Finance Committee Annual Leadership Seminar January 24-25, 2002

Finance Committee Job Products Supervise financial affairs, including investments Annual budget Annual target return-on-net assets rate Financial reports

Finance Committee Job Products Loans or long-term capital resources to affiliates up to limits established by the Board of Directors Review items not included in capital budgets to determine if Board of Director approval is required.

Finance Committee Strategies 1 Assure financial operations to achieve targeted results Measures: Revenue from operations -- annually target and achieve a reasonable marginal revenue from operations to exceed $100,000. Return-On-Net Assets -- annually achieve a net assets increase at least equal to the targeted return- on-net assets rate established by the Finance Committee. Revenue per Full-Time Equivalent Staff -- operating revenue generated per full-time equivalent staff will increase over the preceding year.

1 Assure financial operations to achieve targeted results Measures (Cont’d): Unrestricted Net Assets -- As measured by the three year period of the Business Plan, actual unrestricted net assets at the end of the period will exceed targeted unrestricted net assets at the beginning of the period including inflation for the period. Non-Salary Expense Per Full-Time Equivalent Staff -- Operating revenue will increase at a faster rate than operating expense, less salaries and benefits, on a per full-time equivalent staff basis Finance Committee Strategies

1 Assure financial operations to achieve targeted results Action: Reviewed by Finance Committee twice annually during budget review and year-end actual performance Finance Committee Strategies

2 Assure liquidity sufficient to meet SAE’s operating needs Measure: SAE Investment Fund Policy states: SAE’s operations must generally be self-sustaining to achieve a reasonable marginal revenue from operations. Net income from the Liquidity Investments may be used for operations and the General Investment Fund may be used to cover losses from operations. Action: Reviewed by Finance Committee twice annually during investment strategy meeting with Advisor and year-end actual performance. Finance Committee Strategies

3 Set long-term investment policy to achieve targeted income and capital growth Measures: Investment objectives per SAE Investment Fund Policy: Liquidity Investment Fund objectives by priority: Liquidity Safety Yield Measure is stated composite benchmark of SAE managed fund. Finance Committee Strategies

3 Set long-term investment policy to achieve targeted income and capital growth Measures (Cont’): General Investment Fund objectives by priority: Yield Safety Liquidity Measure is stated composite benchmark for outside equity managers and SAE managed internal funds. Finance Committee Strategies

3 Set long-term investment policy to achieve targeted income and capital growth Action: Reviewed by Finance Committee at least annually Create a financial reporting structure as appropriate to the SAE Foundation and SAE Foundation Canada in response to the operating structure of SAE. Finance Committee Strategies

Finance Committee Customers SAE Board of Directors SAE Operating Boards and Committees

Finance Committee 2002 Team Composition (Members & Staff) James E. (Ted) Robertson, Chair Karl Goering, Treasurer Gregory W. Henderson, Asst. Treasurer Thomas E. Austin Dr. Louis T. Dixon Robert P. Larsen John Leinonen Ronald K. Leonard Thomas J. Sheahan Stan Theobald, SAE Staff

Finance Committee Key Activities Annual review of SAE’s Financial Management Policy Review financial statements and projections Review investment reports and investment management performance Development of annual Business Plan including budgets for the following two years.

Finance Committee Key Activities (Cont’d) Review progress against SAE Strategic Plan Report activities to the SAE Board of Directors

Finance Committee Key Activities (Cont’d) Board of Directors Vision/Ends/Sub-Ends Strategic Planning Committee Operating Boards & Committees Visions/Ends Strategies Measures Actions Business Plan (Finance Committee) Next Year’s Budget plus two years Projection Major New Programs Management and Technical Summaries Financial Management Policy-Funding Methods Finance Committee and Top Tier Measures Finance Committee Approval

SAE Unrestricted Net Assets ACTUAL COMPARED TO TARGET AMOUNT, ADDING ANNUAL INFLATION RATE FY FY2001 (000’S Omitted) UNRESTRICTED NET ASSETS AS MEASURED BY THE THREE YEAR PERIOD OF THE CURRENT FISCAL YEAR AND TWO YEARS PRECEDING. ACTUAL UNRESTRICTED NET ASSETS AT THE END OF THE CURRENT FISCAL YEAR WILL EXCEED TARGETED UNRESTRICTED NET ASSETS AT THE BASE YEAR, INCLUDING INFLATION FOR THE PERIOD.

Return On Net Assets

Net Operating Results

Note: Expenses Exclude Salary and Benefits Operating Revenue And Expense Per Full Time Equivalent Staff Thousands