DIRECT SUPPORT ORGANIZATION ANNUAL FINANCIAL PLANS FISCAL YEAR 2014

Transcription

1 DIRECT SUPPORT ORGANIZATION ANNUAL FINANCIAL PLANS FISCAL YEAR 2014 May 23, 2013

2 ANNUAL FINANCIAL PLANS FOR FY 2014 INDEX USF Research Foundation, Inc Sun Dome Inc USF Foundation, Inc USF Alumni Association, Inc USF Financing Corporation University Medical Services Association, Inc Medical Services Support Corporation, Inc USF Health Professions Conferencing Corporation [ 2 of 32 ]

3 USF Research Foundation, Inc. FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University The USF Research Foundation, a 501(c) (3) organization, was established to promote, encourage and enhance the research activities of USF faculty, staff and students. The Research Foundation provides a mechanism for the funding of licensed research, and the management of research funding. The Research Foundation owns and operates the USF Research Park of Tampa Bay with the core philosophy of an innovation complex that brings together interdisciplinary research teams in an environment of collaboration with private sector research enterprise. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year The relocation of Research Park tenants and renovation of various facilities from our initiative to address "best use of space" resulted in increased occupancy specifically in the 3802 Spectrum building from 82% to 91% in FY13 and Research Park occupancy overall, increased from 95% to 97%. This increased occupancy and associated increase in rental revenue forecast in FY13 is expected to generate an additional $85,000 Research Park rental revenue in FY14. Positive impact on Incubator Revenue is separately discussed. The relocation in FY13 of some Incubator tenants, along with University departments and Research Foundation administrative offices, designed to increase the space inventory available to the Incubator program, should improve revenue growth and profitability (reduced loss) we will realize from the Incubator Program in FY14. Further, the Affiliate program for Incubator clients that was implemented in FY13, is a new revenue source. FY14 budget projects a 41% increase in Incubator rent (+$150,000) compared to our FY13 forecast as previously presented. Continued cost containment in managing all business lines. Despite increased occupancy in Research Foundation owned buildings, FY14 operating expenses (excluding interest and depreciation expense) are budgeted to decrease 7.3% (-$458,000) from the FY13 forecast. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) In FY14 the Research Foundation will finalize the renovation of the 3650 Spectrum building (DSO owned building) that converts exclusive use of the building to Dr. Krischer's Pediatric Epidemiology Center. With over 41,000 square feet, the center will have more than doubled from the previous square footage of 19,934. Amortization of the tenant improvements over the life of a 10 year lease will be reflected in increased rent revenues in FY14 and future years. Continued development of the Research Park remains a primary goal of the USF Research Foundation. Planning for initiatives to market the Research Park, and potential development of a speculative office and research mixed-used building with goal of generating future property rents and corporate research tenants, will be discussed with our Board of Directors in FY14. [ 3 of 32 ]

4 FY14 Capital project for Retro-commissioning of IDRB (3720 Spectrum building) focused on HVAC and electrical systems with an expectation of energy savings opportunities and redistribution of air capacity for laboratory requirements. These cost savings will result in reduced costs to USF under its master lease. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond Financial Market Risk that could adversely affect the financial resources we have invested. We want to insure financial resources are available in future years for building out the Research Park. One significant lease in 3802 Spectrum (9,611sf) expires in October Lease pricing will be important in the negotiations to retain the tenant as they have many other location options, including a large facility owned by their parent company that is one mile from campus. [ 4 of 32 ]

5 USF Research Foundation, Inc. INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % REVENUES Rental Revenue $7,533 $7,369 $164 2 % Program Revenue 3,445 4,010 (565) (14)% Economic Development Grant (284) (46)% Other Revenues (57) (34)% Total Revenues $11,424 $12,166 $(742) (6)% EXPENSES Salaries & Benefits $1,060 $1,012 $48 5 % Contractual Services % Program Expenses 1,462 1,767 (305) (17)% Operations - Utilities / Repairs / Maintenance 2,983 3,178 (195) (6)% Other Expenses (7) 100 % Interest Expense 1,892 1, % Depreciation/Amortization 2,855 2, % Total Expenses $10,526 $10,836 $(310) (3)% OPERATING PROFIT BEFORE NON-CASH CHANGES $898 $1,330 $(432) (32)% Unrealized Gains (Losses) 1,165 1, % Change in Fair Value of Swaps % Total Non-Cash Changes $1,165 $1,014 $ % NET OPERATING PROFIT $2,063 $2,344 $(281) (12)% [ 5 of 32 ]

6 USF Research Foundation, Inc. STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % OPERATING ACTIVITIES Net Operating Profit $2,063 $2,344 $(281) (12)% Adjustments for Non-Cash Activities: Depreciation / Amortization 2,855 2, % Non Cash Investment Gain (1,165) (1,014) (151) (15)% Non Cash Revenue (327) (416) % Non Cash Amortization of Commissions (17) (57)% Total Cash From Operating Activities $3,439 $3,687 $(248) (7)% INVESTING ACTIVITIES Capital Expenditures $(1,754) $(1,717) $(37) (2)% Purchases (Sales) of Investments % Total Cash From Investing Activities $(1,754) $(1,717) $(37) (2)% FINANCING ACTIVITIES Proceeds of Long-Term Debt $0 $0 $0 % Principal Paid on Debt (1,580) (1,435) (145) (10)% Total Cash From Financing Activities $(1,580) $(1,435) $(145) (10)% CHANGE IN CASH (430) (80)% Cash, Beginning of Year 2,819 2, % Cash, End of Year $2,924 $2,819 $105 4% [ 6 of 32 ]

7 Sun Dome, Inc. University of South Florida Direct Support Organization FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University Sun Dome, Inc. (SDI) manages and operates a multi-purpose facility known as the Sun Dome Arena on behalf of the University of South Florida (University) to provide the students, faculty, and staff of the University, as well as, the general public an array of cultural, athletic, and educational events. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year SDI/Global Spectrum has firm commitments on certain revenue enhancements including a renegotiated and more favorable ticketing agreement, increased rental contributions from University user groups (Athletics, etc.), and increased facility fee surcharges on paid tickets. In addition, SDI anticipates revenue enhancements resulting from a positive industry-wide trend in touring concerts, the application of an operating learning curve from year one (e.g. concessions, etc.), and the incremental sale of premium seating (e.g. loge suites) and sponsorship opportunities. SDI/Global Spectrum is developing a marketing strategy for utilizing available meeting spaces (e.g. arena club area, media press room, hardwood club area, etc.) for rental to ancilliary based events. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) SDI/Global Spectrum continues to develop industry relationships (primarily key event promoters) through attending and participating in national conferences and seminars. Also, SDI is making a concerted effort in generating multi-year event contracts with current and more profitable events (e.g. American Cheer Power, Harlem Globetrotters, Bellator, etc.) and is focused on obtaining new long-term event partnerships. SDI/Global Spectrum is ensuring the proper long-term care and quality of the University's newly renovated Sun Dome asset by entering into cost effective vendor maintenance and service agreements. This upfront initiative will maintain the facility's competiveness in the marketplace and negate major deferred maintenance needs in the future. Furthermore, SDI staff are properly and consistently monitoring facility systems and equipment by updating electronic record-keeping systems and documenting/addressing needs as issues are identified. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond SDI operates in a highly competitive environment for booking and hosting external events, as well as, attracting patrons and disposable income. SDI's market conditions make it susceptible to the conditions at competing facilities (hosted events, consumer amenities, facility investment) and the attractiveness/success of SDI's hosted events. Furthermore, SDI's industry can be highly cyclical and variable including the number of touring artists, new and emerging event types, and maturing and/or declining event types. SDI acknowledges that FY13-14 represents the initial year in which all facility systems (mechanical, machinery, equipment) will be without warranty and unexpected repairs may occur. Furthermore, other necessary mechanical maintenance expenses may occur without notice such as attending to beam detectors, spotlights, 3rd level lighting, air handler units, video boards, boilers, etc. [ 7 of 32 ]

8 Sun Dome, Inc. INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % REVENUES Arena Operations $2,026 $1,913 $113 6 % Direct Event Exp Reimbursements 1,823 2,000 (177) (9)% Management Fee % Flight Operations % Total Revenues $4,324 $4,373 $(49) (1)% EXPENSES Arena Operations $1,725 $1,711 $14 1 % Direct Event Expenses (Passthrough) 1,823 2,000 (177) (9)% Flight Operations % Depreciation/Amortization (2) (1)% Other Expenses (15) (21)% Total Expenses $4,141 $4,321 $(180) (4)% OPERATING PROFIT BEFORE NON-CASH CHANGES $183 $52 $ % Unrealized Gains (Losses) % Change in Fair Value of Swaps % Total Non-Cash Changes $0 $0 $0 % NET OPERATING PROFIT $183 $52 $ % [ 8 of 32 ]

9 Sun Dome, Inc. STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % OPERATING ACTIVITIES Net Operating Profit $183 $52 $ % Adjustments for Non-Cash Activities: Depreciation / Amortization (2) (1)% Net Increase/Decrease in B/S Accounts 0 (1,354) 1, % Total Cash From Operating Activities $421 $(1,062) $1, % INVESTING ACTIVITIES Capital Expenditures $0 $0 $0 % Purchases (Sales) of Investments % Total Cash From Investing Activities $0 $0 $0 % FINANCING ACTIVITIES Proceeds of Long-Term Debt $0 $0 $0 % Principal Paid on Debt (170) (140) (30) (21)% Total Cash From Financing Activities $(170) $(140) $(30) (21)% CHANGE IN CASH 251 (1,202) 1, % Cash, Beginning of Year 425 1,627 (1,202) (74)% Cash, End of Year $676 $425 $ % [ 9 of 32 ]

10 USF Foundation, Inc. FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University The University of South Florida Foundation aids and promotes excellence in the educational, research and service activities of USF by seeking, receiving and administering private gifts for the benefit of the University. We enhance resources that support the strategic objectives of the University of South Florida System within a culture of cooperation and collaboration. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year The Foundation is nearing the completion of a comprehensive campaign to raise funds to attract world-class scholars and students, build state-of-the art academic and athletic facilities, and support groundbreaking research activities with over $592 million raised so far. As we look towards the successful completion of the campaign this year, our plan is to focus on the core strategies that have shown success and to begin a transition into a new phase of high-level fundraising for the USF System. The Foundation's Investment Committee continues to actively monitor the performance and liquidity of our asset allocation and investment managers and take action when appropriate to enhance the growth and benefit of the endowment to USF over a long-term horizon. Our short-term and long-term returns are consistently in the top quartile amongst our peers. Our goal is to grow the endowment by 8% next year through continued solid investment returns and gifts. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) The Foundation will continue to support the University's goal surrounding its Student Success initiative with fundraising for scholarships and fellowships. During the Unstoppable Campaign, over $74.2 million was raised for scholarships with $6.5 million of that amount for First Generation Scholarships. Each year the Foundation awards more than $5 million in scholarships to over 2,500 students. Study-abroad scholarships are now supported by an endowment in excess of $1.4 million which provides students the opportunity to obtain a global experience in perpetuity. In addition, the many new athletic facilities supported by fundraising efforts have allowed our studentathletes to be all that they can be. Research and Innovation is continually supported through the Foundation's efforts in securing philanthropic, private research grants. During the Unstoppable Campaign approximately $28.5 million in philanthropic grants were received by the Foundation to support research efforts in areas such as Health, Engineering and Education. In addition, Endowed Chair and Professorship funds provide a predictable, steady stream of earnings to support the Chair or Professors' research efforts in perpetuity. [ 10 of 32 ]

11 Cultivating university partnerships, both public and private, is a goal of the Foundation. The generosity of our donors ensures an environment rich in research, teaching, learning and discovery. Our partnership with the Tampa Bay Lightning has made the Sports and Entertainment Management Program possible. This program benefits graduate students who will become the future leaders of the sports management field. The Lightning have provided financial support, but also provide access to their executives for real-world learning, classroom space at their facility and paid internships for many of the students. Agilent Technologies' gift of software provides an advantage to our Engineering students by allowing them to learn to use industry-leading software while still in school. The Foundation enhances the economic base for USF through the annual support generated from the Foundation's endowment. The endowment provides over $15M each year to support USF faculty, students and programs. The endowment along with other gifts for current operations provides over $60M in annual support to USF. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond The budget reductions experienced by the USF System have led to fluctuations in the utilization of Foundation funds. While Foundation sources of support like the endowment provide a small percentage of the System's overall budget, this source is critical for many University programs while providing a funding catalyst for others to achieve the University's goals and aspirations. The Investment Committee prudently considers the risks associated with each asset class in addition to the return when conducting its annual review of the endowment asset allocation. The goal of this process is to minimize the volatility of the investment performance and provide a more consistent, reliable stream of income to the University. University support of the Foundation's operating budget is essential to continue the high level of fundraising demonstrated during the Unstoppable Campaign. Good financial stewardship of this support and other available resources is important to the Foundation's success. The Foundation's cost to raise a dollar remained low at 17 cents per dollar during the length of the Unstoppable Campaign. In other words, for every dollar invested in fundraising during the Campaign, the Foundation has raised over five dollars in return. State funding from the suspended Major Gifts matching program continues to remain unfunded by the legislature with more than $20 million in match funds to enhance the endowment once received. [ 11 of 32 ]

12 USF Foundation, Inc. INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % REVENUES Gifts & Donations $69,500 $68,500 $1,000 1 % Investment Income (Loss) 8,208 9,379 (1,171) (12)% Campaign Support 3,683 3, % Other Revenues 2,424 2, % Total Revenues $83,815 $83,737 $78 0% EXPENSES Program Services Salaries & Benefits $15,236 $14,735 $501 3 % Scholarship & Fellowships 6,708 6, % Service & independent contractors 3,821 3, % Supplies 2,781 2, % Gift in kind transfers 29,955 29, % Other Transfers & Expenses 7,677 9,310 (1,633) (18)% Total Program Service Expense 66,178 66,243 (65) (0)% Fundraising & Operating Expenses Salaries & Benefits 4,650 4, % Service & independent contractors 1,150 1, % Other Transfers & Expenses 1,853 1, % Total Fundraising & Operating Expenses 7,653 7, % Total Expenses $73,831 $73,287 $545 1 % OPERATING PROFIT BEFORE NON-CASH CHANGES $9,984 $10,451 $(467) (4)% Unrealized Gains (Losses) 33,374 31,479 1,895 6 % Change in Fair Value of Swaps % Total Non-Cash Changes $33,374 $31,479 $1,895 6% NET OPERATING PROFIT $43,358 $41,930 $1,429 3% [ 12 of 32 ]

13 USF Foundation, Inc. STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % OPERATING ACTIVITIES Net Operating Profit $43,358 $41,930 $1,428 3 % Adjustments for Non-Cash Activities: Investment (gains) losses (41,582) (40,858) (724) (2)% Change in assets & liabilities, net (17,473) (8,764) (8,709) (99)% Total Cash From Operating Activities $(15,697) $(7,692) $(8,005) (104)% INVESTING ACTIVITIES Purchases (Sales) of Investments 11,210 6,600 4, % Interest dividends reinvested 3,806 1,379 2, % Total Cash From Investing Activities $15,016 $7,979 $7, % FINANCING ACTIVITIES Proceeds of Long-Term Debt $0 $0 $0 % Principal Paid on Debt % Total Cash From Financing Activities $0 $0 $0 % CHANGE IN CASH (681) 287 (968) (337)% Cash, Beginning of Year 3,948 3, % Cash, End of Year $3,267 $3,948 $(681) (17)% [ 13 of 32 ]

14 USF Alumni Association, Inc. FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University The mission of the USF Alumni Association is to foster a mutually beneficial, lifelong relationship between the University and its alumni; to inspire loyalty and pride among current and future alumni; and to advocate for excellence in teaching, research and public service. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year Focus on increased membership through a myriad of marketing approaches. These approaches are anticipated to increase membership revenue by 13%. New alumni engagement programs such as a 50 year reunion and Alumni faculty/staff luncheon. In addition to new opportunities, growth in existing events including FAST 56, Homecoming, Commencement Open House and Bulls Around the World. Events such as these will lead to a 112% increase in event revenue. Growth in Alumni events will in turn bring in a 31% increase in sponsorship opportunities and revenue. These relationships will be cultivated throughout the Association's fiscal year for a greater return on investment to the sponsor. A five times increase in advertising revenue including annual contracts with various organization both inside and outside the University System. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years Offer a new graduate membership program, providing a free one year membership for all USF graduates in the Alumni Association. This membership will allow alumni to experience the benefits of being a member of the Alumni Association and allow the University and Alumni Association to stay more tightly connected, including keeping current with a valid address, with all new graduates. This tight connection will also assist the University's efforts to survey and develop a deeper understanding about graduates' post graduation activities (schooling, employment, etc.). Foster mutually beneficial relationships with affinity partners focusing not just on revenue generation, but leveraging partner resources for programs, communications and more. Renew focus on membership as a critical revenue source, but also as the means by which Alumni choose to engage with USF. Dedicate membership efforts to the acquisition of new Life Members while remaining mindful of the importance of Annual Members. Improve Association engagement at the Chapter level by implementing a long-term plan to provide relevant University programming in local areas while increasing participation, giving and membership rates. [ 14 of 32 ]

15 Develop new revenue sources by exploring advertising opportunities, expanding the Alumni Travel Program and implementing new event strategies. Events should focus on increased engagement of alumni, with a target of getting new alums reconnected with USF. Continue to grow the scholarship program of the University, whether it be scholarships managed by the Association or through individual colleges. This includes a new initiative to have local chapters establish scholarships for students from the area attending USF. In FY'13, Alumni Association generated scholarships provided $347k in distributions to 79 different students. In fiscal year 2013, the Alumni Association experienced a decrease in affinity revenue received under its credit card program. The Foundation offered additional budget support in the amount of $373k for FY'13 in order for the Association to operate at breakeven. This was in addition to the $400k support provided by the Foundation in prior years. The Alumni Association is currently in year two of a five year plan to eliminate the need for this additional (above the core $400K) Foundation funding through increases in membership, sponsorship, event, advertising, and other program revenue. After this five year period, the Association is anticipated to return to the $400k annual support received in prior years. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond Economic conditions continue to impact membership enrollment. State of Florida higher education budget reductions could affect the financial support received from the USF Foundation. Investment returns decrease resulting in a smaller dividend to the operating fund. [ 15 of 32 ]

16 USF Alumni Association, Inc. INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % REVENUES Program Revenue-Membership $513 $452 $61 13 % Program Revenue % License Plate Revenue % Gifts & Donations % Investment Income (Loss) % Other: Foundation Support (24) (3)% Other: Royalties % Total Revenues $2,573 $2,401 $172 7% EXPENSES Salaries & Benefits $1,336 $1,249 $87 7 % Scholarships & Fellowships (14) (35)% Contractual Services % Materials & Supplies % Program Services % Utilities/Repairs/Maintenance % Total Expenses $2,340 $2,179 $161 7% OPERATING PROFIT BEFORE NON-CASH CHANGES $233 $222 $11 5% Unrealized Gains (Losses) % Change in Fair Value of Swaps % Total Non-Cash Changes $330 $312 $19 6% NET OPERATING PROFIT $563 $534 $30 6% [ 16 of 32 ]

17 USF Alumni Association, Inc. STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % OPERATING ACTIVITIES Net Operating Profit $563 $534 $30 6 % Unrealized Gain on Investments (330) (312) (19) (6)% Change in operating assets/liabilities Pledges Receivable 20 (50) % Deferred Revenue (7) (5)% Accounts Payable (10) (50)% Total Cash From Operating Activities $388 $324 $64 20 % INVESTING ACTIVITIES Capital Expenditures $0 $0 $0 % Purchases (Sales) of Investments (390) (296) (94) (32)% Total Cash From Investing Activities $(390) $(296) $(94) (32)% FINANCING ACTIVITIES Proceeds of Long-Term Debt $0 $0 $0 % Principal Paid on Debt % Total Cash From Financing Activities $0 $0 $0 % CHANGE IN CASH (2) 28 (30) (106)% Cash, Beginning of Year % Cash, End of Year $34 $36 $(2) (4)% [ 17 of 32 ]

18 USF Financing Corporation FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University The Financing Corporation is the University's financing arm and is expected to provide attractive long-term financing for the University's major capital projects. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year The Financing Corporation is a conduit financing entity, which issues debt on behalf of the University, and which receives pledged revenues or lease payments from the University's major business units to pay debt service on their capital projects. The Corporation has a duty to ensure that these key business units operate successfully in order to manage their bond obligations, plan for future capital needs and support the University's credit ratings. * For example, the Corporation has worked with Tampa Housing on its Public-Private Partnership strategy to develop Andros replacement housing while maintaining current Moody's / S&P Housing System ratings. The Corporation is also providing oversight to Tampa Housing regarding funding deferred maintenance on the housing facilities. A key strategy for the Corporation is to create current and lasting financial value to the University including the development of sound agreement structures, obtaining below-market pricing, managing banking relationships, being responsive to changing capital market conditions and managing financial risks. On October 1, 2012, the Corporation proactively refunded $158M of Housing bonds in advance of expiring letters of credit. To obtain the most attractive pricing, the Corporation directly placed term bonds, Series 2012A and Series 2012B, with Wells Fargo Bank for 3-year and 5-year terms. On March 26, 2013, the Corporation Board authorized a similar refunding of $64.5M of Health bonds also in advance of expiring letters of credit. The Corporation has received a commitment from JP Morgan Chase Bank to directly place the term bonds for 3-year and 5-year terms. The Corporation anticipates closing this transaction on May 31, * These transactions will improve the 2014 Financial Plan over the current year by reducing risks associated with former variable rate demand bonds supported with letters of credit, including bank risk, basis risk, renewal risk and remarketing risk. * Additionally, the 3-year terms of the Series 2012A Housing bonds and the prospective Series 2013A Health bonds coincide with the expiration of the related interest rate swap agreements, which provides an opportunity to convert the bonds from variable to fixed interest rates. [ 18 of 32 ]

19 On November 6, 2012, the Board authorized $20M of debt to refinance the University's renovation of the Arena and Convocation Center. The Corporation obtained competitive financing proposals and has secured University Board of Trustees approval. The Florida Board of Governors will consider this transaction at its June 2013 meeting. Debt issuance is anticipated in FY * This transaction will provide low-cost, long-term capital which will restore a portion of the University's unrestricted, liquid, net assets previously expended on the renovation of the arena, thereby improving the University's liquidity ratios. * The cost to renovate the arena is a long-term capital investment of the University. Matching the term of the financing to the useful life of the building, and restoring the short-term funds to the University, supports the University's financing strategies. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) The key objective for Corporation management is to maintain / enhance the University's long-term "AA" credit ratings from Moody's and S&P (aligns with Goal #4 of the University's Strategic Plan: Sound financial management to establish a strong and sustainable economic base in support of USF's continued academic advancement). Corporation management is focused on proactive debt management for its existing debt (determine needed transactions in advance of certain events, such as expiring letters of credit). The Corporation also actively monitors the capital markets to identify opportunities and risks. Considering the current record low interest rates, Corporation management will assess the maturities of the University's outstanding debt and interest rate swaps to identify opportunities to lock in low, long-term fixed interest rates. Corporation management strives to improve the alignment of the liquid portion of USF's investment portfolio with its outstanding debt. * Today, USF's investment portfolio exceeds its variable rate debt by 1.25x. Improving this coverage ratio can be achieved by continuing to issue only fixed rate debt. * Maturities of new privately placed term bank loans are being matched to expirations of interest rate swaps creating an opportunity for USF to convert $152M of variable rate bonds to fixed rate debt over the next 2-3 years. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond Recovery of the financial performance of the University in 2014, due to the expected restoration of $45M of state funding and maintenance of carryforward funds, will ensure a Stable Outlook for the University's "AA" credit ratings. Capital market interest rates are not expected to rise significantly over the next 2 years until the Federal Reserve confirms unemployment at 6.5%. USF's tax-exempt borrowing rates could also be affected by proposed changes in the Federal Tax Code. [ 19 of 32 ]

20 USF Financing Corporation INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 3/31/13) $ % REVENUES USF housing system gross revenues $41,641 $41,000 $641 2 % USF athletics system lease revenue 2,642 2, % Arena lease revenue % MSSC lease revenue 4,585 4, % HPCC (CAMLS) lease revenue 1,859 1, % Total Revenues $51,515 $49,621 $1,894 4% EXPENSES USF Housing System Operating Expenses $21,391 $21,000 $391 2 % Management Fee % Interest Expense 15,377 14,300 1,077 8 % Depreciation & Amortization 9,395 10,612 (1,217) (11)% Bond Fees and Property Insurance Costs 464 1,279 (815) (64)% Total Expenses $47,159 $47,715 $(556) (1)% Other Revenues (Expenses) Transfers (To) From DSOs/Auxiliaries $(4,361) $(1,917) (2,444) (128)% Investment Income $5 $6 (1) (17)% Total Other Revenues (Expenses) $(4,356) $(1,911) $(2,445) (128)% OPERATING PROFIT BEFORE NON-CASH CHANGES $0 $(5) $5 100 % INTO USF Investment Unrealized Gain (Loss) % Change in Fair Value of Swaps 0 6,903 (6,903) (100)% Transfers (To) From Affiliates to Offset Swaps 0 (6,903) 6, % Total Non-Cash Changes $337 $211 $ % NET OPERATING PROFIT $337 $206 $ % [ 20 of 32 ]

21 USF Financing Corporation STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 3/31/13) $ % OPERATING ACTIVITIES Net Operating Profit $337 $206 $ % Adjustments for Non-Cash Activities: Depreciation / Amortization 9,395 10,612 (1,217) (11)% Net Amortization on Premiums / Discounts (102) (102) 0 0 % Change in Fair Value of Swap 0 (6,903) 6, % Change in Fair Value of Equity Investment (337) (211) (126) (59)% Adjustments for Other Non-Cash Activities & Changes in Operating Assets and Liabilities 14,735 23,600 (8,865) (38)% Total Cash From Operating Activities $24,028 $27,202 $(3,174) (12)% INVESTING ACTIVITIES Capital Expenditures $(50) $(4,005) $3, % Debt Proceeds - Reimbursement to USF (20,000) 0 (20,000) % Purchases (Sales) of Investments 1,053 (663) 1, % Total Cash From Investing Activities $(18,997) $(4,668) $(14,329) (307)% FINANCING ACTIVITIES Proceeds of Long-Term Debt $20,000 $0 $20,000 % Debt Proceeds - Refunding 0 222,290 (222,290) (100)% Principal Payments - Refunding 0 (222,290) 222, % Deferred Charges on Issuance of Debt (50) 1,048 (1,098) (105)% Security Pledged to Counterparty % Principal Payments (9,801) (9,071) (730) (8)% Interest Payments (15,180) (14,515) (665) (5)% Total Cash From Financing Activities $(5,031) $(22,538) $17, % CHANGE IN CASH 0 (4) % Cash, Beginning of Year 3 7 (4) (57)% Cash, End of Year $3 $3 $0 3% [ 21 of 32 ]

22 UNIVERSITY MEDICAL SERVICE ASSOCIATION FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University University Medical Services Association is a not-for-profit entity organized to operate exclusively for scientific and educational purposes for the support of the objectives of USF's College of Medicine in accordance with the College Faculty Practice Plan. It's ongoing goal is programmatic development of business lines that support the education of medical students and residents, promote research in the clinical environment, and provide focused healthcare to the community. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year Call Center Operation Improvements: a) Investment in new Technology (Avaya System); b) Setting operational targets/standards e.g. average speed to answer (15-20 seconds), average total time of call (2min 30secs), time to 3rd available appt (same day for primary care & 10 days for specialist), first call resolution (90%); c) Improving access for patients by making changes to faculty schedules, tapping into the capacity we currently already have available; d) Driving customer service improvements. Targeted Recruitment of Local Community Physician Groups that will add to and support the mission of USF Health - Education, Research and Clinical. Opening of the Villages Specialty Clinic - October 2013 with currently employed faculty and additional recruitment of new faculty to provide specialty care to residents of the community. Opening of the Healthy Living Clinic in South Tampa in June 2013, which will function as a Medical Home for Type II Diabetic patients. Other Tampa Bay locations will be considered approx 6 month after this clinic is opened and performing well for additional expansion. Continuation and refinement of the USFPG Pay For Performance program. Full implementation of this program in FY 2013 had resulted in faculty reviewing for potential opportunities for both revenue growth and expense reductions. Review and evaluate each programmatic component of the organization for enhancement and/or elimination, based on support of USF Health mission, need and alignment with organizational strategic direction. Review operational capacity and clinic room utilization to more efficiently match demand and supply. Continued recruitment of Community Surgeons to increase utilization at the Morsani Ambulatory Surgery Center. Improving partnership efforts with area hospitals. Expansion of a non-teaching Hospitalist Program at TGH beginning July Doctors of USF Health Marketing Campaign via web, radio, internet pay per click to strengthen brand name and recognition. [ 22 of 32 ]

23 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. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) Expansion of a non-teaching Hospitalist Program at TGH. Healthy Living Clinic - Medical Home Initiative. Doctors of USF Health Marketing Campaign. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond IT Initiatives related to ICD-10 and CMS's Clinical Quality Measures Reporting : a) ICD-10 Implementation, Training & Readiness (deadline of Oct 1, 2014); b) AllScripts 11.4 Upgrade; c) Meaningful Use Stage 2 Readiness & Quality Reporting Capability. These changes will alter current business processes and could impact cash flows industry wide. Medicare Reimbursement reductions - via sequestration (2%) and other targeted programs e.g. derm/path lab and EMG reimbursements. Projecting continued downward reimbursement pressure moving forward from CMS. Overall downward pressure on Managed Care rates. Medicaid Expansion - potential reduction in Physician Supplemental Payments. Potential reduction of managed care patient volumes due to continued increase of deductible thresholds and out of pocket expenses. [ 23 of 32 ]

24 UNIVERSITY MEDICAL SERVICE ASSOCIATION INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 3/31/13) $ % REVENUES Patient Service Revenue $126,710 $119,575 $7,135 6 % Grants & Contract Revenue 45,359 45,575 (216) (0)% Other Operating Revenue 29,486 31,704 (2,218) (7)% Total Revenues $201,555 $196,854 $4,701 2% EXPENSES Faculty Support $90,000 $88,230 $1,770 2 % Housestaff Support 11,570 11, % Other Staff Support 26,470 25, % Depreciation 1, % MSSC Operating Expenses 53,697 52,000 1,697 3 % All Other Expenses 18,275 17, % $201,555 $196,366 $5,190 3% INCOME FROM OPERATIONS $0 $489 $(489) (100)% Realized & Unrealized Gains (Losses) (450) (64)% Change in Fair Value of Swaps % Total Non-Operating Changes $250 $700 $(450) (64)% NET INCOME/(LOSS) $250 $1,189 $(939) (79)% [ 24 of 32 ]

25 UNIVERSITY MEDICAL SERVICE ASSOCIATION STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 3/31/13) $ % OPERATING ACTIVITIES Net Operating Profit $250 $1,189 $(939) (79)% Adjustments for Non-Cash Activities: Depreciation / Amortization 1, % Unrealized Gains (188) (525) % Total Cash From Operating Activities $1,606 $1,639 $(34) (2)% INVESTING ACTIVITIES Capital Expenditures $(2,000) $(1,000) $(1,000) (100)% Purchases (Sales) of Investments (2,000) (4,000) 2, % Total Cash From Investing Activities $(4,000) $(5,000) $1, % FINANCING ACTIVITIES Proceeds of Long-Term Debt $(4,400) $0 $(4,400) % Principal Paid on Debt % Total Cash From Financing Activities $(4,400) $0 $(4,400) % CHANGE IN CASH (6,795) (3,361) (3,434) (102)% Operating Cash, Beginning of Year 17,164 20,525 (3,361) (16)% Operating Cash, End of Year $10,370 $17,164 $(6,795) (40)% Footnote: - 6/30/2009 6/30/2010 6/30/2011 6/30/2012 3/31/2013 Operating Cash $ 15,744 $ 21,587 $ 24,768 $ 20,525 $ 21,414 Cash & Other Investments $ 24,672 $ 24,843 $ 31,896 $ 32,998 $ 34,913 GRAND TOTAL $ 40,416 $ 46,430 $ 56,664 $ 53,523 $ 56, UMSA Cash & Investments Operating Cash Cash & Other Investments GRAND TOTAL [ 25 of 32 ]

26 USF MEDICAL SERVICE SUPPORT CORPORATION FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University Medical Services Support Corporation is a not-for-profit entity organized to operate exclusively for scientific and educational purposes or the support of the objectives of USF's College of Medicine in accordance with the College Faculty Practice Plan. It serves as a clinical support organization to the USF Faculty Practice Plan. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year Tied directly to the support of the Faculty Practice Plan and UMSA. List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) 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. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond Plans for close monitoring of financial market conditions that may affect interest rates and break-even financial position. [ 26 of 32 ]

27 USF MEDICAL SERVICE SUPPORT CORPORATION INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 3/31/13) $ % REVENUES Rental Revenue $50 $50 $0 0 % Other: Expense Reimbursements 2,678 3,678 (1,000) (27)% Other: Funding from UMSA 52,447 52,652 (205) (0)% Total Revenues $55,175 $56,379 $(1,204) (2)% EXPENSES Faculty Support $120 $456 $(336) (74)% Housestaff Support % Other Staff Support 33,366 33,866 (500) (1)% Depreciation 5,291 4, % All Other Expenses 20,516 19, % Total Expenses $59,351 $59,033 $318 1% OPERATING PROFIT BEFORE NON-CASH CHANGES $(4,176) $(2,654) $(1,522) (57)% Unrealized Gains (Losses) % Change in Fair Value of Swaps 0 2,022 (2,022) (100)% Total Non-Cash Changes $0 $2,022 $(2,022) (100)% NET OPERATING PROFIT $(4,176) $(632) $(3,544) (560)% [ 27 of 32 ]

28 USF MEDICAL SERVICE SUPPORT CORPORATION STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 3/31/13) $ % OPERATING ACTIVITIES Net Operating Profit $(4,176) $(632) $(3,544) (560)% Adjustments for Non-Cash Activities: Depreciation / Amortization 5,291 4, % Change in Fair Value of Swaps 0 (2,022) 2, % Total Cash From Operating Activities $1,115 $2,214 $(1,099) (50)% INVESTING ACTIVITIES Capital Expenditures $(5,400) $(1,000) $(4,400) (440)% Purchases (Sales) of Investments % Total Cash From Investing Activities $(5,400) $(1,000) $(4,400) (440)% FINANCING ACTIVITIES Proceeds of Long-Term Debt $4,400 $0 $4,400 % Principal Paid on Debt (1,174) (1,174) 0 0 % Total Cash From Financing Activities $3,226 $(1,174) $4, % CHANGE IN CASH (1,059) 40 (1,099) (2,772)% Cash, Beginning of Year 2,610 2, % Cash, End of Year $1,551 $2,610 $(1,059) (41)% Footnote: - USF MSSC is primarily a pass through organization and its Financial Statements are linked to UMSA. UMSA guarantees the cash operating expenses of USF MSSC. [ 28 of 32 ]

29 USF Health Professions Conferencing Corporation FINANCIAL PLAN STATEMENT State the DSO's Statutory Mission which Supports the Goals of the University The USF Health Professions Conferencing Corporation (HPCC) trains students and healthcare professionals in the development and maintenance of professional excellence through the ethical, innovative and efficient dissemination of knowledge and enhancement of skills required for clinical practice, research and education. The education activities provided to USF students, faculty, alumni and healthcare professionals practicing throughout the state, nationally and internationally are leading the education revolution in hands on teaching and assessment of technical and teamwork competence. The heart of this revolution is in downtown Tampa where USF teaches its students, conducts high quality research in an innovative environment and improves the delivery of healthcare through its public-private partnerships. List Key Drivers that Improve the 2014 Financial Plan Over the Current Year The sales team began FY13 at a standing start but still generated almost $3 million in CAMLS related sales. Overcoming obstacles such as having the facility open, needing to certify the facility, establishing a national reputation and creating operational flow has laid a path to some open field running in FY14. The sales team has already generated sales in excess of $1 million for FY14 and CAMLS was recently featured on CBS Sunday Morning. Robotics training has doubled in size and more than doubled its revenue from greater utilization. HPCC has pending grants worth $3.6 million of direct operating cost support awaiting approval. Only grants with the highest certainty of approval totaling $600,000 of direct operating cost support are included in this plan. HPCC received a little more than $2,000,000 of support from USF Health in FY13 including wage support to launch the academic programs at CAMLS. HPCC will receive less than $1,000,000 of support in FY14 and this change is the primary driver of a 46% wage increase in FY14. Although gross revenue remains unchanged year over year, the 60% contribution margin from CAMLS-generated revenue compared to a 10% contribution margin from traditional CPD business, creates a dramatic improvement in operating income even after the reduced support from USF Health. HPCC utilized $1,500,000 of a $2,000,000 line of credit from USF in FY13. No further draws are expected and repayment is planned for FY15. The reduced support from USF Health and otherwise self-funding the corporation's cash flow is a result of the traction gained over the past year. Management will continue to execute the core strategy of USF system participation in the world's cutting edge healthcare training facility. The right management team is in place to deliver the CAMLS strategy and commitments. With one year of operating history management has reassessed an already lean operation and eliminated an additional $500,000 of unnecessary or unproductive expenses. [ 29 of 32 ]

30 List Major DSO Initiatives for 2014 that will Drive Operating Earnings Over the Next 3 Years (Also, Align the DSO with Goals of the University - Specifically the USF Strategic Plan) The capacity to present potential students with the hands on learning opportunities of CAMLS will attract a higher caliber student and will produce a better educated, more highly skilled graduate. The Tampa Bay Research and Innovation Center has been retooled and is generating a growing stream of revenue from product validation, 3-D printing and preclinical testing. These innovative public/private partnerships hold great promise for the growth of CAMLS and Florida in the global economy. The private/public partnerships and client relationships HPCC has developed to train health care professionals, assess technical and teamwork competence and develop course content unique to CAMLS is laying the groundwork to replace outdated healthcare methodologies. Partnering with regional hospitals to develop proven trainings and therefore better methodologies that increase hospital quality and reduce malpractice rates will create a competitive advantage regionally which can then be delivered nationally and internationally. Identify Key Risks That Might Affect Achievement of the Financial Plan in 2014 and Beyond Although participation is increasing University wide adoption of the USF downtown presence and educational opportunities is one of CAMLS main pillars and needs to be fully developed. Further sequestration dampens the likelihood of successful grant applications. Leading the way to better more efficient healthcare requires trust and sharing among stakeholders to achieve success. [ 30 of 32 ]

31 USF Health Professions Conferencing Corporation INCOME STATEMENT (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % REVENUES Contracts & Grants $12,183 $13,874 $(1,691) (12)% Program Registrations & Exhibits 5,813 4, % In Kind Donations 2,000 1, % Other Revenues % Total Revenues $20,211 $20,497 $(286) (1)% EXPENSES Salaries & Benefits $4,469 $3,067 $1, % Program Services 7,010 10,543 (3,533) (34)% Rent, Utilities, Equip Leases & Maint 3,584 3,594 (10) (0)% Interest Paid on Debt (71) (8)% In Kind Donation Utilization 2,000 1, % Depreciation/Amortization 4,154 4, % Total Expenses $22,041 $23,693 $(1,652) (7)% OPERATING PROFIT BEFORE NON-CASH CHANGES $(1,830) $(3,196) $1, % Unrealized Gains (Losses) % Change in Fair Value of Swaps % Total Non-Cash Changes $0 $0 $0 % NET OPERATING PROFIT $(1,830) $(3,196) $1, % [ 31 of 32 ]

32 USF Health Professions Conferencing Corporation STATEMENT OF CASH FLOWS (In thousands) Fiscal Year Ended June 30, Variance PLAN FORECAST (as of 12/31/12) $ % OPERATING ACTIVITIES Net Operating Profit $(1,830) $(3,196) $1, % Adjustments for Non-Cash Activities: Depreciation / Amortization 4,154 4, % Total Cash From Operating Activities $2,324 $899 $1, % INVESTING ACTIVITIES Capital Expenditures $(400) $(740) $ % (Purchases) Sales of Investments 0 1,081 (1,081) (100)% Total Cash From Investing Activities $(400) $341 $(741) (217)% FINANCING ACTIVITIES Proceeds of Short-Term Debt $0 $1,500 $(1,500) (100)% Principal Paid on Debt (1,900) (2,731) % Total Cash From Financing Activities $(1,900) $(1,231) $(669) (54)% CHANGE IN CASH % Cash, Beginning of Year % Cash, End of Year $1,008 $984 $24 2% [ 32 of 32 ]