THE UNIVERSITY ATHLETIC ASSOCIATION, INC. FINANCIAL STATEMENTS JUNE 30, 2013 AND 2012

Transcription

1 FINANCIAL STATEMENTS JUNE 30, AND

2 JUNE 30, AND TABLE OF CONTENTS Page(s) Independent Auditors Report 1 2 Required Supplementary Information Management s Discussion and Analysis 3 18 Basic Financial Statements Statements of Net Position 19 Statements of Revenues, Expenses, and Changes in Net Position 20 Statements of Cash Flows Notes to Financial Statements Additional Information Detailed Schedule of Revenues, Expenses, and Budgeted Capital Items Compared with Budget Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 89 90

3 INDEPENDENT AUDITORS REPORT The Audit Committee, The University Athletic Association, Inc.: Report on the Financial Statements: We have audited the accompanying financial statements of The University Athletic Association, Inc. (the Association), a direct support organization and component unit (for accounting purposes only) of the University of Florida, as of and for the years ended June 30, and, and the related notes to the financial statements, which collectively comprise the Association s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements The Association s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion

4 Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Association as of June 30, and, and the changes in financial position and cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis on pages 3 through 18 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the Association s financial statements as a whole. The detailed schedule of revenues, expenses, and budgeted capital items compared with the budget on pages 41 through 88 is presented for purposes of additional analysis and is not a required part of the financial statements. The detailed schedule of revenues, expenses, and budgeted capital items compared with the budget has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 24,, on our consideration of the Association s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Association s internal control over financial reporting and compliance. Gainesville, Florida September 24, - 2 -

5 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND Introduction The University Athletic Association, Inc. (the Association), a not-for-profit corporation, is a direct support organization of the University of Florida (UF). The Association exists to advance UF s teaching, research and service missions through the intercollegiate athletics program. The Association s goal is to be the nation s finest intercollegiate athletics program, where each studentathlete has every opportunity for athletic and academic success and each coach and support staff member has challenging and rewarding career opportunities. The Association recognizes its responsibility to UF to operate the Association in an efficient manner using sound business principles within an ethical decision making process. The tremendous success of the athletic program can be attributed to many factors: outstanding coaches and support staff, extremely talented student-athletes, a great academic institution, a strong recruiting base, university support, supportive alumni and friends, and a commitment to each sport. The Association s financial strength is also a key component in its success and is a major factor in maintaining or surpassing its current level of achievement in all the Association s endeavors. Overview of the Financial Statements and Financial Analysis The Association is pleased to present its financial statements for the fiscal years ended June 30, and. This discussion and analysis is a narrative explanation of the Association s financial condition and operating activities for these years. The overview presented below highlights the significant financial activities that occurred during the past two years and describes changes in financial activity from the prior year. Please read this overview in conjunction with the comparative summaries of net position and revenues, expenses and changes in net position and the Association s financial statements which begin on Page 19. Using these Financial Statements This report consists of a series of financial statements, prepared in accordance with the Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments and Statement No. 35, Basic Financial Statements and Management s Discussion and Analysis for Colleges and Universities. There are three financial statements presented: the Statements of Net Position; the Statements of Revenues, Expenses and Changes in Net Position; and the Statements of Cash Flows. The Association s net position is one indicator of the improvement or erosion of its financial health when considered with non-financial facts such as the overall academic and athletic success of the intercollegiate athletic program and the condition of its facilities, and is a key indicator of the overall health of the Association and its programs. This success is evidenced by: Two NCAA titles highlighted Florida s national team finishes in the - season. Florida became the nation s fifth program to win a NCAA gymnastics team title when it claimed the crown in April in Los Angeles. The Gator men s track & field claimed a share of its second consecutive NCAA Outdoor title, surging to the top with three event wins on the meet s final day

6 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Two other programs contributed NCAA top-three finishes. Men s indoor track & field was runner-up and women s tennis advanced to the NCAA semifinal round. In all, 12 teams registered top-10 finishes last season, which matches the third-highest total in school history. At least 10 Gator teams have turned in top-10 finishes in each of the last dozen seasons. The program s record of 14 top-10 finishes came in Florida took second overall in the - Learfield Sports Directors Cup standings. The 16.5 point margin between first and second is the closest in the 21-year history of the Directors Cup. The finish matches Florida s highest ever in the annual all-sports rankings and marks Florida s fifth consecutive top-four finish in the rankings. The national all-sports competition award is presented annually by the National Association of Collegiate Directors of Athletics (NACDA), Learfield Sports and USA Today. The finish marks Florida s 30th consecutive finish among the nation s top-10 programs. Florida is the only school to finish in the top 10 in national all-sports rankings every year since Florida s runner-up finish in the Director s Cup standings was the highest by any school in the Southeastern Conference (SEC). Nine Gator teams won conference titles in -, including eight in Southeastern Conference action a league record. Florida won SEC titles in men s basketball, women s cross country, gymnastics, soccer, softball, men s swimming & diving, women s tennis and volleyball. The Gators now own 52 titles since the academic year, the most by any conference school during the 10-year span. The Gators newest program won a share of its third consecutive American Lacrosse Conference title. The University of Florida swept the - Halifax Media Group's Southeastern Conference All-Sports titles the 13th time the Gator program has taken the three titles. The overall SEC All- Sports title is the 23rd for Florida, while the Gator program also earned its 20th women's and 17th men s. Florida was also successful away from the athletic arena in -, as the Gators earned 186 SEC Academic Honor Roll accolades. The SEC annually selects an Academic Honor Roll for each team that honors student-athletes who have posted cumulative 3.0 grade-point averages for the previous academic year. When Florida s selections for the SEC First-Year Academic Honor Roll are added, a total of 242 Gators earned recognition by the league in - for their work in the classroom. Additionally, four UF student-athletes were named Capital One Academic All- Americans in -, with Olympic medalist Elizabeth Beisel being named the Capital One At-Large Academic All-American of the Year. In an era when the NCAA estimates that 70 percent of Division I schools are losing money on intercollegiate athletics, the University Athletic Association has contributed more than $75 million since 1990 to help fund University of Florida academic endeavors. This included gifts in support of the Florida Opportunity Scholarship program totaling $10.5 million since

7 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Summary of Net Position The Statements of Net Position present the assets, liabilities and net position of the Association as of the end of the last two fiscal years. A Statement of Net Position is a point-in-time financial statement. Its purpose is to present to the readers of the financial statements a fiscal snapshot of the Association. The Statements of Net Position present end-of-the-year data concerning assets (what the Association owns and how much is owed to the Association by others), liabilities (what the Association owes to others and has collected from others before the service has been provided), and net position (assets minus liabilities). The statements are prepared using the economic resources measurement focus and the accrual basis of accounting, where revenues are recorded when they are earned and expenses are recognized when they are incurred. From the data presented, readers of the Statements of Net Position are able to determine the assets available to continue the operations of the Association. They are able to determine how much the Association owes to vendors and lending institutions. Finally, the Statements of Net Position provide a picture of the net position and their availability for expenditure by the Association. Net Position is divided into three major categories. The first category, net investment in capital assets, presents the Association s equity in property, plant and equipment. The next net position category is restricted net position. The Association s restricted net positions have constraints placed upon their use by independent donors. The final category is unrestricted net position. Unrestricted assets are available to the Association for any legal use. Condensed Summary of Net Position (thousands of dollars) Increase Percent Increase Percent (decrease) change 2011 (decrease) change Assets: Current assets $ 73,401 $ 72,677 $ % $ 60,827 $ 11, % Capital assets, net of depreciation 175, , % 164,548 10, % Other assets 51,788 45,509 6, % 47,205 (1,696) (3.59)% Total assets 300, ,766 7, % 272,580 20, % Liabilities: Long-term debt outstanding 88,795 92,790 (3,995) (4.31)% 80,845 11, % Other liabilities 69,252 73,261 (4,009) (5.47)% 74,283 (1,022) (1.38)% Total liabilities 158, ,051 (8,004) (4.82)% 155,128 10, % Net position: Net invetment in capital assets 86,259 91,958 (5,699) (6.20)% 83,703 8, % Restricted 12,235 4,232 8, % 143 4,089 2,859.44% Unrestricted 43,702 30,525 13, % 33,606 (3,081) (9.17)% Total net position $ 142,196 $ 126,715 $ 15, % $ 117,452 $ 9, % - 5 -

8 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Highlights The Association s total assets increased by $7.5 million in and increased by $20.2 million in. The fluctuation in total assets between and was primarily due to fluctuations in the market value of investments. In, the increase was due to an increase in capital assets, net of depreciation and an increase in current assets due to unspent proceeds of the Series 2011 Bond issue. In, other assets increased by $6.3 million and decreased in by $1.7 million due to fluctuations in the value of long term investments. Current assets increased in by $11.9 million due to a $1.4 million increase in cash and cash equivalents, a $1.6 million increase in short-term investments, a $1.3 million decrease in accounts receivable and a $10.2 million increase in restricted short-term investments. Capital assets increased in due to the beginning of several major multi-year projects funded by the issuance of the Series 2011 Bonds. Long-term debt outstanding decreased by $4.0 million in due to loan repayments. Longterm debt outstanding increased in by $11.9 million due to the issuance of $15 million in Series 2011 Bonds and the repayment of $3.1 million of principal. Other liabilities decreased by $4.0 million in due to a $3.0 million decrease in advanced football ticket sales and deferred Gator Booster contributions related to the and future football seasons, a $0.1 million decrease in deferred royalties, a $0.7 million decrease in accounts payable and accrued expenses, an increase of $0.1 million in accrued compensated absences and a decrease of $0.1 million in contracts payable. In, other liabilities decreased by $1.0 million due to a $0.4 million increase in advanced football, men s basketball, women s basketball, volleyball and gold card ticket sales, handling fees and deferred Gator Booster contributions related to the and future football seasons, a $1.1 million decrease in deferred royalties, a $0.9 million increase in accounts payable and accrued expenses, a $1.3 million decrease in accrued compensated absences and a $0.1 million increase in longevity incentives. Total net position increased by $15.5 million and by $9.3 million in and, respectively. Unrestricted net position increased by $13.2 million in and decreased by $3.1 million in. In, net position invested in capital assets, net of related debt decreased by $5.7 million due to payments of $4.0 million on long-term debt, purchases of $12.7 million in capital assets, spending of $10.2 million in construction trust funds, disposal of $3.3 million in capital assets and the expensing of $8.9 million in depreciation. Net position invested in capital assets, net of related debt increased by $8.3 million in due to the issuance of $15.0 million in additional long-term debt, unspent construction trust funds of $10.2 million, payments of $3.1 million on long-term debt, purchases of $19.3 million in capital assets, disposal of $0.8 million in capital assets and the expensing of $8.5 million in depreciation

9 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Summary of Revenues, Expenses and Changes in Net Position The Statements of Revenues, Expenses and Changes in Net Position present the revenues and expenses incurred during each year. Revenues and expenses are reported as operating and nonoperating. In general, operating revenues are received for providing goods and services to the Association s various customers and constituencies. Operating expenses are those expenses paid to acquire or produce goods and services provided in return for the operating revenues, and to carry out the mission of the Association. The utilization of long-lived assets, referred to as capital assets, is reflected in the financial statements as depreciation, which amortizes, and reduces net income, by the cost of an asset over its expected useful life. Nonoperating revenues are revenues received for which goods or services are not provided. Investment income and other revenues, such as sales taxes retained and state appropriations, which are not payment for services are classified as nonoperating revenues. Nonoperating expenses include interest on capital asset related debt and contributions to the University of Florida (UF) and the University of Florida Foundation (UFF). Contributions to UF include unrestricted gifts for the academic mission of the University, contributions for designated purposes and costs contributed by the Association for UF projects. Contributions to the UFF are transfers by the Association to the athletic scholarship endowment. Capital contributions are considered neither operating nor nonoperating and are reported after Income before contributions. Changes in total net position as presented on the Statements of Net Position are based on the activity presented in the Statements of Revenues, Expenses and Changes in Net Position. The purpose of the Statements of Revenues, Expenses and Changes in Net Position is to present the operating and nonoperating revenues received by the Association and the operating and nonoperating expenses paid by the Association, and any other revenues, expenses, gains and losses received or spent by the Association

10 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Condensed Summary of Revenues, Expenses and Changes in Net Position (thousands of dollars) Increase Percent Increase Percent (decrease) change 2011 (decrease) change Operating revenues: Football $ 71,293 $ 70,664 $ % $ 68,608 $ 2, % Other sports 10,179 10,528 (349) (3.31)% 10, % Royalties and sponsorships 18,785 17,767 1, % 17,778 (11) (0.06)% Auxiliaries, camps and other 10,043 12,053 (2,010) (16.68)% 12,701 (648) (5.10)% Total operating revenues 110, ,012 (712) (0.64)% 109,347 1, % Nonoperating revenues 7,908 1,270 6, % 11,012 (9,742) (88.47)% Total revenues 118, ,282 5, % 120,359 (8,077) (6.71)% Operating expenses: Team expenses 43,857 40,393 3, % 44,051 (3,658) (8.30)% Scholarships and support services 24,071 23, % 23, % General and administrative 24,341 24,503 (162) (0.66)% 23,048 1, % Auxiliaries, camps and depreciation 12,072 13,565 (1,493) (11.01)% 13, % Total operating expenses 104, ,113 2, % 103,697 (1,584) (1.53)% Nonoperating expenses: Interest on capital related debt 2,088 2,434 (346) (14.22)% 2,898 (464) (16.01)% Contributions to University of Florida and UF Foundation 7,596 6,457 1, % 6, % Total nonoperating expenses 9,684 8, % 9,255 (364) (3.93)% Total expenses 114, ,004 3, % 112,952 (1,948) (1.72)% Capital contributions from Gator Boosters and others 11,298 7,985 3, % 2,650 5, % Increase (decrease) in net position 15,481 9,263 6, % 10,057 (794) (7.89)% Net position, beginning of year 126, ,452 9, % 108,040 9, % Prior period adjustment (Note 15) % (645) 645 (100.00)% Net position, end of year $ 142,196 $ 126,715 $ 15, % $ 117,452 $ 9, % - 8 -

11 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Highlights Football revenues increased in by $2.1 million due to a price increase for season and single game tickets. Royalties and sponsorships increased by $1.0 million in due to a reporting change as a result of outsourcing the sportshop operations previously reported as an Auxiliary. Auxiliary, camps and other revenue decreased by $2.0 million in due to the outsourcing of the sportshop operation. In, the $0.8 million decrease in Auxiliary, camps and other revenue was primarily due to a $0.3 million decrease in camp revenue and a $0.3 million decrease in inkind contributions. Nonoperating revenue increased by $6.6 million and decreased by $9.7 million in and in due to investment performance fluctuations. In, operating expenses increased by $2.2 million due to the following: Team expenses increased by $3.5 million primarily due to increases in football bowl expenses and opponent guarantees and other sports post season travel and related expenses. Scholarships and supports services increased by $0.4 million primarily due to an increase in scholarship costs. General and administrative expenses decreased by $0.2 million primarily due to a decrease in capital asset disposals. Auxiliaries, camps and depreciation expenses decreased by $1.5 million primarily due to a $1.3 million decrease in sportshop expenses, a $0.6 million decrease in camp expenses and a $0.4 million increase in depreciation. Operating expenses for decreased by $1.6 million due to the following: Team expenses decreased by $3.6 million primarily due to decreases in football staff additional compensation and increases in football team travel and opponent guarantees. Scholarships and supports services increased by $0.4 million primarily due to an increase in scholarship costs. General and administrative expenses increased by $1.5 million due to increases in capital asset disposals and administrative longevity incentives. Auxiliaries, camps and depreciation expenses increased by $0.1 million primarily due to an increase in depreciation expense and a decrease in camp expenses. Contributions to the University of Florida and to the University of Florida Foundation increased by $1.1 million in and by $0.1 million in. Contributions to the University of Florida include unrestricted gifts for the academic mission of the University, contributions for designated purposes and costs incurred by the Association for UF projects. See Note 9 in the Notes to the Financial Statements for further details on the Association s contributions to the University of Florida. Contributions to the University of Florida Foundation consisted of transfers by the Association to the Athletic Endowment Fund from profits from the Gator Walk brick program. See Note 10 in the Notes to the Financial Statements for further details on the Association s contributions to the University of Florida Foundation

12 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Capital contributions are major gifts designated by the donors for facility construction, renovations and equipment purchases. In, capital contributions totaled $11.0 million and included $7.6 million for the renovation of the Stephen C. O Connell Center, $1.3 million for the Gateway of Champions football front door project, $0.9 million for renovation of the Carse swim dive facility, $0.4 million for the lacrosse stadium and $0.8 million for various other projects. In, capital contributions totaled $8.0 million and included $1.6 million for the Gateway of Champions football front door project, $2.0 million for naming of the Gatorvision control room, $1.0 million for the naming of the baseball stadium plaza, $0.9 million for the renovation of the softball facility, $0.7 million for the naming of the indoor tennis facility, $0.4 million for the lacrosse stadium, $0.4 million for the academic center and $1.0 million for various other projects

13 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Other 6% Revenue - Nonoperating Revenues 7% Royalties and Sponsorshps 16% Camps 1% Auxiliaries 1% Other Sports 1% Men's Basketball 8% Football 60% Revenue Nonoperating Revenues Other 1% 6% Royalties and Sponsorships 16% Camps 2% Auxiliaries 3% Other Sports 1% Men's Basketball 8% Football 63%

14 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Nonoperating Expenses 9% Depreciation and Amortization 8% Expenses - Football Team 19% Camps Auxiliaries 2% 1% Men's Basketball Team 6% General and Administrative 21% Other Sports Teams 13% Support Services 11% Scholarships 10% Expenses Nonoperating Expenses 8% Depreciation and Amortization 8% Football Team 17% Camps 2% Auxiliaries 2% Men's Basketball Team 7% General and Administrative 22% Other Sports Teams 13% Support Services 11% Scholarships 10%

15 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Annual Contributions to UF $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $

16 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Statement of Cash Flows The final statements presented include Statements of Cash Flows. The primary purpose of the Statements of Cash Flows is to provide relevant information about the Association s cash receipts and cash payments during the years shown. The statements classify cash receipts and cash payments as they result from operating, noncapital financing, capital and related financing, or investing activities. The first section, cash flows from operating activities, presents the cash effects of transactions and other events that enter into the determination of the Association s operating income. The second section, cash flows from noncapital financing activities, shows the cash received and spent for nonoperating, noninvesting, and noncapital financing purposes and includes contributions to and from the University of Florida, the University of Florida Foundation and the State of Florida. The next section, cash flows from capital and related financing activities, provides information about cash used for the acquisition and construction of capital and related items and cash received from contributions specifically designated for capital purposes. The fourth section, cash flows from investing activities, details the purchases, proceeds and income received from investing activities. The final section reconciles the net cash provided (used) by operating activities to the operating income reflected on the Statements of Revenues, Expenses, and Changes in Net Position. Condensed Summary of Cash Flows (thousands of dollars) Increase Percent Increase Percent (decrease) change 2011 (decrease) change Cash flows from: Operating activities $ 3,669 $ 18,632 $ (14,963) (80.31)% $ 13,550 $ 5, % Noncapital financing activities (4,134) (4,531) % (4,493) (38) (0.85)% Capital & related financing activities (4,442) (2,181) (2,261) (103.67)% (7,009) 4, % Investing activities 10,899 (10,623) 21, % (3,337) (7,286) (218.34)% Net change in cash and cash equivalents 5,992 1,297 4, % (1,289) 2,586 (200.62)% Cash and cash equivalents, beginning of year 4,774 3,477 1, % 4,766 (1,289) (27.05)% Cash and cash equivalents, end of year $ 10,766 $ 4,774 $ 5, % $ 3,477 $ 1, % Highlights Cash provided by operating activities decreased by $15.0 million in due to decreased cash contributions from Gator Boosters of $7.8 million, decreased cash receipts from ticket holders of $6.0 million, increased cash receipts from the Southeastern Conference of $0.5 million, increased cash receipts from rights, royalties and sponsors of $1.7 million, increased other cash receipts of $0.2 million, increased cash used for payments to suppliers of $3.3 million and for scholarships of $0.5 million and decreased cash used for payments to employees of $0.2 million. In, cash provided by operating activities increased by $5.1 million due to increased cash contributions from Gator Boosters of $1.0 million, increased cash receipts from ticket holders of $2.0 million, increased cash receipts from the Southeastern Conference of $1.1 million, decreased cash receipts from royalties, rights and sponsors of $0.2 million, increased cash used for payments to suppliers of $1.1 million and decreased cash used for payments to employees of $2.3 million

17 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Cash used in capital and related financing activities decreased in by $2.3 million due to a $6.5 million decrease in the purchase of capital assets, a $15.0 million reduction in the proceeds from the issuance of long-term debt, a $3.3 million increase in capital contributions from Gator Boosters, a $0.3 million increase in cash used for the payment of bond principal and interest and a $3.2 million increase in the proceeds from the sale of capital assets. In, Cash used in capital and related financing activities decreased in by $4.8 million due to a $15.7 million increase in the purchase of capital assets, a $15.0 million issuance of long-term debt, a $5.3 million increase in cash capital contributions from Gator Boosters and $0.2 million reduction in cash used for the payment of bond principal and interest. Cash provided by investing activities increased by $21.5 million in due to a $24.0 million reduction in cash payments for the purchase of investment securities, a $2.3 million reduction in cash proceeds from the sale and maturities of investment securities and a $0.2 million reduction in the cash received from interest and dividends. In, cash used in investing activities increased by $7.3 million due to a $25.7 million increase in cash payments for the purchase of investment securities, a $18.0 million increase in cash proceeds from the sale and maturities of investment securities and a $0.4 million increase in cash received from interest and dividends. Net Cash Flow Activities $20, $18,632 $15,000 $13,550 Operating Activities $10,000 $10,899 Noncapital Financing Activities $5,000 $- $(5,000) $(2,181) $(3,669) $(4,442) $(4,134) $(4,531) $(4,493) $(3,337) $(7,009) Capital & Related Financing Activities Investing Activities $(10,000) $(10,623) $(15,000)

18 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) Capital Asset and Debt Administration A major renovation and expansion of the west side of Ben Hill Griffin Stadium was completed in August, The project was started in May, The expansion included a new club level, the Champions Club, and additional suites as well as expanded and renovated Bull Gator, Press and President s decks. The total cost of the football stadium expansion was approximately $55.0 million of which $5.0 million was funded from private contributions and $50.0 million from the 2001 bond issue. In October, 2001, the Association issued $57.4 million in tax-exempt revenue bonds. Proceeds of the bond issue were used to retire the outstanding 1994 Capital Improvement Revenue bonds and to pay costs associated with bond issuance and to fund a portion of the new basketball facility. The remaining proceeds were used for the football stadium expansion. A total of $49.9 million and $50.8 million were outstanding at June 30, and, respectively. In September, 2005, the Association issued $10.0 million in tax-exempt revenue bonds. Proceeds were used to pay the costs associated with bond issuance and to finance the construction of improvements and the expansion of McKethan Stadium at Perry Field, the construction of a new football equipment storage facility/restroom/training room and renovation and improvements to the Lemerand Athletic Center. A total of $5.2 million and $5.8 million were outstanding at June 30, and, respectively. In October, 2007, the Association issued $10.0 million in tax-exempt revenue bonds. Proceeds were used to pay the costs associated with bond issuance and to finance a portion of the construction costs for the football Gateway of Champions front door project. The balance of the funding for the $28.3 million project was raised by Gator Boosters. The project completely renovated and expanded the football office complex, created a new entry into the football office complex, created a new Gator Room and conference room, expanded the strength and conditioning complex and renovated other areas in the south end zone football team areas. The project was completed in August of A total of $7.5 million and $8.0 million were outstanding at June 30, and, respectively. In October, 2011, the Association issued $15.0 million in tax-exempt revenue bonds. Proceeds were used to pay the costs associated with bond issuance and to finance the construction costs for the following capital improvement projects: Renovation of the west side concourse in Ben Hill Griffin Stadium; Renovation of the first floor of the Stephen C. O Connell Center; Renovation of the Pressly Softball Stadium; Creation of a scoreboard control room; Renovation of the baseball and softball scoreboards; Construction of an indoor tennis facility; Renovation of the gymnastics studio. The renovations of the baseball and softball scoreboards and the softball stadium were completed by June 30,. The remaining projects were completed by June 30,. A total of $14.3 million and $15.0 million were outstanding at June 30, and, respectively. The 1990 tax-exempt revenue bonds remain outstanding ($11.9 million at June 30, and $13.2 million at June 30, ). The Association s total long term debt as of June 30, and was $88.8 million and $92.8 million, respectively. All bonds are general obligations of the Association. In December, 2009, the Association converted $34.7 million of the bonds to a fixed rate. In January, 2011, the Association converted $30.4 million to an extendable bank rate, fixed for 3 years. In October, 2011, the Association converted $23.0 million to an extendable bank rate, fixed for 5 years. The remaining bonds, totaling $14.2 million, are backed by an irrevocable letter of credit as collateral for their payment. In March,, the Association changed letter of credit providers. The bond covenants include minimum requirements for net revenues and liquidity. These requirements were met in and. For additional information on Capital Assets and Long Term Obligations, see Notes 5 and 6 in the Notes to the Financial Statements

19 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) The Association has made a significant commitment to buildings and improvements. Since 2005 over $122 million dollars has been spent on capital assets. The funding for these projects has come from operating funds, private capital contributions and tax exempt revenue bonds. Annual Capitalized Projects Total of $122,036,276 Operating Funds $46,379,106 38% Private Capital Contributions $40,657,170 33% Bond Issuance $35,000,000 29%

20 MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, AND (Continued) $25,000,000 $20,000,000 $15,000,000 Operating Funds Bond Issuance $10,000,000 $5,000,000 Private Capital Contributions $ Economic Outlook Although the U.S. economy continues its lackluster recovery, the Association remains in good financial condition as a result of a supportive fan base and the success of the Gator Booster Organization. Through the recession, the Association s Increase in Net Position has continued to have steady growth year after year. This has been accomplished by keeping expenses to minimum and maximizing opportunities to increase revenue through ticket sales, the multi-media rights, Southeastern Conference revenues and major gift fund raising. The on-going recession will continue to provide challenges to maintain this growth, while still providing significant support to the University and a first class experience for the student athletes. For -2014, the Association is projecting minimal increases in both revenue and expense, along with continued focus on major gifts and scholarship endowment fund raising to ensure the future financial success of the Association. Contacting Management This financial narrative is designed to provide the reader with a general overview of the University Athletic Association, Inc. s finances and to show the Association s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Association s Business Office at Ben Hill Griffin Stadium, Gainesville, Florida: The University Athletic Association, Inc. Attn: Assistant Athletics Director/Controller PO Box Gainesville, FL (352)

21 STATEMENTS OF NET POSITION JUNE 30, AND ASSETS Current assets Cash and cash equivalents $ 10,765,628 $ 4,773,756 Short-term investments 45,734,048 46,715,489 Accounts and other receivables, net 15,179,361 8,354,659 Inventories 36, ,241 Prepaid expenses and other assets current portion 1,685,386 1,966,642 Restricted short-term investments - 10,167,499 Total current assets 73,401,184 72,677,286 Noncurrent assets Investments 51,626,587 45,294,150 Prepaid expenses and other assets, less current portion 160, ,561 Capital assets not being depreciated 3,753,482 9,281,075 Capital assets being depreciated, net of accumulated depreciation 171,300, ,298,867 Total noncurrent assets 226,841, ,088,653 Total assets $ 300,242,545 $ 292,765,939 LIABILITIES Current liabilities Accounts payable and accrued expenses $ 7,543,225 $ 8,224,778 Accrued compensated absences current portion 290, ,000 Longevity incentive payable current portion - 110,695 Contracts payable current portion 83,333 83,333 Long-term debt current portion 4,085,000 3,995,000 Deferred revenues current portion 53,991,123 56,846,384 Agency funds payable 22,803 65,015 Total current liabilities 66,015,484 69,555,205 Noncurrent liabilities Longevity incentive payable, less current portion 205, ,000 Accrued compensated absences, less current portion 1,320,213 1,440,562 Contracts payable, less current portion 256, ,668 Deferred revenues, less current portion 5,539,651 5,820,652 Long-term debt, less current portion 84,710,000 88,795,000 Total noncurrent liabilities 92,031,527 96,495,882 Total liabilities $ 158,047,011 $ 166,051,087 NET POSITION Net position Net investment in capital assets $ 86,258,826 $ 91,957,442 Restricted for: Capital projects 12,234,832 4,232,232 Unrestricted 43,701,876 30,525,178 Total net position $ 142,195,534 $ 126,714,852 The accompanying notes to financial statements are an integral part of these statements

22 STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEARS ENDED JUNE 30, AND Operating revenues Football $ 71,292,850 $ 70,663,882 Men s basketball 9,393,073 9,545,026 Other sports 785, ,418 Auxiliaries 1,283,046 3,417,400 Camps 1,633,594 2,310,229 Royalties and sponsorships 18,785,043 17,766,887 Other 7,126,438 6,325,325 Total operating revenues 110,299, ,012,167 Operating expenses Football team expenses 21,264,683 18,542,214 Men s basketball team expenses 7,246,124 7,487,970 Other sports team expenses 15,346,179 14,362,200 Scholarships 11,144,842 10,824,910 Support services 12,925,922 12,827,056 General and administrative 24,341,225 24,503,366 Auxiliaries 1,493,752 2,756,497 Camps 1,675,423 2,311,840 Depreciation and amortization 8,902,820 8,496,719 Total operating expenses 104,340, ,112,772 Operating income 5,958,999 8,899,395 Nonoperating revenues (expenses) Investment income (loss), net 5,936,340 (666,629) Interest on capital asset related debt (2,088,391) (2,433,976) Contributions to the University of Florida (7,557,579) (6,410,113) Contributions to the University of Florida Foundation, Inc. (38,022) (47,225) Other nonoperating revenues 1,971,142 1,936,427 Net nonoperating revenues (expenses) (1,776,510) (7,621,516) Income before capital contributions 4,182,489 1,277,879 Capital contributions from Gator Boosters, Inc. and others 11,298,193 7,985,141 Increase in net position 15,480,682 9,263,020 Net position, beginning of year, as restated (see Note 15) 126,714, ,451,832 Net position, end of year $ 142,195,534 $ 126,714,852 The accompanying notes to financial statements are an integral part of these statements

23 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, AND Cash flows from operating activities Contributions from Gator Boosters, Inc. $ 26,848,610 $ 34,625,973 Receipts from ticket holders and others 28,701,685 34,683,759 Receipts from the Southeastern Conference and NCAA 22,467,081 22,005,691 Receipts from rights, royalties, and sponsors 18,903,272 17,228,003 Other receipts 760, ,242 Payments to suppliers and others (40,660,450) (37,380,723) Payments to employees (42,199,521) (42,441,073) Payments for scholarships (11,151,922) (10,696,353) Net cash provided by operating activities 3,669,058 18,631,519 Cash flows from noncapital financing activities Statutory distributions for women's athletics from the University of Florida and the State of Florida 1,971,142 1,936,427 Contributions to the University of Florida (6,057,579) (6,410,113) Contributions to the University of Florida Foundation, Inc. (47,225) (57,245) Net cash used in noncapital financing activities (4,133,662) (4,530,931) Cash flows from capital and related financing activities Purchase of capital assets (12,714,277) (19,294,155) Proceeds from capital debt - 15,000,000 Capital contributions from Gator Boosters, Inc. 11,298,193 7,985,141 Principal paid on bonds (3,995,000) (3,055,000) Interest paid on bonds (2,235,269) (2,828,581) Proceeds from sale of capital assets 3,203,909 11,970 Net cash used in capital and related financing activities (4,442,444) (2,180,625) Cash flows from investing activities Purchases of investment securities (78,291,495) (102,255,639) Proceeds from sale and maturities of investment securities 87,538,990 89,830,756 Interest and dividends received 1,651,425 1,801,666 Net cash provided (used) in investing activities 10,898,920 (10,623,217) Net increase in cash and cash equivalents 5,991,872 1,296,746 Cash and cash equivalents, beginning of year 4,773,756 3,477,010 Cash and cash equivalents, end of year $ 10,765,628 $ 4,773,756 The accompanying notes to financial statements are an integral part of these statements

24 STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, AND (Continued) Reconciliation of operating income to net cash provided by operating activities Operating income $ 5,958,999 $ 8,899,395 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 8,902,820 8,496,719 Loss on disposal of capital assets 133, ,456 Changes in assets and liabilities: Accounts and other receivables (6,857,922) 1,276,034 Inventories 662, ,310 Prepaid expenses and other assets 334,869 (181,623) Accounts payable and accrued expenses (2,138,000) 1,147,100 Accrued compensated absences (60,349) (1,325,395) Longevity incentive payable (5,695) 115,000 Contract payable (83,334) (83,333) Deferred revenues (3,136,262) (651,269) Agency funds payable (42,212) (1,875) Net cash provided by operating activities $ 3,669,058 $ 18,631,519 Supplemental disclosure of noncash activity Deecrease in investments and longevity incentive payable to reflect earnings on employee directed incentive balances $ - $ (4,287) The accompanying notes to financial statements are an integral part of these statements

25 NOTES TO FINANCIAL STATEMENTS JUNE 30, AND (1) Summary of Significant Accounting Policies: The following is a summary of the more significant accounting policies of The University Athletic Association, Inc. (the Association), which affect significant elements of the accompanying basic financial statements. (a) Reporting entity The Association is a not-for-profit entity organized in 1929 for the purpose of conducting various intercollegiate athletic programs for and on behalf of the University of Florida. The Association operates for the service and convenience of the University of Florida and is a direct support organization and component unit (for accounting purposes only) of the University of Florida. (b) Measurement focus, basis of accounting, and financial statement presentation The financial statements of the Association have been prepared using the economic resources measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The Association distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses for the Association are those that result from the operation of the University of Florida s intercollegiate athletic programs. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or investing activities. As required by GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments, capital contributions from Gator Boosters and others and contributions to the University of Florida and University of Florida Foundation, Inc. are not considered operating revenues or expenses and are reported after nonoperating revenues and expenses in the accompanying statements of revenues, expenses, and changes in net position. (c) Cash and cash equivalents Cash and cash equivalents include cash in banks and money market funds available for immediate use. (d) Accounts receivable Accounts receivable are stated at the amount management expects to collect from balances at year-end. Based on management's assessment of the credit history with organizations and individuals having outstanding balances and current relationships with them, it has concluded that realization losses on balances outstanding at year-end will be immaterial. The Association has no policy requiring collateral or other security to support its accounts receivable. (e) Inventories Inventories consist of items held for sale at the Gator Sportshop, golf course pro shop and snack bar. Inventory items at the Gator Sportshop and the golf course pro shop are recorded at the lower of cost or market using the average cost method. All other inventory items are recorded at the lower of cost or market, as determined by using the first-in, first-out (FIFO) method

26 NOTES TO FINANCIAL STATEMENTS JUNE 30, AND (1) Summary of Significant Accounting Policies: (Continued) (f) Capital assets Capital assets purchased with an original cost of $1,000 or more are recorded at cost and depreciated utilizing the straight-line method over the estimated useful lives of assets (generally 5 years for permanent equipment and 10 to 15 years for capital improvements, except for improvements to buildings which range from 50 to 60 years). Interest incurred during the construction phase of capital assets is included as part of the capitalized value of assets constructed. Costs to maintain or repair these assets are expensed as incurred. (g) Agency funds The Association acts as an agent for the control and distribution of cash from the sale of Gator Growl tickets for the University of Florida. Such amounts are not included in the statements of revenues, expenses and changes in net position. (h) Accrued compensated absences Eligible employees are entitled to vacation and sick leave with pay. Employees are not limited in the amount of annual and sick leave accrued during the fiscal year. For annual leave, however, only a maximum of 352 hours can be carried forward from one fiscal year to the next and only a maximum of 200 hours can be paid upon termination provided the employee has completed six months of continuous service. Any amounts accrued over the maximums convert to sick leave at the end of the year on an hour for hour basis. Effective January, the sick leave payout for employees was eliminated except for employees separating employment for retirement reasons. Eligible employees must retire on or before June 30, 2016, and either be at least age 62 and have completed at least ten years of creditable service or have completed 30 years of creditable service. If these requirements are meet, retirees will be paid out 1/4 of their sick leave balance up to a maximum of 480 hours. Vacation pay is expensed when earned by the employee up to the maximum payout. Sick leave payments are expensed when earned up to the maximum payout only for eligible employees. The effect of these changes in the Association s compensated absence policies was a reduction in the accrued compensated absence liability of approximately $1 million as of June 30,. (i) Deferred revenues Current deferred revenue consist of advance sales of football, men s and women s basketball, volleyball gold and platinum card tickets, related football and men s basketball contributions, and miscellaneous other unearned fees received. The deferred items are recognized as revenue when the related games are played and when the service is performed or event occurs for which miscellaneous fees were received. Additionally, deferred revenues included in other liabilities consist of booster prepayments and advance sponsorship and royalty payments. The sponsorship and royalty amounts are recognized over the life of the agreements, while the booster prepayments will be recognized in the applicable sports season. (j) Longevity incentive payable These balances represent amounts due to various coaches as specified in their employment contracts. Such amounts are accrued based upon schedules included in the respective employment contracts. In some circumstances, the coach s employment contract may require the Association to make specified deposits into an employee directed investment account until such time as the coach has reached the stay period specified in their contract. These investment balances would transfer to the coach at the end of the stay period and are included in investments or short term investments in the accompanying statements of net position. In other circumstances, the Association is obligated to pay certain amounts to the coach at the end of the