CONSOLIDATED FINANCIAL STATEMENTS. JUNE 30, 2012 and 2011 INDEPENDENT AUDITORS' REPORTS

CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2012 and 2011 WITH INDEPENDENT AUDITORS' REPORTS

CONTENTS Independent Auditors' Report... 1 Consolidated Statements of Financial Position as of June 30, 2012 and 2011... 2 Consolidated Statement of Activities for the year ended June 30, 2012... 3 Consolidated Statement of Activities for the year ended June 30, 2011... 4 Consolidated Statements of Cash Flows for the years ended June 30, 2012 and 2011... 5 Notes to Consolidated Financial Statements... 6

INDEPENDENT AUDITORS' REPORT To the Board of Trustees The University of Tulsa We have audited the accompanying consolidated statements of financial position of The University of Tulsa (the University) as of June 30, 2012 and 2011, and the related consolidated statements of activities and cash flows for the years then ended. These financial statements are the responsibility of the University's management. 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the University's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the University as of June 30, 2012 and 2011, and the changes in its consolidated net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. October 10, 2012 6120 S. Yale, Suite 1200, Tulsa, OK 74136-4242 P 918.496.1080 F 918.745.2399 www.hogantaylor.com 2

THE UNIVERSITY OF TULSA CONSOLIDATED STATEMENTS OF FINANCIAL POSITION June 30, 2012 and 2011 (dollars in thousands) Assets Current assets: 1 Cash and cash equivalents $ 30,098 $ 37,578 2 Investments - 4,000 3 Accounts receivable, net 10,942 14,160 4 Deposits with bond trustee, current portion 2,272 10,576 5 Inventories 493 512 6 Prepaid expenses and deferred charges 2,774 4,029 7 Contributions receivable, current portion, net 19,042 19,666 Total current assets 65,621 90,521 8 Contributions receivable, net 23,069 31,510 9 Student loans receivable, net 6,675 8,570 10 Investments 333,923 327,555 11 Deferred bond issue costs 1,023 1,145 12 Deposits with bond trustee 13,569 13,569 13 Educational plant, net 348,981 321,474 14 Beneficial interest in funds held in trust by others 463,180 487,152 15 Total assets $ 1,256,041 $ 1,281,496 Liabilities and Net Assets Current liabilities: 16 Accounts payable $ 6,470 $ 8,259 17 Accrued expenses 8,524 7,345 18 Notes and mortgages payable, current portion 6,288 1,779 19 Deposits payable 1,114 949 20 Deferred revenue 7,775 7,652 21 Advances under grants and contracts 9,277 9,313 22 Bonds payable, current portion 4,480 4,105 23 Postretirement benefit obligation, current portion 262 223 Total current liabilities 44,190 39,625 24 Notes and mortgages payable 9,143 12,574 25 Advances under federal loan programs 6,878 6,948 26 Bonds payable 129,081 133,705 27 Postretirement benefit obligation 7,998 7,064 28 Other long-term liabilities 3,351 2,853 29 Total liabilities 200,641 202,769 Net assets: 30 Unrestricted 224,894 212,125 31 Temporarily restricted 156,541 193,397 32 Permanently restricted 673,965 673,205 33 Total net assets 1,055,400 1,078,727 34 Total liabilities and net assets $ 1,256,041 $ 1,281,496 See notes to consolidated financial statements. 3

THE UNIVERSITY OF TULSA CONSOLIDATED STATEMENT OF ACTIVITIES Year ended June 30, 2012 (with comparative totals for the year ended June 30, 2011) (dollars in thousands) Temporarily Restricted Permanently Restricted Unrestricted Total Total Revenues, gains and other support: 1 Student tuition and fees $ 116,859 $ - $ - $ 116,859 $ 109,740 Less: 2 University funded scholarships (38,124) - - (38,124) (35,995) 3 University funded athletic scholarships (6,809) - - (6,809) (6,268) 4 Scholarships funded by other sources (9,357) - - (9,357) (9,176) 5 Net student tuition and fees 62,569 - - 62,569 58,301 6 Sales and services of educational departments and public services 10,890 - - 10,890 9,618 7 Sales and services - auxiliary enterprises 25,109 - - 25,109 25,513 8 Research services and sponsored projects 17,125 - - 17,125 18,302 9 Gifts, grants and pledges 7,512 7,868-15,380 19,416 10 Endowment income 8,650 9,651-18,301 18,246 11 Nonendowment investment income (loss) (1,067) 498 - (569) 5,816 12 Distributions from beneficial interest in funds held in trust by others 19,469 3,656-23,125 23,566 13 Other 1,788 86-1,874 1,281 2011 152,045 21,759-173,804 180,059 14 Net assets released from restrictions 51,295 (50,933) (362) - - 15 Total revenues, gains and other support 203,340 (29,174) (362) 173,804 180,059 Expenses: 16 Instruction 62,298 - - 62,298 58,775 17 Research 18,677 - - 18,677 17,611 18 Public service 6,879 - - 6,879 6,566 19 Academic support 28,911 - - 28,911 27,454 20 Student services 15,794 - - 15,794 14,937 21 Institutional support and other 27,394 - - 27,394 25,127 22 Auxiliary enterprises 27,658 - - 27,658 27,286 23 Total expenses 187,611 - - 187,611 177,756 24 Increase (decrease) from operating activities 15,729 (29,174) (362) (13,807) 2,303 Nonoperating activities: 25 Net endowment income (loss) in excess of income designated for operations (2,489) (10,852) (9) (13,350) 36,942 26 Gifts for capital acquisitions and endowments - 11,008 17,263 28,271 31,838 27 Other permanently restricted income (loss), net - - (427) (427) 561 28 Change in donor restrictions (180) (7,838) 8,018 - - 29 Adjustment of unrecognized postretirement costs (291) - - (291) 683 30 Increase (decrease) in fair value of beneficial interest in funds held in trust by others - - (23,723) (23,723) 62,262 31 Increase (decrease) from nonoperating activities (2,960) (7,682) 1,122 (9,520) 132,286 32 Net increase (decrease) for the year 12,769 (36,856) 760 (23,327) 134,589 33 Net assets, beginning of year 212,125 193,397 673,205 1,078,727 944,138 34 Net assets, end of year $ 224,894 $ 156,541 $ 673,965 $ 1,055,400 $ 1,078,727 2012 See notes to consolidated financial statements. 4

THE UNIVERSITY OF TULSA CONSOLIDATED STATEMENT OF ACTIVITIES Year ended June 30, 2011 (dollars in thousands) Temporarily Restricted Permanently Restricted Unrestricted Total Revenues, gains and other support: 1 Student tuition and fees $ 109,740 $ - $ - $ 109,740 Less: 2 University funded scholarships (35,995) - - (35,995) 3 University funded athletic scholarships (6,268) - - (6,268) 4 Scholarships funded by other sources (9,176) - - (9,176) 5 Net student tuition and fees 58,301 - - 58,301 6 Sales and services of educational departments and public services 9,615 3-9,618 7 Sales and services - auxiliary enterprises 25,513 - - 25,513 8 Research services and sponsored projects 18,302 - - 18,302 9 Gifts, grants and pledges 7,273 12,143-19,416 10 Endowment income 8,865 9,381-18,246 11 Nonendowment investment income 5,517 299-5,816 12 Distributions from beneficial interest in funds held in trust by others 19,735 3,831-23,566 13 Other 1,149 132-1,281 154,270 25,789-180,059 14 Net assets released from restrictions 38,299 (38,220) (79) - 15 Total revenues, gains and other support 192,569 (12,431) (79) 180,059 Expenses: 16 Instruction 58,775 - - 58,775 17 Research 17,611 - - 17,611 18 Public service 6,566 - - 6,566 19 Academic support 27,454 - - 27,454 20 Student services 14,937 - - 14,937 21 Institutional support and other 25,127 - - 25,127 22 Auxiliary enterprises 27,286 - - 27,286 23 Total expenses 177,756 - - 177,756 24 Increase (decrease) from operating activities 14,813 (12,431) (79) 2,303 Nonoperating activities: 25 Net endowment income in excess of income designated for operations 9,429 27,406 107 36,942 26 Gifts for capital acquisitions and endowments 96 7,528 24,214 31,838 27 Other permanently restricted income, net - - 561 561 28 Change in donor restrictions (1) (1,962) 1,963-29 Adjustment of unrecognized postretirement costs 683 - - 683 30 Increase in fair value of beneficial interest in - funds held in trust by others - - 62,262 62,262 31 Increase from nonoperating activities 10,207 32,972 89,107 132,286 32 Net increase for the year 25,020 20,541 89,028 134,589 33 Net assets, beginning of year 187,105 172,856 584,177 944,138 34 Net assets, end of year $ 212,125 $ 193,397 $ 673,205 $ 1,078,727 See notes to consolidated financial statements. 5

THE UNIVERSITY OF TULSA CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended June 30, 2012 and June 30, 2011 (dollars in thousands) Cash Flows from Operating Activities Increase (decrease) in net assets $ (23,327) $ 134,589 Adjustments to reconcile increase (decrease) in net assets to net cash provided by (used in) operating activities: Depreciation and amortization 13,168 14,016 Provision for uncollectible accounts (45) 1,481 Loss on disposals of educational plant 395 325 Net investment unrealized and realized gains (4,280) (58,819) Contributions received for endowment (14,930) (13,920) Contributions received for purchases of educational plant (10,987) (13,745) Decrease (increase) in fair value of beneficial interest in funds held in trust by others 23,972 (62,262) Forgiveness of note payable - (1,000) Changes in operating assets and liabilities: Accounts receivable 3,016 (1,168) Contributions receivable 9,312 (1,586) Student loans receivable 1,400 150 Inventories 19 (29) Prepaid expenses and deferred charges 1,255 (1,341) Deferred bond issues costs 122 (248) Accounts payable (1,789) 2,595 Accrued expenses 1,179 115 Deposits payable 165 (200) Deferred revenue 123 (154) Advances under grants and contracts (36) 485 Postretirement benefit obligation 973 22 Other long-term liabilities 498 235 Net cash provided by (used in) operating activities 203 (459) Cash Flows from Investing Activities Deposits with bond trustee 8,304 (10,119) Proceeds from sale of investments 182,104 170,847 Purchases of investments (180,192) (144,360) Student loans advanced (811) (870) Student loans collected 1,306 1,371 Purchases of educational plant (41,214) (36,456) Net cash used in investing activities (30,503) (19,587) Cash Flows from Financing Activities Payments of notes and mortgages payable (13,922) (8,306) Proceeds from notes and mortgages payable 15,000 13,138 Payments on bonds payable (4,105) (22,850) Proceeds from bonds - 30,445 Decrease in federal loan programs (70) (72) Contributions received for endowment 14,930 13,920 Contributions received for purchases of educational plant 10,987 13,745 Net cash provided by financing activities 22,820 40,020 Net increase (decrease) in cash and cash equivalents (7,480) 19,974 Cash and cash equivalents, beginning of year 37,578 17,604 Cash and cash equivalents, end of year $ 30,098 $ 37,578 Supplemental Cash Flow Information Interest paid $ 6,710 $ 6,635 See notes to consolidated financial statements. 6

THE UNIVERSITY OF TULSA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2012 and 2011 (dollars in thousands) Note 1 Organization and Summary of Significant Accounting Policies Organization The University of Tulsa is an independent comprehensive institution providing undergraduate, graduate, and professional education in a variety of multicultural programs. The University has an undergraduate enrollment of approximately 3,000 and a graduate and law enrollment of approximately 1,090. Principles of consolidation The accompanying consolidated financial statements include the accounts of the University of Tulsa and The Gilcrease Museum Management Trust (the Trust) (collectively, the University). Effective July 1, 2008, the University formed the Trust and entered into a Management Agreement with The City of Tulsa and The Board of Trustees of the Thomas Gilcrease Institute of American History and Art to manage and operate Gilcrease Museum. The University has agreed that it will incorporate fundraising for the endowment and operations of Gilcrease Museum into its fundraising efforts and will separately account for such funds and manage the investment of such funds within the University's policies. The Trust is consolidated due to the University's control and economic interest in it. All material intercompany transactions and balances have been eliminated in the consolidated statements. Basis of financial statements The financial statements of the University have been prepared on the accrual basis in accordance with accounting principles generally accepted in the United States of America. Net assets are classified based on the existence or absence of donor-imposed restrictions as follows: Unrestricted Net assets that are not subject to donor-imposed restrictions. Unrestricted net assets may be designated for specific purposes by action of the Board of Trustees or may otherwise be limited by contractual agreements with outside parties. Temporarily restricted Net assets whose use by the University is subject to donor-imposed restrictions that can be fulfilled by actions of the University or by the passage of time. Permanently restricted Net assets subject to donor-imposed restrictions that they be maintained permanently by the University. Generally, the donors of these assets permit the University to use all or part of the income earned on related investments for general or specific purposes. Such net assets also include the University's beneficial interests in irrevocable trusts held by others. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. 7

Measure of operations The increase (decrease) from operating activities reflected in the accompanying consolidated statements of activities excludes endowment income (losses) in excess of the University's spending policy, changes in the fair value of beneficial interest in funds held in trust by others, gifts for capital acquisitions and endowments, permanently restricted gifts and other income, changes in donor restrictions and other reclassifications and unusual or nonrecurring items. Cash and cash equivalents Cash and cash equivalents include cash on hand and on deposit in demand and interest-bearing accounts administered by the University with original maturities of three months or less. Investments The University's investments in common stocks and mutual funds with readily determinable fair values and investments in debt securities including corporate obligations, commercial paper, and Treasury obligations are reported at fair value in the consolidated statements of financial position. Nonmarketable investments in hedge funds and private equities reflect the estimated fair value of the underlying assets or cost adjusted for transactions if no meaningful estimate of market value is available. Other investments are reported at amounts that are not materially different from their fair value. The University's investments are exposed to various risks, such as interest rate, credit and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and such changes could materially affect the amounts reported in the consolidated statements of activities. Significant fluctuations in fair values could occur from year to year and the amounts the University will ultimately realize could differ materially. Income and gains or losses on investments are generally reported as follows: Increases in permanently restricted net assets if the terms of the gift that gave rise to the investment or applicable law require income and gains or losses be added to the principal of a permanent endowment. Increases in temporarily restricted net assets if the terms of the gift or applicable law impose restrictions on the use of the income. For this purpose, restrictions on funds for scholarships are not considered met until the specific scholarship funds have been expended. Increases in unrestricted net assets in all other cases. Generally, losses on the investments of restricted endowments reduce temporarily restricted net assets to the extent donor-imposed temporary restrictions on net appreciation of investments have not been met before the loss occurs. Any remaining losses reduce unrestricted net assets, but can be restored through subsequent investment gains. Contributions receivable Contributions are recorded at fair value. Unconditional promises to give are recorded net of an allowance for doubtful receivables estimated based on such factors as prior collections history, types of contributions and the nature of the fundraising activity. Amounts due in more than one year are recorded at net realizable discounted cash flow using an appropriate discount rate commensurate with the risks involved. Amortization of the discount is recorded as additional contribution revenue. 8

Gifts of land, buildings and equipment and other long-lived assets are reported as unrestricted support unless explicit donor stipulations specify how or how long the donated assets must be used, in which case the gift is reported as restricted support. Conditional promises to give are not recorded until conditions are substantially met. Fair value of financial instruments The following methods and assumptions were used to estimate the fair value of each financial classification: Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses the carrying amounts approximate fair value due to their short maturity. Contributions receivables the fair value is estimated by discounting the future cash flows of each instrument at a rate of 5% for contributions due in excess of one year. Investments, deposits with bond trustee and beneficial interest in funds held in trust by others with readily determinable fair values the fair value is based on quoted market prices. See Note 4 for determination of fair value of nonmarketable investments. Student loans it is not practicable to estimate the fair value of these receivables since they contain federally mandated interest rates and repayment terms subject to significant restrictions as to their transfer and disposition. Bonds, notes and mortgages payable the fair value is determined by discounting the future cash flows of each instrument at rates currently offered to the University for similar debt instruments of comparable maturities by the University's bankers. Educational plant Plant facilities, including library books, are stated at cost less accumulated depreciation or, if received as a gift, at fair value or appraised value at the date received, less accumulated depreciation. Generally, improvements, renovations, and equipment purchases in excess of $5 are capitalized. Depreciation is recognized on a straight-line basis over the estimated useful lives of buildings (50 years), improvements (20 years), and equipment and library books (5-20 years). The University records impairments to its educational plant when, and if, it becomes probable that the carrying value of these assets will not be fully recovered over the estimated lives of the assets. Impairments, if any, are recorded to reduce the carrying value of the asset to the net realizable value determined by management based on facts and circumstances in existence at the time of the determination, estimates of probable future economic conditions, and other information. No impairments were required in 2012 or 2011. Inventories Inventories are stated at the lower of cost or market on the first-in, first-out basis. Student loans receivable Student loans receivable consist primarily of loans made to students under U.S. Government loan programs. The loans are stated at estimated net realizable value. Beneficial interest in funds held in trust by others Beneficial interest in funds held in trust by others represent amounts held for the beneficial interest of the University under irrevocable perpetual trust agreements between donors and third-party trustees. The 9

University's interest in the trusts are recorded at the fair value of the net assets of the trusts, with net increases or decreases in net assets being reported as changes to permanently restricted net assets. The amounts the University will ultimately realize could differ materially and significant fluctuations in fair values could occur from year to year. Deposits with bond trustee Deposits with bond trustee consist of the unexpended bond proceeds and debt service funds for bonds payable. These funds are invested in cash equivalents and U.S. Government obligations and will be used for designated projects, required bond reserves or payment of debt service. Advances under federal loan programs Funds provided by the U.S. Government primarily under the Federal Perkins Loan Program are loaned to qualified students and may be re-loaned upon collection. These funds are ultimately refundable to the government. Advances under grants and contracts Grants and contracts consist primarily of contractual agreements with governmental and private entities for the performance of research services and other sponsored programs. Revenues are generally recognized as expenses are incurred. Amounts received in advance are reported as advances under grants and contracts. Cost of borrowing Bond issue costs are amortized over the term of the related obligations using the interest method. Tuition discount, financial aid and deferred revenue Tuition discounts and financial aid awarded to nonemployees in the form of scholarships, grants and fellowships, including amounts awarded to students from grants and contributions to the University for this purpose, have been reported as a reduction of tuition revenues. Tuition discounts granted to employees and their dependents are recorded as compensation expense in the appropriate functional expense classification. Deferred revenue, primarily tuition, includes those payments received before services or products are provided by the University. Expenses and other activity Expenses are reported as decreases in unrestricted net assets. Temporarily restricted net assets for which donor-imposed conditions are met are reclassified to unrestricted net assets and reported as net assets released from restrictions. Net assets released from restrictions represent satisfaction of purpose restrictions or passage of the stipulated time period on expenditures made pursuant to donor specifications. Investment income, contributions and trust distributions restricted for scholarships and financial aid are released from restrictions as awards are made by the University in accordance with its policies governing the administration of financial aid and the requirements of donors. The costs of providing the various programs and supporting activities of the University have been summarized on a functional basis in the consolidated statements of activities. Accordingly, certain costs have been allocated based on total personnel costs or other systematic bases. Fundraising expense incurred was $6,995 and $5,725 in 2012 and 2011, respectively. 10

Income taxes The University is an organization exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (the Code) and has been determined not to be a private foundation under Section 509(a) of the Code. As a result, as long as the University maintains its tax exemption, it will not be subject to income tax. The accounting for income taxes may, at times, involve some degree of uncertainty and, as such, lead to uncertain tax positions having been taken. Management evaluated the University's tax positions and concluded that the University had taken no uncertain tax positions that require adjustment to the financial statements. Generally, the University is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for years before 2009. Subsequent events The University's management has evaluated subsequent events through October 10, 2012, the date the financial statements were available to be issued. Note 2 Receivables Accounts receivable at June 30 consist of the following: Current: Student tuition and fees, net of $2,655 and $2,513 allowance for doubtful accounts, respectively $ 3,404 $ 4,579 Student loans, net of $135 and $81 allowance for doubtful accounts, respectively 1,504 430 Government receivables 367 1,393 Accrued interest 39 64 Federal and nonfederal research receivables 4,800 6,398 Other receivables, net of $0 and $30 allowance for doubtful accounts, respectively 828 1,296 $ 10,942 $ 14,160 Noncurrent: Student loans, net of $556 and $610 allowance for doubtful accounts, respectively $ 6,675 $ 8,570 Contributions receivable at June 30 consist of the following: Less than 1 to 5 Over 5 Less than 1 to 5 Over 5 1 year years years 1 year years years Unconditional promises $ 20,555 $ 21,537 $ 7,586 $ 21,290 $ 28,043 $ 12,151 Less unamortized discount and allowance for doubtful accounts (1,513) (3,354) (2,700) (1,624) (4,537) (4,147) $ 19,042 $ 18,183 $ 4,886 $ 19,666 $ 23,506 $ 8,004 The majority of contributions receivable represents pledges to fund planned construction and acquisition of various University buildings and improvements. Contributions that are expected to be received in more than one year have been discounted to present value using a rate of 5%. 11

Note 3 Endowment Investments, Investments and Funds Held in Trust by Others The fair value of investments at June 30, including endowment investments, consist of the following: Private equities $ 91,065 $ 83,140 Hedge funds: Equity long/short 122,400 119,182 Fixed income strategies 11,663 12,347 Multistrategy 78,571 77,316 Other 1,084 979 Fixed income 10,542 14,642 Equity securities 5,835 11,660 Equity mutual funds 3,200 3,605 Real estate 2,556 2,424 Life income 5,830 5,025 Life insurance 1,045 1,057 Certificate of deposit 132 178 Total $ 333,923 $ 331,555 At June 30, the fair value of endowment assets, including beneficial interest in funds held in trust by others for the University's benefit, consists of the following: Beneficial interest in funds held in trust by others: J.A. and Leta M. Chapman 1949 Trust $ 34,577 $ 36,377 James A. and Leta M. Chapman Charitable Trust 255,326 268,490 Leta McFarlin Chapman Memorial Trust 132,686 139,364 Pauline McFarlin Walter Memorial Trust 33,755 35,717 Jay P. Walker Charitable Trust 3,066 2,995 Virginia Mayo Ownby Memorial Trust 2,170 2,213 Doris K. Catlett Trust 1,411 1,537 Other 189 459 463,180 487,152 Other endowment assets: Cash and cash equivalents 11,472 16,094 Contributions receivable 17,909 16,399 Investments 309,892 297,677 Total endowment assets $ 802,453 $ 817,322 Endowment investments include perpetual endowments included in permanently restricted net assets, gifts, gains and term endowments included in temporarily restricted net assets and designated endowments and related gains which are included in unrestricted net assets. The University's endowments consist of 663 individual funds established for a variety of purposes, as well as the beneficial interest in 14 trusts managed by outside trustees to function as endowments. The endowments include both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments. As required by generally accepted accounting principles (GAAP), net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor-imposed restrictions. 12

Interpretation of Relevant Laws The University interprets the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds, absent explicit donor stipulations to the contrary. As a result of this interpretation, the University classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the University in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the University considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds: (1) The duration and preservation of the fund (2) The purposes of the University and the donor-restricted endowment fund (3) General economic conditions (4) The possible effect of inflation and deflation (5) The expected total return from income and the appreciation of investments (6) Other resources of the University (7) The investment policies of the University Funds with Deficiencies From time to time, the fair value of assets associated with individual donorrestricted endowment funds may fall below the level that the donor or UPMIFA requires the University to retain as a fund of perpetual duration. In accordance with GAAP, deficiencies of this nature that are reported in unrestricted net assets were $2,528 and $1,115 as of June 30, 2012 and 2011, respectively. These deficiencies resulted from unfavorable market fluctuations that occurred shortly after the investment of new permanently restricted contributions and continued appropriation for certain programs that was deemed prudent by the Board of Trustees. In accordance with the terms of donor gift instruments, the University is permitted to reduce the balance of several restricted endowments below the original amount of the gift. Subsequent investment gains are then used to restore the balance up to the fair value of the original amount of the gift. Subsequent gains above that amount are recorded to temporarily restricted net assets. Strategies Employed for Achieving Objectives Certain of the University's external investment managers are authorized to use specified derivative financial instruments in managing the assets under their control, subject to restrictions and limitations adopted by the Board of Trustees. From time to time, the managers may enter into forward currency contracts to hedge currency exchange risk on investments in foreign securities and other future contracts to adjust asset allocation for a more efficient portfolio. The managers settle these contracts on a net basis and, accordingly, the cash requirements are substantially less than the contract amounts. Changes in the fair value of the derivative contracts are included in investment income and are not significant in 2012 or 2011. Spending Policy and How the Investment Objectives Relate to Spending Policy The University's spending policy has two components. The first component uses the previous year's spending rate and adjusts it for inflation, which is defined as the previous calendar year's Consumer Price Index increase plus 1%. This component is 70% of the calculation. The second component uses the average endowment market value as of September 30 and December 31 of the preceding year and multiplies the result by a fixed percentage. This percentage was 5% for 2012 and 5.25% for 2011. The second component is the remaining 30% of the calculation. 13

In establishing this policy, the University considered the long-term expected return on its endowments. Accordingly, over the long term, the University expects the current spending policy to allow its endowments to grow at or near the inflation rate, as represented by the Consumer Price Index, before the effect of new gifts. This is consistent with the University's objective to maintain the purchasing power of the endowment assets held in perpetuity or for a specified term as well as to provide additional real growth through new gifts. The annual withdrawal includes amounts for operations and amounts utilized in accordance with the terms of donor-restricted and board-designated endowments. Endowment net assets composition by type of fund as of June 30: Temporarily Permanently 2012 Unrestricted Restricted Restricted Total Pure endowment funds $ (2,528) $ 75,981 $ 206,917 $ 280,370 Quasi endowment funds 25,751 31,536-57,287 Term endowment funds - 1,616-1,616 Beneficial interest in funds held in trust by others - - 463,180 463,180 Total $ 23,223 $ 109,133 $ 670,097 $ 802,453 Temporarily Permanently 2011 Unrestricted Restricted Restricted Total Pure endowment funds $ (1,115) $ 85,396 $ 183,597 $ 267,878 Quasi endowment funds 28,389 32,219-60,608 Term endowment funds - 1,684-1,684 Beneficial interest in funds held in trust by others - - 487,152 487,152 Total $ 27,274 $ 119,299 $ 670,749 $ 817,322 Changes in Endowment net assets for the years ended June 30: Temporarily Permanently Unrestricted Restricted Restricted Total Endowment net assets, June 30, 2010 $ 18,966 $ 90,897 $ 582,054 $ 691,917 Investment return: Investment income, net of fees 31 1,393-1,424 Net realized and unrealized appreciation 32,410 44,812 62,285 139,507 Reclassification for funds with deficiencies 5,587 (5,587) - - Change in donor restrictions (1,216) 813 2,005 1,602 Total investment return 36,812 41,431 64,290 142,533 Contributions 96 183 24,405 24,684 Use of endowment assets for expenditures: Annual transfer for operations (28,600) (13,212) - (41,812) 14

Endowment net assets, June 30, 2011 27,274 119,299 670,749 817,322 Investment return: Investment loss, net of fees (120) (1,014) (1) (1,135) Net realized and unrealized appreciation 27,162 2,055 (23,980) 5,237 Reclassification for funds with deficiencies (1,413) 1,413 - - Change in donor restrictions (1,561) 557 8,020 7,016 Total investment return 24,068 3,011 (15,961) 11,118 Contributions - 130 15,309 15,439 Use of endowment assets for expenditures: Annual transfer for operations (28,119) (13,307) - (41,426) Endowment net assets, June 30, 2012 $ 23,223 $ 109,133 $ 670,097 $ 802,453 Beneficial interest in funds held in trust by others are resources which are neither in the possession of, nor under the control of, the University. They are held and administered by external fiscal trust agents, with the income distributed to the University according to the terms of the gift instruments. Only the distributions from these funds are expendable. Investment return on beneficial interest in funds held in trust by others is as follows: Beneficial interest in funds held in trust by others: Distributions of income $ 23,125 4.70 % $ 23,566 5.50 % Increase (decrease) in fair value (23,723) (4.90) % 62,262 14.70 % Total investments return on beneficial interest in funds held in trust by others $ (598) (0.20) % $ 85,828 20.20 % Note 4 Fair Value Measurement The Financial Accounting Standards Board (FASB) Accounting Standards Codification establishes a consistent framework for measuring fair value and a fair value hierarchy based on the observability of inputs used to measure fair value. These inputs are summarized in three broad levels: Level 1 Level 2 Level 3 Quoted prices in active markets for identical securities. Other significant observable inputs (including quoted prices for similar securities, interest rates, credit risk, and others). Unobservable inputs (including the University's assumptions in determining the value of investments). The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. Fair value measurements are categorized as Level 3 when a significant amount of price or other inputs that are considered to be unobservable are used in their valuations. 15

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. There were no transfers into or out of Level 1, 2 or 3 measurements for the year ended June 30, 2012. The following table presents the University's assets that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions as of June 30: Fair Value Measurements Redemption Days' 2012 Total Level 1 Level 2 Level 3 or Liquidation Notice Cash and cash equivalents $ 38,053 $ 38,053 $ - $ - Daily Daily Fixed income 93,578 93,558 20 - Daily Daily Equities 164,900 164,900 - - Daily Daily Mutual funds 76,909 76,909 - - Daily Daily Real estate 16,551 - - 16,551 Illiquid Illiquid Private equities 134,974 - - 134,974 Illiquid Illiquid Hedge funds: Equity long/short 122,400-122,400 - Daily/Monthly 10 to 120 Fixed income strategies 11,663 - - 11,663 Subject to lockup 60 to 90 Multistrategy 78,571-78,571 - Monthly 90 Other 68,466 106-68,360 Daily/Monthly 10 to 120 Life income 5,834-5,834 - Life insurance 1,045-1,045 - Total investments $ 812,944 $ 373,526 $ 207,870 $ 231,548 Fair Value Measurements Redemption Days' 2011 Total Level 1 Level 2 Level 3 or Liquidation Notice Cash and cash equivalents $ 52,370 $ 52,370 $ - $ - Daily Daily Fixed income 92,572 84,775 7,797 - Daily Daily Equities 214,984 214,984 - - Daily Daily Mutual funds 56,489 56,489 - - Daily Daily Real estate 15,278 23-15,255 Illiquid Illiquid Private equities 121,334 - - 121,334 Illiquid Illiquid Hedge funds: Equity long/short 119,183-119,183 - Daily/Monthly 10 to 120 Fixed income strategies 12,347 - - 12,347 Subject to lockup 60 to 90 Multistrategy 77,316-77,316 - Monthly 90 Other 74,893 - - 74,893 Daily/Monthly 10 to 120 Life income 5,029-5,029 - Life insurance 1,057-1,057 - Total investments $ 842,852 $ 408,641 $ 210,382 $ 223,829 The University's assets measured at fair value are reported in the consolidated statements of financial position as follows: Short term investments $ - $ 4,000 Deposits with bond trustee, current portion 2,272 10,576 Investments 333,923 327,555 Deposits with bond trustee 13,569 13,569 Beneficial interests in funds held in trust by others 463,180 487,152 $ 812,944 $ 842,852 16

The following table presents the net change in the assets measured at fair value on a recurring basis and included in the Level 3 fair value category for the year ended June 30, 2012: Balance at July 1, 2011 $ 223,829 Acquisitions 15,667 Dispositions (11,313) Net appreciation 3,365 Balance at June 30, 2012 $ 231,548 The amount of total net gains for the year included in changes in net assets that are attributable to the change in unrealized gains or losses relating to assets still held at the reporting date $ 3,274 Note 5 Educational Plant Net investment in educational plant at June 30 consists of the following: Land and improvements $ 72,196 $ 72,196 Buildings 319,258 287,558 Furniture fixtures, and equipment 61,175 59,019 Library books 39,551 40,885 492,180 459,658 Less accumulated depreciation (159,844) (153,420) 332,336 306,238 Construction in progress 16,645 15,236 $ 348,981 $ 321,474 Depreciation expense was $13,312 and $13,132 for the years ended June 30, 2012 and 2011, respectively. Note 6 Bonds, Notes and Mortgages Payable Bonds payable Bonds payable consists of the following at June 30: Tulsa Industrial Authority (TIA) Revenue and Refunding Bonds (University of Tulsa) Series 1996A (the 1996A Series) TIA Revenue Bonds (University of Tulsa) Series 2000A (the 2000A Series) TIA Student Housing Revenue Bonds (The University of Tulsa) Series 2006 (the 2006 Series) TIA Revenue Refunding Bonds (The University of Tulsa) Series 2006 (the 2006 Series) TIA Revenue Refunding Bonds (The University of Tulsa) Series 2009 (the 2009 Series) TIA Revenue and Refunding Bonds (The University of Tulsa) Series 2011 (the 2011 Series) 17

1996A Series dated March 1, 1996 The 1996A Series $55,000 fixed rate serial and term bonds are subject to scheduled annual sinking fund redemptions commencing 2009. In 2011, proceeds from the 2011 Series Revenue and Refunding Bonds were used to advance refund $19,130 in aggregate principal amount of the Series 1996A Bonds maturing October 1, 2022. Maturities, interest rates and outstanding principal amounts at June 30, 2012, are as follows: 1996A Series, due October 1, 2016, 6.00% $ 13,359 Unamortized net bond discount/premiums 225 Total 1996A Series 13,584 Less current portion (2,395) Total long-term portion $ 11,189 Payment of principal and interest on the 1996A Series is guaranteed by a financial guaranty insurance policy issued by MBIA Insurance Corporation (MBIA). Bank of Oklahoma, N.A. is trustee for the 1996 A Series. Under terms of a mortgage and security agreement between the University, TIA, MBIA and the trustee, the University has secured its payment obligations for this Series with a mortgage on various campus buildings and security interests in student accounts receivable, as defined, and bond reserve funds deposited with the trustee. The bond agreement contains certain restrictive covenants of the University, including: 1) maintenance of an available funds ratio of a minimum.5:1; 2) maintenance of a maximum annual debt service ratio of.1:1; and 3) limitations on additional indebtedness. 2000A Series dated August 31, 2000 The 2000A Series was comprised of $15,000 of variable rate term bonds. The final payment of $610 was made during the year ended June 30, 2011. 2006 Series Student Housing Revenue Bonds dated July 31, 2006 The proceeds from these bonds were used to build apartment complexes housing approximately 700 students. The bonds are secured by future revenues from these apartments. The University's obligations to make the loan payments on these bonds are subordinated to its obligations on its 1996A Series, Series 2006 Revenue Refunding and 2009 Series. The Series 2006 Student Housing Revenue Bonds maturing October 1 in each of the years 2021, 2026 and 2037 (the Term Bonds) are subject to mandatory sinking fund redemption in part by TIA prior to their scheduled maturity at a redemption price equal to 100% of the principal amount, without premium, plus accrued but unpaid interest to the redemption date. Maturities, interest rates and outstanding principal amounts at June 30, 2012, are as follows: Serial Bond, due October 1, 2012 4.30% $ 575 Serial Bond, due October 1, 2013 4.75% 600 Serial Bond, due October 1, 2014 5.00% 630 Serial Bond, due October 1, 2015 5.00% 660 Serial Bond, due October 1, 2016 5.00% 695 Serial Bond, due October 1, 2021 5.25% 4,055 Serial Bond, due October 1, 2026 5.25% 5,230 Serial Bond, due October 1, 2037 5.00% 17,295 Unamortized net bond discount/premiums 155 2006 Series Student Housing Revenue Bonds $ 29,895 2006 Series Revenue Refunding Bonds dated October 12, 2006 The proceeds from these bonds were used to advance refund $26,215 in aggregate principal amount of the 2000A Series bonds maturing October 1, 2011-2017, inclusive of the payments due in each of the years 18

2020, 2025 and 2031 (the Refunded Series 2000A Bonds), for redemption on October 1, 2010, at a redemption price of par plus interest accrued thereon to the redemption date. The 2006 Series bonds maturing October 1 in each of the years 2026 and 2031 (the Term Bonds), are subject to mandatory sinking fund redemption in part by TIA prior to their scheduled maturity at a redemption price equal to 100% of the principal amount, without premium, plus accrued but unpaid interest to the redemption date. Maturities, interest rates and outstanding principal amounts at June 30, 2012, are as follows: Serial Bond, due October 1, 2012 4.00% $ 795 Serial Bond, due October 1, 2013 4.00% 845 Serial Bond, due October 1, 2014 4.00% 890 Serial Bond, due October 1, 2015 4.00% 945 Serial Bond, due October 1, 2016 5.00% 1,000 Serial Bond, due October 1, 2017 5.00% 1,055 Serial Bond, due October 1, 2018 5.00% 1,090 Serial Bond, due October 1, 2019 4.50% 1,130 Serial Bond, due October 1, 2020 5.00% 1,170 Serial Bond, due October 1, 2026 4.50% 8,750 Serial Bond, due October 1, 2031 5.00% 5,325 Serial Bond, due October 1, 2031 4.50% 3,250 Unamortized net bond discount/premiums 146 2006 Series Revenue Refunding Bonds $ 26,391 2009 Series Revenue Refunding Bonds dated February 12, 2009 The proceeds from these bonds were used to advance refund $33,445 in aggregate principal amount of the Series 1996B bonds maturing October 1, 2022-2026 and Series 2000B bonds maturing October 1, 2009-2032. The 2009 Series bonds maturing October 1 in each of the years 2023 and 2027 (the Term Bonds), are subject to mandatory sinking fund redemption in part by TIA prior to their scheduled maturity at a redemption price equal to 100% of the principal amount, without premium, plus accrued but unpaid interest to the redemption date. Maturities, interest rates and outstanding principal amounts at June 30, 2012, are as follows: Serial Bond, due October 1, 2012 3.00% $ 360 Serial Bond, due October 1, 2013 3.00% 370 Serial Bond, due October 1, 2014 4.00% 380 Serial Bond, due October 1, 2015 4.00% 395 Serial Bond, due October 1, 2016 4.00% 410 Serial Bond, due October 1, 2017 4.00% 455 Serial Bond, due October 1, 2018 4.00% 445 Serial Bond, due October 1, 2019 4.25% 460 Serial Bond, due October 1, 2020 4.50% 485 Serial Bond, due October 1, 2021 5.00% 515 Serial Bond, due October 1, 2022 5.50% 1,000 Serial Bond, due October 1, 2023 5.00% 6,430 Serial Bond, due October 1, 2027 6.00% 21,950 Unamortized net bond discount/premiums (86) 2009 Series Revenue Refunding Bonds $ 33,569 2011 Series Revenue and Refunding Bonds dated March 3, 2011 The proceeds from these bonds were used to advance refund $19,130 in aggregate principal amount of the 1996A Series bonds maturing October 1, 2022, and to fund capital projects. 19

The 2011 Series bonds maturing October 1 in each of the years 2021, 2026 and 2030 (the Term Bonds) are subject to mandatory sinking fund redemption in part by TIA prior to their scheduled maturity at a redemption price equal to 100% of the principal amount, without premium, plus accrued but unpaid interest to the redemption date. Maturities, interest rates and outstanding principal amounts at June 30, 2012, are as follows: Serial Bond, due October 1, 2012 3.00% $ 355 Serial Bond, due October 1, 2013 3.00% 370 Serial Bond, due October 1, 2014 4.00% 380 Serial Bond, due October 1, 2015 4.00% 395 Serial Bond, due October 1, 2016 5.00% 1,255 Serial Bond, due October 1, 2016 3.00% 2,395 Serial Bond, due October 1, 2017 3.50% 3,155 Serial Bond, due October 1, 2018 3.63% 3,270 Serial Bond, due October 1, 2022 5.00% 2,895 Serial Bond, due October 1, 2021 4.00% 10,670 Serial Bond, due October 1, 2026 5.00% 2,305 Serial Bond, due October 1, 2030 5.25% 2,815 Unamortized net bond discount/premiums (138) 2011 Series Revenue and Refunding Bonds $ 30,122 Total bonds outstanding at June 30 are as follows: 1996A Series $ 13,584 $ 15,912 2006 Series Student Housing Revenue 29,895 30,471 2006 Series Revenue Refunding 26,391 27,167 2009 Series 33,569 33,939 2011 Series 30,122 30,321 Total bonds 133,561 137,810 Less current portion (4,480) (4,105) Total long-term portion $ 129,081 $ 133,705 The annual sinking fund redemption requirements for the bonds are as follows: 2006 Series 2006 Series 1996A Student Revenue 2009 2011 Series Housing Refunding Series Series 2013 $ 2,395 $ - $ - $ - $ - $ 2,395 2014 2,525 - - - - 2,525 2015 2,665 - - - - 2,665 2016 2,810 - - - - 2,810 2017 2,965 - - - - 2,965 2021-3,160 - - 6,960 10,120 2026-4,970 7,210 16,770 5,395 34,345 2031-6,400 4,935 11,610 3,435 26,380 Thereafter - 12,050 5,180 - - 17,230 Total $ 13,360 $ 26,580 $ 17,325 $ 28,380 $ 15,790 $ 101,435 The University is subject to various financial and related covenants contained in the bond agreements. The University was in compliance with the alternate calculation of the available funds ratio requirement, as defined in the bond agreements, at June 30, 2012 and 2011. 20

Notes and mortgages payable Notes and mortgages payable consist of the following at June 30: The University has purchased certain properties adjacent to its campus for student apartment housing and other uses. The related notes and mortgages mature at various dates through 2020, and bear interest at 6.08% to 15.75%. The majority of of the notes are unsecured. $ 1,270 $ 1,411 Line of credit payable to the George Kaiser Family Foundation at an annual interest rate of 1.00% with initial payments commencing in 2012. 8,161 10,442 Revolving line of credit with The F&M Bank & Trust Company for up to $30 million; interest is due monthly at the Wall Street Journal LIBOR Interest rate plus 1.55%, but not less than 4.25% (4.25% at June 30, 2012); the line of credit is unsecured; due March 2013; contains a non-usage fee of 0.25% per annum on unused balance. 5,000 - Tulsa IV notes payable to various donors, noninterest bearing. 1,000 2,500 15,431 14,353 Less current portion (6,288) (1,779) $ 9,143 $ 12,574 Tulsa IV was created by a series of interest-free loans made by donors to the University. The principal on the notes is payable in 2014. Any investment income generated by the funds is retained by the University to use at its discretion. The investments in the funds are held at Goldman, Sachs & Co. and are managed by the William K. Warren Foundation. Effective August 25, 2011, the University established a $20 million line of credit with The Bank of Oklahoma which matures on August 23, 2012. Effective August 23, 2012, the University renewed the line of credit which matures on August 22, 2013. Interest is payable monthly at the 1-Month LIBOR Interest Rate plus 2.75% (2.99% at June 30, 2012). At June 30, 2012, the University had no borrowings outstanding. Total interest costs incurred on indebtedness during 2012 and 2011 were approximately $6,682 and $6,708, respectively. Required maturities of all long-term debt, including bonds payable at June 30, 2012, are as follows: 2013 $ 10,768 2014 8,149 2015 7,415 2016 7,707 2017 8,871 Thereafter 105,781 148,691 Unamortized net bond discount 301 Total debt $ 148,992 21