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S.03-72..

FOR INFORMATION

SIMON FRASER UNIVERSITY ?

MEMORANDUM

Director, University Secretariat

DATE: ?

August 28, 2003

SUBJECT:

Annual Financial Statements

Section 32 of the University Act states: "The board shall make an annual report of its

transactions to the Minister, in which shall be 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."

A copy of the report is attached.

NOTE:

IF YOU DO NOT WISH TO KEEP THE ANNUAL FINANCIAL STATEMENT, PLEASE

RETURN IT TO BOBBIE GRANT, OFFICE OF THE REGISTRAR

. 0

SIMON FRASER UNIVERSITY

FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2003

0 0

SIMON FRASER UNIVERSITY

FINANCIAL STATEMENTS

MARCH 31, 2003

TABLE OF CONTENTS

Statement of Management Responsibility

Report of the Vice-President Finance & Administration

Report of the Auditor General of British Columbia

Audited Statements

Statement of Financial Position

- Statement of Operations and Changes in Operating Net Assets

- Statement of Changes in Net Assets

- Statement of Cash Flows

Notes to the Financial Statements

S S

Page

S 0

STATEMENT OF MANAGEMENT RESPONSIBILITY

The University is responsible for the preparation of the financial statements and has

prepared them in accordance with Canadian generally accepted accounting principles

for not-for profit organizations. The financial statements present fairly the financial

position of the University as at March 31, 2003 and the results of its operations 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 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 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, 2003 have been reported on by

the Auditor General of the Province of British Columbia, the auditor appointed under the

University Act. The Auditor's Report outlines the scope of his examination and provides

his opinion on the fairness of presentation of the information in the financial statements.

Finance & Administration

Related Entities that are not consolidated

SFU COMMUNITY TRUST

The SFU Community Trust is developing 78 hectares of land on the Burnaby campus into a

residential area.

The SFU Community Trust was established as a trust under the laws of British Columbia on July

29, 2002 with SFU Community Corporation (formerly called Burnaby Mountain Community

Corporation) as the sole trustee. The beneficiaries of the SFU Community Trust are Simon Fraser

University and the Simon Fraser University Foundation. The University owns all of the outstanding

shares of the SFU Community Corporation.

In February 2003, the SFU Community Trust leased two parcels of land for total proceeds of about

$9,000,000.

The University had advanced $4,612,000 to the SFU Community Corporation of which $4,000,000

was repaid during the year. The remaining balance owed to SFU at March 31 st, 2003 is $882,000.

SF UNI VENTURES 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.

18. ?

Comparatives

Certain comparative figures have been restated to conform with the current year's presentation.

Page 1 ?

Page 22

. . . Related Entities that are not consolidated

REPORT OF THE VICE-PRESIDENT FINANCE AND ADMINISTRATION

The university prepares its annual financial statements according to generally accepted accounting

WCUMBS

principles for not-for-profit organizations. The operations for the entire entity have been combined

for reporting purposes. However, we continue to manage internally on a fund basis and I am pleased

The University is one of five university members of the Western Canadian Universities Marine

to provide this financial information for the operating fund and additional information on the other

Biological Society (WCUMBS) which operates a research station at Bamfield, British Columbia.

funds in the following pages.

The university's operating grant to the Society was $176,000 (2002 - $176,000) and is recorded

as an expenditure by the University. There is no expectation of monetary gain to the University

Operating fund (000's)

Budget ?

2002/03

2001/02

2002/03 ?

2002103

Revenue

150,061 ?

57,566 ?

45,931

5,166

5,649

3,979

C. ?

SFU FOUNDATION

Prior year appropriations

27,182 ?

27,182

24,517

The Simon Fraser University Foundation was established in 1987 under the provisions of the

Total revenue ?

217 279

250 868 ?

256

076

224 769

University Foundations Act

Its main purpose is to receive, manage and invest funds to further

Expenses

residential lots for sale valued at $2,845,000 (2002 - $5,349,000) and the proceeds from the

6,751

sale of those lots will be transferred to the University.

The Foundation transferred its 5°'

Student financial assistance

7,622 ?

7,690 ?

7,491

5,673

interest and corresponding debt in the Great Northern Way land to the University. See notes 4

Utilities and janitorials

5,062

37,709

Total ?

197,587

2003 ?

Cumulative appropriations ?

34,411

27,182

(000) ?

(000)

Financial Position

Total Assets

Summary of Appropriations

Carryovers: Departmental

11,679

6,098

843

AuxilIaries and Special projects

2,246

3,395

Research and other contracts

7,900

Results of Operation

Non-recurring expenditures

8,567

6,563

Total (Loss) Revenue

(55) ?

$ ?

288

Total Disbursements ?

Total

Deficiency of Revenue over Expenses

1811 ?

1_18

This statement reflects the format of the 2002/2003 operating budget, approved by the Board

of Governors in June 2002. It groups expenses in a different format than the audited statements.

The summary of the

appropriations

$34,411

March 31, 2003 has

been extracted

from note 9 to the financial statements.

•

* includes prior year appropriations, transfers to operating and transfers within operating.

Page 21

Page 2

17. ?

Related Entities that are not consolidated

I S

Simon Fraser University is a member along with the University of Alberta, the University of

British Columbia, the University of Victoria and Carleton University in a joint venture called the

Tr-Universities Meson Facility (TRIUMF) located on the UBC campus. TRIUMF is Canada's

National Laboratory for research in Particle Physics. TRIUMF is not incorporated and each

university appoints three members to a Management Board. The facility and its operations are

funded by federal government grants and the university makes no direct financial contribution.

The land and buildings are owned by UBC.

TRIUMF

2003

2002

(000)

(000)

Financial Position

Fund Balances - restricted

Results of Operation

51,627

(Deficiency) Excess of Revenue

over Expenses

$12,238)

Operating Fund

Government grants from the Province of British Columbia for 2002/03 were $8,100,000 higher

than the previous year due to the amalgamation of Tech BC within SFU at the new SFU Surrey

campus and the provision of funding to double the annual number of graduates in Computer

Science and Computer Engineering within five years. The Government of Canada made a one

time contribution of $4,500,000 towards the infrastructure that supports research activities.

Tuition fees revenue increased by $16,900,000 as a result of the 30% increase in tuition rate,

500 new students at SFU Surrey and 180 students under the double the opportunity initiative.

Non-credit revenue remained the same at $5,300,000. The 30% increase in tuition also applied

to other student fees and generated an additional $1,154,000 of revenue. Investment income

was slightly lower than last year by $400,000 due to lower rates of return and Other income was

up by $500,000 due to increased billings in a large number of departments.

Salaries and benefits increased by 9.2% in total. Salary increase and market adjustments

accounted for approximately 4% to 5% depending on the group and the timing of the increase

and the remaining increase was due mainly to the addition of staff and faculty for SFU Surrey

and the double the opportunity initiative. A portion of the tuition increase is allocated towards

scholarships so student financial assistance increased by $1,800,000. Under non-salary the

largest increases were in materials and supplies $1,900,000 and operational expenses

$1,500,000.

Ancillary Enterprises

Included in Ancillary Enterprises are the Bookstore, Food Services, Residences, Parking

Operations and the Microcomputer Store. Ancillary Enterprises are mandated to break even

but are allowed to retain their surpluses for future upgrades to facilities, equipment replacement

and for new service initiatives. Total reserves are $4,500,000.

SFU Bookstores in Burnaby and Harbour Centre provided over $12 million worth of products,

academic supplies and services to the community. The stores sponsored numerous campus

events and provided donations to student groups. $750,000 was returned to students for their

used and unwanted books. The Bookstore went "live on the net" and received a good response

with course books available for sale via the internet. Each month an SFU faculty author was

selected to enhance their visibility and the general prestige of the University. Their book was

prominently displayed and promoted for a month and they had an opportunity to participate in a

reading and autograph session.

Food Services on the Burnaby campus, including the Diamond University Center, is operated

by Chartwells College and University Dining Services who signed a ten year agreement

effective April 1, 2002. Renovations of $300,000 to Raven's Cafeteria and $100,000 to the

Diamond University Center were completed during the year and plans are underway for a

$1,000,000 renovation to the Mckenzie Cafeteria to be completed in the Summer of 2004.

Page 3

Page 20

• .Administrative/Union Pension Plan

b. ?

The latest actuarial valuation as at December 31, 2001 showed an actuarial liability o•

$112,725,000 against market value assets of $127,409,000, resulting in a surplus of

$14,684,000. 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 rate of employer contribution was also increased from 10.43% to 10.44%, effective

January 1, 2002, as indicated by the 2001 actuarial valuation. Contributions by the

employer for 2003 were $6,402,000 (2002 - $5,889,000).

d. ?

The valuation is based on the 1983 Group Annuity Mortality Table using an investment rate

of return of 6.75% and an inflation rate of 2.5%.

Financial Instruments

The 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.

13. Pledges

Pledges made by donors to the university for donations to be received in future years are estimated

at $11,144,000 (2002 - $11,349,000). Pledges are not recorded in the financial statements until the

related donations are received by the university.

Contingencies

Simon Fraser University is the defendant to several unresolved statements of claims. It is not

expected that the ultimate outcome of these claims will have a material effect on the financial

position of the University.

15.

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 (C.U.R.l.E.), the

University is required to share in any net losses experienced by C.U.R.I.E. The commitment

was recently renewed to January 1, 2004.

Subsequent Event - Bond Issue of $150,000,000

The University has entered into an engagement letter agreement dated February 17, 2003 with

Scotia Capital Inc. (the "Agent") pursuant to which the University appointed the Agent as its

financial advisor and lead agent in respect of a private placement offering of $150,000,000 of

Senior Unsecured Debentures. The placement is expected to take place in June 2003.

Residences completed the second phase of a major renovation at Shell House and the final

phase of a plumbing renovation at Louis Riel. Architectural drawings have been completed and

site clearing and preparation is underway on a new $25 million 500 bed residence and dining

hall facility scheduled to open in September 2004.

The Parking Operation supports all parking lot expenses and pays down the debt on the

parkade. The parking rates remained the same as the prior year.

The Microcomputer Store continues to offer an increased level of customer service to SFU by

offering on-site consultation, loaner equipment, and a more interactive environment for the

campus community. During the year the store negotiated significant savings for SFU for anti-

virus software and Microsoft Office.

Research

University research is mainly funded by Federal agencies such as National Science and

Engineering Research Council and Social Services and Humanities Research Council and the

provincial government, although over $8 million comes from private sector corporations and

from non-profit organizations. For example, SFU received over $1 million from the Michael

Smith Foundation for Health Research in 2002-2003. There are over 1,500 active research

accounts with total activity of over $43 million compared to $36 million the previous year. The

Canada Foundation for Innovation awarded $3.9 million for infrastructure under several

categories and $4.2 million was received from the Province of BC's Knowledge Development

Fund as matching funding. The Federal government's Canada Research Chair program

awarded $1.6 million for salaries and research purposes.

Endowment

The University's endowment consists of restricted donations to the University and internal

allocations, the principal of which is required to be maintained in perpetuity. The investment

income generated from endowments can be spent only in accordance with the various

purposes established by the donors or the University's Board of Governors.

The Endowment Fund investment strategy aims to maintain the purchasing power of the

original capital value of endowments for future generations. It also ensures that spending

allocations remain stable each year through the use of an income stabilization fund. The

Endowment Fund is invested in bonds and equity markets to meet this strategy over the long

term.

This fund received $2,524,000 in new donations during the year and $705,000 of interest

income and other transfers was capitalized in order to protect the economic value of the

endowments. The fund stands at $97,102,000 at the end of the fiscal year.

Page 4

12.

14.

16.

Page 19

10.

Endowment

Specific Purpose ?

2003 ?

2002

w w

(000) ?

(000)

The sources of specific purpose funds include government and corporate grants, conference

fees, private donations and interest income from endowments for programs and scholarships.

Balance, beginning of year

93,873 ?

89,824

There are many international 'activities; the Canadian International Development Agency funds

Donations ?

2,524

1,745

projects in Indonesia, China and Mexico

Field Schools funded by participants were held in

Capitalized income and other transfers

705

2,304

China, Fiji, Prague, France, Greece and South East Asia and the Faculty of Education also has

Balance, end of year

$71Q2 ?

$93,873

a number of smaller international initiatives in Jamaica, Indonesia and Japan as examples.

Except for Jamaica, funding is to bring students to SFU to attend courses.

Endowment consists of restricted donations to the University.

The investment income generated

from endowments must

used in accordance with the various purposes established by the

The Canadian Institute of Health Research approved funding of $3,461,000 for hosting the

donors or the Board of Governors. Donors as well as university policy stipulate that the economic

Institute of Nutrition, Metabolism and Diabetes.

At March 31,

2003

a total of $2,461,500 had

value of the endowments must be protected by limiting the amount of income that may be

been received,

expended, and reinvesting unexpended income. Included in the

$97,102,000

(2002 - $93,873,000)

is a receivable of $3,149,000

(2002 - $5,135,000)

from the SFU Foundation for future proceeds

Capital

from the sale of the 9 remaining lots.

The Bank of Montreal building in downtown Vancouver valued at

$6,070,000

was donated to

the University to become the Segal Graduate School of Business.

$933,000 has been

11.

Pension Plans

expended on planning and design. The gas station on Burnaby Campus valued at

$100,000

was donated to the University.

The assets and liabilities of both Plans are not reflected in the university's financial statements.

library collections, ?

worth ?

$3,533,000 were

Academic Pension Plan

transferred to SFU upon the windup of TechBC.

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

The University transferred its interest in land on Great Northern Way in Vancouver to the Great

benefits based on years of service, and the average of the highest sixty (60) consecutive months'

Northern Way Campus Trust for a 25% interest in the Trust, which is shared equally with UBC,

salary. It is fully funded by the employer. Contributions by the University for

2003 were $6,309,000

BOlT and the Emily Carr Institute of Art and Design.

(2002 - $5,772,000).

The expenditure of $1,688,000 on the PeopleSoft suite of programs was capitalized.

An amendment to the plan in 1981 and a letter of agreement between the university and the

Residences spent $1,021,000 for Shell House and Louis Riel renovations and $854,000

Faculty Association in 1990 addressed the funding and the distribution of the formula retirement

towards the building of a new 500 bed and dining hall residence. benefit account. The latest actuarial valuation for this group as at December 31, 2000 shows an

actuarial liability of $8,712,000 against the actuarial value of assets of $9,181,000 resulting in a

surplus of $469,000 in the fund, which is not being amortized. There were no contributions

required for 2003 nor 2002 due to the surplus.

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. Under the Pension

Plan:

a. 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

Page 5

not contribute to the Plan.

Page 18

Restricted for Specific Commitments

2003

2002

(000)

General Operating

Carryovers - faculties & departments

11,679

6,098

Auxiliaries and special projects

2,246,

3,395

Research and other grants

Non-recurring expenditures

8,192

6,363

Total General Operating

34,411

27,182

Ancillary enterprises

Long-term commitments

550

Total Restricted for Specific Commitments

$79,1 OQ

74.868

The General Operating is composed of carryover funds for faculties and

departments under a

policy that allows them to carry over unspent budget.

It also includes unspent balances on specific

projects, internally funded research already in progress, funds set aside for specific provisions and

one-time non-recurring expenditures as approved by the Board of Governors.

The Ancillary Enterprise represents accumulated funds held for the ongoing operations of

ancillaries such as the Bookstore, Food Services, Microcomputer Store, Residences and Parking.

Capital represents funds that are committed to capital projects.

Specific purpose represents funds from various sources that are allocated internally to specific

activities.

The funds committed for long term commitments are set aside to meet the cost of future

obligations.

a. 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.

Lease commitment funds provide for commitments entered into for the occupancy of the

University's Harbour Centre facility which include lease payments, tenant loan payments and a

contribution towards operating costs. 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 $8,000,000 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.

Report of the Auditor General?

of British Columbia

To the Members of the Board of Governors

of Simon Fraser University, and

To the Minister ofAdvanced Education,

Province of British Columbia:

I have audited the statement of financial position of

Simon Fraser University

as at

March 31, 2003 and the statements of operations and changes in operating net assets, changes in

net assets and cash flows. These financial statements are the responsibility of the University's

management.

responsibility is to express an opinion on these financial statements based on

my audit.

I conducted my audit in accordance with Canadian generally accepted auditing standards. Those

standards require that I 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 my opinion, these financial statements present fairly, in all material respects, the financial

position of

Simon Fraser University

as at March 31, 2003 and the results of its operations and its

cash flows for the year then ended in accordance with Canadian generally accepted accounting

principles.

//y4it a&

Victoria, British Columbia

Page 6

SIMON FRASER UNIVERSITY

Statement

STATEMENT OF FINANCIAL POSITION

AS AT MARCH

31, 2003

(thousands of dollars)

-603

2002 ?

• ?

. .

Non-Pension Benefits

ASSETS

An actuarial valuation was done at March 31, 2003 to reflect the changes in staff and faculty and

CURRENT ASSETS

increase in premiums since the previous valuation at March 31, 2000. The actuarial valuation

Cash and short-term investments (Note

18,595 ?

15,724 ?

shows an increase of $7,978,000 which brings the total obligation to $23,080,000 at March 31,

Accounts receivable

12,532 ?

17,200

2003. The increase of $7,978,000 will be amortized over the average remaining service period of

Inventories ?

1,787 ?

2,112 ?

active employees. The average remaining service period of active employees covered by the non-

Prepaid expenses

1,269 ?

1,254 ?

pension benefits as of March 31, 2003 is 10 years.

34,183 ?

36,290

The March 31, 2003 valuation is based on the 1994 Uninsured Pensioners Mortality table. The

Investments (Note

208,113 ?

185,765 ?

actuarial assumptions used in this valuation are a discount rate of 6.75%, price inflation at 2.5% per

Capital assets (Note

5) ?

332.321

320,114

annum, a medical trend rate of price inflation plus 3.5% and a dental trend rate of price inflation

plus 2.9%. There are no contributions by the employees to fund this benefit.

Unamortized debt discount

189 ?

208

8. ?

Deferred Contributions

$ 574,806 ?

$542,377

Deferred contributions represent unspent resources externally restricted for a particular use relating

LIABILITIES AND NET ASSETS ?

to a subsequent period. Changes in the deferred contributions are as follows:

CURRENT LIABILITIES ?

2002

Accounts payable and accrued liabilities

18,118 ?

$ ?

21,446 ?

Research ?

Purpose ?

Total ?

Total

Current portion of long term debt (Note

12,882

5,782 ?

27,228

Employees future benefits (Note

7) ?

20,060 ?

18,855 ?

Add: Contributions

received during the year

22,005 ?

Deferred contributions (Note

28,802 ?

Deferred contributions related to capital assets (Note

190,571 ?

186,938

288,291 ?

283,828 ?

Under the deferred 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

NET ASSETS

related expenses are incurred. The $190,571,000 of deferred capital contribution represents the

Operating ?

(16,928)

(16,378)

unamortized portion of restricted capital advances relating to assets which were purchased with

Restricted for specific commitments (Note

79,100 ?

74,868 ?

restricted contributions.

Invested in capital assets

127,241 ?

106,186

Endowment (Note

10)

97,102 ?

93,873

286,515 ?

258,549

$ 574.806 ?

$542,377

The acc

nying notes are an integral part of these financial statements

Finance and Administration ?

Page 16

Page

Employee benefits (Note 7)

Travel and personnel costs

Materials and supplies

Communications

Other operational expenses

Depreciation

Grants to other agencies

Utilities

Renovations and alterations

Scholarships, bursaries and prizes

Equipment rental and maintenance

EXCESS OF REVENUE OVER EXPENSE

CHANGES IN NET ASSETS

Increase in specific commitments

Increase in investment in capital assets

NET CHANGE IN OPERATING EQUITY

OPERATING NET ASSETS, beginning of year,

OPERATING NET ASSETS, end of year

...Long Term Debt

Debentures are issued to the Province of British Columbia pursuant to the Financial Administrative

Act. They bear interest at rates from 6.0% to 9.5%, and mature between 2003 and 2022. Annual

payments including principal and interest due within the next five years are as follows:

Total

$2,210

7. ?

Employee Future Benefits

SIMON FRASER UNIVERSITY

Statement 2

STATEMENT OF OPERATIONS and

CHANGES IN OPERATING NET ASSETS

FOR THE YEAR ENDED MARCH 31, 2003?

(thousands of dollars)

2003

2002

REVENUE

Government grants and contracts

Province of British Columbia

Student fees - credit courses

Gifts, grants and contracts

21,433

22,838

Sale of goods and services

Amortization of deferred capital contributions

Total ?

EXPENSE

2002

Salaries - academic

(000)

other instruction and research

Early ?

Retirement

(000)

Interest on benefit obligation

Non-Pension ?

Benefits

(000)

Total

2003

The early retirement amount represents current and future pension payments to employees that

took early retirement in the mid eighties and other employees that receive supplementary pensions.

$4,975,000 (2002 - $4,877,000) has been set aside internally 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 $15,085,000 (2002 - 13,978,000). At March 31, 2003 an

amount of $2,157,000 has been set aside internally to fund this liability.

STATEMENT

OF CHANGES IN NET ASSETS

•

Accumulated

2003 ?

2002

FOR THE YEAR ENDED MARCH 31, 2003

Depreciation

Net ?

Net

(000) ?

(000)1

(000)

(thousands of dollars)

$201,977($199,602

13,404

Leasehold improvements

6,262

19,408 ?

11,053

Equipment & furnishings

55,856 ?

19,807, ?

36,049 ?

26,851

Library books

55,847 ?

21,410 ?

437 ?

32,340

4,836 ?

4,645

Special collections ?

4,836 ?

NET ASSETS, 

beginning of year

$ ?

10,167

$320

Net change in operating equity

429

acres of land in Burnaby is recorded in the financial statements at its

1965

assessed value

$572,000. 78

acres of this land is set aside for development by the SFU Community Trust. The

Endowment contributions

- ?

2,524

1,745

Centre for Dialogue land

recorded

its 1998 assessed value

$1,148,000. ?

The Segal

Graduate School of Business land is recorded at its

2002

assessed value of

$3,669,000.

Beneficial

Capital preservation of endowment

interest in land held under an educational joint venture agreement was transferred to Great

Northern Way Campus Trust.

The University's

25%

undivided interest in the trust, valued at

Change in investment in capital assets

$8,447,000,

is included in long term investments, and the related equity is included in the

Amortization of deferred capital

investment in capital assets.

Capital asset acquisitions

Deferred contributions

2O ?

2002

(000) ?

(000)

Depreciation

Internally imposed restrictions

4,500

CHANGE IN NET ASSETS       

5,920

2,518

NET ASSETS, 

end of year

21,348

(7,799) ?

(6,499)

27,787

(5,782)

$22,005

Term loans, used to complete the Centre for Dialogue, are secured by promissory notes.

They

bear interest rates between

3.37%

and 6.54%, and are due for renewal in January and December

2004.

Other long-term debt annual principal and interest payments are funded through a charge to

Ancillary Enterprises operations and from contributions from the Simon Fraser Students Society for

a portion of the Maggie Benston Student Services Building.

CMHC Mortgages issued by the Canada Mortgage and Housing Corporation are secured by

student residence buildings.

They bear interest rates between

5.375%

6.875%

and mature

between January 1,

2017

and July 1,

2019.

Annual payments including principal and interest until

$248,000.

SIMON FRASER UNIVERSITY

4. Long Term Investments

0 ?

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED MARCH 31, 2003

Long term investments at fiscal year end are comprised of the following:

(thousands of dollars)

2002

OPERATING ACTIVITIES

Excess of revenue over expense

Net decrease in non cash current assets

Net increase in accounts payable and accrued liabilities

Donation of land to SFU

The Vancouver Foundation holds a number of endowment funds for the benefit of the University.

These funds totalled $7,338,000 at March 31, 2003 and the portion of $5,305,000 belonging to the

University is included in the university's financial statements. In the fiscal year 2002103 these funds

generated $612,135 of income (2002 - $645,608) for the University to be used for specific

purposes.

The market value of the interest in Great Northern Way Campus Trust cannot be readil

determined because there are certain restrictions on the disposal of the interest.

Bonds and Debentures Analysis

2003 ?

2002

Sub-total externally held

Internally managed

Total Bonds and Debentures

CASH PROVIDED BY OPERATING ACTIVITIES

INVESTING ACTIVITIES

Exchange donated land for investment in shares

Net increase in long term investments

Capital asset acquisitions

CASH USED IN INVESTING ACTIVITIES

FINANCING ACTIVITIES

Net debt principal (repaid) incurred

CASH PROVIDED USED IN FINANCING ACTIVITIES

24,737 ?

23,847

4,978

(3,328)

(8,018)

17,311

3,229

(44,501)

(58,402)

(2,688)

NET INCREASE IN CASH AND

SHORT TERM INVESTMENTS

CASH AND SHORT TERM INVESTMENTS, beginning of year

15,724

52,553

52,604

48,142

CASH AND SHORT TERM INVESTMENTS, end of year

18,595

SIMON FRASER UNIVERSITY ?

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2003

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.

Summary of Significant Accounting Policies and Reporting Practices

.Capital Assets

0 ?

Library books ?

10 years

Equipment and furnishings

8 years

Computing equipment

3 years

Leasehold improvements

Term of

Lease

Special collections, which include works of art and that portion of library assets considered to have

permanent value, are not amortized.

d. ?

Investments

Short term investments are recorded at the lower of cost or market value.

Long term investments, which consist of marketable securities and real estate, are carried at cost

or, when donated, at their fair market value at the date of the ownership transfer of these assets 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 these investments are recognized in the year of disposal and are

Accounting Method

included in investment income.

The financial statements are prepared following Canadian generally accepted accounting principles

Inventories

on a non-fund basis as the operations for the entire university have been combined for reporting

purposes. The university follows the accrual basis of accounting. Unrestricted revenue is recorded

Inventories of supplies kept at Central Stores are recorded at cost. Inventories of merchandise

when receivable and expenditures are recorded when goods or services are received,

held for resale in the Bookstore and the Microcomputer Store are recorded at the lower of cost and

Revenue Recognition ?

• ?

• ?

net realizable value.

Use of Estimates

Externally restricted contributions for purposes other than endowment or the acquisition of capital

assets are deferred and recognized as revenue in the year in which the related expenses are

incurred. Externally restricted amounts can only be used for purposes designated by the

contributors.

Externally restricted capital contributions are recorded as deferred contributions until the amount is

invested to acquire capital assets. Amounts invested representing externally funded capital assets

are then transferred to unamortized deferred capital contributions. Capital contributions are

deferred and amortized to revenue over the life of the related asset.

Gifts-in-kind are recorded at fair market value on the date of their donation or at nominal value

when the fair market value cannot be reasonably determined.

Capital Assets

Capital asset acquisitions are recorded on the statement of financial position at cost, except

donated assets which are recorded at fair market value at the date of acquisition. Depreciation is

recorded on a straight line basis over the estimated life of the asset as per the schedule below.

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 the reported

amounts of revenue and expenses during the reporting period. Actual results could differ from

management's best estimates as additional information becomes available in the future.

Related Entities

Details of corporations and consortiums, in which Simon Fraser University may have a significant

interest, are contained in Note 17. These entities are not consolidated in these financial

statements.

3. ?

Cash and Short Term Investments

2002

Bonds maturing under one year

579

1,499

1.537

Total Cash and Short Term

724