2006 NBAA Annual Report
2006 NBAA Annual Report 2006 NBAA Annual Report
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years Ended June 30, 2006 and 2005Benefit cost, contributions and benefits paid for the years ended June30, 2006 and 2005, were as follows:2006 2005Net periodic benefit cost $ 368,422 $ 660,161Employer contribution $ 61,556 $ 43,045Benefits paid $ 61,556 $ 43,045Assumptions 2006 2005Weighted average assumption fordiscount rate as of June 30 6.25% 5.00%Initial health care cost trend rate 8.00% 9.00%Rate to which the health care cost trend rate isassumed to decline (the ultimate trend rate) 5.00% 5.00%Year that the rate reaches ultimate trend rate 2008 20085. Commitments and RisksOperating LeaseThe Association leases its administrative office space in Washington,DC and certain office equipment under agreements expiring at varioustimes through 2011. Future minimum annual rental payments requiredunder these operating leases are:For the Year Ending June 30,2007 $ 431,7432008 424,4742009 405,2352010 396,1552011 66,026Total $1,723,633The health care cost trend rate assumption has a significant effect onthe amounts reported in the accompanying consolidated financialstatements. If the assumed rates were to increase by one percentagepoint in each year, it would increase the benefit obligation as of June30, 2006 and 2005, by $367,828 and $514,273, respectively.ContributionsAs the plan is unfunded, contributions are expected to be equivalent tofuture estimated benefit payments. Accordingly, for the year endingJune 30, 2007, the Association expects to contribute approximately$82,000 to its postretirement health benefit plan.Estimated Future Benefit PaymentsThe following benefit payments, which reflect expected future service,as appropriate, are expected to be paid as follows:Estimated Future Benefit PaymentsFor the Year Ending June 30,2007 82,0002008 98,0002009 109,0002010 136,0002011 143,0002012–2016 922,000Total expenses related to leases were approximately $471,253 and$493,747 in the years ended June 30, 2006 and 2005, respectively.Concentrations of Credit RiskThe Association’s financial instruments that are exposed to concentrationsof credit risk consist primarily of cash equivalents andinvestments. The Association’s cash equivalents and investments are inhigh quality securities placed with major banks and financial institutionswith which it places its financial instruments. While the amount ata given bank at times exceeds the amount guaranteed by the FederalDeposit Insurance Corporation (FDIC) and, therefore bears some risk,the Association has not experienced nor does it anticipate any losseson its funds. The Association’s cash balances in excess of the FDICinsured limits were $330,000 and $4,000,000 as of June 30, 2006and 2005, respectively.6. Related PartiesThe Association is a member of the International Business AviationCouncil (IBAC) along with eight other aviation member groups.Administrative, overhead and direct costs are borne by IBAC membergroups through assessments. Costs incurred by the Association tosupport IBAC were $306,407 and $232,050 in 2006 and 2005,respectively.18 2006 NBAA ANNUAL REPORT
The National Business Aviation Association, Inc. Political ActionCommittee is a non-profit political association that was registered withthe Federal Election Commission on June 17, 1996. Administrative,overhead and direct costs were borne by the Association during theyears ended June 30, 2006 and 2005.7. Joint Venture and Cooperation AgreementThe Association created EBACE, LLC, a partnership in which NBAAhas a 50-percent ownership interest and is the general partner.EBACE, the European Business Aviation Convention & Exhibition, wascreated to address the issues of European-based operators, U.S. operatorsflying to Europe and non-operators that can benefit from the useof aircraft.The Association entered into a cooperation agreement with theBrazilian Association of General Aviation (ABAG). Revenue andexpenses generated by activities associated with this agreement areshared equally between the Association and ABAG. The purpose ofthis agreement is to address the issues of Latin American based operatorsand this will be facilitated by a joint effort entitled LABACE, theLatin American Business Aviation Conference & Exhibition. In June2006, NBAA made the decision to cancel the LABACE conventionthat was to be held in fiscal year 2007. Consequently, any expensesfor the future meeting were accounted for in fiscal year 2006. Therewas not a separate Latin American conference held during fiscal year2006.The equity in net income of the unconsolidated joint venture andcooperation agreement reported in the accompanying consolidatedstatements of activities consists of the Association’s share of therevenue and expenses as follows:Since the joint venture or cooperation agreement retain no assets, noinvestment in unconsolidated joint ventures is reported in the accompanyingconsolidated statements of financial position.8. NBAA Charities (formerly NBAA BASIC Fund)The BASIC Fund is a tax exempt organization recognized underInternal Revenue Code Section 501(c)(3). The BASIC Fund was organizedto provide educational and historical programs relatedto business aviation. Effective for the year ended June 30, 2006, andformalized in 2007, it was decided to rename the entity “NBAACharities” and revise its mission to represent a broader scope of charitablegiving within the business aviation industry. Activity withinNBAA Charities for the years ended June 30, 2006 and 2005,respectively, is as follows:9. Reclassifications2006 2005Beginning Net Assets $ 171,110 $ 171,110Donations received 45,765 -Contributions made (216,875) -Net activity in BASIC Fund (171,110) -Ending Net Assets $ – $ 171,110Certain 2005 amounts have been reclassified to conform with the2006 presentation.EBACE LABACE TotalYear Ended June 30, 2006Revenue $ 4,259,090 $ – $ 4,259,090Expenses (3,294,209) (214,176) (3,508,385)Net $ 964,881 $ (214,176) $ 750,705Year Ended June 30, 2005Revenue $ 2,853,873 $ 451,201 $ 3,305,074Expenses (2,076,377) (448,044) (2,524,421)Net $ 777,496 $ 3,157 $ 780,6532006 NBAA ANNUAL REPORT 19
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTSFor the Years Ended June 30, <strong>2006</strong> and 2005Benefit cost, contributions and benefits paid for the years ended June30, <strong>2006</strong> and 2005, were as follows:<strong>2006</strong> 2005Net periodic benefit cost $ 368,422 $ 660,161Employer contribution $ 61,556 $ 43,045Benefits paid $ 61,556 $ 43,045Assumptions <strong>2006</strong> 2005Weighted average assumption fordiscount rate as of June 30 6.25% 5.00%Initial health care cost trend rate 8.00% 9.00%Rate to which the health care cost trend rate isassumed to decline (the ultimate trend rate) 5.00% 5.00%Year that the rate reaches ultimate trend rate 2008 20085. Commitments and RisksOperating LeaseThe Association leases its administrative office space in Washington,DC and certain office equipment under agreements expiring at varioustimes through 2011. Future minimum annual rental payments requiredunder these operating leases are:For the Year Ending June 30,2007 $ 431,7432008 424,4742009 405,2352010 396,1552011 66,026Total $1,723,633The health care cost trend rate assumption has a significant effect onthe amounts reported in the accompanying consolidated financialstatements. If the assumed rates were to increase by one percentagepoint in each year, it would increase the benefit obligation as of June30, <strong>2006</strong> and 2005, by $367,828 and $514,273, respectively.ContributionsAs the plan is unfunded, contributions are expected to be equivalent tofuture estimated benefit payments. Accordingly, for the year endingJune 30, 2007, the Association expects to contribute approximately$82,000 to its postretirement health benefit plan.Estimated Future Benefit PaymentsThe following benefit payments, which reflect expected future service,as appropriate, are expected to be paid as follows:Estimated Future Benefit PaymentsFor the Year Ending June 30,2007 82,0002008 98,0002009 109,0002010 136,0002011 143,0002012–2016 922,000Total expenses related to leases were approximately $471,253 and$493,747 in the years ended June 30, <strong>2006</strong> and 2005, respectively.Concentrations of Credit RiskThe Association’s financial instruments that are exposed to concentrationsof credit risk consist primarily of cash equivalents andinvestments. The Association’s cash equivalents and investments are inhigh quality securities placed with major banks and financial institutionswith which it places its financial instruments. While the amount ata given bank at times exceeds the amount guaranteed by the FederalDeposit Insurance Corporation (FDIC) and, therefore bears some risk,the Association has not experienced nor does it anticipate any losseson its funds. The Association’s cash balances in excess of the FDICinsured limits were $330,000 and $4,000,000 as of June 30, <strong>2006</strong>and 2005, respectively.6. Related PartiesThe Association is a member of the International Business AviationCouncil (IBAC) along with eight other aviation member groups.Administrative, overhead and direct costs are borne by IBAC membergroups through assessments. Costs incurred by the Association tosupport IBAC were $306,407 and $232,050 in <strong>2006</strong> and 2005,respectively.18 <strong>2006</strong> <strong>NBAA</strong> ANNUAL REPORT
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