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Notes to Financial Statements, December 31, 2000.

Note 1: Summary of Significant Accounting Policies

A. Method of Accounting

The financial statements are presented on the accrual basis of accounting.

Effective for 1996 the Association has changed its method of accounting for investments from "original cost" to "fair market value" as required by the provisions of Statement of Financial Accounting Standards No. 124.

The cumulative effect of the change in accounting principle from prior years was shown as an extraordinary item on the statement of Activities for the year ended December 31, 1996. Since investments are stated at fair market value realized and unrealized gains and losses are combined on the statement of activities where in years prior to 1996 only realized gains and losses were shown.

B. Inventory

Magazine, proceedings, conference books and publications in process inventory is valued at the lower of cost or market value as of December 31, 2000.

C. Furniture, Fixtures and Equipment:

Furniture, fixtures and equipment are stated at cost, less accumulated depreciation. Depreciation is computed on the straight-line method over estimated useful lives of five to ten years. Furniture, fixtures and equipment consist of the following at December 31, 2000.
Cost                       $ 201,970
Accumulated depreciation    (141,900)
Net                         $ 60,070

D. Income Taxes:

The American Association for Artificial Intelligence is exempt from income taxes on its earning from investments and its exempt function operations under Section 501(c)(3) of the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code. Federal and California taxes were paid during 2000 on earnings from sales of mailing lists and advertising.

Note 2: Operations

The American Association for Artificial Intelligence (AAAI) was formed in 1979 as a scientific society, to encourage the basic knowledge of what constitutes intelligent thought and behavior and how it can be exhibited in computers.

This is accomplished by the AI Magazine, the publications of the AAAI Press, the National Conference on Artificial Intelligence (NCAI), the Conference on Innovative Applications of Artificial Intelligence (IAAI), the International Conference on Knowledge Discovery and Data Mining, the Mobile Robot Competition, the Symposium Series, and the AAAI Workshop Program.

In addition, AAAI has an extensive program for student scholarships, women and minority grants, and sponsorship of independent workshops and conferences.

Finally, AAAI's world wide web site serves as a central resource for individuals involved in AI research.

Note 3: Investments at December 31, 2000

Investments are stated at fair market value since it is readily determinable and the investments are not necessarily being held to any maturity. Realized and unrealized gains and losses are reported in the statement of activities.

Investment activity for 2000 is as follows:
  Investments - Beginning of year (At fair
   market value)                                         $ 12,186,610
  Unrealized & Realized gains (Loss)                        (414,581)
  Interest & Dividends (Investments only)                     278,753
    Total Return On Investments                            12,050,782
  Purchases of Investments                                  6,760,874
  Sales of Investments                                    (7,435,274)
  Interest & Dividends deposited to Cash & Equivalents      (278,753)
  Investments - End of Year                               $11,097,629
Investments consist of the following at 12-31-2000:
U.S. Treasury / Agency Notes & Guaranteed Mortgages       $ 1,817,570
    Corporate Fixed Income                                  1,760,856
    Common/Preferred Stocks                                 7,519,203
Total Investments - Unrestricted                          $11,097,629

Note 4: Memberships

Annual membership in the American. Association for Artificial Intelligence is $50 for individuals, $20 for student members, and $ 75 for library subscriptions. Twenty five dollars is added to the above for other than U.S. and Canadian members. Three, five year, and lifetime memberships are also available. All Revenue from memberships is included in the AI Memberships gross profit center. Revenues from membership fees are earned ratably over the respective membership period. Lifetime membership fees are recognized as income over ten years.

Note 5: Pension Benefits

Prior to 1998 American Association for Artificial Intelligence sponsored a pension plan under Section 403 (B) of the Internal Revenue Code allowing employee contributions to their own individual accounts. Beginning in 1998 the plan expanded benefits to include company contributions to their individual accounts of five percent of their salaries for regular, full-time employees who have worked a minimum of three years at AAAI. In addition, AAAI will match employees' contributions up to five percent of their salaries for regular, full-time employees who have worked a minimum of five years at AAAI.
COPYRIGHT 2001 American Association for Artificial Intelligence
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Publication:AI Magazine
Date:Sep 22, 2001
Previous Article:Independent Auditor's Report.
Next Article:Statement of Activities and Changes in Net Assets for the Year Ended December 31, 2000.

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