MISSOURI BOTANICAL GARDEN CONSOLIDATED FINANCIAL STATEMENTS. Years Ended December 31, 2011 and 2010

Transcription

1 MISSOURI BOTANICAL GARDEN CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2011 and 2010

2 Mayer Hoffman McCann P.C. An Independent CPA Firm One City Place Drive, Suite 570 st. Louis, Missouri ph fx INDEPENDENT AUDITORS' REPORT To the Board of Trustees of the Missouri Botanical Garden: We have audited the accompanying consolidated statements of financial position of the Missouri Botanical Garden (a perpetual trust established by Henry Shaw and authorized by the General Assembly of the State of Missouri) as of December 31, 2011 and 2010, and the related consolidated statements of activities and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Missouri Botanical Garden'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 U.S. generally accepted auditing standards. 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the 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, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Missouri Botanical Garden as of December 31, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles. St. Louis, Missouri March 27,2012 M~mber tj( Kr estot1 international a global nelwurk of /tlt"lcpendenl accoufi!ln g films

3 MISSOURI BOTANICAL GARDEN CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of December 31, 2011 and ASSETS: Cash and cash equivalents $ 6,140,522 $ 1,493,287 Grants receivable 3,532,729 1,893,965 Pledges receivable 23,330,292 9,480,653 Other receivables, net 1,060,972 1,217,440 Inventories, prepayments and other assets 2,430,950 1,943,991 Investments 82,353,782 81,894,769 Property and equipment, net of accumulated depreciation 85,983,066 85,575,024 TOTAL ASSETS $ 204,832,313 $ 183,499,129 LIABILITIES: Accounts payable and accrued liabilities $ 7,826,279 $ 6,015,953 Refundable advances 5,400,724 4,327,127 Liability for gift annuity payments 3,574,935 3,606,480 TOTAL LIABILITIES 16,801,938 13,949,560 NET ASSETS: Unrestricted- General operating - undesignated 2,675,436 3,094,138 Board Designated- Operating 510,882 (163,887) Capital expenditures 78,291,129 78,036,351 Long-term investment (Note 4) - 124,645 Total designated 78,802,011 77,997,109 Total unrestricted 81,477,447 81,091,247 Temporarily restricted 38,852,156 43,938,852 Permanently restricted 67,700,772 44,519,470 TOTAL NET ASSETS 188,030, ,549,569 TOTAL LIABILITIES AND NET ASSETS $ 204,832,313 $ 183,499,129 The accompanying notes are an integral part of these statements. -2-

4 MISSOURI BOTANICAL GARDEN CONSOLIDATED STATEMENT OF ACTIVITIES For The Year Ended December 31, 2011 Unrestricted General Operating Designated Total Temporarily Restricted Permanently Restricted Total Activities PUBLIC SUPPORT AND REVENUES: Public support- Services provided for Botanical Garden Subdistrict $ 10,200,000 $ - $ 10,200,000 $ - $ - $ 10,200,000 Contributions and memberships 6,736,570 1,107,620 7,844,190 3,069,414 23,181,302 34,094,906 Bequests 2,031,198-2,031, ,031,198 Revenues- Admissions 1,840,881-1,840, ,840,881 Grants and contracts - 10,159,509 10,159,509 1,679,878-11,839,387 Retail shops 2,457,874-2,457, ,457,874 Education 392, , ,310 Property rentals 429, , ,016 Overhead recovered from grants and contracts 326,347 (326,347) Interest and dividend income, net- Endowment ,212,122-1,212,122 Other investments ,657 38, ,344 Net realized investment gains (losses)- Endowment , ,783 Other investments (3,301) 63,231 59,930 80, ,961 Net unrealized investment gains (losses)- Endowment (1,108,172) - (1,108,172) Appropriated investment income 2,598,256 (2,673,256) (75,000) - - (75,000) Other investments - (116,479) (116,479) - - (116,479) Other 1,013, ,168 1,663, ,663,418 Net assets released from restrictions - 10,212,445 10,212,445 (10,212,445) - - TOTAL PUBLIC SUPPORT AND REVENUES $ 28,023,088 $ 19,114,548 $ 47,137,636 $ (5,052,389) $ 23,181,302 $ 65,266,549 (Continued on following page) The accompanying notes are an integral part of this statement. -3-

5 MISSOURI BOTANICAL GARDEN CONSOLIDATED STATEMENT OF ACTIVITIES (Continued from previous page) For The Year Ended December 31, 2011 General Operating Unrestricted Designated EXPENSES: Operating services- Horticulture $ 2,801,855 $ 352,701 $ 3,154,556 $ - $ - $ 3,154,556 Science and conservation 4,486,047 4,505,825 8,991, ,991,872 Retail shops 2,482,464-2,482, ,482,464 Education 1,157,965 1,355,877 2,513, ,513,842 Earthways/Sustainability 254,815 2,230,869 2,485, ,485,684 Butterfly House-general 936, , ,466 Shaw Nature Reserve-general 735, ,297 1,021, ,021,311 Visitor services 350, , ,818 Public events 683, , , ,680 Professional services - 2,081,605 2,081, ,081,605 Bioinformatics 120, , , ,860 Neighborhood improvements - 275, , ,435 TOTAL OPERATING SERVICES 14,008,536 12,086,057 26,094, ,094,593 Supporting Services- Administrative 6,660, ,254 6,767, ,767,014 Maintenance and improvements 3,010, ,722 3,262, ,262,380 Depreciation - 4,205,488 4,205, ,205,488 Utilities 946, , ,853 Security 669, , ,132 Membership department 877, , ,902 Institutional advancement 1,292, ,026 1,726, ,726,563 TOTAL SUPPORTING SERVICES 13,457,842 4,997,490 18,455, ,455,332 CHANGE IN VALUE OF ANNUITY AGREEMENTS , ,227 TOTAL EXPENSES 27,466,378 17,083,547 44,549, ,227-44,988,152 CHANGE IN NET ASSETS BEFORE TRANSFERS 556,710 2,031,001 2,587,711 (5,490,616) 23,181,302 20,278,397 PROPERTY TRANSFERS (382,542) 382, TRANSFERS OF FUNDS 1,192,620 (1,596,540) (403,920) 403, CHANGE IN NET ASSETS BEFORE MINIMUM PENSION LIABILITY ADJUSTMENT 1,366, ,003 2,183,791 (5,086,696) 23,181,302 20,278,397 MINIMUM PENSION LIABILITY ADJUSTMENT (1,785,490) (12,101) (1,797,591) - - (1,797,591) CHANGE IN NET ASSETS (418,702) 804, ,200 (5,086,696) 23,181,302 18,480,806 NET ASSETS - BEGINNING OF YEAR 3,094,138 77,997,109 81,091,247 43,938,852 44,519, ,549,569 NET ASSETS - END OF YEAR $ 2,675,436 $ 78,802,011 $ 81,477,447 $ 38,852,156 $ 67,700,772 $ 188,030,375 Total Temporarily Restricted Permanently Restricted Total Activities The accompanying notes are an integral part of this statement. -4-

6 MISSOURI BOTANICAL GARDEN CONSOLIDATED STATEMENT OF ACTIVITIES For The Year Ended December 31, 2010 Unrestricted General Operating Designated Total Temporarily Restricted Permanently Restricted Total Activities PUBLIC SUPPORT AND REVENUES: Public support- Services provided for Botanical Garden Subdistrict $ 10,300,000 $ - $ 10,300,000 $ - $ - $ 10,300,000 Contributions and memberships 6,012, ,255 6,455,137 4,160,552 4,288,167 14,903,856 Bequests 311, , ,271 Revenues- Admissions 2,275,752-2,275, ,275,752 Grants and contracts - 8,653,169 8,653, ,495-9,509,664 Retail shops 2,489,029-2,489, ,489,029 Education 357, , ,186 Property rentals 380, , ,172 Overhead recovered from grants and contracts 281,424 (281,424) Interest and dividend income, net- Endowment ,134,179-1,134,179 Other investments 950 (19,395) (18,445) - (18,445) Net realized investment gains (losses)- Endowment , ,110 Other investments (4,419) 42,137 37, ,718 Net unrealized investment gains- Endowment ,099,861-5,099,861 Appropriated investment income 2,990,393 (2,990,393) Other investments - 19,476 19, ,476 Other 861,592 (4,397) 857, ,195 Net assets released from restrictions - 14,674,407 14,674,407 (14,674,407) - - TOTAL PUBLIC SUPPORT AND REVENUES $ 26,256,232 $ 20,535,835 $ 46,792,067 $ (3,301,210) $ 4,288,167 $ 47,779,024 (Continued on following page) The accompanying notes are an integral part of this statement. -5-

7 MISSOURI BOTANICAL GARDEN CONSOLIDATED STATEMENT OF ACTIVITIES (Continued from previous page) For The Year Ended December 31, 2010 General Operating Unrestricted Designated EXPENSES: Operating services- Horticulture $ 2,614,037 $ 395,402 $ 3,009,439 $ - $ - $ 3,009,439 Science and conservation 4,306,444 4,884,398 9,190, ,190,842 Retail shops 2,370,975-2,370, ,370,975 Education 1,110,760 1,902,268 3,013, ,013,028 Earthways/Sustainability 277, , ,684 Butterfly House-general 1,128,898-1,128, ,128,898 Shaw Nature Reserve-general 709, ,512 1,024, ,024,837 Visitor services 372,991 8, , ,941 Public events 480, , , ,205 Professional services - 1,905,789 1,905, ,905,789 Bioinformatics 6, , , ,070 Neighborhood improvements - 62,424 62, ,424 TOTAL OPERATING SERVICES 13,377,580 10,689,552 24,067, ,067,132 Supporting Services- Administrative 6,538, ,303 6,644, ,644,643 Maintenance and improvements 2,869, ,055 3,155, ,155,878 Depreciation - 4,142,470 4,142, ,142,470 Utilities 982, , ,771 Security 675, , ,855 Membership department 900, , ,110 Institutional advancement 1,152, ,569 1,562, ,562,257 TOTAL SUPPORTING SERVICES 13,119,587 4,944,397 18,063, ,063,984 CHANGE IN VALUE OF ANNUITY AGREEMENTS (192,052) - (192,052) TOTAL EXPENSES 26,497,167 15,633,949 42,131,116 (192,052) - 41,939,064 CHANGE IN NET ASSETS BEFORE TRANSFERS (240,935) 4,901,886 4,660,951 (3,109,158) 4,288,167 5,839,960 PROPERTY TRANSFERS (110,190) (5,462,090) (5,572,280) 5,572, TRANSFERS OF FUNDS (155,120) 800, ,264 (645,264) - - CHANGE IN NET ASSETS BEFORE MINIMUM PENSION LIABILITY ADJUSTMENT (506,245) 240,180 (266,065) 1,817,858 4,288,167 5,839,960 MINIMUM PENSION LIABILITY ADJUSTMENT (253,870) (5,947) (259,817) - - (259,817) CHANGE IN NET ASSETS (760,115) 234,233 (525,882) 1,817,858 4,288,167 5,580,143 NET ASSETS - BEGINNING OF YEAR 3,854,253 77,762,876 81,617,129 42,120,994 40,231, ,969,426 NET ASSETS - END OF YEAR $ 3,094,138 $ 77,997,109 $ 81,091,247 $ 43,938,852 $ 44,519,470 $ 169,549,569 Total Temporarily Restricted Permanently Restricted Total Activities The accompanying notes are an integral part of this statement. -6-

8 MISSOURI BOTANICAL GARDEN CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2011 and CASH FLOWS FROM OPERATIONS: Change in net assets $ 18,480,806 $ 5,580,143 Adjustments to reconcile change in net assets to cash- Depreciation 4,205,488 4,142,470 Net realized gains on investments (366,744) (159,828) Net unrealized (gains) losses on investments 1,224,651 (5,119,337) Net unrealized (gains) losses on investments- Annuity fund 91,232 (222,034) Change in assets and liabilities- Receivables (15,331,935) (1,301,671) Inventories, prepayments and other assets (486,959) 291,077 Accounts payable and accrued liabilities 1,810,326 54,738 Refundable advances 1,073,597 (697,376) Liability for gift annuity payments (31,545) (395,751) Contributions and investment income restricted for long-term purposes (5,160,056) (11,373,197) NET CASH FROM OPERATIONS 5,508,861 (9,200,766) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of investments 17,379,906 19,611,253 Purchases of investments (18,788,058) (20,173,675) Purchases of property (4,613,530) (6,468,803) NET CASH FROM INVESTING ACTIVITIES (6,021,682) (7,031,225) CASH FLOWS FROM FINANCING ACTIVITIES: Contributions and investment income restricted for long-term purposes 5,160,056 11,373,197 NET CASH FROM FINANCING ACTIVITIES 5,160,056 11,373,197 NET CHANGE IN CASH AND CASH EQUIVALENTS 4,647,235 (4,858,794) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 1,493,287 6,352,081 CASH AND CASH EQUIVALENTS, END OF YEAR $ 6,140,522 $ 1,493,287 The accompanying notes are an integral part of these statements

9 MISSOURI BOTANICAL GARDEN (1) Summary of significant accounting policies Garden operations The Missouri Botanical Garden (the Garden) is a not-for-profit charitable trust whose three primary functions are research, education and horticultural display. Its mission is to discover and share knowledge about plants and their environment in order to preserve and enrich life. The Garden is funded through public contributions, local and federal grants, investment income, membership and admission fees, retail shop revenue and revenue from botanical services provided to the public and funded by the Botanical Garden Subdistrict of the Metropolitan Zoological Park and Museum District of the City of St. Louis and St. Louis County (the Botanical Garden Subdistrict). Principles of consolidation The accompanying consolidated financial statements include the accounts of the Garden and its wholly-owned subsidiary, MBG Properties, Inc. All significant inter-organization transactions and balances have been eliminated in consolidation. Basis of presentation The Garden follows accounting standards set by the Financial Accounting Standards Board (FASB). The financial statement presentation follows the recommendations of the FASB Accounting Standards Codification ASC Under ASC , the Garden is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Fair value measurements The fair value of financial instruments including cash and cash equivalents, grants receivables, prepaid expenses, accounts payable and accrued liabilities and refundable advances approximate carrying value due to the short-term nature of these accounts. The Garden determines the fair value of certain financial assets and liabilities on a recurring basis through application of ASC 820, as disclosed in Note 5 to the financial statements. There were no triggering events that required fair value measurements of the Garden s nonfinancial assets and liabilities at December 31, 2011 and Cash and cash equivalents Cash and cash equivalents consist of demand deposits held in banks and overnight repurchase agreements with original maturities of three months or less. Short-term commercial paper, liquid securities and money market funds are included in investments. Grants receivable Grants receivable consists of amounts due to the Garden related to the work performed under grant and contract agreements. Pledges receivable Legally enforceable pledges are recorded as receivables in the year made. Pledges for support of current operations are recorded as unrestricted-general operating support. Pledges made and received beyond one year are discounted to the present value of estimated future cash flows using a risk-adjusted discount rate equal to the 30-year - 8 -

10 MISSOURI BOTANICAL GARDEN (1) Summary of significant accounting policies (continued) Treasury Bond rate at the pledge date (ranging from 2.89% to 5.12% at December 31, 2011 and 2010). For pledges made and received within one year, the net realizable value is a reasonable estimate of the fair value. Amortization of the discount is included in contribution revenue. Conditional pledges receivable are not included as support until the conditions are substantially met. Management writes off receivables when it determines that an amount will not be collected and considers all pledges receivable at December 31, 2011 and 2010 to be collectible. Accordingly, no allowance for uncollectible pledges receivable has been reflected in the consolidated financial statements. Other receivables Other receivables consist primarily of a receivable from a related entity, accrued interest, bequest receivables, and the cash surrender value of a life insurance policy. Inventory Inventory is stated at the lower of cost or market and consists of items held for sale at the retail centers of the Garden. Cost is determined using the average cost method. Investments Investments are carried at market value, and net realized and unrealized gains (losses) are reflected in the consolidated statements of activities. Contributed securities are stated at their fair market value on the date of receipt. It is the policy of the Garden to sell all contributed securities as soon as they are received. Property and equipment Property and equipment are recorded at cost, if purchased, or at estimated fair market value on the date of receipt, if donated. Expenditures greater than $5,000 for vehicles and $15,000 for non-vehicles are reviewed for capitalization. Expenditures for repairs and maintenance are charged to expense as incurred, and additions and improvements that significantly extend the lives of assets are capitalized. Construction in progress includes expenditures made toward the replacement of the Ridgway Center roof, renovation of a parking lot, and improvements at Shaw Nature Reserve. Generally, plant materials are expensed as purchased and are not capitalized. Depreciation and amortization is provided on a straight-line basis over the following useful lives: Building, gardens and other structures Furniture, office and data processing equipment Other Useful Lives years 3-15 years 3-15 years Refundable advances Refundable advances represent cash received from grants prior to performance by the Garden. Gift annuities The Garden has certain arrangements with donors in which the donor contributes assets in exchange for a promise of fixed payment for a specified period of time to a designated party. At the time of the donation, the assets received are held by the Garden as - 9 -

11 MISSOURI BOTANICAL GARDEN (1) Summary of significant accounting policies (continued) part of its general assets; a liability is recorded and measured at the present value of the expected future payments to be made to other beneficiaries; any difference is recognized as contribution revenue. Actuarially determined present values are calculated utilizing discount rates ranging from 5% to 7% as of December 31, Unrestricted-designated net assets Unrestricted-designated net assets include net assets restricted by the Board of Trustees for specified purposes, net assets that have accomplished donor restrictions in the same period that the contribution was made, and net assets used for capital projects. Revenue recognition Revenue derived from contract services provided by the Garden to the Botanical Garden Subdistrict are recorded as earned (Note 13). The Garden records contributions when received as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted-designated net assets in the consolidated statements of activities. Bequests are recognized at the time the probate court declares the donor s will valid, unless there are conditions or uncertain events surrounding the bequest. In those circumstances, the transaction is recorded at the time the cash is received. The Garden reports gifts of land, buildings and equipment as unrestricted support unless explicit donor stipulations specify how the donated assets must be used. Gifts of long-lived assets with explicit restrictions that specify how the assets are to be used and gifts of cash or other assets that must be used to acquire long-lived assets are reported as restricted support. Absent explicit donor stipulations about how long those long-lived assets must be maintained, the Garden reports expirations of donor restrictions when the donated or acquired long-lived assets are placed in service. Admissions revenue consists of ticket sales and is recognized when the tickets are sold. Grant and contract revenues are recorded as earned, that is, as expenditures are incurred related to individual grant programs and contracts. The Garden has sponsorship agreements with corporations. These agreements allow for the sponsor to have their name displayed on signage at the facilities, on specified promotional materials and/or at certain events. Sponsorships received for future events are recorded as deferred support until the event occurs. A number of volunteers contribute services to the Garden in a variety of ways such as gardening and various clerical services that did not meet the requirements of ASC , and are not reflected in the accompanying consolidated financial statements. Advertising expenses Advertising costs are expensed as incurred

12 MISSOURI BOTANICAL GARDEN (1) Summary of significant accounting policies (continued) Income taxes The Garden is a not-for-profit trust, exempt from Federal income tax under section 501(c)(3) of the Internal Revenue Code and none of its present or anticipated future activities are subject to taxation as unrelated business income. Therefore, no provision for income taxes has been made in the accompanying consolidated financial statements. The Garden follows the provisions of ASC requiring disclosure of uncertain tax positions. There have been no interest or penalties neither recognized in the Statements of Activities nor in the Statements of Financial Position related to uncertain tax positions. In addition, no tax positions exist for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The Garden evaluates its uncertain tax positions, if any, on a continual basis through review of its policies and procedures, review of its regular tax filings, and discussions with outside experts. Use of estimates The presentation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain items in the 2010 financial statements have been reclassified to conform to the 2011 presentation. (2) Pledges receivable Pledges receivable are due as follows: December 31, Less than one year $ 5,649,559 $ 2,704,747 One to five years 14,843,328 6,740,834 More than five years 4,918, ,850 Pledge discounts (2,081,398) (839,778) $ 23,330,292 $ 9,480,653 (3) Investments Investment income on the consolidated statements of activities is shown net of investment, advisory and management fees of $514,264 and $382,063 for the years ended December 31, 2011 and 2010, respectively. Included in these fees are amounts paid to the asset custodian of the investments. The asset custodian is a financial institution for which a Trustee is a director

13 (3) Investments (continued) MISSOURI BOTANICAL GARDEN The amounts paid to the asset custodian during the years ended December 31, 2011 and 2010 are $126,795 and $132,422, respectively. This conflict of interest was approved at the Garden Board of Trustees regular meetings held on February 7, 2011 and February 10, Investments are recorded at fair value in the accompanying consolidated statements of financial position in accordance with ASC The fair values of investments with readily determinable fair values are based on quoted market prices. For further discussion of fair value refer to Note 5. Investments consist of the following at: December 31, Equities $ 24,552,838 $ 25,362,154 Bonds 16,875,301 15,568,689 Equity mutual funds 30,642,929 25,934,724 Commercial paper 1,719,462 8,116,759 Real estate funds 8,563,252 6,912,443 $ 82,353,782 $ 81,894,769 (4) Endowment The Garden s endowment consist of 21 individual funds established for a variety of purposes. As required by GAAP, net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The Board of Trustees of the Garden has interpreted the state of Missouri enacted version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Garden classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, and (b) the original value of subsequent gifts to the permanent endowment. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Garden in a manner consistent with the standard of prudence prescribed by UPMIFA

14 (4) Endowment (continued) MISSOURI BOTANICAL GARDEN The Garden has investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Garden must hold in perpetuity or for a donor-specified period(s) as well as board-designated funds. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce results that exceed the price and yield results of the applicable indices while assuming a moderate level of investment risk. The Garden expects its endowment funds, over time, to provide an average rate of return equal to or greater than 7.0% annually. Actual returns in any given year may vary from this amount. To satisfy its long-term rate-of-return objectives, the Garden relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Garden targets a diversified asset allocation that places a greater emphasis on equity-based investments to achieve its long-term return objectives within prudent risk constraints. The Garden has a policy of appropriating for distribution each year 5 percent of its endowment fund s average fair value over the prior 3 years through June 30 preceding the fiscal year in which the distribution is planned. In establishing this policy, the Garden considered the longterm expected return on its endowment. The changes in endowment net assets for the year ended December 31, 2011 are as follows: Board Designated Unrestricted Temporarily Restricted Permanently Restricted Total Endowment net assets, January 1, 2011 $ 124,645 $ 31,850,353 $ 43,956,257 $ 75,931,255 Contributions ,181,302 23,181,302 Investment return: Investment income, net of realized gains - 1,518,936-1,518,936 Net depreciation - (1,108,172) - (1,108,172) Net assets released from restriction 3,558,121 (3,558,121) - - Amounts disbursed (300,605) (286,303) - (586,908) Amounts appropriated (3,382,161) - - (3,382,161) Endowment net assets, December 31, 2011 $ - $ 28,416,693 $ 67,137,559 $ 95,554,

15 (4) Endowment (continued) MISSOURI BOTANICAL GARDEN From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or UPMIFA requires the Garden to retain as a fund of perpetual duration. There were no such deficiencies as of December 31, 2011 and (5) Fair value measurements Fair values of assets and liabilities measured on a recurring basis at December 31, 2011 and 2010 are as follows: December 31, 2011 Quoted Prices In Active Markets for Identical Assets Fair Value (Level 1) Significant Other Observable Inputs Significant Unobservable Inputs (Level 2) (Level 3) Investments: Equities $ 24,552,838 $ 24,552,838 $ - $ - Bonds 16,875,301-16,875,301 - Equity mutual funds 30,642,929 30,642, Commercial paper 1,719,462 1,719, Real estate funds 8,563,252-8,563,252 - Total Investments $ 82,353,782 $ 56,915,229 $ 25,438,553 $ - December 31, 2010 Investments: Equities $ 25,362,154 $ 25,362,154 $ - $ - Bonds 15,568,689-15,568,689 - Equity mutual funds 25,934,724 25,934, Commercial paper 8,116,759 8,116, Real estate funds 6,912,443-6,912,443 - Total Investments $ 81,894,769 $ 59,413,637 $ 22,481,132 $ - Fair value for investments valued using level 1 inputs are based on unadjusted quoted market prices within active markets. Fair value for investments valued using level 2 inputs are based primarily on available quoted prices for similar assets in active or inactive markets. Investments in Level 2 category include bonds and real estate funds

16 (6) Property and equipment MISSOURI BOTANICAL GARDEN Property and equipment, consists of the following at: December 31, Nondepreciable: Land $ 4,342,868 $ 4,342,868 Construction in progress 7,663,598 7,000,569 Fountains, sculptures, gardens and other 3,078,082 3,078,083 Depreciable: Buildings, gardens and other structures 126,474, ,598,959 Furniture, office and data processing equipment 5,557,750 5,544,544 Other 4,066,873 4,011,096 Less - accumulated depreciation (65,200,740) (61,001,095) $ 85,983,066 $ 85,575,024 Depreciation expense for the years ended December 31, 2011 and 2010 was $4,205,488 and $4,142,470 respectively. (7) Lines of credit The Garden maintains an unsecured line of credit at December 31, 2011 for $5,000,000 which expires on April 27, The line of credit bears interest of 1.50% above the LIBOR index. The line of credit was not used in 2011 and (8) Operating leases The Garden leases copiers and an automobile under noncancelable operating lease agreements having an initial term of greater than one year. The expected minimum lease payments are as follows: Year ending December 31: 2012 $ 43, , ,736 Thereafter $ - 73,222 Rental expense for noncancelable operating lease agreements was $76,505 and $110,806 for the years ended December 31, 2011 and 2010, respectively

17 (9) Restricted net assets MISSOURI BOTANICAL GARDEN Temporarily restricted net assets consist of: December 31, Property and equipment $ 10,435,463 $ 12,088,499 Research and education 28,416,693 31,850,353 $ 38,852,156 $ 43,938,852 Permanently restricted net assets are primarily to provide a permanent endowment with investment income available for the operating expenses of the Garden. Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes or by occurrence of other events specified by donors. Net assets were released for the following purposes: (10) Retirement plans Years Ended December 31, Research and education projects $ 921,097 $ 1,521,121 Capital projects 5,733,227 10,538,078 General operating 3,257,516 2,851,953 Annuity fund 300,605 (236,745) $ 10,212,445 $ 14,674,407 The Garden sponsors a defined contribution 403(b) plan covering substantially all eligible employees who choose to participate. The Garden matches employee contributions up to a maximum of 6%. The Garden s contributions for the years ended December 31, 2011 and 2010 were $788,208 and $793,386, respectively. In addition, the Garden sponsors a defined benefit pension plan covering certain eligible employees (the Plan). Effective January 1, 2005, benefit accounts were frozen for all participants and no new participants were allowed to enter the Plan. The benefits are based on years of service and an employee s cumulative compensation from entering the Plan through December 31, The Garden uses a December 31 measurement date for the Plan. The following tables provide further information about the Plan in accordance with required disclosures under ASC :

18 (10) Retirement plans (continued) MISSOURI BOTANICAL GARDEN Change in benefit obligation during year: December 31, 2011 December 31, 2010 Projected Benefit Obligation (PBO) at beginning of year $ 8,210,940 $ 7,447,603 Interest cost 448, ,594 Benefits paid (194,047) (192,639) Actuarial loss 1,241, ,382 PBO at end of year $ 9,706,559 $ 8,210,940 Accumulated benefit obligation at end of year $ 9,706,559 $ 8,210,940 Change in plan assets during year: December 31, 2011 December 31, 2010 Fair value of plan assets at beginning of year $ 6,196,491 $ 5,576,079 Actual return (loss) on plan assets (107,925) 696,159 Employer contributions 426, ,892 Benefits paid (194,047) (192,639) Fair value of plan assets at end of year $ 6,321,345 $ 6,196,491 Funded status at end of year- Assets- PBO $ (3,385,214) $ (2,014,449) ASC 715 amounts recognized in Statement of Financial Position consist of: December 31, 2011 December 31, 2010 Liabilities $ 3,385,214 $ 2,014,449 ASC 715 amounts recognized in Unrestricted Net Assets consist of: December 31, 2011 December 31, 2010 Increase during year $ 1,664,144 $ 85,055 Beginning of year actuarial net loss 2,467,502 2,382,447 Total $ 4,131,646 $ 2,467,

19 (10) Retirement plans (continued) MISSOURI BOTANICAL GARDEN Pension Benefits Weighted-average assumptions used to determine benefit obligations at December 31: Discount rate 4.40% 5.50% Rate of compensation increase N/A N/A Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31: Discount rate 5.50% 6.00% Expected return on plan assets 8.00% 8.00% Rate of compensation increase N/A N/A The Garden's expected rate of return on Plan assets is determined by the Plan assets' historical long-term investment performance, current asset allocation, and estimates of future long-term returns by asset class, as follows: Expected Long-Term Return = Contribution to Asset Class on Class X Allocation Assumption Equity 8-10 % 60% 4.8% - 6.0% Fixed Income 5-7% 40% 2.0% - 2.8% 6.8% - 8.8% The 8% expected return on Plan assets assumption falls within the expected range. Plan Assets The Garden s pension plan weighted-average asset allocations at December 31, 2011 and 2010, by asset category are as follows: December 31, Equity securities 49% 58% Fixed income 30% 27% Alternatives 16% 13% Cash equivalents 5% 2% Total 100% 100%

20 (10) Retirement plans (continued) MISSOURI BOTANICAL GARDEN The Garden s overall objective for Plan assets is to provide benefits to its beneficiaries through a carefully planned and executed investment program. The assets of the Plan shall be diversified to minimize the risk of large losses within any one asset class, investment type, geographic location, industry or sector distributions, or maturity date, which could seriously impair the Plan s ability to achieve its funding and long-term investment objectives. The assets of the Plan shall be invested to maximize returns for the level of risk taken and maintain adequate liquidity to meet required benefit payments to the Plan s beneficiaries. Based on the determination of the appropriate risk posture for the Plan and its long-term expectations, the following target allocation ranges were established for each major asset category: Domestic equity securities 40%-50% International equity securities 5%-15% Debt securities 20%-35% Alternative investments 5%-15% The Garden attempts to mitigate investment risk by rebalancing the portfolio back to target allocations as the Garden s contributions and monthly benefit payments are made. If an event causes the portfolio weightings to change significantly, the portfolios are rebalanced immediately following the change. Cash Flows Contributions The Garden expects to contribute $567,422 to the Plan in 2012, because the estimated 2011 remaining minimum required contribution and the estimated 2012 total required quarterly contributions are $232,112 and $335,310, respectively. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: Pension Benefits 2012 $ 457, , , , ,055 Years ,104,881 Total $ 5,622,

21 (11) Concentrations of credit risk MISSOURI BOTANICAL GARDEN Financial instruments that potentially subject the Garden to concentrations of credit risk consist principally of cash deposits in banks and other financial institutions, investment securities, and pledge receivables. The Garden maintains cash and cash equivalents and short and long-term investments with major banks and financial institutions. Accounts at banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 and accounts at brokerage firms are insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 at each institution, as applicable. At times, the Garden may have cash balances with banks in excess of the FDIC coverage. At December 31, 2011, approximately 5 donors comprise over 90% of the pledge receivable balance. All of these donors have a strong history with the Garden and no issues with collectability are anticipated. (12) Related party transactions During the years ended December 31, 2011 and 2010, the Garden received $4,049,658 and $2,070,324, respectively, in contributions for operating, research, and capital purposes from various members of the Board of Trustees (Trustees). In addition, during the years ended December 31, 2011 and 2010, $23,353,136 and $693,565, respectively, were received from immediate family members of the Trustees, or from companies in which Trustees serve as a director or officer. At December 31, 2011 and 2010, pledges receivable, gross, of $22,742,966 and $9,888,048, respectively, were due from Trustees, immediate family members of the Trustees and companies in which Trustees serve as a director or officer, and consisted of multiple year pledges to the Garden for operating, research, and capital funds. Note 3 includes amounts paid for investment, advisory and management fees to a related party. (13) Botanical Garden Subdistrict The Subdistrict is a part of the Metropolitan Zoological Park and Museum District of the City of St. Louis and St. Louis County. The Subdistrict was established to receive tax revenues from the tax collectors offices and to pay for botanical services provided to benefit the public. Pursuant to legal requirements, the Subdistrict and the Garden enter into an annually renewable contract for botanical services. The contract provides for botanical facilities and services to be provided to the public by the Garden in exchange for compensation from the Subdistrict. In accordance with the contract, the Garden records revenue based on a rate of 3.81 and 3.64 on each $100 of assessed valuation at December 31, 2011 and 2010, respectively. (14) Related entities The Garden leases employees to and/or provides accounting services pursuant to written contracts for six other entities. In accordance with ASC , the accounts of the Garden District Commission (GDC), Center for Plant Conservation, Inc. (CPC), Gateway Greening, Inc. (GGI), the St. Louis-Jefferson Solid Waste Management District (Solid Waste Management), the Botanical Society of America (BSA) and Earth Share of Missouri (ESMO) have not been included in the accompanying consolidated financial statements as the criteria of control does not exist. As required, the following information regarding transactions between the Garden and these entities is provided:

22 (14) Related entities (continued) MISSOURI BOTANICAL GARDEN Garden District Commission GDC is a not-for-profit corporation established to help stabilize and strengthen the Shaw, McRee Town, Tiffany, and Southwest Garden neighborhoods. It is also intended to provide services to organizations and institutions within these neighborhoods as part of a planned approach to neighborhood stabilization and improvement. In addition to providing accounting services, the Garden lends money to the GDC from time to time primarily for property purchases and other related expenses. As of December 31, 2011 and 2010, the Garden has a receivable from GDC of $729,535 (net of an allowance and discount totaling $182,384) and $898,399, respectively. During the years ended December 31, 2011 and 2010, the Garden received $275,435 and $62,423, respectively, in Federal grants that were passed through to GDC and reported as neighborhood improvements on the consolidated statement of activities. Center for Plant Conservation, Inc. CPC is a not-for-profit corporation established for the purpose of promoting the conservation and preservation of endangered species in the United States. As of December 31, 2011 and 2010, the Garden has a contract receivable from CPC of $192,720 and $186,139, respectively, relating to salaries and other operational support funded by the Garden on a reimbursement basis. Gateway Greening, Inc. GGI is a not-for-profit organization dedicated to community development through community gardening. GGI s mission is to provide resources and training to neighborhood groups who believe in their communities and want to reclaim them from urban decay. As of December 31, 2011 and 2010, the Garden has a contract receivable from GGI of $68,104 and $47,017 respectively, relating to salaries and other operational support funded by the Garden on a reimbursement basis. The St. Louis-Jefferson Solid Waste Management District Solid Waste Management is a local government agency which serves as a resource to assist the public, private and not-forprofit sectors in establishing and expanding waste reduction, recycling and composting efforts in the St. Louis area. At December 31, 2011 and 2010, the Garden has a contract receivable from Solid Waste Management of $0 and $56,873, respectively. Botanical Society of America BSA is a not-for-profit corporation established to promote botany, the field of basic science dealing with the study and inquiry into form, function, diversity, development, reproduction, evolution, and uses of plants and their interactions within the biosphere. In addition to leasing employees to BSA, the Garden also leases approximately 1,000 square feet of space for a nominal fee. At December 31, 2011 and 2010, the Garden has a contract receivable from BSA of $0 and $92,984, respectively. Earth Share of Missouri ESMO is a Missouri nonprofit corporation whose mission is to promote charitable contributions to other conservation and environmental not-for-profit organizations and to increase understanding of the importance of sound environmental stewardship. At December 31, 2011 and 2010, the Garden has a contract receivable from ESMO of $959 and $3,345, respectively

23 (15) Functional classification of expenses MISSOURI BOTANICAL GARDEN The Garden provides research, education, and horticultural displays to the public. classification of expenses related to fulfilling these functions is as follows: The Years Ending December 31, Program services: Horticulture $ 4,215,693 $ 4,074,126 Research 12,016,580 12,442,403 Education 9,297,618 7,370,597 Other programs 9,342,465 8,694,538 Support services: Management and general support 7,884,050 7,876,365 Fundraising 1,793,519 1,673,087 44,549,925 42,131,116 Change in value of annuity agreements 438,227 (192,052) (16) Risks and uncertainties $ 44,988,152 $ 41,939,064 The Garden s investments are exposed to various risks, such as interest rate, market, and credit risks. Due to current economic conditions, it is at least reasonably possible that changes in the value of the Garden s investments will occur in the near term and those changes could materially affect the amounts reported in the Garden s financial statements. (17) Subsequent events In accordance with ASC 855, the Garden has evaluated subsequent events through March 27, 2012, which is the date the financial statements were available to be issued

24 Mayer Hoffman McCann P.C. An Independent CPA Firm One City Place Drive, Suite 570 st. Louis, Missouri ph fx INDEPENDENT AUDITORS' REPORT To the Board of Trustees of the Missouri Botanical Garden: Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements as a whole. The supplemental schedules on pages 24 through 26 are presented for purposes of additional analysis and are not a required part of the consolidated financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the consolidated financial statements. The information has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the consolidated financial statements or to the consolidated financial statements themselves, and other additional procedures in accordance with U.S. generally accepted auditing standards. In our opinion, the information is fairly stated in all material respects in relation to the consolidated financial statements as a whole. 1I\~u ~~fil. St. Louis, Missouri March 27, 2012 Member 01 Kreston International - a global network I independent accounting firms

25 MISSOURI BOTANICAL GARDEN CONSOLIDATING STATEMENT OF FINANCIAL POSITION BY FUND As of December 31, 2011 Unrestricted Restricted Property Capital ASSETS: Operating Operating Endowment and Equipment Campaign Gift Annuities Total Cash and cash equivalents $ 5,480,394 $ - $ 660,128 $ - $ - $ - $ 6,140,522 Grants receivable - 2,047,837-1,484, ,532,729 Pledges receivable 40, ,000 18,211, ,000 4,478,238-23,330,292 Other receivables, net 167, , ,890-15,136 5,805 1,060,972 Inventories, prepayments and other assets 1,890, , ,430,950 Investments ,890 76,405,666-2,256,908 3,125,300 82,353,782 Property and equipment, net of accumulated depreciation ,983, ,983,066 Interfund receivables (payables) 2,909,993 1,377, ,297 (1,630,906) (3,509,345) 467,828 - TOTAL ASSETS $ 10,489,433 $ 5,661,606 $ 95,804,252 $ 86,037,152 $ 3,240,937 $ 3,598,933 $ 204,832,313 LIABILITIES: Accounts payable and accrued liabilities $ 7,813,997 $ - $ - $ 749 $ - $ 11,533 $ 7,826,279 Refundable advances - 5,150, , ,400,724 Liability for gift annuity payments ,574,935 3,574,935 TOTAL LIABILITIES 7,813,997 5,150, , ,586,468 16,801,938 NET ASSETS: Unrestricted- General operating - undesignated 2,675, ,675,436 Board Designated- Operating - 510, ,882 Capital expenditures ,464,732 (1,173,603) - 78,291,129 Long-term investment Total designated - 510,882-79,464,732 (1,173,603) - 78,802,011 Total unrestricted 2,675, ,882-79,464,732 (1,173,603) - 81,477,447 Temporarily restricted ,416,693 6,020,923 4,414,540-38,852,156 Permanently restricted ,137, ,748-12,465 67,700,772 TOTAL NET ASSETS 2,675, ,882 95,554,252 86,036,403 3,240,937 12, ,030,375 TOTAL LIABILITIES AND NET ASSETS $ 10,489,433 $ 5,661,606 $ 95,804,252 $ 86,037,152 $ 3,240,937 $ 3,598,933 $ 204,832,313 See Accountant s Report on Supplemental Information -24-

26 PUBLIC SUPPORT AND REVENUES: Public support- Services provided for Botanical Garden Subdistrict 10,200,000 MISSOURI BOTANICAL GARDEN CONSOLIDATING STATEMENT OF ACTIVITIES BY FUND For the Year Ended December 31, 2011 Unrestricted Restricted Property Capital Operating Operating Endowment and Equipment Campaign Gift Annuities Total $ $ - $ - $ - $ - $ - $ 10,200,000 Contributions and memberships 6,736, ,620 23,181, ,688 2,709, ,711 34,094,906 Bequests 2,031, ,031,198 Revenues- Admissions 1,840, ,840,881 Grants and contracts - 10,159,509-1,679, ,839,387 Retail shops 2,457, ,457,874 Education 392, ,310 Property rentals 429, ,016 Overhead recovered from grants and contracts 326,347 (326,347) Interest and dividend income, net- Endowment - - 1,212, ,212,122 Other investments 687 6, , ,344 Net realized investment gains (losses)- Endowment , ,783 Other investments (3,301) 4,348 80,031 (1,535) 61,002 (584) 139,961 Net unrealized investment gains- Endowment - - (1,108,172) (1,108,172) Appropriated investment income 2,598, ,905 (3,382,161) (75,000) Other investments - (16,610) - - (99,869) - (116,479) Other 1,013, ,391 - (21,678) ,663,418 TOTAL PUBLIC SUPPORT AND REVENUES $ 28,023,088 $ 11,640,604 $ 20,209,905 $ 2,554,353 $ 2,700,977 $ 137,622 $ 65,266,549 (Continued on following page) See Accountant s Report on Supplemental Information -25-