Net Income (Loss) May ($2,401,000) ($1,787,000) ($ 614,000) Net Income (Loss) Year to Date $2,825,000 $ 665,000 $ 2,160,000

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Aleesha Bennett
5 years ago
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1 th Ave. NE Kirkland, WA June 29, 2017 Dear Northwest University Board Member, We have concluded FY 17, and in spite of the tuition revenue struggles we faced, we were able to end the year with our net operating income being better than budget. Praise God for His faithfulness to Northwest. I also want to praise and thank the budget managers and others within the organization that worked hard at controlling and saving on expenses wherever possible. After the April financial reports came out and we continued to exceed budget expectations, we asked the Executive Committee if they would approve a bonus for our full time faculty and staff within a range of 2% 5%. Once we had all May journal entries posted, we were able to accrue for a 3.75% bonus that will be paid out in July. On behalf of the employees of Northwest, I want to thank the Executive Committee and Board for this action. Net Income Summary Actual Budget Variance Net Operating Income (Loss) May ($2,446,000) ($1,787,000) ($ 659,000) Net Operating Income (Loss) Year to Date $359,000 $325,000 $ 34,000 Net Income (Loss) May ($2,401,000) ($1,787,000) ($ 614,000) Net Income (Loss) Year to Date $2,825,000 $ 665,000 $ 2,160,000 We separately reflect the capital contributions, investment market gains (losses), and the swap adjustment gain (loss). These are the differences between net operating income and net income. It is important to note that the interest rate swap is a paper gain, there is no increase in our assets as a result of this gain. May investments experienced market gains as the market continues to be strong. The capital contributions consist of the Caf remodel, the outdoor tennis courts and other various projects. Tuition Summary Year to Date FY 17 Budget Variance Year to Date Tuition Revenue $37,909,000 $40,739,000 ($2,830,000) Kirkland Undergrad $ 859,000 Online ($1,645,000) Adult Evening ($ 765,000) CPP ($ 423,000) International ($ 422,000) Grad Programs ($ 415,000) Other programs ($ 19,000) Tuition Summary May FY 17 Budget Variance Tuition Revenue $755,000 $1,001,000 ($246,000) Grad Programs ($101,000) Online ($202,000) Summer $ 47,000 Other programs $ 10,000 The May Online start fell below budget, as did the grad programs with May starts. Based on prior starts during FY 17 for these programs this was expected. Phone:

2 2 FY 17 Budget Variance Discounts YTD $12,278,000 $11,717,000 ($561,000) The Kirkland undergrad discount rate ended the year at 47.1% versus a budget of 46.6%. This difference caused approximately $127,000 of the variance. Approximately $400,000 more of the variance was a result of discounts related to the better than budget performance of the Kirkland undergrad program. All other sources of revenue for the month of May were $276,000 better than budget. Contributions for May were $142,000 better than budget due to mission trips, and funds contributed towards athletic and academic expenses. We also recognized revenue towards the Concert Choir trip that contributed to the better than budget performance in other revenue. Year to date other revenue is $1,253,000 better than budget as auxiliary revenue (housing primarily) is $396,000 better than budget; contributions are also better than budget by $599,000, other revenue is better than budget by $286,000, offset by interest and dividend revenue being $67,000 below budget. Operating Contribution Detail Actual Budget Variance Opportunity Fund (General Giving) $ 388,000 $320,000 $ 68,000 Other Giving (Mission Trips, Choralons, Banquets, etc.) $ 863,000 $342,000 $ 521,000 Grant Contributions (Murdock, Lilly) $ 97,000 $ 87,000 $ 10,000 Total $1,348,000 $749,000 $ 599,000 Operating Expense Detail May Monthly Variance Year to Date Variance Primary Variance Factor Total ($677,000) $2,172,000 Presidents Department ($ 4,000) $ 53,000 Salary & related savings Jim Heugel Departments $142,000 $2,116,000 Sig Sys expense less due to online revenue shortfall; salary and related savings; savings on trip expenses Ken Cornell Departments ($135,000) $ 202,000 No Hall of Fame banquet; salary and related savings; professional services savings Phil Rasmussen Departments ($ 58,000) ($ 123,000) Mission trips John Jordan Departments ($117,000) $ 169,000 Salary and related savings; depreciation savings; utility savings Contingency Department ($505,000) ($ 245,000) Bonus for employees Jim Heugel s Departments with variances exceeding $100,000: Operating Expense Detail Year to Date Variance Primary Variance Factor Online $1,235,000 Less revenue yielded less Sig System expenses Church Partnership Program $ 209,000 Less revenue yielded less Sig System expenses; salary and related savings College of Education $ 162,000 Student trip expenses; salary and related savings International Studies $ 129,000 Less short term program and camp expenses College of Arts & Sciences $ 122,000 Salary and related savings College of Ministry $ 106,000 Student trip expenses; salary and related savings

3 3 Balance sheet items to note as of May 31 include the following: Major Balance Sheet Categories Year to Date Variance Variance from Last Year Primary Variance Factor Unrestricted cash ($ 298,000) ($ 183,000) Student receivables Investments $1,146,000 $ 1,572,000 Strong market gains this fiscal year Interest rate swap ($1,044,000) ($ 1,044,000) Rising interest rates Beginning with the June letter, I will include data on enrollment projections for fall semester compared to budget. Please continue to pray for the following items: Enrollment for online programs as we break away from using Significant Systems. We are still working with Significant Systems and one of their partners, Integrated Education Services to negotiate a fair settlement contract with Significant Systems. Pray for Fall 2017 enrollment for the Kirkland undergrad program; we are tracking similar to last year s enrollment of new students for the Kirkland undergrad program. We continue to be on track towards our budgeted target for continuing students. Pray for enrollment for all of our other programs. Enrollment counselors are working with potential students on a daily basis; please pray that we will find favor with these potential students. Please pray for the master plan process. It appears that our public hearing will not be until September. 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 Year to Date Financial Results Through May 2017 (12 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 $ 24,202 $ 25,167 $ 24,308 $ 859 $ 24, (101) Grad Tuition Revenue 5,347 5,380 5,795 (415) 5,795 (2) (2) CAPS Tuition Revenue (less Online) 3,551 3,351 4,539 (1,188) 4, (202) Online Programs 2,062 2,015 3,660 (1,645) 3, Salem (51) Sacramento (73) 440 International ,382 (422) 1, Summer & Other ,001 (246) Total Tuition 36,829 37,909 40,739 (2,830) 40, (14) Fee Revenue 1,099 1,372 1, ,333 (13) (1) (12) Discounts (11,653) (12,278) (11,717) (561) (11,717) 846 1,118 (272) Net Tuition & Fees 26,275 27,003 30,355 (3,352) 30, Contribution Revenue 842 1, Auxiliary Revenue 5,389 5,751 5, , Other Revenue 660 1, Interest/Dividend Revenue (67) 445 1,376 1, Total Operating Revenue 33,740 35,653 37,791 (2,138) 37,791 Expense: (4) Castleberry Departments ,730 1, Heugel Departments 17,565 18,524 20,640 2,116 20, (135) Cornell Departments 3,117 3,180 3, , (58) Rasmussen Departments 1,102 1,228 1,105 (123) 1, (117) Jordan Departments 11,016 11,363 11, , (505) Contingency (245) 260 3,822 3,145 (677) Total Operating Expense 33,388 35,294 37,466 2,172 37,466 (2,446) (1,787) (659) Net Operating Income (Loss) (18) (18) Capital Contributions Investment Market gain (loss) (369) (53) (53) Swap Adjustment gain (loss) (12) 1,044 1,044 $ (2,401) $ (1,787) $ (614) Net Income (Loss) $ 27 $ 2,825 $ 665 $ 2,160 $ 665

5 Balance Sheet For the period ending May 31, 2017 In thousands Prior Current Budget Variance Year Year to Budget Assets: Unrestricted cash $ 5,941 $ 5,758 $ 6,056 $ (298) Donor restricted cash Restricted cash (94) Student receivables, net 1,788 1,673 1, Other receivables 761 1, Other current assets Total Current Assets 10,118 10,250 9, Investments 14,347 15,919 14,773 1,146 Notes receivable (2) Planned giving assets 4,212 4,237 4, Fixed assets, net 46,646 46,032 45, Other assets Total Assets $ 75,885 $ 76,863 $ 75,164 $ 1,699 Liabilities & Net Assets Accounts payable & accrued expenses $ 3,565 $ 3,733 $ 3,574 $ 159 Student deposits Deferred revenue 2,343 2,079 2,281 (202) Current portion of notes & bonds payable 2,058 1,726 1,758 (32) Total Current Liabilities 8,434 8,150 8, Interest rate swap agreement 3,436 2,392 3,436 (1,044) Planned giving liabilities 2,988 2,922 2,988 (66) Student loan program (111) Notes & bonds payable 30,425 29,505 29, Other liabilities Total Liabilities 46,081 43,656 44,757 (1,101) Unrestricted net assets 23,448 26,274 24,113 2,161 Temporarily restricted net assets 1,965 2,486 1, Permanently restricted net assets 4,391 4,447 4, Total Net Assets 29,804 33,207 30,407 2,800 Total Liabilities & Net Assets $ 75,885 $ 76,863 $ 75,164 $ 1,699

Net Income (Loss) February ($2,604,000) ($2,791,000) $ 187,000 Net Income (Loss) Year to Date $8,463,000 $7,001,000 $ 1,462,000

Net Income (Loss) February ($2,604,000) ($2,791,000) $ 187,000 Net Income (Loss) Year to Date $8,463,000 $7,001,000 $ 1,462,000 5520 108th Ave. NE Kirkland, WA 98033 March 19, 2018 Dear Board Member, Greetings from the campus in Kirkland. Spring break is over and students are back on campus. It is hard to believe that there are