To Our Fellow Writers,
Despite an undoubtedly anxious and politically tumultuous year for the Writers Guild of America, west, it is with great pleasure that we report that our union remains in healthy, even robust, financial shape. For the fiscal year ending March 31, 2004, the Guild ran a surplus of over $1.3 million, our fourth consecutive annual surplus.
This booklet contains the Guild's complete Financial Statements (beginning on page 19), details of some WGAw achievements, and other relevant industry and employment data for this past year. But before you rush into those pages, allow us to point out the fiscal highlights.
This past year, Guild revenues increased 5% to $20.2 million from $19.3 million for fiscal year 2003. This was primarily the result of growth in member dues, which increased from $16.7 million last year to $17.5 million this year. Note that the increase in member earnings from $815.2 million in 2002 to $831.4 million in 2003 was accompanied by a decline in the number of writers working. Employment declined by 1.7% in television and 0.9% in screen.
Expenses, on the other hand, increased 11% to $20.5 million (from $18.5 million last year). This increase was chiefly due to adding staff in the Residuals, Credits, and Contracts Departments. The Guild also incurred one-time expenditures from the 2003 election challenge, FCC media deregulation lobbying, the 70th Anniversary Campaign, and information technology improvements, as well as from televising our annual award show for the first time.
Investment income accounted for the remainder of the surplus, increasing to $1.6 million for fiscal year 2004 (up from $700,000 for fiscal year 2003). This improvement was largely due to unrealized market gains on our equity investments (positions which we continue to hold).
Capital expenditures were $1.1 million in FY 2004 (compared to $500,000 in FY 2003). Significant investment was made in information technology and software updates to streamline the Guild's collection of data and to enhance its enforcement and negotiation efforts as well as to facilitate tracking and disbursement of funds held in trust for members (like clip payments and foreign copyright royalties). These expenditures are designed to accelerate payments of these funds in the future.
Undeliverable funds reached $4.8 million by the end of the fiscal year. This amount includes residuals and clip payments due to writers who cannot be located and foreign levies monies held for more than seven years (after all reasonable efforts to identify and locate the recipients of the funds are exhausted). The Guild is prepared to fully distribute this money should writers or their heirs come forward. The names of individuals for whom the Guild holds such funds and the procedure for redemption are available on the WGAw website (www.wga.org).
Net assets belonging to the Guild reached $30.1 million as of March 31, 2004. As you may know, the Guild owns its headquarters and has an unused $4.0 million line of credit. The Guild's investments stand at $17.3 million including almost $11.0 million in our Strike Fund and our Good and Welfare Fund combined.
In spite of this financial strength, serious challenges face our union. As we write this letter, our 2001 Minimum Basic Agreement has expired and no new collective bargaining agreement is in place. Though this development has had little or no fiscal impact on the Guild (or the services it offers) because our members continue to work under most of the terms of the prior MBA, we will naturally be taking the contract status into account as fiscal decisions are made going forward.
What has had (and will continue to have) an effect on this Guild and its membership are the thousands of hours of nonunion network reality programming and the overwhelming amount of non-WGA writing being done for cable in the fields of animation, nonfiction, and comedy-variety programs (displacing covered programming, causing a cavalier reduction in television staff sizes, and cutting deeply into our initial compensation and rerun earnings) and for nonunion independent feature films (impacting the screen trade in a similar fashion). So far, these reductions have been partially offset by increased member earnings due to the explosive growth of DVDs. This offset is deceptive, however, in that it reflects only a tiny fraction of the DVD windfall experienced by our employers. These two issues (along with restoring our Health Fund) have been at the core of our ongoing negotiations.
In the face of these challenges, the Guild will continue to maintain a prudent and conservative fiscal strategy along with strong operating accountability. Our Audit Committee (a seven-member subcommittee of the Board of Directors) oversees the rigorous, annual top-to-bottom audit process performed by the independent accounting firm of Miller, Kaplan, Arase & Co. The WGAw staff (led by Executive Director John McLean) has been responsible for adopting sound accounting policies, establishing and maintaining internal control, and preventing and detecting fraud. Deserving special appreciation in this regard are Chief Financial Officer Don Gor, Comptroller John Bagley, and several department heads including Arthur Ureche (Dues), Corinne Tippin (Membership), and Paul Nawrocki (Assistant Executive Director/Member Services).
Determined to preserve our financial stability while addressing the challenges ahead, we, the undersigned members of the Membership and Finance Committee, present this Annual Report, and invite you to join us in our effort to protect and improve the working conditions and benefits which our fellow members have won for us over the past seventy years.
The Membership and Finance Committee:
Patric M. Verrone, Chair
John P. Ziaukas