National Nurses United

CALIFORNIA NURSES ASSOCIATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) Note 4 - Investments Investments are stated at fair value and are summarized as follows: 2004 Unrealized Fair Gain Cost Value (Loss) Corporate Bonds $ 46,850 $ 67,541 $ 20,691 U.S. Treasury Obligations 54,76 47,281 (7,487) Common Stocks 197,595 175,169 (22,426 ) $ 299,213 $ 289,991 $ (9,222) 2003 Unrealized Fair Gain Cost Value (Loss) Corporate Bonds $ 99,038 $ 100,716 $ 1,678 U.S. Treasury Obligations 154,604 150,953 (3,651) Common Stocks 228,031 193,092 (34,939 ) $ 481,673 $ 444,761 $ (36,912) The following summarizes the investment return and its classification in the Statement of Activities. Year Ended June 30 2004 2003 Interest and Dividends $ 25,162 $ 18,024 Net Realized and Unrealized Gains 30,479 (19,077 ) Total Investment Return $ 55,641 $ (1,053) CALIFORNIA NURSES ASSOCIATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) Note 5 - Fixed Assets Fixed assets at June 30, 2004 and June 30, 2003 consisted of the following: 2004 Estimated Net Useful Accumulated Book Lives Cost Depreciation Value Office Furniture 5–7 $ 1,085,644 $ 854,411 $ 231,233 Computers and Software 5–7 1,578,750 950,603 628,147 Communication Systems 5–7 149,600 89,470 60,130 Building and Improvements 39.5 5,493,964 644,459 4,849,505 Parking Lot - 438,588 - 438,588 Land - 593,935 - 593,935 Total $ 9,340,481 $ 2,538,943 $ 6,801,583 2003 Estimated Net Useful Accumulated Book Lives Cost Depreciation Value Office Furniture 5–7 $ 910,484 $ 758,473 $ 152,011 Computers and Software 5–7 1,242,202 702,118 540,084 Communication Systems 5–7 117,356 62,816 54,540 Building and Improvements 39.5 4,171,108 511,309 3,659,799 Parking Lot - 438,588 - 438,588 Land - 593,935 - 593,935 Total $ 7,473,673 $ 2,034,716 $ 5,438,957 Depreciation expenses were $504,227 and $437,157 for the years ending June 30, 2004 and 2003, respectively. CALIFORNIA NURSES ASSOCIATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) Note 6 - Assets Designated for Specific Programs (Continued) June 30, 2003 Balance Other Balance Program 2002 Dues Receipts Expenditures 2003 Delegate $ 389,039 $ 182,320 $ 10,000 $ (50,837) $ 530,522 Supportive (255,525) 472,318 - (750,969) (534,176) Candidate PAC 21,507 285,639 32,200 (297,464) 41,882 Initiative PAC 128 - - (106) 22 Voter Guide PAC 346 - 900 (1,054) 192 Direct Mail 250,000 - 962,056 (887,056 ) 325,000 Total $ 405,495 $ 940,277 $ 1,005,156 $ (1,987,486) $ 363,442 Note 7 - Margin Loan CNA's investment account is managed by an investment adviser and the underlying assets are held by a financial institution. CNA has an agreement with the financial institution allowing CNA to borrow and withdraw funds up to a percentage of the securities' current fair market value (purchasing power) using the underlying securities as collateral. The agreement also allows the investment advisor to purchase new securities by borrowing against the existing underlying securities. Payment of any balance of borrowed funds is due upon demand. The agreement also calls for CNA to remit funds, either directly or by selling the underlying securities, whenever the balance of funds borrowed exceeds the allowed percentage of their fair market value. Interest is paid on the average balance of borrowed funds on a monthly basis and rate varies depending on the total amount of funds outstanding. The interest rate was 5.375% with interest expense totaling $9,688 for the year ended June 30, 2004. The interest rate ranged from 5.996% to 7.375% with interest expense totaling $1,016 for the year ended June 30, 2003. The agreement does not stipulate a termination date as long as investment securities are held by the financial institution. CNA made net direct withdrawals totaling $455,702 from the investment account and made net direct payments totaling $225,000 into the investment account during the years ended June 30, 2004 and 2003, respectively. Interest, dividends, sales proceeds, and other receipts reduced the total amount of funds borrowed. Purchases of assets and expenses including the monthly interest charged on the borrowed funds increased the amount of funds borrowed. The balance of funds borrowed and amount due was $173,592 at June 30, 2004. CALIFORNIA NURSES ASSOCIATION NOTES TO FINANCIAL STATEMENTS (CONTINUED) Note 6 - Assets Designated for Specific Programs In accordance with CNA's bylaws, constitution, or by direction of the Board a portion of dues paid by each member is designated for specific purposes. By direction of the Board, $671,556 of the change in undesignated unrestricted net assets during the year ended June 30, 2003 was designated for use by the Direct Mail program. In addition, the Regions contributed $290,500 in dues to the Direct Mail program during the year ended June 30, 2003. The following is a summary of revenue and expenses and the balance (deficit) of funds at year- end for each program. The Delegate and Supportive Program deficits are owed to the general fund. CNA is not required to segregate undesignated and designated net assets from each other except for the funds in the Candidate PAC, Initiative PAC and Voter Guide PAC programs that are shown as assets set aside for specific programs in the Statement of Financial Position June 30, 2004 Balance Other Balance Program 2003 Dues Receipts Expenditures 2004 Delegate $ 530,522 $ 198,711 $ 254,356 $ (1,045,959) $ (62,370) Supportive (534,176) 636,684 - (581,951) (479,443) Candidate PAC 41,882 309,629 - (269,893) 81,618 Initiative PAC 22 - - - 22 Voter Guide PAC 192 - - (13) 179 Direct Mail 325,000 - - (79,249) 245,751 Grocery Worker's Fund - - 100,000 (100,000) - Organizing School - - 20,000 - 20,000 Total $ 363,442 $ 1,145,024 $ 374,356 $ (2,077,065) $ (194,243)

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