map financial statement 2005

8/7/2019 MAP Financial Statement 2005

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MAP INTERNATIONAL

FINANCIAL STATEMENTS

With Independent Auditors Report

September 30, 2005 and 2004


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MAP INTERNATIONAL

Table of Contents

Page

Independent Auditors Report 1

Financial Statements

Statements of Financial Position 2-3

Statements of Activities 4-5Statements of Cash Flows 6-7

Statement of Functional Expenses2005 8

Statement of Functional Expenses2004 9

Notes to Financial Statements 10-22


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INDEPENDENT AUDITORS REPORT

Board of DirectorsMAP International

Brunswick, Georgia

Atlanta, GeorgiaNovember 18, 2005

We have audited the accompanying statements of financial position ofMAP International as of

September 30, 2005, and 2004 and the related statements of activities, cash flows, and functional

expenses for the years then ended. These financial statements are the responsibility of the

organizations management. Our responsibility is to express an opinion on these financial statementsbased on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States

of America. Those standards require that we plan and perform the audits to obtain reasonable assurance

about whether the financial statements are free of material misstatement. An audit includes

consideration of internal control over 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 organizations internal control over financial reporting. Accordingly, we express no

such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used

and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the

financial position ofMAP International as of September 30, 2005, and 2004 and the changes in its

net assets and its cash flows for the years then ended in conformity with accounting principles generally

accepted in the United States of America.

CAPIN CROUSE LLP

Certified Public Accountant

.Suite 130

1255 Lakes ParkwayLawrenceville, GA 30043

Telephone 678.518.5301

Facsimile 678.518.5302

.www.capincrouse.com


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MAP INTERNATIONAL

Statements of Financial Position

September 30,

2005 2004

Specified Time Specified Time

Operating or Purpose Endowment Total Operating or Purpose Endowment Tot

SSETS:Cash and cash equivalents 589,671$ 2,581,360$ -$ 3,171,031$ 450,432$ 578,296$ -$ 1,02$

Accounts receivablenet 175,032 - - 175,032 412,091 - - 41

Other receivable 55,825 - - 55,825 36,825 - - 3

Pledges receivablenet - 998,564 - 998,564 - 1,428,783 - 1,42

Inventory:

Purchased 314,049 - - 314,049 238,140 - - 23

Donated 61,090,819 18,707,851 - 79,798,670 43,968,967 7,348,025 - 51,31

Prepaid expenses and other assets 108,990 - - 108,990 86,329 - - 8

Investments 12,107 963,524 3,470,552 4,446,183 530,368 881,062 3,436,315 4,84

Property and equipmentnet 1,793,458 - - 1,793,458 1,706,513 - - 1,70

Interfund balances (140,863) (156,055) 296,918 - (619,895) 288,740 331,155

otal Assets 63,999,088$ 23,095,244$ 3,767,470$ 90,861,802$ 46,809,770$ 10,524,906$ 3,767,470$ 61,10$

IABILITIES AND NET ASSETS:Liabilities:

Accounts payable 274,591$ -$ -$ 274,591$ 154,025$ -$ -$ 15$

Deposits 250,352 - - 250,352 27,884 - - 2

Accrued expenses 363,393 - - 363,393 352,444 - - 35

Notes and loans payable 746,172 - - 746,172 1,359,421 - - 1,35

Annuities and trust payable - 452,330 - 452,330 - 412,640 - 41

Total liabilities 1,634,508 452,330 - 2,086,838 1,893,774 412,640 - 2,30

(continued)

See notes to financial statements

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MAP INTERNATIONAL

Statements of Financial Position

(continued)

September 30,

2005 2004

Specified Time Specified Time

Operating or Purpose Endowment Total Operating or Purpose Endowment Tot

LIABILITIES AND NET ASSETS,

continued:

Net assets:

Unrestricted 62,364,580 479,218 - 62,843,798 44,915,996 459,214 - 45,37

Temporarily restricted - 22,163,696 - 22,163,696 - 9,653,052 - 9,65

Permanently restricted - - 3,767,470 3,767,470 - - 3,767,470 3,76

Total net assets 62,364,580 22,642,914 3,767,470 88,774,964 44,915,996 10,112,266 3,767,470 58,79

otal Liabilities and Net Assets 63,999,088$ 23,095,244$ 3,767,470$ 90,861,802$ 46,809,770$ 10,524,906$ 3,767,470$ 61,10$


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MAP INTERNATIONAL

Statements of Activities

Years Ended September 30,

2005 2004

Temporarily Permanently Temporarily Permanently

Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Tota

UPPORT AND REVENUE:Contributions 4,087,794$ 3,190,473$ -$ 7,278,267$ 2,777,237$ 922,842$ -$ 3,700$

Donated inventory 230,724,358 108,247,000 - 338,971,358 175,287,722 76,561,354 - 251,849

Donated property and equipment 27,427 - - 27,427 46,400 - - 46

Donated securities and other assets 197,998 109,133 - 307,131 191,715 - - 19

Government grants 6,715 - - 6,715 60,658 - - 60

Handling charges and service fees 3,095,505 - - 3,095,505 2,507,068 - - 2,507

Investment income (336,919) 107,997 - (228,922) 93,660 81,831 - 175

Other revenue 33,746 - - 33,746 45,449 - - 45

otal Support and Revenue 237,836,624 111,654,603 - 349,491,227 181,009,909 77,566,027 - 258,575

ECLASSIFICATIONS:

Net assets released from restrictions 99,143,959 (99,143,959) - - 83,441,661 (83,441,661) -

XPENSES:Program services:

Essential medicines 276,190,561 - - 276,190,561 196,602,888 - - 196,602

Disease, prevention, and

eradication 1,191,365 - - 1,191,365 1,084,035 - - 1,084

Community health services 38,572,526 - - 38,572,526 39,620,592 - - 39,620

315,954,452 - - 315,954,452 237,307,515 - - 237,307

(continued)


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MAP INTERNATIONAL

Statements of Activities

(continued)


2005 2004

Temporarily Permanently Temporarily Permanently

Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Tota

XPENSES, continued:

Supporting activities:

General and administrative 1,160,361 - - 1,160,361 681,012 - - 68

Fund-raising 2,397,182 - - 2,397,182 1,694,359 - - 1,694

3,557,543 - - 3,557,543 2,375,371 - - 2,375

otal Expenses 319,511,995 - - 319,511,995 239,682,886 - - 239,682

hange in Net Assets 17,468,588 12,510,644 - 29,979,232 24,768,684 (5,875,634) - 18,893

et Assets, Beginning of Year 45,375,210 9,653,052 3,767,470 58,795,732 20,606,526 15,528,686 3,767,470 39,902

et Assets, End of Year 62,843,798$ 22,163,696$ 3,767,470$ 88,774,964$ 45,375,210 9,653,052$ 3,767,470$ 8,795$


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MAP INTERNATIONAL

Statements of Cash Flows

Years Ended September 30,2005 2004

CASH FLOWS FROM OPERATING ACTIVITIES:Change in net assets 29,979,232$ 18,893,050$Adjustments to reconcile change in net assets to net cashprovided (used) by operating activities:Donated inventory (338,971,358) (251,849,076)Distributed inventory 310,489,679 232,717,051Donated securities, property, equipment, and other assets (332,131) (206,691)Depreciation 213,829 228,243Gain on disposal of property and equipment 13,989 (2,816)

Net realized and unrealized gains and losses on investments (184,246) (72,517)Net realized and unrealized gains and losses in change in value of annuities (25,619) (21,143)Investment income restricted for long-term investment (107,997) (81,831)Actuarial change in value of annuities 20,098 54,702

Write-off of closely held stock 515,000 -Write-off of uncollectible pledge 500,000 -

Changes in operating assets and liabilities:Accounts and other receivables 218,059 (207,357)Pledges receivable (69,781) 368,300Purchased inventory (75,909) (3,906)Prepaid expenses and other assets (22,661) 7,478Accounts payable and deposits 343,034 20,776Accrued expenses 10,949 (28,639)

Net Cash Provided (Used) by Operating Activities 2,514,167 (184,376)

CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from sale of investments 4,731,398 3,049,311Purchases of investments (4,327,840) (3,016,625)Proceeds from sale of property and equipment - 5,386Purchases of property and equipment (261,432) (138,479)

Net Cash Provided (Used) by Investing Activities 142,126 (100,407)

CASH FLOWS FROM FINANCING ACTIVITIES:Investment income restricted for long-term investment 107,997 81,831Proceeds from issuance of annuities 111,000 5,000Payments on annuities (91,408) (92,913)Repayments on notes payable (88,435) (86,371)

Repayments on capital leases (3,144) -Borrowings on lines of credit - 350,000Repayments on lines of credit (550,000) (125,300)

Net Cash Provided (Used) by Financing Activities (513,990) 132,247

(continued)


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MAP INTERNATIONAL

Statements of Cash Flows

(continued)


2005 2004

Net Change in Cash and Cash Equivalents 2,142,303 (152,536)

Cash and Cash Equivalents, Beginning of Year 1,028,728 1,181,264

Cash and Cash Equivalents, End of Year 3,171,031$ 1,028,728$

SUPPLEMENTAL DISCLOSURES:Cash paid for interest 71,669$ 74,919$

NONCASH INVESTING ACTIVITIES:Donated securities and other assets 307,131$ 191,715$

Donated property and equipment 25,000$ 14,976$

Property and equipment acquired via capital lease 28,330$ -$


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MAP INTERNATIONAL

Statement of Functional Expenses

Year Ended September 30, 2005

Program Services Supporting ServicesDisease, Community Total Total

Essential Prevention, and Health Program General and Fund- upporting

Medicines Eradication Services Services Administrative Raising Services Tota

XPENSES:Distributed inventory 273,610,044$ 1,180,233$ 35,699,402$ 310,489,679$ -$ -$ -$ 310,48$Cost of goods distributed 851,786 3,674 111,137 966,597 - - - 96Freight 315,252 1,360 46,565 363,177 - - - 36Personnel:

Salaries and wages 710,022 3,063 931,011 1,644,096 300,993 79,432 1,180,425 2,82Employee benefits 197,532 852 215,390 413,774 65,734 55,204 320,938 73

Outside services 117,306 506 99,550 217,362 79,121 9,344 118,465 33Travel 88,087 380 131,196 219,663 35,324 4,531 129,855 34Supplies 28,830 124 54,201 83,155 12,919 17,131 30,050 11Conferences and meetings 17,090 74 605,093 622,257 12,233 6,845 49,078 67Grants - - 391,629 391,629 - - - 39Printing and publications 21,111 91 17,580 38,782 2,927 01,308 904,235 94Postage 1,910 8 2,071 3,989 4,505 2,099 26,604 3Equipment rental and

repair 42,403 183 58,679 101,265 62,662 0,735 103,397 20Uncollectible accounts - - - - 491,481 - 491,481 49Telephone 12,877 56 36,926 49,859 21,380 4,966 46,346 9Occupanc 28,658 124 40,370 69,152 17,451 10,049 27,500 9Interest 16,366 71 21,879 38,316 14,817 18,536 33,353 7Insurance 40,880 176 10,987 52,043 7,483 5,607 13,090 6Depreciation 79,889 345 73,748 153,982 25,312 4,535 59,847 21Miscellaneous 10,518 45 25,112 35,675 6,019 16,860 22,879 5

otal Expenses 276,190,561 1,191,365 38,572,526 315,954,452 1,160,361 ,397,182 3,557,543 319,51


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MAP INTERNATIONAL

Notes to Financial Statements


1. NATURE OF ORGANIZATION:

MAP International (MAP), founded as Medical Assistance Programs, was incorporated in 1965 in Illinois as anonprofit corporation. MAPs purpose is to promote the total health of people living in the worlds impoverished

communities. Through its offices in the Unites States, Bolivia, Ecuador, Cote DIvoire, and Kenya, MAP promotes

access to health services and essential medicines in more than 130 countries. MAPs operations depend upon gifts-in-

kind, which include donated medicines, equipment, and supplies primarily from pharmaceutical companies, as well as

cash contributions received from individuals, churches, organizations, foundations, and corporations.

MAP works with partners to accomplish its objectives through the promotion of community health development and

provision of essential medicines, prevention, and eradication of disease. These primary activities are described below:

Essential MedicinesMAP provides critical life-saving medications that are always in short supply in

impoverished countries with limited health care. FDA-approved medicines and medical supplies are provided tohospitals, clinics, refugee centers, and physicians in other countries as they are needed. In addition, MAPs

specially designed travel packs are used by Christian health personnel and mission groups on short-term missions

and include an assortment of some of the most critically needed medicines and supplies. MAP also provides

medicines and supplies for rapid response to humanitarian emergencies around the world and, at times, in the

United States.

Disease Prevention and EradicationMAPs programs provide vital medicines, educational materials, and

training to aid in the treatment and prevention of diseases. MAP provides a variety of disease prevention and

eradication programs, including the award winning indigenous church-based HIV/AIDS education and

prevention programs that benefit communities in Latin America and Africa. MAPs program in Bolivia

vaccinates children and screens them for parasites, malnutrition, and many other diseases.

Community Health ServicesTotal health training workshops teach medical, cultural, and biblical principles of

health in remote rural areas from the Amazon to Kenya. The MAP/Readers Digest International Fellowship

provides opportunities for medical students to serve short-term missions in Christian hospitals around the world.

Promotion of a Christian Transformation Network in eight Latin American countries exchanges information and

provides training and encouragement for sustainable biblically-based community development.

MAP is classified as a publicly supported organization, which is not a private foundation under Section 509(a)(1) of

the Internal Revenue Code (Code) and is exempt from federal income taxes under Section 501(a) as an organization

described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. Contributions to MAP are tax-

deductible within the limitations prescribed by the Code.

MAP is also exempt from state franchise and income taxes under Sections 105-130.11(3) of the General Statutes of

Georgia.

MAP also controls a separate Illinois nonprofit corporation, Upward, Inc. (Upward). Upward is classified as a

publicly supported organization, is not a private foundation under Section 509(a)(3) of the Code, and is exempt from

federal income taxes under Section 501(a) as an organization described in Section 501(c)(3) of the Code. Upward is

organized exclusively for the benefit of and to support the charitable purposes of MAP. Upward had no operating

activities during the years ended September 30, 2005 and 2004.

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MAP INTERNATIONAL



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

RECLASSIFICATIONS

ESTIMATES

CASH AND CASH EQUIVALENTS

ACCOUNTS RECEIVABLE

Cash includes petty cash; checking, savings, and money market accounts; and certificates of deposit with original

maturity dates of less than three months held in both U.S. and foreign accounts. For U.S. accounts, these accounts

may, at times, exceed federally insured limits. MAP has not experienced any losses on such accounts, and

management believes it is not exposed to any significant credit risk associated with U.S. based cash and cash

equivalents. Foreign cash accounts are under the control of MAP, but it should be noted that the political situation

in many countries is subject to rapid change. Therefore, the reader should be aware that while management

believes the assets are properly stated at the date of this report, subsequent changes could occur that would

adversely affect the value of the assets in other countries. Total cash and cash equivalents held in foreign accounts

amounted to $354,855 and $266,339 at September 30, 2005, and 2004, respectively.

The preparation of the financial statements, in conformity with accounting principles generally accepted in the

United States, requires management to make estimates and assumptions that affect the reported amounts of assets

and liabilities and disclosures at the date of the financial statements and the reported amounts of revenues and

expenses during the reporting period. Actual results could differ from those estimates.

The financial statements of MAP have been prepared on the accrual basis of accounting. The significant accountingpolicies followed are described herein to enhance the usefulness of the statements to the reader.

Certain information from the prior year financial statements has been reclassified to conform to the current year

presentation format.

Accounts receivable includes billings for service fees and handling charges and are reported net of any

anticipated losses due to uncollectible accounts. Foreign field receivables consist primarily of amounts due to

MAP under a cost-reimbursement private grant. The organizations policy for determining when receivables are

past due or delinquent is 30 days after invoicing. Uncollectible accounts are reported as additions to the

allowance for bad debts when it is determined the amounts are uncollectible. Payments received from nonaccrual

receivables are credited to appropriate receivable accounts.

The allowance for doubtful accounts is maintained at a level which, in managements judgment, is adequate to

absorb potential losses inherent in the receivable portfolio. The amount of the allowance is based on

managements evaluation of collectibility of the receivable portfolio, including the nature of the portfolio, trends

in historical loss experience, specific impaired accounts, and economic conditions. An allowance for

uncollectible accounts has been provided for in the amount of $11,945 and $21,600 as of September 30, 2005,

and 2004, respectively.

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MAP INTERNATIONAL



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

PLEDGES RECEIVABLE

INVENTORY

INVESTMENTS

ENDOWMENT FUNDS

PROPERTY AND EQUIPMENT

Pledges receivable include unconditional promises made by donors wherein the donor has unconditionally

promised to contribute funds to MAP in future periods. Unconditional promises expected to be collected within

one year are recorded as support and a receivable at net realizable value. Unconditional promises expected to be

collected in future years are recorded as support and a receivable at the present value of expected future cash

flows. Discounts on those amounts are computed using risk-free, interest rates applicable to the years in which the

promises are received, ranging from 3.60% to 4.75%. Amortization of discounts is included in contribution

revenue. Conditional promises are not included as support until the conditions are substantially met.

Inventory consists of purchased and donated medical products and supplies. Purchased inventory is stated at thelower of cost or market. Cost is determined using the average cost method. Donated inventory is stated at

wholesale value determined on the date of receipt. Inventory cost is expensed when goods are shipped.

Management periodically evaluates the net realizable value of all inventory to ensure that any impairments are

recognized in the period in which they are incurred. Total inventory held in foreign locations amounts to $33,208

and $30,315 at September 30, 2005, and 2004, respectively.

Investments in equity and debt securities with readily determinable fair values are reported at fair value. Gains

and losses (including unrealized) are reported in the statements of activities as other revenue. Donated

investments are recorded at market value on the date of donation and thereafter carried in accordance with the

above provisions.

Items purchased as property, plant, and equipment are recorded at historical cost. Donated items are recorded at

fair market value on the date of the gift. Depreciation of buildings, equipment, furniture, and fixtures is computed

using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 20 years. MAP

capitalizes all items greater than $500 for U.S. and locations except for infrequent instances where field

representatives capitalize long-lived items with a lower value.

Endowment funds represent assets and net assets that are subject to permanent restriction by gift instruments as

prescribed by donors. The principal amount, based on historical gift value of each endowment, is to be maintained

permanently. The income derived from each permanent endowment is allocated to the unrestricted or temporarily

restricted revenue per the donors specifications.

During 1997, MAP elected to initiate an interfund borrowing from an endowment fund to an unrestricted fund in

the amount of $1.55 million. The purpose of this interfund borrowing was to reduce interest expense associated

with external debt. As of September 30, 2005, and 2004, the endowment interfund borrowing balances were

$600,000 and $700,000, respectively.

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MAP INTERNATIONAL




ANNUITIES PAYABLE

REVOCABLE TRUST

NET ASSETS

The financial statements report amounts by classification of net assets:

SUPPORT, REVENUE, AND RECLASSIFICATIONSRevenue is recognized when earned and support when contributions are made, which may be when cash is

received, unconditional promises are made, or ownership of donated assets is transferred to MAP. Gifts-in-kind

(including inventory, securities, property, and equipment) are recorded at fair value at the date of the gift.

Contributions other than gifts-in-kind are primarily cash contributions that are derived from ongoing fund-raising.

All contributions are considered to be available for unrestricted use unless specifically designated by the donor.

Bequests are recorded as income at the time MAP has an established right to the bequest and the proceeds are

measurable.

MAP has issued charitable gift annuity agreements. Under these agreements, a donor contributes assets to MAP

in exchange for the right to receive a fixed dollar annual return during the donors lifetime. A portion of the

transfer is considered to be a charitable contribution for income tax purposes. The difference between the amount

provided for the gift annuity and the liability for future payments, determined on an actuarial basis, is recognized

as a contribution at the date of the gift. The annuity liability is revalued annually using a discount rate established

at the inception of the agreement and appropriate actuarial assumptions. Actuarial changes and annuity payments

are reported as change in value of annuities within other revenue in the statements of activities.

As trustee, MAP administers a revocable (grantor) trust that provides for a beneficial interest to MAP at thegrantors death. The principal amounts provided are recorded as liabilities because the trusts are revocable at the

discretion of the grantor. Trust income, deductions, and credits are reportable by the grantor for tax purposes. At

the grantors death, the remaining trust assets will be recorded as contribution support.

Unrestricted net assets are those currently available for purposes under the direction of the board, those

designated by the board, those resources invested in property and equipment, and those held as annuity reserves.

Temporarily restricted net assets are those contributed with donor stipulations for specific operating purposes orprograms, those with time restrictions, or those not currently available for use until commitments regarding their

use have been fulfilled.

Permanently restricted net assets are those contributed with donor restrictions that the principal remain in

perpetuity with only the income available as unrestricted or temporarily restricted, per endowment agreements.

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SUPPORT, REVENUE, AND RECLASSIFICATIONS, continued

EXPENSES

Donated inventory (consisting of medicines and medical supplies) is recorded as inventory and contribution

revenue at its estimated wholesale value at the date of donation, taking into consideration inventory condition and

utility for use. All donated inventory is received from private organizations and is considered to be unrestricted

support unless the inventory explicitly contains donor restrictions. MAP only records the value of donated

inventory in which they were either the original recipient of the gift, were involved in partnership with another

organization for distribution internationally, or used in MAPs programs.

When MAP receives donated inventories with specific geographic or purpose restrictions, they are recognized as

temporarily restricted contributions. Donor restrictions are satisfied, and donated inventory is released from

restriction and reclassified as unrestricted, when the donated product has been shipped. Donated inventories

received with conditions, such as the provision that they cannot be distributed within the United States, are

considered limitations rather than purpose restrictions and are therefore reported as unrestricted contributions.

Expenses are recorded when incurred in accordance with the accrual basis of accounting. The costs of providing

various program services and supporting activities of the organization have been summarized on a functional

basis in the statements of activities. Accordingly, certain costs have been allocated among the program services

and supporting activities benefited.

Service fee revenues, including handling charges, are received primarily from organizations and mission boards

to offset administrative costs for distribution of donated inventory and covers only a portion of total operating

costs. Service fee revenue is recognized when the inventory is shipped to a recipient.

MAP reports contributions as restricted support if they are received with donor stipulations that limit the use of

the donated assets. When a donor restriction expires, that is, when the stipulated time restriction ends or purpose

estriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported

in the statements of activities as net assets released from restrictions.

Donated property and equipment are recorded as temporarily restricted if donors stipulate how or how long the

asset must be used. In the absence of such stipulations, contributions of property and equipment are recorded as

unrestricted support.

The accompanying financial statements do not recognize the value of donated services as such services do not

meet the recognition requirements under Statement of Financial Accounting Standards 116; however, a

substantial number of volunteers have donated significant amounts of their time to MAPs program services.

During the years ended September 30, 2005, and 2004, management estimated that volunteers donated over 3,107

and 5,042 hours each year to MAP, respectively.

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ALLOCATION OF JOINT COSTS

Joint cost allocations are as follows:

2005 2004

Program activities 17,942$ 9,397$

Fund-raising 879,200 460,434

897,142$ 469,831$

3. ACCOUNTS RECEIVABLENET:

Accounts receivable consist of:

2005 2004

Trade receivables 161,052$ 202,013$

Foreign field receivables 25,925 231,678

186,977 433,691

Less allowance for uncollectible accounts (11,945) (21,600)

175,032$ 412,091$

4. PLEDGES RECEIVABLENET:

Pledges receivablenet consist of:

2005 2004

Unconditional promises receivable (pledges) before unamortized discount 1,123,606$ 1,864,278$

Less unamortized discount (125,042) (435,495)

998,564$ 1,428,783$


September 30,

September 30,

MAP has adopted the American Institute of Certified Public Accountants Statement of Position 98-2,

Accounting for Costs of Activities of Not-for-Profit Organizations and State and Local Government Entities that

Include Fund-Raising. This statement requires all costs which contain a fund-raising appeal to be allocated to

fund-raising unless all of the following three tests are met: content, purpose, and audience.

MAP incurs costs for activities, such as publications of newsletters and appeal letters that include fund-raising

components. These costs are referred to as joint costs and are allocated to program activities and fund-raising.

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MAP INTERNATIONAL



4. PLEDGES RECEIVABLENET, continued:

Pledges are due to be collected as follows:

Less than one year 429,136$

One to five years 569,428

998,564$

5. INVESTMENTS:

Investments consist of:

2005 2004

Money market funds and certificates of deposit 666,207$ 697,643$

Marketable equity securities 1,753,263 1,813,524

Government and corporate bonds 1,923,619 1,777,188

Closely held stock * - 515,000

Other investments 103,094 44,390

4,446,183$ 4,847,745$

Investments are held for the following purposes:

2005 2004

Operating 12,107$ 530,368$

Specified time or purpose:

Annuity funds 487,785 420,432

Designated for medicine purchases 426,027 413,845

Funds held for loan repayment 29,712 26,785

Revocable trusts 20,000 20,000

963,524 881,062

Endowment 3,470,552 3,436,315

4,446,183$ 4,847,745$

* During the year ended September 30, 2005, MAP learned about financial difficulties in a company which

MAP owns 64,375 shares previously valued at $515,000. Based upon managements assessment of

expected realization, MAP felt it necessary to write-down the value of the closely held stock to $0. The

write-down was recorded as a component of investment income (see below).

September 30,

September 30,

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5. INVESTMENTS, continued:

Investment income consists of the following:

2005 2004

Unrestricted:

Interest and dividends 104,567$ 79,056$

Write-off of closely held stock (515,000) -

Net realized gains (losses) 41,020 22,061

Net unrealized gains (losses) 32,494 (7,457)

(336,919)$ 93,660$

Temporarily restricted:


Net realized gains (losses) 58,960 12,423

Net unrealized gains 18,271 42,445

107,997$ 81,831$

6. PROPERTY AND EQUIPMENTNET:

Property and equipmentnet consist of:

September 30, 2005

U.S. Foreign Total

Land and improvements 163,778$ 82,500$ 246,278$

Building and improvements 1,879,018 247,306 2,126,324

Equipment 1,660,232 669,581 2,329,813

3,703,028 999,387 4,702,415

Less accumulated depreciation (2,392,364) (516,593) (2,908,957)

1,310,664$ 482,794$ 1,793,458$

September 30, 2004

U.S. Foreign Total

Land and improvements 163,778$ 94,111$ 257,889$

Building and improvements 1,800,998 217,486 2,018,484

Equipment 1,571,221 562,543 2,133,764

3,535,997 874,140 4,410,137

Less accumulated depreciation (2,261,019) (442,605) (2,703,624)

1,274,978$ 431,535$ 1,706,513$


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6. PROPERTY AND EQUIPMENTNET, continued:

Net equity in property and equipment consists of:

2005 2004

Property and equipmentnet 1,793,458$ 1,706,513$

Less related debt (includes capital lease obligation) (726,172) (789,421)

1,067,286$ 917,092$

7. NOTES AND LOANS PAYABLE:

Notes and loans payable consist of:

2005 2004

Note payable, secured by real property, payable in monthly installments of

$10,159 with any remaining unpaid balance due May 2012. Interest is

charged at .50% over the prime rate and adjusted annually on the anniversary

date of the loan, May 1st (effective rate on September 30, 2005 was 5.75%). 700,986$ 789,421$

Unsecured line of credit in the amount of $300,125 with interest at

the prime rate (effective rate at September 30, 2004 was 4.75%).

The line of credit matured March 2005. - 300,000

Unsecured line of credit in the amount of $300,000 with interest atthe prime rate (effective rate at September 30, 2004 was 4.75%).

The line of credit matured January 2005. - 250,000

Capital lease on equipment with total monthly payments of $467

ending December 2009 25,186 -

Noninterest bearing demand loan payable to a donor 20,000 20,000

746,172$ 1,359,421$

September 30,

September 30,

Management has reviewed the assets in other countries and, in its opinion, has determined they are under the control

of MAP. While for this reason such items are recognized as assets of MAP, it should be noted that the politicalsituation in many countries is subject to rapid change. Therefore, the reader should be aware that while management

believes the assets are properly stated at the date of this report, subsequent changes could occur that would adversely

affect the value of the assets in other countries. In addition, it should be understood that the assets in other countries

may not be representative of the amount that would be realized should the assets be sold. Many of the assets were

designed to carry out the specific programs of MAP, and they might have limited resale potential.

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7. NOTES AND LOANS PAYABLE, continued:

Maturities of notes and loans payable are as follows:

Years Ending September 30, Amount

2006 117,099$

2007 103,225

2008 109,772

2009 116,777

Thereafter 299,299

746,172$

8. ANNUITIES AND TRUST PAYABLE:

2005 2004

Annuities payablecurrent portion 92,732$ 95,530$

Annuities payablenet of current portion 339,598 297,110

432,330 392,640Revocable trusts 20,000 20,000

452,330$ 412,640$

2005 2004

Change in value of annuities:


Net realized gains 24,109 7,016

Net unrealized gains 1,510 14,127Annuity payments (91,408) (92,913)

Fees (1,942) (1,502)

Terminated annuities 10,425 18,842

Actuarial change (20,098) (54,702)

(66,239)$ (104,101)$

September 30,


Annuities payable represent the present value of future payments to annuitants. Annuity liabilities are computed

using federal income tax mortality rate tables and charitable mid-term rates published by the Internal Revenue

Service at the inception of the agreement. Annuities payable consist of:

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9. NET ASSETS:

Net assets consist of:

2005 2004

Unrestricted net assets:

Operating 64,517$ (92,334)$

Donated inventory 61,090,819 43,968,967

Designated for annual medicine purchases 400,000 400,000

Designated for bulk purchases of medicines 100,000 100,000

Designated for annuity reserve 432,331 392,640

Designated for loan repayment 20,000 20,000Net equity in property and equipment 1,067,286 917,092

Obligation for repayment of endowment funds (331,155) (331,155)

62,843,798 45,375,210

Temporarily restricted net assets:

Donated inventory 18,707,849 7,348,025

Pledges receivable 988,375 1,386,495

Pledges receivable for scholarship funds 10,189 42,288

Special projects 283,414 535,590

Relief 2,173,869 340,654

22,163,696 9,653,052

Permanently restricted:

MAP program activities endowment 2,561,443 2,561,443

Readers Digest International Fellowship endowment 1,206,027 1,206,027

3,767,470 3,767,470

88,774,964$ 58,795,732$

September 30,

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10. GIFTS-IN-KIND:

11. EMPLOYEE BENEFIT PLANS:

12. COMMITMENTS:

Years Ending September 30, Amount

2006 92,258$2007 52,322

2008 4,440

149,020$

MAP offers its full-time, permanent employees health, life, and disability insurance plans. MAP also has a defined

contribution retirement plan (Plan) covering substantially all of its employees. The Plan consists of three

components: (1) MAPs variable contribution, (2) employee deferred contributions to the Plan, and (3) employer

matching components. Employees are eligible to participate in the Plan immediately upon employment. Eligibility

for the variable contribution and matching programs begins after one year of service with full vesting of employer

contributions occurring after 5 years of service. MAPs variable contribution may vary, but for the years ended

September 30, 2005, and 2004, eligible employees received a contribution equal to 4% of annual salary. During the

past two fiscal years, MAP matched eligible 401(k) contributions at a rate of 50% of the first 6% of annual salary

deferred. Fiduciaries of the Plan include MAP officers as Trustees and Administrator and Manufacturers Life

Insurance Company as Investment Manager or Custodian. Amounts contributed by MAP to this plan during the fiscal

years ended September 30, 2005, and 2004 were $115,412 and $108,439, respectively.

MAP maintains certain noncancellable operating leases for certain buildings expiring at various dates through 2008.

The scheduled obligations associated with these noncancellable operating leases are as follows:

Rental expense under operating leases totaled approximately $65,697 and $59,865 for the years ended September 30,

2005, and 2004, respectively and is allocated to the program services and supporting activities benefited.

MAP receives donations of medicine and supplies for use in relief and development programs. MAP ships all suchgifts-in-kind to similar not-for-profit organizations for ultimate distribution throughout the world.

For the years ended September 30, 2005, and 2004, MAP distributed donated inventory totaling $310,489,679 and

$232,717,050, respectively. For the year ended September 30, 2005, $310,482,254 of donated inventory was

delivered to MAP before being distributed, and the remaining amount of $7,425 was shipped directly from the donor

to the organizations. For the year ended September 30, 2004, $232,672,558 of donated inventory was delivered to

MAP before being distributed, and the remaining amount of $44,492 was shipped directly from the donor to the

organizations.

In accordance with Interagency Standards established by the Association of Evangelical Relief and Development

Organizations (AERDO), MAP only records the value of gifts-in-kind for which they were either the original

recipient of the gift or were involved in partnership with another organization for international distribution.

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13. DONOR CONCENTRATION:

Approximately 46% and 19% of the donated inventory received by MAP for the years ended September 30, 2005,and 2004, respectively, was provided by five donors. The organizational implications of this concentration are

recognized by management and the board.

map financial statement 2005

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