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Exploris hits revenue goals

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By Todd Cohen

RALEIGH, N.C. – The Exploris children’s museum in Raleigh says it posted a modest operating surplus in the fiscal year ended June 30 and is revamping its strategy to clarify its focus, boost service to visitors, strengthen its finances and improve communications.

“Our job for the next two years is making sure we have as solid a foundation as we possibly can in order to put us in position to go on to new priorities,” says Anne Bryan, Exploris’ president.

Ticket sales nearly met goals and charitable contributions exceeded goals for the fiscal year, but the museum posted big deficits for its retail store and wholesale crafts business, according to a one-page financial report Exploris has submitted to Wake County.

Overall, Exploris ended the fiscal year with an operating surplus of $10,460 on a budget of $6.1 million.

That surplus depended on cutting spending more than $750,000 for a broad range of operations and programs, saving more than $200,000 owed to Wachovia and other lenders because of declining interest rates, and using $58,619 in reserve funds created through a surplus from Exploris Middle School the previous year to cover one-time repairs at the school.

“I feel pretty good they’ve hit their mark on the revenue side,” says Wake County Manager David Cooke. “On the expenditure side, expenditures are within the revenue streams.”

Still, he says, questions remain about Exploris, a nonprofit museum that received $1.5 million from Wake County for the fiscal year and has faced mounting criticism for its financial performance. Overall, the museum has raised more than $50 million in public and private funds.

Exploris’ board has formed a task force to develop a strategic plan, Bryan says, and its staff is developing new initiatives and already has put some into effect.

Those include efforts to get visitors more involved in the museum as soon as they walk in the door and help them make connections among exhibits, she says.

Cooke says he met with Exploris’ board Aug. 13 and challenged it to decide how it wants to define and measure its success.

“The issue is, is the government investing in something that is successful,” Cooke says, noting that other museums typically receive government subsidies.

Attendance will be a key measure, he says.

“And we need to say whether we’re hitting the mark with it,” he says. “If we hit it, then we ought to be able to say we were successful. If we didn’t hit it, we ought to be able to explain why not or what are we going to do to change that.  That’s what the strategic plan is about.”

According to its one-page report, revenue at Exploris totaled $6,138,585 in the fiscal year ended June 30, while expenses totaled $6,186,744.

Exploris received $1,146,052 in contributed revenue, compared to $1,053,264 it was budgeted to receive.

Those contributions were in addition to $1.5 million Exploris received from the county.

Cooke has asked Exploris in future reports to provide more details on revenues and expenses, particularly for its museum and the IMAX theater it opened last November with $11.9 million in funds from the city and county.

In the financial report for the fiscal year just ended, for example, Exploris says admissions revenue totaled $1,344,151, compared to a budgeted projection of $1,398,476.

But the report does not say how much of that revenue the museum generated and how much IMAX generated.

Rod Brooks, the museum’s vice president for administration, says attendance overall totaled 207,000, compared to 200,000 that Exploris had projected.

Admissions revenue fell short of budgeted projections, he says, because people took greater advantage of discounts than Exploris had expected, slightly lowering the average ticket price.

Exploris’ middle school generated $1,142,066 in revenue but incurred $1,200,686 in expenses, compared to $1,013,952 budgeted for revenue and expenses each.

Exploris intended at the start of the year to use more than $58,000 in reserves from the previous year’s surplus for one-time repairs, Brooks says.

The retail store generated $309,088, compared to $761,430 that was budgeted, and posted $414,763 in expenses, compared to $582,459 that was budgeted.

Bryan says retail sales per visitor were lower than expected because a second store it opened last year in its IMAX theater did not fare as well as its museum store. Many students attended the theater only to see a movie, not to shop, and many theater-goers visited in the evening and had no time to shop, she says.

The museum’s wholesale crafts business generated $242,690 in revenue, compared to $175,000 that was budgeted, and posted $501,514 in expenses, compared to $177,456 that was budgeted.

Bryan says $125,000 worth of inventory – more than half the deficit – had been sold but had to be booked as an expense rather than as revenue because it had not been shipped but still was in Exploris’ warehouse when the fiscal year ended.

The wholesale-crafts deficit stemmed from Exploris’ decisions – not anticipated in the budget — to create a booth at the High Point furniture market and to lease warehouse space in High Point.

Cooke says success at the retail store and crafts business would reduce the need for taxpayer dollars, which he says are intended to support the museum and IMAX theater, not the retail store or crafts business.

Exploris also cut more than $750,000 in spending from budgeted levels for its facilities and technology operations, marketing and publications operations, and a number of programs, including its retail store, IMAX theater, volunteer services, visitor services, group sales, exhibit halls, traveling exhibits, exhibit and group programs and membership.

And Exploris paid only $242,373 in interest on its $5 million line of credit with Wachovia and other lenders, rather than $450,000 it had budgeted, thanks to declining interest rates, Brooks says.

The museum still is working with the banks to renegotiate the terms of the loans, he says.

“The good news is that, with the combination of contributed revenue we got from private donors and the county, along with earned revenue, which was enhanced by the opening of IMAX, we did operate the museum with a surplus of operating revenue over expenses,” Brooks says.

“With lower interest rates, our line-of-credit interest payment was lower than originally budgeted,” he says, adding, “As we went through the year, we monitored the budget to make sure we would stay within our budget.”  

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