woodland park zoological society

REPORT OF INDEPENDENT AUDITORS AND CONSOLIDATED FINANCIAL STATEMENTS

WOODLAND PARK ZOOLOGICAL SOCIETY

December 31, 2020 and 2019

Table of Contents PAGE Report of Independent Auditors 1–2 Consolidated Financial Statements

Consolidated statements of financial position 3 Consolidated statements of activities 4 Consolidated statements of cash flows 5 Consolidated schedules of functional expenses 6 Notes to consolidated financial statements 7–28

1

Report of Independent Auditors To the Board of Directors Woodland Park Zoological Society Report on the Financial Statements

We have audited the accompanying consolidated financial statements of Woodland Park Zoological Society, which comprise the consolidated statements of financial position as of December 31, 2020 and 2019, and the related consolidated statements of activities, cash flows and functional expenses for the years then ended, and the related notes to the consolidated financial statements. Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance 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 fair presentation of consolidated 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 consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated 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 the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Woodland Park Zoological Society as of December 31, 2020 and 2019, and the results of its changes in net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Seattle, Washington May 25, 2021

See accompanying notes. 3

Woodland Park Zoological Society Consolidated Statements of Financial Position

ASSETSDecember 31,

2020 2019CURRENT ASSETS

Cash and cash equivalents 16,376,881$ 10,464,395$ Short-term investments 1,249,985 2,752,685 Accounts receivable, net 614,596 319,698 Receivable from City of Seattle 1,051,560 1,043,424 Promises to give, current, net 997,652 1,484,891 Prepaid expenses 798,018 892,812

Total current assets 21,088,692 16,957,905

ENDOWMENT INVESTMENTS 24,093,288 21,333,725

PROMISES TO GIVE, long-term portion, net 1,132,254 1,247,724

PROPERTY AND EQUIPMENT, net 4,156,416 4,448,448

OTHER ASSETS 206,517 526,548

ARTWORK 317,338 317,338

50,994,505$ 44,831,688$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIESAccounts payable and accrued liabilities 4,662,715$ 3,420,996$ Current portion of payable to City of Seattle 46,200 46,200 Deferred revenue 4,198,936 2,863,240

Total current liabilities 8,907,851 6,330,436

LONG-TERM PAYABLE TO CITY OF SEATTLE 46,200 92,400

NET ASSETSNet assets without donor restrictions -

Undesignated 4,388,445 3,788,347 Property, equipment, and leasehold improvements 2,668,536 3,118,188 Internally-designated funds 696,940 329,111 Board-designated endowment 4,416,165 3,977,415 Board-designated for capital improvements 1,235,854 1,235,854

Total net assets without donor restrictions 13,405,940 12,448,915

Net assets with donor restrictions -Capital campaign 4,784,240 4,302,302 Endowments 20,035,439 17,584,759 Program and operational restrictions 2,899,835 3,157,876 Carousel 915,000 915,000

Total net assets with donor restrictions 28,634,514 25,959,937

Total net assets 42,040,454 38,408,852

50,994,505$ 44,831,688$

4 See accompanying notes.

Woodland Park Zoological Society Consolidated Statements of Activities

Years Ended December 31,2020 2019

Without With Without WithDonor Restrictions Donor Restrictions Total Donor Restrictions Donor Restrictions Total

OPERATING ACTIVITIESPublic support, revenue, and other support

Contributed support 4,159,695$ 1,631,501$ 5,791,196$ 4,066,180$ 1,795,809$ 5,861,989$ Conditional grants 133,905 1,823,685 1,957,590 122,733 1,918,079 2,040,812 Paycheck Protection Program proceeds 5,367,787 - 5,367,787 - - - Admissions and parking 4,104,047 - 4,104,047 11,260,000 - 11,260,000 Membership fees 2,581,460 - 2,581,460 3,944,198 - 3,944,198 Events and promotions, net of direct costs 855,674 - 855,674 1,671,371 - 1,671,371 Enterprise revenue 973,793 - 973,793 2,822,361 - 2,822,361 City of Seattle support 7,250,672 - 7,250,672 7,171,991 - 7,171,991 King County levy proceeds 5,278,564 - 5,278,564 5,587,239 - 5,587,239 Education fees 78,752 - 78,752 951,719 - 951,719 Other revenue 213,076 - 213,076 578,827 - 578,827 Net assets released from time restrictions 18,117 (18,117) - 24,840 (24,840) - Net assets released from purpose restrictions 3,683,622 (3,683,622) - 4,134,300 (4,134,300) -

Total public support, revenue, and other support 34,699,164 (246,553) 34,452,611 42,335,759 (445,252) 41,890,507

EXPENSESProgram services

Animal management and health care 9,214,459 - 9,214,459 9,689,006 - 9,689,006 Exhibits and ground maintenance 7,016,818 - 7,016,818 7,830,128 - 7,830,128 Education and conservation programs 4,329,000 - 4,329,000 6,203,216 - 6,203,216 Membership and visitor experiences 5,248,360 - 5,248,360 6,195,000 - 6,195,000 Marketing and public relations 2,584,006 - 2,584,006 3,546,739 - 3,546,739

Total operating program expenses 28,392,643 - 28,392,643 33,464,089 - 33,464,089

Supporting servicesManagement and general 3,928,444 - 3,928,444 5,874,891 - 5,874,891 Fundraising 2,578,155 - 2,578,155 3,123,198 - 3,123,198

Total operating expenses 34,899,242 - 34,899,242 42,462,178 - 42,462,178

Change in net assets from operating activities (200,078) (246,553) (446,631) (126,419) (445,252) (571,671)

NONOPERATING INCOME/(EXPENSE)Contributed support and other revenue 680,925 1,292,320 1,973,245 354,899 687,495 1,042,394 Investment income, gains and (losses), net 441,437 2,448,994 2,890,431 639,219 3,148,595 3,787,814 City of Seattle major maintenance support 1,125,605 - 1,125,605 1,995,332 - 1,995,332 Net assets released from purpose restrictions 820,184 (820,184) - 634,464 (634,464) - New exhibit, facility improvement and other program expenses (1,383,046) - (1,383,046) (2,688,133) - (2,688,133) Management and general (9,695) - (9,695) (9,694) - (9,694) Fundraising expenses (518,307) - (518,307) (293,879) - (293,879)

Change in net assets from non-operating activities 1,157,103 2,921,130 4,078,233 632,208 3,201,626 3,833,834

Total change in net assets 957,025 2,674,577 3,631,602 505,789 2,756,374 3,262,163

NET ASSETS - beginning of year 12,448,915 25,959,937 38,408,852 11,943,126 23,203,563 35,146,689

NET ASSETS - end of year 13,405,940$ 28,634,514$ 42,040,454$ 12,448,915$ 25,959,937$ 38,408,852$

See accompanying notes. 5

Woodland Park Zoological Society Consolidated Statements of Cash Flows

Years Ended December 31,2020 2019

CASH FLOWS FROM OPERATING ACTIVITIESGain on disposal of asset 35,590$ 2,889$ Cash received from contributed support 5,877,167 7,018,996 Cash received from sale of donated stock 1,009,914 208,841 Cash received from the City of Seattle 8,660,687 7,460,490 Cash received from admissions and parking 4,177,243 11,260,000 Cash received from membership fees 2,581,460 3,944,198 Cash received from King County levy proceeds 5,278,564 5,587,239 Cash received from the City Park District 1,125,756 1,995,332 Cash received from enterprise revenue 900,596 2,822,361 Cash received from conditional grant revenue 7,325,376 2,040,812 Cash received from events and promotions 844,948 1,671,371 Cash received from education fees 78,752 951,719 Cash received (paid) in advance of services being performed 1,335,696 (481,626) Cash received from investment gains (losses) 1,434,213 3,740,403 Cash received from other revenue 297,251 574,046 Cash paid for employee salaries, wages, taxes and benefits (24,597,981) (27,660,171) Cash paid to vendors (10,108,389) (17,282,529) Cash paid for conservation grants to others (304,157) (410,978)

Net cash from operating activities 5,952,686 3,443,393

CASH FLOWS USED IN INVESTING ACTIVITIESCash paid for property and equipment (127,328) (527,057) Cash paid for purchase of investments (1,288,473) (8,337,197) Cash received (reinvested) from sales of investments 1,091,266 (616,731)

Net cash used in investing activities (324,535) (9,480,985)

CASH FLOWS FROM FINANCING ACTIVITIES Cash received from endowment contributions 6,200 4,850 Cash paid for City of Seattle principal payments on long term debt (46,200) (46,200) Cash received from endowment withdrawals to fund spending,

net of endowment receipts 324,335 284,191

Net cash from financing activities 284,335 242,841

CHANGE IN CASH AND CASH EQUIVALENTS 5,912,486 (5,794,751)

CASH AND CASH EQUIVALENTSBeginning of year 10,464,395 16,259,146

End of year 16,376,881$ 10,464,395$

6 See accompanying notes.

Woodland Park Zoological Society Consolidated Schedules of Functional Expenses FOR THE YEAR ENDED DECEMBER 31, 2020

Program Activities Supporting Activities

Animal Management

Exhibits and Grounds

Education and Conservation

Membership and Visitor

Experiences

Marketing and Public

RelationsPrograms Subtotal

Management and General Fundraising

Supporting Subtotal

2020 Total Expenses

Salaries and wages $5,895,569 $3,598,304 $2,139,648 $2,901,978 $1,167,040 $15,702,540 $2,205,933 $1,826,429 4,032,362$ 19,734,902$ Benefits and payroll taxes 1,686,624 905,322 595,148 720,944 270,398 4,178,436 474,208 379,948 854,156 5,032,592 Outside services and professional fees 163,918 907,276 166,040 483,721 121,269 1,842,225 442,875 301,279 744,154 2,586,379 Utilities 8,249 1,906,021 8,603 12,538 3,620 1,939,032 72,049 47,672 119,721 2,058,753 Operations 1,138,346 854,082 202,486 364,076 105,226 2,664,216 293,656 146,064 439,720 3,103,936 Advertising - - - 219,779 624,854 844,633 141,790 23,060 164,850 1,009,483 Information technology 232,551 193,793 139,531 139,531 69,765 775,172 114,840 66,990 181,830 957,002 Training, conferences and dues 81,135 6,532 76,146 8,828 128,534 301,175 88,792 37,504 126,296 427,471 Contributions and field projects 938 - 959,039 - - 959,977 1,938 969 2,907 962,884 Taxes, licenses and credit card processing fees 2,129 24,965 35,502 396,964 57,476 517,036 80,038 95,653 175,691 692,727 In-kind and in-trade expenses 5,000 3,569 6,863 - 37,950 53,382 22,256 186,802 209,058 262,440

9,214,459 8,399,864 4,329,006 5,248,359 2,586,132 29,777,824 3,938,375 3,112,370 7,050,745 36,828,569 Less special event "cost of sales" expenses

netted against revenues - - - - 2,128 2,128 236 15,908 16,144 18,272

Total expenses on statement of activities 9,214,459$ 8,399,864$ 4,329,006$ 5,248,359$ 2,584,004$ 29,775,696$ 3,938,139$ 3,096,462$ 7,034,601$ 36,810,297$

FOR THE YEAR ENDED DECEMBER 31, 2019

Animal Management

Exhibits and Grounds

Education and Conservation

Membership and Visitor

Experiences

Marketing and Public

RelationsPrograms Subtotal

Management and General Fundraising

Supporting Subtotal

2019 Total Expenses

Salaries and wages 6,035,888$ 3,363,604$ 3,048,607$ 2,790,140$ 1,201,935$ 16,440,174$ 2,789,658$ 1,589,649$ 4,379,307$ 20,819,481$ Benefits and payroll taxes 1,640,108 993,800 876,252 745,506 263,080 4,518,746 697,618 347,050 1,044,668 5,563,414 Outside services and professional fees 266,234 3,103,807 197,980 765,570 725,716 5,059,307 1,224,428 1,159,043 2,383,471 7,442,778 Utilities 4,328 2,000,142 5,733 12,957 3,990 2,027,150 128,359 72,359 200,718 2,227,868 Operations 1,337,774 817,777 411,195 763,655 299,526 3,629,927 629,209 82,585 711,794 4,341,721 Advertising - - - 191,788 886,523 1,078,311 220,783 45,242 266,025 1,344,336 Information technology 228,034 190,029 136,821 136,821 68,410 760,115 112,610 65,689 178,299 938,414 Training, conferences and dues 164,645 22,771 208,395 33,279 131,953 561,043 181,727 93,041 274,768 835,811 Contributions and field projects 3,752 - 1,177,787 75 60,060 1,241,674 44,867 2,376 47,243 1,288,917 Taxes, licenses and credit card processing fees 1,828 20,841 49,288 765,974 88,886 926,817 144,589 132,858 277,447 1,204,264 In-kind and in-trade expenses 6,415 5,490 91,158 - 367,420 470,483 223,492 207,426 430,918 901,401

9,689,006 10,518,261 6,203,216 6,205,765 4,097,499 36,713,747 6,397,340 3,797,318 10,194,658 46,908,405 Less special event "cost of sales" expenses

netted against revenues - - - 10,765 550,760 561,525 652,826 449,816 1,102,642 1,664,167

Total expenses on statement of activities 9,689,006$ 10,518,261$ 6,203,216$ 6,195,000$ 3,546,739$ 36,152,222$ 5,744,514$ 3,347,502$ 9,092,016$ 45,244,238$

Program Activities Supporting Activities

Woodland Park Zoological Society

Notes to Consolidated Financial Statements

7

Note 1 – Organization and Significant Accounting Policies Woodland Park Zoo (the Zoo), saves wildlife and inspires everyone to make conservation a priority in their lives. Woodland Park Zoological Society (Zoo Society) was formed as a nonprofit corporation on November 10, 1965, under the laws of the State of Washington. Effective March 1, 2002, the City of Seattle transferred management and financial responsibility for the Woodland Park Zoo to the Zoo Society. Under the twenty-year agreement, the Zoo Society manages the Zoo and the City continues to own the Zoo grounds and animal exhibits (unless otherwise noted), including all future improvements funded by the Zoo Society. The City continues to provide annual public funding in accordance with an annual inflation calculation. Agreement renewal efforts are underway given the current 20-year operating agreement expiration date of February 28, 2022. If a new operating agreement is not approved prior to the end of 2021, then an extension of the current agreement would occur. Both Zoo Society leadership and City of Seattle staff are working together to get a new agreement approved as soon as possible (see Note 3). The Zoo Society’s main revenue sources can be grouped into three categories: contributed support (including conditional grants, major gifts, and fundraisers such as an annual auction), earned revenues (including admission fees, membership sales, retail, class fees, and event ticket sales) and public support (from the City of Seattle and a King County Parks Levy). Approximately 80% of the Zoo’s expenses cover “program” expenses, which include caring for the many animals, zoo grounds, conservation, and education efforts. The impact of the COVID-19 pandemic and the publicly mandated 3.5 month closure followed by restricted operations had a large impact on Zoo operations and earned revenues in 2020. The Zoo operating revenue streams that are driven by attendance (admissions and parking, membership fees, events and promotions, enterprise revenues, and education fees) were down nearly $12 million compared to 2019, but the Zoo Society received a paycheck protection program loan of just under $5.4 million to help offset this loss. The Zoo Society endeavored to reduce expenses as much as possible, and many expenses were avoided when the events, such as the concert series, were cancelled. As a result, a minimal operating net loss was achieved for 2020. Basis of presentation – The accompanying consolidated financial statements include the balances of both the Woodland Park Zoological Society and Center for Wildlife Conservation (CWC), a wholly controlled nonprofit corporation. As of December 31, 2020 and 2019, the CWC is currently inactive. CWC administered the finances of the Northwest Zoo and Aquarium Alliance, which included participation of eight zoos and aquariums to promote conservation in the Northwest region. Inter-entity transactions, if any, and balances have been eliminated in consolidation. The consolidated entity is referred to as the Zoo Society in the notes to the consolidated financial statements. In accordance with accounting principles generally accepted in the United States of America (US GAAP), the Zoo Society is required to classify information regarding its financial position based on the existence or absence of donor-imposed restrictions. In 2018, the Financial Accounting Standards Board’s Accounting Standards Update 2016-14: Nonprofit Entities (Topic 958): Presentation of Financial Statements for Not-for-Profit Entities (ASU 2016-14) became effective for the Zoo Society. Accordingly, the Zoo Society reports two classes of net assets as follows:

Woodland Park Zoological Society Notes to Consolidated Financial Statements

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Note 1 – Organization and Significant Accounting Policies (continued) Net assets without donor restrictions include all net assets on which there are no donor-imposed restrictions for use, or on which donor-imposed restrictions were temporary and have expired. Net assets without donor restrictions of $13,405,940 and $12,448,915 as of December 31, 2020 and 2019, respectively, are available without restriction for support of the Zoo Society’s operations. This category of net assets also includes the board-designated endowment which has been built up over the years largely with bequests without donor restrictions. Donor-restricted net assets are restricted by the donor to be used for certain purposes or future periods. Donor-restricted net assets at December 31 were available as follows:

2020 2019

Capital campaign 4,784,240$ 4,302,302$ Endowment contributions held in perpetuity

(principal balances) 11,451,131 11,182,036 Net earnings and market appreciation from

donor-restricted endowments 8,584,308 6,402,723 Education programs 412,679 363,807 Conservation programs 1,432,600 1,392,935 Animal support funds 101,233 146,703 Zoo operations 935,337 1,227,823 Other projects and restrictions 17,986 26,608 Carousel 915,000 915,000

Total net assets with donor restrictions 28,634,514$ 25,959,937$

Cash and cash equivalents – Cash and cash equivalents consist of checking and governmental money market mutual fund accounts. The Zoo Society maintains cash deposits in bank accounts which may exceed federally insured limits. The Zoo Society has not experienced any losses in these accounts, and management does not believe it is exposed to any significant credit risk. Short-term investments –In accordance with its Cash Management and Short-Term to Mid-Term Investment Policy, the Zoo Society has invested a portion of cash not needed for liquidity purposes in Certificates of Deposit in amounts within existing FDIC insurance limits. Accounts receivable – Accounts receivable and receivable from City of Seattle are stated at net realizable value. An allowance for doubtful accounts is maintained for any balances aged greater than 90 days. An allowance of $19,118 was recorded as of December 31, 2020, and an allowance of $18,879 was recorded as of December 31, 2019. Promises to give – In accordance with US GAAP, unconditional promises to give are recognized as support in the period received. Promises to give are shown net of the allowance for uncollectible amounts which are calculated based on any balances aged greater than 90 days. The fair value of promises to give is estimated by discounting the future cash flows using the risk-free rate of return. Conditional promises to give are recognized when the conditions on which they depend are substantially met.



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Note 1 – Organization and Significant Accounting Policies (continued) Endowment investments – The assets of the Zoo Society’s endowments are held in a consolidated endowment investment pool. The Zoo Society’s board has an Investment Subcommittee that monitors its investments and the valuation of investment assets in accordance with the Endowment Investment and Spending Policy. The investment securities are exposed to various risks, such as interest rate, market, and credit. Property and equipment – Property and equipment are recorded at cost or, if donated, at the estimated fair market value at the date of donation. Purchases that exceed $7,500 are capitalized as assets. Depreciation and amortization is provided using the straight-line method over the estimated useful lives of the assets, typically from three to five years and 15 to 30 years for major improvements. Depreciation and amortization expense for the years ended December 31, 2020 and 2019, was $419,360 and $530,038, respectively. Property and equipment consisted of the following at December 31:

2020 2019

Furniture and equipment 4,233,685$ 4,534,787$ Vehicles 1,281,044 1,321,882 Office buildings 676,183 676,183 Parking project leasehold improvements 1,221,903 1,221,903 Banyan Wilds exhibit leasehold

improvements 1,418,004 1,418,004 All other leasehold improvements 304,296 304,296 Carousel 915,000 915,000

10,050,115 10,392,054 Less accumulated depreciation (5,893,699) (5,943,607)

Total property and equipment 4,156,416$ 4,448,448$

The Zoo Society may capitalize all non-donor funded major improvements and additions made to City of Seattle property. The Zoo Society operates an antique carousel donated by the Alleniana Foundation. The fixed asset value represents estimated fair market value at the date of donation, and this amount is to be held in perpetuity and is included in net assets with donor restrictions. Depreciation commenced when operations began in 2006, using the straight-line method over the estimated useful life of 100 years. A long useful life was selected due to the historic nature of the carousel. Collections – While the animal collection represents the Zoo Society’s most cherished asset, the Zoo Society does not attempt to quantify the value of the collection. Thus, the animal collection is not represented on the consolidated statement of financial position.


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Note 1 – Organization and Significant Accounting Policies (continued) Artwork – The Zoo Society commissioned and owns certain bronze sculptures that are located on the Zoo grounds. These sculptures are valued at their original acquisition cost. Examples of these sculptures include the bronze ravens perched on a bench along the Northern Trail, the hippo sculpture along the African Savanna pathway, and the crawl-in wren’s nest sculpture near the Family Farm. Artwork is not being depreciated. Unemployment insurance – The Zoo Society has elected to self-insure its employees for unemployment compensation through participation in the 501(c)3 Agencies Trust plan. Unemployment claims are paid by the Trust from the Zoo Society’s account. At December 31, 2020 and 2019, the Zoo Society had a balance in their account of $582,802 and $558,603, respectively, which is included in prepaid expenses. There has not been an excess of claims submitted that would require a liability as of December 31, 2020 and 2019. Contributed property and equipment – Contributions of property and equipment are recorded as support at their estimated fair value at the date of donation. Such donations are reported as support without donor restrictions unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as donor-restricted support. Contributed property and equipment are only capitalized if they exceed the Zoo Society’s capitalization minimum amount of $7,500, individually. Absent donor stipulations regarding how long those donated assets must be maintained, the Zoo Society reports expirations of donor restrictions when the donated or acquired assets are placed in service as instructed by the donor. The Zoo Society reclassifies net assets with donor restrictions to net assets without donor restrictions at that time. Revenue recognition (Topic 606) – On January 1, 2019, the Zoo Society adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606) by applying the full retrospective approach to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. In addition, on January 1, 2019, the Zoo Society adopted Accounting Standards Update (ASU) No. 2018-08 Not-for-Profit Entities: Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (Topic 605). Management believes the standards improve the usefulness and understandability of the Zoo Society’s financial reporting. While the Zoo Society’s accounting for contributions and sponsorships was already consistent with Topic 605, adopting Topic 606 involved a change to the timing of membership revenue recognition (see Note 2). Below describes the revenue recognition methods for the Zoo’s various revenue streams. The Zoo Society recognizes contributions when cash, securities or other assets, an unconditional promise to give, or a notification of a beneficial interest is received. Conditional promises to give, that is those with a measurable performance or other barrier and a right of return, are not recognized until the conditions on which they depend have been met. The Zoo Society received and satisfied conditions on conditional grants for $1,957,589 and $2,040,812 for 2020 and 2019, respectively. The 2020 amount excludes the amounts related to the Paycheck Protection Program (PPP) Loan, which was recorded as conditional grant revenue when payroll expenses were incurred in satisfaction of the requirements for forgiveness. See Note 21 for more information on the PPP loan.



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Note 1 – Organization and Significant Accounting Policies (continued) During the years ended December 31, 2020 and 2019, the Zoo Society received conditional grant pledges of support for certain activities. These have not been recorded because they are dependent upon future events or activities occurring before revenue is earned. The Zoo Society received advances relating to conditional grants that have not been recognized as revenue totaling $2,067,549 and $648,538 at December 31, 2020 and 2019, respectively, because qualifying expenditures have not yet been incurred. These advances are recognized in the consolidated statement of financial position as deferred revenue. Multi-year event sponsorship pledges total $140,000 and $332,000 for 2020 and 2019, respectively. These pledges will be recognized in the year in which the activity occurs, satisfying the condition. Zoo management reviewed all revenue streams in light of this new recognition rule and determined most sources, including admissions, food and retail commissions, and other revenue streams did not involve any recognition changes between years. As explained in Note 2, the Zoo Society now defers membership revenue that will be earned in the following year. The amount of Deferred Membership Revenue as of December 31, 2020 and 2019, was $1,819,496 and $1,869,139, respectively. In-kind donations and trade transactions – Contributed goods and services are recorded at donor-reported values. Amounts included in the consolidated statement of activities consisted of the following at December 31:

2020 2019

Computer hardware/software -$ 50,805$ Other goods 10,270 43,862

Total in-kind goods 10,270 94,667

Marketing strategy services 24,575 70,560 Complimentary advertising 93,947 120,500 Donated catering - 4,550 Fundraising event support 12,950 1,248 Grant partners donations as part of matching efforts 5,063 94,565 Other services 13,935 25,355

Total in-kind services 150,470 316,778

Total in-kind revenue 160,740$ 411,445$

The Zoo occasionally receives goods or services, such as advertising, in exchange for providing items of value, such as admission tickets or sponsorship credit. The Zoo will record such transactions with both in-trade revenue (based on the nature of the benefits given) and an in-trade expense for the goods or service that is received. In-kind revenue is reported in contributed support on the consolidated statement of activities.


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Note 1 – Organization and Significant Accounting Policies (continued) Related-party activity – The Zoo Society receives contributions and promises to give from members of the Board of Directors. Contributions received directly from members of the Board of Directors during years ended December 31, 2020 and 2019, totaled $637,341 and $516,033, respectively. Nonoperating activities – The Zoo Society’s nonoperating activities relate to contributions and funding for zoo exhibits or facilities and related construction spending, bequests without donor restrictions, plus donor-restricted endowment contributions and any fiscal sponsorship arrangements. Any unusual, one-time expenses may be shown in this section of the consolidated statement of activities. On December 15, 2016, the Zoo experienced a fire in the former and largely unused Night House exhibit that impacted the adjacent Day House exhibit as well. Both exhibits have remained closed since that date and the City of Seattle’s property insurance has reimbursed $766,470 and $670,564 of the Zoo Society’s recovery expenses through the end of 2020 and 2019, respectively. Insurance reimbursements are included as other revenue and the expenses are included as nonoperating “new exhibit, facility improvement and other program expenses” on the consolidated statements of activities. In late 2019, the Zoo Society, the City of Seattle and the City’s property insurance company, Lexington Insurance, reached a settlement relating to the December 15, 2016, fire that rendered the Day/Night exhibit unusable. This settlement of $15.5 million was remitted to the City in two payments: an earlier advance of $2,794,827 and a final payment of $12,705,173 sent in early December 2019. The City continues to hold these funds and reimburses the Zoo Society for replacement costs incurred. Functional allocation of expenses – The costs of providing the Zoo Society’s various programs and activities have been summarized on a functional basis on the consolidated schedules of functional expenses and in the consolidated statements of activities. Throughout the year, “common costs” relating to occupancy costs, insurance, shared systems, copier rentals, etc., are allocated to departments based on each department’s percentage of total salaries. This functional analysis then involves assigning percentage allocations to the Program, Management & General, and Fundraising categories for each department, depending on the nature of the department’s workload. While there’s a wide variety of programs at the Zoo and sponsored by the Zoo around the world, the Zoo Society has limited presentation to five main groupings which were largely based upon departmental structure. As such, there are many estimates involved in this analysis. Presentation of expenses on the schedules of functional expenses includes both operating and nonoperating activities, and thus total expenses will not tie directly back to the operating expenses section on the statement of activities.



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Note 1 – Organization and Significant Accounting Policies (continued) Joint costs – The Zoo Society incurred joint costs for informational materials and activities that included fundraising appeals, specifically for the zoo.org website and the zoo member magazine. Based upon their relative percentages, those costs were allocated as follows:

2020 2019

Program services 197,772$ 238,899$ Management and general 48,929 42,861 Fundraising 29,935 36,299

276,636$ 318,059$

Advertising – The Zoo Society expenses the production costs of advertising as incurred. Advertising expense was $1,009,483 and $1,344,336 for the years ended December 31, 2020 and 2019, respectively. These amounts do not include the in-kind donated services nor in-trade services noted earlier in this footnote. Use of estimates – The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income taxes – The Internal Revenue Service has recognized both the Woodland Park Zoological Society and the Center for Wildlife Conservation as 501(c)3 organizations exempt from federal income taxes under Section 509(a)(l) as publicly supported charitable organizations. The Zoo Society is subject to federal income taxes for any activities that are unrelated to its exempt purpose. Note 2 – Implementation of New Revenue Recognition Standards in 2019 Revenue recognition (Topic 606) – On January 1, 2019, the Zoo Society adopted FASB ASC Topic 606, Revenue from Contracts with Customers (Topic 606) and Accounting Standards Update (ASU) No. 2018-08 Not-for-Profit Entities: Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made (Topic 605). Prior to adopting Topic 606, the Zoo Society recognized revenue from membership sales at the time of purchase. Zoo memberships are valid for 12 months, and as such, the value attributed to the following calendar year should be deferred and recognized in the future year. Given that memberships are paid for up front, the Zoo Society has established a liability to account for the deferred membership revenue related to the cash received but not yet earned, as of each year end. Membership revenue is recognized over the membership period. Going forward from 2019, the change in the Deferred Membership Revenue Liability will represent a relatively small change based on volume and timing of membership sales throughout the year. In 2020, the liability decreased by $49,643.


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Note 3 – Management Agreement As noted above, the City of Seattle transferred management and financial responsibility for the Woodland Park Zoo to the Zoo Society during the year ended December 31, 2002. The Operations and Management Agreement is effective March 1, 2002, and expires February 28, 2022, with a stated option to extend the agreement for an additional ten-year period. In accordance with this agreement, as well as related agreements, the Zoo Society received City Operations support payments totaling $7,250,672 and $7,171,991 in 2020 and 2019, respectively, and will continue to receive support payments for the duration of the Management Agreement. Zoo Society management and board have commenced discussions with City of Seattle personnel regarding a proposed updated agreement and are preparing for renewal prior to year-end. The renewal agreement must be approved by the City of Seattle Council. If renewal has not been achieved by year-end, then an extension of the existing agreement will occur. Zoo Society and City of Seattle leadership are committed to renewing this agreement by year end. Note 4 – King County Levy The Zoo Society recorded $5,278,564 and $5,587,239 in 2020 and 2019, respectively, as revenue from the King County Parks Levy. This levy funds mainly environmental education programs including public programs on grounds, and also funds conservation programs and facility improvements. The King County Parks levy was renewed by voters in August 2019. Note 5 – Investments The Zoo Society’s endowment investments are managed together in a single investment pool. Each endowment fund purchases units of the pool on a quarterly basis, and the value of the units reflects the pool’s investment earnings or losses less fees. Investments are stated at fair value based on quoted market prices and consist of the following:

2020 2019Short-term investments

Certificates of deposit 1,249,985$ 2,752,685$

Endowment investmentsMoney market funds 1,490,613 319 Environmentally sustainable equity funds 11,768,289 8,747,274 All other equity funds 3,739,982 5,475,095 Bond funds 6,001,972 5,993,672 Real estate investment funds 1,092,432 1,117,365

Total endowment investments 24,093,288 21,333,725

Total Investments 25,343,273$ 24,086,410$



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Note 5 – Investments (continued) The above investment pool amounts are less than the total endowment net assets in the endowment footnote (Note 16) due to the following:

2020 2019

Endowment pledges receivable at year-end -$ 211,500$ Endowment cash receipts not yet forwarded to the consolidated investment pool 358,316 16,949

Total receipts added after year-end 358,316 228,449 Total investments 24,093,288 21,333,725

Total endowment net assets 24,451,604$ 21,562,174$

The components of investment income (loss) for the years ended December 31 are as follows:

2020 2019

Interest and dividends 528,007$ 845,685$ Investment gains (losses), net of fees 2,369,830 3,074,486

2,897,837$ 3,920,171$

Operating interest 7,406$ 132,357$ Nonoperating interest, dividends and gains (losses), net of fees 2,890,431 3,787,814

2,897,837$ 3,920,171$

Note 6 – Liquidity, Line of Credit and Availability of Financial Assets The Zoo Society’s policy is to maintain adequate liquid assets to fund near-term operating needs using bank deposits or a government money market mutual fund. In an effort to earn reasonable rates of return on working capital not estimated as required for disbursement within the near-term, staff may consider: 1. Certificates of deposit in amounts within existing FDIC insurance limits (up to $250,000 currently). 2. Commercial Paper with credit ratings not to be lower than A-1 P-1. These timed deposits can range between 3 months and 3 years. The Zoo Society’s cash flows have seasonal variations during the year attributed to the highest attendance months being in the summer. In light of this seasonality, as a precautionary measure, the Zoo Society has a $4 million revolving line of credit, secured by all assets, expiring May 31, 2022. Although the Zoo Society does not currently intend to spend from the board-designated endowment, other than amounts appropriated for general expenditure on an annual basis, amounts from the board-designated endowment could be made available by board authorization.


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Note 6 – Liquidity, Line of Credit and Availability of Financial Assets (continued) The following reflects the Zoo Society’s availability of financial assets as of the consolidated statements of financial position date. Financial assets are reduced by the amounts not available for general use within one year of the consolidated statements of financial position date because of contractual or donor-imposed restrictions or internal designations. Internal designations can be changed based on Board approval. The Zoo Society's financial assets available within one year of the consolidated statement of financial position date for general expenditures were as follows:

2020 2019

Cash 15,000,591$ 7,600,860$ Government money market fund 1,376,290 2,863,535 Certificates of deposit 1,249,985 2,752,685 Receivables for general purposes, due within one year 1,666,159 1,382,001 Promises to give 2,212,361 2,820,225 Board-designated endowment investments 4,416,165 3,977,415 Spending appropriated for the next year from endowment

investments with donor restrictions 324,334 335,223

Financial assets available to meet cash needs for generalexpenditures within one year 26,245,885$ 21,731,944$

Note 7 – Line of Credit The Zoo Society has a $4 million revolving line of credit, secured by all assets, expiring May 31, 2022. Bank advances on the line of credit are payable by the date of expiration and subject to an annual 30-day “clean up” period. Interest is calculated at the Prime rate or LIBOR plus 2.75%, at the Zoo Society’s option, and is payable monthly. The line of credit has one loan covenant which requires a minimum liquid endowment asset balance of not less than $8 million. The requirement to maintain a board-designated endowment balance of not less than $2 million was removed in the July 2020 renewal process. There were no line of credit draws in 2020 or 2019.



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Note 8 – Promises to Give Promises to give at December 31 are as follows:

2020 2019

Receivable in less than one year 1,072,677$ 1,558,041$ Receivable in one to five years 1,139,684 1,262,184

2,212,361 2,820,225

Less discount to present value at 3% (7,430) (14,460) Less allowance for uncollectible accounts (75,025) (73,150)

2,129,906$ 2,732,615$

Promises to give by category at December 31 are as follows:

2020 2019

Bequest receivable 1,364,034$ 1,974,034$ Banyan Wilds exhibit 29,050 64,050 Living NW Trail exhibit 93,000 190,500 Other exhibits 70,300 70,300 All other promises to give 655,977 521,341

2,212,361$ 2,820,225$

At December 31, 2020, 62% of promises to give are due from two donors. At December 31, 2019, 55% was due from two donors. Note 9 – Collective Bargaining Agreement Approximately one-third of the Zoo Society’s typical year-round staffing levels are covered by a unified four-year agreement between the Zoo Society and multiple labor unions. The current contract was approved on April 24, 2017 and expired on December 31, 2020. The Zoo and the Joint Crafts Council have agreed to extend the current agreement, so all terms and conditions provided in the current CBA shall remain in full force and effect until a new agreement becomes effective or until either party gives seven calendar days written notice to the other party of its desire to terminate this agreement.


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Note 10 – Contributed Support Operational contributions consist of the following for the years ended December 31:

2020 2019

In-kind support 157,002$ 411,445$ Operating bequests - 226,684 Major gifts 2,177,975 1,108,744 Annual fund 1,616,839 809,045 Corporate sponsorships 597,745 1,363,902 Jungle Party, excluding ticket sales 217,951 668,334 Jungle Party fund-our-future 719,539 948,040 Thrive!, excluding sponsorships 214,115 239,160 ZooParent animal adoptions 66,777 34,668 On-grounds contributions 23,253 51,967

5,791,196$ 5,861,989$

Note 11 – Foundation Bequest The Zoo Society is named as one of five beneficiaries in the Helen Mull Foundation (the Foundation), which was fully funded in February 2015 when Helen Mull passed away. The Zoo Society received annual distributions of $337,040 and $254,930 in 2020 and 2019, respectively, from the Helen Mull Foundation, in accordance with the governing trust document. Annual payments equal to 1% of the net market value of the Foundation’s assets as of the first business day of each year will continue for a total of 150 years. After 150 years of existence, (in the year 2165), the Foundation shall be terminated, and its remaining assets will be distributed to the five named organizations (assuming they remain qualified per the trust document). The Helen Mull Foundation’s investments were valued at over $37 million and $33 million at the end of 2020 and 2019, respectively. During her lifetime, Helen Mull contributed annually to support the ongoing care of animals. Given that the Zoo Society doesn’t have variance power over the funds in the Foundation, and the very long-term nature of the Foundation and the contingency of meeting the trustee’s requirements at the time of dissolution, the Zoo Society records only the annual value of the calculated contributions when received.



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Note 12 – Events and Promotions Events and promotions consist of the following for the years ended December 31:

2020 2019ZooTunes, less direct cost of benefits provided to participants

of $0 and $1,011,733 -$ 514,683$

WildLanterns and WildLights 814,137 864,850

Fundraising events and promotions, less direct cost of benefitsprovided to participants of $17,855 and $436,523 41,537 291,838

855,674$ 1,671,371$

In 2020 the Zoo entered into a revenue share arrangement with a vendor who provided lanterns for “WildLanterns.” The revenue shown above is the Zoo’s share of gross receipts for dates in 2020 only, per the revenue share arrangement. The gross receipts earned by the lanterns vendor for 2020 dates were calculated at $743,468. Note 13 – Long-Term Payable to City of Seattle In 2013, the Zoo Society and City of Seattle reached an agreement related to many years of efforts to expand Zoo visitor parking. This agreement, which was approved by the City of Seattle and amended the original Operations and Management Agreement, provided for the City to reimburse the Zoo Society up to a maximum of $2 million for parking improvements that will result in approximately 165 new parking spaces. As part of this arrangement, the Zoo Society assumed responsibility for repaying the City for its $462,000 share of the earlier parking garage expenses plus a negotiated interest amount of $10,800 per year starting in 2013. The principal payments are due as follows: 2021 46,200$ 2022 46,200

92,400$


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Note 14 – Retirement Plan The Zoo Society provides retirement benefits for all Zoo Society employees through a defined contribution plan. Employer contributions are based on a matching formula. In July 2020, the Zoo Society temporarily suspended its matching contributions. The Zoo Society retirement contributions during the years ended December 31, 2020 and 2019, totaled $434,437 and $879,947, respectively. The Zoo Society also provides a non-qualified, non-matching, deferred compensation plan open to senior management. Deferred compensation plan assets of $199,096 and $574,209 are recorded in other assets on the consolidated statements of financial position as of December 31, 2020 and 2019, respectively. Note 15 – Contributions Collected on Behalf of Other Organizations During the years ended December 31, 2020 and 2019, the Zoo Society raised $24,667 and $114,943, respectively, for several non-profit conservation organizations from around the world, including conservation partners in Asia, Hornbill research and AAZK (a zookeepers’ association). The Zoo Society does not record these contributions or the related expenses in the consolidated statements of activities as they are agency transactions. Note 16 – Endowments As of December 31, 2020, the Zoo Society has nine funded endowments established for a variety of mission-related purposes. One of these endowments is a board-designated general endowment established by the board in 2001 by its Gift Acceptance Policy. This policy provides that bequests without donor restrictions (up to an annual maximum amount) are to be placed in this board-designated general endowment fund. As required by financial accounting standards, net assets associated with endowment funds, including funds designated by the board to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. The initial dollar value of donor-restricted contributions to any endowment is tracked as a permanently restricted net asset, while the returns on those funds are tracked for internal purposes as temporarily restricted net assets, although these are combined on the consolidated statements of financial position and presented as net assets with donor restriction. The board-designated endowment and related returns are shown as net assets without donor restrictions. Endowments in Washington State are governed by the “Uniform Prudent Management of Institutional Funds Act,” UPMIFA, as stated in the Revised Code of Washington (RCW) 24.55. UPMIFA provides that, unless stated otherwise in endowment gift instruments, no portions of donor-restricted endowments will be shown as net assets without donor restrictions other than amounts appropriated for spending in the current year, or negative endowment earnings to date. Interpretation of relevant law – The Zoo Society Board has interpreted UPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Zoo Society classifies as endowment net assets with donor restrictions: (a) the original value of gifts donated to the endowment, and (b) the original value of subsequent gifts to the endowment.



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Note 16 – Endowments (continued) Endowment oversight and investment policy – While the board retains the fiduciary responsibility for the Zoo Society’s endowment fund assets, it delegates oversight of the investment of such assets to its Investment Subcommittee. The Investment Subcommittee (the “Subcommittee”) of the Business and Finance Committee was established in 2000 to provide oversight and implementation of the broad guidelines approved by the board for the management of the Zoo Society’s endowment funds. It is comprised of Business and Finance Committee and other Board members, and may also include non-Board members. Returns are compared to a custom benchmark that closely mirrors the market segment allocations of the investments in the annual evaluation of the manager’s performance. In managing the endowment investments, the Subcommittee will comply with the standard of conduct set forth in UPMIFA, including: • Acting in good faith and with the care an ordinarily prudent person in a like position would exercise

under similar circumstances; • Making decisions about an individual asset in the context of the Zoo Society’s portfolio as a whole

and as a part of an overall investment strategy; and • Considering the following factors, if relevant (and unless instructed otherwise by the terms of the

applicable gift instrument):

♦ General economic conditions, ♦ Effects of inflation or deflation, ♦ Expected tax consequences, ♦ Expected total return from income and appreciation, ♦ The Zoo Society’s other resources, ♦ Balancing the Zoo Society’s needs for both spending and preserving capital, and ♦ An asset’s special relationship or special value, if any, to the Zoo Society’s charitable purposes.

Return objectives, risk parameters, and strategies employed for achieving objectives – The endowments are managed with the broad goal of investment income growth that will be used to provide a stable, supplemental source of funding for Zoo operations and donor specified programs. The Subcommittee seeks to maximize the long-term total returns consistent with prudent levels of risk. Investment diversification and selecting a “target investment return” are keys to managing risk. A target investment return percentage is identified annually by the Subcommittee. This target is calculated as the sum of the following annual components (expressed as percentages): • The rate of inflation (a local 5-year rolling average), • Desired endowment earnings growth, • Annual investment management fees, and • Plus/minus rounding to the nearest percentage.


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Note 16 – Endowments (continued) For example, the target investment return percentage for both 2020 and 2019 was 7%. The Subcommittee determines these percentages in light of discussions with Zoo Society management and the investment advisor. These objectives are re-evaluated on an annual basis and compared to actual results and the prevailing financial market environment. An aggregate “total return” methodology is applied (all interest and dividends automatically reinvested), and results for the trailing 12 months are reviewed each quarter. While these periodic reviews occur and the objectives may slightly change, the time horizon basically remains “long-term” for investment purposes. The endowments’ investments are rebalanced to the Subcommittee’s approved asset allocation on at least an annual basis. Spending policy – In accordance with the Zoo Society Endowment Investment and Spending Policy, the Investment Subcommittee makes recommendations regarding annual endowment spending totals and incorporates spending plans into the management of endowment investments. As provided in UPMIFA and subject to any restrictions in the applicable gift instrument, the Zoo Society may spend from or accumulate as much of a donor-restricted endowment fund (including its principal) as the board or a duly authorized board committee determines is prudent given the uses, benefits, purposes, and duration for which the endowment fund was created. In making decisions about how much of each endowment fund to spend or accumulate, the Subcommittee will consider the following factors, if relevant: • Duration and preservation of the endowment fund, • Purposes of the Zoo Society and the endowment fund, • General economic conditions, • Possible effect of inflation or deflation, • Expected total return from income and appreciation of investments, • Zoo Society’s other resources, and • This Endowment and Investment Policy. After considering the above-described factors, the Subcommittee will recommend a spending percentage, subject to the approval of the Business and Finance Committee, to be applied in calculating the distribution for the specific endowment funds that the committee decides to spend from (the “Spending Percentage”). The Spending Percentage will be calculated as an annual percentage of the average of the prior five (5) years’ total market valuation as of June 30th. The annual spending percentage for all funds is typically 3%. Spending amounts of $324,335 and $284,191 were disbursed for typical annual spending in 2020 and 2019, respectively. Funds with deficiencies – From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the historical dollar value of the donor contributions. In accordance with US GAAP, deficiencies of this nature are reported in net assets with donor restrictions. There were no such deficiencies as of December 31, 2020 or 2019.



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Note 16 – Endowments (continued) Endowment net asset composition by type of fund as of December 31, 2020:

Without Donor Restrictions

With Donor Restrictions Total

Donor-restricted endowment funds -$ 20,035,439$ 20,035,439$ Board-designated endowment funds 4,416,165 - 4,416,165

Total funds 4,416,165$ 20,035,439$ 24,451,604$

Changes in endowment net assets for the year ended December 31, 2020:



Endowment net assets, beginning of year 3,977,415$ 17,584,759$ 21,562,174$

Investment returnInvestment income (loss) 52,639 374,027 426,666 Investment fees (13,473) (66,160) (79,633) Net appreciation (depreciation) (realized and

unrealized) 402,273 2,024,364 2,426,637

Total investment return (loss) 441,439 2,332,231 2,773,670

Contributions 171,000 269,095 440,095

Appropriation of endowment assets for expenditure (173,689) (150,646) (324,335)

Endowment net assets, end of year 4,416,165$ 20,035,439$ 24,451,604$

Endowment net asset composition by type of fund as of December 31, 2019:



Donor-restricted endowment funds -$ 17,584,759$ 17,584,759$ Board-designated endowment funds 3,977,415 - 3,977,415

Total funds 3,977,415$ 17,584,759$ 21,562,174$


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Note 16 – Endowments (continued) Changes in endowment net assets for the year ended December 31, 2019:



Endowment net assets, beginning of year 3,193,323$ 14,697,217$ 17,890,540$

Investment returnInvestment income (loss) 110,107 522,774 632,881 Investment fees (13,500) (64,217) (77,717) Net appreciation (depreciation) (realized and

unrealized) 542,613 2,628,267 3,170,880

Total investment return (loss) 639,220 3,086,824 3,726,044

Contributions 224,931 4,850 229,781

Appropriation of endowment assets forexpenditure (80,059) (204,132) (284,191)

Endowment net assets, end of year 3,977,415$ 17,584,759$ 21,562,174$

Note 17 – Food Service and Retail Subcontract Commitments The Zoo Society hired Levy Restaurants to operating all food and catering services effective January 16, 2019, with a 10-year contract expiring January 15, 2029. Gross food commissions received in 2020 and 2019 from Levy Restaurants were $486,996 and $1,191,560, respectively. Additionally, Levy provided funds equal to 3% of gross sales that were applied to expenses incurred by the Zoo Society for food service, utilities, marketing, and repairs. Gross commissions remitted by Levy for these reimbursement funds were $28,916 and $146,554 in 2020 and 2019, respectively. Food service revenue is reported in enterprise revenue on the consolidated statements of activities. The Zoo Society transitioned to an outsourced retail arrangement in 2014 by signing a four-year, nine-month agreement with Event Network effective March 31, 2014. This agreement was renewed in 2018 with a new expiration date of December 31, 2025. Gross commissions received in 2020 and 2019 totaled $268,931 and $799,520, respectively. An additional percentage of sales was remitted to cover joint marketing efforts, totaling $25,186 and $38,621 for 2020 and 2019, respectively. Retail revenue is reported in enterprise revenue on the consolidated statements of activities. These amounts for 2020 were severely impacted by the 3-month pandemic-related Zoo closure and restricted operations for July through December.



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Note 18 – Fair Value Measurements In accordance with financial accounting standards, a three-tiered hierarchy of input levels is used for measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques utilized to determine fair value are consistently applied. The three tiers of inputs used for fair value measurements are as follows:

Level 1 – Fair values are based on quoted prices in active markets for identical assets and liabilities.

Level 2 – Fair values are based on observable inputs that include: quoted market prices for similar assets or liabilities; quoted market prices that are not in an active market; or other inputs that are observable in the market and can be corroborated by observable market data for substantially the full term of the assets.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair value of assets measured on a recurring basis as of December 31, 2020 and 2019, are as follows:

Quoted Prices OtherIn Active Observable UnobservableMarkets Inputs Inputs(Level 1) (Level 2) (Level 3) Total

As of December 31, 2020Certificates of deposit -$ -$ -$ -$

Cash and bank sweep 1,490,613 - - 1,490,613

Equity fundsLarge cap equity funds - - - - Mid cap equity fund 729,510 - - 729,510 Small cap equity funds 1,307,951 - - 1,307,951 International equity funds 1,702,521 - - 1,702,521 Environmentally Sustainable U.S. Core Fund 8,739,618 - - 8,739,618 Environmentally Sustainable International

Core Fund 3,028,671 - - 3,028,671

Total equity funds 15,508,271 - - 15,508,271

Bond fundsDomestic corporate bond funds 2,951,110 - - 2,951,110 International bond funds 3,050,862 - - 3,050,862

Total bond funds 6,001,972 - - 6,001,972

OtherGlobal real estate fund 1,092,432 - - 1,092,432

Short-term and endowment Investments 24,093,288 - - 24,093,288

Total assets shown at fair value 24,093,288$ -$ -$ 24,093,288$ `


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Note 18 – Fair Value Measurements (continued)

Quoted Prices OtherIn Active Observable UnobservableMarkets Inputs Inputs(Level 1) (Level 2) (Level 3) Total

As of December 31, 2019Certificates of deposit 2,752,685$ -$ -$ 2,752,685$

Cash and bank sweep 319 - - 319

Equity fundsLarge cap equity funds 1,142,342 - - 1,142,342 Mid cap equity fund 1,257,300 - - 1,257,300 Small cap equity funds 1,402,643 - - 1,402,643 International equity funds 1,672,810 - - 1,672,810 Environmentally Sustainable U.S. Core Fund 6,177,435 - - 6,177,435 Environmentally Sustainable International

Core Fund 2,569,839 - - 2,569,839

Total equity funds 14,222,369 - - 14,222,369

Bond fundsDomestic corporate bond funds 2,984,673 - - 2,984,673 International bond funds 3,008,999 - - 3,008,999

Total bond funds 5,993,672 - - 5,993,672

OtherGlobal real estate fund 1,117,365 - - 1,117,365

Short-term and endowment Investments 24,086,410 - - 24,086,410

Total assets shown at fair value 24,086,410$ -$ -$ 24,086,410$

Note 19 – Operating Leases The Zoo Society is leasing several multi-functioning copier and printer devices, one trailer, a postage meter, and nearby office space. There are renewal options for all of the continuing leases, and purchase options for the copier and trailer lease. Future minimum non-cancellable lease payments for the copier, postage, and trailer lease for years ending December 31 are as follows: 2021 52,704$ 2022 37,320 2023 26,100 2024 19,575 2025 -

135,699$

Rent expense for noncancelable and month-to-month leases during 2020 and 2019 was $85,704 and $90,005, respectively.



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Note 20 – City Park District On August 5, 2014, Proposition 1, “Parks for All,” was approved by the citizens of Seattle, creating the “Seattle Park District,” which is a permanent taxing authority that will support parks and recreation services throughout the city as managed by the Department of Parks and Recreation. The Zoo Society then entered into an agreement with the City of Seattle Department of Parks and Recreation to provide major maintenance and repair projects. The annual process includes providing a new listing of annual projects, referred to as a Capital Asset Management Plan Project Listing, to the Department of Parks and Recreation. The annual spending budgets for the first five years of the park district were already identified in the original legislation, increased slightly by an inflation escalator each year. The amounts for the next five years will be determined in 2022. For the years 2015–2018, Park District support was used to fund major facility maintenance improvements at the Zoo. Effective in 2019, the City of Seattle shifted the source of funding for the Zoo’s major maintenance projects to the Real Estate Excise Tax Fund, and the Park District funding was shifted to provide part of the Zoo’s annual general funding. The City’s General Fund continues to provide the remainder of the Zoo’s annual general funding. The City states that this does not impact any actual funding amounts, it was only a change in funding sources for budgetary reasons. Note 21 – Paycheck Protection Program (PPP) Loan On April 22, 2020, the Zoo Society received a PPP loan totaling $5,367,787 from a bank. On December 22, 2020 the Zoo Society finalized its application for forgiveness by providing payroll and benefit expenses in accordance with the SBA’s requirements. The bank approved of this support and submitted it to the SBA. In mid-January the Zoo Society received notice that the SBA had commenced a review of our application. The Zoo Society has reasonable assurance that it’s PPP forgivable loan will be forgiven, thus the cash inflow from the PPP loan has been recorded as revenue in 2020, which matches the accounting period of the eligible expenses. Amount is shown as a separate line item on the consolidated statement of activities. Note 22 – Subsequent Events Subsequent events are events or transactions that occur after the consolidated statement of financial position date but before the consolidated financial statements are issued. The Zoo Society recognizes in the consolidated financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the consolidated statement of financial position, including the estimates inherent in the process of preparing the consolidated financial statements. The Zoo Society’s consolidated financial statements do not recognize subsequent events that provide evidence about conditions that did not exist at the date of the consolidated statement of financial position but arose after the consolidated statement of financial position date and before the consolidated financial statements are issued. The Zoo Society has evaluated subsequent events through May 25, 2021, which is the date the consolidated financial statements were issued.


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Note 22 – Subsequent Events (continued) As of the date of this audit report, the impact of the COVID-19 pandemic is continuing to unfold. While the Zoo Society has been open since July 1, 2020, after a 3.5 month closure, the Zoo’s earned revenues continue to be materially adversely impacted during 2021 due to attendance restrictions and social distancing requirements. Similarly, many planned, annual revenue-generating activities and events will have to be modified or cancelled. The Zoo Society received a second SBA Paycheck Protection Program loan on April 5, 2021, in the amount of $2 million. Management believes this forgivable loan will be forgiven by using it to cover eligible expenses in mid-2021. The Zoo Society is also eligible for other federal relief offers via the American Rescue Plan Act of 2021. Management will continue to safeguard the basic mission of the Zoo Society by carefully navigating this time of financial uncertainty.

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