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					       CATHOLIC CHARITIES USA

CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2010 AND 2009
                       CATHOLIC CHARITIES USA
                         TABLE OF CONTENTS
                YEARS ENDED DECEMBER 31, 2010 AND 2009




INDEPENDENT AUDITORS’ REPORT                             1

FINANCIAL STATEMENTS

 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION           2

 CONSOLIDATED STATEMENTS OF ACTIVITIES                   3

 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES – 2010    4

 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES – 2009    5

 CONSOLIDATED STATEMENTS OF CASH FLOWS                   6

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS              7
                                      INDEPENDENT AUDITORS’ REPORT


Board of Trustees
Catholic Charities USA
Alexandria, Virginia


We have audited the accompanying consolidated statements of financial position of Catholic Charities USA (“CCUSA”) as
of December 31, 2010 and 2009, and the related consolidated statements of activities, functional expenses, and cash flows
for the years then ended. These financial statements are the responsibility of CCUSA's management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with U.S. generally accepted auditing standards. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial 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 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of CCUSA as of December 31, 2010 and 2009, and the changes in its net assets and its cash flows for the years
then ended in conformity with U.S. generally accepted accounting principles.




                                                                                 LarsonAllen LLP
Arlington, Virginia
May 13, 2011




                                                              (1)
                                      CATHOLIC CHARITIES USA
                           CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                      DECEMBER 31, 2010 AND 2009

                                                                         2010             2009
                                           ASSETS

Cash and Cash Equivalents                                            $   26,649,779   $    6,859,712
Investments                                                              14,629,707       14,384,938
Receivables:
  U.S. Government                                                            87,080        5,400,193
  Interest and Dividends                                                     41,385           45,651
  Other (Net of Allowance of $53,406 and $11,640, Respectively)             117,650          119,450
       Total Receivables                                                    246,115        5,565,294
Pledges Receivable, Net                                                   6,972,578        1,975,259
Prepaid Expenses                                                            230,806          219,945
Property and Equipment, Net                                               1,792,107        5,852,022
Other Assets                                                                      -          575,386

       Total Assets                                                  $   50,521,092   $   35,432,556

                           LIABILITIES AND NET ASSETS

LIABILITIES
 Accounts Payable and Accrued Expenses                               $      642,041   $    3,080,960
 Due to Catholic Charities Member Agencies                                   66,475            8,655
 Grants Payable, Net                                                      3,567,783        5,865,140
 Deferred Rent                                                            1,246,956        1,323,011
 Tenant Security Deposits and Prepaid Rent                                        -          186,505
 Non-Federal Deferred Revenue                                                 2,000           72,751
           p Agreements
 Split Interest y                                                           136,407          150,276
      Total Liabilities                                                   5,661,662       10,687,298

NET ASSETS
 Unrestricted:
   Board-Designated (See Note 12)                                        30,514,352       10,625,549
   Net Investment in Property and Equipment                               1,792,107        5,852,022
   Undesignated                                                          10,710,150        6,527,384
    Total Unrestricted                                                   43,016,609       23,004,955
 Temporarily Restricted                                                   1,727,821        1,625,303
 Permanently Restricted                                                     115,000          115,000
    Total Net Assets                                                     44,859,430       24,745,258

       Total Liabilities and Net Assets                              $   50,521,092   $   35,432,556




See accompanying Notes to Consolidated Financial Statements.
                                                               (2)
                                                                             CATHOLIC CHARITIES USA
                                                                     CONSOLIDATED STATEMENTS OF ACTIVITIES
                                                                      YEARS ENDED DECEMBER 31, 2010 AND 2009

                                                                                                         2010                                                                                2009
                                                                                       Temporarily              Permanently                                                Temporarily              Permanently
                                                                   Unrestricted         Restricted               Restricted           Total            Unrestricted         Restricted               Restricted           Total
REVENUE
 Membership Dues                                               $       1,476,743   $                 -      $                 -   $    1,476,743   $       1,493,345   $                 -      $                 -   $    1,493,345
 Federal Grants                                                        1,895,448                     -                        -        1,895,448           1,897,513                     -                        -        1,897,513
 Federal Contracts                                                     2,872,176                     -                        -        2,872,176          10,234,088                     -                        -       10,234,088
 Contributions:
   Disaster Response                                                           -           124,709                            -          124,709                   -           246,375                            -          246,375
   Combined Federal Campaign                                             908,646                 -                            -          908,646           1,375,476                 -                            -        1,375,476
   Other                                                              27,754,595           230,479                            -       27,985,074           7,035,714           187,728                            -        7,223,442
     Total Contributions                                              28,663,241           355,188                            -       29,018,429           8,411,190           434,103                            -        8,845,293
 Investment Income:
   Disaster Response                                                      35,863                  -                           -           35,863             246,765                  -                           -          246,765
   Other                                                               1,598,614             16,626                           -        1,615,240           2,705,500             20,196                           -        2,725,696
     Total Investment Income                                           1,634,477             16,626                           -        1,651,103           2,952,265             20,196                           -        2,972,461
 Registration and Workshop Fees                                          488,233                  -                           -          488,233             222,731                  -                           -          222,731
 Publications                                                                435                  -                           -              435                 205                  -                           -              205
 Other Revenue                                                           496,157             81,240                           -          577,397             298,384                  -                           -          298,384
 1731 King Street LLC Rental                                             602,375                  -                           -          602,375             620,730                  -                           -          620,730
 Gain on Sale of 1731 King Street LLC                                  1,465,106                  -                           -        1,465,106                   -                  -                           -                -
 Net Assets Released from Restrictions                                   350,536           (350,536)                          -                -           2,373,985         (2,373,985)                          -                -
       Total Revenue                                                  39,944,927            102,518                           -       40,047,445          28,504,436         (1,919,686)                          -       26,584,750

EXPENSES
 Program Services:
   Distributions to Catholic Charities
   Service Agencies and Other Non Profits:
     Disaster Response                                                 2,389,442                     -                        -        2,389,442          12,435,392                     -                        -       12,435,392
     Housing and Other Federal Grants                                  2,019,311                     -                        -        2,019,311           2,057,407                     -                        -        2,057,407
     Member Agencies' Support                                            947,244                     -                        -          947,244             583,387                     -                        -          583,387
     Member Services                                                   1,705,135                     -                        -        1,705,135             101,063                     -                        -          101,063
     Other Programs                                                        3,819                     -                        -            3,819               7,000                     -                        -            7,000
       Total Distributions                                             7,064,951                     -                        -        7,064,951          15,184,249                     -                        -       15,184,249
 Other Program Services:
   Disaster Response                                                   1,225,354                     -                        -        1,225,354           1,596,316                     -                        -        1,596,316
   Programs and Services                                               2,509,796                     -                        -        2,509,796           2,430,028                     -                        -        2,430,028
   Social Policy                                                       1,196,653                     -                        -        1,196,653           1,528,303                     -                        -        1,528,303
   Member Agencies' Support                                               21,491                     -                        -           21,491              23,830                     -                        -           23,830
   Member Services                                                     3,568,625                     -                        -        3,568,625           1,573,415                     -                        -        1,573,415
     Total Other Program Services                                      8,521,919                     -                        -        8,521,919           7,151,892                     -                        -        7,151,892
 Supporting Services:
   Management and General                                              2,912,369                     -                        -        2,912,369           2,532,178                     -                        -        2,532,178
   1731 King Street LLC Rental                                           365,236                     -                        -          365,236             371,437                     -                        -          371,437
   Fundraising and External Relations                                  1,068,798                     -                        -        1,068,798           1,319,085                     -                        -        1,319,085
     Total Supporting Services                                         4,346,403                     -                        -        4,346,403           4,222,700                     -                        -        4,222,700
       Total Expenses                                                 19,933,273                     -                        -       19,933,273          26,558,841                     -                        -       26,558,841

CHANGE IN NET ASSETS                                                  20,011,654           102,518                            -       20,114,172           1,945,595         (1,919,686)                          -          25,909

Net Assets - Beginning of Year                                        23,004,955          1,625,303                    115,000        24,745,258          21,059,360          3,544,989                 115,000           24,719,349

NET ASSETS - END OF YEAR                                       $      43,016,609   $      1,727,821         $          115,000    $   44,859,430   $      23,004,955   $      1,625,303         $       115,000       $   24,745,258


See accompanying Notes to Consolidated Financial Statements.
                                                                                                                 (3)
                                                                                   CATHOLIC CHARITIES USA
                                                                       CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
                                                                                 YEAR ENDED DECEMBER 31, 2010



                                                                                                       Program Services                                                                                Supporting Services

                                                                                                                    Member                                                   Management
                                                            Disaster          Programs and        Social            Agencies'             Member                                and              King Street
                                                            Response            Services          Policy            Support               Services          Total             General               LLC                Fundraising         Total            Total

 Distributions to Catholic Charities Service Agencies   $     1,453,720   $       2,019,311   $        3,819    $         947,244     $     1,705,135   $    6,129,229   $        33,460     $                 -   $          52,237   $      85,697    $    6,214,926
 Distributions to Other Non Profits                             935,722                   -                -                    -                   -          935,722                 -                       -                   -               -           935,722
       Total Distributions                                    2,389,442           2,019,311            3,819              947,244           1,705,135        7,064,951            33,460                       -              52,237          85,697         7,150,648

OTHER PROGRAM AND
 SUPPORTING SERVICES
 Salaries                                                      326,514              961,549         433,752                16,760             470,745        2,209,320          1,128,530                    -               335,146       1,463,676         3,672,996
 Employee Benefits and Payroll Taxes                           156,580              435,489         216,237                 4,376             176,198          988,880            635,616                    -               136,335         771,951         1,760,831
 Insurance                                                          12                    -               -                     -                   -               12             28,266                1,044                     -          29,310            29,322
 Professional Fees                                             371,693              157,089         189,645                     -           1,101,555        1,819,982            542,148               67,709                32,077         641,934         2,461,916
 Employee Relations                                                164                  283               -                     -                 110              557              4,529                    -                   144           4,673             5,230
 Web Hosting & Casting Services                                      7               15,055           4,255                     -              18,695           38,012             14,819                    -                 4,331          19,150            57,162
 Direct Mail                                                        26                   20              20                     -                  59              125                 67                    -                60,152          60,219            60,344
 Bank Fees/Charges                                               4,253                2,703           2,663                     -               7,751           17,370             30,707                  279                34,463          65,449            82,819
 Telecommunications                                              9,390               23,040          10,102                     -               2,872           45,404             41,979                    -                 3,167          45,146            90,550
 Postage/Shipping                                               13,881                8,226          10,893                    11              34,564           67,575             23,518                    -                14,048          37,566           105,141
 Equipment Maintenance and Rental                                3,645                5,717           2,033                     -              19,193           30,588            122,171                    -                27,790         149,961           180,549
 Occupancy                                                      63,640              196,543          91,161                     -              49,092          400,436            267,381              115,732                80,419         463,532           863,968
 Printing and Promotions                                         8,485              224,890          10,062                   299             158,237          401,973              4,757                    -               187,073         191,830           593,803
 Travel                                                        161,395              173,429          58,490                    45             121,479          514,838             72,055                    -                 7,973          80,028           594,866
 Conferences and meetings                                       25,024              115,846          18,750                     -           1,342,101        1,501,721             32,969                    -                   467          33,436         1,535,157
 Reference Publications                                          5,001               23,263           5,803                     -               4,157           38,224              5,935                    -                 1,788           7,723            45,947
 Interest and Taxes                                                  6                    -               -                     -                   -                6              4,129               15,511                     -          19,640            19,646
 Overhead                                                       38,147               89,252          43,347                     -              16,643          187,389           (225,579)                   -                38,190        (187,389)                -
 Depreciation and Amortization                                  22,015               72,422          31,888                     -              21,353          147,678             98,040              159,437                27,759         285,236           432,914
  Other Expenses                                                15,476                4,980          67,552                     -              23,821          111,829             46,872                5,524                25,239          77,635           189,464
        Total Other Program and
          Supporting Service Expenses                         1,225,354           2,509,796        1,196,653               21,491           3,568,625        8,521,919          2,878,909              365,236            1,016,561        4,260,706        12,782,625

       Total Functional Expenses                        $     3,614,796   $       4,529,107   $    1,200,472    $         968,735     $     5,273,760   $   15,586,870   $      2,912,369    $         365,236     $      1,068,798    $   4,346,403    $   19,933,273




 See accompanying Notes to Consolidated Financial Statements.

                                                                                                                                (4)
                                                                        CATHOLIC CHARITIES USA
                                                            CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES
                                                                     YEAR ENDED DECEMBER 31, 2009

                                                                                                       Program Services                                                                            Supporting Services


                                                                                                                     Member                                             Management
                                                            Disaster        Programs and           Social            Agencies'           Member                              and              King Street
                                                            Response            Services           Policy            Support             Services          Total            General              LLC                Fundraising           Total            Total


 Distributions to Catholic Charities Service Agencies   $    7,467,319      $    2,057,407     $       7,000     $        583,387    $      101,063     $ 10,216,176    $        5,073    $                 -   $       100,953       $    106,026      $ 10,322,202
 Distributions to Other Non Profits                          4,968,073                   -                 -                    -                 -        4,968,073                 -                      -                 -                  -         4,968,073
       Total Distributions                                  12,435,392           2,057,407             7,000              583,387           101,063       15,184,249             5,073                      -           100,953            106,026        15,290,275


OTHER PROGRAM AND
 SUPPORTING SERVICES
 Salaries                                                      404,316             872,535           443,986               18,756           460,965        2,200,558          843,797                       -           383,976           1,227,773        3,428,331
 Employee Benefits and Payroll Taxes                           202,392             439,665           218,573                5,013           232,648        1,098,291          458,490                       -           170,409            628,899         1,727,190
 Insurance                                                             51                  -                -                    -                  -              51          24,967                  569                        -         25,536            25,587
 Professional Fees                                             470,898             285,036           428,449                     -           98,934        1,283,317          470,065              52,949                39,534            562,548         1,845,865
 Employee Relations                                                     -                  -                -                    -                  -               -              678                      -                     -               678              678
 Web Hosting & Casting Services                                    918              18,381             2,805                     -           21,194           43,298             7,083                      -             7,465             14,548            57,846
 Direct Mail                                                            -                  -                -                    -                  -               -                 -                     -           155,159            155,159           155,159
 Bank Fees/Charges                                               3,696               2,130             2,061                     -           10,622           18,509           29,144                  366               26,531             56,041            74,550
 Telecommunications                                             18,671              18,705            13,672                     -            6,407           57,455           39,441                       -            21,057             60,498           117,953
 Postage/Shipping                                                2,680               5,449             3,972                   13            28,736           40,850           22,721                       -            93,508            116,229           157,079
 Equipment Maintenance and Rental                               24,742              25,541            17,292                     -           23,735           91,310          132,526                       -            46,663            179,189           270,499
 Occupancy                                                      65,951             160,378            91,468                     -           82,836          400,633          295,126             146,501                67,459            509,086           909,719
 Printing and Promotions                                        60,841               9,481            22,752                     -           54,989          148,063             8,414                      -           112,974            121,388           269,451
 Travel                                                        257,080             204,010            74,767                   48           110,679          646,584           96,620                       -            10,815            107,435           754,019
 Conferences and Meetings                                       34,918             171,427            30,531                     -          329,298          566,174           33,664                       -            22,116             55,780           621,954
 Reference Publications                                          6,142              97,155            34,631                     -            7,099          145,027             1,452                      -             2,737              4,189           149,216
 Interest and Taxes                                                    25                  -                -                    -                  -              25            8,629              6,776                         -         15,405            15,430
 Overhead                                                       17,215              43,360            24,746                     -           21,635          106,956          (127,847)                     -            20,891           (106,956)                  -
 Depreciation and Amortization                                  23,027              71,283            33,353                     -           20,938          148,601          102,548             164,276                34,898            301,722           450,323
  Other Expenses                                                 2,753               5,492            85,245                     -           62,700          156,190           79,587                       -             1,940             81,527           237,717
       Total Other Program and
            Supporting Service Expenses                      1,596,316           2,430,028         1,528,303               23,830         1,573,415        7,151,892         2,527,105            371,437              1,218,132          4,116,674       11,268,566


       Total Functional Expenses                        $ 14,031,708        $    4,487,435     $   1,535,303     $        607,217    $    1,674,478     $ 22,336,141    $    2,532,178    $       371,437       $      1,319,085      $   4,222,700     $ 26,558,841




See accompanying Notes to Consolidated Financial Statements.
                                                                                                                       (5)
                                            CATHOLIC CHARITIES USA
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     YEARS ENDED DECEMBER 31, 2010 AND 2009


                                                                          2010                 2009

   CASH FLOWS FROM OPERATING ACTIVITIES
    Change in Net Assets                                              $   20,114,172       $       25,909
    Adjustments to Reconcile Change in Net Assets to Net Cash
     Provided by (Used in) Operating Activities:
      Depreciation and Amortization                                          432,916               450,324
      Change in Bad Debt Allowance                                            10,817               336,589
      Donated Stock                                                         (609,913)             (606,585)
      Unrealized (Gain) on Investments                                      (619,760)           (3,058,799)
      Realized (Gain) Loss on Sales of Investments                          (612,110)              527,462
      Gain on Sale of Fixed Assets                                        (1,465,107)                    -
      Deferred Compensation                                                        -               (62,810)
      Change in Present Value Factor to Discount Grants Payable                    -                77,576
      Changes in Assets and Liabilities:
       Receivables                                                         5,277,413            (3,855,733)
       Pledges Receivable                                                 (4,966,370)           (1,062,724)
       Prepaid Expenses                                                      (10,861)              (66,223)
       Other Assets                                                           (9,986)              (27,074)
       Accounts Payable and Accrued Expenses                              (2,438,919)            1,393,374
       Due to Catholic Charities Member Agencies                              57,820                (3,451)
       Grants Payable                                                     (2,297,357)           (7,920,741)
       Deferred Rent                                                         (76,055)              (54,616)
       Tenant Security Deposits and Prepaid Rent                            (186,505)                    -
       Non-Federal Deferred Revenue                                          (70,751)               70,751
            Net Cash Provided by (Used in) Operating Activities           12,529,444           (13,836,771)

   CASH FLOWS FROM INVESTING ACTIVITIES
    Purchases of Property and Equipment                                     (166,629)                    -
    Proceeds from Sale of Fixed Assets                                     5,844,109                     -
    Proceeds from Sale of Investments                                      7,637,295             8,337,202
    Purchases of Investments                                              (6,040,283)           (8,102,571)
            Net Cash Provided by Investing Activities                      7,274,492               234,631

   CASH FLOWS FROM FINANCING ACTIVITIES
    Payments on Split-Interest Agreements                                       (13,869)           (24,353)
    Payment on Deferred Compensation                                                  -            (21,610)
           Net Cash Used in Financing Activities                                (13,869)           (45,963)

   NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   19,790,067           (13,648,103)

   Cash and Cash Equivalents - Beginning of Year                              6,859,712        20,507,815

   CASH AND CASH EQUIVALENTS - END OF YEAR                            $   26,649,779       $    6,859,712




See accompanying Notes to Consolidated Financial Statements.
                                                               (6)
                                  CATHOLIC CHARITIES USA
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 2010 AND 2009


NOTE 1   ORGANIZATION

         Catholic Charities USA (“CCUSA”) is a not-for-profit organization incorporated in 1950 to provide a forum for
         discussing the application of Catholic thought in the general field of social welfare and to stimulate action,
         research, and the publication of material in this field. Primary sources of funding include public contributions,
         membership dues and government grants.

         The consolidated financial statements include the assets, liabilities, net assets and activities of CCUSA and the 1731
         King Street LLC (the “LLC”). All significant intercompany transactions and balances have been eliminated in
         consolidation. The LLC is a limited liability corporation as defined under the Internal Revenue Code and is operated
         exclusively for purposes of renting out office space located at 1731 King Street. The LLC, which was incorporated in
         the District of Columbia in June 2008, is wholly owned by CCUSA and is therefore consolidated as required under
         U.S. GAAP. In December 2010, CCUSA sold the office building located at 1731 King Street (see note 14).

         Program services are provided in the following principal areas:

         Programs and Services
         Local Catholic Charities agencies provide a wide range of human services to millions of people in need each year.
         CCUSA provides training, technical assistance and networking opportunities for its membership on a range of
         issues of critical importance including aging, housing, emergency services, parish social ministry, child care,
         healthcare and Catholic Identity. In addition, CCUSA provides opportunities for leadership development and
         consultations to ensure that members remain at the forefront of emerging needs and quality services.

               Social Policy
               CCUSA provides a national voice for the needs and concerns of its membership and the people they serve.
               Working with its membership, CCUSA develops and advocates for just public policies that empower
               people and alleviate the conditions that perpetuate poverty. CCUSA also works with its membership
               around issues of racial equality and diversity.

               Disaster Response
               CCUSA provides leadership, coordination, and technical assistance to Catholic Charities and other diocesan
               organizations as part of its role as the lead Catholic agency in times of natural disaster. CCUSA support is
               provided to not only help organizations and communities respond to disasters, but also to help them
               prepare and plan for disasters. Additionally, CCUSA has a contract with the federal government to provide
               disaster case management services for individuals and families recovering from natural disasters.

               Member Services
               CCUSA supports its membership by providing a range of services that promote networking, ongoing
               education, and improve their ability to respond to the needs of the poor and vulnerable in their
               communities. These services include: an annual gathering, web-based training and information, a quarterly
               newsletter and other printed resources. In 2010, CCUSA hosted an event celebrating the 100 year
               anniversary of Catholic Charities in the United States.




                                                           (7)
                                   CATHOLIC CHARITIES USA
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  DECEMBER 31, 2010 AND 2009


NOTE 1   ORGANIZATION (CONTINUED)

         Programs and Services (Continued)
              Federal Grants
              CCUSA applies for federal grants to support specific programs on behalf of its membership. These funds
              are then transferred to member agencies interested in implementing these programs through a sub-granting
              process.

                In 2009, CCUSA received a grant from the Division of State Children’s Health Insurance, Centers for
                Medicare and Medicaid entitled The Children’s Health Insurance Program Reauthorization Act (CHIPRA),
                which assists in enrolling children into healthcare.

                In 2008, CCUSA received a grant from the Department of Housing and Urban Development to support
                housing counseling programs implemented by local Catholic Charities agencies. Additionally, in 2008,
                CCUSA received a grant from Neighborworks America to support foreclosure mitigation counseling
                services being provided by twelve local Catholic Charities agencies.

NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Accounting
         The financial statements of CCUSA are presented on the accrual basis of accounting. Consequently, revenue is
         recognized when earned and expenses when obligations are incurred.

         Use of Estimates
         The preparation of financial statements in conformity with accounting principles generally accepted in the United
         States of America requires management to make estimates and assumptions that affect certain reported amounts
         of assets and liabilities and disclosures 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.

         Cash and Cash Equivalents
         For financial statement purposes, CCUSA considers money market and overnight sweep accounts to be cash
         equivalents. However, at times part of the investment portfolio may be held in cash equivalents.

         Investments
         Investments are recorded at fair value. CCUSA invests in various securities, including U.S. Government securities,
         corporate debt securities, and equities. Investment securities, in general, are exposed to various risks, such as
         interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment
         securities, it is reasonably possible that changes in the values of investment securities will occur in the near term
         and that such changes could materially affect the amounts reported in future statement of activities.

         Fair Value of Financial Instruments
         CCUSA accounts for a portion of its financial instruments at fair value or considers fair value in their
         measurement. CCUSA accounts for certain financial assets and liabilities at fair value under various accounting
         literature that establishes a fair value hierarchy.




                                                             (8)
                                  CATHOLIC CHARITIES USA
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 2010 AND 2009


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Uniform Prudent Management of Institutional Funds Act
         During 2008, Virginia enacted the Uniform Prudent Management of Institutional Funds Act (UPMIFA). Also
         during 2008, guidance was provided on the classification of endowment fund net assets for states that have
         enacted versions of UPMIFA. Under UPMIFA all unappropriated endowment fund assets are considered
         restricted.

         Pledges Receivable
         Pledges receivable are reported at fair value at the date the promise is received. Pledges that are expected to be
         collected within one year are recorded at their net realizable value. Pledges that are expected to be collected in
         future years are recorded at the present value of the amount expected to be collected. The discounts on those
         amounts are computed using an imputed interest rate applicable to the year in which the pledge is expected to be
         received.

         Property and Equipment
         Acquisitions of property and equipment are recorded at cost and depreciated using the straight-line depreciation
         method. Depreciation is provided over the estimated useful lives of the assets, which range from 3 - 40 years.
         Building improvements are depreciated on a straight-line basis over the lesser of the remaining life of the building
         or estimated useful life of the improvement. Leasehold improvements are amortized on a straight-line basis over
         the remaining term of the lease agreement. CCUSA capitalizes all property and equipment purchased with a cost
         of $5,000 or more.

         Net Assets
         To ensure the observance of limitations and restrictions placed on the use of resources available to CCUSA, its
         net assets and revenue have been classified into net asset groups based on the existence or absence of donor-
         imposed restrictions. The classes of net assets are as follows:

              Unrestricted: Represents both resources of CCUSA available to support general operations and amounts
              invested in property and equipment, net of the mortgage liability. The CCUSA Board of Trustees has
              internally designated a portion of its unrestricted net assets (see Note 12).
              Temporarily Restricted: Represents resources that result from contributions limited in use by donor-imposed
              stipulations. Such restrictions either expire by the passage of time or can be fulfilled and removed by actions of
              CCUSA pursuant to those stipulations.

              Permanently Restricted: Represents two bequests that established Endowment Funds. The Caritas Endowment
              Fund is to be held in perpetuity by CCUSA. Investment income earned is used to support program activities
              for Caritas Internationalis and is recorded as temporarily restricted activity. The Tracy Endowment Fund is
              to be held in perpetuity by CCUSA. Investment income earned is used to support scholarships granted by
              CCUSA and is recorded as temporarily restricted activity.

         Membership Dues Revenue
         Membership dues are treated as an exchange transaction due to membership benefits offered. Revenue is
         recognized in the year to which the membership applies.




                                                           (9)
                                  CATHOLIC CHARITIES USA
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 2010 AND 2009


NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Grants and contracts from U.S. Government
         Grant and contract funds are reported as revenue when earned. Revenue is earned when eligible expenditures, as
         defined in each grant or contract, are incurred. Funds received but not yet earned are reported as deferred
         revenue. Expenditures under government grants and contracts are subject to review by the granting authority. To
         the extent, if any, that such a review reduces expenditures allowable under these grants and contracts, CCUSA will
         record such disallowance at the time the final assessment is made.
         Temporarily Restricted Support
         CCUSA’s policy is to generally report all donor-restricted contributions as temporarily restricted support even if
         those restrictions are met in the same reporting period the contributions are received.

         Grants (Disaster Response)
         CCUSA supports various Catholic service agencies in need as a result of catastrophic or disastrous events through
         grants. This includes significant support provided in response to Hurricane Katrina and the September 11, 2001
         terrorist attacks. These grants are recorded as expenses after grant requests are approved and committed by
         CCUSA. For the years ended December 31, 2010 and 2009, disaster response grant expenses totaled $498,272 and
         $5,091,372.

         Bequests
         CCUSA recognizes bequests when the probate court declares the will valid or at such time it becomes apparent
         there will be no challenge to the will. At such time the contribution revenue and receivable are recorded at fair
         value, unless the promise is conditioned upon future and uncertain events.

         Functional Allocation of Expenses
         The costs of providing programs and other activities have been summarized on a functional basis in the statement
         of activities. Accordingly, indirect expenses have been allocated among the programs and supporting services
         benefited that includes an allocation of personnel and overhead expenses based upon the estimated amount of
         time worked by employees and space utilized in each functional area.

         Income Taxes
         CCUSA is exempt from the payment of federal income taxes on activities exempt under Section 501(c)(3) of the
         Internal Revenue Code and is classified as an organization that is not a private foundation under Section 509(a) of
         the Code. The LLC is a limited liability corporation as defined by the Internal Revenue Service.

         CCUSA is not aware of any activities that would jeopardize its tax-exempt status and is not aware of any activities
         that are subject to tax on unrelated business income, excise, or other taxes. As of December 31, 2010, there are no
         uncertain tax positions. As a church related entity, CCUSA does not file a 990 with the IRS.

         Subsequent Events
         In preparing these financial statements, CCUSA has evaluated events and transactions for potential recognition or
         disclosure through May 13, 2011, the date the financial statements were available to be issued.




                                                          (10)
                                   CATHOLIC CHARITIES USA
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  DECEMBER 31, 2010 AND 2009


NOTE 3   FAIR VALUE OF FINANCIAL INSTRUMENTS

         Fair Value Hierarchy
         CCUSA has categorized its financial instruments, based on the priority of the inputs to the valuation technique,
         into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active
         markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the
         inputs used to measure the financial instruments fall within different levels of the hierarchy, the categorization is
         based on the lowest level input that is significant to the fair value measurement of the instrument.

         Financial assets and liabilities recorded on the statement of financial position are categorized based on the inputs
         to the valuation techniques as follows:

               Level 1
               Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or
               liabilities in an active market that CCUSA has the ability to access (examples include active exchange-traded
               equity securities, listed derivatives, and most U.S. Government and agency securities).

               Level 2
               Financial assets and liabilities whose values are based on quoted prices in markets that are not active or
               model inputs that are observable either directly or indirectly for substantially the full term of the asset or
               liability. Level 2 inputs include the following:

                    • Quoted prices for similar assets or liabilities in active markets (for example, restricted stock);
                    • Quoted prices for identical or similar assets or liabilities in non-active markets (examples include
                      corporate and municipal bonds, which trade infrequently);
                    • Pricing models whose inputs are observable for substantially the full term of the asset or liability
                      (examples include most over-the-counter derivatives, including interest rate and currency swaps); and
                    • Pricing models whose inputs are derived principally from or corroborated by observable market data
                      through correlation or other means for substantially the full term of the asset or liability (examples
                      include certain residential and commercial mortgage related assets, including loans, securities, and
                      derivatives).

               Level 3
               Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs
               that are both unobservable and significant to the overall fair value measurement. These inputs reflect
               management’s assumptions about how a market participant determines the price of the asset or liability
               (examples include certain private equity investments and split interest agreements).




                                                           (11)
                                    CATHOLIC CHARITIES USA
                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   DECEMBER 31, 2010 AND 2009


NOTE 3   FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

         Fair Value Hierarchy (Continued)
         The following tables present CCUSA’s fair value hierarchy for those assets and liabilities measured at fair value on
         a recurring basis as of December 31, 2010 and 2009.

                                                         December 31, 2010
                                                        Level 1         Level 2                Level 3              Total
         Assets
          Government Obligations and
                Corporate Bonds                     $     3,176,055     $            -     $             -     $    3,176,055
          Equities                                        7,411,526                  -                   -          7,411,526
          Mutual Funds (Fixed Income and
                Real Estate)                             3,227,887                   -                   -          3,227,887
            Total Assets                            $   13,815,468     $             -     $             -     $   13,815,468

         Liabilities
           Split-Interest Liability                 $             -    $             -     $      136,407      $      136,407
             Total Liabilities                      $             -    $             -     $      136,407      $      136,407

                                                         December 31, 2009
                                                        Level 1         Level 2                Level 3              Total
         Assets
          Government Obligations and
                Corporate Bonds                     $     3,596,885     $            -     $             -     $    3,596,885
          Equities                                        7,346,495                  -                   -          7,346,495
          Mutual Funds (Fixed Income and
                Real Estate)                             2,680,524                   -                   -          2,680,524
            Total Assets                            $   13,623,904     $             -     $             -     $   13,623,904

         Liabilities
           Split-Interest Liability                 $             -    $             -     $      150,276      $      150,276
             Total Liabilities                      $             -    $             -     $      150,276      $      150,276




                                                          (12)
                                   CATHOLIC CHARITIES USA
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  DECEMBER 31, 2010 AND 2009


NOTE 3   FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

         Fair Value Hierarchy (Continued)
         The following table provides a summary of changes in fair value of CCUSA’s Level 3 financial assets and liabilities
         for the years ended December 31, 2010 and 2009:

                                                                                Split-Interest
                                                                                  Liability

                          Beginning Balance as of January 1, 2009              $      174,629
                          Unrealized and Realized Net Gain                             13,006
                          Change in Allowance/PV Discount                               1,083
                          Purchases/(Distributions)                                   (38,442)
                          Balance as of December 31, 2009                      $      150,276




                          Beginning Balance as of January 1, 2010              $      150,276
                          Unrealized and Realized Net Gain                              7,280
                          Change in Allowance/PV Discount                                   -
                          Purchases/(Distributions)                                   (21,149)
                          Balance as of December 31, 2010                      $      136,407


         The Reginato trust and charitable gift annuity split-interest liabilities were calculated based upon the Internal
         Revenue Service life expectancy tables and an inflation rate assumption of 3.25 percent for the years ended
         December 31, 2010 and 2009, respectively.


NOTE 4   CONCENTRATION OF CREDIT RISK

         Financial instruments, which subject the Organization to concentrations of credit risk, consist of demand deposits,
         overnight repurchase agreements, money market, and mutual funds that are held by financial institutions. Funds in
         excess of Federal and other insurance limits are comprised of the following at December 31, 2010 and 2009:

                                                                             2010                   2009
             Demand Deposit Accounts                                      $ 1,170,514            $ 2,588,747
             Overnight repurchase agreements                                 1,005,408                     -
             Principally federal agency obligations                                  -             3,219,511
             Money market and mutual funds                                  22,012,590               261,035
                  Total Funds                                             $ 24,188,512           $ 6,069,293




                                                          (13)
                                       CATHOLIC CHARITIES USA
                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                      DECEMBER 31, 2010 AND 2009


NOTE 5      INVESTMENTS

           Investments are recorded at fair market value and are comprised of the following at December 31, 2010 and 2009:

                                                                       2010                                             2009
                                                         Cost                        Market                Cost                    Market
U.S. Government Obligations
   and corporate bonds                            $        3,149,769           $  3,176,055         $       2,641,660          $  3,596,885
Equities                                                   5,972,124              7,411,524                 6,428,280             7,346,495
Mutual funds                                               3,086,668              3,227,887                 3,566,828             2,680,524
                                                          12,208,561             13,815,466                12,636,768            13,623,904
Money market funds                                           814,241                814,241                   761,034               761,034
   Total investments                              $       13,022,802           $ 14,629,707         $      13,397,802          $ 14,384,938


           Investment income consists of the following for the years ended December 31, 2010 and 2009:

                                                                                   2010                 2009
                       Interest and dividends                              $          419,233       $     441,124
                       Unrealized gain on investments                                 619,760           3,058,799
                       Realized gains on sale of investments                          612,110            (527,462)
                        Total investment income                            $        1,651,103       $   2,972,461


NOTE 6     PLEDGES RECEIVABLE

           Pledges receivable at December 31, 2010 and 2009 represent unconditional amounts pledged under various
           fundraising campaigns. Pledges expected to be collected in more than one year are reflected at net realizable value.
           The net realizable value is estimated by calculating the present value of estimated cash flows. In both 2010 and
           2009, all pledges were due within one year; therefore no present value discounting was performed.

           The amount of the pledges receivable at December 31, 2010 and 2009 is reflected below:

                                                                               2010                     2009

                         Receivable in Less than One Year              $           7,297,578    $        2,331,208
                         Less: Allowance for Doubtful Pledges                       (325,000)             (355,949)

                             Net Pledges Receivable                    $           6,972,578    $        1,975,259


           During 2010, CCUSA received a bequest for approximately $21,775,000. Approximately $15,861,000 of the
           bequest was received in 2010 with the remaining balance of approximately $5,914,000 expected to be received in
           2011.




                                                                (14)
                                  CATHOLIC CHARITIES USA
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 2010 AND 2009


NOTE 7   PROPERTY AND EQUIPMENT

         At December 31, 2010 and 2009, property and equipment consisted of the following:

                                                                                      2010                   2009
         Canal Center:
          Leasehold Improvements - Canal Center                                 $      1,833,338      $       1,813,026
          Equipment and Software                                                         192,675                341,306
          Furniture and Fixtures                                                         637,874                637,874
          Less: Accumulated Depreciation
            and Amortization                                                            (871,780)              (927,141)
               Total Canal Center Property and Equipment                               1,792,107              1,865,065
         King Street LLC:
          Land                                                                                  -               698,206
          Building - Condominium Units                                                          -             3,273,247
          Building and Leasehold Improvements                                                   -               876,785
          Less: Accumulated Depreciation
            and Amortization                                                                    -              (861,281)
               Total King Street LLC Property and Equipment                                     -             3,986,957

               Net Property and Equipment                                       $      1,792,107      $       5,852,022



NOTE 8   DISASTER RESPONSE AND GRANTS PAYABLE

         Grants are based on applications submitted and reviewed by the Disaster Response Advisory Committee as part
         of the approval process, which requires concurrence by the President of CCUSA. Grants are made for needs
         related to a variety of disasters, including Hurricane Katrina, September 11, 2001 terrorist attacks, and other
         events.

         It is CCUSA’s policy to be reimbursed for actual costs incurred for Disaster Response oversight and
         administration. Amounts charged for the administration of the Disaster Response program are determined by
         formula based on amounts received and disbursed. An assessment is applied against each Disaster Response
         program and is recovered over the period the funds are held, part when contributions are processed, and the
         remainder when grants are disbursed. For most disasters, the total assessment is 10%. Total fees assessed for the
         Hurricane Katrina program were less than 1%.

         Grants payable at December 31, 2010 and 2009 represent approved grants and awards committed to Catholic
         service agencies. Grant distributions typically do not exceed three years. Grants expected to be paid in more than
         one year are reflected at face value minus a discount. The discount is estimated by calculating the present value of
         estimated future cash outflows. The rate used to discount grants payable to their net realizable value at December
         31, 2009 was 0.50%. All grants payable as of December 31, 2010 are expected to be paid in one year. These grants
         payable at December 31, 2010 and 2009 represent amounts committed in response to Hurricane Katrina,
         September 11 terrorist attack, 2004 hurricane disasters, and other events.




                                                          (15)
                                  CATHOLIC CHARITIES USA
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 2010 AND 2009


NOTE 8   DISASTER RESPONSE AND GRANTS PAYABLE (CONTINUED)

         The expected timing of funds to be disbursed is reflected below:

                                                                       2010                   2009

                 Payable in Less than One Year                   $       3,567,783      $       5,572,237
                 Payable in One to Three Years                                   -                294,600
                                                                         3,567,783              5,866,837
                 Discount of Grants Payable to Present Value                     -                 (1,697)

                     Total Grants Payable                        $       3,567,783      $       5,865,140



NOTE 9   SPLIT INTEREST AGREEMENTS

         CCUSA receives contributions pursuant to several charitable gift annuity contracts with donors. The actuarially
         determined liability resulting from the annuity gifts was recorded at the date of the gift. The excess of the annuity
         gifts over the annuity liabilities is recognized as unrestricted support and has been set aside as a portion of the
         Board-designated net assets. The liability amount is adjusted annually based on the latest actuarial information
         available. The charitable gift annuity obligations approximated $95,000 and $103,000 at December 31, 2010 and
         2009, respectively.

         CCUSA also received a contribution of a charitable remainder unitrust in 1998. Under this charitable remainder
         unitrust, a donor made a contribution to CCUSA that will remain in trust until a stipulated event, at which time
         the remaining trust balance will convey to CCUSA. The unitrust was valued at market value at the time of the gift.
         In consideration of the gift, the donors will receive an annuity from the trust based on the lesser of the trust
         principal at the beginning of the year at a stated interest rate or the actual earnings of the trust. The liability
         amount is adjusted annually based on the latest actuarial information available. The assets of the unitrust are
         included in temporarily restricted net assets on the Statement of Activities. The charitable remainder unitrust
         obligation approximated $41,000 and $47,000 at December 31, 2010 and 2009, respectively.


NOTE 10 DEFERRED COMPENSATION

         CCUSA entered into a deferred compensation agreement with a former Executive Director to fund certain
         retirement benefits beginning in 1982 for his lifetime. The individual received an annual amount equal to his
         compensation on the date of his retirement increased by the same percentage as increases in salaries of current
         CCUSA employees. The present value of the estimated future payments was recorded as deferred compensation
         and adjusted as appropriate for changes in the average rate of pay, life expectancy, and interest rates. A payment of
         $31,518 related to this obligation was made during the year ended December 31, 2009. The beneficiary died
         during 2009. Therefore, the deferred compensation liability was written off in 2009.




                                                          (16)
                                    CATHOLIC CHARITIES USA
                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   DECEMBER 31, 2010 AND 2009


NOTE 11 TEMPORARILY RESTRICTED NET ASSETS

        Changes in temporarily restricted net assets during the year ended December 31, 2010 are detailed as follows:

                                                 Balance                                     Funds                 Balance
                                                January 1,             Funds             Released from           December 31,
                                                  2010                Received            Restriction               2010

      Cafferty Fellow                       $         92,659     $               -   $              500      $          92,159
      Centennial Celebration                          15,690                25,100               40,790                      -
      Children of Children                            43,669                     -                    -                 43,669
      Disaster Response                            1,375,292               205,949              100,410              1,480,831
      Domestic Trafficking                                63                 1,063                  184                    942
      Family Strengthening                                 -               200,000              200,000                      -
      National Religious Partnership                   3,842                     -                    -                  3,842
      Other                                           21,876                 4,316                7,316                 18,876
      Reginato Trust                                  61,712                16,626                1,336                 77,002
      U.S. Catholic Conference Children's
       Environmental Health                           10,500                     -                       -              10,500

            Total                           $      1,625,303     $         453,054   $          350,536      $       1,727,821


        Changes in temporarily restricted net assets during the year ended December 31, 2009 are detailed as follows:

                                                 Balance                                     Funds                 Balance
                                                January 1,             Funds             Released from           December 31,
                                                  2009                Received            Restriction               2009

      Cafferty Fellow                       $         92,659     $               -   $                -      $          92,659
      Centennial Celebration                         251,000                     -              235,310                 15,690
      Children of Children                            43,669                     -                    -                 43,669
      Disaster Response                            3,034,063               246,375            1,905,146              1,375,292
      Domestic Trafficking                                 -                   273                  210                     63
      Family Strengthening                                 -               145,000              145,000                      -
      National Religious Partnership                   9,689                 5,000               10,847                  3,842
      Other                                           59,748                37,455               75,327                 21,876
      Reginato Trust                                  43,661                20,196                2,145                 61,712
      U.S. Catholic Conference Children's
       Environmental Health                           10,500                     -                    -                 10,500
             Total                          $      3,544,989     $         454,299   $        2,373,985      $       1,625,303



NOTE 12 UNRESTRICTED NET ASSETS

        Unrestricted Net Assets
        Unrestricted net assets are available to finance the general operations of Catholic Charities USA. The only limits
        on the use of unrestricted net assets are the purposes specified in the organization’s articles of incorporation and
        those limitations resulting from the nature of the Organization and the environment in which it operates.




                                                               (17)
                                CATHOLIC CHARITIES USA
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2010 AND 2009


NOTE 12 UNRESTRICTED NET ASSETS (CONTINUED)

       Board-Designated Net Assets
       Board-designated net assets are based on voluntary resolutions by the Board of Trustees to designate a portion of
       net assets for specific purposes and do not result in restricted net assets. Since designations are voluntary and may
       be reversed by the Board of Trustees at any time, designated net assets are classified as unrestricted net assets.
       During 2004, the Board of Trustees approved a policy to designate for operations unrestricted net assets by
       transferring a portion of the Facilities and General Reserve Funds to the Designated for Operations Fund. The
       reserve will serve to address the Organization’s financial needs when economic downturns impact Catholic
       Charities USA and to address cash flow needs that result from differences in the timing between Catholic
       Charities USA expenses and the receipt of revenues. The designated purpose of the Operations Fund is to address
       cash flow needs of Catholic Charities USA; therefore the Board believes such funds are not subject to the
       Uniform Prudent Management of Institutional Funds Acts (UPMIFA). The appropriations from the fund are
       authorized by the Board of Trustees’ resolutions. The investment objectives of this fund are primarily liquidity and
       secondarily return and capital preservation.
       Board-designated Disaster Response funds are unrestricted net assets resulting primarily from investment income
       on contributions designated for general and specific disasters. This fund is measured on each December 31 and is
       to equal the total operating expense budget before budgeted distributions to member agencies for the subsequent
       year as approved by the Board at its annual December meeting.

       At December 31, 2010 and 2009, CCUSA unrestricted net assets were as follows:

                                                                       2010                2009

                 Unrestricted and Not Board-Designated           $    10,710,150     $      6,527,384

                 Board-Designated:
                  Disaster Response                                    2,088,672            2,824,869
                  Operations Fund                                      6,650,680            7,800,680
                  Funds Held for Purchase of
                     Corporate Headquarters                           21,775,000                   -
                    Total Board-Designated                            30,514,352          10,625,549

                 Net Investment in Property and Equipment              1,792,107            5,852,022

                     Total Unrestricted Net Assets               $    43,016,609     $    23,004,955


NOTE 13 PENSION PLAN

       CCUSA sponsors a defined contribution 401(k) profit sharing plan covering all employees who have reached the
       age of twenty-one and have completed one year of continuous employment. Under the terms of the plan, CCUSA
       contributes 10% of the employee’s compensation (3% safe harbor and 7% profit share) within statutory limits to
       the plan. Pension expense was approximately $356,000 and $286,000 for the years ended December 31, 2010 and
       2009, respectively.




                                                         (18)
                                CATHOLIC CHARITIES USA
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 2010 AND 2009


NOTE 14 LEASES

       Leases – 1731 King Street
       Effective July 2008, CCUSA (via 1731 King St LLC) executed a non-cancelable operating lease with another non-
       profit organization to rent out office space at 1731 King Street (16,955 square feet) in Alexandria, Virginia. The
       lease provided the tenant with an option to acquire the building, if exercised between June 1, 2010 and December
       31, 2013. In December 2010, the tenant exercised the option to purchase the building for $5,844,109 resulting in a
       gain of $1,465,107 from the sale.

       Rental income recognized for the years ended December 31, 2010 and 2009 was $602,375 and $620,730,
       respectively.

       Leases – 66 Canal Center
       In October 2007, CCUSA executed a non-cancelable operating lease for its primary office space (20,866 square
       feet) in Alexandria, Virginia for ten years, six months effective through March 31, 2018. Future minimum lease
       payments for the years ending December 31 are as follows:

                                   Year Ending December 31,                             Amount
                                             2011                                  $        820,608
                                             2012                                           843,091
                                             2013                                           866,200
                                             2014                                           889,935
                                             2015                                           914,348
                                          Thereafter                                      2,151,180

                                     Total Rental Payments                         $       6,485,362


       CCUSA records rent expense on a straight-line basis over the term of the lease. A deferred rent obligation in the
       amount of $526,789 and $503,511 has been recorded at December 31, 2010 and 2009, respectively, that represents
       the excess of rent expense over cash payments. CCUSA was provided a leasehold improvement allowance in the
       amount of approximately $1,043,000 as an incentive to enter into this lease. The leasehold improvement allowance
       is amortized over the term of the lease and has an unamortized balance of $720,167 and $819,500 as of December
       31, 2010 and 2009, respectively.

       The lease has an option to renew for 5 additional years. Additionally, in lieu of a security deposit CCUSA executed
       a letter of credit tied to this lease in the amount of $250,932. With each passing year, the minimum balance
       requirement reduces until the sixth anniversary in which minimum requirement is set at $62,598 for the duration
       of the lease.

       Related rent expense was $735,760 and $739,933 for the years ended December 31, 2010 and 2009, respectively.


NOTE 15 COMMITMENTS AND CONTINGENCIES

       Hotel Commitments
       CCUSA entered into several agreements with hotels concerning room accommodations for its meetings and
       seminars through 2011. These agreements indicate CCUSA is liable for liquidated damages in the event of
       cancellation. At December 31, 2010, CCUSA’s commitments for possible liquidated damages were immaterial.
       However, a contract was signed subsequent to year end which included a potential liability of $334,000.


                                                       (19)
                                 CATHOLIC CHARITIES USA
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2010 AND 2009


NOTE 15 COMMITMENTS AND CONTINGENCIES (CONTINUED)

        Federal Grants and Contracts
        Under the terms of the Organization’s reimbursable government grants and contracts, CCUSA is entitled to the
        reimbursement of direct and indirect costs incurred. These expenses are subject to audit by the cognizant
        government agency.


NOTE 16 ENDOWMENT

        CCUSA has a donor-restricted endowment fund established for the purposes of providing income to support
        specific donor-restricted activities. As required by GAAP, net assets of the endowment fund are classified and
        reported based on the existence or absence of donor-imposed restrictions. The board of directors of the
        Organization has interpreted Virginia’s Uniform Prudent Management of Institutional Funds Act (UPMIFA) as
        requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted
        endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, CCUSA
        classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment,
        (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent
        endowment made in accordance with the direction of the applicable donor gift instrument at the time the
        accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not
        classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts
        are appropriated for expenditure by the Organization in a manner consistent with the standard of prudence
        prescribed by UPMIFA. The Organization considered all amounts earned on the endowment fund to be
        appropriated for current use.


NOTE 17 CHANGE IN FISCAL YEAR END

        In 2011, CCUSA will change to a fiscal year ending June 30th. CCUSA receives a majority of its contributions in
        December, thus the change in year-end to June will move a majority of contribution revenue from the end of the
        year to the middle of the year, resulting in better planning and more efficient year-end closings. A June 30th year-
        end will also be more consistent with CCUSA’s member agencies year-ends. In addition, the year-end change will
        alleviate the current conflict between the annual internal budget and planning process and the annual meeting
        hosted by CCUSA for its member agencies. The fiscal period ending June 30, 2011 will be for a six-month period.


NOTE 18 SUBSEQUENT EVENT

        In April 2011, CCUSA purchased an unoccupied 72,670 square foot office building in Alexandria, Virginia for
        $24,696,000. While most of the payment involved cash, a $3,900,000 bridge loan was also initiated. CCUSA
        expects to pay off this loan in 2011 with the bequest pledge disbursement mentioned in Note 6. CCUSA plans on
        moving to the new office space, occupying a portion of the building, and leasing the remaining portion. Currently,
        CCUSA is planning to sublease the office space at its current location to another tenant after the move to the new
        office building. CCUSA plans on financing the cost of improvements to the office building.




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