Fortunately for the Institute, with thanks to the USNI team and you, our members, the Naval Institute had its strongest financial performance in more than 20 years. In 2010 we continued and expanded the significant financial and operational successes of 2009.
The Institute met or exceeded every financial goal for 2010 and reported a positive net operating margin of $613K. Our traditional business lines—membership, periodicals, books, and conferences—showed positive operating margins. The Foundation raised $2.3M, due in no small measure to almost 5,000 member gifts and pledges, including some that were quite large.
The Naval Institute Foundation portfolio gained an additional 15 percent over the 29 percent growth of 2009. The combined impact for USNI was a positive consolidated margin of $1.8M with a net positive cash flow of $522K.
On the operational side, our modest budget together with economic uncertainties, produced a relatively flat member count, with a slight loss of just over 2 percent. With our marketing partner MGI, we added 1,900 new members last year and continued recording high—and stable—retention rates. Three events stand out: First, our USNI blog site, together with USNI.org, enjoyed a record year of member engagement; second, we placed our team of authors and national defense experts on radio and TV over 400 times; and third, with our partner MOAA, we conducted the fourth and best-to-date Defense Forum Washington conference series on military and veterans health care. The conference, covered by national media, was a critical success, with outstanding speakers including Senator Jim Webb (D-VA), Army Chief of Staff General George Casey and Mrs. Casey, and the Honorable Tammy Duckworth, herself a combat veteran and wounded warrior. We also conducted our first Naval History Conference on piracy in the Middle East, drawing more than 250 attendees including Midshipmen from the Naval Academy.
Again, all of this would not have been possible without you, our members, through your enduring strong commitments to the mission of the Institute. There should be no doubt that you played a critical role in our 2010 financial and operational success.
This was also another strong year for awards and recognition for USNI authors and publications.
At the 2010 USNI Honors Night we celebrated the 137th birthday of the Institute and honored those who helped to make it happen. Among them:
The General Prize Essay Contest : 1st Place to Captain Victor G. Addison, U.S. Navy, for a series of four essays pushing the envelope of conventional wisdom on the next naval strategies.
The Naval History Author-of-the-Year : Colonel Joseph H. Alexander, U.S. Marine Corps (Retired), for his essay on the 1944 Battle of Peleliu.
The Naval Institute Press Authors-of-the-Year : Admiral and Mrs. James G. Stavridis, for their extensive and continuing contributions in multiple books on naval leadership and training/helping naval families.
Other recognition for Naval Institute authors, speakers, and commentators included:
• Kenny Wayne Fields, The Rescue of Streetcar 304: A Navy Pilot’s Forty Hours on the Run in Laos
“2010 Eagle,” Gathering of Eagles Honor, c/o Air Command and Staff College
• Dennis Giangreco, Hell to Pay: Operation DOWNFALL and the Invasion of Japan , 194-1947
“Arthur Goodzeit Award for Best Military History Book of 2009” as presented by the New York Military Affairs Symposium
• Rear Admiral Joseph Callo, U.S. Navy Reserve (Retired), John Paul Jones: America’s First Sea Warrior
“Lee Wayland Douglas Award for Literary Achievement” as awarded by the Association of the United States Navy
• Gannon McHale, Stealth Boat: Fighting the Cold War in a Fast Attack Submarine
3rd Place – Memoirs other than Vietnam based - “2010 Branson Stars and Flags Book Award”
• Lynne Joiner, Honorable Survivor: Mao’s China, McCarthy’s America, and the Persecution of John S. Service
The American Academy of Diplomacy Douglas Dillon Award for a book of distinction on the practice of American diplomacy.
• Toshi Yoshihara and James R. Holmes, Red Star Over the Pacific: China’s Rise and the Challenge to U.S. Maritime Strategy
The Atlantic ’s 2010 Best Books of the Year: Foreign Affairs Edition
During 2011, we will continue to “live within our means” and to keep our professional staff together, engaged, and productive. Our 2011 objective is to continue the two-year trend of strong financial and operational performance. Only in this manner can we protect our “national treasure” and see it safely through this economic downturn.
With your continued strong support, we want the Institute to remain “the independent forum of the Sea Services advocating the necessity of global sea power for national security and economic prosperity.” The Sea Services and the nation need to hear our and your voices.
Finally, we announce that the Board has begun the search for the next CEO of the Naval Institute. Tom Wilkerson has served honorably and well for eight years; and will officially leave the Institute at Honors Night 2011. The Board is providing for an orderly transition to a new CEO to ensure that the mission of the Institute is continued and placed in good hands for the future. We appreciate your continued loyalty and advice.
Stephen M. Waters, Chairman of the Board
Thomas L. Wilkerson, Major General, USMC (Ret)
Chief Executive Officer
(Note: You will find the full 2010 Annual Report, together with the 2010 Financial Statement, on the USNI Web site ( www.usni.org  ). We will also provide a hard copy of the Annual Report to members who request it.)