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' a Hos ital Inc . and Subsidiaries Indian River Memori , 1 p , Notes to Consolidated Financial Statements For the Years Ended September 30 , 2002 and 20) 1 Functional Expenses The Hospital does not present expense information by functional classification because its resources and activities are primarily related to providing health care services. Further, since the Hospital received substantially all of its resources from providing health care services in a manner similar to a business enterprise, other indicators contained in these financial statements are considered important in evaluating how well management has discharged their stewardship responsibilities. Donor Restricted Gifts -- - Unconditional promises to give cash and other assets to the Hospital are reported at fair value - at the date the promise is received. Conditional promises to give - and intentions to give are reported at fair value at the date the gift is received The gifts are reported as Either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified as unrestricted net assets and reported in the statement of operations as net assets released. from restrictions . Donor-restricted contributions whose restrictions are met within the same year as received are reported as unrestricted contributions in the , - accompanying financial statements. Estimated Professional Liability, Workers ' Compensation and Health Insurance Costs The provision for professional liability, workers' compensation and health insurance claims - includes estimates of the ultimate costs for both reported claims and claims incurred but not reported - Income Taxes - - IRMH is a not-for-profit corporation and has been recognized as atax-exempt organization by the Internal Revenue Service pursuant to Section 501 (c) (3 ) of the Internal Revenue Code (the "Code") . Income earned in furtherance of IRH' s tax-exempt purpose i Ms exempt from ( federal and state income taxes. The Code provides for taxation of unrelated business income R - under certain circumstances . Mhffl has no material unrelated business income; however, such status is subject to final determination upon examination of the related income tax returns by the appropriate taxing authority. Reclassifications Certain amounts in the 2001 consolidated fitiancial statements have been reclassified to conform to the 2002 presentation. These reclassifications had no effect on net assets or change in net assets. - 12 -