S.08-99 For Information
SIMON FRASER UNIVERSITY THINKING OF THE WORLD

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S.08-99

For Information

SIMON FRASER UNIVERSITY

THINKING OF THE WORLD

TO:

Senate

FROM:

Alison Watt

Director, University Secretariat

DATE:

August 27, 2008

SUBJECT: SFU Financial Statements - March 31, 2008

Section 32 of the University Act states that 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 to

Senate.

The document is forwarded to Senate for information.

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NOTE:

If you do not wish to keep a copy of the Financial Statement, please return it to Bobbie

Grant, Senate & Academic Services, Student Services, MBC 3102

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ADDITIONAL RESOURCES AVAILABLE ONLINE:

www.sfu.ca/finance/accounts

PRESIDENTS MESSAGE

. 2

REPORT OF THE VICE-PRESIDENT FINANCE & ADMINISTRATION ......................4

FINANCIAL HIGHLIGHTS ..................................................6

STATEMENT OF MANAGEMENT RESPONSIBILITY

................................

REPORT OF THE AUDITOR

.................................................

AUDITED STATEMENTS

Statement of Financial Position ...........................................

Statement of Operations and Changes in Operating Net Assets....................

Statement of Changes in Net Assets ........................................ 19

Statement of Cash Flows ................................................ 20

NOTES TO THE FINANCIAL STATEMENTS

Authority and Purpose

.............................................. 21

2 Significant Accounting Policies and Reporting Practices

Accounting Method .................................................... 21

Entities

......................................................

Revenue Recognition ................................................... 21

Financial Instruments .................................................. 21

Inventories

........................................................

Property and Equipment ................................................. 22

Prepaid

Lease

.......................................................

Debt Discount and Issue Costs

............................................. 22

Use of Estimates

.....................................................

New Accounting Pronouncements ........................................... 22

Cash and Short Term Investments ......................................

4 Investments

...................................................... 23

Property and Equipment .............................................

6 Long-term Debt

...................................................

7 Employee Future Benefits

G r ou

pIn su ran c e

...................................................... 24

Early Retirement

..................................................... 23

Non-Pension Benefits................................................... 23

Deferred Contributions

...............................................

Deferred Lease Proceeds

Entities accounted for by the equity method

Equity in

SFU

Community Trust

.............................................

SPU Community Trust—Financial Summary ....................................... 27

10 Internally Restricted for Operating Commitments

..........................

Internally Restricted for Capital, Lease & Other Commitments.................

12 Endowment;

......................................................

Pension Plans

Academic Pension Plan..................................................

Administrative/Union Pension Plan............................................. 28

Pension Plan for Certain Members

...........................................

Pledges

.......................................................... 29

15 Contingencies

..................................................... 29

Canadian University Reciprocal Insurance Exchange ........................ 29

17 Related Entities that are not consolidated

TRIUMF............................................................... 29

WCUMBS.............................................................. 29

SFU Community Corporate................................................ 29

SF Univentures Corporation ............................................... 29

Comparative Amounts ...............................................

19 Change in Accounting Policy ..........................................

20 Asset Retirement Obligation

.......................................... 30

BOARD OF GOVERNORS ..................................................31

DR. MICHAEL STEVENSON

PRESIDENT

Simon Fraser University has a goal to

provide the best liberal arts and science

education in Canada, differentiating

itself through interdisciplinary academic

programs, student-centred teaching,

successful research innovation, and valuable

engagement with the external community.

2007/08,

our exceptional faculty,

staff, students, alumni, and community

partners helped us embrace this goal and

achieve outstanding progress towards it.

Michael Francis, Deputy Chair

Daniel U. Pekarsky

Barry Macdonald (term ended February 2008)

Saida Rasul (term ended February 2008)

Jeanette McPhee

Derrick Harder

Pauline Rafferty

Paul Percival

Michael Stevenson, President and Vice-Chancellor

Judy Zaichkowsky

Nancy McKinstry, Chair

Paulette Johnston

Members not appearing in the photograph:

Brandt C. Loam, Chancellor

C.A. Apaak

Peter Dhillon (new member effective February 2008)

Robert Elton

Brian E. Taylor (new member effective February 2008)

Board of Governors

Responding to the factors that shape the delivery of higher

education and research, SFU has made strides in 2007/08 that

will provide a foundation for further development:

cultural and global priorities signify the need for

new programs centering on the environment, public

health, and contemporary arts and technology;

demographic forecasts in student populations call

for new recruitment initiatives, both nationally and

internationally, as well as providing lifelong learning

opportunities to a broader range of students;

infrastructure developments are required to accommodate

new teaching methods and research programs; and

economic challenges influence the availability of

resources and affect where we choose to invest.

Evaluating how we respond to these factors has been a large part

of 2007/08, and the results provide a basis for moving forward.

The year concluded a rigorous review of our academic

operations. The evaluation of our faculty structure will lead to

a reorganization of our curriculum, and the implementation

of new faculties of the Environment, and Contemporary Arts,

Communication and Design. Completion of the new buildings

at our Burnaby campus for the Faculty of Health Sciences, and

19.

Change in Accounting Policy

Effective April 1, 2007, the University adopted the Canadian Institute of Chartered

Accountants new recommendations for the recognition and measurement of

financial instruments, and amendments to the existing presentation and disclosure

standards. CICA 3855 Financial Instruments—Recognition and Measurement

establishes standards for recognizing and measuring financial assets, financial

liabilities and derivatives. CICA 3861 Financial Instruments Disclosures and

Presentation and CICA 3865 Hedges discuss the presentation and disclosure of

these items. Financial instruments are defined as a contractual right to either

receive or deliver cash or another financial instrument to another party.

Transactions entered in to prior to the adoption of these recommendations

have not been retroactively designated. In accordance with the transitional

provisions, the prior year comparative figures have not been restated.

Pursuant to the requirements of these financial instruments standards,

the University now classifies and recognizes its financial assets and liabilities as

described in the Summary of Significant Accounting Policies. Upon adoption, the

University remeasured its held-for-trading financial assets at their fair value, and

its held-to-maturity investments, loans and receivables and other liabilities at their

amortized cost. This resulted in an increase to investments at April

1, 2007 of

$40,517,000 and was accounted for as follows:

20.

Asset Retirement Obligation

In accordance with Generally Accepted Accounting Principles, the University

recognizes asset retirement obligations where a reasonable estimate of the fair

market value of the obligation and the future settlement date of the retirement

of the asset can be determined. The University has identified potential asset

retirement obligations relating to removal and disposal of environmentally

hazardous building materials in some facilities that may be incurred upon major

upgrades or demolition in the future. At this time, the University has not recognized

these asset retirement obligations as there is an indeterminate settlement date of

any potential future demolition or renovation of the facilities and therefore the fair

value can not be reasonably estimated.

(Dollars i,,

200 8

Operating net assets

3,904

Deferred contributions

36,613

40,517

2007/08 PROGRESS

I Exceeded enrolment targets for both

undergraduate and graduate students

i Completed the Arts and Social Sciences

Complex on Burnaby Mountain

u Maintained fundraising at $32 million

i Won teaching and research awards: Malgorzata

Dubiel, named 3M National Teaching Fellowship

i Increased research revenues to $67 million

the development of the new location for the School for the

Contemporary Arts, will provide the necessary facilities for these

innovative programs.

Although enrolment is growing, we continue to look for new

ways to recruit and retain top students—both across Canada

and globally. Our strategic partnerships in China are helping build

our international reputation, and new partnerships in Indonesia

and Malaysia will further this cause as well. Our goal is not only

to create and to develop unique programs of study that will

attract the best students, but to provide them with an exceptional

university experience once they arrive, we have invested in

upgrading the whole process—from streamlining admissions

procedures, to renovating classrooms, laboratories and student

residences, to offering personalized support to foster student

success.

As one of British Columbia's research intensive institutions,

building our capacity for innovative research is a key priority.

Overcoming the competitive market for attracting top faculty is

vital, both for maintaining the ability to offer graduate students

with unsurpassed research opportunities, and for winning the

research awards that support and fund these endeavours. The

success of our faculty in building our research enterprise is

i Achieved "Go Green" certification from the

International Building and Owner Managers

Association (IBOMA)

I Built strategic partnerships: MOU signed between

SFU and the Public Health Foundation of India to

collaborate on public health in India

I Named one of Canada's Top 10 family friendly

employers

evidenced by our strong level of research funding in 2007/08.

Despite these advancements, this year will also be pivotal

from a financial perspective. Economic realities impede our

ability to move forward at our desired rate, and this is the third

consecutive year that we have funded escalating expenditures

from reserves.

The level of government funding for our core operations,

despite continuing to increase year over year, is not keeping up

with the cost of delivering post-secondary education and research

in British Columbia—particularly at a first class level. Changes to

our financial position are imperative and we have taken the first

steps to turn this around. In the coming year, we will seek out

new ways of being the best, while implementing the means to

restore our strong financial position.

DR. MICHAEL STEVENSON

PRESIDENT

PAT HIBBITTS

VICE PRESIDENT

FINANCE & ADMINISTRATION

Consistent with SFU's strategic direction,

2007/08

saw continued focus on the growth

and development of the Faculty of Health

Sciences and the expansion of programs

at the Surrey campus. Enrolment in both

these areas climbed and we supported this

growth with additional human resources and

capital infrastructure. Moreover, we invested

in initiatives for improving academic and

research quality, and services for our students.

Due to the lack of sustainable government funding and constraints

on tuition fees, fiscal prudence continued through 2007/08 and

the consolidated financial picture finished in a positive position.

Key highlights for the year ended March 31, 2008 are as follows:

I Total revenues increased by 3% to reach $518.5 million. While

competition for research and philanthropic dollars continues

to be strong, SFU increased its level of research funding

and maintained fundraising targets. As expected, operating

revenues from provincial and federal funding increased 3% over

2007, while student fees were up 6% due to a 2% rate increase

and the remainder from growth. Total expenditures escalated

7% to $511.9 million, with salaries and benefits increasing by

$20.5 million.

I Domestic undergraduate enrolment remains strong and

exceeded targets, however international student recruitment

continues to be challenging. undergraduate enrolment at

the Surrey campus increased over 30%, and tripled for the

Faculty of Health Sciences. Raising our international profile and

recruiting students from abroad is a core component of ongoing

enrolment initiatives. Demand for academic programs remains

strong and we continue to attract top students. The admission

average cutoff was 75% in the 2007 fall semester intake, while

the admission average for high school admits was 85%.

Our sponsored research revenue from awards, grants and

contracts increased by $500,000 to $67 million. The federal

government continues to be the largest source of research

funding with over $44 million received from the federal granting

councils, and an additional

$11 million from the provincial

14. Pledges

Pledges made by donors to the University for donations to be received in future

years are estimated at $39,429,000 (2007: $39,313,000). 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.

17.

Related Entities that are not consolidated

TRIUMF

Simon Fraser University is a member along with six (effective April

2008: seven)

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 fractional interest in all the

assets, liabilities and obligations of TRIUMF, except for the land and buildings

occupied by TRIUMF, which are owned by UBC. The facility and its operations are

funded by federal government grants and the University makes no direct financial

contribution and has no expectation of monetary gain from this research venture.

(Dollars In thousands)

2008

2007

Financial Position

Assets

16,607

9,132

Liabilities

11,466

5,299

Fund balances - restricted

3,371

2,633

other

1,770

1,200

Total liabilities and fund balances

16,607

91132

Results of Operations

Revenue

68,524

59,932

Expenses

67,216

58,392

Net revenue

for

the year

1,308

1,540

WCUMBS

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 made no

operating grant to the Society in 2008 (2007: $281,775). Such grants, when made,

are 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 2. 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.

18. Comparative Amounts

Certain amounts on the financial statements for the year ended March 31, 2007

have been reclassified in order to conform to the presentation adopted in the

current year.

MUSEUM OF ETHNOLOGY AND ARCHAEOLOGY, ARTS AND SOCIAL SCIENCES COMPLEX

12. Endowment

Endowment consists of restricted donations to the University. The 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 capitalizing

a portion of investment income in order to maintain purchasing power.

(Dollars in thousands)

2008

2007

Balance, beginning of year

147,667

132,979

Donations

14,431

4,956

Capitalized investment income

5,642

3,892

Equity income for the year from

SFU Community Trust (note 9)

(791)

216

Capitalized

share of GNWCT endowment from BC Govt

4,250

Deferred investment income capitalized under

Burnaby Mountain Matching program

6,277

851

Deferred contributions capitalized pursuant to donor definition

of endowment terms & other endowment fundraising

3,676

523

Balance, end of year

176,902 1

147,667

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" amortized to income over the remaining terms of the leases. Funds

from the Trust are invested to generate income for the benefit of the endowment.

13.

Pension Plans

The assets and liabilities of pension plans are not reflected in the University's

financial statements. The boards of trustees of these plans represent plan members

and the employer and are responsible for the management of the pension plans

including the investment of assets and administration of benefits.

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 2007 were

$9,630,000 (2006: $8,853,000).

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, 2006 shows an actuarial liability of $25,123,000 against

the actuarial value of assets of $29,209,000 resulting in a surplus of $4,086,000.

The valuation is based on the 1994 Uninsured Pensioners Mortality Table, using an

investment rate of return of 6.25% 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:

I 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.

I 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.

I The employer contribution rate is 12.34%, as indicated by the 2004 actuarial

valuation. Employer contributions for calendar year 2007 were $10,047,000 (2006:

$9,202,000).

I 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

2007 were $21,600 (2006: $35,700).

government. An $8.2 million award for research infrastructure

from the Canada Foundation for Innovation and matching

$4 million from BC Knowledge Development Fund was an

admirable achievement for our Faculty of Science, Department

of Physics. To support our objectives, we enrolled over 3,100

graduate students in 2008.

University Advancement raised over $32 million in gifts and

pledges in 2008. Notable fundraising achievements included a

pledge of over $3 million from St. Paul's Hospital Foundation,

the Heart and Stroke Foundation and Pfizer Canada Inc., for

the Pfizer/Heart and Stroke Foundation of BC & Yukon Chair in

Cardiovascular Prevention Research at St. Paul's Hospital; a $4

million gift from the Djavad Mowafaghian Foundation, of which

$1.5 million is for the Containment Lab in Infectious Disease

Research and, $2.5 million is for the Mowafaghian Endowment

in Children's Health Policy Research.

The endowment fund grew to $177 million in 2008. we received

over $14 million in new endowed donations but investment

income fell by 6% over 2006/07 due to market declines.

Capital projects, which are financed through provincial

government funding, federal research councils, fundraising, and

advances from SFU's bond fund resulted in over $55 million of

LIGHTING AND ARCHITECTURAL DETAILS, ARTS AND SOCIAL SCIENCES COMPLEX

spending. This included construction of the Health Sciences

building, the School for Contemporary Arts at Woodwards,

wrap-up of the Surrey campus fit out, and completion of the

Arts and Social Sciences Complex on Burnaby Mountain.

I Our six ancillary operations generated over $33 million in

revenues, an increase of 12% over 2007.

While the year included a number of positive financial gains,

challenges lie ahead. Expenditures continue to out pace revenues

and our general operating net assets were drawn down from

$13.8 million to $3.1 million. The University has resolved to look

proactively at how we can manage the growing gap between our

funding and our costs, and to develop a financial strategy that

rebuilds our reserves to adequate levels. Implementation of these

measures, while continuing to maintain the quality of our core

programs and services, will be a chief priority for 2008/09.

PAT HIBBITTS

VICE PRESIDENT, FINANCE & ADMINISTRATION

FINANCIAL HIGHLIGHTS

Elm

TOTAL REVENUE, ALL FUNDS

The University's total revenue rose 3% or

$16.8

million over 2007

$518.5

million.

(Dollars in thousands)

2008

2007

Change (%)

Government grants and contracts

274,280

267,455

Student fees

141,993

133,998

Sales of goods and services

40,075

38,048

Gifts, grants and contracts

25,614

27,395

(7)

Investment income

19,185

20,492

(6)

Amortization of deferred capital contrib.

10,822

9,454

Miscellaneous income

6,536

4,890

Total

518,505

501,732

The following significant changes contributed to increased revenues for 2008

Government grants and contracts

grew by

due to provincial funding increases

for student growth and wage settlements.

Student fees

increased by

6% due to a 2%

rate increase and growth in graduate

and undergraduate enrolment. Surrey campus enrolment grew by over 30%.

Investment Income

decreased by

due to unfavourable market conditions that

persisted during

2007/08.

1 / REVENUE BY SOURCE

REVENUE 2004-2008

(IN MILLIONS OF DOLLARS)

iii"

SFU COMMUNITY TRUST, FINANCIAL SUMMARY

(Dollars in thousands)

2008

2007

FINANCIAL POSITION

Total assets

26,834

15,996

Total liabilities

13,007

8,658

RESULTS OF OPERATIONS AND TRUST BALANCE

Revenue

6,674

8,433

Expenses

8,311

6,152

Net income (loss) for the year

(1,637)

2,281

Trust balance, beginning of year

7,338

7,317

Allocation to beneficiaries during year

(2,260)

Transfer of land rights from the University

8,126

! JTust balance; end of year

CASH FLOWS

Operating activities

7,729

8,375

Investing activities

(9,693)

(5,691)

Financing activities

346

(1,032)

10.

Internally Restricted for Operating Commitments

(Dollars in thousands)

Operating budget carryovers

Market adjustment of operating investments, at year end

Auxiliaries and special projects

Research and other grants

23,574

34,294

Less: accrued but not funded

Employee future benefits, funded liability

22,135

19,896

Accrued liability

(36,729)

(34, 869)

Unfunded portion

(14,594)

(14, 973)

Vacation pay

(5,820)

(5, 440)

(20, 414)

(20, 413)

3,160

13,881

Operating Commitments is composed of carryover funds for faculties and

departments under a policy allowing them to carry over unspent budget. It includes

unspent balances on specific projects and internally funded research in progress.

Market Adjustment of Operating Investments represents the cumulative gain

(loss) to adjust investments related to all activities except endowments from cost to

market value. As described in note 19, an accounting policy adopted during the year

affects this accounting, and as it was applied retroactively without restatement,

there is no comparative amount presented for 2007.

ii. Internally Restricted for Capital, Lease & Other

Commitments

2008

2007

(1,141)

(1,116)

4,507

8,765

16,636

17,336

16,096

16,250

521

706

36,619

41,941

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.

Property and equipment represents funds restricted to capital projects.

Specific purpose represents funds from various sources that are allocated

internally to specific activities.

Long-term 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, a contribution towards operating costs, and to

fund amortization of the Prepaid Lease.

During the year, the University prepaid a termination payment due at the expiry

of the lease in December 2017 as the terms were favorable to the University. The

Prepaid Lease will be amortized over the remainder of the lease.

Commitments in relation to the Harbour Centre lease for the next five years are

$331,000 per year.

Self-insurance funds are held to pay self-insured property and liability losses.

274 GOVT GRANTS & CONTRACTS

142

STUDENT FEES

SALES OF GOODS & SERVICES

SIFTS, GRANTS & CONTRACTS

19INVESTMENT INCOME

AMORT. DEFERRED CAP, CONTRIB

MISCELLANEOUS INCOME

TOTAL

2008

2007

9,972

15,334

(1,904)

3,048

4,195

12,548

14,765

(Dollars in thousands)

Ancillary enterprises

Property and equipment

Specific purpose

Long term lease commitment

Self insurance

400

1111

momm

478

455

308 SALARIES AND BENEFITS

105 SUPPLIES AND SERVICES

AMORTIZATION OF ASSETS

SCHOLARSHIPS & BURSARIES

COST OF GOODS SOLD

INTEREST & AMORTIZATION

RENOVATIONS B ALTERATIONS

TOTAL

512

TOTAL EXPENSES, ALL FUNDS

Total expenses for the year increased by 7% to $512 million. Changes include

Salaries and employee benefits

represent 60% of total annual expenses. The

increase in salaries of $20.4 million is due to government funded wage settlements,

merit increases, progression through the ranks, and growth in faculty and staff.

Supplies and services

were higher due to an increase in new facilities-related

contracts at the Surrey campus, and an increase in travel costs for field programs.

Scholarships and bursaries

increased 9% over 2007/08 due to our continuing

commitment to provide students in need with financial assistance.

Renovations and alterations

spending in 2006/07 was elevated due to a one time

increase of $2.5 million in the Annual Capital Allowance grant received in 2006. in

2007/08 spending returned to previous levels.

Interest on long-term debt

grew 48% due to the completion of Construction

on many of our major capital projects and as such the interest is no longer being

capitalized.

(D,llarsir,

2008

2007

change

(%l

Salaries and benefits

308,287

287,829

Supplies and services

104,628

95,909

Amortization of capital assets

41,858

39,873

Scholarships and bursaries

25,828

23,802

Cost of goods sold

12,163

11,218

interest & amortization on long-term debt

10,614

7,186

Renovations and alterations

8,411

12,313

(32)

Total

511,789

478,130

3 I

EXPENSES 2004-2008

4 / EXPENSES BY SOURCE

(IN MILLIONS OF DOLLARS)

)IN MILLIONS OF DOLLARS)

EQUITY IN SFU COMMUNITY TRUST

The university records its equity accounted interest in the income (loss) of the Trust as a direct increase (decrease) in

net assets held as endowment principal as described in note 12. This amounted to a loss of $791,000 (2007: income of

$216,000) and was determined as follows:

(Dollars in thousands)

2008

2007

NET INCOME FROM TRUST

Net income (loss) as reported by the Trust

(1,637)

2,281

Adjustment of land value on transfer to Trust realized through sale of leases

227

460

Elimination of rent expense in the Trust paid to SFU

401

(1,007)

2,741

Less: net income deferred to future years to be amortized over terms of leases

(2,714)

Portion of income of prior year recognized this year

216

189

CHANGE IN DEFERRED LEASE PROCEEDS

EQUITY

TRUST

Net income (loss) to University from Trust, per above

(791)

216

Trust allocations to beneficiaries

Foundation

(960)

University

(1,300)

Base rent elimination

(401)

Change in the year

(1,194)

(2,044)

Balance, beginning of year

(16,710)

(14,666)

Balance, end of year

III!J

DEFERRED LEASE PROCEEDS / EQUITY IN TRUST COMPARED TO TRUST BALANCE

Deferred lease proceeds! equity interest in Trust, end of year, per above

(17,904)

(16,710)

Adjustment of land value on transfer to Trust not realized through sales of leases

on original transfer

2,971

3,198

on transfer during the year

8,126

income recognized in the Trust, but deferred by the University

to be recognized in relation to the underlying leases

20,634

balance, end of year

Trust

20,850

ASSETS

2008

2007

767,267

699,932

352,731

300,635

50,227

54,285

3,066

1,173,291

1,054,852

Property and equipment

is a combination of capital projects for buildings and

leasehold improvements, as well as library acquisitions, computers, and furniture

and equipment. Capital investment increased by $67 million. $55 million was

spent on major capital construction for the Health Sciences building, the School

for Contemporary Arts at the Woodwards' redevelopment, the completion of the

Surrey campus and the completion of the Arts & Social Sciences building on Burnaby

Mountain; $16.5 million in computer acquisitions of which $5 million was donated

from IBM Canada; $14.4 million in furniture and equipment; and $9.4 million in library

collections.

STUDENTS IN NEW COMPUTER LAB, SFU BURNABY CAMPUS

Investments

consist of endowments and general operating funds. In accordance

with the new accounting standards implemented this year, investments for 2008

are reported at market value while the 2007 figure is at cost. The end of year market

adjustment at March 31, 2008 for the investment portfolio was an increase in $13.3

million.

The prepaid lease

is related to Harbour Centre. It required an $8 million payment at

the end 2017. we had the option of prepaying the obligation by discounting it at an

effective rate of 10.5% per year. we have exercised the option and prepaid $3 million

in 2008.

5 /ASSETS 2004-2008

/ASSETS BY SOURCE

(IN MILLIONS OF DOLLARS)

1173

An actuarial valuation as at March 31, 2006 reports an unaccrued liability of

$9,166,000. This is being amortized over the average remaining service period of

active employees covered by the non-pension benefits, which as of March 31, 2008

is 7 years.

The valuation is based on the RP-2000 Mortality table, 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 as at 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 SUBTOTAL PROPERTY &

2008

2007

(Dollars in thousands)

RESEARCH PURPOSE

EQUIPMENT

TOTAL

Opening balance

31,697

14,468

46,165

324,676

370,841

323,030

Opening market

adj. for endowment

investments (note 19)

36,613

Contributions in

the year

67,022

19,345

86,367

49,922 I 136,289

154,619

Decrease in unrealized

market value of

endowment

investments in year

(21,364) (21,364)

(21,364)

Transferred

to revenue

(65,615) (23,447) (89,062)

(10,822)

(99,884)

(106,808)

Balance, end of year

33,104

2 5, 61 5

58,719

363,776 422,495

370,841

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 $363,776,000 of deferred

contributions for property and equipment represents the unamortized portion of

restricted capital advances relating to assets which were purchased with restricted

contributions.

Deferred contributions, specific purposes

(Dollars ithousands)

2008

2007

External non-research Contracts

7,480

7,303

Endowment & other externally restricted spending accounts

2,886

7,165

Market adjustment

of endowment investments

15,249

Balance, end of year

25,615 j

14,468

Market adjustment of endowment investments represents the cumulative gain

at the end of the year to adjust endowment related investments from cost to

market value. These funds are utilized to stabilize funding available for endowment

spending and to fund preservation of the capital of endowments. As described in

note 19, an accounting policy adopted during the year affects this accounting and as

it was applied retroactively without restatement, there is no comparative amount

presented for 2007.

9 .

Deferred Lease Proceeds / Related Entities

accounted for by the equity method

SFU Community Trust is developing 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 with the income amortized

over the 99 year terms of the related leases.

Since its inception, the Trust has distributed $19,800,000 (2007: $19,800,000) to

the University and $2,060,000 (2007

.$2,060,000) to the Foundation. Cumulatively,

the University has, on an equity accounted basis, recognized $3,477,000 (2007:

$4,269,000) as income capitalized to the endowment. However, the entire actual

funds received, $19,800,000, is invested for the benefit of the endowment.

SFU Community Corporation, a company 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.

(Dollars in thousands)

Property and equipment

Investments

Current assets

Prepaid lease

Total

767 PROPERTY AND EQUIPMENT

352

INVESTMENTS

CURRENTASSETS

PREPAID LEASE

TOTAL

LIABILITIES

•

(Dollars i's thousands)

2008

2007

Current liabilities

60,081

51,219

Employee future benefits

36,729

34,869

•

Long term debt

157,674

152,560

Deferred contributions

58,719

46,165

Deferred contributions for property & equipment

363,776

324,676

Deferred lease proceeds

17,904

16,710

Total

694,883

629,199

As at March 31, 2008, the University had committed to contracts for the

construction and acquisition of buildings that involve future expenditures of

approximately

$49,500,000.

6. Long-term Debt

(Dollars in thousands)

Demand loan

Term loan

Mortgages-student residences

Mortgages -Verdant

Debentures-senior unsecured

Debentures-Province of

unsecured

Unamortized debt discount and issue costs

Current portion

Total long-term debt

Demand loan is the University's share of the Great Northern Way Campus Trust

(GNWCT) demand loan and revolving loan. The loan bears interest at prime plus

0.65%,

has interest only payments, and the principal is due on demand. Pursuant to

an interest rate swap agreement, the interest on

$2,500,000

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

3.80%

and is due August

15, 2008.

Mortgages secured by student residence buildings bear interest at rates

between

5.375% to

6.875%

and mature between January

1, 2017

and July

1, 2019

with annual payments of

$248,000

including principal and interest until maturity.

Mortgage secured by the Verdant rental units bears interest at

5.20%

to June

2017, matures June 3, 2037 and is payable in quarterly payments of

$84,000.

Senior Unsecured Debentures issued by the University for $150,000,000

at 5613%

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, unsecured, pursuant to

the Financial Administrative Act, bear interest rates from 8.75% to 9.5%,

and mature

between 2012 and 2022.

Annual payments including principal and interest and sinking fund payments

due within the next five years are as follows:

Annual payments for the next five years

(Dollars in thousands, with priori/sal & interest)

2009

2010

2011

2012

2013

21,503

10,185

10,246

9,867

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, which are 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

$10,456,000 (2007:

$9,989,000).

Based on historical experience, the maximum potential claim is not paid

to all claimants. Accordingly, a lesser amount is accrued for group self-insurance

liability, being

$6,128,000 (2007: $5,811,000).

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. This liability is fully accrued as 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.

NON-PENSION BENEFITS

The non-pension benefits amount represents portions of premiums payable to

current and eligible future retirees for the Medical Services Plan, Extended Health

Benefits and Dental Benefits. New employees are not eligible for this benefit. The

accrued benefit liability for non-pension benefits is

$26,055,000 (2007: $24,455,000).

7 / LIABILITIES 2004-2008

8 / LIABILITIES BY SOURCE

(IN MILLIONS OF DOLLARS)

DEFERRED CAP. CONTRIBUTIONS

364

158

LONG-TERM DEBT

CURRENT LIABILITIES

DEFERRED CONTRIBUTIONS

EMPLOYEE FUTURE BENEFITS

DEFERRED LEASE PROCEEDS

TOTAL

Long-term debt

increased in 2008

was due to an additional $5 million mortgage for

the Verdant housing Complex at UniverCity.

Deferred contributions

are externally restricted resources that are not recognized

as revenue until the related expenses are incurred. The increase in deferred

contributions is due to growth in restricted research contributions and other

contracts as well as the market adjustment for endowment investments.

Deferred capital contributions

represent the unamortized portion of restricted

capital advances. The balance has increased due to contributions received for

ongoing major capital projects including the Health Sciences building and the

Woodward's redevelopment for the School for the Contemporary Arts. The funding

is held in deferred capital contributions until the buildings are complete and the

related amortization is recorded. The balance also includes amounts for gifts in kind,

such as the donation of computers from IBM.

ARCHITECTURAL DETAIL, STUDENT RESIDENCES

7. Employee Future Benefits

2008

2007

GROUP

EARLY

NON-PENSION

2008

2007

5,875

2804

(Dollars wthousands)

INSURANCE

RETIREMENT

BENEFITS

TOTAL

4,907

4,249

opening balance

5,811

4,603

24,455

34,869

33,122

1,915

2,051

Current costs

1,099

5,045

Interest on benefit obligation

317

255

1,624

2,196

2,166

150,000

Adjustment and amortization

11,000

of net actuarial loss

(390)

(413)

(9910)

(10199)

6,128

4,858

26,788

37,774

35,974

168,832

159,905

Disbursements

(312)

(733)

(1,045)

(1,105)

(11,158)

(7345)

Balance end of year

6,128

4,546

26,055

36,729

34,869

157,674

152,560

695

629

596

544

487

1 06 1

Capital Disclosures

Investments include sinking funds held and invested by the Province of British

CICA Handbook Section 1535, Capital Disclosures, requires disclosure of an entity's

Columbia. These funds totaled $5,776,000 (2007: $4,604,000) and will provide for

objectives, policies and processes for managing capital, quantitative data about

the retirement of debentures issued to the Province at maturity. Annual sinking

what the entity regards as capital and whether the entity has complied with any

fund payments due within the next five years are included in the debt repayment

capital requirements and, if it has not complied, the consequences of such non-

schedule in note 6.

compliance. This standard is effective for the University's fiscal year beginning April

1, 2008. The University is currently assessing the impact of the new standard.

Bonds and Debentures

Analysis

2008

2007

3 .

Cash and Short-Term Investments

(Doll.rs inthousasds)

MARKET

COST

MARKET

Cash and short-term investments includes demand deposits in Canadian financial

Government bonds

institutions and investments maturing in less than one year. Short-term investments

Federal

21,127

22,766

22,965

Provincial & municipal

26,783

22,351

23,243

are recorded at market value.

,,....,....

47,910

45,117

46,208

T..

fli

Corporate debentures

32,742

19,869

20,079

(Dollars isthousands)

2008

2007

Indexed bond fund

64,813

60,894

61,334

Cash

20,991

15,032

Total

bonds

and debentures

145,465

[125,880

127,621

Cash equivalents

2,699

3,585

..JJ

Bonds maturing under one year

5,736

15,323

Total

29,426

33,940

5• Property and Equipment

Investments

COST ACCUMULATED

2008

2007

(Dollars is thousands)

AMORTIZATION

NET

Buildings

Long-term investments

Concrete

686,496

140,784

545,712

500,290

2008

2007

Wood

22,567

10,814

11,753

12,392

(Dollars in thousands)

MARKET

COST

MARKET

Site services

35,017

10,482

24,535

24,465

Bonds and debentures

145,465

125,880

127,621

Leasehold improvements

11,869

6,855

5,014

5,624

Canadian equities

112,026

89,374

117,830

Computing equipment

32,494

7,934

24,560

11,473

Foreign equities

42,991

42,758

51,041

Equipment and furnishings

110,250

37,014

73,236

68,305

Long term annuity

12,135

12,021

Library books

76,300

31,095

45,205

43,000

Long term promissory note

8,121

8,922

Special collections

7,151

6,574

Sinking fund

5,776

4,604

Land and property rights

30,101

21,809

Private equities

8,076

3,027

2,637

Total

property & equipment

1,012,245

244,978

767,267

699,932

VGarenacot uNveorr

thFeorun

nWdaaty ion

portfolio investments

9,7,022

022

5,6,305

778

734

_Ji

Donated hedge fund

2,097

1,966

Space n the Central City complex for the Surrey campus s included n buildings.

Total Long-term Investments

352,731

300,635

341,154

The 429 acres of land in Burnaby is recorded in the financial statements at its 1965

assessed value of $572,000. A portion of this land is set aside for development by

the SFU Community Trust.

(Dollars is thousands)

2008

2007

Internally restricted for operating commitments

3,160

13,881

Internally restricted for capital & lease commitments

36,619

41,941

Investment in property, plant and equipment

261,727

225,164

Endowment

176,902

147,667

Total

478,408

428,653

FINANCIAL POSITION, NET ASSETS

Internally Restricted Operating Commitments

are primarily derived from carry

forward balances at the department level and are used to fund non-recurring costs.

Internally Restricted for Capital and Lease Commitments

are for non-operating

commitments which relate principally to capital commitments ($4.5 million) and

long-term lease commitments ($16 million). They also include reserves for the

Specific Purpose Fund ($16.6 million) which are designated for service contracts.

INVESTED IN PROPERTY AND EQUIPMENT

ENDOWMENT

INTERNALLY RESTRICTED FOR CAPITAL & LEASE

INTERNALLY RESTRICTED FOR OPERATING

STUDENTS IN SFUS TOWN SQUARE IN THE ENIVERCITY DEVELOPMENT

NET ASSETS 2004-2008

IN MILLIONS OF DOLLARS)

478

interest method. Gains and losses arising from changes in fair value are recognized

in net income upon derecognition or impairment. Given the short-term nature of

these items their carrying value equates to their fair value.

Other financial liabilities

The university has classified accounts payable and long-term debt as other financial

liabilities for financial reporting purposes. These liabilities are initially recognized at

cost. Other financial liabilities are subsequently measured at their amortized cost,

using the effective interest method. Gains and losses arising from changes in fair

value are recognized in net income upon derecognition or impairment.

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.

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.

Estimated useful life

(Time i, yea rs)

Site services

concrete

wood frame

Library books

Equipment and furnishings

Computing equipment

Leasehold improvements

Term of Lease

No amortization is taken on land, property rights, 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.

PREPAID LEASE

Prepaid lease expense is capitalized and amortized over the term of the related lease.

DEBT DISCOUNT AND ISSUE COSTS

Debt discount and costs related to debt issues are capitalized and amortized over

the life of the debt.

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.

NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements that have been issued but are not yet effective

and have a potential implication for the University, are as follows:

Inventories

The CICA has issued Section 3031—Inventories, which provides guidance on

determining cost as well as other recognition, measurement, disclosure and

presentation issues related to inventories. The standard includes guidance on the

treatment of excess capacities, inventory valuation and write-downs and additional

elements to be considered in measuring inventory costs. The University does not

expect the adoption of these changes to have a material impact on its financial

statements.

Financial instruments—disclosures and presentation

CICA Handbook Section 3862, Financial Instruments—Disclosure, increases

disclosures currently required to enable users to evaluate the significance

of financial instruments for an entity's financial position and performance,

including disclosures about fair value. CICA Handbook Section 3863, Financial

Instruments— Presentation, replaces the existing requirements on the presentation

of financial instruments, which have been carried forward unchanged. These

standards are effective for the university's fiscal year beginning April 1, 2008.

Adoption of the new standards will result in the University revising its disclosure

and carrying its presentation forward unchanged. These include both qualitative

and quantitative disclosure about the nature and extent of risk arising from financial

instruments and how the University manages those risks.

SPONSORED RESEARCH REVENUE

(Dollars in thousands)

Federal research councils

Province of British Columbia

Canada Foundation for Innovation (CFI)

Canada Research Chairs (CRC)

Other sources

Total

RESEARCH REVENUE 2004-2008

(IN MILLIONS OF DOLLARS)

11111

Research is principally funded by the federal granting agencies and the provincial

government. At March 31, 2008, there were over 2,000 active research projects

with total budgets of over $127 million. Notable research grants received in the year

include a Canada Foundation for Innovation award of $8.2 million and a $4 million

award from BC Knowledge Development Fund for the Department of Physics, and

a 5 year award from Canadian Institute of Health Sciences of $2.3 million for the

Faculty of Health Sciences.

SFU increased its level of sponsored research revenue to $67 million. Our

success in competing for research dollars is attributable to our outstanding faculty

and students, and innovative research programs.

2008

29,506

10,784

7,597

5,375

13,759

67,021

11 /

RESEARCH REVENUE BY SOURCE

(IN MILLIONS OF DOLLARS)

FEDERAL RESEARCH COUNCILS

PROVINCE OF BC

cii

CRC

INTL B CORPORATE SPONSORS

TOTAL

NOTES

THE

FINANCIAL STATEMENTS Simon Fraser university I For Year En ed March 31, 2008

ENDOWMENT FUND

Endowments are donations that are restricted by the contributor. They are designed

to preserve capital and purchasing power. In 2008,

donations and capitalized

investment earnings of

$29

million increased the endowment fund to

$177

million.

Investments related to the Endowment Fund include not only the net assets of

the Endowment Fund but also the deferred lease proceeds from the SFU Community

Trust of

$17.9 million. Deferred lease proceed revenue is recognized over the 99 year

lease term, but the amount is prepaid and held in the investment portfolio.

The endowment fund investment benchmark is 70% equity securities and

30%

fixed income and cash.

ANCILLARY SERVICES

The six ancillary Services provide goods and services to the University community.

They include:

SFU Bookstores located in Burnaby, Harbour Centre, and Surrey.

Residences that have accommodation capacity for

1,850 students and provide 14 hotel rooms.

Food Services 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

spaces and encourage the use of transit for environmental benefits.

Document Solutions provides both digital and traditional printing services.

II Microcomputer Store in the Cornerstone building sells personal

computers and supplies to the university community.

Revenues are generated to cover operating expenses, debt service payments,

and to provide reinvestment to ensure long-term financial viability. Revenues

increased 12% over 2007

to $33.5

million.

(Dollars in thousands)

2008

2007

Bookstores

13,364

12,182

Residences

12,976

11,479

Parking

4,110

3,629

Microcomputer Store

2,308

2,158

Food Services

690

451

Document Solutions

Total ancillaries net revenue

33,516

29,936

ONSITE CONFERENCE CATERING AT SFU VANCOUVER'S HARBOUR CENTRE

ENDOWMENT FUND 2004-2008

ANCILLARIES REVENUE 2004-2008

(IN MILLIONS OF DOLLARS)

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.

Significant Accounting Policies & Reporting Practices

ACCOUNTING METHOD

The financial statements are prepared in accordance with Canadian generally

accepted accounting principles for not-for-profit organizations. These principles are

consistent with those used in prior years.

The deferral method of accounting for contributions is used. Net assets are

reported in relation to general operating, internally restricted, invested in property

and equipment, and endowments. 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

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 restrictions on the use of the funds by the contributors.

II 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.

I If the property and equipment acquired is land, property rights

or a special collection item, the amount is recorded as a direct

increase to net assets invested in property and equipment.

I If the property and equipment 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 property and equipment. Amortization

of deferred capital 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.

FINANCIAL INSTRUMENTS

The University's financial instruments consist of cash and short-term investments,

accounts receivable, long-term investments, accounts payable and long-term debt.

These financial instruments are accounted for as follows:

Held-for-trading

The University has designated cash and short-term investments and long-term

investments on initial recognition as held-for-trading. These instruments are initially

recognized at cost. Upon application of the financial instruments accounting policy,

they are recognized at their fair value, determined by published price quotations

in an active market. Transaction costs to buy or sell these items are recognized in

income on the settlement date. Net gains and losses arising from changes in fair

value are recognized immediately in income unless funds are externally restricted.

Loans and receivables

The University has classified accounts receivable as loans and receivables for

financial reporting purposes. These assets are initially recognized at cost. Loans and

receivables are subsequently measured at their amortized cost, using the effective

11111

(Dollars in !housauls)

FOR THE YEAR ENDED MARCH 31, 2008:

OPERATING ACTIVITIES

Net revenue for the year

2'0'0'1..........

6,716

..................

2'0'0'7

23,602

Items not involving cash

Amortization of deferred contributions, property & equipment

(10,822)

(9,454)

Amortization of property & equipment

41,858

39,873

Amortization of debt discount and issue costs

289

298

Employee future benefits

1,860

39,901

1,747

56,066

Changes in non-cash operating balances

Accounts receivable

(2,133)

16,239

Inventories

487

(77)

Prepaid expenses

1,190

Prepaid lease

(3,066)

Accounts payable and accrued liabilities

5,049

(12,994)

Deferred contributions

12,554

(499)

STATEMENT OF

CASH FLOWS

SIMON

FRASER UNIVERSITY

2007/08

8'2

581

INVESTING ACTIVITIES

Net increase in long-term investments

(48,194)

(30,835)

Property and equipment acquisitions

(99,292)

(139,112)

Endowment contributions

29,235

14,472

Net equity loss from SFU Community Trust

1,194

Distributions from SFU Community Trust

2,261

(1)]

FINANCING ACTIVITIES

Deferred contributions for property & equipment

49,922

57,764

Long term debt proceeds

8,829

5,577

Debt principal repaid

(190)

(8,283)

Net decrease in cash and short term investments

(4,514)

(39,365)

Cash and short

term investments, beginning of year

obI

33,940

73,305

STATET OF

CHANGES IN NET

ASSETS SIMON FRASER UNIVEY 2007/08

INTERNALLY RESTRICTED COMMITMENTS

IN VESTED IN

(Dollars in thousands)

GENERAL

CAPITAL

PROPERTY &

ENDOWMENT

FOR THE YEAR ENDED MARCH 31, 2008:

OPERATING

LEASE & OTHER

EQUIPMENT

PRINCIPAL

NET ASSETS, BEGINNING OF YEAR

(20,413)

34,294

41,941

225,164

147,667

Reclassification of accrued but not funded

commitments to Internally restricted

As restated

20,413

(20, 413)

13,881

41,941

225,164

147,667

CHANGES FOR THE YEAR

Opening market adjustment for operating investments (note 19)

3,904

Net Revenue for the Year

6,716

Transfers

Change in restricted for specific commitments

16,043

(10,721)

(5,322)

Increase in investment in property & equipment

(26,663)

26,663

Donation of property rights

9,900

Endowment transactions

Contributions and other transfers

18,107

Capitalized investment income

11,919

SFU Community Trust equity income (loss) (note 9)

(791)

XI I8XJ?

Invested in property & equipment represented by

Property and equipment

767,267

Sinking fund investment

5,776

Long term debt, before current portion

(168,832)

Deferred contributions for property equipment

(363,776)

Net current assets and liabilities in capital fund

(162)

Deferred capital contributions

13,333

Long term donation receivable

8,121

STATEMENT OF

(Dollars in thousands)

....

OPERATIONS AND

FOR THE YEAR ENDED MARCH 31, 2008:

...

2008

................................................

007

CHANGES IN NET ASSETS

Government grants and contracts

SIMON FRASER UNIVERSITY

Province of British Columbia

211,811

203,536

2007/08

Government of Canada

60,941

62,017

other governments

1,528

1,902

Tuition - Credit courses

125,450

118,330

Non-credit courses

7,341

6,894

Other

9,202

8,774

Sales of goods and services

40,075

38,048

Gifts, grants and contracts

25,614

27,395

Investment income

19,185

20,492

Amortization of deferred contributions: property & equipment

10,822

9,454

Miscellaneous income

6,536

4,890

518,505

501,732

EXPENSES

Salaries

258,900

242,634

Employee benefits

49,387

308,287

45,195

287,829

Amortization of property & equipment

41,858

39,873

Scholarships, bursaries & prizes

25,828

23,802

Other operational expenses

25,810

24,734

Travel and personnel expenses

17,837

15,540

Professional fees

17,683

16,703

Materials and supplies

15,246

14,595

Cost of goods sold

12,163

11,218

Interest on long-term debt

10,316

6,888

Contract services

10,135

8,226

Renovations and alterations

8,411

12,313

Utilities

7,801

6,796

Equipment rental and maintenance

5,098

4,620

Grants to other agencies

5,018

4,695

Amortization of bond discount and issue costs

298

511,789

298

478,130

CHANGES IN NET ASSETS

Decrease in net assets restricted for commitments

16,043

19,230

Increase in investment in property and equipment

(26,663)

(42,832)

Net change in operating net assets

(3,904)

Operating net assets, beginning of year (note 19)

3,904

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 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, 2008

have been reported on by the Auditor General of British Columbia.

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 13, 2008

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.

The financial statements present fairly the financial position of the University as at March

31, 2008

and the results of its operations and its cash flows for the year then ended.

18 I

dk%

Report of the Auditor General

of British Columbia

The comparative figures as at March 31, 2007 and for the year then ended were reported upon by other public accountants who

expressed an opinion without reservation in their report dated May 12, 2007.

Approved:

NANCY MCKINSTRY

CHAIR, BOARD OF GOVERNORS

PAT HIBBITTS

VICE PRESIDENT, FINANCE & ADMINISTRATION

The accompanying notes are an integral

part of these financial statements.

STATE

T OF FINANCIAL POSITION SIMON FRASER UNIVERSI

007/08

(Dollars

thousands)

FOR THE YEAR ENDED MARCH 31, 2008:

ASSETS

Current Assets

2008

2007

Cash and short-term investments (note 3)

29,426

33,940

Accounts receivable

16,944

14,811

Inventories

1,563

2,050

Prepaid expenses

2,294

50,227

3,484

54,285

Investments (note 4)

352,731

300,635

Property and equipment (note 5)

767,267

699,932

Prepaid lease (note 11)

Total assets

LIABILITIES AND NET ASSETS

3,066

1,173,291

Current Liabilities

Accounts payable and accrued liabilities

48,923

43,874

Current portion of long-term debt (note 6)

11,158

60,081

7,345

51,219

Employee future benefits (note 7)

36,729

34,869

Long-term debt (note 6)

157,674

152,560

Deferred contributions (note 8)

58,719

46,165

Deferred contributions for property and equipment (note 8)

363,776

324,676

Deferred lease proceeds (note 9)

17,904

694,883

16,710

626,199

NET ASSETS

Operating

Internally Restricted for commitments

Operating (note 10)

3,160

13,881

Capital, lease and other (note 11)

36,619

41,941

Invested in property and equipment

261,727

301,506

225,164

280,986

Endowment (note 12)

176,902

478,408

147,667

428,653

Total Liabilities and Net Assets

1,173,291

1,054,852

Victoria, British Columbia

John Doyle, MBA, CA

May 13, 2008

Auditor General

I have audited the statement of financial position

of Simon

Fraser University

as at March 31, 2008 and the statements of operations

and changes in 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. My 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

Simon Fraser University as at

March 31, 2008 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally

accepted accounting principles.

To the Members

the Board

Governors

Simon Fraser University, and

To the Minister ofAdvanced Education,

Province of British Columbia: