Downloadable - IA.TSE Local 80

Assets
Year Ended April 30
2012 2011
Cash $66,753 $62,679
Investments, at market (note 3)
Merrill Lynch Investment Fund Account 10,913,801 10,639,281
Harris Private Banking 933,733 881,536
11,847,534 11,520,817
Accrued interest and other receivables 59,908 176,117
Due from General Fund 274,274 386,282
Total assets $12,248,469 $12,145,895
Defense Fund Statement of Activities
Year Ended April 30
2012 2011
Income
Per capita tax (note 1) $1,728,293 $1,729,227
Interest earned 324,459 380,486
Foreign currency exchange gain 335 8,626
2,053,087 2,118,339
Expenses
Legal and other 1,309,283 799,228
Basic agreement administration 251,831 248,339
Salary reimbursements to General Fund 99,532 119,944
Special organizing 77,345 1,341
Year Ended April 30
2012 2011
Cash flows from operating activities
Cash flows from operating activities
Change in Net Assets $66,717 $710,300
Adjustments to reconcile change in net assets
to net cash provided by operating activities
Unrealized loss on investments 207,927 176,573
Realized gain on sale of investments (31,693) (6,249)
Changes in Certain Other Accounts
Due from General Fund 112,008 (26,749)
Accrued interest and other receivables 116,209 (93,503)
Other assets - 2,670
Accounts payable and accrued expenses 37,039 44,264
Defense Fund Statement of Financial Position
Defense Fund Statement of Cash Flows
Liabilities and Unrestricted Net Assets
Accounts payable and accrued expenses $114,086 $77,047
Deferred income (note 1) 495,429 496,611
Unrestricted net assets 11,638,954 11,572,237
Total liabilities and unrestricted net assets $12,248,469 $12,145,895
Miscellaneous 72,145 68,863
1,810,136 1,237,715
Change in net assets before
investment gain/(loss) 242,951 880,624
Investment gain/(loss)
Realized gain on sale of investments 31,693 6,249
Unrealized (loss) on investments (207,927) (176,573)
(176,234) (170,324)
Change in net assets 66,717 710,300
Unrestricted net assets - beginning of year 11,572,237 10,861,937
Unrestricted net assets - end of year $11,638,954 $11,572,237
Deferred income (1,182) 36,927
Total adjustments 440,308 133,933
Net cash provided by operating activities 507,025 844,233
Cash flows from investing activities
Purchases of investments (5,773,826) (6,845,884)
Proceeds from redemption of investments 5,270,875 5,977,142
Net cash (used) by investing activities (502,951) (868,742)
Increase (decrease) in cash 4,074 (24,509)
Cash at beginning of year 62,679 87,188
Cash at end of year $ 66,753 $ 62,679
Note 1 - Organization
The Defense Fund (the “Fund”) was initiated by convention action in August 1974. Each
member of “A” Locals is to pay $4 per quarter and each member of “B” Locals is to pay
$3 per quarter to the Fund. The per capita tax is collected and distributed by the General
Fund. The Fund is to be used to defray extraordinary legal and other expenses of Locals as
determined by the Defense Fund Committee. Payments received for future periods have
been deferred.
Note 2 - Summary of significant accounting policies
The Fund is a separate fund of the International. The International is a tax-exempt
organization under the provisions of Section 501(c)(5) of the Internal Revenue Code and
files annual information returns as required.
The Fund’s functional currency is the United States dollar. Some transactions of the
Fund are made in Canadian dollars. Gains and losses from these transactions are included
in income as they occur. These assets are translated using year-end rates while income is
translated at average exchange rates. The Fund records adjustments resulting from these
transactions as foreign currency exchange gain in the statement of activities.
In preparing its financial statements in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”), the Fund makes estimates and
assumptions that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
The Fund’s cash is deposited in various banks at April 30, 2012. The Fund has not
experienced any losses on its cash deposits.
The Fund has evaluated subsequent events through July 19, 2012 and has determined
there are no subsequent events or transactions which would require recognition or disclosure
in the Fund’s financial statements.
Note 3 - Valuation of investments and fair value measurement
The Fund measures and reports its investments at fair value, which is the price that would
be received from selling an asset or paid to transfer a liability in an orderly transaction
between participants at the measurement date.
U.S. GAAP establishes a hierarchal disclosure framework which prioritizes and ranks the
level of market price observability used in measuring fair value. Market price observability
is impacted by a number of factors, including the type of investment and the characteristics
specific to the investment. Investments with readily available active quoted prices or for
which fair value can be measured from actively quoted prices generally will have a higher
degree of market price observability and a lesser degree of judgment used in measuring
Defense Fund Notes to Financial Statements
fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used in
measuring fair value into three broad levels with the highest priority to quoted prices in
active markets (Level I) and the lowest priority to unobservable inputs (Level III).
Fair value measurements are classified in one of the following categories:
Level I - Observable inputs such as quoted prices for identical assets or liabilities in active
markets.
Level II - Observable inputs other than quoted prices substantiated by market data and
observable, either directly or indirectly for the asset or liability. This includes quoted prices
for similar assets or liabilities in active markets.
Level III - Unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets and liabilities.
In certain cases, the inputs used to measure fair value may fall into different levels of the
fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is
based on the lowest level of input that is significant to the fair value of the measurement.
Management of the Fund’s assessment of the significance of a particular input to the fair
value measurement in its entirety requires judgment, and considers factors specific to the
investment.
The following table summarizes the valuation of the Fund’s investments by the above fair
value hierarchy levels as of April 30, 2012 and 2011:
2012
Description Level I Level II Level III Total
Government securities $8,568,643 $ - $ - $8,568,643
Corporate bonds 2,471,712 - - 2,471,712
Cash and cash equivalents 807,179 - - 807,179
Total Investments $11,847,534 $ - $ - $11,847,534
2011
Description Level I Level II Level III Total
Government securities $8,465,117 $ - $ - $8,465,117
Corporate bonds 2,585,218 - - 2,585,218
Cash and cash equivalents 470,482 - - 470,482
Total Investments $ 11,520,817 $ - $ - $11,520,817
Any realized and unrealized gains and losses from investments are reported in the
statement of activities.
16 Official Bulletin
Third Quarter 2012 17