AMA 2006 Consol Financial Statements

7/31/2019 AMA 2006 Consol Financial Statements

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24 R

Consolidated financialstatementsDecember 31, 2005 and 2004


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See accompanying

notes to the

consolidated financialstatements.

In millions 2005 2004

RevenuesMembership dues $ 48.5 $ 48.1Advertising 40.6 40.7Subscriptions 17.2 17.5Other publishing revenue 15.9 17.2Sponsored revenue 1.0 0.8

Book and product sales 47.8 47.8Royalties and credentialing products 55.4 52.6Insurance commissions 33.4 28.3Investment income (Note 4) 9.2 5.2Equity in profit of unconsolidated subsidiary 0.1 0.2Grants and other income 11.0 11.5Total revenues 280.1 269.9

ExpensesCost of products sold 37.5 36.6

Selling expenses 8.5 8.2Contribution to general and administrative expenses 234.1 225.1

General and administrative expensesCompensation and benefits 108.3 104.6Occupancy 17.8 17.9Travel and meetings 11.4 10.8Computer costs 9.4 11.3Marketing and promotion 22.1 7.5Professional services and consulting 11.4 11.4Other operating expenses 13.6 11.8Total general and administrative expenses 194.0 175.3

Operating results before income taxes 40.1 49.8Income taxes (Note 10) 12.0 10.0Net operating results 28.1 39.8

Non-operating and non-recurring itemsNet gain on marketable securities (Note 4) 5.8 11.0

Net gain on sale of real estate (Note 5) - 5.0Gain on partnership distribution, net of tax (Notes 5 and 10) 5.1 -Other non-recurring (expense) income (0.5) 1.2Total non-operating and non-recurring items 10.4 17.2

Change in association equityunrestricted 38.5 57.0

Change in temporarily restricted association equityRestricted contributions 0.5 1.8Net assets released (0.1) -

Change in association equitytemporarily restricted 0.4 1.8

Change in association equity 38.9 58.8Association equity at beginning of year 249.8 191.0Association equity at end of year $ 288.7 $ 249.8

2005 Annual Report R 25

Consolidatedstatementsofactiv

ities


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Assets

Cash and cash equivalents $ 59.6 $ 96.1

Accounts receivable and other receivables, net of an allowance

for doubtful accounts of $0.5 in 2005 and $0.7 in 2004 20.9 19.7Inventories 3.1 3.0

Prepaid expenses and deposits 3.5 4.6

Prepaid and deferred income taxes (Note 10) 1.7 -

Investments

Marketable securities (Note 4) 288.1 224.4

Investment in unconsolidated subsidiary and affiliate (Note 6) 2.2 2.1Property and equipmentnet (Note 7) 17.5 20.8

Prepaid pension costs (Note 8) 32.7 24.5

Other assets 4.2 3.8

$ 433.5 $ 399.0

Liabilities, deferred revenue and association equity

Liabilities

Accounts payable and accrued expenses $ 44.5 $ 41.2Accrued payroll and employee benefits (Notes 8 and 9) 55.3 52.9

Reserve for sub-leased space 0.6 0.9

Income taxes (Note 10) - 5.1

100.4 100.1

Deferred revenue

Membership dues 19.5 20.0

Subscriptions and royalties 19.5 18.5

Grants 3.1 2.9

Other 2.3 7.7

44.4 49.1

Association equity

Unrestricted 286.5 248.0

Temporarily restricted 2.2 1.8288.7 249.8

$ 433.5 $ 399.0

26 R American Medical Association

Consolidatedstateme

ntsoffinancialposition

See accompanying

notes to the

consolidated financialstatements.


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Cash flows from operating activities

Change in association equity $ 38.9 $ 58.8Adjustments to reconcile change in association equity to net cash

from operating activities

Depreciation and amortization 6.7 8.1

Pension and postretirement health care expense 5.0 5.2

Contributions to pension plan (9.0) (1.0)

Equity in profit of unconsolidated subsidiary (0.1) (0.2)

Net gain on partnership distribution/sale of real estate (5.1) (5.0)

Net gain on marketable securities (5.8) (11.0)Increase (reduction) in provision for losses on receivables 0.1 (0.6)

Other 0.1 0.1

Changes in operating assets and liabilities

Accounts receivable and other receivables (1.3) 0.1

Inventories (0.1) 0.3

Prepaid expenses and deposits 1.1 (1.1)

Accounts payable, accrued liabilities and income taxes (7.8) (2.7)Deferred revenue 0.5 (0.2)

Net cash provided by operating activities 23.2 50.8

Cash flows from investing activities

Proceeds from sale of real estate - 6.3

Distribution of partnership assets 1.6 -

Distributions from unconsolidated subsidiary - 7.0

Purchase of property and equipment (3.4) (2.9)

Net purchase of securities (57.9) (33.4)

Net cash used in investing activities (59.7) (23.0)

Net change in cash and cash equivalents (36.5) 27.8

Cash and cash equivalents at beginning of year 96.1 68.3

Cash and cash equivalents at end of year $ 59.6 $ 96.1

See accompanying

notes to the

consolidated financial

statements.

2005 Annual Report R 27

Consolidatedstatem

entsofcashflows


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34 R American Medical Association

Written statement of certification

The undersigned hereby certify that the informa-tion contained in the audited financial statements

of the American Medical Association for the years

ended December 31, 2005 and 2004 fairly present,

in all material respects, the financial condition and

the results of operations of the American Medical

Association.

Michael D. Maves, MD, MBA

AMA executive vice president, chief executive officer

Denise M. Hagerty

AMA chief financial officer

February 17, 2006

Independent auditors report

The Board of Trustees

American Medical Association

We have audited the accompanying consolidated statements of financial position of the American

Medical Association (the Association) and subsidiaries as of December 31, 2005 and 2004, and

the related consolidated statements of activities and of cash flows for the years then ended. Thesefinancial statements are the responsibility of the Associations management. Our responsibility is to

express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the

United States of America. Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes consideration of internal control over financial reporting as a basis for designing

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Associations internal control over financial reporting.Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements, assessing the accounting principles

used and significant estimates made by management, as well as evaluating the overall financial

statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects,

the financial position of the American Medical Association and its subsidiaries as of December 31,

2005 and 2004, and the changes in their equity and their cash flows for the years then ended in con-

formity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP

Chicago, Illinois

February 17, 2006


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AMA 2006 Consol Financial Statements