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-19-

The following report had been considered by the Executive Committee at its December 19 meeting and referred to the Regents for their consideration.

[[underlined]]FINANCIAL REPORT[[/underlined]]

Financial Schedules A thru G attached to this report are the same as those presented at the last Regents meeting in September, but revised to reflect changes which occurred since that time, as detailed below:

[[underlined]]FISCAL YEAR 1978[[/underlined]]

Actual overall gross operating income of $168.5 million, and net operating income of $124.9 million (after deduction of expenses of auxiliary activities), shown on Schedules A and B, were approximately $1.75 million higher than those estimated previously. Roughly half of the higher income was from better than predicted results of the auxiliary activities (Schedule E)--particularly from September sales of the Smithsonian Exposition Book, "The Magnificent Foragers", plus higher than anticipated results from the [[underline]]Smithsonian[[/underline]] Magazine, other Associates programs, museum shops and sales of music records. The other half of the increased income was largely in restricted trust funds and receipts by the bureaus (special purpose funds).

Most of the higher income from auxiliary activities served to raise the general unrestricted trust fund balance which increased in FY 1978 by $850,000 (versus $190,000 predicted at the last meeting) to reach a total of $4,932,000. At the same time there was an unusually large $5.3 million increase to $9,604,000 in the year-end balance of special purpose funds. This resulted from the transfer to the account from the general operating fund of the unspent portion of the FY 1978 $2,000,000 commitment to the Collections Acquisition, Research and Education program, plus the extra $2.0 million for the acquisitions program as agreed upon