$33,210,000 Bucks County Industrial Development Authority Revenue Bonds (George School Project) $28,130,000 Series 2013A (Tax-Exempt)

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1 NEW ISSUE - BOOK-ENTRY ONLY Ratings: S&P: AA- Fitch: AA- (See RATINGS herein) In the opinion of Drinker Biddle & Reath LLP, Bond Counsel, under existing laws as presently enacted and construed, interest on the 2013A Bonds (defined herein) is excluded from the gross income of the owners thereof for federal income tax purposes, and interest on the 2013A Bonds will not be a specific item of tax preference for purposes of the individual and corporate federal alternative minimum tax; however, interest on the 2013A Bonds will be included in adjusted current earnings in computing alternative minimum taxable income with respect to certain corporations. Such opinion of Bond Counsel is subject to continuous compliance by the Authority and the School with certain tax covenants contained with respect to the Bonds in the Indenture and the Loan Agreement. In the further opinion of Bond Counsel, under the laws of the Commonwealth of Pennsylvania, the Bonds (defined herein) are exempt from personal property taxes in Pennsylvania, and interest on the Bonds is exempt from Pennsylvania personal income tax and the Pennsylvania corporate net income tax. Interest on the 2013B Bonds (defined herein) is included in the gross income of the owners thereof for federal income tax purposes. For a more complete description of certain federal and state tax consequences of ownership of the Bonds, see CERTAIN TAX MATTERS herein. $33,210,000 Bucks County Industrial Development Authority Revenue Bonds (George School Project) $28,130,000 Series 2013A (Tax-Exempt) Dated: Date of Issuance $5,080,000 Series 2013B (Taxable) Due: September 15, as shown on the inside cover page The $28,130,000 Revenue Bonds (George School Project) Series 2013A (Tax-Exempt) (the 2013A Bonds ) and the $5,080,000 Revenue Bonds (George School Project) Series 2013B (Taxable) (the 2013B Bonds, and together with the 2013A Bonds, the Bonds ) are issuable only as fully registered bonds without coupons, and when issued, will be registered in the name of Cede & Co., as registered owner and nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as a securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form. Purchasers will not receive certificates representing their beneficial ownership interests in the Bonds. Registered owners shall mean Cede & Co., as aforesaid, and shall not mean the actual purchasers of the Bonds. See THE BONDS Book-Entry Only System herein. Principal or redemption price of and interest on the Bonds will be payable through the corporate trust office of The Bank of New York Mellon Trust Company, N.A., as trustee (the Trustee ). So long as DTC or its nominee, Cede & Co., is the registered owner of the Bonds, such payments will be made directly to DTC or its nominee. Disbursements of such payments to the DTC Participants (as defined herein) is the responsibility of DTC, and disbursements of such payments to the actual purchasers is the responsibility of the DTC Participants and Indirect Participants (as defined herein), as more fully described herein. Interest will be paid each March 15 and September 15, commencing September 15, The Bonds are subject to redemption prior to maturity as more fully described herein. See THE BONDS-Redemption. The Bonds are issued pursuant to the Pennsylvania Economic Development Financing Law, Act of August 23, 1967, P.L. 251, as amended (the Act ), a resolution of the Bucks County Industrial Development Authority (the Authority ) and a Trust Indenture, dated as of February 1, 2013 (the Indenture ), between the Authority and the Trustee. The Bonds are limited obligations of the Authority and the principal or redemption price of and interest on the Bonds are payable by the Authority solely from payments to be made by George School (the School ) under a Loan Agreement, dated as of February 1, 2013 (the Loan Agreement ), between the Authority and the School. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED AS PROVIDED IN THE INDENTURE BY AN ASSIGNMENT TO THE TRUSTEE OF ALL THE RIGHT, TITLE AND INTEREST OF THE AUTHORITY IN AND TO THE LOAN AGREEMENT (SUBJECT TO CERTAIN RESERVED RIGHTS) AND ALL PAYMENTS, REVENUES AND RECEIPTS DERIVED BY THE AUTHORITY UNDER AND PURSUANT TO AND SUBJECT TO THE PROVISIONS OF THE LOAN AGREEMENT AND ALL MONIES AND SECURITIES FROM TIME TO TIME HELD IN THE FUNDS AND ACCOUNTS ESTABLISHED UNDER THE INDENTURE (EXCLUDING THE REBATE FUND). NEITHER THE CREDIT NOR THE TAXING POWER OF THE COUNTY OF BUCKS, PENNSYLVANIA (THE COUNTY ), OF THE COMMONWEALTH OF PENNSYLVANIA (THE COMMONWEALTH ) OR OF ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE OF, OR INTEREST ON THE BONDS, NOR SHALL THE BONDS BE OR BE DEEMED TO BE OBLIGATIONS OF THE COUNTY, THE COMMONWEALTH OR ANY OTHER POLITICAL SUBDIVISION THEREOF. THE AUTHORITY HAS NO TAXING POWER. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are offered when, as and if issued by the Authority and received by the Underwriter subject to the approving legal opinion of Drinker Biddle & Reath LLP, Philadelphia, Pennsylvania, Bond Counsel. Certain legal matters will be passed upon for the Authority by its counsel, Begley Carlin & Mandio, LLP, Langhorne, Pennsylvania; for the School by its counsel, Hunt & Ayres, P.C., Philadelphia, Pennsylvania; and for the Underwriter by its counsel, Greenberg Traurig, LLP, Philadelphia, Pennsylvania. It is expected that the Bonds will be available for delivery in definitive form through DTC in New York, New York, on or about February 21, BofA Merrill Lynch This Official Statement is dated February 7, 2013.

2 MATURITY SCHEDULE $33,210,000 BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY Revenue Bonds (George School Project) Consisting of: $28,130,000 Series 2013A (Tax-Exempt) $17,880, % Term Bond due September 15, 2043 (Priced at % to Yield 3.840%) CUSIP * LW8 $10,250, % Term Bond due September 15, 2044 (Priced at % to Yield 3.330%) CUSIP * LX6 $5,080,000 Series 2013B (Taxable) $5,080, % Term Bond due September 15, 2040 (Priced at % to Yield 4.330%) CUSIP * LY4 * The CUSIP numbers listed above are provided by Standard & Poor s, CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc. The CUSIP numbers are being provided solely for the convenience of bondholders only at the time of issuance of the Bonds and neither the Authority nor the School makes any representation with respect to such numbers or undertakes any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. Priced to first optional redemption date of September 15, 2023.

3 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. No dealer, broker, salesman or other person has been authorized by the Authority, the School or the Underwriter to give any information or to make any representations other than those contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Authority, the School and other sources which are believed to be reliable, but, as to information from other sources, is not guaranteed as to accuracy or completeness by the Authority. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the School or with respect to other matters set forth herein since the date hereof or the date as of which particular information is given, if earlier. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with and as part of its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. If and when included in this Official Statement, including the Appendices hereto, the words expects, forecasts, projects, intends, anticipates, estimates, assumes and analogous expressions are intended to identify forward-looking statements and any such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those that have been projected. Such risks and uncertainties which could affect the revenues and obligations of the School include, among others, changes in economic conditions, mandates from other governments and various other events, conditions and circumstances, many of which are beyond the control of the School. Such forward-looking statements speak only as of the date of this Official Statement. The School disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any changes in the School s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. The Bonds are not and will not be registered under the Securities Act of 1933, as amended, and the Indenture has not been qualified under the Trust Indenture Act of 1939, as amended, or under any state securities laws, in reliance upon exemptions contained in such Acts. Neither the Securities and Exchange Commission nor any federal, state, municipal or other governmental agency will pass upon the accuracy, completeness or adequacy of this Official Statement.

4 TABLE OF CONTENTS Page INTRODUCTORY STATEMENT... 1 THE AUTHORITY... 3 THE BONDS... 3 Description of the Bonds... 3 Book-Entry Only System... 4 Redemption... 7 Notice of Redemption... 9 THE SCHOOL... 9 PLAN OF FINANCING... 9 General... 9 ESTIMATED SOURCES AND USES OF PROCEEDS OF THE BONDS SOURCES OF PAYMENT AND SECURITY FOR THE BONDS Limited Obligations Sources of Payment and Security for the Bonds Rate Covenant Other Indebtedness CERTAIN TAX MATTERS Federal Tax Exemption Certain Federal Tax Considerations Continuing Compliance of School and Authority Qualified 501(c)(3) Status of School Bond Audits Future Changes Pennsylvania Tax Matters LEGAL MATTERS NEGOTIABLE INSTRUMENTS LITIGATION FINANCIAL STATEMENTS UNDERWRITING RATINGS SECONDARY MARKET DISCLOSURE Continuing Disclosure Undertaking OTHER MATTERS Appendix A - Information Concerning George School Appendix B - Audited Financial Statements of George School as of and for the Years Ended July 31, 2012 and 2011 Appendix C - Definitions of Certain Terms and Summary of Certain Provisions of the Indenture, the Loan Agreement and the Intercreditor Agreement Appendix D - Proposed Form of Opinion of Bond Counsel Appendix E - Proposed Form of Continuing Disclosure Agreement i

5 OFFICIAL STATEMENT $33,210,000 BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY Revenue Bonds (George School Project) $28,130,000 Series 2013A (Tax-Exempt) Consisting of: $5,080,000 Series 2013B (Taxable) INTRODUCTORY STATEMENT The purpose of this Official Statement of Bucks County Industrial Development Authority (the Authority ), which includes the cover page, inside cover page, Table of Contents and the Appendices, is to furnish certain information concerning the Authority, George School (the School ) and the Authority s issuance of $33,210,000 aggregate principal amount of its Revenue Bonds (George School Project), consisting of (i) $28,130,000 Revenue Bonds (George School Project) Series 2013A (Tax- Exempt) (the 2013A Bonds ) and (ii) $5,080,000 Revenue Bonds (George School Project) Series 2013B (Taxable) (the 2013B Bonds, together with the 2013A Bonds, the Bonds ). The Bonds are being issued pursuant to the Pennsylvania Economic Development Financing Law, Act of August 23, 1967, P.L. 251, as amended (the Act ), a resolution of the Authority adopted on December 6, 2012 (the Resolution) and a Trust Indenture, dated as of February 1, 2013 (the Indenture ), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the Trustee ). Capitalized terms used in this Official Statement and not otherwise defined have the meanings ascribed to them in Appendix C hereto. The School is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), which operates a private boarding and day school for grades nine through twelve, located in Bucks County, Pennsylvania, primarily in the Township of Middletown, Pennsylvania. The School had an enrollment of 278 boarders and 267 day students for the school year. For a further description of the School, see Appendix A - INFORMATION CONCERNING GEORGE SCHOOL attached hereto. At the request of the School, the Authority intends to issue the Bonds to finance a portion of the costs of a project (the Project ), generally consisting of: (i) the construction, acquisition and equipping of an approximately 99,000 square foot fitness and athletic center, including two gymnasiums, a swimming facility, fitness facilities, locker rooms and other athletic and recreational facilities, (ii) other miscellaneous capital improvements and additions to the School s facilities, and (iii) the payment of the costs and expenses of issuing the Bonds. See PLAN OF FINANCING herein. In connection with the issuance of the Bonds, the School and the Authority will enter into a Loan Agreement, dated as of February 1, 2013 (the Loan Agreement ), pursuant to which the Authority will loan the proceeds of the Bonds to the School, and the School will agree to repay directly to the Trustee (as assignee of the Authority s interest in the Loan Agreement) the amounts required to pay the principal or redemption price of and interest on the Bonds and to pay certain administrative expenses of the Authority. The timely payment of all amounts due under the Loan Agreement is a general obligation of the School. To secure its obligations under the Loan Agreement in respect of the Bonds issued under the Indenture and any other Parity Debt incurred by the School as provided by the Loan Agreement, the School has pledged, assigned and granted to the Authority a lien on and a security interest in the School s Unrestricted Revenues defined herein under the caption SOURCES OF PAYMENT AND SECURITY 1

6 FOR THE BONDS-Sources of Payment and Security for the Bonds. See THE LOAN AGREEMENT Pledge of Unrestricted Revenues in Appendix C hereto. The Bonds are secured under the Indenture by the pledge and assignment to the Trustee of all of the Authority s right, title and interest in and to the Loan Agreement (subject to certain Reserved Rights), and all payments, revenues and receipts derived by the Authority under and pursuant to and subject to the provisions of the Loan Agreement, and all moneys and securities from time to time held in the funds and accounts established under the Indenture (excluding the Rebate Fund). See SOURCES OF PAYMENT AND SECURITY FOR THE BONDS. The Authority has previously issued its $16,000,000 original aggregate principal amount Revenue Bonds, Series 2009A (George School Project) (the 2009 Bonds ), all of which is currently outstanding, pursuant to a Trust Indenture, dated as of July 1, 2009 (the 2009 Indenture ), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the 2009 Trustee ), the proceeds of which were loaned to the School for the purpose of financing certain prior capital projects of the School, pursuant to a Loan Agreement, dated as of July 1, 2009 (the 2009 Loan Agreement ), between the Authority and the School. The Authority also has previously issued its $17,920,000 original aggregate principal amount Revenue Bonds, Series 2011 (George School Project) (the 2011 Bonds ), all of which is currently outstanding, pursuant to a Trust Indenture, dated as of March 1, 2011 (the 2011 Indenture ), between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the 2011 Trustee ), the proceeds of which were loaned to the School for the purpose of advance refunding certain prior bonds and financing certain capital projects of the School, pursuant to a Loan Agreement, dated as of March 1, 2011 (the 2011 Loan Agreement ), between the Authority and the School. The 2009 Bonds and the 2011 Bonds will be referred to collectively as the Prior Bonds; and the 2009 Trustee and the 2011 Trustee will be referred to collectively as the Prior Bonds Trustees. The Prior Bonds were secured under their respective indentures by a pledge and assignment to the Prior Bonds Trustees of all the Authority s right, title and interest in and to the respective loan agreements (subject to Reserved Rights), and all payments, revenues and receipts derived by the Authority pursuant to and subject to the provisions of the respective loan agreements, and all moneys and securities from time to time held in the funds and accounts established under the respective indentures. To further secure its obligations in respect of the Prior Bonds, the School pledged and assigned in favor of the Prior Bonds Trustees its Unrestricted Revenues. As permitted under the 2009 Loan Agreement and the 2011 Loan Agreement, the pledge and assignment of the School s Unrestricted Revenues to the Trustee securing the School s payment obligations in respect of the 2013A Bonds and the 2013B Bonds that are the subject of this Official Statement will rank on a parity with the prior pledge and assignment of the School s Unrestricted Revenues in favor of the Prior Bonds Trustees. To provide for the collection and distribution of the School s Unrestricted Revenues on an equal and ratable basis for the benefit of the Prior Bonds and the Bonds, the School, the Trustee and the Prior Bonds Trustees will enter into a supplement dated as of February 1, 2013 (the Supplement ) to the existing Intercreditor Agreement dated as of December 1, 2009 (together with the Supplement, the Intercreditor Agreement ). See SOURCES OF PAYMENT AND SECURITY FOR THE BONDS herein and DEFINITIONS OF CERTAIN TERMS AND SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE, THE LOAN AGREEMENT AND THE INTERCREDITOR AGREEMENT - THE INTERCREDITOR AGREEMENT in Appendix C hereto. Brief descriptions of the Bonds, the Loan Agreement, the Indenture and the Intercreditor Agreement are included in this Official Statement. The summaries of the documents contained herein do not purport to be complete, comprehensive or definitive and are qualified in their entirety by reference to the entire text of such documents, and the description herein of the Bonds is qualified in its entirety by reference to the form thereof and the information with respect thereto included in the aforesaid 2

7 documents. Copies of the Loan Agreement, the Indenture and the Intercreditor Agreement will be available for inspection upon request during the initial offering period, at the principal offices of the Underwriter and, after initial delivery of the Bonds, at the corporate trust office of the Trustee in Philadelphia, Pennsylvania. THE AUTHORITY The Authority was created by the Board of Commissioners of the County of Bucks, Pennsylvania (the County ), pursuant to the provisions of the Act and is a body corporate and politic. The Authority has the power under its articles of incorporation and bylaws to exercise any and all powers granted under the Act, which will include the power to undertake projects for non-profit institutions located within the Commonwealth of Pennsylvania (the Commonwealth ) and to issue its bonds for such projects. The governing body of the Authority consists of a board of five (5) members, none of whom may be a County Commissioner. Members of the board are appointed by the elected County Commissioners of the County for staggered five-year terms and may be reappointed. Present members and officers are shown in the following table: Mary K. Smithson Michael J. Mabin Stephen Worth Pasquale T. Deon Jennifer Yori Name Office Chairperson Vice-Chairman Treasurer Secretary Assistant Treasurer and Assistant Secretary The Authority has previously issued bonds and notes for other entities secured by specified payments from such entities. All prior issues of the Authority s bonds and notes are special revenue obligations and the revenues associated therewith are not available for payment of debt service on the Bonds. The Authority may enter into future financing transactions which will provide for the issuance of the bonds or notes which will be secured from the project financed. The Authority has not prepared or assisted in the preparation of this Official Statement, except statements solely with respect to the Authority, and, except as aforesaid, the Authority is not responsible for any statements made in this Official Statement. Except for the execution and delivery of documents required to effect the issuance and sale of the Bonds, the Authority has not otherwise assisted in the public offering, or distribution of the Bonds. Accordingly, except as aforesaid, the Authority disclaims responsibility for the disclosures set forth in this Official Statement, or otherwise in connection with the offering, sale or distribution of the Bonds. Description of the Bonds THE BONDS The Bonds will be dated the date of original issuance, and will bear interest from such date payable on March 15 and September 15 (each, an Interest Payment Date ) of each year commencing September 15, 2013 at the rates and will mature on the dates and in the amounts set forth on the inside cover page hereof. Principal of and interest on the Bonds will be payable in lawful money of the United States. 3

8 The Bonds will be issued as fully registered book-entry bonds, and registered in the name of Cede & Co. ( Cede ), as nominee for The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Bonds under its book-entry-only system (the DTC Book- Entry Only System ). An individual purchaser may purchase a Bond in book-entry form (without certificates) in denominations of $5,000, or any integral multiple thereof. Provided DTC, or its nominee Cede, is the registered owner of the Bonds, the principal or redemption price of, and interest on, the Bonds will be paid to DTC or Cede, as its nominee. See, THE BONDS - Book-Entry Only System herein. In the event the Bonds are no longer subject to the DTC Book-Entry Only System, the principal or redemption price of the Bonds will be payable upon surrender of the respective Bonds at a designated payment office of the Trustee. Interest on the Bonds will then be paid by check or draft of the Trustee mailed to the registered owner thereof as of the first (1st) day of the calendar month immediately preceding any Interest Payment Date at their addresses on file on the bond register, maintained by the Trustee. Book-Entry Only System The information in this section has been provided by DTC and is not to be deemed to be a representation of the Authority, the School or the Underwriter. DTC, New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully registered Bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully registered certificate will be issued for each maturity of the 2013A Bonds and each maturity of the 2013B Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at and Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC s records. The ownership interest of each actual purchaser of each Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their 4

9 purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity or series are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to an issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal, premium, if any, and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detailed information from the School or the Trustee, on payable dates in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with Bonds held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the School, or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal, premium, if any, and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the School or the Trustee, disbursements of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 5

10 DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the School or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The information in this section concerning DTC and DTC s book entry system has been obtained from DTC, and neither the Authority, the School nor the Underwriter take any responsibility for the accuracy thereof. THE AUTHORITY, THE SCHOOL AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC, THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE BONDS: (1) PAYMENTS OF PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, PURCHASE PRICE OR INTEREST ON THE BONDS; (2) CONFIRMATION OF BENEFICIAL OWNERSHIP INTEREST IN THE BONDS; OR (3) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNER OF THE BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS, OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE CURRENT PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS ARE ON FILE WITH DTC. NEITHER THE AUTHORITY, THE SCHOOL NOR THE TRUSTEE SHALL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DIRECT PARTICIPANT, INDIRECT PARTICIPANT OR ANY BENEFICIAL OWNER OR ANY OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF THE TRUSTEE AS BEING A BONDHOLDER WITH RESPECT TO: (1) THE BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR PURCHASE PRICE, OR INTEREST ON THE BONDS; (4) THE DELIVERY BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE RESOLUTION TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS REGISTERED OWNER OF THE BONDS. The School may determine to discontinue use of the system of book entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be prepared and delivered as described in the Indenture. So long as Cede & Co. is the registered owner of the Bonds as nominee of DTC, references herein to the Holders, holders, Owners or registered owners of such Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the Bonds. In the event that the Book-Entry Only System is discontinued and the Beneficial Owners become registered owners of the Bonds, the following provisions applicable to registered owners would apply: (1) Bonds may be exchanged for an equal aggregate principal amount of Bonds of the same maturity and series in other authorized denominations, upon surrender thereof at the designated corporate trust office of the Trustee; (2) the transfer of any Bonds may be registered on the books maintained by the Trustee for such purpose only upon the surrender thereof to the Trustee together with a duly executed assignment in 6

11 form satisfactory to the School and the Trustee; and (3) for every exchange or registration of transfer of Bonds, the Trustee may impose a charge sufficient to reimburse it for any tax, fee or governmental charge required to be paid with respect to such exchange or registration of transfer of the Bonds. Redemption Optional Redemption. The Bonds are subject to optional redemption as follows: (a) The 2013A Bonds are subject to optional redemption prior to maturity at the written direction of the School, in whole or in part, on any date on and after September 15, 2023, in any order of maturity as the School may choose and within a maturity as shall be selected by the Trustee by lot, upon payment of a redemption price equal to 100% of the principal amount of such 2013A Bonds to be redeemed, together with accrued interest to the redemption date. (b) The 2013B Bonds are subject to redemption prior to maturity, in whole or in part, on any Business Day, in such order of maturity as directed by the Authority, at the Make-Whole Redemption Price. The Make-Whole Redemption Price is the greater of: (i) 100% of the principal amount of the 2013B Bonds to be redeemed and (ii) the sum of the present value of the remaining scheduled payments of principal and interest to the maturity date of the 2013B Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which the 2013B Bonds are to be redeemed, discounted to the date on which such 2013B Bonds are to be redeemed on a semiannual basis, assuming a 360-day year consisting of twelve 30-day months, at the Treasury Rate (as defined below) plus thirty (30) basis points, plus accrued and unpaid interest on the 2013B Bonds to be redeemed on the redemption date. The Trustee may retain, at the expense of the School, an independent accounting firm or financial advisor to determine the Make-Whole Redemption Price and perform all actions and make all calculations required to determine the Make-Whole Redemption Price. The Trustee, the Authority and the School may conclusively rely on such accounting firm s or financial advisor s calculations in connection with, and determination of, the Make-Whole Redemption Price, and neither the Trustee nor the Authority nor the School will have any liability for their reliance. The Treasury Rate is, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (excluding inflation indexed securities) (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. Mandatory Sinking Fund Redemption. The Bonds are subject to mandatory sinking fund redemption on the dates and in the principal amounts set forth below: (a) The 2013A Bonds maturing on September 15, 2043 and September 15, 2044, respectively, are subject to mandatory sinking fund redemption prior to maturity in part, in direct order of maturity and within a maturity as chosen by lot by the Trustee, on September 15, of each of the years and in the respective amounts set forth below, at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date. 7

12 2013A Bonds Due September 15, A Bonds Due September 15, 2044 Year Principal Amount Year Principal Amount 2040 $1,410, $2,355, ,025, ,895, ,255, ,190,000 Maturity (b) The 2013B Bonds are subject to mandatory sinking fund redemption prior to maturity in part, as chosen by lot by the Trustee, on September 15, on the years and in the amounts set forth below, at a redemption price of 100% of the principal amount thereof plus accrued interest to the redemption date. Maturity 2013B Bonds Due September 15, 2040 Year Principal Amount 2039 $2,615, ,465,000 As described in the Indenture, the principal amount of the Bonds otherwise required to be redeemed on any redemption date by mandatory sinking fund redemption may be reduced by the principal amount of such Bonds theretofore delivered to the Trustee in lieu of cash under the Loan Agreement or purchased by the Trustee out of moneys in the Sinking Fund Subaccount of the Debt Service Account established under the Indenture and which have not been applied as a credit against any sinking fund installment. See THE LOAN AGREEMENT - Prepayment and Payment with 2013 Bonds in Lieu of Cash in Appendix C hereto. In addition, at the direction of the School, the principal amount of the Bonds otherwise required to be redeemed by mandatory sinking fund redemption also may be reduced by the application to such redemption obligation of a partial optional redemption of such Bonds in the manner designated by the School. Extraordinary Optional Redemption. The Bonds will be subject to redemption prior to maturity at the option of the Authority at the direction of the School, in whole or in part at any time, upon payment of a redemption price equal to one hundred percent (100%) of the principal amount, plus accrued interest to the date of redemption, but only in the event that all or a portion of the Facilities is damaged, destroyed, condemned or sold under threat of condemnation and it is determined by the School that repair or reconstruction is not desirable, practical or financially feasible, from and to the extent of insurance proceeds or condemnation awards or proceeds of any sale under threat of condemnation received by the Trustee, as a result of such damage, destruction, condemnation or sale under threat of condemnation. In the case of the extraordinary optional redemption of the Bonds in part, the Bonds shall be redeemed from any series, in any order of maturity and in any amount within each maturity as shall be directed by the School, and the School shall be entitled to (but shall not be obligated) to select the Bonds or portions thereof within any series or maturity to be redeemed. 8

13 Notice of Redemption The Trustee shall cause notice of any redemption of Bonds to be mailed by first class mail to the Owners of all Bonds to be redeemed at the registered addresses appearing in the Bond Register. Each such notice shall (i) be mailed at least thirty (30) days and not more than sixty (60) days prior to the date fixed for redemption, (ii) identify the Bonds to be redeemed, specifying the name of the issue, the date of the issue, the stated maturity, the series designation, the CUSIP numbers and certificate numbers assigned to the Bonds subject to redemption, (iii) specify the date fixed for redemption and the redemption price and (iv) state that on the date fixed for redemption of the Bonds called for redemption will be payable at the payment office of the Trustee as specified in such notice upon presentation and surrender thereof, that from that date interest will cease to accrue and that no representation is made as to the accuracy or correctness of the CUSIP numbers printed therein or on the Bonds. Failure to give notice in the manner described in this subsection with respect to any Bond, or any defect in such notice, shall not affect the validity of the proceedings for redemption for any Bond with respect to which notice was properly given. No further interest will accrue on the principal of any Bonds called for redemption after the redemption date if payment of the redemption price thereof has been duly provided for, and the registered owners of such Bonds will have no rights with respect to such Bonds except to receive payment of the redemption price thereof and unpaid interest accrued to the date fixed for redemption. If the notice so specifies, a call for redemption may be conditioned on the deposit of funds for redemption by 10:00 a.m. on the redemption date, in the absence of which such call for redemption would be of no effect. So long as DTC or its nominee is the owner of the Bonds, the Authority and the Trustee will recognize DTC or its nominee as the holder of the Bonds for all purposes, including notices and voting. Conveyance of notices and other communications by DTC to DTC Participants and by DTC Participants to beneficial owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time. So long as DTC or its nominee is the holder of the Bonds, any failure on the part of DTC or failure on the part of a nominee of a beneficial owner (having received notice from a DTC Participant or otherwise) to notify the beneficial owner so affected shall not affect the validity of the redemption. So long as DTC or its nominee is the holder of the Bonds, if less than all of the Bonds of any series or maturity shall be called for redemption, the particular Bonds or portions of Bonds of such series or maturity to be redeemed shall be selected by lot by DTC in such manner as DTC may determine. THE SCHOOL The School is a private boarding and day school for grades nine through twelve located on approximately 240 acres in Bucks County, Pennsylvania, primarily in the Township of Middletown. The School is a Pennsylvania nonprofit corporation and an organization described in Section 501(c)(3) of the Code. For a further description of the School, see Appendix A - INFORMATION CONCERNING GEORGE SCHOOL. General PLAN OF FINANCING The Bonds are being issued by the Authority for the purposes of undertaking a project (the Project ) on behalf of the School generally consisting of: (i) the construction, acquisition and equipping of an approximately 99,000 square foot fitness and athletic center, including two gymnasiums, a swimming facility, fitness facilities, locker rooms and other athletic and recreational facilities, (ii) other 9

14 miscellaneous capital improvements and additions to the School s facilities, and (iii) the payment of the costs and expenses of issuing the Bonds. Concurrently with the issuance and delivery of the Bonds, the proceeds thereof, after the payment of costs of issuance, will be deposited in a Project Fund established under the Indenture to pay or reimburse the School for the costs of the Project. ESTIMATED SOURCES AND USES OF PROCEEDS OF THE BONDS The estimated sources and uses of proceeds of the Bonds is as follows: Sources of Funds: Par Amount of the 2013A Bonds... $28,130, Par Amount of the 2013B Bonds 5,080, Net Original Issue Premium... 1,225, TOTAL... $34,435, Uses of Funds: Deposit to Project Fund... $34,007, Costs of Issuance (1) , TOTAL... $34,435, (1) Includes underwriter s discount, legal costs, rating agencies fees, printing costs, trustee fees, accountants fees, printing costs and other miscellaneous costs. Limited Obligations SOURCES OF PAYMENT AND SECURITY FOR THE BONDS THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY FROM AND SECURED AS PROVIDED IN THE INDENTURE BY AN ASSIGNMENT TO THE TRUSTEE OF ALL THE RIGHT, TITLE AND INTEREST OF THE AUTHORITY IN AND TO THE LOAN AGREEMENT (SUBJECT TO CERTAIN RESERVED RIGHTS) AND ALL PAYMENTS, REVENUES AND RECEIPTS DERIVED BY THE AUTHORITY UNDER AND PURSUANT TO AND SUBJECT TO THE PROVISIONS OF THE LOAN AGREEMENT AND ALL MONEYS AND SECURITIES FROM TIME TO TIME HELD IN THE FUNDS AND ACCOUNTS ESTABLISHED UNDER THE INDENTURE (EXCLUDING THE REBATE FUND). NEITHER THE CREDIT NOR THE TAXING POWER OF THE COUNTY, OF THE COMMONWEALTH OR OF ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE OF, OR INTEREST ON THE BONDS, NOR SHALL THE BONDS BE OR BE DEEMED TO BE OBLIGATIONS OF THE COUNTY, THE COMMONWEALTH, OR ANY OTHER POLITICAL SUBDIVISION THEREOF. THE AUTHORITY HAS NO TAXING POWER. Except as stated above, the Authority shall not be liable on its obligations, nor are the members, officers or employees of the Authority personally liable on its obligations. Sources of Payment and Security for the Bonds The 2013A Bonds and the 2013B Bonds will be secured equally and ratably with one another and with the Prior Bonds. The Bonds will be payable solely from: (i) payments received from the School 10

15 under the Loan Agreement; and (ii) moneys and securities held by the Trustee in the funds and accounts established under the Indenture (except as otherwise described herein). The obligation of the School to make payments under the Loan Agreement is a general obligation of the School. As security for its obligations under the Loan Agreement, the School will pledge, assign and grant to the Authority a lien on and a security interest in the School s Unrestricted Revenues which security interest has been assigned to the Trustee for the benefit of the Bondholders. Unrestricted Revenues means generally such revenues, income and other moneys (both operating and non-operating) received by the School that would properly be recorded as additions to Unrestricted Net Assets during the period being measured. Unrestricted Net Assets means net assets that are not subject to donor-imposed stipulations, as recorded on the annual financial statements of the School or the equivalent as estimated by the School if the School s accounting presentation format changes materially in the future. The existence of such pledge, assignment, grant and agreement to pay shall not inhibit the right of the School to apply its Unrestricted Revenues in such manner and to such purposes as it deems appropriate so long as no Event of Default has occurred and is continuing. In the Loan Agreement, the School has covenanted that whenever an Event of Default shall occur, the School shall deliver daily its Unrestricted Revenues to the Trustee to be applied to the payment of the School s obligations under the Loan Agreement, the 2011 Loan Agreement and the 2009 Loan Agreement, and all other Parity Debt of the School, on a pro rata basis. So long as any Parity Debt is Outstanding, upon the occurrence of an Event of Default, all of the Unrestricted Revenues required to be delivered to the Trustee shall be delivered instead to the 2009 Trustee, as collateral agent (in such capacity the Collateral Agent ), under the Intercreditor Agreement, to be applied for the equal and ratable benefit of the holders of all Parity Debt, as provided in the Intercreditor Agreement. The terms and provisions of the Indenture, the Loan Agreement and the Intercreditor Agreement are more particularly described in Appendix C hereto. The effectiveness of the pledge of the Unrestricted Revenues of the School is limited since a security interest in money generally cannot be perfected by the filing of financing statements under the Pennsylvania Uniform Commercial Code ( UCC ). Rather, such a security interest is perfected by taking possession or obtaining control (as defined in the UCC) of the subject funds. The monies constituting Unrestricted Revenues received by the School from time to time are not required to be transferred to or held by the Trustee, nor will the Trustee have control over said funds, and said funds may be spent by the School or commingled with its other funds. Under the circumstances, the pledge of Unrestricted Revenues might not be perfected under the UCC. To the extent that a security interest can be perfected in the Unrestricted Revenues of the School by the filing of financing statements, such action will be taken. The security interest in the School s Unrestricted Revenues may not be enforceable against third parties unless such Unrestricted Revenues are actually transferred to the Trustee or the Trustee obtains control over such funds, or unless the security interest in the School s Unrestricted Revenues is subject to exceptions under the UCC as enacted in the Commonwealth. Under the current law, such security interest may be further limited by the following: (1) statutory liens and liens in favor of the depository institution; (2) rights arising in favor of the United States of America or any agency thereof; (3) present or future prohibitions against assignment contained in any Commonwealth or federal statutes or regulations; (4) constructive trusts, equitable liens or other rights impressed or conferred by any Commonwealth or federal court in the exercise of its equitable jurisdiction; (5) federal bankruptcy laws or state laws including those relating to fraudulent conveyances affecting assignments of revenues and assets and preferential transfers; and (6) any defect in the filing of, or any failure to file, appropriate continuation statements pursuant to the UCC. 11

16 Rate Covenant The School has covenanted in the Loan Agreement that it will establish and collect during each Fiscal Year such rates, fees and charges as shall be necessary to produce Unrestricted Revenues in an amount sufficient, together with other available funds, to pay all operating expenses of the School and all debt service requirements on all outstanding Indebtedness due in such Fiscal Year. If in any Fiscal Year, the School shall fail to comply with this rate covenant, the School shall promptly retain an independent consultant with recognized expertise in the operation of educational institutions similar to the School and not unsatisfactory to the Trustee and the Authority to make a report and recommendation with respect to the rates, fees and charges of the School, and other matters with respect to its operations as appropriate. The School will provide a copy of such report to the Trustee and the Authority. So long as the School shall, in good faith, address the recommendations of the consultant and continue to take such action as it deems reasonable and appropriate to obtain compliance with the rate covenant, and so long as no other Event of Default shall have occurred and then be continuing, the failure of the School to comply with the rate covenant shall not constitute an Event of Default under the Loan Agreement. Other Indebtedness The Bonds are the only series of bonds that can be issued under the Indenture. However, the Loan Agreement provides that the School may incur Indebtedness without limitation, on such terms and conditions as shall be acceptable to the School in its sole discretion; provided that prior to the incurrence of such Indebtedness, the School has delivered to the Trustee a certificate of the School demonstrating that the Net Expendable Assets of the School as of the last day of the immediately preceding Fiscal Year, equal or exceed the total principal amount of the Indebtedness of the School to be outstanding upon incurrence of such Indebtedness. Net Expendable Assets means an amount of the School s assets equal to: (A) its total net assets; less (B) its permanently restricted assets; and less (C) its net investment in plant, in each case as reflected in the financial statements of the School prepared in accordance with generally accepted accounting principles applied on a consistent basis. Notwithstanding the foregoing, the delivery of such certificate shall not be required in connection with the incurrence of either (i) any Indebtedness not exceeding $1,000,000 in principal amount incurred in any Fiscal Year or $4,000,000 in the aggregate for all such excluded Indebtedness, or (ii) obligations incurred under any working capital note, line of credit or similar credit facility having a maturity of not greater than one year, but only if and to the extent that the outstanding balance under such facility is reduced to zero for a period of at least thirty (30) consecutive days in each Fiscal Year. The School may incur Indebtedness secured by a lien on and security interest in the Unrestricted Revenues on a parity with or subordinate to the lien securing the Bonds. For a further description of the conditions under which the School may incur Indebtedness, see THE LOAN AGREEMENT - PERMITTED INDEBTEDNESS in Appendix C hereto. Federal Tax Exemption CERTAIN TAX MATTERS Bond Counsel will deliver, concurrently with the delivery of the Bonds, its opinion to the effect that, under existing law as enacted and construed on the date of such opinion, interest on the 2013A Bonds is excluded from gross income for federal income tax purposes. The opinion of Bond Counsel will further state that interest on the 2013A Bonds will not be a specific item of tax preference for purposes of the individual and corporate federal alternative minimum tax; however, interest on the 2013A Bonds will be included in the adjusted current earnings in computing alternative minimum taxable income with 12

17 respect to certain corporations. Interest on the 2013B Bonds is not excluded from gross income for federal income purposes. Certain Federal Tax Considerations Collateral Federal Tax Consequences. Ownership of the 2013A Bonds may result in collateral federal tax consequences to certain taxpayers, including, without limitation, financial institutions, S corporations with excess net passive income, property and casualty companies, individual recipients of social security or railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, foreign corporations that may be subject to the foreign branch profits tax, and taxpayers who may be deemed to have incurred indebtedness to purchase or carry the 2013A Bonds. Bond Counsel will express no opinion with respect to these or any other collateral tax consequences of the ownership of the 2013A Bonds. The nature and extent of the tax benefit to a taxpayer of ownership of the 2013A Bonds will generally depend upon the particular nature of such taxpayer or such taxpayer s own particular circumstances, including other items of income or deduction. Accordingly, prospective purchasers of the 2013A Bonds should consult their own tax advisors with respect to these and other collateral federal tax consequences resulting from ownership of the 2013A Bonds. Original Issue Premium. The initial public offering price of the 2013A Bonds maturing on September 15, 2044, is greater than the stated redemption price thereof at maturity. The difference between the initial public offering price for any such 2013A Bond and the stated redemption price at maturity is original issue premium. For federal income tax purposes, original issue premium is amortizable periodically over the term of a 2013A Bond through reductions in the holder s tax basis for such 2013A Bond for determining taxable gain or loss from sale or from redemption prior to maturity. Amortizable premium does not create a deductible expense or loss. Purchasers of the 2013A Bonds should consult their tax advisors for an explanation of the accrual rules for original issue premium and any other federal, state or local tax consequences of the purchase of any 2013A Bonds with original issue premium. Original Issue Discount. The initial public offering price of the 2013A Bonds maturing on September 15, 2043, is less than the stated redemption price thereof at maturity. The difference between the initial public offering price for any such 2013A Bond and the stated redemption price at maturity is original issue discount. For federal income tax purposes, original issue discount on any 2013A Bond accrues to original holders of the 2013A Bond over the period of its maturity based on the constant yield method compounded annually as interest with the same tax exemption and alternative minimum tax status as regular interest. The accrual of original issue discount increases the holder s tax basis in any 2013A Bond for determining taxable gain or loss on the maturity, redemption, prior sale or other disposition of such 2013A Bond. Purchasers of the 2013A Bonds should consult their tax advisors for an explanation of the accrual rules for original issue discount and any other federal, state or local tax consequences of the purchase of any 2013A Bonds with original issue discount. Sale and Disposition of the Bonds. Owners of any 2013A Bonds should consult their own tax advisors concerning the tax consequences of the sale, disposition or redemption thereof prior to maturity. Continuing Compliance of School and Authority The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2013A Bonds. Ongoing requirements include, among other things, the provisions of Section 148 of the Code which prescribe yield and other limits within which the proceeds of the 2013A Bonds are to be invested and which may require that certain excess earnings on investments made with the proceeds of the 2013A 13

18 Bonds be rebated on a periodic basis to the United States. The School and the Authority will make certain representations and undertake certain agreements and covenants in the Indenture and the Loan Agreement, and in one or more tax compliance agreements to be delivered concurrently with the original issuance of the 2013A Bonds, designed to ensure compliance with the applicable provisions of the Code. The inaccuracy of these representations or the failure on the part of the School to comply with such covenants and agreements could result in the interest on the 2013A Bonds being included in the gross income of the owners for federal income tax purposes, in certain cases retroactive to the date of original issue of the 2013A Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and the future compliance by the School and the Authority with their respective covenants and agreements. Moreover, Bond Counsel has not undertaken to evaluate, determine or inform any person, including any owner of the 2013A Bonds, whether any actions taken or not taken, events occurring or not occurring, or other matters that might come to the attention of Bond Counsel, would adversely affect the value of, or tax status of the interest on, the 2013A Bonds. Qualified 501(c)(3) Status of School In rendering its opinion as to the tax-status of the Bonds for federal income tax purposes, Bond Counsel will further rely upon representations of the School and the opinion of Hunt & Ayres, P.C., counsel for the School, with respect to the qualification of the School as a charitable organization described in Section 501(c)(3) of the Code. The failure of the School to be organized and to remain qualified as a so-called 501(c)(3) organization, and to conduct its activities (and, in particular, its activities with respect to the facilities financed or refinanced with the proceeds of the 2013A Bonds) in a manner that is substantially related to its charitable purpose could also result in the interest on the 2013A Bonds issued for the benefit of the School being included in the gross income of the owners thereof for federal income tax purposes, in some cases retroactive to the date of their original issuance. In recent years, the activities of tax-exempt nonprofit corporations have been subjected to increasing scrutiny by federal, state, and local legislative and administrative agencies. Various proposals either have been considered previously or are presently being considered at the federal, state and local level which would variously restrict the definition of tax-exempt or nonprofit entities, impose new restrictions on the activities of tax-exempt nonprofit corporations, and/or tax or otherwise burden the activities of such corporations. There can be no assurance that future changes in the laws, rules, regulations, interpretations and policies relating to the definition, activities and/or taxation of tax-exempt nonprofit corporations will not have materially adverse effects on the future operations of the School. Loss of tax-exempt status by the School could result in loss of tax exemption of the 2013A Bonds and of other tax-exempt debt issued for the benefit of the School, and defaults in covenants regarding the 2013A Bonds and other related tax-exempt debt would likely be triggered. Such an event would have materially adverse consequences on the financial condition of the School. Management of the School is not aware of any transactions or activities currently ongoing that are likely to result in the revocation of the tax-exempt status of the School. The maintenance by the School of its status as an organization described in Section 501(c)(3) of the Code is contingent upon compliance with general rules promulgated in the Code and related regulations regarding the organization and operation of tax-exempt entities, including their operation for charitable and educational purposes and their avoidance of transactions that may cause their assets to inure to the benefit of private individuals. The Internal Revenue Service has announced that it intends to closely scrutinize transactions between not-for-profit corporations and for-profit entities. Although certain specific activities have been the subject of interpretations by the Internal Revenue Service in the form of 14

19 private letter rulings, many activities have not been addressed in any official opinion, interpretation or policy of the Internal Revenue Service. Bond Audits The Internal Revenue Service continues to devote increasing resources to audits of tax-exempt bonds in the charitable organization sector. The 2013A Bonds may be, from time to time, subject to audits by the Internal Revenue Service. The School believes that the 2013A Bonds properly comply with the tax laws. In addition, Bond Counsel will render an opinion with respect to the tax-exempt status of the 2013A Bonds. No ruling with respect to the tax-exempt status of the 2013A Bonds has been or will be sought from the Internal Revenue Service, however, and opinions of counsel are not binding on the Internal Revenue Service or the courts. There can be no assurance that an audit of the 2013A Bonds will not adversely affect the market for the 2013A Bonds. Under current procedures, parties other than the Authority and the School, and their appointed counsel, including the owners of the 2013A Bonds, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of Internal Revenue Service positions with which the Authority and the School may legitimately disagree, may not be practicable. Any action of the Internal Revenue Service, including but not limited to selection of the 2013A Bonds for audit, or the course or result of such audit, or an audit of 2013A Bonds presenting similar tax issues, may affect the market price for, or the marketability of, the 2013A Bonds, and may cause the Authority, the School or the owners of the 2013A Bonds to incur significant expense. The opinion of Bond Counsel represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the facts that it deems relevant to render such opinions. However, such opinion is not a guarantee of any result and is not binding on the Internal Revenue Service or the courts. Neither the Underwriter nor Bond Counsel is obligated to defend the taxexempt status of the 2013A Bonds. None of the Authority, the Underwriter, the School or Bond Counsel is responsible to pay or reimburse the costs of any owner or beneficial owner with respect to any audit or relating to the 2013A Bonds. Future Changes President Obama released legislative proposals in 2011 and 2012 that would, among other things, subject a portion of the interest on tax-exempt bonds (including the 2013A Bonds) to federal income tax for taxpayers with incomes above certain thresholds. There has been significant recent discussion of these proposals in Congress in connection with the broader discussion of federal budgetary issues and tax reform generally. It is not possible to predict whether these proposals will be enacted into law. If enacted into law, such proposals could affect the value or marketability of tax-exempt bonds (including the 2013A Bonds). More generally, legislative or administrative actions and court decisions, at either the federal or state level, could have an adverse impact on the potential benefits of the exclusion from gross income of the interest on the 2013A Bonds for federal or state income tax purposes, and thus on the value or marketability of the 2013A Bonds. This could result from changes to federal or state income tax rates, changes in the structure of federal or state income taxes (including replacement with another type of tax), repeal of the exclusion of the interest on the 2013A Bonds from gross income for federal or state income tax purposes, or otherwise. It is not possible to predict whether any legislative or administrative actions or court decisions having an adverse impact on the federal or state income tax treatment of holders of the 2013A Bonds may occur, including the legislative proposals described above. Prospective purchasers of the 2013A Bonds should consult their own tax advisors regarding the impact of any change in law on the 2013A Bonds. 15

20 There can be no assurance that currently existing or future legislative proposals by the United States Congress limiting or further qualifying the excludability of interest on tax-exempt bonds from gross income for federal tax purposes, or changes in federal tax policy generally, will not adversely affect the market for the 2013A Bonds. Pennsylvania Tax Matters In connection with the issuance of the Bonds, Drinker Biddle & Reath LLP, Bond Counsel, will also deliver its opinion to the effect that the Bonds are exempt from personal property taxes in Pennsylvania, and the interest on the Bonds is exempt from Pennsylvania personal income taxes and the Pennsylvania corporation net income tax. LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds will be passed upon by Drinker Biddle & Reath LLP, Bond Counsel. The issuance of the Bonds is subject to the receipt of the approving opinion of Bond Counsel, which approving opinion, in substantially the form included in Appendix D, will be delivered with the Bonds. Certain legal matters will be passed upon for the School by its counsel, Hunt & Ayres, P.C., Philadelphia, Pennsylvania; for the Authority by its counsel, Begley, Carlin & Mandio, LLP, Langhorne, Pennsylvania; and for the Underwriter by its counsel, Greenberg Traurig, LLP, Philadelphia, Pennsylvania. NEGOTIABLE INSTRUMENTS The Act provides that bonds of authorities created thereunder shall have all the qualities of negotiable instruments under the law merchant and the negotiable instruments law of the Commonwealth. LITIGATION There is no litigation of any nature pending against the Authority at the date of this Official Statement to restrain or enjoin the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the Authority taken with respect to the issuance or sale thereof, or the pledge or application of any moneys or the security provided for the payment of the Bonds or the existence or powers of the Authority. The School, like other similar institutions, is subject to a variety of suits and proceedings arising in the ordinary course of business. In the opinion of the School, there is no litigation, individually or in the aggregate, currently pending, or to the knowledge of the School threatened against it, which will have a material adverse effect on its financial condition, or will affect the validity or enforceability of the Loan Agreement or which in any way contests the corporate existence or powers of the School. FINANCIAL STATEMENTS The financial statements of the School at July 31, 2012 and 2011 and for the Fiscal Years then ended included in Appendix B to this Official Statement have been audited by Tait, Weller & Baker, LLP, independent accountants, as stated in their reports appearing herein in Appendix B. 16

21 UNDERWRITING Merrill Lynch, Pierce, Fenner & Smith Incorporated, as underwriter (the Underwriter ) has agreed, subject to certain conditions, to purchase the Bonds from the Authority at a purchase price of $34,217, (representing the principal amount of the Bonds less an Underwriter s discount of $218, plus net original issue premium of $1,225,444.30) The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on the inside cover page of this Official Statement, which may be changed by the Underwriter without any requirement of prior notice. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) at prices lower than the public offering prices. The Underwriter and its affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriter and its affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Authority and/or the School, for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriter and its affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the Authority and/or the School. The Underwriter and its affiliates also may communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. RATINGS Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc. ( S&P ) and Fitch Ratings ( Fitch ) have assigned ratings to the Bonds of AA- and AA-, respectively. Any explanation of the significance of these ratings may only be obtained from S&P or Fitch, respectively. There is no assurance that such ratings will remain for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agencies concerned, if in their judgment circumstances so warrant. Any such downward change or withdrawal of the ratings assigned to the Bonds by S&P or Fitch may have an adverse effect on the market price of the Bonds. The ratings outlook for the Bonds from S&P and Fitch is stable. Such credit ratings reflect only the views of S&P and Fitch. An explanation of the significance of such credit ratings may be obtained from S&P and Fitch. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency. Neither the School nor the Underwriter has assumed any responsibility to maintain any rating on the Bonds. 17

22 Continuing Disclosure Undertaking SECONDARY MARKET DISCLOSURE In order to enable the Underwriter to comply with the requirements of Rule 15c2-12, promulgated by the United States Securities and Exchange Commission (as amended, the Rule ), the School will enter into a Continuing Disclosure Agreement with the Trustee, as dissemination agent (the Continuing Disclosure Agreement ), to provide annually, through the dissemination agent, certain financial information and operating data to the Municipal Securities Rulemaking Board (the MSRB ), and to provide notice to the MSRB of certain events pursuant to the requirements of the Rule. The Continuing Disclosure Agreement will constitute a written undertaking for the benefit of the owners from time to time of the Bonds, including owners of book-entry credits evidencing ownership interests in the Bonds. Breach of the undertaking will not be a default under the Bonds, the Loan Agreement or the Trust Indenture. The undertaking may be enforced as provided in the Continuing Disclosure Agreement exclusively by seeking specific performance by court order to cause the School to comply with its obligations under the Continuing Disclosure Agreement. The School has made similar undertakings in connection with the 2011 Bonds and the 2009 Bonds to file with the MSRB certain information required under the Rule. As of the date of this Official Statement, the School has made all of the filings required under such other undertakings and under the Rule. However, for fiscal years 2008, 2009, 2010 and 2011, the School did not file its financial information and operating data within the time frame set forth in such other undertakings. For fiscal years 2008, 2009, 2010 and 2011, the School s filings were 13, 8, 4 and 6 days late, respectively. The School has made the filings required for fiscal year 2012 on a timely basis and intends to comply fully and on a timely basis with all current and future continuing disclosure undertakings. As of the date of this Official Statement, the School has complied with the requirements of the Rule in all material respects. The proposed form of the Continuing Disclosure Agreement is attached to this Official Statement as APPENDIX E. OTHER MATTERS The School has furnished information herein relating to the School (including Appendices A and B) and the Project. The Authority has furnished only the information included herein under the section entitled THE AUTHORITY and in the sections entitled INTRODUCTORY STATEMENT, and LITIGATION insofar as it relates to the Authority. However, said summaries, and all other summaries and references to such other materials not purporting to be quoted in full, are only brief outlines of certain provisions thereof and are made subject to all the detailed provisions thereof, to which reference is hereby made for further information, and do not purport to be complete statements of any or all such provisions of such documents. All estimates and assumptions herein have been made on the best information available and are believed to be reliable, but no representations whatsoever are made that such estimates or assumptions are correct or will be realized. So far as any statements herein involve matters of opinion, whether or not expressly so stated, they are intended merely as such and not as representations of fact. The information hereinabove set forth, and that which follows in the Appendices, should not be construed as representing all of the conditions affecting the Authority, the School or the Bonds. 18

23 This Official Statement is issued by the Authority and approved by the School. BUCKS COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY Approved: By: /s/ Michael J. Mabin Name: Michael J. Mabin Title: Vice Chairman GEORGE SCHOOL By: /s/ Michael W. Toohey Name: Michael W. Toohey Title: Chief Financial Officer

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25 APPENDIX A INFORMATION CONCERNING GEORGE SCHOOL

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27 Appendix A Table of Contents General Description... 2 Location and Facilities... 2 Accreditation... 3 Governance... 3 Financial Matters... 8 Historical Operating Results... 9 Budgetary Matters... 9 Endowment Assets and Other Investments Outstanding Indebtedness Pension Plan Gifts, Contributions and Grants Litigation The Academic Program Enrollment College Matriculations Admission Selectivity Tuition Rates and Competition Financial Aid Faculty and Staff Mission and Core Values Strategic Areas, Goals and Overviews A-1

28 General Description George School (the School or George School ) was founded as a boarding school in 1893 by a group of Philadelphia Quakers, the religious group that founded Pennsylvania, who wanted to guard the minds of impressionable young people from the world s attractions. From the very beginning the School was co-educational and served students from grades nine through twelve. George School was named for John M. George, the Quaker philanthropist who left a bequest to construct the School and establish its endowment. Over a century later, George School is a boarding and day school with 278 boarding and 267 day students and full-time teaching faculty of 78. Located on its original site, the School attracts students from around the United States and the world, embracing a variety of cultures and religions. George School challenges its students to hold themselves to high academic standards, to practice humility, and to develop lifelong habits of scholarship and intellectual curiosity. George School s operations are funded from tuition and fees, gifts, contributions, bequests, endowment income, summer programs and other revenues. Location and Facilities George School is located in Bucks County, Pennsylvania, primarily in the Township of Middletown, on approximately 240 wooded acres in a suburban setting approximately 30 miles north of Center City Philadelphia, Pennsylvania. This area of Bucks County has experienced rapid suburban growth in the last 30 years. The campus facilities comprise approximately 61 buildings, including classrooms, student residential buildings, an administration building, a meetinghouse for worship, an auditorium, a multi-building athletic facility and playing fields, an equestrian facility, and a new library with a collection of 25,000 volumes. There are also 52 houses and apartments on the campus that serve as residences for 88 faculty and staff members. Friends Fiduciary Corporation, an affiliate of the Philadelphia Yearly Meeting of the Religious Society of Friends ( PYM ), holds legal title to the real estate for the benefit of George School. In 1900, using the bequest of John M. George, the first three parcels of real estate were acquired for George School in the name of the predecessor of Friends Fiduciary Corporation, Trustees of Philadelphia Yearly Meeting of Friends, a corporation of the State of Pennsylvania. Consistent with PYM custom, at various other times during the twentieth century, Friends Fiduciary Corporation or its predecessors took title to additional parcels of real estate George School chose to acquire using the School s funds. George School does not pay rent to Friends Fiduciary Corporation, and Friends Fiduciary Corporation cannot dispossess George School of George School s beneficial interest in the real estate. Since 1900, George School has possessed, controlled and beneficially owned the real estate where its facilities are located. A-2

29 Accreditation The School is accredited by the Middle States Association of Colleges and Schools, the Pennsylvania Association of Independent Schools, and the International Baccalaureate (IB) Organization. Governance George School, originally organized as an unincorporated, nonprofit association under the auspices of PYM, was incorporated in 2005 as a nonprofit corporation organized under the laws of the Commonwealth of Pennsylvania. The School is governed by the George School Committee ( GSC ). GSC has full authority to manage and control the business and affairs of George School. It delegates various functions to subcommittees and to the Head of School. GSC retains responsibility for the coordination and oversight of the activities so delegated and regularly receives and approves reports from subcommittees and the Head of School. GSC is required to have at least 18 members but not more than 36 members. Two-thirds of the members are required to be members of the Religious Society of Friends, and the majority of these members must be selected among nominees presented by PYM. GSC appoints the balance of the members through an approval process that is overseen by the Membership Committee of GSC. In order to attract individuals with a broader range of skills, GSC expects to amend its governance procedures before the end of the academic year to reduce the Quaker participation requirement from two-thirds to a majority and to establish a process for PYM approval of fifty-one percent of the nominees to GSC. GSC members serve for staggered three year terms so that only one-third of the members are up for election each year. Members are limited to four consecutive three-year terms. GSC holds quarterly meetings in September, November, January, and April. The Clerks Committee the Quaker equivalent of an executive committee and other working committees meet during the intervening periods. GSC has adopted a Conflict of Interest Policy ( Conflict Policy ) to protect the interest of the School when the School is contemplating entering into a transaction or arrangement that might benefit directly or indirectly the private interest of an officer or member of GSC or a GSC subcommittee or that might result in a possible excess benefit transaction. In connection with any actual or possible conflict of interest, the officer or member must disclose the existence of the financial interest or personal gain to GSC or the GSC subcommittee considering the transaction or arrangement. Such officer or member may make a presentation to GSC or the GSC subcommittee but shall then leave the meeting during discussions. GSC or the subcommittee shall determine whether the School can obtain with reasonable efforts a more advantageous transaction or arrangement that would not give rise to a conflict of interest. If not reasonably possible under the circumstances, GSC or the subcommittee shall determine whether the transaction or arrangement is in the School s best interest and for its own benefit and whether it is fair and reasonable. The minutes of proceedings shall identify the persons who disclosed or were found to have an actual or potential conflict of interest, the nature of the conflict, actions taken, the identity of those present during discussions, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of the decision. A-3

30 GSC member Michael J. Kosoff disclosed a potential conflict of interest to GSC and the ad hoc Construction Manager Selection Committee ( Selection Committee ), when the Selection Committee was contemplating an agreement with R. S. Mowery & Sons, Inc. to serve as Construction Manager as Constructor for the athletics and fitness center, the construction of which is to be financed with the proceeds of the 2013 Bonds. Mr. Kosoff disclosed that he has, through The Dauntless Group, LLC, an arrangement with R. S. Mowery & Sons, Inc. such that he will financially benefit from the School s agreement with R.S. Mowery & Sons, Inc. Mr. Kosoff will serve as project executive for R.S. Mowery & Sons, Inc. for the athletics and fitness center project. Mr. Kosoff was not present during and did not participate in the deliberations relating to the decision to retain R. S. Mowery & Sons, Inc. and will be excused from those parts of GSC meetings when the work in connection with the project is under discussion. Further, the Selection Committee determined that the School could not obtain with reasonable efforts a more advantageous agreement than the agreement with R. S. Mowery & Sons, Inc., that the agreement was in the School s best interest and that it was fair and reasonable. GSC regularly invites two student and two faculty representatives, the Head of School, and senior administrators (Chief Financial Officer, Associate Head of School, Director of Communications & Marketing, Director of Admission & Enrollment Management, Director of Institutional Advancement, Director of Operations, and Dean of Students) to all of its meetings. GSC and its subcommittees observe the Quaker practice of consensual decision making. The following is a list of the current members of the GSC, their principal organizational affiliations, educational background and their respective years of appointment. The current faculty and student representatives to the GSC are included in the list. Joanna M. Bassert, director and professor, Program of Veterinary Technology, Manor College; George School 77; A.B. Mount Holyoke College, V.M.D. University of Pennsylvania; member, Germantown Monthly Meeting (appointed 2008). Lisa Parry Becker, vice president, William P. Parry & Son; George School 89; B.A. William Smith College, M.S. Northwestern University; member, Solebury Monthly Meeting (appointed 2012). Thomas D. Bell, president and chief operating officer, Pan Asian Commercial Consulting Group, LLC; B.B.A. St. John s Tobin School of Risk Management and The College of Insurance, Wharton School of the University of Pennsylvania; parent of two George School graduates (appointed 2007). Edward G. Biester, Jr., self-employed (Arbitration and Mediation); George School 48; B.A. Wesleyan University, Temple School of Law; parent of two George School graduates (appointed 2012). Amy Ward Brimmer, executive director, Earth Quaker Action Team; B.A. College of St. Benedict, M.A. New York University; member, Fallsington Monthly Meeting; parent of current George School student and one graduate (appointed 2012). A-4

31 Maria Crosman, faculty representative; teacher of religion; employed by George School since 1975; B.S. University of Tennessee; M.Min. Earlham School of Religion; D. Min. Lancaster Theological Seminary; parent of two George School graduates (appointed 2008). Gloria S. H. Denoon, sociologist; B.A., M.A. Soochow University (Taiwan); Ph.D. New York University; member Wrightstown Monthly Meeting (appointed 2011). Katherine Hahn Falk, parent of one current George School student and two graduates; George School Parents Association Representative (appointed 2012). Terry Foppert, superintendent, Sussex County Educational Services Commission; B.A. Douglass College, Rutgers University; B.A.,M.A. New York University; M.A. Lean University; member, Quakertown, NJ Monthly Meeting; parent of four George School graduates (appointed 2012). Arthur C. Henrie, retired president/ceo, Carpenter Industrial Supply Co.; George School 47; B.B.A. University of Michigan Business School; member, Millville, PA Monthly Meeting; parent of two George School graduates (appointed 2008). Edwin D. Huff, Certified Public Accountant; partner, Huff & VanderBeek LLP; B.S. UC Berkeley (appointed 2009). Timothy D. Katsiff, partner, Morgan Lewis & Bockius LLP; George School 87; B.A. University of Chicago; J.D. Cornell Law School (appointed 2005). Alan Keim, president, Lone Oak Medical Technologies LLC; B.A. Gettysburg College; member, Wrightstown Monthly Meeting; parent of two George School graduates (appointed 2012). Christopher Kerr, Charles Kerr Enterprises, Inc.; B.A. Haverford College; M.A. London School of Economics; member, Solebury Monthly Meeting; parent of two George School graduates (appointed 2004). Michael J. Kosoff, construction manager, The Dauntless Group, LLC; George School 56; A.A.S. West Chester Community College; Hamilton College (appointed 2006). Bennett P. Lomax, president & CEO, The Lomax Companies; George School 95; B.S. Hampton University; J.D. Temple University Beasley School of Law; member, Doylestown Monthly Meeting (appointed 2007). Tommy Lubeck, boarding student, George School 14, student representative to GSC (appointed 2012). Kassem L. Lucas, partner, Pepper Hamilton LLP; George School 90; B.A. Yale University; J.D. Temple University School of Law (appointed 2005). A-5

32 Nancy Chiyo Moriuchi, B.A. Mount Holyoke College, M.B.A. Columbia University; member, Newtown Monthly Meeting; parent of current George School student and one graduate (appointed 2011). Theodore Nickles, president, Nickles Contracting, Inc.; B.A. Pennsylvania State University; member, Abington Monthly Meeting; parent of George School graduate (appointed 2000). Norval D. Reece, CEO, Reece Communications; B.A. DePauw University, B.D., MDiv Yale University; member, Newtown Monthly Meeting; parent of two George School graduates (appointed 2012). Craig Henry Scott, A.B. Brown University; M.B.A. University of Pennsylvania - The Wharton School; member, Doylestown Monthly Meeting; parent of two George School graduates (appointed 2011). Richard M. Segel, president, Highlands LLC; B.M.E., M.M.E Yale University; M.B.A. University of Chicago; member, Wrightstown Monthly Meeting; parent of George School graduate (appointed 2005). Deborah M. Spitalnik, executive director and professor of pediatrics, The Elizabeth M. Boggs Center on Developmental Disabilities, UMDNJ - Robert Wood Johnson Medical School; B.A. Brandeis University; Ed.M. Harvard University; Ph.D. Temple University; parent of George School graduate (appointed 2002). Andrew Steginsky, manager, Steginsky Capital, LLC; B.S.B.A. Ohio State University; parent of two George School graduates (appointed 2004). Hanna Vaughn, day student, George School 15, student representative to GSC (appointed 2012). James L. Whitely, retired vice president, JP Morgan Chase; George School 54; B.A. Oberlin College; M.A. Johns Hopkins School of Advanced International Studies; Certificate, Harvard GSBA; Certificate, Columbia GSBA; member, NYYM-Summit Meeting; parent of George School graduate (appointed 2002). Following are brief resumes of the principal officers and administrators of George School: Nancy O. Starmer, Head of School: Ms. Starmer is in her thirteenth year as head of school at George School. She holds a B.A. from the College of Wooster and an M. Ed. from Boston University and is the recipient of a Klingenstein Fellowship from Columbia University. Prior to becoming the head of school at George School, she was the principal of the Upper School at Milton Academy in Milton, Massachusetts, where she served in various capacities for 27 years. In the year prior to coming to George School, Ms. Starmer held sabbatical appointments as a Visiting Practitioner at the Harvard Graduate School of Education and as a Visiting Scholar at the Wellesley Centers for Research on Women. She is a member of Newtown Monthly Meeting. A-6

33 Ari Betof, Director of Institutional Advancement: Mr. Betof, a 1998 graduate of George School, was appointed as the director of institutional advancement in Prior to this, he was the director of enrollment and strategic planning, appointed in He has a B.S. from the honors program at Guilford College and an Ed.D. in educational leadership from the University of Pennsylvania with specialization in financial and organizational sustainability of independent schools. He spent three years as a teacher at Northfield Mount Hermon School in Northfield, Massachusetts. Mr. Betof serves on the boards of the Friends Council on Education and the School Committee of Newtown Friends School. Christian Donovan, Director of Admission and Enrollment Management: A 1995 graduate of George School, Mr. Donovan is the director of admission and enrollment management, appointed in He has a B.A. from Wesleyan University and an M.S. Ed in Educational leadership from the University of Pennsylvania. Before returning to George School to work in 2003, Mr. Donovan spent three years at the Athenian School in Danville, California as the associate director of admission and financial aid and as the associate director of college counseling. Catherine Ezzo, Dean of Students: Ms. Ezzo was appointed the Dean of Students in July She also teaches in the English department. Catherine earned both her B.A. (Hons.) and M.A. in English Literature from the University of Sussex in the United Kingdom. Prior to coming to George School, she taught at the Millbrook School, New York, and at the William Penn Charter School in Philadelphia, Pennsylvania. Michael Gersie, Director of Operations: Mr. Gersie has been the director of operations of George School since He has a B.S. from Tusculum College, an M.A. from William Patterson College, and Ed.D. from Wilmington College. Mr. Gersie started his career in 1974 as an economics teacher in New Jersey. In 1986 he became the business administrator and board secretary for the Burlington, New Jersey Township School District. In 1997, he was named the assistant superintendent for finance and operations for Burlington, New Jersey. S. Odie LeFever, Director of Communications and Marketing: Ms. LeFever has worked at George School since 1987, holding the positions of associate director of advancement, the director of external affairs, the director of external affairs/advancement operations and most recently, director of communications and marketing. She earned a B.A. from the College of New Jersey and is the parent of two George School graduates. Megan McBride, Controller: Ms. McBride has been controller of George School since June She earned a B.S. from DeSales University and is a Certified Public Accountant. She is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants. She previously served as an auditor for a regional accounting firm in Philadelphia, Pennsylvania. W. Scott Spence, Associate Head of School: Mr. Spence has been associate head of school since August, 2001 and a history teacher at George School since He earned a B.A. from Colgate University, attended the Pushkin Institute in Moscow, and earned an M.I.A. degree from Columbia University. He is a parent of a George School graduate and a current student. Mr. Spence serves on A-7

34 the Committee on Quaker Education for the Philadelphia Yearly Meeting and is a member of Newtown Monthly Meeting. Michael Toohey, Chief Financial Officer: Mr. Toohey was named George School s chief financial officer in July, Prior to joining the management team at George School, he served as chief operating officer of the Southern Poverty Law Center, a nonprofit civil rights advocacy organization. Mr. Toohey began his career and spent 20 years in management consulting after earning his undergraduate degree from Wesleyan University and a Masters in Management from the Kellogg School at Northwestern University. His youngest son is currently a student at George School. Financial Matters The following summaries and discussions of financial matters should be read in conjunction with the audited financial statements of the School, related notes, and the auditor s report, which are included as Appendix B to this Official Statement. George School operates on a fiscal year ending July 31. The School follows Financial Accounting Standards Board Accounting Standards Codification 958, which established standards for external financial statements provided by a nonprofit organization. The purpose is to present the statements of the School as a whole and to present balances and transactions according to the existence or absence of donor-imposed restrictions. The financial statements report net assets, revenues, expenditures, and gains and losses in three classifications: unrestricted, temporarily restricted, and permanently restricted. Unrestricted net assets attributable to operations include revenues and expenses associated with the principal educational mission of the School. Temporarily restricted net assets are those whose use by the School is restricted by the donor for specific purposes and/or the passage of time. Permanently restricted net assets include gifts, trusts, and pledges which require, by donor restriction, that the corpus is invested in perpetuity and only the income is made available for program operations in accordance with donor restrictions. The financial statements for the years July 31, 2012 and 2011, as included in Appendix B of this Official Statement, were audited by Tait, Weller & Baker LLP, Certified Public Accountants. In the opinion of the School, there has been no material adverse change in the financial condition of George School since July 31, [Remainder of Page Intentionally Left Blank] A-8

35 Historical Operating Results The following table provides a summary of the School s annual operations over the past five fiscal years. The information contained in this table has been compiled from the audited financial statements of George School. Historical Revenues and Expenditures Revenues Tuition & Fees $17,094,122 $ 18,205,178 $19,379,216 $20,311,270 $20,837,054 Less: Student Aid (5,472,187) (5,696,079) (6,193,674) (6,461,969) (6,863,470) Net Tuition & Fees 11,621,935 12,509,099 13,185,542 13,849,301 13,973,584 Auxiliary enterprises revenues 917, , , , ,660 Summer programs and rentals 1,210,664 1,065,935 1,190,859 1,022, ,783 Gifts, contributions, bequests 1,426,557 1,316,568 1,566,083 32,846,423 2,940,626 Endowment income 2,383,086 2,270,938 2,292,838 2,225,402 2,233,216 Interest and dividend income 401, , , , ,400 Realized and unrealized gains (losses) on investments and property (2,154,975) (3,547,717) 1,443,557 2,343,554 (523,744) Other revenues (expenses) 14, ,283 29,060 (1,555,229) 1,643,108 Net assets released from restrictions 5,151,576 14,843,964 6,502,303 6,761,385 6,728,458 Total revenues and other additions $20,972,359 $30,014,816 $27,690,012 $58,693,389 $ 29,273,091 Expenditures and other deductions Instruction and student activities 10,357,428 11,115,089 11,584,771 12,431,353 12,542,265 Auxiliary services 3,495,473 3,640,189 3,716,903 3,743,385 3,749,059 Summer programs and rentals 952, , , , ,555 Total program services 14,805,740 15,574,634 16,220,878 17,147,957 17,279,879 Management and general 4,513,735 4,671,932 5,930,346 5,874,389 6,700,973 Fund-raising 1,381,874 1,358,914 1,380,922 1,397,852 1,798,186 Total support services 5,895,609 6,030,846 7,311,268 7,272,241 8,499,159 Total expenditures 20,701,349 21,605,480 23,532,146 24,420,198 25,779,038 Net change in net assets $ 271,010 $ 8,409,336 $ 4,157,866 $34,273,191 $ 3,494,053 Budgetary Matters George School uses a long range financial model for developing its annual operating and capital budgets. The Administrative Team and Finance and Investment Committee use the model to assess the financial effects of making changes in such key variables as enrollment, tuition and fee rates, salaries and benefits, financial aid, endowment spending, and various other revenue and expense components. GSC policy requires the annual operating budget to be in balance and funding to be provided for the renewal and replacement of plant and equipment. A-9

36 Endowment Assets and Other Investments The School has pooled its investments, including unrestricted net assets designated for investment and permanently restricted net assets. George School uses the total return concept to determine the value of its pooled investment funds. Under the total return method, investments are recorded at market value. GSC annually approves a spending amount for the new academic year that results from a weighted formula: 50% of an amount equal to 5% of the average market value of the endowment assets at the end of each of the last 12 calendar quarters, plus 50% of an amount equal to the spending amount for the last academic year increased by the Consumer Price Index (12 month CPI as of July 31) plus 1%, but subject to a cap of 6% and a floor of 4% of the average quarter-ending market value of the endowment over the last 12 quarters. The endowment assets are invested by outside managers hired and evaluated by the Finance and Investment Committee, a subcommittee of the GSC. The Finance and Investment Committee meets quarterly to review the performance of the various investment managers and to review the asset allocations established by the Committee and the GSC. For the fiscal years ending July 31, 2010 through the present, the School was assisted in these tasks by Colonial Consulting LLC. The market values of the School s endowment assets and other investment assets as of July 31 for fiscal years 2008 to 2012 are summarized in the table on the following page. [Remainder of Page Intentionally Left Blank] A-10

37 Endowment and Other Investment Assets Amounts % Amounts % Amounts % Amounts % Amounts % Cash and cash equivalents $10,742, % $14,017, % $12,137, % $11,114, % $8,123, % Cash deposited with escrow agent 0 0.0% 6,260, % 3,261, % 4,952, % 3,556, % Money market funds 3,043, % 526, % 1,068, % 2,846, % 11,123, % Domestic equities 35,036, % 29,170, % 44,098, % 76,447, % 72,015, % International equities 8,135, % 15,458, % 16,621, % 7,236, % 6,546, % Pooled income fund 1,298, % 1,263, % 1,221, % 4,964, % 4,378, % Other mutual funds 0 0.0% 0 0.0% 0 0.0% 0 0.0% 157, % Fixed income 15,746, % 6,988, % 159, % 497, % 497, % Real estate 301, % 301, % 301, % 301, % 301, % Private partnerships 3,091, % 3,201, % 1,703, % 12,728, % 13,353, % Beneficial interest in perpetual and lead trusts 76,589, % 73,970, % 73,381, % 72,694, % 71,198, % Total $153,985, % $151,157, % $153,955, % $193,783, % $191,251, % Source: George School Records. A-11

38 The School s endowment assets and other investments are included as part of the School s Net Assets in its financial statements. By nature of restrictions placed on some of the funds by donors, certain net assets are expendable while others cannot be expended. The following table reflects the School s Net Assets for fiscal years 2008 to Net Assets FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Total Net Assets $167,568,960 $155,645,240 $161,609,034 $199,393,433 $200,295,598 Less: Permanently Restricted Net Assets (26,993,658) (25,608,895) (27,168,938) (28,257,103) (28,518,703) Less: Net Investment in Plant (15,732,620) (17,522,575) (18,203,786) (33,042,604) (34,485,099) Expendable Net Assets $124,842,682 $112,513,770 $116,236,310 $138,093,726 $137,291,796 Source: George School Records. Outstanding Indebtedness George School has available a $2,000,000 unsecured, revolving line of credit, payable upon demand with TD Bank, N.A., which expires on April 30, Interest is payable at a rate of 50 basis points above the LIBOR rate for amounts drawn up to $1,000,000, and 100 basis points for amounts drawn over $1,000,000. The School intends to renew the line of credit for another year despite the fact that the School has not drawn on the line of credit since fiscal year [Remainder of Page Intentionally Left Blank] A-12

39 The following table sets forth the School s fiscal year debt service requirements, reflecting the issuance of the 2013A&B Bonds. 2013A&B Bonds Fiscal Existing Total Year Debt Service Principal Interest Debt Service Debt Service 2013 $ 1,696,000 $ - $ - $ - $ 1,696, ,696,000-1,496,495 1,496,495 3,192, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,696,000-1,402,964 1,402,964 3,098, ,007,375-1,402,964 1,402,964 4,410, ,013,250-1,402,964 1,402,964 4,416, ,141,500-1,402,964 1,402,964 5,544, ,140,625-1,402,964 1,402,964 5,543, ,142,750-1,402,964 1,402,964 5,545, ,142,500-1,402,964 1,402,964 5,545, ,139,625-1,402,964 1,402,964 5,542, ,138,750-1,402,964 1,402,964 5,541, ,139,375-1,402,964 1,402,964 5,542, ,136,125 2,615,000 1,346,349 3,961,349 8,097, ,017,250 3,875,000 1,209,930 5,084,930 8,102, ,018,625 4,025,000 1,054,656 5,079,656 8,098, ,255, ,156 8,098,156 8,098, ,545, ,938 8,095,938 8,095, ,895, ,375 8,092,375 8,092,375 Total $ 75,705,750 $33,210,000 $41,772,999 $ 74,982,999 $150,688,749 Pension Plan The School offers a pension plan to eligible faculty, administrators, and staff employees, sponsored and administered by The Teachers Insurance and Annuity Association of America. The plan is a defined-contribution plan, is fully funded, and the participants interest is fully vested. George School contributes to these plans annually an amount equal to 7% of an employee s salary. A-13

40 After reaching 22 years of full-time work experience, the School s contribution increases to 8% of total salary; after reaching the 27th year, the School s contribution increases to 9%; and in the 32nd year, the School s contribution increases to 10%. These contributions are applied to individual annuity accounts established for the benefit of the employee and administered by the Teachers Insurance and Annuity Association of America. Contributions by the School under this plan for the years ended July 31, 2012 and 2011 amounted to approximately $750,000 and $671,000, respectively. Gifts, Contributions and Grants George School s Advancement Office coordinates all of George School s fundraising, marketing, and communications. The Advancement Office is staffed by 16 full-time and 1 part-time professionals. The work of the office is augmented by volunteers, including members of GSC, the Development Advisory Committee, and Campaign Committee, as well as other graduates, parents, and members of the School community. George School is the charitable beneficiary of The Barbara Dodd Anderson Charitable Lead Annuity Trust established on August 21, 2007 by George School graduate, Barbara Dodd Anderson (Class of 1950). Over the 20-year term of the trust, George School is to be paid $5,000,000 per year for the first 15 years and $10,711,000 per year for the last five years. The annuity amount is to be paid from income and, to the extent income is insufficient, from principal. The trust has been funded with cash and Class A shares of stock in Berkshire Hathaway, Inc. On July 31, 2012, the assets of the trust had a market value of $56,528,012. The assets are allocated approximately 95% to equity investments and 5% to cash or cash equivalents. George School believes that the trust is adequately funded for payment of the annual annuity amounts payable. Most of the funds received from the trust are expected to be added to George School s endowment to support its financial aid program, faculty salaries, and sustainability initiatives. George School has an excellent record of developing strong relationships with donors, demonstrated by one of the nation s most robust and lucrative independent school planned giving programs. As of July 31, 2012, George School has 349 living individuals who have planned giving arrangements with the School. In Fiscal Year 2011, George School received a $30,000,000 unrestricted bequest from the estate of the late Barbara Dodd Anderson. $15,000,000 is being held in a board-designated fund to support salaries; the other $15,000,000 has been designated to support athletics at George School. George School received cash gifts as follows for the fiscal years 2008 to 2012: FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Annual giving $1.0m $1.1m $1.1m $ 1.2m $1.2m Capital and endowment gifts $5.8m $5.7m $5.7m $ 6.6m $6.1m Matured planned gifts $1.1m $0.3m $1.2m $31.8m $2.6m TOTAL GIFTS $7.9m $7.1m $8.0m $39.6m $9.9m Source: George School Records. A-14

41 George School has repeatedly been recognized for its fundraising and marketing publications by the Council for the Advancement and Support of Education (CASE), the premier international association for educational advancement professionals. Since 1990 George School earned two grand gold awards, seven gold awards, two silver awards, and five bronze awards in the international CASE Circle of Excellence competition. George School also received the 1996 CASE Circle of Excellence award in educational fundraising for overall performance. Litigation George School is subject from time to time to a variety of suits and proceedings arising in the ordinary course of business. In the opinion of the School, no litigation, individually or in the aggregate, currently pending or, to the knowledge of George School, threatened against it will result in a material adverse impact on the School s financial condition. The School is not involved currently in any litigation matters other than two real estate tax appeals regarding parcels of real estate on which faculty housing is located. George School is contesting the imposition of the real estate tax; no assurances can be given as to the outcome of the matter, but the School does not consider the potential tax imposition to be material to its future financial results. George School has received notice of an age discrimination claim from a former employee. If the claimant proceeds to file a civil action, George School will dispute liability and look to its insurance carrier for defense and indemnity. The Academic Program George School designates the rigor of its academic programs as demanding, very demanding, or most demanding: Demanding: The student taking a demanding program over the junior and senior years typically completes the following college preparatory courses: American Literature and International Baccalaureate ( IB ) Standard Level ( SL ) World Literature U.S. History Foreign language through at least the third year At least one course in biology, chemistry, physics, or environmental science Math courses covering Algebra 2, trigonometry, and statistics Very demanding: The student taking a very demanding program over the junior and senior years typically completes all or most of the following: American Literature and IB SL or Higher Level ( HL ) World Literature Accelerated U.S. History An intensive foreign language course through at least the third year Physics and/or an Advance Placement ( AP ) or IB science course A math course that covers pre-calculus A-15

42 Most demanding: The student taking the most demanding program over the junior and senior years typically completes all or most of the following: IB HL American Literature and IB HL World Literature AP U.S. History and/or an IB history course Foreign language through Intensive Spanish 4, Intensive French 4, or IB/AP Latin 4 An AP or IB biology, chemistry, or physics course A math course that covers calculus and at least one of the following: An academic course overload in the junior and/or senior year AP Spanish, French, or Latin 5 An AP or IB arts course AP Statistics, AP Calculus, IB HL Math 2: Calculus A second AP or IB science course By the senior year, almost all IB Diploma candidates are taking the most demanding program. Those not taking a course overload typically complete the IB math or foreign language sequence in their junior year. George School maintains several special curricula: International Baccalaureate: The program was introduced at George School in In May 2012, 149 students sat for a total of 363 IB examinations. 38 of 40 diploma candidates in the Class of 2012 earned their IB Diplomas, with an average point total of 30 (24 points are required for the diploma). Currently 42 seniors and 57 juniors are enrolled in the full IB Diploma Program. Advanced Placement: Sophomores, juniors, and seniors may enroll in AP courses with departmental permission. In the academic year, 16 courses (including some designated as IB) prepare students for the following AP exams: Studio Art, Biology, Calculus AB, Chemistry, English Language and Composition, English Literature, French, Human Geography, Latin, Physics C, Spanish, Statistics, and U.S. History. In May 2012, 134 students took 207 AP exams. 84% of these exams (173 total) received scores of 3 or better: 64 exams (31%) received a score of 5 49 exams (24%) received a score of 4 61 exams (29%) received a score of 3 English as a Second Language: Introduced in 1989, the program enrolls about 15 students each year. Students are expected to take a mainstream English class by senior year in order to graduate. The School recently strengthened this program by eliminating the Intermediate sequence, now admitting only Advanced ESL students. A-16

43 Enrollment The following table illustrates enrollment trends for the last five academic years. Total Applications Applications Completed Accepted Acceptance Rate (%) New Student Enrollment Yield (%) Total Enrollment Source: George School Records. George School maintains an enrollment target of approximately 540 students, generally balanced equally between male and female students and enhanced overall by considerable racial and cultural diversity. In order to maintain a predominantly boarding culture in the George School community, boarding enrollment is maintained at a level greater than 50%. On average, over the past five years, students have enrolled from 37 foreign countries and 22 states. The student body has included an average of 24% American students of color and another 24% international students (including dual citizens, Americans living abroad, and citizens of other countries). The following table shows the breakdown of total applications between boarding and day students: Boarding and Day Applications BD Day BD Day BD Day BD Day BD Day Applications Completed Accepted Acceptance Rate (%) Enrolled New Yield (%) Total Enrollment Source: George School Records. A-17

44 In the past ten years, George School has attracted students from 88 countries. The current School population includes students from a record 45 countries. This expanded international diversity provides the School flexibility to offset financial instability in various geographic markets. The School s long-time prominence as an international school has helped enable the School to maintain its enrollment strength. The introduction of the International Baccalaureate (IB) and the English language learning program in the 1980s, broadened George School s market at a time when domestic demographics and a sluggish U.S. economy worked against secondary school enrollment. As the IB program has become more prominent in the United States, the School s successful 30- year history has made the School into a recognized leader in this area, drawing domestic as well as international students who are specifically looking for the opportunity to receive an IB diploma. In the past few years, George School has become more agile in responding to market forces with the creation and application of an integrated plan that includes an enhanced website and new models for inter-office project development, workflow coordination, and technology integration. The website is the focal point of the School s marketing efforts and, in recognition of the quality of the website, the Council for Advancement and Support of Education (CASE) awarded George School its 2009 Circle of Excellence gold medal in the Complete Institutional Website category. George School is the only independent school, college, or university in six years to be recognized with a gold medal in this category. In 2012, George School also received a CASE grand gold award for the quality of its admission viewbook, Compendium, the only grand gold awarded to an independent school in any category in that year s judging. Applicants receive Compendium at the beginning of the application process. At the time an applicant is offered admission, they are sent The Definitive Guide (For Now) to Playing Four Square at George School, which also won a CASE grand gold award in George School also uses major social media outlets like Facebook, Twitter, and YouTube to engage in a deepening relationship with multiple constituent groups including applicants and their parents. While it is difficult to attribute directly growth in applications and enrollment to the website, Compendium, The Definitive Guide, or any other marketing effort, the School clearly benefits from the quality of its marketing materials. More prospective students are looking at George School and a higher percentage of those looking are completing applications. George School also has strategically increased its admission travel and advertising, and plans to continue these efforts. In the academic year, the Admissions Office combined its resources with the Advancement Office to create an Institutional Advancement Team. This facilitated School representatives travel to 18 states and 11 foreign countries, which far exceeded travel in previous years. In addition to their traditional functions, admission officers visit donors and development officers visit admission candidates when traveling for the School. This pooling of resources allows George School to maximize its return on investment of financial and human resources. An important aspect of the ongoing enrollment strength has been the School s ability to limit returning student attrition. Through annual analysis of attrition data, the Admission Committee has been able to refine its policies and practices so as to minimize the enrollment of students who may be at risk for separation from the School prior to graduation. The School also continues to refine A-18

45 internal practices to support students who are enrolled to ensure their successful graduation. Student attrition has averaged 5.5% over the five-year period from the academic year through the academic year, as compared to the NAIS national average of 10.4% for boardingday schools during the same period. [Remainder of Page Intentionally Left Blank] A-19

46 College Matriculations At least three George School graduates entered the following colleges and universities between 2008 and 2012: Allegheny College American University Arcadia University Bard College Bates College Bennington College Berklee College of Music Boston University Brandeis University Bryn Mawr College Bucknell University Bucks County Community College Carnegie Mellon University Case Western Reserve University College of New Jersey College of William and Mary Colorado College Columbia University Connecticut College Cornell University Davidson College Dickinson College Drew University Drexel University Earlham College Eckerd College Emerson College Emory University Eugene Lang College Franklin & Marshall College George Washington University Goucher College Guilford College Haverford College Howard University Indiana University/Bloomington Ithaca College Johns Hopkins University Johnson & Wales University Lehigh University Loyola University Maryland Loyola University New Orleans McGill University Mount Holyoke College Muhlenberg College New York University Northeastern University Pennsylvania State University, Altoona Pennsylvania State University/University Park Pratt Institute Purdue University Rensselaer Polytechnic Institute Rochester Institute of Technology Rutgers State University Saint Joseph s University Sarah Lawrence College School of the Art Institute of Chicago Smith College Stanford University Susquehanna University Syracuse University Temple University Tulane University University of California/Berkeley University of Chicago University of Delaware University of Illinois/Urbana-Champaign University of Miami University of Michigan University of North Carolina/Chapel Hill University of Pennsylvania University of Pittsburgh University of Rochester University of Southern California University of St. Andrews University of Vermont University of Washington University of Wisconsin/Madison Ursinus College Virginia Polytechnic Institute Washington University in St. Louis Wellesley College Source: George School Records. A-20

47 Admission Selectivity Admission to George School has become increasingly competitive. In the past two years, the ratio of applicants to spaces in the ninth grade has been approximately three to one. Given its mission to serve students with a wide range of abilities and learning styles, George School especially focuses on the selection process to ensure that it includes qualitative as well as quantitative criteria. The primary criteria for admission are academic and personal qualities as shown by school records, teacher and personal recommendations, a personal interview, Secondary School Admission Test scores, and extracurricular involvement. Tuition Rates and Competition The following table shows tuition rates for boarding and day students for the last five academic years Tuition (boarding) $39,600 $40,870 $42,920 $45,710 $48,910 Tuition (day) $29,300 $30,240 $30,850 $31,780 $32,860 Source: George School Records. [Remainder of Page Intentionally Left Blank] A-21

48 George School competes with other private schools predominantly in the tri-state area. On the basis of overlapping Secondary School Admission Test scores from its recipients, George School believes that its most significant competitors are the institutions listed in the following table, which also reflects the published tuition charges for boarding and day students for the academic year Institutions Board/Day Tuition Rates Abington Friends, Jenkintown, PA D $28,400 Berkshire School, Sheffield, MA B $49,900 Blair Academy, Blairstown, NJ B $49,500 George School, Newtown, PA B $48,910 D $32,860 Germantown Friends, Philadelphia, PA D $28,450 Hill School, Pottstown, PA B $49,400 Hun School, Princeton, NJ D $33,400 Lawrenceville School, Lawrenceville, NJ B $51,025 D $42,185 The Masters School, Dobbs Ferry, NY B $49,930 Mercersburg Academy, Mercersburg, PA B $48,825 Northfield Mount Hermon, Mount Hermon, MA B $49,700 Peddie School, Hightstown, NJ B $47,500 D $39,000 Pennington School, Pennington, NJ D $30,950 Princeton Day School, Princeton, NJ D $30,230 Solebury School, New Hope, PA D $32,900 Westtown School, West Chester, PA B $46,400 Sources: Individual school websites and survey compiled by Association of Business Officers of Preparatory Schools. A-22

49 Financial Aid George School establishes a financial aid budget for each fiscal year as part of its annual budget process. For the past decade and beyond, George School has utilized financial aid to further its goal of economic diversity among the student population. Since 1991, the financial aid budget has been stratified into small, medium, and large financial aid packages so as to ensure that the School uses its available funds to aid families across a wide continuum of calculated need in both the boarding and day populations. This planning model has been employed successfully to maintain the economic diversity within George School s financial aid population. The School consistently provides need-based financial aid to 45-47% of its students. Academic Year Boarding Financial Aid (# of students, percent) Day Financial Aid (# of students, percent) $3,771,250 (137, 50.0%) $1,615,250 (98, 40.0%) $4,180,520 (148, 50.9%) $1,662,500 (105, 41.2%) $4,247,020 (143, 50.0%) $1,931,050 (107, 42.3%) $4,432,455 (138, 50.0%) $2,165,350 (109, 43.8%) $5,252,260 (152, 54.7%) $2,266,250 (111, 41.6%) Source: George School Records. Faculty and Staff In academic year, the School had 181 full-time equivalent employees in the following capacities: Faculty (including those on paid leave) Administration/Professional Staff Total 181 The faculty and staff of George School are not represented by any unions. There is a campus organization that represents the concerns of the faculty and communicates them to the administration. A second campus organization fulfills a similar function with regard to staff employees. There is also a group called the Association of Office Personnel, which represents secretarial and office staff. The administration believes that employee relations generally are very good. A-23

50 Mission and Core Values With Quaker tradition as its touchstone and academic excellence at its core, George School seeks to develop citizen-scholars cheerfully committed to openness in the pursuit of truth, service and peace, and the faithful stewardship of the earth. George School wants its students to treasure learning for its own sake and to use it to benefit a diverse world. Above all, it wants them to let their lives speak. Transformative Teaching and Learning. Transformative relationships between teachers and students are the heart of the George School educational experience. Based upon a powerful combination of example, mutual respect, and personal commitment, these relationships support a program that is intentionally balanced between rigor and reflection, passion and compassion. They provide the environment within which George School teachers challenge their students to hold themselves to high academic standards, to practice humility, and to develop lifelong habits of scholarship and intellectual curiosity. Personal Integrity. The alignment of belief and action that arises when an individual decides what is important and finds a way to be true to it is summed up in George Fox s phrase let your life speak. Through habits of reflection that are honed in Meeting for Worship, through commitment to honor the Light of God in everyone, and by developing an understanding of the Quaker (Friends) values of simplicity, peace, integrity, community, equality, service, and stewardship, graduates are provided with a firm foundation upon which to build lives of personal integrity. Unity in Diversity. George School is committed to being a community where people with vastly different backgrounds, identities, and perspectives are united both in their respect for the unique gifts that each brings and in pursuit of a common good. It places a high value on diversity and on the ways that, individually and collectively, convictions are broadened, strengthened, and enlightened from the appreciation and respect of a range of perspectives. This belief is reflected in George School s motto, Mind the Light. Responsibility to Others. George School grounds the members of its community by a sense of responsibility to each other and to the earth. This leads us to practice good stewardship in daily actions and decisions. Stewardship, a central Friends value, recognizes that physical, financial, natural, cultural, intellectual, and spiritual resources are to be grown and sustained for the good of all and for generations to come. Strategic Areas, Goals and Overviews goals: George School has developed a strategic plan for the next five years with the following Educational Program. George School will endeavor to provide a transformative educational experience that is deeply grounded in Friends values by continuously reviewing and improving the academic curriculum and pedagogy, community life and service programs, and the mechanisms by which George School attracts and retains a high caliber of students, faculty and A-24

51 staff. To accomplish this goal, George School will design and implement a process to assess whether the new curriculum is meeting its stated objectives and to review those objectives over time, enhance total compensation and professional growth in relation to peer schools in developing the next generation of faculty and staff and increase the scope and reach of its service programs. Numerous changes have taken place in the School s academic program since the creation of the Strategic Plan. These include (but are not limited to) new courses in Chinese language, AP Chemistry, IB arts, AP Economics, a variety of religion electives, and significant changes to our English Language Learning (ELL) program. The International Baccalaureate Diploma Program has grown in popularity, with roughly one third of all juniors and seniors now enrolled in the program. In the area of compensation, the GSC has made a commitment to bring salaries closer to the top quartile in comparable markets, earmarking a $15 million bequest as endowment toward that purpose. Finally, several local service projects have been established that offer students an opportunity to serve communities that are closer to home. Diversity. To enhance its distinction as an inclusive educational community, George School will challenge itself by addressing difficult questions raised by diversity in all its dimensions. This will require the re-examination of George School s definition of diversity, both to reflect the world of today and to ensure its alignment with the George School s mission and curricular objectives, and an improvement of George School s practices school-wide from the perspective of the diversity of students and families the School serves. Currently, the school s diversity efforts are focused on better serving the substantial and increasing international population. George School students now come from 45 different countries. To accommodate that population, we have reexamined and improved the School s orientation, host family, vacation, and ELL programs. The School also has launched an exciting initiative aimed at modeling for students how to have open, substantive, respectful conversations across differences. Environmental Stewardship. Recognizing the pressing need for all human beings to live simpler, more sustainable lives, George School will strive to visibly integrate environmental stewardship into the day-to-day activities of students, faculty and staff, and into planning. To do this, George School will design and implement a plan that engages students, faculty, and staff in adopting behaviors that result in saving energy, reducing waste, living more simply, and demonstrating respect for the campus and for the future of the planet. George School will also integrate environmental sustainability goals into all of its facilities planning. Progress in this area has included the installment of energy meters in all dormitories and a steady reduction in energy use; yearly participation in the Independent School Green Cup Challenge; creation of a school garden that has become a centerpiece of this initiative; significant changes in food service practices (including composting and the creation of local purchasing relationships); and a formal commitment to earn LEED certification for all building projects. Future sustainability plans include installation of solar energy panels and construction of a LEED certified fitness and athletic center. Facilities. George School will act to improve its facilities to provide the best physical tools to advance student learning and to meet the needs of its teachers, while maintaining the pristine beauty of the campus. George School s multiple campus master plans were integrated into one plan that: defines needed improvements to the academic, arts, and athletic facilities; prioritizes needs; determines funding needs and sources; and creates a timeline for implementation. Recently completed projects include the construction of a new athletic track and artificial turf field; upgrades A-25

52 and improvements to the science laboratories; renovations to the dining facilities, including installation of air-conditioning; and window replacement in three academic buildings. Future improvements over the next several years include construction of an indoor equestrian riding ring and various deferred maintenance projects in addition to the projects to be financed with the proceeds of the 2013 Bonds, specifically the construction of an approximately 99,000 square foot fitness and athletic center, including two gymnasiums, a swimming facility, fitness facilities, locker rooms and other athletic and recreational facilities, and other miscellaneous capital improvements and additions to the School s facilities including installation of additional air-conditioning in Main Building, installation of solar energy panels and campus-wide window replacement. The athletic track and other recently completed projects cost approximately $6.0 million, the projected cost of completion of the fitness and athletic center is $28.7 million and of the other miscellaneous capital improvements and additions is approximately $3.4 million, all of which have been or will be funded or reimbursed from the proceeds of the 2011 Bonds and 2013 Bonds and School funds. Construction of the fitness and athletic center will commence in March of 2013 and be completed by August The other projects will begin in June 2013 and are expected to be concluded in August Financial Aid. In the context of a changing economic environment for independent schools, George School will challenge itself to demonstrate continued leadership in its commitment to financial aid. George School will undertake a rigorous study of current practices and new methods for making education at the School more affordable to economically diverse families; define needed changes to financial aid, admission, and tuition policies and objectives; and, implement the steps that will ensure George School s continued distinction in financial aid awards. An ad hoc Affordability Committee has been studying this topic and the school introduced a net tuition revenue approach to enrollment for the academic year. Analysis for this first year suggests that the approach was critical to the School s full enrollment and revenue that meets expenses at the opening of the academic year. Financial Sustainability. George School will endeavor to create new processes for fundraising and financial planning that will ensure the support of its strategic objectives for the long-term benefit of George School. To accomplish this goal, George School will identify the operational, capital and endowment needs that are required to implement the Strategic Plan; prioritize needs and integrate these into the School s financial strategies and fundraising goals; finalize and communicate how the Barbara Dodd Anderson gifts will be used; raise the additional funds needed to support capital efforts and build endowment to support ongoing commitments to compensation, financial aid, and affordability; and, design and implement a plan for engaging a broader group of graduates and friends in the ongoing work of George School. The School has made progress in each of these areas over the last five years, restructuring the advancement office, integrating technology and travel with the admission office, undertaking a feasibility study, and launching the nucleus phase of a capital campaign for the long term support of the School s fitness and athletics facilities and programs. Since the start of 2011, the School has received $6.2 million in pledges toward that end, of which $1.7 million is in cash. The School is considering coupling its fundraising in support of fitness and athletics with a broader campaign for an endowment in the years ahead. A-26

53 APPENDIX B AUDITED FINANCIAL STATEMENTS OF GEORGE SCHOOL AS OF AND FOR THE YEARS ENDED JULY 31, 2012 AND 2011

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55 GEORGE SCHOOL AUDITED FINANCIAL STATEMENTS JULY 31, 2012

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57 GEORGE SCHOOL TABLE OF CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1 PAGE FINANCIAL STATEMENTS Statement of Financial Position, July 31, 2012 with Summarized Information for Statement of Activities and Changes in Net Assets, Year ended July 31, 2012 with Summarized Information for Statements of Cash Flows, Years ended July 31, 2012 and Notes to Financial Statements 5 SUPPLEMENTAL INFORMATION Schedule of Functional Expenses, Year ended July 31, 2012 with Summarized Information for

58 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Committee on George School George School Newtown, Pennsylvania We have audited the accompanying statement of financial position of George School as of July 31, 2012, and the related statements of activities and changes in net assets and of cash flows for the year then ended. These financial statements are the responsibility of the School s management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from George School s 2011 financial statements and, in our report dated October 11, 2011, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 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 by management, 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 George School as of July 31, 2012, and the changes in its net assets and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming the above opinion on the basic financial statements taken as a whole. The supplemental information, page 19, is presented for additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Philadelphia, Pennsylvania November 1,