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HomeMy WebLinkAboutCOM 0094.004 2004-2006 DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION YEARS ENDED JANE 30, 2004 AND 2003 (With Independent Auditors' Report) Comm,. No. "14•'7 r. Ref. Tod S E L Ref. Date TABLE OF CONTENTS Page Independent Auditors' Report 1_ii Financial Statements Statements of Financial Position l Statements of Activities 2 - 3 Statements of Cash Flows q Notes to Financial Statements 5 - 14 Additional Information Schedule 1 -Statements of Financial Position for Hawaii Island Food Bank IS Schedule 2 -Statements of Activities for Hawaii Island Food Bank 16 Schedule 3 -Statement of Functional Expenses for Hawaii Island Food Bank 17 Schedule 4 -Statements of Activities for Housing and Community Development Corporation of Hawaii Contracts -Cash Basis lg Note to Statements of Activities for Housing and Community Development Corporation of Hawaii Contracts -Cash Basis 19 CHOO, OSADA 8L LEE, CPAs, INC. CERTIFIED PUBLIC ACCOUNTANTS 3536 HARDING AVENUE TELEPHONE (8001 ]34-1921 SUITE 605 HONOLULU. HAWAII 96fl 16 INDEPENDENT AUDITORS' REPORT To the Reverend Father Thomas L. Gross Administrator of the Roman Catholic Diocese of Honolulu Honolulu, Hawaii We have audited the accompanying statements of financial position of the Diocesan Administrative Offices of the Roman Catholic Church in the State of Hawaii (a nonprofit corporation) as of June 30, 2004 and 2003, and the related statements of activities and cash flows for the years then ended. These fmancial statements are the responsibility of the Organization's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As more fully discussed in Note 11 to the fmancial statements, the Organization leased land to the developer of a retirement community and recognized rental income from the lease on the basis of scheduled rental payments. Accounting principles generally accepted in the United States of America require that the rental income be recognized on a straight-line basis over the term of the lease. If the rental income had been recognized on a straight-line basis, assets would have been increased at June 30, 2004 and 2003 by approximately $851,000 and $284,000 respectively, net assets at June 30, 2004 and 2003 would have been increased by approximately $851,000 and $284,000, respectively, the increase in net assets for the year ended June 30, 2004 would have been increased by approximately $567,000, and the decrease in net assets for the year ended June 30, 2003 would have been decreased by approximately $284,000. In our opinion, except for the effects of the matter discussed in the preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the Diocesan Administrative Offices of the Roman Catholic Church in the State of Hawaii as of June 30, 2004 and 2003, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. -i- Our audits were conducted for the purpose of forming an opinion on the basic financial statements of the Diocesan Administrative Offices of the Roman Catholic Church in the State of Hawaii taken as a whole. The additional information in Schedules 1 to 4 is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ~iorr, CD~u~s 9! ~...~.c , GJ~z .g..c . Honolulu, Hawaii January 12, 2005 -ii - DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII STATEMENTS OF FINANCIAL POSITION Ji1NE 30, 2004 AND 2003 2004 2003 ASSETS Cash and cash equivalents, including amounts held for affiliates and others of $878,018 in 2004 and $871,506 in 2003 $ 5,699,481 3,109,440 Investments 26,928,615 24,313,902 Receivables Loans to parishes, less allowance for doubtful accounts of $107,833 in 2004 and $112,222 in 2003 8,742,302 9,003,087 Due from affiliates 529,688 585,714 Interests in charitable trusts 948,000 1,418,000 Other 138,624 197,496 Inventory 159,000 125,000 Prepaid expenses and other assets 128,198 102,641 Land, buildings and equipment, net of accumulated depreciation 104,833,647 105,528,468 Total assets $ 148.107,555 144.383.748 LIABILITIES AND NET ASSETS Liabilities Notes payable $ 41,304 65,264 Accounts payable and accrued liabilities 2,049,173 1,594,007 Payable to affiliates 2,781,685 2,751,977 Parish deposits 20,220,620 18,809,240 Assets held for others 822,266 816,050 Accrued postretirement benefit obligation 3,865,415 3,519,278 Total liabilities 29,780,463 27,555,816 Net assets Unrestricted Designated for priests' retirement 1,392,218 1,207,226 Investment in land, building and equipment 104,833,647 105,528,468 Undesignated 11,086,484 8,584,010 117,312,349 115,319,704 Temporarily restricted 487,743 1,003,228 Permanently restricted 527,000 505,000 Total net assets 118,327,092 116,827,932 Total liabilities and net assets $ 148.107,555 144,383.748 See accompanying notes. -1- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII STATEMENTS OF ACTIVITIES YEARS ENDED .I1JNE 30, 2004 AND 2003 2004 2003 Unrestricted net assets Support, revenue and gains Parish assessments $ 2,700,012 2,589,984 Donations and bequests, including donations of food items of $3,032,000 in 2004 and e2,o29,nn0in 2003 3,302,831 3,678,521 Interest on Parish loans 445,062 362,930 Investment income 524,514 569,449 Rental income 1,768,412 1,268,220 Program service fees and other 2,760,673 2,254,291 Recovery on loan guarantyloss - 330,000 Net realized and unrealized gain (loss) on investments 2,444,698 (688,491) Gain on sale of land and equipment 410,682 314,672 14,356,884 10,679,576 Net assets released from restrictions 1,262,253 664,847 15,619,137 11,344,423 Expenses Program services Pastoral 212,178 421,277 Education 677,409 614,894 Communications 383,442 393,956 Religious personnel development 1,189,054 1,120,508 Social services 5,700,679 5,910,382 Auxiliary activities 2,662,449 1,672,550 Support services General administration 2,649,674 2,586,496 Fundraising 151,607 185,409 13,626,492 12,905,472 Increase (decrease) in unrestricted net assets 1,992,645 ( 1,561,049) Temporarily restricted net assets Change in value of interests in charitable trusts 531,958 93,471 Donations and grants 214,810 505,041 Net assets released from restrictions Restrictions satisfied by charitable trust receipts (1,023,958) ( 18,471) Restrictions satisfied by payments ( 238,295) ( 646,376) Decrease in temporarily restricted net assets ( 515,485) ( 66,335) Permanently restricted net assets Change in value of interests in charitable trusts 22,000 ( 107,000) Increase (decrease)in permanently restricted net assets $ 22,000 ( 107,000) See accompanying notes. -2- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII STATEMENTS OF ACTMTIES -continued YEARS ENDED JUNE 30, 2004 AND 2003 2004 2003 Increase (decrease) in net assets $ 1,499,160 ( 1,734,384) Net assets At beginning of year 116,827,932 118,562,316 At end of year $ 118.327.092 116.827.932 See accompanying notes. -3- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2004 AND 2003 2004 2003 Cash flows from operating activities Increase (decrease) in net assets $ 1,499,160 ( 1,734,384) Adjustments to reconcile change in net assets to net cash provided (used) by operating activities UepIGCIdIIUII 301,647 292,874 Gain on sale of land and equipment ( 410,682) ( 314,672) Net realized and unrealized loss (gain) on investments (2,444,698) 688,491 Interest income on parish loans ( 445,062) ( 362,930) Subsidies to parishes for loan interest 30,569 34,211 Interest expense on parish deposits 390,641 369,229 Decrease (increase) in receivables 584,898 ( 195,884) Increase in prepaid expenses and other assets ( 25,557) ( 1,157) Decrease (increase) in inventory ( 34,000) 75,000 Increase in accounts payable and accrued liabilities 837,227 699,225 Net cash provided (used) by operating activities 284,143 ( 449,997) Cash flows from investing activities Purchases ofinvestmen[s (29,455,126) (39,370,568) Proceeds from sale of investments 29,285,111 39,229,281 Purchases of property and equipment ( 139,954) ( 88,989) Proceeds from sale of property and equipment 943,810 427,273 Net cash provided by investing activities 633,841 196,997 Cash flows from fmancing activities Repayments on notes payable ( 23,960) ( 9,700) Net increase in parish deposits 1,020,739 275,654 Loans to parishes ( 99,053) (3,253,247) Repayments on loans to parishes 774,331 795,438 Net cash provided (used) by fmancing activities 1,672,057 (2,191,855) Net increase (decrease)in cash and cash equivalents 2,590,041 (2,444,855) Cash and cash equivalents at beginning of year 3,109,440 5,554,295 Cash and cash equivalents at end of year $ 5.699.481 3.109.440 See accompanying notes. -4- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS .IiJNE 30, 2004 AND 2003 NOTE 1 -ORGANIZATION, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES Organization The Diocesan Administrative Offices of the Roman Catholic Church in the State of Hawaii (Diocesan Administrative Offices) are a component of the Roman Catholic Church in the State of Hawaii (Diocese), a nonprofit corporation organized under the laws of the State of Hawaii. The Diocesan Administrative Offices conduct programs in the State of Hawaii which include ministering the faith, care and training of priests, religious education, public information, social services and a cooperative investment and ]ending program for the benefit of the parishes of the Diocese. The accompanying financial statements include the assets, liabilities, net assets and financial activity under the direct control of the Diocesan Administrative Offices; those of the individual parishes, schools, and certain other organizations have been excluded. Cash and cash equivalents For the purposes of the statements of cash flows, the Organization considers all highly liquid debt securities purchased with a maturity of three months or less and not included in its investment portfolios to be cash equivalents. Investments Investments in marketable securities are stated at fair value. Cemetery plots held for sale are stated at fair value as estimated based on the current sales prices of similar cemetery plots. Receivables Loans to parishes represent amounts advanced plus accrued interest. Other receivables represent amounts billed to or advanced on behalf of other parties that have not yet been collected. Receivables considered uncollectible are charged against the allowance account in the year they are deemed uncollectible. The allowance account is adjusted based on management's evaluation of collection efforts. Inventory Inventory consists of donated food items. Donations of inventory are recorded at estimated fair value at time of donation. Land, building and equipment Land, building and equipment are generally stated at cost or fair market value at date of donation; however, acquisitions prior to June 30, 1991 for which such historical information was not available are stated at recent appraisal or property tax valuations as of June 30, 1991. Buildings and equipment are depreciated under the straight-litre basis over the estimated useful lives of the assets. Renewals and improvements that extend the useful lives of assets are capitalized; maintenance and repairs are included as expenses in the statements of activity. -5- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAH NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE I -ORGANIZATION, SUD7MARY OF SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES -continued Support and revenue Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support dependine on the existence and/or nan~re or a.^.y donor restrcfions. v?lieit a resiriction expires, temporarily restricted net assets are reclassified to unrestricted net assets. Rental income Contingent rental income based on a percentage of sales or revenue is accrued when the specified level of sales or revenue is met. Reclassifications Certain reclassifications have been made to the 2003 financial statements to conform to the 2004 presentation. The reclassifications do not affect the change in net assets as previously reported. Income taxes The Organization is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code and is classified as an organization that is not a private foundation by the Internal Revenue Service. The Organization is also exempt from state income taxes under Section 235 of the Hawaii Revised Statutes. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates which could change in the near term are the valuation of the interests in charitable trusts and the ultimate outcome of contingencies. NOTE 2 -CASH AND CASH EQUIVALENTS Cash and cash equivalents consist primarily of deposits in interest-bearing accounts with Hawaii financial institutions or with two investment services firms. At June 30, 2004 and 2003, deposits in excess of federal insurance limits were approximately $5,728,000 and $3,060,000, respectively. NOTE 3 -INVESTMENTS At June 30, 2004 and 2003, investments consisted of the following: 2004 2003 Marketable equity securities (primarily corporate stock) $ 19,832,155 17,538,080 Marketable debt securities (primarily U.S. government obligations) 4,379,036 4,050,243 Money market accounts and cash 2,633,704 2,641,859 Cemetery plots held for sale 83,720 83,720 $ 26.928.615 24.313.902 -6- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE 4 -INTERESTS IN CHARITABLE TRUSTS Certain donors have established irrevocable trusts which give the Diocese Administrative Offices interests in the trust assets at specified dates afrer the death of the trusts' income beneficiaries or an interest in the income of trusts to be maintained indefinitely. The terms of certain of the trusts also specify the Diocese as an income beneficiary. The account "Interests in charitable trusts" in the accompanying statements of financial position represents the present value of the estimated future asset distributions to be received by the Diocesan Administrative Offices, assuming a discount rate of 7.5 NOTE 5 -LAND, BUILDING AND EQUIPMENT At June 30, 2004 and 2003, land, building and equipment consisted of the following: 2004 2003 Land $ 99,677,321 100,209,449 Building 8,399,669 8,399,669 Equipment 1,175,408 1,062,633 109,252,398 109,671,751 Less accumulated depreciation 4,418,751 4,143,283 $ 104.833,647 105,528,468 Land included the following: 2004 2003 Used by parishes and other affiliates $ 86,924,075 86,924,176 Used in rental operations 9,517,968 9,898,052 Used for Diocesan Administrative Offices operations 1,523,624 1,675,567 Idle 1,710,854 1,710,854 Held for others 800 800 $ 99,677.321 100.209,449 Rent is not recorded for the use of land by parishes and schools in the Diocese. At June 30, 2004 and 2003, the acquisition cost of equipment used in operations for which title is held by an affiliated nonprofit corporation amounted to approximately $165,000. This equipment is not recorded in the accompanying statements of financial position. The use of certain equipment acquired with government grants is restricted to activities specified by the grant. -7- DIOCESAN ADMIlVISTRAI'IVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued Ji1NE 30, 2004 AND 2003 NOTE6-NOTES PAYABLE At June 30, 2004 and 2003, notes payable consisted of the following: 2004 2003 Nnn_inrr+racr hegr+;;g ^Cte pa'y'^'-1 4V V to a U.S. government agency; secured by real property; requires semi-annual payments of $8,415 to June 30, 2007 $ 41 304 65.264 The non-interest bearing note payable is stated at the gross amount of payments to be made over the life of the note; the difference between this amount and the obligation balance discounted for imputed interest is not significant. Aggregate maturities of notes payable for each of the five years succeeding June 30, 2004 are as follows: Year ending June 30 2005 $ 16,830 2006 16,830 2007 7,644 2008 _ 2009 _ The Diocesan Administrative Offices have lines of credit with banks which provide for unsecured borrowings of up to $1,000,000 at the bank base rate. There were no outstanding borrowings under those lines at June 30, 2004 and 2003. Under the terms of a line of credit agreement, the Diocesan Administrative Offices were required to maintain working capital of not less than $5,000,000 and a net worth of not less than $10,000,000. At June 30, 2004, unused letters of credit issued by a bank on behalf of the Diocesan Administrative Offices amounted to $1,000,000. NOTE 7 -ASSETS HELD FOR OTHERS At June 30, 2004 and 2003, assets held far non affiliates by the Diocesan Administrative Offices as trustee and fiscal agent consisted of the following: 2004 2003 Cash $ 821,466 815,250 Land 800 800 $ 822.266 816.050 -8- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE 8 -NET ASSETS At June 30, 2004 and 2003, temporarily restricted net assets consisted of amounts available for the following purposes: 2004 2003 For subsequent periods $ 421,000 913,000 Social services 14,273 23,067 Pastoral 52,470 67,161 $ 487.743 1.003.228 At June 30, 2004 and 2003, permanently restricted net assets consisted of interests in charitable trusts which are to be maintained indefinitely, the income from which will be expendable for program and other services. NOTE 9 -RETIREMENT PLANS Lay employee retirement plan The Diocesan Administrative Offices provide retirement benefits covering substantially all lay employees under a defined benefit pension plan administered by the Roman Catholic Church in the State of Hawaii. The benefits are based on each employee's years of credited service, and the average compensation of the highest 60 consecutive months of the final 10 years. An employee becomes fully vested upon completion of 5 years of qualifying service. Contributions to the plan by the Diocesan Administrative Offices for the years ended June 30, 2004 and 2003 were approximately $215,000 and $230,000, respectively. Priest retirement plan The Diocesan Administrative Offices provide retirement benefits for priests under a defined benefit retirement plan administered by the Diocese. The plan provides for a fixed benefit amount ($1,338 per month as of June 30, 2004) at age 70. Retirement benefit expense to the Diocesan Administrative Offices, net of contributions received from affiliates, amounted to approximately $240,000 and $232,000, far the years ended June 30, 2004 and 2003, respectively. -9- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE 10 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Diocesan Administrative Offices provide certain health care and insurance benefits for retired lay employees and for retired Diocesan priests. The followin¢ sets forth the olan's funded status at .lone 30. 2(1(14 and Anna rPrnnrarrt rn rt,A ~...,.,,.,r the statements of financial position at June 30, 2004 and 2003: 2004 2003 Accumulated postretirement benefit obligation $ 4,409,045 4,297,803 Plan assets _ _ Accumulated postretirement benefit obligation in excess of plan assets 4,409,045 4,297,803 Unrecognized net gain (loss) ( 543,630) ( 778,525) Accrued postretirement benefit obligation $ 3,865.415 3.519.278 Net periodic postretirement cost for the years ended June 30, 2004 and 2003 included the following components: 2004 2003 Service cost-benefits attributed to service during the period $ 159,095 150,800 Interest cost on accumulated postretirement benefit obligation 236,379 224,056 Net amortization and deferral 23,250 55,609 Net periodic postretirement benefit cost $ 418.724 430 465 For measurement purposes, a 5 % annual increase in the cost of covered benefits was assumed. The weighted-average discount rates used in determining the accumulated postretirement benefit obligation at June 30, 2004 and 2003 were 5.5 % and 6.5 respectively. Benefit payments under the plan for the years ended June 30, 2004 and 2003 amounted to $72,587 and $-0-, respectively. -10- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE 10 - POSTRETIItEMENT BENEFITS OTHER THAN PENSIONS -continued Expected future benefit payments under the plan for the ten years succeeding June 30, 2004 are as follows: Year ending Tune 30, 2005 $ 78,000 2006 85,000 2007 96,000 2008 103,000 2009 111,000 2010 - 2014 720,000 NOTE 11 -LEASES The Diocesan Administrative Offices lease (as lessor) certain real properties under noncancellable operating leases that expire at various dates to 2063. The terms of certain of the leases include provisions for contingent rentals based on a percentage of sales or revenue. The following is a schedule of minimum future rentals due under these leases: Year ending June 30, 2005 $ 1,198,000 2006 1,159,000 2007 1,162,000 2008 1,165,000 2009 1,152,000 Thereafter 90,194,000 $ 96.030.000 Rental income for the years ended June 30, 2004 and 2003 included contingent rentals of approximately $11,000 and $13,000, respectively. The Diocesan Administrative Offices have recorded rental income on the basis of scheduled rental payments due rather than on a straight-line basis as required under accounting principles generally accepted in the United States of America. Management is of the opinion that recording income from land rentals in [he State of Hawaii on a straight-line basis results in a material overstatement of income in the early years of a lease, and a corresponding understatement in later years. Therefore, even though it represents a departure from accounting principles generally accepted in the United States of America, management's opinion is that recording rental income on the basis of scheduled rental payments due presents a more accurate presentation of income from rentals. -11- DIOCESAN ADMIMSTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE 11 -LEASES -continued The Diocesan Administrative Offices lease (as lessee) land under a noncancellable operating lease that expires in 2015. The following is a schedule of minimum future rental payments due under the lease: Year ending June 30, 2005 $ 11,000 2006 11,000 2007 11,000 2008 11,000 2009 11,000 Thereafter 71, 000 $ 126.000 Rent expense for each of the years ended June 30, 2004 and 2003 consisted of the following: Minimum rentals under noncancellable operating leases $ 11.000 NOTE 12 -RELATED PARTY TRANSACTIONS An assessment is collected from the parishes of the Diocese to provide support for the operating costs of the Diocesan Administrative Offices. The deposit and loan fund receives deposits from parishes of the Diocese which are made available for loans to parishes. For the years ended June 30, 2004 and 2003, the interest rate on loans was S l . For the years ended June 30, 2004 and 2003, the interest rate on parish deposits was 2%. Interest expense on parish deposits for the years ended June 30, 2004 and 2003 was approximately $391,000 and $369,000, respectively. During the years ended June 30, 2004 and 2003, the Diocesan Administrative Offices waived interest due on loans to certain parishes of approximately $31,000 and $34,000, respectively; this amount has been reflected in the financial statements as interest income and program services expense. The Diocesan Administrative Offices have made certain real properties available for the use of affiliated nonprofit corporations without charge. The fair value of the use of these properties, estimated at approximately $245,000 for the years ended June 30, 2004 and 2003, has been reflected in the financial statements as rental income and program services expense. An affiliated nonprofit corporation has made certain equipment available for the use of the Diocesan Administrative Offices without charge. The fair value of the use of this equipment, estimated a[ $12,000 for each of the years ended June 30, 2004 and 2003, has been reflected in the fmancial statements as support and program services expense. -12- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued JUNE 30, 2004 AND 2003 NOTE 12 -RELATED PARTY TRANSACTIONS -continued The Diocesan Administrative Offices are the guarantor of a $600,000 line of credit and a $750,000 term loan facility extended by a bank to affiliated schools of the Diocese. At June 30, 2004, the amounts outstanding under the line of credit and term loan totaled $-0- and $413,119, respectively. Under agreements with the affiliated schools, the Diocesan Administrative Offices would be entitled to recover amounts paid as guarantor from the schools. Other transactions with affiliates for the years ended June 30, 2004 and 2003 were as follows: 2004 2003 Financial assistance to parishes, schools and other affiliates $ 1,146,000 881,000 Service fee revenue from affiliates 458,000 308,000 Priest retirement contributions from affiliates 135,000 159,000 Contribution payable to affiliate 148,000 173,000 The contribution payable to affiliate is payable in annual installments of $25,000 with a final installment of $23,000; the difference between the carrying amount of the obligation and the obligation balance discounted for imputed interest is not significant. The change in value of permanently restricted interests in charitable trusts for the year ended June 30, 2003 includes a decrease of approximately $92,000 representing the transfer of an interest in a charitable trust to an affiliate. NOTE 13 -FAIR VALUE OF FINANCIAL INSTRUMENTS The Diocesan Administrative Offices have a number of financial instruments, none of which are held for trading purposes. Management estimates that the fair value of all fmancial instruments at June 30, 2004 and 2003 did not differ materially from their aggregate canrying values in the accompanying statements of financial position. The estimated fair value amounts have been determined by using available market information and appropriate valuation methodologies. -13- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTES TO FINANCIAL STATEMENTS -continued .IIJNE 30, 2004 AND 2003 NOTE 14 -CONTINGENCIES Certain claims and complaints have been made against the Diocese by various parties alleging sexual abuse, negligence, or other wrongful acts. The ultimate outcome of these claims and complaints is unknown at the present time. Accordingly, no provision for any liability to the Diocesan Administrative Offices that might ..,Stilt hGS been madC lu the BwGnlpa~-iy ing fiilauCiai statenlenis - 14- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII SCHEDULE 1 -STATEMENTS OF FINANCIAL POSITION FOR HAWAII ISLAND FOOD BANK JiJNE 30, 2004 AND 2003 2004 2003 ASSETS Cash and cash equivalents $ 148,781 206,198 Due from affiliates 8,365 - Program services fees receivable 21,997 23,057 Inventory of donated food items 159,000 125,000 Fixed assets, net of accumulated depreciation 178,814 73,031 Total assets $ 516 957 427.286 LIABILITIES AND NET ASSETS Liabilities Accounts payable $ ( 26) 16,686 Due to affiliates 24,451 15,056 Total liabilities 24,425 31,742 Net assets Unrestricted 492,532 395,544 Total liabilities and net assets $ 516,957 427,286 - 15- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAH SCHEDULE 2 -STATEMENTS OF ACTIVITIES FOR HAWAII ISLAND FOOD BANK YEARS ENDED JiINE 3Q 2004 AND 2003 2004 2003 Support and revenue Grants from government agencies $ 184,962 41,688 Grants from foundations and trusts 29,000 140,149 nrho. ti ,~,,...,r:,..... ..v......v..., 223,540 1 / L,.JUJ Noncash donations-food 3,032,000 2,925,000 Program service fees 113,210 118,035 Special events 139,525 285,045 Interest 632 1,585 Other 13,144 11,419 3,736,021 3,695,226 Expenses Program services 3,593,176 3,593,638 Supporting services Management and general 10,754 21,782 Fundraising 35,103 65,621 3,639,033 3,681,041 Increase in net assets 96,988 14,185 Net assets At beginning of year 395,544 381,359 At end of year $ 492.532 395.544 -16- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII SCHEDULE 3 -STATEMENT OF FUNCTIONAL EXPENSES FOR HAWAII ISLAND FOOD BANK YEAR ENDED JUNE 30, 2004 (With Compazative Totals for the Yeaz ended June 30, 2003) Supporting Services Totals Program Management Services and General Fundraising 2004 2003 Payroll and related expenses $ 322,534 10,754 - 333,288 333,204 Food 3,047,027 - - 3,047,027 3,030,035 Facilities 77,177 - - 77,177 100,570 Depreciation 19,693 - - 19,693 11,568 Vehicles and equipment 29,347 - - 29,347 20,654 Administrative and office 93,473 - - 93,473 111,307 Special events - - 35,103 35,103 65,621 O[her 3,925 - - 3,925 8,082 $ 3.593.176 10.754 35.103 3,639.033 3.681.041 Management expense as a percentage of total expenses .29% .59% Fundraising expense as a percentage of total expenses 1.00% 1.78% Supporting services expense as percentage of total expenses 1.29% 2.37% - 17- DIOCESAN ADMINISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII SCHEDULE 4 -STATEMENTS OF ACTIVITIES FOR HOUSING AND COMMUNITY DEVELOPMENT CORPORATION OF HAWAII CONTRACTS -CASH BASIS YEARS ENDED JUNE 30, 2004 AND 2003 Agency Name: Office of Social Ministries/Care-A-Van Statements of Activities: Services to the Homeless 2004 2u03 Support and revenue State Homeless Program contracts $ 298,792 350,025 Expenses Personnel costs 218,550 210,769 Operating costs 78,081 90,981 Administrative costs 52,500 53,250 349,131 355,000 Decrease in net assets (50,339) ( 4,975) Ne[ assets (deficit) At beginning of year ( 17,750) ( 12,775) At end of year $ ( 68.089) ( 17.750) See accompanying note. - 18- DIOCESAN ADMIIVISTRATIVE OFFICES OF THE ROMAN CATHOLIC CHURCH IN THE STATE OF HAWAII NOTE TO STATEMENTS OF ACTMTIES FOR HOUSING AND COMMUNITY DEVELOPMENT CORPORATION OF HAWAII CONTRACTS -CASH BASIS YEAR ENDED J[INE 30, 2004 The accompanying schedule has been prepared on the cash basis of accounting, which is a comprehensive basis of accounting other than generally accepted accounting principles. -19-