Dear Friends in Christ,

We live in an exciting moment in the history of our Local Church. Our recently concluded Archdiocesan Synod highlighted the call to holiness of all the baptized, reaffirmed the responsibility each of us has to spread the Gospel, and called for a renewal of the structures of Church life and governance so that the greatest number of faithful may participate in the decision making and mission of the Church. We approach the future full of hope and nourished by our faith in Christ Jesus. As Pastor of this Local Church, I am especially grateful to all of you for your continued willingness to share your gifts, talents and financial blessings with those in need through your involvement in the various ministries and charitable programs of the Church. Indeed, we begin the implementation of the Synod upon a very firm foundation! As a member of our Local Church, you are entitled to an accounting of the stewardship of the financial resources entrusted to the Church. The Archdiocese, like all other institutions, continues to face financial challenges. We have made every effort to reduce operational expenses and to live within our present fiscal reality. This Financial Summary is offered to assist you in understanding the Archdiocese's Administrative Office finances for Fiscal Year 2003. I am grateful to you for your continued witness to the Gospel and support for our Local Church of Los Angeles. I continue to be particularly gratified by your support for your parishes, schools and our charitable efforts including Together in Mission. Even in these times of stress in the Church, your contributions to parishes and to Together in Mission increased, confirming your confidence in our Local Church. Assuring you of my special prayers as we begin this New Year, I am

Sincerely yours in Christ, Cardinal Roger Mahony Archbishop of Los Angeles January 9, 2004

Introduction
The enclosed statements, shown on page A-2, present the financial results from operations of the Administrative Office of The Roman Catholic Archdiocese of Los Angeles (the "Administrative Office") for the fiscal year ended June 30, 2003 with comparative financial information for fiscal year ended June 30, 2002. The Archdiocese encompasses various institutions and organizations that are fiscally responsible to His Eminence Cardinal Roger M. Mahony, Archbishop of Los Angeles. The accompanying financial statements consist of the accounts of the administrative departments, including the Cathedral of Our Lady of the Angels (which completed construction and opened during the fiscal year) and the Archdiocesan Cemetery and Mausoleum Office (the "Cemeteries"), which consist of 11 cemeteries located in Los Angeles, Santa Barbara and Ventura counties, and the central Administrative Office, located on Wilshire Boulevard in Los Angeles. The parishes and schools are an integral part of the organization, but function as independent operating and accounting entities. Therefore, they are not included in the accompanying financial statements of the Administrative Office of the Archdiocese.

Presentation of the financial information (as summarized from the audited financial statements of the Administrative Office of the Archdiocese) provides the Catholic faithful and other interested parties with an understanding of the administrative and ministerial services of the Archdiocese. This presentation is consistent with how the Archdiocese operates, and is comparable to other dioceses in the Western United States

The financial information includes the Statements of Financial Position and Statements of Activity as of June 30, 2003 and 2002, and the Changes in Net Assets of the Administrative Office for fiscal years ended June 30, 2003 and 2002.

Assets
Total assets increased $21.8 million in fiscal year 2003. The various assets represented include the assets of the Cathedral of Our Lady of the Angels which, effective July 1, 2003, will be reported as a separate entity.

Increases in total assets consisted of a $7.1 million increase resulting from gains and contributions to the Investment Pool, a $16.8 million increase in property, plant and equipment related to parish and school construction (which are included on the Administrative Office's financials until completion), a $2.2 million increase in notes receivable that are primarily Seminary loans which were transferred from the Investment Pool, a $4.9 million increase in Cemetery and Mausoleum accounts receivable, and a net increase in the intangible pension asset of $2.3 million.

The increases in total assets were offset by reductions in cash of $1.0 million and decreases in pledges receivable primarily from the normal collection of $6.2 million Cathedral of Our Lady of the Angels construction pledges. In addition, there was a reduction of $4.3 million related to the Northridge earthquake insurance claims.

Net assets are composed of $78 million restricted by donors and $212 million designated for specific purposes. See the complete financial report for further details.

Liabilities
Total liabilities increased $17.7 million in fiscal year 2003. The primary reasons for the increase relates to more conservative actuarial assumptions in the computation of pension plan obligations (including a decrease in the actuarial discount rate from 7.25% to 6%).

There was an increase in cemetery deferred revenue of $5.4 million resulting from pre-need sales. Notes payable increased by $8.0 million for construction of a new mausoleum at Calvary Cemetery in Los Angeles. Finally, there was also an increase in accounts payable and accrued expenses of $1.4 million and insurances claims reserves of $0.6 million. These increases in liabilities were primarily offset by a reduction of $17.0 million in notes payable resulting from the pay down of short term debt.

Net Assets
Net assets increased $4.1 million during the fiscal year ended June 30, 2003. Included within this increase are transfers of capital and investments associated with the Cathedral. Without these items, net assets would have decreased by $2.6 million, and without the financial activity of the Cathedral included, the net assets of the Administrative Office would have decreased by $8.3 million.

As of June 30, 2003 the ending net asset balance of $290.0 million was comprised of $3.0 million of unrestricted funds, $18.0 million of restricted funds, $191.8 million of Cathedral designated and restricted funds, and $77.1 million of Cemeteries designated funds.

Operating Revenues
The operating revenue of the Administrative Office during fiscal year 2003 amounted to $123.0 million, which is a $27.2 million increase from 2002. The total revenue is comprised of $56.2 million in donations and assessments, $14.5 million in rents, fees and other income, $44.9 million in cemetery sales, and a $7.3 million net investment gain.

The $56.2 million in donations and assessments was an increase of $4.2 million over the prior year, which is comprised of $16.1 million in Cathedral pledge revenue, assessments to parishes of $12.2 million, $13.9 million in Annual Appeal donations through "Together in Mission", $5.9 million in contributions to the Cemeteries and Mausoleum Care Funds (reclassification from Cemetery sales), $2.9 million in restricted construction donations for the benefit of Salesian High School, and $5.2 million in other bequests, collections, and donations.

The $14.5 million in revenues from rents, fees and other sources in fiscal year 2003 reflect an increase of $7.8 million from the previous year. This increase was primarily from Cathedral operations, including $4.5 million in Cathedral mausoleum sales and revenue from parking fees, gift shop revenues, tours and other services provided by the Cathedral in its first year of operations.

The $44.9 million in cemetery sales increased by $3.0 million over the prior year. The change was related to increased pricing and opening of new projects, primarily at Holy Cross Cemetery.

The $7.3 million investment return in fiscal year 2003 corresponds to a loss of $4.8 million in 2002. The investment performance of the Balanced Pool improved from the prior year with an annual return of 3.5% occurring primarily during the last quarter of the fiscal year. The Income Pool rate of return decreased slightly from the prior year with a return of 2.8%. In addition, non-pooled investments appreciated by $2.4 million dollars.

Expenditures
The expenses of the Administrative Office amounted to $125.1 million in 2003, which represents a $12.1 million net increase over fiscal year 2002. This increase consisted of $6.5 million of non-cash items for bad debt, depreciation and actuarially determined pension amounts, $4.2 million in Cathedral operating start up costs (which were offset by related Cathedral revenues), a $2.0 million increase in Cemetery expenses (which were offset by increased Cemetery sales), and $1.9 million in increased administrative expenses including extraordinary legal expenditures.

These expense increases were offset by a decrease of $2.7 million in Pastoral and Evangelization and Social Services costs primarily attributable to $3.2 million in savings from staff reductions and other program cuts implemented during the year.

Subsidies to Affiliated

Organizations
The Administrative Office continued to provide financial assistance to various affiliated entities including certain parishes, elementary schools, seminaries, and The Tidings / Vida Nueva newspapers. During fiscal year 2003, the total assistance to these entities was $10.2 million. Subsidies in this category do not include Together in Mission support.

Annual Appeal
(Together in Mission)
Together in Mission appeal also collects and disburses subsidy funds through the Administrative Office for parishes and elementary schools in economically disadvantaged areas of the Archdiocese. The Together in Mission collection is restricted and all the funds net of administrative costs related to administering the collection are distributed as a subsidy.

Seminaries
The Archdiocese continued to fund the operating deficits of both the St. John Seminary College and Theologate during 2003. The funding has been recorded as loans on the Statement of Financial Position of the Administrative Office. These loans have been fully reserved. Funding for both institutions during 2003 was approximately $5.0 million. During fiscal year 2003 St. Johns' Seminary College was closed. Once the remaining students graduate, operations of the college will cease permanently.

High Schools
During fiscal year 2003 the Administrative office provided $3.3 million in subsidy to nine Archdiocesan high schools. Included in this is limited funding from foundations through the Administrative Office on an annual basis.

The Tidings / Vida Nueva
Subsidy to The Tidings and Vida Nueva during fiscal year 2003 amounted to $915,000.