Rochester Institute of
Technology
Consolidated Financial Statements
June 30, 2013 and 2012
Rochester Institute of Technology
Index
June 30, 2013 and 2012
Page(s)
Independent Auditor’s Report..............................................................................................................................1
Consolidated Financial Statements
Balance Sheets…………………..............................................................................................................................2
Statements of Activities.......................................................................................................................................3–4
Statements of Cash Flows.......................................................................................................................................5
Notes to Financial Statements...........................................................................................................................6–23
Independent Auditor's Report
To The Board of Trustees
Rochester Institute of Technology
We have audited the accompanying consolidated financial statements of the Rochester Institute of Technology (the
University), which comprise the consolidated balance sheets as of June 30, 2013 and June 30, 2012, and the related
consolidated statements of activities and consolidated statements of cash flows for the years then ended.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted
our audits in accordance with auditing standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated
financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material
misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments,
we consider internal control relevant to the University’s preparation and fair presentation of the consolidated financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the University's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Rochester Institute of Technology at June 30, 2013 and June 30, 2012, and the results of its operations and
its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of
America.
November 8, 2013
PricewaterhouseCoopers LLP, 677 Broadway, Albany, NY 12207
T: (518) 462 2030, F: (518) 427 4499, www.pwc.com/us
1
Rochester Institute of Technology
Consolidated Balance Sheets
June 30, 2013 and 2012
(in thousands)
2013
Assets
Cash and cash equivalents
Cash and cash equivalents, held with trustees
Student accounts receivable, net of allowance of $2,577 and $2,094, respectively
Inventories and other assets
Contributions receivable, net
Collateral held under securities lending
Investments, at fair value
Notes and other accounts receivable, net of allowance of $3,633 and $3,352, respectively
Property, plant and equipment, net
Total assets
Liabilities
Accounts payable and accrued expenses
Deferred revenues and other liabilities
Payable under securities lending
Accrued postretirement benefits
Federal Perkins Loan Program advances
Long-term debt, net
Total liabilities
Net assets
Expendable resources
Net investment in plant
Unrestricted
Temporarily restricted
Permanently restricted
Total net assets
Total liabilities and net assets
$
53,256
14,105
12,805
10,174
17,246
811,792
64,309
618,534
$ 1,602,221
31,164
23,249
15,113
8,191
16,922
308
745,520
68,575
581,562
$ 1,490,604
$
$
45,735
46,488
132,961
21,824
297,451
544,459
$
54,509
45,558
310
140,225
21,759
222,912
485,273
316,665
382,716
699,381
220,300
138,081
1,057,762
269,756
389,339
659,095
213,095
133,141
1,005,331
$ 1,602,221
$ 1,490,604
The accompanying notes are an integral part of these Consolidated Financial Statements.
2
2012
Rochester Institute of Technology
Consolidated Statements of Activities
For the fiscal years ended June 30, 2013 and June 30, 2012
(in thousands)
Temporarily Permanently
Unrestricted Restricted Restricted
Operating revenues
Tuition and fees, net of scholarships of $144,551
and $133,821, respectively
Sales and services of auxiliaries
Government grants and contracts
Private grants and contracts
Private contributions
Investment return
Other sources
Net assets released from restrictions
Total operating revenues
Operating expenses
Salaries and wages
Benefits
Postretirement benefits
Purchased services
Materials and supplies
Depreciation
Interest
Utilities, taxes and insurance
Travel for scholarship, professional
development and recruitment
Other
Total operating expenses
Net operating activities
Nonoperating activities
Investment return
Net assets released from restrictions
Contributions for long-term assets
Government grants and contracts for long-term
assets
Postretirement benefits
Beneficiary payments and change in value of
deferred giving arrangements
Change in value of interest rate swap agreement
Other
Net nonoperating activities
$
$
Increase in net assets
Net assets at beginning of year
Net assets at end of year
$
272,047
74,337
91,792
7,101
1,865
14,184
18,724
20,631
500,681
$
9,565
14,436
(20,631)
3,370
$
-
$
2013
2012
Total
Total
272,047
74,337
91,792
7,101
11,430
28,620
18,724
504,051
$
259,721
69,002
95,117
8,636
10,010
28,942
18,826
490,254
252,765
76,437
4,850
39,819
42,926
35,100
9,209
13,432
-
-
252,765
76,437
4,850
39,819
42,926
35,100
9,209
13,432
243,173
76,191
3,934
31,179
42,993
32,622
9,689
14,051
8,584
8,742
491,864
8,817
3,370
-
8,584
8,742
491,864
12,187
8,531
7,875
470,238
20,016
19,298
12,776
2,736
$ 15,966
(12,776)
1,134
$
932
4,307
$
36,196
8,177
$
(12,834)
10,391
7,660
(6,407)
-
141
-
7,801
(6,407)
16,334
(6,272)
(4,594)
31,469
(228)
(261)
3,835
(408)
(32)
4,940
(636)
(4,887)
40,244
(722)
(28)
(10,061)
(3,192)
40,286
7,205
4,940
52,431
16,824
659,095
213,095
133,141
1,005,331
988,507
699,381
$ 220,300
$ 138,081
$ 1,057,762
$ 1,005,331
The accompanying notes are an integral part of these Consolidated Financial Statements.
3
Rochester Institute of Technology
Consolidated Statement of Activities
Year Ended June 30, 2012
(in thousands)
2012
Temporarily Permanently
Unrestricted Restricted Restricted
Operating revenues
Tuition and fees, net of scholarships of $133,821
Sales and services of auxiliaries
Government grants and contracts
Private grants and contracts
Private contributions
Investment return
Other sources
Net assets released from restrictions
Total operating revenues
Operating expenses
Salaries and wages
Benefits
Postretirement benefits
Purchased services
Materials and supplies
Depreciation
Interest
Utilities, taxes and insurance
Travel for scholarship, professional development
and recruitment
Other
Total operating expenses
$
Net operating activities
Nonoperating activities
Investment return
Net assets released from restrictions
Contributions for long-term assets
Government grants and contracts for long-term
assets
Postretirement benefits
Beneficiary payments and change in value of
deferred giving arrangements
Change in value of interest rate swap agreement
Other
Net nonoperating activities
Increase (decrease) in net assets
$
Net assets at beginning of year
Net assets at end of year
$
259,721
69,002
95,117
8,636
1,959
17,544
18,826
16,104
486,909
$
8,051
11,398
(16,104)
3,345
$
-
$
259,721
69,002
95,117
8,636
10,010
28,942
18,826
490,254
243,173
76,191
3,934
31,179
42,993
32,622
9,689
14,051
-
-
243,173
76,191
3,934
31,179
42,993
32,622
9,689
14,051
8,531
7,875
470,238
-
-
8,531
7,875
470,238
16,671
3,345
-
20,016
(3,837)
2,734
1,989
$
(8,989)
(2,734)
7,094
$
(8)
1,308
$
(12,834)
10,391
16,113
(6,272)
-
221
-
16,334
(6,272)
(28)
(9,511)
1,188
17,859
(383)
(508)
(5,520)
(2,175)
(339)
(42)
1,140
1,140
(722)
(28)
(10,061)
(3,192)
16,824
641,236
215,270
132,001
988,507
659,095
$ 213,095
$ 133,141
$ 1,005,331
The accompanying notes are an integral part of these Consolidated Financial Statements.
4
Total
Rochester Institute of Technology
Consolidated Statements of Cash Flows
Years Ended June 30, 2013 and 2012
(in thousands)
2013
Cash flows from operating activities
Change in net assets
$
Adjustments to reconcile change in net assets to net cash provided by
operating activities
Depreciation, amortization and accretion expense
Loss on disposal of property, plant and equipment
Realized and unrealized net gains on investments
Unrealized gain on collateral held for securities lending
Noncash contributions and government grants restricted for long-term purposes
Loss on extinguishment of debt
Premium from the issuance of debt
Asset retirement obligation liquidation and adjustment
52,431
2012
$
16,824
33,608
2,905
(56,250)
(2)
(30,592)
24,346
22,187
3,291
33,088
394
(5,823)
(3)
(24,600)
(1,524)
Changes in assets and liabilities:
Students accounts receivable
Inventories, prepaids and deferred charges
Contributions receivable
Other assets
Accounts payable and accrued expenses
Deferred revenues and other liabilities
Accrued postretirement benefits
2,308
(2,614)
(324)
7,300
(8,774)
(3,357)
(7,264)
(784)
(223)
(3,376)
6,566
2,790
(4,426)
17,520
Net cash provided by operating activities
39,199
36,423
(205,495)
197,155
(7,155)
4,120
9,144
(65,365)
(117,782)
130,882
(7,465)
3,770
13,637
(77,504)
(67,596)
(54,462)
19,381
(114,057)
146,030
(930)
65
21,558
(4,703)
116
50,489
16,971
Increase (decrease) in cash and cash equivalents
22,092
(1,068)
Cash and cash equivalents - beginning of year
31,164
32,232
Cash flows from (used in) investing activities
Purchases of investments
Proceeds from the sales and maturities of investments
Loans made to students
Payments received on student loans
Decrease in cash and cash equivalents held with bond trustees
Acquisition of property, plant and equipment
Net cash used in investing activities
Cash flows from (used in) financing activities
Contributions and government grants restricted for long-term purposes
Payments of long-term debt
Proceeds from the issuance of debt
Bond issuance costs
Increase in refundable government grants for student loans
Net cash provided by financing activities
Cash and cash equivalents - end of year
$
53,256
Supplemental disclosures of cash flow information
Interest paid (including capitalized interest of $2,626 and $1,627 in 2013 and 2012, respectively) $
10,941
Contributions of long-term assets
9,531
Contributions of marketable securities
1,680
(Decrease) increase in construction-related payables
(5,368)
Assets exchanged under capital lease
80
The accompanying notes are an integral part of these Consolidated Financial Statements.
5
$
31,164
$
11,403
2,697
345
4,743
-
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
1.
Summary of Significant Accounting Policies
a. Organization
Rochester Institute of Technology (University, RIT) is a privately endowed, co-educational university comprised of nine
colleges: Applied Science and Technology, Business, Computing and Information Sciences, Engineering, Health
Sciences, Imaging Arts and Sciences, Liberal Arts, National Technical Institute for the Deaf (NTID) and Science.
The University, which occupies 1,300 acres in Rochester, New York, has approximately 17,950 full and part-time
undergraduate and graduate students and 3,276 employees.
The following organizations are consolidated into the financial statements of the University:
 The 5257 West Henrietta Road, LLC (Inn), doing business as the RIT Inn & Conference Center, is a not-forprofit single member limited liability company with the University as its sole member. The Inn is a dual-use 305room full service hotel with approximately half of the rooms dedicated to student housing during the academic
year.
 RIT Campus Club, Inc. (Campus Club) is a not-for-profit subsidiary of the University. Campus Club was
established to support certain aspects of the University’s dining operations.
 RIT Global Delivery Corporation, Inc. (GDC) is a wholly owned not-for-profit subsidiary of the University
established to develop and deliver global instruction. American College of Management and Technology
(ACMT), a subsidiary of GDC, is a not-for-profit entity that delivers instructional services in Croatia. GDC also
operates RIT Dubai in conjunction with the Dubai Silicon Oasis Authority and the American University in
Kosovo in conjunction with the American University in Kosovo Foundation to deliver instructional services in the
United Arab Emirates and Kosovo, respectively.
 RIT High Technology Incubator, Inc. (HTI), doing business as Venture Creations, is a wholly-owned not-forprofit subsidiary of the University. During 2012, all assets and liabilities of the entity were transferred to the
University. During 2013, the dissolution plan was filed and is pending approval by New York State.
 RIT Venture Fund I, LLC (Fund I) is a for-profit limited liability company; the University is its investor member
and sole investor. The Fund was formed to make investments in seed, venture and growth-stage companies
that involve RIT students, faculty, technologies or incubator or similar facilities.
b. Basis of Accounting
The Consolidated Financial Statements of the University are prepared on the accrual basis of accounting in conformity
with generally accepted accounting principles in the United States of America. All significant intercompany transactions
and accounts have been eliminated.
c. Classifications of Net Assets
The University reports its net assets and changes therein according to three classifications: unrestricted, temporarily
restricted and permanently restricted based upon the existence or absence of donor-imposed restrictions.
Unrestricted Net Assets
Unrestricted net assets reflect resources that are not subject to externally imposed stipulations. Certain net
assets classified as unrestricted are designated for specific purposes or uses under various internal operating
and administrative arrangements of the University.
Temporarily Restricted Net Assets
Temporarily restricted net assets represent resources subject to externally imposed stipulations that may or will
be met either by actions of the University and/or the passage of time. Temporarily restricted net assets include
amounts subject to legal restrictions such as realized and unrealized gains and losses on the endowment until
appropriated for spending in accordance with New York State law.
6
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
Permanently Restricted Net Assets
Permanently restricted net assets are subject to externally imposed restrictions that the University maintains in
perpetuity. Generally, the donors of these assets permit the University to use all or part of the income earned,
and net appreciation on related investments, for general or specific purposes.
Revenues are reported as increases in unrestricted net assets unless use of the related assets is limited by donorimposed restrictions. Expenses are reported as decreases in unrestricted net assets. Gains and losses on investments
and other assets or liabilities are reported as nonoperating increases or decreases in unrestricted net assets unless
their use is restricted by explicit donor stipulation or by law.
d. Operations
Revenues earned and expenses incurred during the fiscal year are classified on the University’s Consolidated
Statements of Activities as either operating or nonoperating activity. Operating revenues and expenses consist primarily
of those items attributable to the University’s education and training programs, auxiliary enterprises and research
activities.
Nonoperating activities consist primarily of realized and unrealized gains and losses on investments and other revenue
and expenses not directly associated with education and training programs, or research activities.
e. Revenue Recognition
Tuition revenue is recognized over the academic term to which it relates. Revenues from auxiliary enterprises are also
generally recognized over the academic term, with the exception of dining debit card balances which are included in
deferred revenue until spent by the cardholder.
Revenues from grants and contracts are generally recognized as earned, that is, as the related costs are incurred under
the grant or contract agreements. Amounts received in advance are reported as deferred revenues until expenditures
are incurred.
f. Classification of Operating Expenses
Operating expenses are reported by natural classification on the Consolidated Statements of Activities, and by function
in Note 13.
g. Cash and Cash Equivalents
Cash and cash equivalents are carried at fair value and include cash on deposit with financial institutions and money
market funds with maturities of three months or less when purchased. Cash and cash equivalents on deposit with bond
trustees include cash, money market funds and U.S. government securities with maturities of three months or less
when purchased. Securities and cash and cash equivalents maintained by the University's investment managers as part
of the intermediate and long-term investment portfolios are included in investments on the Consolidated Balance
Sheets.
h. Inventories
The University’s electronics store inventory is valued at cost using the first-in, first-out (FIFO) retail method. Other
inventories are stated at the lower of cost, generally on a FIFO basis, or market value.
i. Contributions
Contributions, including unconditional promises to give, are recognized as revenues in the period received. Conditional
promises to give are not recognized until the conditions on which they depend are substantially met. Contributions to be
received after one year are discounted at a range from 1.7% to 5.0%, to their fair value, based upon the fiscal year in
which the contribution is to be received. Amortization of discount is recorded as additional contribution revenue in
accordance with donor-imposed restrictions, if any, on the contributions. An allowance for potentially uncollectible
contributions receivable is provided based upon management’s judgment and analysis of the creditworthiness of the
donors, past collection experience and other relevant factors.
7
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
j. Investments
Investments are recorded at fair value based on quoted market prices, except for certain alternative investments, for
which quoted market prices may not be available. The estimated fair value of alternative investments is based on
valuations provided by external investment managers. The valuations necessarily involve estimates, appraisals,
assumptions and methods which are reviewed by the University and external investment management.
To minimize the risk of loss, externally managed hedge fund investments are diversified by strategy, manager and
number of positions. The risk of any derivative exposure associated with such funds is limited to the amount invested
with each manager. Derivative investments are recorded at fair value and valuation gains and losses are included on
the Consolidated Statements of Activities.
The University does not hold or issue derivative financial instruments for trading purposes; however, the Board of
Trustees has authorized investments in derivatives to maintain asset class ranges, hedge non-U.S. dollar investments
and currencies, and provide for defensive portfolio strategies. The University’s interest rate risk management strategy
provides for maximum flexibility within its debt structure, seeks to lower its cost of capital, and manages risk on a
portfolio basis.
k. Life Income, Gift Annuities, and Interest in Perpetual Trusts Held by Others
The University’s split-interest agreements with donors consist primarily of gift annuity agreements and irrevocable
charitable remainder trusts for which the University serves as trustee. Assets held in the trusts are included in
investments. Contribution revenues are recognized when trusts (or annuity agreements) are established, after recording
liabilities for the present value of the estimated future payments to be made to beneficiaries. The liabilities are adjusted
annually for changes in the value of assets, accretion of the discount, and other changes in the estimates of future
benefits. The University is also the beneficiary of certain perpetual trusts held and administered by others. The present
value of the estimated future cash receipts from the trusts is recognized in investments and as contribution revenue.
The carrying value of the investments is adjusted annually for changes in fair value.
l. Property, Plant and Equipment
Land, buildings, capital improvements, equipment, capitalized software, special collections and construction-in-progress
are stated at cost at the time of acquisition or fair value (if contributed). Asset retirement costs are initially recorded at
fair value.
Special collections include works of art, literary works, historical treasures and artifacts that are maintained in the
University’s libraries and public areas of the campus. These collections are protected and preserved for public
exhibition, education, research and the furtherance of public service.
Contributed property, plant and equipment, including special collections, is recognized as revenue in the period in which
the items are acquired. Property, plant and equipment acquired through federal appropriations, grants and contracts
where the federal government retains a reversionary interest is also capitalized and depreciated. Interest on borrowings
to finance facilities is capitalized during construction.
Depreciation is recognized using the straight-line method with useful lives of 30 to 50 years for buildings, 10 to 30 years
for site improvements, 5 to 20 years for furniture, fixtures and equipment, and 4 to 10 years for software. Land, special
collections and construction-in-progress are not depreciated. The cost and accumulated depreciation of property, plant
and equipment sold or retired have been eliminated. Costs incurred for maintenance, repairs and renewals of relatively
minor items are expensed as incurred.
m. Income Taxes
The University and its consolidated subsidiaries, except for the RIT Venture Fund I, LLC (Fund I), are not-for-profit
organizations, and generally exempt from income taxes on related income under Section 501(c)(3) of the IRC but are
subject to unrelated business income tax on activities not related to their exempt purposes. Fund I, a limited liability
company of which RIT is the investor member, is classified as a partnership for federal income tax purposes. The
accounting for income taxes Topic of the FASB Accounting Standards Codification addresses the determination of
whether certain tax positions result in benefits claimed or expected to be claimed on a tax return and whether they
8
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
should be recorded in the Consolidated Financial Statements. For tax-exempt entities, tax positions include the entity’s
tax-exempt status and assumptions used to determine unrelated business taxable income. The University believes its
tax positions meet the more-likely-than-not recognition threshold referenced in the Topic.
n. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and changes therein, and 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 may differ from
estimates.
o. Premium and Discount on Long-Term Debt
Premiums and discounts arising from the original issuance of long-term debt are amortized on either the effective
interest method or the straight-line basis, which approximates the effective interest method, over the life of the debt.
The unamortized portion of these premiums and discounts are included in long-term debt on the Consolidated Balance
Sheets.
p. Accounting Pronouncements
Fair Value Measurements
In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRS” which amends ASC Topic 820. ASU 2011-04 clarifies the
application of existing fair value measurement and disclosure requirements, changes certain principles related to
measuring fair value, and requires additional disclosures about fair value measurements. ASU No. 2011-04 is
effective for fiscal year 2013. The University evaluated ASU No. 2011-04 and determined that there is no impact
on the Consolidated Financial Statements.
Sale Proceeds of Donated Financial Assets
In October 2012, the FASB issued ASU No. 2012-05, “Not-for-Profit Entities: Classification of the Sale Proceeds
of Donated Financial Assets in the Statement of Cash Flows” which clarifies how cash received from the sale of
donated securities is classified in the Consolidated Statement of Cash Flows. ASU No. 2012-05 requires that
cash receipts from the sale of donated financial assets without donor-imposed limitations be classified
consistently with cash donations provided they were converted nearly immediately into cash. Accordingly, cash
receipts from the sale of those financial assets should be classified as cash inflows from operating activities,
unless the donor restricted the use of the contributed resources to long-term purposes, in which case those cash
receipts should be classified as cash flows from financing activities. Otherwise, cash receipts from the sale of
donated financial assets should be classified as cash flows from investing activities. ASU No. 2012-05 is effective
for fiscal year 2014. The University is evaluating the impact of future implementation on the Consolidated
Statement of Cash Flows.
q. Risks and Uncertainties
The University's investments are exposed to various risks, such as interest rate, market and credit. Due to the level of
risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is
at least possible that changes in risks in the near term would materially affect the amounts reported in the financial
statements.
r. Reclassification
Certain amounts for 2012 have been reclassified to conform to the current year presentation.
9
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
2.
Contributions
Contributions receivable, less related allowances for uncollectible receivables and discounts for present value on longterm pledges at June 30, is summarized as follows:
2013
Unconditional promises expected to be collected in:
Less than one year
One year to five years
Over five years
$
6,108
10,181
1,973
18,262
(1,016)
$
7,076
8,026
2,702
17,804
(882)
$
17,246
$
16,922
Less: allowance and discount
Contributions receivable, net
2012
At June 30, the University has received other conditional promises to give totaling $3,823. These conditional promises
are not recognized as assets.
Contributions to acquire property, plant and equipment are recorded as temporarily restricted net assets and are
released from restrictions at the time the asset is placed in service. As a result, $9,991 and $13,074 of assets
contributed to acquire property, plant and equipment are recorded as temporarily restricted net assets as of June 30,
2013 and 2012, respectively.
3.
Investments
Total investments for the fiscal years ended June 30 are as follows:
2013
Cost
2012
Fair Value
Cost
Fair Value
Cash and cash equivalents
Domestic fixed income
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
$
12,481
174,915
39,054
97,197
145,505
90,288
82,899
62,931
$
12,481
174,166
39,068
116,266
156,008
157,148
92,038
64,617
$
29,456
144,854
36,523
70,067
111,762
113,865
87,345
74,598
$
29,456
152,313
37,669
84,898
107,341
157,018
99,935
76,890
Total investments
$
705,270
$
811,792
$
668,470
$
745,520
Assets and liabilities measured and reported at fair value are classified and disclosed within one of the following
categories:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets as of the measurement date. An active
market is one in which transactions occur with sufficient frequency and volume to provide pricing information on an
ongoing basis. Market price data is generally obtained from exchange or dealer markets. Investments within Level
1 may include active listed equities and exchange traded funds, option contracts traded in active markets, and
certain U.S. government investments and money market securities.
Level 2 – Pricing inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices
for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the same term of the assets. Inputs are obtained from
10
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
various sources including market participants, dealers and brokers. Investments within Level 2 may include
investment-grade corporate bonds, comingled funds, less liquid listed equities, option contracts, certain mortgage
products, bank loans, U.S. government investments and hedge funds that can be redeemed at net asset value on
the measurement date or in the near term, 90 days or less.
Level 3 – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the
investment. Investments within Level 3 may include insurance contracts, private equity, real assets and hedge fund
limited partnerships.
Inputs are used in applying the various valuation techniques and broadly refer to the assumptions that market
participants use to make valuation decisions, including assumptions about risk. Inputs may include price information,
volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Furthermore, the fair value hierarchy does not correspond to a financial instrument’s relative liquidity in the market or to
its level of risk. The University assumes that any transfers between levels occur at the beginning of any period.
Following is a summary of the University’s investments carried at fair value as of June 30, 2013:
Level 1
Cash and cash equivalents
Domestic fixed income
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
Total investments at fair value
$
Level 2
12,481
87,486
14,137
60,855
41,934
9,750
226,643
$
$
86,561
24,931
53,927
114,074
65,713
345,206
$
Level 3
$
119
1,484
91,435
92,038
54,867
239,943
$
Total
$
$
12,481
174,166
39,068
116,266
156,008
157,148
92,038
64,617
811,792
Following is a reconciliation of beginning and ending balances of Level 3 investments for the year ended June 30:
Level 3
Balance
Realized
Unrealized
June 30, 2012 Gains (Losses) Gains (Losses)
Domestic fixed income
$
Domestic equity securities
Hedge funds
Private equity
Real assets
Total
$
90
1,365
88,287
99,935
51,698
241,375
$
$
59
5,142
3,225
8,426
$
$
11
Purchases
1 $
60
12,818
(3,401)
895
10,373 $
28
15,412
9,640
25,080
Sales
$
$
Balance
June 30, 2013
$
119
1,484
(9,670)
91,435
(25,050)
92,038
(10,591)
54,867
(45,311) $ 239,943
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
Following is a summary of the University’s investments carried at fair value as of June 30, 2012:
Level 1
Cash and cash equivalents
Domestic fixed income
Global fixed income
Domestic equity securities
Global equity securities
Hedge funds
Private equity
Real assets
Total investments at fair value
$
$
16,267
102,768
14,544
51,051
41,270
25,192
251,092
Level 2
$
13,189
49,455
23,125
32,482
66,071
68,731
253,053
$
Level 3
$
90
1,365
88,287
99,935
51,698
241,375
$
Total
$
29,456
152,313
37,669
84,898
107,341
157,018
99,935
76,890
745,520
$
Following is a reconciliation of beginning and ending balances of Level 3 investments for the year ended June 30:
Level 3
Balance
Realized
Unrealized
June 30, 2011 Gains (Losses) Gains (Losses)
Domestic fixed income
$
Domestic equity securities
Hedge funds
Private equity
Real assets
Total
$
99
1,471
92,256
92,348
40,444
226,618
$
$
(10)
5,049
5,139
10,178
$
$
10
(96)
(3,187)
1,102
2,361
190
Purchases
$
$
18,947
13,504
32,451
Sales
$
$
(19)
(782)
(17,511)
(9,750)
(28,062)
Balance
June 30, 2012
$
$
90
1,365
88,287
99,935
51,698
241,375
The fair value of certain hedge fund, private equity and real asset investments (collectively referred to as alternative
investments), held through limited partnerships or commingled funds are based on current information obtained from the
general partner or investment manager or, when available, from readily determinable market values. Factors used by
the investment managers or general partners to value such non-marketable investments include, but are not limited to,
restrictions affecting marketability, operating results, financial condition of the issuers, transactions of similar issues,
industry standard valuation methodologies, and the price of the most recent financing. The University believes that
these valuations are a reasonable estimate of fair value as of June 30, 2013 and 2012, but are subject to uncertainty
and, therefore, may differ from the value that would have been used had an active market for all of the investments
existed.
12
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
As of June 30, 2013, the estimated fair value of the University’s alternative investments totaled $304,053. The
limitations and restrictions on the University’s ability to redeem or sell these investments vary by investment type. Based
upon the terms and conditions in effect at June 30, the University’s alternative investments can be redeemed or sold as
follows:
Unfunded
Commitments
Fair Value
Hedge funds
Private equity
Real assets
$
Total
$
1
157,148
92,038
54,867
$
304,053
$
73,941
30,557
Redemption
Frequency
(if currently eligible)
Redemption
Notice Period
30 to more than 365 days
35 - 90 days
1
1
NA
1
NA
NA
1
NA
104,498
The University does not have redemption rights in these investments; the remaining lives are between 1 and 10 years.
Total Investment Return
Following is a summary of the total investment return and its classification on the Consolidated Statements of Activities
at June 30:
2013
Total investment return
Interest and dividends
Realized and unrealized gains on investments, net of
investment management fees and other expenses
Total investment return
Consolidated Statements of Activities classification
Allocated for operating activities per spending policy
Interest and dividends
Total operating investment return
Nonoperating investment return
Total investment return
4.
$
12,254
$
52,562
64,816
$
$
25,759
2,861
28,620
36,196
64,816
2012
$
13,357
$
2,751
16,108
$
$
26,140
2,802
28,942
(12,834)
16,108
Securities Lending
During 2013, the University completed the termination of its securities lending program.
5.
Endowment
The University’s endowment includes both donor-restricted endowment funds and funds designated by the Board of
Trustees to function as endowments. As required by generally accepted accounting principles, net assets associated
with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified
and reported based on the existence or absence of donor-imposed restrictions.
The New York Prudent Management of Institutional Funds Act (NYPMIFA), which governs the management and
investment of funds held by not-for-profit corporations and other institutions, became effective on September 17, 2010.
Absent donor stipulations to the contrary, the statutory guidelines contained in NYPMIFA relate to the prudent
management, investment and expenditure of donor-restricted endowment funds without regard to the original value of
the gifts. However, NYPMIFA contains specific factors that must be considered prior to making investment decisions or
appropriating funds for expenditure.
The Board of Trustees’ interpretation of its fiduciary responsibilities for donor-restricted endowment funds under New
York State’s Not-for-Profit Corporation Law, including NYPMIFA, is to preserve intergenerational equity to the extent
13
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
possible by prudently managing, investing, and spending from the endowment funds. This principle holds that future
endowment beneficiaries should receive at least the same level of economic support that the current generation
receives. As a result of this interpretation, the University classifies as permanently restricted net assets the
unappropriated portion of (a) the original value of gifts donated to a true endowment; (b) the original value of
subsequent gifts to a true endowment fund; and, (c) accumulations to a true endowment fund made in accordance with
the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. Unspent
appropriations related to donor-restricted endowment funds are classified as temporarily restricted net assets until the
amounts are expended by the University in a manner consistent with the donor’s intent. The remaining portion of donorrestricted endowment funds not classified as permanently or temporarily restricted net assets are classified as
unrestricted net assets.
The Board of Trustees determines the appropriate amount to withdraw from endowment and similar funds on an annual
basis to provide support for operations with prudent concern for the long-term growth in the underlying assets as well as
the specific factors detailed in NYPMIFA.
To satisfy its long-term rate-of-return objectives, the University relies on a total return strategy in which investment
returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and
dividends). The University targets a diversified asset allocation that places a greater emphasis on equity-based and
alternative investments to achieve its long-term objectives within prudent risk constraints.
The University currently accounts for endowment activity in two investment pools, Pool I and Pool II. Pool I is comprised
of contributions, both donor-restricted and board-designated, made to the University for a variety of purposes, as well as
contributions transferred from Pool II. Pool II is comprised of contributions, both donor-restricted and board-designated,
made to NTID. Each pool has a separate investment and spending policy.
Pool I – The University has a policy of appropriating for distribution each year 5% of its endowment fund’s average fair
value over the prior 20 quarters through March of the preceding fiscal year in which the distribution is planned. The total
spending distribution should be at least equal to 3.50% but not greater than 5.25% of the beginning of year portfolio
market value. The distribution excludes those funds with deficiencies due to unfavorable market fluctuations. During
periods when investment return exceeds the distribution, such excess return is added to these investments. Likewise,
when investment return is less than the distribution, such deficit is funded by accumulated return. In establishing the
distribution policy, the University considered the long-term expected return on its endowment. New gifts to existing
funds participate in the spending policy in the quarter that begins subsequent to the date of the gift. New funds
participate in the spending policy in the quarter that begins one year subsequent to the date of the gift. Accordingly, over
the long term, the University expects the current spending policy to allow its endowment to grow at a rate exceeding
expected inflation, consistent with the University’s objective to maintain the purchasing power of the endowment assets
held in perpetuity or for a specified term as well as to provide additional real growth through new gifts and investment
return.
Pool II – The University established a separate investment pool (Pool II) for NTID during 1989 in accordance with the
federal program established by Public Law 99-371 (August 4, 1986) to support NTID. Pool II assets are invested in a
manner intended to produce price and yield results that are at least equal to a blended benchmark of 70% of the S&P
500 Index and 30% of the Barclays Capital Aggregate Bond Index, assuming a moderate level of investment risk. The
federal program stipulates that the investment of annual additions to Pool II is restricted to IRC 501(f) investment
organizations. The federal guidelines authorize a spending distribution from Pool II of not more than 50% of current
year’s investment income (interest and dividends only). After a period of 10 years, the University can elect to invest the
funds consistent with the University’s overall long-term investment strategy (Pool I).
14
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
At June 30, 2013, the endowment net asset composition by type of fund consists of the following:
Temporarily
Restricted
Unrestricted
Donor-restricted funds
Board-designated funds
Total funds
$
$
(15)
349,920
349,905
$
182,812
510
183,322
$
Permanently
Restricted
$
Total
135,905
135,905
$
$
$
318,702
350,430
669,132
Following are changes in endowment net assets for the year ended June 30:
Temporarily
Restricted
Unrestricted
Endowment net assets, June 30, 2012
$
328,968
$
167,743
Permanently
Restricted
$
131,417
Total
$
628,128
Investment return:
Investment income
Net appreciation
Total investment return
4,768
27,242
32,010
4,329
25,682
30,011
78
78
9,097
53,002
62,099
Contributions
Amounts appropriated for expenditure
(11,334)
10
(14,415)
4,411
(1)
4,421
(25,750)
Other changes:
Transfers to create board-designated
endowment funds
Endowment net asset reclassification
Total other changes
234
27
261
(27)
(27)
Endowment net assets, June 30, 2013 $
349,905
$
183,322
$
135,905
234
234
$
669,132
At June 30, 2012, the endowment net asset composition by type of fund consists of the following:
Temporarily
Restricted
Unrestricted
Donor-restricted funds
Board-designated funds
Total funds
$
$
(31)
328,999
328,968
15
$
$
167,278
465
167,743
Permanently
Restricted
$
$
131,417
131,417
Total
$
$
298,664
329,464
628,128
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
Following are changes in endowment net assets for the year ended June 30:
Temporarily
Restricted
Unrestricted
Endowment net assets, June 30, 2011
$
Investment return:
Investment income
Net appreciation
Total investment return
333,665
$
Permanently
Restricted
176,967
$
Total
130,130
$
640,762
6,515
3,214
9,729
1,851
353
2,204
(163)
(163)
8,366
3,404
11,770
Contributions
Amounts appropriated for expenditure
(14,760)
1
(11,319)
1,451
(1)
1,452
(26,080)
Other changes:
Transfers to create board-designated
endowment funds
Endowment net asset reclassification
Total other changes
224
110
334
(110)
(110)
Endowment net assets, June 30, 2012 $
328,968
$
-
167,743
$
224
224
131,417
$
628,128
From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below
the level that the donor or the NYPMIFA requires the University to retain as a fund of perpetual duration. Deficiencies of
this nature, reported in unrestricted net assets, were $15 and $31 as of June 30, 2013 and 2012, respectively. These
deficiencies resulted from unfavorable market fluctuations that occurred shortly after the investment of new permanently
restricted contributions and continued appropriation for certain programs deemed prudent by the Board of Trustees.
Subsequent gains that restore the fair value of the assets of the endowment funds to the required level will be classified
as an increase in unrestricted net assets.
6.
Student Loans Receivable and Credit Disclosures
The University participates in the Federal Perkins Loan Program (Program) and makes uncollateralized loans to
students based on financial need as determined by Program eligibility requirements.
At June 30, student loans included in notes and other receivables on the Consolidated Balance Sheets of the University
consisted of the following:
2013
Federal Perkins Loan Program
Less: allowance for doubtful accounts
Beginning balance
Increases
Write-offs
Ending balance
Student loans receivable, net
$
45,978
$
2,956
320
3,276
42,702
2012
$
43,095
$
2,758
198
2,956
40,139
The University’s student loans receivable represents the amounts due from current and former students under the
Program. The availability of funds for loans under the Program is dependent on reimbursements to the pool from
repayments on outstanding loans. Loans disbursed under the Program are assigned to the Federal Government in
certain non-repayment situations. Allowances for doubtful accounts are established when a non-deferred loan is
16
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
delinquent for 240 days. Outstanding loans cancelled under the Program result in a reduction of the funds available and
a decrease in the liability to the government.
Program advances of $21,824 and $21,759 at June 30, 2013 and 2012, respectively, are ultimately refundable to the
U.S. government and are classified as liabilities on the University’s Consolidated Balance Sheets. In addition to the
required matching, the University has advanced $2,425 and $3,127 for the years ended June 30, 2013 and 2012,
respectively, to provide additional loans to qualified students under the Program.
The student loans receivable aging analysis at June 30 is as follows:
2013
Current
1-60 days past due
61-90 days past due
> 91 days past due
Total student loan receivables
7.
$
39,458
1,362
333
4,825
45,978
$
2012
$
37,046
1,358
346
4,345
43,095
$
Property, Plant and Equipment
Property, plant and equipment, less related depreciation on certain asset categories at June 30, is as follows:
2013
Buildings and capital improvements
Equipment and software
$
Less: accumulated depreciation
Land
Special collections
Construction-in-progress
Property, plant and equipment, net
$
852,287
142,128
994,415
(401,361)
593,054
10,715
8,655
6,110
618,534
2012
$
$
742,775
127,673
870,448
(374,660)
495,788
10,596
8,425
66,753
581,562
Total depreciation expense for 2013 and 2012 was $35,100 and $32,622, respectively.
University Commons
In July 1998, the University entered into a long-term ground lease agreement with Collegiate Housing Foundation
(Foundation), a national not-for-profit organization, for the construction of 416 on-campus residential housing units
(Project II). The financing and construction of the facilities was the exclusive responsibility of the Foundation.
During fiscal year 2013, the University entered into an agreement to purchase Project II from the Foundation. The
purchase price of $11,216 was equal to the principal balance and remaining interest on the security interests as of
January 31, 2013, the closing date. A gain of $6,885, the difference between the purchase prices and the estimated fair
value of the assets, was recognized on the University’s Consolidated Statement of Activities. At closing, the University
and the Foundation terminated the ground lease agreement associated with this project.
17
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
8.
Asset Retirement Obligations
The University recalculates its asset retirement obligations annually, adjusting both the liability, included in deferred
revenues and other liabilities, and the associated asset retirement costs, included in property, plant and equipment, on
the Consolidated Balance Sheets.
The following schedule reflects changes in:
2013
$
Asset retirement obligations beginning balance
Change in estimate
Abatement liability settled
Accretion expenses
Asset retirement obligations ending balance
$
2012
14,229
4,764
(422)
996
19,567
$
$
15,093
(1,465)
(90)
691
14,229
The change in estimate was made in conjunction with associated changes in asset retirement cost and accumulated
depreciation as follows:
Beginning balance
Change in estimate
2013
Asset
Accumulated
Retirement Cost
Depreciation
2012
Asset
Accumulated
Retirement Cost
Depreciation
$
$
Depreciation expense
Ending balance
9.
3,881
2,105
$
$
5,986
3,027
1,054
117
$
4,198
4,126
(245)
$
$
3,881
3,173
(213)
67
$
3,027
Benefit Plans
a. Retirement Benefit Plan
From July 1, 2011 through December 31, 2011, the University offered two defined contribution plans subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and in accordance with IRC Section
403(b). At the close of business on December 31, 2011, the plans were merged and renamed the Rochester Institute of
Technology Retirement Savings Plan (the Plan). Contributions under the Plan are limited to annuity contracts sponsored
by Teachers Insurance Annuity Association-College Retirement Equities Fund (TIAA-CREF) and custodial accounts
which are invested in registered investment companies sponsored by Fidelity Investments (Fidelity). TIAA-CREF and
Fidelity are recordkeepers of the Plan. The Plan is available to all employees who meet certain eligibility requirements. It
is the University’s policy to currently fund defined contribution pension costs as they are incurred. Total retirement
contribution expense for 2013 and 2012 was $18,578 and $18,175, respectively.
b. Postemployment Benefits
The accrued postemployment benefits of the University were $3,292 and $3,571 at June 30, 2013 and 2012,
respectively.
c. Postretirement Benefits
The University sponsors a defined benefit postretirement medical plan that covers substantially all employees.
Employees may retire if they are at least 55 years old (50 if hired prior to July 1996) with at least 10 years of full-time
service (5 years if hired prior to July 1, 1990) and age plus service totals at least 70 at retirement. The plan is
contributory and retiree contributions are assumed to increase at the same rate as active employee contributions. The
University's postretirement medical plan is not funded.
18
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
The University maintains an employer funded Retirement Medical Account (RMA) for retirees hired on or after
January 1, 2004. The funds in the RMAs may be used for Medicare and private medical insurance premiums only.
During fiscal year 2008, the RMA contributions for retirees increased and eligibility was extended to all employees under
35 years of age as of January 1, 2008, irrespective of their adjusted date of hire.
The Plan’s funded status as of June 30 is as follows:
2013
Change in projected benefit obligation
Postretirement benefit obligation
Service cost
Interest cost
Participants' contributions
Actuarial (gains) losses
Benefits paid
Postretirement benefit obligation at end of year
$
$
Amounts recognized in unrestricted net assets consist of:
Net prior service credit
Net losses
Accumulated loss in unrestricted net assets
$
$
Discount rates
Net periodic benefit cost
Year-end benefit obligation
2012
140,225
4,380
5,857
668
(13,564)
(4,605)
132,961
$
(70)
2,233
2,163
$
$
$
4.45%
5.09%
122,705
3,607
6,840
598
11,030
(4,555)
140,225
(125)
16,872
16,747
5.67%
4.45%
The components of net periodic postretirement benefit costs are as follows at June 30:
Service cost
Interest cost
Amortization of unrecognized prior service benefit
Amortization of net losses
Net periodic postretirement benefit cost
$
$
4,380
5,857
(54)
1,074
11,257
$
$
3,607
6,840
(889)
649
10,207
For the fiscal year ending June 30, $4,850 and $6,407 in postretirement benefit expense was allocated to operating and
non-operating activities, respectively, on the University’s Consolidated Statements of Activities.
The University expects to recognize a postretirement benefit amortization in fiscal year 2014 of $231, relating to $10 of
prior service credits partially offset by $241 of net actuarial losses. Amortization of the net gain or loss resulting from
experience different from that assumed and from changes in assumptions (excluding asset gains and losses not yet
reflected in market-related value) is included as a component of Net Periodic Postretirement Benefit Cost/(Income) for a
year. The amortization is the net gain or loss divided by the average remaining service period to full eligibility for
participating employees expected to receive benefits under the Plan.
As of the end of the measurement period, 7.0% was assumed as the annual rate of increase for the per capita cost of
covered medical and prescription drug benefits, respectively for fiscal year 2014 and 2015 with a 0.5% decrease each
subsequent year to 5% in 2019 and remaining at that level thereafter.
19
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
The health care cost trend rate assumption has a significant effect on the amounts reported; a 1% point change in the
assumed health care cost trend rates would have the following effects:
1% Point
Increase
Effect on total of service and interest cost components
Effect on postretirement benefit obligation
$
$
1% Point
Decrease
1,447
19,691
$
$
(1,149)
(16,059)
Benefit Payments
At June 30, the University’s aggregated future estimated postretirement benefit payments, which reflect future services,
are as follows:
2014
2015
2016
2017
2018
2019-2023
$
4,422
4,803
5,199
5,655
6,116
35,582
d. Self-insurance Plans
The University is self-insured for medical, prescription drug and dental benefits. Based on estimates provided by its
actuaries, the University’s obligation for health care claims incurred but not reported was $2,049 and $2,098 as of June
30, 2013 and 2012, respectively. The University is also self-insured for workers compensation and has established a
liability for asserted and unasserted claims totaling $3,990 and $5,230 as of June 30, 2013 and 2012, respectively.
These amounts are included in accounts payable and accrued expenses on the Consolidated Balance Sheets.
10.
Long-Term Debt
The University has entered into various agreements for the purpose of financing construction, renovation and
improvement of its facilities and equipment. Long-term debt outstanding for these purposes, net of applicable
unamortized discount or premium as of June 30, is as follows:
Issue
Interest
Rate(s)
Type of
Rate
Maturity
2013
2012
Tax-exempt revenue bonds
Dormitory Authority of the State of New York (DASNY)
Series 2002B
4.00% - 5.00%
Fixed
7/1/2016
1,915
13,205
Series 2006A
5.00% - 5.25%
Fixed
7/1/2022
42,650
45,900
Series 2008A
4.00% - 5.00%
Fixed
7/1/2019
3,500
79,600
Series 2010
4.00% - 5.00%
Fixed
7/1/2040
76,265
76,995
Series 2012
3.00% - 5.00%
Fixed
7/1/2042
146,030
-
Capital leases
3.54% -7.87%
Variable
Various
181
175
270,541
215,875
26,910
7,037
Total long-term debt, principal
Bond premium/discount, net
Total long-term debt, net
$
20
297,451
$
222,912
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
The required principal payments for long-term debt for each of the years in the five-year period ending June 30, 2018
and thereafter are presented below. The schedule has been prepared based on the contractual maturities as of the debt
outstanding at June 30:
2014
2015
2016
2017
2018
Thereafter
$
$
5,183
5,884
8,044
8,367
8,719
234,344
270,541
The estimated fair value of the University’s debt was $286,827 and $243,844 at June 30, 2013 and 2012, respectively.
Estimated fair value is based on quoted market prices for the same or similar issues. The University is not required to
settle its debt obligations at fair value.
Tax-Exempt Bonds
The University’s tax-exempt bonds are issued through DASNY, a New York State agency serving as a conduit issuer of
tax-exempt debt. The total net unamortized premium of tax-exempt revenue bonds was $26,910 and $7,037 at June 30,
2013 and 2012, respectively.
Deposits with bond trustees consist of debt service funds and the unexpended proceeds of certain debt. These funds
will be used for construction of, or payment of, debt service on certain facilities. Deposits with bond trustees totaling
$61,633 and $30,689 are included in cash and cash equivalents held with bond trustees and investments on the
Consolidated Balance Sheets as of June 30, 2013 and 2012, respectively.
Proceeds from tax-exempt revenue bonds were used as follows:
DASNY 2002B Series – Insured revenue bonds were issued to construct and renovate various buildings on campus.
During fiscal year 2013, the University advance refunded a portion of 2002B Series bonds which were outstanding in
the principal amount of $10,850 (see DASNY 2012 Series). A portion of the proceeds from the 2012 Series bonds was
used to purchase U.S. government securities which were deposited in an irrevocable trust solely for the purpose of
making debt service payments on the 2002B Series bonds. Accordingly, the refunded 2002B Series bonds were legally
extinguished and neither the indebtedness nor the assets of the irrevocable trust are included on the Consolidated
Balance Sheet as of June 30, 2013. In connection with this refunding, the University incurred debt extinguishment
charges of $1,759 included in other nonoperating activities on the Consolidated Statement of Activities.
DASNY 2006A Series – Insured revenue bonds were issued to advance refund a substantial portion of the outstanding
aggregate principal amount of 1997 Series issued to refund the remaining obligation of general and unconditional
obligation Series E revenue bonds. Proceeds were also used to renovate on-campus housing facilities and improve the
technological infrastructure of the University.
DASNY 2008A Series – Unsecured bonds were issued to construct a new mixed-use residential on-campus housing
and retail complex; the renewal, replacement and expansion of existing heating and cooling infrastructure and energy
management; and, the renovation of academic and administrative buildings.
During fiscal year 2013, the University advance refunded a portion of 2008A Series bonds which were outstanding in
the principal amount of $76,100 (see DASNY 2012 Series). A portion of the proceeds from the 2012 Series bonds was
used to purchase U.S. government securities which were deposited in an irrevocable trust solely for the purpose of
making debt service payments on the 2008A Series bonds. Accordingly, the refunded 2008A Series bonds were legally
extinguished and neither the indebtedness nor the assets of the irrevocable trust are included on the Consolidated
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Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
Balance Sheet as of June 30, 2013. In connection with this refunding, the University incurred debt extinguishment
charges of $22,588 included in other nonoperating activities on the Consolidated Statement of Activities.
DASNY 2010 Series – Revenue bonds were issued for the construction of a new academic building, the construction of
a green data center, the expansion of athletic facilities, various other campus-wide improvements and the advance
refunding of DASNY Series 2002A.
DASNY 2012 Series – During fiscal year 2013, the University entered into an agreement with DASNY whereby DASNY
issued $146,030 in revenue bonds (2012 Series). The agreement is a general secured obligation of the University. The
bonds were issued at a premium of $22,187. Proceeds were used to advance refund a portion of DASNY 2002B Series
bonds (see DASNY 2002B Series) and a portion of 2008A Series bonds (see DASNY 2008A Series) and for the
construction of a new athletic and multi-purpose facility, renovations and improvements to academic facilities,
replacement of electrical infrastructure and the acquisition of on-campus residential housing (University Commons
Project II).
Capital Leases
The University has entered into various capital equipment and furniture lease agreements.
11.
Student Aid
Student tuition and fees are presented on the Consolidated Statements of Activities net of scholarships as follows:
2013
12.
Institutional support
1
Sponsored support
Total student aid
2
$
135,274
$
9,277
144,551
2012
$
125,195
$
8,626
133,821
1
Institutional support includes financial aid and merit scholarships awarded to students from unrestricted operating resources.
2
Sponsored support includes financial aid and scholarships funded from restricted and University designated resources and
external sources, including federal, state or private grants and/or contributions.
National Technical Institute for the Deaf
Under an agreement with the U.S. Department of Education (Department), the University established NTID in 1968 to
provide post-secondary education and technical training for deaf and hard of hearing persons. NTID is the world’s first
and largest technical college for deaf students with approximately 1,529 students from the United States and other
countries. The federal appropriation covers approximately 66% of NTID’s total operating costs and provides matching
funds for the University’s Federal Endowment Fund. Funding is applied for annually and is subject to the federal
government’s continued support of the program.
Operating Revenues
The federal appropriation partially covers direct operating expenses and reimbursement to the University for tuition,
fees, room and board and indirect costs for NTID students using RIT facilities. These revenues are included in
government grants and contracts on the Consolidated Statements of Activities and total $62,143 and $64,928 at
June 30, 2013 and 2012, respectively. The remaining operating expenses are funded by tuition and fees collected from
students and other revenues.
Nonoperating Activities
The appropriation may also be used to match qualifying contributions received for the NTID’s Federal Endowment Fund.
Included in permanently restricted nonoperating government grants and contracts for long-term assets on the
Consolidated Statements of Activities are Federal matching funds totaling $141 and $221 at June 30, 2013 and 2012,
respectively.
22
Rochester Institute of Technology
Notes to Consolidated Financial Statements
For the fiscal years ended June 30, 2013 and 2012
Additionally, the University received incremental revenue from the Department to support approved NTID capital and
renovation projects totaling $82 and $45 at June 30, 2013 and 2012, respectively. These revenues are included in
unrestricted government grants and contracts for long-term assets.
13.
Consolidated Statements of Activities – Operating Expenses by Function
2013
Instruction
Research
Public service
Academic support
Student services
1
Institutional support
Auxiliary enterprises
Independent organizations
Operating expenses by function
1
14.
$
$
226,466
33,752
15,194
48,256
39,318
48,800
80,007
71
491,864
2012
$
$
213,725
33,776
13,770
45,861
35,661
48,654
78,744
47
470,238
Includes fundraising expenses of $8,766 and $8,508 in 2013 and 2012, respectively.
Commitments and Contingencies
The University is involved in legal actions arising in the normal course of activities and is subject to periodic audits and
inquiries by various regulatory agencies. Although the ultimate outcome of such matters is not determinable at this time,
management, after taking into consideration advice of legal counsel, believes that the resolution of pending matters will
not have a materially adverse effect, individually or in the aggregate, upon the University's financial statements.
The University is committed under several construction contracts amounting to approximately $15,263 and $37,772 at
June 30, 2013 and 2012, respectively. These contracts relate to the renovation and construction of various on-campus
facilities including projects totaling $182 funded by federal and state grants, $270 funded by private donors and $11,259
and $783 funded by the University’s 2012 Series and 2010 Series debt issues, respectively.
15.
Subsequent Events
In August 2013, the voluntary dissolution of RIT High Technology Incubator, Inc. as described in Note 1 was approved
by New York State.
Subsequent events have been evaluated through November 8, 2013, the date the Consolidated Financial Statements
were issued.
23