SMITHSONIAN INSTITUTION 



Statement of Cash Flows For the Year ended September 30, 1997 (In thousands) (continued) 



Trust 

 Funds 



Federal 

 Funds 



Total 

 Funds 



Adjustments to reconcile net increase (decrease) in net assets to net 

 cash provided by operating activities: 



Increase (decrease) in liabilities: (continued) 

 Deposits held for others 

 Accrued annual leave 

 Unexpended federal appropriations 



(2,950) 



— 



(2,950) 



266 



(1,755) 



(1,489) 



— 



(9,920) 



(9,920) 



Net cash provided from (used in) operating activities 



(9,047) 



17,328 



8,281 



Cash flows from investing activities: 

 Proceeds from sales of collections 

 Collection items purchased 

 Purchase of property and equipment 

 Purchases of investment securities 

 Proceeds from the sales of investment securities 



2,719 



— 



2,719 



(7,359) 



(1,999) 



(9,358) 



(17,404) 



(73,385) 



(90,789) 



(875,740) 



— 



(875,740) 



895,262 



— 



895,262 



Net cash provided from (used in) investing activities 



(2,522) 



(75,384) 



(77,906) 



Cash flows from financing activities: 

 Contributions for increases in endowment 

 Contributions for construction of property 



Appropriations for repair and restoration and construction of property 

 Investment income restricted for long-term purpose 

 Proceeds from issuance of debt 

 Repayments of debt 



See accompanying notes to the financial statements. 



7,605 

 6,422 



419 

 500 



(2,597) 



52,850 



7,605 



6,422 



52,850 



419 



500 



(2,597) 



Net cash provided from financing activities 



12,349 



52,850 



65,199 



Net increase (decrease) in cash and balances with the U.S. Treasury 

 Cash and balances with the U.S. Treasury: 

 Beginning of the year 



780 

 3,413 



(5,206) 

 198,061 



(4,426) 

 201,474 



End of the year 



S 4,193 



192,855 



197,048 



Cash paid for interest during fiscal year 1997 was $58,000. 



(1) Organization 



The Smithsonian Institution was created by act of Congress in 1846 in accordance 

 with the terms of the will of James Smithson of England, who, in 1826, bequeathed 

 his property to the United States of America "to found at Washington, under the name 

 of the Smithsonian Institution, an establishment for the increase and diffusion of 

 knowledge among men." After receiving the property and accepting the trust, Congress 

 vested responsibility in the Smithsonian Board of Regents to administer the trust. 



The Smithsonian Institution (Smithsonian) is a museum, education and research 

 complex of 16 museums and galleries, and the National Zoological Park. Research is 

 carried out in the Smithsonian's museums and facilities throughout the world. The In- 

 stitution's extensive collections number over 140 million objects. During fiscal 

 year 1997, over 25 million individuals visited the Smithsonian museums and facilities. 

 The Smithsonian receives its funding from federal appropriations, private gifts and 

 grants, government grants and contracts, investment income, and various business ac- 

 tivities, including the Smithsonian magazines, mail-order catalogue, museum shops, 

 food services, and other Smithsonian publications. A substantial portion of the Smith- 

 sonian's annual operating budget is funded from annual federal appropriations. Cer- 

 tain construction projects are completely funded from federal appropriations, while 

 others are funded using amounts raised from private sources, or a combination of fed- 

 eral and private funds. The federal operating and construction funding is subject to the 

 annual federal appropriations process, and significant cuts in federal funding would 

 significantly impact the Smithsonian's financial situation. 



These financial statements do not include the accounts of the National Gallery of 

 Art, the John F. Kennedy Center for the Performing Arts, or the Woodrow Wilson In- 

 ternational Center for Scholars, which were established by Congress within the Smith- 

 sonian, but are administered under separate boards of trustees. 



(2) Summary of Significant Accounting Policies 



These financial statements present the financial position, financial activity, and cash 

 flows of the Smithsonian from all funding sources, prepared on the accrual basis of ac- 

 counting in accordance with generally accepted accounting principles. Funds received 

 from direct federal appropriations are reported as Federal Funds in the financial state- 

 ments. All other funds are reported as Trust Funds. 



TrustFunds 



Non-appropriated funds are classified as trust funds, and primarily arise from contribu- 

 tions, grants and contracts, investment income and gains (or losses), and auxiliary ac- 

 tivities. Trust net assets are classified and reported as follows: 



Unrestricted net assets 



Net assets that are not subject to any donor-imposed stipulations on the use of the 

 funds. Funds functioning as endowments in this category represent unrestricted assets 

 which have been designated by management as quasi-endowments and accumulated 

 excess total return on the endowment pool not subject to donor-imposed restrictions. 



Temporarily restricted net assets 



Net assets subject to donor-imposed stipulations on the use of the assets that may be 

 met by actions of the Smithsonian and/or the passage of time. Funds functioning as 

 endowments in this category represent donor-restricted contributions that have been 

 designated by management as quasi-endowment and accumulated excess total return 

 on the endowment pool subject to donor-imposed restrictions. Donor contributions 

 represent unspent gifts and promises-to-give of cash and securities subject to donor- 

 imposed restrictions which have not yet been met. 



Permanently restricted net assets 



Net assets subject to donor-imposed stipulations that the principal be maintained per- 

 manently by the Smithsonian. Generally, the donors of these assets permit the Smith- 

 sonian to use all or part of the income earned on investment of the assets for either 

 general or donor-specified purposes. 



Federal Funds 



The Smithsonian receives federal appropriations to support the Smithsonian's operat- 

 ing salaries and expenses, repair and restoration of facilities, and construction. Federal 

 appropriation revenue is classified as unrestricted and recognized as expenditures are 

 incurred. Unexpended appropriations represent goods and services that have been or- 

 dered but not yet received and appropriated funds that have not yet been obligated, 

 and are recorded as liabilities on the statement of financial position. 



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