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Balance Sheet Grew Stronger in 2004

THE COLONIAL WILLIAMSBURG Foundation's balance sheet grew stronger in 2004. Net assets increased by $51.9 million to $850.3 million at December 31, 2004, as a result of appreciation in the endowment's market value, fund-raising, and the monetization of the Tutter's Pond property, offset by withdrawals from the endowment to support operations.

The endowment return was 11.6 percent, slightly above the return of the Standard and Poor's 500 equity index, thanks to specific asset allocation and investment manager performance. The market value of the endowment was $688.9 million as of December 31, 2004.

Budgeted endowment withdrawals for operations declined by $2.4 million, reflecting an 8 percent decline in the formulaic twelve-quarter average market value of the endowment. The total draw from the endowment was $33.4 million.

Proceeds of the sale of the 350-acre Tutter's Pond property to Riverside Health System were used to reduce debt by $32.75 million. Borrowing funded Williamsburg Lodge renovations, construction of a vehicle maintenance and bus parking facility, and other capital and operating needs. With these adjustments, the foundation's total debt declined $3.7 million.

Operating results in 2004 reflected continuing revenue pressure and an institution in transition. Compared with 2003, operating revenues from admission tickets, hospitality businesses, products, and commercial real estate declined by $2.5 million, or 2 percent, to $139.0 million.

Tickets declined approximately 5 percent, from 768,000 to 729,000. There were related declines in hospitality and retail income, but a 16 percent increase in commercial real estate returns and 11 percent growth in catalog sales partially offset this trend.

The annual Colonial Williamsburg Fund grew by $400,000, or 3 percent.

Operating expenses totaled $216.6 million, down $1.7 million, or 1 percent, versus 2003. Compensation expenses were 3 percent lower, but higher interest expense and a planned increase in advertising partially offset this reduction. These pressures generated an operating deficit of $29.0 million, $3.3 million higher than in 2003.