SAE Annual Report 2010 - 27

The Financial Message
To all SAE International Members: We are pleased to present the SAE 2010 audited financial statements for your information and review. The accompanying reports are: the Independent Auditor’s Report, Statements of Financial Position, Statements of Activities and Changes in Net Assets, Statements of Cash Flows, and Notes to Financial Statements. The SAE Foundation is an unincorporated affiliate of SAE and, accordingly, is included in the accompanying financials. The actual accounts of SAE and the SAE Foundation are maintained separately and the respective funds are not comingled. The Statements of Financial Position reflect total assets of $67.6 million at the end of 2010. The increase in total assets was $4.0 million, or an increase of 6.3% over 2009. The increase was due to cash generated from operations as well as strong performance in the investment markets. The Statements of Financial Position show SAE is financially sound and well positioned to continue to provide strong member service activities in the future. In 2010, the Statements of Activities and Changes in Net Assets reflect SAE operating revenues of $49.0 million and a net gain from operations of $1.7 million. Net margin exceeded SAE’s Financial Management Policy target while operating revenue fell short. Sustainability initiatives which were completed during 2009 continued to benefit SAE in 2010 resulting in lower costs and hence a higher net margin. In non-operating activities, SAE invested $.4 million in new business development activities, also known as strategic investment projects. These projects are supported by returns from the General Investment Fund which finished with a net increase of $4.9 million, due primarily to increases in the market value of our long-term investments. Strategic investment projects, when combined with long-term investment increases, a pension adjustment, and other miscellaneous items, resulted in a total nonoperating gain of $4.2 million. Net assets increased $5.9 million during 2010 as a result of the operating and non-operating gains noted above. The increase in net assets for the year of $5.9 million, when combined with net assets at the beginning of the year of $30.2 million, resulted in $36.1 million net assets at year-end. Once again SAE received a favorable management letter from its independent auditors. Cited positively were SAE internal control activities including budgeting and reporting to the Finance Committee, and the SAE control environment including integrity and ethical values, commitment to competence, Board of Directors and Audit Committee participation, and management’s philosophy and operating style. As a reminder, recall that SAE is tax exempt under Section 501(c)(3) of the Internal Revenue Code. Ultimate responsibility for the financial statements and other information in the annual report rests with the SAE Board of Directors. The Board, through its Finance Committee and Financial Audit Committee, monitors the system of accounting and internal controls, investment management, and the professional competency and integrity of persons performing these functions. The independent auditors have direct access to the Financial Audit Committee to discuss the scope and results of their audit, their comments on the adequacy of internal accounting controls, and the quality of financial reporting. If you would like more details about the accompanying financial statements or any aspect of financial operations at SAE, please feel free to contact either of us or Dana Pless, Chief Financial Officer at SAE World Headquarters (dpless@sae.org). Respectfully submitted,

Carol A. Story Treasurer

Ronald G. Rath Assistant Treasurer

SAE Annual Report 2010

Table of Contents for the Digital Edition of SAE Annual Report 2010