USS Missouri Memorial Association, Inc.
Financial Statements
December 31, 2018 and 2017
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.:
Report on the Financial Statements
We have audited the accompanying financial statements of USS Missouri Memorial Association, Inc.
(the Association), which comprise the statements of financial position as of December 31, 2018 and 2017,
the related statements of activities, functional expenses and cash flows for the years then ended, and therelated notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includes
the design, 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.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparationand fair presentation of the financial statements 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 entity’s
internal control. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

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

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of the Association as of December 31, 2018 and 2017, and the changes in net assets andits cash flows for the years then ended in accordance with accounting principles generally accepted in the
United States of America.

KMH LLP
Honolulu, Hawaii
May 10, 2019

USS Missouri Memorial Association, Inc.
Statements of Financial Position
December 31, 2018 and 2017

Assets2018
Cash and Cash Equivalents
Cash, with donor restrictions
Accounts Receivable, net of allowance for doubtful
accounts of $5,000 in 2018 and 2017
Prepaid Expenses and Other Assets$

844,451
13,167

2017$

565,905
32,334

1,697,779
409,469

1,704,379
421,732

2,964,866

2,724,350

Board Designated or Restricted for Long-Term Purposes:
Cash, restricted for the purchase of equipment and shipboard
improvements
Cash and investments, board designated for ship preservation

41,35014,409,449

39,85015,208,130

Total assets board designated or restricted
for long-term purposes

14,450,799

15,247,980

22,808,326

22,524,226$ 40,223,991$ 40,496,556$$

Total current assets

Equipment and Shipboard Improvements, net
Total assets
Liabilities and Net Assets
Liabilities:
Accounts Payable
Accrued Expenses
Total current liabilities

1,025,783
912,698

1,878,205
783,598

1,938,481

2,661,803

1,013,218
14,409,449
22,808,326

30,213
15,208,130
22,524,226

38,230,993

37,762,569

54,517

72,18438,285,510

37,834,753$ 40,223,991$ 40,496,556

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
With donor restrictions
Total net assets
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, 2018 and 2017

2018

2017

Changes in Net Assets Without Donor Restrictions:
Revenues:
Ticket sales
Commissions
Special events and other
Education
Contributions$ 12,606,977
1,619,106
688,686
235,212224,007$ 12,060,908
1,381,279
741,789
250,704
115,430

Total revenues without donor restrictions

15,373,988

14,550,110

35,667

66,35815,409,655

14,616,468

Expenses:
Program services
Management and generalFundraising

12,483,003
1,375,036
191,499

11,767,727
1,066,228
80,230Total expenses

14,049,538

12,914,185

Revenues without donor restrictions
and other support less expenses

1,360,117

1,702,283(891,693)

1,519,006

468,424

3,221,289

18,000(35,667)

15,380(66,358)

Decrease in net assets with donor restrictions(17,667)(50,978)

Increase in net assets

450,757

3,170,311

Net Assets, beginning of year

37,834,753

34,664,442$ 38,285,510$ 37,834,753

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

Net investment (loss) return
Increase in net assets without donor restrictions
Changes in Net Assets with Donor Restrictions:Contributions
Net assets released from restrictions

Net Assets, end of year

See accompanying notes to financial statements.
4USS Missouri Memorial Association, Inc.
Statements of Functional Expenses
For the Years Ended December 31, 2018 and 20172018:
Payroll and related costs
Depreciation
Ship operations
Ground transportation
Rent
MarketingUtilities
Insurance
Ticketing and reservations
Safety, health and environmental
Professional fees
Special events
Donation expenses
Other

2017:
Payroll and related costs
Depreciation
Ship operations
Ground transportation
Rent
MarketingUtilities
Insurance
Ticketing and reservations
Safety, health and environmental
Professional fees
Special events
Donation expenses
Other

ProgramServicesManagement
and General$ 6,249,347
1,901,898
856,844716,361
807,248592,281
350,392
275,003352,328
122,457
131,628
87,41139,805$ 1,049,963
24,93314,14818,37668,458199,158$

191,499-$ 7,299,310
1,901,898
856,844716,361
832,181592,281364,540
293,379
352,328
122,457
200,086
87,411
191,499
238,963$ 12,483,003$ 1,375,036$

191,499$ 14,049,538$ 5,628,072
1,621,719
1,001,720
755,956
752,083
562,339
378,060
340,784
333,952
173,005
118,828
60,90540,304$

773,555
19,626
14,837
16,83961,729179,642$

80,230-$ 6,401,627
1,621,719
1,001,720
755,956
771,709562,339392,897357,623
333,952
173,005
180,557
60,90580,230219,946$ 11,767,727$ 1,066,228$

80,230$ 12,914,185

Fundraising

See accompanying notes to financial statements.
5

Total

USS Missouri Memorial Association, Inc.
Statements of Cash Flows
For the Years Ended December 31, 2018 and 20172018
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 loss (gain) on investments
Write-off of capital assets
Gain on sale of equipment
Changes in certain assets and liabilities:
Accounts receivable, net
Prepaid expenses and other assets
Accounts payable
Accrued expenses

$

2017

450,757$

3,170,311

1,901,898
1,134,863
25,659-1,621,719(1,057,465)(1,800)6,600
12,263(852,422)
129,100

87,77814,428311,658(26,305)

Net cash provided by operating activities

2,808,718

4,120,324

Cash Flows from Investing Activities:
Capital expenditures
Purchases of investments board designated for ship preservation
Sales of investments board designated for ship preservation
Proceeds from sale of equipment(2,211,657)(16,876,874)
16,540,692-(4,478,355)(3,004,848)
2,176,585
1,800(2,547,839)(5,304,818)(1,500)(250)

259,379(1,184,744)

598,239

1,782,983

Net cash used in investing activities
Cash Flows from Financing Activity -Net Increase in Cash Restricted for the Purchase of
Equipment and Shipboard Improvements
Net increase (decrease) in cash and cash equivalents
Cash and Cash Equivalents, beginning of year
Cash and Cash Equivalents, end of year$

857,618$

598,239

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

844,451
13,167$565,905
32,334

Total cash and cash equivalents$

857,618$

598,239$-$738,574

Supplemental Disclosure of Non-Cash Activity -Capital Expenditures included in Accounts Payable

See accompanying notes to financial statements.
6

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

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 a national memorial commemorating
the end of hostilities in World War II consisting of the USS Missouri (the Battleship). 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 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, 2018 and 2017

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, 2018, the Association had approximately $2,556,000 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 and certificates of deposit included in investments have been designated by the
Board of Directors (the Board), and are not considered cash equivalents for purposes of thestatements 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. Cash Restricted for the Purchase of Equipment and Shipboard Improvements
Cash restricted for the purchase of equipment and shipboard improvements has been restrictedby donors and is not available for operating activities.

8USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

1.

Organization and Significant Accounting Policies (continued)
h. 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.
i.

Revenue Recognition
The Association recognizes revenues from ticket sales at the time of admission. Commissions
from concessionaires, special events and other revenues are recognized when they are realized
or realizable and earned.

j.

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.

9

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

1.

Organization and Significant Accounting Policies (continued)
k. 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.
l.

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 otherlong-term strategic initiatives. The Board can re-designate these net assets at its discretion.

m. 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 during
2018 or 2017.
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.
The Tax Cuts and Jobs Act (TCJA) was enacted on December 22, 2017. The TCJA includes
significant changes to the US individual and corporate income tax system, including changes tothe computation of unrelated business taxable income (UBTI) of tax-exempt organizations andthe inclusion of UBTI for an exempt organization’s nondeductible entertainment and fringe
benefit costs. The TCJA did not have a significant impact on the Association’s operations.

10USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

1.

Organization and Significant Accounting Policies (continued)
n. Recently Adopted Accounting Pronouncement
In August 2016, the Financial Accounting Standards Board (FASB) issued AccountingStandards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of
Financial Statements of Not-for-Profit Entities. The ASU addresses the complexity andunderstandability of net asset classification, deficiencies in information about liquidity andavailability of resources, and the lack of consistency in the type of information provided about
expenses and investment return. Among the changes, the ASU replaces the three current classesof net assets with two new classes, “net assets with donor restrictions” and “net assets without
donor restrictions”, and expands disclosures about the nature and amount of any donor
restrictions. The ASU also requires the presentation or disclosure of expenses by nature andfunction. The Association has adopted this ASU and has adjusted the presentation of thesestatements accordingly.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230):
Restricted Cash, which provides guidance on the presentation of restricted cash or restrictedcash equivalents in the statement of cash flows. ASU 2016-18 is effective for the Association
beginning on January 1, 2019 and must be applied using a retrospective transition method withearly adoption permitted. The Association has early adopted this ASU, which did not have asignificant impact to its financial statements.
o. Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic
606). The new revenue recognition standard provides a five-step analysis of transactions todetermine when and how revenue is recognized. The core principle is that revenue should berecognized to depict the transfer of promised goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled in exchange for those goods
or services. This ASU is effective for annual periods beginning after December 15, 2018, andshall be applied retrospectively to each period presented or as a cumulative-effect adjustment asof the date of adoption. The Association is currently evaluating the effect of adopting the newstandard on its financial statements.

11

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

1.

Organization and Significant Accounting Policies (continued)o. Recently Issued Accounting Pronouncement (continued)
In February 2016, the FASB issued ASU 2016-02, Leases (Subtopic 842). ASU 2016-02
replaced the existing lease guidance with new guidance applicable to both lessees and lessors
and requires lessees to recognize right-of-use assets and lease liabilities for all leases other thanthose that meet the definition of short-term leases at the commencement date of the lease. A
right-of-use asset is an asset that represents the lessee’s right to use, or control the use of, aspecified asset for the lease term. A lease liability is a lessee’s obligation to make lease
payments arising from a lease, measured on a discounted basis. The standard also requires
additional quantitative and qualitative disclosures regarding the amount, timing and uncertainty
of cash flows arising from leases.
In July 2018, the FASB also issued ASU 2018-11, Leases (Topic 842): Targeted Improvements,
which provides for an optional transitional method that allows companies to continue applying
the guidance under the current lease standard in the comparative periods presented in thefinancial statements. The Association may adopt the guidance either: (1) retrospectively to eachprior reporting period presented in the financial statements with a cumulative-effect adjustment
recognized at the beginning of the earliest comparative period presented or (2) retrospectively
at the beginning of the period of adoption through a cumulative effect adjustment. These ASUs
will be effective for the Association for the year ending December 31, 2020. Management iscurrently assessing the effect of implementation of the new guidance.
In June 2018, the FASB issued ASU 2018-08, Not-for-Profit Entities (Topic 958): Clarifying
the Scope and the Accounting Guidance for Contributions Received and Contributions Made,
which clarify and improves the scope and accounting guidance around contributions of cash
and other assets received and made by not-for-profit organizations and business enterprises.
The ASU clarifies current guidance about whether a transfer of asset, or the reduction,
settlement, or cancellation of liabilities, is a contribution or an exchange transaction. It
provides criteria for determining whether the resource provider is receiving commensurate
value in return for the resources transferred which, depending on the outcome, determines
whether the organization follows contribution guidance or exchange transaction guidance in therevenue recognition and other applicable standards. It also provides robust framework fordetermining whether a contribution is conditional or unconditional, and for distinguishing adonor-imposed condition from a donor-imposed restriction. ASU 2018-08 will be effective for
the Association beginning on January 1, 2019. The Association is currently evaluating theimpact the adoption of this guidance will have on its financial statements.

12

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

1.

Organization and Significant Accounting Policies (continued)
p. Reclassifications
Certain reclassifications were made to prior year’s financial statements to conform to the 2018presentation. Such reclassifications had no impact on the previously reported changed in net
assets.
q. Subsequent Events
The Association has evaluated subsequent events through May 10, 2019, the date on which thefinancial statements were issued, and it was determined that all subsequent events had been
properly accounted for.

2.

Board Designated Cash and Investments
Cash and investments board designated for ship preservation are carried at fair value at
December 31, 2018 and 2017, and consist primarily of investments in mutual funds as follows:

2018
Mutual Funds:
Cost
Gross unrealized gains
Gross unrealized losses$

Mutual Funds, at fair value
Cash and Certificate of Deposit
Money Market Funds, at fair value
Accrued Interest

13,011,480(859,565)

2017$12,151,915
2,000,000
246,829
10,705

Total cash and investments,
board
designated for shippreservation$

13

14,409,449

11,083,224
1,165,943(50,182)
12,198,985
2,806,235
193,293
9,617$

15,208,130

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 20172.

Board Designated Cash and Investments (continued)
Net investment returns for 2018 and 2017 consisted of the following:

2018
Net realized/unrealized (loss) gain
Dividend and interest income
Investment fees

3.

2017

$

(1,134,863)
303,139(59,969)$

1,057,465
515,932(54,391)$(891,693)$

1,519,006

Equipment and Shipboard Improvements
Equipment and shipboard improvements at December 31, 2018 and 2017 were as follows:

2018
Shipboard improvements
Equipment and fixtures$

Accumulated depreciation

Construction in progress
Equipment and Shipboard Improvements, net
4.

$26,985,352
8,165,264

2017$

22,718,312
7,762,824

35,150,616

30,481,136(14,202,766)(12,300,868)

20,947,850

18,180,268

1,860,476

4,343,958

22,808,326$

22,524,226

Line of Credit
In August 2018, the Association entered into a credit agreement with a bank amounting to$5 million. Draws on the credit agreement are secured by certain cash, cash equivalents andinvestments held by the Association, require monthly interest-only payments, and bear interest at
the Association’s choice of the prevailing market rate, as defined, or selected London Inter-Bank
Offered Rate (LIBOR) plus applicable margins, as defined, with an expiration date ofAugust 21, 2021. There were no borrowings outstanding at December 31, 2018.

14

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 20174.

Line of Credit (continued)
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.

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. Furthermore, while the Association believes its
valuation methods are appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial instruments could
result in a different fair value measurement at the reporting date.

15

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

5.

Fair Value Measurements (continued)
The following table sets forth the Association’s investments by type of fund based on Level 1
inputs as of December 31:

2018
Mutual Funds:
Intermediate Term Bond
Large Value
Large Growth
Foreign Large Blend
Mid-Cap Value
Mid-Cap Growth
Small Value
Small GrowthDiversified Emerging MktsHigh Yield Bond
Pacific/Asia Ex-Japan Stk
Foreign Small/Mid Value
Large Blend$

Total mutual funds at fair value
Cash and Certificates of Deposit
Money Market Funds
Accrued Interest

4,174,614
1,679,902
1,341,905
1,103,894
763,985
652,311617,065
518,030
486,236
321,090258,846
234,037-

2017$

12,151,915
2,000,000
246,829
10,705

Total cash and investments, board
designated for ship preservation $16

14,409,449

4,091,605
1,335,827
632,280
1,688,819
494,007450,083
99,861
98,883
277,3193,030,301
12,198,985
2,806,235
193,293
9,617$

15,208,130

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 2017

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 $14.4 million and $15.2 million as of December 31, 2018 and 2017,
respectively, in the Ship Preservation Fund, for the purpose of funding future preservation andmajor restoration projects for the Battleship.
The Association is accumulating funds for the purpose of conducing 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 is estimated that the next dry docking will cost between $25 and $30 million. This
work is required every 20 to 25 years for permanently moored ships in order to paint and repair
the hull of the ship below the waterline.
b. With Donor Restrictions
Net assets with donor restrictions at December 31, 2018 and 2017 consisted of the following:
2018
Cash restricted for the following:
Educational purposes
Shipboard improvements and displays
Net assets with donor restrictions

2017

$

13,16741,350$32,33439,850$54,517$

72,184

Net assets with donor restrictions released from restrictions during the years ended
December 31, 2018 and 2017 consisted of the following:2018
Restrictions satisfied by expenditures for:Educational purposes
Shipboard improvements and displays
Net assets with donor restrictions
released from restrictions

17

2017

$

35,667-$65,678680$

35,667$

66,358

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 20177.

Employee Benefit Plan
Substantially all full-time employees of the Association are eligible to participate in the
Association’s 401(k) retirement savings plan upon completion of one year of service. The plan
provides for discretionary employee and employer contributions up to defined limits. For the years
ended December 31, 2018 and 2017, the Association made employer contributions ofapproximately $141,000 and $69,000, respectively. Effective January 1, 2018, full time employees
are allowed to participate in the Association’s 401(k) retirement saving plan upon completion of six
months of service. The Plan was amended to allow employees to contribute up to $18,000 (or$24,000, if the employee is over the age of 50), and allow discretionary employer matching up to 4
percent.

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 2019. Ground transportation fees, based upon fixed hourly rates, wereapproximately $716,000 in 2018 and $756,000 in 2017 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.
c. Operating Leases
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, endingat various dates through December 31, 2019. Percentage rents from these leases are reported ascommission income on the accompanying Statements of Activities for the years ended
December 31, 2018 and 2017 and amounted to approximately $1,619,000 and $1,381,000,
respectively.

18

USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 20178.

Commitments and Contingencies (continued)
c. Operating Leases (continued)
In March 2017, the Association signed a new 25-year lease with the U.S. Navy which iseffective January 1, 2017 through December 31, 2041. The new lease requires estimatedmonthly payments of rent totaling $35,000, which are trued up on an annual basis to equal anannual rent of six percent of the Association’s ticket sales revenue as defined in the lease. Total
rent expense recognized for the years ended December 31, 2018 and 2017 was approximately$771,000 and $724,000, respectively.
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$296,000 and $246,000 and are reported as special events revenue for the years ended
December 31, 2018 and 2017, respectively.
d. Construction Commitments
In 2019, the Association entered into a construction contract for approximately $3 million for
the restoration and preservation of the aft superstructure on the Battleship.

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USS Missouri Memorial Association, Inc.
Notes to Financial Statements
December 31, 2018 and 20179.

Liquidity and Availability
The following reflects the Association’s financial assets as of December 31, 2018, reduced byamounts not available for general use within one year because of board designations or donorimposed restrictions.

2018

2017

Financial assets:
Cash and cash equivalents$
Cash, with donor restrictions
Cash, restricted for the purchase of equipment andshipboard improvements
Accounts receivable
Cash and investments

41,3501,697,779
14,409,449

39,8501,704,379
15,208,130

Financial assets, at year end

17,006,196

17,550,598

Less those unavailable for general expenditure
within one year, due to:
Board designated for ship preservation
Donor restricted(14,409,449)(54,517)(15,208,130)(72,184)

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

844,451
13,1672,542,230$$

565,905
32,3342,270,284

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 and for ship preservation. These assets arelimited in use, which are more fully described in Note 2 and are not available for general
expenditure within the next year. However, the board designated amounts of $14,409,449 and$15,208,130 as of December 31, 2018 and 2017, 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 $5 million line of credit, as discussed in more detail in
Note 4. As of December 31, 2018, $5 million remained available on the Association’s line ofcredit.

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