Jan 28 - Fitch Ratings has affirmed the 'A-' rating on approximately $13.8
million of outstanding series 2003 revenue bonds issued by the Trust for
Cultural Resources for the City of New York (TCR) on behalf of the Alvin Ailey
Dance Foundation (AADF). The rating is an underlying rating, given without
consideration of credit support provided through a letter of credit issued by
The Rating Outlook is Stable.
The bonds are secured by general obligation loan payments from AADF to TCR.
STABLE CREDIT CHARACTERISTICS: The 'A-' rating reflects AADF's history of
positive operating margins, with surpluses that supplement balance sheet
resources and provide strong liquidity, and its highly manageable debt burden
with no additional debt plans. The aforementioned are offset by AADF's heavy
reliance on discretionary revenues. These discretionary revenues are diversified
and exhibit positive trends.
HISTORY OF OPERATING SURPLUSES: AADF operations reflect a sustained track record
of positive margins due to management's ability to increase performance and
educational based revenues while actively managing expenses.
RELIANCE ON DISCRETIONARY REVENUES: AADF is reliant on public support and
performance fees, both of which can vary from year to year, and are
discretionary sources of revenue.
PREMIER REPUTATION: The Alvin Ailey American Dance Theater's (AAADT)
long-standing and international reputation and prominent location at City Center
in New York City continues to attract a donor base of substantially wealthy
individuals and institutions and experiences relatively stable public support
levels which add to its operating flexibility.
Available funds, defined as cash and investments less permanently restricted net
assets, are strong and have grown over time, and totaled $61.2 million at the
end of fiscal 2012, accounting for 182% of expenses and 445% of long-term debt.
AADF's investment portfolio continues to reflect a balanced approach, despite
higher allocations to equities and alternative investments than in previous
years, typical of the non-profit sector. Given AADF's balanced investment
portfolio strategy and positive operations, financial resources for AADF are
expected to remain at current levels. Overall, Fitch believes AADF's liquidity
position relative to its operating and debt profile is strong and appropriate
for an 'A-' rating.
AADF's diligent management practices continued to produce a solidly positive
operating margin in fiscal 2012. AADF's margin increased to 4.8% in fiscal 2012,
from 0.4% in fiscal 2008, when decreased public support and increased marketing
and public relations expenses resulted in a weak margin. Fitch views
management's ability to realign expenses to match revenues and focus on annual
surplus generation and liquidity growth as a credit positive.
AADF's three main sources of income are performance-based revenues (36%), public
support (29%) and educational activities (23%). AADF has demonstrated operating
flexibility in a challenging environment by realizing revenue growth from
educational activities and has been aided by performance fees which have trended
positively for the past three years. AADF performance-based revenues generally
offset related expenses as the foundation has full control over these variable
expenses and can lower payroll costs for touring personnel in the event of fewer
AADF's debt burden is low at 3.4% and the foundation has no future debt plans at
this time. AADF's entire capital structure is composed of variable-rate debt of
$13.76 million, supported by a letter of credit issued by CitiBank (expiring in
2016). The foundation synthetically fixed the interest rate on the bonds with a
fixed payor swap. At FYE 2012, the current mark-to-market valuation for the swap
was negative $2 million, which does not require a collateral posting.
AADF has been instrumental in supporting the activities of the Alvin Ailey
American Dance Theater (AAADT), founded in 1958. AADF leverages its prominence
and promotes its popularity domestically and internationally, for the purpose of
furthering the education about the inspiration, meaning and significance of
Alvin Ailey's modern dance masterpiece reflecting African American heritage.
Additional information is available at 'www.fitchratings.com'. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Revenue-Supported Rating Criteria', dated June 12, 2012;
--'Nonprofit Institutions Rating Criteria', dated June 15, 2012;
--'Fitch Upgrades Alvin Ailey Dance Foundation NY's Revs to 'A-'; Outlook
Stable', Feb 11, 2011.
Applicable Criteria and Related Research:
Revenue-Supported Rating Criteria