S.07-102
For Information
SIMON FRAS
THINKING -
OF THE
.
UNIVERSITY
WORLD
TO: ?
Senate
FROM: ?
Alison Watt
Director, University Secretariat
DATE: ?
August 29, 2007
SUBJECT:
SFU Financial Statements - March 31, 2007
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Section 32 of the University Act states: "The board must make an annual report of its
transactions to the minister, in which it must set out a balance sheet and a statement of revenue
and expenditure for the year ending on the preceding March 31, and other particulars the minister
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may require. A copy of the annual report shall be transmitted promptly to the senate."
This document is forwarded to Senate for information.
NOTE:
IF YOU DO NOT WISH TO KEEP A COPY OF THE SFU FINANCIAL STATEMENTS,
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PLEASE RETURN IT TO?
BOBBIE GRANT, SENATE & ACADEMIC SERVICES, STUDENT SERVICES
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ADDITIONAL RESOURCES AVAILABLE ONLINE
www.sfu .ca/fina
nce/accou nts
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FINANCIAL STATEMENTS
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5n,vn F,or Uniorty I Fiscal y,a, ,ndd March 31, 2007
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STATEMENT OF MANAGEMENT RESPONSIBILITY ...........................
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REPORT OF THE VICE-PRESIDENT, FINANCE & ADMINISTRATION
........... 03
FINANCIAL HIGHLIGHTS
..................................................
05
REPORT OF THE AUDITOR
.................................................
AUDITED STATEMENTS
Statement of Financial Position .....................
.......................
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Statement of Operations and Changes in Operating Net Assets ..............
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Statement of Changes in Net Assets ...........................
..........
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Statement of Cash Flows ........ .......................................
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NOTES TO THE FINANCIAL STATEMENTS
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Authority and .....................
Purpose.
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....... ....
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2 ?
Summary of Significant Accounting Policies and Reporting Practices
a ?
Accounting ?
Method ?
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..............................
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b ?
Related
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Entities ?
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....................................................
15
C ?
Revenue
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Recognition
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.....................................................
15
d
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Property and ?
Equipment ?
..................................................
15
e ?
Debt Discount and Issue Costs
.................................... ?
16
f
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Investments
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...........................................................
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Inventories
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............................................................
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Use of Estimates. ?
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...........................
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Cash and Short Term Investments .....
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16
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Investments.
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Property and Equipment ?
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Long Term
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Debt ? ....................................................
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Employee Future Benefits ?
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Deferred Contributions ?
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Deferred Lease Proceeds / Entities accounted for by the equity method
a ?
Equity in SFU Community Trust ?
............................................
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b
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SFU Community Trust— Financial Summary .......
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10
Internally Restricted for Specific Commitments .......................
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Endowment
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.......................................................
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12
Pension ?
Plans ?
......................................................
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13
Financial
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Instruments ................................... ?
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14
Pledges ..........................
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15
Contingencies.
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.................................................
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Canadian University Reciprocal Insurance Exchange....................
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Related Entities that are not consolidated
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TRIUMF
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b
WC5MBS ?
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SFU COMMUNITY CORPORATION
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d
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SF UNIVENTURE5 CORPORATION
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BOARD OF GOVERNORS
..................................................
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01
Back row left to right
Daniel U. Pekarsky
ORDER-IN-COUNCIL
PRESIDENT. CORPORATE ADVISORY GROUP
Titus Gregory
STUDENT MEMBER
Barry G. Macdonald
ORDER-IN-COUNCIL
PARTNER, PRICEWATERHOUSECOOPERS, LLP
Judy Zaichkowsky
FACULTY MEMBER
PROFESSOR OF MARKETING,
FACULTY OF BUSINESS ADMINISTRATION
Nancy McKinstry
ORDER-IN-COUNCIL
CHAIR (February 2007-present)
FOUNDING MEMBER, MINERVA FOUNDATION
.
Brandt C. Louie
CHANCELLOR
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
H.Y. LOUIE CO., LTD.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
LONDON DRUGS LTD.
Saida Rasul
ORDER-IN-COUNCIL
CHAIR (SeFtereber 2005- February 2007)
H. Michael Stevenson
PRESIDENT AND VICE-CHANCELLOR
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Board of Governors
Board members not present
Paulette Johnston
STAFF MEMBER
PROGRAM MANAGER,
FACULTY OF ARTS AND SOCIAL SCIENCES,
CO-OPERATIVE EDUCATION PROGRAM
Robert Elton
ORDER-IN-COUNCIL
PRESIDENT AND CHIEF EXECUTIVE OFFICER,
BC HYDRO
Paul Percival
FACULTY MEMBER
PROFESSOR OF CHEMISTRY,
SIMON FRASER UNIVERSITY AND TRIUMF
Jeanette McPhee
ALUMNI ORDER-IN-COUNCIL
CHIEF FINANCIAL OFFICER,
LAW SOCIETY OF BRITISH COLUMBIA
Michael Francis
ORDER-IN-COUNCIL
DEPUTY CHAIR (February 1007-present)
PRESIDENT, SEED MANAGEMENT INC
Derrick Harder
STUDENT MEMBER
Pauline Rafferty
ALUMNI ORDER-IN-COUNCIL
CHIEF EXECUTIVE OFFICER,
ROYAL BRITISH COLUMBIA MUSEUM
The University is responsible for the preparation of the
financial statements and has prepared them in accordance
with Canadian generally accepted accounting principles.
The financial statements present fairly the financial position
of the University as at March 31, 2007 and the results of its
operations and its cash flows for the year then ended.
In fulfilling its responsibilities and recognizing the limits
inherent in all systems, the University has developed and
maintains a system of internal control designed to
provide reasonable assurance that University assets are
safeguarded from loss and that the accounting records are
a reliable basis for the preparation of financial statements.
The Board of Governors carries out its responsibility
for review of the financial statements and oversight of
management's performance of its financial reporting
responsibilities principally through its Audit Committee.
Members of the Audit Committee are not officers or
employees of the University. The Audit Committee meets
with Management, the internal auditor and the external
auditors to discuss the results of audit examinations and
financial reporting matters. The external auditors have
full access to the Audit Committee, with and without the
presence of Management.
The financial statements for the year ended March 31, 2007
have been reported on by BDO Dunwoody LLP, Chartered
Accountants. The Auditors' Report outlines the scope of
their examination and provides their opinion on the fairness
of presentation of the information in the statements.
Dr. Michael Stevenson
PRESIDENT
Pat Hibbitts
VICE-PRESIDENT, FINANCE & ADMINISTRATION
MAY 16, 2007
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STATEMENT OF MANAGEMENT RESPONSIBILITY
Simon Frr Uni rsity I Fiscal year ended March 31 2007
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The provincial government of British Columbia has
invested in undergraduate education as a high priority,
with a program to fund 25,000 additional seats in post-
secondary institutions. This program has been introduced
in association with a concurrent decline in the population
graduating from grade 12. Together, these conditions have
ushered in a new era of more open accessibility to B.C.
universities, intensifying the competition for top students.
SFU has responded with emphasis on student recruitment
and retention, as well as revitalization of the undergraduate
student experience.
Research is critical to the overall success of a
comprehensive university, both for new discoveries and
to attract the best professors and graduate students.
Funding from Canada, British Columbia and others drives
research as our fastest area of growth - with an increase
of $7 million this year and 56% over the last five years.
Administrative support to comply with detailed funding
agency requirements is challenging.
Graduate student enrolment has grown in response
to the increased scale of research activity, and increased
demand for post-graduate qualifications in the expanding
knowledge economy. Fortunately, formula funding in
B.C. will again finance growth in graduate enrolment
over the next four years, following a long freeze on such
funding in the province. Growth in enrolment and research
activity has necessitated significant expansion of facilities.
New academic infrastructure has included the first new
Technology and Science complex on Burnaby Mountain,
the Segal Graduate School of Business in our Vancouver
campus and the new Surrey Campus, all officially opened
in our 40th anniversary year. This year, additions to campus
infrastructure included the opening of a new gymnasium
and fitness centre, newly surfaced and lit athletic fields, and
the second Technology and Science complex on the hill.
Construction of other major facilities is proceeding.
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Investment and growth in the higher education system in British Columbia
and in Canada has continued over the past year. The province has invested
in undergraduate enrolment growth, research and capital projects, while the
federal government has continued large investments in the research agenda.
There is much to celebrate; however, progress brings its own challenges. SFU
has had to rise to these challenges over the past year.
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13. Financial
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Instruments
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17. Re ated Entities that are not consolidated
Despite the significant improvements associated with
these capital projects, we continue to face construction
cost inflationary pressures that cannot entirely be handled
by changes to the planned scope of the projects. Internally
Restricted Net Assets have had to be redirected to support
capital projects. Further, these new capital projects entail
additional operating costs not covered by formula funding.
The inevitable result is to resort to operating budget
reductions elsewhere in the university to finance these
infrastructure costs.
Faculty and staff are critical to the success of the
University and represent our largest operating expense.
Four-year public sector compensation agreements, with
corresponding funding provided for the first time to
universities, provide a welcome period of stability and
predictability. However, there remain significant challenges
in attracting the best personnel with constrained
remuneration in a highly competitive employment market
and with strong inflationary pressures on benefit programs.
ARCHITECTURAL DETAIL SURREY CAMPUS
Despite a sustained period of improvements in
government funding based on Full Time Equivalent
growth, the current arrangements create some systemic
financial issues for the university. Inflation in non-salary
expenses is not funded by government and the limiting
of tuition increases to 2% results in ongoing program and
operational reductions to cope with non-salary inflation.
Faculty and staff salary progression, critical to attract
and retain top-notch employees, is not recognized in the
government funding formula. Further, provincial funding
does not adequately recognize construction inflation or
operating costs of new buildings, and it does not recognize
the full extent of capital depreciation and expense of
maintaining buildings of 30 to 40 years old. Even in a
young university, these latter problems are becoming a
serious issue.
One indicator of the support of our communities, alumni
and reputation is our success in fund raising. In 2007, we
exceeded the goal of our six year Reaching New Heights
campaign by raising in excess of $130 million. These
funds are critical to the development of new facilities,
the funding of new academic chairs, professorships and
research programs, and the expansion of student financial
assistance through the Endowment Fund.
As a whole, we are pleased with the support we have
received to realize the University's mandate and look
forward to further success as we work with our funding
agencies and stakeholders to realize the full potential of
this great institution. Following are financial highlights of
the past fiscal year.
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Pat Hibbitts
VICE-PRESIDENT, FINANCE & ADMINISTRATION
The University's financial instruments consist of cash and short term
investments, accounts receivable, investments, accounts payable and
accrued liabilities and long term debt. It is management's opinion that
the University is not exposed to significant interest, currency or credit risk
arising from these financial instruments. The carrying values of accounts
receivable, accounts payable and accrued liabilities approximate their fair
value due to the relatively short periods to maturity of the instruments. The
fair value of long-term debt approximates the carrying value due to the
nature of the existing terms.
On April 1, 2007 the University will be adopting new standards
prescribed by the CICA collectively known as the "New Financial
Instrument Standards". The adoption of the new standards may result in a
retroactive adjustment to the balances of net assets reported at March 31,
2007. The amount of the adjustment to net assets, if any, is not reasonably
determinable at this time.
14. Pledges
Pledges made by donors to the University for donations to be received
in future years are estimated at $39,313,000 (2006: $26,419,000). Pledges
are not recorded in the financial statements until the related donations are
received by the University.
15.
Contingencies
Simon Fraser University is the defendant to several unresolved statements
of claims. It is expected that the ultimate outcome of these claims will
not have a material effect on the financial position of the University. The
majority of these claims are covered by the University's insurance coverage.
Any University payouts that may result from these claims will be recorded in
the period when it becomes likely and determinable.
16.
Canadian University Reciprocal Insurance Exchange
The University is a member in a self-insurance co-operative in association
with other Canadian universities to provide property and general liability
insurance coverage. Under this arrangement referred to as the Canadian
University Reciprocal Insurance Exchange (CURIE), the University is
required to share in any net losses experienced by CURIE. The University is
committed to this insurance arrangement until December 31, 2012.
TRIUMF
Simon Fraser University is a member with five other universities in a joint
venture called the Tr-Universities Meson Facility (TRIUMF) on the University
of British Columbia (UBC) campus. Canada's National Laboratory for
research in Particle Physics, TRIUMF is not incorporated and each University
has an undivided 1/6 interest in its assets, liabilities and obligations, except
for the land and buildings it
occupies, which are owned by UBC. The
facility and its operations are funded by federal government grants and the
University makes no direct financial contribution.
Financial Position
(Dollars in thousands)
?
2007 ?
2006
Total assets
8,660 ?
6,059
^es
?
5298
3
,
766
Fund Balances, restricted
-
2,
608
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2
,
169
other
- ?
754
8,660
?
6,059
Results of Operation
Revenue ?
60,599
?
58,197
Expenses ?
59,530
?
58.356
Excess (deficiency)
of Revenue over Expenses
?
1,069
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(159)
WCUMBS
SFU is one of five University members of the Western Canadian Universities
Marine Biological Society (WCUMBS), which operates a research station
at Bamfield, British Columbia. The Society is a not-for-profit organization
incorporated under the Society Act of British Columbia. SFU's operating
grant to the Society was $281,775 (2006: $359,000), recorded as an
expenditure. SFU has no expectation of monetary gain from this venture.
SFU COMMUNITY CORPORATION
The University owns the outstanding shares of SFU Community Corporation,
which has no business operations and exists solely to act as trustee of SFU
Community Trust, described in Notes 2 and 9.
SF UNIVENTURES CORPORATION
The University owns 100% of the shares of SF Univentures Corporation
(SFUV), established to promote technology transfer to the private sector.
SFUV's consolidated assets are not considered material and are not included
in these financial statements.
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11. Endowment ?
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Endowment consists of restricted donations to the University. Investment
income generated from endowments must be used in accordance with the
various purposes established by the donors or the Board of Governors.
Donors as well as University policy stipulate that the economic value of the
endowments must be protected by limiting the amount of income that may
be expended, and reinvesting unepended income.
(Dollars in thonsands)
2007
2006
Balance, beginning of year
132,979
116,050
Donations
4,956
7,767
Capitalized income and other transfers
Capitalized investment income
3,892
3,747
Equity income, SFU Community Trust (Note 9a)
216
189
Capitalized ¼ share of GNWCT endowment
from the provincial government
4,250
-
Deferred investment income capitalized under
- Burnaby Mountain Matching program
851
2,961
Deferred contributions capitalized pursuant to donor
definition of terms and other endowment fundraising
523
2,265
Balance, end of year
147,667
132,979
Income from the University's beneficial interest in SFU Community Trust
was recognized as a direct increase in net assets held as endowment
principal. Note 9 describes the Trust's sale of 99 year leases that result in
recognition of "deferred lease proceeds" which are amortized to income
over the remaining term of the leases. Funds realized from the Trust are
invested to generate income for the benefit of the endowment.
12. Pension Plans
The assets and liabilities of pension plans are not reflected in the
University's financial statements.
ACADEMIC PENSION PLAN
The University Pension Plan for Academic Staff generally provides benefits
on a money purchase basis, but includes an option to members who were
in the plan on March 20, 1973 to choose benefits based on years of service,
and the average of the highest sixty (60) consecutive months' salary.
All contributions to the plan are by the employer. Contributions by the
University for the calendar year 2006 were $8,853,000 (2005: $8,148,000).
An amendment to the plan in 1981 and a letter of agreement between
the University and the Faculty Association in 1990 addressed the funding
and the distribution of the formula retirement benefit account.
felatest
actuarial valuation for this group as at December 31, 2003 shows an
actuarial liability of $17,380,000 against the actuarial value of assets of
$16,979,000 resulting in an unfunded liability of $401,000. The University
started contributions of $56,400 per year in 2005/2006 towards the
unfunded liability. The valuation is based on the 1994 Uninsured Pensioners
Mortality Table, using an investment rate of return of 6.5% and price
inflation of 3%.
ADMINISTRATIVE/UNION PENSION PLAN
The University Pension Plan for the Administrative/Union Staff provides
benefits based on years of service and the average of the highest sixty (60)
consecutive months' salary. Pensions are indexed to CPI up to a maximum
of 3% per annum. Under the Pension Plan:
The University's contribution is based on the amounts estimated by
the Actuary and recommended by the Administrative/Union Pension Plan
Trustees to the Board of Governors of the University. The University shall
contribute to the fund such amounts as the Board of Governors
determines are required to fund the retirement benefits. All contributions
to the plan are by the employer.
The latest actuarial valuation as at December 31, 2004 showed an
actuarial liability of $146,772,000 against market value assets of
$148,825,000, resulting in a surplus of $2,048,000. This surplus is not
available to the University as the University shall not suspend or reduce
its contribution to the pension fund without the prior approval of the
employee organizations. Pursuant to an agreement between the
University and the employee organizations, the portion of the surplus in
excess of 15% of the defined-benefit portion of the above liabilities with
assets taken at market values would be distributed to members. The next
valuation will be at December 31, 2007.
The employer contribution rate is 12.34%, as indicated by the 2004
actuarial valuation. Employer contributions for calendar year 2006 were
$9,202,000 (2005: $8,467,000).
The valuation is based on the 1994 Uninsured Pensioner Mortality Table
projected to 2015 using mortality projection scale AA; an investment
rate of return of 6.25%; and an inflation rate of 2.25%.
PENSION PLAN FOR CERTAIN MEMBERS
This plan covers four members who contributed to the Teachers Insurance
and Annuity Association and College Retirement Equities fund in 1971,
and have chosen to remain in the defined contribution plan. University
contributions in calendar year 2006 were $35,700 (2005: $37,400).
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DEFERRED
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LEASE PROCEEDS
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EQUITY IN TRUST
10. Internally
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Restricted for Specific Commitments
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o
The University's interest in-the net assets of the Trust and allocations
received in advance of income recognition (in relation to terms of
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FINANCIAL HIGHLIGHTS
underlying leases) represents the University's interest in the Trust
2007 ?
2006
operations, described as "Deferred lease proceeds"
on the Statement of
General Operating ?
.
SinonFrerUniverity I FiceIyerendedMch31,2OO7
Financial Position
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It amounts to $16,710,000 (2006 $14,665,000).
Operating budget carryovers
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15,334
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25,3
-
90
Auxiliaries and special projects
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4,195
?
11,349
I ?
Deferred lease proceeds
Research and other grants
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- ?
14,765 ?
17000
(Dollars inthousands)
007
2006
Total General Operating
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?
. ?
.
53,739
".
TOTAL REVENUE, ALL FUNDS
TOTAL EXPENSES, ALL FUNDS
Trust Balance beginning ofyear
Ancillaryenterprises ?
(1116) ?
1 636
The University's total revenue surpassed
the half billion
Total expenses increased by $28M to $483M (figure 2)
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reported by the Trust
7,317
7,314
9147
mark with a total of $502M (figure 1).
Salaries and employee benefits expenses represent 60%
.
.
Property and Equipment ?
.
?
8,765
Adjustment of land value on transfer to Trust
. Specific Purpose ?
17,336 ?
14,342
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Of the $8M increase n government grant revenue, $4.1 M
of total expenses. The increase
i ?
n
i salaries from $233M to
not realized through
. ?
sales of
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leases
.
(3,658)
(3,882)
Long-term
. ?
. ?
lease
.
Commitment ?
16,250 ?
16,433
related to funding of wage settlements.
$243M n
i
?
2007 s
i
?
due to increased
i
staff numbers to serve
.
Deferred revenue on leases
(18,325)
(17,186)
Self insurance ?
. ?
706 ?
.86
increased student enrollment, increased research activity,
i.r.................................... .....................
.
.
.
and for salary increases agreed to with employee groups
..................interest
.
University's equity
?
n Trust
114.,666)
(13, 754)
Total Restricted for Specific Commitments ?
76,235
?
95,383
Revenue
Net income to University from Trust, per above
216
189
(Dollars in millions)
.
?
........
Trust Allocations to beneficiaries: Foundation
(960)
(1,100)
General Operating is composed of carryover funds for faculties and
FOR THE YEAR ENDED MARCH
3::
2007 ?
2006
____________________________
?
____________________________
University
departments under a policy that allows them to carry over unspent budget.
Sources
1
/
TOTAL REVENUE 2007 ?
2/TOTAL EXPENSES
2007
Deferred Lease Proceeds / University equity
It also includes unspent balances on specific projects and internally funded
Govt. Grants & Contracts
267
259
interest in Trust, end of year
(16,710)
(14,665)
research in progress.
Student Fees
134
130
(IN MILLIONS OF DOLLARS)
?
(IN MILLIONS OF DOLLARS)
The Ancillary Enterprises represents accumulated funds held for the
Sales of Goods & Services
39
37
SFU COMMUNITY TRUST, FINANCIAL SUMMARY
ongoing operations of ancillaries such as the Bookstore, Food Services,
Gifts, Grants & Contracts
27
20
Investment Income
20
20
Microcomputer Store, Residences, Parking and Document Solutions.
Amortization of Deferred Capital Contributions ?
9
9
Financial Position
Property and equipment represents funds that are restricted to capital
Miscellaneous Revenue
5
4
(Dollars in rho: sands)
2007
2006
projects Specific purpose represents funds from various sources that are
Total
502
47979
..
allocated internally to specific activities.
Total assets
15,99 6
15,635
Funds restricted for long term commitments are set aside to meet future
Total liabilities
8658
,
8
'
318
GOVTGRANIS
obligations:
L
igatons.
Trust balance, end of year
7,338
7,317
Expenses
(Dollars in millions)
•
Lease commitment funds provide for obligations entered into for the
2007 ?
2006
1
Results of Operations & Trust Balance
.
occupancy of the University
'
s Harbour Centre facility, which include lease
Sources
FOR THE YEAR ENDED MARCH 31:
Revenue
. : ........
..
.
..........
8433
4722
payments tenant loan payments and a contribution towards operating
Salaries
243
233
Ex penses
.
6,152
3,619
costs. Lease and tenant loan obligations include annual payments of
Employee Benefits
45
42
'°° ?
s
Net income for the year
2281
1,103
$1,140,000, which started in September 1988 increasing to $1,648,000
Supplies & Services
108
105
Trust
balance, beginning of year
7,317
7,314
over the term of the lease, and a termination payment of $8M upon the
Amortization of Property and Equipment
40
32
.
to
.....
beneficiaries
.
Allocation
?
g year
.. ?
.. ?
............... ?
...........................
.................................................
(2,260)
. ?
..-............
(1,100)
expiry of the lease in December 2017 or a discounted equivalent of that
Scholarships, Bursaries
24
23
Trust balance, end of year
7,338
7,317
amount at an earlier date.
Cost of Goods Sold
11
11
9_1
IE1O
•
Self-insurance funds are held to pay the self insured property and
Interest on Long Term Debt
7
8
Cash Flows
-
liability losses.
Total
478
400
Operating activities
8,375
(9071.
Investing activities
-
(5,691)
(3.982)
Financing activities
(1,032)
4,740
Decrease in cash during the year
11,6521
(149)
06
19
.
Changes in deferred contributions
SPONSORED
RESEARCH
(Dollars in thousands)
.
spEcipic
?
PROPERTY +
?
2007 ?
2006
PURPOSE ?
EQUIPMENT ?
TOTAL ?
TOTAL
.
experience, the maximum potential claim is not paid to all claimants. A
lesser amount is accrued for group self-insurance liability: $5,811,000
(2006: $5,520,000).
SPONSORED RESEARCH
As a comprehensive university, research is a major
component of SFU's mandate. In addition to internally
sponsored research, there is sponsored research funded
by external organizations (figures 3, 4).
CAPITAL ASSETS
Physical Infrastructure improvements continue at a robust
rate with $99M spent on land, buildings and leasehold
improvements and $40M on equipment, furniture and
library acquisitions (figure 5).
Capital projects completed in the year include the Surrey
Campus and the extension to the gymnasium. Projects
3/EXTERNAL RESEARCH REVENUE ?
4/SPONSORED RESEARCH REVENUE
(IN MILLIONS OF DOLLARS)
?
(IN MILLIONS OF DOLLARS)
CHEMISTRY STUDENTS IN THE LABORATORY WITH OR. ALICE HANLAN
18
EARLY RETIREMENT
Early retirement amount represents current and future pension payments
to employees that took early retirement in the mid 1980's and other
employees receiving supplementary pehsions. This liability is fully funded;
the actuarial liability at December 31, 2006 was $4,296,000. The actuarial
valuation completed on March 16, 2007 was based on the 1994 Uninsured
Pensioners Mortality table, a discount rate of 5% and an inflation rate of
2.25% per annum. Assets are internally designated to fund this liability.
NON-PENSION BENEFITS
The non-pension benefits amount represents portions of premiums payable
to current and future retirees for the Medical Services Plan, Extended
Health Benefits and Dental Benefits. The accrued benefit liability for non-
pension benefits is $24,455,000 (2006: $22,855,000) and at March 31, 2007
an amount of $9,481,000 has been internally designated to fund this liability.
An actuarial valuation was done at March 31, 2006 to reflect the changes
in staff and faculty and increase in premiums since the previous valuation of
$23,080,000 at March 31, 2003. The actuarial valuation shows an increase
of $9,166,000, which brings the total obligation to $32,246,000 at March
31, 2006. The increase of $9,166,000 will be amortized over the average
remaining service period of active employees. The average remaining
service period of active employees covered by the non-pension benefits as
of March 31, 2007 is 8 years.
The March 31, 2006 valuation is based on the RP2000 Mortality table.
Actuarial assumptions are a discount rate of 5%, price inflation at 2.5% per
annum, an extended Health benefit trend rate of inflation plus 6% trending
down by 0.5% per annum to 3.5%, a Dental trend rate of inflation plus 2%
and an MSP Premium trend rate of 2.5%. There are no contributions by
employees to this benefit. The next valuation will be March 31, 2009.
8. Deferred Contributions
Deferred contributions represent unspent resources externally restricted
for a particular purpose in a subsequent period. Under the deferral
method of accounting for contributions, restricted contributions related
to expenses of future periods are deferred and recognized as revenue in
the period in which the related expenses are incurred. The $324,676,000
of deferred contributions for property and equipment represents the
unamortized portion of restricted capital advances relating to assets
purchased with restricted contributions.
B alance, ? gbng
r of the year
33,294
13,370
276,366
323,030
289,7381
Add: Contributions
[received during the year
66,486
30,369
57,764
154,619
128,1
Less: Transferred to revenue
68,083
29,271
9,454
106,808
95,409
Balance, end of year
31,697
14,468
324,676
370,841
323,030
9. Deferred Lease Proceeds
I
Related Entities accounted for
by the equity method
SFU Community Trust is developing 78 acres of land on Burnaby Mountain
known as "UniverCity." The land was settled on the Trust by the University.
The Trust is a taxable business trust and must pay income taxes on any
taxable income that is not allocated to beneficiaries. The majority of
the development is being accomplished by the sale of 99 year leases to
developers who will develop residential housing.
SFU Community Trust has two beneficiaries, the University and Simon
Fraser University Foundation, whose beneficiary is also the University. The
Trust is not consolidated but is accounted for by the equity method.
SFU Community Corporation, wholly-owned by the University, has the
?
sole purpose of being Trustee of the Trust and has no business operations.
Audited financial statements of the Trust as at December 31st are
separately prepared. Information on the equity accounting in the University
and a financial summary of the Trust's activities are provided below.
EQUITY IN SFU COMMUNITY TRUST
The University recorded its equity accounted interest in the income of the
Trust as a direct increase in net assets held as endowment principal as
described in note 11. This amounted to $216,000 (2006: $189,000).
Net Income from Trust
(Dollars in thousands)
2007
2006
Net income as reported by the Trust
2,281
fl0
Adjustment of land value on transfer to Trust -
-
realized through sales of eases
460
224
1
2,741
1,327
Deferred to be amortized over terms of leases
(2,525)
(1,138)
Net income to University from Trust, recorded as
increase in net assets held as endowment principal
216
189
in progress at March 31, 2007 include Phase 2 of the
Technology and Applied Sciences Complex, the Arts and
Social Sciences Complex and the Health Sciences building.
This year's property development was financed from
Province of B.C. Deferred Capital Contribution ($58M),
the balance of proceeds of a previous debenture issue
($28M), Canada Foundation for Innovation (Federal and
Provincial) ($14M), allocations from research, and donated
funds. Ongoing campus development is dependent on the
provision of provincial funding, provincial authorization to
borrow, and community donations.
PHASE 2 OF THE TECHNOLOGY AND APPLIED SCIENCES COMPLEX, BURNABY CAMPUS
ENDOWMENT FUND
The Endowment Fund balance is growing as the result
of both community donations and proceeds from SFU
Community Trust's UniverCity project (figure 6).
ANCILLARY SERVICES
Ancillary services provide goods and services to the
University community.
Revenues are generated to cover operating expenses,
debt service payments and to provide reinvestment to
ensure long term financial viability.
Net Assets are designated as Internally Restricted For
Specific Commitments (figures 7, 8).
5/ PROPERTY AND EQUIPMENT ?
6/ENDOWMENT FUND BALANCE
(IN MILLIONS OF DOLLARS)
?
(IN MILLIONS OF DOLLARS)
46
03
EARLY
NON-PENSION
2007
2006
RETIREMENT
BENEFITS
TOTAL
TOTAL
22,8 55
33,122
93
-
1,099
1,099
993
251
1,624
2,166
2,4461
-
?
(413) (413)
211
4,998 ?
25,165
35,974 34,143
395 ?
710 1,105 1,021
4,603 ?
24,455 34,869 33,122
.
08
. ?
5.
Property
.
and Equipment
(Dollars in thousands)
Buildings
cosi
ACCUMULATED
AMORTIZATION
2007 ?
2006
NET ?
NET
conc rete
629,937
129,647
500,290 ?
415,1151
wood
22,486
10,094
12,392
?
12,626
Site Services
34,420
9,955
24,465
?
23j
Leasehold improvements
11,975
6,351
5,624 ?
6,067
gquipment
Equipment & furnishings
28,296
99,522
10,823
31,217
17,473 ?
19,309
68,305
?
58,470
books
Special collections
72
,
357
6,574
29, 3 57 ?
43,0 0 0
- ?
6,574 ?
6,549
IIII____ -
21,809
-21,809
1768
Total Capital Assets
927,376
227,444
699,932 ?
600,693
Space in the Central City complex for the Surrey campus is included in
buildings. The 429 acres of land in Burnaby is recorded in the financial
statements at its 1965 assessed value of $572,000. Of this land, 78 acres is
set aside for development by the SFU Community Trust.
As at March 31, 2007, the University had committed to contracts for the
construction and acquisition of buildings that involve future expenditures
of approximately $38M.
6. Long Term Debt
(Dollars in thousands)
2007
2006
Term Loan
[ygages
2,804
4,249
2,051
470021
4,509
3,j
Debentures
Senior unsecured
150,000
Province of BC unsecured
11,000
14,155
i nking F unds)
(4,604)
(7,6]
Current Portion
Total Long Term Debt
165,500
(7,345)
158,155
168,206
(8,796)
159,410
Demand loans are the University's
1/4
share of the Great Northern Way
Campus Trust (GNWCT) demand loan and revolving loan. These loans
bear interest at prime plus 0.65% and prime plus 0.75%. They have interest
only payments and the principal is due on demand. Pursuant to an interest
rate swap agreement, the interest on $2.5M has been fixed at 5.47%
per annum. The debt is secured by a promissory note, general security
agreement and first charge over certain properties.
The term loan, secured by a bankers acceptance agreement, bears
interest at 4.45% and is due August 27, 2007.
Mortgages from Canada Mortgage and Housing Corporation are
secured by student residence buildings. They bear interest rates between
5.375% to 6.875% and mature between January 1, 2017 and July 1, 2019
with annual payments of $248,000 with principal and interest until maturity
Senior Unsecured Debentures issued by the University for $150M at
5.613% have semi-annual interest payments and mature June 10, 2043.
Net
proceeds of the issue were used to finance capital projects. The
debentures are neither obligations of, nor guaranteed by, the Province of
British Columbia.
Debentures issued to the Province of British Columbia pursuant to the
Financial Administrative Act, bear interest rates from 8.75% to 9.5%, and
mature between 2012 and 2022.
Annual payments for the next five years
(Dollars in thousands, including principal and interest due)
2008 ?
2009 ?
2010 ?
2011 ?
2012
17,249 ?
9,849 ?
9,849
?
9,849
?
9,707
7. Employee Future Benefits
GROUP
(Dollars in thousands)
INSURANCE
pengBance
5,520
Current Costs
-
[ierest on benefit obligation
291
Adjustment and Amortization
o Net Actuarial Loss
-
5,811
Disbursements
-
Balance, end of year ?
5,811
GROUP INSURANCE
Group insurance is the estimated liability for claims arising from the
University's self-insured long-term disability plans. Manulife administers the
plans and is reimbursed for disability claims payments plus a service fee;
recorded as employee benefits expense as incurred. Manulife advises that
the gross amount to pay all current claimants to the end of their maximum
entitlements is $9,989,000 (2006: $6,557,000). Based on historical
f
0
Z
>
2
Z
-4
17
THE SIX ANCILLARY SERVICES ARE:
•SFU Bookstores in Burnaby, Harbour Centre and Surrey.
• Residences have capacity for 1,850 students and 14 hotel
rooms. Older residences will be renovated.
• Food services are provided through a contractor
at seven locations on the Burnaby campus.
• Parking operates all parking lots and repays debt on the
parkade. The U-Pass program is a key initiative to control
demand from limited parking space.
• Document Solutions provides both digital and
lithographic printing.
• The Microcomputer Store in the Cornerstone building ?
sells computers and supplies to the SFU community.
7 / ANCILLARIES GROSS REVENUE ?
8 / ANCILLARIES NET ASSETS
IN MILLIONS OF DOLLARS)
?
(IN MILLIONS OF DOLLARS)
11-L71
26 1
281
06 07
ACADEMIC QUADRANGLE, BURNARY CAMPUS
T2222
Estimated useful life
(Time in years)
Site services
rBIdfl9
concrete
La
Library books
[
Equipment and furnishings
Computing equipment
------------
L L
e a se h
d improvements -
No amortization is taken on land, works of art and collections, which
include that portion of library assets considered to have permanent value,
as they are considered to have an unlimited useful life.
DEBT DISCOUNT AND ISSUE COSTS
Debt discount and costs related to debt issues are capitalized and
amortized over the life of the debt.
INVESTMENTS
Short term investments are recorded at the lower of cost or market value.
Long term investments, in marketable securities, are carried at cost
or, when donated, at their fair market value at the date of the ownership
transfer to the University. When there has been a decline in the value of
an investment that is not considered temporary, the investment is written
down to net realizable value. Gains and losses on sales of investments are
recognized in the year of disposal and are included in investment income.
INVENTORIES
Inventories of supplies kept at Central Stores are recorded at cost.
Inventories of merchandise held for resale in the Bookstore and the
Microcomputer Store are recorded at the lower of acquisition cost and net
realizable value.
USE OF ESTIMATES
The preparation of financial statements in accordance with Canadian
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, and revenue and
expenses during the reporting period. Significant areas requiring the use
of management estimates include the impairment of assets, provision for
doubtful accounts, amortization period for property and equipment, and
actuarial assumptions for employee future benefits and pension plans.
Actual results could differ from management's best estimates as additional
information becomes available in the future.
3. Cash and Short Term Investments
Cash and short term investments includes demand deposits in Canadian
financial institutions and investments maturing in less than one year. Short
term investments are recorded at market value.
4. Investments
Long Term Investments
2007
2006
(Dollars in thousands)
cosT
MARKET
COST
MARKET
Bonds and debentures
125,880
127,621
125,10 0
i2690
Canadian equities
89,601
118,066
78,562
109,664
Foreign equities
45,558
53,442
42,310
45,5691
Long term annuity
12,021
12,021
11,919
11,919
Long term
prom ssory note
8,922
8,922
-
Vancouver Foundation
5,305
7,734
5,305
7,432
D
onated hedge fund
1,966
1,966
2,000
Total Long Term Investments
289,253
329,772
265,196
303,492
The Vancouver Foundation holds a number of endowment funds for the
benefit of the University. These funds totalled $7,338,000 at March 31,
2007 and the portion of $5,305,000 belonging to the University is included
in the University's financial statements. In the fiscal year 2006/07 these
funds generated income of $470,000 (2006: $421,000) for the University to
be used for specific purposes.
Bonds and Debentures Analysis
2007
2006
(Do/lan in thousands)
COST
MARKET
COST
MARKET
SegregedAssets__
-
-
Government bonds
F -F-
ed-
er-
ai
22,766
22,965
26,833
-
26,9j
Provincial + municipal
22,351
23,243
19,432
20,196
45,117
46,208
46,265
47,117
Corporate debentures
19,869
20,079
17,913
18,017
[ub-total segregated ?
-
64,986
66,287
64,178
65,1341
Indexed Bond Fund
60,894
61,334
57,680
58,161
[Su -
total externafly managed
125,880
127,621
121,858
123,291
Internally managed Bonds
-
-
3,242
3,610
Total Bonds and Debentures
125,880
127,621
125,100
126,905
.
50
50
10
-
?
-----------
3
Term of Lease!
I
16
To the Members of the Board of Governors of Simon
Fraser University, and to the Minister of Advanced
Education, Province of British Columbia:
We have audited the Statement of Financial Position
of Simon Fraser University as at March 31, 2007 and the
Statements of Operations and Changes in Operating
Net Assets, Changes in Net Assets, and Cash Flows for
the year 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 audit.
We conducted our audit in accordance with Canadian
generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain,
reasonable assurance whether the financial statements are
free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in
all material aspects, the financial position of the University
as at March 31,
2001
and the results of its operations and
its cash flows for the year then ended in accordance with
Canadian generally accepted accounting principles.
BDO Dunwoody LLP
CHARTERED ACCOUNTANTS
VANCOUVER, BRITISH COLUMBIA
MAY 12, 2007
.
?
NOTES TO THE FINANCIAL
.
STATEMENTS
Simon Fraser University I Fiscal year ended March 31, 2007
0
?
1^ ]
I
0
Z
Z
>
Z
us
AUDITOR'S REPORT
BDO Donwoody LLP, Chartered Accountants, Vancouver, British CoIon,bi,
1. Authority and Purpose
Simon Fraser University is an agent of the Crown and operates under
the authority of the University Act, R.S. Chapter 468. The purpose of the
University is to conduct research and deliver a full range of undergraduate,
graduate and continuing studies programs. Simon Fraser University is a
not-for-profit entity governed by a Board of Governors, the majority of
which are appointed by the provincial government of British Columbia.
The academic governance of the University is vested in the Senate. The
University is a registered charity and is therefore exempt from income
taxes under section 149 of the Income Tax Act. The University receives a
significant portion of its revenues from the Province of British Columbia.
2. Summary of Significant Accounting Policies and
Reporting Practices
ACCOUNTING METHOD
The financial statements are prepared in accordance with Canadian
generally accepted accounting principles for not-for-profit organizations
on a non-fund basis, as the operations for the entire University have been
combined for reporting purposes. These principles are consistent with
those used in prior years.
The deferral method of accounting for contributions is used. Results are
reported in the operating fund, special purpose fund and capital fund.
Revenues and expenses are recorded on a gross and accrual basis.
RELATED ENTITIES
The University's 25% interest in the Great Northern Way Campus Trust is
recorded on a proportionate consolidation basis. Simon Fraser University
Foundation is consolidated in the accounts of the University. The SFU
Community Trust is recorded based on the equity method as described in
Note 9.
Details of other corporations and consortiums, in which the University
may have a significant interest, are contained in Note 17. These entities
are not consolidated in these financial statements as the net assets are not
contemplated to be, and are not, readily realizable by the University.
REVENUE RECOGNITION
Operating government grants not restricted in use are recognized when
received or receivable. Such grants, if contributed for a future period, are
deferred and reported as deferred contributions until that future period.
Other unrestricted revenue, including student fees and sales of goods
and services, are reported as revenue at the time the services or products
are provided. Unrestricted contributions are recognized as revenue when
received.
Externally restricted contributions - grants and donations - are
reported as revenue depending on the nature of restrictions on the use
of the funds by the contributors.
Contributions for specific purposes other than endowment or the
acquisition of property and equipment are recorded as deferred
contributions and recognized as revenue in the year related expenses
are incurred.
Contributions restricted for capital purposes are recorded as deferred
contributions until the amount is invested in property and equipment.
• If the property and equipment acquired is land or a special collection
item, the amount is recorded as a direct increase to net assets invested
in property and equipment.
• If the capital asset has a limited life, the amount invested is recorded
as deferred contributions for property and equipment and amortized
over the useful life of the asset to net assets invested in property and
equipment. Amortization of deferred contributions for property and
equipment is recorded on a straight-line basis over the estimated life
of the related assets and commences in the year following acquisition
or substantial completion of construction.
Endowment contributions, matching contributions and investment
income allocated for endowment capital preservation are recognized
as direct increases in net assets held for endowments in the period in
which they are received or earned.
Gifts-in-kind are recorded at fair market value on the date of their
donation or at nominal value when the fair market value can not be
reasonably determined.
PROPERTY AND EQUIPMENT
Property and equipment acquisitions are recorded on the statement of
financial position at cost. Donated assets are recorded at fair market value
at the date of acquisition. Amortization of property and equipment is
recorded on a straight line basis over the estimated life of the asset and
commences in the year following acquisition or substantial completion of
construction.
10 1 ?
1 15
(Dollars in thousands)
AS AT MARCH 31,
2007
?
Notes
?
2007
?
2006
Assets
Current Assets:
Cash and short-term investments
3
-
?
40,718
73,305
Accounts receivable
14,811
31.050
Inventories
2,050
1,973
Prepaid expenses
3.484
3,540
61,063
109,868
Investments
-
?
-
?
4
289,253
?
-
265,196 -
Property and Equipment
5
699.932
600,693
Unamortized debt discount and issue costs
-
?
-
?
-
?
-
10,199
10,497
Its
98J
Liabilities and Net Assets
Current Liabilities:
Accounts payable and accrued liabilities
43,874
56,868
Current portion of long term debt
6
7,345
8,796
51,219
65,664
Employee future benefits
7
34.869
33,122
Long-termdebt
-
?
-
?
-
6
158,155
-
159,410
Deferred contributions
8
-
- ?
-
?
-
46,165
- ? -
46,664
-
Deferred contributions for property and equipment ?
-
8
324,676
276,366
Deferred lease proceeds
9
16,710
14,665
631,794
595,891
Net Assets:
Operating
(20,413)
(20,331)
Internally Restricted for specific commitments
10
76,235
95,383
Invested in Property and Equipment
225,164
182,332
280,986
257,384
Endowment
11
147,667
132,979
428,653
390,363
2007
?
2006
23,602
?
23,522
p
(9,454)
(9,208)
39,873
31,758
298
288
1,747
2,629
56,066
48,989
r
1 ?
STATEMENT OF FINANCI POSITION
Simon Fraser University
2006/07
0
?
STATEM T OF CASH FLOWS
Simon Fraser Un ersity
2006/07
(Dollars in thousands)
YEAR ENDED MARCH 31,
2007:
Operating Activities
Net Revenue for the Year
Items not involving cash:
Amortization of deferred contributions for property and equipment
Amortization of property and equipment
Amortization of debt discount and issue costs
Employee future benefits
Changes in non-cash working capital balances
Accounts receivable ?
-
16,239
(14,124)
Inventories
(77)
(300)
Prepaid expenses
-
?
56
(111)
Accounts Payable and accrued liabilities
(12,994)
15,160
Deferred contributions
499
7,216
Cash Provided by Operating Activities
58,791
56,830
Investing Activities
Net increase in long term investments
(24,057)
(21,816)
Property and equipment purchased
(139112)
(137 891)
Endowment contributions
14,472
16,740
Distributions from SFU Community Trust
2,261
911
Cash Used in Investing Activities
(146,436)
(142,056)
Financing Activities
Deferred contributions for property and equipment
57,764
-
?
35,284
Long term debt proceeds
5,577
3,290
Debt principal repaid
(8,283)
(3,142)
Cash Provided by Financing Activities
55,058
35,432
Net Increase (Decrease) in Cash and Short Term Investments
(32,587)
(49,794)
Cash and Short Term Investments, beginning of year
73,305
123,099
-
The accompanying notes are an integral part of these financial statements.
?
2 ?
V$z
-
14
?
Approved:
?
I1cy cHAIR(76 OF GOVERNORS ?
P
Hibbitts VICE-PRESIDENT, FINANCE
&
ADMINISTRATION
?
-
STATEMENT OF OPERATIONSJD CHANGES
IN OPERATING NET ASSETS
Simon Fraser University 2006/07
(Dollars in thousands)
FOR THE YEAR ENDED MARCH
31, 2007:
2007
2006
Revenue
Government grants and contracts: ?
-
-
?
- -
Province of British Columbia
203,536
209,920
Government of Canada
62,017
46,916
Other governments
1.902
2.209
Student fees - Credit courses
118,330
113,604
Non-credit courses
6,894
7,984
Other
8,774
8,61
Gifts, grants and contracts
27,395
19,555
•
-
Sales ofgoods and-se rvices ?
-
?
--
-
?
-
?
38,048
36,949
Investment income
20,492
19,829
[Miscellaneousincorne
Amortization of deferred contributions for property and equipment
9,454
9,208
501,732
479,008
Expense
Salaries-Academic ?
--
---------------------------
92,721
?
-
'
?
87,978
Other instruction and research
- ? - ?
-
55,432
51,486
- ?
-
Support staff
94,481 - ?
- ?
-
93,972
Total salaries
242,634
233,436
Employee benefits
45,195
42,315
-
Travel and personnel expenses
?
-
?
--
?
--
?
-
15,540
1,745
Materials and supplies
?
- ?
--------------------------------
14,595
?
-
17,030,
Communications
1,579
1,468
1
Other operational expenses
?
-
?
-
?
-
?
--
-
? 2,15 ?
-
Amortization of property and equipment
39,873
31,758
Grants to other agencies ?
-
-
?
-
?
- --
?
--
?
4,695
-
?
- -
?
--
Utilities
?
-
?
--
-
?
-
61797
-
Renovations and alterations
-
?
-
12,313
--
9,751
Scholarships, bursaries and prizes
23,802
22,896
Contract services
8,226
7,276 -
Professional fees
16,703
14,613
Cost of goods sold
11,218
11,092
Interest on long-term debt
6,888
7.933
Amortization of bond discount and issue costs
298
288
Equipment rental and maintenance
4,620
3,992
478,130
455,486
IlilRe,eriaeif,fb'Je'ar
2'3&02
23'52-2I
Changes in Net Assets
?
-
Decrease (increase) in net assets restricted for specific commitments
-
?
-
-
?
-
?
-
?
19,148 -
?
-
?
-
?
-
?
-
-
?
-
?
(6,606)
Increase in investment in property and equipment
142,832>
(18,166)
Net change in operating net assets
1821
(1,439)
Operating net assets, beginning of year
(20,331)
(18.892)
(20T4J'3)
Z
4
3
3
4
12
•
-
?
STATEMENT OF
Simon
CHANGE
Fraser University 2006/07
NET ASSETS
f
0
(Dollars in thousands)
Internally Restricted for
Invested in
Restricted for
FOR THE YEAR ENDED MARCH
31. 2007:
?
General Operating ?
Specific Commitments
Property & Equipment
Endowment Principal
Total
Net Assets, beginning of year
?
(20,331) ?
95.383
182,332
132.979
390,363
Changes for the Year
Net Revenue for the Year
?
23,602
23,602
I"
Transfers
Decrease in restricted for specific commitments
?
19,148 ?
(19,148)
Increase in investment in property & equipment
? (42,832)
42,832
Endowment transactions ?
-
Contributions and other transfers
9,729
9,729
Capitalized investment income ?
-- ? -
--
?
4,743
-
-
?
- 4.743
SFU Community Trust equity income
216
216
....................
- -----
?
$2.35
-:
11'(6$5'7
General operating is represented by:
Employee Future benefits (Note 7)
Funded liability ?
19,896
Accrued liability ?
(34,869)
Unfunded portion ?
(14,973)
Vacation Pay, accrued but not funded
?
(5,440)
Operating Net Assets (deficit)
?
(20,413)
-
Invested in property & equipment is represented by:
Property & equipment less net debt financing
219,955
Net current assets less current liabilities
invested in capital fund
5,209
- -
Invested in Property and Equipment
225,164
13
