FY21 Audited Financial Statement, Exercises of Financial Statement Analysis

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Financial Statements

August 31, 2021 (With Comparative Totals for 2020)

TABLE OF CONTENTS

Page No.

Independent Auditor's Report 1 - 2

Statement of Financial Position 3 - 4

Statement of Activities 5

Statement of Functional Expenses 6

Statement of Cash Flows 7

Notes to Financial Statements 8 - 28

Change in Accounting Principle

As described in Note 2 to the financial statements, the Theatre has adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. Our opinion is not modified with respect to that matter.

Report on Summarized Comparative Information

We have previously audited Berkeley Repertory Theatre's 2020 financial statements, and our report dated February 18, 2021 expressed an unmodified opinion on those audited financial statements. In our opinion, the summarized comparative information presented herein as of and for the year ended August 31, 2020, is consistent, in all material respects, with the audited financial statements from which it has been derived.

ArmaninoLLP San Ramon, California

January 13, 2022

Statement of Financial Position

August 31, 2021

(With Comparative Totals for 2020)

ASSETS

Current assets Cash and cash equivalents $ 5,338,799 $ 2,721, Investments 130,886 103, Accounts receivable 439,603 75, Contributions receivable 1,885,665 2,663, Prepaid expenses 530,566 94, Total current assets 8,325,519 5,658,

Property and equipment, net 39,458,812 32,097,

Other noncurrent assets Restricted cash, bond proceeds 20,671,304 27,054, Investments, noncurrent 5,718,072 5,232, Contributions receivable, noncurrent, net of discount 4,050,400 2,298, Deposits and other assets 60,026 75, Total other noncurrent assets 30,499,802 34,661,

Total assets $^ 78,284,133^ $^ 72,417,

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

Statement of Activities

For the Year Ended August 31, 2021

(With Comparative Totals for 2020)

Without Donor Restrictions

With Donor Restrictions

Total

Total Revenues, gains, and other support Admissions $ 58,310 $ - $ 58,310 $ 4,869, Education programs 150,076 - 150,076 306, Contributions 2,705,589 3,951,772 6,657,361 4,537, Conditional grant (Paycheck Protection Program) 2,159,151 - 2,159,151 1,364, Government grants 25,000 - 25,000 - Special events revenues 593,338 23,000 616,338 676, Co-production revenue 344,776 - 344,776 200, Concessions - - - 181, Investment income, net 297,672 606,495 904,167 375, Other income 1,367,058 - 1,367,058 509, Net assets released from restrictions 3,018,162 (3,018,162) - - Total revenues, gains, and other support 10,719,132 1,563,105 12,282,237 13,021,

Functional expenses Program services Production costs 4,385,272 - 4,385,272 8,946, Box office and theatre operations 1,081,993 - 1,081,993 1,701, Audience services 952,420 - 952,420 897, Education programs 563,480 - 563,480 681, Total program services 6,983,165 - 6,983,165 12,226, Support services General and administrative 1,983,184 - 1,983,184 2,738, Fundraising 923,095 - 923,095 1,066, Total support services 2,906,279 - 2,906,279 3,805, Total functional expenses 9,889,444 - 9,889,444 16,032,

Change in net assets 829,688 1,563,105 2,392,793 (3,011,522)

Net assets, beginning of year 14,170,765 9,959,062 24,129,827 27,141,

Net assets, end of year $ 15,000,453^ $ 11,522,167^ $ 26,522,620^ $ 24,129,

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

Statement of Functional Expenses

For the Year Ended August 31, 2021

(With Comparative Totals for 2020)

Program Services Support Services

Production Costs

Box Office and Theatre Operations

Audience Services

Education Programs

Total Program Services

General and Administrative Fundraising

Total Support Services

2021 Total

2020 Total

Salaries $ 1,423,104 $ 409,156 $ 554,901 $ 349,679 $ 2,736,840 $ 1,359,666 $ 547,488 $ 1,907,154 $ 4,643,994 $ 7,202, Employee benefits 455,918 138,593 160,681 58,792 813,984 218,333 120,510 338,843 1,152,827 1,075, Payroll taxes 109,671 35,861 44,060 32,896 222,488 72,551 39,047 111,598 334,086 583, Contract labor 125,858 - 250 - 126,108 127,319 68,734 196,053 322,161 806, Travel 1,109 5,816 55 - 6,980 1,245 638 1,883 8,863 378, Housing 314,632 - - - 314,632 - - - 314,632 779, Space rental - - - - - - - - - 9, Production materials 153,401 - - - 153,401 - - - 153,401 448, Royalties and commissions 49,320 - - - 49,320 - - - 49,320 393, Printing - - - - - - 21,637 21,637 21,637 137, Advertising - - - - - 26,750 - 26,750 26,750 591, Insurance 202,886 40,492 4,962 13,606 261,946 (39,656) 6,448 (33,208) 228,738 314, Interest 401,359 72,700 8,328 26,437 508,824 11,500 11,500 23,000 531,824 523, Supplies 132 7,387 15 13 7,547 1,166 16,243 17,409 24,956 25, Telephone 25,150 15,819 8,924 5,679 55,572 9,330 6,896 16,226 71,798 87, Postage 57 - 5,473 15 5,545 905 3,326 4,231 9,776 64, Maintenance 165,677 35,690 3,438 10,913 215,718 5,523 4,746 10,269 225,987 180, Credit card fees and charges - 95,425 - 556 95,981 32,021 21,582 53,603 149,584 239, Utilities 123,574 22,384 2,564 8,140 156,662 3,541 3,541 7,082 163,744 201, Miscellaneous 27,534 56,691 142,048 3,671 229,944 129,899 27,668 157,567 387,511 914, Depreciation 805,890^ 145,979^ 16,721^ 53,083^ 1,021,673^ 23,091^ 23,091^ 46,182^ 1,067,855^ 1,074,

$ 4,385,272 $ 1,081,993 $ 952,420 $ 563,480 $ 6,983,165 $ 1,983,184 $ 923,095 $ 2,906,279 $ 9,889,444 $ 16,032,

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

Notes to Financial Statements

August 31, 2021

1. NATURE OF OPERATIONS

The Berkeley Repertory Theatre (the "Theatre") is a professional resident theatre company founded in 1969 that produces major productions from an international repertoire, including premieres of new work. The Theatre performs in its 400-seat thrust stage and its 600-seat proscenium stage in Berkeley, California.

In 2012, the Theatre initiated a new fundraising effort, the Create Campaign, with a goal of $ million. As of August 31, 2021, approximately $48 million has been raised. The funds will support a range of Strategic Initiatives as well as Annual Support for Operations. Strategic Initiatives include artistic programs, facility upgrades and development, and attracting/retaining top talent.

The Theatre has launched the Resilience Campaign, a five-year, $20 million campaign to sustain the Theatre and support the staff and artists behind its work on stage and in the community. As of August 31, 2021, approximately $2.4 million has been raised.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of accounting and financial statement presentation

The accompanying financial statements have been prepared on the accrual basis of accounting. The Theatre reports information regarding its financial position and activities according to the existence or absence of donor-imposed restrictions.

Net assets and changes therein are classified as follows:

 Net assets without donor restrictions - Net assets not subject to donor-imposed stipulations. The Theatre's Board of Trustees may designate net assets without donor restrictions for specific purposes.

 Net assets with donor restrictions - Net assets subject to donor-imposed stipulations. 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 are perpetual in nature, whereby the donor has stipulated the funds be maintained in perpetuity. Net assets with donor restrictions 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 Theatre. Donor-imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both.

Notes to Financial Statements

August 31, 2021

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of accounting and financial statement presentation (continued)

Revenues are reported as increases in net assets without donor restrictions unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in net assets without donor restrictions. Gains and losses on assets and liabilities are reported as increases or decreases in net assets without donor restrictions unless their use is restricted by explicit donor restriction or by law. Expirations of restrictions on net assets (i.e. the donor- stipulated purpose has been fulfilled and/or the stipulated time period has elapsed) are reported as releases from net assets with donor restrictions and recognized as net assets without donor restrictions. Contributions that are restricted by the donor/grantor are reported as increases in net assets without donor restrictions if the restrictions expire in the fiscal year in which the contributions are recognized.

Cash and cash equivalents

For the purpose of the statement of cash flows, the Theatre considers unrestricted highly liquid instruments with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash on deposit and interest bearing money market funds.

As of August 31, 2021, restricted cash represents bond proceeds for ongoing construction in progress (see Note 10).

Cash deposits

The Theatre places its cash and temporary cash investments with high credit quality institutions. Periodically, such investments may be in excess of federally insured limits.

Investments

Investments, which include securities, mutual funds, and certificate of deposits with an original maturity date of more than three months at the date of purchase, are recorded at fair value. Securities and mutual funds are traded on security exchanges and are valued at closing market prices on the dates closest to August 31, 2021. Investments received through gifts are recorded at estimated fair value at the date of donation.

Notes to Financial Statements

August 31, 2021

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Contributions and contributions receivable (continued)

Contributions, including unconditional promises to give, are recognized as revenue in the period received. Conditional promises to give are not recognized until they become unconditional; that is when the conditions on which they depend are substantially met. Contributions of assets other than cash are recorded at their estimated fair value. Donated services are recorded as contributions at their estimated fair value only in those instances where the services create or enhance nonfinancial assets or require specialized skills, are provided by individuals possessing those skills, and would need to be purchased if not provided by donation. Contributions to be received after one year are recorded at the present value of their estimated future cash flows. The discount on these amounts is computed using risk adjusted market interest rates applicable to the years in which the promise was received. Amortization of the discount is recorded as additional contribution revenue in accordance with donor-imposed restrictions, if any, on the contributions. An allowance for uncollectible contributions receivable is established based upon management's judgment including factors such as prior collection history, aging statistics of contributions, and the nature of the receivable. At August 31, 2021, management has determined that no allowance for uncollectible contributions was required.

Property and equipment

Property and equipment are stated at cost when purchased or constructed, or at the asset's estimated fair value at the time the donated property is received. Depreciation is provided using the straight-line method over the assets' estimated useful lives ranging from 4 to 40 years. The Theatre capitalizes all property and equipment with a cost greater than $5,000 and an estimated useful life in excess of one year. Construction in progress and software installments in progress is depreciated only after the assets are completed and have been placed into service. Donated property and equipment is recorded at the estimated fair value at the date the contribution is received and considered to be unrestricted when placed into service by the Theatre, unless restricted as to use by explicit donor stipulation.

Whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recovered, the Theatre, using its best estimates and projections, reviews for impairment the carrying value of long-lived identifiable assets to be held and used in the future. Any impairment losses identified are recognized when determined.

Deferred revenue

Ticket purchases received in advance of performances are included in deferred performance revenue and recognized as admissions revenue at the time the applicable performance is given. Gift certificates purchased are recorded as deferred revenue and recognized upon the earlier of redemption or three years, where the likelihood of the gift certificates being redeemed by the customer based on historical redemption activity is remote.

Notes to Financial Statements

August 31, 2021

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Net assets with donor restrictions

As of August 31, 2021, net assets with donor restrictions of $8,125,603 were available to support long range plan initiatives (covering production, operations and capital), future performance seasons, other time restricted activities and other specified purposes designated by the donors.

As of August 31, 2021, net assets with donor restrictions of $3,396,564 are generally restricted by the donors for investment in perpetuity as an endowment. The terms of certain of the Theatre's endowments allow for the usage of the corpus in the event that investment earnings do not provide for the required spending levels.

Net assets with donor restrictions include endowment income not yet appropriated for expenditure.

Collaborative agreements

The Theatre occasionally enters into collaborative agreements with other artistic producers relating to specific productions in which the Theatre is exposed to significant risk and rewards that depend on the commercial success of the joint production. The production host assumes all expenses incurred in the presentation of the production and will receive enhancement funds from the other party to pay for a portion of direct expenses. Enhancement funds received in advance of the production are included in deferred performance revenue and recognized as co-production revenue at the time the related production begins.

Admissions

The Theatre’s patrons have the option to purchase tickets well in advance of the performance or right before the performance, or at any point in between those two timeframes depending on seat availability. The Theatre recognizes such admissions revenue when the performance has taken place. Concession revenues are recognized upon transfer of goods to the patrons. The Theatre sells gift cards and discount ticket vouchers, the proceeds from which are recorded as deferred performance revenue. Revenues for gift cards and discount ticket vouchers are recognized when they are redeemed for theatre tickets or concession items. The Theatre offers multiple subscription packages. whereby patrons can pay a subscription fee to receive a credit for use towards a future ticket purchase for the Theatre's productions. The Theatre records the subscription program fees as deferred performance revenue and records admissions revenues as the credits are redeemed for tickets or passage of time.

Notes to Financial Statements

August 31, 2021

2. 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 ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Uses of estimates include, but are not limited to, accounting for allowances for doubtful account and contribution receivables, fair value measurements, functional expense allocations and depreciation.

Risks and uncertainties

Occasionally, cash and cash equivalents maintained by the Theatre are in excess of the federally insured limits. The Theatre mitigates this risk by placing cash and cash equivalents with high credit quality institutions.

The Theatre invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the Theatre's account balances and the amounts reported in the statement of financial position.

The Theatre is engaged in a collective bargaining agreement with a labor union representing actors and stage managers in theatre, the Actors' Equity Association. Approximately 15% of the Theatre's labor force is covered by the collective bargaining agreements. Although staffing of actors and stage management is constantly revolving to fill the needs of each production, the staffing does remain fairly consistent year over year.

Comparative financial information

The financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with U.S. GAAP. Accordingly, such information should be read in conjunction with the Theatre's financial statements as of and for the year ended August 31, 2020, from which the summarized information was derived.

Notes to Financial Statements

August 31, 2021

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Change in accounting principle

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) , which provides a five-step analysis of contracts to determine when and how revenue is recognized and replaces most existing revenue recognition guidance in U.S. GAAP. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. Topic 606 is effective for annual reporting periods beginning after December 15, 2019. The Theatre adopted Topic 606 with a date of the initial application of September 1, 2020, using the modified retrospective method.

Analysis of various provisions of this standard resulted in no significant changes in the way the Theatre recognizes revenue, and therefore no changes to the previously issued audited financial statements were required on a retrospective basis. The presentation and disclosures of revenue have been enhanced in accordance with the standard.

3. CONTRIBUTIONS RECEIVABLE

Contributions receivable consisted of the following:

Due in less than one year $ 1,885, Due in one to five years 3,820, Due in more than five years 386, Discounts on contributions receivable (156,104) 5,936, Less current portion (1,885,665)

$ 4,050,

Contributions receivable expected to be collected in more than one year from August 31, 2021 are discounted at a rate of return respective to the year that the contribution was originally promised. Current year contributions receivable are recorded using a discount rate ranging from 0.28% to 2.74%.

Notes to Financial Statements

August 31, 2021

6. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

Land $ 2,802, Building and improvements 37,830, Production equipment 2,609, Office and facilities equipment 901, Software 272, Construction in progress 13,787, 58,203, Accumulated depreciation (18,744,636)

$ 39,458,

Depreciation expense totaled $1,067,855 for the year ended August 31, 2021.

7. DEPOSITS

As of August 31, 2021, deposits of $60,026 consist of insurance deposits, long-term lease deposits, and an Actors' Equity bond deposit.

8. DEFERRED PERFORMANCE REVENUE

Deferred performance revenue consisted of the following:

Deferred performance revenue $ 2,801, Deferred gift certificates 95, Other deferred income 700,

$ 3,597,

9. CREDIT FACILITY

The Theatre has a line of credit agreement with Signature Bank to finance operations in the amount of $3,000,000 which matures on November 30, 2022. The line of credit bears interest at a variable rate, as chosen by the Theatre, of either the Prime rate plus 0.00% or LIBOR plus 2.35% as of August 31, 2021 which, upon renewal of the line of credit, LIBOR was replaced by AMERIBOR as of November 30, 2021.

Notes to Financial Statements

August 31, 2021

10. LONG-TERM DEBT

On March 1, 2019, the Theatre entered into financing agreements with Signature Bank, Signature Public Funding Corp. and the California Enterprise Development Authority with an aggregate principal of $37,696,650; $5,622,236 in the form of Series A Tax-Exempt Revenue Bonds ("Series A Bonds"), $27,418,480 in the form of Series B Tax-Exempt Revenue Bonds ("Series B Bonds") and $4,654,934 in form of Series C Taxable Revenue Bonds ("Series B Bonds"). The Series A Bonds and Series B Bonds bear interest at a rate of 3.25% per annum and mature on March 1, 2049. The Series C Bonds bear interest at a rate of 4.06% per annum and mature on March 1, 2049. The Series A Bonds principal and interest are due and payable monthly beginning May 1, 2019. The Series B Bonds and Series C Bonds are interest only notes through April 1, 2022, at which time principal and interest are due and payable monthly. As of August 31, 2021, $5,359,854, $27,419,480 and $4,654,934 were outstanding on the Series A Bonds, Series B Bonds and Series C Bonds, respectively. The bond proceeds are held in restricted funds (see Note 2), reflected in the accompanying financial statements as restricted cash, bond proceeds and are to be used to finance and refinance the cost of the acquisition, construction, development, equipping and furnishing of theatrical, educational and administrative facilities including the construction of 45 apartment units to house visiting artists. The loan is secured by a deed of trust, the leasehold deed of trust and personal property through a UCC- filing.

On July 30, 2010, the Theatre entered into a note payable agreement to finance the acquisition of real property maturing December 1, 2050, 60 months of interest only payments at 4.31% beginning January 1, 2011 ($20,833 per month), followed by 420 months of installment payments (both principal and interest) of $27,270 bearing interest at 4.45%, secured by the real property acquired; amounts outstanding under the note payable totaled $5,355,346 as of August 31, 2021.

The future maturities of the long-term debt are as follows:

Year ending August 31,

2022 $ 513, 2023 968, 2024 999, 2025 1,038, 2026 1,074, Thereafter 38,195, 42,789, Less: debt issuance cost (642,839)

Long-term debt, net 42,146, Current portion (513,626)

$ 41,633,