Order of Saint Benedict of New Hampshire SAINT ANSELM COLLEGE. Financial Statements June 30, 2007

Transcription

1 SAINT ANSELM COLLEGE Financial Statements June 30, 2007

2

3

4 Statements of Financial Position Assets: Cash and cash equivalents $ 5,672,509 $ 6,941,880 Accounts receivable less allowances of $135,000 in 2007 and $140,000 in ,858, ,235 Federal grants receivable 254, ,619 Contributions receivable less allowances of $243,900 in 2007 and $253,400 in ,804,500 2,913,800 Investments 93,642,988 79,138,638 Inventory and prepaid expenses 1,578,166 1,446,343 Student loans receivable 4,586,928 4,491,287 Asset from interest rate swap 493, ,118 Funds held under bond agreement 1,794,515 1,814,407 Real estate investments 6,670,349 6,669,854 Real estate investments with life estates 1,544,000 1,544,000 Land and buildings 74,008,412 71,110,251 Equipment and library resources 5,391,197 6,421,599 Bond issuance costs 2,203,959 2,309,924 Total assets $ 202,504,668 $ 186,296,955 Liabilities and Net Assets: Liabilities: Accounts payable and accrued expenses $ 4,394,474 $ 3,725,810 Advance tuition and student deposits 1,519,076 2,264,752 Other liabilities and annuity obligations 743, ,330 US government grants refundable 4,444,576 4,408,474 Bonds payable 48,310,000 49,355,000 Total liabilities 59,411,310 60,559,366 Net assets: Unrestricted: From operations 2,254,577 1,943,554 From interest rate swap 493, ,118 Real estate investment fund 6,670,349 6,669,854 Student loan funds 554, ,794 Retirement of indebtedness fund 1,794,515 1,814,407 Functioning as unexpended plant 1,787,250 2,339,596 Functioning as endowment 46,787,653 39,752,269 Net investment in plant 33,293,568 30,486,774 Total unrestricted 93,635,996 84,133,366 Temporarily restricted 36,828,345 29,500,156 Permanently restricted 12,629,017 12,104,067 Total net assets 143,093, ,737,589 Total liabilities and net assets $ 202,504,668 $ 186,296,955 See accompanying notes. 2

5 Statement of Activities Year Ended June 30, 2007 Temporarily Permanently Unrestricted Restricted Restricted Total Operating revenues: Tuition and fees $ 50,638,955 $ $ $ 50,638,955 Less: Scholarships and financial aid-college (19,682,272) (19,682,272) Federal financial aid (263,325) (263,325) Net tuition and fees 30,693,358 30,693,358 Federal grants and contracts 1,739,020 1,739,020 Private gifts, grants and contracts 2,002,623 2,002,623 Investment income - short-term 604, ,884 Sales and services of auxiliary enterprises 18,637,590 18,637,590 Other sources 233, ,570 Net assets released from restrictions 2,414,855 2,414,855 Total revenues, gains and other support 56,325,900 56,325,900 Operating expenses: Instruction 18,083,604 18,083,604 Academic support 4,383,086 4,383,086 Student services 9,768,628 9,768,628 Institutional support 10,838,969 10,838,969 Auxiliary enterprises 10,474,681 10,474,681 Total 53,548,968 53,548,968 Increase in net assets from operations 2,776,932 2,776,932 Nonoperating activities: Gifts 619,146 1,504, ,477 2,651,726 Investment income 825, ,365 1,681,702 Realized and unrealized gains on investments 6,796,625 6,308,857 13,105,482 Nonoperating expenses (10,995) (384,789) (3,527) (399,311) Net loss on interest rate swap (91,557) (91,557) Gain on sale of assets 45,650 45,650 Net assets released from restrictions (1,458,508) (956,347) (2,414,855) Total nonoperating activities 6,725,698 7,328, ,950 14,578,837 Increase in net assets 9,502,630 7,328, ,950 17,355,769 Net assets at beginning of year 84,133,366 29,500,156 12,104, ,737,589 Net assets at end of year $ 93,635,996 $ 36,828,345 $ 12,629,017 $ 143,093,358 See accompanying notes. 3

6 Statement of Activities Year Ended June 30, 2006 Temporarily Permanently Unrestricted Restricted Restricted Total Operating revenues: Tuition and fees $ 48,616,954 $ $ $ 48,616,954 Less: Scholarships and financial aid-college (18,390,656) (18,390,656) Federal financial aid (257,812) (257,812) Net tuition and fees 29,968,486 29,968,486 Federal grants and contracts 1,629,053 1,629,053 Private gifts, grants and contracts 2,365,036 2,365,036 Investment income - short-term 390, ,002 Sales and services of auxiliary enterprises 17,148,147 17,148,147 Other sources 273, ,329 Net assets released from restrictions 1,867,040 1,867,040 Total revenues, gains and other support 53,641,093 53,641,093 Operating expenses: Instruction 17,319,254 17,319,254 Academic support 7,194,423 7,194,423 Student services 6,102,889 6,102,889 Institutional support 9,080,593 9,080,593 Auxiliary enterprises 11,085,043 11,085,043 Total 50,782,202 50,782,202 Increase in net assets from operations 2,858,891 2,858,891 Nonoperating activities: Gifts 145, , ,347 1,588,144 Investment income 1,073,905 1,003,107 2,077,012 Realized and unrealized gains on investments 3,108,441 2,853,329 5,961,770 Nonoperating expenses (169,444) (1,140,204) (1,309,648) Net gain on interest rate swap 1,601,789 1,601,789 Gain on sale of assets 46,900 46,900 Net assets released from restrictions (73,100) (2,034,728) 240,788 (1,867,040) Total nonoperating activities 5,734,127 1,242,665 1,122,135 8,098,927 Increase in net assets 8,593,018 1,242,665 1,122,135 10,957,818 Net assets at beginning of year 75,540,348 28,257,491 10,981, ,779,771 Net assets at end of year $ 84,133,366 $ 29,500,156 $ 12,104,067 $ 125,737,589 See accompanying notes. 4

7 Statements of Cash Flows Years Ended Cash flows from operating activities: Change in net assets $ 17,355,769 $ 10,957,818 Add items providing cash or not requiring cash: Depreciation and amortization 3,814,748 3,753,032 Decrease in accounts receivable 21,929 Decrease in contributions receivable 109,300 1,370,900 Decrease in student loans receivable 180,077 Decrease in funds held under bond agreement 19,892 Decrease in asset for interest rate swap 91,557 Increase in accounts payable and accrued expenses 668,664 Increase in advance tuition and student deposits 22,103 Increase in other liabilities and annuity obligations 24,788 Increase in government grants refundable 36,102 Deduct items requiring cash or not providing cash: Gain on sale of fixed assets (45,650) (46,900) Realized and unrealized gain on investments (13,105,482) (5,961,770) Increase in accounts receivable (1,049,493) Increase in federal grants receivable (154,237) (5,576) Increase in inventory and prepaid expenses (131,823) (239,765) Increase in student loans receivable (95,641) Increase in funds held under bond agreement (147,102) Increase in real estate investments (495) (13,085) Decrease in accounts payable and accrued expenses (346,673) Decrease in advance tuition and student deposits (745,676) Decrease in other liabilities and annuity obligations (62,146) Decrease in liability for interest rate swap (1,601,789) Decrease in government grants refundable (33,303) Total adjustments (10,650,380) (3,023,134) Net cash provided by operating activities 6,705,389 7,934,684 Cash flows from investing activities: Purchases of fixed assets (5,576,542) (4,957,302) Purchases of investments (1,398,868) (1,437,988) Proceeds from sale of fixed assets 45,650 48,900 Net cash used by investing activities (6,929,760) (6,346,390) Cash flows from financing activities Payments on bonds and notes (1,045,000) (775,000) Net cash used by financing activities (1,045,000) (775,000) Net increase (decrease) in cash and cash equivalents (1,269,371) 813,294 Cash and cash equivalents at beginning of year 6,941,880 6,128,586 Cash and cash equivalents at end of year $ 5,672,509 $ 6,941,880 Supplemental disclosures: Cash paid for interest $ 2,216,392 $ 2,168,404 See accompanying notes. 5

8 1. Organization is a Catholic liberal arts college in the Benedictine tradition. 2. Summary of Significant Accounting Policies Basis of Presentation: The significant accounting policies of (the College) are described below to enhance the usefulness of the financial statements to the reader. The accompanying financial statements have been reported in compliance with the provisions of the Statement of Financial Accounting Standards No. 117 (FASB 117), Financial Statements for Not-for-Profit Organizations by the Financial Accounting Standards Board. The financial statements of the College have been prepared on the accrual basis of accounting. The Statement of Financial Position summarizes the assets, liabilities, and net assets of the College. As required by FASB 117, net assets are recorded in three categories - unrestricted, temporarily restricted, and permanently restricted. These categories represent a consolidation of funds maintained by the College to meet various fiduciary requirements. The unrestricted net asset category has been expanded on the Statement of Financial Position to provide additional information as to the nature of the underlying net assets. The Statement of Activities provides relevant information about the changes in net assets for all operations of the College. It summarizes (a) the effects of transactions and other events and circumstances that change the amount and nature of net assets, (b) the relationships of those transactions and other events and circumstances to each other, and (c) how the College s resources are used in providing various programs and services. The Statement of Cash Flows provides information about the cash receipts and cash disbursements of the College for the reporting period. Contributions: The College records contributions in accordance with Statement of Financial Accounting Standards No. 116 (FASB 116), Accounting for Contributions Received and Contributions Made. Contributions are recorded at fair market value at the time of the transfer. Transactions reported as contributions represent transfers to the College of cash or other assets or the cancellation of its liabilities in a nonreciprocal transfer. Promises to give are recognized when the donor makes a pledge to the College that is in substance, unconditional. Conditional promises to give, which depend on the occurrence of a specified future and uncertain event to bind the promisor, are recognized only when the conditions are substantially met. The contributions and promises to give are classified as unrestricted, temporarily restricted or permanently restricted depending on the existence or nature of any donor imposed restrictions. The College has adopted the policy of reporting contributions whose restrictions are met in the same reporting period as unrestricted revenues. 6

9 2. Summary of Significant Accounting Policies (continued) Investments: The College reports investments at market value in accordance with the Statement of Financial Accounting Standards No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations. The value of securities listed on a national exchange are based upon quoted market prices and net asset values. The value of securities that represent interests in partnerships or other nonmarketable securities for which there are no market quotations available are valued by the managers of those entities and reviewed by management. The majority of alternative investments are carried at estimated fair value provided by the management of the alternative investment partnerships or funds. The College believes that the carrying value of its alternative investments is a reasonable estimate of fair value as of. As alternative investments are not readily marketable, the estimated value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for the investments existed and such differences could be material. Purchases and sales of investments are recorded on a trade date basis. Gains or losses from the sale of investment securities are computed on the specific identification cost basis, or for pooled funds, on the average cost basis. Derivative Instruments: In accordance with the Statement of Financial Accounting Standards No. 138, Accounting for Derivative Instruments and Hedging Activities, the College has disclosed the Derivative Instrument's fair value and changes therein in the College's financial statements. Endowment Spending Policy: Under the College's endowment spending policy, 4% of the trailing 3- year average of market value of qualifying endowment investments at June 30 are appropriated for current operations. Income Taxes: The College is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code. Cash and Cash Equivalents: The College considers all highly liquid short-term investments with an original maturity of three months or less to be cash equivalents. Inventory: Inventory, which consists of food, beverages and supplies, is stated at the lower of cost or market as determined on a first-in, first-out basis. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Reclassifications: Certain accounts from the financial statements for the year ended June 30, 2006 have been reclassified to conform to the financial statements for the year ended June 30,

10 3. Investments Investments, which are reported at market value, consist of the following: Equities $ 70,956,983 $ 58,185,536 Fixed income 16,706,858 15,757,784 Alternative assets - hedge funds 5,914,737 4,961,115 Cash and cash equivalents 64, ,203 Total investments $ 93,642,988 $ 79,138,638 Investments are allocated among the various funds as follows: Unrestricted fund $ 46,795,339 $ 42,214,020 Temporarily restricted fund 34,218,632 24,820,551 Permanently restricted fund 12,629,017 12,104,067 Total investments $ 93,642,988 $ 79,138, Contributions Receivable Contributions receivable are presented below. A discount to present value and an allowance for uncollectible contributions is computed to reflect the time value of promises and an estimate for uncollectibility. The discount and allowance total 12% for 2007 and Receivable in less than one year $ 1,272,787 $ 1,231,799 Receivable in one to five years 2,076,933 2,174,754 Receivable in more than five years 100,000 Total unconditional promises to give 3,349,720 3,506,553 Less discount to present value and allowance for uncollectible contributions (545,220) (592,753) Net contributions receivable $ 2,804,500 $ 2,913,800 8

11 5. Bonds Payable New Hampshire Health and Education Facilities Authority: (A) 1998 Series $ 14,585,000 $ 15,130,000 (B) 1999 Series 7,500,000 7,500,000 (C) 2004 Series 26,225,000 26,725,000 Total bonds payable $ 48,310,000 $ 49,355,000 (A) 1998 SERIES BONDS PAYABLE TO THE NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY, dated March 1, 1998, in the following amounts; Serial Bonds in the amount of $5,185,000 with interest rates ranging from 3.95% to 4.45%, maturing serially from July 1, 2000, through July 1, 2011; Term Bonds of $5,865,000 with interest payable at 5.0% maturing July 1, 2018; Term Bonds of $5,595,000 with interest payable at 5.0% maturing July 1, Bond issuance and insurance costs totaling $937,447 were capitalized and are being amortized on a straight-line basis over the 25 year repayment term of these bonds. (B) 1999 SERIES BONDS PAYABLE TO THE NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY, dated March 1, 1999; Term Bonds of $7,500,000 with interest payable at 5.15% maturing July 1, Bond issuance and insurance costs totaling $461,916 were capitalized and are being amortized on a straight-line basis over the year repayment term of these bonds. (C) 2004 SERIES BONDS PAYABLE TO THE NEW HAMPSHIRE HEALTH AND EDUCATION FACILITIES AUTHORITY, dated March 15, 2004; Auction Rate Bonds in the amount of $27,525,000 with principal payable serially on July 1 at varying scheduled amounts to maturity on July 1, 2032; interest payable at a variable auction rate determined for successive 35-day auction periods. The College simultaneously entered into an interest rate swap agreement to fix the interest rate. Interest rates on 2004 Series Bonds Payable are as follows: Auction interest rate 3.830% 3.550% Fixed interest rate under swap agreement 3.480% 3.480% Credit for 67% of Libor Rate under swap agreement % % Net interest rate on 2004 Series Bonds Payable 3.746% 3.606% Bond issuance and insurance costs totaling $1,489,505 were capitalized and are being amortized on a straight-line basis over the 28 year repayment term of these bonds. 9

12 5. Bonds Payable (continued) Bonds payable maturing in the next five years are as follows: Year Ending June 30, 2008 $ 1,165, ,120, ,275, ,255, ,360,000 $ 6,175,000 The estimated fair value of the College's total indebtedness was substantially equivalent to its carrying value as of June 30, Investment in Plant The College's policy is to capitalize expenditures for significant acquisitions of real estate, equipment and library resources, and bond issue costs, which are presented at cost less depreciation and amortization. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. Bond issue costs are being amortized over the term of the bonds. The original cost and accumulated depreciation and amortization for the property, equipment and bond issue costs are as follows: Real estate $ 98,473,384 $ 94,210,183 Less accumulated depreciation (24,464,972) (23,099,932) Net book value $ 74,008,412 $ 71,110,251 Equipment and library resources $ 22,107,614 $ 20,973,774 Less accumulated depreciation (16,716,417) (14,552,175) Net book value $ 5,391,197 $ 6,421,599 Bond issue costs $ 2,888,868 $ 2,888,868 Less accumulated amortization (684,909) (578,944) Net book value $ 2,203,959 $ 2,309,924 Depreciation and amortization expense for the years ended is $3,814,748 and $3,753,032, respectively. 10

13 7. Physical Facilities Costs Allocated The costs associated with the physical plant, depreciation, and interest on indebtedness are allocated to functional categories as follows: Instruction $ 3,035,050 $ 2,896,587 Academic support 1,257,520 1,212,614 Student services 2,242,700 2,108,879 Institutional support 4,104,347 3,796,241 Auxiliary enterprises 2,302,544 2,305,496 Total allocations $ 12,942,161 $ 12,319,817 Cost centers allocated are: Operation of plant $ 6,979,032 $ 6,372,983 Interest on indebtedness 2,148,381 2,193,802 Depreciation and amortization 3,814,748 3,753,032 $ 12,942,161 $ 12,319, Pensions The College has a tax-sheltered contributory pension plan administered by Teachers Insurance and Annuity Association of America (TIAA), College Retirement Equities Fund (CREF) and Mutual of America for its personnel. The 2007 and 2006 pension costs under all the plans amounted to approximately $1,174,587 and $1,031,202, respectively. There are no unfunded prior service costs under these plans. 9. Derivative Instruments In conjunction with the College's issuance of variable rate bonds, 2004 Series, payable to the New Hampshire Health and Education Facilities Authority, the College entered into an interest rate swap agreement with a financial institution counterparty. The purpose of the agreement is to swap the variable rate on the bonds for a fixed rate of 3.48% for the term of the bonds, and not for any speculative purposes. Under FASB 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities the swap agreement's fair value and changes therein must be included in the College's financial statements. These values represent the estimated cost to the College to cancel the swap agreement at June 30. The value of the swap agreement is reported as an asset of $493,561 and $585,118 at, respectively. These values are based on interest rate pricing models and other market factors. The swap agreement's fair value at subsequent reporting dates will be affected by interest rate volatility. The value of the swap agreement will reach zero at the final scheduled maturity of the bonds. The changes in fair value of the swap agreement for the years ended are reported as gains and losses on the statement of activities. 11

14 10. Advance Refunding of Debt New Hampshire Health and Education Facilities Authority, Series 2004 Bonds: On March 15, 2004 the proceeds of the Series 2004 Bonds were utilized to redeem and defease the following bond issue. The Series 1996 Bonds in the amount of $13,070,000 were advance refunded by depositing $14,627,687 in an irrevocable trust with escrow agents to pay all future principal and interest payments through July 1, 2006 and to redeem all outstanding Series 1996 Bonds on July 1, 2006 at 102% of the outstanding principal balance. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the College's financial statements. New Hampshire Health and Education Facilities Authority, Series 1998 Bonds: On March 31, 1998, the College advance refunded $13,830,000 of the Series 1993 Bonds, by placing the proceeds of the new Series 1998 Bonds in an irrevocable trust with escrow agents to provide for all future debt service payments on the defeased bonds. The defeased bonds are payable on July 1, 2013 and July 1, 2023 in the amounts of $4,865,000 and $8,695,000 respectively. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the College's financial statements. The Series 1993 and Series 1996 Bonds are no longer deemed to be outstanding under the Bond Indenture. 11. Endowment Income, Rowell Charitable Remainder Trust The College is a one-half beneficiary of the Annie L. Rowell Charitable Remainder Trust. The Trust is required to distribute a percentage of its income quarterly to the College and one other charitable entity. The Trust will continue to pay all income in equal shares until only one charitable entity remains qualified under Sec. 170C of the Internal Revenue Code. Upon that occurrence, all assets are to be distributed to the remaining tax exempt entity and this Charitable Trust terminates. As the College has no present interest in the trust corpus, the assets of the Trust are not reported as an endowment fund. The Trust distribution of income to the College is reported as endowment income. The income distribution for the years ended is $146,251 and $133,250 respectively. The College s one half beneficial interest at fair market value is $3,079,540 and $2,778,369 at, respectively. 12

15 12. Liability for Gate Student Loans Financed with Recourse The College participates in the "Gate Student Loan Program" where the College receives loan proceeds for tuition owed by students. The College is liable to repay a portion of these loans to the National Collegiate Trust if the student defaults on the loan. The loans outstanding as of June 30, 2007 totaled $11,184,401 of which $7,287,483 are in repayment status. The loans outstanding as of June 30, 2006 totaled $10,513,309 of which $6,242,748 were in repayment status. The College has recorded a liability for Gate student loans financed with recourse of $78,000 and $60,000 at, respectively. 13