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Med ical Assistance Programs www.map.org

MAP INTERNATIONAL

FINANCIAL STATEMENTS With Independent Auditors' Report

September 30, 2008 and 2007

MAP INTERNATIONAL

Table of Contents

Page

Independent Auditors' Report

1

Financial Statements

Statements of Financial Position Statements of Activities Statements of Cash Flows

Statement of Functional Expenses-2008 Statement of Functional Expenses-2007

2-3 4-5 6-7

8 9

Notes to Financial Statements

10-24

INDEPENDENT AUDITORS' REPORT

Board of Directors MAP International Brunswick, Georgia

We have audited the accompanying statements of financial position of MAP International as of September 30, 2008, and 2007 and the related statements of activities, cash flows, and functional expenses for the years then ended. These financial statements are the responsibility of the organization's management. Our responsibility is to express an opinion on these financial statements based 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 organization's 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 statements 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 of MAP International as of September 30, 2008, and 2007 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.

Atlanta, Georgia January 8, 2009

MAP INTERNATIONAL
Statements of Financial Position
September 30,
2008 2007
Specified Time Specified Time
Operating or Purpose Endowment Total Operating or Purpose Endowment Total
ASSETS:
Cash and cash equivalents $ 409,038 $ 703,852 $ $ 1,112,890 $ 462,939 $ 394,991 $ $ 857,930
Accounts receivable-net 388,130 388,130 518,806 518,806
Other receivable 108,028 108,028 208,084 208,084
Pledges receivable-net 278,808 278,808 492,866 492,866
Inventory:
Purchased 371,818 371,818 253,584 253,584
Donated 58,809,580 13,405,231 72,214,811 144,156,001 16,551,553 160,707,554
Prepaid expenses and other asset 192,721 192,721 155,554 155,554
Investments 400,954 492,190 3,710,285 4,603,429 501,613 1,170,603 4,171,297 5,843,513
Property and equipment-net 5,383,132 5,383,132 2,036,812 2,036,812
Interfund balances (644,127) 579,242 64,885 48,740 347,387 (396,127)
Total Assets $ 65,419,274 $15,459,323 $ 3,775,170 $ 84,653,767 $ 148,342,133 $18,957,400 $ 3,775,170 $171,074,703 (continued)

See notes to financial statements

-2-

MAP INTERNATIONAL

Statements of Financial Position (continued)

2008
Specified Time
Operating or Purpose Endowment
LIABILITIES AND NET ASSETS:
Liabilities:
Accounts payable $ 242,125 $ $
Construction payables 1,286,798
Deposits 111,060
Accrued expenses 691,707
Notes and loans payable 610,925
Annuities and trust payable 386,522
Total liabilities 2,942,615 386,522 September 30,

2007

Specified Time

Total

Operating

or Purpose

Endowment

Total

$ 242,125 $ 289,839 $ $ $ 289,839
1,286,798
111,060 60,508 60,508
691,707 623,949 623,949
610,925 1,154,127 1,154,127
386,522 378,160 378,160
3,329,137 2,128,423 378,160 2,506,583 Net assets:
Unrestricted 62,476,659 67,293 62,543,952 146,213,710 67,928 146,281,638
Temporarily restricted 15,005,508 15,005,508 18,511,312 18,511,312
Permanently restricted 3,775,170 3,775,170 3,775,170 3,775,170
Total net assets 62,476,659 15,072,801 3,775,170 81,324,630 146,213,710 18,579,240 3,775,170 168,568,120
Total Liabilities and Net Assets $ 65,419,274 $15,459,323 $ 3,775,170 $ 84,653,767 $ 148,342,133 $18,957,400 $ 3,775,170 $171,074,703 See notes to financial statements

-3-

MAP INTERNATIONAL

Statements of Activities

Year Ended September 30,

2008

2007

Unrestricted

Temporarily Restricted

Permanently Restricted

Total

Unrestricted

Temporarily Restricted

Permanently Restricted

Total

SUPPORT AND REVENUE:
Contributions $ 4,902,800 $ 1,768,070 $ $ 6,670,870 $ 4,767,831 $ 1,059,234 $ $ 5,827,065
Donated inventory 277,536,009 95,920,263 373,456,272 299,843,168 86,483,377 386,326,545
Donated property and equipment 376,767 376,767 12,760 12,760
Donated securities and other assets 266,335 266,335 325,546 12,940 338,486
Government grants 1,106,878 1,106,878 879,727 879,727
Handling charges and service fees 4,090,363 4,090,363 3,524,387 3,524,387
Investment income (loss) (287,369) (213,791) (501,160) 423,449 143,735 567,184
Other revenue 85,461 85,461 63,203 63,203
Gain on sale ofland
and building (Note 6) 3,208,181 3,208,181
Total Support and Revenue 291,285,425 97,474,542 388,759,967 309,840,071 87,699,286 397,539,357
RECLASSIFICATIONS:
Net assets released from
restrictions 100,980,346 (100,980,346) 81,312,425 (81,312,425) (continued)

See notes to financial statements

-4-

MAP INTERNATIONAL
Statements of Activities
(continued)
Year Ended September 30,
2008 2007
Temporarily Permanently Temporarily Permanently
Unrestricted Restricted Restricted Total Unrestricted Restricted Restricted Total
EXPENSES:
Program services:
Essential medicine distribution 417,225,813 417,225,813 280,667,865 280,667,865
Disaster and disease
management 5,783,258 5,783,258 2,698,069 2,698,069
Community health development 48,994,186 48,994,186 35,693,148 35,693,148
472,003,257 472,003,257 319,059,082 319,059,082
Supporting activities:
General and administrative 568,460 568,460 664,756 664,756
Fund-raising 3,431,740 3,431,740 3,675,573 3,675,573
4,000,200 4,000,200 4,340,329 4,340,329
Total Expenses 476,003,457 476,003,457 323,399,411 323,399,411
Change in Net Assets (83,737,686) (3,505,804) (87,243,490) 67,753,085 6,386,861 74,139,946
Net Assets, Beginning of Year 146,281,638 18,511,312 3,775,170 168,568,120 78,528,553 12,124,451 3,775,170 94,428,174
Net Assets, End of Year $ 62,543,952 $ 15,005,508 $3,775,170 $81,324,630 $146,281,638 $ 18,511,312 $ 3,775,170 $168,568,120
See notes to financial statements
-5- MAP INTERNATIONAL

Statements of Cash Flows

CASH FLOWS FROM OPERATING ACTIVITIES:

Change in net assets

Adjustments to reconcile change in net assets to net cash

provided (used) by operating activities:

Donated inventory Distributed inventory

Donated securities, property, equipment, and other assets Depreciation

Gain on sale of property and equipment

Net realized and unrealized gains and losses on investments

Net realized and unrealized gains and losses in change in value of annuitie Actuarial change in value of annuities

Changes in operating assets and liabilities:

Accounts and other receivables Pledges receivable

Purchased inventory

Prepaid expenses and other assets Accounts payable and deposits Accrued expenses

Net Cash Used by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of investments Purchases of investments

Proceeds from the sale of property and equipment Purchases of property and equipment

Increase in construction in progress

Net Cash Provided by Investing Activities

(continued)

See notes to financial statements

-6-

Year Ended September 30,

2008 2007

$ (87,243,490) $ 74,139,946

(373,456,272) (386,326,545)
461,949,015 310,959,540
(266,335) (338,486)
282,730 330,357
(3,202,612) 1,178
780,130 (205,759)
50,968 (52,632)
27,330 (24,626)
230,732 (358,619)
214,058 332,103
(118,234) 232,377
(37,167) (46,855)
2,838 (38,253)
67,758 229,121
(718,551) (1,167,153) (17,459,605) 3,022,361
18,134,926 (2,382,944)
3,676,909
(1,518,211) (286,094)
(1,836,088) (19,600)
997,931 333,723 MAP INTERNATIONAL

Statements of Cash Flows (continued)

Year Ended September 30,
2008 2007
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of annuities 41,569 49,474
Payments on annuities (60,537) (69,910)
Repayments on notes payable (78,637)
Repayments on capital leases (5,452) (4,721)
Borrowings on lines of credit 300,000
Net Cash Provided (Used) by Financing Activities (24,420) 196,206
Net Change in Cash and Cash Equivalents 254,960 (637,224)
Cash and Cash Equivalents, Beginning of Year 857,930 1,495,154
Cash and Cash Equivalents, End of Year $ 1,112,890 $ 857,930
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 28,742 $ 102,433
NONCASH INVESTING ACTIVITIES:
Cash paid directly to lender for satisfaction of debt $ 537,750 $
Construction in progress financing through payables $ 1,286,798 $
Donated securities and other assets $ 266,335 $ 325,726
Donated property and equipment $ $ 12,760 See notes to financial statements

-7-

MAP INTERNATIONAL
Statement of Functional Expenses
Year Ended September 30, 2008
Program Services Supporting Services
Essential Disaster Community Total General Total
Medicine and Disease Health Program and Supporting
Distribution Management Development Services Administrative Fund-raising Services Total
EXPENSES:
Distributed inventory $ 413,441,663 $ 4,495,348 $ 44,012,004 $ 461,949,015 $ $ $ $ 461,949,015
Cost of goods distributed 1,129,847 12,285 120,276 1,262,408 1,262,408
Freight 423,837 4,608 47,449 475,894 10,689 10,689 486,583
Personnel:
Salaries and wages 1,128,123 231,032 1,783,044 3,142,199 223,011 1,181,813 1,404,824 4,547,023
Employee benefits 313,873 75,160 455,591 844,624 64,209 345,758 409,967 1,254,591
Outside services 125,899 210,903 332,576 669,378 77,537 212,076 289,613 958,991
Travel 61,897 39,832 292,500 394,229 28,265 142,748 171,013 565,242
Supplies 54,346 24,553 250,197 329,096 15,101 21,167 36,268 365,364
Conferences and meetings 13,930 5,483 476,823 496,236 32,032 21,604 53,636 549,872
Grants 218,539 225,960 444,499 444,499
Printing and publications 18,009 1,802 68,005 87,816 7,663 1,018,519 1,026,182 1,113,998
Postage 2,420 505 8,112 11,037 217,053 217,053 228,090
Equipment rental and repair 348,439 316,974 374,942 1,040,355 69,341 84,019 153,360 1,193,715
Telephone 21,712 11,582 82,593 115,887 10,914 38,879 49,793 165,680
Occupancy 39,415 15,090 118,071 172,576 14,464 17,098 31,562 204,138
Interest 7,492 81 10,090 17,663 1,436 9,643 11,079 28,742
Insurance 56,142 62,880 21,802 140,824 8,648 7,573 16,221 157,045
Depreciation 29,893 56,418 157,005 243,316 11,156 28,258 39,414 282,730
Miscellaneous 8,876 183 157,146 166,205 4,683 74,843 79,526 245,731
Total Expenses $ 417,225,813 $ 5,783,258 $ 48,994,186 $ 472,003,257 $ 568,460 $ 3,431,740 $ 4,000,200 $ 476,003,457
See notes to financial statements
-8- MAP INTERNATIONAL
Statement of Functional Expenses
Year Ended September 30, 2007
Program Services Supporting Services
Essential Disaster Community Total General Total
Medicine and Disease Health Program and Supporting
Distribution Management Development Services Administrative Fund-raising Services Total
EXPENSES:
Distributed inventory $ 277,250,983 $ 1,163,226 $ 32,545,331 $ 310,959,540 $ $ $ $310,959,540
Cost of goods distributed 975,506 4,093 114,509 1,094,108 1,094,108
Freight 339,563 1,425 39,968 380,956 23,612 23,612 404,568
Personnel:
Salaries and wages 912,992 350,804 1,092,137 2,355,933 260,732 1,206,211 1,466,943 3,822,876
Employee benefits 299,967 35,417 359,229 694,613 87,349 397,883 485,232 1,179,845
Outside services 200,463 17,532 346,976 564,971 118,273 294,464 412,737 977,708
Travel 27,223 112,243 166,397 305,863 34,218 194,643 228,861 534,724
Supplies 70,162 113,424 84,543 268,129 12,415 26,978 39,393 307,522
Conferences and meetings 20,598 101,248 258,293 380,139 14,336 20,710 35,046 415,185
Grants 621,412 181,578 802,990 42,999 42,999 845,989
Printing and publications 16,525 3,555 55,006 75,086 9,967 1,112,159 1,122,126 1,197,212
Postage 843 7,517 4,393 12,753 6 98,957 98,963 111,716
Equipment rental and repair 230,355 33,017 121,779 385,151 34,532 69,192 103,724 488,875
Uncollectible accounts 15,227 15,227 15,227
Telephone 26,287 22,183 50,238 98,708 12,261 41,392 53,653 152,361
Occupancy 42,622 26,657 68,337 137,616 14,351 12,206 26,557 164,173
Interest 29,461 124 27,990 57,575 17,321 27,537 44,858 102,433
Insurance 133,004 2,048 22,850 157,902 8,123 7,355 15,478 173,380
Depreciation 90,731 76,790 101,701 269,222 19,738 41,397 61,135 330,357
Miscellaneous 580 5,354 51,893 57,827 5,907 57,878 63,785 121,612
Total Expenses $ 280,667,865 $ 2,698,069 $ 35,693,148 $ 319,059,082 $ 664,756 $ 3,675,573 $ 4,340,329 $323,399,411
See notes to financial statements
-9- MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

1. NATURE OF ORGANIZATION:

MAP International (MAP), founded as Medical Assistance Programs, was incorporated in 1965 in Illinois as a nonprofit corporation. MAP's purpose is to promote the total health of people living in the world's impoverished communities. Through its offices in the United States, Bolivia, Ecuador, Indonesia, Uganda, Cote D'Ivoire, and Kenya. MAP promotes access to health services and essential medicines in more than 130 countries. MAP's 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 essential medicines, prevention and eradication of disease, and community health services. These primary activities are described below:

Essential Medicine Distribution -MAP 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 to hospitals, clinics, refugee centers, and physicians in other countries as they are needed. In addition, MAP's 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.

Disaster and Disease Management-MAP's 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. MAP's program in Bolivia vaccinates children and screens them for parasites, malnutrition, and many other diseases.

Community Health Development-Total health training workshops teach medical, cultural, and biblical principles of health in remote rural areas from the Amazon to Kenya. The MAP International Fellowship provides opportunities for medical students to serve short-term missions in Christian hospitals around the world.

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.

-10-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

1. NATURE OF ORGANIZATION, continued:

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 30,2008, and 2007.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

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

RECLASSIFICATIONS

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

ESTIMATES

The preparation of the financial statements, in conformity with accounting principles generally accepted in the United States of America, 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.

CASH AND CASH EQUIVALENTS

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 United States and foreign accounts. For United States' accounts, these accounts may, at times, exceed federally insured limits. MAP has not experienced any losses on such accounts, and management believes they are not exposed to any significant credit risk associated with United States 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 $507,978 and $332,457 at September 30,2008, and 2007, respectively.

FOREIGN CURRENCY TRANSLATION

As mentioned above, MAP operates in six foreign field offices using local currency. Current assets and liabilities for these offices are translated at the exchange rates effective at the end of the year. Long-term assets and liabilities are translated at historic exchange rates. Amounts in the statements of activities are translated at the actual exchange rates in effect when funds are transferred from the home office to the field. Currency translation adjustments of $22,939 and $(16,358) for the years ended September 30, 2008, and 2007, respectively, are included in the statements of activities.

-11-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

ACCOUNTS RECEIVABLE

Accounts receivable includes billings for service fees and handling charges and is 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. MAP's 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 management's judgment, is adequate to absorb potential losses inherent in the receivable portfolio. The amount of the allowance is based on management's evaluation of collectibi1ity 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 amounts of $13,517 and $16,397 as of September 30, 2008, and 2007, respectively.

PLEDGES RECEIVABLE

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 5.0%. Amortization of discounts is included in contribution revenue. Conditional promises are not included as support until the conditions are substantially met.

INVENTORY

Inventory consists of purchased and donated medical products and supplies. Purchased inventory is stated at the lower 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. MAP recognized total inventory held in foreign locations amounts to $33,678 and $32,878 at September 30,2008, and 2007, respectively.

INVESTMENTS

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.

-12-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

ENDOWMENT FUNDS

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 donor's 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, 2008, and 2007, the endowment interfund borrowing balances were $300,000 and $400,000, respectively.

PROPERTY AND EQUIPMENT

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 are 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 $1,000 for the United States and foreign locations except for infrequent instances where field offices capitalize long-lived items with a lower value.

On October 1, 2007, MAP increased its capitalization policy from $500 to $1,000. Purchases of property and equipment valued at $1,000 or more are capitalized. In compliance with Statement of Financial Accounting Standards No.154, Accounting Changes and Error Correction, MAP has included the net change of the estimate in the statements of activities for the current year and will apply it to future periods. Retrospective application is not necessary. The total of expenses that would have been capitalized under their former policy during the year ended September 30,2008, was $8,589.

ANNUITIES PAYABLE

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 donor's 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.

REVOCABLE TRUST

As trustee, MAP administers a revocable (grantor) trust that provides for a beneficial interest to MAP at the grantor's 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 grantor's death, the remaining trust assets will be recorded as contribution support.

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MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

NET ASSETS

The financial statements report amounts by classification of net assets:

Unrestricted net assets are currently available for purposes under the direction of the board, designated by the board, resources invested in property and equipment, or held as annuity reserves.

Temporarily restricted net assets are contributed with donor stipulations for specific operating purposes or programs, with time restrictions, or not currently available for use until commitments regarding their use have been fulfilled.

Permanently restricted net assets are contributed with donor restrictions that the principal remain in perpetuity with only the income available as unrestricted or temporarily restricted, per endowment agreements.

SUPPORT, REVENUE, AND RECLASSIFICATIONS

Revenue 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 fundraising. 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.

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 MAP's 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; therefore, they are reported as unrestricted contributions.

-14-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:

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 MAP's program services. During the years ended September 30, 2008, and 2007, management estimated that volunteers donated over 4,000 and 3,800 hours each year to MAP, respectively.

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. A donor restriction expires when the stipulated time restriction ends or purpose restriction is accomplished. Temporarily restricted net assets are then reclassified to unrestricted net assets and reported in the statements of activities as net assets released from restrictions.

EXPENSES

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.

3. ACCOUNTS RECEIVABLE-NET:

Accounts receivable consist of:

September 30,

2008 2007

Trade receivables Foreign field receivables

$

206,985 $

194,662

316,939 218,264

401,647 (13,517)

535,203 (16,397)

Less allowance for uncollectible accounts

$

388,130

$

518,806

-15-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

4. PLEDGES RECEIVABLE-NET:
Pledges receivable-net consist of:
September 30,
2008 2007
Unconditional promises receivable (pledges) before
unamortized discount $ 285,064 $ 535,127
Less unamortized discount (6,256) (42,261)
$ 278,808 $ 492,866
Pledges are due to be collected as follows:
Less than one year $ 138,720 $ 165,376
One to five years 140,088 327,490
$ 278,808 $ 492,866
5. INVESTMENTS:
Investments consist of:
September 30,
2008 2007
Money market funds and certificates of deposit $ 580,960 $ 1,357,123
Marketable equity securities 883,798 2,215,882
Government and corporate bonds 2,169,067
Mutual funds 3,138,671
Other investments 101,441
$ 4,603,429 $ 5,843,513 -16-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

5. INVESTMENTS, continued:

Investments are held for the following purposes:
September 30,
2008 2007
Operating $ 400,954 $ 501,613
Specified time or purpose:
Annuity funds 461,445 533,502
Designated for Indonesia 600,000
Funds held for loan repayment 30,745 37,101
492,190 1,170,603
Endowment 3,710,285 4,171,297
$ 4,603,429 $ 5,843,513
Investment income consists of the following:
Year Ended September 30,
2008 2007
Unrestricted:
Interest and dividends $ 280,878 $ 172,764
Net realized gains 296,381 34,776
Net unrealized gains (losses) (864,628) 215,909
$ (287,369) $ 423,449
Temporarily restricted:
Interest and dividends $ 67,463 $ 46,864
Net realized gains 168,471 9,147
Net unrealized gains (losses) (449,725) 87,724
$ (213,791) $ 143,735 -17-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

6. PROPERTY AND EQUIPMENT-NET:

Property and equipment-net consist of:

Land and improvements Building and improvements Equipment

Less accumulated depreciation Construction in progress*

Land and improvements Building and improvements Equipment

Less accumulated depreciation Construction in progress

Net equity in property and equipment consists of:

Property and equipment-net

Less related debt (includes capital lease obligation) Less related construction payables (included in

construction in progress)

September 30, 2008
United States Foreign Total
$ 303,896 $ 82,500 $ 386,396
15,289 326,332 341,621
1,022,576 1,110,484 2,133,060
1,341,761 1,519,316 2,861,077
(740,599) (829,109) (1,569,708)
4,066,781 24,982 4,091,763
$ 4,667,943 $ 715,189 $ 5,383,132
September 30, 2007
United States Foreign Total
$ 163,778 $ 82,500 $ 246,278
1,894,307 320,140 2,214,447
1,969,618 944,245 2,913,863
4,027,703 1,346,885 5,374,588
(2,656,442) (700,934) (3,357,376)
19,600 19,600
$ 1,390,861 $ 645,951 $ 2,036,812 September 30,
2008 2007
$ 5,383,132 $ 2,036,812
(10,925) (554,127)
(1,286,798)
$ 4,085,409 $ 1,482,685 *During October 2007, MAP sold its land and building and constructed a new facility to serve as its administrative and distribution center. MAP moved into the new facility during November, 2008.

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MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

6. PROPERTY AND EQUIPMENT-NET, continued:

Management has reviewed the assets in other countries and, in its opinion, has determined they are under the control of MAP. For this reason such items are recognized as assets of MAP. 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. 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.

7. NOTES AND LOANS PAYABLE:

Notes and loans payable consist of:

September 30,

2008 2007

Note payable, secured by real property, payable in monthly installments of $10,707 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 1 st (effective rate September 30, 2007, was 8.75%).

$

$

537,750

Line of credit approved up to $300,000, collateralized by security deed. Interest payable monthly at prime (effective rate September 30, 2008, was 5.00%). The note is subject to renewal on March 26,2009.

Line of credit, unsecured, approved up to $300,000 with interest payable monthly at the prime rate (effective rate at September 30, 2008, was 5.00%). The line of credit matures February 12,2009.

300,000

300,000

Capital lease on equipment with total monthly payments of $581 ending December 2009.

300,000

300,000

10,925

16,377

$

610,925

$ 1,154,127

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MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

7. NOTES AND LOANS PAYABLE, continued:
Maturities of notes and loans payable are as follows:
Year Ending September 30, Amount
2009 $ 606,300
2010 4,625
$ 610,925
8. ANNUITIES AND TRUST PAYABLE: 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:

September 30,

2008 2007

Annuities payable-current portion $ 63,184 $ 63,078
Annuities payable-net of current portion 303,338 295,082
366,522 358,160
Revocable trust 20,000 20,000
$ 386,522 $ 378,160
Year Ended September 30,
2008 2007
Change in value of annuities:
Interest and dividends $ 25,449 $ 18,573
Net realized gains 58,639 6,513
Net unrealized gains (135,056) 27,546
Annuity payments (60,537) (69,910)
Fees (2,289) (2,262)
Terminated annuities 1,663 82,415
Actuarial change 27,330 24,626
$ (84,801) $ 87,501 -20-

MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

9. NET ASSETS:
Net assets consist of:
September 30,
2008 2007
Unrestricted net assets:
Operating $ (418,330) $ 575,024
Donated inventory 58,809,580 144,156,001
Designated for minimum state required annuity reserves 67,293 67,928
Net equity in property and equipment 4,085,409 1,482,685
62,543,952 146,281,638
Temporarily restricted net assets:
Donated inventory 13,405,231 16,551,553
Pledges receivable 278,808 492,866
Special projects 1,171,469 1,296,893
Relief 150,000 170,000
15,005,508 18,511,312
Permanently restricted:
MAP program activities endowment 2,561,443 2,561,443
MAP International Fellowship endowment 1,213,727 1,213,727
3,775,170 3,775,170
$ 81,324,630 $ 168,568,120 Periodically, the fair value of assets associated with donor restricted endowment funds may fall below the level that the donor requires MAP to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature that are reported in unrestricted net assets were $64,885 as of September 30, 2008. These deficiencies resulted from unfavorable market fluctuations during 2008. There were no such deficiencies as of September 30,2007.

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MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

10. GIFTS-IN-KIND:

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

For the years ended September 30, 2008, and 2007, MAP distributed donated inventory totaling $461,949,015 and $310,959,540, respectively. For the year ended September 30, 2008, $456,125,119 of donated inventory was delivered to MAP before being distributed and the remaining amount of $5,823,896, was shipped directly from the donor to the organizations. For the year ended September 30, 2007, $306,793,684, of donated inventory was delivered to MAP before being distributed and the remaining amount of$4,165,856, 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.

11. EMPLOYEE BENEFIT PLANS:

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) MAP's 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. Through December 31, 2007, eligibility for the variable contribution and matching programs began after one year of service with full vesting of employer contributions occurring after five years of service for contributions received. Beginning January 1, 2008, MAP's Plan began operations in accordance with the "safe harbor" provisions of section 401(k)(12) of the Internal Revenue Code. Under "safe harbor" eligibility, variable contribution and matching programs begins after one year of service with full vesting of employer contributions occurring immediately. MAP's variable contribution for eligible employees amounted to 3% and 4% of annual salary for the years ended September 30, 2008, and 2007, respectively. Through December 31, 2007, MAP matched eligible 401(k) contributions at a rate of 50% of the first 6% of employee's eligible compensation. For the remainder of the fiscal year ending September 30, 2008, MAP matched 100% of the first 3% of employee's eligible compensation. 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 the Plan during the fiscal years ended September 30, 2008, and 2007 were $144,463 and $132,995, respectively.

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MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

12. COMMITMENTS:

OPERTATING LEASES

MAP maintains noncancellable operating leases for certain buildings expiring at various dates through 2008. The scheduled obligations associated with these noncancellable operating leases are as follows:

Year Ending September 30, Amount
2009 $ 386,667
2010 266,373
2011 89,524
2012 72,867
2013 75,040
$ 890,471 Rental expense under operating leases totaled approximately $468,772 and $287,785 for the years ended September 30, 2008, and 2007, respectively, and is allocated to the program services and supporting activities benefited.

CAPITAL LEASES

MAP has obligations under capital leases for office equipment that expire in 2009. At September 30,2008, the gross amount of office equipment and related accumulated amortization recorded under capital leases were as follows:

Equipment

Less accumulated amortization

$

24,825 (17,378)

$ 7,447

MAP includes amortization of equipment under capital lease in accumulated depreciation and depreciation expense. Obligations under capital lease are summarized as follows:

Total future minimum lease payments Less amount representing interest

$

12,197 (1,272)

Capital leases payable (Note 7)

$

10,925

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MAP INTERNATIONAL

Notes to Financial Statements

September 30, 2008 and 2007

12. COMMITMENTS, continued:

Maturities of obligations under capital leases are as follows:

Year Ending September 30,

Amount

2009 2010

$

6,300 4,625

$ 10,925

OTHER COMMITMENTS

MAP is committed to quarterly payments of $7,200 to a consulting organization for MAP's website development and hosting services through 2009.

13. RELATED PARTY TRANSACTION:

During the years ended September 30, 2008, and 2007, the board approved contributions totaling $0 and $41,000, respectively, to a foundation for which MAP's president serves as the foundation's executive director.

14. DONOR CONCENTRATION:

Five donors provided approximately 49% and 66% of the donated inventory received by MAP for the years ended September 30, 2008, and 2007, respectively. The organizational implications of this concentration are recognized by management and the board.

15. SUBSEQUENT EVENT:

During October 2008, MAP entered into a $3.8 million construction loan to complete their new office and distribution center. The loan is set to convert to a promissory note secured by real property once the construction is complete. Interest only payments began in November 2008 calculated with a variable interest rate at prime, not to fall below 5.5%. The principal is due April 2010.

16. NEW ACCOUNTING PRONOUNCEMENTS:

During September 2006, the Financial Accounting Standards Board (F ASB) issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. MAP is required to adopt provisions of this pronouncement during the year ended September 30, 2009, and is currently evaluating the impact.

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