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To: Tony Capaci

From: Bernard Cason
Date: March 14, 2011
Re: NURFC Financial Analysis Update

This financial analysis was conducted using the audited financial statements
for Fiscal Year (“FY”) 2005 and 2006, and the unaudited consolidated
financial statements for the periods of March 31, 2007 and June 30, 2007.
Additionally, year to date (“YTD”) 2007 actuals, forecasted 2007 year end
numbers, and pro forma statements for FY 2008 and FY 2009 were used for
this analysis.

In reviewing the balance sheet, NURFC continues to hold a sizeable asset

position with total assets of $128.8 million as of December 31, 2006. Total
assets decreased by 1% in FY 06 from $130.5 million in FY 05. This
decrease was primarily due to a 6% decrease in museum facility, net which
includes depreciation of $6.7 million and $11.2 million in FY 05 and FY 06,
respectively. The unaudited statements for March and June, 2007 are
quarterly snapshots and do not account for this depreciation of the museum
facility. Government receivables grew 33% to $2.1 million and investments
reached $24.6 million, a growth of 7% during this same period.

The financial leverage of NURFC remains quite high at 40%, which is due to
the $50 million Adjustable Rate Demand Revenue Bonds borrowed to fund
the project. These Bonds require sinking fund payments of $10 million per
year from 2034 to 2038; however, the reimbursement agreement requires
redemption at varying amounts from 2007 through 2023. The Bonds are fully
backed by letters of credit through April 15, 2009 by which NURFC is also
required to uphold three covenants through December 31, 2008. They are
as follows:
1. Cash and Investments must maintain a balance of $30 million;
2. Borrowing Base cannot fall below $49 million,
3. And a cumulative surplus of $3.5 million for FY 06 and FY 07 must be
As of August 31, 2007, the Cash and Investment balance and Borrowing
Base were met and the cumulative surplus of $2.7 million for FY06 was
satisfied. Management has forecasted a total surplus of $800,000 for
FY 07and believes that this is achievable.

In reviewing the income statement, NURFC has achieved a 3% increase in
total support and revenue from FY 05 to FY 06. This increase was
comprised primarily of $2.8 million gain in net contributions coupled with $1.8
million and $791,174 decreases in government grants and earned revenue.
Total support and revenue for FY 06 was $15.6 million. Management has
forecasted total earned revenue for FY 07 as $1.81 million as compared to
FY 06 earned revenue of $1.83 million. Earned revenue as of August 31,
2007 is $1.2 million or 67% achieved with four months remaining. Based on
past experience, these projections appear to be reasonable.

Total expenses decreased by 8% from FY05 to FY06, primarily due to a 45%

or $1.1 million decrease in fundraising and development expense and a 10%
or $361,978 in museum programs and 22% or $346,198 in general and
administrative expenses. Total expenses for FY06 were $16.4 million.

Management has forecasted operating expenses which include wages and

other expenses necessary for NURFC to function to reflect slight increase in
Base Operations Revenue, decreases to Government Funding Revenue and
decreases to Private Support Revenue and have proactively reduced
expenses. Operating expenses have been forecasted at $7.89 million for
FY07 compared to actual FY06 of $7.52 million. Operating expenses as of
August 31, 2007 were $5.81 million or 74% of total forecast while 75% of the
year has expired. Forecasts $6.85 million for FY 08 and $6.95 million for FY
09 show a reduction in operating expenses due to staff reductions. These
projections also appear reasonable based on past experience.

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