Cleveland Clinic Health System Obligated Group - FMSbonds.com
Cleveland Clinic Health System Obligated Group - FMSbonds.com Cleveland Clinic Health System Obligated Group - FMSbonds.com
Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)Derivatives and Hedging ActivitiesThe System follows SFAS No. 133, Accounting for Derivative Instruments and HedgingActivities (SFAS No. 133), which requires derivative financial instruments, such as interest rateswaps (Note 11), to be recognized as assets or liabilities in the consolidated balance sheets at fairvalue.The System accounts for changes in the fair value of a derivative instrument depending onwhether it is designated and qualified as part of a hedging relationship and further, on the type ofhedging relationship. The change in fair value of derivative instruments that qualified as cashflow hedges under SFAS No. 133 and the gain or loss on the derivative instrument attributable tothe hedged risk are reported as changes in unrestricted net assets. Effective April 1, 2007 inaccordance with SFAS No. 133, Implementation Issue No. G26, Hedging Interest Cash Flows onVariable-Rate Assets and Liabilities that are not based on a Benchmark Interest Rate (IssueNo. G26), the System dedesignated its hedging relationship prospectively on swaps thatpreviously qualified as cash flow hedges and changes in the fair value of these derivativeinstruments (i.e., gains or losses) are recorded in nonoperating gains and losses. The derivativegain or loss for the period prior to the effective date remains in unrestricted net assets and isamortized and recorded in excess of revenues over expenses over the life of the hedged debt. Thechanges in fair value of derivative instruments that are designated as speculative for accountingpurposes are recorded in nonoperating gains and losses.ContributionsUnconditional donor pledges to give cash, marketable securities and other assets are reported atfair value and discounted to present value at the date the pledge is made to the extent estimatedto be collectible by the System. Conditional donor promises to give and indications of intentionsto give are not recognized until the condition is satisfied. Pledges received with donorrestrictions that limit the use of the donated assets are reported as either temporarily orpermanently restricted support. When a donor restriction expires, that is, when a stipulated timerestriction ends or purpose restriction is accomplished, temporarily restricted net assets aretransferred to unrestricted net assets and reported in the consolidated statements of operationsand changes in net assets as other unrestricted revenues if the purpose relates to operations orreported as a change in net asset if the purpose relates to capital.14
Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)GrantsGrant revenue is recognized in the period it is earned as the applicable project expenses areincurred and project milestones are achieved. Payments received in advance are deferred untilthe expenditure has been incurred and recorded as deferred revenue and included in other currentliabilities. The System recorded research grant revenue, included in other unrestricted revenues,of $168.3 million and $150.1 million in 2007 and 2006, respectively.Temporarily and Permanently Restricted Net AssetsTemporarily restricted net assets are used to differentiate resources, the use of which is restrictedby donors or grantors to a specific time period or purpose, from resources on which norestrictions have been placed or that arise from the general operations of the System. Temporarilyrestricted gifts and bequests are recorded as an addition to temporarily restricted net assets in theperiod received. Permanently restricted net assets consist of amounts held in perpetuity or forterms designated by donors, including the present value of expected future cash flows underseveral perpetual trusts for which the System is an income beneficiary or the beneficial interestin the fair value of underlying trust assets. Earnings on permanently restricted net assets arerecorded as investment income in temporarily restricted net assets and subsequently used inaccordance with the donor’s designation. Temporarily and permanently restricted net assets areprimarily restricted for research, education and strategic capital projects.The System returned $5.1 million in 2006 from temporarily restricted net assets to unrestrictednet assets that had been transferred in prior years for the purpose of maintaining donor restrictedfunds at the level required by donor stipulations.Excess of Revenues Over ExpensesThe consolidated statements of operations and changes in net assets include excess of revenuesover expenses. Changes in unrestricted net assets, which are excluded from excess of revenuesover expenses, consistent with industry practice, include unrealized gains and losses oninvestments classified as nontrading, amortization on the accumulative change in value of cashflow hedges previously recorded in unrestricted net assets in accordance with SFAS No. 133,Implementation Issue No. G26, pension liability adjustments, discontinued operations, foreigncurrency translation adjustments, contributions of long-lived assets (including assets acquiredusing grants or contributions which by donor restriction were to be used for the purpose ofacquiring such assets) and the cumulative effect of changes in accounting.15
- Page 85 and 86: In addition to the broad range of o
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- Page 91 and 92: E. UTILIZATIONThe following tables
- Page 93 and 94: Statistical Information. The follow
- Page 95 and 96: I. COLLABORATIVE PROGRAMSIn additio
- Page 97 and 98: Clinic’s charity care policy, see
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- Page 103 and 104: OBLIGATED GROUPConsolidated Stateme
- Page 105 and 106: PART IV.MANAGEMENT’S DISCUSSION A
- Page 107 and 108: increase in minor equipment purchas
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- Page 113 and 114: of funding to the pension plan offs
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- Page 119 and 120: APPENDIX BCERTAIN FINANCIAL STATEME
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- Page 125 and 126: Liabilities and net assetsCurrent l
- Page 127 and 128: Changes in Net AssetsNet AssetsTemp
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- Page 159 and 160: Other Financial Information
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- Page 173 and 174: APPENDIX CSUMMARY OF BASIC DOCUMENT
- Page 175 and 176: APPENDIX CSUMMARY OF BASIC DOCUMENT
- Page 177 and 178: “Bond Indenture” means the Bond
- Page 179 and 180: period of three months from the com
- Page 181 and 182: PROPERTY”, and all improvements,
- Page 183 and 184: direct, express or charitable trust
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<strong>Cleveland</strong> <strong>Clinic</strong> <strong>Health</strong> <strong>System</strong>Notes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)Derivatives and Hedging ActivitiesThe <strong>System</strong> follows SFAS No. 133, Accounting for Derivative Instruments and HedgingActivities (SFAS No. 133), which requires derivative financial instruments, such as interest rateswaps (Note 11), to be recognized as assets or liabilities in the consolidated balance sheets at fairvalue.The <strong>System</strong> accounts for changes in the fair value of a derivative instrument depending onwhether it is designated and qualified as part of a hedging relationship and further, on the type ofhedging relationship. The change in fair value of derivative instruments that qualified as cashflow hedges under SFAS No. 133 and the gain or loss on the derivative instrument attributable tothe hedged risk are reported as changes in unrestricted net assets. Effective April 1, 2007 inaccordance with SFAS No. 133, Implementation Issue No. G26, Hedging Interest Cash Flows onVariable-Rate Assets and Liabilities that are not based on a Benchmark Interest Rate (IssueNo. G26), the <strong>System</strong> dedesignated its hedging relationship prospectively on swaps thatpreviously qualified as cash flow hedges and changes in the fair value of these derivativeinstruments (i.e., gains or losses) are recorded in nonoperating gains and losses. The derivativegain or loss for the period prior to the effective date remains in unrestricted net assets and isamortized and recorded in excess of revenues over expenses over the life of the hedged debt. Thechanges in fair value of derivative instruments that are designated as speculative for accountingpurposes are recorded in nonoperating gains and losses.ContributionsUnconditional donor pledges to give cash, marketable securities and other assets are reported atfair value and discounted to present value at the date the pledge is made to the extent estimatedto be collectible by the <strong>System</strong>. Conditional donor promises to give and indications of intentionsto give are not recognized until the condition is satisfied. Pledges received with donorrestrictions that limit the use of the donated assets are reported as either temporarily orpermanently restricted support. When a donor restriction expires, that is, when a stipulated timerestriction ends or purpose restriction is ac<strong>com</strong>plished, temporarily restricted net assets aretransferred to unrestricted net assets and reported in the consolidated statements of operationsand changes in net assets as other unrestricted revenues if the purpose relates to operations orreported as a change in net asset if the purpose relates to capital.14