CAFR - sdcera
CAFR - sdcera
CAFR - sdcera
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N O T E S T O T H E B A S I C F I N A N C I A L S T A T E M E N T S<br />
/ F I N A N C I A L<br />
As of June 30, 2007, SDCERA had the following futures balances:<br />
Notional Amount<br />
Long/(Short)<br />
Policy Overlay<br />
International equity $ (25,116,873)<br />
Domestic Equity 60,454,630<br />
International Fixed Income 180,817,578<br />
Domestic Fixed Income 127,483,250<br />
S&P 500 Futures Overlay (14,396,300)<br />
Managed Futures Overlay 335,000,000<br />
Total $ 664,242,285<br />
Derivative instruments are designed to provide equivalent exposure to the assets they emulate.<br />
SDCERA’s use of swaps and futures is structured such that market exposure is fundamentally<br />
equivalent to a direct cash investment. SDCERA believes such vehicles offer significant advantages<br />
over a direct investment in the asset, including efficient use of capital, and lower transaction and<br />
custody costs.<br />
INCOME TAXES<br />
The Internal Revenue Service has ruled that plans such as SDCERA’s qualify under Section 401(a)<br />
of the Internal Revenue Code and are not subject to tax under present income tax laws. On March<br />
4, 1998, the Internal Revenue Service issued a favorable Tax Determination Letter. Accordingly, no<br />
provision for income taxes has been made in the accompanying basic financial statements,<br />
as the Plan is exempt from federal and state income taxes under the provisions of the Internal<br />
Revenue Code, Section 401, and the California Revenue and Taxation Code, Section 23701,<br />
respectively.<br />
PROPERTY, PLANT AND EQUIPMENT<br />
Capital assets are carried at cost less accumulated depreciation. Depreciation is calculated using<br />
the straight-line method with a three to five year life for computer software, three years for hardware,<br />
five to ten years for office equipment and leasehold improvements, and seven years for the<br />
Paris benefits source-code. The cost and accumulated depreciation of property, plant and equipment<br />
is depicted in the table below.<br />
PROPERTY, PLANT AND EQUIPMENT<br />
FOR THE FISCAL YEAR ENDED JUNE 30, 2007<br />
Balance Deletions & Balance<br />
07/01/2006 Additions Transfers 06/30/2007<br />
Computer hardware, software, and maintenance $ 5,055,589 301,481 123,706 5,233,364<br />
Office furniture and fixtures 806,313 877,791 - 1,684,104<br />
Leasehold Improvements 602,445 554,966 - 1,157,411<br />
Total Property, Plant and Equipment 6,464,347 1,734,238 123,706 8,074,879<br />
Accumulated Depreciation (3,627,793) (918,621) - (4,546,414)<br />
Net Property, Plant & Equipment $ 2,836,554 815,617 123,706 3,528,465<br />
COMPREHENSIVE ANNUAL FINANCIAL REPORT 2007 27