SMITHSONIAN INSTITUTION 



Statement of Cash Flows For the Year ended September 30, 1998 (In thousands) 



Trust 

 Funds 



Federal 

 Funds 



Total Funds 



1998 



1997 



Adjustments to reconcile net increase in net assets to net 

 cash provided by operating activities: (continued) 

 Increase (decrease) in liabilities: 

 Accounts payable and accrued expenses 

 Net payable for investment securities purchased 

 Deferred revenue 

 Deposits held for others 

 Accrued annual leave 

 Unexpended federal appropriations 



(299) 



657 



358 



5.586 



23,962 



— 



23,962 



(16,635) 



(3,097) 



— 



(3,097) 



2,555 



931 



— 



931 



(2,950) 



169 



277 



446 



(1,489) 



— 



8,823 



8,823 



(9,920) 



Net cash provided from operating activities 



37,951 



9,810 



47,761 



(8,354) 



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 



737 



— 



737 



2,719 



(6,938) 



(1.893) 



(8,831) 



(9,358) 



(20,824) 



(68.986) 



(89,810) 



(90.789) 



(750,907) 



— 



(750,907) 



(865,439) 



687,607 



— 



687,607 



901,596 



Net cash used in investing activities 



(90,325) 



(70.879) 



(161,204) 



(61,271) 



Cash flows from financing activities: 



Contributions for increases in endowment 

 Contributions for construction of property 

 Appropriations for repair, restoration and construction 

 Investment income restricted for long-term purpose 

 Proceeds from issuance of debt 

 Repayments of debt 



8,571 

 3,815 



462 

 40,526 



68.850 



8,571 



7.605 



3,815 



6,422 



68,850 



52,850 



462 



419 



40,526 



500 



— 



(2,597) 



Net cash provided from financing activities 



53,374 



68.850 



122,224 



05.190 



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

 Cash and balances with the U.S. Treasury: 

 Beginning of the year 



1,000 



4,193 



7,781 

 192.855 



8,781 

 197,048 



(4,426) 

 201,474 



End of the year 



5,193 



200,636 



See accompanying notes to the financial statements. 



205,829 



197.048 



Cash paid for interest during fiscal years 1998 and 1997 was $1,332,000 and 558,000, respectively. 



(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 1S26, 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, Con- 

 gress vested responsibility in the Smithsonian Board of Regents (Board.) to administer 

 the trust. 



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

 complex of 16 museums and galleries, the National Zoological Park, and other re- 

 search facilities. Research is carried out in the Smithsonian's museums and facilities 

 throughout the world. The Smithsonian's extensive collections number over 140 mil- 

 lion objects. During fiscal year 1998, over 28 million individuals visited the Smith- 

 sonian museums and other facilities. 



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

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

 activities, including the Smithsonian magazines and other publications, a mailorder 

 catalogue, museum shops, and food services. A substantial portion of the Smith- 

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

 tain construction projects have been completely funded from federal appropnations, 

 while others are funded using amounts raised from private sources, or by a combina- 

 tion of federal and private funds. 



Federal operating and construction funding are both subject to the annual federal 

 appropriations process, and therefore the potential exists for reductions in approved 

 federal funding that would significantly impact the Smithsonian's operations. 



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 W'oodrow Wilson 

 International Center for Scholars, which were established by Congress within the 

 Smithsonian, but are administered by independent boards of trustees. 



(2) Summary of Significant Accounting Policies 



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

 flows of the Smithsonian on the accrual basis of accounting. Funds received from 

 direct federal appropriations are reported as Federal Funds in the financial statements. 

 All other funds are reported as Trust Funds. 



(a) Trust Funds 



All non-appropnated activities are classified as trust funds, income from which arises 

 primarily from contributions, grants and contracts, net investment income, and auxil- 

 iary activities. Trust net assets are classified and reported as follows: 



Unrestricted net assets 

 Net assets that are not subject to any donor-imposed or other legal stipulations on 

 the use of the funds. Funds functioning as endowments in this category represent 



290 



