AKC continued its support of the Canine Health Foundation with total funding and in-kind contributions of $1.7 million in 2005. This included matching funds of $383,000 for completion of an endowment challenge established in 2004.

Investment gains of $3.1 million in 2005 decreased from 2004's record level of $3.9 million. Nevertheless, we were pleased with this result given the stock market's lackluster performance in 2005.

As of December 31, 2005, the AKC and CAR Boards of Directors designated funds to various projects for preserving the future of the organizations and the sport of purebred dogs totaling $39 million. This included funds designated for operating reserves.

Despite the fact that many companies today are facing serious problems with the financial viability of their pension plans, we are pleased to report that AKC's plan is overfunded. The value of its current assets comfortably exceeds the plan's liabilities. Therefore, we do not anticipate a funding requirement in the foreseeable future.