Monterey Bay Aquarium Foundation

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					Monterey Bay
Aquarium Foundation
Consolidated Financial Statements for the
Years Ended December 31, 2007 and 2006,
and Independent Auditors’ Report
INDEPENDENT AUDITORS’ REPORT


To the Board of Trustees of the
Monterey Bay Aquarium Foundation
Monterey, CA

We have audited the accompanying consolidated statements of financial position of the Monterey Bay
Aquarium Foundation and its supporting organization (the “Aquarium”) as of December 31, 2007 and
2006, and the related consolidated statements of activities and changes in net assets and of cash flows for
the years then ended. These consolidated financial statements are the responsibility of the Aquarium’s
management. Our responsibility is to express an opinion on these consolidated financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes consideration of
internal control over financial reporting as a basis for designing audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Aquarium’s internal control over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial
position of the Aquarium as of December 31, 2007 and 2006, and the changes in its net assets and its cash
flows for the years then ended in conformity with accounting principles generally accepted in the United
States of America.

As explained in Notes 1 and 3, the consolidated financial statements include investments valued at
$130,255,000 (44% of net assets) and $117,646,000 (46% of net assets) at December 31, 2007 and 2006,
respectively, whose fair values have been estimated by management in the absence of readily
determinable fair values. Also discussed in Notes 1 and 3 is the information used by management in
making these estimates.




June 6, 2008
MONTEREY BAY AQUARIUM FOUNDATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2007 AND 2006


                                                               2007              2006
ASSETS

CASH AND CASH EQUIVALENTS                               $ 13,882,000      $     5,709,000

PLEDGES AND GRANTS RECEIVABLE — Net                          22,523,000         8,021,000

OTHER RECEIVABLES                                             1,829,000         1,730,000

PREPAID EXPENSES AND OTHER ASSETS                              266,000           418,000

BENEFICIAL INTEREST IN SPLIT-INTEREST
 AGREEMENTS                                                   1,370,000         1,335,000

INVESTMENTS                                                 135,013,000       118,363,000

PROPERTY, EQUIPMENT, AND EXHIBITS — Net                     132,455,000       126,927,000
TOTAL                                                   $ 307,338,000     $ 262,503,000


LIABILITIES AND NET ASSETS

LIABILITIES:
 Accounts payable and accrued liabilities               $     4,424,000   $     3,771,000
 Deferred revenue                                             6,245,000         5,188,000
 Gift annuity payment liability                                 493,000           506,000

      Total liabilities                                      11,162,000         9,465,000

NET ASSETS:
 Unrestricted:
  Funds available for operations                            198,212,000       185,349,000
  Funds functioning as endowment                             56,795,000        50,428,000

      Total unrestricted                                    255,007,000       235,777,000

 Temporarily restricted                                      32,093,000         9,024,000
 Permanently restricted                                       9,076,000         8,237,000

      Total net assets                                      296,176,000       253,038,000

TOTAL                                                   $ 307,338,000     $ 262,503,000

See notes to consolidated financial statements.


                                                  -2-
MONTEREY BAY AQUARIUM FOUNDATION

CONSOLIDATED STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 2007 AND 2006


                                                                                2007                                                              2006
                                                                    Temporarily      Permanently                                      Temporarily      Permanently
                                                    Unrestricted     Restricted       Restricted          Total       Unrestricted     Restricted       Restricted          Total
SUPPORT AND REVENUES:
 Admissions                                        $ 29,265,000    $          -      $        -      $ 29,265,000    $ 24,943,000    $          -      $         -     $ 24,943,000
 Contributions and grants                             9,741,000        28,128,000         839,000      38,708,000       5,701,000         1,942,000        2,037,000      9,680,000
 Memberships                                          7,866,000                                         7,866,000       6,753,000                                         6,753,000
 Merchandising, net of expenses of $880,000
  and $966,000, respectively                          1,611,000                                         1,611,000       1,526,000                                         1,526,000
 Food services, net of expenses
  of $543,000 and $512,000, respectively                131,000                                           131,000         203,000                                           203,000
 Rental income, net of expenses of $1,185,000
  and $992,000, respectively                            742,000                                           742,000       1,488,000                                         1,488,000
 Programs, net of expenses of $134,000
  and $113,000, respectively                            776,000                                           776,000         699,000                                           699,000
 Other, net of expenses of $174,000
  and $216,000, respectively                            146,000                                           146,000         229,000                                           229,000
 Net assets released from restrictions                5,059,000        (5,059,000)                                      4,217,000        (4,217,000)

       Total support and revenues                    55,337,000        23,069,000         839,000      79,245,000      45,759,000        (2,275,000)       2,037,000     45,521,000
EXPENSES:
 Program services:
  Marine life exhibition and care                    21,501,000                                        21,501,000      20,470,000                                        20,470,000
  Education and outreach                              5,869,000                                         5,869,000       5,803,000                                         5,803,000
  Conservation and research                           5,437,000                                         5,437,000       4,669,000                                         4,669,000
  Guest services and marketing                        7,923,000                                         7,923,000       5,345,000                                         5,345,000
 Support services:
  Membership services                                 1,367,000                                         1,367,000       1,324,000                                         1,324,000
  Management and general                              5,762,000                                         5,762,000       5,110,000                                         5,110,000
  Development                                         1,845,000                                         1,845,000       1,712,000                                         1,712,000

       Total expenses                                49,704,000              -                -        49,704,000      44,433,000              -                -        44,433,000
INVESTMENT INCOME:
 Dividends and interest                               2,531,000                                         2,531,000       2,505,000                                         2,505,000
 Net realized and unrealized gain on investments     11,066,000                                        11,066,000      11,388,000                                        11,388,000

       Total investment income                       13,597,000              -                -        13,597,000      13,893,000              -                -        13,893,000
INCREASE (DECREASE) IN NET ASSETS                    19,230,000        23,069,000         839,000      43,138,000      15,219,000        (2,275,000)       2,037,000     14,981,000
NET ASSETS:
 Beginning of year                                  235,777,000         9,024,000        8,237,000    253,038,000     220,558,000        11,299,000        6,200,000    238,057,000

 End of year                                       $ 255,007,000   $ 32,093,000      $ 9,076,000     $ 296,176,000   $ 235,777,000   $ 9,024,000       $ 8,237,000     $ 253,038,000

See notes to consolidated financial statements.

                                                                                           -3-
MONTEREY BAY AQUARIUM FOUNDATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2007 AND 2006


                                                                       2007                2006

CASH FLOWS FROM OPERATING ACTIVITIES:
 Increase in net assets                                         $    43,138,000     $    14,981,000
 Adjustments to reconcile increase in net assets to
  net cash provided by operating activities:
  Depreciation                                                         7,597,000           7,165,000
  Provision for doubtful pledges receivable                              (91,000)            143,000
  Contributions of securities                                         (1,717,000)           (723,000)
  Contributions restricted for investment in endowment                  (839,000)         (1,355,000)
  Contribution of real property                                                             (655,000)
  Loss on retirement of assets                                           342,000             110,000
  Net realized and unrealized gain on investments                    (11,066,000)        (11,388,000)
  Effect of changes in:
   Pledges and grants receivable — net                               (14,411,000)          1,935,000
   Other receivables, prepaid expenses and other assets                  283,000             225,000
   Beneficial interest in split-interest agreements                      (35,000)            (46,000)
   Accounts payable and accrued liabilities                             (621,000)             62,000
   Deferred revenue                                                    1,057,000             385,000
   Gift annuity payment liability                                        (13,000)             31,000

       Net cash provided by operating activities                     23,624,000          10,870,000

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of investments                                           (102,380,000)       (120,249,000)
 Proceeds from sale of investments                                    98,513,000         112,322,000
 Additions to property, equipment, and exhibits                      (12,193,000)         (4,655,000)
 Promissory note receivable from employee                               (230,000)

       Net cash used in investing activities                         (16,290,000)        (12,582,000)

CASH FLOWS FROM FINANCING ACTIVITIES — Proceeds
 from contributions restricted for investment in endowment              839,000            1,355,000

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS                                                      8,173,000            (357,000)

CASH AND CASH EQUIVALENTS — Beginning of year                          5,709,000           6,066,000

CASH AND CASH EQUIVALENTS — End of year                         $    13,882,000     $      5,709,000

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
 ACTIVITIES — Payables for purchase of property,
 equipment, and exhibits                                        $      1,274,000    $       692,000

See notes to consolidated financial statements.




                                                          -4-
MONTEREY BAY AQUARIUM FOUNDATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Organization — The Monterey Bay Aquarium Foundation and its supporting organization, Monterey
   Bay Aquarium Support Services (“MBASS”), (collectively, the “Aquarium”) are California
   not-for-profit corporations founded in 1978 and 2001, respectively. The Aquarium’s mission is to inspire
   conservation of the oceans. It was created with an initial gift from David and Lucile Packard. Members
   of the family continue to participate in directing its operations, as executive director and as members of
   the Aquarium’s Board of Trustees. The Aquarium facilities opened to the public in 1984. The
   Aquarium’s major programs include a public aquarium whose exhibits focus primarily, but not
   exclusively, on marine life of Monterey Bay and California’s central coast; education programs serving
   students from preschool through college as well as primary- and secondary-school educators; and
   research and conservation initiatives which include: (a) the long-term survival of the southern sea otter,
   (b) understanding and conserving tunas and other highly migratory animals, (c) consumer seafood
   awareness, and (d) conducting and communicating scientific research that promotes natural resource
   conservation and informs ocean policy.

   Basis of Presentation — The accompanying consolidated financial statements are presented on the
   basis of unrestricted, temporarily restricted, and permanently restricted net assets.

   Principles of Consolidation — The accompanying consolidated financial statements include the
   accounts of the Monterey Bay Aquarium Foundation and its supporting organization, MBASS. The
   Monterey Bay Aquarium Foundation controls and has an economic interest in MBASS. Intercompany
   transactions and accounts have been eliminated in consolidation.

   Cash and Cash Equivalents — Cash and cash equivalents consist of cash on hand or in demand
   accounts and highly liquid investments purchased with an original maturity of three months or less.

   Pledges and Grants Receivable — Pledges and grants receivable consist of unconditional promises to
   give that are expected to be collected in future years and grants classified as exchange transactions to the
   extent that allowable expenditures have been incurred, but reimbursement from the grantor has not yet
   been received. Pledges receivable are recorded at the present value of their estimated future cash flows.
   The discounts on these amounts are computed using risk-free rates applicable in the years in which those
   promises are received. Amortization of the discounts is included in contributions and grants in the
   accompanying consolidated statements of activities and changes in net assets. Pledges and grants
   receivable are reviewed for collectibility and reserves for uncollectible amounts are recorded based on
   established policies.

   Beneficial Interest in Split-Interest Agreements and Gift Annuity Payment Liability — Assets
   contributed by donors under charitable remainder trust agreements and controlled by third parties are
   recognized at the present value of the estimated future distributions to be received by the Aquarium over
   the term of the agreement. Assets contributed by donors under gift annuity agreements and controlled by
   the Aquarium are recognized at fair value with a corresponding liability to beneficiaries of the annuity
   agreements. Such liability is calculated as the present value of the estimated future cash flows to be
   distributed to the income beneficiaries over their expected lives. The Aquarium has determined such
   liability using investment returns consistent with the composition of investment portfolios, single or


                                                    -5-
joint life expectancies from the Internal Revenue Service Publication 1457 and the discount rates
applicable in the years in which the agreements were entered into.

Investments — Investments in publicly traded securities are stated at estimated fair value based on
quoted market prices, with realized and unrealized gains and losses included in the consolidated
statements of activities and changes in net assets. Nonmarketable investments are also carried at
estimated fair value. Nonmarketable investments include investment securities whose values have been
estimated by management in the absence of readily determinable fair values. Management estimates are
based on information provided by the fund managers or the general partners. Because of the inherent
uncertainty of valuation of nonmarketable investments, those estimated values may differ significantly
from the values that would have been used had a ready market for the securities existed, and the
differences could be material. Investments received through gifts are recorded at estimated fair value at
the date of donation. Gains and losses that result from market fluctuations are recognized when such
fluctuations occur. Dividend and interest income are accrued when earned. (See Note 3.)

Property, Equipment, and Exhibits — Property, equipment, and exhibits are stated at cost, or at fair
value at the date of donation, and depreciated on the straight-line basis over the estimated useful lives of
the assets as follows:

  Asset                                                                                             Years

  Buildings                                                                                         10–40
  Exhibits                                                                                          2–15
  Equipment, furniture, and fixtures                                                                2–15

Capitalized costs for self-constructed assets include direct labor and benefits for employees specifically
identified with the project. Long-lived assets are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of such assets may not be recoverable.

Unrestricted Net Assets — Unrestricted net assets represent unrestricted resources available to support
the Aquarium’s operations and temporarily restricted resources, which have become available for use by
the Aquarium in accordance with the intentions of donors. Funds functioning as endowment are
unrestricted net assets that have been designated for specific purposes by the Aquarium’s Board of
Trustees.

Temporarily Restricted Net Assets — Temporarily restricted net assets represent gifts that are limited
in use by the Aquarium in accordance with temporary donor-imposed stipulations. These stipulations
expire with time and/or are satisfied and removed by the actions of the Aquarium according to the terms
of the gift.

Permanently Restricted Net Assets — Permanently restricted net assets represent gifts to be held as
investments in perpetuity as directed by the donor. The income from these investments may either be
restricted for donor-specified programs or unrestricted.

Memberships — Memberships are recorded as deferred revenue and recognized as support and
revenues ratably over the membership period, which is generally one year.

Revenue Recognition — Contributions are recognized as support and revenues when they are received
or unconditionally pledged. The Aquarium reports gifts of cash and other assets as restricted support if
they are received with donor stipulations that limit the use of the donated assets. When a donor
restriction expires, i.e., when a stipulated time restriction ends or purpose restriction is accomplished,



                                                 -6-
temporarily restricted net assets are reclassified to unrestricted net assets and reported in the
consolidated statements of activities and changes in net assets as net assets released from restrictions.
Temporarily restricted contributions are reported as unrestricted support and revenues when the
restriction is met in the same period as the contribution is received. Grants classified as exchange
transactions are recorded as unrestricted support and revenues as allowable expenditures are incurred.

Rental income is recognized on a straight-line basis. Rental income also includes storage and parking
fees and any reimbursements from tenants for common area maintenance, insurance, and real estate tax
expenses.

Contributions of services are recognized when received if such services (a) enhance nonfinancial assets
or (b) require specialized skills, are provided by individuals possessing those skills, and would typically
need to be purchased if not donated. During the years ended December 31, 2007 and 2006, the value of
contributed services recognized as support and revenues and expenses in the accompanying consolidated
statements of activities and changes in net assets was $291,000 and $112,000, respectively, which
consisted of advertising, professional diver and legal services. (See Note 8.)

The Aquarium also recognizes contributions of food, equipment, and other goods at the estimated fair
value at the date of donation. The estimated fair value of such contributions received and recognized as
contributions and expenses in the consolidated statements of activities and changes in net assets was
$174,000 and $184,000 for the years ended December 31, 2007 and 2006, respectively.

Functional Allocation of Expenses — Certain expenses, such as depreciation and facilities operations,
are allocated among program services, supporting services, and certain revenue categories based
primarily on space occupied and on estimates made by the Aquarium’s management.

Fair Value of Financial Instruments — Financial instruments included in the Aquarium’s
consolidated statements of financial position include cash, cash equivalents, pledges and grants
receivable, other receivables, beneficial interest in split-interest agreements, investments, accounts
payable and accrued liabilities, and gift annuity payment liability. For cash, cash equivalents, other
receivables, and accounts payable and accrued liabilities, the carrying amounts represent a reasonable
estimate of the fair values due to their short-term maturity. Pledges and grants receivable have been
discounted using applicable risk-free rates to approximate fair value. The fair value of investments is
estimated using the methodologies described above. Beneficial interest in split-interest agreements and
gift annuity payment liability are reflected at their estimated fair values using the methodology described
above.

Concentrations of Credit Risk — Financial instruments which potentially subject the Aquarium to
credit risk consist primarily of cash and cash equivalents, receivables, and investments. Cash and cash
equivalents are maintained by major financial institutions and include investments in money market
funds and short-term commercial paper. At times, such amounts may exceed Federal Deposit Insurance
Corporation limits. Receivables consist primarily of pledges due from donors. The Aquarium closely
monitors these receivables and has not experienced significant credit losses. The Aquarium attempts to
limit its credit risk associated with investments through diversification and by utilizing outside
investment managers.

Income Taxes — The Aquarium’s principal activities are exempt from federal and state income taxes
under Section 501(c)(3) of the Internal Revenue Code (the “Code”) and Section 23701(d) of the
California Tax Code.




                                                 -7-
Use of Estimates — The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates and
assumptions. Those estimates and assumptions 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. Significant estimates include the fair
value of investments and the useful lives of property and equipment. Actual results could differ from
those estimates.

New Accounting Pronouncements — In July 2006, the Financial Accounting Standards Board (FASB)
released FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation
of FASB Statement 109. FIN No. 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN No. 48 requires the
evaluation of tax positions taken in the course of preparing the Aquarium’s tax returns to determine
whether tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax
benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax
expense in the current year. FIN No. 48 is required for fiscal years beginning after December 15, 2007.
The Aquarium is currently evaluating the impact of FIN No. 48 and does not believe it will have a
material affect on the financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value
Measurements (SFAS No. 157). This statement establishes a single authoritative definition of fair value,
sets out a framework for measuring fair value and requires additional disclosures about fair value
measurements. SFAS No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007. The changes to current generally accepted accounting principles from the
application of this statement relate to the definition of fair value, the methods used to measure fair value,
and the expanded disclosures about fair value measurements. The Aquarium is currently evaluating the
impact of adopting SFAS No. 157 for the year ending December 31, 2008.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair
Value Option for Financial Assets and Liabilities (SFAS No. 159). This statement permits entities to
choose to measure many financial instruments and certain other items at fair value. If the fair value
option is elected, unrealized gains and losses will be recognized in earnings at each subsequent reporting
date. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after
November 15, 2007. The Aquarium has evaluated the implications of SFAS No. 159 and does not expect
the adoption to have a material impact on the financial statements.




                                                 -8-
2. PLEDGES AND GRANTS RECEIVABLE

  Pledges and grants receivable at December 31, 2007 and 2006, are expected to be collected as follows:

                                                                                2007              2006

    In one year or less                                                     $ 3,448,000        $ 4,701,000
    Between one and five years                                               21,876,000          3,641,000

           Total                                                             25,324,000         8,342,000

    Less discount on multi-year pledges receivable                           (2,764,000)         (193,000)
    Less allowance for doubtful amounts                                         (37,000)         (128,000)

    Total pledges and grants receivable — net                               $ 22,523,000       $ 8,021,000

3. INVESTMENTS

  The Aquarium’s investments consist of operating reserves, funds functioning as endowment, and funds
  which have been restricted by the donor as endowment. The investments are managed as a single
  diversified portfolio governed by the Aquarium’s investment policy, which sets asset allocation ranges
  for marketable securities and alternative investments, as well as equity and fixed income investments.
  All investments are held in funds managed by Commonfund Capital (“Commonfund”). Commonfund’s
  funds are not publicly traded, therefore a readily determinable fair value for the funds is not available.
  The Aquarium establishes fair value through a documented valuation process including review of
  audited reports for the Commonfund funds, verification of the fair value of marketable securities in the
  funds, regular review of Commonfund valuation approaches for non-marketable investments, and
  monitoring of each fund’s activity. Investments at December 31, 2007 and 2006 are stated at estimated
  fair value and are comprised of the following:

                                                                             2007                2006

    Cash and cash equivalents                                          $    4,745,000      $      717,000

    Equity strategies:
     Multi-strategy equity funds                                           75,393,000          70,611,000
     Hedged equities funds                                                 15,580,000          11,727,000
     Multi-strategy commodities fund                                        7,776,000           6,563,000
     Private capital funds                                                    585,000

           Total equity strategies                                         99,334,000          88,901,000

    Fixed income strategies:
     Multi-strategy fixed income fund                                      17,086,000          18,421,000
     Absolute return fund                                                  10,281,000           9,739,000
     Private real estate fund                                               1,951,000
     Distressed debt fund                                                   1,616,000             585,000

           Total fixed income strategies                                   30,934,000          28,745,000

    Total investments                                                  $ 135,013,000       $ 118,363,000



                                                  -9-
  Cash and cash equivalents noted above are being held for investment purposes.

4. PROPERTY, EQUIPMENT, AND EXHIBITS

  Property, equipment, and exhibits at December 31, 2007 and 2006, consist of the following:

                                                                           2007                 2006

    Land                                                             $ 24,209,000       $ 23,422,000
    Buildings                                                         131,271,000        129,076,000
    Exhibits                                                           33,389,000         30,338,000
    Equipment, furniture, and fixtures                                 21,414,000         20,143,000
    Capital projects in process                                         6,716,000          3,668,000

           Total                                                       216,999,000        206,647,000

    Less accumulated depreciation                                      (84,544,000)        (79,720,000)

    Property, equipment, and exhibits — net                          $ 132,455,000      $ 126,927,000

  Depreciation expense for the years ended December 31, 2007 and 2006, was $7,597,000 and
  $7,165,000, respectively.

5. TEMPORARILY AND PERMANENTLY RESTRICTED NET ASSETS

  Temporarily restricted net assets at December 31, 2007 and 2006, are available as follows:

                                                                              2007               2006

    Purpose restricted:
     Outer Bay Wing Remodel                                              $ 8,780,000       $        -
     Education Programs                                                      722,000            500,000
     COMPASS — marine research communication program                         187,000             51,000
     Seafood Watch — sustainable seafood initiative                           53,000            369,000
     Center for the Future of the Oceans                                      50,000            308,000
     Tuna Research and Conservation Center                                                       94,000

           Total purpose restricted                                         9,792,000          1,322,000

    Time restricted                                                        22,301,000          7,702,000

    Total temporarily restricted net assets                              $ 32,093,000      $ 9,024,000

  In 2007, $105,000 was reclassified from purpose restricted net assets to time restricted net assets,
  consisting of $85,000 of Education Programs funds and $20,000 of COMPASS funds. These amounts
  were reclassified since the purpose restriction was satisfied in 2007 but the funds were not due to be
  received as of December 31, 2007.




                                                 - 10 -
  Temporarily restricted net assets were released from restrictions by incurring expenses satisfying the
  donor restricted purposes or by the passage of time during the years ended December 31, 2007 and 2006,
  as follows:

                                                                                  2007              2006

    Seafood Watch — sustainable seafood initiative                            $ 369,000         $ 1,080,000
    Center for the Future of the Oceans                                         308,000
    Education Programs                                                          100,000
    Tuna Research and Conservation Center                                        94,000            363,000
    COMPASS — marine research communication program                              29,000             10,000
    Other purpose restricted                                                                        63,000
    Time restricted                                                             4,159,000        2,701,000

    Total net assets released from restrictions                               $ 5,059,000       $ 4,217,000

  Permanently restricted net assets as of December 31, 2007 and 2006, of $9,076,000 and $8,237,000,
  respectively, represent donor restricted endowment funds held by the Aquarium, the earnings of which
  support education and conservation programs and the mission of the Aquarium.

6. EMPLOYEE BENEFIT PLANS

  The Aquarium maintains a defined contribution plan for employees. All employees may make voluntary
  contributions to the plan within applicable limits as established by the Code. During 2007 and 2006, the
  Aquarium made discretionary contributions to the plan of 10% of eligible compensation. Retirement
  plan expense was $1,686,000 and $1,442,000 in 2007 and 2006, respectively.

7. COMMITMENTS AND CONTINGENCIES

  Lawsuits and claims are filed from time to time against the Aquarium in the ordinary course of business.
  Management does not believe that any outstanding matters will have a material adverse impact on the
  consolidated financial statements.

  The Aquarium derives a portion of its revenue supporting conservation and research from various
  federally funded programs which are subject to review and audit by oversight governmental agencies.
  Aquarium management believes that the Aquarium is in material compliance with the standards set forth
  by the federal governmental agencies and that the outcome of reviews and audits conducted by such
  agencies, if any, will not have a significant effect on the financial position or results of activities of the
  Aquarium.

8. RELATED PARTY TRANSACTIONS

  During 2007 and 2006, contributions from certain members of the Board of Trustees and entities with
  common board members totaled $31,655,000 and $2,090,000, respectively. Undiscounted pledges
  receivable from such related parties were $23,413,000 at December 31, 2007 and $4,413,000 at
  December 31, 2006. Legal services were also provided by certain officers and members of the Board of
  Trustees totaling $52,000 for the year ended December 31, 2007 and $22,000 for the year ended
  December 31, 2006, of which contributed legal services totaled $15,000 for the year ended
  December 31, 2007 and $6,000 for the year ended December 31, 2006.




                                                   - 11 -
   The Aquarium has a promissory note from an employee in the amount of $230,000 as of December 31,
   2007, which is discounted and included in other receivables in the consolidated statement of financial
   position. The note is interest free through November 30, 2009, and thereafter accrues interest at a rate of
   3.5% per year. The note and accrued interest is due on November 30, 2014. The terms of the note
   provide for partial reduction of the principal if certain conditions are met.

9. RENTAL INCOME

   The Aquarium leases space in the real properties located at 807 Cannery Row and 99 Pacific Street,
   Monterey, California to unrelated parties under noncancelable operating leases expiring through 2013.
   Minimum future rental revenues from operating leases having noncancelable lease terms in excess of
   one year are as follows:

     Years Ending
     December 31

     2008                                                                                     $ 983,000
     2009                                                                                       696,000
     2010                                                                                       434,000
     2011                                                                                       144,000
     2012 and thereafter                                                                        171,000

     Total                                                                                    $ 2,428,000

10. LEASE COMMITMENTS

   The Aquarium leases office space at 871 Foam Street, Monterey, California under a noncancelable
   operating lease whose term expires July 2009. Future minimum rental payments under the
   noncancelable operating lease at December 31, 2007, are as follows:

     Years Ending
     December 31

     2008                                                                                        $ 57,000
     2009                                                                                          30,000

     Total                                                                                       $ 87,000

   Rent expense for the years ended December 31, 2007 and 2006, was $55,000 and $54,000, respectively.

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