Children’s Miracle Network 2008 Annual Report 2 | Celebration 2008 Contents Chairman Message 4 Background and Partners 5 Leadership 6 Mission 7 2008 Hospital Highlights 8 Media Partners 9 Corporate Partners 10 2008 Fundraising Highlights 11 2008 Fundraising Total 12 2008 Year in Review 13 2008 Hospital Fundraising Totals 15 Total Children’s Miracle Network Support 19 Endowment Donors 20 The Impact of Hospitals 21 2008 Financial Statements 22 Children’s Miracle Network’s mission is to generate funds and awareness programs in partnership with and for the benefit of member hospitals/foundations and the children they are privileged to serve. 2008 Annual Report | 3 Chairman Message Mario Pilozzi Chairman Children’s Miracle Network Board of Trustees Helping children to overcome the odds is what Children’s Miracle Network is all about...the odds of disease and illness, the potential for death from a preventable accident, and the possibility of a serious injury. Our organization has the best odds to reach out to million of kids and their families, providing tangible help through the hospitals that serve kids and raising the awareness of all those who can give voice to the needs of our children. Children’s Miracle Network would like to see every year become a landmark year for children. This is the reason we exist: to help children—all children. And we continually strive to improve so we can better fulfill this mission. I’m proud to report that Children’s Miracle Network made significant progress during 2008. For example: • • • • Through the compassionate efforts of countless individuals, sponsors and media partners, Children’s Miracle Network raised $243 million for children’s hospitals, a remarkable feat in the current economy. According to an unaided awareness survey, Children’s Miracle Network is the sixth most recognized children’s charity in North America. Children’s Miracle Network is ranked first when it comes to the overall number of children impacted by its fundraising each year—17 million. National fundraising programs like Radiothon, Telethon, Dance Marathon and Direct Mail increased by 4 percent in 2008. But to focus on our achievements—as impressive as they are—misses the point. There is much more to be done. Many families are suffering financially. Parents devastated by sudden loss of income are often postponing care that could prevent an illness—simply because they can’t afford a doctor’s visit or a needed prescription. As a result, about half of all children’s hospitals are seeing an increase in emergency visits. What’s more, 70 percent of children’s hospitals have had to give more charity care and take on more debt. And yet 57 percent of hospitals are receiving fewer charitable contributions—the money just isn’t coming in fast enough to help all children who need miracles. Our goal is to meet the needs of children’s hospitals by cultivating more partnerships, initiating more gifts and providing more funds for the care of children throughout the world. This report gives you a brief snapshot of our successes in 2008 and how we are aligning ourselves to provide more value to more children in the future. 4 | 2008 Annual Report Heading Here Heading (Secondary) Here Text Here Background and Partners 5 | Children’s Miracle Network | 2008 Annual Fundraising Report Children’s Miracle Network | 2008 Annual Fundraising Report | 5 Leadership Board Of Trustees Mario Pilozzi (Chair) Dianna Morgan Tom Sargent Jim Shmerling, DHA John Bozard Jimmy Alexander Jon Vice Steven Altschuler, MD Mr. John Bel Don Black Kevin Churchwell, MD Nana Mensah Ora Pescovitz, MD Marie Osmond Jimmy Osmond John Schneider Ken Potrock Tom Sullivan Steve Weisz President & CEO (Retired), Wal-Mart Canada Corp. Senior Vice President, Public Affairs (Retired), Walt Disney World Company President & CEO, First Technology Credit Union President & CEO, The Children’s Hospital, Denver President, Arnold Palmer Medical Center/Foundation Vice President, Human Resources, Ace Hardware President & CEO (Retired), Children’s Health System of Wisconsin, Inc. President & CEO, The Children’s Hospital of Philadelphia President, Arkansas Children’s Hospital Foundation President & CEO, Child Health Corporation of America CEO & Executive Director, Monroe Carell, Jr., Children’s Hospital at Vanderbilt Chairman & CEO , ‘XPORTS, INC. President & CEO, Riley Hospital For Children Co-Founder, Children’s Miracle Network Co-Founder, Children’s Miracle Network Senior Vice President, Sports Enterprises, Walt Disney Parks & Resorts President, Children’s Memorial Foundation President, Marriott Vacation Club International Executive Staff Scott J. Burt John Hartman Brian Hazelgren Claire Richards Craig Sorensen President & Chief Executive Officer Chief International Officer Chief Development Officer Chief Financial Officer Chief Marketing Officer Children’s Miracle Network International Headquarters 205 West 700 South Salt Lake City, Utah 84101 PHONE: 801-214-7400 FAX: 801-746-6688 ChildrensMiracleNetwork.org 6 | 2008 Annual Report Mission Children’s Miracle Network’s mission is to generate funds and awareness programs in partnership with and for the benefit of member hospitals/ foundations and the children they are privileged to serve. Children’s Miracle Network is an international non-profit organization that raises funds for more than 170 children’s hospitals. Countless individuals, organizations and media partners unite with Children’s Miracle Network hospitals to help sick and injured kids in local communities. Donations to Children’s Miracle Network create miracles by funding medical care, research and education that save and improve the lives of 17 million children each year. Partner Hospitals Children’s Miracle Network raises funds for its member hospitals to use in addressing the most critical children’s health care needs in their respective communities. Funds raised through Children’s Miracle Network for its 170 children’s hospitals are provided to each hospital solely as discretionary funds. Through these hospitals, Children’s Miracle Network funds are used for a wide variety of hospital programs and services. A sampling of these programs and services includes: • • • • • • • • Pediatric research for cancer treatments Sickle cell anemia and juvenile diabetes treatment Critical and urgent care units Pediatric and neonatal intensive care support Staffing and medical training to meet children’s unique health care needs Life-flight helicopters and other emergency vehicles Capital expansion of existing facilities to meet children’s medical needs in a given area Community outreach, prevention and awareness programs ranging from immunizations and childhood obesity education to bicycle safety clinics and accident prevention programs In 2008 more than $243 million was raised under the Children’s Miracle Network umbrella to support these and other programs and services administered by member children’s hospitals. 2008 Annual Report | 7 The Medical Center 2008 Hospital Highlights Children’s Miracle Network funds are used to ensure that children’s hospitals have the resources they need 24 hours a day, 365 days a year. Here are some examples of how Children’s Miracle Network funds are used to provide specialized pediatric care. Just three days after birth, 4-year-old Atticus went into cardiac arrest. He faced several complications: kidney and liver problems, brain damage and a serious lung condition. Atticus finally received a heart transplant and began to heal. Children’s Miracle Network funds helped pay for surgeries, inpatient care, and the heart-lung machine that kept him alive. A life-support machine for a child needing a heart transplant costs approximately *$60,000. After choosing to undergo a risky bone marrow transplant, 14-year-old Kimmi was the first patient at her hospital and one of only 100 children to be cured of sickle cell anemia, a lifelong disorder that causes constant pain and organ damage. Donations to Children’s Miracle Network helped fund research for the procedure that is saving more children’s lives. A bone marrow transplant costs approximately *$223,000. Katie was in a plane crash and was transported by ambulance to her closest children’s hospital. After months of surgeries and therapy, 17-year-old Katie made an amazing recovery. Children’s Miracle Network funded the recreational therapy program that kept her motivated and positive through it all. Said Katie, “The most important lesson I learned is that accidents happen, but so do miracles.” A specialized pediatric ambulance costs up to *$350,000. * Stated in U.S. Dollars 8 | 2008 Annual Report Media Partners Television and radio stations around the world help raise awareness and funds for children’s hospitals. Pictured to the left are cancer survivor A.J. Stinger of Marion, Ind., and football legend Steve Young as they chat with radio stations during the Children’s Miracle Network Celebration event in Walt Disney World. Boogie, on-air talent from Radio Forth, and Kyle, a patient at the Royal Hospital for Sick Children, play an intense game of virtual tennis during the station’s 2008 Radiothon in Edinburgh, Scotland. Cancer survivor and former patient of Baptist St. Anthony’s Health System, 8-year-old Hannah works the phone banks during the KMXJ Mix 94.1 Radiothon in Amarillo, Texas. WGAL-TV8 anchors and reporters hosted the 13hour Children’s Miracle Network Telethon from the WITF Public Media Center in Harrisburg, Pa. 2008 Annual Report | 9 Corporate Partners The 17 million kids treated at 170 Children’s Miracle Network hospitals would like to thank the generous corporate partners who have made miracles happen in their lives. For Children’s Miracle Network® M I L E S ® International 10 | 2008 Annual Report F O R M I R A C L E S Fundraising Highlights Children’s Miracle Network | 2008 Annual Fundraising Report | 11 2008 Fundraising Total 2008 Total $243,398,135 12 | 2008 Annual Report 2008: A Year In Review JANUARY JANUARY FEBRUARY Miss America 2008 Kirsten Haglund became a Goodwill Ambassador. Children’s Miracle Network is the national platform of the Miss America organization. MARCH IHOP gave away about 1.5 million pancakes and raised more than $640,000 on National Pancake Day. Throughout 2008 Speedway SuperAmerica raised $3 million, doubling its 2007 total. MARCH Champions Across the United Kingdom and Ireland attended Celebration for the first time. Champions Across America met President Bush. Champions Across Canada were invited to Canadian Idol and a special NHL practice. APRIL All year, Marriott properties worked together to raise $5 million. The Courtyard by Marriott’s Breakfast Campaign raised $714,043. Good Morning America visited Celebration and interviewed The Osmonds in celebration of their 50th Anniversary. Proceeds from the 2008 McLane Company golf tournament funded convenience store Corporate Direct costs, which generated more than $2 million for hospitals. The SickKids Foundation Toronto Radiothon raised $4 million, making it the largest Radiothon in the world. Foresters’ support of Radiothon helped bring the combined Radiothon total to more than $330 million. In the United States, Walmart and Sam’s Club associates, members and customers raised $10 million in May. The 3rd annual XM Kids Traveling Roadshow culminated in a kid’s concert in Washington, D.C. ODL Securities, based in London, UK, held its first-ever “Trading Day,” donating all trading fees, raising more than £200,000. The “It Matters” sponsor recognition campaign ran in 90 markets. Three Costco Canada warehouses raised $100,000 in 31 days, helping Costco raise more than $4.5 million in Canada. APRIL In just 30 days, Credit Unions for Kids raised more than $1.5 million. Overall fundraising increased by $1 million in 2008. Delta Air Lines honored caregivers at the Children’s Miracle Awards. MAY FEBRUARY JUNE JUNE The Celebration broadcast reached 100 million TV households. MAY The Walmart Walk for Miracles raised almost $1.6 million in 12 cities across Canada. The Mike Weir Miracle Golf Drive for Kids generated nearly $1.1 million for a new children’s hospital in Saskatchewan. Spring Radiothons in Ireland generated more than €600,000. U.S. News and World Report recognized 22 Children’s Miracle Network hospitals and included a section highlighting Children’s Miracle Network. Rite Aid’s executive car wash raised $200,000. The GOLF CHANNEL broadcasted the 11th Annual Ace Hardware Golf Shootout, which raised $845,000. 2008 Annual Report | 13 JULY JULY AUGUST As OAAA’s charity of choice, Children’s Miracle Network billboards across the U.S. increased visibility and brand awareness. Dairy Queen’s Miracle Treat Day raised an estimated $4.7 million— the highest amount raised on a single day in Children’s Miracle Network history. Dairy Queen Canada generated more than $1.9 million of the total. The Giant Food Stores Our Kids Golf Tournament raised more than $1.25 million at 12 golf courses. Alabama’s Log A Load for Kids raised $130,000 from “Kayaking for Kids,” a 330-mile kayak trip down the Alabama River. CDW coworkers contributed more than $160,000 through Miracle Jeans Day donations. Tide Victory Lap/Walmart NASCAR Series champions Andrew Ranger and Alex Tagliani went on a 15-city road circuit race series. Since 2003, it has generated nearly $750,000. SEPTEMBER SEPTEMBER The first-ever Scotland Radiothon raised approximately £85,000. The “Racing for a Miracle” campaign, in association with the Ace Hardware Foundation, Stanley Tools and NASCAR driver Elliot Sadler, garnered publicity worth $720,988. OCTOBER OCTOBER Children’s Miracle Network supporters walked, ran and cycled 6,700 miles from Chicago to Los Angeles during the annual Torch Relay and raised $1 million. Ne-Yo and Jon McLaughlin performed at the “Tiki Rocks the Square” fundraiser in New York City, which generated 78 million media impressions. Winners of the GOLF CHANNEL’s Big Break X: Michigan gave a $10,000 donation to Sparrow Hospital in Michigan. Love’s Travel Stops & Country Stores raised $760,000, an increase of 75 percent over its 2007 total. First Student Canada reached a new milestone—$1 million raised for Children’s Miracle Network. Air Canada Kids’ Horizons partnered with CTV celebrity Marci Ien and placed globes to collect loose change at Toronto and Quebec City International Airports. Pringles launched the “Can Creator.” For every created can, Pringles donated $1 to Children’s Miracle Network. NOVEMBER NOVEMBER AUGUST DECEMBER DECEMBER Indiana University’s Dance Marathon broke all records and raised $1,376,550. Rumba 100.3’s Hispanic Radiothon in Orlando, Fla., raised $351,297. Hispanic Radiothon efforts continue to grow. The Children’s Miracle Network Classic presented by Walmart was broadcast on the GOLF CHANNEL. The first Radiothon in Australia raised more than $123,000 (AUD). Nearly 200 Swiss Chalet restaurants in Canada raised more than $236,000 on Miracle Kids’ Day. Microsoft produced a family game pack for XBOX 360 and donated 100 percent of net proceeds. Other packaged goods partnerships are increasing. Microsoft Canada announced the extension of its year-round support of the CLICK program in the IWK Health Centre and Atlantic Canada, letting hospitalized children stay connected with the outside world. 14 | 2008 Annual Report Panda Restaurant Group’s Workplace Giving totals increased by 76 percent. Workplace Giving campaigns continue to gain momentum. RE/MAX raised $8.3 million in the U.S. and Canada through the Miracle Home® program and other fundraisers. Hospital Fundraising Totals U.S. Market In 2008 Walmart stores in the Atlanta area funded the Walmart & Sam’s Club ground transportation vehicle for Children’s Healthcare of Atlanta. The emergency vehicle is equipped with the latest technologies and equipment, ensuring that children throughout the area have access to lifesaving care at every moment. Hospital Name Total Abilene-Sweetwater Hendrick Medical Center $ 820,456 Akron Akron Children's Hospital 1,876,081 Albany, GA Phoebe Putney Memorial Hospital Albany-Schenectady-Troy Children's Hospital at Albany Medical Center Albuquerque-Santa Fe UNM Children's Hospital 197,242 689,200 1,213,087 Alexandria, LA CHRISTUS St. Frances Cabrini Hospital 566,780 Amarillo Baptist St. Anthony's Health System 342,818 Anchorage The Children's Hospital at Providence 473,420 Atlanta Children's Healthcare of Atlanta Augusta Medical College of Georgia Children's Medical Center 4,702,420 Austin Dell Children's Medical Center of Central Texas Bakersfield Bakersfield Memorial Hospital Baltimore Johns Hopkins Children's Center Bangor The Acadia Hospital, The Aroostook Medical Center, Inland Hospital, Blue Hill Memorial Hospital, Sebasticook Valley Hospital, C.A. Dean Memorial Hospital, Eastern Maine Medical Center 441,826 1,220,740 393,925 2,306,015 Baton Rouge Our Lady of the Lake Children's Hospital Beaumont-Port Arthur CHRISTUS Jasper Memorial Hospital, CHRISTUS Hospital - St. Elizabeth, CHRISTUS Hospital - St. Mary 558,155 1,654,992 405,705 Birmingham Children's Hospital of Alabama 1,716,808 Boise St. Luke's Children's Hospital 1,071,701 Boston Children's Hospital Boston 2,547,407 Buffalo Women & Children's Hospital of Buffalo 1,515,989 Burlington-Plattsburgh Vermont Children's Hospital at Fletcher Allen Health Care Cedar Rapids University of Iowa Children's Hospital Champaign-Springfield St. John's Children's Hospital 551,270 3,273,153 755,069 Charleston, SC Medical University of South Carolina Children's Hospital Charleston-Huntington West Virginia University Children's Hospital 2,022,095 Charlotte Levine Children's Hospital 2,247,160 Charlottesville University of Virginia Children's Hospital Chattanooga T.C. Thompson Children's Hospital Chicago Children's Memorial Hospital 433,008 362,106 509,447 6,678,765 Cincinnati Cincinnati Children's Hospital Medical Center Cleveland Rainbow Babies & Children's Hospital Columbia, SC Palmetto Health Children's Hospital 838,100 1,187,043 671,214 Columbia-Jefferson City MU Children's Hospital 386,819 Columbus, GA The Medical Center 587,779 Columbus, OH Nationwide Children's Hospital Corpus Christi Driscoll Children's Hospital Dallas Children's Medical Center 1,310,713 720,002 1,360,718 Dayton The Children's Medical Center 1,083,469 Denver The Children's Hospital 3,794,752 2,029,677 Detroit Beaumont Hospital El Paso University Medical Center Foundation 184,988 Elmira Arnot Ogden Medical Center 339,099 Erie Saint Vincent Health Center Eugene Sacred Heart Medical Center 194,545 1,164,545 2008 Annual Report | 15 Hospital Fundraising Totals U.S. Market Hospital Name Total Fargo-Valley City MeritCare Children's Hospital Flint-Saginaw-Bay City Hurley Medical Center $ 745,383 968,202 Florence-Myrtle Beach McLeod Children's Hospital 529,561 Fresno-Visalia Children's Hospital Central California 1,542,433 Ft. Worth Cook Children's Medical Center 1,144,937 Gainesville-Daytona Beach Shands Children's Hospital at the University of Florida 2,350,670 Grand Rapids Helen DeVos Children's Hospital 1,109,807 Greenville, NC University Health Systems Children's Hospital 1,378,440 Greenville, SC Children’s Hospital of Greenville Hospital System University Medical Center Harrisburg-Lancaster Penn State Hershey Children's Hospital at Penn State Hershey Medical Center 863,028 3,312,790 Hartford-New Haven Connecticut Children's Medical Center 929,312 Helena Shodair Children's Hospital 501,525 Honolulu Kapi'olani Medical Center for Women & Children Houston Texas Children's Hospital 2,577,853 831,800 Indianapolis Riley Hospital for Children 5,086,897 Jackson, MS Blair E. Batson Hospital for Children at the University of Mississippi Medical Center 914,552 Jacksonville-Brunswick UF & Shands Jacksonville 879,275 Joplin-Pittsburg Freeman Health System 736,343 Kansas City KU Medical Center, Children's Mercy Hospitals and Clinics 1,605,447 Knoxville East Tennessee Children's Hospital 1,860,776 La Crosse-Eau Claire Gundersen Lutheran Health System 1,218,165 Lake Charles CHRISTUS St. Patrick Hospital 531,244 Lansing Sparrow Hospital 669,908 Las Vegas St. Rose Dominican Hospitals 967,315 Lexington Kentucky Children's Hospital 725,171 Little Rock-Pine Bluff Arkansas Children's Hospital 3,718,912 4,751,563 Los Angeles Childrens Hospital Los Angeles Louisville Kosair Children's Hospital Lubbock UMC Children's Hospital Macon The Children's Hospital at the Medical Center of Central Georgia 558,798 1,024,889 431,770 Medford-Klamath Falls Rogue Valley Medical Center 453,887 Memphis Le Bonheur Children's Medical Center 912,493 Miami-Ft. Lauderdale Miami Children's Hospital 1,186,964 Milwaukee Children's Hospital of Wisconsin 5,686,588 Minneapolis-St. Paul Gillette Children's Specialty Healthcare 2,505,135 Mobile University of South Alabama Children's & Women's Hospital 478,118 Monterey-Salinas Salinas Valley Memorial Hospital 373,746 Nashville Monroe Carell Jr. Children's Hospital at Vanderbilt 1,550,608 New Orleans Children's Hospital - New Orleans 1,517,248 New York Children's Specialized Hospital, The Bristol-Myers Squibb Children's Hospital at Robert Wood Johnson University Hospital, Schneider Children's Hospital a member of the North Shore-LIJ Health System, Maria Fareri Children's Hospital at Westchester Medical Center, The Children’s Hospital at Montefiore 3,127,461 Norfolk-Portsmouth Children's Hospital of The King's Daughters 1,405,710 16 | 2008 Annual Report Costco Wholesale locations throughout the state of Hawaii raised $238,376 during the 2008 Miracle Month of May balloon campaign. The funds raised exceeded the goal needed to purchase a new ultrasound machine for the Kapi`olani Medical Center for Women & Children Fetal Diagnostic Center. Because of the additional funds, the hospital was also able to fund an update of older ultrasound machines. Hospital Fundraising Totals U.S. Market Rainbow Babies & Children’s Hospital dedicated a room within its new Neonatal Intensive Care Unit (NICU) to RE/MAX. Since the beginning of its partnership with the hospital, RE/MAX has raised $375,000. The NICU represents just one way the hospital has been able to upgrade its facilities because of generous sponsors like RE/MAX. Hospital Name Total Odessa-Midland Medical Center Hospital Oklahoma City Children's Medical Research Institute $ 405,756 1,253,059 Omaha Children’s Hospital & Medical Center 1,042,222 Orange County CHOC Children's 1,272,621 Orlando Arnold Palmer Hospital for Children, Shands Children's Hospital at the University of Florida 2,512,035 Pensacola Sacred Heart Children's Hospital 664,836 Peoria-Bloomington Children's Hospital of Illinois Philadelphia The Children's Hospital of Philadelphia 2,980,339 855,861 3,434,209 Phoenix Phoenix Children's Hospital Pittsburgh Children's Hospital of Pittsburgh of UPMC Portland, OR Doernbecher Children's Hospital Portland-Auburn The Barbara Bush Children's Hospital at Maine Medical Center 997,454 1,854,549 710,166 Providence-New Bedford Hasbro Children's Hospital 1,117,932 Raleigh-Durham Duke Children's Hospital & Health Center 2,956,734 Rapid City Rapid City Regional Hospital 373,246 Reno Renown Children's Hospital 535,902 Richmond-Petersburg Children's Hospital, VCU Children's Medical Center 832,543 Roanoke-Lynchburg Carilion Clinic Children's Hospital, Virginia Baptist Hospital Rochester, NY Golisano Children's Hospital at Strong Sacramento UC Davis Children's Hospital 1,876,682 2,108,808 Salt Lake City Primary Children's Medical Center San Angelo Shannon Medical Center San Antonio CHRISTUS Santa Rosa Children's Hospital 1,069,960 851,462 432,347 1,498,466 San Diego Rady Children's Hospital 2,658,807 San Francisco-Oakland Children's Hospital & Research Center Oakland 2,105,181 Santa Barbara Santa Barbara Cottage Hospital 473,892 Savannah Backus Children's Hospital at Memorial Health University Medical Center 851,597 Seattle-Tacoma Seattle Children's Hospital Sioux City St. Luke's Regional Medical Center 3,150,281 Sioux Falls-Mitchell Sanford Health USD Medical Center Spokane Kootenai Medical Center, Providence Holy Family Hospital, Providence Mt. Carmel Hospital, Providence Sacred Heart Children's Hospital, Providence St. Joseph's Hospital, St. Luke's Rehabilitation Institute Springfield, MO CoxHealth Springfield-Holyoke Baystate Children's Hospital St. Louis Cardinal Glennon Children's Medical Center, St. Louis Children's Hospital 331,988 1,336,561 852,421 1,285,377 397,846 Syracuse Golisano Children's Hospital at Upstate Tampa-St. Petersburg All Children's Hospital 2,372,050 935,360 4,293,736 Toledo St. Vincent Mercy Children's Hospital 544,836 Topeka St. Francis Health Center 235,143 Tri-Cities, TN/VA Wellmont Health System 574,450 Tucson Tucson Medical Center Tulsa The Children's Hospital at Saint Francis 1,401,903 597,842 Tyler-Longview Mother Frances Hospital 549,703 2008 Annual Report | 17 Hospital Fundraising Totals U.S. Market Hospital Name Utica Faxton-St. Luke's Healthcare Waco-Temple-Bryan The Children's Hospital at Scott & White Total $ 482,246 853,564 Washington, DC Children's National Medical Center Watertown Samaritan Medical Center 3,582,609 507,360 Wausau-Rhinelander Saint Joseph's Children's Hospital of Marshfield 628,033 Wichita Falls-Lawton United Regional Health Care System Wichita-Hutchinson Plus Via Christi Wichita Health Network 1,022,354 Wilkes Barre-Scranton The Janet Weis Children's Hospital at Geisinger 2,365,549 Canada Market 617,598 Hospital/Foundation Name Total Calgary-Southern Alberta Alberta Children's Hospital Foundation $4,040,724 Edmonton-Northern Alberta Stollery Children's Hospital Foundation 4,866,218 Halifax-Maritimes IWK - Health Centre Foundation 2,823,478 Hamilton McMaster Children's Hospital 1,247,154 London-Western Ontario Children's Health Foundation 2,090,375 Manitoba Children's Hospital Foundation of Manitoba 1,766,152 Newfoundland-Labrador Janeway Children's Hospital Foundation Ottawa-Eastern Ontario Children's Hospital of Eastern Ontario Foundation 2,420,770 Quebec Operation Enfant Soleil 6,926,507 Saskatchewan Children's Health Foundation of Saskatchewan Toronto-Northern/Central Ontario SickKids Foundation Vancouver-British Columbia BC Children's Hospital Foundation 4,166,990 Ireland Market Hospital Name Total Cork Cork University Hospital, Mercy University Hospital Dublin Our Lady's Children's Hospital - Crumlin, The National Children's Hospital - Tallaght, Children's University Hospital Temple Street United Kingdom Market Hospital Name Bristol Bristol Royal Hospital for Children 962,976 2,349,551 11,043,486 € 79,809 425,487 Total £ 75,000 Cardiff Children's Hospital for Wales 81,157 Edinburgh Royal Hospital for Sick Kids 86,892 Australia Market Hospital Name Sydney The Children's Hospital at Westmead 18 | 2008 Annual Report Total $ 123,500 Children’s Miracle Network sponsors in Calgary, Alberta, Canada, helped fund the Healing Gardens at Alberta Children’s Hospital. The garden spans six acres and is intended for rehabilitation, meditation and recreation. It provides quiet space for families and patients to seek respite, and is integrated into the therapeutic process of hospital programs. Total Children’s Miracle Network Support This list refers to a sponsor’s or program’s total contribution to Children’s Miracle Network. The ranking is related to funds raised directly for hospitals, underwriting and in-kind support for hospitals and national operations, and the program outcome of underwriting and in-kind support. Those with support above $50,000 are listed. Radiothon by Foresters Wal-Mart Stores, Inc. Local Fundraising Costco Wholesale Corp. Credit Unions for Kids RE/MAX International, Inc. Marriott International, Inc. National Program Dance Marathon Dairy Queen Corp. TD Bank Financial Group National Program Celebration Broadcast Rite Aid Corp. National Program - Direct Mail McLane Company, Inc. Ace Hardware Corp. Food Lion LLC Speedway SuperAmerica LLC Giant Food LLC Log A Load Air Canada Kids’ Horizons Publix Super Markets, Inc. Valero Energy Corp. Newman’s Own, Inc. Mike Weir Miracle Golf Drive For Kids Carmike Cinemas, Inc. Delta Air Lines, Inc. IHOP Corp. Love’s Travel Stops & Country Stores Kroger Co. CO-OP Financial Services Circle K Stores, Inc. Golden Corral Corp. Toys “R” Us Canada Goody’s Family Clothing, Inc. Miss America Organization HMSHost Corp. Blockbuster Canada Kiwanis International Fred’s, Inc. Auntie Anne’s, Inc. Greek Partners - Phi Mu Microsoft/XBOX Canada Combined Federal Campaign CDW Corp. Greek Partners - Sigma Chi PartyLite Tops Markets, LLC Procter & Gamble CROSSMARK, Inc. Sunoco, Inc. Wawa, Inc. Produce for Kids American Legion Great Clips, Inc. Six Flags Theme Parks, Inc Panda Restaurant Group, Inc. Swiss Chalet USA Gymnastics The Hershey Company Brookshire’s/Super 1 Foods Stripes Convenience Stores Pathmark, Inc. Walt Disney World Golf Galaxy Kinney Drugs, Inc. First Student Canada PGA Tour Chevron Corp. Express Services, Inc. The Coca-Cola Company Money Mailer, LLC The Source by Circuit City CEFCO Convenience Stores Safeway Stores, Inc. Greek Partners Sigma Alpha Epsilon Hot Wheels Adcentives West American Taekwondo Assoc. Turkey Hill Minit Markets Sleep Country Canada Crowne Plaza Hotels & Resorts Pizza Pizza Ollie’s Bargain Outlet FirstGroup America Round Table Pizza, Inc. Woodforest Financial Group, Inc. Quick Chek, Inc. Independent Charities of America Talking Rain Beverage Co. E! Entertainment ThyssenKrupp AG 2008 Annual Report | 19 Endowment Donors $1 Million and above: Under $25,000: J. Willard and Alice S. Marriott Foundation Anonymous Barbara and Bob Hannan Children’s Hospital of The King’s Daughters Norfolk, VA Claire Richards CoxHealth of Springfield, MO Craig and Annette Sorensen Jerry Reitman John and Sarah Hartman Judith and John Bel Katherine H. Melvin Estate Ken and Susanne Potrock Mark and Ora Pescovitz Mick and Karen Shannon Scott and Pamela Burt The Coca-Cola Company The Steven A. and Alexandra M. Cohen Foundation Tom and Carol Sargent Tom Sullivan and Kimberlee Yaskoski $500,000 and above: Steve and Linda Weisz $250,000 and above: Arnold Palmer Hospital for Children Children’s Hospital of Wisconsin Children’s Memorial Hospital of Chicago SickKids Foundation - Toronto, Canada $100,000 and above: Akron Children’s Hospital Brett Hutchens Elmer H. Zimmerman Estate $50,000 and above: Brighton Bank Children’s Hospital of Alabama - Birmingham, AL Doernbecher Children’s Hospital Foundation International Dairy Queen Patricia L. Kuhn Estate Texas Children’s Hospital - Houston, TX The Children’s Hospital - Denver, CO Planned/Estate Gift Commitments Diane and Pete Doniger Don and Debra Harris $25,000 and above: Celia and David Swanson Children’s Healthcare of Atlanta Diane and Pete Doniger Don and Debra Harris John and Annie Standley Jon and Teri Vice Mario and Betty Pilozzi Richard J. Eckel Estate Rob Harris The Children’s Hospital of Philadelphia Tom E. Smith Viola J. Reeno Estate 20 | 2008 Annual Report Monroe Carell Jr. Children’s Hospital at Vanderbilt The Impact of Children’s Miracle Network Hospitals Children’s Miracle Network hospitals more Each Year Children’s Miracle Network: Serving Moreserve Children thanare any other children’sMiracle charity. 17 million children andchildren their families served by Children’s Network hospitals each year...more than any other children’s cause. 17 Million Patients per year 4.8 Million Members 129,000 Patients per year 12,000 Wishes per year 100 90 4,900 Patients per year 98% 88% 80 76% 70 60 50 40 30 20 10 Lung & Heart Transplants Cancer Cystic Fibrosis How Children’s Miracle Network hospitals distribute funds: 5% 15% 39% 30% 11% Charitable Care State-of-the-art Equipment Preventative Education Other Immediate Medical Needs Life-saving Research 2008 Annual Report | 21 Financial Statements 22 | Children’s Miracle Network | 2008 Fundraising Report 2008 Financial Statements REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS REPORT OF INDEPENDENT Executive Committee and Board of Trustees CERTIFIED PUBLIC ACCOUNTANTS Children’s Miracle Network and Subsidiaries We have audited the accompanying consolidated statements of financial position of Children’s Miracle Network and subsidiaries (the Organization) as of August 31, 2008 and 2007, and the related consolidatedCommittee statementsand of activities, Executive Board offunctional Trustees expenses and cash flows for the years then ended. These financial statements are the responsibility of the Organization’s management. Our responsibility is to Children’s Miracle Network and Subsidiaries express an opinion on these financial statements based on our audits. We have audited the accompanying consolidated statements of financial position of Children’s Miracle We conducted audits in accordance with auditingasstandards generally in the2007, Unitedand States Network and our subsidiaries (the Organization) of August 31, accepted 2008 and theof related America as established by the American Institute of Certified Public Accountants. Those standards consolidated statements of activities, functional expenses and cash flows for the years then ended. These require that we plan and the audit toofobtain reasonable assurance about whether the financial is to financial statements are perform the responsibility the Organization’s management. Our responsibility statements are free of material misstatement. An audit includes consideration of internal control over express an opinion on these financial statements based on our audits. financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control We our audits in accordance with auditing generally accepted in examining, the United on States of overconducted financial reporting. Accordingly, we express no suchstandards opinion. An audit also includes America as established by the American Institute of Certified Public Accountants. Those standards a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the require thatprinciples we plan used and perform the audit to obtain reasonable assurance thethe financial accounting and significant estimates made by management, as about well aswhether evaluating statements are free of material misstatement. Anthat audit consideration of internal control overall financial statement presentation. We believe ourincludes audits provide a reasonable basis for our over financial opinion. reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Organization’s internal control In our opinion,reporting. the financial statementswereferred in all also material respects, the over financial Accordingly, expresstonoabove such present opinion.fairly, An audit includes examining, on financial position of the Organization as of August 31, 2008 and 2007, and its changes in net assets, its the a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing functional expenses and used its cash flows for the years then ended, with accounting accounting principles and significant estimates madeinbyconformity management, as well asprinciples evaluating the generally accepted in the United States of America. overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Organization as of August 31, 2008 and 2007, and its changes in net assets, its Salt Lake City, Utah and its cash flows for the years then ended, in conformity with accounting principles functional expenses March 18, 2009 generally accepted in the United States of America. Salt Lake City, Utah March 18, 2009 155 North 400 West Suite 500 Salt Lake City, UT 84103 T 801.531.6888 F 801.322.0061 W www.grantthornton.com Grant Thornton LLP US member of Grant Thornton 155 North 400 West Suite 500 Salt Lake City, UT 84103 2008 Annual Report | 23 Children's Miracle Network and Subsidiary 2008 Financial Statements Children's Miracle Network and Subsidiaries CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Year ended August 31, 2007 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION August 31, Program services Support services Community ASSETS Network services and program outreach support services Fund raising Management and general Totals 2008 2007 ASSETS Travel $ 1,792,567 $ 1,758,155 $ 226,006 $ 157,891 $ Cash and cash equivalents Unrestricted $ 16,294,678 Employment costs 2,605,987 5,078,098 1,378,385 928,467 $ Restricted 17,621,038 Equipment rental 27,224 35,655 3,003 1,379 Investments Contract services 2,140,974 1,065,122 493,050 96,619 Unrestricted 9,989,865 Advertising and promotion 3,180,388 544,229 39,508 1,308,519 12,887 Restricted Printing and photography 139,788 176,699 16,554 Contributions receivable 225,2186,420 Accountscampaign receivable, net of allowance for doubtful Corporate 340,033 1,813,507 113,344 accounts of $55,902 in 2008 and $217,544 in 2007 1,778,170 Sponsorship support 243,935 1,346,675 366,483 5,373 Prepaid expenses and other current assets 637,239 Program support 19,012 2,098,767 92,367 Property, furniture and equipment, net 4,463,406 Occupancy and utilities 89,724for doubtful 76,187 57,522 26,094 Non-current contributions receivable, net of allowance Telephone 50,576 100,449 24,744 accounts of $52,329 in 2008 and $0 in 2007 314,2838,709 125,225 Other non-current assets Depreciation 10,380 94,629 4,661 78,623 $ 52,757,641 Total fees assets Professional 138,748 205,195 10,619 108,923 $ Insurance LIABILITIES Postage and shipping Accounts payable Supplies Accrued liabilities Unrelated business income tax Payable to participating hospitals Other Payable to partners Deferred revenue Notes payable - current portion Notes Payable Other long-term liabilities Total liabilities $ 10,862,587 9,990,937 35,375,544 67,261 3,795,765 10,797,409 3,777,012 1,038,116 339,461 397,957 2,266,884 1,842,295 341,458 2,210,146 3,737,810 1,962,466 249,527 184,478 - 110,645 188,293 64,503,821 463,485 56,331 20,195 4,038 13,921 94,485 27,405 16,556 3,562 9,130 56,653 36,234 89,503 26,988 6,731 159,456 LIABILITIES AND NET ASSETS Licenses and fees 3,934,619 $ 2,484,939 1,380,015 236,140 709,560 80,400 13,845 $ 1,039,945 634,423 303,588 16,500 16,500 15,716,238 34,992,406 4,351 3,118 462 648 8,579 1,854,731 383,138 11,139,797 $ 15,232,299 $ 2,849,329 $8,910,517 1,584,527 $ 30,805,952 6,539,428 42,868 2,457,132 1,429,902 1,038,116 33,530,750 44,636,691 NET ASSETS Unrestricted Temporarily restricted Permanently restricted 16,957,023 456,530 1,813,338 18,468,343 579,874 818,913 Total net assets 19,226,891 19,867,130 $ 52,757,641 Total liabilities and net assets The accompanying notes are an integral part of this financial statement 7 24 | 2008 Annual Report The accompanying notes are an integral part of these financial statements $ 64,503,821 Children's Miracle Network and Subsidiary 2008 Financial Statements Children's Miracle Network CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES and Subsidiaries Year ended August 31, 2007 CONSOLIDATED STATEMENT OF ACTIVITIES Year ended services August 31, 2008 Program Community services and outreach support Network program services Unrestricted Revenues: Hospital fees Travel Production underwriting gifts Employment costs Direct mail Donations-in-kind Equipment rental Campaign Contract services Licensing fees Advertising and promotion Endowments, major gifts, and grants Printing and photography Total revenues $ Corporate campaign Other revenue: support Sponsorship Interest andsupport dividend income Program Net realized gain on investments Occupancy and utilities Net unrealized loss on investments Telephone Gain on sale of fixed assets, net Ancillary revenue Depreciation Net assets released from restrictions Professional fees Total revenues, gains and Insurance other support Licenses and fees Expenses Postageand andlosses: shipping Program Suppliesservices Community services and outreach support Unrelated business services income tax Network program Other Total program services Support services Fund raising Management and general Fund Management Temporarily raising andPermanently general restricted restricted 340,033 1,813,507 113,344 - 243,935 1,346,675 2,074,313 2,098,767 387,880 76,187 (1,501,341) 100,449 94,614 1,107,793 94,629 579,874 205,195 366,483 5,373 19,012 89,724 50,576 10,380 138,748 56,331 27,405 20,195 38,067,462 16,556 36,234 89,503 57,522 24,744 4,661 (579,874) 10,619 92,367 26,094 8,709 78,623 108,923 4,038 (123,344) 3,562 26,988 Other loss Change in net assets 1,962,466 2,074,313 2,210,146 387,880 249,527 (1,501,341) 184,478 94,614 1,107,793 188,293 463,485 - 94,485 38,938,543 56,653 6,731 709,560 80,400 14,408,137 20,687,701 4,351 3,118 462 35,095,838 11,139,797 $ 15,232,299 $ 2,849,329 $- Total expenses and losses 2,266,884 13,921 994,425 9,130 236,140 $ Totals Totals - $ - $ 15,801,826 $ 15,801,826 $ 1,792,567 $ 1,758,155 $ 226,006 $ 157,891 $ 3,934,619 11,291,642 75,843 11,367,485 2,605,987 5,078,098 928,467 - 9,990,937 3,753,426 1,378,385 3,753,426 380,687 1,430,854 1,811,541 27,224 35,655 3,003 1,379 67,261 2,865,491 2,865,491 2,140,974 1,065,122 493,050 96,619 3,795,765 171,090 171,090 3,180,388 544,229 39,508 12,887 10,000 994,425 3,777,012 1,004,425 139,788 176,699 16,554 6,420 339,461 36,775,284 35,324,329 456,530 994,425 Total support services Net assets, beginning of year Net assets, end of year Support services 13,845 159,456 1,584,527 $- 1,039,945 14,408,137 16,500 20,687,701 8,579 35,095,838 30,805,952 16,500 648 - 1,771,014 2,634,296 - - 1,771,014 2,634,296 4,405,310 - - 4,405,310 39,501,148 - - 39,501,148 77,634 - - 77,634 (123,344) 994,425 (640,239) (1,511,320) 18,468,343 $ 16,957,023 $ 579,874 456,530 $ 818,913 1,813,338 $ The accompanying notes are an integral part of this financial statement 7 The accompanying notes are an integral part of this financial statement 4 2008 Annual Report | 25 19,867,130 19,226,891 Children's Miracle Network and Subsidiary 2008 Financial Statements CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Children's Miracle Network and Subsidiary Year ended August 31, 2007 CONSOLIDATED STATEMENT OF ACTIVITIES Program services Year ended August 31, 2007 Community Network services and program outreach support services Travel Revenues: Employment Hospital fees costs Production gifts Equipmentunderwriting rental Direct mail Contract services Canister direct Advertising and promotion Donations-in-kind Corporate Campaign Printing and photography Endowments, major gifts, and grants Corporate campaign Total revenues Sponsorship support $ Fund Management raising and general Temporarily Permanently restricted restricted Unrestricted 1,792,567 $ 1,758,155 $ 226,006 $ 157,891 $ Totals Totals 3,934,619 2,605,987 $ 5,078,098 10,934,326 1,378,385 $ - $ 928,467 - $ 9,990,937 10,934,326 11,221,863 397,957 11,619,820 27,224 35,655 3,003 1,379 67,261 3,191,744 3,191,744 2,140,974 1,065,122 493,050 96,619 3,795,765 263,810 263,810 3,180,388 544,229 39,508 12,887 3,777,012 1,531,184 181,917 1,713,101 2,529,045 2,529,045 139,788 176,699 16,554 6,420 339,461 758,000 1,088,931 330,931 340,033 1,813,507 113,344 2,266,884 30,002,903 579,874 758,000 31,340,777 243,935 1,346,675 366,483 5,373 1,962,466 Program support Other revenue: Occupancy and utilities Interest and dividend income 19,012 2,098,767 89,724 Net realized loss on investments Telephone Net unrealized gain on investments Depreciation Gain on sale of property and equipment Professional fees Ancillary revenue Net assets released from restrictions Insurance 76,187 2,580,426 (11,037) 100,449 831,385 94,629 1,225,919 205,195 1,227,016 20,195 - 50,576 10,380 138,748 56,331 Totaland revenues, Licenses fees gains and other support Postage and shipping 27,405 36,234 Supplies Expenses and losses: 236,140 Program services Unrelated business income tax Community services and outreach support Other Network program services Support services $ 57,522 92,367 2,210,146 - 26,094 8,709 78,623 108,923 13,921 - 249,527 2,580,426 (11,037) 184,478 831,385 188,293 1,225,919 463,485 1,227,016 94,485 - 16,556 35,856,612 89,503 3,562 579,874 26,988 9,130 758,000 6,731 56,653 37,194,486 159,456 709,560 80,400 24,744 4,661 10,619 4,038 13,845 11,139,797 3,118 462 15,232,299 11,139,797 $ 15,232,299 $ 2,849,329 $ 1,039,945 - 16,500 4,351 648 1,584,527 $ 16,500 11,139,797 8,579 15,232,299 30,805,952 Total program services 26,372,096 - - 26,372,096 2,849,329 1,584,527 - - 2,849,329 1,584,527 Total support services Total expenses and losses Other gains 4,433,856 30,805,952 80,494 - - 4,433,856 30,805,952 80,494 Change in net assets 5,131,154 579,874 758,000 6,469,028 Net assets, beginning of year 13,337,189 - 60,913 13,398,102 Support services Fund raising Management and general Net assets, end of year $ 18,468,343 $ 579,874 $ The accompanying notes are an integral part of this financial statement 7 The accompanying notes are an intergral part of this financial statement 26 | 2008 Annual Report 5 818,913 $ 19,867,130 Children's Miracle Network and Subsidiary 2008 Financial Statements CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Children's Miracle Network and Subsidiaries Year ended August 31, 2007 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Program services Support services Year ended August 31, 2008 Community services and outreach support Network program services Fund raising Program services $ Employment costs Equipment rental Contract services $ Advertising and promotion 27,224 35,655 3,003 2,140,974 1,065,122 3,180,388 544,229 2,502,124 $ 2,227,990 $ Employment costs Printing and photography Totals Support services Community Network 1,792,567 $ 1,758,155 $ 226,006 $ services and program Fund 2,605,987 5,078,098 1,378,385 outreach support services raising Travel Travel Management and general 157,891 $ 3,934,619 Management 928,467 9,990,937 and general Totals 1,379 67,261 493,050 96,619 3,795,765 39,508 12,887 3,777,012 16,554 6,420 195,584 $ 5,135,399 4,720,993 139,788 7,570,394 176,699 Equipment rentalcampaign Corporate 27,874 340,033 33,358 1,813,507 15,500 113,344 1,521,104 339,461 14,747,241 - 2,140 2,266,884 78,872 Contract services support Sponsorship 2,406,746 243,935 1,173,359 1,346,675 240,930 366,483 198,850 1,962,4664,019,885 5,373 Program Advertising andsupport promotion 19,012 3,403,111 2,098,767 2,052,762 103,091 92,367 113,667 2,210,1465,672,631 89,724 155,164 76,187 136,378 57,522 22,133 26,09410,431 249,527 324,106 8,709 184,478 and utilities PrintingOccupancy and photography Telephone 50,576 Depreciation 10,380 Corporate campaign Sponsorship support - 138,748 Program support Insurance 56,331 Occupancy andand utilities Licenses fees Postage and shipping Telephone Supplies Depreciation Unrelated business income tax Other - $ 94,629 4,661 205,195 10,619 2,220,430 20,195 - 192,049 26,988 10,104 6,73114,540 159,456 237,236 236,140 38 709,560 43,843 80,400 57 - 13,84598,226 1,039,945 142,164 16,500 16,500 - 154,535 204,934 34,983 24,358 3,118 9,13049,287 2,312,948 94,485 89,503 135,607 14,699 1,421 11,139,797 $ 15,232,299 $ 2,849,329 $ 45,882 Postage and shipping 54,903 301,079 56,653 396,042 229,060 462 35,308 $ 92,518 13,921 1,997,680 463,485 36,234 76,985 Licenses and fees Other 5,081 2,865,242 188,293 3,5629,623 286 Unrelated business income tax - 107,797 16,556 5,361 Supplies 108,923 - 4,038 8,880 Interest 78,623 229,335 27,405 4,351 Insurance 24,744 1,507,513 - Professional fees 100,449 2,865,242 293,037 Professional fees 934,750 209,701 $ 648 8,467 1,584,527 $ 8,579 30,805,952 603,228 69,229 7,639 22,166 2,403 14,492 98,085 112,595 9,004 9,621 186,123 214,056 19,234 41,964 576,333 - 6,500 6,500 146 1,008 10,038 - - 3,042 5,842 14,408,137 $ 20,687,701 $ 1,771,014 $ 2,634,296 $ The accompanying notes are an integral part of this financial statement 7 2008 Annual Report | 27 39,501,148 Children's Miracle Network and Subsidiary 2008 Financial Statements CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES Children's Miracle Network and Subsidiary Year ended August 31, 2007 CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES YearProgram ended services August 31, 2007 Community services and outreach support Travel $ Support services Fund raising Program services Management and general Totals Support services 1,792,567 $ 1,758,155 $ 226,006 $ 157,891 $ 3,934,619 928,467 9,990,937 Equipment rental Community 2,605,987 services and 27,224 outreach support Network 5,078,098 program 35,655 services Contract services 2,140,974 1,065,122 493,050 96,619 3,795,765 3,180,388 544,229 39,508 12,887 3,777,012 139,788 176,699 16,554 6,420 339,461 340,033 1,813,507 113,344 - 2,266,884 243,935 1,346,675 366,483 Employment costs Travel Network program services Advertising and promotion $ Printing and photography 1,378,385 1,792,567 $ 1,758,155 $ Employment costs 2,605,987 Corporate campaign Equipment rental 5,078,098 27,224 Sponsorship support 35,655 Fund 3,003 raising Management and1,379 general 226,006 $ 1,378,385 3,003 67,261 Totals 157,891 $ 3,934,619 928,467 9,990,937 5,373 1,379 1,962,466 67,261 Contract services Program support 2,140,974 19,012 1,065,122 2,098,767 493,050 - Advertising and promotion Occupancy and utilities 3,180,388 89,724 544,229 76,187 39,508 57,522 26,09412,887 3,777,012 249,527 PrintingTelephone and photography 50,576 139,788 100,449 176,699 24,744 16,554 8,709 6,420 184,478 339,461 Depreciation Corporate campaign 10,380 340,033 94,629 1,813,507 4,661 113,344 243,935 138,748 1,346,675 Program support 19,012 2,098,767 Occupancy and utilities 89,724 Professional fees 3,795,765 92,36796,619 2,210,146 78,623 - 188,293 2,266,884 205,195 10,619 108,923 20,195 4,038 13,921 16,556 3,562 36,234 89,503 26,988 Telephone Supplies 50,576 236,140 100,449 709,560 24,744 80,400 Depreciation Unrelated business income tax 10,380 - 94,629 - - 4,661 16,50078,623 16,500 188,293 4,351 138,748 3,118 205,195 462 10,619 648 108,923 8,579 463,485 Sponsorship support Insurance 56,331 Licenses and fees 27,405 Postage and shipping Other fees Professional $ Insurance 76,187 366,483 - 56,331 20,195 4,038 Licenses and fees 27,405 16,556 Postage and shipping 36,234 236,140 Supplies Unrelated business income tax Other $ 2,210,146 9,130 56,653 6,731 159,456 26,094 249,527 13,845 8,709 1,039,945 184,478 1,584,527 $ 30,805,952 94,485 3,562 9,130 56,653 89,503 26,988 6,731 159,456 709,560 80,400 13,845 1,039,945 - 16,500 16,500 648 8,579 - 4,351 3,118 462 11,139,797 $ 15,232,299 $ 2,849,329 $ The accompanying notes are an integral part of this financial statement 28 | 2008 Annual Report 1,962,466 94,485 13,921 - 7 463,485 92,367 57,522 11,139,797 $ 15,232,299 $ 2,849,329 $ 5,373 1,584,527 $ 30,805,952 Miracle Network 2008 Financial StatementsChildren's and Subsidiary Children's Miracle Network CONSOLIDATED STATEMENT OF FUNCTIONAL EXPENSES and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended August 31, 2007 Year ended August 31, 2008 Cash flows from operating activities Program services Change in net assets Adjustments to reconcile change in net assets to net cash provided by Community Network operating activities services and program Depreciation and amortization Unrealized loss (gain) on investmentsoutreach support services Realized loss (gain) on investments Gain on sale of property and equipment Investment management fees Travel $ 1,792,567 $ 1,758,155 Proceeds from endowment contributions Dividend income Employment costs 2,605,987 5,078,098 Provision for obsolete inventory Equipment rentalOther (gain) loss 27,224 35,655 In-kind endowment contributions Support $ services (640,239) Fund raising $ 1,378,385 3,003 2,140,974 1,065,122 493,050 in assets and liabilities Advertising andChanges promotion 3,180,388 544,229 39,508 Telephone Total adjustments Depreciation Professional fees Net cash provided by operating activities Insurance Cash flows from investing activities Purchase of property and equipment Licenses and Proceeds fees from sale of property and equipment Purchase of investments Postage and shipping Proceeds from sales of investments Supplies Net cash used in investing activities 139,788 176,699 16,554 340,033 1,813,507 113,344 243,935 1,346,675 366,483 19,012 2,098,767 89,724 76,187 57,522 50,576 100,449 24,744 10,380 94,629 4,661 205,195 10,619 56,331 20,195 4,038 27,405 16,556 3,562 36,234 89,503 26,988 236,140 709,560 80,400 Unrelated business income tax Other Cash flows from financing activities Proceeds from issuance of notes payable $ Principal payments on notes payable Proceeds from endowment contributions - - 4,351 3,118 6,469,028 96,619 3,795,765 12,887 3,777,012 257,900 233,074 17,723,579 6,420 (7,940,965) 339,461 (295,911) - 19,6232,266,884 (328,863) 120,095 842,885 5,373 (764,290) 1,962,466 345,811 154,731 (19,245,241)92,367 7,557,8262,210,146 1,471,593 383,138 2,525,40126,094 1,871,213 249,527 150,395 182,413 - 138,748 $ Management 142,164 188,293 1,501,341 and general (831,385) Totals (387,880) 11,037 (94,614) (1,225,919) $ (3,364) 157,891 $ 3,934,619 (994,425) (260,000) 50,813 -9,990,937 928,467 585,538 77,634 1,379 (80,494) 67,261 (498,000) 226,006 Contract services Accounts receivable Printing and photography Restricted cash Prepaid expenses and other assets Corporate campaign Other non-current assets Accounts payable Sponsorship support Accrued liabilities Program supportPayable to hospitals Payable to partners Occupancy and utilities Deferred revenue Other liabilities 2007 8,709 184,478 3,739,21878,623 (294,072) 188,293 3,098,979 108,923 6,174,956 13,921 94,485 (705,770) (3,665,495) 7,999 9,130 2,049,852 56,653 (952,363) (2,314,484) 569,982 6,731 1,391,315 159,456 13,845 (1,080,152) - 16,500 462 1,039,945 (2,538,812) 648 11,139,797 $ 15,232,299 $ 2,849,329 $ Net cash provided by financing activities 5,500,000 Net increase in cash and cash equivalents 1,584,527 $ Cash and cash equivalents, at beginning of year 30,805,952 260,000 3,494,425 260,000 5,432,091 16,500 8,579 - (3,000,000) 994,425 (81,161) Effect of exchange rate changes on cash 87,258 3,983,402 10,862,587 6,879,185 Cash and cash equivalents, at end of year $ 16,294,678 $ 10,862,587 Supplemental disclosure of cash flow information: Cash paid for interest Cash paid for unrelated business income tax $ $ 9,146 12,362 - Noncash investing and financing activities Property and equipment financed with accounts payable Exchange of property $ $ 229,918 15,830 - The accompanying notes are an integral part of this financial statement 7 The accompanying notes are an integral part of these financial statements 2008 Annual Report | 29 8 463,485 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE A - ORGANIZATION Children’s Miracle Network (the Organization) is a charitable organization, qualified under Section 501(c)(3) of the United States Internal Revenue Code, organized for the purposes of: 1. Making distributions to other charitable organizations. 2. Supporting fundraising for the benefit of sick and injured children and youth, including treatment, health care research, and acquisition of health care equipment and supplies. 3. Generating awareness programs concerning the health care needs of children and youth and the institutions and people who care for them. 4. Generating educational programs to promote good health care practices for children and youth; educating the public in the health care needs of children and youth; and educating the public in the needs and practices of institutions and people who provide health care to them. Children’s Miracle Network raises awareness of children’s health care needs and supports fundraising for nonprofit children’s hospitals. The Organization facilitates fundraising for member children’s hospitals by 1) establishing and maintaining relationships with corporate and media partners and 2) creating, maintaining and facilitating fundraising programs that are executed by corporate, media and hospital partners to benefit children’s health care. The majority of fundraising solicitations are made by Children’s Miracle Network partners—corporate sponsors, media sponsors and member hospitals. Contributions solicited through corporate-sponsored campaigns and through Children’s Miracle Network programs are generally received by Children’s Miracle Network, acting as an agent, and then paid to member hospitals. Children’s Miracle Network has no discretionary variance power over the distribution of such contributions and, in accordance with Statement of Financial Accounting Standards No. 136, Transfers of Assets to a Not-for-Profit Organization or Charitable Trust that Raises or Holds Contributions for Others, such contributions are not reflected as revenues in Children’s Miracle Network’s financial statements. Children’s Miracle Network’s campaign year is January 1 through December 31. Contributions are distributed to member hospitals quarterly. To participate in an upcoming year’s fundraising and awareness campaign, hospitals pay a membership fee and license the use of the Children’s Miracle Network name and logo. They become sole Children’s Miracle Network licensees in their respective markets (geographic areas); the funds raised within these markets are unrestricted funds and may be used by member hospitals as needed. Most funds raised benefit patients, pediatric programs, equipment and ongoing research to create better treatments and cure childhood diseases. Corporate sponsors need not become licensees; however, they are generally required to donate all funds they raise to hospitals affiliated with Children’s Miracle Network. Children’s Miracle Network’s operational activities are primarily supported by hospital membership fees, mentioned above, and corporate underwriting. Corporate underwriting represents donations from corporate sponsors to Children’s Miracle Network. 30 | 2008 Annual Report 9 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows. 1. Basis of presentation The Organization presents its accounts in accordance with the American Institute of Certified Public Accountants Audit and Accounting Guide for Not-for-Profit Organizations (Audit Guide). Under the Audit Guide, not-for-profit organizations are required to provide a statement of financial position, a statement of activities, and a statement of cash flows which are prepared to focus on the organization as a whole and to present balances and transactions according to the existence or absence of donorimposed restrictions. Not-for-profit organizations are required to report total assets, liabilities, and net assets in a statement of financial position; change in net assets in a statement of activities; and changes in cash and cash equivalents in a statement of cash flows. The Audit Guide also requires that not-forprofit organizations report expenses by their functional classification, such as major programs and supporting activities. The Organization presents expenses by functional classification in a statement of functional expenses. The Organization maintains its accounts on the accrual basis of accounting. Net assets and revenues, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net assets and changes therein are classified as follows: Permanently restricted net assets Net assets subject to donor-imposed stipulations that they be maintained permanently by the Organization. Generally, the donors of these assets permit the institution to use all or part of the income earned on related investments for general or specific purposes. As of August 31, 2008 and August 31, 2007, Children’s Miracle Network has received $1,813,338 and $818,913, respectively, of resources which have been classified as permanently restricted net assets. Children’s Miracle Network has an ongoing long-term funding campaign to benefit its endowment fund. Endowment contributions received are classified as permanently restricted net assets in the accompanying financial statements. Temporarily restricted net assets Net assets subject to donor imposed stipulations that may or will be met by actions of the Organization and/or the passage of time. 2008 Annual Report | 31 10 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 1. Basis of presentation (continued) Unrestricted net assets Net assets not subject to donor-imposed stipulations. Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donor-imposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments and other assets or liabilities are reported as increases or decreases in unrestricted net assets unless their use is restricted by explicit donor stipulations or by law. Expirations of temporary restrictions on net assets, i.e., the donor-stipulated purpose has been fulfilled and/or the stipulated time period has elapsed, are reported as reclassifications between the applicable classes of net assets. 2. Principles of consolidation The consolidated financial statements include the accounts and operations of Children’s Miracle Network, Children’s Miracle Network UK, Children’s Miracle Network Enterprises Limited and Children’s Miracle Network Ireland for the period ended August 31, 2008. For the period ended August 31, 2007, the consolidated financial statements include the accounts and operations of Children’s Miracle Network and Cure Kids’ Cancer. As discussed more fully in Note L, Cure Kids’ Cancer was merged into Children’s Miracle Network during the period ended August 31, 2008. All intercompany accounts and transactions have been eliminated in the consolidation. 3. 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 the reported amount of assets, liabilities, and net assets and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, gains and other support, and expenses during the reporting period. On an ongoing basis, the Organization evaluates the estimates and assumptions based upon historical experience and various other factors and circumstances. The Organization believes that the estimates and assumptions are reasonable in the circumstances; however, the actual results could differ from these estimates under different future conditions. 4. Cash and cash equivalents The Organization considers all highly liquid instruments with an original maturity of three months or less when purchased to be cash equivalents. The Organization’s cash equivalents consist of money market funds. 32 | 2008 Annual Report 11 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 5. Restricted cash Restricted cash and equivalents are resources received from the Organization’s campaigns and programs which are payable to member hospitals. Restricted cash is excluded from cash and cash equivalents for the purposes of the statement of cash flows. 6. Investments Investments are stated at fair value determined by quoted market prices as of year end. Investment income or loss (including realized gains and losses on investments, interest, and dividends) and unrealized gains and losses on investments are recognized in the statements of activities. 7. Restricted investments Restricted investments are resources restricted for future payouts of the supplemental employee retirement plan. 8. Contributions Contributions, grants, and bequests including unconditional promises to give, are recognized upon receipt as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction is satisfied, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions. Results of fundraising efforts that are received as agency funds and later paid to member hospitals are not recognized as revenues; instead, these funds are recorded as restricted cash and payables to member hospitals. Contributions of assets other than cash are recorded at their estimated fair value. Contributions that will be received within one year from the statement of financial position date are not discounted. Contribution pledges that are to be received over multiple years are discounted in accordance with APB Opinion No. 21, Interest on Receivables and Payables. Contributions of services are recognized if the services received (a) create or enhance nonfinancial assets or (b) require specialized skills, which are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation. The Organization received service and material donations included in the accompanying statement of activities at an estimated fair market value of approximately $1.8 million and $1.7 million in 2008 and 2007, respectively. The Organization received cash donations included in the accompanying statement of activities of approximately $7.2 million from four major donors during the year ended August 31, 2008. The Organization has a substantial number of volunteers that have donated a significant amount of time to the Organization’s programs and activities. No amounts have been reflected in the financial statements for these services inasmuch as no objective basis is available to measure the value of such services. 2008 Annual Report | 33 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 9. Temporarily restricted net assets The Organization has adopted the following accounting policies with respect to temporarily restricted net assets: • Contributions with restrictions met in the same year Contributions received with donor-imposed restrictions that are met in the same year as received are reported as revenues of unrestricted net assets. • Release of restrictions on net assets for acquisition of land, building and equipment Contributions of land, building, and equipment without donor stipulations concerning the use of such long-lived assets are reported as revenues of unrestricted net assets. Contributions of cash or other assets to be used to acquire land, buildings, and equipment with donor stipulations are reported as revenues of temporarily restricted net assets; the restrictions are considered to be released at the time of acquisition of such long-lived assets. 10. Accounts receivable Accounts receivable represent billings to member hospitals for membership fees and various ancillary services. Accounts receivable are expected to be collected during the next fiscal year and are recorded at net realizable value. The allowance for doubtful accounts is directly related to receivables for the ancillary services provided to member hospitals and to pledges receivable. Accounts outstanding longer than the contractual payment terms are considered past due and finance charges are charged on the outstanding balance. The Organization determines its allowance by considering a number of factors, including the length of time receivables are past due, the Organization’s previous loss history, the member hospital’s current ability to pay its obligation to the Organization, and the condition of the general economy and the industry as a whole. The Organization writes off receivables when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. 11. Property, furniture and equipment Property, furniture and equipment are recorded at cost when purchased or fair market value at the date of gift, if contributed. Expenditures over $2,000 that will benefit future periods are capitalized and expensed over the useful life of the asset. Property, furniture and equipment are depreciated using the straight-line method over the estimated useful lives of the assets, which range from three to five years for furniture and equipment and thirty years for property. The cost and accumulated depreciation of property and equipment sold or otherwise retired are removed from the accounts and the gain or loss on disposition is reflected in the statement of activities in the period of disposition. 34 | 2008 Annual Report 13 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 12. Hospital and licensing fees Cash is received in advance from hospitals for membership fees. Membership fee revenue is deferred and amortized ratably over the one-year contract period. During the period ended August 31, 2008, the Organization received approximately $171,000 of revenue from licensing agreements. Fees received under licensing agreements are accounted for as exchange transactions and are recognized in the statement of activities when earned under the terms of the contracts. 13. Foreign currency translation The accounts of Children’s Miracle Network’s Canadian office, Children’s Miracle Network UK, Children’s Miracle Network Enterprises Limited and Children’s Miracle Network Ireland are translated into U.S. dollars in the accompanying financial statements according to the provisions of Statement of Financial Accounting Standards No. 52, Foreign Currency Translation. The functional currency of Children’s Miracle Network’s Canadian office is the Canadian dollar; the functional currency of Children’s Miracle Network UK and Children’s Miracle Network Enterprises Limited is the pound; and the functional currency of Children’s Miracle Network Ireland is the euro. 14. Income taxes The Organization received a tax determination letter indicating that it qualifies as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. The Organization is also exempt from State of Utah taxation. In 2008 and 2007, the Organization incurred $6,500 and $16,500, respectively, in unrelated business income tax resulting from transactions that were not within the scope of the Organization’s stated mission. 15. Impairment of long-lived assets The Organization reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of 16. Advertising expenses Advertising costs are expensed as incurred and are included in advertising and promotions on the Statement of Functional Expenses. Advertising costs were approximately $5.7 million and $3.8 million in 2008 and 2007, respectively. 2008 Annual Report | 35 14 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 17. Functional expenses The Organization performs four functions: community services & outreach support, network program services, fundraising and management & general. Definitions of these functions are as follows: Community Services & Outreach Support – All costs incurred to develop, package and provide public outreach programs to member children’s hospitals throughout the United States, Canada, the UK and Ireland. Network Program Services – Activities performed by the Organization to develop national fundraising programs for over 170 children’s hospitals throughout the United States, Canada, the UK and Ireland. Participation in the Network provides hospitals access to corporate charity care fundraising programs. Expenses include those related to day-to-day involvement with member hospitals and relationships with corporate sponsors. Fundraising – Activities performed by the Organization to generate funds and/or resources to support its own programs and operations. Management & General – All costs that are not identifiable with a single program or fundraising activity, but are indispensable to the conduct of such programs and activities and to the Organization’s existence. This includes expenses for the overall direction of the Organization, business management, general recordkeeping, budgeting, financial reporting, and activities relating to these functions such as salaries, rent, supplies, equipment, and other general overhead. The majority of the Organization’s expenses are classified as Community Services & Outreach Support and Network Program Services as the majority of expenses incurred by the Organization fulfill the purposes or mission for which the Organization exists. Furthermore, the majority of expenses are incurred to create, maintain and facilitate fundraising programs that are executed by corporate, media and hospital partners to benefit children’s health care. However, actual solicitations to current and potential donors are not made by the Organization; rather, the solicitations are made by the corporate sponsors, media sponsors and member hospitals. Any expenses incurred by the Organization to raise funds to support its own programs and operations or where the Organization directly solicits funds from donors are classified as Fundraising expenses. 18. Reclassifications Certain immaterial reclassifications have been made to fiscal year 2007 financial information to conform to the 2008 presentation. 36 | 2008 Annual Report 15 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE C - INVESTMENTS Investments, at fair value, consist of the following at August, 31: 2008 Mutual funds $ 2007 7,719,776 $ 9,493,195 Treasury or agency securities - 1,165,458 Corporate bonds - 896,112 Mortgage securities - 280,760 Fixed Income 2,300,449 - Equities/Equity Funds 1,278,159 - 11,298,384 $ 11,835,525 $ The net realized gain on investments was $387,880 and the net unrealized loss on investments was $1,501,341 at August 31, 2008. The net realized loss on investments was $11,037 and the net unrealized gain on investments was $831,385 at August 31, 2007. Interest and dividend income was $2,074,313 and $2,580,426 in 2008 and 2007, respectively. NOTE D - PROPERTY, FURNITURE AND EQUIPMENT A summary of property, furniture and equipment and estimated useful lives as of August 31 follows: 2008 1,912,639 $ 2007 1,912,639 Useful lives Building and improvements 2,246,481 1,614,270 30 years Office furniture and equipment 1,074,536 1,003,740 3-5 years 5,233,656 4,530,649 770,250 792,839 Land $ Less accumulated depreciation and amortization $ 4,463,406 $ 3,737,810 Depreciation expense was $142,164 and $188,293 for the years ended August 31, 2008 and 2007, respectively. 2008 Annual Report | 37 16 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE E – COMMITMENTS AND CONTINGENCIES Children’s Miracle Network is involved in litigation and claims arising in the ordinary course of its operations. The Organization’s management believes that the liabilities, if any, arising from such litigation and claims will have no material adverse effect on Children’s Miracle Network’s financial statements. The Organization leases certain of its property under long-term operating leases. Certain of the leases have options to renew the lease beyond the initial term. During 2007, the Organization entered into a sales-leaseback transaction for the sale of its corporate offices. The lease will continue until May 1, 2009. The minimum lease payments required under the sales-leaseback transaction are included in the amounts below. Future minimum lease payments required under operating lease agreements as of August 31, 2008 are as follows: Year ending August 31, 2009 2010 2011 Thereafter Future minimum lease payments $ 258,854 43,155 2,307 - $ 304,316 Rent expense for the years ended August 31, 2008 and 2007 was $352,904 and $201,279, respectively. During 2007, Children’s Miracle Network entered into a three-way agreement between Children’s Miracle Network, Walt Disney World Co. and PGA TOUR, Inc. to be the title sponsor and exclusive benefiting charity of the annual PGA TOUR tournament held at the Walt Disney World Resort in Orlando, Florida. The tournament is called the “Children’s Miracle Network Classic.” Future payments required under the cancelable agreement as of August 31, 2008 are as follows: Year ending August 31, 2009 2010 2011 Thereafter Total future payments per contract $ 3,908,000 4,071,000 4,241,000 9,022,000 $ 21,242,000 In 2008, the Organization recorded $2 million of expense related to this agreement. During 2008, the Organization entered into commitments for renovations on its new international headquarters building in Salt Lake City, Utah. As of August 31, 2008, the commitments totaled approximately $4.5 million. 38 | 2008 Annual Report 17 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE F – LONG-TERM LIABILITIES During 2008, the Organization entered into a 10-year, 6.25 percent, $2.5 million mortgage to finance renovations on its new international headquarters building in Salt Lake City, Utah. The loan is amortized over a 25 year period with a balloon payment after ten years. The loan is secured by the new headquarters building. The following is a schedule by years of aggregate maturities of principal payments for the loan as of August 31, 2008: Year ending August 31, 2009 2010 2011 2012 2013 Thereafter Total $ 42,868 45,626 48,560 51,684 55,008 2,256,254 $ 2,500,000 Debt issuance costs related to this loan were capitalized. Net unamortized debt issuance costs as of August 31, 2008 are $25,572 and are included in other non-current assets in the financial statements. During 2008, the Organization borrowed $3 million on its investment margin account at an average variable rate of 4.3 percent. This entire balance was paid off during the year. Interest expense during 2008 related to these two financing activities was $22,166. NOTE G – CONTRIBUTION RECEIVABLES Contributions receivable are as follows at August 31: Due within one year Due in one to five years $ Less amounts representing interest Less allowance for uncollectible receivables $ 2008 225,218 456,625 681,843 90,013 52,329 539,501 $ $ 2007 397,957 397,957 397,957 2008 Annual Report | 39 18 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE H – CONTRIBUTION PLEDGES The Organization received $3,297,146 and $5,496,600 in conditional contribution pledges and unconditional intentions to give as of August 31, 2008 and 2007, respectively, that were not recognized in the current period financial statements in accordance with FASB Statement No. 116, Accounting for Contributions Received and Contributions Made. These conditional pledges will be recognized in the financial statements in the period when the donor-stipulated conditions are satisfied. NOTE I – EMPLOYEE BENEFIT PLANS The Organization has a noncontributory defined contribution employee pension plan. The plan covers all employees who have completed at least one year of service and are 21 years of age. The plan provides for a scheduled vesting of up to 20 percent a year beginning after two years of service. The Organization also has a Supplemental Executive Retirement Plan which is a money purchase plan. The Plan covers a select group of management and/or highly compensated employees. The plan provides for cliff-vesting when the individual reaches a certain age and remains employed by Children’s Miracle Network. The liability for these plans as of August 31, 2008 and 2007 was $1,358,588 and $1,038,116, respectively, and is contained in other liabilities on the statement of financial position. The total expense recognized for both of these plans during 2008 and 2007 was approximately $1.1 million and 1 million, respectively. NOTE J – RELATED PARTY TRANSACTIONS The Organization engaged in the following related party transactions in 2008 and 2007: • During 2008, the Organization entered into a $2.5 million mortgage for renovations on its new headquarters building. The Executive Vice-President and Chief Operating Officer of Children’s Miracle Network was a member of the Board of Directors of the lending institution during 2008. • During 2008, the Organization contributed $150,000 to the Osmond 50th Anniversary celebration. Certain members of the Osmond family are on the Board of Trustees. 40 | 2008 Annual Report 19 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE K - CONCENTRATIONS OF CREDIT RISK Financial instruments that potentially subject the Organization to concentrations of credit risk consist principally of cash, cash equivalents and investments. The Organization places its cash and investments with high credit quality financial institutions and generally limits the amount of credit exposure to the amount in excess of the FDIC insurance coverage limit of $100,000 (limit as of August 31, 2008). From time to time throughout the year, the Organization’s cash and investment balances may exceed the amount of the FDIC insurance coverage. The Organization, however, does not anticipate nonperformance by the institutions. NOTE L – SUBSIDIARIES During 2008, Children’s Miracle Network Ireland was established as a wholly owned subsidiary of Children’s Miracle Network with charity status granted by the Charities Section of the Office of the Revenue Commissioners. Operations commenced on April 9, 2008, and the consolidated financial statements as of and for the year ended August 31, 2008 include Children’s Miracle Network Ireland. During 2007, Children’s Miracle Network UK was established as a wholly-owned subsidiary of Children’s Miracle Network with charity status granted by the Charity Commission of the United Kingdom. Operations commenced on September 1, 2007; and the consolidated financial statements dated August 31, 2007 contain no assets, liabilities, net assets, revenues and gains, or expenses and losses associated with Children’s Miracle Network UK. During 2008, Children’s Miracle Network Australia was established as a wholly-owned subsidiary of Children’s Miracle Network. Operations commenced on August 1, 2008, and the consolidated financial statements dated August 31, 2008 contain no assets, liabilities, net assets, revenues and gains, or expenses and losses associated with Children’s Miracle Network Australia. During 2008, Cure Kids’ Cancer was merged into Children’s Miracle Network. All assets, liabilities and net assets were transferred to Children’s Miracle Network. Fundraising for pediatric cancer care and research will continue within Children’s Miracle Network under the separate Cure Kids’ Cancer brand. NOTE M – SUBSEQUENT EVENTS (UNAUDITED) Subsequent to year end, the Organization secured long-term financing from the Redevelopment Agency (RDA) of Salt Lake City to provide the balance of funds for renovating its new international headquarters building. The RDA arrangement is a $2.5 million loan that is amortized over 20-years at 3 percent interest with a required balloon payment at the end of 10 years. Subsequent to year end, the Organization settled a portion of the Supplemental Executive Retirement Plan liability. Approximately $1 million was paid to the founder and former CEO of the Organization. 2008 Annual Report | 41 20 2008 Financial Statements Children’s Miracle Network and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS August 31, 2008 and 2007 NOTE M – SUBSEQUENT EVENTS (UNAUDITED) – CONTINUED Subsequent to year end, the Organization’s investment portfolio has declined by approximately $2.3 million through the end of December 2008. The Organization has the ability and intent to hold these investments for a period it believes will be sufficient to allow for recovery of the investment balances. Subsequent to year end, the value of certain intercompany payables and receivables has changed due to changes in foreign currency exchange rates. However, these changes are not material to the financial statements. 42 | 2008 Annual Report Children’s Miracle Network International Headquarters 205 West 700 South Salt Lake City, Utah 84101 PHONE: 801-214-7400 FAX: 801-746-6688 Children’s Miracle Network Canada Office 4220 Steeles Ave. West, Suite C10 Woodbridge, Ontario L4L 3S8 PHONE: 905-265-9750 FAX: 905-265-9749 Children’s Miracle Network U.K. & Ireland Office Foresters House Cromwell Avenue Bromley BR2 9BF PHONE: 0207 558 8627 ChildrensMiracleNetwork.org 093050
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