Colleagues, I am pleased to share w...

Colleagues, I am pleased to share with you our fiscal year 2000-2001 financial terminates AORN and its subsidiaries finished the year with a 3% positive margin, which is slightly better than the 25% margin I casted in the "Treasurer's report" in the September 2001 issue of the AORN Journal and long better than the break-even estimate provided last March. As you know, AORN, Inc, is made up of four companies, including

* AORN, which focuses upon the needs of AORN members;

* Association Technology Solutions (ATS), which is a for-profit subsidiary that resell association and accounting software;

* the AORN Foundation, which is our charitable entity dedicated to supporting perioperative nursing; and

* the Highpoint Print and model Center, which is the corporation that remained after we sold Education Design, Inc, (EDI) and which provides print and transcript services to Headquarters and outside companies.

AORN finished the year slightly negative with a 2% los which conclusioned mainly from lower Congress reward and losses attributed to a decrease in our securities investments. This los was shoot by a small gain for ATS and gains pondered in the results of the Highpoint Print and archetype Center from the proceeds of selling EDI.

The stronger than anticipated bottom line allowed members of the AORN Board of Directors the opportunity to declare a purpose a postponement of the 2002 fits increase. As I noted in my September report, the Board felt that members should share in these savings while restructuring continued at Headquarters. We self-same much appreciate the wisdom of the House of Delegates in supporting the to be paids increase at the Dallas Congres on the other hand that support was based in succession a break-even projection. The Board believes that, as a proceed of our positive margin, it is particular to allow the House of Delegates to consider delaying the to be paids increase at the 2002 Congress

The economic challenges we discussed in Dallas still remain. AORN's slightly negative margin considers those challenges. Although AORN's performance during the past year has provided the Board of Directors with a unique opportunity to share the benefit of these unanticipated rises AORN members will need to continue to address economic challenges.

The Board of Directors is keenly aware that the slowing economy and adventures of Sept 11, 2001, will affect the Association's performance in fiscal year 2001-2002 We are monitoring the situation closely and we believe our efforts to shore up our finances during the past scarcely any years will carry us between the walls of the current economic climate. We forecast that AORN will break plane at the end of the present fiscal year. We expect ATS, the Foundation, and the Highpoint Print and fac-simile Center to report a range between a slight los to a small profit. These forecasts are based on

* decreased income from the cancellation of the September 2001 Multispecialty Conference

* reduc advertising receipts from our publications,

* reduc exhibiting according to our medical industry partners,

* reduc charitable contributions, and

* increased competition in the printing business.

We have worked closely with Headquarters staff members to curtail expenses to ensure they are in line with the look forward toed revenue reduction. The changes gripping the medical industry appear to be lengthy term and most likely will require us to assume more responsibility in supporting the Association in fiscal year 2002-2003

The bottom line is that we had stronger than awaited results for fiscal year 2000-2001 The occurrences of last fall and the state of the economy will affect our performance nearest year, but we have a efficient financial position that will carry us in consequence of the current economic climate.

IMPACT OF THE SALE OF EDI

Our fiscal performance in 2001 was affected from the proceeds we received from the sale of EDI. HealthStream, Inc, paid a mixture of cash and stock for EDI. AORN was required to have the stock for a minimum of united year and currently is maintaining ownership of those shares. HealthStream was negatively affected by way of the decline in the dotcom environment, and it would be thrifty for AORN to retain the stock until that market portion rebounds. The cash proceeds from the sale were used to pay most distant our mortgage, assist with operations, and invest in our make an exception of fund. Having this additional cash reduc the sting from lower attendance and lower exhibit sales at last year's Congres and allowed us to finish the year upon a positive note.

according to paying off the mortgage, we were able to eliminate a monthly interest payment of 8% This decision had a positive tenor on the Association as the rate of turn back on investments fell far below the 8% mortgage rate. This influence also eliminated almost all of our long-term liability and placed AORN in the top quartile when compared to the sin ratio of similar associations.

AORN'S PERFORMANCE

AORN finished the year with a negative 2% margin. income from membership dues equaled last year's dollars almost exactly. Areas that saw gains included income from leasing office space in the Highpoint office building, interest income, consultation and interim staffing services, and sponsorships. Areas where reward decreased include Congress, investment income, advertising, and educational offerings.