Queens University. Page 1 of 11

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1 Page 1 of 11 Publication date: 01-Dec-2005 Primary Credit Analysts: Paul B Calder, CFA, Toronto (1) ; paul_calder@standardandpoors.com Secondary Credit Analyst: Suleman Souleyman, Toronto (1) ; suleman_souleyman@standardandpoors.com Reprinted from RatingsDirect Queens University ISSUER CREDIT RATING Queens University Issuer Credit Rating AA+/Stable/-- Issuer credit rating history: Nov. 1, 2002 AA+ Rationale Outlook Background Capital Program Drawing Toward Completion Current And Medium-Term Demand Profile Is Solid Financial Profile Remains Strong Provincial Support Evident In Grant Increases And Tuition Policy Endowment and Fundraising Rationale The ratings on Queen's University (Queen's) are supported by its strong business and financial profile, as well as its historically conservative approach to budget management. Queen's strong business profile reflects its strong demand, fundraising, and research characteristics. The university's solid financial profile reflects its low debt levels, high unrestricted financial asset balances, higher-than-average debt service coverage ratios (DSCRs), solid consolidated operating surpluses, its very modest accumulated operating deficit, and lower-than-average level of post-employment obligations. Various financial ratios across rated domestic university peers illustrate Queen's very solid financial profile (see table 1). In addition, the university has a good commitment to internally funding maintenance capital expenditures and its sinking fund obligations on its C$90 million bullet maturity (due in November 2032) contribute to the strong ratings. At fiscal 2006 (year ending April 30), the university's estimated sinking fund balance respecting its bullet maturity is expected to be about C$8.9 million. The ratings on Queen's also reflect the support of the province of Ontario (AA/Stable/A-1+) as the key operating funding provider and policy steward for higher education in Ontario. As part of its 2005/06 budget, the province provided notable incremental operating grant and targeted program funding over a multiyear period. Furthermore, it has indicated that it will lift its current tuition freeze, which should restore some modest revenue autonomy to Ontario universities for the 2006/07 academic-year. Queen's is one of only two Canadian higher education institutions (McGill University in Montreal, Que. being the other) with ratings that are higher than the ratings of the provincial governments on which universities rely for significant annual funding and attests to its above-average credit quality. The ratings are constrained at the 'AA+' level mainly by expenditure challenges that are common to most higher education institutions and have been rising faster than inflation in many cases. These costs would include personnel and benefit expenditures, as well as post-employment benefit, energy, insurance, and ongoing capital maintenance obligations. The constrained revenue environment of recent years for Ontario universities, together with expenditures that are rising faster than inflation, has generally resulted in a narrowing of margins and, in some cases, a reduction in balance sheet reserves to fill the gap. Fortunately for Queen's, the university has weathered this challenging fiscal backdrop without any material erosion in its balance sheet. Moreover, the new policy and funding initiatives of the province bode well for the university's fiscal position. Given the lack of an additional indebtedness test to preclude significant unexpected debt issuances, as well as the unlikely circumstance that a publicly funded institution would be rated two notches above the general obligation rating of the province, the current rating would likely represent the ceiling for Queen's credit quality. It is likely that Queen's could issue additional debentures

2 Page 2 of 11 to assist with potential capital funding demands, although the university has indicated that ratings maintenance is a key strategic goal and that it will consider procuring external debt within the context of this corporate aim. The development of the university's next multiyear capital project (the Queen's Centre) could require an additional C$60 million in debt financing. In the medium term, it is Standard & Poor's Ratings Services view that the university has incremental debt capacity at the current ratings level, particularly given their very solid demand and financial ratios relative to peers. Outlook The outlook reflects our expectation that the university's debt burden during the rating horizon will remain low by peer comparison and that potential increases in debt will be supportable by net revenue growth. In addition, the outlook reflects the expectation that provincial government policy respecting financial grants and tuition policy will remain supportive, which appears to be an enduring trend. The outlook also reflects the expectation that the university's positive consolidated budget balances and its robust expendable resources will not erode materially from current levels. To the extent the university's capital program significantly increases, with attendant external debt financing requirements, together with any meaningful reduction in unrestricted financial assets, it could place downward pressure on the ratings. Background Queen's is one of 18 public universities in the province of Ontario and is located in Kingston, Ont., Canada. Queen's has a 2005/06 fiscal full-time enrollment (FTE) base slightly below 19,000, which is up only marginally from the previous two years enrollment levels. Its program offerings include seven faculties, and graduate students comprise about 14% of its enrollment. The university is managed by a board of trustees, which handles all business matters, and a Senate, which handles all academic matters. Given the provincial government's targeted funding envelope for graduate and research programs, it is likely that Queen's will expand its already strong research and graduate student focus with the addition of new or expanded program offerings. Table 1 Queen's University--Peer Comparison Year ended April 30, 2005 Queen's University McMaster University University of Guelph York University University of Toronto Rating AA+/Stable/-- AA/Stable/-- AA-/Stable/-- AA-/Stable/-- AA/Stable/-- C$, thousands (except FTE and ratios) FTEs 18,500 18,360 20,664 19,777 17,653 17,243 43,108 40,910 57,887 55,763 Total revenue 653, , , , , , , ,344 1,653,800 1,568,100 Deferred capital 21,441 20,035 36,899 33,243 16,977 16,667 8,256 6,504 36,900 34,300 Adjusted revenue 631, , , , , , , ,840 1,616,900 1,533,800 Interest 5,394 5,414 10,256 10,221 10,686 10,807 21,424 11,806 26,600 19,800 Depreciation 39,389 38,253 53,700 48,094 33,143 31,416 36,221 28,780 83,500 76,800 Total expenditure 614, , , , , , , ,703 1,612,600 1,521,500 Adjusted expenditure (For DSCR) Endowment contribution Consolidated surplus (%) 569, , , , , , , ,117 1,502,500 1,424,900 N/A N/A N/A N/A 13,276 18,644 N/A N/A N/A N/A (0.2)

3 Page 3 of 11 DSCR (interest only) x DSCR (interest only) x N/A N/A N/A N/A N/A N/A N/A N/A Total debt 96,120 96, , , , , , , , ,100 Unfunded postemployment liabilities Interest expense to adjusted revenue (%) 53,982 50, , , , ,127 92,707 60, , , Debt to FTE 5,196 5,253 7,645 8,027 9,131 9,550 8,570 6,743 7,093 7,444 Debt to adjusted revenue (%) (Debt plus unfunded)/adjusted revenue (%) Internally restricted net assets Internally restricted endowments Externally restricted endowments Unrestricted financial resources ,730 89, , ,987 31,595 30,439 93,463 55,470 91,700 59, , , , ,465 18,253 21,006 20,526 6, , , , , , , , , , ,167 1,422,800 1,287, , , , ,452 49,848 51, ,989 61, , ,000 as % of total debt Total endowment value per FTE 27,936 25,136 16,268 14,591 7,766 7,203 4,097 3,439 29,181 26,462 N/A--Not applicable. Capital Program Drawing Toward Completion In November 2002 (fiscal 2003), the university issued its first public debenture for C$90 million with about C$57 million of the net debt proceeds used to provide funding for the expansion of the residence system at the university and necessary upgrading of the food services facilities in Leonard Hall. Chernoff Hall, the new chemistry building, was constructed with a total capital cost of C$53 million, with C$10 million externally financed using the capital market net debt proceeds noted above. The remaining net debt proceeds were used to refund existing debt obligations and fund transaction-related costs. In addition to the 2002 net debenture proceeds, donations, internal funding, and capital grants have provided the multi-year financing for the university's C$200 million expansionary capital program that is drawing toward completion. Completed capital projects include: The Cancer Research Institute Chernoff Hall (Chemistry Department) Goodes Hall (Queen's School of Business) Two new Residence Facilities Macdonald Hall (Faculty of Law) Integrated Learning Centre (Faculty of Applied Science) Electrical sub-station Construction on the Integrated Learning Centre, a C$24.8 million project related to the Faculty of Applied Science, was the most recently completed of the noted projects as of April The project will facilitate students from various departments undertaking multidisciplinary projects in a single facility and will

4 Page 4 of 11 reduce teaching labs in existing Applied Science faculty buildings. In addition, one of the few remaining capital projects is the ongoing construction of a new 15 megawatt co-generation plant, which in addition to hedging the risk of rising electricity costs, also provides supply reliability respecting research assets and campus facilities. This C$25 million capital project is being undertaken in a cost-sharing relationship with the Kingston General Hospital, with Queen's portion of the capital cost at approximately C$15 million. Finally, the Gordon Hall renovation that began in the spring of 2005 is estimated to cost C$15 million when completed, while the Richardson Hall renovation and refurbishment has been delayed. The Richardson Hall project had an initial budgeted capital cost of about C$7 million, although this may increase; however, any increase from the initial capital approval amount will require Board endorsement. The co-generation plant, and the Gordon Hall and Richardson Hall projects will be funded without the need to procure additional debt. Additional capital projects The provincial announcement respecting additional grant funding, particularly for research and graduate programs, might be linked to providing appropriate capital facilities to accommodate additional students and research capacity. Although the timing and complete details of the announced grant funding is still unknown, an expanded graduate and research focus might require the university to procure additional external debt financing; however, it appears that the province will provide direct grant funding to meet principal and interest payments on such debt obligations An important risk for Standard & Poor's to consider to the rating level on Queen's is the durability of the provincial grants, a portion of which might be required to service incremental debt for a very lengthy period. The term of most Canadian university bullet debt maturities has been at least 25 years, with some extending to 50 years in the case of McMaster University. Standard & Poor's will evaluate the potential debt sizing that might be required to complete capital projects and their potential effect on the financial profile and ratings on the university, if any, only following board approval and a detailed review of the university's business analysis of the costs and funding sources. Queen's Centre Although the university's initial expansionary capital program is drawing toward completion, the Queen's Centre development might require additional indebtedness to fund this substantial campus special capital project. The proposed Queen's Centre would be an on-campus facility that would include five connected building units, including a 2,500-seat arena with an Olympicsized ice rink, a basketball arena seating 1,800, a larger (than the existing) swimming pool, and a field house, including a six-lane track, which will allow the university to host track and field events. The Queen's Centre would combine student life and athletics facilities and would also provide a new home for the School of Physical and Health Education. The university projects that this significant capital facility undertaking would begin in mid-2006 with an estimated total capital cost of about C$230 million and would be built in three phases in the next 9 years (that is, by 2014). The proposed multi-year funding for the Queen's Centre would be as follows: 15-year student levy collections, C$25.5 million; external debt financing, C$60.0 million; fundraising, C$130.0 million; other sources, C$15 million: For a total of C$230.5 million. About C$25.5 million of the approximately C$230 million estimated capital cost will be funded by a special student levy to be collected over a 15-year period.

5 Page 5 of 11 For the first five years, students will contribute C$71 per student, per year, and C$141 for each of the remaining 10 years, until the goal of C$25.5 million is reached. Undergraduate students have shown their support for the Queen's Centre by voting 71 percent in favor of this special student fee. In addition to the student levy, it is estimated that C$130 million in donations will be received over a 10-year time frame. Given that a substantial proportion of the estimated capital donor pledges related to the funding of the Queen's Centre might not be received until well into the future (but which may be used for future debt service), it is possible that the university could require more than the projected C$60 million in additional debt to fund this project. Furthermore, Standard & Poor's notes that potential construction cost overruns and fundraising uncertainty over this project's specific capital campaign could cause the university's debt-financing requirement to be larger than initial projections. As additional information about the timing and form of the university's funding plan for this project becomes available, Standard & Poor's will incorporate it into our forward-looking credit view. Deferred capital maintenance Queen's estimates its deferred capital maintenance backlog to be about C$145 million, although the university continues to chip away at this through a C$7.5 million (C$6 million for deferred maintenance and C$1.5 million for current maintenance of residence assets) annual budget allocation in support of capital maintenance. In addition, Queen's also received about C$9 million in special capital grants for deferred maintenance purposes toward the end of fiscal This grant commitment for fiscal 2005 would be considered more ad hoc and a long-term and consistent funding stream in respect of deferred maintenance for Ontario universities is far from certain. As nearly C$40 million in capital amortization occurs annually, while only C$7.5 million is expended in annual capital maintenance, generally indicates that Queen's, like most Canadian universities, will continue to fall behind in its deferred capital maintenance without further provincial support. Standard & Poor's does not expect that Queen's will procure external financing to remedy its deferred maintenance obligations, although it is hoped that the provincial government will adopt recommendations of the Rae review and provide substantial new funding for deferred maintenance as part of future budget announcements. Current And Medium-Term Demand Profile Is Solid The university's medium-term credit profile is supported by one of the strongest demand positions among its peers, highlighted by better than average (and steady levels of) acceptance, matriculation, student retention, and averageentry (quality) ratios. Table /2006 Percentage Change in Application Statistics (compared to 2004/2005) Queen's University Ontario System First Choice Second Choice Third Choice > than Third Choice Total Applications (0.5) (18.7) (6.4) (1.3) (22.9) (8.9) In addition, Queen's total application statistics following the double cohort years (2003/04 and 2004/05) have remained solid, despite the decrease in total system-wide applications. Queen's first- and second-choice applicants, at September for the 2005/06 academic year--are higher than the previous year and are better than the Ontario system average (see table 2).

6 Page 6 of 11 Table 3 Queen's University--Demand Statistics Applicants, Offers, Acceptances--September 2005 Applicants Offers Acceptances Offer (%) Acceptances (%) Yield (%) Direct entry 16,647 9,599 3, Medicine 1, Law 2, Education 4,037 1, Graduate studies* 4,703 1, Total 29,513 13,186 4, Applicants, Offers, Acceptances--September 2004 Applicants Offers Acceptances Offer (%) Acceptances (%) Yield (%) Direct entry 16,742 9,697 2, Medicine 1, Law 2, Education 4, Graduate studies* 4,956 1, Total 29,949 12,865 4, *Represents acceptances to Sept For direct entry programs, first three choices only Financial Profile Remains Strong At the current rating level, Standard & Poor's expects the university to possess a stronger-than-average financial profile, highlighted by solid consolidated budget positions, a strong endowment fund, robust unrestricted financial asset balances, and low debt levels. These financial characteristics exist and we also view the university's prudent approach to budget operations and financial management as supportive to the ratings (see table 5). In addition, the university's pension and nonpension post-employment liabilities are lower than many other rated university peers, which places less of an operational funding burden on Queen's in respect of these employee benefits. The university's adjusted consolidated surplus for fiscal 2005 (year ended April 30) was 9.0%, up from 7.2% and 5.9% in fiscals 2004 and 2003, respectively. This was the university's highest surplus figure since 1999 and continues Queen's trend of solid surplus positions. The benefit in generating surpluses is that the excess cash flow can be directed to internal funding of capital projects, maintenance capital obligations, or the strengthening of internal reserves. In time, to the extent that key expenditure items rise faster than revenue growth, it has the potential to erode asset balances and narrow operating margins. To date, Queen's has proved adept at managing budget pressures as the increase in fiscal 2005 in its operating surplus from the previous year would suggest. As would be expected from such solid surplus figures, Queen's debt service coverage ratios (DSCR) are also better than its rated university peers (see table 1). No other rated Ontario peer has a DSCR for fiscal 2005 in excess of 4.5x, whereas Queen's ratio is above 11x. Although Queen's has a higher rating than these peers, the magnitude of this DSCR would also suggest that the university has the capacity to assume additional debt, which would moderate its DSCRs. It is unlikely that this factor will affect the rating on the university unless the debt issuance was significant enough to push its debt ratios outside the lower bound of the 'AA+' category. Queen's statement of net assets at April 30, 2005, shows an unrestricted net asset deficit of about C$85.1 million; however, it is important to recognize that

7 Page 7 of 11 the negative balance includes a substantial (C$43.3 million) accrual accounting entry in respect of nonpension post-employment liabilities. In addition, C$30.6 million of that C$85.1 million accrual based accumulated deficit reflects the university's internal funding of capital projects, rather than the issuing of debt. This internal financing will be recovered over varying time periods (from pledged donations, ancillary fees, and faculty budget allocations). Table 4 Queen's University--Financial Commitments (April 30, 2005) (C$ mil.) Debt obligations 96.1 Postemployment liabilities 54.0 Deferred capital maintenance Total Total adjusted revenue Total financial commitments as % of adjusted revenue 46.7 Debt burden remains low At April 30, 2005, the university's debt burden was C$96.1million, which represents about 15.2% of total fiscal 2005 adjusted revenue. On a per FTE basis, Queen's fiscal 2005 debt burden is about C$5,200. Also, at April 30, 2005, the university's internally restricted endowment assets and its internally restricted net assets were C$148.5 million and C$109.7 million, respectively. These fund balances could be undesignated by the university's board of trustees and represent expendable resources, although access to these resources would likely only be considered in a crisis, but nonetheless represent balance sheet strength. In general, these debt and unrestricted financial asset metrics are very favorable by peer comparison and support the university's higher-than-average credit rating. Post-employment benefit liability lower than peers At April 30, 2005, Queen's unfunded pension liability was a fairly modest C$10.7 million, which is only 1.7% of adjusted fiscal 2005 revenue, while its unfunded nonpension post-employment liabilities (medical and dental benefits) for the same period were about C$43.3 million, which is approximately 6.9% of 2005 adjusted revenue. These liabilities are manageable and smaller compared with many similar sized university peers in Ontario, although Standard & Poor's is of the view that the university's unfunded pension position is modestly understated. The understatement reflects the fact that there has not been an actuarial update in the past 12 months as the C$10.7 million pension liability is the same as was recorded for fiscal The decline in market interest rates, which lowers the actuarial discount rate and increases pension liabilities, has likely outpaced investment returns, which would generally increase the unfunded pension position. Queen's pension plan is a defined contribution scheme, which has a defined benefit component that provides a minimum level of pension payout. In calculating benefit obligations, at the retirement date of an employee the university makes a calculation of accrued benefits that is very similar to a defined benefit plan (based on years of service and recent salary levels). Depending on the accumulated asset value in the employee's money purchase account, the university might have to provide a minimum guarantee top-up to bring the retirement payout value to meet the accrued benefit obligation. Analytically, while this feature of the minimum payout benefit within Queen's defined contribution plan would appear to be very similar to the dynamics of a defined benefit pension plan, there are two notable differences. First, the minimum guarantee portion is not as generous as the typical terms of a defined benefit plan, and second, the benefit payout calculation promised to employees

8 Page 8 of 11 is not linked to annual inflation adjustments. These features limit the potential liability risk for Queen's relative to other institutions with a defined benefit pension plan and this funding advantage can be seen in their lower pension liability compared with its peers, such as the University of Toronto, which has more traditional defined benefit pension plans. Table 5 Queen's University--Financial and Credit Metrics --Year ended April Net Asset Composition (C$ thou.) Unrestricted net assets (85,064) (80,736) (76,322) (71,884) (75,422) (71,869) Internally restricted 138, ,222 89,977 79,784 63,349 48,145 Invested in capital assets 107, ,911 98,868 91,245 94,187 96,414 Internally restricted endowments (book value) 142, , , , , ,215 Externally restricted endowments (book value) 288, , , , , ,104 Total 591, , , , , ,009 Research funding (before deferrals) 140, , , ,864 94,418 75,010 Fundraising 40,471 44,595 30,806 40,429 38,176 37,443 Balance Sheet (C$ thou.) Cash & ST investments 10,272 15,472 12,585 10, ,459 Noncash and other current assets 30,237 30,125 34,317 30,471 27,236 25,782 Current assets 40,509 45,597 46,902 41,448 27,236 37,241 Deferred expenses 5,528 7,542 9,384 5,270 6,683 7,983 Investments 666, , , , , ,372 Capital assets 441, , , , , ,909 Total assets 1,154,335 1,084,448 1,027, , , ,505 Bank indebtedness ,465 0 Accounts payable and accrued liabilities 91,277 89,500 94,715 83,898 73,576 68,320 Deferred revenue 137, , , , , ,764 Deferred capital contributions 237, , , , , ,120 Long-term debt 96,120 96,440 96,907 29,975 31,636 32,292 Fund balances/net assets 591, , , , , ,009 Total Liabilities and Fund Balances 1,154,335 1,084,448 1,027, , , ,505 FTE 18,500 18,360 16,976 16,476 16,193 15,756 Debt per FTE 5, , , , , ,049.5 Debt to total adjusted revenue (%) Max. annual debt service burden (as % of adjusted revenue) Unfunded, nonpension, post-retirement liability 43,282 40,038 37,290 33,251 31,353 29,575 Fund balance eedicated to nonpension liability (3,500) (2,300) (900) Net unfunded, nonpension, postretirement liability 39,782 37,738 36,390 33,251 31,353 29,575 Endowment (C$ thou.) Internally restricted 148, , , , , ,600 Externally restricted 368, , , , , ,900 Total market value 516, , , , , ,500 % change (8.0) N/C Total book value 430, , , , , ,908 % change N/C Endowment market value per FTE 27,936 25,136 23,298 26,099 24,844 21,865

9 Page 9 of 11 Provincial Support Evident In Grant Increases And Tuition Policy As part of the 2005/2006 Ontario budget announcement, about C$450 million in post-secondary incremental funding (over a multiyear period) will be provided by the province with approximately C$280 million of this total allocated for universities. In respect to the C$280 million in estimated incremental university funding, the province has identified five broad categories across which this funding will be expended. Undergraduate growth Tuition freeze offset (the second year of the provincial tuition freeze) Medical school growth Graduate program growth Quality, including funding of previously unfunded student places Given potential tuition enhancements, the higher future operating grants to be received from the province, and the targeted grant funding focused on graduate studies, Queen's revenue profile should improve in the future. This future funding commitment should provide important financial support for new operating and capital cost initiatives. Endowment and Fundraising A key credit differentiator for Queen's rating is the university's position as a net creditor--that is--its unrestricted financial assets exceed its debt obligations. In fact, at fiscal 2005, Queen's unrestricted financial assets are more than 2.5x its debt burden (see table 1), whereas only McMaster, the University of British Columbia, and McGill University have net creditor positions among the rated peers, although these universities' net creditor position is slightly in excess of 1x and is less robust than Queen's net creditor position. Queen's endowment value per FTE is also among the highest of Standard & Poor's rated peers, at almost C$28,000 for fiscal 2005 and a higher-thanaverage proportion of the market value of the endowment (at about 29%) is internally restricted. As noted in previous reports, strong endowment balances provide operating, capital, and research activity support through investment earnings, although internally restricted endowments provide the greatest level of balance sheet support to assist the university in the management of potential crises. In addition, strong endowment balances also generally reflect a university's good investment management performance and ability to procure fundraising contributions from its alumni and donor base. At April 30, 2005, Queen's internally restricted endowment assets had improved modestly to C$148.5 million, up from C$141 million in fiscal In addition to the internally restricted endowment funds, Queen's internally restricted net assets have improved, to nearly C$110 million at fiscal 2005, up from C$89.1 million at fiscal The balance of the university's internally restricted net assets at fiscal 2005 is heavily comprised of departmental carry-forwards and faculty trust funds. In the past six years, Queen's total annual donations, including planned giving, have ranged between C$30 million and C$45 million, with fiscal 2005 donations totaling slightly more than C$40 million. The university has begun a very aggressive capital campaign related to the Queen's Centre with a fundraising goal of C$130 million. The university's investment returns have been solid, generally achieving good performance relative to benchmarks.

10 Page 10 of 11 Table 6 Queen's University--Financial Statistics --Year ended April Revenue by Category (%) Govt. grants and contracts Tuition and student fees and sale of goods and services Investment income Donations and other grants Other revenue Amortization of deferred capital contributions % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Expenses By Category (%) Salaries and benefits Supplies and services Minor equipment and servicing Externally contracted services Student assistance Travel and utilities Renovations Interest on long-term debt Restructuring costs Amortization of capital assets Other expenses % 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Revenue By Category (C$ thou.) Govt. grants and contracts 355, , , , , , ,565 Tuition and student fees and sales of goods and services 190, , , , , , ,607 Investment income 43,221 28,280 24,953 21,801 30,077 25,541 24,779 Donations and other grants 26,009 23,001 17,165 22,074 15,283 10,869 15,201 Other revenue 15,838 13,786 19,647 15,792 12,187 10,835 11,612 Amortization of deferred capital contributions 21,441 20,035 17,176 13,007 9,746 8,236 6,503 Total 653, , , , , , ,267 Expenses By Category (C$ thou.) Salaries and benefits 355, , , , , , ,250 Supplies and services 64,974 63,704 61,894 56,961 50,729 47,287 38,602 Minor equipment and servicing 33,573 34,587 20,774 23,077 16,034 11,695 14,679 Externally contracted services 21,270 18,885 17,309 16,168 15,584 14,110 13,632 Student assistance 39,244 38,482 37,289 33,369 26,588 25,248 18,623 Travel and utilities 29,216 26,991 26,939 24,033 21,917 19,685 18,647 Renovations 5,841 11,724 13,940 10,355 10,094 8,817 7,385 Interest on long-term debt 5,394 5,414 3,486 2,315 2,218 2,576 2,572 Amortization of capital assets 39,389 38,253 34,471 30,005 26,218 24,885 21,166 Other expenses 19,832 20,719 20,980 21,299 21,042 20,765 17,734 Total 614, , , , , , ,290

11 Page 11 of 11 Revenues less expenses 38,894 24,094 14,770 22,384 19,154 13,162 17,977 Add back noncash items 17,948 18,218 17,295 16,998 16,472 16,649 14,663 Adjusted consolidated surplus 56,842 42,312 32,065 39,382 35,626 29,811 32,640 Consolidated surplus (as % of total adjusted revenue) This report was reproduced from Standard & Poor's RatingsDirect, the premier source of real-time, Web-based credit ratings and research from an organization that has been a leader in objective credit analysis for more than 140 years. To preview this dynamic on-line product, visit our RatingsDirect Web site at Published by Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. Executive offices: 1221 Avenue of the Americas, New York, NY Editorial offices: 55 Water Street, New York, NY Subscriber services: (1) Copyright 2003 by The McGraw-Hill Companies, Inc. Reproduction in whole or in part prohibited except by permission. All rights reserved. Information has been obtained by Standard & Poor's from sources believed to be reliable. However, because of the possibility of human or mechanical error by our sources, Standard & Poor's or others, Standard & Poor's does not guarantee the accuracy, adequacy, or completeness of any information and is not responsible for any errors or omissions or the result obtained from the use of such information. Ratings are statements of opinion, not statements of fact or recommendations to buy, hold, or sell any securities.