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U~O ~OP~D ~ OF Washington, DC September 2%, A meeting of the USO World Board of Governors was held in Washington, DC on September 29, 1993 at i0:00 am. General Bernard W. Rogers, USA (Ret.), Chairman of the USO World Board of Governors, acted as Chairman of the meeting. The Chairman called the meeting to order. %~ne foll~wing B~ardmembers were present representing an official q~orum of the Board: Hon. Jerry L. Calhoun Hon. Chapman B. Cox John B. Damoose Hon. Ruth M. Davis Charles W. Dyke, LTG, USA (Pat.) RADM J. H. Flatley, IiI, USN (Ret.) Hon. Don FUqua Mary B. Galvin Hon. Grant S. Green, Jr. Charles P. Grier Frau Helga Haub (Represented by Bill Vitulli) Gen. Robert T. Herres, USAF (Ret.) ETCM(SW) John Hagan, USN Wilhelm C. Kast Robert P. Kelsey, Jr. Sgt. Maj. Richard A. Kidd, USA Stephen K. Lambright, Esq. (Represented by Wiley Harrell) MCPO R. Jay Lloyd, USCG Bruce G. Nitsche R. K~ndall Nottingham Sgt. Maj. H. G. Overstreet, USMC Gen. Bernar~W. R~gers, USA (Ret.) VADM William H. Rowden, USN (Ret.) Stephen M. Ryan, Jr. Mary G. Sethness Lee J. Stiilwell Ma~ha C. Sundquist Alfred W. Swan, Jr. John J. Tedesco William Tucker James E. Turner, Jr. Rudolph A. Vignone Gen. Carl E. V~ono, USA (Ret.) Morris Wax James F. Williams James Wood (Rep. by Bill Vitulli) Maj. Gen. Matthew A. Zimmerman,USA Gen. Rogers thanked Jim Williams and Coca Cola for the previous evening buffet. He advised that the Army Chief of Staff attended and gave remarks. P~ welcomed Board ~ers attending for the first time: John Damoose; MCPO John Hagan, USN; MCPO Jay Lloyd, USCG; and S~ Maj Harold Overstreet, USMC. P~ also wel~ed W!l~ Ha~ll (representing Anhe~ser-Bus~ for Steve Lambright), Bill Vitu111 (representing Helga Haub and Jim Woods), Ron Glass (President, Federated Foods), ~ert Stuart and Gary Landwirth (Give Kids The World), LTC Dave Mi;tchell (Chief, Armed Forces Professional Entertainment Office), and Mary Sethness" daughter. Minutes of the Board of Governors meeti~ of May 13, 1993, havin~ been maile~ to the Boaz~ of Governors ~o weeks prior to the meeting date, were approved as written.

The Hon. Grant S. Green, Jr., representing Gen. Lawrence A. Skantze, USAF (Ret.), Chairman, gave the report. It was mo~ed, seconded and carried that the following individual be elected to the US0 World Board of Governors, by virtue of his office and in accordance with the By-laws. Hon. Edwin Dorn Assistant Secretary of Defense (Personnel and Readiness) It was move~, seconded and carried that the foll~wing individual be electe~ to the USO World Board of Governors as an honorary member. Gen. Colin L. Powell, USA Chairman, Joint Chiefs of Staff Finance VADM William H. Rowden, USN (Ret.) reported that the financial condition of the US0 is satisfactory with the revenues being on budget and the expenses being below budget by approximately $1 million. He stated that there is a surplus of $939,000 against a budgeted fiqu~ of a loss of $195,000 indicating a total favorable variance of approximately $I.i million. VADM Rowden mentioned that the figures presented are for Headquarters only and did not include activities for the USO centers worldwide. Finally, ~e projected surplus for Headquarters will be $200,000 this year, which is below the surplus projected at the beginning of the year. VADM Rbwden discussed the restricted revenues. Again, the revenues are on budget and expenses are well behind budget with expenses being about 60% of the budget figure. He cautioned that the expenditure figure will increase because of several suh~l.a~ip p~ymmr#~s ~.at a~ed~e. H~wever, the ~ense figures will be well within the budgeted figures and there will be a surplus at the end of ~the year. He fo~sed next on the balance sheet for the USO with total assets being constant at approximately $15.6 million. He remarke~ that ~ slight ~ecllne cf $1 million in liability improved the fum~balanoes by approximately $1million. ~Bx~w~enreporte~thatthe internal audits conducted at five USO centers this ~rterwere fottnd to be favorable aD~ within the ~ of what is expected within the organisation. TI38922478

Although there are deficiencies, they can be corrected t~hrough a combination of headquarters and field actions. Development & Marketin,q Mr. R. Kendall Nottingham, C~hairman, Development & Marketing Committee, reviewed the various types of revenue under the purview of the Development and Marketing Department. The direct response program, which is the solicitation of funds through mailing is currently on budget and is expected to reach revenue goals for year-en~. Expansion of the do~r file has been positive ~er the last six to ni_~e mo~ths. With encouraging results in expanding USO's donor file, management is re- evaluating the .efforts put forth in expanding the donor files. Expanding the list of donors is very impo~ant to the organization ~erall because the current base file is very aged. Without new names added to the donor file, over time the file will decease with natural attrition. The annual fund has achieved $ii million of the Phase I goal of $12 million. The United Way revenue is still declining. The Combined Pedera! Campaign raises about $10 million from overseas activities. USO receives less than 2 percent of the total revenue. Management has decided to increase activity through public relations and operating centers located overseas to increase the specificCFC designation of the donation to the USO. Mr. Nottingham gave an overview of "Give Kids The World", outlining the ~ose of the program. USO has sta~ed to raise revenue to fund participation by military families with terminally ill children in "Give Kids The World". USO hopes to raise enough revenue to sponsor 20 to 25 familles in a one-year pilot program. Mr. Nottingham reviewed the status of the USO Christmas Gala Celebration. Mr. Nottingham outlined the entertainment theme and awards. Mr. Nottingham reported that the "Always Home" brand has been in~vel~nt for the past two to three years. Two i~po~ant steps have occurred since May of this year. First, after a source selection process, management has ~etermined that Federated Foods, a Chicago age~y, will p~ide ~he expe~ assistance needed to expand a two-brand program to a private label program. Federate~ Foods" role will be brand management, quality assu~nue, marketi~ an~ strategic planning. Mr. Nottingham reviewedthe payment structure of brand revenue. A gross fee of 4% is ~ivi~ed in half allott~ 2% each to Federate~ F~ods and~SO. The ~SO's 2% is then subdivided; 5~% will c~ to USO; 25% will be distributed to the local MWR facility wherever the c~ssary is located; am~ th~ re~almi~g 25% will be distributed to the local USO center nearest the c~m~issary. TI38922479

Mr. Nottingham reported on t~he "Affinity Card- for USO. outlined the various ways of marketing the credit card. He The USO Travel Agency has been moving forward with no new changes since the last board meeting. USO and AT&T are conducting a program called "Countdown to IStardom". This contest involves 22 military installations conducting a talent search of active duty military personnel choosing first, second and third prize winners. In addition to this program, AT&T will continue to offer 5 entertainment t~rs. American InterD~tional Group, Inc. will also Continue funding • entertai~t tours. Program &. C~uncil Relations Charles W. Dyke, LTG, USA (Ret.), Chairman, Program and Council Relations, provided the report. General Dyke remarked that entertainment continues to be a very important part of the programs offered by USO, and that the tours are also a very important part of the USO image. He added that several tours had recently been completed which included the "R&B Live" tour, Char!ie Daniel's visit to the USS Theodore ~mosevelt and the USO Comedy tour. Other tours are currently being scheduled including the Dallas Cowboy Cheerleaders who will travel to the Pacific in early December 1993. General Dyke added that US0 is trying to reduce the entertai.nment subsidy provided by USO World Headquarters. The goal is to become completely funded by corporate sponsorship. This issue was addressed in th.e US0 Five Year Plan. U$O's ultimate objective'is to provide maximum service to the troops at minimal cost. The "USO/AT&T Countdown to Stardom" talent search is an opportunity for servicemembers overseas to win a major label recording session. He added that this program has been very well received in the field. U.S. affiliates are currently working in closer harmony with World USO than at any time in the past. There is now a close interaction a~ exchange of ideas. All domestic affiliate charters are up. to date. The Mid-Amerlca Region representatives of the Board- Affiliate Advisory Council (BAAC) met in St. Louis on June 29, 1993. The gr~u~ ~isc~ss.e~ ways in which W~rl~ USO am~ domestic affiliates ca~ strenqthen their ties an~exc~e i~eas.

General Dyke then moved that the Charters of James S. McDonmall USO, Inc., USO of the Pikes Peak Region, Inc. and USO of Northern California, Inc. be renewed for three years. He additio~ally ~oved that the Charters for USO of Hawaii, Inc., USO of Puget Sound, Inc. a~nd USO of Kentucky, Inc. be renewed for one year. Mo~ed, seconded, and carried. USO of Delaware, Inc. will be independent as of January i, 1994. Also, the USO of Greater Ft. Lauderdale, Inc. is still in the process of closiI~g. T~nere is one issue that is being resolved with the Internal ~venu.e Service. Following resolution, the corporation will dissolve. uso of the Greater Los Angeles Area, Inc. officials and members of the Board of Governors will meet in L~s A~ngeles in November in an attempt to resolve several issues regarding Charter Agreement requirements and provision of Army Grant records to World Uso. In overseas operations USO Frankfurt and USO Weisbaden have merged. The new name of this operation is the USO of ~ein Main Area. USO Fulda will close operations. As the military drawdown in Europe continues, uSO resources will be placed where they may best serve the community. Headquarters programs are running well. The Budweiser/USO Scholarship and Vinson Foundation Scholarship are being promoted through General Dyke's letters to the Chiefs o.f the Services. Genes1 Dyke wiil also write letters to the Public Affairs Officers. The Desert Storm Education Funds were provided to ensure higher education for the surviving family members of those killed in the Desert Storm conflict. The actuarial study which was performed to determine a schedule by which recipients would be paid has been reviewe~. The Committee has agreed .that this scholarship is being invested and paid in a financially sound and conservative manner. General Dyke introduo~azy Lan~wirth, Dire=tot of Operations and R~bert Stewart, Director of Devel~.pment for "Give Kids The World". This program p~ides termimally ill ~hi!dren with a one-we~vaaatlon to Disney World in Orlando., Florida. USO will provide transportation for military f~lies selected for this program. ~r. Landwirth and Mr. Stewart them gave a brief presentation about "~Ive Kids The World". The G~neral ~mlcs ~Ity Service A~ will be presen÷_m~ at the ~993 ~SOChr~~ala. ~ ~I program recognises one outstand~volumteer fr~each service branch. TI38922481

Resources In the absence of Mr. Thomas H. Fey, Chairman of the H~man Resources Committee, Mr. James E. T~rner, Jr. provided the report. He began with discussion of the compensation and benefits review for USO employees that is being conducted by the Baltimore Consulting Group. The purpose of this review is to develop a compensation program which addresses internal and external equity for all employees in areas of performance appraisals, succession plannin~ and incentive compensation. He stated that the study is about 90% complete and the report will be available by the end of October 1993 which will be in time for the 1994 budget process. Mr. Turner commented that the Homan ~sources Committee is pleased with the quality of the survey and that USO Headquarters. Man~ge~ent will gain significant benefits in other areas relating to organizational str~cture and improved operations. He stated that from the information given, USO is doing reasonably well in the upper and lower levels. There are, however, adjustments reco~mmended in the mid-range that the committee believes will fit well within the planned budget for 1994. When the Headquarters review is completed, attention will be given to ~he international USOs and those reports will be completed by early April 1994. Mr. Turner also focused on the World Leadership Conference to be held at Andrews Air Force Base, October 17-20. The purpose of this conference will be to discuss strategies to i~lement ~he uso Five Year Plan and to develop a new partnership between Headquarters and affiliates. In closing, Mr. Turner remarked that normal operations of the Human Resources function are being handled in a timely and professional manner. The focus at present is on health care changes and using all available resources to ensure the best possible coverage for USO emp!~yees. PRESIDENT,S REPORT Informal COmmen~ Ladies and Gentlemen, it's a great time to be a part of the USO. I hope that you were as inspired by some of the things you've seen and heard today as I am. I have several thank-yous before giviD~ my formal report. First, I want to ~ all of you for coming. Those of us that are on ~ ~n~gemer~t aRd s~aff of Hea~aarters w~rkvery herd an~wehave~c~etent~llea~ues at Headquarters, b~t a lot of the time we ~t s~ wra~ ~ each tr~e ~ that s~et~ we lose ~%rpersp~ctive o~ the forest. YOU really help %is re~im that pe~ive and I want to ~k~verymuch for T1:389224~2

c~min~ ~d spe~nding your time and your own financial resources to get here and to stay for the two days. You really do help us keep our perspective. You give us outstanding, highly professional advice, and for your financial and personal support we are very grateful. I want to thank especially Mary Sethness who made a tremendous effort to be here today. As many of you k~ow she is q~ite ill and ~s been for some months. She got out of the hospital to come here. Her husband just passed away a coterie of we~_ks ago. i think it was a very gallant thing for her and I'd like the record to reflect that we all appreciate the effort she ma~,e. Next, I would like to thank our USO Head~arters staff for their preparation for this meeting. It's been a great meeting, and I want to thank them. Then I personally want to thank both the Board and our staff around the world for the great privilege of serviD~ as your president. Being a representative of the USO is a very heartwarming part of my job - there are a lot of challenges, a lot of hard work, and a lot of reasons to be discouraged, but many reasons to be proud and thankful for this job you all have given me. I want to share a little bit of that with you today if I can. I w~Id like to focus on 3 of my experiences as your president sln~e the l&st board meeting, all relating to the great USO tradition in which we all participate. First is one that relates to. the past. This happer~d at a social event which I attended just last week. A retired businessman came up to me and said: "Mr. Cox, I knew you were going to be at this event, so I brought you something." Then he pulled out of his pocket a 1951 black and white photograph, very fa~ed, of the USO in Oklnawa. He said that the Uso really touched his life in 19Sl, that he saw this picture recently in a photo album and re~mbered the times when he experienced io~eli~s and iso1~ti~n ~ ~ the U~ helped bring him ~o~_ragement. He fe!~heneeded to reach out tO USO. Although he doesn't have very many resources now, he wanted USO to have ~his treas~picture. The second experience relates to the pzememt. I recently had the prlvile~e of interpreting ~ flve-year plan to o~_r field operations in northe~ Eu_~0p.e. I came away from thatmeeting ~ed~ the pEofessi~alis~, ~~ication, ~q~har~work of o~_r ~reer staff ~le L~ the field. ~work har~, ~ make do with llttle res~es, an~ they really do bring a home -away from h~me to ~-r men am~ w~me~ w~o are o~rt there on the front 1Lnes. All the way from the f~targenerals in~ T!38922483

theater ~ hea~ers, down to y~ ~listed people who are on their ver~ first o~erseas tour, people Would ~ up to am a~d say: "~r. Cox, thank yo~ for the work that this director or that volunteer or this staff person is doing overseas. - One of these stars is here with us today. From USO Israel, Gilla Gerzon received the Navy ~endatlon Medal fro~ the Secretary of the Navy for her work ~in~ De~ Stor~, and was also one of ~ first to volunteer to go to So~alia during Restore Hope. The th~r~ hea~wt~a~mi~ experle~ that I'd li~ ~o ~are it on ~. ~ ~~ ~at~. N~ ~ly are ~ p~d~ role mo~is for ~ ~ii~ pe~el to ~ in~l~ ~n c~ity se~Ice (that's ~at ~e ~SO/~D =~Ity se~i~ awa~m a~ all about). We're a~ pa~ ~is tr~ti~ ~ t~ ~ ~~ generation of p~ivate citizens. In ~e ~e ~edom's Po~datlon in Va11~ F~ p~e~ted ~e USO wi~ ~elr a~al P~iln Awa~ for Outstan~Im~ ~ri~i~ms to ~e highest vales of our democratic my~. I had the privilege of accepting that awa~ and participate on the second day of the =elebratlon in a sy~poslu~ with high school honor students about the great values of our daocrat~ system. This sy~posiu~ last~ for 3 hours at which we were asked questions first hy a commentator and than by the students themselves. The panel consisted of the ~ee !993 award winners: Ger~ral Noz1nan SchwaEs~pf, R~er Millikln, and mys~f. I'd like to skow you how we are passing this tradition of s~i~e on. Here dee s~e exce~s of the video re¢o~ of ~o symposium. I showed you the tape to indicate one of the ways that we are trying to pass on ~Is USO ~Eadlt!on of s~v~e. B~t I also showed it to co, lend all of you f~ high value of ~ d~Eatl= s~i~y, n~ly, for adopting a cause, getting invo!v~ £n It, ~d s~~£~ i~ wi~ all of yo~ ve~ gra~ful to y~ f~ ~a~ ~d I There were no i~ fro~ the Executive C~aittee that require acti~ by the For th~ last ~ F~ar~, ~ ~ ~ ~ i~ ~ ~ difficult ne~latl~ a~d !iti~atim ~ thr-~at~n~l the ~ TI38922484

existence of our office space. Just this week "we resolved the last te~hnical dispute related to our previous agreement in principle to settle these problems. We expect to close the settle~nt next week and dismiss the law suit. The settlement is on very favorable conditions. The new owner of the building (who foreclosed on our previous landlord), in return for our withdrawing our condomini~um claim, ~ms agreed to pay us $15,725 a month for 15 years whic~ is an income stream of about $2.8 million. We have c~itted to the Executive Committee to deposit those funds in a reserve account wh~ it will draw interest over the 15 years. By the end of the income stream, we expect to have at least $4 million in that fund to give us permanent office facilities for the future. We are very proud and happy with this settlement. Next week I will receive the escrow deposit which secures payment of the landlord's obligation. General Rogers commended Mr. Cox. Formal RePort Ladies and gentlemen, I am pleased to be able to give you the most positive report since becoming your President three and a half years ago. We have met some very difficult challenges and there are more to face, but the future looks very bright for USO. There are many reasons for this, but i'd llke to tick off i0 of them for you this morning. i. For the first time in my 7 years with USO as president and board member, ~ur third quarter financial condition is not only substantially ahead of budget, but also shows a significant s~lus. We are also maintaining our capital reserves at the desired level. We have over $3 million in capital reserves and over $6 million in total reserves. 2. Thanks to the hard work of Ed Christie and his staff, we regularly receive monthly financial statements within 15 days of m~th-~d whi.ch~a~ly Eef!eut n~t only the p~.~eof ~a~ers, ~t also a~urately refl~t the p~u~ ~f ~r ~vers~s operations. ~ now ~ve t~ ~i~y and ~u~a~e is so vital ~ maintaining financial c~t~! ~d s~ility. 3. Thanks to the tremendous contribution of Bill Dyke's Joint Planni~ Committee, we h,~ve an ambitious ~ s~und five- ~r plan which p~ides direction and expanded s~ice within a sta~le fiman~ial framework. We have spem~ the last four~ inte_rpreting that plan to, an~ ~_~eiv~ in-p~t from, ~ st~aff ~"~ volunteers in the field, as we!! as ~mi!itary leadership.

~aintaini~g USO's great tradition of service into the next century. 4. As I just reported infor~ally, after two years of acrimony and adversity including troublesome litigatlon, we have negotiated a favorable settlement of our interest in the 5. The first l~hase of our major gift campaign is nearing success. We have ~ralsed nearly $11 million of o~r $12 ~llion goal fcr~ flrstphase and expect to go overt he top in 1994 ~u~erthe leadership of ~~ Chai~, No, AuguStine, of Martln~arlstta. 6. The marketing of USO's Always Ho~e brand is in a crltical develop~aent stage which looks very promising and we expect it to succeed. 7. We have the best team of professional staff in the field operations that I have seen ~y 7 years with the organization° My reoent trip to Europe relnforoed this uo~fidsnce that the competence and dedication of these people will equal any challenge.' $. Our Headquarters staff also continues to i~_prove. Despite~he morale problems caused by pay cuts and budget reductions, these dedicated professionals have shown courage, maintained ~thelr enthusiasm and have continued to pull to~ether. We have l~st some, but th~se ~Anlng a~e a s~Eong tea~who are' excited about the prospects of achieving our goals under the flve-year plan. 9. We are buildlng stro~er partnerships with our MWR operations in the local co~ms~ds, also with MWR on a Head~arters level through the DOD/MWRJo!n~ Steering Group. We are also growing stronger partnerships with our US affiliates than I have ever e~perlenced. 10. And finally, our entertainment and service delivery P~fi~ ~ ha~ use ~ncl~ In ~e~ .~~cy pl~ f~ So as I nentioned at the ~i~i~ of my rena~ks, I believe we a~e in the most positive p~siti~ in my experi~ with ~SO. ~38922486