TABLE OF CONTENTSLetter from the President 1
Committees
Management Discussion & Analysis
31
Board of Directors
NYSSA Staff
16 to
33
2to
15
34
35
Dear Members:
Fiscal 2007 was an eventful year for NYSSA. In addition to celebrating our 70th anniversary, we hosted the CFA Institute Annual Meeting, which commemorated their 60th Anniversary and drew over 1,600 participants from around the world to New York City. SEC chairman Christopher Cox addressed close to 500 members at our Annual Member Dinner in June. In January, Secretary of the Treasury Henry Paulson made a presentation to the membership on U.S. market competitiveness and investor rights and protections. The Investment Research Challenge completed its 5th year in New York, and CFA Institute adopted NYSSA’s format and is taking the competition global.
Membership also experienced strong growth in fiscal 2007, as we crossed the 10,000 member mark during the year. We ended the fiscal year with 10,859 members versus 9,977 at the end of fiscal 2006, an increase of 882 members.
In the 2006-2007 Annual Member Report we shared our vision and Ends statements for NYSSA (the current ENDS Statements are posted in the governance section on the Society’s website). The Ends statements are the effect the Society seeks to have on the greater community. As we move forward as an organization we are looking to positively
impact the careers and experiences of our members and have used and will continue to use the ENDS (the organizations core values) to guide our program and service development. As an example of the ENDS driving new program development, this past year we have dramatically increased our “free” and subsidized programming for members in the areas of career development and advancement. Overall free and greatly subsidized programs have increased from 66 in fiscal 2006 to 125 in fiscal 2007.
As we entered fiscal 2008, we identified two significant projects that should positively impact the membership experience. The first is a significant update of the website to improve navigation and create committee pages that deliver content focused on the member’s area of interest. This will extend into 2009 with the development of member pages where you should be able to have more control over your interaction with the Society. The second major project is the development of a quarterly journal with a corresponding website. The magazine is focusing on articles that have a practical application written by forward thinking members and other financial professionals.
A multi-year project facing the Society is the end of our facility lease in 2009. Committing to a multi-year lease is a multi-million dollar decision, necessitating a full review of the Society’s current business and potential future service offerings.
The enclosed audited financial statements and management discussion and analysis show that the Society is in a strong financial position. We are investing in future programming and services as well as preparing for an anticipated move at the end of 2009 when the lease on our current facility will end. We have built strength in our balance sheet to afford us the most flexibility in positioning the Society for the next stage of its life in terms of both our physical presence and our service offerings to our membership.
Regards,
Jan Jackrel, CFA President
Letter From the President
3 NYSSA ANNUAL REPORT 2007- 2008
Alternative Investments
Committee Description:
The Alternative Investments Committee (“AIC”) provides a forum for discussion and analysis of nontraditional investment approaches including all forms of hedge funds, funds of funds, private equity, structured products and other investments not typically available in the retail marketplace.
Accomplishments, Event Highlights and Special Notes:
Over the past year, the AIC produced several evening programs under its reputable AlternAtive AnAlysts’ Forum brand. It also held meetings, dinners and other social events so that members would have an opportunity to discuss relevant topics impacting fund managers and network with fellow practitioners.
The AIC’s inaugural AlternAtive AnAlysts’ ForecAst event, 2008-What Lies Ahead?, was held last January with Michael Santoli, Barron’s columnist, as the moderator. This evening panel discussion, held at Bloomberg’s midtown facilities, was a direct outgrowth of members’ suggestions for programming and content. The AIC was also pleased to work with the Institutional Asset Management Committee last Fall to organize the What’s Next for Private Equity program. AIC also provided input into the CFA Institute’s Alternative Asset Conference held in Stamford, CT in February, 2008.
Special Thanks and Recommendations for 2007-2008:
The AIC wishes to thank all NYSSA staff who assist in organizing programs for the committee. The AIC would also like to recognize the generosity of Merrill Lynch for providing meeting rooms and Bloomberg for supplying facilities and refreshments for various events over the years. The AIC appreciates the opportunity to work with other sponsors on developing event ideas and educating members about alternative asset products.
Committee History
The AIC was formed in the fall of 1998. It held its first program De-mystifying the Asset Class in May, 1999. The first AlternAtive AnAlysts’ Forum Essential Considerations for Credit Derivatives took place in July, 2005. Since that time, the AIC has hosted 17 such events which explore relevant issues within the alternative asset sector.
The AIC welcomes new members who want to share a broader understanding of the asset class with experienced alternative investment fund managers.
Chair: Loren A. Busby, CFA Vice Chair: Philip J. Taylor, CFA
NYSSA ANNUAL REPORT 2007- 2008 4
Career Development
Committee Description:
The Career Committee serve the career needs of society members, primarily through the monthly Career Chat program. These programs cover basic skills such as networking and interviewing, as well as areas of interest including emerging markets, private equity, independent research, investor relations, asset management, and derivatives. Accomplishments, Event Highlights and Special Notes:
This past year has been marked by joint programswith other committees, where we expand our reach and relevance. We are very grateful to these committees for their participation. Joint Career Chat programs included Early Stage Career Challenges with the Student Committee. This program was directed at the large, constant inflow of early career members, and the unique challenges they face in today’s financial industry. Another joint program was Private Equity: Renaissance or Dark Ages with the Alternative Investments Committee. This program focused on one of the most dynamic sectors, where little information is publicly available. The committee did a joint program with the Membership Committee, featuring a NYSSA member Dan Reingold, one of the top telcom analysts, and his recent book.
Special Thanks and Recommendations for 2007-2008:
Special thanks go to Richard Lipstein for organizing and chairing two standout, Career Chats - Trends in Strategic Investor and Corporate Communications Consulting, and The State of Independent Research.
Committee History
The role and impact of the committee have changed dramatically since the 1980s, for three major reasons. First, attitudes have changed. Due to large numbers of layoffs and industry restructuring, career paths are no longer linear and career management is no longer considered something to be hidden from employers. Members now want to discuss their career paths openly. In response to their demands for relevant programming, we began the Career Chats series.
Second, NYSSA membership has broadened the historic model of analyst/portfolio manager reflects only part of NYSSA’s membership. Members are now in every part of financial services, in every job category.
Third, as more members work outside of the traditional office setting, NYSSA needs to look to Internet-based-communication and distribution of programs. Reflecting this, the committee is now podcasting the Career Chats.
Chair: Richard G. Lipstein Vice Chair: Barry M. Stine, CFA, CMT
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Corporate Governance
Committee Description:
The Corporate Governance Committee addresses issues related to shareholder rights and corporate governance. The committee hosts a series of events assessing the impact of corporate governance on investors, including topics such as executive compensation, proxy access, and shareholder activism. The committee attempts to provide practical tools to help investing professionals incorporate analysis of governance into their regular analytical process.
Accomplishments, Event Highlights and Special Notes: The Corporate Governance Committee has four projects this year.
1.Coporate Goverance Under a Scenario of DistressProfessor John Macey of Yale Law School and John Sweeney of Standard and Poors offered a lively discussion of a variety of issue concerning corporate governance in situations where a company has become distressed.
2. Top Management Pay and Investor Returns Steve O’Byrne, a leading value-based management consultant, presented a comprehensive measure of top management’s shareholder value incentive—what he calls “wealth leverage.” Rob Greenberg, a senior corporate human resources executive, critiqued wealth leverage as a measure of corporate management’s motivation to increase shareholder value.
3. Executive Compensation PracticesJim Reda, a leading compensation consultant to boards or directors, gave a thorough presentation on the issues boards are considering in light of recent SEC changes to disclosures in proxies and the controversial pay package of Rob Nardell at Home Depot.
4. Corporate Governance Survey of the Membership The committee also conducted a survey that gave insight into the memberships current attitudes towards corporate governance.
Chair: J. Armand Musey, CFA Vice Chair: David Silverman, CFA
Special Thanks and Recommendations for 2007-2008:
David Silverman, Richard Bliss and the entire NYSSA staff.
NYSSA ANNUAL REPORT 2007- 2008 6
Derivatives
Committee Description:
The mission of the Derivatives Committee is to provide a forum for investment professionals to learn more about the use and intricacies of derivatives. The committee offers content to both specialists in the derivatives markets and those professionals who are not currently involved but who wish to learn more. By organizing a variety of events including lectures and forums, the committee is a valuable source of insightful information on derivatives.
Accomplishments, Event Highlights and Special Notes:
This season’s events featured an eclectic mix of presentations including discussions on Single Stock Futures, Portfolio Margining, Information Available in Option Orders and other interesting areas that broadened NYSSA member’s understanding of this fascinating and ever changing field.
Special Thanks and Recommendations for 2007-2008:
Thanks to all committee members for their participation in our events during 2007-2008. We are all looking forward to a terrific and informative 2008-2009.
Committee History
As one of the newer committees at NYSSA, the Derivatives Committee has been making up for lost time with events such as Mock Trading at the NYBOT and presentations from derivatives professionals such as CBOE Chairman Bill Brodsky. We strive to create interesting and informative presentations and look forward to continuing this trend in the future.
Chair: Andrew Spieler, PhD, CFA, FRM Vice Chair: Ehsan Nikbakht, DBA, CFA, FRM, PRM
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Global Investing
Committee Description:
The Global Investing Committee organizes a diverse range of programs to keep members abreast of key trends affecting global investment markets. The committee is continually seeking to partner with Wall Street firms, money managers and foreign government entities such as consulates and trade promotion boards to most effectively educate our members about the global economy, as well as to provide social and professional networking opportunities.
Accomplishments, Event Highlights and Special Notes:
The committee participated in the national discussion on Sovereign Wealth Funds and their increasing importance as institutional investors which included representatives from the Norwegian Pension Fund and also from the Federal Reserve Bank of New York. Also, the committee explored the new economic growth paradigm between emerging and developed countries in an event on BRIC countries, which included investors in the region (Seygem Asset Management) as well as Global and Latin American Equity strategists from Bear Stearns and Deutsche Bank.
Special Thanks and Recommendations for 2007-2008:
Special Thanks to the speakers; Tim Seymour, Guilherme Paiva, Thierry Wizman, Mathew Higgins, Jens Peter Olsen, who kindly agreed to spend some time speaking to comittee members, to those committee and non comittee members that helped to make the necessary introductions that made these events possible, Ricardo Beninatto, Christian Treitler, Inger Talaksen, and to the hard working staff at NYSSA.
We look forward to the active involvement of the members in 2008-2009 so that we can make it another successful year, with a growing list of events.
Committee History
Following the major integration occurred in financial markets during the 1990s and 2000s, the old label for identifying overseas investments -international- quickly lost ground to be replaced by the now commonplace “global”. In 2007, we decided to provide a well deserved update to the official name of our committee, switching it to “Global Investing” from the previous “International”.
The transformation goes beyond the mere name change, as we have made now a conscious effort to present topics framed in a global context, as opposed to previous event which will often focus on very specific countries. This has been a welcomed change by our members, who find that the broader appeal of global-framed topics attracts a greater number of participants to the events and ultimately generates a richer discussion.
As the recent problems in the credit markets point out the global connections among the world’s financial markets, we are in no way short of topics around which to create an educated exchange of ideas, increase our individual knowledge and ultimately promote change through our individual actions in the markets. The Global Investing Committee has its best years ahead.
Chair: Gabriel E. Garcia, CFA Vice Chair: Karl H. Schmidt
NYSSA ANNUAL REPORT 2007- 2008 8
Improved Corporate Reporting
Committee Description:
The Improved Corporate Reporting Committee closely follows issues and events affecting financial reporting, corporate disclosure, and accounting standards. Its primary mission is to keep NYSSA members informed about these issues through speaker programs and conferences. Recent undertakings include the annual Financial Reporting Conference, the annual XBRL forum, and other education events. The committee periodically advocates specific positions on proposed financial reporting standards before regulators and accounting standards setters.
Committee History
“There have long been complaints that regulatory bodies such as the U.S. Securities and Exchange Commission, the International Accounting Standards Committee, and the Financial Accounting Standards Board get very little input from users of financial statements,” said former committee chair Kathleen Dieter, CFA, in 1995. “We believe that as a very important group of users, the membership should actively express its views, both collectively and individually, and provide input tothe standards-setting process.”
The committee was established in 1991. Among the distinguished presenters during the early years were FASB chairmen Dennis R. Beresford and Donald J. Kirk; professor Baruch Lev of NYU’s Stern School of Business; and Dominic Tarantino, chair of the American Institute of Certified Public Accountants (AICPA)
Special Thanks and Recommendations for 2007-2008:
Special thanks go to all those who helped with our programs, including NYSSA staff, and especially our guest speakers. Committee member Eric P. Linder, CFA, deserves special thanks for his efforts.
Chair: Mark R. Newsome, CFA Vice Chair: Eric P. Linder, CFA
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Institutional AssetManagement
Committee Description:
The mission of the Institutional Asset Management Committee is to bring together professionals engaged in the management, oversight and/or advisement of institutional investments. Our diverse member base includes investment consultants, plan sponsors, insurance professionals, risk managers, derivative product specialists and portfolio managers and analysts in a wide variety of asset classes. The committee nurtures a rich exchange of ideas and information by connecting professionals who are broadly in the same profession, but would not otherwise collaborate and network with one another.
Accomplishments, Event Highlights and Special Notes:
The Committee hosted a number of events this past year including Liability Driven Investing: From Theory to Action and What’s Next for Private Equity? The program calendar also featured a members-only breakfast program with a former SEC Examiner discussing the ins and outs of a SEC Examination. Keeping with thought-provoking themes, the Committee hosted Rating Agencies at the Crossroads.
Special Thanks and Recommendations for 2007-2008:
The Committee thanks Jonathan Gold for his service as Chairman from 2003-2007. The Committee would also like to thank its members who served as event Chairmen and on event teams.
Committee History
The committee was established in June 2002 to address the needs of a diverse group of buy-and-sell side professionals involved in the investment decision-making process for large institutions. Since that time it has grown to include over 300 members.
Chair: Lee Minton, III, CFA Vice Chair: William P. Enright, CFA
NYSSA ANNUAL REPORT 2007- 2008 10
Investment Strategy
Committee Description:
To further NYSSA’s mission of being a premier forum for the exchange of information among investment professionals, corporate managements, and other interested members of the public, the Investment Strategy Committee organizes events that bring leading analysts, portfolio managers, strategists, economists, and company executives to speak at NYSSA.
Accomplishments, Event Highlights and Special Notes:
A breakfast presentation on Performance Attribution as an Analytical Tool featured David Spaulding, the founder and president of The Spaulding Group, Inc., and founder and publisher of The Journal of Performance Measurement®. Although performance attribution has become widely used within the investment industry, many professionals still do not have a full understanding of it. Spaulding provided insight into this increasingly important analytical tool and explored topics including relative and absolute attribution, the two “Brinson” models, arithmetic and geometric attribution, holdings and transaction attribution, and fixed income attribution. The committee also hosted an evening presentation on Risk Management Control, featuring Jennifer Bender, PhD, member of the Applied Research Group of MSCI Barra; Nigel Cheetham, head of portfolio management at Reuters America; Bernard Donefer, adjunct associate professor in the Department of Information, Operations, and Management Sciences at the NYU Stern School of Business, and former CIO of Fidelity Investments; and Sampson Glassman, fund of funds risk management consultant.
Special Thanks and Recommendations for 2007-2008:
Special thanks go to all those who helped with our programs, including NYSSA staff, and especially our guest speakers. Committee member Eric P. Linder, CFA, deserves special thanks for his efforts.
Committee History
The Investment Strategy Committee, once known as the Seminar and Investment Strategy Committee, held seminars on topics judged to be of interest to the financial community, including meetings with leading strategists and portfolio managers. In addition, it organized non-corporate luncheon meetings.
The Corporate Program Committee, which held company meetings, industry forums, and roundtable discussions among analysts, merged into the Seminar and Investment Strategy Committee in 1998. The joint committee put together numerous lunch programs and full-day seminars on a broad range of investment topics. Its name was soon shortened to Investment Strategy. Programs have featured leading economists and investment strategists— including Steve Forbes, Harry Markowitz, and Peter Bernstein—and have centered around topics such as risk management, the demutualization of life insurance companies, and the evolution of index proxies.
Chair: Jay L. Lefkowicz, CFA Vice Chair: Alex Urdea, CFA, FRM
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Membership
Committee Description:
The Membership Committee reviews and approve all prospective member applications and makes recommendations to the Board of Directors as to guidelines for membership. The committee assists in developing and evaluating member benefits, reviewing special offers, and looking for new recruitment methods for membership. Membership Committee programs encompass member-networking events, including the Annual Dinner.
Special Thanks and Recommendations for 2007-2008:
We would like to thank our committee members and NYSSA staff who donate their time to these accomplishments, including:
• The core group of members and staff who faithfully review each month all the prospective member application and help locate sponsors;
• Members who conceive and organize unique, fun, and educational events, especially Monsour Yamin and Bob Stewart, who made the mock-trading at NYMEX a reality;
• New members, who provide vibrancy to the committee with energy and ideas; and
• NYSSA staff, who support the volunteers in doing the legwork to create successful programs. We would like to feature programs that highlight our members’ professional diversity and personal accomplishments. Potential initiatives include special forums featuring members who have authored new books or other publications, and a speakers’ bureau where our members can share their professional expertise with the financial press.
Chair: Mary F. Stober Vice Chair: Christian Cooper, CFA
Accomplishments, Event Highlights and Special Notes:
The committee organized the 5th Annual Strategies in Wealth Management Summit, one of the premier conferences focusing exclusively on strategic and business planning issues facing senior management of wealth management advisory firms. The committee continued to deliver top-notch programming that focused on many of the diverse issues that wealth managers face:
• Wealth management advisors and institutional asset managers are increasingly expected to function as a “manager of managers” for their clients. In response to this trend, the committee held the 2nd annual Manager Search and Selection full-day conference.
• It is difficult for many people to discuss the issues involved with living longer because of a variety of fears, including fear of failing health and the associated medical costs that may destroy their estates. A breakfast program on Minimizing Longevity Risk taught ways to put clients at ease.
• Attendees of a half-day program on The Essentials of Estate Planning: Trusts and Other Tools for Wealth Managers learned the pros and cons of trusts, family limited partnerships, gifting, and insurance.
• Mark Tibergien of Moss Adams LLP spoke at a breakfast program, identifying the Ten Key Trends of Wealth Management and discussing strategies that can be used to address them.
• The baby boomer generation is spending significant time, money, and other resources to care for elderly parents. A half-day program on Soft Strategies of Private Wealth Management: Planning for the Elder Generation provided insight and offered resources needed to help private clients with the legal considerations, administrative challenges, insurance choices, and the emotional strain of caring for aging parents.
• A brown-bag luncheon on Tax Planning and the Pension Protection Act: What Advisors to Private Clients Need to Know examined the many implications that this new act has for advisors.
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Committee Description:
The Private Wealth Management (PWM) Committee addresses the needs of the private wealth management professional by providing a community for advisors to high-net-worth individuals; delivering relevant, valuable continuing education; creating a forum for the exchange of ideas; and fostering collaboration and networking with like-minded professionals. PWM programming includes continuing education courses, presentations, and seminars. In addition, the committee provides networking opportunities through its planning meetings, lunch programs, and evening receptions.
Chair: Mark Ukrainskyj, CFA Vice Chair: Ron Shapira, CFA Vice Chair: Stephanie Ackler, CFA
Private Wealth Management
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Socially Responsibility Investing Committee Description:
The Socially Responsible Investing (SRI) Committee offers two key services: (1) it provides a forum for its members to discuss matters of particular concern to SRI practitioners and (2) it introduces current SRI issues to the broader NYSSA membership. In each instance Committee programs reflect the ongoing development of SRI concepts and practices, be it traditional SRI, sustainable investing, or financial analysis which incorporates environmental, social, and governance (ESG) factors. Committee members and program attendees increasingly come from outside the SRI practitioner community as more members of the general financial community seek to gain an understanding of the expanded universe of analytical factors which affect both corporate performance and investment management. Because of this, Committee programs and meetings create important networking opportunities for a diverse array of financial professionals who normally would not interact. Also, the greater interest among non-SRI practitioner financial professionals has created the opportunity for more program collaboration with other committees. Programs address the challenges and benefits of incorporating SRI factors in security analysis and target a wide range of analytical and topical sector issues. Until this year NYSSA was unique among CFA Institute member societies in having a separate committee dedicated to SRI issues.
Committee History
The SRI Committee originally existed by another name during the 1990’s, but was then disbanded. It was revived early in 2002 by James Buro. Members in the original committee were essentially SRI practitioners. The revived SRI Committee increasingly is composed of financial professionals who are not SRI practitioners but who find a need in their professional lives to understand specific issues which are associated with the SRI community. Until this past year NYSSA was the only CFA Institute member society with a separate committee dedicated to SRI. During this past year the Boston Society created its own SRI committee. The NY and Boston committees maintain an informal relation and keep each other informed about programs and program opportunities.
Accomplishments, Event Highlights and Special Notes: The Committee has averaged about one program per month. Over the past year topics have included renewable energy, nuclear and coal sources of power generation for electric utilities, carbon management in the electric utility industry, the quantification of corporate environmental impacts, issues in communicating corporate sustainability for the investor relations professional, microfinance, financial innovation and social change, corporate philanthropy, and global supply chain risk. Upcoming programs will address policies and practices among SRI firms, the greatly expanding range of ESG investment vehicles across asset classes, private equity and alternative energy, issues and opportunities in water, corporate IT infrastructure and energy demand, and evolving corporate environmental initiatives. The Committee also looks forward to expanded collaboration with local universities and government agencies. This year the Committee webpage was expanded to include a References & Resources section which also includes mention of relevant upcoming non-NYSSA programs. The webpage also now includes a listing of recent programs with associated presentations. These changes seek to expand the Committee’s educational mandate for all NYSSA members.
Special Thanks and Recommendations for 2007-2008:
The Committee wishes to thank Mary Jane McQuillen, the immediate past Chair, for her several years service as Vice Chair and Chair and proudly acknowledges her election to the NYSSA Board of Directors at last year’s Annual Meeting. The Committee also thanks the several new members who have volunteered to organize recent and upcoming programs in conjunction with the Committee’s three Vice Chairs.
Chair: Anthony A. Ginsberg Vice Chair: Steve Loren, CFA Vice Chair: Gregg Streibig, CFA Vice Chair: Wendy Walker, CFA
NYSSA ANNUAL REPORT 2007- 2008 14
Student
Committee Description:
The Student Committee encompasses the SEMI Task Force and the Student Programming Task Force. These two groups focus on and enhance the Society’s university outreach program. The SEMI Program (Scholarship, Education, Mentoring, and Internship) is an eight-week educational summer program for undergraduate finance students from New York City–area schools. The program pairs each student with a NYSSA member-mentor during a summer internship. The Student Programming Task Force hosts programs such as the Investment Research Challenge and other NYSSA-sponsored on-campus activities. The Challenge provides seminars on ethics, research analysis, and writing, and gives students the chance to present their research reports on one company to a panel of distinguished investment executives.
Accomplishments, Event Highlights and Special Notes:
The Investment Research Challenge kicked off its 5th year with the same great volunteer spirit that has been the hallmark of the program since it began. Faculty and student representatives from eight area universities were joined by a record number of NYSSA members who volunteered as panelists, graders, mentors, and seminar presenters to support this initiative. NYSSA has also collaborated with CFA Institute to organize the first ever international Investment Research Challenge, modeled after the NYSSA Challenge.
On April 26, 2007, the winning team from NYSSA faced off against the winners of Challenges held by the Boston, Texas, and Hong Kong Societies. In summer 2006, SEMI added Baruch College to its roster of participating schools, with Baruch representing the largest pool of applications ever received from a single school. Five Baruch students were accepted into the 2006 program. Two outside firms hosted the educational breakfast meetings that are an integral part of the SEMI experience. Students enjoyed an inside look at Blackstone and Morgan Stanley. The Student Committee also joined with the Career Development Committee to present a Career Chat on “Early-Stage Career Challenges”.
Special Thanks and Recommendations for 2007-2008:
We thank our SEMI subcommittee, especially Charlie O’Donnell and Ferian Nickelson, for the fantastic job they have done in organizing and running that program. Also, many thanks to all of the members who volunteered their time as presenters, graders, mentors, and panelists for the 5th Annual Investment Research Challenge.
Committee History
The Scholarship Committee was formed in 1996 to distribute a scholarship fund left to the Society by longtime member Heloise S. Ham. Ham led an impressive career and was one of the first women in finance when she entered the profession in the 1950s. The SEMI initiative was launched from this scholarship program in 1997. NYSSA introduced the Investment Research Challenge in the 2002– 2003 academic year as a means to promote best practices in research among the next generation of analysts. NYSSA has collaborated with CFA Institute for the first international Challenge in April 2007.
Chair: Charles H. Stryker, CFA Vice Chair: Timothy McGlinn, CFA
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Value Investing
Committee Description:
The mission of the Value Investing Committee is to provide a forum for the application and modification of Benjamin Graham’s principles in today’s domestic and international markets.
Accomplishments, Event Highlights and Special Notes: A fireside chat with Murray Stahl, CEO and CIO Horizon Asset Management on September 24, 2007.
The Value Investing Committee paid homage to preeminent value investor Walter J. Schloss, CFA, with a dinner on October 11, 2006, at the Harvard Club.
Special Thanks and Recommendations for 2007-2008:
We would like to offer a special thanks to our guests for their generous time spent and invaluable life and investing lessons shared with our committee. We would also like to thank our sponsor PCS Securities Inc.. Also, without the unfettering dedication of the NYSSA staff, none of these events would be possible. Last but not least, we would like to thank our members, without whom, the committee and the platform for the betterment of value investing would not be what it is today.
Chair: Steven Rogé, CMFC® Vice Chair: Christopher M. Kehoe, CFA
Management Discussion and Analysis Overview Overview The New York Society of Security Analysts (NYSSA) was established in 1937 by a group that included Benjamin Graham, the “father of securities analysis” and one of the most influential men in the history of finance. It is the premier independent forum for the exchange of information among investment decision-makers. A not-for-profit educational organization with over 10,000 members, NYSSA is committed to the pro-motion of best practices and the highest professional and ethical standards in the investment industry. NYSSA is the largest of the more than 135 societies worldwide that make up CFA Institute, which has over 92,000 members.
Membership Career Development: Through participation in NYSSA, members gain access to a far-reaching network of senior investment professionals and corporate executives. NYSSA also helps members with their strategic career goals through resources (e.g. monthly Career Chats and career-oriented workshops, and an extensive online database of job listings tailored for securities analysts).
Committees: More than 1,500 investment professionals participate in NYSSA’s 13 member committees each year. These are among NYSSA’s most active members and represent a high caliber of professionals: 23% are at the senior VP level and above. Annual Dinner: The Annual Dinner is the biggest event on the NYSSA calendar. It is an opportunity to celebrate the accomplishments of NYSSA’s members and to honor individual Volunteers of the Year. Last year’s speak-er was SEC Chairman Christopher Cox. Past speakers include Robert E. Rubin, chairman of the Executive Committee of Citigroup, Inc.; Barton Biggs, managing partner at Traxis Partners LLC and author of Hedgehogging; and Paul Steiger, managing editor of The Wall Street Journal.
Networking Events: NYSSA hosts several networking events through the year including the new member receptions and golf outings.
Programs Education: NYSSA is a leading provider of weekly review courses for CFA® Exam Levels I, II, and III, and a CFA curriculum of preparatory workshops. NYSSA also offers professional development classes for experienced professionals on a range of topics, from financial modeling to corporate valuation methodologies to deal structuring.
Industry Conferences: NYSSA has a long-standing tradition as the premier provider of corporate presentations to the Wall Street analyst community. At NYSSA’s industry conferences, small and micro-cap companies present their stories to analysts and institutional investors.
Topical Conferences and Seminars: NYSSA’s topical conferences and seminars bring together industry experts and thought leaders to discuss the critical issues facing financial professionals.
Forums: Shorter programs are presented over breakfast or lunch or after work and often feature a networking component. These presentations are timely, cutting-edge, and committee-driven, keeping the pulse on the industry. Programs that are presented in “brown bag” format are free to members.
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Student Programs: NYSSA is committed to building the future of the industry by helping prepare students for careers as financial professionals. The Investment Research Challenge is an eight-month initiative in which leading industry practitioners teach best practices in securities research to students from top area business schools. The SEMI program helps to advance undergraduate students through a program of Scholarship, Education, Mentoring and Internships.
Results of Operations
Review of the NYSSA’s ActivitiesThe Society’s fiscal year ends on August 31. The Society’s revenues consist primarily of membership dues, education registrations, and conference fees and registrations. Revenue growth of 14.7% in fiscal 2007 was generated primarily through organic growth in membership and educational programming. Membership (excluding students) increased 8.8% to 10,859 total members in fiscal 2007, from 9,977 in fiscal 2006. Additionally, the renewal rate moved up slightly to 90% in fiscal 2007, from 89% in fiscal 2006.
Revenue Aug. 31,
2007Y/Y
ChangeAug. 31,
2006Y/Y
ChangeAug. 31,
2005
Membership $2,153,870 12.0% $1,923,770 4.9% $1,834,670
Education $3,102,591 29.1% $2,403,650 16.3% $2,067,206
Programs $1,207,895 -12.5% $1,380,553 32.9% $1,038,872
Other $476,725 38.1% $345,119 36.1% $253,586
$6,941,081 14.7% $6,053,092 16.5% $5,194,334
The increase in education-related revenues was due to a slight price increase in CFA exam prep courses and overall increased attendance. Attendance at CFA-related courses increased 30% to 2,055 in fiscal 2007, from 1,583 in fiscal 2006. Professional development and continuing education expanded its curriculum, resulting in a 12% increase in attendance to 1,610 in fiscal 2007, from 1,439 in fiscal 2006.
While programming revenues declined in the year as the mix of programming shifted to fewer full-day topical conferences and more morning and evening forums as well as the doubling of “free” programs for members (increasing from 66 in fiscal 2006 to 125 in fiscal 2007). Further, several previously successful industry conferences were not as popular this year, leading to lower levels of paid attendees. The Society also introduced “brown bag” programs, which are programs targeted at areas of specialty interest and provide little or no revenue. Attendance at programs included in programming and other increased to 12,427 in fiscal 2007 from 10,255 in fiscal 2006, an increase of 20%.
Program offerings, all events hosted by the Society, once again grew dramatically in the fiscal year (47%). During the year, the Society held 228 events comprised of 353 session days, from 155 events and 238 session days in fiscal 2006. We also expanded our relationship with other organizations, offering joint programs with Society of Quantitative Analysts and the National Investor Relations Institute for the first time.
NYSSA ANNUAL REPORT 2007- 2008 18
On the expense side, direct expenses in total increased $737,904, a 14.7% increase in fiscal 2007 from fiscal 2006. Indirect expenses declined 26% to $352,783 in fiscal 2007 from $478,346 in fiscal 2006, leading to an increase in total expenses of $612,341 or 11.1%. Personnel expenses accounted for $367,000 of the increase as we filled several open positions from 2006 and added staff to accommodate the 21% growth in programming events.
Expenses on technology updates and upgrades were $135,300. While these expenses were incurred in fiscal 2007, these upgrades should benefit the programming effort for a number of years. The significant changes in technology were (1) architecture change of the network to a hosted model with business continuity and recovery features installed; (2) website redesign to be completed in May 2008, adding many new features and capabilities for members to customize their experience and interaction with the Society; and (3) significantly expanded audio/visual capabilities to allow for live webcasts and archive availability on the website in the fall of 2007.
Net assets (operating income) increased to $822,352 or 50% in fiscal 2007, from $546,704 in fiscal 2006.
Expenses
Aug. 31, 2007
Y/Y Change
Aug. 31, 2006
Y/Y Change
Aug. 31, 2005
Program Services $5,765,946 14.7% $5,028,042 17.4% $4,281,216
Managerial and Administrative $352,783 -26.2% $478,346 18.0% $405,387
Change in net assets $822,352 50.4% $546,704 7.7% $507,731
Review of Changes in Financial PositionAt the end of fiscal 2007, NYSSA had $8.3 million in assets, up from $7.4 million in fiscal 2006. Of the $8.3 million in assets, $7.2 million is in cash and short-term marketable securities (primarily money market funds and short-term U.S. Treasury instruments). The remaining $1.1 million represents renewal dues receivable ($368,000), other prepaid expenses ($289,000), security deposit on facility ($200,387), and fixed assets ($258,898). Liabilities total $2,778,678, with $1,607,820 of the total in unearned dues revenue and $682,571 in unearned revenue (registrations for upcoming educational and programming events). The Society has no debt.
*The pages that follow contain the financial audit.
19 NYSSA ANNUAL REPORT 2007- 2008
THE NEW YORK SOCIETY OF
SECURITY ANALYSTS, INC.
Financial Statements for years ended August 31, 2007
and August 31, 2006
Independent Auditors’ Report
To the Board of Directors
The New York Society of Security Analysts, Inc.
We have audited the accompanying statements of financial position of The New York Society of Security Analysts, Inc. (the “Society”) as of August 31, 2007 and August 31, 2006 and the related statements of activities, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of the Society’s management. Our responsibility is to express an opinion on those 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, the financial statements referred to above present fairly, in all material respects, the financial position of The New York Society of Security Analysts, Inc. at August 31, 2007 and August 31, 2006 and the results of its activities and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
November 1, 2007
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Statements of Financial Position
Assets
August 31
2007 2006
Current assets Cash and cash equivalents (note 3) $ 6,382,125 $ 4,952,953
Investments, at market value (notes 2 and 4)
809,842
801,536
Accounts receivable, net of allowance for doubtful accounts of $3,600 in 2007 and $3,900 in 2006 (note 2)
499,698
498,615
Due from sub-landlord (note 6)
-
515,280
Prepaid expenses and other assets
157,489
132,543 Total current assets
7,849,154
6,900,927
Restricted cash and cash equivalents (note 6)
200,387
200,387
Leasehold improvements and equipment, at cost, net of accumulated depreciation (notes 2 and 5)
258,898 271,462
Total assets $ 8,308,439 $ 7,372,776
Liabilities and Net Assets
Current liabilities Accounts payable $77,352 $19,562
Accrued expenses and taxes
296,305
603,428
Unearned dues revenue (note 2)
1,607,820
1,503,372
Unearned revenue
682,571
680,489
Current portion of rent abatement (note 6)
49,558
49,558 Total current liabilities
2,713,606
2,856,409
Rent abatement, net of current portion (note 6)
65,072
114,630 Total liabilities
2,778,678
2,971,039
Net assets Unrestricted (note 12) Operating fund
251,986
1,021,624
Board designated – Building fund
4,935,938
3,118,196
Total unrestricted
5,187,924
4,139,820
Temporarily restricted (note 7)
341,837
261,917 Total net assets
5,529,761
4,401,737
Total liabilities and net assets $ 8,308,439 $ 7,372,776
TH
E N
EW
YO
RK
SO
CIE
TY
OF
SE
CU
RIT
Y A
NA
LY
STS,
IN
C.
Stat
emen
ts o
f Act
ivit
ies
Yea
r E
nded
Aug
ust
31
2007
20
06
T
empo
rari
ly
Tem
pora
rily
U
nres
tric
ted
R
estr
icte
d
T
otal
Unr
estr
icte
d R
estr
icte
d
T
otal
Supp
ort
and
reve
nue
M
embe
rshi
p du
es a
nd f
ees
(not
e 2)
$
2
,153
,870
$
-
$
2,
153,
870
$ 1,
923,
770
$
-
$1,9
23,7
70
E
duca
tion
3,10
2,59
1
-
3,
102,
591
2,40
3,65
0
-
2,40
3,65
0
Pr
esen
tatio
ns
84
5,35
8
-
84
5,35
8
93
1,29
6
-
931,
296
Se
min
ars
362,
537
-
362,
537
449,
257
-
44
9,25
7
C
ontr
ibut
ions
-
29,
080
29,0
80
-
26,5
65
26
,565
Sp
ecia
l act
ivity
din
ners
141,
885
7
4,90
0
21
6,78
5
10
3,46
5
49
,200
152,
665
O
ther
ope
ratin
g in
com
e
23
0,86
0
-
23
0,86
0
16
5,88
9
-
165,
889
N
et a
sset
s re
leas
ed f
rom
res
tric
tions
(no
te 9
)
34,
311
(3
4,31
1)
-
16,
150
(
16,1
50)
-
To
tal s
uppo
rt a
nd r
even
ue
6,
871,
412
69
,669
6,9
41,0
81
5,99
3,47
7
5
9,61
5
6,05
3,09
2E
xpen
ses
Pr
ogra
m s
ervi
ces
E
duca
tion
2,07
4,21
1
-
2,07
4,21
1
1,
859,
526
-
1,
859,
526
Pr
esen
tatio
ns
93
6,59
8
-
936,
598
957,
920
-
95
7,92
0
Sem
inar
s
75
2,23
3
-
752,
233
714,
759
-
71
4,75
9
Mem
bers
hip
1,8
52,3
20
-
1,8
52,3
20
1,38
8,79
2
-
1,
388,
792
Tota
l pro
gram
ser
vice
s
5,
615,
362
-
5,61
5,36
2
4,
920,
997
-
4,
920,
997
Su
ppor
ting
serv
ices
M
anag
emen
t and
gen
eral
352,
783
-
352,
783
478,
346
-
47
8,34
6
D
irec
t cos
ts o
f sp
ecia
l act
ivity
din
ners
15
0,58
4
-
1
50,5
84
10
7,04
5
-
107,
045
Tota
l exp
ense
s
6,
118,
729
-
6
,118
,729
5,
506,
388
-
5,
506,
388
Incr
ease
in n
et a
sset
s b
efor
e ot
her
addi
tions
(de
duct
ions
)
75
2,68
3
69,6
69
82
2,35
2
48
7,08
9
59
,615
546,
704
Oth
er a
ddit
ions
(de
duct
ions
)
In
vest
men
t inc
ome
(not
e 2)
225,
363
1
0,25
1
23
5,61
4
13
0,37
3
7,
599
137,
972
R
ealiz
ed (
loss
) on
sal
e of
inve
stm
ents
-
-
-
-
(12,
955)
(1
2,95
5)
C
hang
e in
unr
ealiz
ed v
alue
of
inve
stm
ents
7
0,05
8
-
70,0
58
6
7,28
0
1
7,21
5
8
4,49
5
In
crea
se in
net
ass
ets
1,04
8,10
4
79,
920
1,12
8,02
4
68
4,74
2
71
,474
756,
216
Net
ass
ets,
beg
inni
ng o
f ye
ar
4,1
39,8
20
2
61,9
17
4
,401
,737
3,
455,
078
190,
443
3,
645,
521
Net
ass
ets,
end
of
year
$
5,1
87,9
24
$
3
41,8
37
$
5,5
29,7
61$
4,
139,
820
$
26
1,91
7$
4,
401,
737
See
note
s to
fina
ncia
l sta
tem
ents
.
TH
E N
EW
YO
RK
SO
CIE
TY
OF
SE
CU
RIT
Y A
NA
LY
STS,
IN
C.
Stat
emen
t of
Fun
ctio
nal E
xpen
ses
Y
ear
End
ed A
ugus
t 31
, 200
7
Supp
orti
ng
Pro
gram
Ser
vice
s
Se
rvic
es
M
anag
emen
t
A
nd
2007
20
06
Edu
cati
on
Pre
sent
atio
ns
Se
min
ars
M
embe
rshi
p
Tot
al
Gen
eral
T
otal
T
otal
Staf
f pa
yrol
l and
ben
efits
$
5
89,0
35
$
31
7,55
5
$
398
,564
$
953,
451
$
2,2
58,6
05
$
14
2,06
1 $
2
,400
,666
$
2,0
21,5
80
Tem
pora
ry h
elp
11,2
97
1,
000
-
-
12,2
97
-
12,2
97
23
,886
Prof
essi
onal
fee
s
55
4,39
1
28
3,23
9
22
,312
53,6
13
91
3,55
5
48
,956
962,
511
989,
009
Scho
lars
hips
gra
nted
14,0
00
-
-
5,
000
19,0
00
-
19,0
00
16
,000
Boo
ks a
nd p
ublic
atio
ns
27
3,14
8
-
3,55
3
20
,149
296,
850
1,18
1
29
8,03
1
22
6,40
4
Prin
ted
mar
ketin
g m
ater
ials
24,1
63
24
,468
9,99
9
8,
195
66,8
25
-
66,8
25
64
,193
Prin
ting
and
stat
ione
ry
15
,596
521
1,97
9
18
,327
36,4
23
45
2
36
,875
40,8
85
Offi
ce e
xpen
ses
85,0
58
38
,611
50,4
51
16
9,36
4
34
3,48
4
19
,713
363,
197
322,
350
Dat
a pr
oces
sing
68,0
13
36
,243
47,4
47
14
8,09
1
29
9,79
4
28
,589
328,
383
144,
146
Del
iver
y an
d m
ail h
andl
ing
32,2
36
48
,750
22,1
56
10
,538
113,
680
406
114,
086
124,
462
Cat
erin
g
94
3
56
,227
44,1
64
39
,164
140,
498
35,5
19
17
6,01
7
25
8,13
0
Prom
otio
nal a
ctiv
ities
-
-
-
20
,968
20,9
68
62
3
21
,591
4,17
1
New
slet
ter
46,0
01
32
,337
61,7
14
69
,001
209,
053
18,6
74
22
7,72
7
19
2,37
7
Occ
upan
cy (
note
6)
224,
051
77,1
55
71
,157
230,
262
602,
625
42,8
75
64
5,50
0
56
1,94
6
Ren
tal e
xpen
ses
(not
e 6)
25,5
00
-
-
6,
461
31,9
61
3,
500
35,4
61
18
5,35
9
Equ
ipm
ent r
enta
ls
-
-
-
11,9
53
11
,953
-
11
,953
16,0
98
Dep
reci
atio
n
26
,614
8,77
5
8,
205
27,4
12
71
,006
5,27
6
76
,282
53,0
43B
ank
and
cred
it ca
rd
ser
vice
cha
rges
83,9
61
11
,346
9,40
2
58
,021
162,
730
1,47
9
16
4,20
9
13
6,30
4
Mis
cella
neou
s
2
04
3
71
1,1
30
2,3
50
4,0
55
3,4
79
7,5
34
1
9,00
0
T
otal
$
2,0
74,2
11$
9
36,5
98$
7
52,2
33$
1
,852
,320
$
5,6
15,3
62$
352
,783
$
5,96
8,14
5$
5,
399,
343
See
note
s to
fina
ncia
l sta
tem
ents
.
TH
E N
EW
YO
RK
SO
CIE
TY
OF
SE
CU
RIT
Y A
NA
LY
STS,
IN
C.
Stat
emen
t of
Fun
ctio
nal E
xpen
ses
Y
ear
End
ed A
ugus
t 31
, 200
6
Su
ppor
ting
Pro
gram
Ser
vice
s
Ser
vice
s
Man
agem
ent
A
nd
2006
E
duca
tion
P
rese
ntat
ions
Se
min
ars
Mem
bers
hip
T
otal
G
ener
al
Tot
al
Staf
f pa
yrol
l and
ben
efits
$ 5
67,1
32
$
27
4,34
6
$ 35
2,31
9
$
708
,942
$
1,9
02,7
39
$
118
,841
$
2,0
21,5
80
Tem
pora
ry h
elp
-
-
-
-
-
23
,886
23,8
86
Prof
essi
onal
fee
s
46
4,65
4
29
6,77
2
20
,221
14,9
69
79
6,61
6
19
2,39
3
98
9,00
9
Scho
lars
hips
gra
nted
16,0
00
-
-
-
16,0
00
-
16,0
00
Boo
ks a
nd p
ublic
atio
ns
21
1,77
3
-
2,91
3
10
,084
224,
770
1,63
4
22
6,40
4
Prin
ted
mar
ketin
g m
ater
ials
24,9
01
27
,744
10,3
23
1,
225
64,1
93
-
64,1
93
Prin
ting
and
stat
ione
ry
4,
787
924
1,88
4
31
,182
38,7
77
2,
108
40,8
85
Offi
ce e
xpen
ses
67,9
65
35
,980
44,2
74
15
1,43
9
29
9,65
8
22
,692
322,
350
Dat
a pr
oces
sing
35,2
42
18
,372
23,8
18
56
,233
133,
665
10,4
81
14
4,14
6
Del
iver
y an
d m
ail h
andl
ing
17,2
85
66
,554
24,9
20
15
,215
123,
974
488
124,
462
Cat
erin
g
-
128,
323
91,4
70
26
,313
246,
106
12,0
24
25
8,13
0
Prom
otio
nal a
ctiv
ities
-
1,
875
-
2,
296
4,17
1
-
4,17
1
New
slet
ter
38,8
60
27
,510
52,1
34
58
,098
176,
602
15,7
75
19
2,37
7
Occ
upan
cy (
note
6)
155,
573
49,3
55
65
,204
230,
904
501,
036
60,9
10
56
1,94
6
Ren
tal e
xpen
ses
(not
e 6)
175,
945
-
5,
910
2,25
4
18
4,10
9
1,
250
185,
359
Equ
ipm
ent r
enta
ls
87
0
11
,898
3,33
0
-
16,0
98
-
16,0
98
Dep
reci
atio
n
15
,026
3,75
7
5,
175
24,0
83
48
,041
5,00
2
53
,043
Ban
k an
d cr
edit
card
s
ervi
ce c
harg
es
63
,013
10,9
42
10
,219
51,2
49
13
5,42
3
88
1
13
6,30
4
Mis
cella
neou
s
50
0
3,5
68
6
45
4
,306
9
,019
9,98
1
19,
000
Tot
al $
1,85
9,52
6$
957,
920
$714
,759
$1,
388,
792
$4,9
20,9
97$
478
,346
$5,3
99,3
43
See
note
s to
fina
ncia
l sta
tem
ents
.
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Statements of Cash Flows
Year Ended
August 31
2007 2006
Cash flows from operating activities Increase in net assets $ 1,128,024 $ 756,216
Adjustments to reconcile increase in net assets to net cash provided by operating activities
Depreciation 76,282
53,043
Loss on disposal of furniture, fixtures, equipment 3,989
-
Realized loss on sale of investments -
12,955
Change in unrealized value of investments (70,058)
(84,495)
Amortization of premium on U.S. Treasury securities 61,752
61,752
(Accretion) of discount on U.S. Treasury Strips -
(1,586)
(Increase) decrease in current assets Accounts receivable
(1,083)
142,378
Prepaid expenses and other assets
(24,946)
27,330
Increase (decrease) in current liabilities Accounts payable
57,790
(6,338)
Accrued expenses and taxes
(307,123)
335,785
Unearned dues revenue
104,448
84,142
Unearned revenue
2,082
(15,967)
Change in rent abatement
(49,558) 164,188
Net cash provided by operating activities 981,599
1,529,403
Cash flows from investing activities
Sale/maturity of investments -
2,472,983
Purchases of leasehold improvements and equipment (67,707)
(223,850)
Amounts expended for leasehold improvements to be reimbursed by sub-landlord
-
(515,280)
Reimbursement from sub-landlord 515,280
-
Net cash provided by investing activities 447,573
1,733,853
Net increase in cash and cash equivalents 1,429,172
3,263,256
Cash and cash equivalents, beginning of year 5,153,340
1,890,084
Cash and cash equivalents, end of year $ 6,582,512 $ 5,153,340
Consists of: Current assets $ 6,382,125 $ 4,952,953
Restricted 200,387
200,387
Total cash and cash equivalents $ 6,582,512 $ 5,153,340
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements August 31, 2007 and August 31, 2006
Note 1 – Nature of organization
The New York Society of Security Analysts, Inc. (the “Society”) is a not-for-profit, independent society whose mission is to serve the needs of all professionals involved in the investment decision-making process and to educate the investing public. The Society is involved in all professional aspects of interest to its members. The Society generates revenue from three primary sources: (1) membership dues; (2) educational seminars (the largest seminar producer of income is Chartered Financial Analysts classes); and (3) program meetings whereby corporations pay a fee to sponsor meetings.
Note 2 – Summary of significant accounting policies
Net assets
Unrestricted
Operating fund
Net assets that are not subject to donor-imposed stipulations and that may be expendable for any purpose in performing the primary objectives of the Society are considered unrestricted in nature.
Building Fund
The Society maintains a building fund to provide for the eventual replacement or improvement of the Society’s facility. Any interest earned or unrealized gain or loss on the assets is credited to or deducted from the building fund balance. The Society transferred $1,251,806 from the Insurance Recovery Fund to the Building Fund in the 2007 fiscal year to close out the Insurance Recovery Fund. In addition, the Society transferred $400,000 in the 2007 and 2006 fiscal years, from the Operating fund to the Building Fund (see note 12).
Temporarily restricted
Net assets subject to donor-imposed stipulations that may or will be met either by actions of the Society and/or the passages of time are considered temporarily restricted. As the restrictions are satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the accompanying financial statements as net assets released from restrictions.
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements (continued) August 31, 2007 and August 31, 2006
Note 2 – Summary of significant accounting policies (continued)
Investments
The Society reports its investments at market value as reported to them by Merrill Lynch. Interest income and the change in unrealized value of investments are allocated between unrestricted and temporarily restricted net assets. Investment income consists of interest income.
Leasehold improvements and equipment
Furniture, fixtures and equipment are depreciated on the straight-line method over the estimated useful lives of the assets ranging from three to seven years. During 2007, equipment with a cost basis of $59,446 an accumulated depreciation of $55,457 were removed from the books of the Society resulting in a loss on disposal of $3,989.
Membership dues
Membership dues are recognized as income in the applicable membership period, which is from June 1st to May 31st each year. Consistent with past practice, it is the Society’s policy to record the remainder of the anticipated members’ annual dues as accounts receivable and unearned dues revenue as of August 31st each year.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements. Actual results could differ from these estimates.
Functional expenses
The cost of providing the various programs and other activities has been summarized on a functional basis. Accordingly, certain costs have been allocated among the programs and supporting services benefited.
Concentration of credit risk
The Society’s financial instruments that are potentially exposed to concentration of credit risk consist of cash and investments. The Society places its cash with what it believes to be quality financial institutions and primarily invests in U.S. Treasury Securities. The Society routinely assesses the financial strength of its cash and investment portfolio. As a consequence, concentrations of credit risk are limited.
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements (continued) August 31, 2007 and August 31, 2006
Note 2 – Summary of significant accounting policies (continued)
Cash equivalents
The Society considers highly liquid investments with original maturities of 90 days or less to be cash equivalents. Included in cash equivalents are money market funds and a U.S. Governmental Securities Mutual Fund.
Note 3 – Cash and cash equivalents
Cash and cash equivalents are comprised of the following as of August 31, 2007 and August 31, 2006:
2007
Value
Investing
Operating Building Scholarship Archive
Fund Fund Fund Fund Total
Cash on hand $ 300 $ - $ - $ - $ 300
Checking
165,843
-
-
103,939
269,782Money market account
17,992
-
-
-
17,992
U.S. Govt. Securities Mutual fund
1,086,524
-
-
-
1,086,524
Money market fund
652,069
4,121,570
233,888
-
5,007,527
Total $ 1,922,728 $ 4,121,570 $ 233,888 $ 103,939 $ 6,382,125
2006
Operating Building Scholarship
Fund Fund Fund Total
Cash on hand $ 300 $ - $ - $ 300
Checking
129,401
-
-
129,401
Money market account
76,771
-
-
76,771U.S. Govt. Securities Mutual fund
1,294,171
-
-
1,294,171
Money market fund
1,336,059
1,913,079
203,172
3,452,310 Total $ 2,836,702 $ 1,913,079 $ 203,172 $ 4,952,953
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements (continued) August 31, 2007 and August 31, 2006
Note 4 – Investments
The following is a summary of the investments as of August 31, 2007 and August 31, 2006:
2007 2006
Cost Market Cost Market
Building fund
U.S. Treasury Notes $ 653,163
$ 809,842 $ 714,915 $ 801,536 Total $ 653,163 $ 809,842 $ 714,915 $ 801,536
Note 5 – Leasehold improvements and equipment
The following is a summary of the leasehold improvements and equipment as of August 31, 2007 and August 31, 2006:
2007 2006
Leasehold improvements $ 137,094 $ 120,398
Furniture, fixtures and equipment
251,646
260,081 Sub-Total
388,740
380,479
Less: accumulated depreciation
129,842
109,017
Total leasehold improvements and equipment $ 258,898 $ 271,462
Note 6 – Rental lease agreements
On November 27, 2001, the Society entered into an agreement to sublease office space. The sublease, which commenced January 14, 2002 and was to expire on December 31, 2003, required an annual base rental of $372,186 plus a certain portion of the landlord’s operating expenses. The Society elected to extend the lease for two additional one-year periods through 2005.
During the 2005 fiscal year, the Society renegotiated the lease agreement and reduced the annual base rent. The lease required an annual base rent of $286,570 in the 2006 fiscal year, plus a portion of the landlord’s operating expenses. Rent expense for the period of September 1, 2005 thru December 31, 2005 totaled $88,931, and has been included in occupancy charges on the statement of functional expenses.
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements (continued) August 31, 2007 and August 31, 2006
Note 6 – Rental lease agreements (continued)
In addition to the rental of office space, the Society rents space on an as needed basis for its educational programs. Rental expense for the years ended August 31, 2007 and August 31, 2006 totaled $31,961 and $175,945, respectively.
During August 2005, the Society entered into an agreement to sublease office and conference space, commencing in December 2005 and expiring in December 2009. The sublease requires monthly lease payments of $50,097 plus the Society’s proportionate share of certain operating expenses of the sub-landlord as defined in the sublease agreement. Rent expenses paid for the period of December 12, 2005 thru August 31, 2006 totaled $233,784 and have been included in occupancy charges on the statement of functional expenses. The future minimum sublease payments would be as follows:
Fiscal Year
2008 $ 601,160
2009 601,160
2010 198,771
Total $ 1,401,091
As part of the lease agreement, the Society received four months of free rent. The Society amortizes rent expense each year equally over the term of the lease. The difference between rent expense recorded in this manner and the actual cash paid per the lease agreement represents deferred lease liability.
In connection with the above sublease, the Society delivered to the sub-landlord a letter of credit in the amount of $200,387 as security for the sublease agreement. In connection with the letter of credit, the Society established a separate bank account in the amount of the letter of credit, as required by the lease.
In accordance with the above sublease agreement, the Society is entitled to be reimbursed by the sub-landlord for hard costs and expenses for a maximum amount of $515,280. The Society incurred such costs during the 2006 and 2005 fiscal years and, during the 2006 fiscal year submitted a request for the full amount of the reimbursement from the sub-landlord. This reimbursement was received during the 2007 fiscal year.
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements (continued) August 31, 2007 and August 31, 2006
Note 7 – Temporarily restricted net assets
In 1996, the Society established the Heloise S. Ham Educational Scholarship Fund (the “Fund”) from a pledge received from the family of Heloise S. Ham to endow a scholarship program and recorded it as temporarily restricted. On an ongoing basis, the Fund is funded by contributions from the family of Heloise S. Ham and income from the Fund assets and Society members. The scholarships are available to undergraduate students who are enrolled full-time in a college or university in the greater New York area and who have completed at least their sophomore year by the time the program begins in the summer.
They must also demonstrate academic excellence and have an interest in the securities profession. Because these funds can only be used for scholarship purposes, the assets of the fund are considered temporarily restricted.
During 2006 the Society received funds of $49,200 for the creation and maintenance of an archive to benefit value-investing research. The fund is recorded as temporarily restricted.
The following is a summary of the activity of the temporarily restricted net assets for the year ended August 31, 2007:
Balance, Balance,
Beginning Net Assets End of Year Additions Released of Year
Scholarship fund $ 212,717 $ 39,331 $(14,150) $237,898
Value investing archive
49,200
74,900
(20,161) 103,939 Total $ 261,917 $ 114,231 $(34,311) $341,837
Note 8 – Retirement plan
The Society maintains a defined contribution plan (the “Plan”) for all eligible employees who have completed ½-year of service. Employees vest in the Plan 20% each year over five years, beginning in year two. During the 2007 and 2006 fiscal years, the Society contributed 5% of each employee’s base wages to the Plan. Contributions to the Plan are determined annually by the Society’s Board of Directors. The plan expense amounted to $80,403 and $67,473 for the years ended August 31, 2007 and August 31, 2006, respectively.
Note 9 – Net assets released from restrictions
Net assets were released from donor restrictions by incurring expenses that satisfied the restricted purposes specified by donors as follows:
Purpose restriction accomplished: Scholarships $14,000 Bank service charges 150
Value investing archive 20,161
Total $34,311
THE NEW YORK SOCIETY OF SECURITY ANALYSTS, INC.
Notes to Financial Statements (continued) August 31, 2007 and August 31, 2006
Note 10 – Legal claims
As of August 31, 2007, management was not aware of any legal claims against the Society. While claims may arise from time to time in the ordinary course of business, such claims would not in the opinion of management have a material effect on the Society’s financial statements.
Note 11 – Tax status
The Society is exempt from Federal income taxes under Section 501(c)(3) of the Internal Revenue Code (the “Code”). In addition, the Society has been determined by the Internal Revenue Service to be a publicly supported organization, and not a private foundation, within the meaning of Section 509(a)(2) of the Code.
Note 12 – Unrestricted net assets
The following is a summary of the activity of the unrestricted operating and board designated – building fund for the years ended August 31, 2007 and August 31, 2006:
Unrestricted
Board-Designated-
Operating Building
Fund Fund Total
Balance, at August 31, 2005 $ 839,997 $ 2,615,081 $ 3,455,078 Revenue Investment income
94,032
36,341
130,373
Other revenue
5,993,477
-
5,993,477
Change in unrealized value of investments
356
66,924
67,280
Total revenue
6,087,865
103,265
6,191,130
Less: Expenses 5,506,238
150
5,506,388
Increase before interfund transfer 581,627
103,115
684,742
Interfund transfer (400,000)
400,000
-
Increase in net assets
181,627
503,115
684,742
Balance, at August 31, 2006 1,021,624
3,118,196
4,139,820
Revenue Investment income
129,485
95,878
225,363
Other revenue
6,871,412
-
6,871,412
Change in unrealized value of investments
-
70,058
70,058
Total revenue
7,000,897
165,936
7,166,833
Less: Expenses 6,118,729
-
6,118,729
Increase before interfund transfers 882,168
165,936
1,048,104
Interfund transfer to close out Insurance Recovery Fund
(1,251,806)
1,251,806
-
Interfund transfer (400,000)
400,000
-
Increase (decrease) in net assets
(769,638)
1,817,742
1,048,104
Balance, at August 31, 2007 $ 251,986 $ 4,935,938 $ 5,187,924
Officers
President Jan Jackrel, CFA Citigroup
Executive Vice President Nanci D. Morris, CFA Princeton Theological Seminary
Treasurer Thomas J. Boczar, Esq., CFA Twenty-First Securities Corp.
Secretary R. Bruce Cameron, CFA Berkshire Capital
Directors:
Karen E. Boroff Dean Seton Hall University’s Stillman School of Business
Walter (Bud) Haslett, CFA, FRM CEO Miller Tabak Capital Management; Director Option Analytics Miller Tabak & Co., LLC
A. Michael Lipper, CFA President Lipper Advisory Services, Inc., & Lipper Consulting Services, Inc.
Mary Jane McQuillen Director Social Awareness Investment Portfolios ClearBridge Advisors
Andrew J. Melnick, CFA Managing Director Somerset Capital Management
Elizabeth K. Miller, CFA & CIC Managing Director Trevor Stewart Burton & Jacobsen Inc.
Guy G. Rutherfurd, Jr., CFA Principal F&V Capital Management, LLC
Stanley G. Lee, CFA Principal & Portfolio Manager David J. Greene & Co., LLC
Board Members2007-2008
34 NYSSA ANNUAL REPORT 2007- 2008
NYSSA ANNUAL REPORT 2007- 2008 35
Executive
Executive Director Alvin Kressler
Programming,Education & Event Services
Director of Programming, Education & Event Services Eileen Budd
Associate Director of Conferences & Programming Eileen Stempel
Presentations & Programming Manager Evelina Ioselev Program Planner Derly Vargas
Education Manager Open
Education Associate Shelia Panzavecchia
CFA Instructor Susan Lakatos
CFA Instructor
O. Nathan Ronen
Event Services Manager Sharufa Rashied-Walker
Event Services Coordinator Bethany Rivera
Finance, Administration, HR & IT
Director of Finance, Administration, HR & IT Michael Herz
Financial & Benefits Administrator Daisy Carney
Account Manager Stephen Frasier Accountant Nancy Kahanec
IT Manager William Perez
Technical Coordinator Brian Henley
CFA Instructor O. Nathan Ronen
Marketing & Membership Development
Director of Marketing, Membership & Development; Investment Professional Managing Editor William Drawbridge
Business Management Developer Brian Stype
Marketing Manager Lee Arbel
Marketing Associate Shauntay Jones
Marketing Coordinator Natacha Lavelanet
Member Services
Manager of Marketing & Development - Member Services Nanci Roth
Office Manager & Member Services Rosalie Poss Member Services Coordinator Maritza Valenzuela
The Investment Professional
Editor Dawn Cavlieri
Associate Editor Micaela Morrissette
NYSSA Staff2007-2008