Financial statements and report of independent certified public accountants
University of Nevada, Reno Foundation
June 30, 2003
CONTENTS
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS...............................................................
3
MANAGEMENT’S DISCUSSION AND ANALYSIS ..................................................................................................
4
BASIC FINANCIAL STATEMENTS
Balance Sheet...............................................................................................................................................
11
Statement of Support and Revenue, Expenses and Changes in
Fund Net Assets..........................................................................................................................................
12
Statement of Cash Flows ...........................................................................................................................
13
Notes to Financial Statements ..................................................................................................................
15
REQUIRED SUPPLEMENTARY INFORMATION
Statement of Support and Revenue, Expenses and Changes in Fund
Net Assets - Budget and Actual................................................................................................................
24
SUPPLEMENTARY INFORMATION
Unrestricted Fund - Alumni and University Program Expenses ........................................................
26
Unrestricted Fund - Administrative and Fundraising Expenses .........................................................
27
Accountants and
Management Consultants
Grant Thornton LLP
The US Member Firm of
Grant Thornton International
P.O. Box 30
Reno, Nevada 89504
775-786-1520 Phone
775-786-7091 Fax
Report of Independent Certified Public Accountants
Board of Trustees
University of Nevada, Reno Foundation
We have audited the accompanying balance sheet of the University of Nevada, Reno Foundation as of
June 30, 2003, and the related statements of support and revenue, expenses and changes in fund net assets,
and cash flows for the year then ended. These basic financial statements are the responsibility of the
Foundation’s management. Our responsibility is to express an opinion on these basic financial statements
based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
financial position of the University of Nevada, Reno Foundation as of June 30, 2003, and the results of its
operations and its cash flows for the year then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements of the
Foundation taken as a whole. The Management’s Discussion and Analysis and the Statement of Support and
Revenue, Expenses and Changes in Fund Net Assets - Budget and Actual are not required parts of the basic
financial statements but are supplementary information required by the Governmental Accounting Standards
Board. We have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the supplementary information. However, we
did not audit the information and express no opinion on it.
The accompanying supplementary information listed in the foregoing table of contents is presented for
purposes of additional analysis and is not a required part of the basic financial statements of the Foundation.
The supplementary information is the responsibility of the management of the Foundation. Such
information has been subjected to the auditing procedures applied in our audit of the financial statements of
the Foundation and, in our opinion, is fairly stated, in all material respects when considered in relation to the
basic financial statements taken as a whole.
Reno, Nevada
August 14, 2003
MANAGEMENT’S DISCUSSION AND ANALYSIS
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended June 30, 2003
This section of the University of Nevada, Reno Foundation’s (Foundation) annual financial report presents our
discussion and analysis of the financial performance of the Foundation during the fiscal year ended June 30, 2003.
This discussion has been prepared by management along with the financial statements and related footnote
disclosures and should be read in conjunction with and is qualified in its entirety by the financial statements and
footnotes.
Reporting Entity
The University of Nevada, Reno Foundation is a nonprofit corporation whose mission is to facilitate the
solicitation and management of gift revenues for the benefit of the University of Nevada, Reno (University). In
this capacity, the Foundation is considered to be a component unit of the University because its’ Board of
Trustees is appointed by the UCCSN Board of Regents. Accordingly, the Foundation is included in the
University’s financial statements as a discrete component unit. Transactions with the University relate primarily
to the disbursement of gift funds and the reimbursement of expenditures.
Financial Analysis
The basic financial statements of the Foundation are the Balance Sheet; Statement of Support and Revenue,
Expenses and Changes in Fund Net Assets; and the Statement of Cash Flows. The Balance Sheet presents the
financial position of the Foundation as of June 30, 2003. The Statement of Support and Revenue, Expenses and
Changes in Fund Net Assets summarizes the Foundation’s financial activity for the year ended June 30, 2003.
The Statement of Cash Flows reflects the effect on cash that result from the Foundation’s operating activities,
investing activities, and capital and non-capital financing activities for the year ended June 30, 2003.
The following schedules are prepared from the Foundation’s basic financial statements.
Balance Sheet
This statement is presented with three major categories, namely assets, liabilities and net fund assets. The assets
are classified between current and non-current assets. The current assets include cash and cash equivalents,
investments, accounts receivable and deposits, current portion of pledges and notes receivable. The non-current
assets include pledges receivable, notes receivable, residual interests in trusts held for others, and other assets.
Capital assets include land, buildings and improvements and equipment, net of depreciation.
Liabilities are also classified between current and non-current classifications. Current liabilities include due to the
University, accounts payable and current portion of notes payable. These liabilities represent obligations due
within one year. Non-current liabilities include notes payable and deferred revenue.
Total assets increased slightly to $77.9 million in fiscal year 2003 from $72.4 million in fiscal year 2002.
Unrestricted assets increased slightly by $74 thousand, restricted assets increased by $4.39 million and endowed
assets increased by $1.07 million. Current assets increased by $4.6 million. The increases were in cash,
investments and pledges receivable and were a result of increased gift revenue and increases in the market value
of investments. Noncurrent liabilities increased by $1.5 million dollars from a note payable for the Redfield
building. The following is a comparison of the balance sheet at June 30, 2003 and 2002.
5
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2003
Balance Sheet - Continued
Balance Sheet
2003
2002
$64,371,462
$58,007,846
461,951
13,052,370
523,012
13,822,623
$77,885,783
$72,353,481
$ 1,197,446
7,360,581
$ 1,157,151
5,839,573
$ 8,558,027
$ 6,996,724
Fund net assets
Investment in capital assets
Unrestricted
Restricted - expendable
Endowment - nonexpendable
$ 461,951
1,467,482
22,376,358
45,021,965
$ 523,012
1,317,222
19,552,355
43,964,168
Total fund net assets
$69,327,756
$65,356,757
Assets
Current assets
Non-current assets
Capital assets, net of depreciation
Other
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Capital Assets, Net
2003
2002
Less accumulated depreciation
$ 401,900
35,000
97,548
18,015
552,463
(90,512)
$ 439,900
35,000
126,932
18,015
619,847
(96,835)
Net capital assets
$ 461,951
$ 523,012
Land
Buildings
Equipment
Software
Financial Analysis of Fund Net Assets
Fund net assets increased from the prior year by $4 million. Total net assets were $69 million at June 30, 2003, of
which $1.5 million is available for the unrestricted purposes of the Foundation. Of this amount, $800 thousand is
already committed by the Foundation Trustees for programs that exceed one fiscal year, which leaves an
uncommitted balance of $700 thousand. The remainder of the fund net assets is reserved or designated for
specific purposes, and not available for new spending.
6
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2003
Statement of Support and Revenue, Expenses and Changes in Net Assets
This statement reflects the effect of operations on net assets. The statement is broken down into three
categories: Operating Support and Revenue, Operating Expenses and Investment Income.
Operating support and revenue include donor contributions, university support and special event and other
income. These revenues increased from the prior year by $2.5 million. Donor contributions increased by $2.4
million, of which 90% was a gift and pledge from one donor. University support was consistent with the prior
year. Special event and other income increased by $139 thousand.
Expenses include alumni programs, university programs, university scholarships, administrative and fundraising
expenses. These expenses decreased from the prior year by $1.13 million. The majority of the decrease was in a
decrease of university program expense in the restricted funds of $1.27 million. The other categories remained
fairly consistent from year to year.
Investment income increased by $6 million, most of which was a result of the change in market value of the
investments.
The following is a comparison of the operating results for the years ended June 30, 2003 and 2002:
Operating Results
Operating support and revenue
Donor contributions
University support
Special events and other income
Total operating support and revenue
Operating expenses
Program expenses
Alumni programs
University programs
University scholarships
Total program expenses
Administrative and fundraising expenses
Administrative
Fundraising
Total administrative and fundraising
expenses
Total operating expenses
Operating loss
Investment income
Additions to permanent and term endowments
Net change in fund net assets
7
2003
2002
$9,350,550
855,766
626,172
10,832,488
$6,934,720
898,682
486,544
8,319,946
214,770
6,227,154
3,091,669
9,533,593
173,500
7,497,665
3,014,040
10,685,205
597,048
864,254
797,420
645,566
1,461,302
1,442,986
10,994,895
12,128,191
(162,407)
(3,808,245)
3,058,922
1,074,484
(3,020,318)
3,217,295
$3,970,999
($3,611,268)
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2003
Statement of Cash Flows
This statement is used to determine the Foundation’s ability to meet its obligations, and to determine if external
financing is needed. It is presented using the direct method with four major classifications: operating activities,
non-capital financing activities, capital and related financing activities, and investing activities.
Following is a comparison of cash flows for the years ended June 30, 2003 and 2002:
Cash Flows
Cash provided by (used in):
Operating activities
Non-capital financing activities
Capital and related financing activities
Investing activities
NET INCREASE IN CASH
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
2003
2002
($1,698,510)
951,450
1,794,312
(145,084)
($2,947,803)
698,355
454,985
6,519,562
902,168
4,725,099
13,455,617
8,730,518
$14,357,785
$13,455,617
Long-Term Obligations
At June 30, 2003, the Foundation had long-term obligations of $2.5 million, which consists of two notes. One to
Sun West Bank to assist with the construction costs of the Pennington Medical School Library. The outstanding
balance on the loan at June 30 is $232 thousand. The other loan is to Wells Fargo Bank to assist with the
construction costs of the Redfield Campus. The outstanding balance at June 30 is $2.3 million. Additional
information concerning these obligations may be found in Note G of the Notes to the Financial Statements.
Budgetary Highlights
The budget for unrestricted funds for the fiscal year ending June 30, 2003 projected expenditures exceeding
revenues by $338 thousand dollars. The actual net change in fund assets had revenues exceeding expenditures by
$127 thousand dollars for a positive difference of $465 thousand dollars. This a primarily the result of not filling
vacant positions and reducing operating expenditures to the largest extent possible.
8
University of Nevada, Reno Foundation
MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED
For the year ended June 30, 2003
Economic Factors
The Foundation’s primary sources of revenue are donor contributions, university support and investment
income. Comparing fiscal year ending June 30, 2003 to June 30, 2002 donor contributions dipped by 22%. By
mid spring, donor contributions began to increase and donor interest in university projects picked up as well
which coincided with the state of the economy. University support remained consistent from year to year and
investment income increased significantly. Daily cash on hand levels were higher this year than last, which
contributed to the increase in the investment income as well as the equity market turn around.
Looking forward to fiscal year ending June 30, 2004, gift and pledge revenue will see a significant increase as the
fundraising efforts for the Knowledge Center begin to come to fruition. The project has a $66 million dollar
construction budget with $22 million dollars coming from private gifts. In addition, a large estate will be making
a significant gift to the Foundation for unrestricted purposes.
Requests for Information
This report is designed to provide a general overview of the University of Nevada, Reno Foundation’s finances
for all interested parties. Questions concerning the information contained in this report should be addressed to
Laurie McNulty, Treasurer, Mail Stop 162, Reno, Nevada 89557.
9
BASIC FINANCIAL STATEMENTS
University of Nevada, Reno Foundation
BALANCE SHEET
June 30, 2003
(With comparative totals for the year ended June 30, 2002)
CURRENT ASSETS
ASSETS
Cash and cash equivalents
Investments
Accounts receivable
Prepaid expenses and deposits
Current portion of pledges receivable
Current portion of notes receivable
Total current assets
Total
2002
Total
$ 343,127
44,624,374
30,400
44,997,901
$14,357,785
47,918,254
116,003
30,708
1,936,080
12,632
64,371,462
$13,455,617
44,490,979
24,520
26,469
1,761,800
10,261
59,769,646
4,237,330
3,101,118
65,000
4,898,318
146,436
32,218
48,400
-
4,269,548
3,101,118
436,900
5,341,112
340,592
3,142,629
3,102,795
474,900
5,484,229
331,170
25,051
985,501
$ 2,538,684
12,448,202
$30,268,580
80,618
$45,078,519
25,051
13,514,321
$77,885,783
48,112
12,583,835
$72,353,481
$
$
$
$
$
Unrestricted
Restricted
$ 1,294,829
219,784
6,952
26,708
4,910
1,553,183
$12,719,829
3,074,096
109,051
4,000
1,900,770
12,632
17,820,378
323,500
442,794
194,156
NONCURRENT ASSETS
Pledges receivable
Notes receivable
Real property
Residual interest-irrevocable trusts
Other
Equipment, at cost, less accumulated
depreciation of $90,512
Total noncurrent assets
Total assets
LIABILITIES AND FUND NET ASSETS
CURRENT LIABILITIES
Due to University of Nevada, Reno
Accounts payable
Current portion of note payable
Total current liabilities
NONCURRENT LIABILITIES
Note payable
Deferred revenue
Total noncurrent liabilities
FUND NET ASSETS
Investment in capital assets
Unrestricted
Restricted - expendable
Restricted - nonexpendable
Total fund net assets
Total liabilities and fund net assets
The accompanying notes are an integral part of this statement.
54,174
108,135
162,309
462,246
2,347
562,390
1,026,983
2003
Endowment
8,154
8,154
516,420
118,636
562,390
1,197,446
780,222
97,823
279,106
1,157,151
560,342
560,342
1,901,921
4,898,318
6,800,239
-
1,901,921
5,458,660
7,360,581
207,095
5,632,478
5,839,573
348,551
1,467,482
1,816,033
$ 2,538,684
65,000
22,376,358
22,441,358
$30,268,580
48,400
45,021,965
45,070,365
$45,078,519
461,951
1,467,482
22,376,358
45,021,965
69,327,756
$77,885,783
523,012
1,317,222
19,552,355
43,964,168
65,356,757
$72,353,481
University of Nevada, Reno Foundation
STATEMENT OF SUPPORT AND REVENUE, EXPENSES
AND CHANGES IN FUND NET ASSETS
Year ended June 30, 2003
(With comparative totals for the year ended June 30, 2002)
Operating support and revenue
Donor contributions
University support
Special events and other income
Total operating support and revenue
Operating expenses
Program expenses
Alumni programs
University programs
University scholarships
Total program expenses
Administrative and fundraising expenses
Administrative
Fundraising
Total administrative and fundraising expenses
Total operating expenses
OPERATING INCOME (LOSS)
Investment income
Additions to permanent and term endowments
Transfers between funds
Distribution of expendable endowment
Other
Total transfers between funds
NET CHANGE IN FUND NET ASSETS
Fund net assets at beginning of year
Fund net assets at end of year
The accompanying notes are an integral part of this statement.
Total
2002
Total
12,222
12,222
$ 9,350,550
855,766
626,172
10,832,488
$ 6,934,720
898,682
486,544
8,319,946
5,990,293
3,066,669
9,056,962
-
214,770
6,227,154
3,091,669
9,533,593
173,500
7,497,665
3,014,040
10,685,205
597,048
864,254
1,461,302
-
-
597,048
864,254
1,461,302
797,420
645,566
1,442,986
1,937,933
9,056,962
-
10,994,895
12,128,191
(475,488)
300,859
12,222
(162,407)
(3,808,245)
487,557
534,400
2,036,965
3,058,922
(3,020,318)
-
-
1,074,484
1,074,484
3,217,295
63,933
51,197
115,130
2,430,151
(479,407)
1,950,744
(2,494,084)
428,210
(2,065,874)
-
-
127,199
2,786,003
1,057,797
3,970,999
(3,611,268)
1,688,834
19,655,355
44,012,568
65,356,757
68,968,025
$ 1,816,033
$22,441,358
$45,070,365
$69,327,756
$65,356,757
Unrestricted
Restricted
$
301,979
855,766
304,700
1,462,445
$ 9,048,571
309,250
9,357,821
214,770
236,861
25,000
476,631
2003
Endowment
$
University of Nevada, Reno Foundation
STATEMENT OF CASH FLOWS
For the year ended June 30, 2003
(With comparative totals for the year ended June 30, 2002)
Cash flows from operating activities:
Donor contributions
University support
Special events and other income
Cash paid to University
Cash paid to employees for services
Cash paid to suppliers
Net cash provided by (used in) operating activities
Cash flows from non-capital financing activities:
Additions to permanent and term endowments
Transfer between funds
Net cash provided by (used in) non-capital financing
activities
Cash flows from capital and related financing activities:
Purchase of equipment
Repayment of debt
Issuance of debt
Interest paid on notes payable
Net cash provided by (used in) capital and related
financing activities
Cash flows from investing activities:
Interest and dividends on investments
Proceeds from sale of investments
Proceeds from sale of real estate
Purchase of investments
Payments received from notes receivable
Net cash provided by (used in) investing activities
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Unrestricted
$
2003
Restricted
Endowment
$
Total
2002
33,715
12,222
8,154
54,091
$ 7,691,201
855,766
626,172
(9,490,463)
(1,094,580)
(286,606)
(1,698,510)
$ 6,800,646
898,682
486,544
(10,656,299)
(1,133,410)
656,034
(2,947,803)
221,943
855,766
304,700
(484,922)
(1,094,580)
(296,230)
(493,323)
$ 7,435,543
309,250
(9,005,541)
1,470
(1,259,278)
115,130
1,950,744
951,450
(2,065,874)
951,450
-
698,355
-
115,130
1,950,744
(1,114,424)
951,450
698,355
(2,403)
-
(437,723)
2,415,833
(181,395)
-
(2,403)
(437,723)
2,415,833
(181,395)
(4,515)
(283,299)
769,500
(26,701)
(2,403)
1,796,715
-
1,794,312
454,985
467,525
631,942
(649,853)
449,614
537,980
397,679
17,997
(401,889)
10,261
562,028
870,104
3,616,912
(5,643,742)
(1,156,726)
1,875,609
4,646,533
17,997
(6,695,484)
10,261
(145,084)
1,661,174
7,021,361
8,619
(2,183,245)
11,653
6,519,562
69,018
3,050,209
(2,217,059)
902,168
4,725,099
1,225,811
9,669,620
2,560,186
13,455,617
8,730,518
$ 1,294,829
$ 12,719,829
343,127
$ 14,357,785
$ 13,455,617
$
University of Nevada, Reno Foundation
STATEMENT OF CASH FLOWS - CONTINUED
For the year ended June 30, 2003
(With comparative totals for the year ended June 30, 2002)
Reconciliation of operating income (loss) to net cash
provided by (used in) operating activities:
Operating income (loss)
Adjustments to reconcile operating income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization
Interest on notes payable
Gifts of stocks and bonds
Changes in:
Accounts receivable
Accrued interest
Pledges receivable
Prepaid expenses and deposits
Residual interest - irrevocable trust
Due to University of Nevada, Reno
Accounts payable
Deferred revenue
Net cash provided by (used in) operating activities
Non-cash
Increase in cash surrender value of life insurance
The accompanying notes are an integral part of this statement.
Unrestricted
2003
Restricted
Endowment
$ (475,488)
$
$
300,859
Total
2002
12,222
$ (162,407)
$ (3,808,245)
25,464
(1,043)
181,395
(60,353)
-
25,464
181,395
(61,396)
37,784
26,701
(300,515)
(6,103)
(4,110)
(4,239)
25,532
(8,291)
11,189
(56,234)
(101,468)
(1,325,671)
117,585
(255,511)
1,470
(117,584)
5,133
28,582
8,154
-
(107,571)
5,133
(1,301,199)
(4,239)
143,117
(263,802)
20,813
(173,818)
315,232
(5,133)
832,096
2,751
783,335
2,205
(25,977)
(808,037)
$ (493,323)
$ (1,259,278)
$
54,091
$ (1,698,510)
$ (2,947,803)
$
$
$
-
$
$
-
9,422
9,422
11,716
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
NOTE A - SUMMARY OF ACCOUNTING POLICIES
The University of Nevada, Reno Foundation (the “Foundation”) is a nonprofit corporation. The
Foundation’s mission is to serve as an innovative, flexible and efficient organization to facilitate the
solicitation and management of gifts, grants, bequests and other revenues for the benefit of the
University of Nevada, Reno or any organizations that are affiliated with the University of Nevada, Reno
and are exempt from Federal income taxation.
A summary of the Foundation’s significant accounting policies applied in the preparation of the
accompanying financial statements follows.
1. Financial Reporting
The financial statements of the Foundation have been prepared in accordance with generally accepted
accounting principles (“GAAP”) as applied to governmental units. The Governmental Accounting
Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting
and financial reporting principles. For the reporting year, the Foundation has implemented GASB
Statement 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local
Governments. The Foundation also applies FASB Statements and Interpretations issued on or before
November 30, 1989, Accounting Principles Board Opinions, and Accounting Research Bulletins, to its
governmental activities provided they do not conflict with or contradict GASB pronouncements. The
following summary of significant accounting policies is presented to assist the reader in evaluating the
Foundation’s financial statements.
In order to ensure observance of limitations and restrictions placed on the use of resources available to
the Foundation, its accounts are maintained in accordance with the principles of fund accounting.
Resources for various purposes are classified for accounting and reporting purposes into funds
established according to their nature and purpose. Separate accounts are maintained for each fund.
Accordingly, all financial transactions have been recorded and reported by fund group as follows:
Unrestricted Funds - Represents funds that are not restricted and are available for the general operations
and programs of the Foundation.
Restricted Funds - Represents funds that are restricted by the donor and may only be utilized in accordance
with purposes established by such donors.
Endowment Funds - Represents funds that are subject to restrictions of gift instruments requiring that the
principal be invested and only the income be utilized for their established purposes.
Because Endowment investment funds include funds derived originally from permanently restricted
gifts, the management of these funds is subject to Nevada law (NRS 164.500). The Board has
interpreted state law as allowing it to use any of the investment returns as is prudent considering the
Foundation’s long and short-term needs, expected total return on its investments, price level trends and
general economic conditions.
15
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
1. Financial Reporting - Continued
In accordance with this interpretation, the Foundation has adopted an investment policy that establishes
an annual spendable objective, which is funded to provide funds for operating and capital expenditures,
and is calculated as 5% of the average market value of assets over the 12-quarter period ending on
June 30. The spending objective is to be met through the use of interest, dividends, and, to the extent
appropriate, accumulated capital gains and corpus. As of June 30, 2003, the Foundation has calculated
the current spending objective and has distributed all expendable endowment funds accordingly. The
distribution is presented as a transfer between funds - distribution of expendable endowment on the
Statement of Support and Revenue, Expenses and Changes in Fund Net Assets.
2. Recognition of Support and Revenue
Donations, gifts and pledges received are recognized as income when the donor makes a promise to give
to the Foundation that is, in substance, unconditional. Contributions received are recorded as
unrestricted, restricted or endowed support depending on the existence and/or nature of any donor
restrictions.
3. Cash and Cash Equivalents
The Foundation considers all highly liquid short-term interest bearing investments purchased with an
original maturity of three months or less and money market funds to be cash equivalents.
The Foundation’s cash and cash equivalents are categorized by the level of custodial credit risk assumed by
the Foundation and are defined as follows:
Category 1:
Insured or collateralized with securities held by the entity or by its agent in the Foundation’s
name.
Category 2:
Collateralized with securities held by the pledging financial institution’s trust department or
agent in the Foundation’s name.
Category 3:
Uncollateralized.
4. Investments
Investments are stated at fair value, and realized and unrealized gains and losses are reflected in the
statement of support and revenue, expenses and changes in fund balances.
The Foundation’s investments, other than open-end mutual funds, are categorized by the level of custodial
credit risk assumed by the Foundation and are defined as follows:
Category 1:
Investments that are insured or registered or for which securities are held by the
Foundation or its agent in the Foundation’s name.
Category 2:
Uninsured and unregistered investments for which the securities are held by the counter
party’s trust department or agent in the Foundation’s name.
Category 3:
Uninsured and unregistered investments for which the securities are held by the counter
party, or by the counter party’s trust department or agent, but not in the Foundation’s
name.
16
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued
5. Depreciation
Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations
over their estimated service lives on a straight-line basis.
6. Income Taxes
The Foundation is a nonprofit corporation, exempt from income tax under Internal Revenue Code
Section 501(c)(3), qualified for the charitable contribution deduction. Accordingly, no liability for
Federal income taxes has been provided in the financial statements.
7. Donated Assets and Services
Donated assets are reflected as contributions in the accompanying statements at their estimated value at
date of receipt. No amounts have been reflected in the statements for donated services, since no
objective basis is available to measure the value of such services. Nevertheless, a substantial number of
volunteers have donated significant amounts of their time to the organization’s program services and its
fundraising efforts.
8. Special Events
The gross proceeds received from special events have been netted by the related costs and expenses in
the amount of $58,083 and $113,791 for the years ended June 30, 2003 and 2002, respectively.
9. Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles,
management is required to make estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
10. Comparative Information
The financial statements include certain prior-year summarized comparative information in total, but not
by asset class. Such information does not include sufficient detail to constitute a presentation in
conformity with generally accepted accounting principles. Accordingly, such information should be read
in conjunction with the Foundation’s financial statements for the year ended June 30, 2002 from which
the summarized information was derived.
11. Reclassifications
The comparative information for the year ended June 30, 2002 reflect certain reclassifications, which
have no effect on excess of support and revenue over (under) expenses, to conform to classifications in
the current year.
17
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE A - SUMMARY OF ACCOUNTING POLICIES
- Continued
12. Advertising
The Foundation expenses the costs of all advertising and promotions as they are incurred. Total
advertising expenses for the period ended June 30, 2003 and 2002 amounted to $5,345 and $5,926,
respectively.
13. New Accounting Pronouncements
Effective July 1, 2002, the Foundation has adopted the provisions of GASB Statement No. 34, Basic
Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments, GASB Statement
No. 37, Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments:
Omnibus, GASB Statement No. 38, Certain Financial Statement Note Disclosures, and GASB Statement No. 41,
(an amendment of GASB Statement No. 34) Budgetary Comparison Schedules - Perspective Differences. The primary
effects of the adoption include the presentation of a classified balance sheet, modified disclosures, the
inclusion of a Statement of Revenues, Expenses and Changes in Fund Net Assets - Budget and Actual and
the Management’s Discussion and Analysis, as required supplementary information.
In March 2003, the Governmental Accounting Standards Board issued GASB Statement No. 40, Deposit and
Investment Risk Disclosures (an amendment of GASB Statement No. 3) effective for financial statements with
periods beginning after June 15, 2004. We are currently evaluating the impact of the adoption of this
pronouncement, but do not expect the impact to be material to the Foundation’s financial statements.
NOTE B - CASH AND INVESTMENTS
All cash deposits are primarily on deposit with four financial institutions and are carried at fair value at
$14,357,785. The financial institutions’ balance is $7,759,951, including items in transit, of which
$100,000 is insured by the F.D.I.C. The remaining balance is uncollateralized and is a category 3 level of
risk, based on risk categories established by the Governmental Accounting Standards Board, which
includes uninsured and unregistered investments for which the securities are held by the counterparty or
by its agent or trust department but not in the Foundation’s name.
Investments consist primarily of open-end mutual funds through a single custodian. Debt and equity
securities other than open-end mutual funds are uncollateralized and are a category 3 level of risk, based
on risk categories established by the Governmental Accounting Standards Board.
18
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE B - CASH AND INVESTMENTS - Continued
The fair value of investments at June 30, 2003 and 2002 are as follows:
2003
Equity Investments
Commonfund Bond
Commonfund Global Bond
Commonfund Equity
Commonfund International Equity
Commonfund Emerging Markets
Commonfund Capital Partners
Commonfund Real Estate Securities
Commonfund Realty Investors
Certificates of Deposit
Commercial Paper
U.S. Government Securities
2002
$
8,274
12,426,974
617,156
28,638,910
980,909
826,198
80,021
444,147
1,595,200
1,370,942
929,523
$
11,325,930
522,994
28,270,824
1,050,677
789,559
26,098
754,561
1,490,279
260,057
$47,918,254
$44,490,979
Investments are recorded in the following funds at June 30, 2003 and 2002:
2003
Unrestricted Fund
Restricted Fund
Endowment Fund
219,784
3,074,096
44,624,374
2002
$
$
180,798
3,002,532
41,307,649
$47,918,254
$44,490,979
NOTE C - DEFERRED REVENUE
Deferred revenue primarily represents assets received from donors which are held in irrevocable trusts
of which the Foundation is the residual beneficiary. The support and revenue will be recognized when
the Foundation receives its residual interest in the trusts. Interest payments are made to beneficiaries
based on rates set forth in the trust documents. Upon death of the income beneficiaries, the trusts will
be distributed, and the Foundation will receive its residual interest in the trusts. The assets held in the
irrevocable trusts are recorded at fair market value.
19
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE D - RELATED PARTY TRANSACTIONS
The University of Nevada, Reno provided the Foundation with administrative and support services for
the years ended June 30, 2003 and 2002 in the amounts of $855,766 and $898,682, respectively. The
Foundation expended $9,085,565 and $9,429,716 for programs and activities of the University of
Nevada, Reno for the years ended June 30, 2003 and 2002. Amounts due to the University of Nevada,
Reno at June 30, 2003 and 2002 are $516,420 and $780,222, respectively.
The University of Nevada, Reno has signed a $3,000,000 uncollateralized promissory note dated
January 12, 2000 to the Foundation for temporary funds to construct new student services facilities.
The note bears interest at 6% per annum. Interest is payable quarterly commencing on March 1, 2000.
The note is payable on demand, or if no demand is made, on December 31, 2004. During the year
ended June 30, 2003, the Foundation earned and received $180,000 in interest related to the promissory
note.
NOTE E - PLEDGES RECEIVABLE
Pledges receivable are recorded as revenue at the pledge date and adjusted to present value based upon
collection date in the accompanying financial statements. Pledges receivable at June 30, 2003 and 2002
consist of the following:
2003
Bishop Manogue Project
College of Agriculture, Biotech
College of Arts and Science
College of Business Administration
College of Education
College of Engineering
Mackay School of Mines
Redfield Campus
School of Medicine
Scholarships
Women’s Athletics
Other
Present value discount
Net pledges receivable
Less: Current maturities
20
2002
$
75,000
3,120
31,000
1,411,425
2,080,000
2,502,000
234,400
375,000
105,000
6,816,945
(611,317)
6,205,628
1,936,080
$
50,000
95,000
7,500
107,000
713,175
3,270,000
568,000
650,000
400,000
60,800
5,921,475
(1,017,046)
4,904,429
1,761,800
$4,269,548
$3,142,629
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE F - CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Foundation to concentrations of credit risk consist
primarily of cash and cash equivalents and investments. The Foundation restricts investment of cash
and cash equivalents and investments to financial institutions with high credit standing and The
Common Fund, a nonprofit membership corporation operated by and for its member colleges,
universities and independent schools. The Foundation has not experienced any losses in such accounts
and believes it is not exposed to any significant credit risk on cash and cash equivalents and investments.
NOTE G - NOTE PAYABLE
On August 7, 2001, the Foundation consummated a Promissory Note with Sun West Bank to assist the
University of Nevada, Reno with construction costs associated with the Pennington Medical School
Library. The loan has a remaining balance of $213,924. Interest is calculated at a rate of 7.250%
maturing on August 2, 2004. The loan is secured by future pledges receivable.
On May 17, 2002, the Foundation consummated a Promissory Note with Wells Fargo Bank to assist the
University of Nevada, Reno with construction costs associated with the Redfield Campus. The loan is
for $2,415,833, with interest calculated at a rate of .75% below the Prime Rate in effect from time to
time. Principal and interest shall be payable on the 15th day of each January and July in installments of
$250,000 each, with all remaining unpaid principal and interest payable in full on July 15, 2008.
Outstanding pledges of $2,500,000 from the Nell J. Redfield Foundation act as security for the loan, and
the loan is also guaranteed by the Nell J. Redfield Foundation. The outstanding balance of the note at
June 30, 2003 and 2002 was $2,250,387 and $-0-, respectively.
As a means of managing its borrowing costs, the Foundation entered into an interest rate swap in
connection with its $2.4 million promissory note. The intention of the swap was to effectively change
the Foundation’s variable rate on the note to a synthetic fixed rate of 6.95%.
The promissory note and the related swap agreement mature on July 15, 2008, and the swap’s notional
amount of approximately $2.4 million matches the $2.4 million variable-rate promissory note. The swap
was entered at the same time the note was issued (May 2002). Starting in fiscal year 2003, the notional
value of the swap and the principal amount of the associated debt will decline as principal amounts are
paid. Under the swap, the Foundation pays the counterparty a fixed payment of 6.95% and receives a
variable payment computed as the counterparty’s prime rate minus 0.75%. The promissory note bears
interest at the counterparty’s prime lending rate minus 0.75%.
Because interest rates have declined since execution of the swap, the swap had a negative fair value of
$165,877 as of June 30, 2003. The swap’s fair value represents the future net settlement payments
required by the swap, assuming that the current forward rates implied by the yield curve correctly
anticipate future spot interest rates. These payments are then discounted using the spot rates implied by
the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement
on the swap.
21
University of Nevada, Reno Foundation
NOTES TO FINANCIAL STATEMENTS - CONTINUED
June 30, 2003
NOTE G - NOTE PAYABLE - Continued
As of June 30, 2003, the Foundation was not exposed to credit risk because the swap had a negative fair
value. However, should interest rates change and the fair value of the swap becomes positive, the
Foundation would be exposed to credit risk in the amount of the derivative’s fair value. The swap
counterparty was rated AA- by Standard & Poor’s as of June 30, 2003.
The Foundation or the counterparty may terminate the swap if the other party fails to perform under the
terms of the contract or if the related promissory note is repaid. If the swap is terminated, the variablerate promissory note would no longer carry a synthetic rate. Also, at the time of termination the swap,
the defaulting party shall pay on demand to the non-defaulting party in amount equal to the Termination
Amount, computed as the average of the respective one-time all-in fees of each of the three leading
commercial banks or investment banking firms, selected in good faith by the non-defaulting party.
Principal maturities on the above notes are due as follows:
Years ending June 30,
2004
2005
2006
2007
2008
2009
$ 562,390
373,286
399,873
428,354
458,863
241,545
$2,464,311
22
REQUIRED SUPPLEMENTARY INFORMATION
University of Nevada, Reno Foundation
STATEMENT OF SUPPORT AND REVENUE, EXPENSES
AND CHANGES IN FUND NET ASSETS - BUDGET TO ACTUAL
UNRESTRICTED FUNDS
Year ended June 30, 2003
Budgeted Amounts
Original
Final
Operating support and revenue
Donor contributions
University support
Special events and other income
Total operating support and revenue
Operating expenses
Program expenses
Alumni programs
University programs
University scholarships
Total program expenses
Administrative and fundraising expenses
Administrative
Fundraising
Total administrative and fundraising expenses
Total operating expenses
EXCESS OF OPERATING SUPPORT AND
REVENUE OVER (UNDER) OPERATING
EXPENSES
Investment income
Transfer between funds
Expendable endowment
Other
NET CHANGE IN FUND NET ASSETS
Fund net assets at beginning of year
Fund net assets at end of year
24
Actual Amounts
Budgetary Basis
$ 311,158
1,068,332
247,600
1,627,090
$ 311,158
1,068,332
247,600
1,627,090
119,560
236,390
25,000
380,950
119,560
236,390
25,000
380,950
214,770
236,861
25,000
476,631
757,319
1,126,522
1,883,841
757,319
1,126,522
1,883,841
597,048
864,254
1,461,302
2,264,791
2,264,791
1,937,933
(637,701)
(637,701)
(475,488)
300,000
300,000
487,557
-
-
63,933
51,197
$
301,979
855,766
304,700
1,462,445
(337,701)
(337,701)
127,199
1,688,834
1,688,834
1,688,834
$1,351,133
$1,351,133
$
1,816,033
SUPPLEMENTARY INFORMATION
University of Nevada, Reno Foundation
UNRESTRICTED FUND
ALUMNI AND UNIVERSITY PROGRAM EXPENSES
Year ended June 30, 2003
(With comparative totals for the year ended June 30, 2002)
2003
Alumni programs
Alumni College
Alumni Council
Artemesia
Awards Programs
Chapter Development
Executive Committee
Golden Reunion
Homecoming
Membership Fund
Miscellaneous
Pack Tracks
Pregame Events
Senior Scholar Dinner
Staff and Office Expense
Summer Events
Total alumni programs
$
University programs
Art Town
Faculty Enrichment
Foundation Professors
Honor Court
Silver & Blue Magazine
Tibbitts Memorial Distinguished
Teacher Award
University Advertising and Marketing
Total university programs
University scholarships
University scholarships
Total alumni and university
program expenses
26
8,941
6,207
43,031
19,767
1,761
8,119
25,608
46,249
256
3,830
18,759
10,665
20,041
1,536
214,770
2002
$
13,303
7,124
15,000
41,330
18,097
3,500
6,599
32,451
2,292
4,670
3,924
10,006
13,643
1,561
173,500
38,686
59,927
7,170
122,578
7,500
11,310
58,023
4,500
94,159
8,500
236,861
16,200
38,153
229,845
25,000
45,000
$ 476,631
$ 448,345
University of Nevada, Reno Foundation
UNRESTRICTED FUND
ADMINISTRATIVE AND FUNDRAISING EXPENSES
Year ended June 30, 2003
(With comparative totals for the year ended June 30, 2002)
Payroll and related expenses
Salaries and wages
Fringe benefits
Administrative
$
Operating
Accounting fees
Advertising
Appreciation, gifts and sponsorships
Books, periodicals and subscriptions
Contract services
Depreciation expense
Dues and memberships
Equipment maintenance expense
Insurance, taxes and licenses
Legal fees
Meeting and hosting expense
Office expense
Photography
Postage and freight
Printing and duplicating
Real estate appraisal fees
Special event supplies
Telephone
Training and registration fees
Travel expense
Total administrative and
fundraising expenses
285,941
88,735
374,676
2003
Fundraising
$
20,615
588
8,457
3,839
5,874
25,464
8,066
31,301
10,753
3,013
4,185
35,080
1,323
10,325
17,187
3,750
4,326
5,752
22,474
222,372
$
597,048
$
593,764
126,140
719,904
2002
Total
Total
$
879,705
214,875
1,094,580
$
904,825
228,585
1,133,410
4,757
790
1,125
33,300
375
25
23,358
3,172
1,010
14,749
18,975
32,947
5,269
1,799
2,699
144,350
20,615
5,345
9,247
4,964
39,174
25,464
8,441
31,301
10,778
3,013
27,543
38,252
2,333
25,074
36,162
3,750
32,947
9,595
7,551
25,173
366,722
28,235
5,926
7,243
3,606
48,702
37,784
3,298
26,307
9,652
19,696
12,771
21,279
219
26,313
24,728
15,395
9,175
2,944
6,303
309,576
864,254
$ 1,461,302
$ 1,442,986