Net Income (Loss) - July ($1,853,000) ($2,093,000) $ 240,000 Net Income (Loss) Year to Date ($2,761,000) ($3,179,000) $ 418,000

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1 Northwest University th Ave. NE Kirkland, WA August 14, 2018 Dear Northwest University Board Member, Activity is picking up on the campus as athletes and student leaders have arrived on campus. Next week is new student move-in day. The Maintenance department is working hard to wrap up projects and have everything ready for our students. Information Technology is putting finishing touches on classroom upgrades and other technology upgrades. The Admissions team is busy preparing for our new students and working to avoid any significant melt. The Student Development team is preparing for new student orientation that is only a week away. Indeed, it is a busy time of the year as we await the start of school. Net Income Summary Actual Budget Variance Net Operating Income (Loss) July ($2,074,000) ($2,093,000) $ 19,000 Net Operating Income (Loss) Year to Date ($2,903,000) ($3,186,000) $ 283,000 Net Income (Loss) - July ($1,853,000) ($2,093,000) $ 240,000 Net Income (Loss) Year to Date ($2,761,000) ($3,179,000) $ 418,000 We separately reflect capital contributions, investment market gains (losses), and the swap adjustment gain (loss). These are the differences between net operating income and net income. The interest rate swap gain or loss went away in FY 18 after we closed the refinance on our debt at the end of August July investments experienced market gains due to market activity and year to date we have a gain as well. Tuition Summary Year to Date FY 19 Budget Variance Year to Date Tuition Revenue $2,056,000 $2,296,000 ($240,000) Center for Leadership Studies ($ 95,000) College of Business Graduate ($ 40,000) College of Education Graduate ($ 39,000) Online ($ 96,000) Adult Evening ($ 16,000) Northwest Partnership Program $ 26,000 International Programs $ 21,000 All other programs ($ 1,000) Tuition Summary July FY 19 Budget Variance Tuition Revenue $456,000 $650,000 ($194,000) Center for Leadership Studies ($ 95,000) Online ($ 78,000) College of Education Graduate ($ 21,000) Adult Evening ($ 24,000) All other programs $ 24,000 July tuition revenue reflects lower enrollment than budgeted for the new doctoral program, as well as for the July online start. There are very few fees collected in June and July, as well as very little institutional aid disbursed in these two months. All other sources of revenue for the month of July were $21,000 better than budget. Year to date all other sources of revenue are $41,000 better than budget. Phone:

2 2 Year to Date Operating Contribution Detail Actual Budget Variance Opportunity Fund (General Giving) $ 33,000 $ 37,000 ($ 4,000) Other Giving (Mission Trips, Choralons, Banquets, etc.) $ 71,000 $ 15,000 $ 56,000 Grant Contributions (Murdock, Lilly) $ 59,000 $ 53,000 $ 6,000 Total $ 163,000 $105,000 $ 58,000 Operating Expense Detail July Monthly Variance Year to Date Variance Primary Variance Factor Total $189,000 $439,000 Presidents Department ($ 7,000) ($ 14,000) Prepayment for board meetings, should be timing difference Jim Heugel Departments $251,000 $391,000 Online revenue down, professional services also down, some of this is permanent and some are timing differences Ken Cornell Departments ($ 5,000) $ 99,000 Slower marketing spend, timing differences Phil Rasmussen Departments ($ 20,000) ($ 34,000) Mission trips, revenue offset so no bottom line impact John Jordan Departments ($ 35,000) ($ 20,000) Various, primarily timing differences Contingency Department $ - $ 17,000 Shown below is enrollment information for all programs as of August 13. These numbers will continue to change over the next several weeks as final enrollment figures come in. The potential fall financial impact is an estimate based on the forecasted numbers versus budget. However, the actual financial impact won t be known until students are registered and we have made it past add/drop week, which occurs at the end of August or into September depending on when classes begin for each program. Population Forecast Budget Potential Fall Financial Impact Kirkland Undergrad $86,000, net of budgeted discount Undergrad Discounts This is our largest unknown at this time. We anticipate being worse than budget with new and transfer students based on information from our consultants, so more than likely we will be worse than budget for all students. We are working on a forecast that includes new students as well as continuing students. Adult Evening Aug only $81,000 NPP $19,000 to $151,000 Online Aug only Zero to $16,000, we have several different tuition rates, so forecasting actual revenue is difficult until students are

3 3 registered and charged for their specific program Salem $4,000 COB MBA $10,000 COE Grad & Grow Your Own $61,000 COM Grad $7,000 CSBS $23,000, even though students are even with budget, there should be a positive variance due to the mix and tuition rates of the different programs SON RN to BSN 0 7 -$18,000 CELE $48,000 Total tuition only $35,000 to $183,000 Resident Halls and Student Apts $72,000, net of additional fees paid to Pioneer due to more students on the meal plan Total including housing $107,000 to $255,000 At the end of July, we are $240,000 worse than budget for tuition revenue. If we are able to achieve the student numbers above, we will close this gap. This is dependent on how many credits students take for many of these programs, as well as whether they stay in the program. Also, as mentioned above, the discount number is a large unknown at the present time. Over the next two months, we will have a better handle on our revenue and discounts compared to budget. Balance sheet items to note as of July 31 include the following: Major Balance Sheet Year to Date Variance from Primary Variance Factor for Year to Date Variance Categories Variance Last Year Unrestricted cash $ 639,000 $ 847,000 Higher current liabilities than budgeted Please continue to pray for the following items: Pray that our forecasted Fall 2018 enrollment numbers shown above will hold or increase over the next several weeks. Enrollment counselors are working with potential students on a daily basis; please pray that we will find favor with these potential students for the fall start as well as future starts. Pray for the master plan process. We continue to wait for city staff to complete their reviews and issue reports. At this point, it looks like best case scenario is sometime late August, maybe early September for the reports to be issued. Pray for all the departments that are getting ready for new students to move in next week and for classes to begin on August 27. There are many tasks that need to be completed to welcome students to our campus. Should you have any questions regarding this report or the financial statements, please feel free to contact me. Thank you for your service and partnership with Northwest University. Sincerely, John Jordan Chief Financial Officer

4 4 Northwest University Year to Date Financial Results Through July 2018 (2 months) (In Thousands) Current Month Year to Date Variance Variance Annual Actual Budget Good (Bad) Last Year Actual Budget Good (Bad) Budget Revenue: $ (1) $ $ (1) Kirkland Undergrad Tuition Revenue $ 9 $ (1) $ 1 $ (2) $ 27, (115) Grad Tuition Revenue 828 1,100 1,261 (161) 7,388 (23) (23) CAPS Tuition Revenue (less Online) , (78) Online Programs (96) 1,987 Salem Sacramento International Summer & Other (13) (194) Total Tuition 2,024 2,056 2,296 (240) 42, Fee Revenue ,385 Discounts (25) (21) (47) 26 (13,512) (191) Net Tuition & Fees 2,014 2,058 2,255 (197) 30, Contribution Revenue , (6) Auxiliary Revenue (9) 6, (29) Other Revenue (28) Interest/Dividend Revenue (170) Total Operating Revenue 2,634 2,703 2,859 (156) 39,414 Expense: (7) Castleberry Departments (14) 644 1,418 1, Heugel Departments 2,762 2,699 3, , (5) Cornell Departments , (20) Rasmussen Departments (34) 1, (35) Jordan Departments 1,562 1,849 1,829 (20) 11, Contingency ,859 3, Total Operating Expense 5,190 5,606 6, ,831 (2,074) (2,093) 19 Net Operating Income (Loss) (2,556) (2,903) (3,186) Capital Contributions 4 7 (7) Investment Market gain (loss) Swap Adjustment gain (loss) 132 $ (1,853) $ (2,093) $ 240 Net Income (Loss) $ (2,207) $ (2,761) $ (3,179) $ 418 $ 630

5 Northwest University Balance Sheet For the period ending July 31, 2018 In thousands Prior Current Budget Variance Year Year to Budget Assets: Unrestricted cash $ 1,482 $ 2,329 $ 1,690 $ 639 Donor restricted cash (4) Restricted cash Student receivables, net (129) 347 Other receivables 1,081 1, Other current assets Total Current Assets 4,745 4,300 3,173 1,127 Investments 15,922 17,578 17, Notes receivable Planned giving assets 4,239 4,051 4,055 (4) Fixed assets, net 46,247 45,013 45,104 (91) Other assets (1) Total Assets $ 71,543 $ 71,689 $ 70,410 $ 1,279 Liabilities & Net Assets Accounts payable & accrued expenses $ 2,461 $ 3,024 $ 2,657 $ 367 Student deposits Deferred revenue Current portion of notes & bonds payable 1,726 1,829 1,829 Total Current Liabilities 5,265 6,039 5, Interest rate swap agreement 2,260 Planned giving liabilities 2,923 2,920 2,920 Student loan program Notes & bonds payable 29,272 29,036 29,043 (7) Other liabilities Total Liabilities 40,407 38,654 37, Unrestricted net assets 24,065 25,149 24, Temporarily restricted net assets 2,518 3,012 2, Permanently restricted net assets 4,553 4,874 4,869 5 Total Net Assets 31,136 33,035 32, Total Liabilities & Net Assets $ 71,543 $ 71,689 $ 70,410 $ 1,279 5