S
S.06-11O
FOR INFORMATION
SIMON FRASER UNIVERSITY
?
MEMORANDUM
TO:
?
Senate
FROM: ?
Alison Watt
Director, University Secretariat
DATE: ?
September 28, 2006 ?
•
SUBJECT:
Annual Financial Statements
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 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 ANNUAL FINANCIAL
?
STATEMENTS, PLEASE RETURN IT TO
?
BOBBIE GRANT, REGISTRAR'S OFFICE, STUDENT SERVICES
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THE DESIGN GROUP UNIVERSITY RELATIONS PRINTED BY DOCUMENT
4ONS
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-
?
- ?
-
?
- ? -
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in
WCUM BS
The University 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. The
University's operating grant to the Society was $359,000 (2005: $252,000)
and is recorded as an expenditure by the University. There is no
expectation of monetary gain to the University from this venture.
SFU COMMUNITY CORPORATION
The University owns all of the outstanding shares of SFU Community
Corporation. SFU Community Corporation has no business operations
and its sole purpose is to act as the trustee of SFU Community Trust as
described in Notes 2c. and 9.
SF UNIVENTURES CORPORATION
The University owns 100% of the shares of SF Univentures Corporation
(SFUV), which was established to promote technology transfer to the
private sector. The consolidated assets of SFUV are not considered to be
material and are not included in these financial statements.
201S ?
.
FINANCIAL STATEMENTS
Sfrnon ',,or Unreri,y I Fiscal yo,rnndod March 31, 2006
NOTES TO THE FINANCIAL STATEMENTS
1
Authority and Purpose ....... ?
.... ............... ?
.....................
13
2
Summary of Significant Accounting Policies and Reporting Practices
a
?
Accounting ? Method
..................................................... 13
b ?
Related Entities ? ........................................................
13
C
?
Revenue Recognition ?
----------------------------------------------------13
d ?
Capital Assets
?
---------------------------------------------------------13
a
?
Debt Discount and Issue Costs.
?
............................... ...........
?
.
.
14
Investments
?
-----------------------------------------------------------
14
g ?
Inventories ?
------------------------------------------------------------
14
Use of Estimates--------------------------------------------------------
14
3
Cash and Short Term Investments-------------------------------------
14
4
Investments---------------------------------------------------------
14
5
Capital Assets
a ?
Capital Asset Balances----------------------------------------------------15
b ?
Capital Expenditure Commitments
?
------------------------------------------15
6
Long Term
?
Debt ?
----------------------------------------------------15
7
Employee Future Benefits -------------------------------------------
8
Deferred Contributions
9
Deferred Lease Proceeds
I
Entities accounted for by the equity method
a
?
Equity in SFU Community Trust ?
--------------------------------------------16
b ?
SFU Community Trust—Financial Summary-----------------------------------17
10
Internally Restricted for Specific Commitments-------------------------
17
ii
Endowment
--------------------------------------------------------
12
Pension ?
Plans ?
-------------------------------------------------------18
13
Financial Instruments-----------------------------------------------
19
14
Pledges------------------------------------------------------------
19
15
Contingencies------------------------------------------------------
19
16
Canadian University Reciprocal Insurance Exchange-------------------
19
17
Related Entities that are not consolidated
a
TRIOME ?
----------------------------------------------------------------
19
b wcOMBS ? ---------------------------------------------------------------20
C ?
SF0 COMMUNITY CORPORATION -------------------------------------------------20
d
?
SF 0NIVENT000S CORPORATION ?
-------------------------------------------------20
STATEMENT OF MANAGEMENT RESPONSIBILITY
...........................
02
REPORT OF THE VICE-PRESIDENT FINANCE & ADMINISTRATION ............
03
REPORT OF THE AUDITOR
...............................................
..o8
AUDITED STATEMENTS
Statement of Financial Position.... .....................................
.
.
09
Statement of Operations and Changes in Operating Net Assets ..............
10
Statement of Changes in Net Assets........................................
11
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
0
?
S
?
0
01
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, 2006 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.
The majority of the 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, 2006
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.
ik
Dr. Michael Stevenson
PRESIDENT
Pat Hibbitts
VICE-PRESIDENT, FINANCE & ADMINISTRATION
MAY 12, 2006
02
0
I
STATEMENT OF MANAGEMENT RESPONSIBILITY
Simon Fraser University I Fiscal year ended March 31, 2006
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 rate of employer contribution was also increased from 11.44%
to 12.34%, effective January 1, 2005, as indicated by the 2004 actuarial
valuation. Contributions by the employer for the calendar year 2005 were
$8,467,000 (2004: $7,372,000).
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 of the faculty and staff for whom
contributions were paid to the Teachers Insurance and Annuity Association
and College Retirement Equities fund in 1971, and that have chosen to
remain in the defined contribution plan. University contributions were
$37,400 in calendar year 2005 ($61,500 in 2004).
13.
Financial Instruments
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.
14. Pledges
Pledges made by donors to the University for donations to be received in
future years are estimated at $26,419,000 (2005: $12,794,000). 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. Any 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 arrangement until December 31, 2007.
17.
Related Entities that are not consolidated
TRIUMF
Simon Fraser University is a member along with five other universities
in a joint venture called the Tr-Universities Meson Facility (TRIUMF)
located on the University of British Columbia (UBC) campus. TRIUMF is
Canada's National Laboratory for research in Particle Physics. TRIUMF is
not incorporated and each University has an undivided 1/6 interest in all
the assets, liabilities and obligations of TRIUMF, except for the land and
buildings occupied byTRIUMF, 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 thoosan4s)
2006
2005
Total assets
6,059
7,071
Total Liabilities
3,766
4,619
Fund Balances, restricted
2,169
3,047
other
124
(595)
6,059 ? 7,071
19
Results of Operation
Revenue
?
58,197
?
53,628
Expenses
?
58,356
?
54,846
Excess (deficiency) of Revenue over Expenses
?
(159)
?
(1,218)
. ?
.
fl!
VI
Celebrating its 40th anniversary, SFU has earned an international reputation
for innovative teaching, research, athletics, and community outreach. With
three distinctive campuses, more than 700 accomplished tenure-track faculty,
2,500
staff members and nearly 22,000 talented students, SFU consistently
ranks as one of Canada's leading comprehensive universities.
In order to maintain and enhance our reputation and grow
our enrollment we have invested heavily in new buildings,
new faculty and staff for academic programs and we
continue to be very successful at applying and receiving
funds for research.
Revenue for the year was $479 million and expenses
were $455 million leaving a net revenue of which $18 million
represents the increase in investment capital assets. The
remaining $6 million has been allocated to fund activities
for the coming year; details are outlined in this document.
Of particular interest is the use of our Bond issue and
our successful Reaching New Heights campaign which has
allowed us to increase our capital assets by $105 million.
The completion of the Segal Graduate School of Business
at our Vancouver downtown campus and phase one of the
Technology and Applied Sciences Complex are examples.
SFU has hired new faculty and staff to deliver and
support academic programs. We are pleased that the
Provincial Government provided financial resources that
allowed us to secure four year collective agreements with
all our employee groups and associations. The lump sum
components of these agreements are largely responsible
for higher Government funding and higher salary expenses
for the year ending 2006.
Our research activities continue to outpace all areas
of growth with an increase of $7 million this year and an
increase of 66% over the last five years. This allows SFU to
attract the best professors and graduate students which
contribute to the continuing success of this institution.
Pat Hibbitts
VICE-PRESIDENT. FINANCE & ADMINISTRATION
03
0
General Operating is composed of carryover funds for faculties and
departments under a policy that enables them to carry over unspent
budget. It includes unspent balances on specific projects, internally funded
research already in progress, funds set aside for specific provisions and
one-time non-recurring expenditures approved by the Board of Governors.
The Ancillary Enterprises represents accumulated funds held for the
ongoing operations of ancillaries such as the Bookstore, Food Services,
Microcomputer Store, Residences, Parking and Document Solutions.
Capital represents funds that are restricted to capital projects.
Specific purpose represents funds from various sources that are allocated
internally to specific activities.
Funds restricted for long term commitments set aside for future
obligations:
Lease commitment funds provide for obligations entered into for the
occupancy of the University's Harbour Centre facility, which include lease
payments, tenant loan payments and a contribution towards operating
expenses. Lease and tenant loan obligations include annual payments of
$1,140,000, which started in September 1988 increasing to $1,648,000
over the term of the lease, and a termination payment of $8M upon the
expiry of the lease in December 2017 or a discounted equivalent of that
amount at an earlier date.
Self-insurance funds are held to pay self-insured property and liability
losses.
11. Endowment
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
(Do11a" in thosanLr)
2006
2005
Balance, beginning of year
116,050
102,201
Donations
7,767
1,383
Capitalized income and other transfers
Capitalized investment income
3,747
2,977
Equity income for the year, SFU Community Trust
189
175
Other transfers
5,226
5,625
Equity recognized when SFU Community Trust
was deemed to be a controlled entity in 2005
-
3,689
Balance, end of year ?
132,979
?
116,050
S
endowments must be protected by limiting the amount of income that may
be expended, and reinvesting unexpended income.
Income from the University's beneficial interest in SFU Community Trust
was recognized as a direct increase in net assets held as endowment
principal. Described in Note 9, the Trust's sale of 99 year leases results in the
recognition of "deferred lease proceeds" which will be amortized to income
over the remaining terms of the respective 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 2005 were $8,148,000 (2004: $7,478,000).
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. The latest
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%. The next valuation will be at December 31, 2006.
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. Employees do
not contribute to the Plan.
S
CAPITAL ASSETS
Building is at a record level of $105 million this year with an
additional $31 million in capital equipment (figure 1).
Capital projects completed in the year include the Segal
Graduate School of Business and Phase 1 of the Technology
and Applied Sciences Complex. Projects in process as of
now include the Surrey Campus, Phase 2 of the Technology
and Applied Sciences Complex, an extension on the
gymnasium, the Arts and Social Sciences Complex and the
Health Sciences building.
This year's construction was financed from Province of
BC Deferred Capital Contribution ($34M), proceeds of a
previous debenture issue ($51M), allocations from research,
and donated funds. Ongoing campus development is highly
dependent on the provision of provincial funding, provincial
authorization to borrow, and community donations.
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 2).
I /CAPITAL ASSET ACQUISITIONS
?
2 / ENDOWMENT FUND BALANCE
(IN MILLIONS OF DOLLARS) ?
(IN MILLIONS OF DOLLARS(
SFU SURREY CAMPUS, SURREY CENTRAL CITY
100
04
FINANCIAL HIGHLIGHTS
Simon Fraser University I Fiscal year ended March 31, 2006
SFU Community Trust has two beneficiaries, the University and Simon
in the Trust operations and is described as "Deferred lease proceeds"
Fraser University Foundation, whose beneficiary is the University. The Trust
on the Statement of Financial Position. It amounts to $14,665,000
is not consolidated but is accounted for by the equity method.
(2005: $13,754,000).
SFU Community Corporation, wholly-owned by the University, has the
purpose of being Trustee of the Trust and has no business operations.
SFU COMMUNITY TRUST, FINANCIAL SUMMARY
Audited financial statements as at December 31 are separately prepared.
Information on the equity accounting in the University and a financial
.
Financial Position
summary of the Trust's activities are below.
l°'
2oo
6
2005
Total assets
15,635
11,646
EQUITY IN SFU COMMUNITY TRUST
Total liabilities
8,318
4,332
The University recorded its equity accounted interest in the income of the
Trust balance, end of year
7,317
7,314
Trust as a direct increase in net assets held as endowment principal as
*
?
described in note 11. This amounted to $189000 (2005: $175,000).
Results of Operations & Trust Balance
Revenue ?
.
4,722
39,413
Net Income from Trust
. ?
Expenses
. ?
.
3,619
23,915
(DolLsrs,n thousands) ?
2006 ? 2005
Net income for the year
1,103
15,498
Net income as reported by the Trust ? 1,103 ?
15,498
Trust balance, beginning of year
7,314
9,516
Adjustment of land value on transfer to Trust
Allocation to beneficiaries during year
(1,100)
(17,700)
realized through sales of leases
?
224 ? 1,863
Trust balance, end of year
7,317
7,314
1,327 ?
17,361
Deferred to be amortized over terms of leases ?
1,138 ?
17,186
Cash
Flows
Net income to University from Trust, recorded as
Operating activities
(907)
19,840
increase in net assets held as endowment principal
?
189 ? 175
Investing activities
(3,982)
(14,370)
Financing activities
4,740
(5,788)
DEFERRED LEASE PROCEEDS / EQUITY IN TRUST
Decrease in cash during the year
(149)
(318)
The University's interest in the net assets of the Trust and allocations
the
to the
University
terms of
has
underlying
received
leases)
in advance
represents
of income
the University's
recognition
interest
(in relation
10. Internally Restricted for Specific Commitments
Deferred
lease
proceeds
(Dollars in thousands)
2006
2005
(Dollars in thousands) ?
2006 ?
2005
General
........,
Operating
?
. .
Trust Balance, beginning of year
Carryovers - faculties and departments
15,367
32,274
As reported by the Trust
?
7,314 ? 9,517
Auxiliaries and special projects
11,349
1,778
Adjustment of land value on transfer to Trust
Research and other grants
17,000
16,364
not realized through sales of leases
? (3,882) ?
(5,746)
Specific provisions
3,134
2,535
Deferred revenue on leases ?
(17,186) ?
-
Non-recurring expenditures
6,889
4,518
University's equity interest in Trust ?
(13,754) ?
3,771
Total General Operating
53,739
57,469
Net income to University from Trust, per above
?
189 ?
175
Ancillary enterprises
1,636
.
.
4,253
Trust Allocations to beneficiaries:
Capital
9,147
(4,031)
Foundation ?
(1,100) ?
-
Specific Purpose
14,342
14,334
University
?
.
?
.
?
.
?
.
- ?
(17,700)
Long-term commitments, Lease commitment
16,433
16,505
Deferred Lease Proceeds / University equity
............
Self insurance
86
interest in Trust, end of year ?
(14,665) ?
(13,754)
Total Restricted for Specific Commitments
95,383
88,777
is
04
C
?
is ?
.
17
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, including government, Canadian
and international not-for-profit, and industry (figures 3, 4).
ANCILLARY ENTERPRISES
The six ancillary Enterprises provide goods and services
to the University community. Revenues cover operating
expenses, debt service payments and reinvestment for
long term financial viability. Net Assets are designated as
Internally Restricted for Specific Commitments (figures 5, 6).
3 / EXTERNAL RESEARCH REVENUE ?
4/SPONSORED RESEARCH REVENUE
(IN MILLIONS OF DOLLARS)
?
(IN MILLIONS OF DOLLARS)
I!uI
Iii.
9.5
9.8
RESEARCH IN APPLIED SCIENCE
05
.
16
7. Employee Future Benefits
GROUP
EARLY
NON-PENSION
2006
2005
INSURANCE
RETIREMENT
BENEFITS
TOTAL
TOTAL
Opening Balance
5,209
4,862
20,422
30,493
27,481
Current Costs
-
-
993
993
1,212
Interest on benefit obligation
311
291
1,844
2,446
2,177
Adjustment and Amortization
of Net Actuarial Loss
-
-
211
211
567
5,520
5,153
23,470
34,143
31,437
Disbursements
-
406
615
1,021
944
Balance, end of year
?
5,520
?
4,747
?
22,855 ?
33,122 ?
30,493
GROUP INSURANCE
Group insurance is designated for potential requirements related to
self-insured long-term disability plans. Annual premiums are funded from
the general operating funds on a cost of claim plus fee for services basis.
According to Manulife, the insurer, the reserve required at March 31, 2006
to pay disability pension payments is $6,557,000 (2005: $5,492,000). Some
of these employees will be returning to work during the year, so the reserve
of $5,520,000 (2005: $5,209,000) that has been internally designated to fund
this liability is considered adequate.
EARLY RETIREMENT
The early retirement amount represents current and future pension
payments to employees that took early retirement in the mid 1980's and
other employees that receive supplementary pensions. The actuarial
liability at December 31, 2003 was determined by a March 21, 2003 actuarial
valuation based on the 1994 Uninsured Pensioners Mortality table. The
actuarial assumptions used in this valuation are a discount rate of 6.25% and
an inflation rate of 2.5% per annum. The next valuation will be at December
31, 2006. Assets have been 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 $22,855,000 (2005: $20,422,000) and at March 31, 2006
an amount of $7,524,000 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
11
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, 2006 is 9 years.
The March 31, 2006 valuation is based on the RP-2000 Mortality table.
The actuarial assumptions used in this valuation are a discount rate of 5%,
price inflation at 2.5% per annum, an extended Health benefit trend rate
of inflation plus 6.0% 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 the employees to fund 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.
Changes in deferred contributions
SPONSORED
?
SPECIFIC ?
CAPITAL ?
2006 ?
2005
(Do11a,in rho,sands)
?
RESEARCH- PURPOSE -
? TOTAL ?
TOTAL
Balance, beginning
of the year
27,129
12,319
250.290
289,738
268,130
Add: Contributions
received during the year
59,836
33,581
35,284
128,701
114,570
Less: Transferred to revenue
53,671
32,530
9,208
95,409
92,962
Balance, end of year
33,294
13,370
276,366
323,030
289,738
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 $276,366,000 of deferred capital contribution represents the
unamortized portion of restricted capital advances relating to assets which
were purchased with restricted contributions.
9. Deferred Lease Proceeds / 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.
06
The Vancouver Foundation holds a number of endowment funds for the
6. Long Term Debt
benefit of the University. These funds totalled $7338000 at March 31, 2006
.
and the portion of $5,305,000 belonging to the University is included in
ANCILLARY ENTERPRISES (continued)
Revenue
the University's financial statements. In the fiscal year 2005/06 these funds
(Dollan in thousands) ?
2006 ? 2005
•
SFU Bookstores in Burnaby, Harbour Centre and Surrey.
generated income of $421,593 (2005: $369,194) for the University to be used
Demand Loans
?
.
?
4,002 ? $712
A renovation to the Harbour Centre store was completed
FOR THE YEA R ENDED MARCH 3L
2oo6 ?
2005
for specific purposes.
Term Loan
?
4,509 ? 4,905
in May 2005.
Sources
.
. ?
. ?
. ?
.
Mortgages
?
3,186 ?
4,803
• The third tower of a three tower student residences
Govt. Grants & Contracts
259 ?
225
Debentures
construction program was completed in September
Student Fees
130 ?
120
}.
C ?
?
r' ?
apitai
i
?
Assets
ssets
unsecured ?
150,000 ?
150,000
2005, increasing our accommodation capacity to 1 850
Gifts, Grants & Contracts
23
?
22
,
CAPITAL ASSET BALANCES
Province of BC unsecured ?
14,155 ?
16,828
(less Sinking Funds) ?
(7,646) ?
. (9,190)
.
?
.
students and providing 14 hotel rooms.
Sales of Goods & Services
37 ?
32
• Food services are provided through a contractor
Investment Income
17 ?
14
. ?
. ?
. ?
.
.
168,206
?
168,058
at seven locations on the Burnaby campus Renovations
Miscellaneous Revenue ?
4 ?
4
Amortization of Deferred Capital Contributions ?
9 ?
8
.
ACCUMULATED
?
2006 ?
2005
(DoIIars:nthousands)
?
COST ?
AMORTIZATION ?
NET ?
NET
Current Portion
?
(8,796) ?
(6,323)
to the Diamond Alumni Centre were completed in
..................................
?
.
?
. ?
.
.
Total Long Term Debt ?
159410 ?
161 735
June 2005
Total
479 ?
425
Buildings ?
.
concrete
?
535,366 ?
120,251 ?
415,115 ?
330,445
• Parking supports all parking lot operations and repays
wood
?
. ?
23,294 ?
10,668 ?
12,626 ?
11,686
The demand loans are the University's
14
share ofthe Great Northern Way
debt on the parkade. The U-Pass program is a key
Site services ?
33,011 ?
9,323 ?
23,688 ?
17,051
Campus Trust (GNWCT) demand loan, revolving loan, and promissory note.
initiative to control the demand generated by limited
Leasehold improvements ?
11,992 ?
5,835 ?
6,067 ?
6,405
These loans bear interest rates at prime plus 0.65%, prime plus 0.75%, and
parking space
S /
ANCILLARIES GROSS REVENUE
6 / ANCILLARIES NET ASSETS
Computing equipment ? 29,953 ?
10,644 ?
19,309 ?
21,694
the 3 month Canadian Dollar Offered Rate plus 0.45% per annum. They are
• Document Solutions, formerly called Reprographics,
Equipment & furnishings
?
82,402
?
23,932
?
58,470
?
45,522
secured by the assets of the GNWCT.
provides services beyond traditional printing services
(IN M ILL IONSOF DOLLARS)
Library books ?
68,493
?
27,392 ?
41,101 ?
39,917
The term loan, secured by a bankers acceptance agreement, bears
New large-scale digital printing equipment has created
Special collections ? 6,549 ?
- ?
6,549 ?
6,417
interest at 4.06% and is due on August 27, 2006.
new capacities for one-on-one marketing and technically
Land ?
17,768 ?
- ?
17,768 ?
16,143
Mortgages include CMHC Mortgages and a ¼ share of a mortgage
sophisticated document production.
Total Capital Assets
?
808,738 ?
208,045 ?
600,693 ?
494,560
on property held in the GNWCT. The CM HC mortgages are secured by
The Microcomputer Store has moved to a new location
student residence buildings, bear interest rates between 5.375% to 6.875%
in the Cornerstone building in order to provide better
Space in the Central City complex for the Surrey campus is included in
and mature between January 1, 2017 and July 1, 2019 with annual payments
service to the Burnaby Campus.
I
buildings. The 429 acres of land in Burnaby is recorded in the financial
of $248,000 including principal and interest until maturity. The GNWCT
statements at its 1965 assessed value of $572,000. Of this land, 78 acres is
mortgage bears interest at prime plus 1.0% per annum with interest only
TOTAL REVENUE, ALL FUNDS
Total revenue of $479 million was an increase of $54
r ?
.
set aside for development by the SFU Community Trust.
payments until maturity on December 15, 2014.
million from the previous year (figure
I).
r ?
r
?
. ?
.
CAPITAL EXPENDITURE COMMITMENTS
The University issued $150M of 5.613% Senior Unsecured Debentures in
:.
June 2003, which have semi-annual interest payments and mature June 10,
TOTAL
EXPENSES
ALL FUNDS
As at March 31 2006 the University had committed to contracts for the
2043 Net proceeds of the issue are being used primarily to finance capital
Total expenses for the year 2006 increased by $56 million
1
construction of buildings that involve future expenditures of $77M.
projects As at March 31 about $16M (2005 $68M) of the net funds realized
to $455 million (figure 8)
I
remain to be expended on approved capital projects The debentures are
Salaries and employee benefits expenses represent
neither obligations of nor guaranteed by the Province of British Columbia
60% of total annual expenses The increase in salaries
I
Debentures issued to the Province of British Columbia pursuant to the
from $203 million in 2005 to $233 million in 2006 is mainly
I
.
Financial Administrative Act bear interest rates from 6.0% to 9.5%, and
due to increased numbers of staff to serve increased
' ?
j
mature between 2008 and 2022
number of students and increased research activity, and
Ai
to salary increases agreed to with employee groups.
Annual payments for the next five years
(Del/an in thousands, inch'dingpnndpal
and inte,-at due)
2007 ?
2008 ?
2009 ?
2010 ?
2011
18,858 ?
10,048 ?
9,954 ?
9,859 ?
9,859
.
.
.
?
.
15
Estimated
(Tone In years)
useful life
3. Cash and Short Term Investments
Site services
50
2006
2005
Buildings
(Dollars in thoRsands)
?
COST
MARKET
COST
MARKET
wood
concreteframe
3050
Short
Cash ?
term notes ?
69,809(9,034)
69,809(9,034)
113,7364,475
113,736
4,475
Library
Equipment
booksand
furnishings
10
8
Bonds maturing under one year
?
12,530
12,530
4,888
4,888
Computing equipment
3
Total Cash and Short Term
?
73,305
73,305
123,099
123,099
Leasehold improvements
Term of Lease
14
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 capital assets, 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.
4. Investments
Long Term Investments
2006
2005
(Dollars in tholssands)
COST
MARKET
COST
MARKET
Bonds and debentures
125,100
126,905
125,963
128,673
Canadian equities
78,562
109,664
58,637
77,105
Foreign equities
42,310
45,569
37,356
37,763
Long term annuity
11,919
11,919
11,827
11,827
Vancouver Foundation
5,305
7,432
5,305
6,892
Donated hedge fund
2,000
2,003
2,000
2,014
Loans to SFU related entities
-
-
2,292
2,292
Total Long Term Investments
265,196
303,492
243,380
266,566
Bonds and Debentures
Analysis
(Dollars in rhoASana5)
Segregated Assets:
Government bonds
• Federal + guaranteed
• Provincial + municipal
Corporate debentures
Sub-total segregated
Indexed Bond Fund
Sub-total externally managed
Internally managed Bonds
Total Bonds and Debentures
.
Expenses
?
ACADEMIC QUADRANGLE, BURNABY CAMPUS
(Dollars in millions)
FOR THE YEAR ENDED MARCH 31:
?
2006 ?
2005
Sources
Salaries
?
233 ?
203
Employee Benefits
?
42
?
37
Supplies & Services
?
100 ?
85
Amortization of Capital Assets
?
32 ?
29
Cost of Goods Sold
?
11 ?
10
Scholarships, Bursaries
?
23 ?
22
Interest on Long Term Debt
?
8 ?
9
Grants to Other Agencies
?
6 ?
5
Total
?
455 ?
400
7/TOTAL REVENUE 2006
?
8/TOTAL
EXPENSES 2006
(IN MILLIONS OF DOLLARS)
?
(IN MILLIONS OF DOLLARS)
SALARIES
SUPPLIES & SERVICES
.M.. OF
-
CAMTAL ASSETS
DI
ll
.......
.
COST
OF GOODS
SOLD
8
.............
-;;-
.
•)O7
2006
2005
COST
MARKET
COST
MARKET
GOVI GRUnTS
&
CONTRACTS
26,833
26,921
25,209
25,722
19,432
20,196
26,639
27,586
1-23
46,265
47,117
51,848
V
53,308
17,913
18,017
15,848
15,838
STUDENT FEES
64,178
65,134
67,696
69,146
57,680
58,161
54,281
55,491
? *
................
SEllS
OF GOODS
121,858
123,295
121,977
124,637
&SERVIcGS
INVESTMENT INCOME
3,242
3,610
3,986
4,036
4
?
............... .... ...........
?
MIEC
9
?
...............
TOTAL
125,100
126,905
125,963
128,673
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, 2006 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, 2006 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, 2006
NOTES TO THE FINANCIAL STATEMENTS
Simon Fraser University I Fiscal year ended March 31, 2006
AUDITOR'S REPORT
BOO Onwoody LLP, Chartered Accountants, Vancouver, British CoI,,,,,bi,
08
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 capital assets 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 capital assets.
If the capital asset acquired is land or a special collection item, the
amount is recorded as a direct increase to net assets invested in
capital assets.
• If the capital asset has a limited life, the amount invested is
recorded as a deferred capital contribution and amortized over
the useful life of the asset to net assets invested in capital assets.
Amortization of capital contributions 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.
CAPITAL ASSETS
Capital asset 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 capital assets 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.
.
?
9
?
0
?
0
S
4
0
0
0
4
12
0
(Dollar-s in thousands)
YEAR ENDED MARCH
31, 2006:
Operating Activities
Net Revenue for the Year
Items not involving cash:
Amortization of deferred capital contributions
Amortization of capital assets
Amortization of debt discount and issue Costs
Employee future benefits
Changes in non-cash working capital balances
Equity from SFU Community Trust
Accounts receivable
Inventories
Prepaid expenses
Accounts Payable and accrued liabilities
Deferred contributions
Cash Provided by Operating Activities
Investing Activities
Net increase in long term investments
Capital assets purchased
Endowment contributions
Distributions from SFU Community Trust
Cash Used in Investing Activities
Financing Activities
Deferred capital contributions
Long term debt proceeds
Debt principal repaid
Cash Provided Used in Financing Activities
Net Increase (Decrease) in Cash and Short Term Investments
Cash and Short Term Investments, beginning of year
Cash and Short Term Investments, end of year
2006
?
2005
23,522
25,035
(9,208)
(8,312)
31,758
29,122
288
289
2,629
3,012
(189)
(175)
48,800
48,971
(14,124)
(3,529)
(300)
281
(111)
341
15,160
19,232
7,216
(6,561)
56,641
58,735
(21,816)
(31,105)
1137,8911
(109,133)
16,740
9,985
1,100
18,500
(141,867)
(111,753)
35,284
36,481
3,290
712
(3,142)
(1397)
35,432
35,796
149,794 1
(17,222)
123,099
140,321
73,305
123,099
STATEMENT OF CASH FLOWS
Simon Fraser University 2005/06
.
4
1J
STATEMENT OF FINANCIAL POSITION
Simon Fraser University 2005/06
a
(Dollars in thousands)
AS AT MARCH 31, 2006:
Notes
2006
2005
Assets
Current Assets:
Cash and short-term investments
3
73,305
123,099
Accounts receivable
31,050
16,926
Inventories
1,973
1,673
Prepaid expenses
3,540
3,429
109,868
145,127
Investments
4
265,196
243,380
Capital assets
5
600,693
494,560
Unamortized debt discount and issue costs
10,497
10,785
Total assets
986,254
893,852
Liabilities and Net Assets
Current Liabilities:
Accounts payable and accrued liabilities
56,868
41,708
Current portion of long term debt
6
8,796
6,323
65,664
48,031
Employee future benefits
7
33,122
30,493
Long-term debt
6
159,410
161,735
Deferred contributions
8
46,664
39,448
Deferred contributions related to capital assets
8
276,366
250,290
Deferred lease proceeds
9
14,665
13,754
595,891
543,751
Net Assets:
Operating
(20,331)
(18,892)
Internally Restricted for specific commitments
10
95,383
88,777
Invested in capital assets
182,332
164,166
257,384
234,051
Endowment
11
132,979
116,050
390,363
350,101
Total Liabilities and Net Assets
986,254
893,852
The accompanying notes on pages 13-20 are an integral part of those financial statements.
Approved:
?
S
Rasul
CHAIR, BOARD OF GOVERNORS
P Hibbitts
VICE-PRESIDENT, FINANCE & ADMINISTRATION
.
.
•°
Z
4
a
a
4
'I
STATEMENT OF OPERATIONS AND CHANGES IN OPERATING NET ASSETS
SimonFraser Univosty 2005/06
(Dollars
in thousands)
FOR THE YEAR ENDED MARCH
?
2006:
29
2005
Revenue
Government grants and contracts:
Province of British Columbia
209,920
175,354
Government of Canada
46,916
48,208
Other governments
2,209
1,684
Student fees - Credit courses
113,604
103,741
Non-credit courses
7,984
8,312
Other
8,696
.
? 7,330
Gifts, grants and contracts
22,516
22,076
Sales of goods and services
36,949
31,835
Investment income
16,868
13,509
Miscellaneous income
4,138
4,260
Amortization of deferred capital contributions
9,208
8,312
479,008
424,621
Expense
Salaries - Academic
87,978
78,794
Other instruction and research
51,486
42,506
Support staff
93,972
81,921
Total salaries
233,436
203,221
Employee benefits
42,315
36,708
Travel and personnel expenses
15,745
12,855
Materials and supplies
17,030
14,320
Communications
1,468
1,441
Other operational expenses
22,785
19,213
Amortization of capital assets
31,758
29,122
Grants to other agencies
5,978
4,836
Utilities
7,130
5,307
Renovations and alterations
9,751
5,569
Scholarships, bursaries and prizes
22,896
21,672
Contract services
7,276
4,721
Professional fees
14,613
17,938
Cost of goods sold ?
.
11,092
10,177
Interest on long-term debt
7,933
8,749
Amortization of bond discount and issue costs
288
289
Equipment rental and maintenance
3,992
3,448
455,486
399,586
Net Revenue for the Year
23,522
25,035
Changes in Net Assets
Increase in net assets restricted for specific commitments
(6,606)
(13,131)
Increase in investment in capital assets
(18,166)
(13,501)
Equity earnings transferred to endowment
(189)
11751
Net change in operating net assets
(1,439)
11,7721
Operating net assets, beginning of year
(18.892)
(17.1201
STATEMENT OF CHANGES IN NET ASSETS
Simon Freest University 2005/06
(Dollars
in thousands)
Internally Restricted for
Restricted for
FOR THE YEAR ENDED MARCH 31, 2006:
General Operating
Specific Commitments
Invested in Capital Assets
Endowment Principal
Total
Net Assets, beginning of year
(18,892)
88,777
164,166
116,050
350,101
Changes for the Year
Net Revenue for the Year
23,522
-
-
-
23,522
Transfers
Increase in restricted for specific commitments
(6,606)
6,606
Increase in investment in capital assets
(18,166)
-
18,166
-
-
Equity earnings transferred to endowment
(189)
-
-
189
-
(24,961)
6,606
18,166
189
-
Endowment transactions
Contributions
-
-
-
7,767
7,767
Capitalized income and other transfers
-
-
-
8,973
8,973
-
-
-
16,740
16,740
Net Assets, end of year
120,3311
95,303
182,332
132,979
390,363
Represented by:
Employee Future benefits (Note 7)
Funded liability
17,791
Accrued liability
(33,122)
Unfunded portion
(15,331)
Vacation Pay, accrued but not funded
(5,000)
Operating Net Assets (deficit)
(20,331)
S
C
a
a
.4
-4
2
-4
10
0
?
0
?
0
??
..
?
. is
?
LII
