ML13079A218

University of Missouri System 2012 Financial Report

ML13079A218
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Site:	University of Missouri-Columbia
Issue date:	03/12/2013
From:	Univ of Missouri - Columbia
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IUniversity of Missouri SystemCOLUMBIA I KANSAS CITY I ROLLA I ST.LOUIS201 FIANCAL REOR UTMUniversity of Missouri SystemCOLUMBIA I KANSAS CITY I ROLLA I ST.LOUIS2012 FINANCIAL REPORTAd vancing Missouri, This page is intentionaLLy Left bLank Table4567813141530of ContentsMessage from the PresidentUniversity of Missouri System Statewide ReachCurators of the University of MissouriUniversity of Missouri System General OfficersThe University of Missouri SystemFinancial InformationManagement Responsibility of Financial StatementsManagement's Discussion and AnalysisIndependent Auditor's Report32 Statement of net assets34 Statement of revenues, expenses and changes in net assets36 Statement of cash flow38 Statement of plan net assets39 Notes to financial statementsRequired Supplementary InformationStatistical Section6971Advancing Missouri Message from the PresidentWherever you look, the impact of the University of Missouri System can beseen and f'elt.We educate the state's workfiorce. We are your doctors, dentists, pharmacistsand medical researchers. We drive innovation and help small businesses thrive.We deliver technology, health care to the underserved and experts in nearlyevery subject.In short, we Advance Missouri. And every person in it. Every (lay.It is a responsibility-and obligation-we take seriously. As the state's premier I Apublic fbur-year research university, we are committed to improving the lives ofall Missourians and the state we love.We also feel equal responsibility to be good stewards of state resources. As you'll note in the following pages, ourfinancial position and health remains strong and sound. We have been able to maintain our strong financial positiondue to our diversified funding sources and historically low borrowing costs that have allowed us to leverage ourgrowth.At the same time, we recognize the challenges before us: uncertainty in state funding., increased enrollment growth,limited tuition increases and decreased investment returns. We know that in order to continue to thrive, we nmustchart a new course that helps ensure our financial vitality well into the future. This will require strategic thinkingabout the university's areas of focus and how to apply precious resources to those endeavors.We have already identified strategic priorities for the university system that will focus our attention and guide ouractivities in the coming months. We also continue to measure and chart our progress through our accountabilitymeasures, which document our performance and serve as a guide for both our areas of excellence and need forcontinuing improvement.This information and more is available on our website at www.umsystem.edu. We invite you to peruse oursuccesses, review our strategic priorities and interact with us online or through any number of social mediachannels.Sincerely,Timothy M. Wolfe TMPresident, University of Missouri System University of Missouri System Statewide ReachSLKeySchool Districts Served by÷4 UM System Campuses eMINTS Investing in MOREnet SitesInnovation (i3) Projectd Research Parks / I Small Business & Technology Missouri TelehealthW Business Incubators Development Centers Network Sitesz Agriculture Research Stations Health Centers & Affiliates Counties Served byw Extension CentersU .U r-I Curators of the University of MissouriThe Board of Curators, the governing body of the University of Missouri, consists of nine members who areappointed by the governor, by and with the advice and consent of the Senate; provided, that at least one but no morethan two shall be appointed from each congressional district, and no person shall be appointed a curator who shallnot be a citizen of the United States, and who shall not have been a resident of the state of Missouri two years priorto his or her appointment. Not more than five curators shall belong to any one political party.David R. Bradley Wayne Goode Donald L. Cupps D)on M. DowningSt.Joseph, Chairman St. Louis, Vice Chairman Cassville Webster GrovesTermn expires: Jan. 1,2015 Term expires: Jan. 1 2015 Term expires: Jan. 1, 2017 Term expires: Jan. 1,22015Warren K. Erdmamn Pamela Quigg Henrickson David L. Steward Amy (.JohnsonKansas City Jefferson City St. Louis Student RepresentativeTern expires:Jan. 1,2013 Term expires:Jan. 1,2017 Term expires:Jan. 1,2017 to the Board of Curators, UMKTerm expires:Jan. 1,2014Two Seats are Vacant.* * *Dg Ag T University of Missouri System General OfficersTimothy M. Wolfe StephenJ. Owens, JDPresident General CounselGary K. Allen, DVM, PhDVice President forInformation TechnologySteven W. Graham, PhDSenior Associate Vice Presidentfor Academic AffairsStephen C. KnorrVice President forGovernment RelationsNatalie "Nildi" KrawitzVice President for Finance& AdministrationMichael F. Nichols, PhDVice President for Research& Economic DevelopmentElizabeth "Betsy" Rodriguez, PhDVice President forHuman ResourcesBradyJ. Deaton, PhDChancellor, University ofMissouri-ColumbiaThomas F. George, PhDChancellor, University ofMissouri-St. LouisLeo E. MortonChancellor, University ofMissouri-Kansas CityCheryl B. Schrader, PhDChancellor, MissouriUniversity of Science andTechnologyUniversity of Missouri System Finance StaffNatalie "Nikki" Krawitz, Vice President for Finance & AdministrationJane E. Closterman, ControllerTom Richards, TreasurerCuba Plain, Assistant Vice President for Budget Planning and DevelopmentUnivrsiy o Misour Sytem201 Fiaca Rprn-u 7 University of Missouri-ColumbiaConsidered one of the nation's top-tier institutions, the University of Missouri-Columbia has a reputation ofexcellence in teaching and research and is the flagship campus of the four-campus UM System. It is one of only 34public universities and the only public institution in Missouri to be selected for membership in the Association ofAmerican Universities. MU is one of only six public universities in the country with degree programs in medicine,veterinary medicine and law on one campus.

D I I .University of Missouri-Kansas CityThe University of Missouri-Kansas City is home to the nationally-ranked Institute for Entrepreneurshipand Innovation in the Bloch School of Management and was ranked number one in the world for innovationmanagement research. UMKC has long been at the heart of nurturing culture in Kansas City through renownedprograms in music and dance, theater and visual arts. In addition, UMKC has four health science schools on onecampus and is widely known for KCSourceLink, a program that supports small business development.

JF14AV EI//Missouri University of Science and TechnologyMissouri University of Science and Technology in Rolla is one of the nation's most focused technological researchuniversities. With 15 accredited undergraduate engineering programs, Missouri S&T provides more engineeringdegree options than MIT, Purdue, Illinois or Michigan, and three times the average number found at other U.S.universities. Missouri S&T graduates are highly sought by the business community, averaging the second-higheststarting salaries among all public universities in the nation.

YI/a,b-W=-University of Missouri-St. LouisThe University of Missouri-St. Louis is the largest university in the St. Louis region and third largest in Missouri.UMSL boasts several nationally-ranked departments and programs, including the Department of Criminologyand CriminalJustice and the International Business program. With the largest university alumni population in theregion, UMSL is ranked 14th nationally in a survey of "Best College and University Civic Partnerships," whichmeasures the economic, social and cultural impact of academic institutions on metropolitan regions.

University of Missouri Health CareUniversity of Missouri Health Care touches the lives of Missourians across the state in myriad ways -through thequality care provided at its hospitals and clinics, the education of future health professionals offered by its healthsciences schools, the specialty services delivered by University Physicians, and the life-saving research conducted.In partnership with the Tiger Institute for Health Innovation, the health system is equipping health professionalswith the most advanced technology to provide safe and effective care. University of Missouri Health Care was theonly hospital in central Missouri and one of only three hospitals in the state to make U.S. News and World Report'sprestigious Most Connected Hospitals 2012-13 list.1 201 Fmm.lt epf Advncn Ml*or University of Missouri SystemCOLUMBIA I KANSAS CITY I ROLLA I ST.LOUISFINANCIAL INFORMATION1111.Advancing MissourLUniversty of' issouriSyste6 201 F .a a Rpr L 13 MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTSOctober 10, 2012The management of the University of Missouri System (the "University") is responsible for thepreparation, integrity, and fair presentation of the financial statements. The financial statements,presented on pages 32 to 70, have been prepared in conformity with accounting principles generallyaccepted in the United States of America and, as such, include amounts based on judgments andestimates by management.The financial statements have been audited by the independent accounting firm KPMG LLP, which wasgiven unrestricted access to all financial records and related data, including minutes of all meetings of theBoard of Curators. The University believes that all representations made to the independent auditorsduring their audit were valid and appropriate. KPMG's audit opinion is presented on pages 30-31.The University maintains a system of internal controls over financial reporting, which is designed toprovide reasonable assurance to the University's management and Board of Curators regarding thepreparation of reliable published financial statements. Such controls are maintained by the establishmentand communication of accounting and financial policies and procedures, by the selection and training ofqualified personnel, and by an internal audit program designed to identify internal control weaknesses inorder to permit management to take appropriate corrective action on a timely basis. There are, however,inherent limitations in the effectiveness of any system of internal control, including the possibility ofhuman error and the circumvention of controls.The Board of Curators, through its Audit Committee, is responsible for engaging the independent auditorsand meeting regularly with management, internal auditors, and the independent auditors to ensure thateach is carrying out their responsibilities and to discuss auditing, internal control, and financial reportingmatters. Both internal auditors and the independent auditors have full and free access to the AuditCommittee.Based on the above, I certify that the information contained in the accompanying financial statementsfairly presents, in all material respects, the financial condition, changes in net assets and cash flows of theUniversity.Natalie "Nikki" KrawitzVice President for Finance and AdministrationUniversity of Missouri System COLUMBIA I KANSAS CITY I ROLLA I ST. LOUIS215 University Hall .Columbia, MO 65211. 573-882-3611 www.umsystem.eduLýAIIIIIIIIIIIIIýIZ42012 Financial Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)Management's Discussion and Analysis provides anoverview of the financial position and activities of theUniversity of Missouri System (the "University") for thefiscal years ended June 30, 2012 and 2011, and shouldbe read in conjunction with the financial statementsand notes. The University is a component unit of thestate of Missouri and an integral part of the state'sComprehensive Annual Financial Report.This report includes five financial statements:" The three financial statements for the University ofMissouri and its Discretely Presented ComponentUnit include the Statement of Net Assets, theStatement of Revenues, Expenses, and Changes inNet Assets, and the Statement of Cash Flows,where applicable." The two financial statements for the University'sfiduciary fund, which includes the Retirement andthe Other Postemployment Benefits Trust Funds,are the Statement of Plan Net Assets and theStatement of Changes in Plan Net Assets.The University's financial statements are prepared inaccordance with U.S. generally accepted accountingprinciples as prescribed by the GovernmentalAccounting Standards Board (GASB), which establishesfinancial reporting standards for public colleges anduniversities. The University's significant accountingpolicies are summarized in Note 1 to the financialstatements of this report, including further informationon the financial reporting entity. In addition, a moredetailed unaudited financial report that includescampus-level financial statements is available at theUniversity of Missouri, 1000 W Nifong, Building 7, Suite300, Columbia, MO 65211, and at www.umsystem.eduthrough the Finance and Administration page.FINANCIAL HIGHLIGHTSAt June 30, 2012, the University's financial positionremained solid, with Total Assets of $6.4 billion. NetAssets, which represent the residual value of theUniversity's assets after deducting liabilities, totaled$4.1 billion. When operating, non-operating, and otherchanges are included, Net Assets increased byapproximately $68 million in fiscal year (FY) 2012,driven primarily by the $42.3 million Special Itemrelated to the sale of a research and diagnosticlaboratory on the Columbia campus and $37.8 millionincrease in Private Gifts as compared to FY 2011.2012 Financial. Report15 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSIS3une 30, 2012 and 2011 (unaudited)The following charts compare Total Assets, Liabilities, and Net Assets at June 30, 2012, 2011 and 2010, and themajor components of changes in Net Assets for the years ended June 30, 2012, 2011 and 2010:STATMENTOF ET ASET02010

• 2011 32012$7,000$11$6,358$6,000$5,000$4,000$3,000$2,000 $1,856 $2,115 $2,273$1,000$0-Total AssetsTotal LiabilitiesNet AssetsSTTMN OF REEUS.XESEADCAGSNNTAST82010 02011 32012$3,000 T$2,500 --$2,0000 $1,500$1,000$500$0 -Operating Revenues$5 0 $79 $6Operating Expenses Nonoperating Revenues, Capital Contributions, Increase (Decrease) inNet* Endowment Additions & Net AssetsSpecia I Item*includes State Appropriations and Cumulative Effects of Changes in Accounting Principles162012 Financial Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSIS3une 30, 2012 and 2011 (unaudited)CONDENSED STATEMENT OF NET ASSETSThe Statement of Net Assets presents the University'sfinancial position at the end of the fiscal year, includingall assets and liabilities of the University andsegregating them into current and noncurrentcomponents. Total Net Assets is an indicator offinancial condition and changes in Total Net Assetsindicate if the overall financial condition has improvedor worsened. Assets and liabilities are generallymeasured using current values with certain exceptions,such as capital assets which are stated at cost lessaccumulated depreciation, and long-term debt which isstated at cost.The following table summarizes the University's assets, liabilities and net assets at June 30, 2012, 2011 and 2010:CONDNE STATEMEN OFW.U~I NET ASSETS(i *huad of dotarsAs of June 30, 2012AssetsCurrent Assets $ 940,748Noncurrent AssetsEndowment and Other Long-Term Investments 2,430,742Capital Assets, Net 2,848,993Other 106,659Deferred Outflow of Resources 30,415Total Assets and Deferred Outflow of Resources $ 6,357,557LiabilitiesCurrent LiabilitiesCommercial Paper and Current Portion of Long-Term Debt $ 183,226Long-Term Debt Subject to Remarketing Agreements 100,330Other 651,831Noncurrent LiabilitiesLong-Term Debt 1,122,312Other 215,241Total Liabilities 2,272,940Net AssetsInvested in Capital Assets, Net of Related Debt 1,545,227Restricted -Nonexpendable 771,146Expendable 389,029Unrestricted 1,379,215Total Net Assets 4,084,617Total Liabilities and Net Assets $ 6,357,557ASSETSTotal Assets increased by $226 million, or 3.7%, to $6.4billion as of June 30, 2012, compared to the prior year.The increase during FY 2012 was driven primarily bythe University continuing to expand Capital Assetsacross all of its campuses to meet housing,educational, and patient care needs. From FY 2010 toFY 2011, Total Assets increased by 10.7%, primarily dueto strong performance of Investments and expansionof Capital Assets.At June 30, 2012, the University's working capital,which is current assets less current liabilities, was $5.4million, a decrease of $50.1 million from the previousyear. The largest driver of the decrease was thepurchase of a housing and parking facility at the KansasCity campus for $40.8 million which was financed withCommercial Paper.As a measurement of actual liquidity, working capital isadversely impacted by the inclusion, per accountingguidelines, of Long-Term Debt Subject to Remarketingand Commercial Paper. If Long-Term Debt Subject to2012 Financial Report17 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)Remarketing and Commercial Paper were excludedfrom Current Liabilities, working capital would be$266.6 million at June 30, 2012, also expressed asCurrent Assets of 1.40 times Current Liabilities.The following table illustrates actual working capital, as well as working capital adjusted for Long- Term DebtSubject to Remarketing and Commercial Paper:SUM AR OF WOKN AIA(i thuad of doI rAs of June 30, 2012Current Assets $ 940,748Current Lia bi I ities 935,387Working Capital, Unadjusted $ 5,361Ratio of Current Assets to Current Liabilities (Unadjusted) 1-01Current Assets 940,748Current Liabilities 935,387Less: Long-Term Debt Subj ect to Rema rketi ngand Commercial Paper (261,265)Current Liabilities, As Adjusted 674,122Working Capital, As Adjusted $ 266,626Ratio of Current Assets to Current Liabilities (As Adjusted) 1A0182012 Financial Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)At June 30, 2012, the University held $362.8 million inCash and Cash Equivalents, an increase of $141.5million from June 30, 2011. The June 30, 2011 cashbalances of $221.3 million were $106.0 million lowerthan June 30, 2010. The increase in cash at June 30,2012 is largely due to timing differences as lessworking capital was invested at June 30, 2012 ascompared to June 30, 2011. Short-Term and Long-Term Investments totaled $2.6 billion as of June 30,2012, representing a decrease of 4.8% from the prioryear as compared to a 27.4% increase from FY 2010 toFY 2011. The decrease in investment balances duringFY 2012 is primarily offset by increases in cash andcash equivalents due to less working capital beinginvested at June 30, 2012. The financial marketsdeteriorated slightly during FY 2012; net realized andunrealized gains and losses declined by $219.6 million,going from a net gain of $192.1 million in FY 2011 to anet loss of $27.5 million in FY 2012. The overall changein investment returns was most evident in theEndowment Pool, which experienced a net loss of(0.9%) in FY 2012 as compared to a net gain of 21.5%in FY 2011.Composition and returns of the University's various investment pools for the years ended June 30, 2012 and 2011were as follows:CASH,~~ ~ CAS EQIALNS ANS NVSMETJune 30,2012Short-Term BenchmarkCash and Cash and Long-Term Total IndexEquivalents Investments Total Return Return (A)General PoolShort-Term Funds $ 273,102 $ 1,178,307 $ 1,451,409 2.9% 1.4%Endowment Pool 15,528 245,725 261,253 -0.9% 0.5%Endowment FundsEndowment Pool 62,049 981,916 1,043,965 -0.9% 0.5%Fixed Income Pool 4,242 73,543 77,785 5.1% 8.0%Other 7,859 109,397 117,256 N/A N/ATotal 362,780 $ 2,588,888 $ 2,951,668(A) Benchmark index returns are calculated by independent investment consultan ts based on returns of market indicies.2012 Financial. Report19 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)At June 30, 2012, Accounts Receivable, Net of $274.1million included a $31.4 million receivable related tomedical resident FICA refund claims and accruedinterest income on the claims, for periods endingbefore April 1, 2005 due to notification from theInternal Revenue Service (IRS) of its intent to honorthese claims. The net FICA refund to the University,after settlements of $21.5 million to former medicalresidents and other third-party entities, is $6.8 millionplus $3.1 million in interest income.At June 30, 2012, the University's investment in CapitalAssets totaled $2.8 billion compared to $2.6 billion atJune 30, 2011. The University added $367.7 million incapital assets, net of retirements, during FY 2012,offset by depreciation of $160.9 million for the year. FY2011 capital asset additions of $262.9 million, net ofretirements, were offset by $155.1 million indepreciation and transfers.Note 6 presents additional information on changes by asset classification; major capital projects eithersubstantially completed in FY 2012 or ongoing are shown in the following table:ExpendfturesPrjet Th-ogCampus Budget June30,212 Sourcen ofFundiColumbia:Renovation of Mark Twain Hall $ 21,700,000 $ 5,400,000 Revenue BondsRenovation of Johnston and Wolpers Halls 42,800,000 1,300,000 Campus ReservesPower Plant -Combined Heat & Power Upgrade 71,700,00 64,300,000 Revenue Bonds, Campus ReservesPatient Care Tower (University Health Care) 203,000,000 103,100,000 RevenueBonds, Campus Reserves, GiftsKansas City:Oak Street Parking Structure 23,100,000 21,500,000 Revenue BondsBloch School of Management Building Addition 22,100,000 2,400,000 GiftsMissouri S&T:Geothermal Energy Project $ 32,400,000 $ 3,300,000 Revenue BondsTotal Liabilities were $157.6 million higher at June 30,2012 as compared to June 30, 2011, and $259.5 millionhigher at June 30, 2011 as compared to June 30, 2010.Significant changes in Current Liabilities at June 30,2012 include a $130.7 million increase in InvestmentSettlements Payable for purchases of investmentsoccurring on or before June 30, but settling after June30; and a $69.0 million decrease in Collateral Held forSecurities Lending. The Derivative Instrument Liabilityincreased by $31.2 million, which represents thechange in fair market value of the University's interestrate swaps. Investment Settlements Payable andDerivative Instrument Liability, represented the largestincreases in liabilities at June 30, 2012.Current Liabilities include long-term variable ratedemand bonds subject to remarketing agreementstotaling $100.3 million, $220.9 million and $223.7million at June 30, 2012, 2011 and 2010, respectively.The variable rate demand bonds have final contractualmaturities ranging from fiscal years 2031 to 2036.Despite contractual maturities beyond one year, thesevariable rate demand bonds are classified as currentliabilities because the University is ultimately the solesource of liquidity should the option to tender beexercised by the bondholder.On October 21, 2011, the Board of Curators approvedthe University's Commercial Paper Program, whichauthorizes the periodic issuance of up to an aggregateoutstanding principal amount of $375 million. Duringfiscal year 2012, the University issued $160.9 million ofCommercial Paper to fund the purchase of a housingand parking facility on the Kansas City campus andrefund System Facilities Revenue Bonds, Series 2000B,Series 2001A, and Series 2006B.202012 Financial Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)Non Current Liabilities represent those commitmentsbeyond one year. On May 2, 2012, the Universityissued $105.2 million in Series 2012A System FacilitiesRevenue Bonds. Proceeds from issuance of the Series2012A Bonds are being used to refund all or a portionof Series 2003A bonds, Series 2006A bonds, Series2007A bonds, and paying cost of issuance of the Series2012A bonds. The all-in-true interest cost of the Series2012A bonds is 1.7%.On August 3, 2011, the University issued $54.1 millionin Series 2011 System Facilities Revenue Bonds.Proceeds from issuance of the Series 2011 bonds arebeing used to refund all or a portion of Series 1998Abonds, 2001B bonds, Series 2003B Bonds, and payingthe cost of issuance of the Series 2011 bonds. The all-in-true interest cost of the Series 2011 bonds is 3.2%.On December 21, 2010, the University issued $252.3million in taxable Series 2010A System FacilitiesRevenue Bonds designated as "Build America Bonds"under the Internal Revenue Code of 1986, as amended.With respect to the Series 2010A bonds, the Universitywill receive a cash subsidy payment from the UnitedStates Treasury in an amount equal to 35% of theinterest payable on each interest payment date. Theall-in-true interest cost of the Series 2010A bonds,after taking into account the 35% interest paymentfrom the federal government is 3.8%. The Series2010A bonds were Aal and AA+ rated by Moody's andStandard & Poor's, respectively. Proceeds fromissuance of the Series 2010A bonds are being used tofinance construction or renovation of housing facilitieson the Columbia, Kansas City, and Missouri Scienceand Technology (Missouri S&T) campuses, energymanagement improvements on the Columbia andMissouri S&T campuses, construction of a new parkingstructure on the Kansas City campus, new patient caretower and Ellis Fischel Cancer Center relocation atHealth Care, and renovation, furnishing and equippingvarious other facilities, and to finance capitalizedinterest and certain costs of issuance.The following is a summary of long-term debt by type of debt instrument:LONGTR DEBT(i thu and of dLa.As of June 30, 2012System Facilities Revenue Bonds $ 1,206,695Unamortized Premium and Losson Defeasance 26,661Total Bonds Payable 1,233,356Capital Lease Obligations 6,616Notes Payable 4,961Commercial Paper 160,935Total Long-Term Debt $ 1A405,868Contractual Maturities Within One YearBonds Payable- Fixed Rate $ 20,875Bonds Payable -Variable Rate Demand 420Notes Payable 300Capital Lease Obligations 696Commercial Paper 160,935Total Contractual Maturities Within One Year $ 183,2262012 Financial Report21 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)NET ASSETSNet Assets represent the value of the University'sassets after liabilities are deducted. The University'stotal Net Assets increased by $68.4 million during theyear ended June 30, 2012, after increasing by $335.5million in the year ended June 30, 2011. In FY 2010,changes in total Net Assets included a $6.2 milliondecrease due to the effects of changes in accountingprinciples (GASB Statement No. 53, Accounting andFinancial Reporting for Derivative Instruments).The distribution of the Net Asset balances, including additional details on unrestricted net assets by fund type, asof June 30, 2012, are as follows:TOANTSES-$.1*LOTotal Net Assets are reflected in the four componentcategories as follows:Invested in Capital Assets, Net of Related Debt,represents the University's investment in capitalassets, net of accumulated depreciation andoutstanding debt related to acquisition, constructionor improvement of those assets. This categoryincreased by $29.1 million in FY 2012 and $31.0 millionin FY 2011. This increase is largely driven by theconstruction the new Patient Tower for Health Carethat is being partially funded with Unrestricted NetAssets.Restricted Nonexpendable Net Assets includeendowment and similar assets that are subject toexternally imposed stipulations for the principal to bemaintained in perpetuity by the University. Unrealizedmarket losses contributed to a $17.7 million, or 2.2%,decrease in Restricted Nonexpendable Net Assetsduring FY 2012. Realized and unrealized market gainswere largely responsible for a $109.4, or 16.1%,increase during FY 2011.222012 Financial Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)Restricted Expendable Net Assets are resources thatare subject to externally imposed stipulationsregarding their use, but are not required to bemaintained in perpetuity. This category increased by$28.7 million, or 8.0%, during FY 2012 and $8.1 million,or 2.3%, in FY 2011. As of June 30, 2012, this categoryincludes:-$299.8 million of net assets restricted foroperations and giving purposes compared to $264.6million at June 30, 2011;-$79.1 million for student loan programs comparedto $77.3 million at June 30, 2011; and-$10.1 million for facilities compared to $18.4 millionat June 30, 2011.Unrestricted Net Assets are not subject to externallyimposed stipulations although these resources may bedesignated for specific purposes by the University'smanagement or Board of Curators. This categoryincreased by $28.3 million, or 2.1%, to $1.4 billion atJune 30, 2012 after increasing by $187.0 million, or16.1%, in FY 2011. Maintaining adequate levels ofunrestricted net assets is one of several key factorsthat have enabled the University to maintain its Aalcredit rating. As of June 30, 2012 and 2011, UniversityHealth Care designated funds totaled $339.5 millionand $353.7 million, respectively; capital project-designated funds totaled $224.3 million and $215.7million, respectively; student loan program-designatedfunds totaled $8.5 million and $8.5 million,respectively; and unrestricted funds functioning asendowments totaled $161.8 million and $118.3million, respectively. The remaining Unrestricted NetAssets which are available for the University'sinstructional and public service missions and itsgeneral operations totaled $645.1 million and $641.1million at June 30, 2012 and 2011, respectively.2012 Financiat Report23 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSThe Statement of Revenues, Expenses, and Changes in Net Assets presents the University's results of operations.The Statement distinguishes revenues and expenses between operating and non-operating categories, andprovides a view of the University's operating margin.CONDENSED~~~~ ~ STTMN OF REEUS EXESEAN CH GSINETSESFiscal Year Ended June 30, 2012Operating RevenuesNet Tuition and Fees $ 545,276Grants and Contracts 311,742Patient Medical Services, Net 813,024Other Auxilia ry Enterprises 357,101Other Operating Revenues 78,418Total Operating Revenues 2,105,561Operating ExpensesSalaries, Wages and Benefits 1,677,944Supplies, Services and Other Operating Expenses 762,700Other Operating Expenses 221,295Total Operating Expenses 2,661,939Operating Loss Before State Appropriations (556,378)State Appropriations 397,629Income (Loss) after State Appropriations, beforeNonoperating Revenues (Expenses) (158,749)Nonoperating Revenues (Expenses)Investment and Endowment Income (Losses), Net of Fees 30,855Private Gifts 90,346Interest Expense (53,923)Other Nonoperating Revenues, Net 80,319Net Nonoperating Revenues (Expenses) 147,597Income (Loss) before Capital Contributions, Additionsto Permanent Endowments and Special Item (11,152)State Capital Appropriations 937Capital Gifts and Grants 11,788Private Gifts for Endowment Purposes 24,484Special Item 42,316Increase in Net Assets 68,373Net Assets, Beginning of Year 4,016,244Cumulative Effect of Change in Accounting PrinciplesNet Assets, Beginning of Year, as Adjusted 4,016,244Net Assets, End of Year $ 4,084,617REVENUESOperating Revenues represent resources generated bythe University in fulfilling its instruction, research, andpublic service missions. Total Operating Revenuesincreased by $79.8 million, or 3.9% in FY 2012, and by$84.9 million, or 4.4% in FY 2011. Net Tuition and Feesand Patient Medical Services contributed mostsignificantly to the increased operating revenue in FY2012 while Net Tuition and Fees, Patient Medical242012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)Services and Other Auxiliary Enterprises had thelargest increases in the previous year. NonoperatingRevenues are those not generated by the University'score missions and include such funding sources asState and Federal Appropriations, Pell Grants, PrivateGifts and Investment and Endowment Income.The following is a graphic illustration of operatingrevenues by source for FY 2012:TOA OPRTN EVNE 2. ILO2012 as compared to an increase of $51.6 million, or4.8%, in FY 2011. Patient Medical Services, whichincludes fees for services provided by University HealthCare, had the largest increase in both fiscal years 2012and 2011 at $53.3 million, or 7.0%, and $26.9 million,or 3.6%, respectively.Nonoperating RevenuesTotal State Appropriations received for Universityoperations, University Health Care operations, andother special programs decreased by $40.0 million, or9.1%, in FY 2012, and decreased by $60.7 million, or12.2%, in FY 2011. This decrease was largely related toa 7.3% decrease in funding for operations or the coreinstructional mission. Additionally, reductionsoccurred for other curator's programs such asMOREnet, Health Care, and Mid-Missouri MentalHealth Center.As one of the more volatile sources of nonoperatingrevenues, Investment and Endowment Incomeincludes interest and dividend income as well asrealized and unrealized gains and losses. Realized andunrealized market value gains, losses and other activityaffecting Investment and Endowment Income resultedin a net gain of $30.9 million in FY 2012 as compared toa net gain of $266.6 million in FY 2011. This includes adecrease in Investment and Endowment Income of$235.8 million for the year ended June 30, 2012, ascompared to a $93.8 million increase for the yearended June 30, 2011.Gift income is reflected in three categories: PrivateGifts, Capital Gifts and Grants (which are restricted foradding or improving capital assets) and Private Giftsfor Endowments (which are restricted for establishingendowments). Private Gifts and Grants can fluctuatesignificantly from year to year due to the voluntarynature of donors' gifts. In FY 2012, the Universityreceived gifts totaling $126.6 million, as compared to$94.4 million and $92.8 million for FY 2011 and FY2010, respectively.Operating RevenuesTuition and Fees, net of Scholarship Allowances,increased by $49.8 million, or 10.0%, in FY 2012 and by$29.2 million, or 6.3%, in FY 2011. The increase in FY2012 was driven primarily by increased studentenrollment and an average increase of 5.5% in tuitionand fee rates. The FY 2011 increase was drivenprimarily by increases in student enrollment.As a research institution, the University receives asubstantial amount of funding through Federal, Stateand Private Grants and Contracts. Overall, sponsoredfunding decreased by $8.8 million, or 2.7%, in FY 2012compared to an increase of 0.8% in FY 2011. A 5.7%decrease in Federal grants was the primary driver forthe decline FY 2012.The University's auxiliary enterprises include UniversityHealth Care, Housing and Dining Services, campusBookstores, and other such supplemental activities.Total operating revenues generated by these auxiliaryenterprises increased by $34.0 million, or 3.0%, in FY2012 Financial Report25 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)Total Interest Expense during the years ended June 30,2012 and 2011 was $64.5 million and $59.7 million,respectively. Interest expense associated withfinancing projects during construction, net of anyinvestment income earned on bond proceeds duringconstruction, is capitalized. For the years ended June30, 2012 and 2011, capitalization of interest earned onunspent bond proceeds totaled $10.6 million and$10.2 million, respectively, resulting in net interestexpense of $53.9 million and $49.5 million,respectively.The following is a summary of interest expense associated with Long-Term Debt:INTEREST EXPENSE(in thousands of dollars)Fiscal Year Ended June 30, 2012System Facilities Revenue Bonds $ 57,746Net Payment on Interest Rate Swaps 5,754Total System Facilities Revenue Bonds 63,500Capital Project NotesCapitalized Lease Obligations 929Notes Payable 34Commercial Paper 71TotalI nterest Expense BeforeCapitalization of Interest 64,534Capitalization of Interest, Net of InterestEarned on Unspent Bond Proceeds (10,611)Total Interest Expense $ 53,923In FY 2012, Other Nonoperating Revenues, Net of$80.3 million decreased $2.8 million over FY 2011largely due to increases in Other NonoperatingExpenses of $10.2 million. In FY 2012 and FY 2011,Federal Appropriations include cash subsidy paymentsfrom the United States Treasury totaling $10.5 millionand $7.2 million, respectively, for designated BuildAmerica Bonds outstanding. Pell Grants increased by$4.4 million and were largely driven by increasedenrollment and student need.262012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)OPERATING EXPENSESTotal Operating Expenses increased by $131.4 million,or 5.1%, in FY 2012 compared to an increase of $111.7million, or 4.6%, in FY 2011. The following graphillustrates the University's operating expenses bynatural classification for FY 2012:OEA. IN EXENE BY NAUALSSFCTOThe following illustrates the University's operatingexpenses by function for FY 2008 through FY 2012:OEATIN EXENE BYFNTOFY 208-FY21Supplies,Services and-Other29%Benefits,13%Scholarshipsand-Fellowships2%Depreciation6%Salaries andWages50%02008 2009 2010 2011 2012100%90%80%70%60%50%40%30%20%10%0%During FY 2012 and FY 2011, Salaries, Wages andBenefits increased approximately 4.8% and 3.9%,respectively, over the prior fiscal year. Salaries andWages increased by $46.1 million, or 3.6% driven bymerit increases and increased enrollment. StaffBenefits as of June 30, 2012, increased by $31.3million, or 9.5%, as compared to June 30, 2011.Contributing to this was an increase in the employercontributions rate for the retirement plan andincreases in claims and administrative fees paid tomedical and dental providers.In FY 2012 and FY 2011, the University's Supplies,Services, and Other Operating expenses of $762.7million and $716.0 million increased by $46.7 million,or 6.5%, and $39.6 million, or 5.9%, respectively, overthe prior fiscal year. These increases relate tonecessary expenses in the current fiscal year that weredeferred in prior fiscal years due to budgetaryconstraints and enrollment growth.0 Instructions Research" Publc Service" Academic Support" Student Services" Institutional Support* Operation & Maintenance of Plant* Health CareOther Awziary EnterprisesScholarships & Fellowshlps* DepreciationThe core missions of instruction, research, and publicservice account for the largest proportion of OperatingExpenses at 36.2% for FY 2012. University Health Careconstitutes the next highest proportion at 24.1% ofexpenses for FY 2012. Excluding Health Care,instruction, research, and public service account for47.6% of Operating Expenses for FY 2012. Institutionalsupport, which represents the core administrativeoperations of the University, was less than 5 cents ofeach dollar spent during this 5-year period.2012 Financial. Report27 UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)STATEMENT OF CASH FLOWSThe Statement of Cash Flows provides information about the University's sources and uses of cash and cashequivalents during the fiscal year. The following summarizes sources and uses of cash and cash equivalents for thethree years ended June 30, 2012, 2011 and 2010:CONDENSED ST EMN OF CAS FLOWSFiscal Year Ended June 30, 2012Net Cash Used in Operating Activities $ (369,270)Net Cash Provided by Nonca pital Financing Activities 620,913Net Cash Provided by (Used in) Capital andRelated Financing Activities (388,389)Net Cash Provided by (Used in) Investing Activities 278,239Net Increase (Decrease) in Cash and Cash Equivalents 141,493Cash and Cash Equivalents, Beginning of Year 221,287Cash and Cash Equivalents, End of Year $ 362,780Net Cash Used in Operating Activities reflects thecontinued need for funding from the state of Missouri,as funding received from tuition and fees and relatedsales and services of auxiliary and educational activitiesare not sufficient to cover operational needs. In FY2012, cash used in operating activities increased by$36.5 million as compared to FY 2011 due primarily toincreased cash outflows from payroll and benefits andpayments to suppliers. In FY 2011, cash used inoperating activities increased by $67.9 million from FY2010.The University's most significant source of cash, NetCash Provided by Noncapital Financing Activities,includes funding from State and Federalappropriations, Pell grants and noncapital private gifts.Cash from these sources totaling $620.9 million,$617.3 million and $622.4 million in FY 2012, FY 2011and FY 2010, respectively, directly offset the additionalcash needs resulting from operations.Net Cash Provided by (Used In) Capital and RelatedFinancing Activities decreased by $323.5 million in FY2012 due largely to a decrease in the amount of newdebt issued in FY 2012. Net Cash Used in Capital andRelated Financing Activities of $5.7 million in FY 2010was due largely to the bond issue in July 2009 andrelated unspent bond proceeds associated with capitalprojects still under construction at June 30, 2010.Net Cash Provided by (Used In) Investing Activitiesreflects a net cash inflow of $278.2 million in FY 2012as to a net cash outflow of $325.6 million in FY 2011.This is largely driven by unsettled investment trades atthe end of FY 2012.ECONOMIC OUTLOOKThe University of Missouri is the state's premier publicresearch university contributing to the economicdevelopment and vitality of the state through ground-breaking research, educating more than 73,000students, delivering quality healthcare to the citizensof Missouri, and providing extension servicesthroughout the state.The University has experienced 30% enrollmentgrowth over the past 10 years and is now educating17,000 more students each year. Approximately 70%of the state's growth in undergraduate enrollmentamong four-year institutions over the last 10 years hasoccurred at the University of Missouri. This growth hasoccurred during the challenging economy of the pastdecade without any growth in state support andmodest annual average increases in tuition. Whileenrollment growth at this pace is not expected tocontinue in the next decade, without increases in statesupport the university will be challenged to find waysto educate more students while maintaininginstructional quality and affordability. Stateappropriations for operations decreased by 7.3% in FY282012 Financial Report UNIVERSITY OF MISSOURI SYSTEMMANAGEMENT'S DISCUSSION AND ANALYSISJune 30, 2012 and 2011 (unaudited)2012 and will likely remain flat in FY 2013. Withoutsignificant increases in general revenues, the state willcontinue to be challenged to increase funding forhigher education for FY 2014 and beyond.Despite the challenges generated by decreased statefunding and increased enrollment, the University hasbeen able to strengthen its financial position due todiversified funding sources, and historically lowborrowing costs. The University continues to increaseprivate giving, with an increase of 71.9% in FY 2012and a focus on sustain higher levels of giving in FY 13and beyond. The University also continues to benefitfrom historically low borrowing costs to addressacademic, research, student life facility and campusinfrastructure needs.The University is aware of its fiduciary responsibility tocontrol costs in order to provide an affordableeducation for Missourians. The University hascontinued to implement shared services and businessprocess redesign to achieve cost savings andefficiencies and to identify resources for strategicinvestment. This is an on-going process critical tofuture performance.The University continues to maintain its strongresearch base. Research expenditures declined slightlyin FY 2012 as the funding provided by the AmericanRecovery and Reinvestment Act began to wane.Additionally, federal agencies are being faced withshrinking budgets as part of the broader reductions inthe Federal budget. To offset these decreases theUniversity is looking for other opportunities tostimulate research and economic development. Thisincludes the Enterprise Investment Program which wasestablished to expedite the transfer of researchers' labinnovations to the market place and to create newMissouri business and jobs. For FY 12 two Universityresearch teams were chosen to receive $600,000 infunding as part of this program.For FY 2012, University Health Care continues focus onadvancing the health of all people, especiallyMissourians. For the future, University Health Carecontinues to pursue growth and its academic mission.Currently, under construction is a $203,000,000patient care tower, which includes a replacement ofthe Ellis Fischel Cancer Center. The patient tower isscheduled to be completed in FY 2013, with patientcare starting in the new facility in the fourth quarter ofthe fiscal year. These capital investments will assist inproviding quality care to patients, including asignificant increase in private rooms, and enhancedfacilities for physician recruitments. University HealthCare has also begun investing in outpatient facilitiesthrough the FY 2012 opening of the Missouri Centerfor Outpatient Surgery, as well as plans for building anew outpatient facility in Columbia in FY 2015The University continues to monitor the changingenvironment surrounding State and Federal healthcare programs and the corresponding legislation,including the Patient Protection and Affordable CareAct and the Health Care and Education ReconciliationAct, collectively referred to as 'Health Care Reform.'This legislation will significantly impact the future ofhealthcare. University Health Care managementcontinues to review the effect that the legislation willhave on the organization, but has not determined thefull financial statement effect of this new Health CareReform legislation.Strong student demand, highly successful capitalcampaigns, robust research funding, economicdevelopment programs and a financially stable andgrowing healthcare system are all factors in thepositive outlook for the University of Missouri.However, the state economy, limited increases intuition, and flat state support will continue to posebudgetary challenges for the University in the future.2012 Financial Report29 INDEPENDENT AUDITORS' REPORTKPMG LLPSuite 90010 South BroadwaySt. Louis, MO 63102-1761The Board of CuratorsUniversity of Missouri System:We have audited the accompanying financial statements of the business-type activities, the discretelypresented component unit, and the aggregate remaining fund information of the University of MissouriSystem, a component unit of the State of Missouri, as of and for the years ended June 30, 2012 and 2011,which collectively comprise the University of Missouri System's basic financial statements as listed in thetable of contents. These financial statements are the responsibility of the University of Missouri System'smanagement. Our responsibility is to express opinions on these financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the University of Missouri System's internal control over financialreporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinions.In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the business-type activities, the discretely presented component unit, andthe aggregate remaining fund information of the University of Missouri System as of June 30, 2012 and2011, and the respective changes in financial position and, where applicable, cash flows thereof for theyears then ended, in conformity with U.S. generally accepted accounting principles.In accordance with Government Auditing Standards, we have also issued our report dated October 10,2012 on our consideration of the University of Missouri System's internal control over financial reportingand on our tests of its compliance with certain provisions of laws, regulations, contracts, and grantagreements, and other matters. The purpose of that report is to describe the scope of our testing of internalcontrol over financial reporting and compliance and the results of that testing, and not to provide anopinion on the internal control over financial reporting or on compliance. That report is an integral part ofan audit performed in accordance with Government Auditing Standards and should be considered inassessing the results of our audit.U.S. generally accepted accounting principles require that the management's discussion and analysis onpages 15 through 29 and the schedules of employer contributions and the schedules of funding progress onpages 69 and 70 be presented to supplement the basic financial statements. Such information, although nota part of the basic financial statements, is required by the Governmental Accounting Standards Board whoconsiders it to be an essential part of financial reporting for placing the basic financial statements in anKPMG LLP is a Delaware limited liability partnership,the U.S. member lrmn of KPMG International Cooperative("KPMG International"), a Swiss entity.302012 FinanciaL Report INDEPENDENT AUDITORS' REPORTappropriate operational, economic, or historical context. We have applied certain limited procedures to therequired supplementary information in accordance with auditing standards generally accepted in the UnitedStates of America, which consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management's responses to our inquiries,the basic financial statements, and other knowledge we obtained during our audit of the basic financialstatements. We do not express an opinion or provide any assurance on the information because the limitedprocedures do not provide us with sufficient evidence to express an opinion or provide any assurance.Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the University of Missouri System's basic financial statements. The statistical section presentedon pages 72 through 86 is presented for the purposes of additional analysis and is not a required part of thebasic financial statements. Such information has not been subjected to the auditing procedures applied inthe audit of the basic financial statements, and accordingly, we do not express an opinion or provide anyassurance on them.I'PMC, LLVPSt. Louis, MissouriOctober 10. 20122012 Financial. Report331 UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF NET ASSETSAs oF June 30, 2012 and 2011 (in thousands)Discretely PresentedUniversity Component Unit2012 2011 2012 2011AssetsCurrent AssetsCash and Cash Equivalents $ 228,639 $ 44,249 $ 10,301 $ 8,433Restricted Cash and Cash Equivalents 134,141 177,038 --Short-Term Investments 126,054 151,070 --Restricted Short-Term Investments 32,092 49,264 --Investment of Cash Collateral 32,032 101,047 --Accounts Receivable, Net 274,100 255,589 17,417 16,566Pledges Receivable, Net 11,898 12,374 --Investment Settlements Receivable 37,316 15,634Notes Receivable, Net 8,151 8,532 --Due From (To) Component Units (7,029) (6,658) 7,029 6,658Inventories 36,022 35,193 3,486 3,228Prepaid Expenses and Other Current Assets 27,332 25,759 1,837 1,825Total Current Assets 940,748 869,091 40,070 36,710Noncurrent AssetsRestricted Cash and Cash Equivalents --4,318 4,346Pledges Receivable, Net 41,708 14,895 --Notes Receivable, Net 54,698 54,015 --Deferred Charges and Other Assets 10,253 13,218 3,679 1,788Restricted Other Assets --3,151 3,279Long-Term Investments 1,363,827 1,357,918 63,522 55,627Restricted Long-Term Investments 1,066,915 1,161,184 --Capital Assets, Net 2,848,993 2,642,196 63,866 69,021Total Noncurrent Assets 5,386,394 5,243,426 138,536 134,061Deferred Outflow of Resources 30,415 19,023 --Total Assets and DeferredOutflow of Resources $ 6,357,557 $ 6,131,540 $ 178,606 $ 170,771LiabilitiesCurrent LiabilitiesAccounts Payable $ 140,274 $ 130,803 $ 4,037 $ 5,156Accrued Liabilities 150,971 143,347 15,505 13,879Deferred Revenue 84,923 78,209 --Funds Held for Others 65,643 62,951 --Investment Settlements Payable 177,988 47,319 --Collateral Held for Securities Lending 32,032 101,047 --Commercial Paper and Current Portion ofLong-Term Debt 183,226 29,107 2,917 2,263Long-Term Debt Subject to RemarketingAgreements 100,330 220,885 --Total Current Liabilities 935,387 813,668 22,459 21,298(continued)322012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF NET ASSETSAs oF 3une 30, 2012 and 2011 (in thousands)Discretely PresentedUniversity Component Unit2012 2011 2012 2011Liabilities, ContinuedNoncurrent LiabilitiesLong-Term Debt 1,122,312 1,140,934 31,445 34,447Deferred Revenue -1,519 --Derivative Instrument Liability 57,856 26,702Other Postemployment Benefits Liability 109,496 83,306 --Other Noncurrent Liabilities 47,889 49,167 3,209 1,156Total Noncurrent Liabilities 1,337,553 1,301,628 34,654 35,603Total Liabilities 2,272,940 2,115,296 57,113 56,901Net AssetsInvested in Capital Assets, Net of Related Debt 1,545,227 1,516,095 29,715 32,615RestrictedNonexpendable -Endowment 771,146 788,876 --Expendable -Scholarship, Research, Instruction and Other 299,789 264,605 3,151 3,279Loans 79,091 77,300 --Capital Projects 10,149 18,438 --Unrestricted 1,379,215 1,350,930 88,627 77,976Total Net Assets 4,084,617 4,016,244 121,493 113,870Total Liabilities and Net Assets $ 6,357,557 $ 6,131,540 $ 178,606 $ 170,771See notes to the financial statements.2012 Financial, Report333 UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSFor the Years Ended June 30, 2012 and 2011 (in thousands)Discretely PresentedUniversity Component Unit2012 2011 2012 2011Operating RevenuesTuition and Fees (Net of Provision for DoubtfulAccounts of $6,935 in 2012 and$5,739 in 2010) $ 736,074 $ 671,419 $ -$Less Scholarship Allowances 190,798 175,917 -Net Tuition and Fees 545,276 495,502 -Federal Grants and Contracts 184,882 196,122 -State and Local Grants and Contracts 55,837 57,375 -Private Grants and Contracts 71,023 67,025 -Sales and Services of Educational Activities 23,106 21,671 -Auxiliary Enterprises -Patient Medical Services, Net 813,024 759,734 168,311 164,760Housing and Dining Services (Net ofScholarship Allowance of $617 in 2012and $614 in 2011) 99,667 93,724 --Bookstores 57,566 58,591 --Other Auxiliary Enterprises (Net ofScholarship Allowance of $8,339 in2012 and $7,704 in 2011) 199,868 220,162 --Other Operating Revenues 55,312 55,811 --Total Operating Revenues 2,105,561 2,025,717 168,311 164,760Operating ExpensesSalaries and Wages 1,318,349 1,272,226 70,227 68,021Benefits 359,595 328,340 15,050 14,655Supplies, Services and Other Operating Expenses 762,700 716,044 63,490 65,177Scholarships and Fellowships 60,380 58,790 --Depreciation 160,915 155,103 10,559 10,943Total Operating Expenses 2,661,939 2,530,503 159,326 158,796Operating Income (Loss) before StateAppropriations (556,378) (504,786) 8,985 5,964State Appropriations 397,629 437,631 --Operating Income (Loss) after State Appropriations,before Nonoperating Revenues (Expenses) (158,749) (67,155) 8,985 5,964Nonoperating Revenues (Expenses)Federal Appropriations 28,222 28,416 --Federal Pell Grants 62,311 57,951 --Investment and Endowment Income,Net of Fees 30,855 266,633 602 652Private Gifts 90,346 52,564 --Interest Expense (53,923) (49,507) (1,519) (1,954)Other Nonoperating Revenues (Expenses) (10,214) (3,279) (445) 440Net Nonoperating Revenues (Expenses) 147,597 352,778 (1,362) (862)(continued)3z42012 Financial Report UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET ASSETSFor the Years Ended June 30, 2012 and 2011 (in thousands)Discretely PresentedUniversity Component Unit2012 2011 2012 2011Income (Loss) before Capital Contributions, Additionsto Permanent Endowments and Special Item (11,152) 285,623 7,623 5,102State Capital Appropriations 937 8,043 --Capital Gifts and Grants 11,788 15,466Private Gifts for Endowment Purposes 24,484 26,376Special Item 42,316 ---Increase in Net Assets 68,373 335,508 7,623 5,102Net Assets, Beginning of Year 4,016,244 3,680,736 113,870 108,768Net Assets, End of Year $ 4,084,617 $ 4,016,244 $ 121,493 $ 113,870See notes to the financial statements.2012 Financial Report35 UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF CASH FLOWSFor the Years Ended June 30, 2012 and 2011 (in thousands)20122011Cash Flows from Operating ActivitiesTuition and FeesFederal, State and Private Grants and ContractsSales and Services of Educational Activities and Other AuxiliariesPatient Care RevenuesStudent Housing FeesBookstore CollectionsPayments to SuppliersPayments to EmployeesPayments for BenefitsPayments for Scholarships and FellowshipsStudent Loans IssuedStudent Loans CollectedStudent Loan Interest and FeesOther Receipts, Net$ 541,629307,097227,249804,90399,77558,085(760,592)(1,309,080)(333,405)(60,380)(8,711)8,5591,53854,063$ 496,091329,542245,570765,99193,74758,439(741,245)(1,269,544)(304,408)(58,790)(9,608)8,6651,60151,152Net Cash Used in Operating Activities (369,270) (332,797)Cash Flows from Noncapital Financing ActivitiesState Appropriations 397,629 437,631Federal Appropriations and Pell Grants 90,369 88,242Private Gifts 64,009 56,056Endowment and Similar Funds Gifts 24,484 26,376Direct Lending Receipts 356,718 347,237Direct Lending Disbursements (356,718) (347,237)PLUS Loan Receipts 92,509 81,683PLUS Loan Disbursements (92,509) (81,683)Other Receipts, Net 41,730 (705)Deposits (Receipts) of Affiliates 2,692 9,706Net Cash Provided by Noncapital Financing Activities 620,913 617,306Cash Flows from Capital and Related Financing ActivitiesCapital State Appropriations 1,475 14,691Capital Gifts and Grants 5,491 8,627Proceeds from Sales of Capital Assets 4,035 1,050Purchase of Capital Assets (362,015) (262,333)Proceeds from Issuance of Capital Debt, Net 355,472 252,285Principal Payments on Capital Debt (25,603) (29,400)Payments on Capital Lease (789) (739)Payments on Debt Defeasance (310,911) -Payments of Bond Issuance Costs (1,226) (1,551)Interest Payments on Capital Debt (54,318) (47,516)Net Cash Provided by (Used in) Capital and Related Financing Activities (388,389) (64,886)(continued)362012 Financial Report UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF CASH FLOWSFor the Years Ended 3une 30, 2012 and 2011 (in thousands)2012 2011Cash Flows from Investing ActivitiesInterest and Dividends on Investments, Net 58,325 70,091Purchase of Investments, Net of Sales and Maturities 221,535 (397,113)Other Investing Activities (1,621) 1,373Net Cash Provided by (Used in) Investing Activities 278,239 (325,649)Net Increase (Decrease) in Cash and Cash Equivalents 141,493 (106,026)Cash and Cash Equivalents, Beginning of Year 221,287 327,313Cash and Cash Equivalents, End of Year $ 362,780 $ 221,287Reconciliation of Operating Loss to Net Cash Used in Operating ActivitiesOperating Loss $ (556,378) $ (504,786)Adjustments to Net Cash Used in Operating ActivitiesDepreciation Expense 160,915 155,103Changes in Assets and Liabilities:Accounts Receivable, Net (18,682) (3,052)Inventory, Prepaid Expenses and Other Assets (2,103) (6,947)Notes Receivable 411 (252)Accounts Payable 7,575 (1,606)Accrued Liabilities 31,979 28,824Deferred Revenue 7,013 (81)Net Cash Used in Operating Activities $ (369,270) $ (332,797)Supplemental Disclosure of Noncash ActivitiesNet Increase (Decrease) in Fair Value of InvestmentsNoncash Gifts$ (105,689) $ 170,54912,878 22,820See notes to the financial statements.2012 FinanciaL Report37 UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF PLAN NET ASSETSAs of June 30, 2012 and 2011 (in thousands)2012 2011AssetsCash and Cash Equivalents $ 106,033 $ 116,216Investment of Cash Collateral 50,023 257,463Investment Settlements Receivable 83,396 27,006Investments:Debt Securities 933,561 984,980Equity Securities 505,512 607,800Commingled Funds 1,085,669 985,435Nonmarketable Alternative Investments 212,993 174,899Other 11,895 15,022Total Assets 2,989,082 3,168,821LiabilitiesAccounts Payable and Accrued Liabilities 169 119Collateral Held for Securities Lending 50,023 257,463Investment Settlements Payable 206,980 152,057Total Liabilities 257,172 409,639Net Assets Held in Trust for Retirement and OPEB $ 2,731,910 $ 2,759,182UNIVERSITY OF MISSOURI SYSTEMSTATEMENT OF CHANGES IN PLAN NET ASSETSFor the Years Ended June 30, 2012 and 2011 (in thousands)2012 2011Net Revenues and Other AdditionsInvestment Income:Interest & Dividend Income, Net of Fees $ 58,589 $ 61,723Net Appreciation (Depreciation) in Fair Value of Investments (31,548) 379,667Net Investment Income 27,041 441,390Contributions:University 100,095 87,783Members 27,320 26,000Total Contributions 127,415 113,783Other Revenues 1,218 695Total Net Revenues and Other Additions 155,674 555,868Expenses and Other DeductionsAdministrative Expenses 2,630 2,621Payments to Retirees and Beneficiaries 180,316 172,181Total Expenses and Other Deductions 182,946 174,802Increase (Decrease) in Net Assets Held in Trust for Retirement and OPEB (27,272) 381,066Net Assets Held in Trust for Retirement and OPEB, Beginning of Year 2,759,182 2,378,116Net Assets Held in Trust for Retirement and OPEB, End of Year $ 2,731,910 $ 2,759,182See notes to the financial statements.382012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 20111. ORGANIZATION AND SUMMARY OFSIGNIFICANT ACCOUNTING POLICIESUNIVERSITY OF MISSOURI SYSTEMOrganization -The University of Missouri System (the"University"), a Federal land grant institution, conductseducation, research, public service, and relatedactivities, which includes University Health Care andrelated facilities, principally at its four campuses inColumbia, Kansas City, Rolla and St. Louis. TheUniversity also administers a statewide cooperativeextension service with centers located in each countyin the State. The University is a component unit of thestate of Missouri (the "State") and is governed by anine-member Board of Curators appointed by thestate's Governor.The income generated by the University, as aninstrumentality unit of the State, is generally excludedfrom federal income taxes under Section 115 of theInternal Revenue Code. However, the Universityremains subject to income taxes on any net incomethat is derived from a trade or business, regularlycarried on and not in furtherance of the purpose forwhich it is exempt. No income tax provision has beenrecorded as the net income, if any, from unrelatedtrade or business income, is not material to thefinancial statements.Reporting Entity -As defined by generally acceptedaccounting principles established by the GovernmentalAccounting Standards Board ("GASB"), the financialreporting entity consists of the primary governmentand its component units. Component units are legallyseparate organizations for which the primarygovernment is financially accountable or the natureand significance of their relationships with the primarygovernment are such that exclusion would cause theprimary government's financial statements to bemisleading or incomplete.The University of Missouri-Columbia Medical Alliance(the "Medical Alliance") is considered a componentunit of the University according to the criteria in GASBStatement No. 14, The Financial Reporting Entity, andis discretely presented in the University's financialstatements. The Medical Alliance, a not-for-profitcorporation, provides an integrated health caredelivery system for mid-Missouri by establishingaffiliations with various medical facilities. The purposeof the Medical Alliance is to develop a network ofhealth care providers to support the missions of theUniversity Health Care. The Capital Region MedicalCenter ("CRMC") in Jefferson City, Missouri, operatesas an affiliate of the Medical Alliance and providesinpatient, outpatient, and emergency care services tothe surrounding community. CRMC, a not-for-profitorganization that follows generally acceptedaccounting principles under the Financial AccountingStandards Board ("FASB"), is a discretely presentedcomponent unit of the Medical Alliance. The Universityappoints the Board of Directors of the Medical Allianceand can impose its will on the organization. Financialstatements for the Medical Alliance are not available.The Missouri Renewable Energy Corporation isconsidered a component unit of the University, forfinancial reporting purposes, according to the criteriain GASB Statement No. 14, The Financial ReportingEntity, and is included in the University's financialstatements using the blended method. The MissouriRenewable Energy Corporation provides green energyfacilities exclusively to the University. At June 30, 2012Missouri Renewable Energy Corporation was whollyowned by the University. Financial statements forMissouri Renewable Energy Corporation are notavailable.The University operates the University of MissouriRetirement, Disability, and Death Benefit Plan (the"Retirement Plan") and the University of MissouriOther Postemployment Benefits Plan (the "OPEB Plan,"which collectively with the Retirement Plan representthe "Pension Trust Funds"), which are single employer,defined benefit plans. The assets of the RetirementPlan and OPEB Plan are held in the Retirement Trustand OPEB Trust, respectively.Financial Statement Presentation -in accordance withGASB Statement No. 61, The Financial Reporting Entity:Omnibus an amendment to GASB Statements No. 14and No. 34, the University follows all applicable GASBpronouncements.Pursuant to GASB Statement No. 35, Basic FinancialStatement-and Management's Discussion and Analysis-for Public Colleges and Universities, the University'sactivities are considered to be a single business-typeactivity and accordingly, are reported in a singlecolumn in the financial statements. Business-typeactivities are those that are financed in whole or part2012 FinanciaL Report39 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011by funds received by external parties for goods orservices.Basis of Accounting -The University's financialstatements have been prepared using the economicresource measurement focus and the accrual basis ofaccounting. Under the accrual basis, revenues arerecognized when earned and expenses are recordedwhen an obligation has been incurred, regardless ofthe timing of cash flows.On the Statement of Revenues, Expenses and Changesin Net Assets, the University defines operatingactivities as those generally resulting from an exchangetransaction. Nearly all of the University's expenses arefrom exchange transactions, which involve theexchange of equivalent values such as payments forgoods or services. Non-operating revenues orexpenses are those in which the University receives orgives value without directly giving or receiving equalvalue, such as State and Federal appropriations,Federal Pell grants, private gifts, and investmentincome.The financial statements for the Pension Trust Fundshave been prepared using the accrual basis ofaccounting. Benefits and refunds are recognized whendue and payable. Investments are reported at fairvalue. Combining financial statements for these fundsare presented in Note 15.Cash, Cash Equivalents and Investments -Cash andcash equivalents consist of the University's bankdeposits, repurchase agreements, money marketfunds, and other investments with original maturitiesof three months or less. Investment assets are carriedat fair value based primarily on market quotations.Purchases and sales of investments are accounted foron the trade date basis. Investment settlementsreceivable and investment settlements payablerepresent investment transactions occurring on orbefore June 30, which settle after that date.Investment income is recorded on the accrual basis.Net unrealized gains (losses) are included ininvestment and endowment income in the Statementof Revenues, Expenses and Changes in Net Assets.Nonmarketable alternative investments and certaincommingled funds are recorded based on valuationsprovided by the general partners of the respectivepartnerships. The University believes that the carryingvalue of these investments is a reasonable estimate offair value. Because alternative investments are notreadily marketable, the estimated value is subject touncertainty and therefore may differ materially fromthe value that would have been used had a readymarket for investments existed.Derivative instruments such as forward foreigncurrency contracts are recorded at fair value. TheUniversity enters into forward foreign currencycontracts to reduce the foreign exchange rateexposure of its international investments. Thesecontracts are marked to market, with the changes inmarket value being reported in investment andendowment income on the Statement of Revenues,Expenses, and Changes in Net Assets.Pledges Receivable -The University receivesunconditional promises to give through privatedonations (pledges) from corporations, alumni andvarious other supporters of the University. Revenue isrecognized when a pledge is received and all eligibilityrequirements, including time requirements, are met.These pledges have been recorded as pledgesreceivable on the Statement of Net Assets and asprivate or capital gift revenues on the Statement ofRevenues, Expenses, and Changes in Net Assets, at thepresent value of the estimated future cash flows. Anallowance of $10,444,000 and $6,482,000 as of June30, 2012 and 2011, respectively, has been made foruncollectible pledges based upon management'sexpectations regarding the collection of the pledgesand the University's historical collection experience.Inventories -These assets are stated at the lower ofcost or market. Cost is determined on an average costbasis except for University Health Care's inventories,for which cost is determined using the first-in, first-outmethod.Capital Assets -If purchased, these assets are carriedat cost or, if donated, at fair value at the date of gift.Depreciation expense is computed using the straight-line method over the assets' estimated useful lives -generally ten to forty years for buildings andimprovements, eight to twenty-five years forinfrastructure, three to fifteen years for equipmentand twenty years for library materials. Net interestexpense incurred during the construction of debt-financed facilities is included when capitalizingresulting assets. The University capitalizes works ofL102012 Financial. Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011art as these collections generally consist of historicalartifacts and artworks, they are consideredinexhaustible and not subject to depreciation. TheUniversity does not capitalize collections of historicaltreasures held for public exhibition, education,research, and public service. These collections are notdisposed of for financial gain and, accordingly, are notcapitalized for financial statement purposes. Proceedsfrom the sale, exchange, or other disposal of suchitems must be used to acquire additional items for thesame collection. Land is considered inexhaustible andis not subject to depreciation.Deferred Revenue -Deferred revenues are recognizedfor amounts received prior to the end of the fiscal yearbut related to the subsequent period, including certaintuition, fees, and auxiliary revenues. Deferredrevenues also include grant and contract amounts thathave been received but not yet earned.Net Assets -The University's net assets are classifiedas follows:Invested in Capital Assets, Net of Related Debtrepresents capital assets, net of accumulateddepreciation and outstanding principal debt balancesrelated to the acquisition, construction orimprovement of those assets.Restricted Nonexpendable net assets are subject toexternally imposed stipulations that the principal bemaintained in perpetuity, such as the University'spermanent endowment funds. The University's policypermits any realized and unrealized appreciation toremain with these endowments after the spendingdistribution discussed in Note 3.Restricted Expendable net assets are subject toexternally imposed stipulations on the University's useof the resources.Unrestricted net assets are not subject to externallyimposed stipulations, but may be designated forspecific purposes by the University's management orthe Board of Curators. Unrestricted net assets arederived from tuition and fees, sales and services,unrestricted gifts, investment income, and other suchsources, and are used for academics and the generaloperation of the University. When both restricted andunrestricted resources are available for expenditure,the University's policy is to first apply restrictedresources, and then the unrestricted resources.Tuition and Fees, Net of Scholarship Allowances -Student tuition and fees, housing, dining, and othersimilar auxiliary revenues are reported net of anyrelated scholarships and fellowships applied to studentaccounts. However, scholarships and fellowships paiddirectly to students are separately reported asscholarship and fellowship expenses.Patient Medical Services, Net -Patient medicalservices are primarily provided through University ofMissouri Hospitals and Clinics, Ellis Fischel CancerResearch Center, Women's and Children's Hospital,Missouri Rehabilitation Center and UniversityPhysicians. The University has agreements with third-party payors that provide for payments at amountsdifferent from established rates. Paymentarrangements include prospectively determined ratesper discharge, reimbursed costs, discount charges, andper diem payments. Net patient service revenue isreported at the estimated net realizable amounts frompatients, third-party payors, and others for servicesrendered, including estimated retroactive adjustmentsunder reimbursement agreements with third-partypayors. Retroactive adjustments are accrued on anestimated basis in the period the related services arerendered and adjusted in future periods as estimatesare refined and final settlements are determined. Netpatient service revenue is also shown net of estimateduncollectible accounts.Amounts receivable under Medicare and Medicaidreimbursement agreements are subject to examinationand certain retroactive adjustments by the relatedprograms. These adjustments decreased net patientservices revenues by $320,000 and $1,086,000 for theyears ended June 30, 2012, and 2011, respectively.The Medicaid program reimburses inpatient serviceson a prospective established per diem rate. TheMedicaid program reimburses outpatient servicesunder a combination of prospective and fee scheduleamounts.2012 Financial Report141 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011For the years ended June 30, 2012 and 2011, theUniversity Health Care's percentage of gross patientaccounts receivable classified by major payor is asfollows:Table 1.1 -Percentage of Gross Patient AccountsReceivable (by Major Payor)2012 2011Medicare 24% 24%Commercial Insurance 12% 7%Medicaid 22% 22%Self Pay & Other 18% 18%Managed Care Agreements 24% 29%100% 100%Patient services revenue includes the State of MissouriFederal Reimbursement Allowance Program (FRAProgram) for uncompensated care. Health Carerecognizes FRA Program revenue in the period earned.The Statement of Revenues, Expenses and Changes inNet Assets reflect the gross to net patient medicalservices revenue as follows:Table 1.2 -Gross to Net Patient Medical ServicesRevenue (in thousands)2012 2011Patient Medical ServicesRevenue, Gross $1,814,794 $ 1,657,707Deductions for Contractuals (922,418) (822,541)Deductions for Bad Debt (79,352) (75,432)Patient Medical ServicesRevenue, Net $ 813,024 $ 759,734Uncompensated Care -The University provides someservices to patients without regard to their ability topay for those services, For some of it patient services,the University receives no payment or payment that isless than the full cost of providing the services. Theestimated costs of providing these services are asfollows:Table 1.3 -Uncompensated CareRevenue (in thousands)New Accounting Pronouncements -Effective for fiscalyear 2012, the University adopted GASB Statement No.62, Codification of Accounting and Financial ReportingGuidance Contained in Pre-November 30, 1989 FASBand AICPA Pronouncements, which incorporates intothe GASB's authoritative literature certain accountingand financial reporting guidance issued on or beforeNovember 30, 1989, which does not conflict with orcontradict GASB pronouncements. Adoption of GASBStatement No. 62 had no effect on the University'sfinancial statements.Effective for fiscal year 2012, the University adoptedGASB Statement No. 64, Derivative Instruments:application of Hedge Accounting TerminationProvisions -an amendment to GASB No. 53, whichprovides clarification on determining if an effectivehedging relationship still exists for derivativeinstruments. Adoption of GASB Statement No. 64 hadno effect on the University's financial statements.Effective for fiscal year 2011, the University adoptedGASB Statement No. 59, Financial InstrumentsOmnibus, which updated and improved existingstandards regarding financial reporting and disclosurerequirements of certain financial instruments andexternal investment pools. Adoption of GASBStatement No. 59 had no effect on the University'sfinancial statements.Use of Estimates -The preparation of financialstatements, in conformity with U.S. generally acceptedaccounting principles, requires management to makeestimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of thefinancial statements, and the reported amounts ofrevenues and expenses during the reporting period.Actual results could differ from those estimates.Reclassifications -Certain prior year amounts havebeen reclassified to conform to current year amounts.DISCRETELY PRESENTED COMPONENT UNIT-MEDICAL ALLIANCENature of Operations -The Curators of the Universityof Missouri, for and on behalf of University HealthCare, and CRMC entered into an Affiliation Agreementdated August 5, 1997. Pursuant to the AffiliationAgreement, the University created the Medical2012 2011Cost of Charity Care 14,158 $ 10,370Unreimbursed cost under state andlocal government assistanceprograms, net of Medicaiddisproportionate share funding,less Medicaid provider taxes 446 16,265Cost of uncollectible accounts 36,866 32,469Patient Medical ServicesRevenue, Net $ 51,470 $ 59,104ZA22012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30,2012 and 2011Alliance. The Medical Alliance then became the solemember of CRMC. The Medical Alliance's purpose is todevelop a network of healthcare providers to supportthe missions of University Health Care.CRMC operates as a two-hospital system, whichconsists of the Southwest Campus and MadisonCampus complemented by community medical clinics.CRMC primarily earns revenues by providing inpatient,outpatient, and emergency care services to patients inJefferson City, Missouri. It also operates medicalclinics in the surrounding communities. The operatingresults of the facilities and clinics are included in thesefinancial statements. CRMC is served by a group ofadmitting physicians that account for a significantportion of CRMC's net revenues. Additionally, CRMC isalso associated with the Capital Region MedicalFoundation, which is intended to support the interestof CRMC through its fundraising activities.Net Assets -As a not-for-profit organization, theMedical Alliance records its net assets in accordancewith Financial Accounting Standards Board AccountingStandards Codification 958-205, Not-for-Profit EntitiesPresentation of Financial Statements. For presentationwithin the accompanying basic financial statements,the net assets are redistributed amongst the net assetcomponents defined by GASB Statement No. 34.Capital Assets -Capital Assets are recorded at costand depreciated on a straight-line basis over theestimated useful life of each asset following guidelinesof the American Hospital Association. Equipmentunder capital lease obligations is amortized on thestraight-line basis over the shorter period of the leaseterm or the estimated useful life of the equipment.interest cost incurred on borrowed funds during theperiod of construction of capital assets is capitalized asa cost of acquiring those assets.Net Patient Medical Service Revenue -Net patientmedical service revenue is reported at the netamounts to be realized from patients, third-partypayers, and others for services rendered, includingestimated retroactive adjustments for reimbursementagreements with third-party payers. Retroactiveadjustments are estimated and accrued in the periodthe related services are provided, and these amountsare adjusted in future periods as final settlements aredetermined.2. CASH AND CASH EQUIVALENTSCustodial Credit Risk -The custodial credit risk fordeposits is the risk that in the event of bank failure, theUniversity's deposits may not be recovered. State lawrequires collateralization of all deposits with federaldepository insurance, bonds and other obligations ofthe U.S. Treasury, U.S. Agencies and instrumentalitiesof the state of Missouri; bonds of any city, county,school district or special road district of the state ofMissouri; bonds of any state; or a surety bond havingan aggregate value at least equal to the amount of thedeposits. The University's cash deposits were fullyinsured or collateralized at June 30, 2012 and 2011,respectively.3. INVESTMENTSInvestment policies are established by the Board ofCurators ("the Board"). The policies ensure that fundsare managed in accordance with Section 105.688 ofthe Revised Statutes of Missouri and prudentinvestment practices. Additionally, investment policiesestablished by the Board with respect to theRetirement Trust and Other Postemployment Benefit("OPEB") Trust (collectively referred to as "PensionTrust Funds") and the Endowment Funds specificallyrecognize the fiduciary duties set forth in Section105.688 of the Revised Statutes of Missouri. The useof external investment managers has been authorizedby the Board.Substantially all University cash and investments aremanaged centrally, generally in the followinginvestment pools:General Pool -General Pool contains short-termUniversity funds, including but not limited to cash andreserves, operating funds, bond funds, and plant funds.Subject to various limitations contained within thecorresponding investment policy, the University'sinternally managed General Pool may be invested inthe following instruments: U.S. Governmentsecurities; U.S. Government Agency securities; U.S.Government guaranteed securities; money marketfunds; investment grade corporate bonds; certificatesof deposit; repurchase agreements; commercial paper;and other similar short-term investment instrumentsof like or better quality. A limited component of theGeneral Pool may be invested in the University'sEndowment Pool, formally known as Balanced Pool; at2012 Financial Report143 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011June 30, 2012 and 2011, 15.3% and 17.7%,respectively, of General Pool funds were invested inthe Endowment Pool (refer to "Endowment Funds"below). The General Pool's total return, includingunrealized gains and losses, was 2.4% and 5.7% for theyears ended June 30, 2012 and 2011, respectively.Endowment Funds -When appropriate andpermissible, endowment and similar funds are pooledfor investment purposes, with the objective ofachieving long-term returns sufficient to preserveprincipal by protecting against inflation and to meetendowment spending targets.The Endowment Pool, which is externally managed, isthe primary investment vehicle for endowment funds.Subject to various limitations contained within thecorresponding investment policy, the Endowment Poolis allowed to invest in the following asset sectors: U.Sand international equity, emerging markets debt andequity, absolute return strategies, private equity, realestate, global fixed income, high yield fixed income,bank loans, and Treasury inflation-protected securities.The Endowment Pool's total return, includingunrealized gains and losses, was -0.9% and 21.5% forthe years ended June 30, 2012 and 2011, respectively.The Fixed Income Pool, which is internally managed, isan additional investment vehicle for endowmentfunds. Fixed Income Pool asset sectors include debtsecurities issued by the U.S. government and itsagencies, corporate bonds, commercial paper, andrepurchase agreements. The Fixed Income Pool's totalreturn, including unrealized gains and losses, was 5.1%and 2.1% for the years ended June 30, 2012 and 2011,respectively.If a donor has not provided specific restrictions, statelaw permits the Board to appropriate an amount of theEndowment Funds' net appreciation, realized andunrealized, as the Board considers to be prudent. Inestablishing this amount, the Board is required toconsider the University's long- and short-term needs,present and anticipated financial requirements,expected total return on investments, price leveltrends, and general economic conditions. Further, anyexpenditure of net appreciation is required to be forthe purposes for which the endowment wasestablished. Inclusive of both realized and unrealizedgains and losses on investments, donor-restrictedendowments experienced net depreciation ofapproximately $19,271,000 in fiscal year 2012, ascompared to net appreciation of approximately$105,184,000 in fiscal year 2011.The Board has adopted the total return concept (yieldplus change in market value) in determining thespendable return for endowments and similar funds.The spending formula was revised in fiscal year 2012 todistribute 4.5% of a trailing 28-quarter average of theendowment's total market value, with theunderstanding that this spending rate over the longterm will not exceed the total real return (net ofinflation). However, the change from 5% to 4.5% isbeing phased in over several years to ensure adecrease in distributions year over year is not duesolely to the lower rate. In addition, the Universitydistributes 1% of the trailing 28-quarter average of theendowment's total market value to support internalendowment and development administration.PENSION TRUST FUNDSThe Retirement Trust and the OPEB Trust hold theassets of the Retirement Plan and OPEB Plan,respectively. Subject to various limitations containedwithin the corresponding investment policy, theexternally-managed Retirement Trust is allowed toinvest in the following asset sectors: U.S andinternational equity, emerging markets debt andequity, absolute return strategies, private equity, realestate, global fixed income, high yield fixed income,bank loans, and Treasury inflation-protected securities.The Retirement Trust's total return, includingunrealized gains and losses, was 1.1% and 18.9% forthe years ended June 30, 2012 and 2011, respectively.The OPEB Trust held $50,212,000 and $45,748,000 ofassets at June 30, 2012 and 2011, respectively. TheOPEB Trust is invested in a money market mutual fundrated AAA and a global bond fund. The OPEB Trust hasno other investments.Z4Z42012 FinanciaL Report UNIVERSITY, OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended 3une 30, 2012 and 2011At June 30, 2012 and 2011, the University and Pension Trust Funds held the following types of investments:Table 3.1 -Investments by Type (in thousands)University of Missouri2012 2011University of MissouriPension Trust Funds2012 2011As of June 30,Debt Securities:U.S. Treasury ObligationsU.S. Agency ObligationsAsset-Backed SecuritiesGovernment -ForeignCorporate -DomesticCorporate -ForeignEquity Securities:DomesticForeignCommingled Funds:Absolute ReturnDebt Securities -GlobalDebt Securities -DomesticDebt Securities -ForeignEquity Securities -DomesticEquity Securities -ForeignEquity Securities -GlobalReal EstateNonma rketa ble Alternative Investments:Real EstatePrivate EquityOtherTotal InvestmentsMoney Market FundsCommercial Paper$ 144,576483,020542,545126,409153,815115,155$ 273,832779,507263,09360,503255,27969,365$ 311,9854,775110,024154,885202,649149,243$ 382,1633,82997,335124,731201,846175,076189,488 212,457107,913 192,201278,584 261,413226,928 346,38760,359100,54167,71144,395110,359201,96814,03343,43052,41330,7582,588,88862,81942,19063,891146,424169,42618,38729,78647,74732,5292,719,436133,70218,038183,545150,8925,224196,169358,37239,72791,243121,75011,8952,749,630139,06817,614146,099142,197190,315297,54652,59667,445107,45415,0222,768,136124,648 33,715 94,534 50,199213,300 162,100 --Other 24,832 25,472 11,499 66,017Total Cash and Cash Equivalents 362,780 221,287 106,033 116,216Total Investments and Cash andCash Equivalents $ 2,951,668 $ 2,940,723 $ 2,855,663 $ 2,884,352Custodial Credit Risk -For investments, custodialcredit risk is the risk that in the event of failure of thecounterparty to a transaction, the University will notbe able to recover the value of the investments held byan outside party. In accordance with its policy, theUniversity minimizes custodial credit risk byestablishing limitations on the types of instrumentsheld with qualifying institutions. Repurchaseagreements must be collateralized by U.S. Governmentissues and/or U.S. Government Agency issues. AllUniversity and Pension Trust Fund investments areinsured or registered and are held by the University,the Pension Trust Funds or an agent in its name.Concentration of Credit Risk -Concentration of creditrisk is the risk associated with a lack of diversification,such as having substantial investments in a fewindividual issuers, thereby exposing the organization togreater risks resulting from adverse economic,political, regulatory, geographic or creditdevelopments. The investment policies for theGeneral Pool, Endowment Funds, and Retirement Trustall specify diversification requirements across assetsectors. The investment policy for the General Poolhas specific single issuer limits in place for corporatebonds and commercial paper.2012 FinanciaL Report45 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011As of June 30, 2012, of the University's totalinvestments and cash and cash equivalents, 14.5% areissues of the Federal Home Loan Bank (FHLB); 10.2%are issues of Federal National Mortgage Association(FNMA); and 5.5% are issues of Government NationalMortgage Association. As of June 30, 2011, of theUniversity's total investments and cash and cashequivalents, 16.0% are issues of FHLB and 9.4% areissues of FNMA.At June 30, 2012 and 2011, the Pension Trust Fundsdid not contain investments from any single issuer thatexceeded 5% of the total portfolio.Investments issued or guaranteed by the U.S.government as well as investments in mutual fundsand other pooled investments are excluded fromconsideration when evaluating concentration risk.Credit Risk -Debt securities are subject to credit risk,which is the chance that an issuer will fail to payinterest or principal in a timely manner, or thatnegative perceptions of the issuer's ability to makethese payments will cause security prices to decline.These circumstances may arise due to a variety offactors such as financial weakness, bankruptcy,litigation and/or adverse political developments.Certain debt securities, primarily obligations of the U.S.government or those explicitly guaranteed by the U.S.government, are not considered to have credit risk.Nationally recognized statistical rating organizations,such as Moody's and Standard & Poor's (S&P), assigncredit ratings to security issues and issuers thatindicate a measure of potential credit risk to investors.Debt securities considered investment grade are thoserated at least Baa by Moody's and BBB by S&P. ForGeneral Pool investments, the following minimumcredit ratings have been established to manage creditrisk: minimum long-term rating of A or better by S&P,with minimum rating of A-i/P-1 for commercial paperand other short-term securities. For EndowmentFunds and Retirement Trust investments, therespective investment policies allow for a blend ofdifferent credit ratings, subject to certain restrictionsby asset sector. In all cases, disposition of securitieswhose ratings have been downgraded after purchase isgenerally left to the discretion of the respectiveinvestment manager after consideration of individualfacts and circumstances.All holdings of commercial paper were rated A-i/P-i orbetter at June 30, 2012 and 2011. All holdings ofmoney market funds were rated AAA at June 30, 2012and 2011.Z462012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended 3une 30, 2012 and 2011Based on investment ratings provided by Moody's or S&P, the University's and Pension Trust Funds' credit riskexposure as of June 30, 2012 and 2011, is as follows:Table 3.2 -Debt Securities by Type and Credit Rating (in thousands)As of June 30,U.S. Treasury ObligationsU.S. Agency ObligationsAsset-Backed SecuritiesMortgage Backed SecuritiesGuaranteed by U.S. AgenciesAa a /AAAAa/AAA/ABaa/BBBBa/BB and lowerUnratedGovernment -ForeignAaa/AAAAa/AAA/ABaa/BBBBa/BB and lowerUnratedCorporate -DomesticAa a /AAAAa/AAA/ABaa/BBBBa/BB and lowerUnratedCorporate -ForeignAa a /AAAAa/AAA/ABaa/BBBBa/BB and lowerUnratedUniversity of Missouri2012 2011$ 144,576 $ 273,832483,020 779,507University of MissouriPension Trust Funds2012 2011$ 311,985 $ 382,1634,775 3,829506,2413,2562,2997276,27021,6902,06237,98815,45414,33411,36112947,14322,95412,65031,81334,80647,1594,43335,9529,94626,76720,0434,15118,296$1,565,520253,7213,8595351,6425709791,78717,6418,9959,5363,13521,1967,62859,483151,6931,11132,0663,29890,5361,25611,8191,5131632,2552,48250,34826,61318,3915,41654,1174,0886,41115,11117,432148,38711,22061,44316,14931,38111,31610,22918,725933,56169,67017,1964,7662,279532,75561638,00817,94117,7878854,09246,0186,24110,68428,6646,207144,7155,33532,3768,53517,4652,6812,7615,547S 1.701.57961,63828,11540,3029,01113,61822,392984,980Total$7$1701579 -Interest Rate Risk -Interest rate risk is the risk thatchanges in interest rates over time will adversely affectthe fair value of an investment. Debt securities withlonger maturities are likely to be subject to morevariability in their fair values as a result of futurechanges in interest rates. Neither the University northe Pension Trust Funds have a formal policy thataddresses interest rate risk; rather, such risk ismanaged by each individual investment manager, asapplicable.The University and Pension Trust Funds haveinvestments in asset-backed securities, which consistprimarily of mortgage-backed securities guaranteed byU.S. agencies and corporate collateralized mortgageobligations. These securities are based on cash flowsfrom principal and interest payments on theunderlying securities. An asset-backed security mayhave repayments that vary significantly with changes inmarket interest rates.2012 Financial Report147 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Table 3.3 presents the contractual final maturities of the University's and Pension Trust Funds' debt securities,which are not intended to reflect actual projected cash flows, as of June 30, 2012 and 2011, respectively:Table 3.3 -Debt Securities by Type and Maturity (in thousands)University of MissouriUniversity of Missouri Pension Trust FundsAs of June 30, 2012 2011 2012 2011U.S. Treasury ObligationsLess than I Year 2,670 $ 10,247 2,362 $ 18,9881-5 Years 39,536 117,493 114,186 125,6456-10 Years 68,946 107,028 91,892 110,596More than 10 Years 33,424 39,064 103,545 126,934Total U.S Treasury Obligations 144,576 273,832 311,985 382,163U.S. Agency ObligationsLess than I Year 144,937 144,797 1,850 501-5 Years 107,653 301,861 113 2,8146-10 Years 227,130 255,763 1,315 965Morethan 10 Years 3,300 77,086 1,497 -Total U.S. Agency Obligations 483,020 779,507 4,775 3,829Asset-Backed SecuritiesLess than 1 Year 6 24 -731-5 Years 30 266 263 5026-10 Years 42,734 16,818 14,205 14,697More than 10 Years 499,775 245,985 95,556 82,063Total Asset-Backed Securities 542,545 263,093 110,024 97,335Government -ForeignLess than 1 Year 2,202 1,733 1,050 3,9101-5 Years 45,160 21,961 40,756 44,8776-10 Years 56,292 27,119 73,563 55,098More than 10 Years 22,755 9,690 39,516 20,846Total Government -Foreign 126,409 60,503 154,885 124,731Corporate -DomesticLess than 1 Year 2,804 33,377 4,291 3,7981-5 Years 37,956 154,297 51,476 54,4006-10 Years 64,738 58,197 131,170 121,242More than 10 Years 48,317 9,408 15,712 22,406Tota Corporate- Domestic 153,815 255,279 202,649 201,846Corporate -ForeignLess than 1 Year 5,528 10,156 10,998 22,4661-5 Years 64,192 39,248 97,419 103,9276-10 Years 35,456 12,406 25,530 36,824Morethan 10 Years 9,979 7,555 15,296 11,859Total Corporate- Foreign 115,155 69,365 149,243 175,076Total Debt Securities $1,565,520 $1,701,579 $ 933,561 $ 984,980Foreign Exchange Risk -Foreign exchange risk is therisk that investments denominated in foreigncurrencies may lose value due to adverse fluctuationsin the value of the U.S. dollar relative to foreigncurrencies.University and Retirement Trust investment policiesallow for exposure to non-U.S. dollar denominatedequities and fixed income securities, which may befully or partially hedged using forward foreign currencyexchange contracts.1482012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011At June 30, 2012 and 2011, 21.5% and 17.3%,respectively, of the University's total investments andcash and cash equivalents were denominated inforeign currencies. Forward foreign currency contractswith notional amounts totaling $330,216,000 and$143,522,000 were in place at June 30, 2012 and 2011,respectively. At June 30, 2012 and 2011, 40.5% and34.7%, respectively, of the Pension Trust Funds' totalinvestments and cash equivalents were denominatedin foreign currencies. Forward foreign currencycontracts with notional amounts totaling $363,003,000and $268,761,000 were in place at June 30, 2012 and2011, respectively.The University's and Pension Trust Funds' exposure to foreign exchange risk as of June 30, 2012 and 2011:Table 3.4 -Foreign Exchange Risk (in thousands)University of Missouri2012 2011University of MissouriPension Trust Funds2012 2011As of June 30,Debt SecuritiesEuroAustralian DollarCanadian DollarBritish Pound SterlingJapanese YenDanish KroneNew Zealand DollarSouth Korean WonSingapore DollarMexican New PesoSwedish KronaOther$ 70,07111,08211,63024,96810,8351,0283,9551,2261,93414,4602,8116,409$46,2848,0973,8348,5146,2441,9092,1953,1362,2092,9342,9405,657$ 118,20719,8787,52232,62519,3531,7839,1132,1183,7237,7395,4139,806$118,21615,89710,85417,7779,8933,3703,8975,7593,5425,1785,65311,857160,409 93,953 237,280 211,893Equity SecuritiesEuro 11,827 60,033 32,732 105,903Japanese Yen 15,547 34,461 36,148 60,967British Pound Sterling 17,741 37,169 40,774 68,568Australian Dollar 4,264 8,119 10,931 16,739Canadian Dollar 1,019 8,966 2,040 13,340Swiss Franc 12,384 15,001 24,206 28,455Hong Kong Dollar 6,375 6,868 12,417 13,540Swedish Krona 3,954 1,646 7,888 4,296Other 11,636 4,653 21,728 13,69184,747 176,916 188,864 325,499Commingled FundsVarious currency denominations:Debt Securities -Global --18,039 17,614Debt Securities -Foreign 67,711 63,891 150,892 142,197Equity Securities -Global 201,968 358,372Equity Securities -Foreign 110,359 169,426 196,169 297,546380,038 233,317 723,472 457,357Cash and Cash EquivalentsEuro 733 2,529 732 4,197Hong Kong Dollar 251 30 422 102Mexican New Peso 7,689 -16,893 1Japanese Yen 100 605 253 474British Pound Sterling 90 364 20 163Other 412 389 717 7229,275 3,917 19,037 5,659Total Exposure to Foreign Exchange Risk $ 634,469 $ 508,103 $ 1,168,653 $ 1,000,4082012 FinanciaL ReportZ49 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Commingled Funds -Includes Securities and ExchangeCommission regulated mutual funds and externallymanaged funds, limited partnerships, and corporatestructures which are generally unrated andunregulated. Certain commingled funds may usederivatives, short positions and leverage as part oftheir investment strategy. These investments arestructured to limit risk exposure to the amount ofinvested capital. Commingled funds have liquidity(redemption) provisions, which enable the Universityand Pension Trust Funds to make full or partialwithdrawals with notice, subject to restrictions on thetiming and amount.Of the University's and Pension Trust Funds'commingled funds at June 30, 2012, approximately90% and 86%, respectively, are redeemable within 90days, with the remaining redeemable within one year.Nonmarketable Alternative Investments -Consists oflimited partnerships involving an advance commitmentof capital called by the general partner as needed anddistributions of capital and return on invested capitalas underlying strategies are concluded during the lifeof the partnership. The committed but unpaidobligation to these limited partnerships is furtherdiscussed in Note 11.Securities Lending Transactions -The University andPension Trust Funds each participate in an externalinvestment pool securities lending program toaugment income. The program is administered by thecustodial agent bank, which lends equity, governmentand corporate securities for a predetermined period oftime to an independent broker/dealer (borrower) inexchange for collateral. Collateral may be cash, U.S.Government securities, defined letters of credit orother collateral approved by the University or PensionTrust Funds. Loaned domestic securities are initiallycollateralized at 102% of their fair value, while loanedinternational securities are collateralized at 105% offair value. Exposure to credit risk from borrowerdefault has been minimized by having the custodialagent bank determine daily that required collateralmeets a minimum of 100% of the fair value of loaneddomestic securities and 105% for loaned internationalsecurities.For the University, at June 30, 2012 and 2011, therewere a total of $62,168,000 and $101,582,000,respectively, of securities out on loan to borrowers.The value of collateral received from the borrower forthese securities consisted of $32,032,000 cash and$30,785,000 noncash collateral at June 30, 2012 and$101,047,000 cash and $3,687,000 noncash collateralat June 30, 2011.For the Pension Trust Funds, at June 30, 2012 and2011, there were a total of $195,236,000 and$272,633,000, respectively, of securities out on loan toborrowers. The value of collateral received from theborrower for these securities consisted of $50,023,000cash and $151,320,000 noncash collateral at June 30,2012 and $257,463,000 cash and $15,525,000 noncashcollateral at June 30, 2011.Cash collateral received from the borrower is investedby the custodial agent bank in commingled collateralinvestment pools in the name of the University andPension Trust Funds, with guidelines approved byeach. These investments are shown as Investment ofCash Collateral in the Statement of Net Assets andreported at fair value, with changes in market valuerecorded in Investment and Endowment Income onthe Statement of Revenues, Expenses, and Changes inNet Assets. Noncash collateral received for securitieslending activities is not recorded as an asset becausethe University and Pension Trust Funds do not havethe ability to pledge or sell such collateral unless theborrower defaults.The University and Pension Trust Funds continue toreceive interest and dividends during the loan period.The maturities of the investments made with the cashcollateral generally match the maturities of thesecurities lent. At June 30, 2012 and 2011, neither theUniversity nor the Pension Trust Funds have any creditrisk exposure arising from the actual securities lendingtransactions since the collateral received from theborrower exceeds the value of the securities lent.Further, the University and Pension Trust Funds arefully indemnified by the custodial bank against anylosses incurred as a result of borrower default.502012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011DISCRETELY PRESENTED COMPONENT UNIT-MEDICAL ALLIANCEInvestments -The investment policies of MedicalAlliance are established by its board of directors. Thepolicies are established to ensure that Medical Alliancefunds are managed in accordance with the "PrudentMan Rule."Medical Alliance investments are presented at fairvalue in accordance with FASB Accounting StandardsCodification 820, which establishes a fair valuehierarchy that prioritizes the inputs to valuationtechniques used to measure fair value. The hierarchygives the highest priority to unadjusted quoted pricesin active markets for identical assets or liabilities andthe lowest priority to measurements involvingsignificant unobservable inputs. The three levels of thefair value hierarchy are as follows: Level 1 -Quotedprices in active markets for identical assets that theMedical Alliance has the ability to access at themeasurement date; Level 2 -Inputs other than quotedmarket prices included in Level 1, that are observablefor the asset, either directly or indirectly; and, Level 3 -Inputs that are unobservable for the asset. The level inthe fair value hierarchy within which a fair valuemeasurement in its entirety falls is based on the lowestlevel input that is significant to the fair valuemeasurement in its entirety.At June 30, 2012 and 2011, Medical Alliance held thefollowing investments:Table 3.5 -Medical Alliance Cash, CashEquivalents, and InvestmentsAs of June 30, (in thousands) 2012 2011Fair Value-Level 1Money Market Accounts $ 21,830 $ 19,671Federal Farm Callable Note -4,996U.S. Treasury Obligations 73 74Cash and Other Cash Equivalents 8,379 7,020Total Fair Value -Level 1 30,282 31,761Fair Value- Level 2Mortgage-Backed Securities 14,001 18,006Certificates of Deposit 28,368 13,614Corporate Bonds 5,490 5,025Total Fair Value- Level 2 47,859 36,645Total Cash, Cash Equivalents,and Investments $ 78,141 $ 68,4064. ACCOUNTS RECEIVABLEAccounts receivable at June 30, 2012 and 2011, aresummarized as follows:Table 4.1 -Accounts Receivable (in thousands)2012 2011Grants and Contracts $ 60,858 $ 57,256Federal Appropriations 5,441 5,277State Appropriations and StateBond Funds 35 573Student Fees and Other AcademicCharges 98,611 91,035Patient Services, Net of ContractualAllowances 106,689 100,939Medical Resident FICA Refundand Related Income 31,355 30,787Subtotal 302,989 285,867Less Provisions for Loss:Grants & Contracts 516 730University Health Care PatientServices 21,438 23,809Student Fees and OtherAcademic Charges 6,935 5,739Subtotal 28,889 30,278Total Accounts Receivable, Net $274,100 $255,5895. NOTES RECEIVABLENotes receivable generallyconsist of resourcesavailable for financial loans to students. Theseresources are provided through Federal loan programsand University loan programs generally funded byexternal sources. Notes receivable at June 30, 2012and 2011, are summarized as follows:Table 5.1 -Notes Receivable (in thousands)2012 2011Federal Health Profession Loans $ 15,994 $ 16,097Carl D. Perkins National Loans 28,662 28,992University Loan Programs 18,680 18,501Other 3,328 2,614Subtotal 66,663 66,204Less Provisions for Loss 3,814 3,657Total Notes Receivable, Net $ 62,849 $ 62,5472012 Financial Report51 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 20116. CAPITAL ASSETSUNIVERSITY OF MISSOURICapital assets activity for the years ended June 30, 2012 and 2011, is summarized as follows:Table 6.1 -Capital Assets (in thousands)2012 2012Beginning EndingBalance Additions Retirements BalanceCapital Assets, Nondepreciable:Land $ 75,088 $ 5,462 $ (135) $ 80,415Artwork and Historical Artifacts 12,740 144 -12,884Construction in Progress 130,216 150,313 -280,529Total Capital Assets, Nondepreciable 218,044 155,919 (135) 373,828Capital Assets, Depreciable:Buildings and Improvements 2,919,468 138,205 (1,781) 3,055,892Infrastructure 317,551 10,037 -327,588Equipment 680,322 61,818 (16,959) 725,181Library Materials 247,939 4,197 -252,136Total Capital Assets, Depreciable 4,165,280 214,257 (18,740) 4,360,797Less Accumulated Depreciation:Buildings and Improvements 1,015,562 84,320 (1,229) 1,098,653Infrastructure 125,944 14,214 -140,158Equipment 441,014 56,036 (15,182) 481,868Library Materials 158,608 6,345 -164,953Total Accumulated Depreciation 1,741,128 160,915 (16,411) 1,885,632Total Capital Assets, Depreciable, Net 2,424,152 53,342 (2,329) 2,475,165Total Capital Assets, Net $ 2,642,196 $ 209,261 $ (2,464) $2,848,9932011 2011Beginning Additions/ EndingBalance Transfers Retirements BalanceCapital Assets, Nondepreciable:Land $ 72,857 $ 2,231 $ -$ 75,088Artwork and Historical Artifacts 12,624 116 -12,740Construction in Progress 156,601 (26,385) -130,216Total Capital Assets, Nondepreciable 242,082 (24,038) -218,044Capital Assets, Depreciable:Buildings and Improvements 2,754,619 167,452 (2,603) 2,919,468Infrastructure 267,063 50,851 (363) 317,551Equipment 634,360 64,944 (18,982) 680,322Library Materials 240,590 7,349 -247,939Total Capital Assets, Depreciable 3,896,632 290,596 (21,948) 4,165,280Less Accumulated Depreciation:Buildings and Improvements 937,541 79,662 (1,641) 1,015,562Infrastructure 113,990 12,129 (175) 125,944Equipment 402,165 55,357 (16,508) 441,014Library Materials 150,653 7,955 -158,608Total Accumulated Depreciation 1,604,349 155,103 (18,324) 1,741,128Total Capital Assets, Depreciable, Net 2,292,283 135,493 (3,624) 2,424,152Total Capital Assets, Net $2,534,365 $ 111,455 $ (3,624) $2,642,196522012 FinanciaL Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011The estimated cost to complete construction inprogress at June 30, 2012, is $518,671,000 of which$294,295,000 is available from unrestricted net assets.The remaining costs are expected to be funded from$34,506,000 of gifts, $777,000 of grants, and$189,093,000 of debt proceeds.Capital assets include a building facility under a capitallease of $8,332,000 and related accumulateddepreciation of $5,312,000 and $4,895,000 at June 30,2012 and 2011, respectively, and equipment under acapital lease of $964,000 and related accumulateddepreciation of $543,000 and $362,000 at June 30,2012 and 2011, respectively.DISCRETELY PRESENTED COMPONENT UNIT-MEDICAL ALLIANCECapital assets at June 30, 2012 and 2011 aresummarized as follows:Table 6.2 -Medical Alliance -Capital Assets(in thousands) 2012 2011Land & Improvements $ 6,779 $ 6,670Buildings 114,905 113,990Movable Equipment 75,697 73,931Construction in Progress 103 734197,484 195,325Less Accumulated Depreciation 133,618 126,304Total Capital Assets, Net $ 63,866 $ 69,0217. ACCRUED LIABILITIESAccrued liabilities at June 30, 2012 and 2011, aresummarized as follows:Table 7.1 -Accrued Liabilities (in thousands)2012 2011Accrued Salaries, Wages & Benefits $ 58,183 $ 52,831Accrued Vacation 45,862 42,877Accrued Self Insurance Claims 36,322 37,592Accrued Interest Payable 10,604 10,047Total Accrued Liabilities $150,971 $143,3478. OTHER NONCURRENT LIABILITIESTable 8.1 -Other Noncurrent Liabilities (in thousands)Beginning of Total End of Less Current NoncurrentFiscal Year 2012 Year Additions Payments Year Portion End of YearAccrued Vacation $ 56,687 $ 43,766 $ (39,849) $ 60,604 $ (45,862) $ 14,742Accrued Self-Insurance Claims 72,949 213,357 (216,837) 69,469 (36,322) 33,147$ 129,636 $ 257,123 $ (256,686) $ 130,073 S (82,184) $ 47,889Beginning of Total End of Less Current NoncurrentFiscal Year 2011 Year Additions Payments Year Portion End of YearAccrued Vacation $ 55,741 $ 40,111 $ (39,165) $ 56,687 $ (42,877) $ 13,810Accrued Self-Insurance Claims 77,501 194,051 (198,603) 72,949 (37,592) 35,357$ 133,242 $ 234,162 $ (237,768) $ 129,636 $ (80,469) $ 49,1672012 FinanciaL Report53 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 20119. LONG-TERM DEBTThe University's outstanding debt at June 30, 2012 and 2011, with corresponding activity, is as follows:Table 9.1 -Long-Term Debt (in thousands)Beginning Ending CurrentAs of June 30, 2012 Balance Additions Reductions Balance PortionSystem Facilities Revenue Bonds -Fixed $1,144,245 $ 159,280 $ (197,580) $1,105,945 $ 20,875System Facilities Revenue Bonds -Variable 223,680 -(122,930) 100,750 420Unamortized Premium 23,462 31,264 (7,266) 47,460 -Unamortized Loss on Defeasance (9,162) -(11,637) (20,799) -Net System Facilities Revenue Bonds 1,382,225 190,544 (339,413) 1,233,356 21,295Notes Payable 1,296 3,993 (328) 4,961 300Capital Lease Obligations 7,405 -(789) 6,616 696Commercial Paper -160,935 -160,935 160,935Total Long-Term Debt $1,390,926 $ 355,472 $ (340,530) $1,405,868 $ 183,226Beginning Ending CurrentAs of June 30, 2011 Balance Additions Reductions Balance PortionSystem Facilities Revenue Bonds -Fixed $ 919,725 $ 252,285 $ (27,765) $1,144,245 $ 25,195System Facilities Revenue Bonds -Variable 224,925 -(1,245) 223,680 2,795Unamortized Premium 25,000 (1,538) 23,462 -Unamortized Loss on Defeasance (9,755) -593 (9,162) -Net System Facilities Revenue Bonds 1,159,895 252,285 (29,955) 1,382,225 27,990Notes Payable 1,686 -(390) 1,296 328Capital Lease Obligations 8,144 -(739) 7,405 789Total Long-Term Debt $1,169,725 $ 252,285 $ (31,084) $1,390,926 $ 29,107System Facilities Revenue BondsSystem Facilities Revenue Bonds have providedfinancing for capital expansion or renovation of variousUniversity facilities. The principal and interest of thebonds are payable from, and secured by a first lien onand pledge of, designated revenues which include thefollowing: a portion of tuition and fees, sales andservices from the financed facilities, such as bookstorecollections, housing and dining charges, patientservices, and parking collections, as well as certainassessed fees, such as the recreational facility fees,stadium surcharges, and student center fees.On May 2, 2012, the University issued $105,155,000 inSeries 2012A System Facilities Revenue Bonds.Proceeds from issuance of the Series 2012A Bonds arebeing used to refund all of Series 2003A bonds,$75,065,000 principal amount of the Series 2006Abonds, $33,085,000 principal amount of the Series2007A bonds, and paying cost of issuance of the Series2012A bonds. The all-in-true interest cost of the Series2012A bonds is 1.7%.On August 3, 2011, the University issued $54,125,000in Series 2011 System Facilities Revenue Bonds.Proceeds from issuance of the Series 2011 bonds arebeing used to refund all of Series 1998A bonds, all ofSeries 2001B bonds, $9,035,000 principal amount ofthe Series 2003B Bonds, and paying the cost ofissuance of the Series 2011 bonds. The all-in-trueinterest cost of the Series 2011 bonds is 3.2%.On December 21, 2010, the University issued$252,285,000 in taxable Series 2010A System FacilitiesRevenue Bonds designated as "Build America Bonds"under the Internal Revenue Code of 1986, as amended.With respect to the Series 2010A bonds, the Universitywill receive a cash subsidy payment from the UnitedStates Treasury in an amount equal to 35% of theinterest payable on each interest payment date. Theall-in-true interest cost of the Series 2010A bonds,after taking into account the 35% interest paymentfrom the federal government is 3.8%.5142012 Financial. Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Proceeds from issuance of the Series 2010A bonds arebeing used to finance construction or renovation ofhousing facilities on the Columbia, Kansas City, andMissouri Science and Technology (Missouri S&T)campuses, energy management improvements on theColumbia and Missouri S&T campuses, construction ofa new parking structure on the Kansas City campus,new patient care tower and Ellis Fischel Cancer Centerrelocation at University Health Care, and renovation,furnishing and equipping various other facilities, and tofinance capitalized interest and certain costs ofissuance.Interest expense associated with financing projectsduring construction, net of any investment incomeearned on bond proceeds during construction, iscapitalized. Total interest expense during the yearsended June 30, 2012 and 2011 was $64,534,000 and$59,723,000, respectively. Interest expense associatedwith financing projects during construction, net of anyinvestment income earned on bond proceeds duringconstruction, is capitalized. For the years ended June30, 2012 and 2011, capitalization of interest earned onunspent bond proceeds totaled $10,611,000 and$10,216,000, respectively, resulting in net interestexpense of $53,923,000 and $49,507,000, respectively.For the years ended June 30, 2012 and June 30, 2011,the University earned cash subsidy payments from theUnited States Treasury totaling $10,461,000 and$7,193,000, respectively for designated Build AmericaBonds outstanding, which was recorded as FederalAppropriations on the Statement of Revenues,Expenses, and Changes in Net Assets.Table 9.2 -System Facilities Revenue Bonds (in thousands)Weighted Balance June 30,Series Type Average Coupon Final Maturity Original Issue 2012 20111998 Fixed 11/1/2017 $ 65,010 $ $ 9,9852001B Fixed 11/1/2027 44,975 40,6352003A Fixed 11/1/2014 118,080 9,5202003B Fixed 4.648% 11/1/2023 37,085 16,400 27,0302006A Fixed 4.938% 11/1/2026 260,975 144,150 227,3852007A Fixed 4.882% 11/1/2037 262,970 212,135 250,4502009A (1) Fixed 5.960% 11/1/2039 256,300 256,300 256,3002009B Fixed 4.160% 11/1/2021 75,760 65,395 70,6552010A (1) Fixed 5.792% 11/1/2041 252,285 252,285 252,2852011 Fixed 4.495% 11/1/2027 54,125 54,125 -2012A Fixed 4.900% 11/1/2019 105,155 105,155 -Total Fixed Rate Bonds 1,532,720 1,105,945 1,144,2452000B Variable 11/1/2030 50,000 -50,0002001A Variable 11/1/2031 39,225 32,8252006B Variable 11/1/2035 39,705 -39,7052007B Variable 0.15% (2) 11/1/2031 102,250 100,750 101,150Total Variable Rate Demand Bonds 231,180 100,750 223,680Total System Facilities Revenue Bonds $ 1,763,900 $ 1,206,695 $ 1,367,925(1) Taxable issue designated as Build America Bonds under the Internal Revenue Code of1986, as amended.(2) As of June 30, 2012; rates are determined daily or weekly by the remarketing agents. The rate is usually within a range at or near theSecurities Industry and Financial Markets Association Municipal Swap Index (SIFMA Index) rate, which resets weekly.System Facilities Revenue Bonds, Series 2000B, Series2001A, Series 2006B, and Series 2007B are variablerate demand bonds with remarketing features whichallow bondholders to put debt back to the University.Because the University is the sole source of liquidityshould the option to tender be exercised by thebondholder, these variable rate demand bonds areclassified in their entirety as current liabilities on theStatement of Net Assets, with the balance in excess ofactual current principal maturities reported as Long-Term Debt Subject to Remarketing.In-substance defeased bonds aggregating$221,465,000 and $96,965,000 are outstanding at June30, 2012 and 2011, respectively.2012 Financial. Report55 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Interest Rate Swap AgreementsWith an objective of lowering the University'sborrowing costs, when compared against fixed-ratedebt, the University entered into interest rate swapagreements in connection with certain variable-rateSystem Facilities Revenue Bonds and commercialpaper. Under each of the swap agreements, theUniversity pays the swap counterparty a fixed interestrate payment and receives a variable rate interest ratepayment that effectively changes a component of theUniversity's variable interest rate debt to fixed ratedebt. The University assumed a 2006 interest rateswap with a negative fair market value of $9,799,000on March 21, 2012 to which the counterparty wasBank of America, N.A. The 2006 swap was acquired inconjunction with the purchase of a housing andparking facility at the Kansas City campus. The initialloss related to the 2006 swap is included in Other Non-Operating Revenues (Expenses). Table 9.3 presentsthe terms of the outstanding swaps and their fairvalues at June 30, 2012.Table 9.3 -Interest Rate Swaps (in thousands)Notional Effective Maturity CounterpartyType Amount Date Date Terms Fair Value Credit RatingPay fixed; $ 40,000 7/18/2002 11/1/2032 Pay 3.950%; receive $ (14,608) Aa3 /A+receive variable SI FMA IndexPay fixed; 51,570 12/14/2006 8/3/2026 Pay 3.902%; receive (12,833) Baa2 / A-receive variable SIFMA IndexPay fixed; 101,150 7/26/2007 11/1/2031 Pay 3.798%; receive 68% (30,415) Aa3 /A+receive variable of 1-Month LIBORTotal $192,720 $ (57,856)The 2002 and 2006 swaps do not specifically hedge any the synthetic instrument method. The notionalcurrently outstanding debt; rather, they serve to amount of the 2007 swap is equal to the outstandingreduce the overall exposure to interest rate risk on the balance of the Series 2007B bonds.University's variable rate debt not otherwisespecifically hedged. The notional amount of the 2002 The University recognizes the fair value andswap is fixed over the life of the agreement. The corresponding changes in fair value of the outstandingnotional amount of the 2006 swap decreases annually swaps in the University's financial statements.over the life of the swap. The 2007 swap specifically Changes in fair value of the outstanding swaps, withhedges System Facilities Revenue Bond Series 2007B, respective financial statement presentation, arethe effectiveness of which has been determined using presented in Table 9.4:Table 9.4 -Interest Rate Swaps -Change in Fair Value (in thousands)Fair Value at June 30, Fair Value on Change inType 2012 2011 Acquisition Fair Value Presentation of Change in Fair Value2002 Swap -Investment Derivative $ (14,608) $ (7,679) N/A $ (6,929) Investment and Endowment Income, Net2006 Swap -Investment Derivative (12,833) -(9,799) (3,034) Investment and Endowment Income, Net2007 Swap -Cash Flow Hedge (30,415) (19,023) N/A (11,392) Deferred Outflow of ResourcesTotal $ (57,856) $ (26,702) $ (9,799) $ (21,355)Fair Value. There is a risk that the fair value of a swapcould be adversely affected by changing marketconditions. The fair values, developed using the zerocoupon method with proprietary models, wereprepared by the counterparties, JPMorgan Chase Bank,N.A., and Bank of America, N.A., major U.S. financialinstitutions. The zero coupon method calculates thefuture net settlement payments required by the swap,assuming that the current forward rates implied by theyield curve correctly anticipate future spot interestrates. These payments are then discounted using thespot rates implied by the current yield curve forhypothetical zero-coupon bonds due on the date ofeach net settlement of the swap. The fair value of theinterest rate swaps is the estimated amount theUniversity would have either (paid) or received if theswap agreements were terminated on June 30, 2012.562012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Credit Risk. Although the University has entered intothe interest rate swaps with creditworthy financialinstitutions, there is credit risk for losses in the eventof non-performance by the counterparties. Subject toapplicable netting arrangements, swap contracts withpositive fair values are exposed to credit risk. TheUniversity faces a maximum possible loss equivalent tothe amount of the derivative's fair value. Subject toapplicable netting arrangements, swaps with negativefair values are not exposed to credit risk. Collateralrequirements apply to both parties for the 2002 and2007 swaps and for the 2006 swap collateralrequirements only apply to the counterparty. Thecollateral requirements are determined by acombination of credit ratings and the aggregate fairvalue of swaps outstanding with each counterparty aspresented in Table 9.5:Table 9.5 -Swap CollateralFair ValueRequirementsCredit Rating(S&P / Moody's)AAA/Aa aAA+/Aa 1AA/Aa 2AA-/Aa 3A+/A1A/A2A-/A3BBB+/Ba a 1Threshold(in thousands)$ 50,00030,00030,00020,00020,00010,00010,0005,000Basis Risk. The variable-rate payments received by theUniversity on the 2007 swap are determined by 68% ofone month LIBOR, whereas the interest rates paid bythe University on its variable-rate bonds correspond tothe SIFMA Index. The University is exposed to basisrisk only to the extent that the historical relationshipbetween these variable market rates changes goingforward, resulting in a variable-rate payment receivedon the 2007 swap that is significantly less than thevariable-rate interest payment on the bonds.Termination Risk. The University is exposed totermination risk for the 2002 and 2007 interest rateswaps as the counterparty has the right to terminatethe agreements in certain circumstances. For the 2002swap, the counterparty has a contractual right toterminate the agreement if the daily weighted averageof the SIFMA Index for the preceding 30 calendar dayperiod is greater than 7.00%. With regard to the 2007swap, the counterparty has a contractual right toterminate the agreement if the daily weighted averageof the SIFMA Index for the preceding 180 days isgreater than 6.00%. The 2006 interest rate swap is notexposed to termination risk. The SIFMA Index was.18% at June 30, 2012.Pledged Revenues and Debt Service RequirementsFor fiscal years 2012 and 2011, annual debt service,including net payments on associated interest rateswaps, totaled $89,717,000 and $88,237,000,respectively. For fiscal years 2012 and 2011, SystemFacilities Pledged Revenue was eleven and twelvetimes greater than the annual debt service. NetSystem Facilities Revenue was 133% and 122% ofannual debt service, respectively. Table 9.6 providesthe System Facilities pledged revenues and operatingexpenses.Table 9.6 .System Facilities Pledged Revenues andOperating Expenses (in thousands)2012 2011Pledged Revenues:Net Patient Revenue $ 811,598 $ 745,010Housing and Related Food Service 100,284 93,744Bookstores 57,634 58,382Net Tuition and Fees 26,117 24,950Other Operating Revenue 17,486 36,914Pledged Revenues 1,013,119 959,000Operating Expenses 893,540 851,729Net Revenues $ 119,579 $ 107,271If the aggregate fair value of swaps outstanding witheach counterparty is positive and exceeds the fairvalue threshold for the applicable credit rating, thecounterparties are required to post collateral. If theaggregate fair value of the 2002 and 2007 swaps isnegative and exceeds the fair value threshold for theapplicable credit rating, the University is required topost collateral. Permitted collateral for either partyincludes U.S. Treasuries, U.S. government agencies,cash, and commercial paper rated A1/P1 by S&P orMoody's, respectively. As the negative aggregate fairvalue of the 2002 and 2007 swaps exceeded$30,000,000 on June 30, 2012, which is the current fairvalue threshold for the University given a Moody'srating of Aal, the University had collateral posted withthe counterparty as required.2012 FinanciaL Report57 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Table 9.7 provides future debt service requirementsfor the System Facilities Revenue Bonds, including theimpact of both interest rate swap agreements. Withrespect to the inclusion of variable rate bond interestpayments and net payments on swaps, the followingdata was based upon variable rates in effect at June30, 2012. As market rates vary, variable rate bondinterest payments and net swap payments will vary.Table 9.7 -Future Debt Service -System Facilities Revenue Bonds (in thousands)Total BeforeHedging Investment Investment Total FutureFiscal Year Principal Interest Derivatives, Net Derivatives Derivatives, Net Debt Service2013 21,295 57,964 3,653 82,912 3,427 86,3392014 24,325 57,048 3,637 85,010 3,417 88,4272015 26,145 56,000 3,621 85,766 3,411 89,1772016 30,945 54,794 3,540 89,279 3,398 92,6772017 32,095 53,482 3,423 89,000 3,392 92,3922018-2022 249,130 235,708 15,091 499,929 16,764 516,6932023-2027 186,670 189,719 10,994 387,383 16,376 403,7592028-2032 165,570 150,779 3,851 320,200 15,840 336,0402033-2037 146,900 114,055 -260,955 8,126 269,0812038-2042 323,620 56,585 -380,205 4,628 384,833$ 1,206,695 $ 1,026,134 $ 47,810 $ 2,280,639 $ 78,779 $ 2,359,418Commercial PaperDuring fiscal year 2012, the University issued$160,935,000 of commercial paper to fund thepurchase of housing and parking facilities and refundSystem Facilities Revenue Bonds, Series 2000B,Series 2001A, and Series 2006B.On October 21, 2011, the Board adopted a flexiblefinancing program for the University referred to asthe University's Commercial Paper Program ("CPProgram"). The CP Program authorizes the periodicissuance of up to an aggregate outstanding principalamount of $375 million in Commercial Paper Notes.The initial term of the authorization is approximatelyfifteen years.The primary objective of the CP Program is toprovide flexibility in managing the University'soverall debt program through a flexible financingvehicle at attractive interest rates for variousUniversity financial needs including but not limitedto: (a) financing capital projects, including theacquisition or construction of buildings,infrastructure or equipment, (b) allowing for therefunding/refinancing of outstanding debt, and (c)providing a readily accessible source of funds forvarious working capital purposes.Notes PayableNotes payable consist of loans from the stateDepartment of Natural Resources Energy EfficiencyLeveraged Loan Program. Interest is payablesemiannually and ranges from 2.0% to 3.2%.The future payments on all notes payable at June 30,2012, are as follows:Table 9.8 -Future Notes Payable PaymentsAmountYear Ending June 30 (in thousands)2013 $ 3292014 8552015 8552016 7802017 5772018-2022 1,885Total Future Notes Payable Payments 5,280Less: Amount Representing Interest (319)Future Notes PayablePrincipal Payments $ 4,961582012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011Capital Lease ObligationsThe University leases various facilities and equipmentthrough capital leases. Facilities and equipment undercapitalized leases are recorded at the present value offuture minimum lease payments.The future minimum payments on all capital leases atJune 30, 2012, are as follows:Table 9.9 -Future Capital Lease PaymentsAmountYear Ending June 30 (in thousands)2013 1,5632014 1,5632015 1,5632016 1,5632017 1,5632018-2020 3,515Tota I Future Minimum Payments 11,330Less: Amount Representing Interest (4,714)IPresent Value of Future MinimumLease Payments$ 6,616DISCRETELY PRESENTED COMPONENT UNIT- MEDICAL ALLIANCEThe Medical Alliance's outstanding debt at June 30, 2012 and 2011, with corresponding activity, is as follows:Table 9.10 -Long-Term Debt -Medical Alliance (in thousands)Beginning Ending CurrentAs of June 30, 2012 Balance Additions Reductions Balance PortionHealth Facilities Revenue Bonds Series 1998 $ 18,875 $ -$ (18,875) $ $Health Facilities Revenue Bonds Series 2004 15,150 -(15,150) -Health Facilities Revenue Bonds Series 2011 -32,835 -32,835 1,715Total Bonds Payable 34,025 32,835 (34,025) 32,835 1,715Capital Lease Obligations 2,685 -(1,158) 1,527 1,202Total Long-Term Debt $ 36,710 $ 32,835 $ (35,183) $ 34,362 $ 2,917Beginning Ending CurrentAs of June 30, 2011 Balance Additions Reductions Balance PortionHealth Facilities Revenue Bonds Series 1998 $ 19,510 $ -$ (635) $ 18,875 $ 660Health Facilities Revenue Bonds Series 2004 15,570 -(420) 15,150 445Total Bonds Payable 35,080 -(1,055) 34,025 1,105Capital Lease Obligations 3,753 -(1,068) 2,685 1,158Total Long-Term Debt $ 38,833 $ -$ (2,123) $ 36,710 $ 2,263Bonds PayableTax-exempt revenue bonds (Series 2011 Bonds) in theprincipal amount of $32,835,000 were issued by theHealth and Education Facilities Authority of the Stateof Missouri (the Authority) on behalf of the MedicalAlliance dated November 1, 2011. The proceeds wereused to refund all of the outstanding Series 1998 and2004 Bonds and costs of issuance. The premium andthe deferred financing costs on the Series 2011 Bondsare amortized on the straight-line method over the lifeof the respective bonds. The Series 2011 Bonds aresecured by the unrestricted receivables of the MedicalAlliance. Under the terms of the Master Indenture, theMedical Alliance is required to make payments ofprincipal, premium, if any, and interest on the bonds.In addition, the Master Indenture contains certainrestrictions on the operations and activities of theMedical Alliance, including, among other things,covenants restricting the incurrence of additionalindebtedness and the creation of liens on property,except as permitted by the Master Indenture.2012 FinanciaL Report59 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011The Master Indenture has mandatory sinking fundredemption requirements in which funds are requiredto be set aside beginning in 2021 for the Series 2011bonds.Interest expense incurred on the bonds during theyears ended June 30, 2012 and 2011 was $1,433,000and $1,830,000, respectively, of which no interest wascapitalized.As of June 30, 2012, the total of principal and interestdue on bonds during the next five years and insubsequent five-year periods is as follows:Table 9.11 -Future Debt Service -Medical Alliance (in thousands)Fiscal Year Principal Interest Total2013 1,715 1,190 2,9052014 1,740 1,139 2,8792015 1,795 1,085 2,8802016 1,840 1,038 2,8782017 1,885 992 2,8772018-2022 10,320 4,007 14,3272023-2027 12,480 1,753 14,2332028-2031 1,060 27 1,087$ 32,835 $ 11,231 $ 44,066Capital LeasesThe Medical Alliance leases certain equipment throughcapital leases. Equipment under capitalized leases isrecorded at the present value of future minimum leasepayments.The future minimum payments on all capital leases atJune 30, 2012, are as follows:Table 9.12 -Future Capital Lease PaymentsMedical Alliance (in thousands)Year Ending June 30 Amount2013 $ 1,2402014 328Total Future Minimum Payments 1,568Less: Amount Representi ng Interest (41)Present Value of Future MinimumLease Payments $ 1,52710. RISK MANAGEMENTThe University is exposed to various risks of lossrelated to torts; theft of, damage to, and destruction ofassets; injuries to employees; natural disasters; andvarious medically related benefit programs foremployees. The University funds these losses througha combination of self-insured retentions andcommercially purchased insurance. The amount ofself-insurance funds and commercial insurancemaintained are based upon analysis of historicalinformation and actuarial estimates. Settled claimshave not exceeded commercial coverage in any of thepast three fiscal years.The liability for self-insurance claims at June 30, 2012and 2011 of $69,469,000 and $72,949,000,respectively, represents the present value of amountsestimated to have been incurred by those dates, usingdiscount rates ranging from 1.5% to 2.7% for fiscal year2012 and 2.0% to 3.4% for fiscal year 2011, based onexpected future investment yield assumptions.Changes in the self-insurance liability during fiscalyears 2012, 2011, and 2010 were as follows:Table 10.1 -Self-Insurance ClaimsLiability (in thousands)New ClaimsBeginning and Changes Claim End ofFiscal Year of Year in Estimates Payments Year2012 $72,9492011 77,5012010 73,266$ 213,357194,051191,350$(216,837)(198,603)(187,115)$69,46972,94977,50111. COMMITMENTS AND CONTINGENCIESEndowment and Pension Trust FundsThe University Endowment Fund and Pension TrustFunds have made commitments to make investmentsin certain investment partnerships pursuant toprovisions in the various partnership agreements.These commitments totaled $45,339,000 and$96,138,000 for the University and the Pension TrustFunds, respectively, at June 30, 2012.602012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011University Operating LeasesThe University leases various facilities and equipmentunder agreements recorded as operating leases.Operating lease expenses for the years ended June 30,2012 and 2011 were $20,247,000 and $20,251,000,respectively.Future minimum payments on all significant operatingleases with initial or remaining terms of one year ormore at June 30, 2012, are as follows:Table 11.1 -Future Operating Lease PaymentsFiscal Year Amount2013 $ 4,1662014 3,7592015 2,7882016 2,0592017 1,4212018-2022 16Total Future Lease Payments $14,209In addition to the above lease obligations, theUniversity has outstanding commitments for the usageand ongoing support of University Health Care'sinformation technology environment. As of January2010, University Health Care began contracting forsoftware usage and maintenance fees, as well as, laborcosts for approximately 100 full-time equivalentemployees, with the Cerner Corporation. Thisagreement, called IT Works, represents the labor andsoftware component of a cooperative relationshipbetween University Health Care and CernerCorporation referred to as the Tiger Institute forHealth Innovation (the Tiger Institute). The TigerInstitute provides continued development ofinformation technology within the clinical areas, aswell as developing new technology initiatives in healthinformation systems.As of June 30, 2012, this contracted commitmenttotaled $139,216,000 and will be paid in the followingamounts: $16,819,000 in 2013, $17,323,000 in 2014,$17,843,000 in 2015, $18,378,000 in 2016,$18,930,000 in 2017 and $49,923,000 thereafter.Medical Resident FICA RefundsIn March 2010, the United States Internal RevenueService accepted the position that medical residentsare exempted from FICA taxes based upon the"student exception" for tax periods ending before April1, 2005 when new regulations became effective. InDecember 2010, the University of Missouri perfectedits claims for the refund of taxes withheld for therelevant periods.For fiscal year 2011, the University recorded areceivable for this refund and related accrued interestincome in the amounts of $19,187,000 and$11,600,000, respectively, which reflects the estimatedtotal refund from the Internal Revenue Service. Inaddition, accounts payable increased by $21,026,000representing the portion of the refund and accruedinterest income due to individual medical residentsand third-party entities. A net amount of $6,761,000was recorded as a contra expense to benefits and$3,000,000 as investment income.For fiscal year 2012, the University has made nochange to the receivable for this refund and hasaccrued an additional $568,000 in accrued interestincome of which a net amount of $72,000 wasrecorded as investment income.Pollution RemediationThe University has been working with the VoluntaryCleanup Program of the Missouri Department ofNatural Resources (MDNR) to characterize subsurfacecontamination on a University owned property. Theresults were reported to MDNR during fiscal year 2011and the University continues to await direction on howto proceed. As a result, the University is unable toestimate future costs to clean up the site at this time.Radiology InvestigationThe University has engaged an outside law firm toinvestigate allegations of improper billings sinceNovember 2011 after it learned that a federalinvestigation led by the U.S Attorney's Office wasunder way. The University's investigation hasidentified indications that two radiologists improperlycertified that they had performed services that wereactually performed by resident physicians. TheUniversity is cooperating with the investigation of theU.S. Attorney's Office in an effort to achieve aresolution of the matter. The University is unable toestimate the potential future losses or penalties at thistime.2012 Financial Report61 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 201112. RETIREMENT, DISABILITY AND DEATHBENEFIT PLANPlan Description -the Retirement Plan is a singleemployer, defined benefit plan for all qualifiedemployees. As authorized by Section 172.300, RevisedStatutes of Missouri, the University's Board of Curatorsadministers the Retirement Plan and establishes itsterms. Full-time employees vest in the Retirement Planafter five years of credited service and become eligiblefor benefits based on age and years of service. Avested employee who retires at age 65 or older iseligible for a lifetime annuity calculated at a certainrate times the credited service years times thecompensation base (average compensation for the fivehighest consecutive salary years). The rate is 2.2% ifthe employee was hired before October 1, 2012, or1.0% if the employee was hired after September 30,2012. Academic members who provide summerteaching and research service receive additionalsummer service credit. The Board of Curators mayperiodically approve increases to the benefits paid toexisting pensioners. However, vested members wholeave the University prior to eligibility for retirementare not eligible for these pension increases.Table 12.1 -Retirement Plan Membership2012 2011Active MembersVested 11,000 10,758Nonvested 7,274 7,634Pensioners and Beneficiaries 7,644 7,323Former Employees withDeferred Pensions 5,447 4,211Total Members 31,365 29,926Vested employees who are at least age 55 and haveten years or more of credited service or age 60 with atleast five years of service may choose early retirementwith a reduced benefit. However, if the employeeretires at age 62 and has at least 25 years of creditedservice, the benefit is not reduced. Up to 30% of theretirement annuity can be taken in a lump sumpayment. In addition, the standard annuity can beexchanged for an actuarially-equivalent annuityselected from an array of options with joint andsurvivor, period certain, and guaranteed annualincrease features.Vested employees who terminate prior to retirementeligibility may elect to transfer the actuarial equivalentof their benefit to an Individual Retirement Account orinto another employer's qualified plan that acceptssuch rollovers. If the actuarial equivalent is less than$20,000, it may instead be taken in the form of a lumpsum payment.In addition, the Retirement Plan allows vestedemployees who become disabled to continue accruingservice credit until they retire. It also provides a pre-retirement death benefit for vested employees.The Retirement Plan provides a minimum valuefeature for vested employees who terminate or retire.The minimum value is calculated as the actuarialequivalent of 5% of the employee's eligiblecompensation invested at 7.5% per credited serviceyear or the regularly calculated benefit.Contributions -The University's contributions to theRetirement Plan are equal to the actuariallydetermined employer contribution requirement, as apercent of payroll, which averaged 7.2% and 5.7% forthe years ended June 30, 2012 and 2011, respectively.Employees are required to contribute 1% of theirsalary up to $50,000 in a calendar year and 2% of theirsalary in excess of $50,000. An actuarial valuation ofthe Plan is performed annually and the University'scontribution rate is updated at the beginning of theUniversity's fiscal year on July 1, to reflect theactuarially determined funding requirement from themost recent valuation, as of the preceding October 1.This actuarial valuation reflects the adoption of anyRetirement Plan amendments during the previousfiscal year.622012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 2011The University's annual pension cost and net pension obligation to the Retirement Plan for the current year,excluding the impact of employee contributions, along with three-year trend information, were as follows:Table 12.2 -Three-Year Trend Information (in thousands)Annual Required Percentage ofContribution Annual Pension Contributions APC Net PensionFiscal Year Ending (ARC) Cost (APC) Made Contributed Obligation6/30/2010 $ 48,040 $ 48,040 $ 48,040 100%6/30/2011 57,541 57,541 57,541 100%6/30/2012 74,618 74,618 74,618 100%Basis of Accounting -The Retirement Plan'saccounting records are prepared using the accrualbasis of accounting. Employer contributions to theRetirement Plan are recognized when due and theemployer has made a formal commitment to providethe contributions. Benefits and refunds are recognizedwhen due and payable in accordance with terms of theRetirement Plan. The Retirement Plan does not issue aseparate financial report.Investment Valuation -Investments are reported atfair value.Funded Status -As of the most recent actuarialvaluation date, October 1, 2011, the Retirement Planwas 90.1% funded. The actuarial accrued liability (AAL)for benefits was $3,138,190,000 and the actuarialvalue of the assets was $2,828,697,000, resulting inunfunded AAL of funding of $309,493,000. Thecovered payroll (annual payroll of active employeescovered by the plan) was $1,031,891,000 and the ratioof unfunded AAL funding to covered payroll was30.0%.The Schedule of Funding Progress, presented asrequired supplementary information (RSI) followingthe notes to the financial statements, presentsmultiyear trend information about whether theactuarial values of plan assets are increasing ordecreasing over time relative to the actuarial accruedliability for benefits.Actuarial Methods and Assumptions -In the October1, 2011 actuarial valuation, the entry age actuarial costmethod was used. Actuarial assumptions included (1)an 8% rate of investment return net of administrativeexpenses, and (2) projected salary increases rangingfrom 4.5% to 5.3% per year. The assumptions did notinclude postretirement benefit increases. The actuarialvalue of assets was determined using techniques thatspread effects of short-term volatility in the marketvalue of investments over a 5-year period. On June 29,2012, a plan amendment was approved which willchange the plan benefit for employees hired on orafter October 1, 2012. Since no current employees onthe October 1, 2011 valuation were impacted by theseplan benefit changes, a "tabular" contribution wasdetermined as part of the valuation and during fiscalyear 2013 it will be applicable to the salaries ofemployees new to the plan on or after October 1,2012. The underfunded actuarial accrued liability isbeing amortized as a level dollar amount on an openbasis over 20 years from the October 1, 2011 valuationdate.13. OTHER POSTEMPLOYMENT BENEFITSPlan Description -In addition to the pension benefitsdescribed in Note 12, the University operates a single-employer, defined benefit postemployment plan. TheUniversity's Other Postemployment Benefits (OPEB)Plan provides postretirement medical, dental, and lifeinsurance benefits to employees who retire from theUniversity after attaining age 55 and before reachingage 60 with ten or more years of service, or afterattaining age 60 with five or more years of service. Asof June 30, 2012 and 2011, 6,319 and 6,080 retirees,respectively, were receiving benefits, and an estimated18,336 active University employees may becomeeligible to receive future benefits under the plan.Postemployment medical, dental and life insurancebenefits are also provided to long-term disabilityclaimants who were vested in the University'sRetirement Plan at the date the disability began,provided the onset date of the disability was on orafter September 1, 1990. As of June 30, 2012 and2011, 233 and 227 long-term disability claimants,respectively, met those eligibility requirements.2012 Financial Report63 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor Lhe Years Ended June 30, 2012 and 2011The terms and conditions governing thepostemployment benefits to which employees areentitled are at the sole authority and discretion of theUniversity's Board of Curators.Basis of Accounting -The OPEB Plan's accountingrecords are prepared using the accrual basis ofaccounting, in accordance with GASB Statements No.43 and No. 45, which established requirements forfinancial reporting for postemployment benefits otherthan pension plans. The assets of the OPEB Trust Fundare irrevocable and legally protected from creditorsand dedicated to providing postemployment benefitsin accordance with terms of the plan. The OPEB Plandoes not issue a separate financial report.Contributions and Reserves -Contributionrequirements of employees and the University areestablished and may be amended by the University'sBoard of Curators. For employees retiring prior toSeptember 1, 1990, the University contributes 2/3 ofthe medical benefits premium and 1/2 of the dentalplan premium. For employees who retired on or afterSeptember 1, 1990, the University contributes towardpremiums based on the employee's length of serviceand age at retirement.The University makes available two group term lifeinsurance options. Option A coverage is equal to theretiree's salary at the date of retirement, while OptionB is equal to two times that amount. For each Option,graded decreases in coverage are made when theretiree attains specific age levels. The University paysthe full cost of Option A and approximately 91% of thecost of Option B coverage. Coverage for group term lifeinsurance ends on January 1 following the retiree's70th birthday.For the year ended June 30, 2012, participantscontributed $13,681,000 or approximately 47.4% oftotal premiums through their required contributions,which vary depending on the plan and coverageselection.The University makes available two long-term disabilityoptions to its employees. Option A coverage is equal to60% of the employee's salary on the date the disabilitybegan, when integrated with benefits from all othersources. Option B coverage is equal to 66-2/3% of theemployee's salary, integrated so that benefits from allsources will not exceed 85% of the employee's salary.Both options have a 149-day waiting period andprovide benefits until age 65. The University pays thefull cost of the Option A premium, while employeesenrolled in Option B pay the additional cost over theOptional A premium.The Annual Required Contribution (ARC) represents alevel of funding that an employer is projected to needin order to prefund its obligations for postemploymentbenefits over its employees' years of service. TheUniversity has no obligation to make contributions inadvance of when insurance premiums or claims aredue for payment and currently funds postemploymentbenefits at a level no less than the pay-as-you-go basis.In fiscal year 2012, the University contributed$25,477,000, or 50.0% of the ARC, which was$50,954,000 and represented 4.9% of annual coveredpayroll. In fiscal year 2011, the University contributed$30,242,000, or 50.0% of the ARC, which was$60,484,000 and represented 6% of annual coveredpayroll.Table 13.1 presents the OPEB cost for the year, theamount contributed, and changes in the OPEBobligation for fiscal year 2012:Table 13.1 -Changes in Net OPEBObligation (in thousands)Annual Required Contribution $ 50,954Interest on Existing Net OPEB Obligation 4,790ARC Adjustment (4,077)Annual OPEB Cost 51,667Contributions Made (25,477)Increase in net OPEB obligation 26,190Net OPEB obligation -beginning of year 83,306Net OPEB obligation -June 30, 2012 $ 109,496Funding Status and Funding Progress -As of July 1,2011, the date of the last valuation, the OPEB Plan was8.4% funded. The actuarial accrued liability (AAL) forpostemployment benefits was $542,844,000, with$45,745,000 in actuarial value of assets, resulting in anunfunded actuarial accrued liability (UAAL) of$497,099,000. The covered payroll (annual payroll ofactive employees covered by the plan) was$1,041,413,000, and the ratio of UAAL to coveredpayroll was 47.7%.6z42012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor Lhe Years Ended June 30, 2012 and 2011Actuarial valuations involve estimates of the value ofreported amounts and assumptions about theprobability of events far into the future. Examplesinclude assumptions about future employment,mortality, and the healthcare cost trend. Actuariallydetermined amounts are subject to continual revisionof actual results, are compared to past expectationsand new estimates are made about the future. TheSchedule of Funding Progress, presented as requiredsupplementary information following the notes to thefinancial statements, will present multiyear trendinformation about whether the actuarial value of planassets is increasing or decreasing over time relative tothe actuarial accrued liabilities for benefits.Benefit projections for financial reporting purposes arebased on the benefits provided under the terms of thesubstantive plan in effect at the time of each valuationand the historical pattern of cost sharing between theemployer and plan members to that point. Theprojection of benefits for financial reporting purposesdoes not explicitly incorporate the potential effects oflegal or contractual funding limitations on the patternof cost sharing between the University and planmembers in the future.The University's annual OPEB cost and net OPEB obligation to the OPEB Plan for the current year, along with three-year trend information, were as follows:Table 13.2 -OPEB Plan Three-Year Trend Information (in thousands)Fiscal Year Ending6/30/20106/30/20116/30/2012AnnualRequiredContribution$ 52,56360,48550.954Annual OPEBCost (AOC)$ 52,76360,93551.667ContributionsMade$ 23,78930,24225.477Percentage ofAOCContributed45.1%49.6%49.3%Net OPEBObligation(Asset)$ 52,61383,306109.496Actuarial Methods and Assumptions -Consistent withthe long-term perspective of actuarial calculations, theactuarial methods and assumptions used includetechniques that are designed to reduce short-termvolatility in actuarial accrued liabilities and theactuarial value of assets. The projected unit creditactuarial cost method was used in the July 1, 2011actuarial valuation. Actuarial assumptions included a5.75% investment rate of return, net of administrativeexpenses. The projected annual healthcare trend rateis 5.0% to 9.0% initially, reduced by 0.5% decrementsto an ultimate rate of 5.0%. The UAAL is beingamortized as a level dollar amount on an open basis,level percent of pay, over a 30-year amortizationperiod.2012 Financial. Report65 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 201114. OPERATING EXPENSES BY FUNCTIONThe operating expenses of the University are presented based on natural expenditure classifications. TheUniversity's operating expenses by functional classification are as follows:Table 14.1 -Operating Expenses by Functional and Natural Classifications (in thousands)Supplies, ScholarshipsSalaries and Services and andFiscal Year Ended June 30, 2012 Wages Benefits Other Fellowships Depreciation TotalInstruction $ 417,895 $ 113,406 $ 73,394 $ $ -$ 604,695Research 108,266 24,756 77,396 -210,418Public Service 74,601 21,076 51,631 -147,308Academic Support 78,044 23,708 31,990 -133,742Student Services 41,117 11,974 22,115 -75,207Institutional Support 98,278 30,703 (26,417) -102,565Operation and Maintenanceof Plant 35,245 11,503 50,365 -97,114Auxiliary Enterprises 464,902 122,469 482,224 -1,069,595Scholarships and Fellowships ---60,380 -60,380Depreciation ---160,915 160,915Total Operating Expenses $1,318,349 $ 359,595 $ 762,700 $ 60,380 $ 160,915 $2,661,939Supplies, ScholarshipsSalaries and Services and andFiscal Year Ended June 30, 2011 Wages Benefits Other Fellowships Depreciation TotalInstruction $ 394,945 $ 105,048 $ 57,088 $ -$ -$ 557,081Research 113,872 24,441 81,590 --219,903Public Service 73,888 20,139 49,519 --143,546Academic Support 75,563 22,321 29,972 --127,856Student Services 38,454 10,971 20,567 --69,992Institutional Support 94,518 28,840 (25,424) --97,934Operation and Maintenanceof Plant 34,614 10,901 24,467 --69,982Auxiliary Enterprises 446,372 105,679 478,265 --1,030,316Scholarships and Fellowships ---58,790 -58,790Depreciation ---155,103 155,103Total Operating Expenses $1,272,226 $ 328,340 $ 716,044 $ 58,790 $ 155,103 $2,530,503662012 Financial Report UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 201115. FIDUCIARY FUNDS -PENSION TRUST FUNDS COMBINING STATEMENTSCombining financial statements for the Fiduciary Funds -Pension Trust Funds, which encompass the RetirementTrust and OPEB Trust, are as follows:Table 15.1 -Statement of Plan Net Assets (in thousands)2012 2011Retirement OPEB Total Retirement OPEB TotalAssetsCash and Cash Equivalents $ 79,083 $ 26,949 $ 106,033 $ 88,085 $ 28,131 $ 116,216Investment of Cash Collateral 50,023 -50,023 257,463 -257,463Investment Settlements Receivable 83,396 83,396 27,003 3 27,006Investments:Debt Securities 933,561 933,561 984,980 -984,980Equity Securities 505,512 505,512 607,800 -607,800Commingled Funds 1,062,406 23,263 1,085,669 967,821 17,614 985,435Nonmarketa ble Alternative Investments 212,993 -212,993 174,899 174,899Other 11,895 -11,895 15,022 15,022Total Assets 2,938,870 50,212 2,989,082 3,123,073 45,748 3,168,821LiabilitiesAccounts Payable andAccrued Liabilities 169 -169 119 -119Collateral Held forSecurities Lending 50,023 50,023 257,463 -257,463Investment Settlements Payable 206,980 206,980 152,054 3 152,057Total Liabilities 257,172 257,172 409,636 3 409,639Net Assets Held in Trust forRetirement and OPEB $2,681,698 $ 50,212 $2,731,910 $2,713,437 $ 45,745 $2,759,182Table 15.2 -Statement of Changes in Plan Net Assets (in thousands)2012 2011Retirement OPEB Total Retirement OPEB TotalNet Revenues and Other AdditionsInvestment Income:Interest and Dividend Income,Net of Fees $ 57,947 $ 642 $ 58,589 $ 61,718 $ 5 $ 61,723Net Appreciation (Depreciation) inFair Value of Investments (31,357) (191) (31,548) 379,606 61 379,667Net Investment Income (Loss) 26,590 451 27,041 441,324 66 441,390Contributions:University 74,618 25,477 100,095 57,541 30,242 87,783Members 13,232 14,088 27,320 12,610 13,390 26,000Total Contributions 87,850 39,565 127,415 70,151 43,632 113,783Other Revenues -1,218 1,218 -695 695Total Net Revenues andOther Additions 114,441 41,233 155,674 511,475 44,393 555,868Expenses and Other DeductionsAdministrative Expenses 2,263 367 2,630 2,297 324 2,621Payments to Retirees and Beneficiaries 143,917 36,399 180,316 135,440 36,741 172,181Total Expenses andOther Deductions 146,180 36,766 182,946 137,737 37,065 174,802Increase (decrease) in Net Assets Heldin Trust for Retirement and OPEB (31,739) 4,468 (27,271) 373,738 7,328 381,066Net Assets Held i n Trust forRetirement& OPEB, Beginning of Year 2,713,437 45,745 2,759,182 2,339,699 38,417 2,378,116Net Assets Held in Trust forRetirement and OPEB, End of Year $ 2,681,698 $ 50,213 $2,731,911 $2,713,437 $ 45,745 $2,759,1822012 FinanciaL Report67 UNIVERSITY OF MISSOURI SYSTEMNOTES TO FINANCIAL STATEMENTSFor the Years Ended June 30, 2012 and 201116. Special ItemOn November 7, 2011, IDEXX ReferenceLaboratories, Incorporated purchased certain assetsof a research and diagnostic lab on the Columbiacampus and assumed certain liabilities as part of thesales agreement. The University received netproceeds of $43,000,000 of which $42,316,000 wasrecorded as a special item in the Statement ofRevenues, Expenses, and Changes in Net Assets forthe year ended June 30, 2012.682012 Financial ReporL UNIVERSITY OF MISSOURI SYSTEMREQUIRED SUPPLEMENTARY INFORMATIONFor the Years Ended June 30, 2012 and 2011 (unaudited)Retirement Plan -Schedule of Funding Progress (in thousands)UAAL (Excess)Actuarial Actuarial Unfunded Annual as a % ofActuarial Valuation of Accrued AAL/(Excess Covered CoveredValuation Assets Liability (AAL) Funding) Funded Ratio Payroll PayrollDate (a) (b) (b-a) (a / b) (c) ([b-a]/c)10/1/2006 2,325,264 2,400,807 75,543 96.9% 846,884 8.9%10/1/2007 2,651,535 2,555,592 (95,943) 103.8% 891,648 -10.8%10/1/2008 2,808,126 2,733,032 (75,094) 102.7% 954,430 -7.9%10/1/2009 2,843,422 2,819,524 (23,898) 100.8% 970,060 -2.5%10/1/2010 2,851,957 2,960,832 108,875 96.3% 979,888 11.1%10/1/2011 2,828,697 3,138,190 309,493 90.1% 1,031,891 30.0%Retirement Plan -Schedule of Employer Contributions (in thousands)Actuarial Annual Net PensionValuation Required Annual Contributions Percentage ObligationYear Ended Date Contribution Pension Cost Made Contributed (Asset)6/30/2007 10/1/2005 74,736 74,736 74,736 100%6/30/2008 10/1/2006 72,284 72,284 72,284 100%6/30/2009 10/1/2007 56,663 56,663 56,663 100%6/30/2010 10/1/2008 48,040 48,040 48,040 100%6/30/2011 10/1/2009 57,541 57,541 57,541 100%6/30/2012 10/1/2010 74,618 74,618 74,618 100%See independent auditors' report.2012 FinanciaL Report69 UNIVERSITY OF MISSOURI SYSTEMREQUIRED SUPPLEMENTARY INFORMATIONFor the Years Ended June 30, 2012 and 2011 (unaudited)OPEB Plan -Schedule of Funding Progress (in thousands)ActuarialValuationDate7/1/2007 (a)7/1/20097/1/2011 (b)ActuarialValuation ofAssets(a)ActuarialAccruedLiability(AAL)(b)560,340646,655542,84437,17145,745UnfundedAAL(b-a)560,340609,484497,099FundedRatio(a / b)0.0%5.7%8.4%AnnualCoveredPayroll930,3651,009,8001,041,413UAAL as a %of CoveredPayroll([b-a] /c)60.2%60.4%47.7%(a) The 7/1/2007 Actuarial Valuation was revised based on a change in the discount rate from 6.75% to 5.75%.(b) Date of last valuation providedOPEB Plan -Schedule of Employer Contributions (in thousands)Actuarial Annual Net PensionValuation Required Percentage ObligationYear Ended Date Contribution Contributed (Asset)6/30/2010 7/1/2007 (a) 52,563 45% 52,6136/30/2011 7/1/2009 60,485 50% 83,3066/30/2012 7/1/2011 50,954 50% 109,496(a) The 7/1/2007 Actuarial Valuation was revised based on a change in the discount rate from 6.75% to 5.75%.See independent auditors' report.702012 FinanciaL Report University of Missouri SystemCOLUMBIA I KANSAS CITY I ROLLA I ST.LOUISSTATISTICAL SECTIONAdvancing MissouriU ie sit fMsor Syte 201 Frnan -3me t 7 Supplementary Information -Unaudited -See Accompanying Independent Auditors' ReportFiscal Year Ended June 30, 2012 2011 2010 2009 2008AssetsCurrent AssetsCash and Cash Equivalents $ 228,639 $ 44,249 $ 149,515 $ 115,919 $ 57,987Restricted Cash and Cash Equivalents 134,141 177,038 177,798 137,022 109,022Short-Term Investments 126,054 151,070 40,268 124,609 172,294Restricted Short-Term Investments 32,092 49,264 30,619 25,882 91,800Investment of Cash Collateral 32,032 101,047 111,557 111,719 106,360Accounts Receivable, Net 274,100 255,589 249,460 241,325 249,654Pledges Receivable, Net 11,898 12,374 14,505 13,382 9,796Investment Settlements Receivable 37,316 15,634 6,200 15,800 72,878Notes Receivable, Net 8,151 8,532 9,046 12,564 13,747Due To Component Units (7,029) (6,658) (5,285) (3,900) (4,355)Inventories 36,022 35,193 28,401 33,009 33,063Prepaid Expenses and Other Current Assets 27,332 25,759 25,604 21,618 18,636Total Current Assets 940,748 869,091 837,688 848,949 930,882Noncurrent AssetsPledges Receivable, Net 41,708 14,895 16,256 17,231 21,147Notes Receivable, Net 54,698 54,015 50,635 47,524 46,898Deferred Charges and Other Assets 10,253 13,218 12,374 9,836 10,397Long-Term Investments 1,363,827 1,357,918 1,171,998 778,538 810,655Restricted Long-Term Investments 1,066,915 1,161,184 891,067 741,556 919,364Capital Assets, Net 2,848,993 2,642,196 2,534,365 2,392,852 2,227,427Total Noncurrent Assets 5,386,394 5,243,426 4,676,695 3,987,537 4,035,888Deferred Outflow of Resources 30,415 19,023 22,192 --Total Assets and DeferredOutflow of Resources $ 6,357,557 $ 6,131,540 $ 5,536,575 $ 4,836,486 $ 4,966,770LiabilitiesCurrent LiabilitiesAccounts Payable $ 140,274 $ 130,803 $ 123,809 $ 94,531 $ 105,024Accrued Liabilities 150,971 143,347 138,309 130,837 120,967Deferred Revenue 84,923 78,209 78,200 80,703 67,821Funds Held for Others 65,643 62,951 53,245 66,403 70,744Investment Settlements Payable 177,988 47,319 41,931 50,318 136,606Collateral Held for Securities Lending 32,032 101,047 111,557 115,291 106,360Commercial Paper and Current Portion ofLong-Term Debt 183,226 29,107 30,139 24,922 21,697Long-Term Debt Subject to Remarketing 100,330 220,885 223,680 224,925 226,120Total Current Liabilities 935,387 813,668 800,870 787,930 855,339Noncurrent LiabilitiesLong-Term Debt 1,122,312 1,140,934 915,906 608,114 631,742Deferred Revenue -1,519 1,925 1,603 1,876Derivative Instrument Liability 57,856 26,702 30,680 --Other Postemployment Benefits Liability 109,496 83,306 52,613 23,639 -Other Noncurrent Liabilities 47,889 49,167 53,845 50,423 47,371Total Noncurrent Liabilities 1,337,553 1,301,628 1,054,969 683,779 680,989Total Liabilities 2,272,940 2,115,296 1,855,839 1,471,709 1,536,328Net AssetsInvested in Capital Assets, Net of Related Debt 1,545,227 1,516,095 1,485,090 1,540,654 1,439,753RestrictedNonexpendable -Endowment 771,146 788,876 679,494 612,119 718,314Expendable -Scholarship, Research, Instruction & Other 299,789 264,605 244,226 235,405 262,266Loans 79,091 77,300 75,637 78,357 77,656Capital Projects 10,149 18,438 32,373 30,043 27,597Unrestricted 1,379,215 1,350,930 1,163,916 868,199 904,856Total Net Assets 4,084,617 4,016,244 3,680,736 3,364,777 3,430,442Total Liabilities & Net Assets $ 6,357,557 $ 6,131,540 $ 5,536,575 $ 4,836,486 $ 4,966,770722012 FinanciaL Report Supplementary Information -Unaudited -See Accompanying Independent Auditors' ReportFiscal Year Ended June 30, 2012 2011 2010 2009 2008Operating RevenuesTuition and Fees, Net $ 736,074 $ 671,419 $ 630,498 $ 601,742 $ 557,085Less: Scholarship Allowances 190,798 175,917 164,187 148,578 139,880Net Tuition and Fees 545,276 495,502 466,311 453,164 417,205Federal Grants and Contracts 184,882 196,122 183,885 172,669 184,416State and Local Grants and Contracts 55,837 57,375 66,194 53,042 54,414Private Grants and Contracts 71,023 67,025 68,044 71,034 60,318Sales and Services of Educational Activities 23,106 21,671 22,560 22,088 19,569Auxiliary Enterprises -Patient Medical Services, Net 813,024 759,734 736,799 702,424 681,312Housing and Dining Services, Net 99,667 93,724 89,743 81,939 72,503Bookstores 57,566 58,591 59,288 62,113 61,423Other Auxiliary Enterprises, Net 199,868 220,162 198,748 190,315 181,893Other Operating Revenues 55,312 55,811 49,250 53,681 46,968Total Operating Revenues 2,105,561 2,025,717 1,940,822 1,862,469 1,780,021Operating ExpensesSalaries and Wages 1,318,349 1,272,226 1,236,965 1,213,837 1,153,676Benefits 359,595 328,340 303,300 299,586 310,375Supplies, Services and Other Operating Expenses 762,700 716,044 676,362 672,711 662,331Scholarships and Fellowships 60,380 58,790 55,469 48,456 39,485Depreciation 160,915 155,103 146,753 131,167 125,996Total Operating Expenses 2,661,939 2,530,503 2,418,849 2,365,757 2,291,863Operating Loss before State Appropriations (556,378) (504,786) (478,027) (503,288) (511,842)State Appropriations 397,629 437,631 498,358 479,478 462,281Operating Income (Loss) after StateAppropriations, Before NonoperatingRevenues (Expenses) (158,749) (67,155) 20,331 (23,810) (49,561)Nonoperating Revenues (Expenses)Federal Appropriations 28,222 28,416 21,455 14,858 14,277Federal Pell Grants 62,311 57,951 48,281 31,649 27,232Investment and Endowment Income (Losses), Net 30,855 266,633 172,833 (173,355) 45,629Private Gifts 90,346 52,564 48,695 52,552 51,680Interest Expense (53,923) (49,507) (46,103) (31,432) (43,055)Other Nonoperating Revenues (Expenses) (10,214) (3,279) (1,659) (3,930) (4,750)Net Nonoperating Revenues (Expenses) 147,597 352,778 243,502 (109,658) 91,013Income (Loss) before Capital Contributions,Additions to Permanent Endowments,Extraordinary and Special Items (11,152) 285,623 263,833 (133,468) 41,452State Capital Appropriations 937 8,043 14,205 17,817 15,532Capital Gifts and Grants 11,788 15,466 19,381 13,009 17,341Private Gifts for Endowment Purposes 24,484 26,376 24,703 21,093 32,995Extraordinary Item:Net Proceeds from Sale of Missouri Care ---2,550Special Item 42,316 ----Increase (Decrease) in Net Assets 68,373 335,508 322,122 (78,999) 107,320Net Assets, Beginning of Year 4,016,244 3,680,736 3,364,777 3,430,442 3,303,206Cumulative Effect of Change in AccountingPrinciples -(6,163) 13,334 19,916Net Assets, Beginning of Year, as Adjusted 4,016,244 3,680,736 3,358,614 3,443,776 3,323,122Net Assets, End of Year $ 4,084,617 $ 4,016,244 $ 3,680,736 $ 3,364,777 $ 3,430,4422012 FinanciaL Report73 Supplementary Information -Unaudited -See Accompanying Independent Auditors' ReportFiscal Year Ended June 30, 2012 2011 2010 2009 2008Operating RevenuesTuition and Fees, Net 9.6% 6.5% 4.8% 8.0% 3.6%Less: Scholarship Allowances 8.5% 7.1% 10.5% 6.2% 2.5%Net Tuition and Fees 10.0% 6.3% 2.9% 8.6% 4.0%Federal Grants and Contracts -5.7% 6.7% 6.5% -6.4% 12.8%State and Local Grants and Contracts -2.7% -13.3% 24.8% -2.5% 15.7%Private Grants and Contracts 6.0% -1.5% -4.2% 17.8% 11.1%Sales and Services of Educational Activities 6.6% -3.9% 2.1% 12.9% -12.4%Auxiliary Enterprises -Patient Medical Services, Net 7.0% 3.1% 4.9% 3.1% 5.0%Housing and Dining Services, Net 6.3% 4.4% 9.5% 13.0% 8.5%Bookstores -1.7% -1.2% -4.5% 1.1% 7.9%Other Auxiliary Enterprises, Net -9.2% 10.8% 4.4% 4.6% 18.0%Other Operating Revenues -0.9% 13.3% -8.3% 14.3% -12.2%Total Operating Revenues 3.9% 4.4% 4.2% 4.6% 6.7%Operating ExpensesSalaries and Wages 3.6% 2.9% 1.9% 5.2% 4.7%Benefits 9.5% 8.3% 1.2% -3.5% 13.7%Supplies, Services and Other Operating Expenses 6.5% 5.9% 0.5% 1.6% 8.9%Scholarships and Fellowships 2.7% 6.0% 14.5% 22.7% 2.3%Depreciation 3.7% 5.7% 11.9% 4.1% 5.8%Total Operating Expenses 5.2% 4.6% 2.2% 3.2% 7.1%Operating Loss before State Appropriations -10.2% -5.6% 5.0% 1.7% -8.5%State Appropriations -9.1% -12.2% 3.9% 3.7% 4.9%Operating Income (Loss) after StateAppropriations, Before NonoperatingRevenues (Expenses) -136.4% -430.3% 185.4% 52.0% -59.5%Nonoperating Revenues (Expenses)Federal Appropriations -0.7% 32.4% 44.4% 4.1% 1.2%Federal Pell Grants 7.5% 20.0% 52.6% 16.2% 15.3%Investment and Endowment Income (Losses), Net -88.4% 54.3% 199.7% -479.9% -77.5%Private Gifts 71.9% 7.9% -7.3% 1.7% -3.0%Interest Expense 8.9% 7.4% 46.7% -27.0% 46.0%Other Nonoperating Revenues (Expenses) -211.5% -97.6% 57.8% 17.3% -50.9%Net Nonoperating Revenues (Expenses) -58.2% 44.9% 322.1% -220.5% -65.1%Income (Loss) before Capital Contributions,Additions to Permanent Endowments andExtraordinary Item -103.9% 8.3% 297.7% -422.0% -82.0%State Capital Appropriations -88.4% -43.4% -20.3% 14.7% -14.4%Capital Gifts and Grants -23.8% -20.2% 49.0% -25.0% 34.0%Private Gifts for Endowment Purposes -7.2% 6.8% 17.1% -36.1% 18.2%Extraordinary Item:Net Proceeds from Sale of Missouri Care ---Special ItemIncrease (Decrease) in Net Assets -79.6% 4.2% 507.8% -173.6% -65.2%Net Assets, Beginning of Year 9.1% 9.4% -1.9% 3.9% 10.3%Cumulative Effect of Change in AccountingPrinciples 0.0% -100.0% -146.2% -33.0% 100.0%Net Assets, Beginning of Year, as Adjusted 9.1% 9.6% -2.5% 3.6% 11.0%Net Assets, End of Year 1.7% 9.1% 9.4% -1.9% 3.9%7142012 FinanciaL Report FINANCIA IN E Sttstcl SetoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportFiscal Year Ended June 30, 2012 2011 2010 2009 2008+ Primary Reserve Ratio 0,66 0.67 0.62 0.50 0.54/Conversion Factor 0.133 0.133 0.133 0.133 0.133= Strength Factor 4.98 5.05 4.63 3.78 4.08x Weighting Factor 35% 35% 35% 35% 35%= Ratio Subtotal 1.74 1.77 1.62 1.32 1.43Primary Reserve Ratio -measures the financial strength of the institution by indicating how long the institution could function Lexpendable reserves to cover operations should additional net assets not be available. A positive ratio and an increasing amoundenotes strength.+ Return on Assets Ratio/ Conversion Factor= Strength Factorx Weighting Factor1.7%0.0200.8420%8.7%0.0204.3620%9.2%0.0204.5820%-2.3%0.020(1.16)20%3.2%0.0201.5920%= Ratio Subtotal 0.17 0.87 0.92 (0.23) 0.32Return on Assets Ratio -measures total economic return. While an increasing trend reflects strength, a decline may be approprwarranted if it represents a strategy on the part of the institution to fulfill its mission.+ Net Operating Revenues Ratio/ Conversion Factor= Strength Factorx WeiRhtina Factor3.5%0.0132.6810%5.1%0.0133.9610%7.7%0.0135.8910%6.0%0.0134.6010%4.0%0.0133.1010%= Ratio Subtotal 0.27 0.40 0.59 0.46 0.31Net Operating Revenues Ratio -measures whether the institution is living within available resources. A positive ratio and an in(amount over time generally reflects strength.+ Viability Ratio 1.25 1.22 1.27 1.38 1.42/ Conversion Factor 0.417 0.417 0.417 0.417 0.417= Strength Factor 3.00 2.92 3.04 3.30 3.39x Weighting Factor 35% 35% 35% 35% 35%= Ratio Subtotal 1.05 1.02 1.06 1.16 1.19Viability Ratio -mneosures the ability of the institution to cover its debt as of the balance sheet date, should the institution needpositive ratio greater than 1.00 generally denotes strength.Composite Financial Index 3.23 4.06 4.19 2.71 3.24Composite Financial Index -Three Year Average 3.82 3.65 3.38 3.41 3.77Composite Financial Index (CFI) -provides a methodology for a single overall financial measurement of the institution's health bfour core ratios. The CFI uses a reasonable weighting plan and allows for a weakness or strength in a specific ratio to be offset bratio result, which provides a more balanced measure. The CFI provides a more holistic approach to understanding the financialinstitution. The CFI scores are not intended to be precise measures; they are indicators of ranges of financial health that can beoverall institutional well-being when combined with non-financial indicators.2012 FinanciaL Report75 MA KE RA IS Sttsial etoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportNet Tuition per StudentFiscal Year Ended June 30, 2012 2011 2010 2009 2008Gross Tuition and Fees $ 736,074 $ 671,419 $ 630,498 $ 601,742 $ 557,085Less: Scholarship Discounts / Allowances (190,798) (175,917) (164,187) (148,578) (139,880)Less: Scholarship / Fellowship Expenses (60,380) (58,790) (55,469) (48,456) (39,485)Net Tuition $ 484,896 $ 436,712 $ 410,842 $ 404,708 $ 377,720Net Tuition $ 484,896 $ 436,712 $ 410,842 $ 404,708 $ 377,720Number of Students -Fall Semester (FTEs) 56,843 55,272 53,292 51,025 48,994Net Tuition per Student $ 8,530 $ 7,901 $ 7,709 $ 7,932 $ 7,710State Appropriations per StudentFiscal Year Ended June 30, 2012 2011 2010 2009 2008State Appropriations $ 397,629 $ 437,631 $ 498,358 $ 479,478 $ 462,281Number of Students -Fall Semester (FTEs) 56,843 55,272 53,292 51,025 48,994State Appropriations per Student $ 6,995 $ 7,918 $ 9,351 $ 9,397 $ 9,435Educational Expenses per StudentFiscal Year Ended June 30, 2012 2011 2010 2009 2008Total Operating Expenses $ 2,661,939 $ 2,530,503 $ 2,418,849 $ 2,365,757 $ 2,291,863Less: Scholarships / Fellowships Expense (60,380) (58,790) (55,469) (48,456) (39,485)Less: Auxiliary Operating Expenses (1,067,820) (1,028,491) (956,455) (901,089) (886,774)Less: Grants and Contracts Expenses (311,742) (320,522) (318,123) (296,745) (299,148)Interest Expense 53,923 49,507 46,103 31,432 43,055Less: Auxiliary Interest Expense (8,427) (9,006) (9,197) (7,437) (7,905)Net Educational Expenses $ 1,267,493 $ 1,163,201 $ 1,125,708 $ 1,143,462 $ 1,101,606Net Educational Expenses $ 1,267,493 $ 1,163,201 $ 1,125,708 $ 1,143,462 $ 1,101,606Number of Students -Fall Semester (FTEs) 56,843 55,272 53,292 51,025 48,994Educational Expenses per Student $ 22,298 $ 21,045 $ 21,123 $ 22,410 $ 22,485Total Tuition DiscountFiscal Year Ended June 30, 2012 2011 2010 2009 2008Scholarship Allowances $ 190,798 $ 175,917 $ 164,187 $ 148,578 $ 139,880Scholarships / Fellowships Expense 60,380 58,790 55,469 48,456 39,485Total Tuition Discounts ($) $ 251,178 $ 234,707 $ 219,656 $ 197,034 $ 179,365Total Tuition Discounts ($) $ 251,178 $ 234,707 $ 219,656 $ 197,034 $ 179,365Gross Tuition and Fees $ 736,074 $ 671,419 $ 630,498 $ 601,742 $ 557,085Total Tuition Discount (%)34.1% 35.0% 34.8% 32.7% 32.2%762012 Financial Report CA IA RA IS Sttitia. SetoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportUnrestricted Financial Resources to Direct DebtFiscal Year Ended June 30, 2012 2011 2010 2009 2008Current Portion of Long-Term Debt $ 183,226 $ 29,107 $ 30,139 $ 24,922 $ 21,697Long-Term Debt Subject to Remarketing 100,330 220,885 223,680 224,925 226,120Long-Term Debt 1,122,312 1,140,934 915,906 608,114 631,742Total Direct Debt $ 1,405,868 $ 1,390,926 $ 1,169,725 $ 857,961 $ 879,559Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Total Direct Debt $ 1,405,868 $ 1,390,926 $ 1,169,725 $ 857,961 $ 879,559Unrestricted Financial Resourcesto Direct Debt 0.98 0.97 1.00 1.01 1.03Expendable Financial Resources to Direct Debt (Viability Ratio)Fiscal Year Ended June 30, 2012 2011 2010 2009 2008Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Net Assets -Restricted Expendable -Scholarships,Research, Instruction and Other 299,789 264,605 244,226 235,405 262,266Net Assets -Restricted Expendable -Loans 79,091 77,300 75,637 78,357 77,656Expendable Net Assets $ 1,758,095 $ 1,692,835 $ 1,483,779 $ 1,181,961 $ 1,244,778Expendable Net Assets $ 1,758,095 $ 1,692,835 $ 1,483,779 $ 1,181,961 $ 1,244,778Total Direct Debt $ 1,405,868 $ 1,390,926 $ 1,169,725 $ 857,961 $ 879,559Viability Ratio 1.25 1.22 1.27 1.38 1.42Total Financial Resources to Direct DebtFiscal Year Ended June 30, 2012 2011 2010 2009 2008Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Net Assets -Restricted Expendable -Scholarships,Research, Instruction and Other 299,789 264,605 244,226 235,405 262,266Net Assets -Restricted Expendable -Loans 79,091 77,300 75,637 78,357 77,656Net Assets -Restricted Nonexpendable 771,146 788,876 679,494 612,119 718,314Total Financial Resources $ 2,529,241 $ 2,481,711 $ 2,163,273 $ 1,794,080 $ 1,963,092Total Financial Resources $ 2,529,241 $ 2,481,711 $ 2,163,273 $ 1,794,080 $ 1,963,092Total Direct Debt $ 1,405,868 $ 1,390,926 $ 1,169,725 $ 857,961 $ 879,559Total Financial Resourcesto Direct Debt 1.80 1.78 1.85 2.09 2.23Direct Debt per StudentFiscal Year Ended June 30, 2012 2011 2010 2009 2008Total Direct Debt $ 1,405,868 $ 1,390,926 $ 1,169,725 $ 857,961 $ 879,559Number of Students -End of Fiscal Year (FTEs) 57,806 56,843 55,272 53,292 51,025Direct Debt per Student$ 24,320 $ 24,470 $ 21,163 $ 16,099 $ 17,2382012 FinanciaL Report77 MCA IA RATIS Sttstcl SecioSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportActual Debt Service to OperationsFiscal Year Ended June 30, 2012 2011 2010 2009 2008Debt Service -Principal $ 26,393 $ 29,010 $ 24,922 $ 21,987 $ 17,437Debt Service -Interest 53,923 49,507 46,103 31,432 43,055Total Debt Service $ 80,316 $ 78,517 $ 71,025 $ 53,419 $ 60,492Operating Expenses $ 2,661,939 $ 2,530,503 $ 2,418,849 $ 2,365,757 $ 2,291,863Less: Scholarships & Fellowships Expense (60,380) (58,790) (55,469) (48,456) (39,485)Interest Expense 53,923 49,507 46,103 31,432 43,055Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Total Debt Service $ 80,316 $ 78,517 $ 71,025 $ 53,419 $ 60,492Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Actual Debt Service to Operations 3.0% 3.1% 2.9% 2.3% 2.6%Capital Expense to OperationsFiscal Year Ended June 30, 2012 2011 2010 2009 2008Depreciation Expense $ 160,915 $ 155,103 $ 146,753 $ 131,167 $ 125,996Interest Expense 53,923 49,507 46,103 31,432 43,055Total Capital Expense $ 214,838 $ 204,610 $ 192,856 $ 162,599 $ 169,051Operating Expenses $ 2,661,939 $ 2,530,503 $ 2,418,849 $ 2,365,757 $ 2,291,863Less: Scholarships & Fellowships Expense (60,380) (58,790) (55,469) (48,456) (39,485)Interest Expense 53,923 49,507 46,103 31,432 43,055Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Total Capital Expense $ 214,838 $ 204,610 $ 192,856 $ 162,599 $ 169,051Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Capital Expense to Operations8.1%8.1%8.0%6.9%7.4%782012 FinanciaL Report BALNC SH E RA IO SttsialetoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportUnrestricted Financial Resources to OperationsFiscal Year Ended June 30, 2012 2011 2010 2009 2008Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Operating Expenses $ 2,661,939 $ 2,530,503 $ 2,418,849 $ 2,365,757 $ 2,291,863Less: Scholarships & Fellowships Expense (60,380) (58,790) (55,469) (48,456) (39,485)Interest Expense 53,923 49,507 46,103 31,432 43,055Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Unrestricted Financial Resourcesto Operations 0.52 0.54 0.48 0.37 0.39Expendable Financial Resources to Operations (Primary Reserve Ratio)Fiscal Year Ended June 30, 2012 2011 2010 2009 2008Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Net Assets -Restricted Expendable -Scholarships,Research, Instruction and Other 299,789 264,605 244,226 235,405 262,266Net Assets -Restricted Expendable -Loans 79,091 77,300 75,637 78,357 77,656Expendable Net Assets $ 1,758,095 $ 1,692,835 $ 1,483,779 $ 1,181,961 $ 1,244,778Operating Expenses $ 2,661,939 $ 2,530,503 $ 2,418,849 $ 2,365,757 $ 2,291,863Less: Scholarships & Fellowships Expense (60,380) (58,790) (55,469) (48,456) (39,485)Interest Expense 53,923 49,507 46,103 31,432 43,055Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Expendable Net Assets $ 1,758,095 $ 1,692,835 $ 1,483,779 $ 1,181,961 $ 1,244,778Adjusted Total Operating Expense $ 2,655,482 $ 2,521,220 $ 2,409,483 $ 2,348,733 $ 2,295,433Primary Reserve Ratio 0.66 0.67 0.62 0.50 0.54Total Financial Resources per StudentFiscal Year Ended June 30, 2012 2011 2010 2009 2008Net Assets -Unrestricted $ 1,379,215 $ 1,350,930 $ 1,163,916 $ 868,199 $ 904,856Net Assets -Restricted Expendable -Scholarships,Research, Instruction and Other 299,789 264,605 244,226 235,405 262,266Net Assets -Restricted Expendable -Loans 79,091 77,300 75,637 78,357 77,656Net Assets -Restricted Nonexpendable 771,146 788,876 679,494 612,119 718,314Total Financial Resources $ 2,529,241 $ 2,481,711 $ 2,163,273 $ 1,794,080 $ 1,963,092Total Financial Resources $ 2,529,241 $ 2,481,711 $ 2,163,273 $ 1,794,080 $ 1,963,092Number of Students -End of Fiscal Year (FTE)Total Financial Resources per Student57,806$ 43,75456,843$ 43,65955,272$ 39,13953,292$ 33,66551,025$ 38,4732012 Financial Report79 OPER TIN RATIS Sttitia. SetoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportAnnual Operating Margin (Net Operating Revenues Ratio)Fiscal Year Ended June 30, 2012 2011 2010 2009 2008Operating Inc (Loss) After State Appropriations $ (158,749) $ (67,155) $ 20,331 $ (23,810) $ (49,561)Federal Appropriations 28,222 28,416 21,455 14,858 14,277Federal Pell Grants 62,311 57,951 48,281 31,649 27,232Normalized Investment Income 127,497 114,592 107,236 105,498 95,963Private Gifts 90,346 52,564 48,695 52,552 51,680Interest Expense (53,923) (49,507) (46,103) (31,432) (43,055)Net Operating Surplus (Deficit) $ 95,704 $ 136,861 $ 199,895 $ 149,315 $ 96,536Total Operating Revenues $ 2,105,561 $ 2,025,717 $ 1,940,822 $ 1,862,469 $ 1,780,021Less: Scholarship & Fellowships Expense (60,380) (58,790) (55,469) (48,456) (39,485)State Appropriations 397,629 437,631 498,358 479,478 462,281Federal Appropriations 28,222 28,416 21,455 14,858 14,277Federal Pell Grants 62,311 57,951 48,281 31,649 27,232Normalized Investment Income (a) 127,497 114,592 107,236 105,498 95,963Private Gifts 90,346 52,564 48,695 52,552 51,680Total Operating Revenues $ 2,751,186 $ 2,658,081 $ 2,609,378 $ 2,498,048 $ 2,391,969(a) Normalized investment income is equal to 5% of the rolling averoge balance of total cash and investments over the previous three fiscal years.Net Operating Surplus (Deficit) $ 95,704 $ 136,861 $ 199,895 $ 149,315 $ 96,536Total Operating Revenues $ 2,751,186 $ 2,658,081 $ 2,609,378 $ 2,498,048 $ 2,391,969Net Operating Revenues Ratio 3.5% 5.1% 7.7% 6.0% 4.0%Debt Service CoverageFiscal Year Ended June 30, 2012 2011 2010 2009 2008Total Debt Service $ 80,316 $ 78,517 $ 71,025 $ 53,419 $ 60,492Net Operating Surplus (Deficit) $ 95,704 $ 136,861 $ 199,895 $ 149,315 $ 96,536Add Back: Interest Expense 53,923 49,507 46,103 31,432 43,055Add Back: Depreciation Expense 160,915 155,103 146,753 131,167 125,996Adjusted Net Operating Surplus (Deficit) $ 310,542 $ 341,471 $ 392,751 $ 311,914 $ 265,587Adjusted Net Operating Surplus (Deficit) $ 310,542 $ 341,471 $ 392,751 $ 311,914 $ 265,587Total Debt Service $ 80,316 $ 78,517 $ 71,025 $ 53,419 $ 60,492Debt Service Coverage 3.87 4.35 5.53 5.84 4.39Return on Net AssetsFiscal Year Ended June 30, 2012 2011 2010 2009 2008Change in Net Assets $ 68,373 $ 335,508 $ 322,122 $ (78,999) $ 107,320Average Net Assets $ 4,050,431 $ 3,848,490 $ 3,519,675 $ 3,404,277 $ 3,376,782Return on Net Assets Ratio1.7%8.7%9.2% -2.3%3.2%802012 Financial Report Supplementary Information -Unaudited -See Accompanying Independent Auditors' ReportContribution RatiosFiscal Year Ended June 30, 2012 2011 2010 2009 2008State Appropriations $ 397,629 $ 437,631 $ 498,358 $ 479,478 $ 462,281Tuition and Fees, Net of Scholarship Allow/Exp 484,896 436,712 410,842 404,708 377,720Auxiliary Enterprises 357,101 372,477 347,779 334,367 315,819Grants and Contracts 311,742 320,522 318,123 296,745 299,148Federal Pell Grants 62,311 57,951 48,281 31,649 27,232Gifts 90,346 52,564 48,695 52,552 51,680Normalized Investment Income (a) 127,497 114,592 107,236 105,498 95,963Patient Care 813,024 759,734 736,799 702,424 681,312Other 106,640 105,898 93,265 90,627 80,814Total $ 2,751,186 $ 2,658,081 $ 2,609,378 $ 2,498,048 $ 2,391,969State Appropriations 14.5% 16.5% 19.1% 19.2% 19.3%Tuition and Fees, Net of Scholarship Allow/Exp 17.6% 16.4% 15.7% 16.2% 15.8%Auxiliary Enterprises 13.0% 14.0% 13.3% 13.4% 13.2%Grants and Contracts 11.3% 12.1% 12.2% 11.9% 12.5%Federal Pell Grants 2.3% 2.2% 1.9% 1.3% 1.1%Gifts 3.3% 2.0% 1.9% 2.1% 2.2%Normalized Investment Income (a) 4.6% 4.3% 4.1% 4.2% 4.0%Patient Care 29.6% 28.6% 28.2% 28.1% 28.5%Other 3.9% 4.0% 3.6% 3.6% 3.4%Total 100.0% 100.0% 100.0% 100.0% 100.0%(a) Normalized investment income is equal to 5% of the rolling average balance of total cash and investments over the previous three fiscal years.Operating Expenses by Functional ClassificationsFiscal Year Ended June 30, 2012 2011 2010 2009 2008Instruction $ 604,695 $ 557,081 $ 537,813 $ 544,025 $ 513,970Research 210,418 219,903 214,540 214,491 206,803Public Service 147,308 143,546 146,719 173,627 163,203Academic Support 133,742 127,856 124,119 108,626 120,071Student Services 75,207 69,992 70,671 69,234 69,669Institutional Support 102,565 97,934 109,493 104,198 116,672Operation and Maintenance of Plant 97,114 69,982 55,878 70,002 47,796Auxiliary Enterprises 1,069,595 1,030,316 957,394 901,931 888,198Scholarships and Fellowships 60,380 58,790 55,469 48,456 39,485Depreciation 160,915 155,103 146,753 131,167 125,996Total Operating Expenses $ 2,661,939 $ 2,530,503 $ 2,418,849 $ 2,365,757 $ 2,291,863Instruction 22.7% 22.0% 22.2% 23.0% 22.4%Research 7.9% 8.7% 8.9% 9.1% 9.0%Public Service 5.5% 5.7% 6.1% 7.3% 7.1%Academic Support 5.0% 5.1% 5.1% 4.6% 5.2%Student Services 2.8% 2.8% 2.9% 2.9% 3.0%Institutional Support 3.9% 3.9% 4.5% 4.4% 5.1%Operation and Maintenance of Plant 3.6% 2.8% 2.3% 3.0% 2.1%Auxiliary Enterprises 40.2% 40.7% 39.6% 38.1% 38.8%Scholarships and Fellowships 2.3% 2.3% 2.3% 2.0% 1.7%Depreciation 6.0% 6.1% 6.1% 5.5% 5.5%Total Operating Expenses 100.0% 100.0% 100.0% 100.0% 100.0%2012 FinanciaL Report81

!S UD N IN O M TO -CO SOIA E Stti.a SectioSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportEnrollmentFall Semester 2011 2010 2009 2008 2007Undergraduate Students (Head Count) 54,936 53,358 51,352 49,510 47,864Graduate Students (Head Count) 15,562 15,232 15,080 14,336 13,846Professional Students (Head Count) 3,067 3,006 2,952 2,873 2,830Total Students (Head Count) 73,565 71,596 69,384 66,719 64,540Undergraduate Students (FTE) 44,940 43,737 41,974 40,294 38,642Graduate Students (FTE) 8,877 8,571 8,401 7,890 7,553Professional Students (FTE) 3,026 2,964 2,917 2,841 2,799Total Students (FTE) 56,843 55,272 53,292 51,025 48,994Acceptance Rate -First-time Freshmen 79% 80% 80% 81% 80%Acceptance Rate -Undergraduate Transfers 73% 73% 72% 72% 70%Matriculation -First-time Freshmen 41% 42% 41% 46% 47%Matriculation -Undergraduate Transfers 66% 67% 68% 68% 64%DemographicsFall Semester 2011 2010 2009 2008 2007Male 47% 47% 47% 46% 47%Female 53% 53% 53% 54% 53%Undergraduate Residence -Missouri 82% 83% 84% 84% 85%Undergraduate Residence -Out of State 18% 17% 16% 16% 15%Undergraduate Full-Time 77% 77% 77% 76% 76%Undergraduate Part-Time 23% 23% 23% 24% 24%Graduate Full-Time 45% 45% 40% 38% 39%Graduate Part-Time 55% 55% 60% 62% 61%White 75.4% 76.5% 77.1% 78.2% 78.6%Black or African American 10.0% 9.8% 9.9% 9.3% 9.3%Non-Resident Alien 6.4% 6.2% 6.1% 6.0% 5.6%Asian / Pacific Is. 3.6% 3.5% 3.5% 3.4% 3.6%Hispanic 3.0% 2.8% 2.6% 2.5% 2.3%Other 1.6% 1.2% 0.8% 0.6% 0.6%Degrees AwardedFiscal Year Ended June 30, 2012 2011 2010 2009 2008Baccalaureate 10,319 9,703 9,605 9,291 8,997Graduate Certificate 623 539 520 438 321Master's 4,069 3,870 3,608 3,620 3,432Educational Specialist 104 100 123 148 102Doctoral 610 557 519 487 510First Professional Degree 790 818 800 763 749Total 16,515 15,587 15,175 14,747 14,111822012 FinanciaL Report ST D N INF RMA IO -COUM I Sttsia etoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportEnrollmentFall Semester 2011 2010 2009 2008 2007Undergraduate Students (Head Count) 25,992 24,834 23,799 22,980 21,586Graduate Students (Head Count) 6,534 6,310 6,288 6,024 5,708Professional Students (Head Count) 1,236 1,197 1,150 1,126 1,111Total Students (Head Count) 33,762 32,341 31,237 30,130 28,405Undergraduate Students (FTE) 23,840 22,899 21,943 21,197 19,847Graduate Students (FTE) 3,966 3,765 3,721 3,536 3,340Professional Students (FTE) 1,215 1,174 1,134 1,108 1,094Total Students (FTE) 29,021 27,838 26,798 25,841 24,281Acceptance Rate -First-time Freshmen 82% 83% 83% 85% 85%Acceptance Rate -Undergraduate Transfers 67% 67% 69% 71% 67%Matriculation -First-time Freshmen 41% 42% 41% 47% 48%Matriculation -Undergraduate Transfers 62% 66% 66% 68% 71%DemographicsFall Semester 2011 2010 2009 2008 2007Male 47% 47% 46% 46% 46%Female 53% 53% 54% 54% 54%Undergraduate Residence -Missouri 79% 81% 83% 84% 85%Undergraduate Residence -Out of State 21% 19% 17% 16% 15%Undergraduate Full-Time 94% 94% 94% 94% 94%Undergraduate Part-Time 6% 6% 6% 6% 6%Graduate Full-Time 58% 58% 48% 46% 48%Graduate Part-Time 42% 42% 52% 54% 52%White 80.3% 81.8% 82.9% 83.6% 83.8%Black or African American 6.9% 6.6% 6.4% 5.9% 5.8%Non-Resident Alien 5.9% 5.4% 5.4% 5.4% 5.3%Asian / Pacific Is. 2.4% 2.4% 2.5% 2.5% 2.7%Hispanic 2.7% 2.5% 2.2% 2.0% 1.8%Other 1.8% 1.3% 0.6% 0.6% 0.6%Degrees AwardedFiscal Year Ended June 30, 2012 2011 2010 2009 2008Baccalaureate 5,528 5,087 4,963 4,855 4,779Graduate Certificate 179 162 142 88 69Master's 1,631 1,513 1,515 1,506 1,421Educational Specialist 43 53 59 57 34Doctoral 367 365 322 306 326First Professional Degree 299 306 304 307 303Total 8,047 7,486 7,305 7,119 6,9322012 FinanciaL Report83 Supplementary Information -Unaudited -See Accompanying Independent Auditors' ReportEnrollmentFall Semester 2011 2010 2009 2008 2007Undergraduate Students (Head Count) 10,122 9,850 9,381 9,261 9,094Graduate Students (Head Count) 3,692 3,771 3,795 3,651 3,800Professional Students (Head Count) 1,659 1,638 1,623 1,569 1,548Total Students (Head Count) 15,473 15,259 14,799 14,481 14,442Undergraduate Students (FTE) 7,586 7,395 6,972 6,662 6,400Graduate Students (FTE) 2,032 2,030 2,021 1,936 1,909Professional Students (FTE) 1,638 1,618 1,604 1,555 1,535Total Students (FTE) 11,256 11,043 10,597 10,153 9,844Acceptance Rate -First-time Freshmen 71% 71% 72% 73% 66%Acceptance Rate -Undergraduate Transfers 80% 72% 70% 66% 61%Matriculation -First-time Freshmen 39% 39% 40% 42% 44%Matriculation -Undergraduate Transfers 64% 65% 68% 67% 67%DemographicsFall Semester 2011 2010 2009 2008 2007Male 43% 43% 43% 43% 42%Female 57% 57% 57% 57% 58%Undergraduate Residence -Missouri 74% 75% 75% 77% 78%Undergraduate Residence -Out of State 26% 25% 25% 23% 22%Undergraduate Full-Time 68% 68% 67% 63% 61%Undergraduate Part-Time 32% 32% 33% 37% 39%Graduate Full-Time 34% 33% 33% 33% 30%Graduate Part-Time 66% 67% 67% 67% 70%White 67.9% 67.7% 67.6% 68.9% 71.1%Black or African American 12.6% 12.6% 12.7% 12.5% 12.0%Non-Resident Alien 6.5% 7.1% 7.4% 7.3% 6.3%Asian / Pacific Is. 6.5% 6.4% 6.5% 6.2% 6.2%Hispanic 4.7% 4.7% 4.3% 4.4% 3.8%Other 1.8% 1.5% 1.4% 0.7% 0.7%Degrees AwardedFiscal Year Ended June 30, 2012 2011 2010 2009 2008Baccalaureate 1,749 1,523 1,633 1,496 1,289Graduate Certificate 29 24 18 20 24Master's 999 972 911 917 852Educational Specialist 35 25 33 49 40Doctoral 99 77 83 68 59First Professional Degree 444 468 455 412 408Total 3,355 3,089 3,133 2,962 2,67284,2012 FinanciaL Report ST D N IN OR ATO -MIS UI -& Stts a SetoSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportEnrollmentFall Semester 2011 2010 2009 2008 2007Undergraduate Students (Head Count) 5,671 5,503 5,206 4,911 4,752Graduate Students (Head Count) 1,850 1,702 1,608 1,456 1,414Professional Students (Head Count) ----Total Students (Head Count) 7,521 7,205 6,814 6,367 6,166Undergraduate Students (FTE) 5,236 5,127 4,886 4,622 4,483Graduate Students (FTE) 1,141 1,036 979 831 840Professional Students (FTE) -----Total Students (FTE) 6,377 6,163 5,865 5,453 5,323Acceptance Rate -First-time Freshmen 88% 87% 89% 88% 90%Acceptance Rate -Undergraduate Transfers 67% 67% 74% 74% 76%Matriculation -First-time Freshmen 44% 47% 47% 49% 49%Matriculation -Undergraduate Transfers 72% 80% 71% 67% 73%Note: Rolla's pre-application advising process encourages unqualified students to apply elsewhere, thereby producing misleadilacceptance rate figures.DemographicsFall Semester 2011 2010 2009 2008 2007Male 78% 78% 78% 78% 77%Female 22% 22% 22% 22% 23%Undergraduate Residence -Missouri 79% 80% 81% 81% 81%Undergraduate Residence -Out of State 21% 20% 19% 19% 19%Undergraduate Full-Time 91% 91% 92% 93% 92%Undergraduate Part-Time 9% 9% 8% 7% 8%Graduate Full-Time 59% 59% 59% 52% 54%Graduate Part-Time 41% 41% 41% 48% 46%White 74.6% 75.7% 76.4% 78.3% 78.7%Black or African American 4.9% 4.6% 5.4% 4.9% 4.6%Non-Resident Alien 14.4% 13.9% 12.6% 11.0% 10.4%Asian / Pacific Is. 2.4% 2.5% 2.7% 3.1% 3.3%Hispanic 2.5% 2.4% 2.3% 2.2% 2.3%Other 1.2% 0.9% 0.6% 0.5% 0.7%Degrees AwardedFiscal Year Ended June 30, 2012 2011 2010 2009 2008Baccalaureate 1,079 1,001 998 922 913Graduate Certificate 319 282 278 250 164Master's 567 517 411 426 430Educational SpecialistDoctoral 70 65 51 50 63First Professional Degree -----Total 2,035 1,865 1,738 1,648 1,5702012 FinanciaL Report85 ST D N IN O M TO -S .LUS Sttsia ScioSupplementary Information -Unaudited -See Accompanying Independent Auditors' ReportEnrollmentFall Semester 2011 2010 2009 2008 2007Undergraduate Students (Head Count) 13,151 13,171 12,966 12,358 12,432Graduate Students (Head Count) 3,486 3,449 3,389 3,205 2,924Professional Students (Head Count) 172 171 179 178 171Total Students (Head Count) 16,809 16,791 16,534 15,741 15,527Undergraduate Students (FTE) 8,279 8,317 8,172 7,814 7,912Graduate Students (FTE) 1,738 1,740 1,681 1,587 1,464Professional Students (FTE) 172 171 179 178 171Total Students (FTE) 10,189 10,228 10,032 9,579 9,547Acceptance Rate -First-time Freshmen 54% 58% 60% 59% 62%Acceptance Rate -Undergraduate Transfers 75% 78% 77% 79% 78%Matriculation -First-time Freshmen 41% 37% 39% 38% 38%Matriculation -Undergraduate Transfers 71% 66% 69% 69% 57%DemographicsFall Semester 2011 2010 2009 2008 2007Male 40% 39% 38% 35% 40%Female 60% 61% 62% 65% 60%Undergraduate Residence -Missouri 93% 93% 93% 93% 93%Undergraduate Residence -Out of State 7% 7% 7% 7% 7%Undergraduate Full-Time 46% 46% 46% 47% 48%Undergraduate Part-Time 54% 54% 54% 53% 52%Graduate Full-Time 26% 28% 23% 23% 26%Graduate Part-Time 74% 72% 77% 77% 74%White 72.3% 73.7% 74.2% 75.4% 75.1%Black or African American 16.7% 16.4% 16.6% 15.6% 15.8%Non-Resident Alien 3.8% 3.7% 3.6% 3.9% 3.7%Asian / Pacific Is. 3.9% 3.2% 3.2% 3.0% 3.3%Hispanic 2.3% 2.1% 1.9% 1.7% 1.8%Other 1.0% 0.9% 0.5% 0.4% 0.3%Degrees AwardedFiscal Year Ended June 30, 2012 2011 2010 2009 2008Baccalaureate 1,963 2,092 2,011 2,018 2,016Graduate Certificate 96 71 82 80 64Master's 872 868 771 771 729Educational Specialist 26 22 31 42 28Doctoral 74 50 63 63 62First Professional Degree 47 44 41 44 38Total 3,078 3,147 2,999 3,018 2,937862012 FinanciaL Report This page is intentionaLty Left bLankUniversity~~~ ofMsor Syste 202Fnn: eot8 University of Missouri SystemCOLUMBIA I KANSAS CITY I ROLLA I ST.LOUISAdvancing Mlissourl.88 201F .nn **I.eor Adincn* a sorl University of Missouri SystemCOLUMBIA I KANSAS CITY I ROLLA I ST.LOUISOffice of Finance and AdministrationUniversity of Missouri System215 University HallColumbia, MO 65211www.umsystem.eduAdvancing Missourli