Fellow Members of the U.S. Naval Institute,
We are pleased to communicate this summarized annual report on the State of the Institute in its 134th year of service. You will find the full 2007 Annual Report, together with the 2007 Financial Statement, on the USNI Web site (www.usni.org). In accordance with the Constitution & By-Laws, we will also provide the Annual Report to members at the USNI Annual Meeting in April 2008.
The Institute's goals remain constant—to build improved financial security and increase our operational relevance. To reach these goals we set three financial objectives: increase the Foundation portfolio, deliver a positive USNI net operating margin, and maintain a positive cash flow. We also set two operational objectives: grow membership/constituents and increase the Institute's mission-related contribution to national defense.
We did not achieve strong financial results in Year 2007. However, even with the stock market's fourth quarter distress we have increased USNI net worth by 26 percent since 2004 and eliminated all outstanding loans. We completed 2007 with a small negative net operating margin after three consecutive years of positive performance. Revenues stayed flat, as the holiday season was no better for us than it was for the commercial sector. Most important, the Foundation had a dismal year, achieving less than 50 percent of goal. Cash flow improved by some $400K but was still negative due in large measure to the Foundation shortfall.
We enjoyed a very strong operations year with slightly more than 60,000 members and record high accession and retention rates. We built a new, improved USNI Web site, opened online membership free to all military, and launched our Get the Gouge community for today's warriors. Staff turnover dropped to less than 12 percent with 58 staff on board—our most stable situation since before 2000. We also continued our transition to MS Dynamics, featuring all new integrated applications and a fully updated membership database. We are on schedule to complete this important IT transition in 2008.
This was one of our finest years for recognition of Institute authors and publications. In the Naval Institute Press, Joanne Steen and Regina Asaro won Author of the Year honors for Military Widow: A Survival Guide. Ken Werrell's, Sabres Over MiG Alley: The F-86 and the Battle for Air Superiority in Korea won the 2006 Air Force Historical Foundation Book Award for Best Book; and David Curtis Skaggs was a co-winner in the "Biography and Autobiography" category of the 2007 John Lyman Book Awards for Oliver Hazard Perry: Honor, Courage, and Patriotism in the Early U.S. Navy.
In the Periodicals Group, Commander Jerry Hendrix and three of his TACRON 11 team won the Proceedings Author of the Year Award for their essays on topics ranging from financial incentives for Sailors to how we honor our heroes. Historian Richard B. Frank won Naval History Author of the Year for his Guadalcanal articles in the August 2007 issue. Captain Charles Gaouette, U.S. Navy, won 1st Prize and Captain Steve Davis, U.S. Navy, won Honorable Mention for Proceedings articles in the 2007 Literary Award from the Surface Navy Association (SNA). The Honorable John Lehman won the 2007 Bronze Award for Magazine Feature Article, Society of National Association Publications (SNAP), and Kristopher Wilson won the 2007 Bronze Award for Magazine Cover Photography, SNAP.
In the Media Group, the Institute's groundbreaking, high-definition Americans at War series was seen on PBS by more than 50 million households. The Air Force Academy, the Coast Guard Academy, and the Naval Academy adopted it as a leadership instructional set. The series won 1st Place, the Platinum AVA Award, in international competition sponsored by the Association of Marketing and Communication Professionals, and 1st Place International Television Association Peer Award for filming excellence.
We look forward to 2008 with confidence in all mission areas.
James M. Loy
Admiral, U.S. Coast Guard (Ret.)
Chairman of the Board
Thomas L. Wilkerson
Major General, U.S. Marine Corps (Ret.)
Chief Executive Officer