FY 2005 - University of Missouri System

Management’s Discussion and Analysis (unaudited)F o r t h e y e a r s e n d e d J u n e 3 0 , 2 0 0 5 a n d 2 0 0 4The distribution of the Net Asset balances, including additional details on unrestricted net assets by fund type, as ofJune 30, 2005, are as follows:Fiscal Year 2004 Compared to Fiscal Year 2003Total Assets increased $328.9 million to $3.6 billion as of June 30, 2004 compared to June 30, 2003, which reflectedthe University’s continued efforts to strengthen its capital position. This increase was primarily attributable to theincrease in the University’s Long-Term Investments, and the expansion of Capital Assets across all of the campuses.Net capital additions of $247.7 million were offset by $89.8 million in depreciation, resulting in a net change in CapitalAssets of $157.9 million.The University held Cash and Cash Equivalents at the end of fiscal year 2004 of $216.9 million, a decrease of $58.0million from the prior year. The University’s General Pool was more heavily weighted in short-term commercial paperon June 30, 2003 than on June 30, 2004. Accounts Receivable, net of $184.5 million, increased $35.9 million as of June30, 2004, over the prior year. The increase was primarily due to the receipt of bond funds of $34.3 million from theState of Missouri for construction of the new sports arena on the Columbia campus.Long-Term and Short-Term Investment holdings of $1.3 billion as of June 30, 2004, increased $228.9 million overthe prior year. Long-Term Investments in the University’s endowed funds, comprised primarily of a Balanced andFixed Income Pool, increased $75.3 million in fiscal year 2004 due to receipt of gifts, as well as strong bond marketperformance and improving stock market performance.Total Liabilities increased $106.0 million over the prior year. During fiscal year 2004, Bonds and Notes Payable,net of premium/discount and deferred losses on defeasance, increased $111.4 million as a result of a $155.2 millionbond issuance. The bonds financed $118.1 million for capital expansion across all campuses, $37.1 million to defease aportion of existing bonds and to finance certain costs of issuance.A significant change in current liabilities included a $26.2 million increase in Funds Held for Others. In January2004, the University became custodian of approximately $13 million that was previously held in trust by a third party.Another factor affecting the increase in Funds Held for Others was the increase in payroll withholding liabilitiesdue to timing of collection of employer and employee premiums and the subsequent remittance of these funds tothe applicable medical, dental and other employee-related programs. An offsetting decrease in liabilities included adecrease of $55.8 million in Investment Settlements Payable from $74.3 million as of June 30, 2003, to $18.5 millionas of June 30, 2004. Purchases and sales of investments are accounted for on the trade date basis. The Universityrecords Investment Settlements Payable for purchases of investments occurring on or before June 30, which settleafter such date.2 0 0 5 F i n a n c i a l R e p o r t : U n i v e r s i t y o f M i s s o u r ia c o m p o n e n t u n i t o f t h e S t a t e o f M i s s o u r i