Audubon Commission...• Audubon Zoo was the site of the RAM (Remote Area Medical) Volunteer Corps...

Audubon Commission(A Discretely Presented Component Unit ofthe City of New Orleans, Louisiana)

Basic Financial Statements as of and for theYears Ended December 31, 2007 and 2006,Additional Information as of and for theYear Ended December 31, 2007, andIndependent Auditors' Report

Under provisions of state law, this report is a publicdocument. A copy of the report has been submitted tothe entity and other appropriate public officials. Thereport is available for public inspection at the BatonRouge office of the Legislative Auditor and, whereappropriate, at the office of the parish clerk of court.

Release Date

AUDUBON COMMISSION(A Discretely Presented Component Unit of the City of New Orleans, Louisiana)

TABLE OF CONTENTS

Page

INDEPENDENT AUDITORS' REPORT 1-2

MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) 3-9

BASIC FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDEDDECEMBER 31, 2007 AND 2006:

Statements of Net Assets 10-11

Statements of Activities 12

Statements of Cash Flows 13

Notes to Basic Financial Statements 14-24

ADDITIONAL INFORMATION AS OF AND FOR THE YEAR ENDEDDECEMBER 31,2007: 25

Combining Schedule — Statement of Net Assets Information as of December 31, 2007 26-27

Combining Schedule — Statement of Activities Information for the Year EndedDecember 31,2007 28

Combining Schedule — Statement of Cash Flows Information for the Year EndedDecember 31,2007 29-30

OMG CIRCULAR A-133 SUPPLEMENTAL REPORTS AND SCHEDULES 31

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERSBASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 32-33

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTSAPPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVERCOMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 ANDSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 34-35

Schedule of Expenditures of Federal Awards 36

Notes to Schedule of Expenditures of Federal Awards 37

Schedule of Findings and Questioned Costs 38-39

Deloitte Deloitte & louche LLPSuite 4200701 Poydras StreetNew Orleans, LA 70139-4200USA

Tel: + 1 504 581 2727Fax: +1 504 561 7293www.deloitte.com

INDEPENDENT AUDITORS1 REPORT

To the Board of Directors ofAudubon Commission:

We have audited the accompanying statements of net assets of the Audubon Commission (the"Commission"), a discretely presented component unit of the City of New Orleans, Louisiana, as ofDecember 31, 2007 and 2006, and the related statements of activities and cash flows for the years thenended, as listed in the Table of Contents. These financial statements are the responsibility of theCommission's management. Our responsibility is to express an opinion on these financial statementsbased on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Commission's internal control over financial reporting.Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in all material respects, thefinancial position of the Commission as of December 31, 2007 and 2006, and the changes in its net assetsand its cash flows for the years then ended in conformity with accounting principles generally accepted inthe United States of America.

Management's discussion and analysis on pages 3 through 9 is not a required part of the basic financialstatements but is supplementary information required by the Governmental Accounting Standards Board.This supplemental information is the responsibility of the Commission's management. We have appliedcertain limited procedures, which consisted principally of inquiries of management regarding the methodsof measurement and presentation of the supplementary information. However, we did not audit theinformation and we do not express an opinion on it.

Our audits were conducted for the purpose of forming an opinion on the Commission's basic financialstatements. The additional combining information for 2007 is presented for purposes of additionalanalysis and is not a required part of the basic financial statements. This additional information is theresponsibility of the Commission's management. The additional combining information has beensubjected to the auditing procedures applied by us in the audit of the 2007 basic financial statements and,in our opinion, is fairly stated in all material respects in relation to the 2007 basic financial statementstaken as a whole.

Member ofDeloitte louche Tohmatsu

In accordance with Government Auditing Standards, we have also issued our report dated May 23, 2008,on our consideration of the Commission's internal control over financial reporting and our tests of itscompliance with certain provisions of laws, regulations, contracts and grant agreements and other matters.The purpose of that report is to describe the scope of our testing of internal control over financialreporting and compliance and the results of our testing, and not to provide an opinion on the internalcontrol over financial reporting or on compliance. That report is an integral part of an audit performed inaccordance with Government Auditing Standards and should be considered in assessing the results of ouraudit.

May 23, 2008

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MANAGEMENT'S DISCUSSION AND ANALYSIS(Unaudited)

The discussion and analysis of the Audubon Commission's (the "Commission") financial performanceprovides an overall review of the Commission's financial activities for the year ended December 31, 2007. Itshould be read in conjunction with the basic financial statements in this report.

Overview of the Financial Statements

This annual report consists of five components — the Management's Discussion and Analysis (this section),the Independent Auditors' Report, the Basic Financial Statements, the Auditors' Report on Compliance andon Internal Control over Financial Reporting and on Compliance and Other Matters, and AdditionalInformation.

The Basic Financial Statements of the Commission report the financial position of the Commission and theresults of its operations and its cash flows. The basic financial statements are prepared on the accrual basis ofaccounting.

The Statement of Net Assets includes all of the Commission's assets and liabilities and provides informationabout the Commission's investments in resources (assets) and its obligations to the Commission's creditors(liabilities). It also provides information on the capital structure of the Commission, and the liquidity andfinancial flexibility of the Commission.

The Statement of Activities reports on the current year's performance of the Commission's operations.

The Statement of Cash Flows provides information on the Commission's cash from operations, investing andcapital and related financing activities.

The Notes to Financial Statements provide information that is essential in order to gain a full understandingof the data in the basic financial statements.

The Additional Information section provides information on the Combining Statement of Net Assets,Combining Statement of Activities and Combining Statement of Cash Flows.

The Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance andOther Matters Based on an Audit of Financial Statements Performed in Accordance With GovernmentAuditing Standards, briefly discusses the Commission's compliance and internal control that could affect thefinancial statements amounts.

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Post Hurricane Katrina at Audubon:

Restoring Facilities — 2006

• Audubon Zoo was the site of the RAM (Remote Area Medical) Volunteer Corps free clinic thatperformed over 19,000 medical and dental procedures over a week in February. This clinic was theonly opportunity for health care access post-Katrina for most participants.

• Catering facilities reopened for business in spring 2006. Audubon Tea Room, Audubon Clubhouse,Audubon Zoo's Carousel Birthday Party Rooms, the Picnic Pavilion, and the Cajun Ballroomprovided much-need gathering spaces for the city.

• Standard operating systems came back on line in spring 2006: volunteer program began, welcoming150 returning volunteers; school field trips were promoted and booked; info and membership hotlinesreopened; Zoo education outreach programs (ZooMobile and BugMobile) restarted, followed in thefall by the Aquarium's AquaVan; Zoo camp and Toddlers at 10 returned; over 107,000 studentsreceived Taylor/Audubon memberships to recognize good grades. At the Research Center, a majorbreakthrough occurred in fall through a partnership with XY , Inc: the first-ever birth of domestickittens with sex predetermined.

• Audubon Aquarium of the Americas and Entergy IMAX® Theatre reopened May 26, 2006. OnMay 22, the Aquarium's penguins and sea otters returned home from Monterey Bay Aquariumcourtesy of a chartered flight donated by FedEx. FedEx also contributed promotional support thatgenerated over $2 million in media value to announce the animals' return and the Aquarium'sreopening.

• The Zoo, Aquarium, IMAX and Golf Club all extended operations to 6 days/week between May 30and September 4. After September 4, the Zoo, Aquarium and IMAX operated on a 5 day/weekschedule, with special hours for holiday weekends.

• "Hurricane on the Bayou," an IMAX® film executive produced by Audubon that shows the impact ofwetlands loss using the clear example of Hurricane Katrina's aftermath, premiered at Entergy IMAXTheatre on August 29, 2006. It was released world wide December 22, 2006, with pre-leases held by68 theatres.

• Popular festivals returned to Audubon facilities. At the Zoo, Earthfest, Radio Disney's EasterEggstravaganza, Mother's Day with Irma Thomas, Soul Fest, Boo-at-the-Zoo, Swamp Fest and RadioDisney's Noon Year's Eve drew huge crowds comparable to pre-Katrina numbers. At the Aquariumand Woldenberg Riverfront Park, Lundi Gras and Go Fourth on the River attracted people downtown.

• Removal of dead trees in Audubon Park and Audubon Zoo, at Audubon Louisiana Nature Center, andat the Freeport-McMoRan Audubon Species Survival Center was completed and perimeter fenceswere repaired or installed at those facilities. At Audubon Park, Davey Tree Service conducted a GIS-based tree inventory used to develop an in-depth replanting plan.

• Audubon Park's tennis courts were restored through the efforts of the U.S. Tennis Association. Newmanagement was in place for the court's reopening in October 2006.

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Fund Raising Efforts — 2006

• Support from around the country continued, with significant commitments made by Square D, FedEx,Pepsi Project Restore, and Shell for specific recovery projects. A strong personal solicitation programwas in place for individuals, corporations and foundations, raising over $7.3 million.

• Chase Zoo-to-Do and Zoo-to-Do for Kids presented by Humana were the first large-scale fundraisingevents held in the area post-Katrina. Combined, the events raised an additional $656,000 for recoveryefforts.

• Audubon's "Adopt an Animal" grew dramatically as a fundraising initiative and was promotednationally through a partnership with RealSimple magazine. The publication featured "Adopt anAlligator" as a "top gift under $50," and the item was highlighted on The Today Show on NBC. Over700 alligator packages sold in a 6-week period, raising over $35,000.

• As facilities reopened, Audubon's website focused more on activities and events instead of onfundraising. However, fundraising was still prominently featured on the home page and through acoordinated e-communication strategy using targeted e-mail campaigns such as "Bring Back OurFish" and "Louisiana Wetlands." In addition to accepting donations on-line, web capabilitiesexpanded to include an e-store for gift shop items, online ticket purchases for "Hurricane on theBayou," online membership renewals and purchases, and online Zoo-to-Do ticket sales.

Audubon-2007

Audubon started 2007 in the rebuilding mode, but ended the year focused on the future and recommitted to itsrole as a source of pride for our community. Before Hurricane Katrina, Audubon operated Louisiana's threemost popular visitor attractions and contributed greatly to area residents' quality of life. Since the storm,Audubon grows stronger each day:

• An economic impact study by Dr. Wade Ragas of UNO and Dr. Bill Richardson of LSD illustratesthat Audubon's total annual economic impact is currently $314 million, which generates $28.5million in state and local tax revenue and 4,150 jobs.

• Facility attendance was 15% ahead of budget and 70% of 2004 numbers. A total of 1.5 millionpeople came to Audubon Zoo, Audubon Aquarium of the Americas, and Entergy IMAX Theatre in2007.

• Attendance revenue was 13% ahead of budget and approaching 70% of 2004 totals. Proceeds fromattendance contributed $9.4 million to operations in 2007.

• Membership continues to be the foundation for Audubon's success. The number of households withAudubon memberships topped 28,000, approximately 97% of pre-storm totals. Gross revenue of $2.9million exceeded budget by 33% and was 97% of 2004's number; net revenue of $2.2 million was48% greater than budget and 5% greater than 2004's number.

Financial Highlights

• Net Assets decreased by $1,001,518 or 1.0% over 2006.

• Additions to Capital Assets totaled $14,901,227 in 2007.

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• Long-term Liabilities increased by $2,469,764 from 2006 due to new liabilities set up for the GulfZone bond payments.

Audubon Commission Operating Facilities Net Results for the Year Ended December 31,2007 With Prior Year and Budget Comparisons

Actual Actual Budget2007 2006 Variance 2007 Variance

(In thousands)

$ 5,954 $ 3,299 $ 2,655 $ 4,133 $ 1,821

(4,693) (2,377) (2,316) (4,076) (617)

Aquarium/IMAX WoldenbergRiverfront Park

Audubon Zoo and Park &Audubon Golf Course

Research Center/SpeciesSurvival CenterNature Center

Total operations*

Net capital income and expense

Change in net assets

* Excludes capital revenues and expenditures, and the depreciation associated with buildings and fixedexhibitry.

(729)10

$ 542

(1,544)

$(1,002)

(691)18

$ 249 ;

(1,841)

$(1,592)

(38)(8)

$ 293 !• • ^ ^ B •

297

S 590

(57) (672)10

S $ 542

Condensed Statement of Activities

Year Ended December 312007 2006 Change

$ 29,309,990 $21,604,795 $ 7,705,19543,167,820 32,983,668 10,184,152

Operating revenuesOperating expenses

Operating loss

Nonoperating revenues — net

Change in net assets

Beginning net assets

Ending net assets

Comments on Condensed Statement of Revenues, Expenses and Changes in Net Assets

Operating Revenues and Expenses —

2007 was the first full year of operations Post-Hurricane Katrina.

• Operating revenues increased in 2007 due to the re-opening of the Aquarium and Entergy IMAXTheater and Audubon Zoo 6 days a week. Revenues were partially supplemented with Business

(13,857,830)

12,856,312

(1,001,518)

96,647,186

$ 95,645,668

(11,378,873)

9,787,105

(1,591,768)

98,238,954

$96,647,186 :

(2,478,957)

3,069,207

590,250

(1,591,768)

$ (1,001,518)

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Interruption insurance receipts in the amount of $3,962,000 in 2006 and $617,867 in 2007 for theAquarium and Entergy IMAX Theatre. The Zoo received $454,000 in 2006 for Business Interruption.

• Operating revenue includes property damage insurance claims of $503,000 at the Zoo in 2006 and$330,231 at the Aquarium in 2007.

• Federal Emergency Management Administration (FEMA) reimbursements are included in operatingrevenue. $731,685 and $557,172 were paid in 2007 for property damage and operating costs,respectively.

• The increase in operating expenses is attributed to the facilities being open for all of 2007. TheAquarium and Entergy IMAX Theater were temporarily closed until the end of May 2006 due toHurricane Katrina.

Non-Operating Revenues —

• Dedicated tax revenues increased by $2,040,377 from 2006 due to an increase in property taxpayments.

• Private and government grants and donations for capital projects, education programs and operatingsupport decreased from prior year by $359,084.

Audubon Commission — Net Capital Assets

Aquarium and Riverfront ParkAudubon InsectariumAudubon Zoo & ParkAudubon Golf CourseSurvival Center/ Research CenterLouisiana Nature Center

Total

BeginningBalance

2007

$ 53,094,76018,643,54441,238,706

9,874,74916,166,500

Additions

$ 1,291,0011,689,7669,427,776

475,5432,017,141

Depreciation/Transfers

2007

$ (3,411,167)(42,199)

(6,624,543)(522,351)

(1,869,527)

EndingBalance

2007

$ 50,974,59420,291,11144,041,939

9,827,94116,314,114

$139,018,259 $ 14,901,227 $(12,469,787) $141,449,699

Audubon Aquarium of the Americas• Adventure Island, a new pirate-themed attraction in the Aquarium's changing exhibit space, opened

during the summer. This highly interactive play zone features a stingray touch pool and lots ofclimbing stations for our youngest guests.

• Countless visitor requests prompted the return of Frogs!—this time as a permanent gallery on theAquarium's second floor.

• The Aquarium installed a mobile back up generator, funded with a grant from Shell and the State ofLouisiana. It has the capability to be moved to any Audubon facility in case of extended poweroutage but will be housed at the Aquarium for emergencies.

Enter2V IMAX Theatre• "Hurricane on the Bayou," the IMAX film executive produced by Audubon in 2006, increased its

bookings around the world. The Franklin Institute in Philadelphia and other IMAX theatres in the

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United States used the film to help raise money for Audubon's continued recovery. A DVD versionof the film was released in June 2007 and has joined the film's soundtrack as the hottest selling itemin our on-line gift shop.

Audubon Insectarium• Exhibit fabrication and installation in our Custom House space progressed throughout 2007 as

collection building moved forward at the Insect Rearing Facility.

• Audubon Insectarium officially opens on June 13, 2008—the first new major attraction to open inNew Orleans post-Katrina and the largest freestanding museum in the United States celebratinginsects and their relatives.

Audubon Zoo• Audubon opened Zoofari Cafe, a transformation of the old McDonald's location into climate-

controlled seating for 200 plus patio dining. The Caf6 features healthy food choices in a "grab andgo" format and is beautifully decorated with animal-themed artwork created by local talent.

• Chase Zoo-to-Do and Zoo-to-Do for Kids presented by Humana raised record levels of support—over$1 million—to help renovate the sea lion pool and improve this favorite exhibit's life supportcapabilities. In December, our five sea lions returned from Moody Gardens in Galveston, TX, wherethey have been housed since the storm.

• The Zoo experienced a baby boom with two female Amur leopards, a South American anteater, andgolden lion tamarins.

Audubon Center for Research of Endangered Species• The new Whooping Crane breeding facility, funded by the U.S. Fish and Wildlife Service, neared

completion. Several whoopers were already on-site and produced four fertile eggs that were shippedto Patuxent, MD, as part of an initiative to reestablish the crane population. The Whooping Crane isNorth America's most endangered crane species, with fewer than 500 birds known to exist.

• Scientists announced the first cryochick, a Mississippi sandhill crane produced from artificialinsemination with frozen then thawed semen.

• Scientists also successfully developed a vitrification process, which freezes then thaws eggs for use incloning. The process produced African wildcats.

Audubon Louisiana Nature Center• The center remains closed, but the site has been secured. Volunteers from around the country have

removed invasive trees and have begun planting native Louisiana species.

Parks• Nearly 200 trees have been planted in Audubon Park and Audubon Zoo. A grant from the Louisiana

Department of Agriculture and Forestry funded the planting of major Southern live oaks, weepingwillows, cypress and river birch.

• Woldenberg Riverfront Park welcomed hundreds of thousands of guests for Lundi Gras, FrenchQuarter Festival and a wide range of community events.

Audubon Commission — Statement of Net Assets

2007 2006 Change

ASSETS:Cash and cash equivalentsAccounts receivableInventoryPrepaid itemsRestricted assetsNondepreciable capital assetsDepreciable capital assets — netOther assets

Total assets

LIABILITIES:Accounts payablePayable to Audubon Nature InstitutePayables from restricted assetsLong-term liabilities

Total liabilities

$ 4,623,358451,722

1,233,8021,362,8351,991,024800,000

140,649,69913,557,236

$ 1,831,582520,047958,090

1,106,3762,085,825800,000

138,218,25915,061,740

$ 2,791,776(68,325)275,712256,459(94,801)

2,431,440(1,504,504)

$164,669,676 $160,581,919 $ 4,087,757

$ 6,705,0819,538,8893,871,74848,908,290

$ 5,880,2378,009,0493,606,92146,438,526

$ 824,8441,529,840264,827

2,469,764

S 69,024,008 $ 63,934,733 $ 5,089,275

NET ASSETS:Invested in capital assetsUnrestricted

Total net assets

Total liabilities and net assets

$ 91,162,7124,482,956

$ 95,645,668

$164,669,676

$ 91,632,9505,014,236

(470,238)(531,280)

S 96,647,186 $ (1,001,518)

$160,581,919 $ 4,087,757

Comments on the Statement of Net Assets

• The net capital assets increase of $2,431,440 is due to an increase in capital asset additions of$14,901,227, offset by depreciation and transfers out of $12,469,787.

« The increase in long term liabilities is mostly attributable to the bondholder's payment of Limited TaxBonds and Revenue Bonds offset by new liabilities to the state of Louisiana for the Gulf Zone bondpayments made for the bondholder.

Contacting the Commission's Financial Manager

This financial report is designed to provide our citizens, customers, and creditors with a general overview ofthe Commission's finances. If you have any questions about this report or need additional financialinformation, please contact the Director of Finance, Audubon Nature Institute, 6500 Magazine Street, NewOrleans, LA 70118.

-9-


STATEMENTS OF NET ASSETSAS OF DECEMBER 31, 2007 AND 2006

2007 2006

CURRENT ASSETS:Cash and temporary investmentsAccounts receivable — net of allowance for

uncollectible accounts of $178,158 in 2007 and$207,046 in 2006

InventoryPrepaid expenses

Total current assets

RESTRICTED ASSETS:Debt service and bond reserve investmentsAccounts receivable for capital improvements

Total restricted assets

CAPITAL ASSETS:LandBuildings and fixed exhibitryEquipmentConstruction in progressLess accumulated depreciation

Net capital assets

OTHER ASSETS:Prepaid rent — Dock BoardFilm cost — net of accumulated amortizationInvestment — Riverfront Economic Development

AgreementBond issue costs

Total other assets

TOTAL

$ 4,623,358 $ 1,831,582

451,7221,233,8021,362,835

7,671,717

1,466,594524,430

1,991,024

800,000177,186,42919,303,98224,270,637(80,111,349)

141,449,699

9,147,3503,176,760

731,098502,028

13,557,236

520,047958,090

1,106,376

4,416,095

1,416,118669,707

2,085,825

800,000171,426,45320,813,68522,716,029(76,737,908)

139,018,259

9,263,1404,357,236

867,051574,313

15,061,740

$164,669,676 $160,581,919

(Continued)

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STATEMENTS OF NET ASSETSAS OF DECEMBER 31, 2007 AND 2006

2007 2006

CURRENT LIABILITIES:Accounts payable and other accrued liabilitiesDue to Audubon Nature Institute

Total nonrestricted current liabilities

CURRENT LIABILITIES PAYABLE FROMRESTRICTED ASSETS:Accrued interestRevenue bonds — current portionLimited tax bonds — current portionConstruction payables

Total payable from restricted assets

Total current liabilities

LONG-TERM LIABILITIES:Revenue bondsLimited tax bondsUnamortized premium — netGulf Opportunity Zone loanOther

Total long-term liabilities

Total liabilities

NET ASSETS:Invested in capital assets — net of related debtUnrestricted

Total net assets

TOTAL

6,705,081 $ 5,880,2379,538,889 8,009,049

16,243,970

85,3721,110,8742,169,424

506,078

3,871,748

20,115,718

5,113,49432,604,814

846,7489,172,3981,170,836

48,908,290

69,024,008

91,162,7124,482,956

95,645,668

$164,669,676

13,889,286

100,6911,140,8742,064,424

300,932

3,606,921

17,496,207

6,224,36834,774,238

957,4933,336,5921,145,835

46,438,526

63,934,733

91,632,9505,014,236

96,647,186

$160,581,919

See notes to financial statements. (Concluded)

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STATEMENTS OF ACTIVITIESFOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

OPERATING REVENUES:Charges for servicesMiscellaneous

Total operating revenues

OPERATING EXPENSES:Salaries and benefitsContractual services, materials, supplies, otherDepreciation and amortization

Total operating expenses

OPERATING LOSS

NONOPERATING REVENUES (EXPENSES):Audubon Nature Institute grants for capital projects,

education programs, and operating supportDedicated tax revenuesInterest expenseIntergovernmental grants for capital projectsGrant expensesInterest incomeAmortization — debt costs

Total nonoperating revenues — net

CHANGE IN NET ASSETS

NET ASSETS — Beginning of year

NET ASSETS — End of year

2007

$ 26,035,4273,274,563

29,309,990

18,055,79717,123,3927,988,631

43,167,820

(13,857,830)

2,758,9528,531,139

(2,619,741)4,742,934(766,950)318,163

(108,185)

12,856,312

(1,001,518)

96,647,186

$ 95,645,668

2006

$ 15,739,8385,864,957

21,604,795

12,367,85313,492,8877,122,928

32,983,668

(11,378,873)

3,918,5276,490,761

(2,638,810)3,942,443

(2,024,222)206,591

(108,185)

9,787,105

(1,591,768)

98,238,954

$ 96,647,186

See notes to financial statements.

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STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

2007 2006

CASH FLOWS FROM OPERATING ACTIVITIES:Cash received from customers $ 27,141,360 $ 16,385,711Cash received from insurance proceeds and FEMA reimbursements 2,236,955 5,464,598Cash paid to or on behalf of employees (17,903,907) (12,557,402)Cash paid for supplies and services (15,452,769) (13,696,273)

Net cash used in operating activities (3,978,361) (4,403,366)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES;Grants from Audubon Institute for capital projects, education, andoperating support 2,758,952 3,918,527

Payments for projects' design, construction, and equipment purchases (9,034,449) (6,124,181)(Increase) decrease in restricted assets 94,801 (882,352)Increase in restricted liabilities 2,529,445 1,411,121Dedicated tax revenues 8,531,139 6,490,761Interest expense (2,619,741) (2,638,810)Payment of bond principal (1,215,000)Interest income 318,163 206,591Intergovernmental and other grants 4,742,934 3,942,443Grant expenses (766,950) (2,024,222)Other 215,843 30,341

Net cash provided by capital and related financing activities 6,770,137 3,115,219

NET (DECREASE) INCREASE IN CASH AND TEMPORARY INVESTMENTS 2,791,776 (1,288,147)

CASH AND TEMPORARY INVESTMENTS — Beginning of year 1,831,582 3,119,729

CASH AND TEMPORARY INVESTMENTS — End of year $ 4,623,358 S 1,831,582

RECONCILIATION OF OPERATING LOSS TO NET CASHUSED IN OPERATING ACTIVITIES:Operating loss $(13,857,830) $(11,378,873)Adjustments to reconcile operating loss to cash used in operations:

Depreciation and amortization 7,988,631 7,122,928Increase in accounts receivable and other current assets (463,846) (133,074)Increase/(decrease) in accounts payable and other current liabilities 2,354,684 (14,347)

Net cash used in operating activities $ (3,978,36!) S (4,403,366)

NONCASH ITEMS:Gulf Opportunity Zone loan proceeds used to pay principal on limited tax and revenue bonds S 3,650,000 $ 2,270,000

Gulf Opportunity Zone loan proceeds used to pay interest on limited tax and revenue bonds S 2,006,997 $ 1,066,592

See notes to financial statements.

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NOTES TO BASIC FINANCIAL STATEMENTSAS OF AND FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General Information — Audubon Park is located on a 400-acre tract within the City of New Orleans(the "City") that includes the Audubon Zoo, trails for jogging, biking, and horseback riding, an 18-holegolf course and numerous athletic fields. Act 83 passed by the Louisiana Legislature (the "Legislature")in 1871 authorized the Board of Park Commissioners to acquire the land which is now known asAudubon Park. In 1914, the Legislature passed Act 191 which created a Commission to be entrustedwith the management and control of Audubon Park. Act 191, as amended, is the current authority for thepresent Audubon Park Commission (the "Commission") which is composed of 24 members who areappointed by the Mayor with the approval of the City Council. Each member serves a six-year term,with four members' terms expiring each year. The Commission is considered a discretely presentedcomponent unit of the City and its statements are included in the City's annual financial statements. OnJanuary 1, 1996, the Commission's name was changed from Audubon Park Commission to AudubonCommission effective with the City's adoption of amendments to its Home Rule Charter.

On November 4, 1986, City voters approved the levy of a three and four-fifths (3-4/5) mills property taxto finance the construction and certain operating expenses of the Audubon Aquarium of the Americas(the "Aquarium"). The vote was taken pursuant to Act 309, passed by the Legislature earlier in 1986,which provided that the Commission would develop, construct and operate the Aquarium and authorizedthe City to levy and collect the aforementioned ad valorem tax, subject to voter approval, on behalf ofthe Commission. The City acts through the Commission in the issuance of the bonds authorized byAct 309, and through the Board of Liquidation, City Debt, in the sale of its bonds. Construction of theAquarium of the Americas and Woldenberg Riverfront Park was begun in 1987 and the bonds (AudubonPark Commission Aquarium Bonds, Series 1988 — $25,000,000) were issued in 1988. Construction wascompleted and the Aquarium was opened to the public in September 1990. Phase II of the Aquariumwas completed in 1995.

On June 1, 1990, the Commission and the City entered into an agreement for the construction andoperation of the Audubon Wilderness Park and the Freeport Mc-Mo-Ran Audubon Species SurvivalCenter on approximately 64 acres of property owned by the City. The agreement requires an annualpayment to the City's General Fund of one dollar ($1.00) per year for a period of fifty (50) years,commencing on May 1, 1990 and terminating on February 28, 2040. The Audubon Center for Researchof Endangered Species is located adjacent to the Species Survival Center on 986 acres of United StatesCoast Guard property. The United States Coast Guard has granted the Commission a 25-year land uselicense with a 25 year renewal option. Improvements completed on this site by the Commission includea 36,000 square-foot research laboratory.

Effective October 1, 1994, the Commission received assignment of a facility lease by the Society forEnvironmental Education (as lessee) with the City (as lessor). The Society for Environmental Educationdoes business as the Audubon Louisiana Nature Center.

During 2002, construction began on the latest Audubon facility, the Audubon Insectarium. TheInsectarium is located in the Customs House building; it will open in the summer of 2008.

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The Commission has a contractual management agreement with the Audubon Nature Institute, Inc. (the"Institute"), a nonprofit organization, under which the Institute manages and operates the Commissionfacilities located at the Audubon Zoo and Park, the Aquarium and Riverfront Park, the AudubonInsectarium, the Species Survival Center and the Louisiana Nature Center. The Institute employsindividuals to operate and maintain the Commission's facilities; however, all operating revenues andexpenses, including salary expense, related to these facilities are recorded on the records of the relatedfacility. The Institute also supports the Commission financially through specific donations and grantsobtained by the Institute for operations or capital improvements of Commission facilities.

Basis of Presentation-Fund Accounting — The proprietary fund is used to account for theCommission's ongoing operations and activities which are similar to those in the private sector.Proprietary funds are accounted for using a flow of economic resource measurement focus under whichall assets and all liabilities associated with the operation of these funds are included in the balance sheet.The operating statements present increases (revenues) and decreases (expenses) in total net assets. TheCommission maintains one proprietary fund type — the enterprise fund.

Basis of Accounting — Pursuant to Governmental Accounting Standards Board (GASB) StatementNo. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental EntitiesThat Use Proprietary Fund Accounting, the Commission has elected to apply the provisions of allrelevant pronouncements of the Financial Accounting Standards Board (FASB), excluding those issuedafter November 30, 1989.

Use of Estimates — The Commission prepares financial statements in accordance with accountingprinciples generally accepted in the United States. Such principles require management to makeestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ from these estimates.

Basis of Reporting — Effective January 1, 2002, the Commission adopted GASB Statement No. 34,Basic Financial Statements — and Management's Discussion and Analysis —for State and LocalGovernments. GASB Statement No. 34 established standards for external financial reporting for all stateand local governmental entities. It requires the classification of net assets into three components —invested in capital assets, net of related debt; restricted; and unrestricted. These classifications aredefined as follows:

Invested in Capital Assets, Net of Related Debt — This component of net assets consists of capitalassets, including restricted capital assets, net of accumulated depreciation and reduced by theoutstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to theacquisition, construction, or improvement of those assets.

Restricted — This component of net assets consists of constraints placed on net asset use throughexternal constraints imposed by creditors (such as through debt covenants), grantors, contributors, orlaws or regulations of other governments or constraints imposed by law through constitutionalprovisions or enabling legislation.

Unrestricted — This component of net assets consists of net assets that do not meet the definition of"restricted" or "invested in capital assets, net of related debt."

Restricted Assets — Restricted assets consist primarily of investments maintained in the applicableenterprise fund in accordance with bond indentures. This category is also used to report amountsreceivable from public agencies in connection with the funding of capital projects.

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Investments — Investments are stated at cost or amortized cost, which does not materially differ frommarket value.

Inventory — Inventory is stated at the lower of cost, determined by the first-in, first-out method, ormarket.

Capital Assets — Capital assets are recorded at historical cost, net of accumulated depreciation.Depreciation is computed using the straight-line method over the estimated useful lives (ranging from20^0 years for buildings and fixed exhibitry and 3-15 years for equipment) of the assets. When assetsare retired or otherwise disposed of, the cost and related accumulated depreciation are removed from theaccounts and any resulting gain or loss is recognized in revenue or expense for the period. The cost ofmaintenance and repairs is charged to operations as incurred and significant renewals and bettermentsare capitalized.

Statement of Cash Flows — For purposes of the Statement of Cash Flows, the enterprise fundsconsider all investments with an original maturity of ninety days or less to be cash equivalents. Cash andcash equivalents at December 31, 2007 and 2006, consisted of unrestricted cash and investments of$4,623,358 and $1,831,582, respectively.

Budgeting — Operating and capital expenditure budgets are adopted by the Commission on a basisconsistent with accounting principles generally accepted in the United States. Budget information isutilized for analytical purposes, and the budget process is a key component of the Commission'smanagement control environment.

2. IMPACT OF HURRICANE KATRINA

On August 29, 2005, Hurricane Katrina reached landfall in the Gulf region of the United States, withsignificant damage to eastern Louisiana and Mississippi. On a local level, the storm caused significantwind and flood damage to the Greater New Orleans area with the eventual breach of several leveesinundating the city with water for several weeks. As a result, all of the Commission's facilities closedthrough at least Thanksgiving 2005 with damage ranging from trees uprooted to total destruction ofequipment and furniture in some facilities. The most severely impacted location was the LouisianaNature Center, located in New Orleans East, with the entire facility flooded. The Commission recorded aloss on impairment at the Nature Center of approximately $446,000 in 2005 and the Nature Center hasnot reopened. Management is in the process of developing plans to utilize the site in the future.

The Commission is insured for an event of this nature and has property damage insurance limits ofapproximately $143,000,000 for all facilities. The Commission received $330,231 and $451,200 inproperty insurance payments in 2007 and 2006, respectively. The Commission also has businessinterruption coverage of approximately $18,200,000 for all facilities and received $617,867 in businessinterruption insurance proceeds in 2007, and received $4,415,700 in business interruption insuranceadvances in 2006. The Commission received $1,288,857 and $597,700 from the Federal EmergencyManagement Administration (FEMA) in 2007 and 2006, respectively. The Commission has notcompleted the process of filing for reimbursements with FEMA and expects to receive additionalamounts in 2008. All amounts are recorded in miscellaneous revenues.

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3. CASH AND TEMPORARY INVESTMENTS

Cash on Deposit — The Commission's deposits at financial institutions at December 31, 2007 and2006, were $4,518,698 and $1,723,252, respectively (excluding $104,660 and $108,330 of cash on handat December 31, 2007 and 2006, respectively). The bank balances with respect to these deposits were$5,176,754 and $3,026,491 at December 31, 2007 and 2006, respectively.

Custodial credit risk is the risk that in the event of a bank failure, the Commission's deposits may not bereturned to it. The Commission does not have a deposit policy for custodial credit risk. As ofDecember 31, 2007 and 2006, $2,609,199 and $1,323,919, respectively, of the Commission's bankbalances of $2,713,860 and $3,026,401, respectively, were exposed to custodial credit risk in that thoseamounts were uninsured and collateral was held by the pledging financial institution not in theCommission's name.

Investments — The carrying and market values of the Commission's investments as of December 31,2007 and 2006, were approximately $1,466,594 and $1,416,118, respectively. At December 31, 2007amounts were comprised of certificates of deposit of $307,088 that mature in 2008 and treasury bills of$1,159,506 that mature in 2008. At December 31, 2006 amounts were comprised of cash balances of$128,600, certificates of deposit of $307,088 that matured in 2007 and treasury bills of $980,430 thatmatured in 2007.

Interest Rate Risk — The Commission does not have a formal investment policy that limits investmentmaturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

Custodial Credit Risk — For an investment, custodial credit risk is the risk that, in the event of thefailure of a counterparty, the Commission would not be able to recover the value of its investments orcollateral securities that are in the possession of an outside party. At December 31, 2007 and 2006, theCommission is not exposed to significant custodial credit risk with respect to its investments because allinvestments are either insured by Federal Depository Insurance, registered in the name of theCommission or collateralized by other investments pledged in the name of the Commission.

4. OTHER ASSETS

On April 30, 1992, the Commission, the City and the Board of Commissioners of the Port of NewOrleans (the "Port") entered into an agreement titled "Riverfront Economic Development Agreement"(the "Agreement") under which the Commission paid $13,000,000 ($11,000,000 from the sale of theCommission's Aquarium Revenue Bonds, Series 1992A, and $2,000,000 from self-generated funds ofthe Commission) to the Port. In consideration for the $11,000,000 of the payment, the Commission wasrelieved of all rents or fees due for occupancy pursuant to an agreement with the Port dated October 23,1987, that provided for the development and occupancy of an aquarium and related facilities by theCommission over the 99-year term of the agreement. The $11,000,000 payment was recorded as prepaidrent and is being amortized over the remaining term of the agreement.

In consideration for $2,000,000 of the payment, the City, which became the sole owner of the RivergateFacility under the agreement, agreed to transfer and assign the second $200,000 of annual net incomefrom the parking facilities at the Rivergate to the Commission for twenty years beginning with the 1992calendar year. In the event parking operations were discontinued at the Rivergate, the agreementprovided for the City to make a lump sum payment to the Commission for the remaining paymentsdiscounted at 7%, or to continue to pay the $200,000 annually in monthly installments of $16,666.Parking operations were discontinued and the City has elected to continue paying the $200,000 annuallythrough 2011. Harrah's Jazz Casino Company assumed payment of this receivable from the City upon

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its operation of the Rivergate Facility. As payments are received from Harrah's Jazz Casino Company,this receivable, carried in Other Assets, is reduced for that portion of the payment representing return ofprincipal, with the balance credited to interest income.

Unamortized bond issue costs represent costs incurred in the issuance of the revenue bonds and thelimited tax bonds (Note 6). These costs are being amortized over the life of the bonds.

Film Cost — The Commission and a partner began production on an IMAX® film about the LouisianaWetlands in 2004 and the Commission capitalized its related costs as part of construction in process. OnAugust 29, 2006, the "Hurricane on the Bayou," IMAX® film was complete and released at theAquarium only. The unamortized film cost as of December 31, 2006, was approximately $4,532,379.The Commission amortizes the film costs using the individual-film-forecast-computation method whichamortizes such costs in the same ratio that current period actual revenue bears to estimated remainingunrecognized ultimate revenue as of the beginning of the current fiscal year (denominator). The filmrevenue for the years ended December 31, 2007 and 2006, was approximately $1,895,000 and $258,000,respectively, and ultimate revenue is estimated at approximately $7,200,000. Ultimate revenue includesthe estimates that are based on the history of earning such revenue. The Commission recognizedapproximately $1,180,000 and $175,000 of the film amortization for the years ended December 31, 2007and 2006, respectively.

5. CAPITAL ASSETS

A summary of changes in capital assets during 2007 and 2006, is as follows:

2007

Capital assets not beingdepreciated:LandConstruction in progress

Total capital assetsnot being depreciated

BeginningBalance

2007

800,00022,716,029

23,516,029

Capital assets beingdepreciated:Buildings and fixed exhibitry 171,426,453Equipment 20,813,685

Total capital assetsbeing depreciated 192,240,138

Less accumulated depreciation (76,737.908)

Total capital assets — net $139,018,259

Additions

7,314,584

7,314,584

5,759,9761,826,667

7,586,643

(6,717,348)

$ 8,183,879

Transfers

S(5,759,976)

(5,759.976)

Retirements

(3,336,370)

(3,336,370)

3,343,907

$(5,759,976) $ 7,537

EndingBalance

2007

800,00024,270,637

25,070,637

177,186,42919,303,982

196,490,411

(80,111,349)

$141,449,699

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2006

Capital assets not beingdepreciated:LandConstruction in progress

Total capital assetsnot being depreciated

Capital assets beingdepreciated:Buildings and fixed

exhibitryEquipment

Total capital assetsbeing depreciated

Less accumulateddepreciation

Total capital assets — net

BeginningBalance

2006

$ 800,00022,484,171

23,284,171

170,741,07019,863,436

190,604,506

(69,910,509)

$143,978,168

Additions Transfers

5,449,144 (5,217,286)

5,449,144 (5,217,286)

476 684,907950,249

950,725 684,907

(6,827,399)

$ (427,530) $(4,532,379)

EndingBalance

Retirements 2006

$ - $ 800,00022,716,029

23,516,029

171,426,45320,813,685

192,240,138

(76,737,908)

$ - $139,018,259

Depreciation and amortization expense for the years ended December 31, 2007 and 2006, related tothese assets amounted to approximately $6,717,000 and $6,827,000, respectively.

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6. BONDS AND LOAN PAYABLE

Bonds and loans payable at December 31, 2007 and 2006, are comprised of the following:

2007 2006

Limited Tax Bonds;3.00% to 5.00% Audubon Commission Aquarium Bonds,

Series 2003 A due in annual installments of $1,875,000 to$2,695,000 through October 2013 $ 14,425,000 $ 16,490,000

3.00% to 5 3/8% Audubon Commission Aquarium Bonds,Series 2001 A due in annual installments of $10,000 to$3,595,000 through October 2017 13,420,000 13,435,000

3.00% to 4.70% Audubon Commission Aquarium Bonds,Series 2001 B due in annual installments of $55,000 to$1,260,067 through October 2021 6,348,572 6,408,572

5.00% to 6.50% Audubon Commission Improvement andRefunding Zoo Bonds, Series 1997, due in annualinstallments of $185,000 to $365,000 throughDecember 2016 2,650,000 2,870,000

Revenue Bonds:4.5% to 5.00% 1997 Audubon Commission Aquarium

Revenue Refunding Bonds Series 1997, due in annualinstallments of $1,050,000 to $1,520,000 through April 2012 6,970,000 8,260,000

State of Louisiana, Office of Community DevelopmentGulf Opportunity Zone Act Loan 9,172,398 3,336,592

Total bonds and loans payable 52,985,970 50,800,164

Deferred losses on refinancings — net of amortization (2,814,965) (3,259,668)

Unamortized premium — net 846,748 957,493

Total 51,017,753 48,497,989

Less current maturities and current portion of deferred losses (3,280,298) (3,205,298)

Bonds and loans payable — long-term $47,737,455 $45,292,691

On July 9, 2003, the Commission issued $22,285,000 Aquarium Refunding Bonds, Series 2003 A withan average interest rate of 3.726%. The proceeds of this issue were used to advance refund $22,565,000of the Audubon Commission Aquarium Bonds, Series 1993. The 2003 A series bonds were issued oncomplete parity with the Aquarium Refunding Bonds, Series 2001 A and 2001 B. The advance refundincluded escrowing $23,685,145 into an irrevocable trust to provide for all future debt service paymentson the Series 1993 bonds; therefore the Series 1993 bonds were removed from the balance sheet in 2003.The reacquisition price exceeded the recorded book value by approximately $2.4 million which isreported in the financial statements as a deduction to bonds payable and is being charged to interestexpense through 2013 using the straight-line method.

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On November 1, 2001, the Commission issued $13,555,000 Audubon Commission AquariumRefunding Bonds, Series 2001 A and $6,683,572 Audubon Commission Aquarium Bonds,Series 2001 B with an average interest rate of 4.5%. Series A was issued to advance refund $13,390,000of Aquarium Series 1993 bonds with an average interest rate of 6.25% maturing in October 2014through 2017. The advance refunding included escrowing $14,573,000 into an irrevocable trust toprovide for future debt service for a portion ($13,309,000) of the Aquarium Series 1993 bonds;therefore, that portion of the Aquarium Series 1993 bonds was removed from the balance sheet in fiscal2001. The reacquisition price exceeded the recorded book value by approximately $1.1 million which isreported in the financial statements as a deduction to bonds payable and is being charged to interestexpense through 2017 using the straight-line method. Series B was issued to finance furtherconstruction, extension and improvement of the Aquarium and related facilities, including thedevelopment, design and construction of the Audubon Insectarium. Proceeds from the bonds are alsoused to pay the costs of issuance of the bonds. These bonds are special and limited obligations of theCity payable from and secured solely by the proceeds of a property tax levied at a rate of three andfour-fifths mills.

In December 1996, the Commission received a commitment to purchase its $4,500,000 Improvementand Refunding Bonds, Series 1997. The proceeds of the issue were used to advance refund $1,895,000in Series 1979 and 1988 Improvement Bonds, and provide $2.5 million for capital improvements atAudubon Zoo. The advance refunding included escrowing $ 1,943,500 into an irrevocable trust toprovide for future debt service on the defeased bonds.

Debt service applicable to the limited tax bonds is held by the Board of Liquidation, City Debt. No taxbonds may be sold without approval of the Board of Liquidation. Property taxes levied by the City ofNew Orleans and dedicated to the payment of these limited tax bonds are collected by the City of NewOrleans and, as required by law, paid to the Board of Liquidation as collected. The millages for theselimited tax bonds were established at the time the bonds were issued, based upon the approval of theCity's voters. The property taxes are recorded as nonoperating revenue for the appropriate fund.

In December 1997, the Commission issued its $16,380,000 Aquarium Revenue Refunding Bonds,Series 1997 to advance refund its $14,200,000 Series 1992 A Aquarium Revenue Bonds. The advancerefunding included escrowing $16,048,000 into an irrevocable trust to provide for all future debt servicepayments on the Series 1992 A bonds; therefore, the 1992 A bonds were removed from the balancesheet. The reacquisition price exceeded the recorded book value by $2.2 million which is reported in thefinancial statements as a deduction to bonds payable and is being charged to interest expense in equalannual amounts through 2012.

The various bond indentures contain significant limitations and restrictions on annual debt servicerequirements, maintenance of and flow of monies through various restricted accounts, minimumamounts to be maintained in various sinking funds, and minimum revenue bond coverages. Managementbelieves the Commission is in compliance with all such significant limitations and restrictions atDecember 31,2007.

In July 2006, pursuant to the Public Law 109-135 of the United States Congress, the Gulf OpportunityZone Act of 2005 was enacted to provide tax relief and tax credit bond authority designed to aid theState with recovery efforts from Hurricane Katrina and Hurricane Rita. Accordingly, the State ofLouisiana, Office of Community Development loaned the Commission $4,907,500 to make thescheduled debt payments for the Aquarium Revenue Refunding Bonds, Series 1997 and $11,851,006 tomake scheduled debt payments for the Improvement and Refunding Zoo Bonds, Series 1997, AquariumRefunding Bonds, Series 2001 A, Aquarium Bonds, Series 2001 B and Aquarium Refunding Bonds,Series 2003 A through 2009. Per the agreement the funds shall be maintained at the State identified

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trustee and disbursed according to the debt schedule of the bonds identified above. Once funds aredisbursed by the State, the debt service payments are made with the proceeds and amounts are recordedas loans payable by the Commission. The agreement matures 20 years from the date of the delivery ofthe loan which was on July 19, 2006. No principal or interest is payable during the initial five yearperiod of the loan. After the expiration of the initial five year period of the loan, the loan shall bearinterest at a fixed rate of 4.64%. Principal and interest shall be repaid over the remaining 15 year periodbased on level annual amortization of principal and interest. An extension may be requested at the end ofthe first five year period to defer the payment of principal and interest for an additional five years. Theloan balance may be prepaid at any time, in whole or in part, by the Commission without penalty orpremium. The total amount of interest to accrue over the 20-year period of the loan is $6,874,054. As ofDecember 31, 2007 and 2006, the amount of long-term liability under the loan was $9,172,398 and$3,336,592, respectively, related to principal and interest payments made to bondholders on behalf ofthe Commission.

A summary of changes in long-term debt during 2007 and 2006, is as follows:

2007

Limited tax bondsRevenue bondsGulf Opportunity

Zone loan

Limited tax bondsRevenue bondsGulf OpportunityZone loan

BeginningBalance

$39,203,5728,260,000

3,336,592

$50,800,164

Additions Payments

$ - $(2,360,000)(1,290,000)

5,835,806

$5,835,806 $(3,650,000)

EndingBalance

$36,843,5726,970,000

9,172,398

$52,985,970

Due WithinOne Year

$2,465,0001,260,000

$3,725,000

2006BeginningBalance

$41,473,5729,475,000

Additions Payments

$ - $(2,270,000)(1,215,000)

EndingBalance

$39,203,5728,260,000

Due WithinOne Year

$2,064,4241,140,874

3,336,592 3,336,592

$50,948,572 $3,336,592 $(3,485,000) $50,800,164 $3,205,298

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Debt service requirements on all bonds outstanding as of December 31, 2007, including interestpayments of approximately $20,139,529 are as follows:

Years EndingDecember 31

20082009201020112012Thereafter

Limited TaxBonds

RevenueBonds

GulfOpportunityZone Loan Total

InterestIncludedin Total

$ 4,003,0714,002,3094,002,0944,004,1844,004,509

36,069,748

$ 1,572,1001,580,5881,584,0001,572,5001,558,000

$

2,353,0996,819,299

$ 5,575,1715,582,8975,586,0945,576,6847,915,608

42,889,047

$ 1,850,1711,687,8961,516,0941,311,6841,097,509

12,676,175

$56,085,915 $ 7,867,188 $ 9,172,398 $73,125,501 $20,139,529

A certain Endowment Income Trust Fund loaned the Commission in the amount of $500,000 in 1982 forcapital improvements within the Audubon Park and Zoo. The loan accrues interest at 5%. The loan is tobe repaid annually from 50% of any operating surplus of the Audubon Park and Zoo, excluding anyintergovernmental revenues. Amounts not repaid after 25 years are to be forgiven by the lender. Theagreement also requires minimum annual payments of $25,000 which commenced January 1, 1992.Accordingly, the Commission has recorded a repayment liability of $1,170,835 and $1,145,835 atDecember 31, 2007 and 2006, respectively, which includes accrued interest.

7. RETIREMENT SYSTEM

Employees of the Institute that provide services for the Commission in accordance with the terms of themanagement agreement may participate on an optional basis in a tax-deferred annuity plan establishedby the Institute for the benefit of all full-time employees. The plan provides for the purchase of annuitieswhich qualify for tax deferral. Participating employees contribute between 2% and 15% of their salary,not to exceed $14,000, and the Commission, through its management agreement with the Institute,matches employee contributions up to 3% of base salary. The retirement expense provision for 2007 and2006 amounted to approximately $528,000 and $458,000, respectively.

8. RELATED-PARTY TRANSACTIONS

The Commission and the Institute are related through the interaction of their Boards of Directors andcontractual management agreements under which the Institute manages and operates Commissionfacilities. To assure efficiencies through economies of scale, these entities often engage in operationsthrough one organization that benefit the other organization. One example of this is the use of commonor central bank and investment accounts. As of December 31, 2007 and 2006, the Commission had apayable balance due to the Institute of $9,538,889 and $8,009,049, respectively.

The Commission also received additional financial support from the Institute in the form of specific giftsand grants of $2,758,952 and $3,918,527 and distributions from the Institute's Endowment Fundamounting to $133,847 and $44,445 (included in interest income) during 2007 and 2006, respectively.

9. COMMITMENTS AND CONTINGENCIES

Long-Term Leases — The Commission leases its Audubon Insectarium premises under an operatinglease which was amended in March 2, 2005, and expires August 2, 2009. The lease provides for fixed

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monthly base rentals in the amount of $28,000. The lease also provides that the agreement may berenewed, at the option of the lessee providing that 360 days written notice is given before the end of thefixed term, for four separate and consecutive ten year terms. The annual rent for these renewals will beat a rate to be negotiated which will be based on the current market rate, and other tenant rental rates atthe time of negotiations.

Litigation — Certain claims and suits have been filed against the Commission. The majority of theseclaims are covered by insurance and, based on all available information and consultation with theCommission's legal counsel, management does not believe the ultimate resolution of these matters willhave a significant effect on the Commission's financial position, results of operations, or cash flows.

* * * * * *

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OMB CIRCULAR A-133 SUPPLEMENTAL REPORTS AND SCHEDULES

- 3 1 -

INDEPENDENT AUDITORS1 REPORT ON INTERNAL CONTROL OVERFINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERSBASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Directors ofAudubon Commission:

We have audited the basic financial statements of the Audubon Commission (the "Commission"), adiscretely presented component unit of the City of New Orleans, Louisiana as of and for the years endedDecember 31, 2007 and 2006, and have issued our report thereon dated May 23, 2008. We conducted ouraudits in accordance with auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States.

Internal Control Over Financial Reporting

In planning and performing our audits, we considered the Commission's internal control over financialreporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on thefinancial statements but not for the purpose of expressing an opinion on the effectiveness of theCommission's internal control over financial reporting. Accordingly, we do not express an opinion on theeffectiveness of the Commission's internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in thepreceding paragraph and would not necessarily identify all deficiencies in internal control over financialreporting that might be significant deficiencies or material weaknesses. However, as discussed below, weidentified a deficiency in internal control over financial reporting that we consider to be a significantdeficiency.

A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detectmisstatements on a timely basis. A significant deficiency is a control deficiency, or combination ofcontrol deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process, orreport financial data reliably in accordance with generally accepted accounting principles such that thereis more than a remote likelihood that a misstatement of the entity's financial statements that is more thaninconsequential will not be prevented or detected by the entity's internal control. We consider thedeficiency described in the accompanying schedule of findings and questioned costs [Finding 2007-1] tobe a significant deficiency in internal control over financial reporting.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that material misstatement of the financial statements will not be preventedor detected by the entity's internal control.

Our consideration of the internal control over financial reporting was for the limited purpose described inthe first paragraph of this section and would not necessarily identify all deficiencies in the internal controlthat might be significant deficiencies and, accordingly, would not necessarily disclose all significantdeficiencies that are also considered to be material weaknesses. However, we believe that the significantdeficiency described above is not a material weakness..

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Commission's basic financial statements arefree of material misstatement, we performed tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements, noncompliance with which could have a direct and materialeffect on the determination of financial statement amounts. However, providing an opinion on compliancewith those provisions was not an objective of our audit, and accordingly, we do not express such anopinion. The results of our tests disclosed no instances of noncompliance that are required to be reportedunder Government Auditing Standards.

We noted certain matters that we plan to report to management of the Commission in a separate letter alsodated May 23, 2008.

The Commission's response to the findings identified in our audit are described in the accompanyingschedule of findings and response. We did not audit the Commission's response and, accordingly, weexpress no opinion on it.

This report is intended solely for the information and use of the Board of Commissioners, managementthe City of New Orleans, Louisiana, the Louisiana Legislative Auditor, and federal awarding agencies andis not intended to be and should not be used by anyone other than these specified parties. Under LouisianaRevised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

May 23, 2008

- 3 3 -

INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITHREQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM ANDINTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMBCIRCULAR A-133 AND SCHEDULE OF EXPENDITURES OF FEDERALAWARDS

To the Board of CommissionersAudubon Commission:

Compliance

We have audited the compliance of Audubon Commission (the "Commission"), with the types ofcompliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133Compliance Supplement that are applicable to each of its major federal programs for the year endedDecember 31, 2007. The Commission's major federal programs are identified in the summary of auditor'sresults section of the accompanying schedule of findings and questioned costs. Compliance with therequirements of laws, regulations, contracts and grant agreements applicable to each of its major federalprograms is the responsibility of the Commission's management. Our responsibility is to express anopinion on the Commission's compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133require that we plan and perform the audit to obtain reasonable assurance about whether noncompliancewith the types of compliance requirements referred to above that could have a direct and material effecton a major federal program occurred. An audit includes examining, on a test basis, evidence about theCommission's compliance with those requirements and performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides a reasonable basis for ouropinion. Our audit does not provide a legal determination on the Commission's compliance with thoserequirements.

In our opinion, the Commission complied, in all material respects, with the requirements referred to abovethat are applicable to each of its major federal programs for the year ended December 31, 2007.

Internal Control Over Compliance

The management of the Commission is responsible for establishing and maintaining effective internalcontrol over compliance with requirements of laws, regulations, contracts and grant agreementsapplicable to federal programs. In planning and performing our audit, we considered the Commission'sinternal control over compliance with the requirements that could have a direct and material effect on amajor federal program in order to determine our auditing procedures for the purpose of expressing ouropinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal

control over compliance. Accordingly, we do not express an opinion on the effectiveness of theCommission's internal control over compliance.

A control deficiency in an entity's internal control over compliance exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent or detect noncompliance with a type of compliance requirement of a federal programon a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies,that adversely affects the entity's ability to administer a federal program such that there is more than aremote likelihood that noncompliance with a type of compliance requirement of a federal program that ismore than inconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results inmore than a remote likelihood that material noncompliance with a type of compliance requirement of afederal program will not be prevented or detected by the entity's internal control.

Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and would not necessarily identify all deficiencies in internal control that mightbe significant deficiencies or material weaknesses. We did not identify any deficiencies in internal controlover compliance that we consider to be material weaknesses, as defined above.

Schedule of Expenditures of Federal Awards

We have audited the basic financial statements of the Commission as of and for the years endedDecember 31, 2007 and 2006, and have issued our report thereon dated May 23, 2008. Our audit wasperformed for the purpose of forming an opinion on the basic financial statements taken as a whole. Theaccompanying schedule of expenditures of federal awards is presented for the purpose of additionalanalysis as required by OMB Circular A-133 and is not a required part of the basic financial statements.Such information has been subjected to the auditing procedures applied in our audit of the basic financialstatements and, in our opinion, is fairly stated, in all material respects when considered in relation to thebasic financial statements taken as a whole.

This report is intended solely for the information and use of the Board of Commissioners, management,the City of New Orleans, Louisiana, the Louisiana Legislative Auditor and federal awarding agencies andis not intended to be and should not be used by anyone other than these specified parties. Under LouisianaRevised Statute 24:513, this report is distributed by the Legislative Auditor as a public document.

May 23, 2008

- 3 5 -


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFOR THE YEAR ENDED DECEMBER 31, 2007

Federal Grantor or Pass-throughGrantor and Program Title

U.S. Department of Homeland Security —Federal Emergency Management Agency:

Public Assistance Grants

CFDANumber

97.036

FederalExpenditures

$ 1,379,062

See note to the schedule of expenditures of federal awards.

-36-


NOTE TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDSYEAR ENDED DECEMBER 31, 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying schedule of expenditures of federal activity of theCommission and is presented on the cash basis of accounting. Grant revenues are recorded for financialreporting purposes when the Institute has met the qualifications for OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations..

-37-


SCHEDULE OF FINDINGS AND QUESTIONED COSTSYEAR ENDED DECEMBER 31, 2007

Part I — Summary of Auditor's Results

Financial Statements

Type of auditor's report issued: Unqualifed

Internal control over financial reporting:• Material weakness(es) identified? No

• Significant deficiency(ies) identified thatare not considered to be material weaknesses? Yes

Noncompliance material to financial statements noted? No

Federal Awards

Internal control over major programs:• Material weakness(es) identified? No

• Significant deficiency(ies) identified thatare not considered to be material weaknesses? None Reported

Type of auditor's report issued on compliance for major programs: Unqualifed

Any audit findings disclosed that are required to be reportedin accordance with section 510(a) of OMB Circular A-133? No

Identification of major programs: CFDA Number

Department of Homeland Security - Federal Emergency ManagementAgency 97.036

Dollar threshold used to distinguish between type Aand type B programs: $ 300,000

Auditee qualified as low-risk auditee? No

Part II — Financial Statement Findings Section

Finding 07-1

Issue

A recorded audit adjustment related to the amortization of film costs was determined during the auditprocess that was considered significant. The entry was to increase the amortization of such costs asincomplete factors were used in the calculation of amortization.

Background

The Commission capitalized film costs related to its "Hurricane on the Bayou" IMAX® film and uponissuance of the film in 2006, placed the asset into service. The Commission began amortization of thecosts in 2006 using the individual-film-forecast-computation method. The film was released fordistribution to the Aquarium/IMAX® only in 2006 and for national distribution in 2007. In 2006 only

-38-

Aquarium/IMAX® revenues were generated and therefore used in calculating amortization. In 2007 theamortization was calculated using only Aquarium/IMAX® revenues and excluding revenues generatedfrom national distribution. This error resulted in an audit adjustment that is considered significant to thefinancial statements. Recorded film costs and their amortization are not a part of the Commission'snormal operations and were recorded and calculated first in 2006.

Recommendation

The Commission should implement a detailed review of the recording of infrequent or unusualtransactions including consideration of the relevant accounting literature. The review should include theeffect of such transactions on and disclosures in the financial statements and be performed by a memberof management senior to the preparer.

Management's Response and Corrective Action Plan

The Commission will implement a second review level for infrequent and unusual transactions.Management will review relevant accounting literature related to such transactions.

Part III — Federal Award findings and Questioned Cost Section

The Commission had no findings or questioned costs requiring disclosure for the year endedDecember 31,2007

-39-

Audubon CommissionManagement Letter for theYear Ended December 31, 2007

Deloitte Deloitte & Touche LLPSuite 4200701 Poydras StreetNew Orleans, LA 70139-4200USA

Tel: +1 504 581 2727Fax: +1 504 561 7293www.deloilte.com

May 23, 2008

The Board of CommissionersManagementAudubon CommissionNew Orleans, Louisiana

Dear Members of the Board of Directors:

In planning and performing our audit of the basic financial statements of Audubon Commission("Audubon") as of and for the year ended December 31, 2007 (on which we have issued our reportdated May 23, 2008), in accordance with auditing standards generally accepted in the United States ofAmerica, we considered Audubon's internal control over financial reporting as a basis for designingaudit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of Audubon's internal control over financial reporting. Accordingly, wedo not express an opinion on the effectiveness of Audubon's internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described inthe preceding paragraph and would not necessarily identify all deficiencies in internal control overfinancial reporting that might be significant deficiencies or material weaknesses. However, inconnection with our audit, we identified, and included in the attached Appendix, a matter involving theCompany's internal control over financial reporting that we consider to be a significant deficiencyunder standards established by the American Institute of Certified Public Accountants.

The definitions of a control deficiency, and a significant deficiency, are also set forth in the attachedAppendix A.

Although we have included management's written response to our comments in the attachedAppendix, such responses have not been subjected to the auditing procedures applied in our audit and,accordingly, we do not express an opinion or provide any form of assurance on the appropriateness ofthe responses or the effectiveness of any corrective actions described therein.

This report is intended solely for the information and use of the Board of Commissioners,management, others within the organization, and the State of Louisiana Legislative Auditor and is notintended to be and should not be used by anyone other than these specified parties.

Yours truly,

Member ofDeloitte Touche Tohmatsu

AUDUBON COMMISSION

TABLE OF CONTENTS

Page

APPENDIX A — Current Year Comments:

I. Significant Deficiency 3

II. Definitions 3

APPENDIX B — Prior Year Comments:

Status of Prior Year's Recommendations 4

APPENDIX A

SIGNIFICANT DEFICIENCYAUDUBON COMMISSIONYEAR ENDED DECEMBER 31, 2007

SECTION I — SIGNIFICANT DEFICIENCY

We consider the following deficiency in Audubon's internal control over financial reporting to be asignificant deficiency:

Observation — A recorded audit adjustment related to the amortization of film costs was determined duringthe audit process that was considered significant. The entry was to increase the amortization of such costs asincomplete factors were used in the calculation of amortization.

Background — Audubon capitalized film costs related to its "Hurricane on the Bayou" IMAX® film andupon issuance of the film in 2006, placed the asset into service. Audubon began amortization of the costs in2006 using the individual-film-forecast-computation method. The film was released for distribution to theAquarium IMAX® only in 2006 and for national distribution in 2007. In 2006 only Aquarium IMAX®revenues were generated and therefore used in calculating amortization. In 2007 the amortization wascalculated using only Aquarium IMAX® revenues and excluding revenues generated from nationaldistribution. This error resulted in an audit adjustment that is considered significant to the financialstatements. Recorded film costs and their amortization are not a part of Audubon's normal operations andwere recorded and calculated first in 2006.

Recommendation — Audubon should implement a detailed review of the recording of infrequent orunusual transactions including consideration of the relevant accounting literature. The review should includethe effect of such transactions on and disclosures in the financial statements and be performed by a member ofmanagement senior to the preparer.

Management's Response — Audubon will implement a second review level for infrequent and unusualtransactions. Management will review relevant accounting literature related to such transactions.

SECTION II — DEFINITIONS

The definitions of a control deficiency and a significant deficiency that are established in AU 325,Communicating Internal Control Related Matters Identified in an Audit, are as follows:

A control deficiency exists when the design or operation of a control does not allow management oremployees, in the normal course of performing their assigned functions, to prevent or detect misstatements ona timely basis. A deficiency in design exists when (a) a control necessary to meet the control objective ismissing or (b) an existing control is not properly designed so that even if the control operates as designed, thecontrol objective is not always met. A deficiency in operation exists when a properly designed control doesnot operate as designed, or when the person performing the control does not possess the necessary authorityor qualifications to perform the control effectively.

A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affectsthe entity's ability to initiate, authorize, record, process, or report financial data reliably in accordance withgenerally accepted accounting principles such that there is more than a remote likelihood that a misstatementof the entity's financial statements that is more than inconsequential will not be prevented or detected by theentity's internal control.

APPENDIX B

STATUS OF PRIOR YEAR RECOMMENDATIONS

AUDUBON COMMISSION

STATUS OF PRIOR YEAR'S RECOMMENDATIONSYEAR ENDED DECEMBER 31, 2007

Fixed Assets

Accounts Payable

Procurement Policy for Federal Awards

Risk Assessment

Improvements noted, comment not repeated.




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