Cleveland Clinic Health System Obligated Group - FMSbonds.com

Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)3. Accounting Policies (continued)Foreign Currency TranslationThe financial position and results of operations of the System’s foreign subsidiaries are measuredusing the local currency as the functional currency. Assets and liabilities of operationsdenominated in foreign currencies are translated into U.S. dollars at exchange rates in effect atyear-end, while revenues and expenses are translated at the weighted average exchange rates forthe year. The resulting translation gains and losses on assets and liabilities are recorded in netassets.Other Nonoperating Gains and LossesOther nonoperating gains and losses in December 31, 2007 and 2006 include income or loss oninvestments accounted for using the equity method of accounting including alternativeinvestments. Additionally in 2006, the System recorded a loss of $4.8 million associated with arequired lease termination payment and a loss of $13.8 million associated with the purchase ofWeston Hospital (Note 2).ReclassificationsCertain prior year amounts have been reclassified to conform with the current year presentation,which had no impact on previously reported net assets. In previous years, the System’sinvestments were classified as nontrading. As such, unrealized gains and losses that wereconsidered temporary were excluded from excess of revenue over expenses. During 2007, theSystem determined that substantially all its investment portfolio was more accurately classifiedas trading, with unrealized gains and losses included in excess of revenue over expenses.Therefore, $68.9 million of unrealized investment gains previously recorded in unrestricted netassets in 2006 have been reclassified to nonoperating gains and losses. These reclassificationsdid not impact the total increase in net assets previously reported.16