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YEAR OF 'NEW. BEGINNINGS

Simon Fraser University

Annual Financial Report

MARCH 31. 2011

'"'-'.

Our mission is to advance knowledge through teaching,

research, and engagement with the community. We are an

open, inclusive university whose foundation is intellectual

and academic freedom. Our scholarship unites teaching and

research: we celebrate discovery, diversity and dialogue.

Our students and communities can expect teaching that

is personal and learning opportunities that are lifelong.

We champion the liberal arts and sciences and pioneering

interdisciplinary and professional programs. We are a

university where risks can be taken and bold initiatives

embraced. Upon these foundations, we will engage all

our communities in building a robust and ethical society.

OUR VALUES AND COMMITMENTS

Message from the Chair, Board of Governors

Message from the President

Message from the Vice President, Finance and Administration

2010/11 in Review

Our People

Growth and Accomplishments

Getting to Know Simon Fraser University

Student-Centred

Research-Driven

Community-Engaged

Our Faculties

Management Discussion and Analysis(Unaudited)

Forward Looking Statements

Planning and Management

Financial Highlights

Financial Information

Operating Environment

Risks and Uncertainties

Information on Related Organizations

Statement of Management Responsibility

Report of the Auditor

Financial Statements

Financial Position

Operations

Changes in Net Assets

Cash Flows

Notes to the Financial Statements

Board of Governors

SFU ANNUAL FINANCIAL REPORt 2010/11

the Board of Governors would like to recognize the

contributions of Michael Stevenson and thank him

for laying the foundation for future development

and growth at Simon Fraser University.

Concurrently, we welcome Professor Andrew

Petter as our new leader and look forward to

working together to build on SFU’s strengths.

the Board would also like to thank the University

Community and the Finance staff for their

efforts in making this a sound financial year.

I have the privilege of serving with a very dedicated

group of community-oriented volunteers. It is an

honour to represent the University Community

as Chair of SFU’s Board of Governors.

robert g elton

C hAir, BoArd o F GoVernors

r obert g e lton

CHAIR, BOARD OF GOvERNORS

This year

2(010/11)

was a year of transition with the retirement

of President Emeritus Michael Stevenson. As President of

sfu

from

2000

2010,

Dr. Stevenson transformed

sf, uleading

one

of the most ambitious and successful programs of organizational

change, growth and development in any Canadian university.

SFU ANNUAL FINANCIAL REPORt 2010/11

2010/11 brought announcements of a new

chancellor, and the completion of a new downtown

facility for the School for the Contemporary Arts

in the dynamic Woodward’s redevelopment.

Significant research activity combined with a wide

range of innovative programming contributed to SFU’s

recognition in the

Maclean’s

ratings for the third year in

a row as Canada’s leading comprehensive university.

this was also a year of great achievements on the

fundraising front with donations to the University

reaching over $52 million, a new milestone.

SFU remains committed to delivering an

outstanding undergraduate student experience

through exposure to high caliber teaching, ground-

breaking research, co-op and other experiential

learning programs, and international opportunities

such as exchanges and field schools.

We can also be proud that SFU has been recognized as

a research leader amongst Canadian comprehensive

universities, and a national model for business

incubation, entrepreneurship and technology transfer.

In 2010 we were pleased to announce the Surrey

campus will develop 5,000 square metres of new

classrooms and science and research labs. Given the

needs and aspirations of the South Fraser region, we

are hoping to see this capacity continue to grow.

Environmental considerations are an important part

of planning for our future. For example, the Surrey

campus has developed numerous programs and projects

to solidify SFU’s status as a leader in sustainability.

We are also proud that SFU earned the only four-

star rating given to a higher-education institution

for its energy-management business practices.

SFU can take pride in its record and reputation as a

major contributor to social, cultural and economic well-

being of the communities it serves. A recent economic

impact assessment calculates that the University

adds over $3.6 billion annually to the local economy.

In early 2011, we launched en

vision>SFU

— a broadly-

based consultation process to develop a strategic vision

that will help to define and guide the University over the

next five years. By engaging both internal and external

communities in its development, we hope to strengthen

our identity and cultivate a shared sense of mission.

t hrough these and other developments of 2010/11,

SFU remained united in its common purpose: to

advance knowledge through teaching, research,

and engagement with the community.

Pro F. Andrew Petter

President A nd V iCe-Ch AnCellor

The year ended March ,31

2011

was a period of new beginnings for Simon

Fraser University. Having taken up my appointment on Septem, be2r

010

sfu’s

ninth president and vice-chancellor, I am delighted to have been given

the opportunity to lead a university with strong commitments to undergraduate

learning, advanced research, graduate studies and community enrichment.

Pro F. Andrew P etter

PRESIDENt AND vICE-CHANCELLOR

SFU ANNUAL FINANCIAL REPORt 2010/11

Our positive financial results are primarily attributable

to international enrolment, which was higher than

anticipated and greater than planned; a strong

recovery of investment portfolios caused by the

rebound in financial markets; and diligent financial

management which resulted in controlled expenses.

t he 2010/11 year also benefited from generous

philanthropic pledges to support SFU’s

programs: $10 million pledge from Goldcorp

Inc.; and a record $22 million pledge from

alumnus Ryan Beedie and his father, Keith.

Going forward, a projected actuarial valuation of the

Administrative/Union Pension Plan poses a substantial

financial risk. In addition, deferred maintenance of

the capital buildings on the Burnaby campus poses a

funding challenge. Funding for pensions and deferred

maintenance comprise SFU’s top financial challenges.

Although we have experienced a rebound in financial

markets, early in 2010 the economic recovery

began to lose momentum with the impact of several

significant global economic events. Concerns

over sustainability of the improved growth have

triggered instability in investment markets.

As we enter 2011/12, we will continue to be diligent

in our investment portfolio management as we are

cognizant of the ever-changing economic landscape.

Beginning the new year in a strong financial

position allows us to be both confident in our fiscal

achievements and to endure the risks associated

with economic instability and our current financial

challenges. In 2011/12 we will continue to work

towards mitigating the University’s risks and

preserving a financially sustainable future at SFU.

dr. PAt hibbitt S

vICE PRESIDENt, FINANCE AND ADMINISt RAt ION

dr. PAt hibbitt S

ViCe President, F in An Ce And A dMinistr Ation

The University had a healthy fnancial year and fnished fscal year

2/11

010

in a strong fnancial position with assets over b$1

illion and consolidated

revenues increasing by .34%. The University’s endowment fund has a growing

balance over

$200

million which generates resources to support student

fnancial aid, professorships, research, athletics, and library collections.

not even a full year after its historic recovery

as SFU’s goldCorp Centre for the Arts, this airy

studio in the newly-revitalized woodward’s

building represents our passionate engagement

with Vancouver’s urban centre. the University

is as committed to the social and cultural facets

of sustainability as it is to renewable energy and

species conservation. in this report we present

SFU’s ongoing work toward sustainability; by

students, researchers, and in collaboration with

community members and industry partners.

SFU ANNUAL FINANCIAL REPORt 2010/11

Students, Faculty

and Staff

Headcount

Undergrads

including International

2007 25,009

2008 26,332

2009 27,479

2010 28,477

2011 29,697

g raduate

2007 5,044

2008 5,241

2009 5,461

2010 5,685

2011 5,507

international students

2007 2,524

2008 2,802

2009 2,991

2010 3,790

2011 4,602

Faculty and Staff

2007 2,471

2008 2,618

2009 2,566

2010 2,585

2011 2,620

Robyn Buna

Most Valuable Player

Kinesiology major and guard on

the SFU women’s basketball team,

Robyn Buna was named MvP at the

2010 CIS National Championships

and SFU’s top student-athlete.

Buna also coaches inner city youth

and Special Olympics athletes.

Resources

Gross square metres

burnaby Campus Space

2007 297,075

2008 321,270

2009 324,280

2010 339,270

2011 338,042

Surrey Campus Space

2007 10,842

2008 23,684

2009 27,531

2010 29,071

2011 34,061

Vancouver Academic

Campus Space

2007 28,750

2008 27,760

2009 29,071

2010 27,723

2011 27,953

Adam Oberman

Rising Mathematics Star

Adam Oberman won the coveted

Monroe H. Martin prize for solving

the Infinity Laplace equation, that

has stumped researchers for more

than 40 years. His solution could

affect digital mapping, 3D image

compression, and brain imaging.

Financials

Dollars in millions

Sponsored r esearch

Funding

2007 67

2008 67

2009

2010

2011 66

g overnment Funding

2007 267

2008 274

2009 271

2010 297

2011 300

endowment Fund

2007 148

2008 177

2009 149

2010 186

2011 209

total r evenues

2007 502

2008 519

2009 483

2010 591

2011 616

Parminder Parhar

Community Builder

Parminder Parhar’s Renaissance

Cafés are the heart of our community.

Inspired by the exemplary work

at SFU, his endowment funds the

Renaissance Community Service

Award for academic excellence

and community leadership.

numbers and stories.

our people

Behind every list of

numbers is a story;

a community leader,

a successful student,

an inspired researcher,

a dedicated teacher.

Sophie Lavieri

Acclaimed Teacher

Sophie Lavieri has been recognized

with three awards over the last five

years for excellence in teaching. She

has spent 25 years inspiring students

and making chemistry fun, taking

her portable lab into schools, doing

workshops at no cost to the schools.

2010/11 IN RE v IEW

Growth and Accomplishments

SFU is a public university serving the student

population both locally and globally. hte University

is a research intensive, comprehensive learning

institution with over 34,000 students and 110,000

alumni. We offer 100 undergraduate major and joint

major programs and 45 graduate programs. Over 10

years, SFU has seen growth of 45.6% in undergraduate

students and 68.8% in graduate students.

SFU meets the needs of a widely diverse community

of students with its tri-semester system, fexible

curriculum including night and weekend courses,

and new programs in areas such as public

health, environment and applied sciences.

Committed to advancing knowledge through teaching,

research, and community engagement, the University is

recognized worldwide for its faculty, students, academic

programs, and research activities. hte 2010

Maclean’s

University Rankings identified SFU as #1 among

comprehensive institutions. We have placed first in the

comprehensive category eight times in the 20 years since

the rankings began— more than any other university.

t his is the third year in a row that SFU has placed first.

SFU was ranked in the top 200 in the itmes

Higher Education Index World University Rankings

(out of 17,000 institutions). We have achieved a

272% increase in research income over the past

10 years and have been identified as a leader

in research impact and publication growth.

2010/2011

in reView

Since its inception in 1965, our Clan Athletics program

has excelled in the National Association of Intercollegiate

Athletics and in the Canadian Interuniversity Sport.

Beginning with the 2011/12 season, SFU’s varsity teams

will become the first Canadian teams to compete

in the Great Northwest Athletic Conference of the

National Collegiate Athletic Association (NCAA)’s

Division II. NCAA is the world’s largest college sports

organization. SFU is the only university outside

of the United States to be admitted to NCAA.

We are proud of our accomplishments as a

comprehensive university and have a strong commitment

to providing an outstanding undergraduate program,

advanced research, and community enrichment.

SFU ANNUAL FINANCIAL REPORt 2010/11

getting to know

siMon FrAser UniVersity

Ming Hua

China

Ming Hua came to SFU in 2006

from Fudan University in Shanghai.

While earning her PhD in computer

science, she mentored other female

students, and was awarded a Google

scholarship in 2008. She now works

as a research scientist at Facebook.

Mahboubeh Asgari

Iran

Education PhD Mahboubeh Asgari

earned an honourable mention in the

‘05 Elizabeth Paterson international

student of the year competition. She

won the silver medal for best paper

at the ‘09 Asian Association of Open

Universities Conference in tehran.

Clement Abas Apaak

Ghana

Originally an international student

from Ghana, archaeology instructor

Clement Apaak is a tireless advocate

for human rights and social justice.

In 2005, he launched Canadian

Students for Darfur. He was given the

YMCA Power of Peace medal in 2007.

Aurosish Mishra

India

As part of a 2010 internship program

for India’s top undergrads, Aurosish

Mishra spent the summer working on

a complex computer-science problem

at SFU’s Burnaby campus. He would

like to pursue graduate work in BC,

“a great place to lead a balanced life.”

in Fall 2010

sFU had

4,602

international

students.

t he largest proportion of international students

came from China, where Canadian curriculum

courses prepare students for study in Canada.

SFU International promotes international learning

and supports international students. SFU has 290

partnership agreements in over 64 countries.

Exchanges, field schools, work abroad and other study

abroad options are available in over 50 countries.

48%

China

21%

Korea

t aiwan

Japan

other

Asia

6.5%

North

America

Europe

Russia

Middle

East

Africa

6.5%

Other

Student-Centred

ACCeSS AnD DIVeRSITy

At SFU, our student body mirrors the diversity embedded

within the larger communities where our three

campuses are located. Our international students are

warmly welcomed by informal student groups as well

as specialized student services, advising and mentoring

programs, and services provided to all students.

the first Director of the Office for Aboriginal Peoples

began the position in January 2010. As part of the

mandate to implement the First Nations University-

wide Strategic Plan, two Lifelong Learning programs

that prepare Aboriginal students for post-secondary

education received credit status in 2010: the

Aboriginal University Prep program and Preparing for

Health Careers: Aboriginal pre-Health Program.

QUALITy

SFU is committed to providing an outstanding student

experience and continued institutional evolution. By

creating multiple opportunities for students to engage

in and out of the classroom, we provide students with

opportunities to develop as individuals and citizens.

Approximately 20% of eligible students participate in co-

op or international courses/opportunities. Currently, 2,400

students are placed in co-op jobs each year with another

2,500 preparing to enter or actively seeking a position.

One of the core mandates of the University is

to educate students and provide them with the

knowledge and skills needed to enter the workforce

and make immediate contributions to society.

GEtt ING tO KNOW SFU

One measure of success in achieving this goal is

the number of credentials annually awarded by the

University. total credentials awarded has grown 17%

from 2004–2010, with Bachelors increasing by 22%,

Masters by 48%, and Doctorate degrees by 64%.

Recruitment and retention of students is a core strategic

focus. the University has implemented initiatives to

enrich student engagement and provide students with a

rewarding experience while at SFU and after graduation.

t hese initiatives continue to not only provide

students with greater academic success but to

promote a quality of life that makes the university

journey at SFU a memorable and enjoyable one.

By providing students with opportunities to

extend their learning through engagement with

both local communities and global partners, the

University enriches the student experience.

Credenti Al S eArned

BAChelor

other G r Ad

MAster

Phd

4,155

4,310

4,199

4,446 4,342

629

776

791

790

944

697

663

624

542

556

100

110

133

126

143

CAPACITy

Enrolment growth is one of the most significant

indicators of effective engagement with communities and

provides a direct link to revenues through government

funding, tuition and student fees. International student

enrolment and enrolment in professional programs

provides an important source of additional revenue.

SFU’s total student headcount for 2010/11 was 35,155

students, including 29,697 undergraduates and 5,507

graduates (49 students were both undergraduate

and graduate students in the same year). With 50%

of undergraduate students attending the University

on a part-time basis, this equates to 25,492 total

full-time equivalent (Ft E) students (graduate,

undergradute and international), an increase of

5% over the previous year. the 2010 fall intake

of new domestic students was 4,275 students,

slightly more than the University’s goal of 4,265.

t he majority of students enter SFU’s undergraduate

programs either directly from BC Grade 12 or

through college transfer. In 2010/11, 41% of SFU’s

new undergraduates came from BC Grade 12 with

average entry grades of 85%. BC College transfer

students made up another 28% of new students.

the Faculty of Arts and Social Sciences accepted 69% of

incoming undergraduate students followed by the Beedie

School of Business 9%, Faculties of Applied Sciences 7%,

Science 5%, and Communication, Art and etchnology 5%.

Graduate student enrolment directly impacts the

research mission of the University and SFU’s long-

term goal to increase the graduate student population

to 25% of total enrolment. the Faculty of Education

has the highest Ft E enrolment of graduate students

at 30%, followed by Arts and Social Sciences 20%,

Sciences 16%, Applied Sciences 11%, Beedie School

of Business 11%, Communication, Art and technology

6%, Environment 4%, and Health Sciences 4%.

the student to faculty ratio refers to the number of

faculty in a university with respect to the number of

students who attend the institution. SFU’s student to

faculty ratio increased slightly to 26.6 in 2010/11.

SFU ANNUAL FINANCIAL REPORt 2010/11

world-renowned ecologist and 2010 President’s

award winner John reynolds is considered the

go-to scientist for Pacifc salmon-related issues

for national and international media as well as

the community, public policy and Aboriginal

groups. his team focuses on the conservation

and ecology of Pacifc salmon, particularly their

ecosystems, and connections between marine,

freshwater and terrestrial habitats. “You’re never

talking just about salmon—

you’re talking about

ecosystems, the sea, rivers, watersheds, and all

the impacts we’re having on the environment.”

Research-Driven

GROwInG FInAnCIAL SUPPORT

With a spectacular 272% increase in research income

over the past decade, SFU now ranks among the top 20

Canadian post-secondary institutions in this measure

and within the top five comprehensive universities.

We have been successful in identifying new funding

opportunities and bringing together the necessary

teams to capitalize on these opportunities, in

expanding and optimizing our physical and personnel

infrastructure, in developing collaborative networks,

and in promoting our faculty for prestigious awards.

Approximately 68% of our total research funding

comes from the federal government (through

the tri-Councils, Canadian Foundation for

Innovation, and other sources), with 8% from

provincial funds and 24% from other sectors.

We have been active at the federal and

provincial government levels to infuence

policy changes and to ensure continued

investment in SFU’s research enterprise.

Currently we are one of the top five universities in

Canada with respect to research intensity in the natural

and health sciences, as defined by average Natural

Sciences and Engineering Research Council of Canada

(NSERC) and Canadian Institutes of Health Research,

funding per eligible faculty member. Our researchers

have consistently exceeded the national success rates

in the NSERC and the Social Sciences and Humanities

Research Council (SSHRC) competitions for funding.

InTeGRATIOn OF TeACHInG AnD LeARnInG

SFU’s objective is to incorporate research into the

curriculum and provide an opportunity for undergraduate

and graduate students to perform research. Research

is embedded in many of our undergraduate courses

through statistics and research methods courses,

research papers, and experiential learning.

In addition to formal courses, undergraduates

are employed as research assistants through

an externally funded national undergraduate

student research award program which provides

a full semester of research experience.

It is apparent that the impact of our research is

further improving as indicated by the citations and

research publication data as well as the increase in

our industry partnerships and industrial innovations.

Undergraduates are gaining research experience

at an increasing rate and, as an institution, the

number of graduate students pursuing a research

degree is increasing relative to the rate of

increase in overall graduate student numbers.

GEtt ING tO KNOW SFU

SFU ANNUAL FINANCIAL REPORt 2010/11

ReSeARCH OUTPUT

the Canada Research Chairs program (CRC) is part of a

national strategy to make Canada one of the world’s top

countries in research and development. hte CRC invests

$300M per year in researchers across Canada. Each

eligible degree-granting institution receives an allocation

of Chairs and the University nominates a researcher

whose work complements its strategic research plan.

Chairholders aim to achieve research excellence in a

variety of fields including engineering and the natural

sciences, health sciences, humanities, and social

sciences. the Chairholders improve Canada’s depth

of knowledge and quality of life, strengthen Canada’s

international competitiveness, and help train the next

generation of highly skilled people through student

supervision, teaching, and the coordination of other

researchers’ work. SFU currently has 39 Chairs.

FROM ReSeARCH TO MARKeT

Our researchers are embedded in local, national,

and international communities, investigating issues

relevant to today’s societal and economic needs. We

are preparing students for tomorrow’s challenges and

career opportunities, and mobilizing next-generation

models to transfer knowledge through the pipeline

of ideas, to innovation, to commercialization.

In support of student entrepreneurs, SFU’s evnture

Connection student business mentorship program

added three new Mentors-in-Residence this

year. these vancouver entrepreneurs offer their

expertise to promising student entrepreneurs by

setting milestones and monitoring business start-

up individuals and teams. ht ey provide advice

on market research, business planning, business

models, sales and organizational development.

More than 1,000 students have taken advantage

of venture Connection since its launch in the

fall of 2008, with 20 student teams currently

receiving additional support through the early-

stage business incubator, SFU evntureLabs.

Awards and Accomplishments

Robert N. Young, SFU’s Merck Frosst-BC Leadership Chair

in Pharmaceutical Genomics, Bioinformatics and Drug

Discovery received a 2011

distinguished Alumni Award

from the University of victoria in honour of his eminent

career and contributions to pharmaceutical chemistry.

SFU Chemistry professor and glycobiologist,

David vocaldo, was awarded an

nSer C

e.w.r . Steacie Memorial Fellowship

for

his research in the field of glycobiology.

Four Faculty of Science researchers were honoured with

2010 LifeSciences British Columbia Awards. Andy Hoffer

received the

innovation and Achievement Award

for

devising and developing implantable medical devices.

Robt Holt, Marco Marra, and Steve Jones were awarded

the

genome bC Award for Scientifc excellence

Danny Leznoff

from the Department of Chemistry

received the

Strem Chemicals Award for

Pure or Applied inorganic Chemistry

from

the Canadian Society for Chemistry.

International Business Review

study ranked

the Beedie School of Business as

one of the

world’s most prolifc institutions in the study

of international business

. the prestigious journal

ranked SFU 38th out of more than 1,200 institutions

worldwide, based on the total amount of academic

articles published in a ten-year period. SFU was one

of only two Canadian universities in the top 40.

2010 was the third year in a row that researchers won

the

Pearson education Prize

for best case study at

the Academy of Marketing Conference, the largest

of its kind in the United Kingdom. Professors Leyland

Pitt

and

Michael Pitt, and PHD students Anjali Bal

and Wade Halvorson (Lulea University of etchnology,

Sweden) won for their in-depth investigation of

business and marketing practices on Second Life, titled

Cashing in on the Green Dots: Marketing Ireland.

t he SFU Pocket Farmers Market is in Cornerstone otwn Square every Wednesday during the summer.

GEtt ING tO KNOW SFU

Sustainability

Sustainable Community Development (SCD) aims

to integrate economic, social, and environmental

objectives in community development. SCD is

based on a consideration of the relationship

between economic factors and other community

elements such as housing, education, the natural

environment, health, accessibility and the arts.

the SFU Centre for SCD (the Centre) is committed to

the sustainable development of communities through

research, education, and community mobilization.

t he Centre provides research, training, and advisory

services locally and internationally. ht ere are a range of

educational opportunities for students: an undergraduate

certificate and post-baccalaureate diploma, graduate

support, and a non-credit professional program.

SCD has emerged as a compelling alternative

to conventional approaches to development: a

participatory, holistic and inclusive process that

leads to positive, concrete changes in communities

by creating employment, reducing poverty, restoring

the health of the natural environment, stabilizing

local economies, and increasing community control.

SFU’s Pocket Farmers Market is a community space with

a wide range of delicious food options: local/organic

fruits and vegetables, freshly baked bread, delicious jams,

honey, salsa, eggs and more. Live music and educational

activities make the market the perfect place to get

to know your local community and learn more about

your role as a consumer in sustainable food systems.

Pocket markets are different from farmers market

in that staff and volunteers sell directly on behalf of

local vendors, so the farmers don’t have to leave

the field. this lessens the burden on farmers to

attend multiple markets thereby increasing the

economic viability of local food production, creating

new avenues for distribution, and broadening

access to fresh, local food within the community.

SFU ANNUAL FINANCIAL REPORt 2010/11

BURnAB y

SFU’s original campus atop Burnaby Mountain offers

a panoramic, mountain-framed view of the avncouver

region, a stunning spot to contemplate our dedication to

fostering educational diversity and global thinking.

t he Burnaby campus provides academic and

research space for all Faculties as well as residences

for 1,766 students. It also includes UniverCity,

a sustainable urban community that supports

and enhances the University environment.

University Highlands Elementary School opened at

UniverCity in September 2010, with 165 students

registered. the $8M school is a LEED (Leadership

in Energy and Environmental Design) Gold building,

the first of its kind in BC, and features reclaimed

building materials, natural lighting and green

products. Skylights, solar panels and a living roof all

contribute to the building’s energy management.

Ringed by a network of hiking trails and forests that

overlook vancouver’s island-dotted Burrard Inlet, the

Burnaby campus offers an inviting walk to nearby shops

and services. UniverCity’s residences on the east side and

campus housing on the west side reduce or eliminate the

University community’s daily commute, making Burnaby

Mountain an environmentally friendly place to live.

the Surrey campus has a new, secure indoor bike locker for commuters, and the Burnaby campus has new WaterFillz stations that dispense free filtered, chilled water.

Community-Engaged

DIVeRSe, DISTInCT CAMPUSeS

SFU serves local, national, and international

communities. Each of SFU’s three campuses is a

distinctive model for community engagement.

SFU’s connection to community enables it to

deliver different programs in different ways, and

provide exciting experiential learning and applied

research opportunities. It also gives rise to important

new challenges. In the South Fraser region, SFU

is committed to addressing the post-secondary

education needs of a diverse and rapidly growing

population; in vancouver, the University is reaching

out to residents of the Downtown Eastside through

community programming associated with its

newly relocated Goldcorp Centre for the Arts.

More generally, the ethnic and cultural diversity of

the Lower Mainland represents a critical strength

that can assist SFU to attract international students

and to promote other forms of internationalization.

SURRey

SFU Surrey, with the support of the City of Surrey, is

forming the nucleus of a vibrant new Surrey City Centre.

SFU Surrey is uniquely situated in the middle of BC’s

next great metropolitan core. Anchored by a new Civic

Centre, Surrey’s new City Centre plan includes a fagship

library, community plaza, city hall, performing arts centre

and new commercial and residential developments

within walking distance of Sktyrain and bus access,

recreation facilities and a large-scale urban park.

the Surrey campus offers a modern learning

environment with courses from all Faculties

and with progressive programs in science,

technology, communication, and engineering.

the Surrey campus will expand in 2011 with the addition

of new teaching and specialized science and research

labs. the new space will be used for a variety of

programs including biology, chemistry, health sciences,

mechatronics and criminology, and will have new labs

for visual analytics, mechatronics and cybercrime.

Professors encourage over 6,000 students in their pursuit

of academic excellence through supportive first-year

programs and unique programming. ht e breadth of first-

year programs offered at SFU Surrey allows students

to begin most SFU degrees at the Surrey campus.

VAnCOUVe R

t he vancouver campus comprises four primary

locations: the Wosk Centre for Dialogue, SFU Harbour

Centre, the Beedie School of Business at the Segal

Graduate School, and the Goldcorp Centre for the Arts.

this campus has been steadily growing and now serves

over 70,000 people annually. Approximately 10,000

are students enrolled in credit and non-credit courses.

In addition to leading edge research programs, a

wide and varying range of undergraduate courses are

offered each semester. Professional graduate degrees

are available in business, gerontology, international

studies, liberal studies, public policy, publishing and

urban studies. A unique program in liberal and business

studies offers the opportunity for degree completion

for those already in the work force. htousands of

other individuals, groups and companies attend SFU

conferences, lectures, performances and exhibitions

or are involved in courses, seminars and meetings

organized externally, but held at SFU avncouver.

Continuing Studies, a major part of the avncouver

campus, was renamed the Office of Lifelong

Learning. the new title refects the changing nature

of university education and the increasing demand

for access to education throughout one’s life.

GEtt ING tO KNOW SFU

Sustainable SFU is a student-funded organization, responsible for the SFU Local Food Project, SFU’s Sustainability Festival, and its Sustainability Advisory Committee.

SFU ANNUAL FINANCIAL REPORt 2010/11

historian John Craig is the new dean of the

Faculty of Arts and Social Sciences. he was

selected from a feld of internal and external

candidates after serving as dean pro tem

since last July. Craig joined SFU in 1994 as an

assistant professor after completing his Phd

at Cambridge. Craig, who received an SFU

excellence in teaching Award in 1997, refers to

himself as a ‘very happy teacher and historian’.

he views his term as dean as an opportunity to

help his faculty develop a shared sense of what

connects their work as scholars and teachers.

GEtt ING tO KNOW SFU

Our Faculties

Ryan and Keith Beedie pledged $22 million to Ryan’s alma

mater — SFU Business in early 2011, which has now been

renamed the Beedie School of Business. htis pledge was

the largest since SFU’s opening in 1965. hte pledge will

help make the business faculty a global leader in several

areas including Asia-Pacific business and sustainability.

the Faculty of Environment, new as of April 2009, has

expanded to include the Departments of Geography

and Archeology. the transition into the Faculty

of Environment provides for synergies between

programs, an opportunity to develop new programs,

collaborations and interdisciplinary research.

the Faculty of Health Sciences has been growing

steadily since its establishment in 2004. Recently,

international accreditation was received from the

Council on Education for Public Health (CePH) for

the BA, BSc and Master of Public Health. CePH is

the world’s premier accreditation organization for

schools and programs in Public Health. SFU is the

only Anglophone Canadian university to receive

internationally recognized accreditation.

t he Mechatronic Systems Engineering (MSE) program,

within the Faculty of Applied Sciences, received

$925,000 from the federal government to invest in

new leading-edge equipment. In 2011/12, the Faculty

will seek accreditation of the MSE program.

the Faculty of Arts and Social Sciences appointed

a new dean, Dr. John Craig, effective April 1, 2011.

Dr. Craig has been a faculty member of SFU’s

history department since 1994 (see opposite).

Maclean’s

2010 rankings show that SFU had the highest

number of full-time professors, per 1,000, who have

won national awards in the five-year period 2005-2009.

the Faculty of Arts and Social Sciences’ Liz Elliott

received the Ron Wiebe Restorative Justice Award in

2010 for her passion and dedication to restorative justice.

Established in April 2009, the Faculty of Communication,

Art, and technology includes the Schools of

Communication, Interactive Arts and ect hnology,

Contemporary Arts, as well as the Master of Publishing

Program, and techOne. In 2010/11, three SFU filmmakers

took major awards in the student film category in

vancouver’s Short Film Festival. David McDonald’s

Empire City

won best director, best cinematography,

best editing, and audience choice awards; Jun-Sun

Song’s

The Letters

won best screenplay and best actress;

and Julia Hutching’s

Irradiate

won for best sound.

In 2010/11, Senate approved the Centre for

Research in International Education (CRIE) within

the Faculty of Education. CRIE will bring together

faculty and graduate students across SFU who

are dedicated to engaging global communities

in the internationalization of education.

the Faculty of Science is expanding at SFU’s Surrey

campus. Construction commenced in 2010/11 for

the new undergraduate science teaching labs:

Physics Studio Lab, Biology Lab, Chemistry Lab,

Biomedical Physiology and Kinesiology Lab.

SFU ANNUAL FINANCIAL REPORt 2010/11

Stephanie bertels, Assistant Professor in the

beedie School of business, teaches her students

to go the extra mile when it comes to integrating

sustainability into business practices. i“ try to

help students move beyond establishing the

business case for sustainability. we focus on

how to embed sustainability into organizational

culture to support what organizations are

already doing in the areas of innovation and

operational excellence. Sustainability does not

need to be an add-on. n i leading companies, it’s

becoming a core part of business strategy.”

MANAGEMENt DISCUSSION AND ANALYSIS

MAnA geMent diSCUSSion And AnAl YSiS

UnAUdited

For the ye Ar ended MA r Ch 31, 2011

Forward Looking Statements

t he objective of this Management Discussion and

Analysis (MD&A) is to assist readers of SFU’s financial

statements better understand the financial position

of the University and operating activities for the fiscal

year ended March 31, 2011. It provides a look at the

internal and external factors that infuenced the year’s

financial results and a basis for future performance.

Although the MD&A is unaudited, this discussion

should be read in conjunction with the annual audited

financial statements and accompanying notes.

the MD&A provides an overview of the University’s:

❙

Planning and Management

❙

Financial Highlights

❙

Financial Information

❙

Operating Environment

❙

Risks and Uncertainties

❙

Information on Related Organizations

Cautionary note on Forward looking Statements

Some statements in this MD&A are forward looking

statements, based on assumptions and addressing

future events and conditions, and by their nature involve

risks and uncertainties. Actual results could differ

materially from those anticipated in forward looking

statements. Readers should not place undue reliance

on any forward looking statements. Factors that could

cause results to differ materially from expectations

include, but are not limited to, the performance of

financial markets, interest rate fuctuations, changes in

legislation and regulations, the impact of competition,

and business continuity risks. SFU does not undertake

any obligation to update or revise these forward looking

statements to refect events or circumstances after

the date of this report, or to refect the occurance of

unanticipated events, except as required by law.

Planning and Management

SFU has a dynamic planning process which is currently

guided by the Academic Plan, the Strategic Research

Plan, and will be enhanced by the creation of a

University strategic vision in 2011. the University will

build upon the core commitments of being student-

centred, research-driven, and community-engaged.

Combined strengths in undergraduate education,

advanced research, graduate studies, and community

betterment refect the deep commitment to a

comprehensive model of university education.

SFU remains dedicated to fostering a university

environment in which there is a positive and productive

interplay amongst these strengths. In such an

environment, intellectual engagement and academic

enquiry are energized by motivated undergraduate

students who, in turn, benefit from their exposure to

accomplished scholars, talented graduate student

mentors, and advanced research practices.

t he current mechanism for communicating priorities is

the University Planning Framework which encompasses

strategic goals from the University’s key plans and

groups them under four core themes:

teaching and learning

Offer quality programs from a diverse set of disciplines

across all faculties, with growth in areas of strategic

importance. Support and promote teaching excellence.

r esearch

Increase the level and quality of research and promote

our profile as a research intensive university.

Student experience and Success

Provide an outstanding student experience.

Community and Citizenship

Engage and involve our many communities.

Mobilize University resources and expertise to

refect the distinctive contribution we can make

to regional, national and global concerns.

SFU ANNUAL FINANCIAL REPORt 2010/11

Built with local BC materials, West House offers all

the amenities and technologies that people look

for in a new home while being highly passively

efficient: insulation exceeds Canadian standards

at R-26, and proprietary building methods ensure a

continuous thermal envelope with no thermal breaks.

In addition, an efficient heat recovery ventilation

system reduces heat loss and improves air quality.

West House uses two types of solar energy systems. A

thermal system designed by Canadian Solar ect hnologies

preheats water for in-foor radiant heating and domestic

hot water use. Day4 Energy Solar Photovoltaic panels

provide electricity in a grid-tie installation: the house

is fully connected to the grid with a bidirectional

net meter that allows it to feed power back into the

grid when surplus is produced and use power as

it is needed. (Photograph by Keith Henderson)

weST HOUSe: LIVInG LAB

t his energy-efficient laneway house was showcased

during the 2010 Winter Olympics and is now located

at the Cedar Cottage Community Garden, where it

will serve as a technology showcase, research and

development test bed, and living lab. Built by Smallworks,

the two-level home, with 610 square feet of living

space plus a 226-square-foot garage, is the first of its

kind to be constructed in avncouver since the City

of vancouver passed zoning for laneway housing.

West House welcomed its first tenants in 2011; a

year-long experience that will encourage effective

use of fewer resources. het Adaptive Living Interface

System (ALIS) integrates energy consciousness and

device control into daily routines using touch screens

throughout the house. ALIS was designed and built by the

Human-Centred Systems for Sustainable Living at SFU,

led by professors Lyn Bartram and Robert Woodbury.

FoCUS

hUMAn-Centred systeMs For sUst

AinABle liVinG

MANAGEMENt DISCUSSION AND ANALYSIS

FInAnCIAL HeALTH

Continuing last year’s economic recovery, increased

revenues and the diligent management of costs has

allowed internally restricted net operating assets

to grow to $45.0M. this brings the University back

to 2003/04 and 2004/05 levels which means that

net assets have now fully recovered to normal

levels required to sustain University operations.

t he Endowment Fund which supports academic

programs, professorships, student financial aid,

athletics, library collections, and research chairs

has reached an all-time high of $208.6M which is a

40% increase since the market crash in 2008/09.

Debt levels have been contained and reduced slightly

by refinancing external loans with non-endowed cash

resources. In November 2010, Moody’s Investor Service

graded the University’s credit rating at Aa1, with a

stable outlook. DBRS also confirmed their highly rated

and stable ranking. these very high ratings refect

the University’s declining debt burden and its track

record of consistent, stable operating performance.

In VeSTMenTS

Investment balances grew by $71M reaching a total of

$429M market value at year end. Continued strength in

the equity markets, both domestic and foreign, plus solid

performance of fixed income investments contributed

to higher than forecasted investment income returns.

OPeRATIOnS AnD FISCAL ReSTRAInT

t he University’s academic operations are funded

primarily by government grants and tuition fees. hte

provincial operating grants remained steady at $222M,

and funded 18,119 undergraduate and 2,084 graduate

full-time equivalent student spaces. ottal student

enrolment exceeded plans particularly with international

students, and resulted in tuition and student fee

revenues of $190.2M. Research revenues benefited

from increased activity, with $65.6M reported, while

Ancillaries revenues remained steady at $36.7M.

While SFU continues to actively manage costs, increased

student enrolments have led to increased sessions

to meet student demand. ht e University’s expenses

largely comprise salary and benefit costs, refecting an

increase of 7.2% to $350.7M. the proportion between

salaries & benefits and non-salary expenditures

remains stable year over year, with compensation

related expenses accounting for 62% of the total.

GOVeRn MenT GRAnTS

t he provincial operating grants are $222M which

is consistent with prior year funding. htere was

no increase for student growth. Support for

the Electronic Library Network has remained

stable and the grant to support French language

programs has decreased slightly to $1.5M.

CAPITAL

Capital investment in property and equipment was

$85.1M for the year. Most of the expenditures were on

the $49.4M renovation of Chemistry facilities on Burnaby

campus and the $10M expansion of SFU Surrey, both

geared for completion by the summer of 2011. hte

$71.5M Woodward’s redevelopment for the Goldcorp

Centre for the Arts was completed and is occupied.

Financial Highlights

SFU ANNUAL FINANCIAL REPORt 2010/11

Financial Information

ReVen UeS

Revenues increased 4.3% to $616M.

Dollars in thousands

2011

2010 %

Govt grants & contracts

300,336

296,919

1.2

tuition & student fees

190,160

171,099

11.1

Sales of goods & services

44,463

43,183

3.0

Gifts, grants & contracts

35,435

31,853

11.2

Investment income

20,735

24,194

(14.3)

Amortization of deferred

capital contributions

14,126

13,689

3.2

Other revenues

10,864

10,058

8.0

total revenues

616,119

590,995

4.3

❙

government grants & contracts

including sponsored

research revenues, increased by 1.2% over the year.

t he provincial operating grant funding increased

3% to $222M, comprising 35% of total revenues.

❙

tuition & student fees

rose 11.1% due to

increased enrolment and a 2% increase in fees.

❙

gifts, grants & contracts

increased due to successful

fundraising for capital projects such as Goldcorp’s

contributions towards the Woodward’s project.

❙

investment income

was down slightly from very

buoyant returns of 19% in 2009/10 to 11% in 2010/11.

❙

other revenue

includes fees for facility rentals

and other services, and increased due to

contributions from SFU Community trust.

ex Pen SeS

Expenses increased 5.2% to $564M.

Dollars in thousands

2011

2010 %

Salaries & benefits

350,736

327,167

7.2

Supplies & op. expenses

54,197

55,259

(1.9)

Amortization cap. assets

51,687

50,706

1.9

Professional services

31,830

31,418

1.3

Scholarships & bursaries

28,606

27,161

5.3

travel & personnel exp.

14,776

14,732

0.3

Cost of goods sold

13,596

12,128

12.1

Interest on long term debt

10,090

9,926

1.7

Utilities

8,281 7,500 10.4

total expenses

563,799

535,997

5.2

❙

Salaries & benefts

represent 62% of expenses;

approximately the same proportion as the prior year.

Compensation costs increased based on progression

through ranks and step increases, and growth in faculty

and staff to support increased student enrolment.

Benefits represent 17% of total compensation expenses.

❙

Scholarships & bursaries

were funded 63% from

operating and 37% from endowments. $1.3M of the

$1.4M increase was funded from endowments.

❙

Cost of goods sold

increased by 12% largely related

to hardware and software product sales achieved with

the availability of technical products in the Bookstore.

❙

Utilities

increased due to carbon tax and power usage

over last year’s savings from warmer weather.

exPenSeS

doll Ars in M illions

536

545

512

564

478

591

483

519

502

616

re VenUe

doll Ars in M illions

MANAGEMENt DISCUSSION AND ANALYSIS

ASSeTS

Assets increased 11.2% to $1,335M.

Dollars in thousands

2011 2010

Current assets

51,310

26,285

Due from a related party

9,663

5,033

Investments 429,270 357,783

Investments in related entity

11,438

11,227

Property & equipment

831,142

797,675

Prepaid lease

2,122

2,437

total assets

1,334,945 1,200,440

❙

Current assets

are significantly higher than

in 2010 due to increases in cash, short term

investments and accounts receivable. In 2011,

additional cash was on hand due to capital

funding and increased liability accruals.

❙

due from a related party

has increased due to

the increase in SFU Community rust t receivables

from the displacement of a parking lot.

❙

investments

increased by $71M to a market value

of $429M which includes unrealized gains of $49M.

❙

Property & equipment

includes capital projects

for buildings, leasehold improvements, library

acquisitions, computers, and furniture and equipment.

the increase was due mainly to the renovation of the

Chemistry building and retrofit of Surrey Podium.

Dollars in thousands

2011

2010

Current liabilities

46,460

32,882

Employee future benefits

54,970

48,630

Long term debt

157,202

160,347

Deferred contributions

68,117

54,301

Deferred capital contrib.

402,873

375,475

Deferred lease proceeds

22,980

21,533

total liabilities

752,602

693,168

LIABILITIeS

Liabilities increased 8.6% to $753M.

❙

Current liabilities

are higher due to increases in capital

construction activity and related liabilities, tuition

deferrals and accounts payable and liability accruals.

❙

employee future benefts

liability increased by

$6.3M as accruals were made based upon actuarial

recommendations including an actuarial loss of $4M.

❙

l ong term debt

decreased by refinancing CMHC loans

on student residences with internal loans, and a partial

paydown of the mortgage from sale of four faculty/staff

housing units in verdant.

❙

deferred contributions

are externally restricted

resources not recognized as revenue until related

expenses are incurred. the increase is primarily due to

an increase in deferred income of endowment accounts.

❙

deferred capital contributions

are the unamortized

portion of restricted capital advances, and increased due

to provincial and federal contributions for the Chemistry

renewal and Surrey campus expansion.

ASSet S

doll Ars in M illions

li Abilitie S

doll Ars in M illions

693

695

753

634

1200

1113

1173

1063

1335

SFU ANNUAL FINANCIAL REPORt 2010/11

neT ASSeTS

Net assets increased 14.8% to $582M.

enDOwMenT exPenDITUReS

SFU’s endowment funds are a key source of financial

support for academic programs, professorships, student

financial aid, athletics, library collections and research

chairs. Endowments are donations that are restricted by

the contributor to have the capital held in perpetuity and

investment income to be spent for a defined purpose.

Dollars in thousands

2011

2010

Internally restricted, operating

45,026

9,318

Internally restricted, lease & other

33,380

30,372

Invested in property & equipment

295,344

281,740

Endowment fund balance

208,593

185,842

total net assets

582,343

507,272

❙

internally restricted, operating

include balances

derived from operating budget carryforward amounts

at the department level as well as internally restricted

funds for research and other projects.ht ese funds

increased due to positive net revenue for the year.

❙

internally restricted, lease and other

are

for non-operating commitments which relate

to long term lease commitments for SFU

Harbour Centre, and reserves designated for

contracts for specific purpose activities.

❙

endowment fund balance

increased as a result

of positive investment returns that enabled

catch-up capitalization of investment income

from infation protection of $8.6M and recovery

of principal of $1.9M; together with a restored,

post-recession level of new contributions.

* t he 2009 total was restated from $(19.5)M to $(33.1)M

t he endowment fund investment strategy aims to

maintain the purchasing power of the original capital

value for future generations, while also ensuring

spending income allocations remain stable each year.

Donations of $9.3M, capitalization of earnings

of $8.6M and University matching of $2.6M, all

contributed to growing the endowment fund balance

to $208.6M. the endowment income stabilization

reserve protects endowment spending from

fuctuating market returns. Positive results enabled

the account to recover to a balance of $12.1M.

Dollars in thousands

2011

2010

Athletics

108

Research chairs

2,230

2,193

Faculty & academic support

3,153

3,565

Financial aid

2,297

2,201

Library

180

178

Professorships

478

380

total endowment expenditures

8,446

8,625

endowMent ex Pendit Ure S

doll Ars in M illions

net ASS etS

doll Ars in M illions

8.6

9.1

10.4

7.5

8.4

9.3

(33.1)*

3.2

13.9

MANAGEMENt DISCUSSION AND ANALYSIS

AnCILLARI eS ReVen UeS

Revenues are generated to cover operating expenses,

debt service payments, and to provide reinvestment

necessary to ensure long term financial viability.

Revenues remain stable in 2010/11 at $36.7M.

SPOnSOReD ReSeARCH ReVenUeS

Research is primarily funded by three federal granting

agencies: Natural Sciences and Engineering Research

Council, Social Sciences and Humanities Research

Council, and Canadian Institutes of Health Research.

Sponsored research funding, as it has an externally

restricted purpose, is recorded as deferred

contributions and is recognized as revenue in the year

related expenditures are incurred. ht us sponsored

research revenue and expenditures are equal.

Revenue recognition of sponsored research increased

from $62.2M to $65.6M and deferred contributions for

sponsored research at the end of the year increased

from $38.1M to $40.2M. the facts demonstrate

an increase in research intensity at SFU.

Dollars in thousands

2011

2010

Federal government

44,378

39,376

Canadian not for profit

8,807

10,208

BC government

5,687

5,815

Foreign not for profit

1,628

930

Industry

3,131

2,659

Other

1,985

3,227

total sponsored research

65,616

62,215

Dollars in thousands

2011

2010

Bookstore 17,483 16,628

Residences 14,354 13,553

Parking 4,171 4,430

Food Services

508

515

Document Solutions

172

119

total ancillaries revenues

36,688

35,245

❙

bookstores

are located at the Burnaby, Harbour

Centre and Surrey campuses, with the etch

Shop located within the Burnaby Bookstore

providing hardware, software and technology

supplies for the University community.

❙

r esidences

has accommodation capacity for

1,766 students and provides 14 hotel rooms.

❙

Parking

revenues declined due to a combination

of an increase in parking taxes that drove a shift

in demand to less expensive lots, and UniverCity

development which eliminated 322 parking spaces.

❙

document Solutions

experienced a decrease in

business from the campus community but was able

to increase their business to external customers.

SPon Sored re SeAr Ch re VenUeS

doll Ars in M illions

AnCill Arie S reVenUeS

doll Ars in M illions

SFU ANNUAL FINANCIAL REPORt 2010/11

Many factors contribute to SFU’s operating environment

including BC’s changing student demographic,

government funding and priorities, and the economy.

STUDen T DeMOGRAPHIC

According to Statistics Canada, anv couver’s population

had one of the highest growth rates at 22.9 per thousand

for the period July 1, 2009 to July 1, 2010. the province

grew at 1.2% during 2010 with approximately 26.8%

of BC’s population comprising the age range 15–34.

Between 2009 and 2036, BC Statistics forecasts the

population will increase by approximately 36% with

international migration accounting for 75.8%; the

median age will increase from 40.7 to 45.6 years.

t he changing demographic of BC’s population creates

a shift in demand for education. Starting in 2013,

a decline in post-secondary school age population

(18–24 years) is expected for ten years. Despite the

population decline of our key student demographic,

the Association of Universities and Colleges of Canada

expects enrolment to increase as the participation

rate rises (based on their historical trend data).

Our total planned enrolment for 2011/12 is 25,337

FtEs, a 3% decrease from 2010/11 projections but

still well in excess of government funded targets.

SFU has high international demand and our challenge

is to manage international enrolment to ensure

excellent education for all students. htis year

SFU will be developing a strategic management

process to better manage enrolment.

GOVeRnMenT FUnDInG AnD PRIORITIeS

In March 2011, BC’s new premier re-united responsibility

for advanced education, including SFU, into one ministry:

t he Ministry for Advanced Education. hte mandate of

the Ministry is to ensure BC’s university system aligns

with and supports the future needs of the workforce.

It is forecast that three-quarters of all job openings

up to 2017 will require a university degree, college

credential or trade certificate. Provincial funding for

education is therefore focused on educational needs to

align graduates with employers’ demands for workers.

the 2009/10 Annual Service Plan Report produced by

the Ministry of Advanced Education and Labour Market

Development highlighted that funding for student

spaces will be targeted to graduate students, skilled

trades, and to health care and medical education.

t here is clear demand for post-secondary education;

however, due to the financial realities of the

current economy, there is no growth planned for

SFU’s operating grant. With the reduction of the

Annual Capital Allowance to $0.5M, government

support for cyclical and preventative building

maintenance has been further reduced (refer to

Risks and Uncertainties, Maintenance Funding).

eCOnOM y

the local economy experienced a large housing boom

together with large infrastructure improvement projects

undertaken in preparation for the 2010 Winter Olympics

held in vancouver. this contributed to strong growth in

the local economy and created many job opportunities;

however, the economic slowdown has negatively

affected the growth and continuation of this job creation.

the 2010 t owers Watson survey of economists,

strategists, market analysts, and investment managers,

provides an economic outlook for the coming year. GDP

growth of 2–2.5% combined with a modest infation

expectation of 1–2% refects the continuation of a slow

economic recovery. A full economic recovery may

take several years but will continue to trend upwards.

Investment returns are anticipated to be marginal

albeit positive. Similarly, interest rates will remain

relatively low and are not expected to climb higher than

approximately 3.5%. Despite the positive predictions,

the majority of survey respondents expect the economic

recovery to continue to experience some volatility.

Overall, the economic forecast allows SFU to have an

optimistic outlook both fiscally and with regard to our

ability to continue successfully serving our communities.

Operating Environment

MANAGEMENt DISCUSSION AND ANALYSIS

SFU manages risk through a framework of risk

identification, measurement, and monitoring. ht e

following is an overview of the most significant

financial risks currently facing the University.

AFFORDABILITy OF PenSIOn S

SFU has two pension plans:

❙

Pension Plan for Administrative/Union Staff

(Administrative/Union Plan); and

❙

Pension Plan for Members of the

Academic Staff (Academic Plan).

t he Administrative/Union Plan is a defined benefit

pension plan requiring an actuarial valuation at least

every three years. A valuation will be completed in the

summer 2011 by an independent actuary for the calendar

year ended December 31, 2010. A projected actuarial

valuation indicated actuarial funding deficiencies.

t he Academic Plan is primarily a defined contribution

plan, not requiring an actuarial valuation. hte plan

changed to defined contribution in 1973 and the

members remaining in the closed plan (Formula

Retirement Benefit (FRB) pension plan) can choose

a defined benefit which is subject to an actuarial

valuation at least every three years.ht e most

recent valuation of the FRB fund was completed for

the calendar year ending December 31, 2009.

DeFeRReD MAInTenAnCe FUnDInG

t he provincial government funding for cyclical

maintenance, renovations and upgrades to buildings has

been progressively reduced over the last several years

from the baseline funding of $6.6M to $0.5M in 2010/11.

As a result, deferred maintenance on our Burnaby

campus buildings has been growing. hte renewal of

existing facilities is an identified priority of government

and is of particular concern for the Burnaby campus

which is now over 45 years old. htese aging facilities are

experiencing increasing deficiencies, lack of functionality,

and unreliable and inefficient building systems.

Risks and Uncertainties

FUnDRAISInG

Despite this year’s fundraising success, the decline

in grants and increasing costs to provide services,

will cause SFU to become increasingly reliant on

fundraising efforts to support students, scholarly

activity and provide funding for infrastructure.

In 2011/12, SFU will continue to shift away from

capital project fundraising since the campaign for the

Goldcorp Centre for the Arts is nearly complete. We will

concentrate fundraising efforts on attracting donations

and endowed funds to support students and faculty.

eCOn OMIC en VIROnMenT

An D InVeSTMen T ReTURn S

the recession and decline of markets in 2008

caused SFU to experience significant market

value losses in its investment portfolios. Fiscal

2009/10, and most recently in 2010/11, provided

investment returns higher than expected.

However, the ongoing instability in the market

exposes SFU to volatility in investment returns with

respect to our endowment fund market values,

spending allocation and income stabilization.

ReSeRVeS ADeQUACy

A contingency fund was established in 2009/10 to cover

unavoidable costs that arise during the course of the

year. In 2009/10 the reserve level was established at

1% of the University’s operating revenues; this was

increased to 2% in 2010/11 and currently remains at

2% or $8.5M for 2011/12. Reserves have improved,

but we continue to monitor with a watchful eye.

SFU ANNUAL FINANCIAL REPORt 2010/11

As explained in notes 2 and 14 of the University’s

financial statements, financial information is

included for the following related entities:

SFU COMMUnITy TRUST

SFU Community trust’s mandate is to oversee the

development of UniverCity, a compact, mixed-use

residential neighbourhood founded on the Four

Cornerstones of Sustainability: Equity, Economy,

Education and Environment. the Official Community

Plan (OCP) allows for up to 4,536 residential units

in two distinct neighbourhoods to the south and

east of SFU’s campus, each with its own elementary

school and neighbourhood park. ht e OCP includes

provisions for a commercial core, community facilities,

and an extensive network of pedestrian paths and

bike trails. the trust oversees the development of

UniverCity through the provision of zoned, serviced,

subdivided sites to private sector developers on

a prepaid, long-term (99-year) leasehold basis.

the trust is presided over by a 17-member Board of

Directors comprising key SFU stakeholders, faculty

and student representatives as well as a number of

prominent real estate and development professionals

from in and around vancouver and the Lower Mainland.

the Board of Directors establishes policy for SFU

Community trust and plays a very active role in

shaping the planning and development of UniverCity.

t he University’s interest in the rtust is

accounted for using the equity method.

SIMOn FRASeR UnIVeRSITy FOUnDATIOn

t he purpose of Simon Fraser University Foundation

(Foundation) is to encourage public awareness of,

and support for, SFU and its benefits to the people of

British Columbia. the Foundation is an Agent of the

Crown and is therefore exempt from income taxes

under section 149 of the

Income Tax Ac

the majority

of the Foundation’s revenue is rental income from

the 10 rental units in the verdant housing complex

which are owned by the Foundation for the purposes

of leasing to SFU’s faculty and staff. hte Foundation is

consolidated in the University’s financial statements.

GReAT nORTHeRn wAy CAMPUS TRUST

t he Great Northern Way Campus rust t (GNWCt )

collaborative university campus combines the

strengths of four academic institutions: Simon

Fraser University; University of British Columbia;

Emily Carr University of Art + Design; and the British

Columbia Institute of technology. GNWCt has the

mandate to intersect arts, technology and the

environment in a manner that bridges academia with

industry, artists with technology, and innovation

with development. It is an integrative environment

that builds community and celebrates innovation.

SFU has a 25% interest in GNWCt and it is

accounted for using the equity method.

TRIUMF AnD wCUMSS

SFU participates with other universities in two

research joint venture entities which are accounted

for in the University’s financial statements by

proportionate consolidation of its interest.

tri-University Meson Facility t(RIUMF) is a joint operation

of eleven Canadian universities that comprise Canada’s

national laboratory for particle and nuclear physics.

Western Canadian Universities Marine Sciences

Society (WCUMSS) is a society in which the University

is one of five members. WCUMSS provides a

permanent base for marine and coastal-oriented

field operations from its location in Bamfield, BC.

Information on Related Organizations

t he 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, 2011 and the results of its operations

and its cash fows 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 controls 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.

t he 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.

t he Committee meets with Management, the internal

auditor and the external auditors to discuss the results of

audit examinations and financial reporting matters. ht e

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, 2011 have been reported on by the

Auditor General of British Columbia. hte Auditors’

Report outlines the scope of their examination

and provides their opinion on the fairness of

presentation of the information in the statements.

Statement of Management Responsibility

dr. PAt hibbitt S

vICE PRESIDENt, FINANCE AND ADMINISt RAt ION

MAY 26, 2011

Pro F. Andrew P etter

PRESIDENt AND vICE-CHANCELLOR

INDEPENDENT AUDITOR'S REPORT

To the Members of the Board of Governors of Simon Fraser University, and

To the Minister of Advanced Education, Province of British Columbia

Report on the Financial Statements

I have audited the accompanying financial statements of Simon Fraser University, which comprise the

statement of financial position as at March 31, 2011, and the statements of operations, changes in net

assets and cash flows for the year then ended, and a summary of significant accounting policies and

other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with Canadian generally accepted accounting principles, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

Auditor's Responsibility

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 comply with ethical requirements and plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures

in the financial statements. The procedures selected depend on the auditor's judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or

error. In making those risk assessments, the auditor considers internal control relevant to the entity's

preparation and fair presentation of the financial statements in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as

well as evaluating the overall presentation of the financial statements.

In my view, the audit evidence I have obtained is sufficient and appropriate to provide a basis for my

audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of

Simon Fraser University as at March 31, 2011, and the results of its operations and its cash flows for

the year then ended in accordance with Canadian generally accepted accounting principles.

Victoria, British Columbia

John Doyle, MAcc, CA

May 26, 2011

Auditor General

Fin AnC iAl S tAteMent S

For the ye Ar ended MA r Ch 31, 2011

SFU ANNUAL FINANCIAL REPORt 2010/11

Dollars in thousands

2011

2010*

ASSet S

Current Assets

Cash and cash equivalents (notes 3, 4)

27,597

3,248

Accounts receivable (note 3)

19,262

18,737

Inventories

2,443

2,204

Prepaid expenses

2,008

2,096

51,310

26,285

Due from related party (note 5)

9,663

5,033

Investments (notes 3, 6)

429,270

357,783

Investment in related entity (note 7)

11,438

11,227

Property and equipment (note 8)

831,142

797,675

Prepaid lease (note 9)

2,122

2,437

total Assets

1,334,945

1,200,440

li Abilitie S And net ASSetS

Current liabilities

Accounts payable and accrued liabilities

45,587

32,179

Current portion of long term debt (note 10)

873

703

46,460

32,882

Employee future benefits (note 11)

54,970

48,630

Long term debt (note 10)

157,202

160,347

Deferred contributions (note 13)

68,117

54,301

Deferred contributions for property and equipment (note 13)

402,873

375,475

Deferred lease proceeds (note 14)

22,980

21,533

752,602

693,168

Net Assets (note 15)

Internally restricted for commitments

Operating (note 16)

45,026

9,317

Lease and other (note 17)

33,380

30,373

78,406

39,690

Invested in property and equipment

295,344

281,740

Endowment (note 18)

208,593

185,842

582,343

507,272

total liabilities and net Assets

1,334,945

1,200,440

*Restated: Note 25.

t he accompanying notes are an integral part of these financial statements.

Approved:

StAteM ent o F FinAn CiAl P oSition

For the ye Ar ended MA r Ch 31, 2011

dr PA t hibbitt S

vICE PRESIDENt, FINANCE AND ADMINISt RAt ION

robert g elton

CHAIR, BOARD OF GOvERNORS

AUDIt ED St At EMENt S

Dollars in thousands

2011

2010*

re VenUe

Government grants and contracts (note 19)

Province of British Columbia

232,918

231,321

Government of Canada

65,985

63,791

Other governments

1,433

1,807

t uition

Credit courses

167,060

150,326

Non-credit courses and other student fees

23,100

20,773

Sales of goods and services

44,463

43,183

Donations, non-government grants and contracts

35,435

31,853

Investment income (notes 20, 25)

20,735

24,194

Amortization of deferred contributions: property and equipment

14,126

13,689

Other revenue

10,864

10,058

616,119

590,995

ex Pen Se

Salaries

290,717

281,095

Employee benefits (note 11)

60,019

46,072

350,736

327,167

Supplies and other operational expenses

54,197

55,259

Amortization of property and equipment

51,687

50,706

Professional and contracted services

31,830

31,418

Scholarships, bursaries and prizes

28,606

27,161

travel and personnel expenses

14,776

14,732

Cost of goods sold

13,596

12,128

Interest on long term debt

10,090

9,926

Utilities

8,281

7,500

563,799

535,997

Net revenue from continuing operations

52,320

54,998

Gain on disposal of properties

6,962

net revenue for the year

52,320

61,960

Net revenue for the year was applied to increase

net assets internally restricted for:

Operating commitments

35,708

42,393

Invested in property and equipment

13,604

17,114

Lease and other commitments

3,008

2,453

*Restated: Note 25.

t he accompanying notes are an integral part of these financial statements.

StAteM ent o F oPer Ation S

For the ye Ar ended MA r Ch 31, 2011

SFU ANNUAL FINANCIAL REPORt 2010/11

StAte Ment o F ChAnge S in net ASS et S

For the ye Ar ended MA r Ch 31, 2011

t he accompanying notes are an integral part of these financial statements.

INtERNALLY REStRICtED COMMItMEN tS

Dollars in thousands

GENERAL

OPERAt ING

LEASE

& Ot HER

INvESt ED IN

PROPERt Y &

EqUIPMEN t

REStRICtED FOR

ENDOWMENt

PRINCIPAL

net ASSetS, beginning of year

As previously stated

13,150

30,373

280,013

185,842

Prior period adjustments (note 25)

Changes in accounting treatment

for Great Northern Way Campus rust t

187

Consolidate tRIUMF and WCUMSS

1,226

Employee future benefits

(3,833)

Gain on disposal of properties

314

As restated

9,317

30,373

281,740

185,842

ChAnge S For the Y eAr

Net revenue for the year

52,320

t ransfers

Increase in investment in property and equipment

(13,604)

13,604

Change in restricted for specific commitments

(38,716)

35,709

3,007

Endowment transactions (note 18)

22,751

net assets, end of year

45,026

33,380

295,344

208,593

note 16

note 17

below

note 18

Invested in Property and Equipment is represented by

Property and equipment

831,143

Sinking fund investment

7,144

Long term debt, before current portion

(158,075)

Deferred contributions for property and equipment

(402,873)

Net current assets and current liabilities

invested in Capital Fund

10,283

Due from a related party, parking displacement

4,632

Due from a related party, sale proceeds

3,090

Invested in Property and equipment

295,344

AUDIt ED St At EMENt S

Dollars in thousands

2011

2010*

oPer Ating ACtiV itie S

Net revenue for the year

52,320

61,960

Items not involving cash

Amortization of property and equipment

51,687

50,706

Gain on sale of properties

(6,962)

Unrealized portion of investment gains in net revenue (note 20)

(12,113)

(53,078)

Amortization of deferred contributions, property and equipment

(14,126)

(13,689)

Employee future benefits

6,340

(5,184)

84,108

33,753

Changes in non-cash operating balances

Accounts receivable

(525)

(5,518)

Due from related party

(4,630)

(5,033)

Inventories

(239)

250

Prepaid expenses

(116)

Prepaid lease

315

314

Accounts payable and accrued liabilities

13,408

(15,124)

Deferred contributions, less unrealized gains (note 13)

6,230

(1,339)

Cash provided by operating activities

98,755

7,187

in VeSting ACtiV itie S

Net increase in long term investments, net of market adjustment

(51,788)

(965)

Proceeds from sale of properties

6,728

Property and equipment acquisitions

(85,154)

(80,855)

Endowment contributions

24,198

39,073

Re-investment in to Great Northern Way Campusrus

t t

(211)

(679)

Cash used in investing activities

(112,955)

(36,698)

FinAnCing ACtiV itie S

Deferred contributions for property and equipment

41,524

31,140

Long term debt proceeds

159

Debt principal repaid

(2,975)

(1,627)

Cash provided by fnancing activities

38,549

29,672

Net increase in cash and cash equivalents

24,349

161

Cash and cash equivalents, beginning of year

3,248

3,087

Cash and cash equivalents, end of year

27,597

3,248

SUPPLEMENt AL CASH FLOW INFORMAt ION

Cash interest paid during the year was $9,821,000 (2010: $9,988,000).

StAte Ment o F CASh Flow S

For the ye Ar ended MA r Ch 31, 2011

*Restated: Note 25.

t he accompanying notes are an integral part of these financial statements.

SFU ANNUAL FINANCIAL REPORt 2010/11

note S to the F in AnC iAl S tAte Ment S

siMon Fr Aser Uni Versity 2010/11

1. AUTHORITy An D PURPOSe

Simon Fraser University operates under the authority

of the

University Act of British Columbi

It is a

comprehensive research university engaged in research

and delivering a full range of undergraduate, graduate and

Lifelong Learning programs from campuses in Burnaby,

vancouver and Surrey, BC. 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. ht e academic governance

of the University is vested in the Senate. hte University

is a registered charity and is therefore exempt from

income taxes under section 149 of the

Income Tax A

2. SIGnIFICAnT ACCOUnTI nG POLICIeS

AnD RePORTInG PRACTICeS

Accounting Method

t he financial statements are prepared in accordance

with Canadian Generally Accepted Accounting

Principles using the not-for-profit organization reporting

standards as recommended by the Canadian Institute

of Chartered Accountants (CICA). htese principles are

consistent with those used in prior years, except for the

changes to accounting policies described in note 25.

t he deferral method of accounting for contributions

is used. Net assets are reported in relation to general

operating, internally restricted, invested in property &

equipment and endowments. Revenues and expenses

are recorded on a gross and accrual basis.

r elated entities

Changes in accounting policy, note 25

t he financial statements include related entities that

have been accounted for by the following methods:

❙

Consolidation — SFU Foundation (100% interest)

❙

Proportionate Consolidation — tri Universities

Meson Facility (t RIUMF) (9% interest) and

Western Canada Universities Marine Sciences

Society (WCUMSS) (20% interest)

❙

Equity Method—

SFU Community trust (SFUCt )

(100% interest) and Great Northern Way

Campus trust (GNWCt ) (25% interest)

two entities are 100% controlled; but not consolidated

as they are not material to these financial statements:

❙

SFU Community Corporation has no business

operations and its sole purpose is to act as

the trustee of SFU Community rtust; and

❙

SF Univentures Corporation promotes technology

transfer to the private sector and has very

limited business operations and assets.

r evenue r ecognition

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 tuition and sales of goods and services,

are reported as revenue at the time the services or

products are provided. Unrestricted contributions and

pledges are recognized as revenue when received.

Externally restricted contributions (grants and donations)

are reported as revenue depending on the nature of

restrictions on the use of the funds by the contributors.

❙

Contributions for specific purposes other than

endowment or the acquisition of property

and equipment are recorded as deferred

contributions and recognized as revenue in

the year related expenses are incurred.

❙

Contributions restricted for capital purposes

are recorded as deferred contributions until the

amount is invested in property and equipment.

If the property and equipment acquired is land,

property rights or a special collection item, the

amount is recorded as a direct increase to net

assets invested in property and equipment.

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.

❙

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.

NOt ES t O t HE FINANCIAL St At EMENt S

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.

Financial instruments

the University has elected to apply CICA Handbook section

3861 in relation to reporting on financial instruments

with some additional disclosures in relation to risk. hte

University’s financial instruments consist of cash and cash

equivalents, accounts receivable, investments, accounts

payable and accrued liabilities and long term debt. htese

financial instruments are accounted for as follows:

held for trading

the University has designated cash and cash

equivalents and investments, except for long term

annuity and long term promissory note, as held for

trading. these instruments are recognized at their

fair value, determined by published price quotations

in an active market. rtansaction 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 and other fnancial liabilities

t he University has classified accounts receivable

and receivable due from a related party as loans

and receivables. Accounts payable and accrued

liabilities and long term debt are classified as other

financial liabilities for financial reporting purposes.

t hese instruments are initially recognized at their

fair value and 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. Given the short term nature of accounts

receivable, accounts payable and accrued liabilities,

their carrying value equates to their fair value.

held to maturity

t he University has classified investments in long

term annuity and long term promissory note as held

to maturity for financial reporting purposes.

t hese financial instruments are initially recognized at

their fair value and subsequently measured at their

amortized cost, using the effective interest method.

inventories

Inventories of merchandise held for resale in

the bookstore 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.

2a / Estimated useful life

Time in years

Site services

Buildings

Concrete

Wood

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.

impairment of long lived Assets

Long lived assets are tested for impairment whenever

circumstances indicate that the service potential

has declined. When events or circumstance indicate

that the service potential has declined, the long lived

assets are written down based upon the relative loss

of service potential and a related expense recognized

in the statement of operations. A long lived asset taken

completely out of use is written down to its residual value.

there was no write down of long lived assets in 2011.

Prepaid l ease

Prepaid lease expense is capitalized and

amortized over the term of the related lease.

SFU ANNUAL FINANCIAL REPORt 2010/11

Pension Plans

t he University contributes to two pension plans

whose boards of trustees, represent the members

and the employer, manage the plans including the

investment of assets and administration of benefits.

Accordingly, the pension plans have separate financial

statements. the University’s contributions to these

plans are expensed as incurred. Contributions are

determined using the projected benefit method

prorated on employment services with actuarial gains

and losses amortized over the estimated average

remaining service lifetime of eligible employees.

employee Future benefts

Changes in accounting policy, note 25

t he University operates three employee future benefit

plans providing post retirement medical and dental

benefits, early retirement benefits and a long term

disability plan. the cost of employee future benefits

is determined using the projected benefit method

prorated on employment services and is expensed

to employee benefits expense as employees provide

services. Adjustments arising from changes in

assumptions and experience gains and losses are

recognized immediately in the year in which they occur.

Use of estimates

t he 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 & r egulatory Pronouncements

t he University’s financial reporting is currently

based on the CICA Handbook’s private enterprise

standards which include the section 4400 series

on not-for-profit accounting standards.

For the fiscal year commencing April 1, 2012, the

University, as a government not-for-profit organization

(GNPO), will be required to prepare financial

statements in accordance with Canadian Public

Sector Accounting Standards (PSAS) established

by the Canadian Public Sector Accounting Board

(PSAB) with restatement of comparative figures. hte

change to public sector accounting standards will

result in different financial measurement, format of

financial statements, and financial disclosure as they

are based on different principles and concepts.

PSAB enables GNPOs to apply or not apply the

PSAS section 4200 series which are similar to

the section 4400 series of the private enterprise

standards. Pursuant to the

Budget Transparency and

Accountability Act

, the British Columbia rteasury

Board has directed that the University adopt PSAS

without the not-for-profit provisions contained in the

PSAS section 4200 series and that elections or choices

available under the PSAS be made after consultation

with or direction of the Comptroller General.

the areas that may be most impacted by the change

in the reporting framework includes accounting

for: government transfers, endowment funds,

employee future benefit and pension obligations,

and related entities. the application of PSAS

standards for GNPOs in these areas is continuing

to be developed by PSAB. hte University is working

with peer organizations and provincial authorities

to coordinate consistent application of the PSAS

standards. For these reasons, the impact of these

future changes has not been determined at this time.

NOt ES t O t HE FINANCIAL St At EMENt S

3. FInAnCIAL InSTRUMenT RISKS

the fair value of a financial instrument is the estimated

amount that the University would receive or pay to

settle a financial asset or liability at the reporting date.

t he financial instruments of the University and the nature

of risks that they may be subject to are as follows:

3a / Fair value of financial instruments

MAr Ket ris Ks

Credit liQUidity

interest

other

Financialinstrument

risK risK CUrrenCy rAte PriCe

Cash and cash equivalents

Accounts receivable

Investments

x x x x x

Accounts payable and accrued liabilities

Longtermdebt

Credit risk

the University is exposed to credit risk resulting

from the possibility that parties may default on their

financial obligations, or if there is a concentration of

transactions carried out with the same party, or if

there is a concentration of financial obligations which

have similar economic characteristics such that they

could be similarly affected by changes in economic

conditions. the University does not directly hold

any collateral as security for financial obligations.

Cash and cash equivalents

Credit risk associated with cash and cash

equivalents investments is minimized substantially

by ensuring that these assets are invested in

Schedule A Canadian chartered banks.

Accounts receivable

Management believes concentrations of risk with

respect to accounts receivable is limited due to:

❙

Student accounts receivable being a large

population of limited amounts, the leverage

to stop further enrollment and the granting

of transcripts until payment is made and

pro-active collections management.

❙

Other receivables, advances and tax recoveries

are generally with governments, major

institutions other credit-worthy institutions.

t he University maintains allowances for potential credit

losses, and such losses to date have been within the

University’s expectations. In making estimates in

respect of the allowance for doubtful accounts, current

economic conditions, historical information, reasons

for the accounts being past due and line of business

from which the receivable arose are all considered

in the determination of when to allow for past due

accounts. the same factors are considered when

determining whether to write off amounts charged to

the allowance account against the amounts receivable.

due from a related party

t he University believes its receivable from SFU

Community trust is collectible based on its

understanding of the business plans of the rtust.

investments

t he University has investment policies to ensure

investments are managed appropriately in order

to balance preserving of capital, meeting liquidity

requirements and achieving attractive returns. hte

University retains several external investment firms

to invest funds in accordance with its investment

policies utilizing diverse agreed upon investment

strategies primarily in active trading markets.

Applying the CICA fair value hierarchy for fair value

measurements provides an indication of the overall

types of investments held at March 31, 2011 being:

97% quoted prices in active markets for identical

investments (level 1); 3% direct or indirect observable

prices that are not quoted prices (level 2); and 0%

inputs that are not observable market data (level 3).

SFU ANNUAL FINANCIAL REPORt 2010/11

liquidity risk

Liquidity risk is the risk that the University will not be

able to meet a demand for cash or fund its obligations

as they come due. Liquidity risk also includes the

risk of the University not being able to liquidate

assets in a timely manner at a reasonable price.

t he University meets its liquidity requirements by

holding assets that can be readily converted into

cash and preparing annual operating and capital

expenditure budgets, which are monitored and

are updated as required. In addition, the University

requires authorizations of expenditures on projects

to assist with the management of capital.

Market risk

Market risk is the risk that the value of a financial

instrument will fuctuate as a result of changes in

market prices, whether those changes are caused

by factors specific to the individual financial

instrument, or factors affecting financial instruments

traded in the market. ht e significant market risks

to which the University is exposed are currency

risk, interest rate risk and other price risk.

Currency risk

Currency risk refers to the risk that the fair value of

financial instruments or future cash fows associated

with the instruments will fuctuate in Canadian dollar

value due to changes in foreign exchange rates.

the functional currency of the University is the

Canadian dollar. the University transacts some

revenue expenditure activity in US dollars and other

currencies due to certain operating costs being

denominated in US dollars and other currencies.

t he University uses foreign exchange forward contracts

only as a defensive strategy for known future obligations

to manage foreign exchange transaction exposures.

interest rate risk

Interest rate risk refers to the risk that the fair

value of financial instruments or future cash fows

associated with the instruments will fuctuate

due to changes in market interest rates.

the interest rate exposure of the University arises

from its interest bearing assets and its fixed income

investments including bonds and mortgages.

t he University’s cash includes amounts on deposit

with financial institutions that earn interest at market

rates. the University manages its exposure to the

interest rate risk of its cash by maximizing the interest

income earned on excess funds while maintaining the

minimum liquidity necessary to conduct operations

on a day-to-day basis. Fluctuations in market

rates of interest on cash do not have a significant

impact on the University’s results of operations.

the primary objective of the University with respect

to its investments in fixed income investments is to

ensure the security of principal amounts invested

and provide for a high degree of liquidity, while

achieving a satisfactory investment return.

other price risk

Other price risk refers to the risk that the fair value of

financial instruments or future cash fows associated

with the instruments will fuctuate because of changes

in market prices (other than those arising from currency

risk or interest rate risk). hte University is exposed

to price risk through its investment in equities. hte

price risk associated with bonds is considered as

part of interest rate risk for these purposes.

4. CASH AnD CASH eQUIVALenTS

Cash and cash equivalents are demand deposits in

Canadian financial institutions; primarily in Canadian

currency; and presented net of outstanding items

including cheques written but not cleared by the bank

as at the date of the statement of financial position.

5. DUe FROM A ReLATeD PARTy

the due from a related party is receivable from SFU

Community trust and is without interest or fixed

repayment terms except for $4,630,000 that bears

interest at the bank prime rate and is repayable on

an event-driven basis. ht e University is a beneficiary

of SFU Community trust and accounts for it by

the equity method as discussed in note 14.

NOt ES t O t HE FINANCIAL St At EMENt S

6. InVeSTMenTS

Bonds in the actively managed bond fund

mature between 2011 and 2041; and have

coupon rates between 1.0% and 10.65%.

the indexed bond fund is based on the DEX Universe

Bond index which references 1,049 bonds that are 47%

federal government, 25% provincial and municipal, and

28% corporate. As at March 31, 2011, the portfolio’s one

year return was 5.18% and the duration was 6.08 years.

Canadian equities are managed by two investment

management firms, each with a separate investment

style. One manager uses a growth based stock

selection process, while the other uses a combination

of value and growth in a core selection process.

Foreign equity investments are invested

approximately 47% in United States markets and

53% outside of Canada and the United States.

Private equities consist of five pooled private equity

funds in which the University participates.

the long term annuity is receivable in installments

of $1,457,000 from 2011 to 2013, $2,257,000

from 2014 to 2017 and $8,257,000 in 2018.

t he Student Investment Advisory Fund manages a

portfolio with a balanced mandate. hte portfolio

follows the same asset allocation proportions as

the overall endowment fund, investing in fixed

incomes, Canadian equities and foreign equities.

Sinking fund investments are held and invested

by the Province of British Columbia. htese funds

totaled $7,145,000 (2010: $6,678,000) and will

provide for the retirement of debentures issued

to the Province at maturity. Annual sinking fund

payments due within the next five years are included

in the debt repayment schedule in note 10.

t he vancouver Foundation investment is

in its Consolidated trust Fund pool which

invests in several investment pools of

equities, fixed income and real estate.

6a / Long term investments

2011

2010

Dollars in thousands

MArKet

MAr Ket

Actively managed bond fund

67,995

74,939

Indexed bond fund

97,005

71,433

total bonds

165,000

146,372

Canadian equities

127,981

105,437

Foreign equities

86,371

52,575

Private equities

13,347

12,155

Long term annuity

11,925

12,004

Student investment advisory fund

10,793

9,706

Sinking fund

7,145

6,678

vancouver Foundation

6,708

6,540

Long term promissory note

6,316

total

429,270

357,783

6b / Actively managed bond fund

2011

2010

Dollars in thousands

MAr Ket

Government bonds

Federal

21,493

18,478

Provincial and municipal

24,338

31,327

45,831

49,805

Corporate debentures

22,164

25,134

total

67,995

74,939

SFU ANNUAL FINANCIAL REPORt 2010/11

6d / Impact of market adjustment of investments

Dollars in thousands

2011

2010

Balance, beginning of year

Net assets: Internally restricted for commitments: Operating (note 16)

29,621

5,427

Netassets:Endowments

- (28,884)

29,621

(23,457)

Change in the year

Net revenue for the year (note 16)

12,113

24,194

Deferred contributions: Endowment income stabilization account (note 13)

7,586

Net assets: Endowments (note 20)

28,884

19,699 53,078

Balance, end of year

Net assets: Internally restricted for commitments: Operating (note 16)

41,734

29,621

Deferred contributions: Endowment income stabilization account (note 13)

7,586

49,320

29,621

7. InVeSTMen T In ReLAT eD enTITy

t he investment in related entity is the University’s

25% interest in Great Northern Way Campus trust.

t his interest has been retroactively restated from

the proportionate consolidation basis to the equity

basis and has been accounted for as follows:

7a / Investment in related entity

Dollars in thousands

2011

2010

Balance, beginning of year

As previously stated

Prior period adjustment to

account on equity basis (note 25)

11,227

11,228

As restated

11,227

11,228

Change for the year

Net revenue (loss) for the year

211

(1)

balance, end of year

11,438

11,227

6c / Market adjustment analysis

2011

2010

Dollars in thousands

MArKet

MAr Ket

Market adjustment

Operating investments

Balance, beginning of year

8,553

1,(730 )

Change in the year

4,979

10,283

Balance, end of year

13,532

8,553

Endowment investments

Balance, beginning of year

21,068

(21,727)

Change in the year

14,720

42,795

Balance, end of year

35,788

21,068

total, end of year

49,320

29,621

Investments, cost, year end

379,950

328,162

investments, market, year end 429,270

357,783

NOt ES t O t HE FINANCIAL St At EMENt S

8. PROPeRTy AnD eQUIPMenT

8a / Property and equipment

Cost

ACCUMUl Ated

2011 net

2010 net

Dollars in thousands

dePreCiA tion

Boo K VAlU e

Buildings

Concrete

727,786

179,847

547,939

489,170

Wood

27,075

11,511

15,564

10,869

Site services

37,448

12,619

24,829

23,958

Leasehold improvements

12,384

8,500

3,884

4,334

Computing equipment

19,573

9,595

9,978

15,171

Equipment and furnishings

115,350

54,828

60,522

72,612

Library books

85,421

38,063

47,358

47,080

Special collections

8,712

8,614

Land 19,974 - 19,974 19,299

Buildings under construction

92,382

106,568

total

1,146,105

314,963

831,142

797,675

Space in the Central City complex for the Surrey campus

is included in buildings. hte 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 rtust.

As at March 31, 2011, the University had committed to

contracts for the construction and acquisition of buildings

with future expenditures of approximately $13,500,000.

Special collections include the University’s art collection.

t he art collection, managed by a curator, primarily

consists of donated art and is insured at a replacement

value of $15,000,000.

9. PRePAID LeASe

the University prepaid a liability due on the expiry

of the Harbour Centre lease in December 2017. hte

prepaid lease amount is being amortized over the

remainder of the lease. Commitments in relation to

the Harbour Centre lease are $4,739,000 per year

until the end of the lease in December 2017.

10. LOnG TeRM DeBT

Debentures–Senior Unsecured issued by the University

for $150,000,000 bear interest at 5.613%; interest

paid semi annually; due June 10, 2043; and are

recorded using the effective interest method. 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 obtained from the Province of British

Columbia are unsecured, bear interest at rates between

8.75% and 9.5%; and are due between 2012 and 2022.

term loan bears interest at 4.26%, with annual

payments of $400,000 including principal

and interest, due September 30, 2014.

Mortgage collateralized by the verdant rental units bears

interest at 5.20%; has quarterly payments of $84,165,

including principal and interest and is due June 1, 2017.

Mortgages collateralized by student residences bore

interest rates between 5.375% and 6.875% and had

annual payments of $248,000 (principal and interest).

Annual payments of principal, sinking fund installments

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

10b / Annual payments

Dollars in thousands

Prin CiPAl

sinKinG FUnd

interest

2012

468

405

9,695

2013

490

493

9,245

2014

514

9,080

2015

3,931

8,981

2016

305

8,888

10a / Long term debt

Dollars in thousands

2011

2010

Debentures, senior unsecured

140,958

140,669

Debentures, Province of BC

11,000

term loan

4,327

4,537

Mortgages, verdant

1,790

3,186

Mortgages, student residences

1,658

158,075

161,050

Current portion

(873)

(703)

total long term debt

157,202

160,347

SFU ANNUAL FINANCIAL REPORt 2010/11

11. eMPLO yee FUTURe BeneFITS

Some benefit plans for employees involve payments

to be made after the provision of service and

are described as employee future benefits. ht e

immediate attribution method is utilized to recognize

the expense and determine the accrued benefit

obligation/liability. Estimating the expense for the

current fiscal period of these future benefits involves

an actuarial valuation to determine the accrued

benefit obligation. As the immediate attribution

method is utilized, there is no unamortized net

actuarial gain or loss. hte University does not

segregate assets to specifically offset this liability.

description of beneft Plans

t he University has three defined benefit

plans that provide retirement and post-

employment benefits to employees.

n on-Pension benefts

Non pension benefits represents the obligation/

liability for portions of future premiums payable to

eligible current employees and retirees for Medical

Services Plan, Extended Health Benefits and Dental

Benefits. Only employees hired before dates

between July 1, 2001 and May 1, 2003, depending

on employee group, are eligible for this benefit.

11a / Accrued benefit obligation

non -Pension

eArly lonG-terM 2011 2010

Dollars in thousands

BeneFits retireMent disABility

totAl totAl

Current service cost

516

2,292

2,843

3,250

Interest cost

2,109

181

449

2,739

2,873

Actuarial loss (gains)

6,817

(299)

(2,486)

4,032

(8,271)

Expense for the year

9,442

(83)

255

9,614

(2,148)

Balance, beginning of year

34,032

3,590

11,008

48,630

53,814

Benefits paid

(1,090)

(304)

(1,880)

(3,274)

(3,036)

balance, end of year

42,384

3,203

9,383

54,970

48,630

early retirement

Early Retirement represents the obligation/

liability to employees that took early retirement

in the mid 1990’s and other employees that

receive supplementary pensions.

l ong term disability

Long term Disability represents the obligation/

liability to employees who are being paid or have

made claims pursuant to the University’s self

insured long term disability plans. An insurance

company administers the plans and is reimbursed

for disability claims payments plus service fees.

defned employee future beneft plans

t he University measures the accrued benefit

obligations for accounting purposes through actuarial

valuations. the most recent actuarial valuations

of all three plans were as of March 31, 2011 and

reported an actuarial loss of $4,032,000 which

has been immediately recognized as expense.

11b / Significant actuarial assumptions

non- Pension

eArly

lon G ter M

Discountrate

BeneFits retireMent disABility

Beginning of year

6.25%

5.25%

4.00%

End of year

5.25%

11c / Health care cost trend rates

extended

Medi CAl

heAlth

serViCes

Non-pensionbenefts

BeneFits dentAl

PlAn

Initial trend rate

8.25%

4.25%

5.25%

Cost trend rate

declines to

5.00%

4.25%

2.25%

Year rate reaches rate

assumed to remain at 2024 2011 2014

NOt ES t O t HE FINANCIAL St At EMENt S

11e / Accrued benefit obligation/liability

Dollars in thousands

2011

2010

Balance, beginning of year,

as previously stated

44,797

40,244

Prior period adjustment

for immediate recognition

policy (note 25) 3,833 13,570

48,630

53,814

Expense for the year,

as previously stated

9,614

7,589

Prior period adjustment

for immediate recognition

policy (note 25)

- (9,737)

9,614

(2,148)

Benefits paid

(3,274)

(3,036)

balance, end of year

54,970

48,630

11d / Non-pension benefits sensitivity analysis

1 percent increase

total of service and interest cost

485

Accrued benefit obligation, year end

7,569

1 percent decrease

total of service and interest cost

(385)

Accrued benefit obligation, year end

(6,016)

Sensitivity Analysis

Assumed health care cost trend rates have a

significant effect on the amounts reported for the

health care plans. A one-percentage-point change

has the following effects for the fiscal year:

11f / Employee benefits expense

Dollars in thousands

2011

2010

Employee Benefits Expense,

as previously stated

60,019

55,809

Prior period adjustment for

immediate recognition of

Employee Future Benefits (note 25)

(9,737)

60,019

46,072

12. PenSIO n PLAnS

SFU has two pension plans providing pension

benefits to its employees. the assets and

liabilities of these pension plans are not included

in the University’s financial statements.

the boards of trustees for each of these plans

represent plan members and the University. hte

trustees are responsible for the management

of the plans including the investment of assets

and administration of benefits. the University is

responsible for funding the pension plans.

t he BC

Pension Benefts Standards Act

(the Act)

requires an actuarial valuation of each defined

benefit pension plan at three year intervals. hte

actuarial valuations provide two measurements, a

going concern valuation and a solvency valuation:

❙

t he going concern valuation considers liabilities

for benefits earned up to the valuation date

assuming the plan continues indefinitely; and

❙

t he solvency valuation assesses whether

all future liabilities would be fully funded if

the plan was wound up immediately.

Going concern valuation actuarial gains and

losses are amortized to employee benefits

expense over the estimated average remaining

service lifetime of eligible employees.

Solvency valuation deficits, under the Act, may be

addressed by either contributions over a maximum of

five years or by the provision of increasing letters of

credit over the same period. hte University has chosen to

address solvency valuation deficits with letters of credit.

SFU ANNUAL FINANCIAL REPORt 2010/11

Pursuant to the Act, instead of making solvency

deficiency payments of $1,575,000 for five years

commencing in 2010, the University chose to

arrange letters of credit in the cumulative amount

of $1,340,000 (2009–$0) to satisfy the solvency

contribution requirement. In the calendar years

2011 to 2014, contributions or further letters of

credit of $1,575,000 per year will be required to

satisfy solvency contribution requirements.

Pension Plan for Administrative/Union

Staff (Administrative/Union Plan)

t he Administrative/Union Plan provides a defined pension

benefit based on years of service and the average of

the highest sixty consecutive months’ salary. Pensions

are indexed to CPI up to a maximum of 3% per annum.

All contributions are made by the University and,

for the calendar year 2010, were $11,706,000 (2009:

$11,794,000). ( t here were 26 biweekly pay periods

in calendar 2010 as compared to 27 in 2009.)

the most recent actuarial valuation for the

Administrative/Union Plan was completed as at

December 31, 2007. Significant actuarial assumptions

include investment return of 6.00%, salary

increases of 3.75%, and price infation of 2.25%.

the next actuarial valuation will be completed as

at December 31, 2010 and is expected mid 2011.

Pursuant to the Act, instead of making solvency

deficiency payments of $4,856,000 for five years

commencing in 2008, the University chose to

arrange letters of credit in the cumulative amount

of $15,580,000 (2009: $10,000,000) to satisfy the

solvency contribution requirements. In the calendar

years 2011 and 2012, contributions or further letters

of credit of $5,000,000 per year will be required

to satisfy solvency contribution requirements.

Pursuant to an agreement between the University

and the employee organizations, in certain

circumstances, a portion of assets in excess of

liabilities may be payable to plan members.

Pension Plan for Members of the

Academic Staff (Academic Plan)

t he Academic Plan provides pension benefits primarily

on a money purchase basis as a defined contribution

plan. the Academic Plan also includes a grandfathered

formula retirement benefit plan (FRB). hte FRB is a

defined benefit pension plan which provides benefits

based on final earnings and years of service at SFU,

indexed relative to the increase in the Consumer Price

Index (CPI) up to a maximum of 3% per annum.

All contributions are made by the University and,

for the calendar year 2010 were $11,107,000 (2009:

$11,409,000) and for the FRB were $8,497 (2009:

$8,600). (there were 26 biweekly pay periods in

calendar 2010 as compared to 27 in 2009.)

the most recent actuarial valuation for the FRB was

completed as at December 31, 2009. Significant actuarial

assumptions include investment return of 6.00%,

salary increases of 2.30%, and price infation of 2.30%.

An actuarial valuation is not required for the money

purchase plan. the next actuarial valuation of the FRB

plan will be completed as at December 31, 2012.

12a / Academic plan

ACt UAri Al VAl UAtion

Dollars in thousands

As At de CeMBer 31, 2009

Going Concern Financial Position

Actuarial value of assets (smoothed value)

26,763

Actuarial value of liabilities

27,526

Actuarial surplus (unfunded liability)

(763)

Solvency Financial Position

Solvency assets

24,230

Solvency liabilities

32,868

Solvency excess (deficit)

(8,638)

12b / Administrative/Union plan

ACt UAri Al VAl UAtion

Dollars in thousands

As At deCeMBer 31, 2007

Going Concern Financial Position

Actuarial value of assets (smoothed value)

185,079

Actuarial value of liabilities

184,975

Actuarial surplus (unfunded liability)

104

Solvency Financial position

Solvency assets

188,656

Solvency liabilities

210,378

Solvency excess (deficit)

(21,722)

NOt ES t O t HE FINANCIAL St At EMENt S

13. DeFeRReD COnTRIBUTIOnS

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 $402,873,000 of deferred contributions

for property and equipment represents the unamortized

portion of restricted capital advances relating to assets

which were purchased with restricted contributions.

13c / Deferred contributions for specific purposes

Dollars in thousands

2011

2010

External non-research contracts

7,194

7,439

Endowment & other externally

restricted spending accounts

8,666

8,770

Endowment income stabilization

account (next page)

12,065

balance, end of year

27,925

16,209

13a / Changes in deferred contributions

sP onsored

sPeCiFiC

Pro Perty &

2011

2010

Dollars in thousands

r eseAr Ch

PUr Pose

sUBtot Al

eQUiPMent

totAl totAl

Balance, beginning of year

38,092

16,209

54,301

379,915

434,216

415,520

Restatement of gain on

disposal of properties (note 25)

756

Restatement for GNWCt

accounting policy change (note 25)

(5,196)

38,092

16,209

54,301

375,475

429,776

415,520

Contributions in the year

65,617

27,222

92,839

41,524

134,363

119,231

transferred to revenue

(63,517)

(27,571)

(91,088)

(14,126)

(105,214)

(103,875)

terminated in relation to

to disposal of building

(1,100)

Increase in deferred endowment

income in the year

13,940

30,994

Gain on endowment investments

allocated to endowment

principal (below)

(1,875)

(30,994)

balance, end of year

40,192

27,925

68,117

402,873

470,990

429,776

13b / Source of deferred contributions, end of year

Province of British Columbia

4,422

3,756

8,178

313,309

321,487

321,179

Government of Canada

35,770

3,139

38,909

43,824

82,733

53,182

Other

21,030

45,740

66,770

55,415

balance, end of year

40,192

27,925

68,117

402,873

470,990

429,776

SFU ANNUAL FINANCIAL REPORt 2010/11

13d / Endowment income stabilization account

2011 2010

Dollars in thousands

tot Al

Endowment investment income (loss) for the year

Realized (note 20)

14,844

(3,106)

Unrealized (notes 6, 20)

14,720

42,795

29,564

39,689

Endowment income allocated to

Individual endowment spending accounts

(8,446)

(8,625)

Endowment principal to preserve purchasing power

(7,178)

(70)

Increase in endowment income stabilization account during the year

13,940

30,994

Balance, beginning of year (note 20)

Gain on endowment investments allocated to endowment principal (note 18)

(1,875)

(30,994)

Balance, end of year

12,065

balance, end of year endowment income stabilization

account losses applied to reduce endowment principal (note 18)

(1,875)

t he endowment income stabilization account is externally

restricted by donors and represents the cumulative

difference between endowment investment income and

the funding applied to: (a) individual endowment spending

accounts and (b) the amounts applied to endowment

principal to preserve the spending power of the capital.

13e / Unrealized portion of endowment income

stabilization component of deferred contributions

Dollars in thousands

2011

2010

Balance, beginning of year

Change in the year

(notes 5, 6, 20)

7,586

balance, year end (notes 6, 20)

7,586

14. DeFeRReD LeASe PROCeeDS /

ReLATeD enTITy ACCOUnTeD FOR

By THe eQUITy MeTHOD

SFU Community trust is developing land on Burnaby

Mountain known as UniverCity. ht e land was provided to

the trust by the University. hte trust is a taxable business

trust and must pay income taxes on any taxable income

that is not allocated to beneficiaries. hte majority of the

development is being accomplished by the sale of 99 year

leases to developers who develop residential housing.

SFU Community trust has two beneficiaries, the University

and Simon Fraser University Foundation, whose beneficiary

is also the University. hte 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 rust t has distributed earnings of

$22,244,000 (2010: $19,800,000), accrued $1,095,000 (2010:

$401,000) of base rent to the University and distributed

NOt ES t O t HE FINANCIAL St At EMENt S

earnings of $2,060,000 (2010: $2,060,000) to the

Foundation. Cumulatively, the University has, on an

equity accounting basis, recognized $2,162,000 (2010:

$1,891,000) as income capitalized to the endowment.

However, the entire actual funds received, $22,244,000,

is invested for the benefit of the endowment. In the

coming year, SFU Community rust t has committed

to distribute $1,317,000 to the University.

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.

equity in SFU Community trust

t he University records its equity accounted interest

in the income of the rtust as a direct increase in net

assets held as endowment principal as described in

note 18. this amounted to an income of $271,000

(2010: $242,000) and was determined as follows:

14a / Net income from trust

2011 2010

Dollars in thousands

tot Al

Net income as reported by the rtust

1,287

2,539

Adjustment of land value on transfer to rtust realized through sales of leases

921

Adjustment of base rent expense in the rtust due to SFU

694

Deferred current net income from SFUCt

(2,873)

(2,513)

Income of current year recognized this year

Portion of trust income of prior years recognized this year

242

216

net income to University from trust, recorded as increase

in net assets held as endowment principal (note 18)

271

242

14b / trust’s equity reconciled to University’s deferred lease proceeds / equity in trust

tr Ust

Consolid Ation

2011 deF erred

2010 deF erred

Dollars in thousands

eQUity

AdJUst Ments

le Ase Pro Ceeds

Balance, beginning of year

11,876

(33,409)

(21,533)

(19,331)

Changes in the year

Net income reported by trust

1,287

2,539

Adjustment of land value on transfer

to trust realized through sales of leases

921

Base rent elimination

694

Deferred current year’s net income

(2,902)

(2,539)

Income of current year recognized in the year

Income of prior years recognized in the year

242

216

Prior year base rent receivable

(401)

Allocation to beneficiaries

(1,317)

(2,444)

Subtotal, changes in year

(30)

(1,417)

(1,447)

(2,202)

balance, end of year

11,846

(34,826)

(22,980)

(21,533)

SFU ANNUAL FINANCIAL REPORt 2010/11

Consolidation adjustments relate to two factors:

land was transferred to the rust t that was recorded

at fair market value, but is retained in the University’s

records at cost until realized by third party

transactions; and, income from the sale of leases by

the trust is recognized in the rtust at the same time

of the lease sale, but is recognized in the University

over the 99 year terms of the related leases.

14c / SFU Community trust: Financial summary

2011 2010

Dollars in thousands

tot Al

Financial Position

total assets

67,459

63,057

total liabilities

55,613

51,181

trust balance, end of year

11,846

11,876

Operations & trust Balance

Revenue

11,677

5,900

Expenses

10,390

3,361

Net income for the year

1,287

2,539

trust balance, beginning of year

11,876

11,781

Allocations to beneficiaries

(1,317)

(2,444)

trust balance, end of year

11,846

11,876

Cash Flows

Operating activities

5,041

2,566

Investing activities

(6,122)

(14,094)

Financing activities

1,692

13,115

increase in cash during the year

611

1,587

16c / Unrealized portion of internally

restricted for commitments: operating

Dollars in thousands

2011

2010

Balance, beginning of year

Operating (note 6)

8,553

(1,730)

Endowment operating (note 6)

21,068

(21,727)

29,621

(23,457)

Changes in the year

Operating (notes 6, 20)

4,979

10,283

Endowment operating

(notes 6, 20)

7,134

42,795

12,113

53,078

Balance, end of year

Operating (note 6)

13,532

8,553

Endowment operating

28,202

21,068

41,734

29,621

15. CAPITAL DISCLOSUReS

the University considers its capital to be its net assets

excluding endowments. the University’s objective

when managing its capital are to safeguard its ability

to continue as a going concern so it can continue

to provide services to its students and research

funding agencies. Annual budgets are developed

and monitored to ensure the University’s capital is

maintained at an appropriate level. hte University

has no external restrictions imposed on its capital.

16. InTeRn ALLy ReSTRICTeD

FOR COMMITMenTS : OPeRATInG

Internally restricted amounts are

subject to funds being available.

16a / Internally restricted for commitments: operating

Dollars in thousands

2011

2010

Balance, beginning of year

9,317

(33,078)

Increase in the year

35,709

42,395

balance, end of year

45,026

9,317

16b / Components of internally restricted

for commitments: operating

Dollars in thousands

2011

2010

Operating budget carryover

20,255

9,700

Auxiliaries and special projects

8,317

2,666

Research and other grants

16,454

13,795

Accrued but not funded employee

future benefits and vacation pay

(16,844)

balance, end of year

45,026

9,317

NOt ES t O t HE FINANCIAL St At EMENt S

17. InTeRn ALLy ReSTRICTeD FOR

COMMITMenTS : LeASe & O THeR

17a / Internally restricted for commitments: lease & other

Dollars in thousands

2011

2010

Ancillary enterprises

5,803

2,961

Specific purpose

13,567

12,682

Long term lease commitment

13,227

14,263

Self insurance

783

467

balance, end of year

33,380

30,373

t he Ancillary enterprises represent accumulated funds

held for the ongoing operations of the Bookstore, Food

Services, Residences, Parking and Document Solutions.

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 that is reported as an asset on the

University’s statement of financial position (note 9).

Self insurance funds are held to pay self

insured property and liability losses.

Income from the University’s beneficial interest in SFU

Community trust is recognized as a direct increase

in net assets held as endowment principal. Note 14

describes the trust’s sale of 99 year leases that result

in recognition of “deferred lease proceeds” which

are amortized to income over the remaining terms

of the leases. Funds from the rtust are invested to

generate income for the benefit of the endowment.

18a / Endowment

Dollars in thousands

2011

2010

Donations

9,254

4,351

Capitalized investment income

8,602

2,463

Equity income for the year from

SFU Community trust (note 14)

271

242

Base rent SFU Community trust

694

Removed from endowment

per donor request

(1,500)

Matching & other funds capitalized

2,644

2,287

Capital reduction from loss

on specific related investment

(589)

(1,966)

Recovery of endowment

investments allocated to

endowment principal (notes 13, 25)

1,875

30,994

Change in the year

22,751

36,871

Balance, beginning of year

185,842

148,971

balance, end of year

208,593

185,842

18b / Endowment principal

Dollars in thousands

2011

2010

Individual endowment

principal balances, end of year

208,593

187,717

Income stabilization account

loss not applied to endowment

principal balances (note 13)

Balance, beginning of year

(1,875)

(32,869)

Change in the year

1,875

30,994

Balance, end of year

(1,875)

n et assets, endowments,

end of year

208,593

185,842

18. en DOwMen T

Endowment consists of restricted donations to the

University. the investment income generated from

endowments must be used in accordance with

purposes established by donors. 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.

SFU ANNUAL FINANCIAL REPORt 2010/11

19. GOVeRnMe nT GRAnT S AnD COnTRACTS

19a / Government grants and contracts

Dollars in thousands

2011

2010

Province of British Columbia

Operating

221,945 215,612