Report of the Treasurer for the Year Ended December 31, 2009 (2010) / Chapter Skim
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Notes to Financial Statements
Notes to Financial Statements
Pages 45-62
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From page 45... ...
TNAC is nary problems facing American society, NRC is organ controlled by NAS and NAEF. The financial position and ized into the following five major divisions responsible results of TNAC are not consolidated in the NAS for most study activities: financial statements.
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From page 46... ...
Amounts collected but not yet remitted to reclassified to unrestricted net assets. NAEF are reported as assets and liabilities in the NAS financial statements.
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From page 47... ...
NAS recorded the effect of applying the provisions Building and leasehold improvements – lesser of the of FASB ASC Section 958-205-45 as a reclassification of remaining life of the building or improvement unrestricted net assets to temporarily restricted net assets Furniture and equipment – 4 to 10 years of $102.8 million as of January 1, 2008. The Einstein Memorial sculpture is valued at cost and is Effective December 31, 2009, NAS applied the guidance not depreciated.
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From page 48... ...
Level 2: Observable inputs other than Level 1 prices such Vanguard equity funds comprised approximately as quoted prices for similar assets or liabilities; quoted $85 million and $47 million of the total equity securities prices in markets that are not active; or other inputs that funds at December 31, 2009 and 2008, respectively. are observable or can be corroborated by observable NAS holds alternative investments, comprised of private market data for substantially the full term of the assets or equity securities and hedge funds, in its long-term liabilities.
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From page 49... ...
on actively traded market prices and are accordingly included in the bonds and notes amount in Level 1. The funds held on behalf of others liability approximates the investments held in NAS' long-term investment pool Fair values of exchange-traded equity securities have on behalf of TNAC.
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From page 50... ...
The following table presents NAS' fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis at December 31, 2009 (dollars in thousands) : Fair value measurements at December 31 using: Fair Value Level 1 Level 2 Level 3 Financial Assets: Short-term and long-term investments: Cash equivalents $ 17,980 $ 17,980 $ - $ Bonds and notes 83,142 54,903 28,239 Equity securities 266,583 266,583 - Hedge funds 45,536 - 34,255 11,281 Private equity 12,035 - - 12,035 Total investments 425,276 339,466 62,494 23,316 Charitable gift annuity assets: Cash equivalents 125 125 - Bonds and notes 625 625 - Equity securities 1,631 1,631 - Total charitable gift annuity assets 2,381 2,381 - Deferred compensation assets: Cash equivalents 24 24 - Bonds and notes 427 427 - Equity securities 1,938 1,938 - Total deferred compensation assets 2,389 2,389 - Total Financial Assets $ 430,046 $ 344,236 $ 62,494 $ 23,316 Financial Liabilities: Funds held on behalf of others $ 8,794 $ 7,324 $ 875 $ 595 Deferred compensation liability 2,389 2,389 - Interest rate swaps 9,210 - 9,210 Total Financial Liabilities $ 20,393 $ 9,713 $ 10,085 $ 595 50
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From page 51... ...
The following table presents NAS' fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis at December 31, 2008 (dollars in thousands) : Fair value measurements at December 31 using: Fair Value Level 1 Level 2 Level 3 Financial Assets: Short-term and long-term investments: Cash equivalents $ 19,928 $ 19,928 $ - $ Bonds and notes 83,820 62,058 21,762 Equity securities 172,481 172,481 - Hedge funds 65,283 - - 65,283 Private equity 11,684 - - 11,684 Total investments 353,196 254,467 21,762 76,967 Charitable gift annuity assets: Cash equivalents 30 30 - Bonds and notes 644 644 - Equity securities 1,439 1,439 - Total charitable gift annuity assets 2,113 2,113 - Deferred compensation assets: Cash equivalents 31 31 - Bonds and notes 339 339 - Equity securities 1,835 1,835 - Total deferred compensation assets 2,205 2,205 - Interest rate swap 934 - 934 Total Financial Assets $ 358,448 $ 258,785 $ 22,696 $ 76,967 Financial Liabilities: Funds held on behalf of others $ 7,186 $ 5,266 $ - $ 1,920 Deferred compensation liability 2,205 2,205 - Interest rate swaption 12,543 - 12,543 Total Financial Liabilities $ 21,934 $ 7,471 $ 12,543 $ 1,920 Level 3 assets comprised approximately 5% and 22% of NAS' total investment portfolio fair value at December 31, 2009 and 2008, respectively.
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From page 52... ...
instruments such as, but not limited to, securities sold Asset classes include domestic and international marketshort, futures, forwards, swaps, and written options. The able equity securities, hedged equity, real estate, natural fair values of the investments in this category have been resource, fixed income, and private equity and absolute estimated using the NAV per share of the investments.
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From page 53... ...
(f) This category includes several domestic private equity Total contributions receivable, long-term $ 28,191 funds which make investments in domestic equity securities, warrants or other securities that are generally not actively traded at the time of investment.
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as requiring NAS, absent explicit donor Prizes and awards 22,784 17,903 stipulations to the contrary, to act in good faith and with Woods Hole facility 2,793 1,896 the care that an ordinarily prudent person in a like Total temporarily restricted net assets $241,734 $200,791 position would exercise under similar circumstances in making determinations to appropriate or accumulate endowment funds, taking into account both its obligation Temporarily restricted net assets were released from to preserve the value of the endowment and its obligation restriction for the following purposes during the years to use the endowment to achieve the purposes for which it ended December 31, 2009 and 2008 (dollars was donated. NAS classifies as permanently restricted net in thousands)
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From page 55... ...
Hedge Funds 12% Return Objectives and Strategies Other Alternative 3% Total 100% NAS has adopted an investment and spending policy for NAS has adopted a spending policy that limits the annual endowment assets that is designed to provide a predict spending to 5% of the three-year average fair value of the able stream of funding to programs supported by the participating funds in the endowment portfolio. This is endowment while seeking to protect the real purchasing consistent with NAS' objective to maintain the purchaspower of the assets from inflation.
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From page 56... ...
Subsequent gains that restore the fair value of the Engineering and Physical Sciences 21,043 19,783 Behavioral and Social Sciences and assets of the endowment fund to the required level were 10,268 9,649 Education classified as an increase in unrestricted net assets. Proceedings of the National Academy of Sciences 13,425 12,477 National Academy Press 4,351 4,573 National Academy of Engineering 4,079 4,641 Koshland Science Museum 1,616 1,890 NAS and National Sciences Resource Center 8,129 6,605 Total program expenses $260,709 $247,426 56
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From page 57... ...
included in the contracts receivable balance in the statements of financial position. Interest on all Series 1999A revenue bonds was payable semiannually every January 1 and July 1.
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NAS entered into a swaption agreement on August 21, 2007 that gave the counterparty the option to require NAS (15) EMPLOYEE BENEFITS to enter into an additional swap agreement related to the Series 1999A Revenue Bonds.
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Unrecognized net initial obligation 117 142 In addition, certain health and life insurance benefits are Total $ 4,772 $ 6,941 provided for employees retired due to disability. A benefit-eligible employee may become eligible for disabled retiree benefits if deemed totally disabled under The estimated amounts, measured at year-end, that are NAS' long-term disability insurance or if they are eligible expected to be recognized in the net periodic benefit cost for disability benefits from the Social Security Admini- over the next fiscal year for the postretirement benefit stration.
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From page 60... ...
: The assumptions used to determine net periodic benefit cost for years ended December 31, 2009 and 2008 are as Fair value measurements follows: at December 31 using: Fair Value Level 1 Level 2 Level 3 2009 2008 Financial Assets: Discount rate 6.00% 6.00% Retiree Welfare Benefit Plan Expected long-term return on plan assets 7.50% 7.50% Money market funds $ 519 $ 519 $ - $ The assumptions used to calculate the accumulated U.S. Government securities 3,416 3,416 - postretirement benefit obligation for the years ended Corporate bonds 549 - 549 December 31, 2009 and 2008 are as follows: Common stock 7,082 7,082 - Mutual funds 6,135 6,135 - 2009 2008 Total investments $17,701 $17,152 $ 549 $ Discount rate 6.00% 6.00% 60
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From page 61... ...
The Asset Retirement Obligation subtopic of NAS expects to contribute to the Plan the actuarially FASB ASC requires a liability to be recorded if the fair determined net periodic cost for 2010, which is value of the obligation to retire an asset can be reasonaapproximately $891,000. bly estimated.
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From page 62... ...
COMMITMENTS AND (20) SUBSEQUENT EVENT CONTINGENCIES NAS evaluated subsequent events through May 21, 2010, which is the date the financial statements were available (a)
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