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Financial Review Year Ended June 30, 2014

Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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Page 1: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

Financial Review Year Ended June 30, 2014

Page 2: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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Plante/MoranAudit

Results of the AuditPresented to the Finance and Audit Committee on October 6• Unmodified opinion which is the highest you can receive• There were no significant adjustments proposed by Plante/Moran• There were no significant disagreements with management on

financial accounting and reporting matters• Management cooperated completely and allowed complete access

to the books and records

Page 3: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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Key IndicatorsBalance Sheet• Asset growth• Net Position growth• Cash and Cash Equivalent growth• Investment growth• Days of Cash and Investments on Hand• Long Term Debt reduction

Page 4: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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FY 2014 Results

Balance Sheet     FY2014 FY2013

Increase (Decrease

)

Net Assets 1,149,308 1,150,600 -1,292

Net Position Growth 675,285 650,549 24,736

Cash and Cash Equivalents 66,757 66,131 626Long Term Investments

University 190,175 186,129 4,046

Foundation 232,179 193,136 39,043

Days of Cash and Investments on Hand

Without Foundation 111 110 1

With Foundation 212 194 18

Long Term Debt 316,466 332,549 -16,083

Page 5: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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SummaryBalance SheetPositives• Net position grew $24.7 million as a result of a reduction in non-

current liabilities• Foundation long-term investments increased $39.0 million• Days Cash and Investments(including Foundation) increased 18

days• Long Term Debt decreased $16.0 millionNeutral• Cash and Cash Equivalents remained nearly the same.• University Investments remained nearly the same.Negatives• Net assets decreased $1.3 million

Page 6: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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Key IndicatorsIncome Statement• Operating Revenue growth• Operating Expense growth• State Share of Instruction growth• Income before Investment Income, Gifts and Capital

Appropriations• Investment Income growth• Gifts/Capital Appropriations growth

Page 7: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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FY2014 Results

Income Statement     FY2014 FY2013Increase

(Decrease)

Operating Revenue Growth 688,878 690,232 -1,354

State Share of Instruction 103,357 104,451 -1,094

Operating Expense 843,684 838,082 5,602

Income before Investment Income and gifts

and Capital Appropriations -31,243 -34,839 3,596

Investment Income 40,672 31,652 9,020

Gifts/Capital Appropriations 15,366 12,479 2,887

Page 8: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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SummaryIncome StatementPositives• Investment income increased $9.0 million• Income before Investments, Gifts, and Capital Appropriations

increased $3.6 million• Gifts and Capital Appropriations increased $2.9 millionNegatives• Operating Revenue decreased $1.1 million• SSI decreased $1.1 million• Operating Expense increased $5.6 million, however that only

equates to 0.7%.

Page 9: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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Key IndicatorsCash Flow• Fully Funded Depreciation• Positive increase in Cash and Cash Equivalents

Page 10: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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FY2014 ResultsCash Flow       FY2014 FY2013

Increase (Decreas

e)Fully funded depreciation

Capital Purchases 54,897 80,830 -25,933Depreciation 56,596 53,829 2,767Difference -1,699 27,001 -28,700

Net Cash from operating activities and non-capital financing activitiesNet cash used in operating activities -100,365 -84,713 -15,652Net cash provided by non-capital financing activities 143,968 147,924 -3,956 Total 43,603 63,211 -19,608

Net Cash from operating activities as a percent of operating revenue and SSI 5.50% 7.95% -2.45%

Cash flows from capital and related financing activities -71,391 -73,052 1,661

Cash flow from investing activities 28,414 13,193 15,221

Total change in cash and cash equivalents 626 3,352 -2,726

Page 11: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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SummaryCash FlowPositives• Cash Flow from Investing Activities increased $15.2 millionNeutral• Depreciation and Capital Purchases were relatively equal for the

yearNegative• Net Cash from Operating Activities declined $19.6 million• Net Change in Cash and Cash Equivalents was $27.8 less than

Cash from Investing Activities.

Page 12: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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FY 2015 Budget

Notes: • The UT FY2015 Budget does not include all funds of the University. It excludes UTP,

Malpractice Captive and some smaller funds. • The FY 2014 actual includes all funds of the University, thus the FY budget to FY

actual comparison is not the complete picture.

Income Statement     FY 2015 Budget FY 2014

Actual Difference

Operating Revenue Growth 669,723 688,878 -19,155

State Share of Instruction 113,678 103,357 10,321

Operating Expense 808,117 843,684 -35,567

Income before Investment Income and gifts 0

and Capital Appropriations -39,013 -31,243 -7,770

Investment Income 4,800 40,672 -35,872

Gifts/Capital Appropriations 19,267 15,366 3,901

Page 13: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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SummaryIncome StatementPositives• SSI is budgeted to increase $10.3 million• Gifts and Capital Appropriations is budgeted to increase $3.9

millionNegatives• Investment income is budgeted at $4 million which represents a

return of 2.5%• Income before Investment Income, Gifts and Capital

Appropriations is budgeted at $(39 million ) which is a budgeted decrease of $7.7 million

Page 14: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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FY 2015 BudgetCash Flow

FY 2015 Budget

FY 2014Actual Difference

Fully funded depreciationCapital Purchases 29,800 54,897 -25,097Depreciation 58,596 56,596 2,000Funded(unfunded) depreciation -28,796 -1,699 -27,097

Net Cash from operating activities and non-capital financing activitiesNet cash used in operating activities -79,798 -100,365 20,567Net cash provided by non-capital financing activities 121,145 143,968 -22,823

Total 41,347 43,603 -2,256

Net Cash from operating activities as a percent of operating revenue and SSI 5.22% 5.50% -0.28%

Cash flows from capital and related financing activities -46,017 -71,391 -25,374

Cash flow from investing activities 4,800 28,414 -23,6142.52% 15.27%

Total change in cash and cash equivalents 130 626 -496

Page 15: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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SummaryCash FlowPositives• Net cash used in Operating Activities is budgeted to improve by

$20.5 millionNeutral• Net cash from Operating Activities and Non Capital Financing

Activities is budgeted to remain relatively constant.• The budgeted change in Cash and Cash Equivalents will remain

constant.Negatives• Our capital purchases are budgeted to be $28.8 million less than

depreciation. (We are budgeted to reinvest in our capital less than we are depreciating our capital)

Page 16: Financial Review Year Ended June 30, 2014. Plante/Moran Audit Results of the Audit Presented to the Finance and Audit Committee on October 6 Unmodified

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ConclusionsOur financial position continued to improve through 2014 as indicated in $25.5 million improvement in Net position, primarily as a result of $40.6 million in investment earnings and a $16.1 million reduction in Long Term Debt.

We face challenges moving forward in 2015 and beyond:• In 2015 our budgeted capital purchases are $28.8 million less than

depreciation• The Net Cash from Operating Activities did not cover our Capital or

Related Financing Activities. The shortfall was $27.8 million in FY14.

We must continue to grow our Net Position and we must commit to funding depreciation and reducing the shortfall in our Net Cash from Operating Activities.