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- vi - STATUS REPORTS The Regents were provided status reports on the following topics: Litigation Mitchell and Other Advancement/Indemnification Cases Development Initiative and Funds Raised Senior-Level Recruitments Major Construction Activities Planning for the Extension of the National Air and Space Museum Natural History Museum's West Court Project Smithsonian Financial System Biodiversity and Environmental Initiatives Electronic Access and Communications March 1995 "What About Increase?" Symposium REPORT OF THE AUDIT AND REVIEW COMMITTEE Mrs. Clark discussed the work of the Committee, noting that the Committee has held more than 50 meetings in the 15 years since its establishment, covering an extraordinarily wide range of topics, everything from the Archives of American Art to the Zoo. Citing Bylaw provisions for three Regent members of the Committee, Mrs. Clark encouraged her fellow Board members to consider serving in this capacity. Providing an example of the kind of topic the Committee frequently considers in depth, Under Secretary Newman presented an update on "Issues of Revenue Enhancement." She gauged the dimensions of Smithsonian auxiliary activities in financial terms, noting fiscal year 1994 gross revenues of approximately $200 million and net revenues of approximately $20 million. These revenues assist in the funding of fellowships, acquisition of museum collections, educational outreach, scholarly studies, and special exhibitions. With all of the future financial scenarios suggesting that the Smithsonian will become even more dependent on its auxiliary activities, the Institution must be more cost-effective, more innovative, and even more aggressive in its revenue-producing activities. Accordingly, a series of analyses are being prepared on opportunities for revenue enhancement and the Smithsonian has contracted with Peat Marwick for a review of the organization, staffing, and the market environment of the Smithsonian Press in an age of electronic information. Mrs. Newman described the major categories of businesses within the Smithsonian, examined the reasons for fluctuations in revenue experienced by these activities, and outlined the steps being taken by each to increase revenue. A discussion which followed included the marketing of Smithsonian magazine, the issue of unrelated business income taxes, and reference to the Smithsonian National Board assistance in management's review of Smithsonian publishing. The Committee reported that on November 29, 1994, they received a similar report from Mrs. Newman, a status report from Peat Warwick's review of the Smithsonian's fiscal year 1994 financial transactions, and Inspector General Blair's draft Five-Year Plan for fiscal years 1995-1999.