University of Dayton FINANCIAL REPORT 2014 · June 30, 2014 FINANCIAL REPORT. 2 REPORT OF...

University of Dayton

FINANCIAL REPORT 2014June 30, 2013-14

2009-10 2010-11 2011-12 2012-13 2013-14

Endowment - Market 355,550 423,419 407,358 450,612 518,164

Physical Plant - Carrying Value 702,055 729,303 774,981 877,427 918,237 (Excluding Depreciation)

Physical Plant - Insurable Value 955,622 962,663 1,005,953 1,086,740 1,105,769

Long Term Debt 301,689 304,046 355,399 380,966 367,783

Enrollment - Full Time - Undergraduate 6,900 7,156 7,310 7,479 7,475

Enrollment - Law School 503 530 493 419 338

Enrollment - Graduate School 2,999 2,935 2,709 2,698 2,522

Total Enrollment - Full and Part Time 10,909 11,199 11,063 11,186 10,857

Degrees Awarded - Undergraduate 1,848 1,820 1,917 1,856 1,953

Degrees Awarded - Graduate 978 1,124 1,130 1,042 1,052

COMPARATIVE SUMMARYINFORMATION(All Dollar Amounts in Thousands)

June 30, 2014

FINANCIAL REPORT

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REPORT OFINDEPENDENT AUDITORS

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MANAGEMENT’SDISCUSSION AND ANALYSISfor Year Fiscal Year Ended 6/30/14

Introduction

The following discussion and analysis provides an overview of the financial position of the University of Dayton for the year ended June 30, 2014 with comparative information for the previous year ended June 30, 2013. This overview has been prepared by management and should be read in conjunction with the audited financial state-ments and the notes that follow this section.

The University of Dayton is a private Roman Catholic national research university in Dayton, Ohio. Founded in 1850 by the Society of Mary (the Marianists), it is one of three Marianist universities in the nation and the largest private university in Ohio. The university’s campus spans 388 acres in Dayton and occupies a building at the University of Dayton China Institute in Suzhou Industrial Park, China. The University has approximately 7,500 full time undergraduates, 2,500 graduate students and 500 part time students with a wide variety of backgrounds, drawn from across the United States and over 40 countries. The university offers more than 70 academic programs in arts and sciences, business administration, education and health sciences, engineering and law.

Financial Highlights

The University continued to produce strong financial results from operations, generating over $47 million of op-erating surplus compared to $42 million in the previous year. Cash flows were also strong for the year with $60.1 million provided from operating activities compared to $44.6 in 2013. These results were attributed primarily to increased enrollment, increases in private gifts and grants, and partially offset by decreases in government grants and contracts.

Total assets increased by 8.2% from $1.4 billion to $1.5 billion while liabilities decreased to $548 million com-pared to $564 million in 2013. Total net assets grew by 15.9% or $126 million due to strong operations and posi-tive financial market conditions. Significant financial events during fiscal year 2014 were:

• Total enrollment was 10,857. The number of full-time undergrad students from outside Ohio increased to 51.8% from 49.1% in the previous year. International students comprised 9.3% of the undergraduates com-pared to 6.5% in fiscal year 2013, a 43% increase.

• Investments increased by $88.5 million (+13.8%) to a total of $731.4 million. The endowment, which is the largest component of investments, increased by $67.6 million (+15.0%) to a balance of $518.2 million. The primary cause of the endowment increase was due to investment gains of $58.4 million; gifts and other addi-tions of $15.6 million and investment income of $7.7 million. The annual endowment spending draw of $14.2 million partially offset these increases.

• For fiscal year 2014, the University increased salary wage pools by an average of 2.75% but was able to limit total wage expense growth to 1.1% or $168.3 million as full-time employment remained level. Benefit expenses decreased $1.6 million (-2.7%) to a total of $58.8 million. Savings were experienced in many of the major staff benefit categories with health care costs being relatively flat after restructuring the overall plan.

• The University added $40.8 million in fixed assets during fiscal year 2014. Renovations to housing facili-ties, research labs, the University library and a major renovation of Raymond L. Fitz Hall for the School of Education and Health Services accounted for much of these additions.

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MANAGEMENT’SDISCUSSION AND ANALYSIS(continued)

• In 2012, the University and certain affiliated entities entered into a new market tax credit financing transac-tion to finance a portion of the new office and research facility in the amount of a $27.3 million term note with a bank. In addition, the University has a loan payable from its affiliate to other unrelated entities in the amount of $36 million. Under the terms of these loan agreements, principal payments will not begin until 2017. The principal amounts of these notes and loans remained the same at the end of fiscal year 2013 and 2014.

Consolidated Statements of Financial Position

• Total assets grew by 8.2% or $110.5 million primarily from increases in investments of $88.5 million and an $18.3 million increase in net fixed assets.

• Total liabilities decreased by $15.6 million due primarily to bond principal payments of $12.2 million. The accrued postretirement obligation increased by $4.7 million and other liabilities decreased by approximately $7.1 million.

• Total unrestricted net assets grew by $100.7 million compared to $91.1 million in 2013. This was the result of unrealized investment gains, strong operating results, changes in post-retirement benefit obligations and changes in unrealized losses on interest rate swap agreements. The 2014 investment gains were $52.8 million compared to $31.7 million in 2013.

• Restricted and temporarily restricted net assets increased by $25.4 million due to new gifts and investment return compared to an increase of $5.5 million in 2013.

Consolidated Statements of Activities

• Total net assets increased by $126.1 million in fiscal year 2014 compared to an increase of $96.6 million in fiscal 2013. The university recognized a total net asset change of $103.4 million from investments in 2014 compared to $68.1 in 2013. As previously discussed, the University recognized actuarial losses of $2.6 million relating to discount rate assumption changes for its post-retirement benefits, compared to actuarial gains of $8.8 million in 2013. Also, the liability value of interest rate swaps improved by $0.5 million compared to a gain of $6.4 million in the prior year. The 2013 change in total net assets was reduced by a loss on the defease-ment of bonds in the amount of $2.2 million.

• Private gifts and grants increased to $58.1 million from $49.6 million in fiscal year 2014. This increase was due to increased gift receipts of $4.1 million and to rental income receipts of $3.7 million from the office and research facility which opened in August 2013.

• Government grants and contracts decreased by $3.4 million (-4.4%) to a total of $73.9 million. This was due to the effects of the government furloughs and sequestration early in the fiscal year tempered by growth in academic research of $1.9 million.

• While operating revenues increased by 2.3%, operating expenditures increased by 1.3%. The growth in expen-ditures is due to increases in depreciation expense and interest expense from the new buildings and ongoing renovations. All other expenditures remained flat.

Consolidated Statements of Cash Flows

• Cash increased by $11.1 million in fiscal year 2014 due primarily to strong operating cash flows, decreases in accounts receivable, decreases in accounts payable, and decreases in short term debt.

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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(In Thousands)

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CONSOLIDATED STATEMENTOF ACTIVITIESYear Ended June 30, 2014 (In Thousands)

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CONSOLIDATED STATEMENT OF ACTIVITIESYear Ended June 30, 2013 (In Thousands)

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CONSOLIDATED STATEMENT OF CASH FLOWS(In Thousands)

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NOTES TO CONSOLIDATED FI-NANCIAL STATEMENTS(All Dollar Amounts In Thousands)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)(All Dollar Amounts In Thousands)

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MEMBERS OF THE BOARD2014 – 2015

CHAIRMAN OF THE BOARDSteven D. CobbChairman and CEOHenny Penny CorporationEaton, Ohio VICE CHAIR Rev. Martin A. Solma, S.M. ProvincialMarianist Province of the United StatesSt. Louis, Missouri SECRETARY OF THE BOARDDaniel J. Curran, Ph.D.PresidentUniversity of Dayton Dayton, Ohio Mary H. Boosalis Executive Vice President and Chief Operating OfficerPremier Health PartnersDayton, Ohio Thomas G. Brietenbach Chief Executive Officer (Retired)Premier Health PartnersDayton, Ohio Bro. Edward M. Brink, S.M. Assistant for EducationMarianist Province of the United StatesSt. Louis, Missouri Kevin Crotty Executive Vice President and Chief Operating Officer (Retired)Van Dyne CrottyDayton, Ohio

Rev. James F. Fitz, S.M.Vice President for Mission and RectorUniversity of DaytonDayton, Ohio

John M. Forte PresidentForte PropertiesCoral Gables, Florida Bro. Thomas F. Giardino, S.M. Executive DirectorAssociation of Marianist UniversitiesUniversity of DaytonDayton, OH George Hanley President Hanley Capital Chicago, Illinois Larry Harris Partner, Fox Rothschild, LLPWashington, DC Joseph Hinrichs Executive Vice President of the AmericasFord Motor CompanyDearborn, Michigan Thomas A. Holton, Esq. Counsel to the FirmPorter, Wright, Morris & Arthur, LLCDayton, OH Bro. Joseph H. Kamis, S.M. Assistant ProvincialMarianist Province of the United StatesSt. Louis, Missouri Anne Eiting Klamar, MD President and CEOMidmark CorporationDayton, Ohio Kevin Maloney President Maloney and AssociatesBethesda, Maryland

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D. Darlene Marlowe OwnerD & G ManagementDayton, Ohio Dennis Marx, CPA/PFS PrincipalJMG Financial Group, Ltd.Oak Brook, Illinois Richard J. Omlor Executive Advisor (Former President and CEO)YSI, Inc.Yellow Springs, Ohio Bro. Bernard J. Ploeger, S.M., Ph.D. PresidentChaminade UniversityHonolulu, Hawaii Michael Ruffolo Executive ChairmanEdgeware ABStockholm, Sweden Kurtis P. Sanford President and Chief Executive OfficerProQuest, LLCAnn Arbor, Michigan Mary Jo Scalzo, Ph.D. Superintendent, (Retired) Oakwood City SchoolsSpringboro, Ohio

Lynton ScotlandVice President for Energy ServicesSustainable StarFairfax, Virginia Joseph SpadafordEVP & Chief Operations Strategy Officer ComputershareJersey City, New Jersey Thomas Swidarski Former PresidentDiebold CorporationHudson, OH Rev. Rudy A. Vela, S.M., D.Min. Vice President for Mission and RectorSt. Mary’s UniversitySan Antonio, Texas Ty J. Williams Senior Vice PresidentFifth Third BankNew York, New York Lawrence Woerner Global Head of Regions, (Retired)Mercer, Inc.Miami, Florida David Yeager Chairman and CEOHub GroupOakbrook, IL

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Daniel J. Curran, Ph.D. president

Paul H. Benson, Ph.D. interim provost

Thomas E. Burkhardt vice president for finance and administrative services

Joyce M. Carter vice president for human resources

William M. Fischer, J.D. vice president for student development

Rev. James F. Fitz, S.M. vice president for mission and rector

Beth H. Keyes vice president for facilities

Sundar Kumarasamy vice president for enrollment management

John E. Leland, Ph.D. interim vice president for research and executive director of the research institute

David L. Harper vice president for university advancement

Timothy J. Wabler vice president and director of athletics

Angela K. Buechele controller

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