on the basis of the per unit market value at the beginning of the month that 

 the transaction takes place. At September 30, 1995, each unit had a market 

 value of S483. The market value of the pool's net assets at September 30, 

 1995 was S433. 351,000, representing all pooled investments (see note 3) net 

 of receivables and payables for investment transactions. 



Each fund participating in the investment pool receives an annual payout 

 equal to the number of units owned times the annual payout amount per 

 unit. The payout for fiscal year 1995 was $16.50 per unit. Based on 

 approved Board policy, if the market value of any endowment fund is less 

 than 110 percent of the historical value, the current payout is limited to the 

 actual interest and dividends allocable to that fund. 



Fund balances of the endowment and similar funds were comprised of the 

 following at September 30, 1995: 



Units 



[SOOOs) 



Endowment - unrestricted 

 Endowment - restricted 

 Quasi-endowmen! - unrestricted 

 Quasi-endowment - restricted 



23.370 S 9.890 



330.504 137.785 



367.229 158.121 



176.98.1 75.778 



Total endowment fund balance 



S 381.574 



(S) Receivables and Advance Payments 



Trust fund receivables at September 30, 1995 consisted of: 



(SOOOs) 



Auxiliary activities and other, nel of SI. 722 in allowances 



Investment securities sold 



Pledges 



Grants and contracts 



Interest and dividends due 



Intertund receivables and other 



18.907 

 3.113 



22.447 

 9.176 

 2.520 



26.419 



Total receivables and advances - trust fund 



Federal advance payments of $14,595,000 represent prepavments made to 

 government agencies, educational institutions, firms and individuals for ser- 

 vices to be rendered, or property or materials to be furnished. 

 At September 30, 1995, the Institution had advance payments outstanding to 

 the General Services Administration of $10,178,000, principally for equip- 

 ment purchases for the Museum Support Center and other proiects to be 

 completed in future years. Advance payments to educational institutions 

 amounting to $2,316,000 were principally under the Special Foreign 

 Currency Program. Other advance payments totaled $2,101,000. 



(6) Deferred Promotion Costs 



At September 30, 1995 and 1994, respectively, prepaid, deferred expense and 

 other includes approximately $11,800,000 and $11,000,000 of deferred pro- 

 motion costs, mostly related to the Smithsonian Magazine, were reported as 

 assets. Promotion expense was $17,957,000 and $20,549,000 in fiscal year 

 1995 and 1994, respectively. 



(7) Property and Equipment 



Property and equipment at September 30, 1995 consisted of: 







Trust funds 





Federal 







Current 



Plant 









funds 



funds 



Totals 



funds 



Totals 



Land 



S 



2565 



2 565 





2.565 



Buildings 



4.125 



86.012 



90. 1 37 



310.359 



400.496 



Capital improvements 



28.486 



- 



28.486 



328.203 



356.689 



Equipment 



13.335 



7.484 



20.819 



50.207 



71.026 



Leasehold improvements 



1.582 



- 



1.582 



- 



1.582 





47.528 



96.1)61 



143.589 



.... >,'. 



832.358 



... . .- . :■.:-: :eprec :x\ : s 



(24.1421 



(30.0921 



(54.2341 



(335.3571 



(389.591) 



Tola, pn.perr. and equipment 



S 23.386 



65.969 



89.355 



353.412 



442.767 



Property use and depreciation in the federal funds for expenditure and other 

 deductions for fiscal year 1995 included $33,302,000 of depreciation 

 expense in the capital funds. 



Depreciation expense in the trust funds for fiscal year 1995 for 

 income-producing assets amounted to $2,069,000 and is included in auxil- 

 iary activities expenditures in the current funds. Depreciation for non-income 

 producing equipment and buildings for fiscal year 1995 amounted to 

 $3,907,000 and is included in the plant funds. 



At September 30, 1995, the fund balance of the trust plant funds included 

 $22,652,000 of restricted funds and $1,395,000 of unrestricted funds desig- 

 nated for future plant acquisitions. 



(8) Commitments and Contingencies 



Leasing Activities 



Leases for Smithsonian warehouse and office spaces provide for rent escala- 

 tions to coincide with increases in property taxes, operating expenses attrib- 

 utable to the leased property and the Consumer Price Index. The Institution 

 has the authority to enter into leases for up to 30 years using federal funds. 



The Institution's operating leases for the warehouse and office spaces require 

 future minimum lease payments as follows: 



Year (SOOOs) 



1996 



1997 

 1998 

 1999 

 2000 

 Thereafter 



10.771 

 9.137 

 8.553 

 7.900 

 3.245 

 4.237 



Rental expense for these operating leases totaled $9,880,000 for fiscal year 

 1995. 



Government Grants and Contracts 



The Institution receives funding or reimbursement from governmental agen- 

 cies for various activities which are subject to audit. Audits of these activities 

 have been completed through fiscal year 1994. However, audits of fiscal 

 years 1993 and 1994 have not been closed with the cognizant agency. 

 Management believes that any adjustments which may result from those 

 audits and the audits for fiscal year 1995 would not have a material effect on 

 the Institution's financial statements. 



(9) Long-term Debt 



All September 30, 1995, long-term debt consisted of an unsecured note 

 payable to Signet Bank totaling $2,850,000 and an interest-free loan from 

 the Virginia Department of Aviation totaling $500,000. 



The Signet note bears interest at 1 percent in excess of the Federal Funds 

 Rate, which was 6.20 percent at September 30, 1995. Interest is payable 

 quarterly; principal is payable in quarterly installments of $63,333. The 

 remaining unpaid principal balance is due December 31, 1996. The proceeds 

 from the Signet Bank note financed a warehouse facility for Institution muse- 

 um shops. During the fiscal year 1995, $203,000 was recorded as interest 

 expense in the auxiliary activities funds for the note with Signet Bank. 



The Virginia Department of Aviation provided the Institution with an 

 interest-free loan totaling $3 million, $500,000 of which was received by 

 year-end. This loan will help finance the planning, marketing, fund raising, 

 and design of the proposed National Air and Space Museum extension at 

 Washington Dulles International Airport. The Institution is scheduled to 

 repay the outstanding loan not later than June 30. 1998. 



The aggregate amount due for outstanding loans for the years ending 

 September 30, are as follows: 



1996 

 1997 

 1998 



S 



253 



2.597 



500 





s 



3.350 



3*7 



