University of South Florida System and DSO/Component Unit Quarterly Financial Reports QUARTER 1 FOR FISCAL YEAR

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1 University of South Florida System and DSO/Component Unit Quarterly Financial Reports QUARTER 1 FOR FISCAL YEAR Period Ended September 30, 2015

2 FY 2016 QUARTER 1 REPORT SEPTEMBER 30, 2015 INDEX University of South Florida System USF Foundation USF Alumni Association USF Financing Corporation University Medical Service Association, Inc USF Medical Services Support Corporation USF Research Foundation USF Health Professions Conferencing Corporation Sun Dome, Inc [ Page 1 of 40 ]

3 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 University of South Florida System EXECUTIVE SUMMARY INCOME STATEMENT Year to date operating revenues increased $5.7M from fiscal year 2015 to This was primarily due increases in tuition & fees and state appropriations. Year to date operating expenses increased $14.4 M from fiscal year 2015 to This was primarily due to increases in salaries and benefits, as well as services and supplies. Year to date non-operating activity decreased $45.6M from fiscal year 2015 to This was primarily caused by a delay in the recognition of our state capital appropriations, which were not booked until the second quarter of fiscal year 2016, as opposed to the first quarter in the prior year. BALANCE SHEET Total University assets and deferred outflows of resources increased $106.2M from September 30, 2014 to 2015; $45.3M of which represents an increase in cash & investments and $54.9M of which is the new asset associated with the recognition of deferred outflows of pension resources. The increase in assets is more than offset by a decrease in University liabilities and deferred inflows of resources of $247.6M. Major components of the change in liabilities are: an increase in the amount due primary and component units of $51.8M for the refinanced Marshall Center debt, the new net pension liability of $106.3M and the new deferred inflow of pension resources of $75.8M. The University's overall net position decreased $141M from September 30, 2014 to This was primarily caused by a $135.7M beginning balance adjustment to unrestricted net position which was recognized during the closing of fiscal year This adjustment was related to the net pension liability that is now recorded on our financial statements. CASH FLOW The University's cash flow is positive at the close of the first quarter. This is primarily accomplished through increased cash from tuition & fees, as well as contracts & grants. [ Page 2 of 40 ]

4 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 University of South Florida System BALANCE SHEET (In thousands) ASSETS 3 Months Ended September 30, Variance ACTUAL ACTUAL $ % Current Assets Cash and Cash Equivalents $3,517 $16,294 $(12,777) (78)% Investments 601, ,938 50,996 9 % Receivables 84,247 97,165 (12,918) (13)% Due from Primary and Component Units 62,793 80,800 (18,007) (22)% Other Current Assets 1,176 1,947 (771) (40)% Total Current Assets $753,667 $747,144 $6,523 1 % Noncurrent Assets Restricted Cash and Cash Equivalents $13,010 $8,596 $4, % Restricted Investments 42,922 40,245 2,677 7 % Capital Assets 1,411,033 1,346,128 64,905 5 % Less: Accumulated Depreciation (622,015) (586,493) (35,522) (6)% Non-Depreciable Items (CIP, Land, etc.) 42,821 33,835 8, % Loans and Notes Receivable, net of allowance 4,162 4,570 (408) (9)% Other (242) (100)% Total Noncurrent Assets $891,933 $847,123 $44,810 5 % Total Assets $1,645,600 $1,594,267 $51,333 3 % DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Pension Resources 54, ,883 % Total Deferred Outflows of Resources $54,883 $0 $54,883 % Total Assets & Deferred Outflows of Resources $1,700,483 $1,594,267 $106,216 7 % LIABILITIES Current Liabilities Accounts Payable $22,756 $19,795 $2, % Accrued Salaries and Benefits 878 7,670 (6,792) (89)% Due to Primary and Component Units 84,836 33,042 51, % Unearned Revenue 30,760 29,358 1,402 5 % Other Current Liabilities 19,293 22,162 (2,869) (13)% Total Current Liabilities $158,523 $112,027 $46, % Noncurrent Liabilities Long Term Debt $22,260 $25,377 $(3,117) (12)% Compensated Absences 68,000 63,598 4,402 7 % Net Pension Liability 106, ,378 % Other Noncurrent Liabilities 113,994 96,369 17, % Total Noncurrent Liabilities $310,632 $185,344 $125, % Total Liabilities $469,155 $297,371 $171, % DEFERRED INFLOWS OF RESOURCES Deferred Inflows of Pension Resources 75, ,841 % Total Inferred Outflows of Resources $75,841 $0 $75,841 % Total Liabilities & Deferred Inflows of Resources $544,996 $297,371 $247, % NET POSITION $1,155,487 $1,296,896 $(141,409) (11)% Total Liabilities, Deferred Inflows & Net Position $1,700,483 $1,594,267 $106,216 7 % [ Page 3 of 40 ]

5 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 University of South Florida System INCOME STATEMENT (In thousands) 3 Months Ended September 30, Variance ACTUAL ACTUAL $ % REVENUES Tuition & Fees, net $124,952 $113,399 $11, % State Appropriations 83,163 78,693 4,470 6 % Contracts & Grants 78,945 77,718 1,227 2 % Federal & State Financial Aid 47,005 47,207 (202) (0)% Program Revenue / Sales / Services 50,022 51,966 (1,944) (4)% Noncapital Grants and Donations 6,187 10,035 (3,848) (38)% Investment Income (Loss) (7,502) (1,867) (5,635) (302)% Other Revenues 1,339 1, % Total Revenues $384,111 $378,397 $5,714 2% EXPENSES Salaries & Benefits $180,389 $173,330 $7,059 4 % Scholarships & Fellowships 36,630 39,035 (2,405) (6)% Services and Supplies 69,511 66,181 3,330 5 % Utilities and Communications 8,585 7,525 1, % Interest Paid on Debt 0 86 (86) (100)% Depreciation/Amortization 12,508 11, % Other expenses 8,956 4,238 4, % Total Expenses $316,579 $302,160 $14,419 5% Operating Profit $67,532 $76,237 $(8,705) (11)% Non Operating State Capital Appropriations $0 $43,842 $(43,842) (100)% Capital Grants, Contracts, Donations & Fees $84 $324 $(240) (74)% Transfer to/from Primary Government / Other SUS $125 $1,603 $(1,478) (92)% INCREASE (DECREASE) in Net Position $67,741 $122,006 $(54,265) (44)% [ Page 4 of 40 ]

6 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 University of South Florida System STATEMENT OF CASH FLOWS (In thousands) 3 Months Ended September 30, Variance ACTUAL ACTUAL $ % BEGINNING CASH $625,669 $579,261 $46,408 8% Cash Flow from Operating Activities Tuition & Fees $111,814 $95,339 $16, % Contracts and Grants 81,472 71,219 10, % Program Revenue / Sales / Services 44,298 42,266 2,032 5 % Other Operating Activities 1,022 1, % Operating Expenses (316,581) (298,597) (17,984) (6)% Net Cash Flow from Operating Activities $(77,975) $(88,764) $10, % Cash Flow from Financing Activities State Appropriations $85,822 $85,144 $678 1 % Federal and State Financial Aid $47,005 $47,207 $(202) (0)% Noncapital Grants, Contracts and Donations $5,157 $6,667 $(1,510) (23)% Acquisition / Construction of Capital Asset (9,508) (6,260) (3,248) (52)% Principal & Interest Payments 0 (16) % Capital Grants, Contracts, Donations and Fees 0 (78) % Other Financing Activities (7,285) (5,220) (2,065) (40)% Net Cash Flow from Financing Activities $121,191 $127,444 $(6,253) (5)% Cash Flow from Investing Activities Investment Income (7,502) (1,867) (5,635) (302)% Net Cash Flow from Investing Activities $(7,502) $(1,867) $(5,635) (302)% ENDING CASH $661,383 $616,074 $45,309 7 % [ Page 5 of 40 ]

7 EXECUTIVE SUMMARY MAJOR BUSINESS INITIATIVES - FY 2016 The USF System continues its second phase of the Unstoppable Campaign after successfully exceeding the original $600 million goal with over $621 million raised. The second phase will continue to focus on our students and faculty by strengthening the academic environment, supporting research, and making the dream of a college education more affordable. At the end of the 2nd phase of the campaign, the USF Foundation will have raised another $400 million for the institutions of the USF System, for a Campaign total of $1 billion. The Foundation's investment strategy is to maximize support to the University while not endangering the ability to maintain the original purchasing power of donor investments over the long term. The Foundation's Investment Committee guides this process by actively monitoring the performance of our asset allocation, prudently considering the risks associated with each asset class and taking action if necessary to enhance the growth of the endowment over the long-term. The goal is to grow the endowment through continued solid investment returns and gifts. In order to provide for a consistent, reliable stream of income to the University the Foundation Board annually establishes a spending policy from the endowment to help mitigate the impact of market volatility on University programs that depend on the income to operate. The spending policy employs a 5 year average market value in its calculation which helps suppress the risk of volatility. Further, the Board approved a 4% dividend for fiscal year 2016, consistent with prior years. The Foundation supports program activities of the University for USF faculty & staff, student scholarships, research initiatives, and capital projects according to donor restrictions. These expenses can be funded by current gifts estimated on the annual plan, existing balances in accounts from gifts and distributions received in prior years, or projected endowment distributions during the year of about $15.4 million. With the assistance of the Foundation, spending from these sources is directed by the colleges and units designated by our donors as the beneficiaries of their gifts. EXPLANATION OF MAJOR VARIANCES Statement of Financial Position Cash in the Foundation's checking account is managed based on a frequent evaluation of gifts received and funding requests to be paid. The balance at September 30th is reflective of this evaluation with the goal to maintain only a small amount of cash in the checking account sufficient for daily operations. Maintaining only what is necessary in checking will maximize potential returns of the operating investment pool. The change in the endowment investment pool is due to the performance of the market netted with distributions for dividends and administrative fees. The estimated return for the first quarter of fiscal year 2016 is approximately -5.9%. The overall decrease in total net assets primarily relates to fluctuations experienced in the investment markets. Gains/losses on the endowment pool are recorded in temporarily restricted net assets. The fair value of assets associated with individual donor-restricted endowment funds may fall below the level of the original gift. Losses of this nature must be reported in unrestricted net assets. During the quarter, accumulated losses of approximately $2.3 million were transferred out of temporarily restricted net assets into unrestricted net assets. The increase in permanently restricted net assets is reflective of new gifts and pledge commitments to endowments. Statement of Changes in Net Assets Contributions in the prior year through September included a significant naming gift for the Tiedmann College of Business at USF St Pete. During the current year the Foundation has been named a beneficiary of a similar naming gift for the Collier Student Success Center in the Muma College of Business; however, due to the nature of the estate gift vehicle, accounting standards require the revenue associated with this gift be recorded when realized rather than when pledged. University support represents salaries paid by the University for those employees providing services to the Foundation. Approximately $1.5 million was recorded for quarter 1 as required under the accounting standard for Contributed Services from Personnel of an Affiliate which was adopted and effective for the Foundation on June 30th of the prior year. During the fiscal year, requests to fund salaries and salary supplements for university faculty and staff have increased over the prior year as a result of increased requests from multiple units across the System in an effort to effectively utilize Foundation resources during times of budget challenges. The increase in fundraising and operating salaries is related to the recognition of salaries associated with contributed services described above in University support. [ Page 6 of 40 ]

8 The change in investment returns at September 30th impacts the fluctuation of realized/unrealized gains and losses. The year to date return at 9/30 for fiscal year 2016 was -5.9% as opposed to -1.64% for the 1st quarter of the prior fiscal year. Statement of Cash Flows Change in cash balance is due to the fluctuations in receipt of major gifts, dividend distributions and movement between the checking account, operating investment pool and the long-term endowment pool. [ Page 7 of 40 ]

9 STATEMENT OF FINANCIAL POSITION Audited Current Year Prior Year Variance 9/30/2015 6/30/2015 $ % Assets Cash and cash equivalents $ 1,006,770 $ 866, ,419 16% Operating investment pool 70,336,445 69,046,027 1,290,418 2% Contributions receivable, net 46,320,790 47,040,171 (719,381) -2% Accrued interest & other receivables, net 1,054, , ,579 19% Endowment investment pool 412,807, ,608,407 (33,800,679) -8% Remainder interest trusts 1,742,305 1,836,780 (94,475) -5% Funds held in trust by others 16,060,169 16,999,158 (938,989) -6% Books and art objects 3,292,409 3,292,409-0% Land, buildings, and equipment, net 6,678,442 6,683,717 (5,275) 0% Real estate held for resale 600, ,000-0% Total assets $ 559,899,789 $ 593,860,172 $ (33,960,383) -6% Liabilities and Net Assets Liabilities: Accounts payable and accrued expenses $ 2,740,113 $ 2,620, ,514 5% Mortgage payable 6,058,200 6,143,420 (85,220) -1% Annuities and life income trusts payable 774, ,902 (17,407) -2% Amounts due to third-party beneficiaries 25,171,264 26,739,791 (1,568,527) -6% Due to the University of South Florida 671,319 2,327,313 (1,655,994) -71% Total liabilities 35,415,391 38,623,025 (3,207,634) -8% Net Assets: Unrestricted net assets 7,542,928 9,553,317 (2,010,389) -21% Temporarily restricted net assets 176,354, ,341,067 (28,986,522) -14% Permanently restricted net assets 340,586, ,342, ,162 0% Total net assets 524,484, ,237,147 (30,752,749) -6% Total liabilities and net assets $ 559,899,789 $ 593,860,172 $ (33,960,383) -6% Records of the University of South Florida are subject to disclosure under the Florida Public Records law unless exempt by law. Documents made or received by a USF Foundation agent in connection with the transaction of business by the USF Foundation are confidential and exempt from F.S. 119 pursuant to F.S (5) and in accordance with the USF Foundation Policy on Confidentiality of USF Foundation Documents. [ Page 8 of 40 ]

10 STATEMENT OF CHANGES IN NET ASSETS Revenues: Year-to-Date Fiscal Year 2014 Current Year Prior Year Variance 9/30/2015 9/30/2014 $ % Contributions, gifts and bequests $ 5,771,987 12,452,044 (6,680,057) -54% Fundraising activities 794, ,407 (88,084) -10% Investment income 1,562,856 1,414, ,712 11% Campaign support 795,817 1,592,057 (796,240) -50% University support 1,591,635-1,591, % Total revenues 10,516,618 16,340,652 (5,824,035) -36% Expenditures: Program services: Salaries and benefits 4,446,303 3,817, ,462 16% Scholarships/fellowships 2,604,558 2,578,332 26,226 1% Contractual services 1,178,226 1,436,707 (258,481) -18% Supplies 806, ,424 (7,909) -1% Transfers to state - other 398, ,288 96,971 32% Gift in kind transfers 95, ,740 (225,782) -70% Travel, meals & auto 619, , ,888 23% Community relations 269, , , % Depreciation 5,275 5,275 (0) 0% Repairs and maintenance 233, ,598 (105,098) -31% Provision for doubtful accounts 43,505 63,730 (20,225) -32% Other 293, ,836 (364,923) -80% Total program service expense 10,995,367 10,965,807 29,560 0% Fundraising & operating costs: Salaries and benefits 2,474, ,585 1,755, % Contractual services 182, ,767 (89,739) -33% Other transfers and expenses 926, , ,913 17% Total fundraising & operating expense 3,583,009 1,780,383 1,802, % Total expenditures 14,578,376 12,746,191 1,832,185 14% Change in net assets before change in market value (4,061,759) 3,594,462 (7,656,220) -213% Changes in market value: Unrealized investment income gain (30,154,765) (10,727,832) (19,426,933) -181% Realized investment income gain 3,463,775 1,969,183 1,494,592 76% Total changes in market value (26,690,990) (8,758,649) (17,932,341) -205% Change in net assets $ (30,752,749) (5,164,187) (25,588,561) -496% Records of the University of South Florida are subject to disclosure under the Florida Public Records law unless exempt by law. Documents made or received by a USF Foundation agent in connection with the transaction of business by the USF Foundation are confidential and exempt from F.S. 119 pursuant to F.S (5) and in accordance with the USF Foundation Policy on Confidentiality of USF Foundation Documents. [ Page 9 of 40 ]

11 STATEMENT OF CASH FLOWS Current Year Prior Year Variance 9/30/2015 6/30/2015 $ % Change in Net Assets (30,752,749) 14,522,589 (45,275,338) (312)% Operating Activities Depreciation 5,275 21,102 (15,827) (75)% Investment (gains) losses, net 29,197,962 (8,424,000) 37,621, % Gain on sale of land held for resale (37,263) 37, % Change in assets/liabilities: Contributions receivable 719,381 2,374,328 (1,654,947) (70)% Other receivables (167,580) (17,249,500) 17,081, % Books and art objects - (170,900) 170, % Accounts payable & accrued expenses 119,514 (716,753) 836, % Annuities & life income trusts payable (17,407) 128,665 (146,072) (114)% Amts due to third-party beneficiaries (4,676,012) (477,598) (4,198,414) (879)% Due to University of South Florida (1,655,993) 297,522 (1,953,515) (657)% Net cash flow from operating activities (7,227,609) (9,731,808) 2,504, % Investing Activities Disposal of land held for resale 121,376 (121,376) (100)% Purchase of land (31,589) 31, % Proceeds from sale of investments 12,924, ,043,740 (125,118,947) (91)% Purchases of investments (4,141,716) (122,261,063) 118,119, % Interest & dividends reinvested (1,329,830) (5,811,688) 4,481, % Repayment of loans to the University of South Florida 122,672 (122,672) Net cash flow from investing activities 7,453,247 10,183,448 (2,730,201) (27)% Financing Activities Principle payments on mortgage payable (85,220) (56,580) (28,640) (51)% Net cash flow from investing activities (85,220) (56,580) (28,640) (51)% Net increase in cash 140, ,060 (254,642) (64)% Cash at the beginning of the year 866, , , % Cash at the end of the year 1,006, , , % Records of the University of South Florida are subject to disclosure under the Florida Public Records law unless exempt by law. Documents made or received by a USF Foundation agent in connection with the transaction of business by the USF Foundation are confidential and exempt from F.S. 119 pursuant to F.S (5) and in accordance with the USF Foundation Policy on Confidentiality of USF Foundation Documents. [ Page 10 of 40 ]

12 University of South Florida Alumni Association, Inc. Executive Summary September 30, 2015 BALANCE SHEET Accounts Receivable: The Alumni Association's accounts receivable balance decreased during the first quarter of the fiscal year due to receipt of royalty revenue during the month of July that was outstanding during the end of the prior fiscal year. Included in this was $10k in royalties from ring sales and $7k from the USF Credit Union for exceeding their contractual minimums. Accounts Payable: The Association had expenses accrued for at the end of the prior fiscal year for the production of Alumni Voice magazine and membership solicitation that caused accounts payable to be higher then the end of the first quarter of the current year. Due to USF: Increase in liability to the University is due to pay period 1607 which mostly contained September paydays, but was actually paid in the beginning of October. Deferred Revenue: The decrease in deferred revenue is due to recognition of the sponsorship revenue within affinity contracts. In addition, the Liberty Mutual contract is paid in full during the month of February, and recognized over 12 months. During the month ended September, there was only four months remaining of this revenue within deferred revenue. SUMMARY OF REVENUES AND EXPENSES Memberships revenue: Due to an increased focus on social media and telemarketing campaigning, the Association has seen an increase in membership revenue year over year. License plate revenue: The Association has seen an increase in license plate revenue in the first quarter of the year. This is due to a reconciliation performed by the State in which extra was sent to catch up receipts from FY'15. Credit card revenue: The USF Credit Union royalty contract has exceeded its minimums in the three months of the fiscal year. This caused an increase when compared to FY'15 as we did not exceed our minimum guarantee in the first quarter in the prior year. Sponsorship revenue: Increase in sponsorship revenue is due to a larger sponsorship for the Awards Dinner that occurs during the week of Homecoming. In addition, the Association has a new overall sponsorship with Sagicor that started in February. Salaries expense: Salaries expense increased in the current year due to being fully staffed and for state mandated raises that occurred in January. Printing and Postage expenses: In the current fiscal year, USF Magazine and Alumni Voice combined into one magazine. Printing expenses has not yet been paid for by the Association, and is expected to catch up in the second quarter. Professional services expense: Professional services expense was higher in the current year due to timing of the payment on the external audit contract. CASH FLOW Slight decrease to cash is due to the reduction in accounts payable at 9/30/15. Confidential For internal use only [ Page 11 of 40 ]

13 University of South Florida Alumni Association, Inc. Operating Balance Sheet September 30, 2015 June 30, 2015 Variance $ Variance % ASSETS Cash and cash equivalents 198, ,239 (7,986) 4% Pooled investments within Foundation 838, ,392 0% Accounts receivable 26,568 44,195 (17,627) 40% Prepaid expenses 25,178 16,501 8,677 53% Total assets 1,088,391 1,105,327 (16,936) 2% LIABILITIES AND NET ASSETS Liabilities: Accounts payable and accrued expenses 36,552 90,350 (53,798) 60% Due to Foundation 3,015 (3,015) 100% Due to USF 62,714 48,483 14,231 29% Deferred revenue 76, ,333 (83,947) 52% Total liabilities 175, ,181 (126,529) 42% Net Assets: Unrestricted net assets 912, , ,593 14% Total liabilities and net assets 1,088,391 1,105,327 (16,936) 2% Reserve: Principle 838, ,392 Reserve: Market Adjustment 120, ,728 Total Reserve 958, ,120 Confidential For internal use only [ Page 12 of 40 ]

14 University of South Florida Alumni Association, Inc. Summary of Revenues and Expenses September 30, 2015 Current Month Totals Year to Date Totals (25%) Actual Prior Year Actual Prior Year Sep 15 Sep 14 Variance $ Variance % YTD YTD Variance $ Variance % REVENUES: Annual Membership 31,533 26,885 4,648 17% 111,405 96,667 14,738 15% Life Membership 4,658 1,208 3, % 7,744 4,772 2,972 62% License Plates 30,151 29, % 126, ,096 23,321 23% Foundation support 100, ,000 0% 303, ,000 3,015 1% Credit Cards 27,835 20,168 7,667 38% 81,517 60,500 21,017 35% Other Royalty* 12,447 12,863 (416) 3% 35,447 40,323 (4,876) 12% Investment Income 0% 33,917 30,683 3,234 11% Sponsorships 21,441 15,000 6,441 43% 25,625 15,000 10,625 71% Advertising 2,537 1,384 1,153 83% 11,769 11,869 (100) 1% Event Revenue 11,974 9,850 2,124 22% 11,974 9,850 2,124 22% Gifts 2,624 2, % 9,419 5,854 3,565 61% Travel 153 (153) 100% 2,119 2,240 (121) 5% Merchandise 1,654 1,788 (134) 7% 2,654 2, % Fund transfers to endowment (25,283) (20,619) (4,664) 23% (25,283) (20,619) (4,664) 23% Total Operating Revenue 221, ,244 21,327 11% 737, ,281 75,458 11% EXPENSES Salaries 127, ,019 (9,307) 8% 366, ,142 (26,247) 8% Membership and membership services 20,581 29,065 8,484 29% 92,033 87,929 (4,104) 5% Printing/Duplicating 3,214 23,175 19,961 86% 5,457 24,150 18,693 77% Event Services 25,010 15,809 (9,201) 58% 41,389 41, % Professional Services 13,658 3,710 (9,948) 268% 34,475 18,858 (15,617) 83% Postage 15,661 14,884 (777) 5% 24,921 22,901 (2,020) 9% Travel 4, (3,456) 498% 10,440 5,535 (4,905) 89% Advertising & Marketing 7,456 4,866 (2,590) 53% 11,671 10,758 (913) 8% Insurance 5,189 8,894 3,705 42% 15,565 13,341 (2,224) 17% Community Relations 2,656 (359) (3,015) 840% 8,746 5,832 (2,914) 50% Other Services 3,483 2,228 (1,255) 56% 5,224 5, % Telephone (411) 462% (293) 142% Professional Dues & Fees 2,500 (2,500) 100% 2,714 3, % Repairs & Maintenance % 1,277 1,277 0% Office Supplies (474) 203% (360) 94% Miscellaneous 1,787 5,291 3,504 66% 6,604 8,117 1,513 19% Total Operating Expenses 234, ,450 (6,855) 3% 628, ,194 (37,952) 6% NET INCOME FROM OPERATIONS (12,734) (27,206) 14,472 53% 109,593 72,087 37,506 52% Change in net assets 109,593 Net assets, beginning 803,146 Net assets, end 912,739 Confidential For internal use only [ Page 13 of 40 ]

15 University of South Florida Alumni Association, Inc. Operating Cash Flow Operating activities September 30, 2015 June 30, 2015 Variance $ Variance % Change in net assets $ 109,593 $ Adjustments to reconcile change in net assets to net cash provided by operating activities: Changes in assets and liabilities: Accounts receivable 17,627 10,917 Prepaid expenses (8,677) 18,936 Due to University of South Florida 14,231 23,272 Due to University of South Florida Foundation, Inc. (3,015) (30,204) Accounts payable and accrued expenses (53,798) (695) Deferred revenue (83,947) 29,698 Net cash provided by operating activities (7,986) 51,924 Change in cash and cash equivalents (7,986) 51,924 Cash and cash equivalents, beginning of year 206, ,315 Cash and cash equivalents, end of year $ 198,253 $ 206,239 $ (7,986) 4% Confidential For internal use only [ Page 14 of 40 ]

16 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 USF Financing Corporation and USF Property Corporation EXECUTIVE SUMMARY MAJOR BUSINESS INITIATIVES - FY 2016 Maintain / Enhance the University's Long-Term "AA" Credit Ratings - In alignment with the University's Strategic Goals, strong ratings provide credit support for future financing transactions on the best possible terms. Moody's and Standard & Poor's met with University leadership on February 3 and February 18, 2015, respectively. On April 6, 2015, Moody's affirmed USF's "Aa2" rating. Moody's also assigned its "Aa3" rating to the Series 2015 Marshall Center (formerly 2005C) bonds, and its "A1" rating to the Series 2015A (formerly 2005A) and 2012A bonds. On April 3, 2015, Standard & Poor's affirmed USF's "AA-" rating. S&P also assigned its "AA-" rating to the Series 2015 Marshall Center (formerly Series 2005C) bonds, and affirmed its "AA-" rating on the USF parking bonds and its "A+" rating on the Series 2015A (formerly 2005A) and 2012A bonds. On October 14, 2015, the Corporation provided Moody's and S&P with final details on the three Housing bond refunding transactions. On November 16, 2015, the Corporation disclosed to Moody's and S&P the BOG approval of the Student Housing Project, the documented reduction in Housing debt service costs, the reduction in risks related to variable rate debt and related interest rate swap, and the release of the Andros site for the University's P3 project. Health Bonds Refunding Initiative - In 2013, the maturity of the Health Series 2013A privately placed bank bonds was matched to the July 1, 2016 expiration of the related interest rate swap, creating an opportunity to convert $41 M of variable rate bonds to fixed rate debt in fiscal year The Corporation issued a Request for Proposals to 7 banks on October 2, 2015 and 3 responses were received on October 16, The Corporation evaluated the proposals and selected JPMorgan Chase Bank to continue negotiations. A rate lock agreement was executed on November 25, 2015, committing the bank to a 10-year rate of 2.31%. The restructuring will reduce interest costs and variable rate structure remarketing, renewal, and interest rate swap exposures. Present value savings total $7.2 M, or 18.9%, reducing annual debt service payments by approximately $500,000 over the next 10 years. University Housing P3 Project - Participate in the University's Andros replacement project to ensure maintenance of the USF Housing System's "A1 Stable" credit rating on $197 M of outstanding Housing System debt as the Corporation releases the Ground Lease on the existing Andros facilities. Work with Leveraged DSO/Auxiliary Management - Develop plans with management for new project financing and management of existing financings to reduce risk. The Corporation has a duty to ensure that these leveraged business units operate successfully in order to manage their bond obligations, plan for future capital needs and support the University's credit ratings. [ Page 15 of 40 ]

17 EXPLANATION OF MAJOR VARIANCES FROM PRIOR YEAR - YTD Balance Sheet: Assets - Increase in receivable from University due to the $53 M transfer of the Marshall Center building to the University in May There is a corresponding decrease in capital assets, along with annual depreciation of $9 M. Decrease of $1.3 M in security pledged as swap collateral due to the termination of the Series 2012A interest rate swap, increase of $1.8 M in the equity investment due to the Corporation's share of INTO USF's cumulative positive operating profit, and increase of $1.7 M in restricted cash accumulated for debt service payments. Balance Sheet: Liabilities - Net decrease of $10.4 M in total liabilities due to $9.7 M of annual principal payments on existing long-term debt and the $0.8 M decrease in the interest rate swap liability. Balance Sheet: Net Assets - Net assets totaling $1.6 M at September 30, 2015 are solely attributed to the cumulative gains reported by INTO USF. Income Statement: Revenues - Increase of $0.6 M in Housing revenues due to Tampa Housing occupancy levels being higher than in the previous year. Decrease of $0.3 M in Marshall Center lease revenues due to the debt service savings resulting from the May 2015 refunding of the Marshall Center debt. Income Statement: Expenses - Increase of $0.4 M in USF housing system operating expenses due to increased occupancy. Decrease of $0.4 M in depreciation expense due to the Marshall Center and related building improvements no longer being depreciated by the Corporation, following the May 2015 transfer to the University. Income Statement: Other Revenues (Expenses) - Total variance is due to the Corporation's conduit nature: lease revenues increased by $0.3 M with no material change in operating expenses, resulting in a negative $0.3 M variance in operating profit, as net revenues are transferred back to affiliates. Additionally, INTO USF's net profit improved by $0.3 M. Income Statement: Change in Unrestricted Net Assets - As 50% owner, the Financing Corporation recognizes half of INTO USF's net operating profit or loss. Thus, the Financing Corporation recognized a gain of $303,279, 50% of INTO USF's $606,558 gain for the year through September 30, Statement of Cash Flows: Cash Provided by (Used In) Operating, Investing and Financing Activities - The $2.6 M decrease in cash provided by operating activities and $2.2 M increase in cash used in investing activities are determined by the lower debt service costs resulting from the May 2015 Housing refunding transactions. The related decrease of $4.9 M is shown under cash used in financing activities. [ Page 16 of 40 ]

18 USF Financing Corporation and USF Property Corporation Consolidated Statements of Financial Position Period Ending September 30, Variance $ % Assets Cash $ 2,641 $ 2,641 $ 0% Restricted cash and cash equivalents 27,209,988 25,475,346 1,734,642 7% Due from related parties 86,464,203 36,093,282 50,370, % Accounts receivable % Equity investment 1,657,781 (223,741) 1,881, % Security pledged to counterparty 6,640,000 7,970,000 (1,330,000) (17)% Deferred charges, net of accumulated amortization of $2,277,611 and $2,191,500, respectively 1,425,267 1,268, , % Construction in progress - % Capital assets, net of accumulated depreciation of $47,519,753 and $49,508,196, respectively 255,322, ,654,374 (61,331,552) (19)% Total assets $ 378,723,629 $ 387,240,868 $ (8,517,239) (2)% Liabilities and net assets Liabilities: Accounts payable $ 36,931 $ $ 36,931 % Interest payable 3,466,671 3,369,471 97,200 3% Due to related parties 1,600,518 1,572,367 28,151 2% Interest rate swaps payable 18,391,201 19,229,580 (838,379) (4)% Long-term debt 353,567, ,290,550 (9,722,664) (3)% Total liabilities 377,063, ,461,968 (10,398,761) (3)% Net assets: Unrestricted net assets 1,660,422 (221,100) 1,881, % Total liabilities and net assets $ 378,723,629 $ 387,240,868 $ (8,517,239) (2)% [ Page 17 of 40 ]

19 USF Financing Corporation and USF Property Corporation Consolidated Statements of Activities and Changes in Net Assets 3 Months Ending September 30, Variance $ % Revenues Operating revenues: University of South Florida housing system lease revenue $ 15,549,463 $ 14,948,344 $ 601,119 4% University of South Florida athletics system lease revenue 683, ,962 5,186 1% University of South Florida Marshall Center lease revenue 384, ,796 (281,103) (42)% University of South Florida arena revenue 466, ,422 29,881 7% Medical Services Support Corporation lease revenue 1,225,368 1,230,773 (5,405) (0)% Health Professions Conferencing Corporation lease revenue 483, ,296 (3,575) (1)% Total operating revenues 18,792,696 18,446, ,103 2% Expenses University of South Florida housing system operating expenses $ 5,232,013 $ 4,824,543 $ 407,470 8% Management expense 166, ,013 31, % Interest expense 3,802,771 3,820,370 (17,599) (0)% Amortization of deferred charges 23,062 20,432 2, % Depreciation expense 1,952,730 2,348,767 (396,037) (17)% General and administrative expense 415, ,385 (47,168) (10)% Total expenses 11,592,186 11,611,510 (19,324) (0)% Other revenues (expenses) Change in interest in equity investment $ 303,279 $ (16,109) $ 319,388 % Loss on debt extinguishment - % Change in fair value of interest rate swaps (1,414,938) 2,361,060 (3,775,998) (160)% Transfer to affiliates to offset the change in fair value of interest rate swaps and other expenses (5,786,217) (9,196,824) 3,410, % Interest income (37) (5)% Total other expenses (6,897,232) (6,851,192) (46,040) (1)% Change in unrestricted net assets 303,279 (16,109) 319,388 % Unrestricted net assets (deficit), beginning of year 1,357,143 (204,991) 1,562, % Unrestricted net assets, end of year $ 1,660,422 $ (221,100) $ 1,881, % [ Page 18 of 40 ]

20 USF Financing Corporation and USF Property Corporation Consolidated Statements of Cash Flows 3 Months Ending September 30, Variance $ % Operating activities Change in net assets $ 303,279 $ (16,109) $ 319,388 % Adjustments to reconcile change in net assets to net cash provided by operating activities: Amortization of deferred charges 23,062 20,432 2, % Loss on debt extinguishment % Depreciation expense 1,952,730 2,348,767 (396,037) (17)% Net amortization of premiums and discounts on COPs and bonds (21,858) (25,585) 3, % Change in fair value of interest rate swap 1,414,938 (2,361,060) 3,775, % Change in interest in equity investment (303,279) 16,109 (319,388) % Changes in operating assets and liabilities: Due from related parties 3,790,946 10,932,752 (7,141,806) (65)% Accounts receivable 207, ,398 % Accounts payable (185,366) (1,000) (184,366) % Interest payable (558,193) (2,603,354) 2,045, % Due to related parties 259,416 1,251,985 (992,569) (79)% Net cash provided by operating activities 6,883,147 9,563,011 (2,679,864) (28)% Investing activities Capital expenditures - (225,442) 225, % Purchases of investments (34,002,943) (37,101,413) 3,098,470 8% Proceeds from sales or maturities of investments 31,934,796 37,478,844 (5,544,048) (15)% Net cash (used in) provided by investing activities (2,068,147) 151,989 (2,220,136) % Financing activities Cash paid for debt issuance costs % Proceeds from issuances of long-term debt % Principal paid due to refunding of debt % Principal paid on debt (4,815,000) (8,715,000) 3,900, % Security pledged to counterparty - (1,000,000) 1,000, % Net cash used in financing activities (4,815,000) (9,715,000) 4,900, % Change in cash and cash equivalents (0) - (0) % Cash and cash equivalents, beginning of year 2,641 2,641-0% Cash and cash equivalents, end of year $ 2,641 $ 2,641 $ (0) (0)% [ Page 19 of 40 ]

21 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 University Medical Service Association, Inc. EXECUTIVE SUMMARY MAJOR BUSINESS INITIATIVES - FY 2016 Improvements to Patient Access and Ambulatory Operations: a) Physician schedules and Central Scheduling are being redesigned to remove barriers that negatively impact patient access. New templates went live 8/1/2015. Assumption is a 2% volume increase in the first half of the year and a 5% volume increase in the second half. b) Improve operational capacity and clinic room utilization to more efficiently match demand and supply. c) Care teams and clinical space are being redesigned to improve efficiency and patient experience. Customer service training will occur in an effort to improve patient satisfaction. d) Implementation of the Avaya Telecommunication System has been completed. Management is setting operational targets/standards. Call Center will expand and templates will be optimized to improve patient experience. Improvements to Ancillary Operations: a) Move Phlebotomy to first floor of Morsani & STC. b) Grow volume & Improve nursing skill level in infusion suite. c) Increase volume and rates in ASC. d) Addition of new MRI at Morsani Imaging Center to build ancillary margins. Primary Care: Expansion of primary care through affiliation of hospital partnerships to drive downstream revenue Performance Management and Efficiency a) Implement patient satisfaction tracking system and hire a CQO to implement a robust quality improvement and patient safety program b) Improve coding, managed care, and revenue cycle operations. c) Enhance provider & staff productivity. d) Consolidation of UMSA&MSSC will reduce costs & gain efficiencies by eliminating duplication of efforts Improving partnership efforts with area hospitals. Disciplined Cash Investment strategies to continue generating non-operating income/return. Oversight provided by the USFPG Investment Committee. Continued Clinical Department accountability based on Approved and Recognized Budgets and industry standards. EXPLANATION OF MAJOR VARIANCES FROM PRIOR YEAR - YTD and FORECAST Consolidation of UMSA & MSSC mid-year will result in a decrease from PY in Contributions to MSSC with an offsetting increase in Other Expenses Accounting treatment of TGH contributions related to Epic conversion resulted in non-cash gains of $4.7M on FY15 financial statements Net Increase (Loss) decreased from PY primarily due to Epic conversion which resulted in $2.4M in new consulting fees in Q EXPLANATION OF MAJOR VARIANCES FROM BOT-APPROVED PLAN - FORECAST N/A [ Page 20 of 40 ]

22 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 UNIVERSITY MEDICAL SERVICE ASSOCIATION BALANCE SHEET (In thousands) SEPTEMBER 30 SEPTEMBER 30 Variance $ % ASSETS Current Assets Cash and Cash Equivalents $13,259 $8,870 $4, % Investments 27,426 39,403 (11,976) (30)% Receivables 30,307 23,429 6, % Due from Primary Unit and Other Component Units 5,938 5, % Inventories % Promise of contributed use of software-epic ST 1,143 Other: Prepaid 2,216 1, % Total Current Assets $80,509 $78,916 $1,594 2 % Noncurrent Assets Other Noncurrent Assets Other: Notes Receivable, Deposits (49) (28)% Promise of contributed use of software-epic LT 6,970 Capital Assets Depreciables (Buildings and other Fixed Assets) 27,321 25,944 1,377 5 % Less Accumulated Depreciation (24,642) (24,413) (229) (1)% Non-Depreciables (Construction in Process, Land, etc.) 2,839 1,702 1, % Total Noncurrent Assets $12,616 $3,409 $9, % Total Assets $93,126 $82,325 $10, % LIABILITIES Current Liabilities Accounts Payable $6,411 $3,076 $3, % Accrued Salaries and Benefits 3,018 1,528 1, % Due to Primary Unit and Other Component Units 5,703 5, % Deferred Revenue 1,542 1, % Other: (75) (18)% Total Current Liabilities $17,024 $11,671 $5, % Noncurrent Liabilities Other $48 $54 $(5) (10)% Total Noncurrent Liabilities $48 $54 $(5) (10)% Total Liabilities $17,072 $11,724 $5, % Temporarily Restricted Net Assets-Epic 8, ,113 Unrestricted Net Assets 67,941 70,601 $(2,660) (4)% Net Assets $76,054 $70,601 $5,453 8 % Total Liabilities & Net Assets $93,126 $82,325 $10, % [ Page 21 of 40 ]

23 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 UNIVERSITY MEDICAL SERVICE ASSOCIATION INCOME STATEMENT (In thousands) 3 Months Ended September 30, Fiscal Year Ended June 30, Variance Variance 2016 ACTUAL ACTUAL $ % FORECAST ACTUAL $ % PLAN REVENUES Net Patient Service $35,242 $33,119 $2,123 6 % $155,306 $141,424 $13, % $155,306 Grants, Contracts & Awards 14,375 12,569 1, % 57,711 53,399 4,312 8 % 57,711 UPL 1,709 1, % 6,583 6, % 6,583 Other Revenues 7,729 5,822 1, % 28,661 28,690 (29) (0)% 28,661 Total Revenues $59,055 $52,994 $6, % $248,261 $229,909 $18,352 8% $248,261 EXPENSES Faculty Support 28,881 25,308 $3, % 120, ,544 $10,422 9 % 120,966 Housestaff Support 2,652 2, % 11,771 10, % 11,771 Other Staff Support 7,984 6,559 1, % 35,604 27,530 8, % 35,604 Contributions to MSSC 12,631 14,691 (2,061) (14)% 33,116 61,572 (28,456) (46)% 54,257 Depreciation/Amortization % 3,407 1,390 2, % 1,864 Other Expenses 9,237 4,402 4, % 51,643 17,999 33, % 32,045 Exit Costs on Behalf of MSSC % % 0 Total Expenses $61,801 $53,815 $7, % $256,507 $229,807 $26, % $256,507 Operating Profit Before Non-Cash Changes $(2,747) $(820) $(1,926) (235)% $(8,245) $102 $(8,347) (8,181)% $(8,245) Unrealized Gain/Losses (594) (329) (264) (80)% 0 (325) % 0 Non-Cash Impact of Epic Conversion % 0 4,672 (4,672) (100)% 0 Total Non-Cash Changes $(594) $(329) $(264) (80)% $0 $4,347 $(4,347) (100)% $0 NET OPERATING PROFIT $(3,340) $(1,150) $(2,190) (191)% $(8,245) $4,449 $(12,695) (285)% $(8,245) [ Page 22 of 40 ]

24 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 UNIVERSITY MEDICAL SERVICE ASSOCIATION STATEMENT OF CASH FLOWS (In thousands) 3 Mos Ended September 30, Fiscal Year Ended June 30, Variance 2016 ACTUAL FORECAST ACTUAL $ % PLAN OPERATING ACTIVITIES Net Operating Profit $(3,340) $(8,245) $4,449 $(12,695) (285)% $(8,245) Changes in operating assets and liabilities (1,875) 3,928 (1,080) 5, % 3,928 Adjustments for Non-Cash Activities: Depreciation / Amortization 416 3,407 1,390 2, % 1,864 Non Cash Imact of Epic 0 0 (4,672) Unrealized Gains (325) (100)% 0 Total Cash From Operating Activities $(4,205) $(910) $412 $(1,323) (321)% $(2,453) INVESTING ACTIVITIES Capital Expenditures $(2,437) $(4,000) $(2,537) $(1,463) (58)% $(4,000) Purchases/Sales of Investments 8,859 8,859 2,552 6, % 8,859 Total Cash From Investing Activities $6,422 $4,859 $15 $4,844 32,981 % $4,859 FINANCING ACTIVITIES Proceeds of Long-Term Debt $0 $0 $0 $0 % $0 Principal Paid on Debt 0 (941) 0 (941) % 0 Total Cash From Financing Activities $0 $(941) $0 $(941) % $0 CHANGE IN CASH 2,216 3, , % 2,405 Operatng Cash, Beginning of Year 11,042 11,042 10, % 11,042 Operating Cash, End of Quarter 13,259 14,050 11,042 3, % 13,448 Invested Cash, End of Quarter 27,426 28,000 36,753 3,434 (9)% 28,000 Total Cash, End of Quarter $40,685 $42,050 $47,795 $3,007 (6)% $41,448 [ Page 23 of 40 ]

25 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 USF MEDICAL SERVICES SUPPORT CORPORATION EXECUTIVE SUMMARY MAJOR BUSINESS INITIATIVES - FY 2016 Tied directly to the support of the Faculty Practice Plan and UMSA. As MSSC is primarily structured to be a break-even organization, all payroll and operating expenses are funded by UMSA in the form of services revenue. EXPLANATION OF MAJOR VARIANCES FROM PRIOR YEAR - YTD and FORECAST Decrease in Forcast Cash, Revenue and Expenses due to consolidation of MSSC & UMSA planned for Jan 1, EXPLANATION OF MAJOR VARIANCES FROM BOT-APPROVED PLAN - FORECAST n/a [ Page 24 of 40 ]

26 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 USF MEDICAL SERVICES SUPPORT CORPORATION BALANCE SHEET (In thousands) September 30, September 30, Variance $ % ASSETS Current Assets Cash and Cash Equivalents $1,471 $ 1,950 $(479) (25)% Receivables % Due from Primary Unit and Other Component Units 5,403 5, % Inventories 1,324 1, % Other: Prepaid 1,192 1, % Total Current Assets $9,398 $9,265 $133 1 % Noncurrent Assets Other Noncurrent Assets $0 % Other: Deposits (0) (0)% Capital Assets Depreciables (Buildings and other Fixed Assets) 82,227 81, % Less Accumulated Depreciation (24,746) (21,649) (3,097) (14)% Non-Depreciables (Construction in Process, Land, etc.) 2 46 (44) (95)% Total Noncurrent Assets $57,500 $59,806 $(2,305) (4)% Total Assets $66,898 $69,070 $(2,172) (3)% LIABILITIES Current Liabilities Accounts Payable $2,324 $2,493 $(169) (7)% Accrued Salaries and Benefits 5,191 4, % Due to Primary Unit and Other Component Units 1,241 2,124 (882) (42)% Deferred Revenue % Other: 2,260 2,352 (91) (4)% Total Current Liabilities $11,132 $11,511 $(379) (3)% Noncurrent Liabilities Long Term Debt 55,955 57,595 (1,640) (3)% Other $159 $95 $64 67 % Total Noncurrent Liabilities $56,113 $57,690 $(1,577) (3)% Total Liabilities $67,245 $69,201 $(1,956) (3)% NET ASSETS $(347) $(131) $(216) (165)% Total Liabilities & Net Assets $66,898 $69,070 $(2,172) (3)% [ Page 25 of 40 ]

27 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 USF MEDICAL SERVICES SUPPORT CORPORATION INCOME STATEMENT (In thousands) 3 Months Ended September 30, Fiscal Year Ended June 30, Variance Variance 2016 ACTUAL ACTUAL $ % FORECAST ACTUAL $ % PLAN REVENUES Operating/payroll expenses funded by UMSA $16,915 $15, % $33,116 $66,854 (33,738) (50)% $33,116 Other Revenues % 2 3 (1) (22)% $2 Total Revenues $16,916 $15,934 $982 6% $33,118 $66,857 $(33,739) (50)% $33,118 EXPENSES Faculty support % (64) (38)% 105 Housestaff support % (19) (39)% 30 Staff support 10,713 9,621 1,093 11% 21,426 40,883 (19,456) (48)% 21,426 Medical Materials/Supplies 2,665 2, % 5,330 11,819 (6,489) (55)% 5,330 Interest Paid on Debt (17) (3)% 1,233 2,579 (1,346) (52)% 1,233 Depreciation/Amortization % 1,543 3,025 (1,482) (49)% 1,543 Other Expenses 2,497 2,627 (130) (5)% 4,994 8,820 (3,826) (43)% 4,994 Total Expenses $17,331 $15,977 $1,354 8% $34,662 $67,343 $(32,682) (49)% $34,662 Operating Profit Before Non-Cash Changes $(415) $(43) $(372) (875)% $(1,543) $(486) $(1,057) (217)% $(1,543) Unrealized Gains/Losses % % 0 Gains/Losses on Transfer of Assets % % 0 Change in Fair Value of Swaps 0 1,117 (1,117) (100)% 0 1,760 (1,760) (100)% 0 Total Non-Cash Changes $0 $1,117 $(1,117) (100)% $0 $1,760 $(1,760) (100)% $0 NET OPERATING PROFIT $(415) $1,075 $(1,489) (139)% $(1,543) $1,273 $(2,817) (221)% $(1,543) [ Page 26 of 40 ]

28 FY 2016 QUARTER 1 REPORT - SEPTEMBER 30, 2015 USF MEDICAL SERVICES SUPPORT CORPORATION STATEMENT OF CASH FLOWS (In thousands) 3 Mos Ended September 30, Fiscal Year Ended June 30, Variance 2016 ACTUAL FORECAST ACTUAL $ % PLAN OPERATING ACTIVITIES Net Operating Profit $(415) $(1,543) $1,273 $(2,817) (221)% $(1,543) Changes in operating assets and liabilities (272) (854) (1,378) % (854) Adjustments for Non-Cash Activities: Depreciation / Amortization 772 1,543 3,484 (1,941) (56)% 1,543 Unrealized Gains % 0 Total Cash From Operating Activities $84 $(854) $3,379 $(4,234) (125)% $(854) INVESTING ACTIVITIES Capital Expenditures $(88) $(150) $(574) $ % $(150) Purchases (Sales) of Investments % 0 Total Cash From Investing Activities $(88) $(150) $(574) $ % $(150) FINANCING ACTIVITIES Proceeds of Long-Term Debt $0 $0 $0 $0 % $0 Principal Paid on Debt (470) (941) (1,930) % (941) Total Cash From Financing Activities $(470) $(941) $(1,930) $ % $(941) CHANGE IN CASH (474) (1,945) 875 (2,821) (322)% (1,945) Cash, Beginning of Year 1,945 1,945 1, % 1,945 Cash, End of Year $1,471 $(0) $1,945 $(1,945) (100)% $(0) [ Page 27 of 40 ]

29 USF Research Foundation, Inc. FY 2016 QUARTER 1 REPORT - September 30, 2015 EXECUTIVE SUMMARY MAJOR BUSINESS INITIATIVES - FY 2016 Continued development of the Research Park remains a primary goal of the Research Foundation. We are seeking developer interest in the Research Park and are investing in the design and marketing of a new mixed use facility in concert with overall revisioning of the strategic master plan. Our goal is to create an urbanized science district with the high density, mixed use, and concentration of activities that spur innovation, encourage entrepreneurism and spark interaction. Facilities of this kind support and align with the university s strategic plan. Companies come to the Research Park with a desire for and commitment to working with USF by collaborating on research with faculty, hiring student interns or working with the university in other ways. These facilities will promote interdisciplinary hands-on learning opportunities for undergraduate, graduate and professional students. These facilities will expand world-class, high-impact interdisciplinary research by providing research facilities and opportunities for collaboration between private enterprises and USF faculty resulting in job creation and innovationbased economic development in the Tampa Bay region. These facilities increase partnership opportunities by putting effective, sustainable business practices and initiatives for public and private partnerships to work that will enhance the well-being of people in our community, the state of Florida, and the nation. Continued diligence in maintaining occupancy in existing Research Park buildings including renovation to accommodate the needs of new tenants and continued review of our program services to ensure the value provided to clients and the community is maximized. EXPLANATION OF MAJOR VARIANCES FROM PRIOR YEAR - YTD and FORECAST As forecasted, revenue from Economic Development Grant, has decreased from prior year, as the agreement concluded in FY15. FY16 decrease in Incubator Program Revenue from FY15 is due to timing of receipts; no variance expected in forecast. Major variance in Investment Income through FY16 Quarter 1, is attributed to FY16 market returns being significantly less than same period prior year and from FY16 Plan. Operating Revenue and Expenses are tracking favorably to budget for three month period ended September 30, No significant unfavorable variances in operating income for FY16 forecast are anticipated at this time. The exiting of Draper Laboratory from USF Connect building in FY16 Quarter 1 has caused the sale of certain equipment by Hillsborough County at a loss of $270K to USFRF. The loss is equal to the remaining book value of that equipment and is reported as non-operating. EXPLANATION OF MAJOR VARIANCES FROM BOT-APPROVED PLAN - FORECAST FY16 Investment Earnings were forecasted at an 8% expected return on the investments managed by the Foundation Endowment Fund and 5% expected return on SunTrust Investment Services. The market returns for FY16 are expected to be less than originally forecasted, based on Quarter 1 market conditions. [ Page 28 of 40 ]