THE METROPOLITAN OPERA GUILD, INC

THE METROPOLITAN OPERA GUILD, INC.

FINANCIAL STATEMENTS

JUNE 30, 2011 and 2010

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INDEPENDENT AUDITORS' REPORT Board of Directors The Metropolitan Opera Guild, Inc. New York, New York We have audited the accompanying statements of financial position of The Metropolitan Opera Guild, Inc. (the "Guild") as of June 30, 2011 and 2010 and the related statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the Guild's management. Our responsibility is to express an opinion on these 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements enumerated above present fairly, in all material respects, the financial position of The Metropolitan Opera Guild, Inc. as of June 30, 2011 and 2010, and the changes in its net assets and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. New York, New York January 26, 2012


See notes to financial statements 2

Statements of Financial Position June 30, 2011 2010 ASSETS Cash and cash equivalents $ 968,928 $ 573,890 Investments 18,065,083 17,859,868 Accounts receivable, net 333,852 134,808 Contributions receivable 58,500 85,800 Inventory 96,829 78,830 Deposits, deferred expenses, and other assets 285,969 226,333 Property and equipment, net 554,738 525,135 Samuel B. and David Rose Building - lease costs and leasehold

improvements, net 2,968,991 3,132,311 $ 23,332,890 $ 22,616,975 LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses $ 761,961 $ 1,033,681 Deferred revenue: Membership 1,665,344 1,508,593 Miscellaneous 2,143 84,391 Bank line-of-credit 2,400,000 2,000,000 Accrued pension benefit liability 3,511,030 4,451,030 8,340,478 9,077,695 Commitments and contingency (Note M) Net assets: Unrestricted: Unrestricted 11,080,496 9,499,847 Rose Building Fund 3,073,393 3,236,713 Total unrestricted 14,153,889 12,736,560 Temporarily restricted 377,205 341,402 Permanently restricted 461,318 461,318 14,992,412 13,539,280 $ 23,332,890 $ 22,616,975



Statement of Activities Year Ended June 30, 2011 (with summarized financial information for June 30, 2010)

Temporarily Permanently Total Unrestricted Restricted Restricted 2011 2010

Operating activities: Public support and revenue: Publication sales and advertising $ 2,054,946 $ 2,054,946 $ 2,192,148 Education program fees 569,258 569,258 464,053 Special events (including contributions of $433,667 and $460,340 for 2011 and 2010, respectively) 718,070 718,070 673,830 Other income 287,196 287,196 66,554 Membership dues 7,755,583 7,755,583 6,808,963 Contributions (including donated services of $1,999,000 and $2,054,000 for 2011 and 2010, respectively) 3,264,022 $ 260,000 3,524,022 3,320,077 Investment returns based on spending rate 932,000 932,000 831,184 13,526,129 260,000 13,786,129 12,164,661 Total public support and revenue before release of restrictions 15,581,075 260,000 15,841,075 14,356,809 Net assets released from restrictions 327,047 (327,047) 0 0 Total public support and revenue 15,908,122 (67,047) 15,841,075 14,356,809 Expenses: Program services: Donation to Metropolitan Opera Association, Inc. 7,024,249 7,024,249 6,186,023 Costs of publications for members and subscribers 3,883,516 3,883,516 3,655,562 Educational programs 1,907,128 1,907,128 1,743,819 Total program services 12,814,893 12,814,893 11,585,404 Supporting services: Management and general 1,847,034 1,847,034 1,901,119 Fund-raising and membership development: Fund-raising 973,799 973,799 815,907 Membership development 1,999,000 1,999,000 2,094,275 Total fund-raising and membership development 2,972,799 2,972,799 2,910,182 Total expenses 17,634,726 17,634,726 16,396,705 Change in net assets before non-operating activities (1,726,604) (67,047) (1,793,651) (2,039,896) Non-operating activities: Legacies and bequests 4,689 4,689 100,000 Gains in excess of authorized spending rate 2,056,764 102,850 2,159,614 1,349,849 Discontinued merchandising operations (Note N) 0 0 (20,204) Pension-related changes other than periodic costs 1,082,480 1,082,480 (629,362) Change in net assets 1,417,329 35,803 1,453,132 (1,239,613)Net assets, beginning of year 12,736,560 341,402 $ 461,318 13,539,280 14,778,893 Net assets, end of year $ 14,153,889 $ 377,205 $ 461,318 $ 14,992,412 $ 13,539,280



Statement of Activities Year Ended June 30, 2010

Temporarily Permanently Unrestricted Restricted Restricted Total

Operating activities: Public support and revenue: Publication sales and advertising $ 2,192,148 $ 2,192,148 Education program fees 464,053 464,053 Special events (including contributions of $460,340) 673,830 673,830 Other income 66,554 66,554 Membership dues 6,808,963 6,808,963 Contributions (including donated services of $2,054,000) 3,206,081 $ 113,996 3,320,077 Investment returns based on spending rate 831,184 831,184 12,050,665 113,996 12,164,661 Total public support and revenue before release of restrictions 14,242,813 113,996 14,356,809 Net assets released from restrictions 767,433 (767,433) 0 Total public support and revenue 15,010,246 (653,437) 14,356,809 Expenses: Program services: Donation to Metropolitan Opera Association, Inc. 6,186,023 6,186,023 Costs of publications for members and subscribers 3,655,562 3,655,562 Educational programs 1,743,819 1,743,819 Total program services 11,585,404 11,585,404 Supporting services: Management and general 1,901,119 1,901,119 Fund-raising and membership development: Fund-raising 815,907 815,907 Membership development 2,094,275 2,094,275 Total fund-raising and membership development 2,910,182 2,910,182 Total expenses 16,396,705 16,396,705 Change in net assets before non-operating activities (1,386,459) (653,437) (2,039,896) Non-operating activities: Legacies and bequests 100,000 100,000 Gains in excess of authorized spending rate 1,312,606 37,243 1,349,849 Discontinued merchandising operations (Note N) (20,204) (20,204) Pension-related changes other than periodic costs (629,362) (629,362) Decrease in net assets (623,419) (616,194) (1,239,613)Net assets, beginning of year (as restated, see Note A[19]) 13,359,979 957,596 $ 461,318 14,778,893 Net assets, end of year $ 12,736,560 $ 341,402 $ 461,318 $ 13,539,280



Statements of Cash Flows Year Ended June 30, 2011 2010

Cash flows from operating activities: Change in net assets $ 1,453,132 $ (1,239,613) Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation and amortization 274,567 239,210 Net realized gains on investments (3,576,645) (114,378) Net unrealized losses (gains) on investments 741,090 (2,044,392) Expense attributed to doubtful accounts 12,000 Changes in: Accounts receivable (211,044) 329,855 Contributions receivable 27,300 (5,797) Inventory (17,999) (4,991) Deposits, deferred expenses, and other assets (59,636) (29,459) Accounts payable and accrued expenses (271,720) (607,347) Deferred revenue 74,503 (382,466) Accrued pension benefit liability (940,000) 1,058,141 Net cash used in operating activities (2,494,452) (2,801,237) Cash flows from investing activities: Proceeds from sales of investments 18,023,173 6,586,738 Purchases of investments (15,392,833) (6,745,162) Purchases of property and equipment (140,850) (161,482) Net cash provided by (used in) investing activities 2,489,490 (319,906) Cash flows from financing activities: Proceeds from bank line-of-credit 2,400,000 2,000,000 Repayments of bank loan (2,000,000) Net cash provided by financing activities 400,000 2,000,000 Net change in cash and cash equivalents 395,038 (1,121,143) Cash and cash equivalents, beginning of year 573,890 1,695,033 Cash and cash equivalents, end of year $ 968,928 $ 573,890 Supplemental disclosures of cash flow information: Donated services $ 1,999,000 $ 2,054,000 Interest paid during the year $ 22,769 $ 20,191

THE METROPOLITAN OPERA GUILD, INC. Notes to Financial Statements June 30, 2011 and 2010

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NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [1] Organization:

The Metropolitan Opera Guild, Inc. (the "Guild"), incorporated in New York in 1936, is organized (i) to develop, support, and cultivate a wider public interest in the Metropolitan Opera and the art form at-large, (ii) to further musical education and appreciation, and (iii) to sponsor and give assistance to operatic, musical and cultural programs, as well as other activities of an educational character (see also Note J). The Guild provides educational programs for schoolchildren and teachers, as well as for the general public, and seeks grants and contributions from foundations, corporations, and individuals to support its programs. The Guild is a not-for-profit organization and is exempt from federal income taxes under Section 501(c)(3) of the U.S. Internal Revenue Code and from state and local taxes under comparable laws, except for certain types of income subject to unrelated business income tax.

[2] Basis of accounting:

The accompanying financial statements of the Guild have been prepared using the accrual basis of accounting and conform to accounting principles generally accepted in the United States of America as applicable to not-for-profit organizations.

[3] Applicability of NYPMIFA:

In September 2010, New York State enacted the New York Prudent Management of Institutional Funds Act ("NYPMIFA"), the terms of which are applicable to the Guild. NYPMIFA principally addresses (i) the management and investment of all of a not-for-profit entity's "institutional funds" (which are mainly the financial assets of the entity and which exclude programmatic assets such as buildings or operating facilities), and (ii) the appropriations by the governing board of earnings derived from donor restricted endowment funds. In essence, NYPMIFA requires all of the financial resources of the entity to be used in a "prudent" fashion, with the express approval and action of the governing board.

[4] Functional allocation of expenses:

The costs of providing the various programs and the supporting services have been summarized on a functional basis in the accompanying statements of activities. Accordingly, certain costs have been allocated by management, using appropriate measurement methodologies, among the program, management, and fund-raising areas.

[5] Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

[6] Cash equivalents:

For financial-reporting purposes, the Guild considers all highly liquid investments, with maturities of three months or less when purchased, to be cash equivalents. Cash equivalents considered to be part of the Guild's investment portfolio are reflected as investments in the accompanying financial statements.


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NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [7] Investments:

Investments in equity securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the accompanying statements of financial position, with realized and unrealized gains and losses included in the accompanying statements of activities. The Guild's mutual funds are also reported at their fair values, as determined by the related investment manager or advisor. Donated securities are recorded at their fair values at the dates of donation. The Guild has investments in certain not-readily-marketable securities which are ownership interests in certain limited partnerships for which market values are not readily obtainable. Because of the inherent uncertainty of the valuation of these investments, the Guild and its various investment managers monitor their positions to reduce the risk of potential losses due to changes in fair values or the failure of counterparties to perform. The estimated values provided by these managers may differ from actual values had a ready market for these investments existed. Investment transactions are recorded on a trade-date basis. Realized gains or losses on investments are determined by comparison of the average cost of acquisition to proceeds at the time of disposition. The earnings from dividends and interest are recognized when earned. Investment expenses include the services of bank trustees, investment managers and custodians. The balances of investment management fees disclosed in Note B are those specific fees charged by the Guild's various investment managers in each fiscal year; however, they do not include those fees that are embedded in various other investment accounts and transactions.

[8] Property and equipment: Property and equipment are reported at their original costs or, if contributed, at their fair values at the dates of donation. Depreciation is provided over estimated useful lives ranging from five to ten years. Likewise, leasehold improvements are amortized over the terms of the underlying leases. Depreciation and amortization are calculated using the straight-line method.

[9] Inventory: Inventory consists of paper held for use in printing Opera News magazine. The Guild reports all inventory at the lower of cost or market value, with cost determined using the first-in, first-out ("FIFO") method.

[10] Collections: The Guild maintains a collection of various opera memorabilia. The Guild has chosen not to capitalize the basis of these items and therefore, the cost or value of the collection is not included in the accompanying statements of financial position. Purchases of collection items are recorded as expenses in the year in which the items are purchased. Likewise, contributed collection items are not included in the accompanying statements of financial position. The Guild reviews its collections and may periodically acquire or deaccess items. Proceeds from deaccessions are classified as unrestricted, except when donor restrictions apply.

[11] Accrued vacation: Accrued vacation is included as a liability in the accompanying financial statements and represents the Guild's obligation for the cost of unused employee vacation time payable in the event of employee terminations; the obligation is recalculated every year. At June 30 2011 and 2010, the accrued vacation obligation was estimated to be approximately $223,000 and $216,000, respectively.


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NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[12] Net assets: The Guild's net assets and its revenue, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, the net assets of the Guild and changes therein are reported as follows: (a) Unrestricted:

Unrestricted net assets represent those resources available for current operations. The Board of Directors has designated a portion of unrestricted net assets to serve as an endowment of the Guild to provide reserves for programs and operations.

(b) Temporarily restricted: Temporarily restricted net assets represent those resources that are subject to the requirements of NYPMIFA and the use of which has been restricted by donors to specific purposes and/or the passage of time. When a donor restriction expires, that is, when a stipulated time restriction ends, a purpose restriction is accomplished, or funds are appropriated through an action of the Board of Directors, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the accompanying statements of activities as net assets released from restrictions.

(c) Permanently restricted: Permanently restricted net assets represent those resources the principal of which is originally restricted into perpetuity by its donors. The purposes for which the income and net capital appreciation arising from the underlying assets may be used depend on the wishes of that donor. Under the terms of NYPMIFA, those earnings are classified as temporarily restricted in the accompanying statements of activities, pending appropriation by the Board of Directors.

[13] Membership dues: Amounts received from members consist of (i) payments for the privileges of membership and (ii) tax deductible contributions to the Guild. A portion of membership dues is deferred and recognized as income upon the publication of Opera News magazine. The remainder is recognized as income in the period in which it is received.

[14] Publication sales:

Payments for subscriptions to Opera News magazine are recognized as income over the period during which the subscriptions are fulfilled.

[15] Contributions: Contributions are recorded as revenue upon the receipt of cash or unconditional pledges. Contributions are considered available for unrestricted use, unless specifically restricted by the donor. Conditional contributions are recorded when the specified conditions have been met. The Guild reports contributions in the temporarily or permanently restricted net-asset class if they are received with donor stipulations or time considerations as to their use. When a donor's restriction is met, that is, when a stipulated time restriction ends or the purpose of the restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the accompanying statements of activities as "net assets released from restrictions."


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NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

[16] Contributed services:

Those services contributed to the Guild that meet the requirements for recognition are reported as both revenue and expense in the accompanying statements of activities, at amounts determined by management to be reasonable for obtaining such services (see Note J).

[17] Advertising:

The Guild expenses the costs of advertising, including merchandise advertising through catalogues, as incurred. Advertising expense for the years ended June 30, 2011 and 2010 was approximately $325,000 and $311,000, respectively.

[18] Measure of operations: The Guild includes in its definition of operations all revenues and expenses that are an integral part of its programs and supporting activities, including an authorized investment allocation. Legacies, bequests and investment income, including net realized and unrealized gains and losses earned in excess or deficit of the Guild's authorized spending limit, is recognized as a part of non-operating activities.

[19] Restatement:

The beginning net assets for the fiscal-year 2010 have been restated to conform to donor intent. Previously unrestricted net assets of $35,000 have been reclassified to permanently restricted net assets.

[20] Reclassification:

Certain amounts in the prior year's financial statements have been reclassified to conform to the current year's presentation.

[21] Income tax uncertainties:

The Guild is subject to the provisions of the Financial Accounting Standards Board's Accounting Standards Codification ("ASC") Topic 740-10-05 relating to accounting and reporting for uncertainty in income taxes. Since the Guild has always recorded the potential tax liability for excise and unrelated business tax, and due to its general not-for-profit status, ASC 740-10-05 has not had, and is not anticipated to have, a material impact on the Guild's financial statements.

[22] Fair-value measurement:

As further described in Note B, the Guild reports a fair-value measurement of all applicable financial assets and liabilities, including investments, receivables, and short-term payables.

[23] Endowment funds:

The Guild reports all applicable disclosures of its funds treated as endowment, both donor-restricted and board-designated.

[24] Subsequent events:

The Guild considers all of the accounting treatments, and the related disclosures in the current fiscal-year's financial statements, that may be required as the result of all events or transactions that occur after fiscal year-end through the date of the independent auditors' report.


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NOTE B - INVESTMENTS At each fiscal year-end, investments consisted of the following:

June 30, 2011 2010 Fair Fair Value Cost Value Cost Cash and cash equivalents $ 884,512 $ 884,512 $ 239,136 $ 239,136 Fixed-income securities 1,720,838 1,708,339 Mutual funds 10,059,875 9,983,711 2,287,845 2,249,833 Equity securities 1,055,373 1,057,477 4,979,717 4,674,262 Alternative investments 4,344,485 2,581,809 10,353,170 8,106,312 $ 18,065,083 $ 16,215,848 $ 17,859,868 $ 15,269,543

During each fiscal year, investment earnings/(losses) consisted of the following:

Year Ended June 30, 2011 Temporarily Unrestricted Restricted Total Interest and dividends $ 320,469 $ 11,028 $ 331,497 Net realized gains on sales of investments 3,457,659 118,986 3,576,645 Net unrealized losses on investments (716,436) (24,654) (741,090) Investment fees (72,928) (2,510) (75,438) 2,988,764 102,850 3,091,614 Investment returns based on spending rate (932,000) (932,000) Gains in excess of authorized spending rate $ 2,056,764 $ 102,850 $ 2,159,614

Year Ended June 30, 2010 Temporarily Unrestricted Restricted Total Interest and dividends $ 107,385 $ 4,565 $ 111,950 Net realized gains on sales of investments 109,862 4,516 114,378 Net unrealized gains on investments 2,010,845 33,547 2,044,392 Investment fees (84,678) (5,009) (89,687) 2,143,414 37,619 2,181,033 Investment returns based on spending rate (831,184) (831,184) Gains in excess of authorized spending rate $ 1,312,230 $ 37,619 $ 1,349,849

The Guild determined that 5% of the average fair value of investments, based on a moving average of the preceding four quarters, calculated quarterly at the rate of 1.25% per period, is a reasonable amount of investment income to be used to fund current operations. The Guild utilized investment income for current operations of approximately $932,000 and $831,200 in fiscal-years 2011 and 2010, respectively. During fiscal-year 2011, the Board approved spending an additional $1,982,833 to meet interim requirements.


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NOTE B - INVESTMENTS (CONTINUED) ASC 820-10-05 establishes a three-level valuation hierarchy of fair-value measurements. These valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. These two types of inputs create the following fair-value hierarchy:

Level 1: Valuations are based on observable inputs that reflect quoted market prices in active markets for identical assets and liabilities at the reporting date. The types of investments and other assets included in Level 1 are exchange-traded equity and debt securities, short-term money-market funds, and actively traded obligations issued by the U.S. government and government agencies.

Level 2: Valuations are based on (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted

prices for identical or similar assets or liabilities in markets that are not active, or (iii) pricing inputs other than quoted prices that are directly or indirectly observable at the reporting date. Level 2 assets include other U.S. government and agency securities and corporate equity and debt securities that are redeemable at or near the balance sheet date and for which a model was derived for valuation.

Level 3: Fair value is determined based on pricing inputs that are unobservable and includes situations

where there is little, if any, market activity for the asset or liability. Level 3 assets include securities in privately held companies, secured notes, private corporate bonds, and limited partnerships, the underlying investments of which cannot be independently valued, or cannot be immediately redeemed at or near the fiscal year-end.

Investments classified in Level 3 consist of shares or units in investment funds as opposed to direct interests in the funds' underlying holdings, which may be marketable. Because the net-asset value reported by each fund is used as a practical expedient to estimate fair value of the Guild's interest therein, its classification in Level 3 is based on the Guild's ability to redeem its interest at or near fiscal year-end. If the interest can be redeemed in the near term, the investment is classified as Level 2. The classification of investments in the fair-value hierarchy is not necessarily an indication of the risks, liquidity, or degree of difficulty in estimating the fair value of each investment's underlying assets and liabilities. The following table summarizes the fair values of the Guild's assets at each fiscal year-end:

June 30, 2011

Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 884,512 $ 884,512 Fixed-income securities $ 1,720,838 1,720,838 Mutual funds 10,059,875 10,059,875 Equity securities 1,055,373 1,055,373 Alternative investments $ 4,344,485 4,344,485 Total $ 11,999,760 $ 1,720,838 $ 4,344,485 $ 18,065,083

June 30, 2010

Level 1 Level 3 Total Cash and cash equivalents $ 239,136 $ 239,136 Mutual funds 2,287,845 2,287,845 Equity securities 4,979,717 4,979,717 Alternative investments $ 10,353,170 10,353,170 Total $7,506,698 $ 10,353,170 $ 17,859,868


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NOTE B - INVESTMENTS (CONTINUED) The following table presents the Guild's reconciliation of Level 3 at each fiscal year-end: June 30, 2011 2010 Beginning balance - July 1 $ 10,353,170 $ 10,608,131Additional subscriptions - 2,000,000Withdrawals (7,396,716) (3,613,842)Realized gains 1,872,213 -Unrealized (losses) gains (484,182) 1,358,881 Ending balance - June 30 $ 4,344,485 $ 10,353,170 The following table lists investments in other investment companies by major category:

June 30, 2011 Unfunded Redemption Redemption

Fair Value Commitments Frequency Notice Period Alternative investments in limited partnerships: Farallon Capital Institutional Partners $ 2,499,898 None Annual 45 days OSS Overseas Limited 180,475 None Quarterly 45 days Crestline Offshore Fund Limited 1,664,112 None Quarterly 95 days $ 4,344,485 NOTE C - PROPERTY AND EQUIPMENT At each fiscal year-end, property and equipment consisted of the following:

June 30, 2011 2010 Computer equipment $ 876,183 $ 735,333 Leasehold improvements 235,808 235,808 Furniture, fixtures, and operating equipment 100,122 100,122 1,212,113 1,071,263 Less accumulated depreciation and amortization (657,375) (546,128) $ 554,738 $ 525,135

In fiscal-years 2011 and 2010, depreciation and amortization expense was $111,247 and $75,890, respectively.


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NOTE D - SAMUEL B. AND DAVID ROSE BUILDING In May 1987, the Guild entered into an agreement with certain organizations that now occupy the Samuel B. and David Rose Building (the "Rose Building"), which is owned by Lincoln Center (see Note M). Under terms of the agreement, the Guild pays a portion of the building's maintenance costs. Capitalized lease costs and leasehold improvements and furniture and fixtures of $2,968,991 and $3,132,311 at June 30, 2011 and 2010, respectively, included on a net basis in the accompanying statements of financial position, are depreciated or amortized using the straight-line method over the estimated useful lives of the underlying assets. During fiscal-years 2011 and 2010, depreciation and amortization expense associated with the building was $163,320 for each fiscal year. NOTE E - RECEIVABLES

[1] Contributions receivable:

At June 30, 2011 and 2010, the Guild's contributions receivable consisted of unconditional promises to give, primarily in the form of pledges, grants and bequests. Amounts are scheduled to be received within one year. Management believes these are fully collectible and, accordingly, has not provided a reserve for uncollectible accounts.

[2] Accounts receivable:

At each fiscal year-end, other receivables consisted of amounts due to the Guild for exchange-type transactions. All amounts are due within one year. Based on management's past experience, for fiscal years ended June 30, 2011 and 2010, respectively, approximately $41,000 and $29,000 of accounts receivable were reserved for uncollectible accounts.

NOTE F - TEMPORARILY RESTRICTED NET ASSETS At each fiscal year-end, temporarily restricted net assets (including allocation of investment gains and losses) were categorized as follows:

June 30,

2011 2010 Education $ 294,000 $ 274,533 Community programs 10,000 10,000 Opera memorabilia 73,205 56,869 $ 377,205 $ 341,402

During each fiscal year, net assets released from restrictions were for the following:

Year Ended June 30,

2011 2010 Education $ 238,493 $ 705,306 Community programs 10,000 10,000 Other 1,026 248,493 716,332 Recovery of funds with deficiencies 78,554 51,101 $ 327,047 $ 767,433


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NOTE G - PERMANENTLY RESTRICTED NET ASSETS At each fiscal year-end, net assets were permanently restricted to support the following purposes:

June 30,

2011 2010 Education $ 435,000 $ 435,000 Opera memorabilia 26,318 26,318 $ 461,318 $ 461,318

NOTE H - ACCOUNTING AND REPORTING FOR ENDOWMENTS [1] The endowments:

The Guild's endowments consist of three donor-restricted funds and four board-designated funds, established for a variety of purposes.

[2] Interpretation of relevant law:

As discussed in Note A[3], NYPMIFA is applicable to all of the Guild's institutional funds, including its donor-restricted and board-designated endowment funds. The Board of Directors will continue to adhere to NYPMIFA's requirements.

[3] Endowment net-asset composition by type of fund:

June 30, 2011 (NYPMIFA) Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ (65,587) $ 58,575 $ 461,318 $ 454,306 Board-designated funds 9,444,935 9,444,935 Total funds $ 9,379,348 $ 58,575 $ 461,318 $ 9,899,241

June 30, 2010 (UMIFA) Temporarily Permanently Unrestricted Restricted Restricted Total Donor-restricted endowment funds $ (144,141) $ 47,772 $ 461,318 $ 364,949 Board-designated funds 9,691,825 9,691,825 Total funds $ 9,547,684 $ 47,772 $ 461,318 $ 10,056,774


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NOTE H - ACCOUNTING AND REPORTING FOR ENDOWMENTS (CONTINUED) [4] Changes in endowment net assets:

Year Ended June 30, 2011 (NYPMIFA) Unrestricted Temporarily Permanently Losses Unrestricted Restricted Restricted Total Net assets, beginning of the year $ (144,141) $ 9,691,825 $ 47,772 $ 461,318 $ 10,056,774 Investment income 1,901,847 102,850 2,004,697 Appropriation of endowment assets for expenditure (2,148,737) (13,493) (2,162,230) Recovery of funds with deficiencies 78,554 (78,554) 0 Net assets, end of the year $ (65,587) $ 9,444,935 $ 58,575 $ 461,318 $ 9,899,241 Year Ended June 30, 2010 (UMIFA) Unrestricted Temporarily Permanently Losses Unrestricted Restricted Restricted Total Net assets, beginning of the year $ (195,242) $ 8,897,290 $ 44,135 $ 461,318 $ 9,207,501 Investment income 1,988,863 55,196 2,044,059 Appropriation of endowment assets for expenditure (1,194,328) (458) (1,194,786) Recovery of funds with deficiencies 51,101 (51,101) 0 Net assets, end of the year $ (144,141) $ 9,691,825 $ 47,772 $ 461,318 $ 10,056,774 [5] Funds with deficiencies:

Due to unfavorable market fluctuations, from time to time the fair value of assets associated with individual donor-restricted endowment funds may decline below the historical dollar value of the donor's original, permanently restricted contribution. At June 30, 2011 and 2010 deficiencies of this nature that are reported in unrestricted net assets amounted to $65,587 and $144,141, respectively. Under the terms of NYPMIFA, the Guild has no responsibility to restore such decrease in value.

[6] Return objectives and risk parameters: The overall financial objective of the endowment assets is to provide the operations of the Guild with a relatively stable stream of spendable revenue.

[7] Strategies employed for achieving objectives:

To satisfy its long-term, rate-of-return objectives, the Guild relies on a total-return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Guild targets a diversified asset allocation to achieve its long-term return objectives within prudent risk constraints.

[8] Spending policy and relationships with investment objectives:

When authorized by the Board of Directors, the Guild may, at its discretion, draw up to 5% annually of the total market value of the endowment assets, calculated on a 15-month rolling average.


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NOTE I - RETIREMENT PLANS [1] Defined-benefit retirement plan:

The Guild has a defined-benefit retirement plan covering substantially all of its full-time employees. The benefits are based on years of services and each employee's compensation during the last five years of employment. The Guild's funding policy is to contribute annually to the plan in amounts not less than the minimum statutory funding requirements. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. The Guild contributed $300,033 to the plan during fiscal-year 2011. The measurement date used to determine pension benefits was June 30, 2010. The estimated contribution required by the Guild for the plan year ending June 30, 2012 is $712,000.

The plan assets are managed in a global tactical allocation fund which may invest in index funds, long and short positions in foreign and domestic financial futures, options and foreign currency forward contracts. The investment objective is to exceed the performance of the returns on a static mix of 60% Morgan Stanley Capital International World Index (50% hedged into the U.S. dollar) and 40% Citigroup World Government Bond Index (50% hedged into U.S. dollar). At each fiscal year-end, plan assets were invested as follows:

June 30, 2011 2010 Fair % Fair % Value Cost Total Value Cost Total Cash and cash equivalents $ 57,023 $ 57,023 0% $ (11,927) $ (11,927) 0%Mutual funds 6,315,027 6,231,991 90% 3,670,113 2,248,054 60%Exchange traded index funds 614,534 598,697 10% - - 0%Funds of Funds - - 0% 2,430,379 2,934,507 40% $ 6,986,584 $ 6,887,711 100% $ 6,088,565 $ 5,170,634 100%

The following table sets forth the plan's unfunded status at each fiscal-year end:

June 30, 2011 2010 Accumulated benefit obligation $ (9,987,278) $ (9,607,626) Projected benefit obligation at end of year $ (10,497,614) $ (10,539,595) Fair value of plan assets at end of year 6,986,584 6,088,565 Deficit of plan assets $ (3,511,030) $ (4,451,030) Accrued benefit obligation in the statement of financial position $ (3,511,030) $ (4,451,030)


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NOTE I - RETIREMENT PLANS (CONTINUED) [1] Defined-benefit retirement plan: (continued)

Amounts recognized in changes in unrestricted net assets at each fiscal year-end:

June 30, 2011 2010 Net gains $ 1,078,717 $ (633,125) Prior service cost 3,763 3,763 $ 1,082,480 $ (629,362)

Assumptions used to measure benefit obligations at each fiscal year-end:

June 30, 2011 2010 Weighted-average assumption: Discounted rate 5.37% 5.22% Expected rate of return on plan assets 8.00% 8.00% Rate of compensation increase 3.00% 3.00%

Benefits cost $ 442,513 $ 428,779 Benefits paid $ 345,199 $ 380,966 Components of net periodic benefit cost: Service cost $ 198,554 $ 171,955 Interest cost 540,311 542,720 Expected return on plan assets (491,629) (434,523) Amortization of unrecognized actuarial loss 191,514 144,864 Amortization of prior service cost 3,763 3,763 Net periodic benefit cost $ 442,513 $ 428,779

Assumptions used to measure net periodic benefit cost at each fiscal year-end:

June 30, 2011 2010 Discount rate 5.37% 5.22% Expected rate of return on plan assets 8.00% 8.00% Rate of compensation increase 3.00% 3.00%


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NOTE I - RETIREMENT PLANS (CONTINUED) [1] Defined-benefit retirement plan: (continued)

The expected benefits to be made under the plan for retirees, former members entitled to deferred benefits, and currently active employees are as follows:

Fiscal Year Amount 2012 $ 420,512 2013 426,602 2014 434,264 2015 452,222 2016 574,539 2017 - 2021 3,221,956 $ 5,530,095

[2] Defined-contribution retirement plan:

The Guild maintains a defined-contribution pension plan operating under Section 403(b) of the Internal Revenue Code for the benefit of all eligible employees. All employees are eligible to participate upon employment with the Guild. The Guild does not match contributions to this plan.

NOTE J - RELATED-PARTY TRANSACTIONS The Metropolitan Opera Association, Inc. (the "Met") is an independent not-for-profit membership organization that maintains the Guild's membership records and provides membership development at no charge to the Guild. In addition, the Managing Director of the Guild is also the Assistant Manager of Operations of the Met, and both organizational governing boards share certain directors in common. Although the Guild and the Met have some common interests, they are separate corporate entities, are engaged in different activities, and do not meet the criteria for the consolidation of their financial statements under generally accepted accounting principles. In fiscal-years 2011 and 2010, the Guild made unrestricted contributions to the Met of $7,024,249 and $6,186,023, respectively. In fiscal-years 2011 and 2010, the Met contributed services for membership development to the Guild which are recognized in the accompanying statements of activities at a value of approximately $1,999,000 and $2,054,000, respectively. During 2011, the Met gave the Guild $250,000 to offset the previously incurred costs of the discontinued merchandising operations (see also Note N). At June 30, 2010, approximately $145,000 was included in the Guild's accounts payable and accrued expenses in the accompanying statements of financial position as due to the Met consisting principally of accrued donations and rent. NOTE K - BANK LINE-OF-CREDIT During 2011, the Guild refinanced an existing $2,000,000 bank line-of-credit and established a new bank line-of-credit that provides up to $5,000,000 for operations, bears interest (at the 3-month LIBOR plus 1.25%), and expires on January 31, 2013. The bank-line-of-credit is secured by an amount equivalent to outstanding borrowings from the Guild's investment portfolio. At June 30, 2011, the Guild had $2,400,000 in outstanding borrowings.


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NOTE L - CONCENTRATIONS OF CREDIT RISK The Guild maintains its cash in non-interest-bearing accounts on which there is currently no limit on federal insurance. The Guild's investments are held at major financial institutions, and management believes that there is no significant risk of loss by reason of the institutions' failures. NOTE M - COMMITMENTS AND CONTINGENCY [1] Leases:

The Guild entered into an agreement with Lincoln Center to lease space in the Rose Building for a period of 99 years (ending December 31, 2085), and the lease agreement can be renewed for any number of terms of 99 years. The Guild paid maintenance of approximately $294,620 and $292,500 in fiscal-years 2011 and 2010, respectively, based on its proportionate share of the costs of operating and maintaining the building. Rental expense, exclusive of that for the Rose Building, was approximately $55,339 and $51,500 in fiscal-years 2011 and 2010, respectively.

[2] Government-funded activities: Government-funded activities are subject to audit by the applicable granting agencies. At June 30, 2011, there were no material obligations outstanding as a result of such audits, and management believes that unaudited projects would not result in any material obligation.

NOTE N - DISCONTINUED MERCHANDISING OPERATIONS During fiscal-year 2008, the Guild discontinued operations of the Opera Store. During fiscal-year 2010, the Guild recognized severance payments $20,441 in relation to the Opera Store's closing. During fiscal-year 2011, the Met gave the Guild $250,000 to offset the previously incurred costs of the discontinued merchandising operations (see Note J).


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NOTE O - DONATIONS AND EXPENSES Donations and expenses were as follows:

June 30, 2011 2010 Donations: Donation to the Metropolitan Opera Association, Inc. $ 7,024,249 $ 6,186,023 Expenses: Compensation and benefits 4,083,875 3,522,903 Printing and paper 587,361 690,089 Promotion and advertising 418,696 419,725 Mailing, postage and shipping 495,256 549,321 Occupancy costs 349,959 344,017 Art and editorial 526,851 505,435 Supplies, equipment, and equipment maintenance 124,540 139,030 Student performances and lectures 434,721 505,362 Data processing 67,461 79,358 Telephone 33,183 34,958 Professional fees 155,230 140,181 Depreciation and amortization 274,567 239,210 Other 1,059,777 987,093 Value of contributed services 1,999,000 2,054,000 $ 17,634,726 $ 16,396,705

For fiscal-years 2011 and 2010, the Guild recognized approximately $286,000 and $200,000, respectively, of costs of direct benefit to donors for special events. These costs are included in fund-raising expenses in the accompanying statements of activities.

Documents

THE METROPOLITAN OPERA GUILD, INC