USS Missouri Memorial Association, Inc.
Financial Statements
December 31, 2022 and 2021
Together with Independent Auditor’s ReportA Hawaii Limited Liability Partnership

Independent Auditor’s Report

To the Board of Directors of
USS Missouri Memorial Association, Inc.:
OpinionWe have audited the financial statements of USS Missouri Memorial Association, Inc. (the Association),
which comprise the statements of financial position as of December 31, 2022 and 2021, the related
statements of activities, functional expenses, and cash flows for the years then ended, and the related
notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the Association as of December 31, 2022 and 2021, and the changes in net assets and its cash
flows for the years then ended in accordance with accounting principles generally accepted in the UnitedStates of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica (GAAS). Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of the Association and to meet our other ethical responsibilities, in accordance with therelevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in the United States of America, and for thedesign, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Association’s ability to continue
as a going concern within one year after the date that the financial statements are issued or available to beissued.

1003 Bishop Street  Suite 2400  Honolulu, HI 96813  Telephone: 808-526-2255  Fax: 808-536-5817  www.kmhllp.com

Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance andtherefore is not a guarantee that an audit conducted in accordance with GAAS will always detect amaterial misstatement when it exists. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:-

Exercise professional judgment and maintain professional skepticism throughout the audit.

-

Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. Suchprocedures include examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements.

-

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Association’s internal control. Accordingly, no such opinion isexpressed.

-

Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of thefinancial statements.

-

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,that raise substantial doubt about the Association’s ability to continue as a going concern for areasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.

KMH LLP
Honolulu, Hawaii
May 12, 2023

USS Missouri Memorial Association, Inc.
Statements of Financial Position
December 31, 2022 and 2021

Assets2022
Cash and Cash Equivalents
Cash, with donor restrictions
Accounts Receivable, net of allowance for doubtful
accounts of $5,000 in 2022 and 2021
Prepaid Expenses and Other Assets
Custodial Fund$

3,846,187
76,7682021$

1,165,618
45,5491,936,204
404,302
11,543

2,738,960
269,299
32,625

6,275,004

4,252,051

Cash and Investments, board designated for ship preservation

12,141,495

10,415,689

Equipment and Shipboard Improvements, net

24,662,690

26,379,293$ 43,079,189$ 41,047,033$$

Total Current Assets

Total Assets
Liabilities and Net Assets
Liabilities:
Accounts Payable
Accrued Expenses
Liability for Custodial Fund

714,141
585,591
11,543

Total Current Liabilities

550,146
476,853
32,625

1,311,275

1,059,624

4,886,961
12,141,495
24,662,690

3,146,878
10,415,689
26,379,293

41,691,146

39,941,860

With Donor Restrictions

76,76845,549Total Net Assets

41,767,914

39,987,409$ 43,079,189$ 41,047,033

Commitments and Contingencies
Net Assets:
Without Donor Restrictions:
UndesignatedCash and Investments, board designated for ship preservation
Invested in Equipment and Shipboard Improvements
Total Without Donor Restrictions

Total Liabilities and Net Assets

See accompanying notes to financial statements.
3

USS Missouri Memorial Association, Inc.
Statements of Activities
For the Years Ended December 31, 2022 and 2021

2022

2021

Changes in Net Assets Without Donor Restrictions:
Revenue and support:
Ticket sales
Commissions
Special events and other
Contributions
Education
Other income$ 13,468,608
1,583,377
651,624300,044
172,948
267,887

Total revenues without donor restrictions

16,444,488

8,252,457

48,265

114,683

16,492,753

8,367,140

Expenses:
Program services
Management and generalFundraising

11,564,498
1,413,403
29,027

9,982,803
1,032,212
24,104

Total expenses

13,006,928

11,039,119

Revenue and support less expenses

3,485,825(2,671,979)

CARES and Consolidated Appropriations Act federal assistance
Net investment (loss) return(1,736,539)

2,748,165
1,815,651

Increase in net assets without donor restrictions

1,749,286

1,891,837

79,484(48,265)

123,348(114,683)

31,219

8,665

Increase in net assets

1,780,505

1,900,502

Net Assets, beginning of year

39,987,409

38,086,907$ 41,767,914$ 39,987,409

Net assets released from restrictions
Total revenues without donor restrictions and other support

Changes in Net Assets with Donor Restrictions:Contributions
Net assets released from restrictions
Increase in net assets with donor restrictions

Net Assets, end of year

See accompanying notes to financial statements.
4$

6,870,529
798,296
230,886
130,639
68,565
153,542USS Missouri Memorial Association, Inc.
Statements of Functional Expenses
For the Years Ended December 31, 2022 and 2021

2022:
Payroll and related costs
Depreciation
Ticketing and reservations
Ground transportation
Ship operations
Rent
Insurance
Marketing
Professional fees
Utilities
Special events
Safety, health and environmental
Donation expenses
Other

2021:
Payroll and related costs
Depreciation
Ticketing and reservations
Ground transportation
Ship operations
Rent
Insurance
Marketing
Professional fees
Utilities
Special events
Safety, health and environmental
Donation expenses
Other

ProgramServicesManagement
and General

4,917,536
2,460,972
1,116,227
954,372
553,975
780,418
266,942
228,478
103,526
100,838
44,344
9,796
27,074$ 1,130,001
7,214
30,78767,325
21,262
156,814$

29,027-$ 6,047,537
2,460,972
1,116,227
954,372
553,975
787,632
297,729
228,478
170,851
122,100
44,344
9,796
29,027
183,888$ 11,564,498$ 1,413,403$

29,027$ 13,006,928$

4,595,488
2,620,640
610,948551,221469,215
411,489
222,419
180,703
97,24475,12722,182
11,346
114,781$817,680
7,863
32,09564,936
20,152
89,486$24,104-$ 5,413,168
2,620,640
610,948551,221469,215419,352
254,514
180,703
162,180
95,27922,182
11,34624,104204,267$

9,982,803$ 1,032,212$

24,104$ 11,039,119$

Fundraising

See accompanying notes to financial statements.
5

Total

USS Missouri Memorial Association, Inc.
Statements of Cash Flows
For the Years Ended December 31, 2022 and 2021

2022
Cash Flows from Operating Activities:
Increase in net assets
Adjustments to reconcile increase in net assets
to net cash provided by operating activities:
Depreciation
Net realized and unrealized losses (gains) on investments
Changes in certain assets and liabilities:
Accounts receivable, net
Prepaid expenses and other assets
Accounts payable
Deferred rent payable
Accrued expenses

$

2021

1,780,505$

1,900,502

2,460,972
1,947,209

2,620,640(1,588,084)

802,756(135,003)
163,995
108,738(2,106,220)
26,40830,966(412,009)(78,879)

Net cash provided by operating activities

7,129,172

393,324

Cash Flows from Investing Activities:
Capital expenditures
Purchases of investments board designated for ship preservation
Sales of investments board designated for ship preservation(744,369)(3,849,381)
176,366(374,995)(9,168,384)
17,190,979(4,417,384)

7,647,600

Net cash (used in) provided by investing activities
Cash Flows from Financing Activities:
Payments on line of credit
Proceeds from line of credit
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and Cash Equivalents, beginning of year-

(8,250,000)
1,250,000-(7,000,000)

2,711,788

1,040,924

1,211,167

170,243

Cash and Cash Equivalents, end of year$

3,922,955$

1,211,167

Reconciliation of Cash and Cash Equivalents:
Cash and cash equivalents
Cash, with donor restrictions$

3,846,187
76,768$1,165,618
45,549Total cash and cash equivalents$

3,922,955$

1,211,167

See accompanying notes to financial statements.
6

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

1.

Organization and Significant Accounting Policies
a. Organization
The USS Missouri Memorial Association, Inc. (the Association) is a not-for-profit organization
incorporated in 1994 to establish, operate and maintain the USS Missouri (the Battleship) as anational memorial commemorating the end of hostilities in World War II. The Association
began significant operating activities and opened the Battleship to visitors on January 29, 1999.
b. Basis of Presentation
The Association maintains its accounting records and prepares its financial statements on theaccrual basis of accounting in conformity with accounting principles generally accepted in the
United States of America (US GAAP). In accordance with US GAAP, the Association reports
information regarding its financial position and activities according to the following net asset
classifications:
Net assets without donor restrictions: Net assets that are not subject to donor-imposed
restrictions and may be expended for any purpose in performing the primary objectives of the
Association. These net assets may be used at the discretion of the Association’s management
and the board of directors.
Net assets with donor restrictions: Net assets subject to stipulations imposed by donors andgrantors. Some donor restrictions are temporary in nature; those restrictions will be met byactions of the Association or by the passage of time.
Donor restricted contributions are reported as an increase in net assets with donor restrictions.
When a restriction expires, net assets are reclassified from net assets with donor restrictions to
net assets without donor restrictions in the statements of activities.
c. Management Estimates
The preparation of financial statements in conformity with US GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the date of the financial statements and thereported amounts of revenues and expenses during the reporting periods. Actual results could
differ from those estimates.

7

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

1.

Organization and Significant Accounting Policies (continued)
d. Cash and Cash Equivalents
The Association maintains its cash and cash equivalents in commercial banks. At
December 31, 2022, the Association had approximately $3,705,000 in excess of federally
insured limits. The Association has not experienced any losses in such accounts and believes it
is not exposed to any significant credit risk related to cash and cash equivalents. Cash and cash
equivalents included in investments have been designated by the Board of Directors(the Board), and are not considered cash equivalents for purposes of the statements of financial
position and cash flows.
e. Investments
The Association’s investments are stated at fair value. Fair value is the price that would bereceived to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date (see Note 5 for discussion of fair value measurements).
f.

Accounts Receivable
Accounts receivable are primarily generated by wholesale tour and travel companies operatingin Hawaii and are stated at the amounts billed, net of an allowance for doubtful accounts. The
Association establishes an allowance for doubtful accounts based on historical experience andany specific customer collection issues identified by management. The Association performs
ongoing credit evaluations of these wholesalers’ financial condition and may require collateralfrom the wholesalers, if deemed necessary.

g. Equipment and Shipboard Improvements
Equipment and shipboard improvements are presented at cost if purchased, or estimated fairvalue if contributed, less accumulated depreciation. Depreciation is calculated using thestraight-line method over the estimated useful lives of the Association’s assets as follows:
Shipboard improvements
Equipment and fixtures

7 – 25 years
5 – 7 years

The carrying values of equipment and shipboard improvements are reviewed whencircumstances indicate that the carrying amounts may not be recoverable. If the expected future
cash flows generated from equipment and shipboard improvements are less than the related
carrying value, the carrying value of these assets would be reduced to estimated fair value.

8USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

1.

Organization and Significant Accounting Policies (continued)
h. Revenue Recognition
The Association recognizes revenue in accordance with Accounting Standards Codification(ASC) Topic 606, Revenue from Contracts with Customers, which provides a five-step model
for recognizing revenue from contracts with customers as follows:-

Identify the contract with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognize revenue when or as performance obligations are satisfied

The Association recognizes revenues from ticket sales at the time of admission, which is when
the performance obligation is satisfied. Commissions from concessionaires, special events andother revenues are recognized when they are realized or realizable and earned.
i.

Contributions and Promises to Give
Contributions are recognized when received or when the donor makes an unconditional promise
to give to the Association. Amounts received that are designated for future periods or restrictedby the donor for specific purposes are reported as net assets with donor restrictions. When arestriction is fulfilled or expires, net assets with donor restrictions are reclassified to net assets
without donor restrictions and reported in the accompanying statements of activities as net
assets released from restrictions.
The Association has unpaid volunteers who assist in performing administrative andmaintenance duties and conducting tours. The value of this contributed time does not meet thecriteria for financial statement recognition provided by US GAAP and, accordingly, is notreflected in the accompanying financial statements.

j.

In-Kind Contributions
In-kind contributions, including depreciable assets, are reflected as contributions without donor
restrictions at their estimated fair values when received by the Association. The Battleship andcertain other exhibits were donated by the U.S. Navy and others. The fair values of thesecontributed exhibits have not been recognized in the accompanying financial statements as theirvalues are not readily determinable. Costs related to placing these exhibits into service arerecognized when incurred as a decrease in net assets without donor restrictions.

9USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

1.

Organization and Significant Accounting Policies (continued)
k. Board Designated Net Assets
Board designated net assets consist of amounts expended on ship equipment and improvements
and amounts that have been designated by the Board for ship preservation purposes and otherstrategic initiatives. The Board can re-designate these net assets at its discretion.
l.

Income Taxes
The Association is exempt from federal income taxes under Internal Revenue Code
Section 501(c)(3), whereby only unrelated business income, as defined by Section 512(a)(1) issubject to federal income tax. The Association is also exempt under Hawaii Revised Statutes on
income related to its exempt purpose. No unrelated business income taxes were incurred during2022 or 2021.
Management has evaluated the Association’s tax positions and concluded that the Association
has maintained its tax exempt status and has no uncertain tax positions that require recognition
or disclosure in the financial statements. The Association is subject to routine audits by taxing
jurisdictions; however, there are currently no audits for any tax periods in progress. Interest andpenalties, if any, are recognized in management and general expense.

m. Custodial Fund
The Association is the custodian of funds which were received from unrelated organizations
and individuals to be used for costs associated with the 75th Anniversary of the end of WorldWar II, which is more fully described in Note 11.

10USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

1.

Organization and Significant Accounting Policies (continued)
n. Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FAS) issued AccountingStandards Update (ASU) 2016-02, Leases (Topic 842). The guidance in this ASU supersedes
the leasing guidance in Topic 840 Leases. Under the new guidance, lessees are required torecognize lease assets and lease liabilities on the balance sheet for all leases with terms longer
than 12 months. Leases will be classified as either financing or operating, with classification
affecting the pattern of expense recognition in the statement of activities. A modified
retrospective transition approach is required for lessees for capital and operating leases existingat, or entered into after, the beginning of the earliest comparative period presented in thefinancial statements, with certain practical expedients available. The adoption of this ASU did
not have a significant impact to the Association’s financial statements as management hasdetermined that the terms of the lease do not require recognition of a lease liability or right ofuse asset (see Note 9).
In September 2020, the FASB issued ASU 2020-07 Not-for-Profit Entities (Topic 958):
Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets.
This ASU requires that a not-for-profit present contributed nonfinancial assets as a separate line
item in the statement of activities, apart from contributions of cash and other financial assets. It
also requires a not-for-profit to disclose a disaggregation of the amount of contributed
nonfinancial assets recognized within the statement of activities by category that depicts thetype of contributed nonfinancial assets and qualitative disclosures for each disaggregatedcategory. The amendments in this ASU should be applied on a retrospective basis and are
effective for annual periods beginning after June 15, 2021. Early adoption is permitted. The
adoption of ASU 2020-07 did not have a significant impact on the Association’s financial
statements.
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):
Disclosures by Business Entities about Government Assistance, which is intended to increasetransparency in financial reporting by requiring business entities to disclose information aboutcertain types of government assistance they receive. ASU 2021-10 requires business entities tomake certain annual disclosures about transactions with a government that are accounted for by
applying a grant or contribution accounting model by analogy to other accounting guidance.
This guidance is effective for fiscal years beginning after December 15, 2021. The adoption of
ASU 2021-10 did not have a significant impact on the Association’s financial statements.

11

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

1.

Organization and Significant Accounting Policies (continued)o. Risks and Uncertainties
On March 11, 2020, the World Health Organization declared the coronavirus outbreak to be apandemic. The coronavirus and actions taken to mitigate it have had an adverse impact on theeconomies and financial markets of many countries, including the geographical area in which
the Association operates. On March 27, 2020, the Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) was enacted to amongst other provisions, provide emergency
assistance for individuals, families and businesses affected by the coronavirus pandemic (seeNote 12).
The Association operated with limited hours between January 2021 and May 2021. As a result,the Association experienced significant declines in revenues and experienced staff furloughs.
p. Subsequent Events
The Association has evaluated subsequent events through May 12, 2023, the date on which thefinancial statements were issued, and it was determined that all subsequent events had been
properly accounted for.

12USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

2.

Board Designated Cash and Investments
Cash and investments board designated for ship preservation are carried at fair value at
December 31, 2022 and 2021, and consist primarily of investments in mutual funds as follows:

2022
Mutual Funds:
Cost
Gross unrealized gains
Gross unrealized losses$

11,919,107
700,494(812,736)

2021$

11,806,865
334,630-

Mutual Funds, at fair value
Money Market Funds, at fair value
Accrued Interest
Total board designatedcash and investments$

12,141,495

8,370,507
1,808,908(23,991)
10,155,424
253,532
6,733$

10,415,689

Net investment (loss) returns for 2022 and 2021 consisted of the following:

2022

2021

Net realized/unrealized (loss) gain
Dividend and interest income
Investment fees$

(1,947,209)
262,570(51,900)$

1,588,084
302,339(74,772)

Net investment (loss) return$(1,736,539)$

1,815,651

13

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

3.

Equipment and Shipboard Improvements
Equipment and shipboard improvements at December 31, 2022 and 2021 were as follows:

2022
Shipboard improvements
Equipment and fixtures$

Accumulated depreciation

Construction in progress
Equipment and Shipboard Improvements, net$

32,029,004
14,731,870

2021$

31,725,396
14,388,019

46,760,874

46,113,415(23,017,829)(20,624,682)

23,743,045

25,488,733

919,645

890,560

24,662,690$

26,379,293

Construction in progress primarily consists of teak deck replacement and a life safety project. As of
December 31, 2022, the Association did not have any contract commitments related to theconstruction in progress balance.
4.

Line of Credit
In August 2018, the Association entered into a credit agreement with a bank amounting to$5 million. In August 2020, the Association increased its credit agreement to $7 million and in
December 2020, the Association increased its credit agreement to $9 million. In November 2021,
the credit agreement was decreased to $5 million. Draws on the credit agreement are secured bycertain cash, cash equivalents and investments held by the Association, require monthly interestonly payments, and bear interest at the Association’s choice of the prevailing market rate, as
defined, or selected Secured Overnight Financing Rate plus applicable margins, as defined, with an
expiration date of August 5, 2024. As of December 31, 2022 and 2021, the Association did not haveany outstanding borrowings under the credit agreement.
The credit agreement contains customary conditions and events of default, the failure to comply
with, or occurrence of, would give the lender the right to demand repayment of any outstanding
borrowings or terminate the credit agreement.

14

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

5.

Fair Value Measurements
US GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used
to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the lowest priority tounobservable inputs (Level 3 measurements). Level 1 inputs to the valuation methodology areunadjusted quoted prices for identical assets or liabilities in active markets that the Association has
the ability to access. The Association maintains all its investments in mutual funds, which arevalued at Level 1 and are stated at fair value using quoted market prices. Shares of mutual funds arevalued at the net asset value of shares held by the Association at the reporting date on a recurring
basis.
The method described above may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values.
The following table sets forth the Association’s investments by type of fund based on Level 1
inputs as of December 31:

Mutual Funds
Money Market Funds
Accrued Interest
Total board designated cash
and investments $

15

2022

2021

11,806,865
334,630-

10,155,424
253,532
6,733

12,141,495$

10,415,689

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

6.

Net Assets
a. Without Donor Restriction
Net assets without donor restrictions include undesignated net assets as well as those designatedfor specific purposes by the Association’s Board of Directors. The Board of Directors has
designated approximately $12.1 million and $10.4 million as of December 31, 2022 and 2021,
respectively, in the Ship Preservation Fund, for the purpose of funding future preservation andmajor restoration projects for the Battleship.
The Association has accumulated funds for the purpose of conducting a dry docking of the shipin or near the year 2030. The last time the ship was dry docked was in 2010 for a cost of $12.5
million. It was previously estimated that the next dry docking will cost between $25 and $30
million. However, the Association is exploring various alternatives which will address theengineering needs to repair and repaint the underwater portion of the hull and, if necessary,
repair cofferdams which will not require dry docking and could cost substantially less.
b. With Donor Restrictions
Net assets with donor restrictions at December 31, 2022 and 2021 consisted of the following:

2022
Cash restricted for the following:
Educational purposes
Shipboard improvements and displays
Net assets with donor restrictions

16

2021

$

55,994
20,774$

24,775
20,774$76,768$45,549

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

6.

Net Assets (continued)
b. With Donor Restriction (continued)
Net assets with donor restrictions released from restrictions during the years ended
December 31, 2022 and 2021 consisted of the following:2022
Restrictions satisfied by expenditures for:Educational purposes
Shipboard improvements and displays
Net assets with donor restrictions
released from restrictions
7.

2021

$

12,08636,179$105,143
9,540$

48,265$

114,683

Employee Benefit Plan
Substantially all full-time and part-time employees of the Association are eligible to participate in
the Association’s 401(k) retirement savings plan upon completion of six months of service. The
plan provides for discretionary employee and employer contributions up to defined limits. For theyears ended December 31, 2022 and 2021, the Association did not make any employer
contributions. Effective January 1, 2020, the Plan was amended to allow employees to contribute up
to $19,500 (or $26,000, if the employee is over the age of 50), and allow discretionary employer
matching up to 4 percent.

17

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

8.

Commitments and Contingencies
a. Operating Agreements
The Association has an agreement with a company to provide ground transportation for visitors
to the Battleship through 2027. Ground transportation fees, based upon fixed hourly rates, wereapproximately $954,000 in 2022 and $551,000 in 2021 and are included in Program Services in
the accompanying Statements of Activities.
The Association entered into an agreement with a company effective January 2019 to provide
ticketing services for a term of 5 years. Ticketing and reservation expense include
reimbursements for operating costs and a management fee that consists of: (a) three percent ofgross receipts derived from onsite and online ticketing services, and (b) one percent of grossreceipts derived from tour groups and online travel agency sales. The Association implemented
a seven percent ticketing service fee charge for onsite and online ticket purchases to help offset
the additional ticketing and reservation fees. Ticketing and reservation expense wasapproximately $1,116,000 in 2022 and $611,000 in 2021 and are included in Program Services
in the accompanying Statements of Activities.
b. Litigation
In the normal course of conducting its activities, the Association may be subject to various
claims and litigation. Management believes that the resolution of these matters will not have amaterial adverse effect on the Association’s financial position, results of operations or cash
flows.

9.

LeasesAs Lessor
The Association acts as lessor in leasing space to merchandise, food and beverage and photo
concessionaires under the terms of certain operating leases. The leases provide for minimum orpercentage rents based on visitor counts or gross revenues, as defined in the agreements, ending at
various dates through December 31, 2024. Percentage rents from these leases are reported ascommission income on the accompanying Statements of Activities for the years ended
December 31, 2022 and 2021 and amounted to approximately $1,583,000 and $798,000,
respectively.

18

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

9.

Leases (continued)
As Lessee
In March 2017, the Association signed a 25-year lease with the U.S. Navy which is effective
January 1, 2017 through December 31, 2041. The lease requires the Association to pay percentage
rent equal to six percent of the Association’s ticket sales revenue, as defined in the lease agreement.
In accordance with the lease agreement, the Association is required to pay estimated rent of$35,000 per month. Estimated rents paid are trued up on an annual basis to equal an annual rent ofsix percent of the Association’s ticket sales revenue. Total rent expense recognized for the years
ended December 31, 2022 and 2021 was approximately $780,000 and $419,000, respectively.
Under the provisions of ASC Topic 842, Leases, variable lease payments that vary after thecommencement date for reasons other than a change in an index or rate are not included in the lease
payments used for classification or measurement purposes. As a result, management has determinedthat the terms of the lease do not have lease payments that give rise to recognition of a leaseliability or right of use asset.
The Association also receives credit towards the rent payments due for in-kind services provided by
the Association to the U.S. Government. These credits totaled approximately $343,000 and$129,000 and are reported as special events revenue for the years ended December 31, 2022 and
2021, respectively.

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USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

10.

Liquidity and Availability
The following reflects the Association’s financial assets as of December 31, 2022 and 2021,
reduced by amounts not available for general use within one year because of board designations or
donor-imposed restrictions.

2022
Financial assets:
Cash and cash equivalents
Cash, with donor restrictions
Accounts receivable, net
Cash and investments$

3,846,187
76,768
1,936,204
12,141,495

2021$

1,165,618
45,5492,738,960
10,415,689

Financial assets, at year end

18,000,654

14,365,816

Less those unavailable for general expenditure
within one year, due to:
Board designated for ship preservation
Donor restricted(12,141,495)(76,768)(10,415,869)(45,549)

Financial assets available to meet cash needs forgeneral expenditures within one year$

5,782,391$

3,904,398

The Association structures its financial assets to be available as its general expenditures, liabilities,
and other obligations become due. The Association’s board designated assets are designated for thepurchase of equipment and shipboard improvements, for ship preservation and the line of credit.
These assets are limited in use, which are more fully described in Note 2 and are not available forgeneral expenditure within the next year. However, the board designated amounts of $12,141,495
and $10,415,689 as of December 31, 2022 and 2021, respectively, could be made available, if
necessary.
As part of the Association’s liquidity management plan, cash in excess of daily requirements areinvested in short-term investments and money market funds.
Additionally, the Association maintains a line of credit, as discussed in more detail in Note 4. Asof December 31, 2022 and 2021, $5 million remained available on the Association’s line of credit.

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USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2022 and 2021

11.

Custodial Funds - 75th WWII Commemoration
Effective September 1, 2019, the Association and the 75th WWII Commemoration Committee
Hawaii (the Committee), solicited donors and contributions for the Commemoration of the 75th
Anniversary of the end of World War II (the WWII Commemoration). The activities, programs andevents associated with the WWII Commemoration were the responsibility of the Committee. The
Association was responsible to collect all donations and contributions related to the WWII
Commemoration and to disburse approved expenditures. The Association recorded these funds as acustodial fund with a corresponding credit to a liability in the accompanying financial statements.
The remaining funds of $11,543 are being held for any remaining expenses related to the 75th WWICommemoration.

12.

CARES Act and Other Federal Assistance
The CARES Act, which was enacted on March 27, 2020, provided for fiscal relief in 2020 and
2021 for entities impacted by the coronavirus pandemic. The CARES Act provided for an
Employee Retention Credit, a refundable tax credit against certain employment taxes based on
qualified wages an eligible employer pays to employees after March 12, 2020 and before
January 1, 2021. In February 2021, the Association applied for $1,193,650 in employee retention
credits based on such qualified wages for 2020. This amount was received in March 2022 andrecorded in the accompanying 2021 financial statements as CARES and Consolidated
Appropriations Act federal assistance revenues.
The federal Consolidated Appropriations Act 2021, which was enacted on December 27, 2020,
provides for a Small Business Administration (SBA) Paycheck Protection Program (PPP) loan
second draw and other additional fiscal relief in 2021 for entities impacted by the COVID-19
pandemic. In February 2021, the Association applied for and received a $1,554,515 SBA PPP loan
second draw from a bank. Management concluded that, as of December 31, 2021, the Association
had met the compliance requirements established by the SBA and other federal agencies and,accordingly, recognized the SBA PPP loan as CARES and Consolidated Appropriations Act federal
assistance revenue in the accompanying 2021 financial statements. The SBA confirmed that
conclusion with the forgiveness of the second PPP loan on September 13, 2021.

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