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:ITI. Financial Condition

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Report of the Auditing Committee of the National Academy of Sciences Dear Dr. Alberts: December IS, 1997 In accordance with Bylaw V-6 of the National Academy of Sciences, the firm of KPMG Peat Mar- wick LLP was retained to conduct an audit of the accounts of the Treasurer for the fiscal year ended June 30, 1997, and to report to the Auditing Committee. The independent accountants have completed their audit of the financial statements and have sub- mitted their report, a copy of which is attached, concerning financial statements to which they refer. The Auditing Committee has reviewed the report and recommends its acceptance in compliance with the governing bylaw and that the opinion of the independent accountants be published with the report of the Treasurer. Respectfully submitted, ELKAN R. BLOUT, Chair ELLIS B. COWLING DAVID M. KIPNIS National Academy of Sciences Auditing Committee Dr. Bruce Alberts, President National Academy of Sciences Washington, D.C. 40

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Independent Auditor's Report NahonalAcademy of Sciences Auditing Committee We have audited the accompanying statement of financial position of the National Academy of Sci- ences (NAS) as of June 30, 1997, and the related statements of activities and cash flows for the year then ended. Preparation of these financial statements is the responsibility of the NAS's man- agement. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the finan- cial statements are free of material misstatement. An audit includes examining, on a test basis, evi- dence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a rea- sonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the National Academy of Sciences as of June 30, 1997, and its changes in net assets and its cash flows for the year then ended in conformity with generally accepted accounting . . principles. As discussed in note 2 to the financial statements, the NAS adopted the provisions of Statement of Financial Accounting Standards No. 124, Accounting for Certain Investments Held by Not-for- Profit Organizations in 1997. October 17, 1997 Washington, D.C. KPMG PEAT MARWICK LLP 41

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EXHIBIT A Statement of Financial Position of the National Academy of Sciences Year Ended June 30, 997 (With Comparative Information for 1996' ($ in thousands) ~997 996 ASSETS Current Assets Cash and cash equivalents$ 62$ 251 Short-term investments (note 3)26,91728,236 Accounts receivable - U.S. government28,71822,645 Other current receivables (note 5)4,6896,319 Inventories of publications and supplies1,8371,638 Prepaid expenses and other assets645833 Total Current Assets62,86859,922 Property and equipment (note 4)15,51416,319 Einstein Memorial1,7231,723 Other assets (note 10)5,6594,873 Endowment and Trust Investment Pool (note 3)231,848150,211 Total Assets$ 317,612$ 233,048 LIABILITIES AND NET ASSETS Current Liabilities Accounts payable and accrued expenses (note 12)$ 14,253$ 12,292 Advances on U.S. government contracts2,3304,515 Deferred revenue14,67510,645 Total Current Liabilities31,25827,452 Long-Term Liabilities Funds held on behalf of others (note 1)10,59310,987 Accrued employee benefits (note 10)9,6957,776 Other liabilities (note 12)2,2173,244 Total Liabilities53,76349,459 Net Assets Unrestricted Temporarily restricted (note 7) Permanently restricted (note 7) Total Net Assets 117,185 75,659 71,005 79,954 33,475 70,160 263,849 183,589 Total Liabilities and Net Assets $ 317,612 $ 233,048 See accompanying explanatory notes to the financial statements. 42

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EXHIBIT B Statement of Act~vides of the Nat~onalAcademy of Sciences Year Ended June 30, 1997 (With Summarized Information for 1996) ($ in thousands) ~997 Temporarily Permanently 1996 Unrestricted Restricted Restricted Totals Totals REVENUES, GAINS, AND OTHER SUPPORT Government, contracts and grants$144,540 $144,540$146,992 Private contracts and grants12,817 9,480 22,29722,667 Other contributions5,468 8456,3134,276 Fees and publications11,947 11,9478,280 Investment income (note 3)25,262 18,984 44,24617,133 Other3,096 3,0962,433 Net assets released from restrictions4,633 (4,633) Total revenues, gains, and other support207,763 23,831845232,439201,781 EXPENSES Programs (note 8)175,081 -175,081175,520 Management and general19,740 19,74016,782 Fund raising1,414 1,414869 Total expenses196,235 196,235193,171 Change in net assets before cumulative effect of11,528 23,83184536,2048,610 changes in accounting principles Cumulative effect of changes in accounting principles (note 2)25,703 18,353 44,0568,944 Change in net assess37,231 42,18484580,26017,554 Net assets at beginning of the year79,954 33,47570,160183,589166,035 Net assets at end of year$117,185 75,65971,005263,849183,589 See accompanying explanatory notes to the financial statements. 43

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Statement of Cash Flows of the NationalAcademy of Sciences Year Ended June 30, 1997 (With Comparative Information for 1996) CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities Depreciation and amortization Gain on sale of securities Unrealized gain on securities Loss on sale of property and equipment Increase in accounts receivable U.S. government Decrease in other receivables Increase in inventories of publications and supplies Increase in prepaid expenses and other assets Increase (decrease) in accounts payable and accrued expenses Increase (decrease) in advances on U.S. government contracts Increase in deferred revenue Increase in other liabilities Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment Proceeds from sale of equipment Sale or maturity of investments Purchase of investments Net cash used by investing activities CASH FLOWS USED BY FINANCING ACTIVITIES Payments on financing agreement Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year Supplemental data Interest paid on obligations See accompanying explanatory notes to the financial statements. 44 1997 $ 80,260 4,042 (4,023) (70,191) (6,073) 1,630 (198) (598) 3,561 (2,185) 4,030 648 EXHIBIT C ($ in thousands) 1996 $ 17,554 3,260 (4,487) 13 (1,984) 32 (268) (264) (4,038) (979) 1,038 118 10,903 9,995 (3~237) 145~871 (152,369) (4,237) 4 76,635 (81,154) (9,735)(8,752) ) :) (1,235) (189) 251 8 243 62 $ 251 $ 252 $ 255

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Explanatory Notes to the Financial Statements June 30, 1997 NOTE 1: ORGANIZATION AND RELATED ENTITIES NationalAcademy of Sciences The National Academy of Sciences (NAS) was formed under a charter that was passed as an Act of Incorporation by the United States Congress and signed into law on March 3, 1863. The NAS operates as a private cooperative society of distinguished scholars engaged in scientific or engineering research, dedicated to the furtherance of sci- ence and its use for the general welfare. The NAS is exempt from federal income taxes under Section 501(c)~3) of the Internal Revenue Code, except for unrelated busi ness Income. National Research Council Most of the activities undertaken by the NAS are carried out through the Commissions, Offices, and Boards of the National Research Council, which draw upon a wide cross-section of the nation's leading scientists and engi- neers for advisory services to government agencies and the Congress. To respond effectively to both the disciplinary concerns of the research community and the complex interdisciplinary problems facing American society, the National Research Council is organized into 10 major units, which are responsible for most study activities Commission on Behavioral and Social Sciences and Edu- cation; Commission on Engineering and Technical Sys tems; Commission on Geosciences, Environment, and Resources; Commission on Life Sciences; Commission on Physical Sciences, Mathematics, and Applications; Office of International Affairs; Office of Scientific and Engineer- ing Personnel; Board on Agriculture; Transportation Research Board; Center for Science, Mathematics, and Engineering Education. The financial activity and results of the National Research Council are included in the NAS's financial statements. Institute of Medicine The Institute of Medicine (IOM), established in 1970, con- ducts studies of policy issues related to health and medi- cine; issues position statements on these policies; cooper- ates with the major scientific and professional societies in the field; identifies qualified individuals to serve on study groups in other organization units; and disseminates infor- mation to the public and the relevant professions. The IOM was established as a separate membership organization within the NAS. The IOM's Policy Division is responsible to the Executive Office of the National Research Council. The financial activity and results of the IOM are included in the NAS's financial statements. National Academy of Engineering The National Academy of Engineering (NAE) was estab- lished in December 1964 under the charter of the National Academy of Sciences, as a related parallel organization, autonomous in its administration and in the selection of members. The NAE shares with the NAS the responsibil- ity for advising the federal government on scientific issues. The NAS is reimbursed by the NAE for indirect costs it incurs on behalf of the NAE. These costs totaled $2.9 mil- lion in 1997. The financial activity and results of the NAE are not included in the NAS's financial statements. National Academy of Engineering Fund The National Academy of Engineering Fund (NAEF) is a separately incorporated not-for-profit organization estab- lished by the NAE to raise funds to support the goals of the NAE. The financial activity and results of the NAEF are not included in the NAS's financial statements. The description of a loan between NAEF and the NAS for the acquisition of equipment is disclosed in note 12 to the financial statements. The National Academies' Corporation The National Academies' Corporation (TNAC) was separately incorporated in January 1986 as a not-for-profit corporation for the purpose of constructing and maintaining a study and con- ference facility. This facility, the Arnold and Mabel Beckman Center, is located in Irvine, California, and operates to expand and support the general activities of the NAS, the NRC, the IOM, and the NAE. The NAS and the NAEF are 50/50 joint investors of TNAC. The financial activity and results of TNAC 45

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are not included in the NAS's financial statements. TNAC uti- lizes the NAS's Endowment and Trust Investment Pool as a means to invest certain assets. These TNAC investments partic- ipate in the investment pool experience along with all other funds in this pool. Earnings allocated to the TNAC investments are reinvested with the original investments. The NAS's oblig- ation to TNAC for these funds held in trust, which total $10.6 million as of June 30, 1997, is reported as funds held on behalf of others on the statement of financial position. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Net Asset Classif cation Net assets and revenues, expenses, gains and losses are classified based on the existence or absence of donor- imposed restrictions. Accordingly, net assets of the NAS are classified and reported as follows: Permanently restricted: Net assets subject to donor- imposed stipulations that they be maintained in perpetuity by the NAS. Generally, the donors of these assets permit the NAS to use all or part of the income earned on related investments for general or specific purposes. Temporarily restricted: Net assets subject to donor- imposed stipulations that may or will be met either by actions of the NAS and/or by the passage of time. When a donor restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Unrestricted: Net assets arising from exchange transac- tions and contributions that are not subject to donor- imposed stipulations. The NAS adopted this basis of accounting in 1996. The effect of this change is reported as the cumulative effect of change in accounting principle in 1996 on the statement of activities. Cash and Cash Equivalents The NAS considers excess cash that is invested in overnight government-backed repurchase agreements and demand deposits to be cash equivalents. Investments Effective July 1, 1996, the NAS adopted the provisions of Statements of Financial Accounting Standards No. 124, 46 Accounting for Certain Investments Held by Not-for-Profit Organizations. In accordance with these standards, the NAS's equity and certain debt securities are reported at their fair values, based on quoted market prices. Changes in the fair value are recognized in the statement of activities. The effect of the adoption of this standard is reported as a change in accounting principle on the 1997 statement of activities. Unrealized and realized gains and losses on investments are reported as changes in unrestricted net assets unless other- wise specified by the donor. The NAS investments in real estate mortgages do not meet the criteria for reporting at fair value and are therefore reported at cost. The NAS holds certain short-term investments for program and operational liquidity requirements. Endowment and Trust investments are pooled for long-term investment purposes. Investments in this pool are administered as an open-end investment trust, with shares of the pool funds expressed in terms of participating capital units (PCU). PCU values are used to determine equity among funds in the pool whenever new money is contributed or withdrawals are made. Income earned that is not reinvested does not affect the PCU value. Contributions Contributions, including unconditional promises to give, are recognized as revenues in the period received. Condi- tional promises to give are not recognized until the condi- tions on which they depend are substantially met. Gifts of land, buildings, and equipment are reported as unrestricted net assets unless explicit donor stipulations specify how the donated assets must be used. Temporary restrictions on gifts to acquire long-lived assets are consid- ered met in the period in which the assets are acquired and placed in service. Contracts and Grants A major portion of the NAS's activities is performed under cost-reimbursable contracts with the U.S. government. The largest concentration among federal sponsors are the Depart- ment of Transportation (approximately 20%) and the Depart- ment of Defense (approximately 15%~. It is the policy of the NAS to record these contracts as exchange transactions and recognize revenue as reimbursable costs are incurred. The costs associated with the U.S. government contracts are sub- ject to audit by the Defense Contract Audit Agency (DCAA), which has completed its examinations through June 30, 1996.

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Activities supported by individuals or private organiza- tions are generally financed by grants to the NAS. Revenue for grants qualifying as contributions is recorded at the time the NAS is notified of the grant. Such grants are classified as temporarily restricted if use of the grant funds is limited to specific areas of study or restricted to be used in future periods. The net asset restrictions are released when the funds are used for the specific purpose. Revenue from private grants that is not restricted to purpose or future periods is recognized as unrestricted revenue. Deferred Revenue For grants and contracts that are determined to be exchange transactions, revenue is recognized as the related costs are incurred. Funds received in advance for these grants are recorded as deferred revenue on the statement of financial position. Inventories Inventories are stated at the lower of cost or net realizable value and include supplies, work-in-process, and finished goods for the publication activities of the NAS. The majority of the NAS's inventory of publications and sup- plies resides at the National Academy Press (NAP). NAP uses the full absorption costing methodology in pricing finished products. This methodology includes all direct printing cost and indirect cost. Property and Equipment Depreciation of the NAS's buildings and equipment is computed on a straight-line basis using the following lives: class. Such information does not include sufficient detail to constitute a presentation in conformity with generally accepted accounting principles. Accordingly, such infor- mation should be read in conjunction with NAS's financial statements for the year ended June 30, 1996, from which the summarized information was derived. Use of Estimates The preparation of these financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and disclosure of contin- gent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. Reclassif cations Certain prior year balances have been reclassified to con- form to the current year presentation. NOTE 3: INVESTMENTS Short-term investments and endowment and trust invest- ments consist of the following as of June 30, 1997: Short-term investments Investments reported at fair value: ($ in thousands) Merganser Capital Bankers Trust $ 26,817 100 $ 26,917 Endowment and trust investments Investments reported at fair value: ($ in thousands) Cash equivalents $ 4,956 buildings - 40 to 50 years Bonds and notes 44,899 building and leasehold improvements - lesser of the Equity securities 168,932 remaining life of the building or estimated useful life 218,787 of improvement Investment reported at cost: Real estate mortgage 13,061 furniture and equipment - 4 to 10 years. $ 23~,348 Improvements to leased facilities are amortized over the remaining life of the lease. The Einstein Memorial sculp- ture is not depreciated. Comparative Financial Statements The financial statements include certain prior year summa- rized comparative information in total but not by net asset Vanguard equity funds comprise approximately $101 mil- lion of the total equity securities funds. Fair value for real estate mortgage investments approxi- mates cost and is determined by comparative analysis of like location and properties. Fair value for other invest- ments is determined based on quoted market prices. 47

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Investment income is reported net of investment expenses of approximately $ 120,000 in 1997 and is comprised of the following: ($ in thousands) Interest and dividend income Net gains on investments NOTE 4: PROPERTY AND EQUIPMENT 14,088 30,158 $ 44,246 Property and equipment as of June 30, 1997, are as follows: ($ in thousands) 1997 1996 Land $ 369 Buildings and improvements12,477 Furniture and equipment26,446 Leasehold improvements6,367 $ 45,659 Less: Accumulated depreciation $ 369 12,279 26,135 6,238 $ 45,021 and amortization (30,145 ) (28,702) $ 15,514 $ 16,319 The NAS is the custodian of certain property and equip- ment that is owned by the U.S. government and is fur- nished to the NAS for work under government contracts. The cost for these assets, which is not reflected in the accompanying statements of financial position, was approximately $372,000 and $560,000 as of June 30, 1997, and 1996, respectively. NOTE 5: CONTRIBUTIONS RECEIVABLE Pledged contributions are included with the other current receivables in the statement of financial position. Contrib- utors have pledged to provide support in the following future periods: Fiscal Year ($ in thousands) Totals 1998$ 125 1999-20033,177 Contributions receivable$ 3,302 48 NOTE 6: CHARITABLE GIFT ANNUITY The NAS has arrangements with donors in which the donor contributes assets in exchange for a promise to receive a fixed amount of income for a specified period of time. The fair market value for these assets of $224,302 is included in investments, and the liability of $87,423 repre- senting the present value of future cash flows expected to be paid to the annuitants is included as accrued expenses on the statement of financial position. The NAS received no new charitable gift annuities in 1997. Assets are recog- nized based on the fair market value of the donated asset. The discount rate used to project present value of cash out flow is based on the Internal Revenue Service discount rate applicable at the date of the gift. NOTE 7: RESTRICTED NETASSETS Temporarily restricted net assets are available for the fol- lowing purposes as of June 30, 1997: ($ in thousands) Program$ 54,819 Prizes and awards18,842 Woods Hole facility1,998 Total$ 75,659 Permanently restricted net assets are invested in perpetuity. The income generated by these assets is to be used to sup- port donor-specified programs or general activities of the NAS. As of June 30, 1997, the NAS held the following per- manently restricted net assets, classified by the purpose for which the income is to be used: ($ in thousands) Programs$ 68,702 Prizes and awards2,303 Total$ 71,005

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NOTE 8: DIRECT AND INDIRECT PROGRAM EXPENSES Program expenses for 1997 are classified as follows: ($ in thousands) Scientific and Engineering Personnel Transportation Research Board Institute of Medicine Engineering and Technical Systems Behavioral and Social Sciences and Education Geosciences, Environment, and Resources Physical Sciences, Mathematics, and Applications International Affairs Commission on Life Sciences Science, Mathematics, and Engineenng Education Policy Division National Sciences Resource Center National Academy of Engineering Board on Agriculture Other Total NOTE 9: INDIRECT COSTS $ 46,738 41,873 14,133 10,620 12,026 9,537 11,910 6,774 8,384 4,440 3,427 1,965 1,557 908 789 $ 175,081 The NAS received fixed indirect rates for fiscal year 1997. The overhead rate was 62.9%, and the general and admin- istrative (G & A) rate was 18.7%. Overhead was assessed against direct salaries, accrued leave, fringe benefits, and services provided by outside contractors (e.g., temporary personnel agencies, consultants) on NAS property, and G & A was assessed against direct costs and overhead less subcontract costs and stipends. Therefore, both the over- head and G & A rates were applied to projects incurring direct salaries and other direct costs such as travel. If a project did not require direct salaries, such as a travel grant program, a subcontract/flow-through administration rate of 2.0% was applied. Certain other activities, such as off-site work (not performed on NAS property), were assessed at a reduced overhead rate of 34.2%. NOTE 10: EMPLOYEE BENEFITS Pension Plans The NAS has an insured, noncontributory, defined contri- bution pension plan covering substantially all of its employees. The plan is intended to qualify under Section . Service cost (with interest) 401(a) of the Internal Revenue Code and uses Teachers Interest cost Insurance and Annuity Association/College Retirement Amortization of~ransition Equities Fund (TIAA/CREF) group retirement annuity obligation Total expense contracts as the investing vehicle. Employees under this plan vest immediately. The NAS continues to seek a favor- able determination letter from the Internal Revenue Service on the qualification of this plan under Section 401(a) of the Internal Revenue Code. In addition, the NAS has a voluntary employee contribution retirement plan that is funded solely by employee contributions made on a pretax, salary-reduc- tion basis under Section 403(b) of the Internal Revenue Code. The investing vehicles under this voluntary plan are retirement annuity contracts issued by TIAA/CREF and mutual funds offered by the Vanguard Group, Inc. Pension expense in 1997 and 1996 amounted to $5.3 million and $5.0 million, respectively. The NAS's policy is to fund pension benefits as they are earned. The NAS's normal retire- ment age is 65, but there is no mandatory age for retirement. Deferred Compensation The NAS holds long-term investments as part of a deferred compensation arrangement for certain employees. The fair value of these investments is approximately $5.6 million as of June 30, 1997, and is reported in other assets. The relat- ed obligation is included in the accrued employee benefits on the statement of financial position. Postretirement Benefit ts The NAS provides certain health care and life insurance benefits for retired employees. All employees may become eligible for these benefits if they reach normal retirement age while working for the NAS and meet certain service requirements. These benefits for retirees are provided by an insurance company whose premiums are determined on an experience-rated basis. The plan is contributory for employ- ees who retire after January 1, 1990. Employees contribute 25% of the monthly premium. The NAS has elected to rec- ognize the initial postretirement benefit obligation over a period of 20 years. The accrued postretirement benefit obligation is reported as accrued employee benefits on the statement of financial position. The postretirement benefit cost for 1997 includes the following components: ($ in thousands) Life Insurance Health Benefits Benefits Total $ 6$ 299 37749 26406 $ 30s 786 432 $ 69 $ 1,454 $ 1,523 49

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The status of the NAS's postretirement benefit obligation is summarized as follows as of June 30, 1997: ($ in thousands) Life Insurance Health Benefits Benefits Accumulated Postretirement Benef t Obligation: Retirees Fully eligible actives Other actives Total APBO Plan assets Funded status Unrecognized net gain Unrecognized transition obligation Accrued postretirement benefit cost $ (83) (2,540 $ (433)(7,286) (23)(636) (46)(2,488) (502)(10,410) (502)(10,410)(10,912) (18)977959 4376,893 7,330 (2,623) The discount rate used to calculate the accumulated post- retirement benefit obligation was 7.75%. The trend rates for growth in health care costs used in calculating the accu- mulated postretirement benefit obligation were 12.1% for employees under age 65 and 10.6% for employees 65+ in fiscal year 1995, declining gradually to 5.8% for both employee groups. The health care cost trend rate assump- tion has a significant impact on the postretirement benefit cost and obligation. A one percentage point increase in the assumed health care cost trend rate for each year would increase the accumulated postretirement benefit obligation by approximately 12%, or $1.3 million. Postemploymer~t Benef ts The NAS also provides postemployment benefits to former or inactive employees before retirement. The liability for these benefits is calculated on an actuarially determined basis over the years the employees become eligible. The total 1997 post- employment benefit expense was approximately $419,000. NOTE 11: LINE OF CREDIT The NAS has a $5.0 million unsecured line of credit from NationsBank within interest at prime. As of June 30, 1997, the outstanding balance on the line of credit was $3.5 million. 50 NOTE 12: COMMITMENTS NAEF Loans The NAS has a series of 5-year loans from the NAEF for Totals the acquisition of equipment. These loans are to be repaid in equal installments at an interest rate determined by the Secretary of the Treasury in accordance with P.L. 92-41 ( ~6s9' (6.375% as of June 30, 19971. The present loan obligation (2,534) iS approximately $650,000 and is included in accounts (10,912) payable and accrued expenses. Total interest expense for 1997 and 1996 was $81,000 and $168,000, respectively. The future loan repayment schedule is as follows: ($ in thousands) Payment 1 998 $ 672 1 999 4 676 (27) $ 649 Leases The NAS is committed to several noncancelable leases for office space and equipment. In 2007 the NAS may exer- cise a 5-year renewal option on a building lease. If the NAS should exercise the option, the annual rentals will be based upon the then market rental for comparable office space within Washington, D.C. Provided that the NAS exercises its renewal option, the property will pass to the NAS at the end of the 5-year option period. Future minimum rental payments due under noncancelable leases are as follows: June 30 1 998 1999 2000 2001 2002 Thereafter ($ in thousands) Minimum Rental Payments $ 7,266 7,1 17 5,126 4,797 4,767 23,257 $ 52,330 Rental expense for 1997 and 1996 amounted to $7.2 mil- lion and $8.3 million' respectively.

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AS OF JULY 1, 1997 OFFICERS Bruce Alberts, President Jack Halpern, Vice-President Peter H. Raven, Home Secretary Sherwood Rowland, Foreign Secretary Ronald Graham, Treasurer FINANCE COMMITTEE Ronald Graham, Chair Bruce Alberts Elkan R. Blout David M. Kipnis Lawrence R. Klein Robert C. Merton Joseph P. Newhouse Paul A. Samuelson Howard E. Simmons, Jr. BUDGETAND INTERNAL AFFAIRS COMMITTEE Ronald Graham, Chair Ellis B. Cowling Marye Anne Fox Jack Halpern David M. Kipnis Richard N. Zare AUDITING COMMITTEE Elkan R. Blout, Chair Ellis B. Cowling David M. Kipnis FINANCIAL MANAGEMENT STAFF Archie L. Turner, Chief Financial Officer Therese Swetnam, Director of Accounting Office 51