Net Income (Loss) November ($2,552,000) ($2,704,000) $ 152,000 Net Income (Loss) Year to Date $1,649,000 $ 973,000 $ 676,000

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1 th Ave. NE Kirkland, WA December 14, 2018 Dear Board Member, Merry Christmas and Happy New Year to you and your families. May the true blessing of Christmas be found this year as you celebrate the birth of our Lord and Savior with family and friends. The campus is brightly lit with Christmas lights and the students are wrapping up their finals and heading home for the holidays. Net Income Summary Actual Budget Variance Net Operating Income (Loss) November ($2,742,000) ($2,704,000) ($ 38,000) Net Operating Income (Loss) Year to Date $1,882,000 $ 926,000 $ 956,000 Net Income (Loss) November ($2,552,000) ($2,704,000) $ 152,000 Net Income (Loss) Year to Date $1,649,000 $ 973,000 $ 676,000 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. The capital contributions in November are from instruments for the new orchestra program. November investments experienced a gain as the markets continue to find their rhythm, year to date we now have a loss of $363,000. The interest rate swap gain or loss went away in FY 18 after we closed the refinance on our debt in August Tuition Summary Year to Date FY 19 Budget Variance Year to Date Tuition Revenue $21,641,000 $22,044,000 ($403,000) Northwest Partnership Program $ 78,000 CSBS $ 75,000 Kirkland Summer Programs ($ 40,000) International Programs ($ 86,000) Center for Leadership Studies ($ 86,000) College of Business ($ 86,000) Online ($ 91,000) Adult Evening ($241,000) All other programs $ 74,000 Tuition Summary November FY 19 Budget Variance Tuition Revenue $39,000 $23,000 $16,000 All other programs $16,000 November tuition revenue reflects various adjustments to student s accounts, plus a small budgeted amount for the concurrent credit program. Fee revenue is $28,000 better than budget for the month and $53,000 better than budget year to date. Discounts are $94,000 worse than budget in November and $270,000 worse than budget year to date. We are anticipating that our discounts will be higher than we budgeted for the year. The fall discount rate for the Kirkland Undergrad program is currently running at 47.7% versus a budgeted rate of 45.4%. All other sources of revenue for the month of November were $18,000 worse than budget. Year to date all other sources of revenue are $193,000 better than budget, with the largest variances being in auxiliary revenue, which is $95,000 Phone:

2 2 better than budget, followed by other revenue which is $82,000 better than budget, and interest/dividend revenue which is $57,000 better than budget. Year to Date Operating Contribution Detail Actual Budget Variance Opportunity Fund (General Giving) $130,000 $168,000 ($ 38,000) Other Giving (Mission Trips, Choralons, Banquets, etc.) $173,000 $197,000 ($ 24,000) Grant Contributions (Murdock, Lilly) $ 92,000 $ 71,000 $ 21,000 Total $395,000 $436,000 ($ 41,000) Operating Expense Detail November Monthly Variance Year to Date Variance Primary Variance Factor Total $30,000 $1,383,000 Presidents Department ($23,000) ($ 15,000) Jim Heugel Departments $62,000 $ 706,000 Online professional services & payroll, maintenance & utilities in campus housing, and the timing of filling open staff/faculty positions; some of this is permanent but most are timing Ken Cornell Departments $18,000 $ 298,000 Slower marketing spend, timing of filling an open staff position, professional services; some of this is permanent but most are timing Phil Rasmussen Departments $13,000 ($ 36,000) Mission trips, contribution revenue offset so no bottom line impact. John Jordan Departments ($43,000) $ 207,000 Depreciation, professional services, and interest expense, some of this is permanent, but most are timing Contingency Department $ 3,000 $ 223,000 Revenue contingencies. Balance sheet items to note as of November 30 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 $1,343,000 $1,545,000 Faster collection of receivables due to earlier disbursement of aid, which allowed us to access Federal funds earlier, slower capital spend than budgeted, higher net income than budgeted Student receivables and other ($ 314,000) ($ 480,000) Earlier disbursement of aid, which allowed us to access Federal funds earlier and reduce student AR receivables, net Fixed assets, net ($ 427,000) ($1,263,000) Slower spend of capital budget Unrestricted net assets $ 611,000 $ 867,000 Higher net income than budget

3 3 Please continue to pray for the following items: Pray that the retention rate will be at an all-time high going into Spring semester. Pray traditional admission staff will reap benefits with current high school students that have been contacted this fall for enrollment next fall. Also, pray for spring admissions for the Kirkland Undergrad program, we have 45 students budgeted for new admits for spring. Pray for the master plan process. We continue to inch closer to the city issuing reports and a public hearing date being set. We had our meeting with city staff to review the SEPA report, and are waiting for them to reissue the SEPA based on some input and changes we proposed. Pray for all the departments that interact with our students, academic, advising, student development, campus ministries, student financial services, food service and many more. Pray that we will listen to the Holy Spirit and be attuned to the best way to provide excellent customer service and minister to our students at the same time. Pray that University employees and students will have a wonderful time away from the office/campus for Christmas break and that we will have meaningful time to celebrate the birth of Jesus Christ with family and friends. 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. Merry Christmas and Happy New Year. Sincerely, John Jordan Chief Financial Officer

4 4 Year to Date Financial Results Through November 2018 (6 months) (In Thousands) Current Month Year to Date Variance Variance Annual Actual Budget Good (Bad) Last Year Actual Budget Good (Bad) Budget Revenue: $ 16 $ $ 16 Kirkland Undergrad Tuition Revenue $ 13,505 $ 14,240 $ 14,206 $ 34 $ 27, Grad Tuition Revenue 3,028 3,626 3,718 (92) 7, CAPS Tuition Revenue (less Online) 2,138 2,154 2,317 (163) 4,128 (4) (4) Online Programs ,039 (91) 1,987 Salem Sacramento 190 (4) (4) International (86) 701 Summer & Other (40) Total Tuition 20,656 21,641 22,044 (403) 42, Fee Revenue ,385 (96) (2) (94) Discounts (6,546) (7,141) (6,871) (270) (13,512) (50) Net Tuition & Fees 14,545 14,973 15,593 (620) 30, (37) Contribution Revenue (41) 1, (1) Auxiliary Revenue 3,063 3,255 3, , Other Revenue Interest/Dividend Revenue (68) Total Operating Revenue 18,864 19,386 19,813 (427) 39,414 Expense: (23) Castleberry Departments (15) 644 1,557 1, Heugel Departments 8,829 8,751 9, , Cornell Departments 1,942 2,108 2, , Rasmussen Departments (36) 1, (43) Jordan Departments 5,558 5,696 5, , Contingency (15) ,054 3, Total Operating Expense 17,163 17,504 18,887 1,383 38,831 (2,742) (2,704) (38) Net Operating Income (Loss) 1,701 1, Capital Contributions Investment Market gain (loss) (363) (363) Swap Adjustment gain (loss) 20 $ (2,552) $ (2,704) $ 152 Net Income (Loss) $ 2,353 $ 1,649 $ 973 $ 676 $ 630

5 Balance Sheet For the period ending November 30, 2018 In thousands Prior Current Budget Variance Year Year to Budget Assets: Unrestricted cash $ 4,438 $ 5,983 $ 4,640 $ 1,343 Donor restricted cash (64) Restricted cash Student receivables, net (179) Other receivables 1,384 1,042 1,177 (135) Other current assets Total Current Assets 7,680 8,498 7,484 1,014 Investments 16,962 17,514 17, Notes receivable (17) Planned giving assets 4,193 4,035 4,054 (19) Fixed assets, net 45,855 44,592 45,019 (427) Other assets Total Assets $ 75,071 $ 75,363 $ 74,720 $ 643 Liabilities & Net Assets Accounts payable & accrued expenses $ 2,802 $ 2,745 $ 3,006 $ (261) Student deposits Deferred revenue Current portion of notes & bonds payable 2,262 1,829 1,829 Total Current Liabilities 6,306 5,888 5, Planned giving liabilities 2,923 2,920 2,920 Student loan program (7) Notes & bonds payable 29,352 28,653 28,665 (12) Other liabilities Total Liabilities 39,269 38,113 38, Unrestricted net assets 28,626 29,493 28, Temporarily restricted net assets 2,573 2,735 2,881 (146) Permanently restricted net assets 4,603 5,022 4, Total Net Assets 35,802 37,250 36, Total Liabilities & Net Assets $ 75,071 $ 75,363 $ 74,720 $ 643 5