Phoenix House Foundation Inc.

“Agency funds consist principally of amounts received from government agencies, clients and others attributable and payable to specific individuals in both Phoenix House Foundation and its New York Affiliate's programs. Unexpended funds are to be returned to the respective agencies, clients or grantors.”

“Phoenix House Foundation adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. This policy permits the use of 5.5% annually of the average endowment investment portfolio's fair value based on its total return over the previous 20 quarters.”

“Phoenix House Foundation, Inc. financial information is reported in the consolidated financial statements of its parent, Phoenix House. The following FIN 48 footnote is from the Phoenix House and Affiliates ("PH&A") consolidated financial statements.PH&A follows guidance that clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition and measurement. This guidance provides that the tax effects from an uncertain tax position can only be recognized in the financial statements if the position is "more-likely-than-not" to be sustained if the position were to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged.PH&A is exempt from federal income tax under IRC section 501(c)(3), though it is subject to tax on income unrelated to its exempt purpose, unless that income is otherwise excluded by the Code. PH&A has processes presently in place to ensure the maintenance of its tax-exempt status; to identify and report unrelated income; to determine its filing and tax obligations in jurisdictions, for which it was nexus; and to identify and evaluate other matters that may be considered tax positions. PH&A has determined that there are no material uncertain tax positions that require recognition or disclosure in the consolidated financial statements.Part X- Other LiabilitiesConditional Asset Retirement Obligations are legal obligations associated with the retirement of long-lived assets. These include costs associated with the eventual remediation and abatement of asbestos utilized within the construction of certain of its facilities, and were initially recorded at fair value along with the related assets by the same amount as the liability.”

“Admin. Costs Allocated to Affiliates $8046000 Change in int of net assets of affiliate $-551170”

“Admin. Costs paid by Affiliates $8046000”