Davis Health System Inc.

“Form 990 will be distributed to all board members. It will be presented and discussed at a board of trustees meeting or a finance committee meeting, whichever occurs first after the completion of form 990. If the finance committee meeting is the first to occur, all members of the board of trustees will be encouraged to attend the finance committee meeting where the form 990 will be discussed.”

“The davis health system conflict of interest policy requires that each director, officer and committee member with board delegated powers shall annually sign a statement which affirms the person has received a copy of the conflict of interest policy and reads and understands the policy. Board members complete the statement in january of each year. The conflict of interest statements are reviewed by the executive committee. In addition to board members, senior staff is required to annually prepare a conflict of interest statement.”

“The compensation committee of the board of trustees is responsible for the oversight of the compensation for the senior staff. A consultant (yaffe & company) is engaged who facilitates the annual evaluation process for determining compensation for executives. The consultant coordinates a series of meetings, leads discussions on the chief executive officer's performance evaluation, presents market analysis information for key positions and provides recommendations for salary levels based on the information. The committee makes their decision using the guidance of the consultant. During the two years when yaffe does not assist with a detailed review, comparative wage data is obtained from a yaffe annual survey. The comparative data is reviewed by the compensation committee to establish compensation for executives.”

“The board of trustees adopted a record keeping and disclosure policy in january of 2003. The policy provides for disclosure of corporate and financial records not covered by governmental or contractual agreements. Any request for financial or other corporate documents are submitted to the executive committee of the board of trustees and decisions are made on a case by case basis. The compliance code of conduct policy includes standards relating to conflicts of interest within the organization. This information is shared with the public, being posted on the website in addition to being distributed to all patients admitted to the hospital.”

“Amended 990: the taxpayer recently became aware of the requirement to file form 5471 and schedule f with the form 990 for their foreign captive insurance company. To comply with the informational reporting, the taxpayer is filing an amended 990 tax return to include the missing schedule f and form 5471.”

“Contract fees: program service expenses 0. Management and general expenses 103,636. Fundraising expenses 0. Total expenses 103,636.”

“Net transfers to affiliates -428,333. Equity method gain of subsidiary 980,857.”