Summary
Again this year, we have used the strategic planning of the organization to determine where we should allocate our resources. This is important, as these goals are our guiding principals in deciding how to spend our resources, and when spending is tight, they are our guiding principals in deciding how to make cuts. As a reminder, the goals are as follows:

Overall Goal: Increase Participation
Specific Goals:
· Strive for excellence in the National Team program
· Financial diversification and development
· Develop and implement programs to increase participation and quality performance for judges, athletes, and coaches.

Again, the plans for 2002-03 continued to place focus on education and marketing, as well as continuing to support a strong National Team. We also planned on a significant shift in our revenue base in 2002-03, as we expected more funding to come from membership, education programs, and sponsorships, and less resources from the USOC and USSS Foundation.

For a third year in a row, we were faced with some very challenging realities. The impact of the poor economic situation continued to affect our ability to obtain new sponsors at the level budgeted. The education programs have gone very well, but have not yielded the financial results budgeted. Also, YTD through June, we have a slight decline in the number of members from the prior year. In April, and again at our mid-year review, the staff and Executive Committee took action to reduce our spending consistent with the realities of our revenues. In June, the Executive Committee directed the staff to develop and implement a plan to reduce the net deficit to a specified level. Further, they authorized the use of reserves up to that level. (Note: The last time reserves were used in 2002 when the deal for the America's Teams did not come to fruition, and in 1996 prior to that).

At this time, we have the results through June 2002. An estimate of the year-end results will be provided to the Finance Committee and the Board of Directors at Convention. Below is a summary of 2001-02 actual results (w/o VIK), the 2002-03 budget, and the 2002-03 results through June 2002.
Comments on 2001-02
At the time of Convention last year, we expected the year to finish at a break-even position. At the time, the revenues of $127,000 and related expenses had not yet been received, but we had been assured that the deal would close eminently. Unfortunately, the deal never closed, and the monies were never received. The Executive Committee authorized reserves to cover the shortfall.

Comments on 2002-03 Revenues
· USOC Funding - This amount will be fully received. The decrease from the prior year reflects the change in the method used by the USOC to fund NGBs.

· Membership - In 2003, we had an increase in the membership dues that accounted for the increase in revenues. The actual number of members is down 3% (approx. 5250 at 7/03 and approx. 5420 at 7/02)

· Sanctions - We expect the revenues to be on plan as this is consistent with our typical YTD trend.

· Sponsorship - The impacts of the economy continued to affect our ability to secure new sponsors; a trend also experienced by other NGBs. In the current year, we focused on solidifying the relationships with existing sponsors, as well as working on new opportunities.

· TV Rights - Made a decision not to pursue this in the current year. Also, there was no related expense.

· Education - All programs have gone very well. The financial model (how revenues and expenses are recognized and shared) that we eventually used was different than budgeted, so there are differences in both the revenue and expense lines. The net position was still less than we had planned initially. It was a learning year for us, and plans for next year have been adjusted based on these learnings.

Comments on 2002-03 Expenses
At the time of the mid-year review of the budget, the reduction in revenues required a review of all programs yet to be completed. These budgets were adjusted in consultation with the VP in each area. Also, the OIC expenses are expected to be within budget, with many of the expenses coming in the last quarter of the year.

Long-Range Plans
At the June Planning meeting, we reviewed and refocused the finance/marketing goals to focus on revenue growth through membership growth. The goal and key strategies include:

Goal: Financial diversification and development resulting in cash revenues of $1.5M by 2004 and $1.8M by 2008
1. Focus on programs that grow membership, as more members will yield more revenues in all categories.
2. Develop new properties to drive new revenues - one major event per year.
3. Continue to review all existing "properties"/programs to enhance marketability: 1) National events/Olympic Trials, 2) education programs, and 3) National Team.
4. Continue to work with the Foundation to grow the corpus.

Other Items
· Financial Planning and Reporting Process - The planning process that was implemented two year ago, continues to be in place. The four-year financial plan was updated as part of the June Planning meeting, and we did monthly budgeting and monthly reporting of results.

· Annual Audit - The audit by Dunbar, Cook, and Shepard went well. They had a few management recommendations that will be reviewed by the Finance Committee at Convention.