmental initiatives is highly uncertain and subject to change

15.

RELATED PARTIES Related parties include members of the Board of Directors and affiliated organizations they exercise significant control over. There were contributions receivable from related parties of approximately $3,513,000 and $4,306,000, respectively, at July 31, 2020 and 2019.

26

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Notes to Consolidated Financial Statements July 31, 2020 and 2019 16.

SUBSEQUENT EVENTS In December, 2020, the Foundation reached agreement on terms to amend the obligations of the Foundation to its financial institutions in connection with the 2008 Letter of Credit and Reimbursement Agreements. Under this amendment, the financial institutions have agreed to release certain pledges from their security agreement, and allow the Foundation to request that all donors and pledgers with such outstanding pledges to the Capital Campaign provide consent for the conversion of their pledge payments to operational cash. The financial institutions will redeem the Series 2008-A Bonds and the Series 2008-B Bonds in an aggregate amount equal to the actual amount of the Capital Campaign pledges so converted and received by the Foundation.

The amount of such redemptions made by the Banks will not exceed $3,650,000 in the aggregate, or $1,825,000 for each Bank. Following the approval of donors of this conversion, the Foundation is permitted to use those proceeds for general operating purposes.

Any redemptions made by the financial institutions under the new terms will be converted to indebtedness represented by the applicable Bank Redemption Note and applied against the amount of redemptions required to be made by the Foundation pursuant to the terms of the Reimbursement Agreements. The Foundation is not aware of any such additional events which would require recognition or disclosure in the financial statements other than those disclosed elsewhere in the footnotes.

27

SUPPLEMENTARY INFORMATION

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidating Statement of Financial Position July 31, 2020 (With Comparative Totals for 2019)

ASSETS

Cash and cash equivalents Contributions and grants receivable, net Other receivables, net Intercompany receivable Prepaid expenses and other assets Investments held for endowment, at fair value Property and equipment, net Right of use asset, net Total assets

$

$

9 1,646

Eliminating Entries

Foundation

Endowment $

8,143,911 3,589,404 685,083 9,875 549,408

10,409,591 -

3,675,184 1,182,826 191,986,560

10,411,246

$ 209,822,251

$

$

2019 Total

Total

- $ (9,875) -

8,143,911 3,589,404 685,092 551,054

$

6,324,459 5,801,123 1,032,553 857,209

-

14,084,775 1,182,826 191,986,560

13,749,860 1,310,537 198,494,579

(9,875) $ 220,223,622

$ 227,570,320

LIABILITIES AND NET ASSETS Endowment Liabilities Accounts payable and accrued liabilities Deferred revenue Intercompany payable Agency funds Deferred sponsorship agreements Bank redemption note Bonds payable, net Total liabilities

$

Net assets Without donor restrictions With donor restrictions Total net assets Total liabilities and net assets

$

18 9,875 9,893

Eliminating Entries

Foundation $

2,986,884 2,660,520 870,974 10,622,230 32,800,000 26,265,742 76,206,350

10,401,353 10,401,353

(64,698,813) 198,314,714 133,615,901

10,411,246

$ 209,822,251

29

$

$

2019 Total

Total

- $ (9,875) (9,875)

2,986,902 2,660,520 870,974 10,622,230 32,800,000 26,265,742 76,206,368

$

1,347,778 3,299,048 414,176 10,345,486 27,600,000 36,594,784 79,601,272

-

(64,698,813) 208,716,067 144,017,254

(67,483,373) 215,452,421 147,969,048

(9,875) $ 220,223,622

$ 227,570,320

Dallas Center for the Performing Arts Foundation, Inc. and Subsidiary Consolidating Statement of Activities For The Year Ended July 31, 2020 (With Comparative Totals for 2019)

Endowment Revenues, gains and other support Programming Education and community Facility City of Dallas Service Sponsorships Contributions and grants Investment income, net Total revenues, gains and other support Functional expenses Program services Programming Education & community engagement Facility Services Total program services Management & general Fundraising Total functional expenses Changes in net assets Net assets, beginning of year Net assets, end of year

$

Foundation

2019 Total

Total

- $ 609,010

4,298,503 11,241 1,226,993 4,157,580 3,539,190 3,549,825 5,330,657 243,962

609,010

22,357,951

22,966,961

27,304,315

355,000 355,000

5,834,641 463,636 11,719,722 2,972,331 20,990,330

6,189,641 463,636 11,719,722 2,972,331 21,345,330

8,815,553 504,419 12,265,761 3,971,034 25,556,767

9,876 364,876

4,243,401 1,320,148 26,553,879

4,253,277 1,320,148 26,918,755

4,015,350 1,460,527 31,032,644

244,134

(4,195,928)

(3,951,794)

(3,728,329)

10,157,219

137,811,829

147,969,048

151,697,377

$ 10,401,353

$ 133,615,901

$ 144,017,254

$ 147,969,048

30

$

4,298,503 11,241 1,226,993 4,157,580 3,539,190 3,549,825 5,330,657 852,972

$

6,536,423 33,500 1,799,542 4,000,000 5,870,916 3,274,690 5,372,913 416,331