Net Income (Loss) January $11,116,000 $11,371,000 ($ 255,000) Net Income (Loss) Year to Date $11,067,000 $ 9,793,000 $ 1,274,000

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1 th Ave. NE Kirkland, WA February 14, 2018 Dear Board Member, Greetings from the campus in Kirkland. We appear to be in that window of the year when the weather is trying to figure out if it is still winter, or if spring is on the way. The last several days have had beautiful sunshine, but with very cold temperatures. I am starting to notice buds on the trees though, so hopefully, spring is right around the corner in the northwest, rather than more winter. Thank you for your service, prayers, and support for, our students, faculty, and staff. Net Income Summary Actual Budget Variance Net Operating Income (Loss) January $10,755,000 $11,371,000 ($ 616,000) Net Operating Income (Loss) Year to Date $ 9,909,000 $ 9,753,000 $ 156,000 Net Income (Loss) January $11,116,000 $11,371,000 ($ 255,000) Net Income (Loss) Year to Date $11,067,000 $ 9,793,000 $ 1,274,000 We separately reflect capital contributions, investment market gains (losses), and the swap adjustment gain (loss). These are the differences between net operating income and net income. January investments experienced market gains due to market fluctuations. We no longer have swap gains or losses due to the refinancing that closed at the end of August. Tuition Summary Year to Date FY 18 Budget Variance Year to Date Tuition Revenue $37,687,000 $38,988,000 ($1,301,000) Graduate ($ 150,000) Adult Evening ($ 324,000) Northwest (Church) Partnership Program ($ 89,000) Online ($ 268,000) International ($ 347,000) Salem ($ 83,000) Sacramento ($ 42,000) All other programs $ 2,000 Tuition Summary January FY 18 Budget Variance Tuition Revenue $17,018,000 $17,341,000 ($323,000) Kirkland Undergrad $ 28,000 Graduate ($ 94,000) Northwest (Church) Partnership ($ 78,000) Program Online ($ 11,000) International ($ 85,000) Salem ($ 46,000) Sacramento ($ 37,000) January is one of our highest revenue months of the year, as we have starts in all programs, except the Adult Evening program, 42% of our tuition revenue is budgeted in this one month. The budget for the next four months of the fiscal year, however, only have 5% of our annual tuition revenue included in those months. Phone:

2 2 Fee revenue for January was $112,000 better than budget, primarily due to international trip revenue recognized against expenses incurred. Year to date fee revenue is $74,000 better than budget. Discounts for January were $591,000 worse than budget. As we have analyzed this, it appears that more of the spring institutional aid was recorded in January and less will be recorded in the next four months. At this time we are forecasting a better than budget performance for institutional aid over the next four months of $360,000 that will partially make up the January performance. Year to date discounts is $596,000 worse than budget at the end of January. The undergrad discount rate for fall & spring semester is currently at 46.9% versus a budget of 45.0%. The annual budget is 47.0%. If our forecast is accurate, we will be at approximately 47.8% for the entire year. All other sources of revenue for the month of January are $83,000 better than budget. Year to date all other sources of revenue are $346,000 better than budget. The year to date better than budget variance is led by auxiliary revenue which is $115,000 better than budget, contribution revenue which is $96,000 better than budget and other revenue which is $96,000 better than budget. Year to Date Operating Contribution Detail Actual Budget Variance Opportunity Fund (General Giving) $290,000 $252,000 $ 38,000 Other Giving (Mission Trips, Choralons, Banquets, etc.) $339,000 $286,000 $ 53,000 Grant Contributions (Murdock, Lilly) $ 97,000 $ 92,000 $ 5,000 Total $726,000 $630,000 $ 96,000 Operating Expense Detail January Monthly Year to Date Variance Primary Variance Factor Variance Total $103,000 $1,633,000 Presidents Department ($ 2,000) ($ 56,000) Additional staff and chess club expenses Jim Heugel Departments ($ 15,000) $ 972,000 Savings in International, College of Education, NPP, Online and School of Nursing, overspent in Athletics, combination of temporary and permanent differences Ken Cornell Departments $ 94,000 $ 206,000 Slower spending in all departments, combination of temporary and permanent differences Phil Rasmussen Departments $ 0 $ 8,000 Various expenses, combination of temporary and permanent differences John Jordan Departments ($ 37,000) $ 328,000 Insurance, interest, professional services and software licensing, combination of temporary and timing differences Contingency Department $ 63,000 $ 175,000 General contingency against revenue shortfalls

3 3 Balance sheet items to note as of January 31 include the following: Major Balance Sheet Year to Date Variance from Primary Variance Factor for Year to Date Variance Categories Variance Last Year Unrestricted cash $1,216,000 $ 633,000 Net income variance and faster collection of student and other receivables than budgeted Student & other ($ 804,000) ($ 406,000) Receivables being collected faster than budget receivables, net Investments $1,429,000 $2,316,000 Market gains, interest earnings Notes and bonds payable, current portion and longterm portion ($ 324,000) $ 74,000 Combined the current portion and long-term portion of our debt is fairly close to budget, individually they both have a variance over $1,000,000 as we made an error in the budgeting and forgot to budget the current portion of our new debt Unrestricted net assets $1,275,000 $3,128,000 Net income variance from the income statement, most of this is market gains Please continue to pray for the following items: Enrollment for online programs. We are seeing some encouraging results from some of our new efforts regarding leads and students, but need to find an effective way to generate more new students on a consistent basis. Future enrollment, please pray that as we start concentrating our efforts on next fall that we will develop relationships with potential students who want to attend Northwest. Right now submitted applications for fall 2018, are ahead of last year for the Kirkland undergrad population. Please pray that all of our other programs will also have strong enrollment numbers in the fall. Please pray for the master plan process. The city has issued their traffic mitigation report, and we are in the process of negotiating with the city on final traffic mitigation. After we come to an agreement with the city, they will issue their staff reports and SEPA report. Once the reports are issued, the public hearing date will be set. Should you have any questions regarding this report or the financial statements, please feel free to contact me. Thank you for your service and partnership with. Sincerely, John Jordan Chief Financial Officer

4 4 Year to Date Financial Results Through January 2018 (8 months) (In Thousands) Current Month Year to Date Variance Variance Annual Actual Budget Good (Bad) Last Year Actual Budget Good (Bad) Budget Revenue: $ 12,963 $ 12,934 $ 29 Kirkland Undergrad Tuition Revenue $ 25,195 $ 26,464 $ 26,479 $ (15) $ 26,507 2,131 2,225 (94) Grad Tuition Revenue 4,549 5,159 5,309 (150) 6,319 1,090 1,168 (78) CAPS Tuition Revenue (less Online) 2,942 3,250 3,663 (413) 4, (11) Online Programs 1,593 1,304 1,572 (268) 2, (46) Salem (83) (37) Sacramento (42) (85) International ,113 (347) 1,113 (1) (1) Summer & Other ,018 17,341 (323) Total Tuition 35,959 37,687 38,988 (1,301) 41, Fee Revenue ,370 (6,157) (5,566) (591) Discounts (12,197) (12,710) (12,114) (596) (12,806) 11,323 12,125 (802) Net Tuition & Fees 24,668 25,945 27,768 (1,823) 29, (36) Contribution Revenue ,124 2,388 2, Auxiliary Revenue 5,311 5,556 5, , Other Revenue Interest/Dividend Revenue ,892 14,611 (719) Total Operating Revenue 31,533 33,179 34,656 (1,477) 37,851 Expense: (2) Castleberry Departments (56) 475 1,659 1,644 (15) Heugel Departments 12,094 12,122 13, , Cornell Departments 2,041 2,588 2, , Rasmussen Departments ,182 1, (37) Jordan Departments 7,536 7,423 7, , Contingency ,137 3, Total Operating Expense 22,702 23,270 24,903 1,633 37,496 10,755 11,371 (616) Net Operating Income (Loss) 8,831 9,909 9, Capital Contributions Investment Market gain (loss) 511 1,031 1,031 Swap Adjustment gain (loss) $ 11,116 $ 11,371 $ (255) Net Income (Loss) $ 10,765 $ 11,067 $ 9,793 $ 1,274 $ 395

5 5 Balance Sheet For the period ending January 31, 2018 In thousands Prior Current Budget Variance Year Year to Budget Assets: Unrestricted cash $ 8,564 $ 9,197 $ 7,981 $ 1,216 Donor restricted cash Restricted cash (47) Student receivables, net 4,331 3,872 4,346 (474) Other receivables 3,119 3,172 3,502 (330) Other current assets Total Current Assets 17,486 17,121 16, Investments 15,288 17,604 16,175 1,429 Notes receivable (7) Planned giving assets 4,097 4,199 4,237 (38) Fixed assets, net 46,396 45,511 45,527 (16) Other assets Total Assets $ 83,697 $ 85,198 $ 82,938 $ 2,260 Liabilities & Net Assets Accounts payable & accrued expenses $ 3,854 $ 3,336 $ 3,608 $ (272) Student deposits (60) Deferred revenue 1,295 1, Current portion of notes & bonds payable 2,058 2, ,341 Total Current Liabilities 7,587 7,212 5,619 1,593 Interest rate swap agreement 2,455 Planned giving liabilities 2,988 2,923 2,923 Student loan program Notes & bonds payable 29,293 29,163 30,828 (1,665) Other liabilities Total Liabilities 43,009 39,986 40,057 (71) Unrestricted net assets 34,212 37,340 36,065 1,275 Temporarily restricted net assets 2,126 3,129 2, Permanently restricted net assets 4,350 4,743 4, Total Net Assets 40,688 45,212 42,881 2,331 Total Liabilities & Net Assets $ 83,697 $ 85,198 $ 82,938 $ 2,260