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FAST FORWARD Building the Profession of Tomorrow. Item 12. Finance and Operations Report Tom Hilton, CPA, CGMA Anthony Pugliese , CPA, CGMA, CITP Spring Council | May 18-20, 2014. Agenda. Review 2014 Forecast Membership, Operational, and Balance Sheet Highlights Pension Update - PowerPoint PPT Presentation
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FAST FORWARD Building the Profession of Tomorrow
Finance and Operations ReportTom Hilton, CPA, CGMAAnthony Pugliese, CPA, CGMA, CITPSpring Council | May 18-20, 2014
Item 12
AgendaReview 2014 Forecast
Membership, Operational, and Balance Sheet Highlights
Pension Update
Review Proposed 2015 Budget
2
2014 Forecast Update ($ in thousands)
3
2014 2014 Fav / Forecast Budget (Unfav)
Revenue Producing Activities 89,163$ * 93,703$ (4,540)$
Net Cost of Sales 22,190 22,763 573
Gross Margin 66,973 70,940 (3,967)
Membership Dues 110,890 111,290 (400)
Interest / Dividends / Other 12,143 11,114 1,029
Net Operating Revenue 190,006 193,344 (3,338)
Expenses, Excluding Pension 185,048 192,286 7,238
Pension Expense 4,900 1,000 (3,900)
Total Expenses 189,948 193,286 3,338 Net Excess of Operating Revenue Over Expense 58$ 58$ -$
* FY14 forecast is 3% higher than FY13 actual
2014 Membership HighlightsGeneral Membership• Retention rate of 94% versus budget of 94.75% • On track to meet or exceed this year’s budget
Sections and Credentials• Retention trends in line with prior years• International expansion
CGMA Designation• On track to meet budget of 42,000 designees• Exam launch in Spring 2015
4
2014 Operational HighlightsLeveraging Horizons 2025 to advance AICPA’s Digital Strategy• Re-designing and re-launching Journal of Accountancy website• Implementing new operating systems to enhance member service
and interaction
Growing Product Lines and Revenue• Created new on-demand and group study products• Enhanced marketing efforts and streamlined product delivery
methodology
5
®
0%
10%
20%
30%
40%
50%
60%BLENDED L/T INDICES AICPA L/T INVESTMENTS
$88.4M
$112.3M $110.7M
$97.0M$97.7M
AICPA L/T Investments vs. Blended L/T Indices
6
Liquidated $10M in October-2013
$7.2M gains year to date
Domestic CPA Exam Reinvestment ($ in millions)
7
Max. Deferred Liability
International CPA ExamAdministering in six countries
Collaborating with NASBA on expansion to other countries
2014 profit of $1.4 million and 10,000 sections
8
Long-Term ($ in millions)
$10.0 $8.8
$3.8$0.0$0
$5
$10
$15
Apr-14 Jul-14 Jul-15 Apr-16
Total Debt
9
Pension Plan Update Environmental factors for plan sponsors:• Negatively being impacted by low interest rate environment
• Mortality table changes will increase pension expense
• Increase in PBGC premiums may accelerate plan funding strategy
Recent changes to reduce pension exposure:• Accelerated plan freeze from April 30, 2017 to June 30, 2013
• Offered lump sum payouts to terminated vested participants
10
2015 Proposed Budget ($ in thousands)
11
2015 2014Budget Forecast Fav (Unfav)
Revenue Producing Activities 93,534$ 89,163$ 4,371$ Net Cost of Sales 22,869 22,190 (679)
Gross Margin 70,665 66,973 3,692
Membership Dues 114,730 110,890 3,840 Interest / Dividends / Other 11,347 12,143 (796)
Net Operating Revenue 196,742 190,006 6,736 Total Expenses 196,642 189,948 (6,694)
Net Excess of Operating Revenue Over Expense 100$ 58$ 42$
Cash Flow Projections through July 2015
-$13M
-$30
-$20
-$10
$0
$10
$20
$30
$40
$50
$60
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
12
Council ResolutionResolved:
That the proposed operating budget for the American Institute of Certified Public Accountants for the 2014-2015 fiscal year, as presented to Council as agenda item 12, be approved and adopted.
13
2014 AICPA Spring Council
Scottsdale, ArizonaMay 18-20, 2014