Text

Reed College - Financial Assurance and Financial Statements for June 30, 2015 and 2014
	ML15300A261
Person / Time
Site:	Reed College
Issue date:	10/16/2015
From:	Krahenbuhl M; Reed College, Reed Institute
To:	; Document Control Desk, Office of Nuclear Reactor Regulation
References
	Download: ML15300A261 (33)
	v • d • e

REED COLLEGE REACTOR FACILITY 3203 Southeast Woodstock Boulevard Portland, Oregon 97202-8199 Oct. 16, 2015 telephone 503/777-7222 fax 503/777-7274 email reactoe@reed.edu ATTN: Document Control Desk U.S. Nuclear Regulatory Commission web Washington, DCi 20555-0001 hrp://reactonreeed.edu Docket: 50-288 License No: R-112 Enclosed are the following

1. Financial Assurance for Reed Institute dba Reed College.

2. Financial Statements for The Reed Institute Jun30, 2015 and 2014.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on / / /

Melinda Krahenbuhl, Ph.D.

Director, Reed Research Reactor

/}b

W REED COLLEGE October 13, 2015 OFFICE OF THE REAU~R Financial Assurance for Cost of Decommissioning Activities THETRASUERSelf-Guarantee Agreement 3203 Southeast Guarantee made by Reed College, a non-profit college, organized under the laws of the Woodstock Boulevard State of Oregon, herein referred to as the "guarantor" to the U.S. Nuclear Regulatory Portland, Oregon conmmission, on behalf of the college as licensee.

97202-8199 Recitals*

telephone 1. The guarantor has full authority and capacity to enter into this self-guarantee by 5o3177.75o6the by-laws of the trustees of Reed College.

fax 2. This self-guarantee is being issued to comply with regulations issued by NRC, an 503/777775agency of the U.S. Government, pursuant to the Atomic Energy Act of 1954, as 503177-7775amended, and the Energy Reorganization Act of 1974. NRC has promulgated em.ail regulations in Title 10, Chapter I of the Cold of Federal Regulations, Part 50, arvinl@reed.edu which require that a holder of, or an applicant for, a materials license issued pursuant to 10 CFR Part 50 provide assurance that funds will for, a materials license issued pursuant to 10 CFR part 50 provide assurance that falls will be available when needed for required decommissioning activities.

3. The self-guarantee is issued to provide financial assurance for decommissioning activates for the licenses and facilities shown.

License# License description Estimate based on Certified amounts and year 2015 dollars of 2015 cost Docket # estimates R- 112 Research and test reactor 50-288 and related facilities $1,810,000.00 $1,810,000.00 located at Reed Collage

_________Portland Oregon 97202

______Subtotal $1,810,000.00

______25% Contingency fund $453,750.00 Total Estimated cost $2,263,750.00

4. The Guarantor meets or exceeds the following financial test for a nonprofit college that issues bonds. Specifically, the current rating for Reed College is Aa2/VMIGI by Moody's Investor Services, and Reed College agrees to comply with all notification requirements as specified in 10 CFR part 50, and Appendix A to 10 CFR part 30.

5. The guarantor does not have a parent company holding majority control of its voting stock.

6. Decommissioning activities as used below refer to activities required by 10 CFR Part 50 for decommissioning of the facilities identified.

REED COLLEGE OFFICE OF THE TREASURER 7. Pursuant to the guarantor's authority to enter into this guarantee, the guarantor guarantees to the NRC that the guarantor shall carry out the required 3203 Southeast decommissioning activities, as required by the license listed above.

8. The guarantor agrees to submit revised financial statements, financial test data Woodstock Boulevard annually within 90 days of the completion of the fiscal year audit.

Portland, Oregon

9. The guarantor agrees that if, at the end of any fiscal year before termination of 97202-8199 this self-guarantee, it fails to meet the self-guarantee financial test criteria, it shall telephone send in 90 days of the end of the fiscal year, by certified mail to the NRC that it intends to provide alternative financial assurance as specified in 10 CFR Part 30.

503/777-7506 Within 120 days after the end of the fiscal year, the guarantor shall establish such fax financial assurance.

503/777-7775

10. The guarantor agrees that if it determines, at any time other than as described in email Recital 9, that it no longer meets the self guarantee financial test criteria or it is arvinl@reed.edu disallowed from continuing as a self guarantor, it shall establish alternative financial assurance as specified in 10 CFR part 50 within 30 days.

11. The guarantor as well as its successors and assignees, agrees to remain bound jointly and severally under this guarantee notwithstanding all of the following:

amendment or modification of the license or NRC -approved decommission funding plan for that facility, the extension or reduction of the time of performance of required activities, or any other modification or alteration of an obligation of the licenses pursuant to 10 CFR Parts 50 and 70.

12. The guarantor agrees that it shall be liable for all litigation costs incurred by the NRC in any successful effort to enforce the agreement against the guarantor.

13. The guarantor agrees to remain bound under the self guarantee for as long as it, as licensee, must comply with the applicable financial assurance requirements of 10 CFR Part 50, for the previously listed facilities, except that the guarantor may cancel this self-guarantee by sending notice by certified mail to the NRC, such cancellation to become effective not before an alternative financial assurance mechanism has been put in place by the guarantor.

14. The guarantor agrees that if it, as licensee, fails to provide alternative financial assurance as specific if 10 CFR parts 50 and 70 and obtain written approval of such assurance from the NRC within 90 days after a notice of cancellation by the guarantor is received by the NRC from the guarantor, the guarantor shall make full payment under self-guarantee.

15. The guarantor expressly waives notice of acceptance of this self- guarantee by the NRC. The guarantor expressly waives notice of amendments or modifications of decommissioning requirements.

16. If the guarantor files financial reports with the U.S. Securities and Exchange Commission, then it shall promptly submit them to its independent auditor and to

the NRC during each year in which this self-guarantee is in effect.

REED COLLEGE OFFICE OF THE TREASURER 17. The guarantor agrees that if, at any time before termination of this self-guarantee, its most recent bond issuance ceased to be rated in the category of "A" or above 3203 Southeast by either Standard & Poor's or Moody's, it shall provide notice in writing of such Woodstock Boulevard fact to the NRC within 20 days of publication of the change by the rating service.

Portland, Oregon 97202-8199 telephone I herby certify that this self-guarantee is true and correct to the best of my knowledge.

503/777-7506 Effective date 23543*/

503/777-7775 Reed College by:

email arvinl@reed.edu Lorrajne Arviin,iV4 ce Iresident and Treasurer State of :Oregon L

County of: Multnomah Signed before me this /3*'day of*/' **:,5 atii lsslngton Hene* , Notary 4lu lic - State of Oregon

THE REED INSTITUTE Financial Statements June 30, 2015 and, 2014 (With Independent Auditors' Report Thereon)

THE REED INSTITUTE Table of Contents Page(s)

Independent Auditors' Report 1 Statements of Financial Position 2 Statement of Activities and Changes in Net Assets - Year ended *June 30, ,2015 *

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Statement of Activities and Changes in.Net.Assets -,Year ended June .30, 20:14 Statements of Cash Flows , ,. .*: ,.o:: ,;*,**

Notes to Financial Stattements ,, ".- ,. .. ' / .. .:6-27

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KPMG LLP Suite 3800 , , , * ., ,

1300 South West Fifth Avenue" Portland, OR 97201 Independent Auditors' Report The Board of Trustees The Reed Institute:

We have audited the accompanying statements: ,of:'financial position of Thea Reed Institute (an-Oregon nonprofit corporation) as of June 30, 2015 and 2014,. and the related statements of activities and changes in net assets, and cash flows for the years then ended,' and the related, notes to the financial 'statements.

Management's Responsibility for the Financial Statements " -

Management is responsible for the preparation and fair presentation of .these. financial, statements .in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements .that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we 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 auditors' 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. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to.above present fairly in all material respects, the financial position of The Reed Institute as of June 30, 2015 and 2014, and the change in its net assets and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles.

c. LUP, October 2, 2015 KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMI3 International Cooperative I"KPMG International"). a Swiss entity.

THE REED INSTITUTE Statements of FinancialPosition" June 30, 2015 and 2014

' ' Assets 2015 2014 Current assets: .. ..

Cash and cash equivalents . $ 14,168,589 Accounts receivable - student and other (note 8) . 6,506,607 S.3,572,591. ... .. 852,073 Short-term investments (note 3) 166,983 104,592 Contributions receivable, net of allowance $36,0.00 in 2015.and $37,000

.in 2014 (note 8) . . 681,944 *. 703,856

Prepaid expenses and'other assets .. 4,900,976 -. 4,659,873 Total current assets . . 12,827,001 Noncurrent assets:" -

"Cash and cash equivalentswhose use is limited. .. . -..

6,171,930 ... .6,174,350 Accounts receivable noncurrent - student and other, net of a~llowance of

$60,239 in 2015 and $60,239 in 2014 (note 8) 5,040,340 5,088,951 Property, plant, and~equipment, net (note 4)! .......- "*.... 139,745,333 /138,782,755 Contributions receivable - noncurrent net of allowance of $454,000 in 2015

anld$587,000 in 2014 (note 8). " 8,597,760*

Funds held in trust by others (note 7) 11,120,028

- -* 1,190,977 1,172,563 Long-term investments (note 3) 568,1 86,67,0 576,758,467 Other assets . 555,955 4.80,865 Total noncurrent assets " 729,488,965 739,577;979

' * ~Total assets -, : . $752,980,048

752,404,980

,-: . ~~Liabilities and Net Assets ,,. .

Current liabilities: -

Accounts payable and accrued liabilities 6,329,393

."Postretirement benefits payable (note 6) . ..:.. $ 5,708,406 870,043" 794,443 Debt and capital leases, current portion (n~ote. 5) " 1,340,614 41,601,305 SDefer~red reveiiue -,... , .. 1,960,120 1,413,955 Total current liabilities 9,879,183 50,139,096 Long-term liabilities:

Liability for split-interest agreements " '11,096,869 '1,177,015 1.

Postretirement benefits payable (note 6)' '25,662,500* ,24,705;839

..Refundable loan programs ... .

-. .. 2,698,841" * '2,756,743 Asset retirement obligation .. . .' 3,079,868, .:3,053,284 Debt and capital leases, netc of current portion (note 5)". 78,875,35,3 *39,819,982

Other liabilities 1,928,246* 2,149,050

Total long-term liabilities. .. 123,34i,477

83,661,913' Total liabilities . .. " . . 133,220,860 133,801,009 Net assets (note 9):

Unrestricted "373,159,780* 358,720,805 Temporarily restricted 82,363,062 95,501,981 Permanently restricted 164,236,346 164,381,185 Total net assets 619,759,188 618,603,971 Total liabilities and net assets $752,980,048 752,404,980 See accompanying notes to financial statements.

2

-"THE REED:INSTITUTE Statement~of Activities and.Changes, in Net Assets Year ended June:30, 2015 Temporarily Permanently Total Unrestricted restric~ted restricted 2015 Revenues, gains, and other s~upport:

Tuition and fees ' $ 62,326,717 -- - 62,326,717 Less college-funded scholarships (23,625,581) --- (23,625;581)

Net tuition 'and fees 38,701,136 _____ -- _________ 38,701,136 Auxiliary enterprises ' 13,537,300 -_ 13,537,300 Gifts and private gr~ants b 9,312,432 600,796 .: .932,979 10,846,207 Government grants, contracts, and student aid 1,902,067 -- -- 1,902,067 Realized and unrealized gains (losses) 25,282,834 (2,056,368) :" ' :""" 23,226,466 Other investment losses (327,066) -- (1,060,000). . (1,387,066)

Other rev¢enues and additions.. 2,331,724 ....__ -__.... 18,218, '. . 2,349,942 Subtotal -"1:.52,039,291,, *1,455,572) II.. (108,803)' 50,474,916

Net assets released from restrictions 11,269,727 (114269,727)

Total revenues, gifts, and

"' other support' 102,010,154 (12,725,299) :".(1.08,803)* - 89,176,052 Expenses: -_ -

Educafiojiaal and genq'ral:

'Inastruction - .. ...

31,704,230 ---- 31,704,230 Research 1,845,01.5 --.. , -- .* . 1,845,015

Academic support 9,969,415 -- -- 9,969,415 Gener al institutional support" 15,952,269 - --; ' 15,952,269 student ser-vices - 7,052,409 -- -- 7,052,409 Public affairs 5,557,383 Total educational and general 72,080,721 -- -- ".:"' 72,080;721

..Auxiliary enterprises 15,154,996 -. '1"..... . .. , 15,154,996

" Total expenses' *87,235,717 !* " ., *,: .* "... .-.... 87,235,717

.:i'.

... 'Increase (decrease) from operations 14,774,437 (12,725,299) (108,803j') 1,940,335 Nonoperatmng activity:...

Other interest expense (158,958)

(158,958:)

(452*513)

Change in,value of split-interest: agreements (383,979).. (68,534)

Decrease in underwater endowments 10,597 (10,597)

Other: additions (deductti~ns),. (187,101) (19,044) *.32,498 . . (1!73,647)

- ',,'Total nonoperating activity (335,462) (413,620) '(36,036) * (785,118)

Increase (decrease) in net assets 14,438,975 '*(13,138,919) (1144,839).* *.1,155,217

'Net as!*ts, beginning of yeai: 358,720,805 95,501,981 164,381,185 618,603,971 Net assets, end of year ... .. $373,159,780 82,363,062 164L,236,346 619,759,188 See accomPanying notes to financial statements..

3

STHE REED: INSTITUTE Statement oAcitesand Changes in Net Assets S ,Year ended June 30, 2014.

Temporarily Permanently Total Unrestricted restricted restricted 2014 Revenues, gains, and other support:

Tuition and fees $ 62,110,883 Less college-funded scholarships -- 62,110,883 (22,800,465) _______ ,____-__--__, (22,800,465)

Net tuition and fees 39,310,418 _______ ________ ,' 39,310,418 Auxiliary enterprises 13,234,897 *" ': --'* " ' 13,234,897 Gifts and private grants"." 11,501,436 2,906,083' " 125,80J3" 14,533,322

Government grants, contracts, and student aid 1,269,60J1',,-' ,*. . _. . " '* :" ' 1,269,601

Realized and unrealized gains 46,756,262 26,145,122 r ,*': . ... *72,901,384 Other investment gains (16s*es)' (375,541.) , , .; '*'"276,828 *..... " (98,713)

Other 'revenues and additions !."-23,820. ". .2,160,145

" Subtotal" 74,522,980 '* 29,051,205 ' !26,5"1: ":"104,000,636 Net assets released fr~om restrictions 9,921,004 :, (9,921,004)"

Total revenues, gifts, and

" .* . other support 123,754,402 19,130,201 .. .. 426,451' , .143,311,054*

Expen'Ses: "

Educational and general: ...

S Instruction- 31,123,091 "',"* K 31,123,091

Research *. 1,331,839 ... . * 1,331,839 Academic support..", 9,301,215 -* ;'.,-: 9,301,215

-. General institutional support 15,952,198 . , . .*.*15,952,198

...Student services .... ... .. 6,641,523 -- 6,641,523

" Pfblic affairs . .*. 5,471,642 -- ' 5,471,642 Total educational and general 69,821,508 ,., ,'"

- ,* 69,821,508 "Auxiliary enterprises *""" ? 14,983,570 ___"____"__ *"14,983,570

.Total exp~enses. 84,805,078 -- .. 84,80'5,078

- Increase from operations 38,949,324 19,130,201 426,451 58,505,976 Nonoperating activity: ::.-:*

'Other interest expense., *. (133,632), ,

"1,302,448 1,704,371 ,. (133,632)

Change in value of split-interest agreements 3,006,819 Decrease in underwater endowments 1,710,101 (1,710,101).

!Other additions (deduictions)' (19,139) .,.(292,3.36)... ,*. 111,334, -. (200,141)

,..* Totalnopeangatvy 1,557,330 (699,989) i *:,815,'705' l " '2,673,0)46

. .:.. Increase in net assets' 40,506,654 18,430,22 - , ; .2,242,156

61,179,022 Net assets, beginning of year ". . 3 18,214, 15 1 77,071,769 . S1624139,029 '557,424,949 Net as~sets, end of year * $ 358,720,805: 95,501,981 .. .164,381,185 618,603,971 See accompanying notes to~financial statements.

4

THE REEDINSTITUTE

.... Statements of Cash Flows. '

Years endedJune 30, 20'15 and 2014 2015 2014 Cash flows from operating activities:

Increase in net assets $ 1,155,217 '61,179,022 Adjustments to reconcile increase in net assets to net cash used in operating activities:

Depreciation and amortization costs ' i*, 5,327,380 4,6*80,816 Loss on dispogsal of assets . . 2,541 Contributions restricted for long-term investment , ,(2,083,893) ";'(4,420,840)

Noncash contributions ~...,: ... .. , (5,1,81,80 1), ..(4,158,312)

Net realized andunrealized gains on investments -" (20,887,152). l

,(71,972,813)

Net realized and _unr~e.alized gains on split-interest agreements 571,363. .'(2,773,155)

,.Change in value of split-interest agreements :..,. (18,414) ,.(233,664)

Change in asset retirement obligation 26,584 29,977

Change in fair value of derivative instruments . -: - :(220,804) (233,585)

Changes in operating assets and liabilities that provided (used) cash:

., Cash

.....whose use is limited. .. " '.z '!. 2,420 1,919,828 Accounts receivable (2,671,907) 386,0904 Contributions receivable 2,544,180,..

1,587,558 Prepaid and other . (216,020) (460,900)

,:, Accounts payable and accrued liabilities , (620,987) (1,140,123)

' . Postretirement" ., 1,032,26 1: ,1,522,172

. Deferred revenue' .546;165. , (427,780)

Net cash used irn operating activities .. (20,692,867) (14;5 15,795)

Cash flows from investing activities:

Proceeds from maturities/sales of investments

' " ,.i ' 204,134,885

228,389,564 Purchases of investments... . (168,683,262) (206,732,589)

.Contracts receivable collected . . ... .. 2 .. .... . 102,194 ' ** 46,532

'Contracts receivable advanced ,, (202,368) ,. ,... (16,278)

Piurcthase of property, plant, and eqiiiipment- (6,173,493) i**(9,940,908) 29,177,956 ... :*11,746,321 S Net cash provided by investing activities --"'

cash flows from financing activities:. ,,

.Conffributions r~estrict&d ftor.iong-terrn., investment . '2,083,893 , 4,420,840

..Payment of debt principal/capital lease obligations ...(1,324,326) (2,486,530)

...Payme-nts on split-int~ere~st agreements ... ... . (1,444,626) (1,346,359)

(Decrease) increase in obligations for spl'it-interest agreementfs (80,146) " 1,659,439

." Changes in9 governmental loan funds ,!. _ . .. ; (57,902). .. (55,599)

' . Net cas~h :(used .in) provided by 'financing iactivities (823,107)... ... 2,191;791 Net increase (decrease) in cash and cash equivalents 7,661,982 (577,683)

Cash and cash equivalents, beginning of year 6,506,607 *7;,084,290 Cash and cash equivalents, end of year $ 14,168,589 6,506,607 Supplemental disclosure of cash flow information:

Interest paid $ 2,037,577 2,046,182 See accompanying notes to financial statements.

5

THE REED INSTITUTE

.Notes to Financial Statements June-30, 2015 and 2014 (1)

Background:

The Reed 'Inst*itute (Reed' College) wais founded in 1908 by Simeoni and Amnanda Reed, with one central commitment: to provide a balanced, comprehensive education in, liberal arts and sciences,, fulfilling the highest standards of intellectual excellence. Reed College offers a B.A. in one of 22 major fields and

.numerous interdisciplinary *fields, as well as a master, of arts in liberal studies degree. The Reed College

educational prografm pays particular attention to a b'alhnce between b5road s~iidy in the various areas of human

knowledge'and close, in-depth study in a recognize'd academic discipline>... .,.*';

,(2). Summary of Significant Accounting Policies ,. .,.:-, ,i, .* .

(a) "Accru~alBasis"' ", : **-'" " " "" '"':

The financial statements of Reed College have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

(b) Basis of Presentation ... . ..* ..... : " .! ' . : : ,i.

-,,Net assets, revenues, expenses, gainis, and losses are classified based on the existence or absence of

.donor-imposed restrictions.,Th definitions used to classify and report net assets are as. follows:

... .Unrestricted. net, assets -net :assets, th~at,, are not subject. to.,donor-impos~ed stipulations or

.... .. , donor-restricted contributions whose: restrictions ,are mnet~in the same reporting period.

. Temporarily restricted net assets - net assets subject to don6r-'imposed"Stipulations that will be met either by actions of Reed College or the passage of time.

. Permanently restricted net assets - net assets subject to donor-imposed stipulations that they be

,permanently m~aintained by Reed College. Generally, the donors of these assets permit Reed

,College. to use all or part of the income earned onyelatedi investmlents for general or specific purposes.. .~

., , ,,, P:,

Revenues, are, reported, as ,increases, in unrestricted net assets unless their, use is limited by donor-.imposed restrictions~. All expen'ses fire r~eported as decreases in unrestricted 'net assets with the

" " ~exception of activ'ity' relaied to lif~e incomne agreements.i Gains and losses 'on, investments and other assets or liabilities are reported as increases or decreases in unrestricte'd net assets unless their use is

,.,restricted either 'by donor stipulation or by law. Expirations of temporary restrictions (i.e., the

..... donb~r-stipulae-dp~urpose has been fulfilled and/or the stipulated time period has elapsed) are reported

""' as reclassifications between the applicable classes 'of net 'ssets"*nd ate rgpoirted: as "net :iissets released

, from restriction" in the statements of activities and changes in net assets. 'PResftictions related to cotiuin'o h ucas fcptladfinsare released when the ase is placed in service.

Income and net gaiins on investments of endowment and similar funds are reported as follows:

,* Increases .in permanently, restricted net assets if the terms ,of the,, gift ,or Reed College's

interpretati~n of relevant state law require they be added to .the principal of a permanently restricted net asset.

6 6(Continued)

THE REED ItNSTITUT-E Notes to Financial 'Statements June30, 2015 ard'2014

Increases in temporarily restricted net assets if the terms of the gift impose' restrictions on the use of the income or if endowment income has not yet been appropriated, for expenditure.

Increases in unrestricted net assets in all other cases. . ...

Reed College follows the provisions of:,Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 96$8-205, Not-for-Profit Entities;-: Presentation. of Financial Statements, which provides guidance: on !the net asset classification* of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Funds Act of 2006; (UPMIF.A) and also* requires disclosures about endowment funds, both donor-restricted endowment funds and board-designated endowment funds.

See note 10 for further disclosures.

(c) Ue oEstimates.......... .;.... ..... "*. .:, .... ,.," ,I The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates' and *ssumnptions that affect the reported amounts of assets and .liabilities and disclosure of contingent assets and liabilities at the

. ,,date of the financial statements and the repolrted aniounts of revenues and expenses during the reporting period. Actual results could 'differ from those estimates. Significant items subject to such estimates

'and assumptions..:include the useful liVes":of fixed 'assets;' allowanc~s for' stud'ei~t and contributions receivables; and the valuationfof,the i~nterest:rate swaps*, ihvestm'ents, split-interest agreements, and actuarial assumptions. .* ., . '.

(d) Revenues . : t. ':

'~' t.1.'> .! ,¢' ,

The principal sources of revUenue, cosslgoftultimn, room and board, various'other educational fees, unrestricted income from funds functoning as endowment, unrestrcted gifts,' arnd net assets released fronm restrictions, 'are accouhted for in unrestrlcte*I net assets. Ulnrestrlcted net assets also include

-revenue from grants, auxiliary enterprises, and gains on disposal of assetL ... "

... The following assets have become available for general dperatling purpo~ses 'from release from donor

'restrlctionS 'through the 'passage of time and throug:h the liatura.tidD of' variousplanned giving

.. agreements 'for thle ybars ended June 30; 2015 anid 20]t4, resi'ebtively.'"... ; ' "

...* ". "* ,:' . .. , V 2015 ". " : 2014

. Maturation of planned giving agreements . . '$. 106,936 32,086 Passage of time. '. " '... 1,123,052 ' 981,258 Endowment earnings aplpropriated for expenditure ' 10,039,739 8,907,660___

Total net assets released from restrictions $ 11,269,727 '9,921,004 With a few exceptions, the monies in the endowment and similar funds* are invested as a pool, and the related income of the pool is distributed to each.participatingfund based, upon a spending formula and its relative proportion of the pool. -,.;'

7 7(Continued)

_THE REED INSTITUTE

,.Notes to Financial Statements June,30, 2015 anid 2014 In addition, monies, which are not. required to meet short-term demands, are combined .and invested.

The income earned on these, intermediate investments is allocated to each participating fund based uon its felative prop~rtion of the combined ietm'et.

(e,) Investm ents "' * "" ': .:-" ' " * :" . . . . '*'° ""

,.Investments in marketable equity securities .with~readily determinable, fair values and all investments

. indebt securities are carried at fair value. In conjunction' with the ad~ption ofFASB. ASC Topic 820,

..'.Fair Value Measurement, Reed. College has adopted the. measuremeynt provisiions of FASB ASC

,,Subtopic 820-1j0, Investments ,in Certain Entities That C'alculate~ Net Asset Value per. Share (or Its Equivalent), to certain investments i~n .fur~ds *that do no0t h~ave readily determinable fairya~lues including private investments, hedge funds, and real estate. Net asset value (NAV), in many instances may not equal fair value that would be calculated pursuant to ASC Topic 820. ,: ..

' Realized and unrealized, gains and losses arising fr6mn' the' sale, collection, or other 'disposition of

".*.investmfents, ,as,'well -as all dividends, *interest; and o0th'er investment income, 'are shown in the

. statements of'activities~arid changes'.inflet:'as'sets. Gaiinsand 'investment incomethat are limited to

-specific uses* by donor-imrposed re'gtrictibris atereYp'ortted as increases in unrestricted net assets if the restrictions are met in the same reporting period that the gains and income are recognized. Losses on investments related to gifts that the donor required to be iThested'd inr perpethiity (ii~e., endowment funds)

,.*are classified as 'decreases,.in temporarily restricted net assets :until .the: investments fall below the

... original gift at .which ppint'they.d¢.crease unrestricted net,.assets., Subsequent. gains that. restore, the fair

'value~ of the .assets of the. endowm~ent funds, to the required~ level are classified, as: increases in

.,: unrestricted net assets . . . : , ,... . .,: ..

"During'the year 'ended J 3 th o!g~aotdAS 2015-07 DisclosuresjorInvestments in Certain Entities That Calculate Net Asset-Vah~e,. Investmenits valued utilizing net asset value as a practical expedient are excluded from~ the 'fair'value hierarchy under this guidance (Note 12).

(09 Split-Interest Agreements

' Reed College h~as been, name~d as' a ben~fkiaCiy f~r variou~s spli'ti-i'n~terest agreeme'nt's:.Each agreement provides for coiitractuar pay¢ments to stated b'eneficia*ries f'or their. lifetimes,. after ,aihich remaining principal and interest revert to Reed College. Assets contributed are recorded at fair"',alue. In addition, Reed College has recognized the present value of estimated future' payments ,to, be made to beneficiaries over their expected lifetimes as a long-term liability. The present values of these estimated payments were determined on the' basis of pubhishe'd'acfiuarial factors 'for ages of the respective beneficiates disco Unte'd iUsiiig the risk-free trate tdj'u'*ted'f~r mortaility uncertainties and are Sn6t changedl after the daite of ihe gift.' Annual adjdistments 'are 'made 'between the liability and the net assets to record 'actuarial g~ain* or 16sses. Differei'ices bWetflenthe :a'S~es 60dntributed and the expected payments t6' be-'made to'" ben'eficiai'ie'*ha~e been recorded "as contribution revenue in the year established. These 'don~ationis aire either 'tdmp6rarily restricted on the basis of time* or permanently restricted based orn the i"en of th donor.'

8 8(Continued)

' THE REED INSTITUTE

,'Notes to Financial Statements June'30, 2015 and 20:14 (g) -Contributions Receivable .. ' . *. .. .,..' " ' .. :

Unconditional prominses to give (contributions) are recorded as igifts and' private grfint income and contributions receivable. Promises to give are not recognized until they become unconditional, that is, when the donor-imposed restrictions are substantially met. Contributions other than cash are. recorded at their estimated fair value. Management estimates an allowance for uncollectible contributions based on risk~factors, s'tich' as prior collectlon'hi~tory, type'of contribution, and the. hatuie of the. fund-raising

' .activityiCcintri'bufioris are general~ly i~eceivable within *five years Of the date t'li& commitment was made and were discounted to 'present Value Using a :dis~ount rate commensurate 'with the risk involved.

Amotiztio 'f te dscdntis'recorded' as a~dditional 'contribution' r'e-,nue 'in 'accordance with dono:imposedrestr:ictiohs, if rn),, on the 'cb~ntribiition. ' ' '"

(h) Derivative Instruments- ° ,

<"'C.,'" I.*'. " ; .*- : *' '."-.

.. Ree d. College accounts for deriva~ives in,*accprdance with ,FASB,ASC Subtopic 815-10, Derivative

, . and,Hedging - Overallh as anmewnded,.which re~uir~s t~hat all derivative instruments be.recorded on the

. ,statements of financial position at their~es~iated fair~values.' Changes in th~e fair value are recognized

. in unreali~zed gains and losses, uneqstri~ted*, in the *~tatements of activities and changes in net assets.

"( Property, Plant, and Eq.uipment, Ne* ... ,,.,...*, ' .,., ,, ........, . .

. Propert3', plaint, and *efuipment' .rer'sf~t~d 'at 'Cbg ft the' date of acquisition*, if"ptiichased, or at fair

'"'n'i *farket value,. at the date of rece'ipt,'if'aeLtuired' by donatiotiL Equipment' under &apital leases are stated at -thepresent Value"of mi-nii~um lease payni~ents'."DepreciatiO~fi is computed 'on a straight-line basis over the estimated useful lives of buildings (twenty to fifty years) 1'arid' equipment anid furnishings (five years). Equipment held under capital leases areamortized on a straight-line basis over the shorter of the lease term or estimat'edius'efiil life Of the ass~et. Routine repair aind 'maintenance expenses and

' equipment replacem~ent costs are expenised as infcurred. ' ' '*

(I) Donated Materials Donated materials are included in the statements of activities and changes in net assets as "Gifts and

~ teir~tiiatd firvalues at clat* 'of i~eceiist. Thes'e maiterials are subsequently priategi~nts.

s WleA used."

expend , .... ' .

(k) Income"Tax Status { -" "'i" ,,,. -,..i ..

.,' The Internal Revenuej Service has recognized Reed College as exempt.fromn tax under the provisions

.. :i.of Section 501(a) as an organization describedl Under Section 501(c)(3) oftihe Internal Revenue Code

. .except to the extent pof unrelated,.bus.{ness. incqme~ under Sections 511 through 515.. Management believes that *unrelated business income tax,: if any, is immaterial;: and th~erefore, .no tax provision has been made.,Reed College accounts for..incomnetaxes in acpord~mnce'with FASB ASC Subtopic 740-10,

. Income Taxes Overall, anInterpretation of FAS.B Statement 109, which clarifies the accounting for uncertainty in income taxes recognized in an ,enterprise 's.,financ~ial statements and: prescribes a threshold of more likely than not for recognition of tax benefits of uncertain tax positions taken or expected to be taken in a tax return. ASC Subtopic 740-10 also provides related guidance on measurement, derecognition, classification, interest and penalties, and disclosure. The College does not have any uncertain tax positions.

(Continued) 9'

THlE REED INSTITUTE

.*Notes toFinancial Statements June 30, 2015 and 2014

'ahad Cash Equialents.'

Cash and cash equivalents represent cash im bank and other highly liquid investrnentwthogia maturities of. three months or less, except for certain cash and caheuvlnsincluded in the

".investment pbrtf'i~oi0ttarineddobeivsedna lofig-'termn ba[sis.' Ca~h* and cash equivalents Swhose use: is* limited ar* *e~tricted for the Fed~ral Perkins Loan program.`* "

S(in) Oeferred Reve;n-e.. . " *' ' ' '"

,*..?:-Deferred revenues consist primarily of iprepaynients of tuition and :fees. related. to* future academic years. -..... 3/4 -,.:.

(ni) Postretirement, Benef its ", *i* *..'-, ;:- ,

.... r . . ,i.. -:;

~Reed College hais a noncontributory' pos*tretlriement' medical benefit plan covering atcptn

mployees upon th~eir retirement. Reed College mainitains'a agotetrmepme~

rticipaitingan

- accounts f~ h lan ~ihntefm~No AB

Topic 958-7 15, Ndt-for-Pr~bfit Entities -

.- :":Reed College. records .annual ;hiriunts~relating to' its'i'iostretirement :medical!benefit.-plan'based on calculations that incorporate various actuarial and other assumptions;.inclUding-'discbunt *rates, mortality, and healthcare cost trend rates. Reed. College reviews its assumptions on an annual basis

.. ..:" "and makes 'modificatidns to'the assunap~ihen based on'current rates' lind trends w'hen it ls'appropriate

,' ' to do so. ReedCollege beheves that the, assumptions utd1ized in reording its obhigatlons 'underits plans

;...: "are'r~easoi~ilel baket.Oinits exp~erien~e' and iarket'd~6nditidiis: '.. ' ;t : :

..:(o) Concentration of Risk. '- '

' . ' .h

i ! . .. . * .2'.,: ' . ' - , . * * : " - ., *, . , ' ?

Reed College's standard*financial instruments include commercial paper,,!U.S, government and agency securities, corporate obligations, equity securities, mutual funds, hedge funds, p~rivate equity, and real

' : '... -estate.:-These financial, instrument, 'may "Subje'ct- R~ed C011ege.'t0 concentrations of' risk.';Federal

' " : , depository' insurance *coverage 'covers~up to $250,000 per. depositor,' for each .account 'ownership

. t'3/4 ' ", '.., , i , ; i" .- ',

(3) Investments

'Thi~e fair value of investments at June 30, 201'5 axgd 2014 are as follows:*

2015 2014 SInvestments:

Bond funds $ -11,480,423 19,861,676 Equity mutual funds 92,535,131 107,618,626 Hedge funds '297,064,459. 297,254,925 Private equity 156,928,498' 139,622,099 REITs 3,002,609 3,333,711 Real estate 3,718,469 3,522,313 Money market and other 3,624,064 5,649,709 Total investments $ 568,353,653 576,863,059 10 10 (Continued)

THE REED :INSTITUTE

-_Notes to Financial Statements June'30, 2015 and 20.14 At June 30, 2015 and 2014, Reed College has approximately $454,million andS$437 million, respectively, of investments that are not readily marketable (alternative, investments). These investments .represent 80%

and 76% of total investments alnd73% *ind 71i% of t~tal neti.sets at Jfinui 30,:2015 g~hd12014, respectively.

Thes inesientinsrumntsmay contain 'elements of both credit and marketriisk. Sticli 'risks include, but are not limited to, lim~ited liquidlty, absenice of regulatory oversight, dependence upon key Individuals, emphasis on speculative 'Investmients (both derivatives and nonmariketable investmients);and nondisclosure of portfolio composition. Because these investments are not readily marketab~le*,:their, estimated~value is subject to uncertainty and, therefore, may differ from the value that would have been used had a ready market for *such* investments existed. ,Such* difference could 'be ,tnateriai. iSee note 12 for 'investment fair value measurements. .

The alternative investments are~reported at net asset value (NAV). TheS in'~estmentts are redeemable at NAV under the. original terms of the partnership agreements, x/o s~ubscrip~tion agr~eements and operatigons of the underlying funads~ However, it is possible that teeredemiption rightsmnay be restricted or eliminated by the funds in the future in accordance with ~the, underlyirt fi.dge. agreements.. Due. *,othe paature of the investments held by the funds, changes in market conditions and the econoillic environment may significantly impact the NAV of the funds and, consequently, the fair value of the Reed College interests in the funds, Furthermore, Schanges tQ the-liquidity provisions*,o.flhe fundsrnlay* s~gr~cant~ly {mpact the fair value of t~he *Reed College At June 30, 2015, Reed College has com mitte* $165,490,000 to private equity partnerships and hedge funds.

SAs of Juine 30, 2015, ,Reed Coqllege has fundqd $82,.274,580 of th~s com~mitments leaving an unfunded balance of $83,215,420. These commiitments ar( callable by th* general par rs/advisers between now and 2024; The terminations of these p~airtnerships/funds are based upon specific provisions in the a~greements.

Included in investments, are $23,900, 177 and $25,659,799 of planned givin trusts held ... inimutual" funds that

. "re~not'available for spending as of June 30, 2015*and*2014;. respectively.:..., ,.,

S., Within private equity-and hedge funds, Reed College .has 'fundsinvested in~seventy and .fifty-seven limited

., partnerships, re~pectively;:withl~ownership intere~sts ranging from .0.02,% to :16.57% at, June .30, 2015 and June 30, 2014. Included in the assets oflthe various partnerships at times there are certain positions of derivative financial instruments.

Total investment income and realized and unrealized gains on investments that are not readily marketable was approximately $19,473,000 and $51,347,000 for the yea~s 6fided .June 30; :2015 iind 2014', respectively.

. , 5,'* ./

" -\ p J!

11 .(Continued) 11

THE REED INSTITUTE

..Notes to Financial Statements June 30, 2015 and 2014

.(4) Property, Plant, and Equipment, Net., - K..

Pr~pei2i, pliant, and *quipffrnent 'at Jline 30, 2015 and 2014consist of the followinig:

2015 2014 Land and land improvements- . * ,':4 42214: '. 44,482,214 iBuildings :...; *. " ":., ....

i , . . ,,,i :193,338,669; *-183,687,925 Construction in progress .... . :, 1,654,6.46 , : * ,5,600,861 Equipment, furniture, and fixtures 14,315,996 14,125,246 22,9,55 1,896,246

... Less accumulated 4~epreciat io~n (84,046,192) *(79,113,491)

_:**; i, . Net'propeit*,; planit, and equipment $. 139,745,333 .. ,138,782,755 Deprciaionexpense wa~s $5,251,253 and $4,486,684 for the years ended June 30,2 2015 and 2014,

. respectively, andi is* allocated to the functional expenses 'based on the relative square- footage of the

..department. ,. . . ..

(5) Long-Term Debt (a) Capital Lease Obligations ,. 'I Reed Col~lege .leases *copiers o~ver~ various .terms. The carrying values of assets under capital lease at

.* June'30, 20Q15 and 2014 are $1,4Q,5,58$.and$97*679, .respectively. Amortization costs of $76,127 and

- $108,331 hr*e iriclhded in *iccumiilat~d'depreciation for the years. ended June 30, 2Q15 and 2014,

"' * 'respectively:. i* * .. ."

" i: The paynmenf schedule for the capital lease obligation is as follows:.: "

.. :. , *12016 ,$ . 74,613. .

. .,: *.:" 201

... ,.* * " '*-53,084 . :

.. .. ..... , , i 2018 ..... ,-........ 37,714 2020 .18,857 Less amount representing interest (53,265")i

' "$ 168,717 (b) Notes Payable ....

During 2008, Reed College refinanced the 2006 and the 2007 State of Oregon Bonds in the amount of

$47,060,000. The 2008 State of Oregon notes mature on July 1, 2038 and bear interest based on a weekly basis set thrUg the remarketing process. -.

1*2 12 (Continued)

THE REED INSTITU.TE Notces to Financial Statements June'30, 2015 and 2014 Effective March 22, 2011, Reed College refinanced the 2000 State of Oregon Bonds inthe amount of

$19,080,000 and borrowed an additional $20,950,000 to be used to finance the construction of a new performing arts b~uilding.

Wells Fargo Bank is-the liquidity facility provider for the 2008 Bond Issue should the bonds fail to remarket. The!Liquidity Facility agreement was renewed in May 2015 for an additional three years

and remains inf effect until June 2, 2018, unless renewed or terminated pursuan~t to the conditions set

forth in the 2008 Liquidity Facility. *'

Notes payab~e are summarized as follows:

... i'2015, . ., 2014

. 2008 State of Oregon notes ,.r.'$ .40A445,000." 41,74 0,000 2011 State of Oregon *notes 40,030,000 40,030,000

, .. .... 80,475,000 81,740,000

,r ... .. .1.5;

" ' - ]'l * * )'" . ,'.{ ' '. ,

...Less discount, *..,i.:*;{ ',399,590)

(, :*.(416,392)

$ 80,075,410 ::'81,323,608 Total Principal payments on the notes payable become due as follows: * ..

., * !,,'I a,;'. . 2011 state of .... 2008 State of-

... OregoW notes .; Oregon notes Total

2016 $ -- 1,310,000 : .. 1,310,000 2017 -- 1,375,000 1,375,000 2018 * :'.. . *,1,415,00Q

1,415,000 2019 ,--- 1,465,000 1,465,000 2020 ' __ :."r1,535,000 1,535,000 Thereafter.: 40,030,000 ' : 33,345,000 73,375,000

$ 40,030,000 40,445,000 80,475,000 Interest on the State of Oregon notes payable bonds and amortization of discount and issuance costs are as follows:.............

2015 2014

$ 2,037,577 2,046,183 Interest Amortization of discount and issuance costs 31,149 31,149 Total interest expensed $ 2,068,726 2,077,332 Notes payable discount, net of amortization, was $399,590.and$4,!6392 at June 30, 2015 and 2014, respectively. Issuance costs, net of amortization were $338,342 and $352,689 at June 30, 2015 and 13 13 (Continued)

.THE REED-INSTITUTE Notes to. Financial Statements June 30, 20.15 and 2014 2014, respectively. Amortization is calculated over the life of the notes. The fair value of the notes payable at June 30, 2015 and 2014 was approximately $86,364,000 and $86,064,000, respectively.

(c) lnterest Rate Risk Management " ""

In order to take advantage of fluctuations in long-term interest rates, Reed'College has entered into an interest rate swap agreement with a notional amount $16,650,000, .which allowsRedolget change the variable interest rate to'a fiked initerest t:ite onthe* State of Oregon notes pay;able.

'.In June 2006* Reed College issued $16,650,000 of au~ction rate debt through the Oregon Facilities Authority. Reed College entered into an interest rate swap* of like term, amortization, and notional

amount with an: investment bank to hedge ths. underlyi~ng. variable :rate ;*debt. Reed College has

-- subsequently, refinanced the 2006 notes, however, retained this swap arrangeme.nt for interest rate risk

. management.. Pursuant to this swap, Reed College works with a consulting firm. to .aid in monitoring

. changes in interest rates and the impact they may have on long-term debt. . =-.

---::*Duringthe-years-ended

" June 30, 2015 and 2014, $502,637, and $532,938 was p~aid,' respectively, and

* is recorded in the statements of activities and chairige's in Pdt assets as other investment gains (losses).

The change in unrealized gain and loss oni t~he~swap agreem~ents for .the year~s ended June 30, 2015 and

:. 2014 was ia gain, of $220,804 and a gain of $,233,585,-respectively,. an~d is recorded*in the statements

-.-.of activities and changes in net assets as realized and unrealized gains...The*.fair value of the swap

..... agreemerit.igof Jiine30, 2015 and 2014 was a liability of $1,928,246 and $2,149,050, respectively,

""... which is recorded in the statements of financial position as other long-term liabilities.

(6) Retirement and Postretirement Benefits (a) Retirement Plan

Reed College has a defined-contribution pension plan administered through Teachers Insurance and

."Annuity Associatioh - College Retirement Equities Fund. Employees are able to voluntarily contribute

. funds to this plan'beginning on the first day of employment provided they are notstudents. Employees

."o..are eligible for fixed employer contributions the-first-month following, the completion of a year of

service, and must have'attained the age of twenty-one. Participants are immediately vested in their employee and employer contributions and earnings thereon. Reed College's policy is to fund pension

. ...,expehlses as incurred. Expenditures relating to the plan were $3;'307,207 and. $3,266,429 for the years S-..* ended June 30,.20.1.5 and 20.14* respectively, and are included in 'education and general expenses in the accompanying statements of activities and changes in net assets.

-(b) Defined Benefit Retiree Medical Insurance Plan .

Reed College maintains a defined benefit retiree medical insurance plan' which is not funded.

Employees hired after June 30, 2006 do'not participate i~n this plan. In order to participate, employees hired prior to September 2, 2001 must retire from Reed College at or after age 55 with at least 10 years of continuous service. In order to participate, employees hired between September 1,2001 and June 30, 2006 must retire from Reed College at or after age 55 with 20 years of continuous service.

, *Participating retirees have the option of continuing to be insured by either- Pioneer Educators Health Trust or a supplemental. Kaiser plan. Both plans are supplemental to Medicare. Participating retirees who retired prior to September 2, 2001 and spouses/domestic partners are covered for their lifetime.

lzt (Continued) 14

THE REED ,INSTITUTE Notes to Financial Statements June 30, 2015 and 2014 All other participating retirees are covered at the lowest*premium plan for their lifetime and spouses/domestic partners are covered at the rate of 50% of the lowest premium plan for their lifetime.

Employer premium expenses were $794,907 and $753,292 for the years ended June 30, 2015 and 2014, respectively, and are included in education and general expenses "in the accompanying statements ofactivities and changes in net assets. . .,", :.. . .

The accrued liability for postretirement. bene~fits at year-end is as follows:

2015.. ,2014 "Ch'ange in benefit obligatioh -- ' -'I'. 't*; ' - .**"" ' .

...:Benefit obligation at begi'tmning'of year ... i * , , ,';$ ... "'2.5,500,282' '-23,978,1 10

.,. Service cost, .. *-.-.,.'.. v ,',,; V;.. 455,6'.48.

i,,* :. 471,440

. .'Interest cost '.:.; .1!.I*,. ,."* , :.. , ..* , 1..i 21.23,534 .'.'; 1,104,535 Benefits paid. ,., ...... .. . . :;. . , . * *. (794;4.43) : .,(746,693)

Actuarial gan(los) . .. 157,522 692,890

.:, .Benefit ob~ligation at.end of y.ear and funded .status,. *:$,.. 26,532,543 .. .25,500,282

- Amounts recognized in~the bailancle sheet cohsisit of:! :r.,,,,

' * *Postretirement benefits payable -J cur'rent :,.' ' .**$ . 870,043 ... 794,443

....*Postretirement benefits payable* *. "'r.;*::..* *:%'25;662,,500. , *24,705,839

,. .2 i U "' **A: ,. .; .: ,';. ". $ '2,5 2,4 , 25,0028 Net periodic benefit cost for the years ended June 30 includ'ed the following components:

-2015 2014

,Interest cost,. , '.* " U )." $ 1,213,53,4 *'1,104,535

.. ,Service cost .:. .. ,. . : ",-i : . *- 4.55,648 471,440

.' Net~periodic'benefit cost ' " "- * $ 1,669,182 1,575,975

...,Reed College used the following actuarial assumlptions to determine~its employee benefit obligations Sat and net periodic benefit cost for the years ended June 30, ,2015 and 2014,, as-measured at June 30:

tF Ij

. r: . " ' .

2015 2014

'Benefit obligation:

Weighted average-discount rate *,:* <

4.65% 4.40%

S Rate of increase in per capita cost of covered./ *7% trending to 7.5% trending to healthcare benefits .,' -, , . . "4% in 2022

4% in 2022

Net. periodic benefit cost: ". .. ,,.:. .,

Weighted average discount rate*

4.40% *~4.85%

,-Rate of increase in per capita cost of covered-* ,.7.5%4 trending~to . 8% trending to healthcare benefits .. 4% in,2022 . , 4%in 2022 I5 15 (Continued)

STHE REED INSTITUTE

Notes to 'Financial Statements

June 30, 2015 and 20 14 Reed College's policy is to fund~the plan'as claims payments are made. In the 2015-2016 fiscal year, Reed College expects to contribute, from ongoing cash flows and current assets, $870,043 to the plan.

-Benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows for the years ending June 30: ::

.. . Year:

. .. .. 2016 $ 870,043

- . - 2017 ..*'. , 919,181-2018 974,723,.-

.: : 2019 'l,*Y44,460

"1,113,984

..... ........... 202 1-2023 6,526,465

.*(c).. Emeriti.Retiree Defined-Contribution Health Plan - " " * " . .

"Ree Coleg ha a efind-cntr~iiionretiree health p~lan for employee's hired on or after July 1,

.. :' '2.006. R~eed collee makes contributions on :each eligible'employee's behalf once the individual reaches the age of 40 years. Employees are also eligible to make discretionary after-tax contributions to their account if the individual is 21 years or older. Employees are eligible to receive benefits from the planif the employee hasattained age'55 y/ears'aiid achieved 20 years of continuous service to Reed College. Employer expenses related td~tl-is-pllan were $202,454"and $256,06 I for'fiscal years ended

,June 30,. 2015 ~and 2014, rsetivly and are included in education and eea xessi h accompanying statements of actlwitles ond chang~es in net assets...

(7) ~Funds Held in Trust by Ot~hers..

Reed College has been named beneficiary of a portion of the' remainder of three trusts inf2014 and four trusts in 2013 maturing at specified dates in the future. These trusts are administered by other entities. Reed College revalues the receivables using the fair v~alue of expected future cash flows. At June 30, 2015 and 2014, the trusts receivable were $1,190,977 and $1,172,563, respectively, and were included under funds held in trust by others, noncurrent, in the statements of financial position.

(8) Contributions and Accounts Receivable Contributions receivable consist of the following:

2015 2014 Annual fund $ 1,170,984 1,358,869 Campaign fund 559,937 547,470 Endowment fund 6,533,909 8,323,632 Plant fund 1,958,474 2,769,372 Gross contributions receivable $ 10,223,304 12,999,343 16 16 (Continued)

THE REED INSTITUTE Notes to Financial Statements June 30, 20.15 .and 2014 Contributions receivable reported on the statements of financial position were, as follows: ,

,*. 2015, 2014 Current:

Gross contributions receivable $ 717,944 740,856 Less allowance for doubtful accounts (36,000) (37,000)

Total, current net contributions receivable 681,944 703,856 Long-term (one' to five years):

Gross contribu~tions receivable 'i 9,505,360 12,258,487 Less allowance for doubtful accounts "' F (454,000) (587,000)

Net long-term contributions receivable 9,051,360 11,671,487 Less discount to present value . . (453,600). , , (551,459)

Total long-term ,net contributions receivable 8,597,760. .11,120,028 Total net co~ntributions r~ecei~vable..,o,;, -, .$ 9,279,704. 11,823,884

"'. ¢College "'

' ."" ," expects $-",916,48,

' to;'*receive, $39640iiscal in f i: year,,21and 2016 d "* : ',

$5,363,22.4 Over the following three

Reed.

fiscal years, related *to re~ceivables outstanding at Jimne 3Q0O .215.. ,. .

ecevabl duein eces ~tone year are discoduntedi at 0.568% to 1.;57% anid 0'.743% to 1.552%

Contibutons for the years ended June 30, 2015 ahd 20:14, respectivd1y.""* : . :" , -:>*-"

Of the net unconditional promises to give included above, $6,047,308 :rejresents* an Unconditional promise

.... to give from 7 members of the Reed College board of trustees due in one to three years._.: '

.. . ., I . .. 1, .

17 17 (Continued)

. THE REED INSTIT.UTE

Notes 'toFinancial Statements

June.30, 20:15 and 20.14 Accounts receivable consist of the following at June 30, 2015: . ..

-Unrestricted Restricted Loan fund Endowment' Total Current:

Student accounts receivable Related parties $ (27,685).:-- ,:. .-.--

66,036 ,- .

375,A338.

(27,685) 441,374 Other receivables 2,649,206 502,812 -- 6,884 3,158,902 2,621,521 568,848 -- 382,222 , : 3,572,591 Noncurrent: .,v?"

"" 'Siudent accountcs r'eceivable --- *"18,537 . .--- >/ 18,537

Reed loans . ", --- 1,236,825. . -*.i;*

1,236,825

-:, Related parties . -:; . --.--- (2,846) ........ -4' " (2,846)

. Federal Perkins loans ' ---- 3,848,063 ., 3,848,063

-- 5,100,579 : " --- '! 5,100,579 L.-Iess allowance for doubtful.

accounts -- (60,239) * *. . .* (60,239)

$!' 2,621,521 568,848_:__ 5,040',340 " " 382,222 " 8,612,931

.Accounts receiyable consist of the following at June 30, 2014:....: . . " *

-: . : * ...-. Unrestricted Restricted' Loan fund Endowment Total (Jurrent:

Student accounts receixable $ (3,831) (3,831)

Related parties .; ... 24,080 ': -* 464,938 ': 489,018

Other receivables* 190,196 176,690 * . 7 366,886 186,365 200,770 -464,938 852,073 Noncurrent:

Student accounts receivabl le -- -- 8,597 -- 8,597 Reed loans ': / . .. -- *. '.* ---- 1,237,'070 *"

. - 1,237,070 S Relatedparties. .. _ : ' .. 5- . (324) *.. -. 34

.Federal Perkins loans . - .. - 3,903,847 '- - ... '3,903,847

, -".. . i 4 ,19 vU m ' 5,149,190

..Less allowance for doubtful accounts --- (60,239) (60,239)

S 186,365 ,. '200,770. '5,088,951 ,...464,938 5,941,024 The Federal Perkins Loans and Reed-.loans are generally payable at interest rates of 5% to 9% over approximately ten years. Repayment begins after. a designated grace period following the student's college attendance. Principal payments,, interest, and losses .due to cancellation are shared by Reed College and the U.S. government in proportion to their share of funds provided. The Federal Perkins Loan program provides 18 18 (Continued)

THlE REED ,INSTITUTE Notes to Financial Statements June 30,.2015 and 2014 for cancellation of loans if the student is employed in certain occupations following graduation (employment cancelations). Such employment cancellations are absorbed in full by the U.S. government.

(9) Net Assets At June 30, 2015 and 2014, net assets consisted of the following: " "' :

- -' - - 2015 2014 U nrestricted: ... . . ... . . .. .- "- ...

Operating $ 2,899,677 *4,235,170 Designated for special programs 3,843,402- .,i,.!11,281,607

'Institutional loan programs 5,017,687 *..4*842,199 Funds functioning as endowment 126,934,328... .. 1.26;491,681

. Accumulated quasi-endowment gains ...... -- 179,367,431 !.. "1-68;3 52,248 Net investment in plant 55,097,255 43,517,900

-* Total unrestricted .. .. .... .... . ... .....$ 373,159,780 3.58,720,805

Temporarily restricted: '.. . ... . .....

Educational and generaJ programs , . -$ 11,880,424 11,505,112 Annuity and life income funds--- ="*"' 11,113,433 Accumulated endowment gains 57,798,353 70,289,646 Other temporarily restricted net assets */. ; ,*,...: -. ,',i 2,345,104. . 2,593,790 Total temporarily restricted $ 82,363,062 95,501,981

Permanently restricted: .. .. ...

True endowment funds $ 160,349,343 159,809,527 Annuity and life income funds .., * ~3,887,003. 4,571,658

'- .. ~Total permanently restricted ' .... $ 164,236,346 164,381,185 (10) Endowments Through December 31, 2007, Reed College's management and investment of donor-restricted endowment funds were subject to the pr:ovisions of the Uniform Management of Institutional Funds Act (UMIFA). In

.2006, the Uniform Law Commission approved the .model .act, UPMIFA, that Serves a§aaguideline to states using the enacted legislation.oAmong UPMIFA's most significant changes is the elimination of UMIFA's "concept ofhistoric dollar v*Iil~threshbld, the amn6unt below wh~ich°an organization could not spend from.the endowment fund, in favor of a more robust set of guidelines about what constitutes prudent spending.

Effective January 1,- 200)8,' the- State of Oregon enacted UPMIFA, the provisions of w~hich apply to endowment funds existing on' or established after that date.

In August 2008, the FASB issued FASB ASC Subtopic 958-205, Not-for-ProfitEntities - Presentationof FinancialStatements. ASC Subtopic958-205 was effective .for fiscal years2015 and 2014 for Reed College.

The major change in net assets classification~resulting from .ASC;Subtopic. 958-205 relates to the portion of the fund not stipulated by the donor to be restricted in perpetuity. In the absence of explicit donor~instructions

on the use of such funds, the earnings previously classified as either permanently restricted or unrestricted must be reported as temporarily restricted until appropriated for spending.

1'9 (Continued)

THE REED INST.IT.UTE

.Notes to ,Financial Statements SJune 30, 2015 anid 2014 Reed College's endowment consists of approximately 450 individual funds of which approximately 65%, or 291, funds are donor-restricted endowment funds. Net assets associated with endowment funds are classified and reported based on the existence of those donor restrictions. Endowment funds are invested on the basis

.of a total return policy to provide income and to realize appreciation on invested assets. Under this policy, a portion of realized and unrealized gains, in add ition to interest and dividend~income,, can~ be used to support operations. Inetetincome used to support operations is allocated from funds tathve a. fair value in

excess of historical value and are utilized in accordance with donor-imposed restrictions.."

.Reed College spends endowment, income and~capitai gains within a spending policy that preserves principal in accordance-with the UPMIFA. The policy on spending endowment income is to spend,5.25% and 5.3%

over a rolling.1 3-quarter moving average of the fair value or market value of endowment assets for fiscal years 2015 and 2Q14, respectively. If losses reduce the assets of a donor-restricted endowment fund below the. donor-restricted corpus, temporarily restricted net: assets will be reduced until the accumulated gains associated with a fund are reduced to $0. At that point, further losses reduce unrestricted~net assets. The

. value of donor-restricted endowment funds with a fair value of associated assets th'at'is less than the original S"gift' am'ount is.$3.76,61.5, and $366,Q1.8..for thei yeat:s ended at June 30; 201'5 and 2014; respectfully. Future gains that restore the corpus :value will be recorded, as increases..in, temporarily restricted ,net assets after rep lacilg' any losses charged tounrestricted net assets. ....

Endowment net assets by type of fund :as of June 30o, 2015:

.... . ......... ...... .. Temporarily Permanently

' *.: . : Unrestricted j_*restricted restricted ., Total Donor-restricted endowment funds, $ (376,615) 69,342,397 .160,349,343 "229,315,125

Board-designated endowment *uhdls ": 305;49'8,530 -- . . _; ' 305,498,530

.Total funds . $ 305,121,915 69,342,397 160,349,343 ,534,813,655 SEndowment net assets by type of fund as of June 30, 2014:

. ' " ' Temporarily Permanently...'

, -- i ;*Unrestricted restricted;* restricted., ,,**Total

Donior-restrictederndowment funds v.: .. $ .(366,018) 81,449,103* 159,809,527-.240,892,612

"Board-designa~ted endowment fiinds-" 294,414,69'1 -- -- 294,414,691 Total funds $ 294,048,673 81,449,103 1.5,9,809,527 535,307,303

.. ~~~~.........*,- ............... ,* i* .

20 20 (Continued)

THE REED INSTITUTE

-Notes to Financial Statemrents .

June 30, 2015 and 2014 Changes in. endowment net assets~for the years ended June 30;, 2015-and 20-14 are as follows:> .

ijnTmporarl -1 ermanentl

. . . .. : * ::....,U restricted .,,, restricted .restricted* Total Endowrfieht net assets', Juiyi, 2014' $ 294,048,673" g18,44,l3'1i "59,809,527 535,3'07,303

-Net investment giin" "": ! '-' :%.. :," :11 9,948& . . 610,0"48* ' ",.'-

'" .;>729,996 Net appreciation (depreciation)

.. iv~tfet~ '.. 24,..120,32"'-(2;066,968)' '"- *:*' - '" '22,053,334 Cotrbuios' ' t < *'. ". 'L 1/4 " : " i: 442,586 '.""-: 442,586

.iContribultions from trustterminatibns " ,'". 106,936 '* '.'" -5,., *** k'1,:!125,557 7:;:' '4q,:232,493

Appropriaition~of endowment assets .. '2 .. .'* ." ,1,'". :,v':i i .' :. /' ';.., .. ' .,'7 "

... .. for expendi~ture , ,' "- .. ,(13.*609,655) ": (10,649,7'86) .',v' t ,... --* ' 2 . (4,;259,441)

- Transfers to~create board-designated ,;:-', - Jrm I"

'. , .. U '**..: - ",'-- *, '. .h -,,-.

,. . endowment fund .. .... ., , ..... '.*',43.6426-.. r.. .- ,.7, , -- "; .,,.,436,426

.. Transfers

. and otherreclassifications 7,*.. :., ,(1O,,5)! , . -, : * - (1,028,327) .,.,i.(-1,129,042)

Endowment'nei assets, June"30,' 2015 .; '$"'* 30:5,121;915' *': %*9,342,397' 160,349,343'. .. . 534,813,655 C:"". "rTeiipbraiiryj".

'" 'Permfanently" ' : '7

.Unrestricted restricted restricted Total

. En~dowment net assets, July 1, 20:132" ' $ 25'5;075,3.081: 65,921,743 159,401,101 -480,398,152 Investment return: - . .7, '"...

7 840,04 '1.'f-- 1,020,680

. "Net investment gain .180,27.6i 84,0!, ' ". ': 71,51,69

....Net. appreciation of investments--.... 47,136,677: 24,435,01'9 '.. -- 1,769

.-Contributions, ... . -c. ". . ... . "' -- .*; (162,352) (162,352)

-*Contrib~utions fromtrust terminatidiis .. '. .. 32,086 *" -- ,45 1,136 - . 483,222 Appropriation of endowment assets """

for expenditure (13,207,812) ::(9,748;063) - -f -- -*..(22,955,875)

Transfers to create* board-designated endowment fund .' '. - ..... 4,957,778 -- -- 4,957,778

.Ttansfers an.d other reclassificationis' * (125,640) ". - 119,642 (5,998)

-Endowmenthetassets;"-June30,*2014 i$ 294,048,673 81,449,103- '* . 159,809;527, '-.': 535,307,303 (11) :Commitments and Contingencies '-

Reed College has placed certain of its medical and dental insurance coverage -with the Pioneer Educators Health Trust (PEHIT), formulated by Seven Oregon colleges and universities for'the purpose of providing medical and dental insurance to higher education institutions. Under the agreement, member institutions are required to make contributions to the fund at such times and in an amount as determined by the board of trustees for the various benefit programs sufficient to provide the benefits, pay the administrative expenses of the Plan, which are not otherwise paid by Reed College directly, and to establish and maintain a minimum reserve as determined by the board of trustees. In the event losses of PEH'T exceed its capital and secondary coverages, the maximum contingent liability exposure to Reed College is approximately $538,000. This 21 21(Continued)

.THE REED INSTITUTE Notes to ,Financial' Statements

.June 30, 201*5 and 2014 exposure fluctuates based on changes in actuarial assumptions, medical trend,rates,, and reinsurance amounts.

The level of reinsurance is not expected to fluctuate significantly in the~ future."

'"On July.' 1, 1 988,'Reed College: elected to' place its"iiability' ihsurance coverfige with the College Liability SInsurance Cbmpany', Ltd](CIC): CLIC was formed by seveni similar w~estern'co1Ieges and Universities for thle purpose of pi~oviding liaibility insuranice to higher education institutions: AS a portidn 6f.'its capital, CLIC haS placed a $2,000,000 stindby: etter of'credit'of which Reed Collegd-is'continigently liable for a pro rata

portion based upon premium~c~ritributions from coVe'red irisfitutions*. In the event sthe 10gses of CLIC exceed its capital and .'Seconidaryf',coverages, 'tthe'maxinmuim conting'nt liability exp6sire t6' Reed College is approximately $199,000. As of June 30, 2015 and 2014, there were no amounts outstandirng against the standby letter of credit.

.From time to time, Reed College is involved in various claims and legal actions arising in the or~dinary course of'Bu~siness. In~th~eopinion of ma~nagemn¶tt, most of tlhes claims and leg,al actions are covered~ by insurance and the ultimate disposition of these niatterI*Will fot'hf\i&* a Aiateri~l effe'ct on Reed Coli~ge's financial

, position,. statemuents of activities and changes in net. assets* orcs lw.

(12) FarVau.Ma...mnt" ~ *'

r' "

"(a) T!:air Value bf Finan'ciallnstrunients:*',: '- , :'-'.,, '- ",;; -; , :.

The following methods and assumptions were used to estimate the fair value of each class of financial Cash and cash equivalents, and accounts receivable: The carrying amounts, at face value or cost plus

.;".. accrued interest, approximate fair .value because of the-short maturity of these instruments.

Contributions receivable and funds held in trust by others: The fair value is determined as the present value of future contractual cash flows discounted at an interest rate that reflects the risks inherent in those cash flows.

Investments: Equity securities are measured using quoted market prices at the reporting date multiplied by the quantity held. Debt securities are measured using quoted market prices multiplied* by. .the quantity held when quoted market prices are available. Investments in real estate for which fair value is not readily determinable are carried at estimated fair values, if purchased, or at fair value at the date of receipt, if acquired by donation. Alternative investments, which are not readily marketable, are carried at estimated fair values. Reed College reviews and evaluates the values provided by the investment managers and estimates the fair value of the alternative investments- using the NAV as a practical expedient.

Interest rate swaps: The fair value of interest rate swaps is determined using pricing models developed based on the LIBOR swap rate and other observable market data. The value was determined after considering the potential impact of collateralization and netting agreements, adjusted to reflect

nonperformance risk of both the counterparty and Reed College.

Long-term debt: -The fair value of Reed College's long-term debt is measured using quoted offered-side prices when quoted market prices are available.

22 (Continued) 22

THE REED INSTITUTE Notes to Financial. Statements-June 30, 2015 and 2014 (b). FairValue Hierarchy . ... . .. . " ' ;. ,... '* '

Reed College adopted IFASB ASC Topic 820 Fair Value M9easurenments and Disclosureson July 1,

2008 fo~r fair value measurements of Ifinancial assets., and financial liabilities and for fair value

measurements of nonfinancial itemi's th~at, are rec9gnized or. disclosed at fair value in the financial

.statements on a recurrin!g basis..ASQTopic 820 establishes a fair, value hi'.r~archy that prioritizes the

,.inputs to valuation techniques used to ,measurefair. value. The hierarchy, gives the highest priority to Sunadjusted .quotedl. prices in ac~tive, markets foi*.identical .assets or, liabilities. (Level .1 measurements)

-and th~e lowest .priority .to *me~as.urements, n~y.olvying .significant. unobservable .inputs (Level 3

measurem~ents),*....... .. .. *' " .*..'. " ... , .. ?***'*

The three levels of the fair value hierarchy are as follows:

Level 1 inputs are quoted prices.(naj .eii active miarkets 'for idehtical assets-or liabilities that Level 2 inputs are inputs other than quodted prices' included withln Level 1 'that are observable for the asset or liability, either directly or indirectly, for substantially the full terpn of the asset or liability.

Level 3 inputs are unobservable inputs for the asset or, liability, used to me~asure fair value to *the extent that observable inputs are not available.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

' In accordance' with ASU .2,015-07'Disclosuresfor: Investmie'nts in"Certain Entities That Calculate Net Asset Value; investments valued utilizing net asset value as a practical expedient are excluded from

'the fair v l ehierarchy. .... * .,: . .*..... ,

., , ' 2' " ;' ' "* *.

23 (Continued) 23

.THE REED tNSTITUTE Notes to Financial Statements June 30, 2015 and 20.14 The following table presents assets and liabilities that are measured at fair value on a recurring basis at June 30, 2015:

", Quoted prices in

",active Significant

...... *markets for other Significant

. .identical

observable unobservable

* 'assets inputs inputs

. ... .

Total. .,' (Levell1) (Level 2) (Level 3)

Assets:

Bond funds I 5,066,433.

Equity: mutual funds - $*.. S92,535,1'31,,.

i1,480,423 - '" "6,413,990 7.."7,382,489 *15,152,642, REITs :. 3,002,609 *; - 3,002,609:

. . :'-2. Real estate"* 3,718,4609 .. - 3,718,469 Money market and oth'ef " - 3,624,064 'I,. 2,945,571 '1 :678,493. "

Funds held in trust by

~others .... 1,19.0.977 *:.::5 .. --

, - 1,190,977

' ' "~Totail '" 115,551,673 . 86,742,050 23,900,177 4,909,446 Investments where NAV was Used as a practical expedient to measure fair value:

Hedge funds 297,064,459:"*.:

--.Private equity.. . .. 156,928,498 ___ ,____

Total investments S-- at fair vahje-.. $. 569,544,6-30 ;". .. _86,742,050 23,;900,177 4,909,446 Liabilities: .

Interest rate swap $ 1,928,246' .....'1,928,246 ;

, .. :, {' .

'i .';5 '* . ..'.q '. 'i

"..: b . , .* -',:* .f, ,'.:' '-

..' l, '.I',L " i -

24 24 (Continued)

THlE REED INSTITUTE

-Notes to Financial Statements Jun'e30, 2015 and 2014 The following table presents assets and liabilities that are measured at fair value on a recurring basis at June 30, 2014: :

.* Quoted

' .,*prices in

active Significant

.,-.,*markets for other Significant

,,bidentical

-:* ". observable unobservable

, * .. .. *assets inputs inputs

. Total i,..'* (Level 1) (Level 2) (Level 3)

Assets:

Bond funds. '.$, 19,861,676 /, 1.4,456,224 5,405.,452 '

Equity mutual funds ..... 107,618,626x.* 91,354,379 . .:1.6,264,247,.

REITs,' 3,333,711!.t - 3,333,711' Real estate 3,522,31\3 "- : 3,522,313 Money market and oi ther .t ' 5,649,709. .". 4,982,626 f67,083 6

Funds held in trust by others 1,172,563, i... - 1,172,563

.:,Total *'il: 41,158,59.8, :. :110,793,229 25.,670,493 4,694,876 Investments where NAV t.

t'I: . : 2, was used as a practical expedient to measure fair value:

Hedge e funds 297,254,925 ,,,______

Privat:e equity 139,622,099 Total investments

.at fahir value : 578,035,622,., 110,793,229 25,670,493 4,694,876 Liabilities:

Interest rate swap $ 2,149,050 , -- ,2,149,'05.0' The College's beneficial interest in irrevocable split-interest agreements held or controlled by a third party is classified as Level 1, Level 2, and Level 3 as the fair values are based on a combination of Level 1 inputs (observable market values of the trusts' investment portfolios), indirect observable inputs (Real Estate Investments Trusts), and significant unobservable inputs (real estate). The fair values are measured at the present value of the future distributions the College expects to receive over the term of the agreements.

Treasuries, registered bond mutual funds, registered large cap equity mutual funds, and money market funds are classified in Level 1 of the fair value hierarchy as defined above because their fair values are based on quoted prices for identical securities. Most investments classified in Levels 2 and 3 consist of shares or units in nonregistered investment funds as opposed to direct interests in the funds' underlying securities. Even though these shares and units in nonregistered investment funds are classified in Levels 2 and 3, some of the underlying securities are marketable or not difficult to value.

In addition to evaluating the inputs as described above, the College's ability to-redeem its interest at or near the date of the statements of financial position is also considered in determining the level in 25 (Continued)

,THE REED .INSTITUTE Notes to Financial Statements June 30, 2015 and 20,1.4 which a fund'~s fair value measurement is classified. The inputs or methodology, used for valuing or classifying investments for financial reporting purposes are not necessarily an indication of the risks associated with those investments or a reflection of the liquidity of or degree of difficulty in estimating the fair value"of'each fund's underlying assets and liabilities.

-- The following table presents Reed College's activity for assets measured at fair value on a recurring

"" basis usinfg significant Unibbservable inputs (Level 3) for the years ended June 30) 201i5 and June 30, 2014, resp.ectiv~ely: .

Balance at June 30, 2013 . .. $ 4,620,060:

Total realized andunreali*6d.gains " 471,6543:

Purchases, issuanc~es, and *eittl.*menat* (net) (396,8'27)

' . .I '<"I P" ,

.:,Balance at.June 30, 2014 *.v'" 4,694,876.

Total reahized and unrealizdd gains-... (8,3)

Purchases, issuances, and sefttlements (net) 795,000 Balance at June 30, 2015 .$ 4,909,446 The .following .table p~resents information for investme~nts .where the, NAV: Was used as a practical

,:expedient to measure, fair yalue at June 30, 2015:

S ,.* .. . ... *. , *.

Lockup Redemption Redemption Fair value period frequency notice period Hedge funds $ 105,469 liquidating Nq/A 'N/A

,.Hedge funds 1 month* SMonthly' 10o-30 days S. . 87,999,695 Hedge funds 12,244,199 3 months Monthly 90 days Hedge funds 9,343,939 2 months Quarterly 60 days Hedge funds 130,573,237 3 months Quarterly 30-75 days

Hedge funds 12,354,004 3 months Semiannually

90 days

,Hedge funds 20,751,147 9 months" :Annually '60-90 days Hedge funds 8,000,000 12 months Annually *'60 days Hedge funds 4,704,575 18 months Annually . *45 'Days Hedge funids 10,988,194 3 months '"Triennial : 60 days

$ 297,064,459 Ii ,

26 26 (Continued)

THE REED *INSTITUTE Notes to Financifl Sta~temerfts June 30, 2015 and 2014 The following table presents information for investments' where the NAV was used as a practical expedient to measure fair value at June 30, 2014:- '-< I'* .

Lockup . ...Rederuption

Redemption Fair value period frequency notice period

$ *.39"7,621,'. Sliquidating I*e~dge funds' N/A Hedge funds 1 ,633,620 none *, Daily 1day Hedge funds 5,187,770 3 months :M"No~thly 90 days Hedge funds 90,630,351. , month i .. ;;Monthly 10-3 0 days Hedge fihiids *6,099,600, .. 12 months-,, , .Quarterly 45 days Hedge funds S146,060,541., *°,Quarterly 30-75 days

-Hedge funds' 7,617,539 3 months Triennial 15' days Hedge funds 12,713,585 - 9 mnohthfs Se~ni annual 90 days Hedge funds 23,9!14,298' 9 ro.rt~hs., .I Annually 60-90 days

-" ,$' .297,254,925 .,;: . '." '" . I Reed College holds investments in private equity limited partnerships where NAV is used as a practical expedient to measure fair value at June 30, 2015. These partnerships do not allow for periodic redemptions', but x'ather liqtiidate 'tipon th~eriito date' gg.stated in thqe partnership agreement.

Therefore, the private equity investments are c~onsidered illiquid ifnvestments; At June 30, 2015, Reed held $156,928,498 of private equity limited partnerships and had termination dates that ranged from 2016 to 2024. ....

(13) Split-Interest Agreements" The following .schedUle summarizes the change in~value and its presentation in the statements of activities

..as,'elated to the change in value of split-interest agreements:

2015 2014 Dividends and interest . ,'" $ 1,011,410 776,985

.Beneficiary payments !,, (1,444,626) - (1,346,359)

,Inyestment fees , .. . (214,861) :(207,340)

..Net realized gain (loss) 461,577,.

"Net unrealized (loss) gain (266,013). 3,470,729 Total change in value $ (452,513) 3,006,819 (14) Fund-Raising Expense Reed College expended $3,022,228 and $2,939,622 for the years ended June 30, 2015 and 2014, respectively, for payroll and benefits, informational materials, travel, and special events relating to fund-raising activities.

These costs are all classified as public affairs in the statements of activities and changes in net assets.

(15) Subsequent Events Reed College has evaluated subsequent events from the statement of financial position date through October 2, 2015, the date at which the financial statements were available to be issued, and determined that there are no other items to disclose.

27"