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2009 Annual Report


Charting a Course for the Future


2009 Annual Report Like most organizations, AAA Washington was confronted with a severe downturn in the economy during 2009. This fact, combined with some extraordinary weather conditions, made for a challenging year. However, adverse conditions can bring out the best in people and organizations, and that is precisely what happened for us, resulting in a very solid year for our company. Perhaps that success is best evidenced by our member satisfaction scores, which remain at historic highs. Membership continued to grow, with renewal rates considerably ahead of the AAA National averages. Insurance turned in another very strong year, both in growth and profitability. Travel expenditures are discretionary, and our travel services business was certainly the most seriously impacted by the economic downturn. Toward the end of the Fiscal Year, as the nation’s economy began to stabilize, we saw improvement in sales, and we are optimistic that this trend will continue in FY 2010. No report on Fiscal Year 2009 would be complete without mention of the success of our wellness programs, which were strongly embraced by our employees. The results of these efforts contributed greatly to keeping health costs in check. As we look toward 2010 and beyond, we remain optimistic about our opportunities. If we are to capitalize on them, though, we must remain relentless in our pursuit of providing excellent service and product value to our members. These efforts, combined with a focus on profitable growth in our business lines, will enable us to once again achieve a year of positive progress. In reading the following pages, I encourage you to think about the men and women behind the results. In the face of difficult circumstances, their commitment to member service was nothing short of exceptional. Above all, it is this dedication that fuels our optimism for the future.

Charles Liekweg President and CEO

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NAVIGATING CHANGE Serious blue-water sailors know they’ve got to keep one eye on the weather at all times. In fact, any sailor worth his or her salt will actually begin gathering weather forecasts up to a week before they set sail. They have to become experts on cloud cover, sea swells and “reading” the wind to predict what weather conditions might be in store. Yet even the most cautious skipper knows that Mother Nature can still turn on you. That’s why the smart ones take precautions and prepare for the worst. They trust their instincts, and they advise their crew to stand ready to adjust to any change. As the region’s largest member-services organization, AAA Washington embraces the trust and responsibility

that comes with its stature. The economic uncertainty of the past year and the resulting reduction in consumer confidence adversely affected many organizations during the past several months. However, our company moved forward at a steady clip, adding nearly 116,000 new members and reaching an 88.8% renewal rate to close the year with a total of 986,788 members and a 0.6% growth rate. Each of these figures exceeded national AAA averages. Additionally, our AAA Plus penetration continues to grow, currently at 64%, well ahead of the Association average of 46%.


NAVIGATING CHANGE, CONT. We continued to find strength in our online offerings to members and clients. More than 31% of our new members joined via the Internet, and, although our total Internet sales (travel and membership combined) did not match the previous year’s record levels, AAA Washington remains the top club in the Association (U.S) for Internet visits per 1,000 members – a key metric in measuring the success of the club’s Web site. Furthermore, we rank sixth in the Association for sales per 1,000 members.

in popularity combined with its low entry barriers and unique communication proposition. In other membership areas, our deposit program with Discover Bank continued to grow by offering members safe, secure investment options. Through the end of the fiscal year, AAA Washington members have nearly $16 million in CD and money market deposits.

The number of members contacting our member services call centers for auto travel and membership assistance increased substantially during the year. Overall, we experienced a 22% increase in membership-related calls, many of them related to the economy, as members looked for advice on not only maintaining their relationship with AAA, but also on how to travel the most cost-effectively. Understanding the communication potential of the new world of “social media” was a focus for the marketing team as we looked to extending our relationships with members. Our staff provided ongoing monitoring services of several social media sites (Facebook, Twitter, YouTube and other channels) for the entire Association. Locally, AAA Washington conducted a twoand-a-half-month long social media pilot program to study the effectiveness of club-level involvement in social media. Twitter was selected as the testing ground due to its recent surge

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Sent on July 30, 2009, AAA Washington’s 431 Twitter followers forwarded this tweet to 8,080 more Twitter accounts, resulting in 172 Web site visits and 21 media “mentions.”

JOURNEY MAGAZINE Our members value the information they find in each issue of Journey magazine. In fact, 82% indicate that they read three out of four issues of the publication. During the past year, AAA National turned to our writers to assist with transportation-policy feature stories that were then made available to other AAA publications. Highlights included one-on-one interviews with presidential candidates Barack Obama and John McCain (Sept./Oct. 2008), and a face-to-face meeting with U.S. Transportation Secretary Ray LaHood for an interview focused on the future of our nation’s highways, bridges and mass-transit systems (Sept./Oct. 2009). The magazine’s Web site, which provides fresh material between the bimonthly publication schedule, now carries a full complement of feature stories, celebrity interviews, a letters-to-the-editor section, and travel blogs written by the editors. Journey Magazine Cover


SHOW YOUR CARD & SAVE® The popular Show Your Card & Save (SYC&S) member-discount program continued expanding member-saving opportunities. With the number of participating partners now exceeding 110,000 businesses in the US and Canada, helping members discover where they can get discounts was a major focus. • Our PURL (Personal URL) Project targeted members in the Seattle area, who received a postcard bearing their name and a personalized Web address (or URL), which when accessed supplied them with information on locating SYC&S partners near where they live. • We are currently testing a partnership with Azigo, a company whose software identifies online companies who offer member discounts by placing a AAA logo next to these companies when they appear as search results on Google, Yahoo! and Bing. Members download the free software application from our Web site. • AAA National’s iPhone App now allows users to easily locate SYC&S retail locations through the phone’s GPS technology. Key information (name, address, phone, distance from location and a summary of the discount) are provided to the user. This application became one of the top free downloads in the Lifestyle category on iTune’s Apps store.

Jessica...

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GOOD NEIGHBORS:

With AAA Discounts

Let you borrow a Show Your Card & Save offers discounts

Whether it’s a great deal

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SYC&S PURL Front SHOPPING AAA Prescription Savings Bellis Fair Cookies By Design Duty Free Americas Factory Stores at North Bend Kelly-Moore Paints LensCrafters Made In Washington New York & Company Payless ShoeSource Pearle Vision Pilgrim’s Natureway/Fresh Vitamins Puget Sound Hearing Aid & Audiology Red Wing Shoes Reebok Outlet Stores Rodda Paint Sears Optical Seattle Premium Outlets Tanger Outlet Centers Target Optical U-Frame-It USA TODAY

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Royal Argosy SeaBear Smokehouse Tully’s Coffee Zoopa

SERVICES Brink’s Home Security Consumer Relocation Services DIRECTV Extra Space Storage Fetch! Pet Care Geek Squad (AAA.com/GeekSquad) Normandy Mortgage Penske Truck Rental Sisna Internet Services Stevens Worldwide Van Lines The Tux Shop The UPS Store Washington Energy Services Your Expert Shipping Stores

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ONLINE* 1800Flowers.com Barnes&Noble.com (AAA.com/BarnesAndNoble) Big Fish Games Blue Nile Jewelry (AAA.com/BlueNile) Dell (AAA.com/Dell) eTravel Store (AAA.com/eTravelStore) FTD.com (AAA.com/FTD) GNC (AAA.com/ShopNow) GolfDiscount.com/AAA Hearthsong Toys Jos. A. Bank (AAA.com/ShopNow) Magic Cabin Toys NBAStore.com (AAA.com/ShopNow) NFLShop.com (AAA.com/ShopNow) Plow & Hearth Shop.NHL.com (AAA.com/ShopNow) Sirius Satellite Radio (AAA.com/Sirius) Target.com (AAA.com/Target) The Popcorn Factory

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DINING Auntie Anne’s Pretzels Hard Rock Cafe Landry’s Restaurants

AUTOMOTIVE Appleway Carwash & Quick Lube Auto Driveaway Auto Glass Express Big O Tires 4 Less Dent Wizard eAutoRepair (AAA.com/eAutoRepair) Jiffy Lube Kanopy Kingdom Magellan GPS (AAA.com/GPS) NAPA Auto Parts Participating AAR facilities Poulsbo RV Puget Sound Car Wash Association Network Rack N Road Truck and Vehicle Outfitters

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ENTERTAINMENT The 5th Avenue Theatre Argosy Cruises Beamers Hells Canyon Tours Best of Broadway – Spokane Busch Gardens Experience Music Project | Science Fiction Museum Family Fun Center Future of Flight and Boeing Tour Hit Show Club – Broadway Show Tickets Kenmore Air – Seattle LEGOLAND California LeMay – America’s Car Museum Mt. Rainier Scenic Railroad Museum of Flight Pacific Raceways Pacific Science Center Papillon Grand Canyon Helicopters & Tours Riverfront Park Seattle Children's Theatre Seattle Food Tours Seattle Repertory Theatre Seattle Sounders FC SeaWorld Sesame Place Six Flags Theme Parks Spokane Arena Spokane Indians Tacoma Dome Tillicum Village Universal CityWalk Hollywood Universal CityWalk Orlando Universal Orlando Resort Universal Studios Hollywood

TRAVEL AAA Travel Money AjaxParkingRUs Amtrak Diamond Park’N Jet EagleRider Motorcycle Rental El Monte RV Rental Grand Canyon Railway and Resort Gray Line Tours Hertz MasterPark PlanetFone International Cell Phone Rental (AAA.com/Planetfone) Shuttle Express Services Yellow Cab

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LODGING Best Western International Hilton Hotels Hyatt Hotels & Resorts Marriott Hotels & Resorts Starwood Hotels & Resorts, including Sheraton and Westin

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BUT, GREAT NEIGHBORS:

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AAA member discounts aren’t just great for when you travel. You can also save in your neighborhood on everyday products and services through AAA’s Show Your Card & Save® program. With discounts at businesses close-to-home, online, across the U.S. and around the world, you can easily save the cost of your annual AAA membership fee. Some might call that neighborly, we just call it “living life the AAA way.”

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For an interactive map that shows participating Show Your Card & Save partner locations in your neighborhood, go online to:

www.aaawa.com/save/JessicaAmoateng

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Find out more by going to AAA.com/Discounts, calling (800) 562-2582 or by circling “2” on the Reader Service card on page XX to have a Savings Directory sent to you.

(800) 562-2582

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*Go to AAA.com/Discounts to find complete savings details and restrictions, exclusive

member-only Web sites and savings codes, and up-to-date local, national, online and worldwide participating partners. Partners and offers are subject to change without notice.

SYC&S “Travel Feature” Journey Magazine Ad

SYC&S PURL Back

Jessica Amoateng 1234 Street Name Here City, WA 12345


STANDING WATCH INSURANCE AGENCY

The AAA Insurance Agency continued to operate in a soft insurance market during the past year. In addition, consumers’ reluctance to spend money on new cars and homes hindered some of our normal new business opportunities, which take advantage of writing insurance policies for autos, homes, boats, recreational vehicles and other major purchases. Many were inclined to batten down the hatches, not knowing what the economic downturn might bring. AAA Insurance was there to help them. Following the record-setting snowstorms of the winter of 2008, many policyholders discovered the benefit of having their insurance planned by the professionals at the AAA Insurance Agency. Although the level of claims resulting from storm-related damage negatively impacted our opportunity to receive profit sharing contingency bonuses, policyholder retention rates reached a record level (89%), demonstrating their satisfaction with our products and services. During the year, we recruited several new sales agents to fill new and open slots on our sales team. To assist these new agents, we created a new incentive program, the AAA Legion Award, which recognizes excellent sales results during the first year of work with the agency. In addition, we continually evaluated and updated the training modules for our New Producer Sales School and introduced a new Agent Lab, which replicates a field office to ease the new agent from a training room scenario to a sales desk environment. The insurance marketing theme for the past year focused on portraying the AAA Insurance Agency as an added value to the membership. Enhancements to ads in Journey magazine, such as a front page positioned “gatefold,� helped drive member awareness of our insurance services and the values associated with our member-only discounts. In May, we launched a PURL program (similar to the Show Your Card & Save test), which integrated the strengths of personalized direct mail messages with the interactive opportunities of the Internet.

61,079

Total Households Insured (With a customer retention rate of nearly 89%)

101,644

Total Policy Count (6.5% increase over 2008)

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Insurance Agency Net Contribution

Insurance Agency Revenue

14M

24M

12M

22M

10M

20M

8M

18M

6M

16M

4M

14M

2M

12M

2007 $5,600,667

2008 $9,652,591

2009 $9,835,403

2007 $15,340,081

2008 $19,962,444

2009 $20,994,920

INSURANCE AGENTS & BROKERS OF AMERICA AAA Insurance Agency continued, for the 9th year, to be part of an elite group of independent insurance agencies around the United States participating in the Independent Insurance Agents & Brokers of America “Best Practices” study group. Participating agencies are selected based on operational excellence, including outstanding customer service, growth, stability and financial management. 8

As a AAA member, you’re entitled to a wide variety of benefits, one of the most valuable being the discounts you can receive through AAA Insurance. In fact, you may save up to 30% on your car insurance alone. Combine your home insurance with your auto policy and save even more. The point is, right now, many AAA members across Washington and northern Idaho are literally saving hundreds of dollars a year on insurance just for being AAA members. Are you?

What are scores of AAA members doing righton nowinsurance. to save money? Using their member benefits to save them hundreds of dollars

Contact a AAA agent for a free quote today, and you too could be saving insurance dollars by tomorrow.

As a AAA member, you’re entitled to a wide variety of benefits, one of the most valuable being the discounts you can receive through AAA Insurance. In fact, you may save up to 30% on your car insurance alone. Combine your home insurance with your auto policy and save even more. The point is, right now, many AAA members across Washington and northern Idaho are literally saving hundreds of dollars a year on insurance just for being AAA members. Are you?

Using their member benefits to save them hundreds of dollars on insurance. Contact a AAA agent for a free quote today, and you too could be saving insurance dollars by tomorrow.

(877) 222-4678 • AAA.com

(877) 222-4678 • AAA.com

The only insurance agency designed with the AAA member in mind.

Gatefold Ad in Journey Magazine - Closed

The only insurance agency designed with the AAA member in mind.

Gatefold Ad in Journey Magazine - Open

HIGHLIGHTS: • Introduced a life insurance referral program in the Customer Service Unit (CSU), which was instrumental in boosting our overall life insurance sales production by 20.2% over the previous year. • Reorganized and restructured our agency operations function area, which resulted in lower employee turnover, allowing us to maintain high service levels. • Created an automated, Internet-based quote process that directs requests to an available agent, allowing us to immediately offer a quote, as well as to track results of the interactions. • Honored by AAA National for the highest increase in net insurance revenues per member in the Association. • Recognized as the top sales agency in the nation for American Commerce Insurance Company.

“Top Sales Agency” Award From ACIC


97.3

Percentage of “satisfied/totally satisfied� Emergency Road Service member-customers.

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ALL HANDS ON DECK AUTOMOTIVE SERVICES

The past year for Automotive Services could be summed up in one word…well, actually two words – “D2000” and “weather.” Much of the year was spent planning, training and converting to D2000, the emergency road service operations system developed by AAA National. The major advantage of moving to this solution included the implementation of the pacesetter on-the-go strategy, improved call management of every dispatched call, automating ERS accounting, and improved reporting and data mining. Our IT team ensured that the new system was fully integrated with our membership and auto travel system, allowing us to continue to offer one-stop shopping and service to members through our call center operations. This significant program change involved a team effort that included the call center, dispatch, ERS accounting and IT. 10

across our region impacted our professional and personal lives for weeks. During this time, our staff operated in an “all hands on deck” mode to help members. Many of our employees volunteered to work extra shifts, were shuttled into work by coworkers and family, gave up or delayed holiday and vacation plans, and even stayed overnight in local hotels (even during the Christmas holiday) to ensure that our members received the best possible service. And just when we thought we were clear of extreme weather, our region experienced an unusually hot and dry summer, which extended from May into late summer. Road service calls peaked during the last week of July and first week of August when all-time records for high temperatures were broken with 103 degrees in Seattle, and more than 110 degrees in southwest, central and eastern Washington.

While weather difficulties are expected, 2008 – 2009 presented extreme challenges. The record winter snowfall

Pacesetter Scorecard

Club Rate

Assoc. Average

Overall Club On-the-Go Rate: (% of all service calls solved at the roadside)

62.2%

59.5%

Dedicated Network On-the-Go Rate: (Club Fleet and Preferred Service Providers)

65.2%

63.5%

AAA Battery Service (% of all battery calls)

57.8%

N/A

HIGHLIGHTS: • Implemented a new program to recognize ERS contractor “perfection,” by offering a special commemorative jacket to the staff of any contractor that scored 100% “fully satisfied” customer service ratings. • Received the 2009 “Outstanding Dedication and Support Award” from NAPA Auto Parts for the high participating rate of our Approved Auto Repair facilities in that company’s rebate program. • Completed the roll-out of our AAA battery service in all major population centers in our region, and installed 10,896 AAA-branded batteries, an increase of 24.7% over last year.

AAA Fan Rescue Truck


STEERING A STEADY COURSE TRAVEL SERVICES

The experience of our travel business mirrored what was happening to the country’s economy as a whole. While other parts of the business, which are viewed as “insurance” against larger costs, were somewhat buffered from the full impact of doing business during a recession, travel saw a decline in sales during the past year, as it is one of the most discretionary of consumer purchases. Ironically, we helped our members who did travel save millions of dollars by taking advantage of the many tremendous discounts offered by hotels, cruise lines, tour companies, Disney and other purveyors of travel. In the end, the AAA Travel Agency remained the most successful, financially sound and resilient travel agency in the Northwest. And, in spite of the challenging

environment, the travel agency posted $7.78 million in revenue. We saw a slight increase in the use of the Internet Triptik® routings and a slight decrease in the use of manually marked routings, a result of people continuing to migrate toward the use of online technology. While still quite popular, we did see a slight decline in our distribution of maps, TourBook® guides and CampBook® guides, as a weaker economy impacted member travel plans. The increased use of available online travel information also impacted the number of publications distributed.

98.5 Percentage of “Satisfied/Totally Satisfied” Auto Travel Customers

98.2 Percentage of “Satisfied/Totally Satisfied” AAA Travel Agency Customers

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SAILING SEATTLE-TO-ALASKA JUST GOT A LOT MORE “FUN”

FANTASTIC OFFERS ON: Alaska | Hawaii | Europe | Disney | USA | And More

COMPASS

AAA TRAVEL Fall 2009

INTRODUCING...

CARNIVAL’S INAUGURAL CRUISES SAILING DIRECTLY FROM SEATTLE TO ALASKA! AAA Travel is proud to introduce Carnival Cruise Lines’® new homeport departure from Seattle. Sail on a AAA Concierge cruise departure, or on many other departures in 2010, directly from Seattle to Alaska’s ruggedly beautiful Inside Passage. Call a AAA Travel agent to book your space on one of the following cruises, or on a wide variety of similar departures today. (800) 430-9001

7-Day “Fun Ship®” Cruise to Alaska Carnival Spirit® • May 11 – 18, 2010

AAA has created a specially priced Concierge cruise just for you! Sail roundtrip from Seattle on the fabulous Carnival Spirit®. After a “Fun Day” at sea SM, you’ll cruise breathtaking Tracy Arm Fjord, where chunks of ice, the size of numerous busses combined, dramatically calve and splash down into the frigid waters. The former gold rush town of Skagway follows. In Juneau, browse the gift shops and art galleries, or get out and kayak, dogsled, heli-hike, flightsee or more. Walk stilted Creek Street and see the famous totem poles in Ketchikan. Allow charming Victoria, BC, to delight you with the boutiques, museums and fine dining of its Inner Harbour area. And end your Alaskan adventure back in Seattle. Exclusive AAA benefits include: hosted cocktail party, special AAA gift, a “Bon Voyage” bottle of champagne and chocolates, and experienced AAA Hosts Jim and Sharon Johnston on board to assist you. Brochure fare from

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$

AAA for specially 699* Call discounted prices.

7-day Alaskan Cruises Roundtrip From Seattle If you can’t make our special Concierge cruise, there are 16 other Carnival Spirit® 7-day Seattle-to-Alaska departures to choose from, from May – September, all at great prices. Cruise Tracy Arm Fjord and visit the ports of Skagway, Juneau and Ketchikan, AK, as well as Victoria, BC. Don’t wait – call a AAA Travel Agent now to book your “Fun Ship®” vacation to the Last Frontier! Ask about multiple departures from

MORE CRUISES FROM THE WEST COAST Baja Mexico

3-, 4- and 5-Day Cruises • Carnival Elation® Get a taste of sunny California and laid-back Mexico on these cruises specially designed with itinerary lengths that are made to fit even the tightest of vacation schedules, while still packing in tons of fun. Itinerary: sail roundtrip from San Diego, CA, to Catalina, Ensenada and Cabo San Lucas. $ * $ * Brochure fare from

699

AAA fare from

179

Mexican Riviera

7-Day Cruise • Carnival Splendor® Sail on board the newest and largest “Fun Ship®” to sail from Long Beach. From the crystal-clear waters and sparkling nightlife of Puerto Vallarta, to the energizing fun of sport fishing and shopping in Mazatlan, to the beaches and unforgettable underwater scenery of Cabo San Lucas, you’ll find as much relaxation or exhilaration as you desire on this quintessential Mexican Riviera cruise. Itinerary: sail roundtrip from Long Beach (Los Angeles), CA, to Puerto Vallarta, Mazatlan and Cabo San Lucas. $ * $ * Brochure fare from

1669

AAA fare from

449

The Compass Points brochure, which is sent three times a year to 75,000 previous AAA Travel customers, enjoyed a complete redesign.

Exotic Mexican Riviera

8-Day Cruise • Carnival Spirit® Treat yourself to an exploration of some of the Mexican Riviera’s more exotic ports of call. Spend two days at sea, and then two more in Acapulco – a resort town virtually synonymous with luxury, and a longtime getaway destination for the rich and famous. Zihautanejo (quieter and breathtaking) and Ixtapa (lively and more modern) are so close, you can visit them both in one day. The resort town of Mananillo – with its wide, soft-sand beaches and diverse dive sites – will be your final port of call before cruising for two days back to San Diego. Itinerary: sail roundtrip from San Diego, CA, to Acapulco, Zihuatanejo/Ixtapa and Manzanillo. $ * $ * Brochure fare from

1819

AAA fare from

479

699*

$

Carnival reserves the right to re-instate the fuel supplement for all guests at up to $9 per person per day if the NYMEX oil price exceeds $70 per barrel.

Call Today to Book With a AAA Office Near You! AAA Bellevue Office 14404 NE 20th Street, Ste. 150

AAA Lynnwood Office 4100 Alderwood Mall Blvd. #8

AAA Seattle Office 1523 15th Avenue W.

AAA Everett Office 909 SE Everett Mall Way

AAA Puyallup Office 10210 123rd Street Ct. E.

AAA Seattle - Univ. Dist. Office 4554 Ninth Avenue NE

AAA Federal Way Office 2122 S. 314th Street

AAA Redmond Office 7950 164th Ave NE, Ste. 102

AAA West Seattle Office 4701 42nd Avenue SW

AAA Issaquah Office 405 NW Gilman Blvd. #102

AAA Renton Office 3900 E. Valley Highway #105

AAA Tacoma Office 1801 S. Union Avenue

(800) 430-9001 AAA.com Members and non-members welcome!

*Prices are per person double occupancy and are valid at time of printing. Cruise rates are category 1A, per guest, based on double occupancy, capacity controlled and cruise only. Government taxes and fees ($20—$170) are additional per guest. Rates available on select sailings only. Restrictions apply. © 2009 Carnival Cruise Lines. All rights reserved. Ships’ Registry: The Bahamas and Panama.Subject to availability. Offers are capacity controlled, and may be modified or withdrawn without prior notice. Restrictions and limitations apply. Ask AAA for details. Agency #178-018-521. #7316

AAA partnered with a number of our travel vendors to produce full-page ads in the Seattle Times, like this one.

LOCAL OFFICES RECOGNIZED FOR CUSTOMER SERVICE: • Bellevue Office: “Best of Bellevue” (Bellevue Reporter) • Mount Vernon Office: “Best Travel Agency” (Skagit County People’s Choice Award) • Renton Office: “Best Travel Agency” (Renton Reporter) • Walla Walla Office: “Sweet Service” award recognizing the best customer service organization in the area (Walla Walla Chamber of Commerce) • Yakima Office: “Best Travel Agency” (Yakima Valley Business Times) • Yakima Office: “Business Excellence Award” recognizing the outstanding service provided in all three lines of business, the commitment to their employees’ well-being and their involvement with the community (Greater Yakima Chamber of Commerce)

HIGHLIGHTS: • Remodeled the Bremerton and Spokane Main offices. • Implemented a strong, pro-active sales lead-generation program for agents in all offices. • Hosted successful travel and cruise shows in Seattle, Tacoma, Olympia, Lynnwood, Everett, Spokane and Sequim. • Increased the frequency of our popular eTravel Specials online newsletter, putting the latest discounts on travel products in front of subscribers. • Completed the rollout of the RMS computerized sales and inventory control system, which improved our productivity and efficiency, while expediting the customer service process in our offices. • Distributed 565,663 maps and prepared 25,312 TripTik® routings.

The eTravel Specials online newsletter is sent out to 11,000 subscribers a week.


FROM THE CROW’S NEST AAA EMPLOYEES AND THE COMMUNITY At AAA Washington, we pride ourselves on hiring the right people – people with a positive attitude, experience and willingness to maintain high standards of service. We strive to provide each employee with a friendly work environment and the opportunity for personal satisfaction and growth. Once again, our employees told us that they appreciate these efforts when they responded to a survey that placed AAA Washington as one of “Washington’s Best Workplaces” in a competition sponsored by the Puget Sound Business Journal. A group of employees representing all of our business lines and corporate support areas celebrated with the other winners at a party at Safeco Field.

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STEPS ON THE PATHWAYS TO WELLNESS While many employees and their families are enjoying the personal benefits of healthier living, our innovative programs also have had a positive effect on our bottom line. Health care claims, the biggest part of our healthcare costs, are down by more than 21% for some of the main diseases related to life-style choices.

FIT-FRIENDLY COMPANY

The American Heart Association recognized AAA Washington with a “Gold Achievement Award” as a “Fit-Friendly Company.” Their aim was to recognize employers who champion and prioritize the health of their employees, and work to create a culture of physical activity in the workplace. This nationwide program, along with its 2009 winners, was featured in a special supplement in the October 2009 Forbes magazine.

Be Like Liekweg CHARLIE WANTS YOU TO GET TO KNOW YOUR NUMBERS

PATHWAYS TO WELLNESS

Hits the Road

Engaging work and physical activity keeps the brain sharp.

This 16-week fitness challenge is automatic. It’s systematic. It’s hyyyydromatic. Why it’s virtually grease lightning! Stay tuned for more information on how to “Get Fit on Route 66” – a new, fun fitness program you can follow online. Coming soon from your Pathways to Wellness team.

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Cholesterol numbers are in check – be sure to steer clear of those doughnuts. Blood sugar levels satisfactory – Charlie prefers peanuts over candy bars.

Body mass index measure on target, thanks to Rayna’s healthy cooking.

Blood pressure in range – old sports injuries keep Charlie from running, but not from visiting the gym, biking and rowing.

A group of AAA Washington representatives at the 2009 American Heart Association “Heart Walk.”

Poster sent company-wide to promote Pathways to Wellness program.

“Route 66” Exercise Challenge Poster

continued

HIGHLIGHTS:

1,000 miles

• In the popular “Get Fit on Route 66 Challenge,” AAA employees recorded their daily activity minutes as “miles” on a special Web site that tracked their progress along the 2,448-mile length of old Route 66. According to pre- and post-challenge surveys, the program spurred employees to greatly increase their activity levels, both in the number of days per week they exercised and in the number of minutes they exercised. • More employees participated in runs and walks, from the Pumpkin Push and St. Patrick’s Day Dash in Seattle to the Bloomsday Run in Spokane. “Mile Marker” magnets were • The expanded workout facility in the Corporate Office continues to get more use as employees were given to “Route 66” participants encouraged to know their blood pressure, cholesterol level and other health indicators. at 1,000, 1,500 and 2,000 minutes of exercise logged.


SOAP FOR HOPE In a broad-based outreach campaign, AAA Washington sponsored a donation drive that encouraged our members, clients and the public to drop off toiletry items at their local office. Each office selected a charity, shelter or food bank in their community to receive these items. During the first six weeks of the campaign, we collected more than 30,000 items. Soap for Hope received a great deal of media publicity for AAA statewide and was very successful in bringing people into our offices, where they could learn about our products and services while making their donations.

“Soap for Hope” Donation Drive Logo

The Association of Washington Business recognized the Soap for Hope program when it awarded AAA Washington its “2009 Community Service Award” for business contributions which make our communities better places in which to live and work.

OTHER ACTIVITIES:

• LeMay Museum Car Show and Auction (Tacoma) – AAA Washington once again was the presenting sponsor for this popular regional event, which took place during the Labor Day holiday and attracted 6,300 spectators. • Hot Air Balloon Stampede (Walla Walla) – This event, the largest of its kind in the Pacific Northwest, drew more than 30,000 people. AAA Washington’s support as a “Balloonmeister” included the sponsorship of a hot air balloon with our name on it during all flights, as well as a popular booth featuring our 1931 Model A antique tow truck. • Sea-to-Ski Festival (Bellingham) – Our antique tow truck was a prize-winner during this event’s annual historical hometown parade, which is always a highlight of this popular event. • 4-H Teen Leadership Conference (Pullman) – AAA Washington sponsored a motivational presentation about teens making smart choices when behind the wheel of a car. The event attracted 500 teens and 75 parents.

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AAA’s 1931 Model A Antique Tow Truck Makes the Event Rounds

KOMO RADIO MEDIA PARTNERSHIP In January, AAA Washington kicked off a new multifaceted partnership with KOMO Newsradio (AM 1000/FM 97.7) – the number-one news station in Seattle. Listeners now get up-to-theminute traffic reports, which are the most comprehensive in the region thanks to our AAA Fleet technicians. AAA’s on-duty technicians call in updates on blocking vehicles they’re assisting and give first-hand accounts of road conditions affected by severe weather. In addition, every afternoon, the audience hears one of AAA’s travel experts sharing tips with KOMO’s business reporter about the latest trends and special deals in travel. We are pleased to have joined forces with an equally civic-minded company, and look forward to partnering with KOMO on projects that give back to our communities throughout the year. KOMO Newsradio Partnership


JUNIOR ACHIEVEMENT Volunteers from all of AAA Washington’s business lines devoted a workday to bringing Junior Achievement’s program to Thurgood Marshall Elementary in Seattle. Our staff taught lessons on the relevance of education to the workplace through fun and exciting activities. AAA also continued its major sponsorship of JA’s BizTown, a mock city where young consumers rush to the bank to deposit their paychecks, sales clerks create merchandise displays and reporters interview local citizens to get the latest story. AAA’s Dean Granholm during Junior Achievement Day

NATIONAL AAA LIFESAVER AWARD Sierra Clark, a AAA School Safety Patroller from Vancouver, WA, was honored this year for her quick thinking and reflexes when she pushed a young student out of the way of an oncoming vehicle, thus saving the student from serious injury or death.

Sierra Clark – 2009 National AAA Lifesaver Award Recipient 16

SPEAKING OUT FOR OUR MEMBERS

In Olympia and Boise, we continued to watch out for the interests of our members and other motorists. Our voice was strongly heard in the debate surrounding efforts to legislate reductions to the annual number of vehicle miles traveled by motorists. AAA Washington successfully led a lobbying effort to emphasize ways the state can create incentives for people to voluntarily achieve significant reductions in greenhouse gas emissions, rather than arbitrarily restrict mobility. These efforts resulted in top officials reevaluating the VMT reduction goals and developing other strategies to reduce emissions.

AAA’s Dave Overstreet with Governor Gregoire at “Teen Driver Safety Week” Signing

HIGHLIGHTS: • Participated on various statewide traffic-safety-related committees, including the Washington Impaired Driving Advisory Council, the Washington State Teen Driving Task Force and the state’s Strategic Highway Safety Plan steering committee. • Joined with other business-community leaders to support a tunnel configuration as the preferred option to replace the aging Alaskan Way Viaduct along the Seattle waterfront. • Worked with the Joint Transportation Committee as it developed roadway-tolling policies for state highways to ensure that motorists are treated fairly. • Monitored the Puget Sound Regional Council during the development of its critical long-range plan – Transportation 2040 – and commented on the draft environmental impact statement.


SWINGING THE COMPASS

MEASURING OUR FINANCIAL RESULTS • FISCAL YEAR ENDED AUGUST 31, 2009 AAA Washington ended the 2009 fiscal year with a strong operating performance. Our ability to manage expenses, including head count and capital spending, helped us weather the storm. It also was heartening to gain recognition from AAA National for having the highest operating income, net income and equity per member for our club size (based on 2008 year-end results).

INVESTMENTS Our corporate investment portfolio, impacted by the collapse of global financial markets during the first half of the fiscal year, rebounded with partial recoveries as the market conditions improved in mid-2009. Working with our investment advisors, changes were made to certain fund managers in the corporate portfolio. These actions should position us better for the future. Suitability and performance of funds offered to employees in the 401(k) plan were continuously monitored, which also led to additions and changes in the investment line-up. Just prior to the end of the fiscal year, we decided that it was in the best interest of AAA Washington to sell our wholesale travel operation, Travel Connection (EGS Enterprises), to the operation’s former owners and current management. The CANADA à la Carte and Brennan Vacations segments of the operation were retained by AAA Washington and organized under a new wholesale travel subsidiary called TTWI, Inc.

OPERATING INCOME/NET INCOME PER MEMBER

EQUITY PER MEMBER

$13

$75

$11

$70

$9

$65

$7

$60

$5

$55

$0

$50

-$5

$45 2007 $10.20/$9.21

2008 $9.97/$9.66

2009 $7.47/($3.35)

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2007 $70.50

2008 $71.61

2009 $67.81


AAA Washington and Subsidiaries Consolidated Balance Sheets AUGUST 31, 2009 AND 2008 ASSETS:

2009

Cash and cash equivalents

$

Cash held in investment accounts

2008 2,897,940

$

2,848,911

948,664

4,690,492

72,564,416

72,970,558

3,383,688

3,861,195

Inventories

1,200,721

1,645,101

Deferred income taxes

1,534,057

308,601

Income taxes recoverable

1,670,075

-

776,433

1,329,501

Total Current Assets

84,975,994

87,654,359

Property and equipment, net of accumulated depreciation and amortization

19,075,604

19,958,385

-

1,804,358

Investments Accounts receivable, less allowance for doubtful accounts

Prepaid expenses

Intangible assets, net of accumulated amortization

Total Assets

$

104,051,598

$

5,305,521

$

109,417,102

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LIABILITIES AND EQUITY: Accounts payable

$

Salaries, commissions, and vacation payable

2,584,269

Payroll taxes and amounts withheld from employees

5,061,742 2,362,206

272,992

414,432

27,361,274

26,909,869

Deferred revenue, wholesale travel

-

1,814,731

Income taxes payable

-

783,075

35,524,056

37,346,055

233,905

303,324

Deferred dues revenue

Total Current Liabilities Deferred income taxes, less current portion Contingent gain on acquisition

-

232,021

1,378,695

1,311,262

Total Liabilities

37,136,656

39,192,662

Retained earnings

66,914,942

70,167,157

Other non-current liabilities

Accumulated other comprehensive income Total Equity

Total Liabilities and Equity

$

-

57,283

66,914,942

70,224,440

104,051,598

$

109,417,102


AAA WASHINGTON AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED AUGUST 31, 2009 AND 2008 OPERATING REVENUES:

2009

Membership dues revenue

$

Insurance agency commissions

2008 57,275,833

$

15,617,843

55,969,326 13,510,369

Insurance agency contingency revenue

2,053,827

729,799

Insurance agency stock option grant revenue

3,323,250

5,722,276

Travel agency commissions, retail

7,778,618

11,094,958

Wholesale travel revenue

136,742

120,917

6,052,671

6,665,955

92,238,784

93,813,600

Emergency road service

28,748,046

27,698,283

Other direct member service

15,206,306

15,705,203

Insurance agency

11,159,517

10,309,853

7,840,351

9,000,841

Other revenue Total Operating Revenues OPERATING EXPENSES:

Travel agency Wholesale travel

272,133

24,000

15,153,048

14,830,239

Marketing and communications

4,640,385

4,301,232

Other expense

1,851,929

2,163,796

84,871,715

84,033,447

7,367,069

9,780,153

Investment earnings (losses), net

(9,404,318)

6,230,757

Other non-operating expense, net

(34,322)

(489,505)

(2,071,571)

15,521,405

670,447

(5,513,542)

(1,401,124)

10,007,863

(2,877,061)

(831,052)

General and administrative

Total Operating Expenses

OPERATING INCOME

Income (Loss) From Continuing Operations Before Income Tax Income tax benefit (expense)

INCOME (LOSS) FROM CONTINUING OPERATIONS Loss from operations of discontinued wholesale travel operations, including loss on sale Income tax benefit Loss on Discontinued Operations

NET INCOME (LOSS)

$

968,687

295,411

(1,908,374)

(535,641)

(3,309,498)

$

9,472,222

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20

AT THE HELM

AAA WASHINGTON’S 2009 BOARD OF TRUSTEES (Seated, Left to Right) Robert Flowers, Kerry Bivens, Joanne Harrell, Marilyn Dunn, Bruce Bixler, Richard Rubens (Standing, Left to Right) Patrick F. Patrick, John Blackman, Charles Liekweg, Stephen Matsko, William Lampson (Not Pictured: Dennis Okamoto)

STAFF OFFICERS

BOARD OFFICERS

Charles Liekweg, President and Chief Executive Officer Dean Granholm, VP, Chief Accounting Officer Richard Hawkins, VP, Insurance John Iwanski, VP, Chief Financial Officer George Johnson, VP, Marketing John Milbrath, VP, Automotive Steven Pomranz, VP, Travel Kay Riley, VP, Chief Administrative Officer

John Blackman, Chairman Stephen Matsko, Vice Chairman Marilyn Dunn, Treasurer Charles Liekweg, President Janet Ray, Secretary

Report  

This is a report from 2009

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