U.S. - Japan Council
Financial Statements For The Year Ended
December 31, 2011 and Independent
Auditors' ReportINDEPENDENT AUDITORS’ REPORTBoard of Directors
U.S.-Japan Council
We have audited the accompanying statement of financial position of U.S.-JapanCouncil (a nonprofit corporation) as of December 31, 2011, and the related
statements of activities, cash flows and functional expenses for the year 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 audit.
We conducted our audit in accordance with auditing standards generally accepted in
the United States. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. 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 bymanagement, as well as evaluating the overall financial statement presentation. We
believe that our audit provides 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 U.S.-Japan Council at December 31, 2011, and thechanges in its net assets and cash flows for the year then ended in conformity withaccounting principles generally accepted in the United States.

March 19, 2012

U.S.-JAPAN COUNCIL
STATEMENT OF FINANCIAL POSITIONDECEMBER 31, 2011ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Time certificates of deposit
Grants and pledges receivable
Receivables, otherPrepaid expenses
Total current assets
PROPERTY AND EQUIPMENT, net ofaccumulated depreciation

Notes

222$

2,3

TOTAL ASSETS

Temporarily
Restricted

Unrestricted

1,006,560
20,25658,350490
16,498
1,102,154$

721,536

Total$

750,000

1,471,536

6,297$

1,108,451$

5,981
98,634
2,852
21,263625,000
753,730

1,728,096
20,256808,350490
16,4982,573,690

6,297$

1,471,536$

2,579,987$

5,981
98,634
2,852
21,263625,000
753,730

LIABILITIES AND NET ASSETSCURRENT LIABILITIES:Accounts payable
Deferred revenue
Accrued expenses
Accrued vacation
Earthquake Relief Fund payable
Total current liabilities

22,6COMMITMENTS

5NET ASSETS

2,4,6

TOTAL LIABILITIES AND NET ASSETS

See notes to financial statements.

$354,721$

1,471,536

1,108,451$

1,471,536

1,826,257$

2,579,987

U.S.-JAPAN COUNCIL
STATEMENT OF ACTIVITIESFOR THE YEAR ENDED DECEMBER 31, 2011

Notes
SUPPORT AND REVENUE:
Support:Grant and pledge income
Earthquake Relief FundDonations
Revenue:
Programs
TOMODACHIInterest income
In-kind contributions
Net assets released from restriction:
Restriction satisfied by performance
Total support and revenue

262

Temporarily
Restricted

Unrestricted$

33,5201,916,360
440,277

Total

$
$

647,946

758,416
6

758,416
837,187
2,914
22,365

837,187
2,914
22,365(27,753)
1,457,380

4,658,985

1,069,847
1,916,360
73,69551,586
3,111,488

0

1,069,847
1,916,360
73,69551,586
3,111,488

Change in net assets

90,117

1,457,380

1,547,497

NET ASSETS, JANUARY 1, 2011

264,604

14,156

278,760

FUNCTIONAL EXPENSES (see statement of functional expense):
Program services
Earthquake Relief FundManagement and generalFundraising
Total functional expenses

NET ASSETS, DECEMBER 31, 2011

See notes to financial statements.

227,753
3,201,605

33,5202,564,306
440,2776$

354,721$

1,471,536$

1,826,257

U.S.-JAPAN COUNCIL
STATEMENT OF CASH FLOWSFOR THE YEAR ENDED DECEMBER 31, 2011
INCREASE IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Increase in net assets
Adjustments to reconcile increase in net assets to net cash
provided by operating activities:
Depreciation and amortization
Changes in:
Grants and pledges receivable
Receivable, otherPrepaid expenses
Deposits
Accounts payable
Deferred revenue
Accrued expenses
Accrued vacations
Earthquake Relief Fund payable
Net cash provided by operating activities$

1,547,497

2,309(803,850)(490)(9,680)3,300(13,089)
73,634
1,691
9,731
625,000
1,436,053

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in time certificates of deposit
Purchase of property and equipment
Net cash used in investing activities(10,077)(8,214)(18,291)

NET INCREASE IN CASH AND CASH EQUIVALENTS

1,417,762

CASH AND CASH EQUIVALENTS, JANUARY 1, 2011

310,334

CASH AND CASH EQUIVALENTS, DECEMBER 31, 2011

See notes to financial statements.

$1,728,096

U.S.-JAPAN COUNCILNOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2011

1. GENERALThe U.S.-Japan Council (USJC) is a nonprofit, public benefit corporation incorporated in thestate of California in December 2008 to promote people-to-people relations on national andcommunity levels between the United States of America and Japan. The USJC has offices in
Washington, DC and Los Angeles, California.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe accompanying financial statements have been prepared on the accrual basis ofaccounting in accordance with generally accepted accounting principles.
Recognition of donor restrictions - Contributions received are recorded as unrestricted ortemporarily restricted support depending on the existence or nature of donor restrictions. The
two net asset classes are based solely on the existence or absence of donor-imposedrestrictions. Amounts that are received for future periods or restricted by the donor for specificpurposes are reported as temporarily restricted or permanently restricted support that
increases these net asset classes. However, if a restriction is fulfilled in the same time period
in which the contribution is received, the USJC reports the support as unrestricted.
a. Permanently restricted net assets result from contributions whose use is limited bydonor-imposed stipulations that neither expire by the passage of time nor can befulfilled or otherwise removed by USJC's actions. USJC currently has no permanently
restricted net assets.
b. Temporarily restricted net assets result from contributions whose use is limited by donorimposed stipulations that either expire by passage of time or can be fulfilled and removedby actions of USJC pursuant to these stipulations. The net assets may be temporarily
restricted for various purposes, such as use in future periods or use for specific purposes.
USJC currently has a temporarily restricted net asset balance of $1,471,536 which includes$721,536 of cash and cash equivalents (Earthquake Relief Fund and TOMODACHI) and$750,000 of pledges receivable (TOMODACHI).
c. In the absence of donor-imposed restrictions, net assets are classified as unrestricted.
Cash and cash equivalents - USJC considers highly liquid investments with a maturity of threemonths or less when purchased to be cash equivalents. USJC maintains its cash in bankdeposit accounts which, at times, may exceed the federally insured limits. USJC believes it is
not exposed to any significant credit risk on these cash deposits.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property and equipment - Property and equipment are stated at cost or, if donated, at theapproximate fair value at the date of donation. Depreciation is determined on the straight-line
method over the estimated useful lives of the assets. Repairs and maintenance are charged
as expense when incurred.
Income taxes - The Internal Revenue Service has classified the organization as exempt fromfederal income taxes under Section 501(c)(3) of the Internal Revenue Code. Under the statuteof limitations, USJC is open to examination by the Internal Revenue Service for the years
ended December 31, 2009 through December 31, 2011.
Deferred revenue - Deferred revenue represents temporarily restricted funds received fromgrantors and foundations that are received in advance and will benefit subsequent periods.
Functional expenses - USJC allocates its expenses on a functional basis among its various
programs and support services. Expenses that can be identified with a specific program andsupport service are allocated directly according to their natural expenditure classifications.
Other expense that are common to several functions are allocated by direct labor costs.
In-kind contributions - The Terasaki Foundation provided the Los Angeles office space to theUSJC during the year. Based on fair market value provided by the Terasaki Foundation,
approximately $7,100 of in-kind donations are included in revenues and expenses in thefinancial statements. In-kind donations also includes donations of other rental space, food andbeverages for meetings and receptions.
Use of estimates - Management uses estimates and assumptions in preparing its financialstatements. Those estimates and assumptions affect the reported amounts of assets andliabilities, the disclosure of contingent assets and liabilities, and the reported public support
revenues and expenses. Actual results could differ from those estimates and assumptions.
Fair value of financial instruments - The carrying amounts of cash and cash equivalents,
receivables, accounts payable, and accrued expenses approximate fair value because of theshort maturities of these instruments.

3. PROPERTY AND EQUIPMENT
The major classes of property and equipment and the estimated useful lives in computing
depreciation are as follows:

Office equipment
Less accumulated depreciation$Amount
8,848
2,551

$

6,297

Lives
3 yearsDepreciation expense for property and equipment amounted to $2,309 for the year.

4. RESTRICTIONS ON NET ASSETS
Temporarily restricted net assets are available for the following purposes (see note 6):
Earthquake Relief FundTOMODACHI$647,946
823,590$ 1,471,536

5. COMMITMENTS
The USJC has a noncancelable lease for its office facilities which expires May 2014. Rent
expense for the year amounted to $64,249, which includes $7,142 of donated office space.
The minimum future rental follows:Year ended December 31,2012
2013
2014Amount$73,555
75,39431,737$180,686

6. SUBSEQUENT EVENTS
Earthquake Relief Fund
The USJC responded to the March 11, 2011 Great East Japan Earthquake by establishing theU.S.-Japan Council Earthquake Relief Fund (EQRF). The USJC Board of Directors (BOD)
approved 100 percent distribution of the contributions to support immediate relief efforts andlonger term rebuilding in the devastated region of Tohoku, Japan. $2,564,306 was collected
as of December 31, 2011. The BOD approved commitments of $1,916,360 to qualified NonProfit Organizations or Non-Governmental Organizations that supported relief and rebuilding
efforts. The total distribution as of December 31, 2011 was $1,291,360, with a balance of$625,000 payable.
Subsequent contributions of $9,732 were received by the EQRF in 2012. The remainingbalance of the EQRF and any additional contributions received will be designated with BOD
approval for distribution by December 31, 2012.

6. SUBSEQUENT EVENTS (Continued)
TOMODACHIIn Fall 2011, the USJC and the U.S. Embassy in Tokyo, with the support of the government ofJapan, formed a public-private partnership, TOMODACHI, to aid in the long-term recovery ofJapan. TOMODACHI raises funds from U.S. and Japanese donors that will invest in the next
generation of Japanese and Americans to strengthen cultural and economic ties, and deepen
the friendship between the U.S. and Japan over the long-term. The USJC is administering theTOMODACHI initiative in collaboration with numerous public and private entities.
TOMODACHI will be supported by USJC staff in Tokyo and in the U.S.
A Private Benefit Organization (PBO) corporation, U.S.-Japan Council (Japan) was formed inTokyo, Japan in March 2012. The Japanese organization is a separate legal entity andgoverned by executive board members independent of the USJC. The Japanese organization
will collaborate with USJC in supporting the TOMODACHI initiative.
$837,187 in contributions was received and $13,597 was expensed for TOMODACHI as ofDecember 31, 2011. Subsequent commitments of approximately $5,400,000 have been
received in 2012.

U.S.-JAPAN COUNCIL
STATEMENT OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2011
ProgramServices
Earthquake
Programs
Relief FundSalaries
Payroll taxes
Employee benefits
Programs and events$407,80430,482
23,223442,848

Management
And General$$

49,133
3,672
2,798

Fundraising$

34,393
2,571
1,958

Total
$

1,916,360

491,330
36,72527,9792,359,208

Program consultant
Depreciation
Fees
Insurance

15,311
1,916
13,618
5,325

231
1,641
641

162
1,148
449

15,311
2,309
16,407
6,415

Meetings
Office expenses
Printing
Professional services

5,260
8,959
11,887
11,780

634
1,080
1,432
1,419

444
755
1,003
994

6,338
10,794
14,322
14,193

Rent
Supplies
Taxes and licenses
Telephone and internet

53,327
8,603
825
14,043

6,425
1,036
99
1,691

4,497
725
69
1,184

64,24910,364993
16,918Training
Travel3,491
11,145

420
1,343

294
940

4,205
13,428TOTAL$

See notes to financial statements.

1,069,847$

1,916,360$

73,695$51,586$

3,111,488