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Essential to Your Profession Essential to Your Career Essential to You.

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Presentation on theme: "Essential to Your Profession Essential to Your Career Essential to You."— Presentation transcript:

1 Essential to Your Profession Essential to Your Career Essential to You

2 A Focus on the Essentials Near-term Path Forward Essential Changes Longer-term Path Forward Recent History Options Considered Your Role Supplementary Financial Material (Net Asset Value and Annual Changes , Essential Scenario)

3 A Focus on the Essentials Providing the latest and most accurate technical information Offering concise, targeted award-winning publications Delivering meetings that set industry standards Making available attractive/affordable insurance programs Expanding networking opportunities

4 AIChE Path Forward Near-Term Continue to implement new staff structure Secure financing of up-front costs of office sublease Explore additional efficiencies through outsourcing of administrative functions Retain AIChE division and forum identities Ensure profession of chemical engineering remains strong

5 Essential Changes Broadened leadership and networking Alliances with sister societies and commercial partners could generate opportunities in -programming -training -publishing

6 Essential Changes Elimination of some services, such as career services and web support No individual staff liaisons—more reliance on operating council liaisons Reduced frequency of membership and accounting updates for AIChE groups Reduced support in logistics for reserving meeting rooms, conducting division elections, handling of awards, welcome letters, etc.

7 AIChE Path Forward Longer-Term AIChE’s Board of Directors will continue to explore possible acquisitions, mergers, alliances, and joint ventures with other societies, with the primary objectives of: Retaining AIChE’s independence Retaining AIChE’s identity Retaining AIChE’s essential benefits/services

8 Recent History AIChE experienced a serious decline in its Net Asset Value, which led the Board to take action to maintain the Institute’s sustainability

9 Factors in Net Asset Decline Included: -major investments in IT/Web -investment losses in permanent fund -investment losses in pension fund required transfer of additional assets -facilities costs -funding for new ventures -erosion in business operations (e.g. advertising, publication sales, number of members, ITA sponsorships, etc.) -general economic downturn

10 Options Considered by AIChE Board Cooperation with sister society (joint venture) Merger with/acquisition by sister society Focus on essential values and services through significant restructuring and staff reductions Further opportunities for efficiencies through outsourced services

11 While there was merit in each of these options, the Board concluded that AIChE’s immediate course of action should Focus on the Essentials Retrenchment in the near term sets a firm foundation for longer-term growth, focused on “Genesis” strategic plan

12 AIChE Needs You For nearly 100 years, AIChE has served the needs of chemical engineers. AIChE members will continue to have a voice in planning the future of the Institute and a role in securing that future. AIChE is essential to your career. And you are essential to AIChE.

13 Financial Material Net Asset Value and Annual Changes from AIChE Pre-essential and Essential Budget Scenarios

14 * 2003 excludes effect of asset write-downs due to potential HQ sublease

15 Operating with Negative Net Assets Negative net assets are partly due to long-term liabilities (e.g., pension obligation, medical benefits) Dues and meeting revenues received in advance of costs allows AIChE to continue to operate with negative net assets

16 : AIChE experienced a period of growth –Net asset value (NAV) increased by $9.2 million : AIChE experienced a period of contraction –NAV declined by $11.9 million AIChE saw a shift from + $9.2 to $ (11.9), totaling $ (21.1) million What happened can be grouped in 3 categories –Financial:$ (13.0) million –Administrative:$ ( 2.8) million –Business:$ ( 4.6) million –Other Factors (Not Studied):$ ( 0.7) million –TOTAL$ (21.1) million

17 GROWTH CONTRACTION CHANGE OVER 6 YEARS SPECIAL ITEMS - Sale of UEC - Sale of Petro Expo - Database Write-Off $ 6.2 $ 0.4 $ (1.2) $ (6.2) $ (0.4) $ (1.2) INVESTMENT PERFORMANCE$ 4.6$ 2.5$ (2.1) NET FOUNDATION REVENUES$ 2.4$ (0.7)$ (3.1) - Timing of Receipts versus Expenditures TOTAL FINANCIAL CHANGES $ (13.0) Financial

18 GROWTH CONTRACTION CHANGE OVER 6 YEARS HEADQUARTERS LEASE - Relocation to 3 Park Ave - Offset by Proceeds from sale of United Engineering Building (see “Special Items”) $ (3.5)$ (4.9)$ (1.4) IT/WEB/DATABASE COSTS - Addition of Web Development and Maintenance $ (4.7)$ (5.5)$ (0.8) INSTITUTE ADMINISTRATION$ (7.8)$ (8.4)$ (0.6) TOTAL ADMIN CHANGES$ (2.8) Administrative

19 GROWTH CONTRACTION CHANGE OVER 6 YEARS DUES - Decline in Membership - Returns to Historic Levels with 2003 Dues Increase $ 15.6$ 13.2$ (2.4) CEP ADVERTISING - Shrinking Spending in Market $ 3.5$ 2.4$ (1.1) CONTINUING EDUCATION - Continued Erosion of Business $ (1.6)$ (2.3)$ (0.7) MEETINGS$ 0.8$ 0.3$ (0.5) TOTAL BUSINESS CHANGES $ (4.6) Business-Related

20 Details by Year (1)Includes Finance & Accounting, Office & Facility Services, General Administration, and Human Resources. (2)Includes Governance, Government Relations, Profession & Education, Federal Funding, Marketing & Communications, Customer Service, Purchasing & Production, Financial Services, Technical Publications and ITAs.

21 AIChE Results of Operations 2002 versus 2001

22 Pre-Essential Essential Staff Level Revenue$17.5M$13.4M Expenses$20.5M$12.9M Net($3.1M)$ 0.5M AIChE’s Scenarios


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