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ANNUAL REPORTFOR THE YEAR ENDED MARCH 31, 2011Prepared for the Government of Alberta

EXCELLENCE

INNOVATION

SUCCESS

TABLE OF CONTENTS

Accountability Statement ........................................................................................................................................... 1

Board Of Governors .................................................................................................................................................... 2

Management’s Responsibility For Reporting ................................................................................................................ 3

Message From The Board Chair .................................................................................................................................. 4

Message From The President ...................................................................................................................................... 5

At The Forefront ......................................................................................................................................................... 7

Quick Facts ................................................................................................................................................................ 8

Operational Overview ................................................................................................................................................. 9

Major Accomplishments ........................................................................................................................................... 11

Goals, Expected Outcomes And Performance Measures ............................................................................................ 17

A Shared Responsibility .......................................................................................................................................... 21

Management Discussion And Analysis ..................................................................................................................... 22

Audited Consolidated Financial Statements ............................................................................................................ 32

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ACCOUNTABILITY STATEMENT

June 22, 2011

The University of Calgary’s annual report for the year ended March 31, 2011 was prepared under the Board’s direction in accordance with the Government Accountability Act and ministerial guidelines established pursuant to the Government Accountability Act. All material economic, environmental or fiscal implications of which we are aware have been considered in the preparation of this report.

Douglas Black Q.C., LL.B. Chair, Board of Governors

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BOARD OF GOVERNORS

Board Membership – Voting

Douglas Black Board Chair Bonnie DuPont Board Vice-Chair Elizabeth Cannon President Jim Dinning Chancellor Keith Dobson General Faculties Council Joe Doolan Public Paul Farion Alumni John Hickie Alumni Kabir Jivraj Public Patricia Johnson Alberta Union of Public Employees Brenda Kenny Public Nick Kirton Public Jeff LaFrenz Senate James Lange Graduate Students’ Association, President Ken McKinnon Public Paul Rogers The University of Calgary Faculty Association Mike Shaikh Public Kay She Students’ Union William Smith Public Lauren Webber Students’ Union, President Steve Wilson Public

Board Officials – Non-Voting

Charlene Anderson General Counsel Gary Durbeniuk Vice-President (Development) Bob Ellard Vice-President (Facilities Management and Development) Jonathan Gebert Vice-President (Finance and Services) Alan Harrison Provost and Vice-President (Academic) Diane Kenyon Vice-President (University Relations) Jon Meddings Interim Vice-President (Research) Elizabeth Osler University Secretary and Associate General Counsel Ann Tierney Vice-Provost (Students)

Community Members – Voting

Kay Best Audit Committee David Day Environment, Health, Safety and Sustainability Committee Stephanie Felesky Investment Committee, Human Resources and Governance Committee Charles Fischer Audit Committee Randy Gossen Environment, Health, Safety and Sustainability Committee Grant MacEachern Investment Committee Al Monaco Investment Committee Gord Richie Investment Committee Harry Roberts Audit Committee

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MANAGEMENT’S RESPONSIBILITY FOR REPORTING

Reliable, accurate, and objective information

The University of Calgary’s management is responsible for the preparation, accuracy, objectivity and integrity of the information contained in the Annual Report including the financial statements, performance results, and supporting management information. Systems of internal control are designed and maintained by management to produce reliable information to meet reporting requirements. The system is designed to provide management with reasonable assurance that transactions are properly authorized, are executed in accordance with all relevant legislation, regulations and policies, reliable financial records are maintained, and assets are properly accounted for and safeguarded.

The Annual Report has been developed under the oversight of the institution audit committee, as well as approved by the Board of Governors and is prepared in accordance with the Government Accountability Act and the Post-secondary Learning Act.

The Auditor General of the Province of Alberta, the institution’s external auditor appointed under the Auditor General Act, performs an annual independent audit of the consolidated financial statements in accordance with generally accepted accounting principles.

M. Elizabeth Cannon President and Vice-Chancellor

Jonathan Gebert Vice-President (Finance and Services)

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MESSAGE FROM THE BOARD CHAIR

Excellence, Innovation and Success

I am pleased to present the University of Calgary’s Annual Report for 2010-11. This report highlights the achievements of our faculty, staff and students who share responsibility for the excellence, innovation and success highlighted within these pages.

Our community rallied around a plan that focused our collective attention more sharply on our academic priorities. Because of their commitment to a combination of strategic investments, restrained spending, and revenue generation, I am pleased to report significant progress against the strategic priorities that we set for ourselves:

� Aligning our activity with our fundamental academic principles;

� Assuring the success of the united Faculty of Arts; and

� Balancing the budget and achieving greater financial stability.

Our commitment to these priorities allowed us to grow our resources, enhance our reputation, and improve our service to students and society such that we now find ourselves on a more solid foundation among Canada’s major research institutions.

As we plan for our 50th anniversary in 2016, I am confident that our core principles—student success, excellence in research, scholarship and creative activity, interdisciplinary education and research, and return to community—will continue to guide our activity and the allocation of our resources in the years ahead.

Douglas Black Q.C., LL.B. Chair, Board of Governors

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MESSAGE FROM THE PRESIDENT

Pride, Leadership and Service

One year ago, we stood together to honour our past, reflect on the present and, most importantly, to lift up our eyes to the beginning of a new era of pride, leadership and service for the University of Calgary.

From that vantage point, it was clear that we needed to develop a shared vision for the University of Calgary— one that would fill our community with an abundant sense of pride; one that would celebrate us as a leading research-intensive institution with a strong educational mission; and one that would recognize us as a well-governed and effective service organization. At that time, I invited our community to join me in the development of this vision so that the University of Calgary of tomorrow would be even more successful than it is today.

One year later, I am pleased to report that our vision for the future is becoming more vivid, more compelling, and more engaging. Through Project Next, the university undertook a strategic planning process that brought students, faculty, staff and community together to develop core values and a strategic direction that will guide our institution into the future. By 2016, we will lead the nation in terms of student engagement. More of our research programs will become leading examples of their kind in Canada. We will continue to grow the already successful connections we have made with our broader community that make us the envy of every other institution in the country.

Our road to autonomy in 1966 was paved by pioneers—Calgarians whose unwavering determination and commitment to establish a local university was guided by a simple vision of a great city built on a foundation of higher learning. As we approach our 50th anniversary in 2016, we understand that our prominence on the world stage will be shaped by this same spirit—a community demonstrating its commitment and determination to the success of a great university in a world class city.

M. Elizabeth Cannon President and Vice-Chancellor

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AT THE FOREFRONT

Excellence, Innovation and Success

The University of Calgary is a young and ambitious research-intensive institution with almost 4,700 faculty and staff offering over 100 different academic programs through 14 faculties and 53 teaching departments.

All this adds up to an endless opportunity for new ideas, exploration and discovery. From the individual learning experiences of each of our over 30,000 students to hundreds of globally recognized researchers performing cutting-edge work, we share responsibility for excellence, innovation and success.

Being situated in Calgary, one of Canada’s most dynamic cities and a global energy hub means the University of Calgary has the unique advantage—and pressing responsibility—to find better, cleaner ways to extract oil and gas to fuel the global economy. We are leading the world in research in energy and the environment.

And our students and faculty members are making huge strides in medicine, biomedical engineering, and many other exciting areas of interdisciplinary research. The depth and breadth of intellectual discovery at the University of Calgary over the course of a year is truly staggering.

In the following pages, we invite you to read just a few examples of how teaching, research and creative activity at the University of Calgary are making a difference in our community, our country and our world.

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QUICK FACTS

Growing our Resources

Enhancing our Reputation

Improving our Service to Students and Society

TOTAL STUDENTS

UNDERGRADUATE STUDENTS

GRADUATE STUDENTS

DEGREES & DIPLOMAS AWARDED

FACULTY AND STAFF

SPONSORED RESEARCH INCOME ($M)

NATIONAL RESEARCH RANKING

BUDGET ($B)

UNRESTRICTED NET ASSETS ($M)

2009 2010 2011 CHANGE

27,915

22,539

5,376

6,001

4,921

245

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0.971

-59.4

340ENDOWMENT BALANCE ($M)

29,663

23,824

5,839

5,888

4,782

272

9

1.032

-10.6

442

30,476

24,586

5,890

6,157

4,691

276

8

1.072

36.5

497

813

762

51

269

(91)

4

1

0.040

47.1

55

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Vision

The University of Calgary is a passionate community of scholars dedicated to high-level teaching and research created and shared with students to the benefit of society.

Mandate

Founded in 1966, the University of Calgary is governed by a Board of Governors, and operates as a public Comprehensive Academic and Research Institution under the authority of Alberta’s Post-secondary Learning Act. Education and research at the University of Calgary serve the needs of local, provincial, national and international communities. Through its inquiry-based teaching and research programs and strategic and entrepreneurial partnerships, the university’s faculty, staff and students pursue knowledge, contribute to the development and critique of societal goals, and engage in creativity and innovation in many fields. The university’s goal is to be recognized internationally for the success of its students and for excellence in research, scholarly and creative activity.

The university offers a broad selection of programs of study including baccalaureate, graduate professional, and research-based master and doctoral degrees. It also offers a wide assortment of credit and non-credit diplomas and certificates and executive development programs. Building on strengths in disciplines in the areas of fine arts, humanities, sciences and social sciences as well as in the professions, including architecture, business, education, engineering, environmental design, kinesiology, law, medicine, nursing, social work and veterinary medicine, the University is committed to offering an experience that provides both disciplinary and interdisciplinary education to its students. A number of the programs it has developed are unique within Alberta.

As an autonomous institution working within Campus Alberta, the university collaborates with other post-secondary institutions in the delivery of collaborative degrees, the use of transfer and articulation agreements, the sharing of facilities and faculty members, and the offering of degree-completion opportunities to students from both rural and urban communities. Working with the private sector and all three levels of government, the University of Calgary takes a leadership role within Alberta for the further development of educational and research programs in areas designated as strategic academic priorities.

At the University of Calgary, research, teaching and scholarship are interdependent and steeped in the principle of academic freedom. The university encourages, supports and disseminates research, scholarship, innovation, and creative activity in many forms and integrates these activities into both the graduate and undergraduate curriculum. Students and faculty at the University of Calgary conduct basic and applied research at the frontiers of knowledge and transfer knowledge to society, locally, regionally, nationally and internationally. The university stimulates and supports the commercialization of research and innovation for the common good and for the prosperity of the province, the nation and the world. Students and other scholars, including post-doctoral fellows, are attracted to the University of Calgary for the opportunity to refine their research, teaching and mentoring skills.

The development of programs of study and of research partnerships across Alberta, nationally and internationally, extends the university’s engagement with the broader community and enlarges the vision of its students, faculty and staff. International partnerships, alliances, and development projects, together with study abroad initiatives, allow the university to contribute to and benefit from a network of world-wide interactions that enrich the student experience.

OPERATIONAL OVERVIEW

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The University of Calgary offers a comprehensive set of programs, facilities, and services to provide students with an excellent experience both inside and outside the classroom. The university supports the student experience with a range of services including academic and career advising, student life programming, health and wellness services, and academic success programs. Community service learning, cooperative and internship placements, and international exchanges all provide experiential learning opportunities to complement students’ classroom experiences. The university supplements and enriches its face-to-face instruction with communication and digital technologies, library and cultural resources, and both distance education and blended learning techniques.

The University of Calgary is responsive to the expectations of the communities it serves in the delivery of its educational and research programs. The university contributes in diverse ways to the cultural, social and economic life of the province, through striving for high quality in its graduates, its research, and its service to the community. The University of Calgary is committed to the goals of environmental and financial sustainability, and to making a positive impact on individuals and communities.

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Quarter 1 (April to June)

New Faculty of Arts

The official launch of the Faculty of Arts on April 1 followed months of planning to combine the faculties of communication and culture, fine arts, humanities and social sciences.

Alberta invests in clean energy research

$25 million in investments from the Governments of Alberta and Canada helped to create a University of Calgary-anchored research network to advance clean energy development in Canada.

Solar car hits Alberta highway

The latest solar car headed out on a seven-day tour of the province to test its performance before entering in the American Solar Challenge, a race from Tulsa, Oklahoma to Chicago, Illinois.

Hotchkiss Brain Institute (HBI)

receives $2.3 million

Support for the HBI Nerve Repair and Regeneration Facility from the Canada-Alberta Western Economic Partnership Agreement, the University of Calgary, and Integra LifeSciences Corporation will make it easier for promising treatments to reach patients worldwide.

Improving access to justice

Canadian legal history was made when leaders of the University of Calgary’s law school and Thompson Rivers University in Kamloops, B.C. signed a partnering agreement to create the country’s first new law school in three decades.

Spring convocation ceremonies conclude

Chancellor Joanne Cuthbertson presided over her final graduation ceremonies at spring convocation where more than 4,500 University of Calgary students graduated during the five days of ceremonies.

Quarter 2 (July to September)

UC-Qatar inaugural convocation

Twenty-four students received their Bachelor of Nursing Degree at the University of Calgary–Qatar inaugural Convocation.

University of Calgary ranks high in Corporate Knights

For the second time in a row, the Schulich School of Engineering ranked first in Canada for integrating sustainability into engineering education. The Haskayne School of Business ranked second.

Developing the world’s future energy leaders

IHS Cambridge Energy Research Associates and the Haskayne School of Business teamed up to offer the Global Energy Executive MBA program, starting in 2012.

Cogeneration plant on time and on budget

Minister of Industry, Tony Clement paid a visit to the University of Calgary’s new cogeneration plant which is funded through the Government of Canada’s Knowledge infrastructure Program.

Minister approved new mandate

A new mandate was approved by the Minister of Advanced Education and Technology that more clearly defines the University of Calgary role within the provincial system as a comprehensive academic and research institution.

Dinos ranked the top football team in the nation

For the first time in 17 years, the University of Calgary was voted the number one football team in the Canadian Interuniversity Sport poll.

Chancellor Cuthbertson Student Success Centre Opens

Chancellor Joanne Cuthbertson and husband, Board of Governors Vice-Chair Charlie Fischer donated $1 million to create the Joanne Cuthbertson Student Success Centre.

MAJOR ACCOMPLISHMENTS

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New Killam Trust programs

Four new Killam Trust programs will provide more potential awards and prizes for University of Calgary researchers across a broader scope of research.

Faculty of Arts Program Information Centre

Connecting undergraduate students with a variety of services from academic program advising to referral procedures is the purpose of the Program Information Centre located in the Social Sciences Building.

Quarter 3 (October to December)

Installation of the President

Elizabeth Cannon was installed as the eighth President and Vice-Chancellor of the University of Calgary on October 6, 2010.

WestJet founder accepts University of Calgary position

Clive Beddoe, founder and chairman of WestJet Airlines Ltd., accepted the Haskayne School of Business 2010-11 Jarislowsky fellowship in business management.

Nexus Dialogue Series

Community leaders launched the Nexus Dialogue Series —a new community engagement program that will shape how the university contributes to Calgary’s growth and success.

Downtown Campus opens

The Downtown Campus opened its doors to programs offered through Continuing Education, the Haskayne School of Business, and the School of Public Policy.

Enhancing the student experience

The Chronicle of Higher Education recognized the University of Calgary for its commitment to placing volunteering on student records.

$2 million to enhance the student experience

Forty new and continuing projects were approved to enhance the quality of the student experience. Funded through a unique partnership with the University of Calgary called Quality Money, the Student Legislative Council approved fifteen projects valued at $1.6 million,

and the Graduate Representative Council of the Graduate Students’ Association approved twenty-five projects valued at $0.4 million.

Strengthening ties to China

President Elizabeth Cannon’s first international visit since taking office provided an opportunity to renew relationships in education, research, and technology commercialization.

Mayor Naheed Nenshi,

University of Calgary alumnus

His Worship Mayor Nenshi is Calgary’s first mayor to enter office as a former president of the Students’ Union and an alumnus who earned a Bachelor of Commerce degree with distinction.

U.S. mid-term election results debate

Hosted by the School of Public Policy, Republican Fred Thompson and Democrat Howard Dean were on campus to dissect the results of President Barack Obama’s first major political test.

50 years of history

Opened on October 28, 1960, the Arts and Education (now Administration) and Science and Engineering (now Science A) buildings celebrated their 50th anniversary as the oldest buildings on campus.

Faculty of Medicine celebrates its 40th anniversary

October 29, 2010, marked the Faculty of Medicine’s 40th anniversary of the first class to start the medical school at the University of Calgary.

‘Q’ opens at the University of Calgary

The Students’ Union opened the first ever-on-campus space devoted to serving lesbian, gay, bisexual, transgendered and queer community and their allies.

University of Calgary enrolment at an all-time high

Enrolment topped 30,000 students for the first time in fall 2010 at 30,476 students—up 11 percent compared to three years earlier.

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Investing in new Canadians

A $1 million gift from RBC will help the Haskayne School of Business study how organizations can take full advantage of the professional credentials earned by new Canadians outside of Canada.

Olympic Oval future secured

The ‘world’s fastest ice’ is officially back in business for the long haul as Olympic Oval directors and WinSport Canada confirmed plans to secure the future of the Olympic Oval for the next 20 years.

Honouring Canada’s past, celebrating the future

General Rick Hillier, former Chief of the Defence Staff, received an honorary degree during fall convocation ceremonies in recognition of the brave men and women who serve Canada.

“Wall of stone” protects residence students

Yamnuska—the newest student residence building—was named for a mountain adjacent to the traditional land of the Stoney people.

Chancellor’s Installation

Jim Dinning was officially installed as the University of Calgary’s 12th Chancellor during the Fall Convocation ceremony.

University of Calgary secures nearly

$10 million through Canada Research Chairs

Ten University of Calgary faculty members were awarded a total of $9.5 million for either securing their Canada Research Chairs (CRC) or having their CRCs renewed.

Jack Perraton retires as Board of Governors chair

After over 12 years of service to the University of Calgary, Jack Perraton announced his retirement from his position as chair and member of the Board of Governors.

Taking aim at the public policy deficit

The University of Calgary’s newest Master of Public Policy program was unveiled at the Downtown Campus.

Celebrating university educators

Sixty faculty members and graduate students gathered to receive certificates that recognize completion of the University Teaching Certificate, Teaching in Canadian Classrooms and Course Design programs.

Innovative support services

Improving financial controls, streamlining administrative services, and reducing costs are central to the success of this multi-year strategic project headed into its fifth and final phase which will focus on the integrated service delivery model and changes to PeopleSoft.

University of Calgary releases Climate Action Plan

Calgary became the first university in Alberta and only the second university in Canada to release a Climate Action Plan for reducing greenhouse gas (GHG) emissions.

Quarter 4 (January to March)

Project Next

The community was invited to participate in Project Next, an initiative that will culminate in the development of a strategy to guide the university through to its 50th anniversary in 2016.

New institute examines pollutants from water and land

A new Institute of Environmental Toxicology will bring together engineers and biologists to develop new and improved technologies for effective risk assessment and remediation of contaminated sites.

Business undergrads #1 again

For the 33rd consecutive year, Haskayne Bachelor of Commerce students finished in the top two overall in the Inter-Collegiate Business Competition, finishing in a first place tie in the 2010 season.

Faculty of Arts engages community

in discussions about its future

Themes figuring prominently in strategic planning forums held by the newly amalgamated Faculty of Arts were

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undergraduate program quality, excellence in graduate programs, research support, and administrative efficiency.

Students checking out the Taylor Family Digital

Library (TFDL)

The TFDL opened its doors to students and faculty who can now explore and enjoy information online with the click of an icon, sketch their friends, or digitally leaf through stunning images from the TFDL’s special collections using touch technology.

Titanic: The Musical opens

The University of Calgary Operetta Company broke new ground with its unique take on one of the 20th century’s most iconic disasters—the sinking of the RMS Titanic.

Nobel laureate the featured speaker

for Drummond Memorial Lecture

Nobel laureate Andrew Fire was the featured speaker for the 2011 Drummond Memorial Lecture. Fire was awarded the 2006 Nobel Prize for Physiology or Medicine, along with Craig C. Mello, for the discovery of RNA interference.

University of Calgary hosts new Canadians

Chancellor Jim Dinning hosted a Canadian Citizenship ceremony where 99 new citizens from 31 counties were sworn in. Joining the celebration were Rob Anders, MP for Calgary West and Harry Chase, MLA for Calgary Varsity.

Economics professor elected

to the Royal Society of Canada

One of Canada’s leading microeconomic theorists, B. Curtis Eaton was elected a Fellow of the Royal Society of Canada. Eaton’s work spans several areas, including spatial competition, urban/regional economics, industrial organization, labour economics, game theory, the economics of information and social interaction.

Students experience indigenous social work

Smudges, pipe ceremonies and a sweat lodge are just part of the preparation students receive at the University of Calgary’s Edmonton-based social work faculty so that they are better prepared to work with First Nations and Métis communities.

New SUPER Work program launched

Funded through a unique partnership with the Board of Governors, the Students’ Union Program for Education Related Work (SUPER Work) will support students in their quest for summer work related to their academic programs and career aspirations.

New Board of Governors chair appointed

Douglas J. Black, Q.C. was appointed as the new chair of the Board of Governors through an Order-In-Council by the Government of Alberta. Black is vice chair and senior counsel of Fraser Milner Casgrain LLP and a prominent community leader.

3M National Teaching Fellowship

Leslie Reid is one of this year’s 10 fellowship recipients to win a 3M National Teaching Fellowship. Reid is the Tamaratt Teaching Professor in Geoscience.

University of Calgary becoming

more financially sustainable

Limiting expenditure growth, making the university’s operations more efficient and accountable, and finding ways to increase revenue put the university on a sustainable financial path as the Board approves a $1.09 billion budget for 2011-12.

Exploring ideas for McMahon Stadium lands

Innovative ideas are what the university is looking for from the community to develop the McMahon Stadium site, which is owned by the university and home to both the Dino’s football program and Calgary Stampeders.

UC-Qatar receives prestigious Canadian accreditation

The University of Calgary—Qatar was recognized for delivering excellence in nursing education by the Canadian Association of Schools of Nursing (CASN). It is the first time CASN has awarded accreditation to an institution outside of Canada.

Accredited university on Chinese list

The People’s Republic of China listed the University of Calgary as an accredited university. This is an important factor in the university’s ability to build research

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collaborations and offer scholarly opportunities to both students and faculty.

Bringing together youth for change

The Inter-American Development Bank youth conference was hosted on campus March 24. About 500 youth development specialists, government officials and students from Canada and the Latin American and Caribbean region attended to discuss the role of youth as agents of change.

Nursing faculty’s sim lab continues to expand

A $300,000 Government of Alberta grant will further enhance the university’s role as a North American leader in nursing simulation education. The centre is home to state-of-the-art patient simulators in a student learning environment that can mimic home care settings and hospital wards.

New board of directors for west campus

Creating a vibrant place where people can live, work, learn, and play on campus is on its way to becoming reality as the Board of Governors considers a request to establish the West Campus Development Corporation.

Top fundraising university

For the third year in a row the University of Calgary exceeded its fundraising target and finished the year at $76.5 million, maintaining its status as one of the top fundraising universities in the country

EXCELLENCE

INNOVATION

SUCCESS

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Goal 1: Student Success

Our fundamental role is to educate students to appreciate the complexities of the natural and human worlds in which they live, and to prepare them to engage actively, thoughtfully and productively both in their careers and as citizens of their communities. Recruiting excellent students and providing them with fulfilling educational experiences are keys to our mission and success.

Goal 2: Excellence in Research, Scholarship and Creative Activity

Central to our purpose and passion is the pursuit of knowledge. We contribute to society by exploring the frontiers of knowledge through basic and applied investigations that help us to discover new ways to interpret the world and respond to its needs. We are committed to innovative research, scholarship and creative activity in all of their forms.

Goal 3: Interdisciplinary Education and Research

The success of our exploration and discovery increasingly relies on collaborative teams that work across disciplines, departments and even time zones. In today’s complex environment, scholarly excellence is most often is the result of purposeful partnerships that help us to achieve our central mission.

Goal 4: Return to Community

Engagement with our community is central to our mission and vital to our success. Our efforts this past year deepened our engagement with the community through the relevance of our scholarship and the connections we made locally and around the world.

Expected Outcomes and Performance Measures

Monitoring our performance against national and international measures of success and excellence ensures that we remain focused on desirable outcomes.

� Our students will encounter high-quality learning experiences. They will report that they are highly satisfied with the quality of their learning experiences and the associated development of their critical thinking and research skills. Our graduates will be leaders in interdisciplinary research, inquiry and service.

� The University will be internationally recognized as a top Canadian research university through its achievements in strategic academic priority areas. Our focus on discovery, integration, application and teaching—the basis of engaged scholarship—will encourage faculty to collaborate, inquire, investigate, challenge and apply knowledge, often across disciplinary lines.

� We will draw upon our disciplinary strengths as we explore and discover knowledge and identify societal problems that require innovative interdisciplinary approaches for their resolution.

� The outstanding and sustained service involvement and advocacy of our faculty, staff, and students will increasingly benefit the community. Our community is productively engaged in our activities, priorities and focus to ensure that our graduates and the knowledge we generate address societal needs.

GOALS, EXPECTED OUTCOMES AND PERFORMANCE MEASURES

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2008 – 2009 2009 – 2010 2010 – 2011 Target

Average Entering Grade (%) 82.8 82.0 81.8 83.0

Undergraduate Retention Rate (%) 83.9 85.7 85.0 83.9

Graduate Satisfaction (%) 84.7 84.7 85.4 88

Undergraduate Engagement

(First year/senior year) (%) 72/71 75/65 75/65 75/65

Graduate Student Engagement (%) 85.2 85.2 81.5 87

Graduation Rate (%):

Undergraduate (Six-year tracking) 61.4 61.6 66.0 66

Master (Five-year tracking) 70.2 74.4 71.5 85

PhD (Nine-year tracking) 71.9 72.5 79.2 72

Time to Completion (terms):

Undergraduate (Six-year tracking) 14.8 14.6 14.2 13.8

Master (Five-year tracking) 8.1 8.2 7.6 8

PhD (Nine-year tracking) 14.1 15.0 13.6 14

Tri-Council Revenue ($M) 85 77 81 79

Graduate Employment Rate (%) 97.6 97.6 95.0 97

Administration Expenditures (%) 5.0 4.5 4.4 4.4

Fundraising ($M) 82.9 71.5 79.1 75

Endowment ($M) 340 442 497 381

Average Entering Grade

We promote high levels of student achievement by emphasizing the importance of academic admission standards concerning student performance.

Undergraduate Retention Rate

Our undergraduate first-to-second year retention rate is an indicator of performance that provides a basis for understanding at what stages in degree programs students leave.

Undergraduate Student Engagement

We monitor the overall level of satisfaction reported by senior level undergraduate students through their responses to the National Survey of Student Engagement (NSSE).

Graduate Student Engagement

We monitor the quality of our learning environment through student responses to a Canadian Graduate and Professional Student Survey (CGPSS) question, which assesses the percentage of thesis students (Master and PhD) rating the quality of their graduate program as excellent or very good.

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Graduate Satisfaction

We assess the quality of our learning environment through student responses to the question, “Rate the quality of your education experience”, on a government survey completed two years after graduation.

Graduation Rate

We monitor our graduation rate as an indicator of performance, which provides a basis for understanding how many students ultimately graduate from a starting cohort (Master five-year tracking, PhD nine-year tracking).

Time to Completion

Our time-to-degree measure describes the average number of years taken to complete a first degree by students who started at the university.

Sponsored Research Income

We monitor the level of sponsored research income we generate as a comparative measure of research income and intensity among Canadian universities.

Tri-Council Revenue

We monitor the level of Tri-Council (NSERC, CIHR, and SSHRC) research income as a comparative measure of research income, intensity, and quality among Canadian universities.

Degrees Awarded

This measure assesses our responsiveness to societal needs through the number of students who graduate annually.

Fundraising

This measure tracks the extent to which we engage the community in our research, scholarship and creative activity through the level of funds we raise to support these activities.

Endowment Balance

Our endowment balance provides a measure of the cumulative support we have received over the years, as well an indication of capacity to support the institution’s teaching, research and service mandate in the future.

Administration Expenditures

This measure tracks how efficiently we provide quality learning opportunities to the greatest number of students at a reasonable cost. This measure expresses administration expenses as a percentage of total expenses, less ancillary expenditures.

EXCELLENCE

INNOVATION

SUCCESS

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A SHARED RESPONSIBILITY

Excellence, Innovation and Success

The road to excellence, innovation and success was paved by members of our community—faculty, staff, students, alumni, government, and industry—whose unwavering determination and commitment enhanced our profile as a great university in a world class city. We are a better organization today a result of their inspiration, dedication and support.

As we turn our attention toward our 50th anniversary in 2016, we invite our community to share in our vision of a new tomorrow—one that invites us all to lift up our eyes to a future where the University of Calgary proudly stands among the best in the world.

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MANAGEMENT DISCUSSION AND ANALYSIS

This management discussion and analysis (MD&A) should be read in conjunction with the University of Calgary annual audited financial statements and accompanying notes. The MD&A and audited financial statements are reviewed and approved by the University of Calgary Board of Governors on the recommendation of the University of Calgary Audit Committee. The university financial statements have been prepared in accordance with Canadian generally accepted accounting principles and are expressed in Canadian dollars.

The university has reported a $69.8 million excess of revenue over expense for the year ended March 31, 2011. This compares to a $48 million excess of revenue over expense for the year ended March 31, 2010. The year-end net asset position is $835.2 million as compared to last year’s $710 million.

Total revenue increased by $31.7 million (3.1%) over fiscal 2010 to $1,065.8 million while total expenditures increased by $9.8 million (1.0%) to $995.9 million. The predominant changes in revenue include increases of $13.6 million in tuition, $11.3 million in grants and donations and $7.8 million in amortization of deferred capital contributions. The main increases in expense categories include increases in materials, supplies and services of $13.4 million, $8.8 million in amortization of capital assets and $5.3 million in scholarships and bursaries. These increases are offset by a decrease in salaries and benefits of $18.9 million.

This MD&A provides an overview of the results the University of Calgary achieved in 2011 with a detailed discussion and analysis of the university’s:

1. Operating Environment

2. Business Planning and Management

3. Financial/Budget information

4. Areas of Significant Financial Risk

5. Progress in Capital Projects

1. Operating Environment

The University of Calgary operates in an environment characterized by political, economic, social, technological, and environmental change. Increasing competition, population growth, economic uncertainty, challenges related to student recruitment, retention and engagement, affordable student housing, the gap between revenue and expenditure growth, and calls for greater public accountability, among other factors offered opportunities and presented challenges.

The recession was just one of a number of factors contributing to increased student demand as more people moved from the workforce to post-secondary education. Meeting this demand, particularly in areas of strategic priority, was challenging for the university since much of the funding for planned program expansions across the Campus Alberta system was cancelled to meet provincial budget targets.

Changes to the provincial research and innovation landscape introduced by Alberta Advanced Education and Technology in 2009-10 continued to work their way through the system in 2010-11, making it less complex, more

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focused on government’s priorities, with less overlap and providing stronger links between the players. Despite considerable public sector debt, the demand for university research remained strong as governments turned to innovation as a driver of social and economic development.

The global financial crisis had a profound and lasting effect on all aspects of the Alberta post-secondary system. Numerous provincial grants were frozen or reduced. Planned program expansions were cancelled, and new capital projects were deferred.

Fortunately, the university was better positioned than many other institutions in its sector to buffer the financial downturn. It continued to benefit from a favourable student to faculty ratio, and a broad range of desirable programs. In anticipation of the challenges ahead, budgets were reduced by three percent in 2010-11. The Innovative Support Services (iS2) project reduced ongoing administrative costs. Senior administrative salaries were frozen in 2010-11. Annual tuition fee increases were approved by the Minister of Advanced Education and Technology for the Bachelor of Commerce and MBA program to correct market anomalies. A new student services fee was phased in over three years to direct more of the operating budget into core academic operations. Additionally, collective agreements were settled at rates lower than in previous years.

Despite these challenges, the university leveraged its strengths to attend to its priorities, enhance its resources, and improve the service it provided to students and the community.

2. Business Planning And Management

The university’s three-year business plan lays out the framework and resources for the institution to achieve its teaching, research, interdisciplinary, and service goals and objectives. Within this plan, the university describes its operating environment as well as the strategies it will engage in to further enhance its quality, reputation, profile and distinctive character.

Performance measures monitor plan progress. As the university refines its plans, these measures are updated to ensure they continue to assess performance against desirable outcomes. Together, this plan and the annual report form part of an accountability relationship with many stakeholders including students, faculty and staff, the Board of Governors, the business community, various public communities, other post-secondary institutions, and the provincial and federal governments.

3. Financial / Budget Information

Revenues

Total revenues have increased by $31.7 million (3.1 percent) to $1,065.8 million from the $1,034.1 million recorded in 2010. The following table shows the composition of the university’s total revenues for the 2011 fiscal year with comparative information for 2010 and 2009:

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Revenue by Source Budget –

unaudited2011 2010 2009

Government grants $ 625,347 $ 618,126 $ 614,404 $ 564,370

Sales of services and products 93,910 93,371 94,967 90,949

Student tuition and fees 179,198 183,253 169,720 157,166

Donations and other grants 70,314 79,075 71,456 82,929

Investment income 26,477 32,078 31,510 7,036

Amortization of deferred capital

contributions56,124 59,859 52,073 51,751

Total Revenue $ 1,051,370 $ 1,065,762 $ 1,034,130 $ 954,201

Government Grants

The university’s single largest source of revenue is government grants which increased by $3.7 million (0.6 percent) from $614.4 million in 2010 to $618.1 million in 2011.

Grants received during the year from Alberta Advanced Education and Technology decreased by $100.6 million (14.5 percent) from $693.4 million in 2010 to $592.8 million in 2011. Of this amount, $97.9 million (2010 - $193.7 million) relates to capital grants. The decrease in capital grants from 2010 to 2011 is due to the near completion of the major capital expansion program funded by Alberta Advanced Education and Technology. These capital grant amounts are deferred and recognized into revenue as “amortization of deferred capital contributions” over the life of the associated capital assets, which is why the reduction in capital grants is not reflected in grant revenues on the statement of operations.

Operating grants decreased by $2.6 million (one percent) over the prior year. In 2010, grants consisted of the base operating grant combined with supplemental funding, most notably the Enrolment Planning Envelope grant. This year, Alberta Advanced Education and Technology grants were combined, eliminated or modified into what is now referred to as the Campus Alberta grant, resulting in a net decrease in the overall grant.

Grants from the Government of Alberta represent 80.8 percent of the total government grant revenue received by the university (2010 - 81.3 percent) and 46.9 percent of total revenues for the university in 2011 (2010 - 48.3 percent).

Tuition Fees

Tuition fees totaled $183.3 million (2010 - $169.7 million) and consisted of $166 million (2010 - $154 million) in credit tuition fees and $17.3 million (2010 - $15.7 million) in non-credit tuition fees.

Total credit tuition revenue increased by $12.0 million (7.8 percent) from $154 million in 2010 to $166 million in 2011. Of this increase, $4.5 million represents enrolment growth and $1.9 million relates to the Government of Alberta Tuition Policy which allowed for a 1.5 percent increase (2010 - 4.1 percent). The newly implemented student services fee resulted in an additional general tuition of $3.8 million along with visa and program differential revenue and other tuition revenue of $1.8 million, which accounted for the remaining $5.6 million revenue growth.

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Non-credit tuition increased by $1.6 million (10.2 percent) from $15.7 million in 2010 to $17.3 million in 2011. The increase is mainly due to stronger enrolment in 2011 in English as a Second Language (ESL) classes and the expansion of the customized executive development programs. In 2010, the revenue was lower due to the weakened economic environment which led to a reduction in registrations in leisure programs and the threat of a flu epidemic which led to cancellations of ESL and other international group program registrations.

Research

Cash research contributions during the year increased by $3.6 million from $272.1 million in 2010 to $275.7 million in 2011.

Research grants and revenues are recognized in the period in which related expenditures are incurred. There is a significant deferral of unspent research revenues at the balance sheet date. The financial statements reflect recognized research revenue of $258.1 million in 2011 (2010 - $260.6 million) which match research expenditures incurred in those periods. Research revenue is derived from a number of sources and as such is reported within multiple lines of the statement of operations.

Investment Income

The university’s investment income increased by $0.6 million (1.9 percent) to $32.1 million from the $31.5 million reported in 2010. The $32.1 million in investment income is comprised of the following:

Investment Income ($000)

Income on investments held for endowments 48,989

Income on other investments 16,196

Recovery on Floating Rate Notes (ABCP) 4,051

Gain from subsidiaries & joint venture 338

69,574

Less:

Income capitalized to endowment (31,428)

Amounts deferred (6,068)

Net investment income 32,078

The increase in total investment income earned is the result of an increase in equity valuations (primarily domestic equity). Equity investments represent a substantial component of the university’s long-term investment portfolio. Fixed income and money market investment returns also experienced a slight increase during the year. The investment gain relating to externally restricted endowments, net of endowment spending and fees, was transferred to cumulative capitalized endowment earnings. In addition, the value of the university’s investment in Floating Rate Notes (formerly Asset Backed Commercial Paper) increased during the fiscal year, resulting in a recovery of $4.1 million.

For the year ended March 31, 2011 the return on the university’s endowment funds was 11.8 percent (2010 - 23.8 percent) and on non-endowed funds was 2.6 percent (2010 - 2.4 percent).

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Expenses

Total expenditures increased by $9.8 million (one percent) from $986.1 million in 2010 to $995.9 million in 2011. The following table shows the composition of the university’s total expenses for the 2011 fiscal year with comparative information for 2010 and 2009:

Expense by CategoryBudget –

unaudited2011 2010 2009

Salaries $ 496,535 $ 496,491 $ 502,482 $ 479,030

Benefits 96,801 89,056 101,957 87,596

Materials, supplies and services 267,880 195,478 182,095 180,727

Utilities 33,352 31,144 28,214 32,039

Maintenance and repairs 12,047 13,734 14,160 14,054

Scholarships and bursaries 62,941 66,371 61,061 55,572

Cost of goods sold 18,353 14,174 15,471 15,833

Amortization of capital assets 84,533 89,474 80,681 80,668

Total Expenses $ 1,072,442 $ 995,922 $ 986,121 $ 945,519

Salaries and Benefits

At 58.8 percent of total expenditures (2010 - 61.3 percent) salaries and benefits represent the single largest operating expenditure. Salaries expense decreased in 2011 by $6 million or 1.2 percent over 2010 primarily due to staff reductions and a decrease in severance payments.

The average overall headcount decreased by 353 compared to 2010, primarily due to a decrease of 265 in term appointments and hourly employees, which had a minimal impact to salaries. The major cost reduction resulted from an average headcount decrease of 53 within the support staff group. Severance payments decreased by $1.9 million compared to fiscal 2010 when the University made significant staff reductions in senior administrative, regular continuing academic, support staff and management and professional categories. The FTE figures provided as at March 31, 2011 are not necessarily indicative of staffing levels throughout the year as they are at a point in time. As such, both headcount and year-end FTE figures are provided.

Within the Post Secondary Sector, Universities use full time equivalent (FTE), a common metric, when referring to staffing complement. FTE staffing numbers for specific employee groups as at March 31, 2011 with comparative numbers for March 31, 2010 are provided in the table below:

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Full Time Equivalent March 31, 2011 March 31, 2010 Net Change

Regular Continuing Academic 1,752 1,798 (46)

Senior Administration 48 51 (3)

Management & Professional 725 698 27

Support Staff 2,175 2,165 10

Total Workforce 4,700 4,712 (12)

A portion of salary costs was recovered from external sources.

Expenditures on benefits decreased by $12.9 million (12.6 percent) over the prior year. The cost of benefits as a percentage of salary is 17.9 percent in 2011 compared to 20.3 percent in 2010. Of this decrease, $16 million (2010 - $12 million) is due to the decrease in the actuarially determined UAPP pension expense. The remainder of the variance in benefits expense is primarily due to a one-time adjustment of $2.1 million to accrued vacation balances recorded in 2010 relating to former trust employees who became university employees, net of an increase in pension plan contributions of $6.1 million.

Utilities

Utilities expense increased by $2.9 million (10.3 percent) over 2010 primarily as a result of increase in the average natural gas rates experienced in 2011, and an increase in usage due to completion and usage of new buildings which opened on campus during the year. A significant portion of gas costs incurred during 2010 were at a low floating rate, prior to the university’s decision to move to improve predictability of utilities expenses through the commencement of a hedging program.

Scholarships and Bursaries

Scholarship expense increased by $5.3 million (8.7 percent) over 2010. Higher enrolment numbers in 2011 contributed to the increase in scholarship spending as more students became eligible for support. Increased scholarship expense came from a number of faculties including the Faculty of Science and the Schulich School of Engineering.

Budget To Actual

The 2011 excess of revenue over expense of $69.8 is $90.9 million greater than the budgeted deficiency of revenue over expense of $21.1 million. This variance is a reflection of cumulative favorable overall variances for both revenue and expenditures.

Actual revenue is $14.4 million over budget due to higher than anticipated donations and other grants in the amount of $8.8 million, higher than expected investment returns in the amount of $5.6 million, and higher than expected tuition revenues in the amount of $4 million, partially offset by some unfavourable variances from Government of Alberta grants.

Actual expenses are $76.5 million below budget primarily due to lower than budgeted materials and supplies expenses of $72.4 million. The materials and supplies budget variance is the result of expenditure restraint at the university combined with lower than anticipated use of contingency amounts budgeted for within this line item.

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Financial Position

Net Assets

The university’s net asset balance is $835.2 million at March 31, 2011. This is an increase of $125.2 million (0 percent to 15 percent) over 2010 ($710.0 million). The net asset balance is reported in the following four major categories:

Net Assets - Endowments

Net assets restricted for endowment purposes increased by $55.1 million or 12.5 percent to $496.8 million from $441.7 million in 2010. The increase is the result of net investment gains of $49 million and $23.7 million in new contributions less $17.6 million in endowment expenditures.

Net Assets - Investment in capital assets and collections

Net assets invested in capital assets and collections of $193.4 million decreased by $1.1 million from 2010 ($194.5 million). The decrease was the result of amortization expense relating to internally funded capital assets of $29.9 million largely offset by internally funded net capital purchases and long-term debt repayments relating to capital assets of $28.8 million. Growth in the capital asset and collections balance is discussed in Section 5, Progress in Capital Projects.

Net Assets - Internally restricted

Internally restricted net assets represent amounts set aside by the university for specific purposes. The balance increased by $24 million from $84.5 million in 2010 to $108.5 million in 2011. The increase in this balance is primarily due to an internal restriction to allow for management of departmental budget surpluses carried over from 2011, with offsetting reductions relating to spending of amounts that were internally restricted for in previous years.

The composition of internally restricted net assets is as follows:

$ (000’s)

Funding reserved for Capital activities 2,400

Funding reserved for Operating activities 88,544

Funding reserved for Research activities (includes research activities and for subsidiaries – University Technologies Group and Arctic Institute of North America)

17,545

Total $108,489

Net Assets - Unrestricted

The university’s unrestricted net assets balance at year-end has recovered significantly to a surplus of $36.5 million (2010 - $10.6 million deficit). This improvement of $47.1 million is primarily due to the $69.8 million excess of revenue over expenditures.

Investments

The cash and cash equivalents balance decreased by $41.1 million to $535 million compared to $576.1 million at March 31, 2010. This decrease is a result of cash of $356.3 million used in investing activities, offset by cash inflows of $43.5 million and $271.7 million respectively from operating and financing activities.

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Total investments increased by $133.4 million (20.9 percent) from the $639.6 million recorded in 2010 to $773 million in 2011. Long-term investments increased by $68.5 million and current investments increased by $64.9 million. The increase in long-term investments is primarily due to an increase in the market value of the portfolio in the amount of $40.2 million and net purchases in the amount of $28.3 million. The increase in short-term investments is primarily due to increases in unspent research and other restricted balances that have been invested.

4. AREAS OF SIGNIFICANT FINANCIAL RISK

Unfunded Pension Liability

The university participates with other employers in the Universities Academic Pension Plan (UAPP) to provide pensions for certain staff members.

The actuarial deficiency reported by the UAPP as at December 31, 2010 related to all participants is $1,123 million (2009 - $971 million) consisting of a pre-1992 deficiency ($754 million) and a post 1991-deficiency ($369 million). Based on an extrapolation of the UAPP’s financial position to March 31, 2011, the university’s portion of this deficiency, which has been allocated based on its plan members’ percentage of pensionable earnings is estimated to be $119.8 million (2010 - $116.4 million). The university has recorded an accrued benefit liability of $61.9 million (2010 - $58.3 million) and deferred $57.9 million (2010 - $58.1 million) of unamortized experience losses as prescribed by GAAP for employee future benefits. The unfunded deficiency for service prior to January 1, 1992 is financed by additional contributions of 1.25 percent (2010 - 1.25 percent) of salaries by the Government of Alberta. Employees and employers equally share the balance of the contributions of 2.03 percent (2010 - 2.03 percent) of salaries required to eliminate the unfunded deficiency by December 31, 2043.

The university is also a participant in the Public Sector Pension Plan (PSPP) for certain other employees. Participants, including the university, are unable to isolate their share of the PSPP pension due to the number of participating employers in the PSPP and the resultant complexities in calculating accurate information related to the participants’ share of any unfunded liability. There is a significant likelihood that both employer and employee contribution rates will increase in the near future for PSPP plans.

For multi-employer defined-benefit plans where there is measurement uncertainty with respect to each plan participant, the CICA Handbook guidance allows for following the standards on defined-contribution plans. Therefore, the university has chosen to continue to account for the PSPP on a defined-contribution basis.

Deferred Maintenance

The current deferred maintenance balance for buildings is estimated at $304.5 million (2010 -$298.7 million) based on March 31, 2011 information from Alberta Infrastructure. This balance represents the expected future life cycle costs associated with university buildings over the next five years based on periodic audits conducted by Alberta Infrastructure. Deferred maintenance is retired through infrastructure maintenance grants, special preservation grants and as part of the ongoing capital program within the existing building inventory. Total provincially-funded expenditures on maintenance events over the 12 months ended March 31, 2011 was $33.2 million (2010 - $21.1 million). Of this amount, $15.2 million (2010 - $6.9 million) was funded from special preservation grants. A portion of these amounts were treated as capital improvements and are further discussed under “Progress in Capital Projects” (below). The Facility Condition Index (FCI) is an industry standard for measuring building condition against the total replacement

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value of the university’s buildings. The university’s current FCI of 10.6 percent is within an acceptable range (0 to 15 percent) and would indicate a well managed maintenance program.

Budgetary Pressure

The university’s future finances are under pressure as a result of a number of factors including:

� the expectation that there will be no increases, and a possibility of reductions, in operating grant funding in the foreseeable future;

� reduction in, or loss of, external funding sources;

� potential for significant unexpected repairs on aging facilities;

� likely increase in contribution rates for pension plans;

� maintaining enrolment associated tuition revenue as economy recovers;

� potential for negotiated salaries and other inflationary pressures in excess of funding;

� a tuition policy that limits tuition to rates below inflation rates; and,

� potential for volatility with regards to investment returns

The university continues to be committed to address these budgetary pressures and will work closely with the Board of Governors and the government to develop long-term strategies to ensure that it can continue to deliver on its mandate.

5. PROGRESS IN CAPITAL PROJECTS

In 2011 the university expended $271.6 million (2010 - $274.1 million) on buildings and plant, and a total of $80.6 million (2010 - $47 million) on equipment & furnishings, books, software and artwork. These additions were funded as follows: $28.8 million from internal university funds, $38.3 million from debt financing and $285.1 million from other external sources.

Significant investment in capital projects from external funds includes: Energy, Environment & Experiential Learning ($76.9 million), Taylor Family Digital Library and High Density Library ($48.2 million), Phase VI New Residence ($25.8 million – debt funded), Foothills Campus including Health Research Innovation Centre fit out costs, Health Science Centre Critical Renovations, and Undergraduate Medical Expansion ($35.4 million), Phase I Expansion of Schulich School of Engineering ($20.6 million), Central Heating and Cooling Plant / Energy Centre ($25 million), and Phase II of Energy Performance Projects ($10.9 million).

EXCELLENCE

INNOVATION

SUCCESS

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Financial Statements

For the Year Ended March 31, 2011

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TABLE OF CONTENTS

Statement of Management Responsibility ................................................................................................................. 2 Auditor’s Report ........................................................................................................................................................ 3 Statement of Financial Position ................................................................................................................................. 4 Statement of Operations ........................................................................................................................................... 5 Statement of Changes in Net Assets .......................................................................................................................... 6 Statement of Cash Flows ........................................................................................................................................... 7 Notes to the Financial Statements ............................................................................................................................. 8

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STATEMENT OF MANAGEMENT RESPONSIBILITY

The University is responsible for the preparation of the financial statements and has prepared them in accordance with Canadian generally accepted accounting principles as described in note 2 to the financial statements. The financial statements present fairly the financial position of the University as at March 31, 2011 and the results of its operations and cash flows for the year then ended. In fulfilling its responsibilities and recognizing the limits inherent in all systems, the University has developed and maintains a system of internal control designed to provide reasonable assurance that University assets are safeguarded from loss and that the accounting records are a reliable basis for the preparation of the financial statements. The Board of Governors carries out its responsibility for review of the financial statements principally through its Audit Committee. The Audit Committee meets with Management and the External Auditor to discuss the results of audit examinations and financial reporting matters. The External Auditor has full access to the Audit Committee, with and without the presence of Management. The financial statements for the year ended March 31, 2011 have been reported on by the Auditor General of the Province of Alberta, the auditor appointed under The Post-secondary Learning Act. The Auditor's Report outlines the scope of his examination and provides his opinion on the fairness of presentation of the information in the financial statements. Original signed by Elizabeth Cannon Original signed by Jonathan Gebert President Vice-President (Finance and Services)

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Independent Auditor’s Report To the Board of Governors of the University of Calgary Report on the Financial Statements I have audited the accompanying financial statements of the University of Calgary, which comprise the statement of financial position as at March 31,2011, and the statements of operations, changes in net assets and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, the financial statements present fairly, in all material respects, the financial position of the University of Calgary as at March 31, 2011, and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Edmonton, Alberta Original signed by Merwan N. Saher, CA June 22, 2011 Auditor General

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STATEMENT OF FINANCIAL POSITION AS AT MARCH 31, 2011 (thousands of dollars)

The accompanying notes are part of these financial statements.

Signed on behalf of the Board of Governors: _______________________ ____________________________ Chair, Board of Governors Vice-President (Finance & Services)

2011 2010 ASSETS Current Cash and cash equivalents (note 3) $ 534,960 $ 576,062 Short-term investments (note 4) 255,214 190,331 Accounts receivable 46,247 63,379 Inventories and prepaid expenses 21,781 19,916 858,202 849,688 Long-term investments (note 4) 517,791 449,242 Other long-term assets (note 5) 22,727 22,604 Capital assets and collections (note 6) 1,471,315 1,209,195

$ 2,870,035 $ 2,530,729

LIABILITIES AND NET ASSETS Current Liabilities Accounts payable and accrued liabilities $ 150,910 $ 166,550 Current portion of long-term liabilities (note 8) 4,917 3,951 Deferred contributions, research and other (note 9) 426,618 391,665 Deferred revenue 22,104 20,238 604,549 582,404 Employee future benefit liabilities (note 7) 68,424 63,691 Long-term liabilities (note 8) 157,443 110,186 Deferred contributions, capital (note 9) 77,124 162,059 Unamortized deferred capital contributions (note 10) 1,127,290 902,374 2,034,830 1,820,714 Net Assets Endowments (note 11) 496,807 441,658 Investment in capital assets and collections (note 12) 193,360 194,471 Internally restricted (note 13) 108,489 84,468 Unrestricted (deficit) 36,549 (10,582) 835,205 710,015

$ 2,870,035 $ 2,530,729

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STATEMENT OF OPERATIONS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

The accompanying notes are part of these financial statements.

Budget 2011

(unaudited - note

16) 2011 2010 REVENUE Government of Alberta grants (note 18) $ 506,927 $ 499,705 $ 499,583 Federal and other government grants 118,420 118,421 114,821 Sales of services and products 93,910 93,371 94,967 Student tuition and fees 179,198 183,253 169,720 Donations and other grants 70,314 79,075 71,456 Investment income (note 17) 26,477 32,078 31,510 Amortization of deferred capital contributions (note 10) 56,124 59,859 52,073 $ 1,051,370 $ 1,065,762 $ 1,034,130 EXPENSE Salaries 496,535 496,491 502,482 Employee benefits 96,801 89,056 101,957 Materials, supplies and services 267,880 195,478 182,095 Utilities 33,352 31,144 28,214 Maintenance and repairs 12,047 13,734 14,160 Scholarships and bursaries 62,941 66,371 61,061 Cost of goods sold 18,353 14,174 15,471 Amortization of capital assets 84,533 89,474 80,681 $ 1,072,442 $ 995,922 $ 986,121 (DEFICIENCY) EXCESS OF REVENUE OVER EXPENSE $ (21,072) $ 69,840 $ 48,009

NET TRANSFER TO ENDOWMENTS (note 11)

(136)

(1,208) NET CHANGE IN INVESTMENT IN CAPITAL ASSETS (note 12) 1,448 6,059 NET CHANGE IN INTERNALLY RESTRICTED NET ASSETS (note 13) (24,021) (5,844)

CHANGE IN UNRESTRICTED NET ASSETS FOR THE YEAR 47,131

47,016

UNRESTRICTED DEFICIT, Beginning of year (10,582)

(57,598) UNRESTRICTED NET ASSETS (Deficit), End of year $ 36,549 $ (10,582)

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STATEMENT OF CHANGES IN NET ASSETS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

The accompanying notes are part of these financial statements.

Endowments

Investment in Capital Assets

and Collections

Internally Restricted Net Assets

Unrestricted Net Assets

(deficit) NET ASSETS (deficit), March 31, 2009 $ 340,103 $ 200,144 $ 78,624 $ (57,598)

Excess of revenue over expense - - - 48,009

Investment income (note 17)

57,944 - - -

Endowment contributions (note 11)

42,403 - - -

Net transfers

1,208 - -

(1,208) Net change in investment in capital assets (note 12) - (6,059) - 6,059 Contribution of assets not subject to amortization (note 12) - 386 - -

Net expenditures and transfers of internally restricted net assets - -

5,844

(5,844)

NET ASSETS (deficit), March 31, 2010 $ 441,658 $ 194,471 $ 84,468 $ (10,582)

Excess of revenue over expense - - - 69,840

Investment income (note 17)

31,428 - - -

Endowment contributions (note 11)

23,585 - - - Net transfers 136 - - (136) Net change in investment in capital assets (note 12) - (1,448) 102 1,346 Contribution of assets not subject to amortization (note 12) - 337 - - Net expenditures and transfers of internally restricted net assets - - 23,919 (23,919) NET ASSETS , March 31, 2011 $ 496,807 $ 193,360 $ 108,489 $ 36,549

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STATEMENT OF CASH FLOWS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

The accompanying notes are part of these financial statements.

2011 2010 CASH PROVIDED FROM (USED IN) OPERATING ACTIVITIES Excess of revenue over expense $ 69,840 $ 48,009 Add (deduct) non-cash items: Amortization of capital assets 89,474 80,681 Amortization of deferred capital contributions (59,859) (52,073) In-kind contributions (capital) included in donations (10,572) (7,110) Change in employee future benefit liabilities 4,733 19,971 Change in unrealized gain on investments (21,612) (21,060) Total non-cash items 2,164 20,409 Net change in non-cash working capital (*) (28,437) 67,416 43,567 135,834 CASH PROVIDED FROM (USED IN) INVESTING ACTIVITIES Purchase of capital assets and collections, net of proceeds from disposals (340,685) (312,534) Purchase of long-term investments, net of sales (28,347) (23,895) Net proceeds from (decrease in) other long-term assets (123) 3,159 Endowment investment earnings 12,838 8,112 (356,317) (325,158) CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES Endowment contributions 23,585 42,403 Capital contributions 199,841 222,877 Long-term liabilities - new financing, net of repayments 48,222 43,463 271,648 308,743 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (41,102) 119,419 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 576,062 456,643 CASH AND CASH EQUIVALENTS, END OF YEAR (note 3) $ 534,960 $ 576,062 (*) Net change in non-cash working capital: Increase in short-term investments (64,883) (70,864) Decrease (increase) in accounts receivable 17,132 (2,480) Increase in inventories and prepaid expenses (1,865) (2,359) (Decrease) increase in accounts payable and accrued liabilities (15,640) 76,859 Increase in deferred contributions, research and other 34,953 64,540 Increase in deferred revenue 1,866 1,720 $ (28,437) $ 67,416

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NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

1. Authority and Purpose

“The Governors of the University of Calgary” is a corporation which manages and operates the University of Calgary (“the University”) under the Post-Secondary Learning Act (Alberta). All members of the Board of Governors are appointed by either the Lieutenant Governor in Council or the Minister of Advanced Education and Technology, with the exception of the Chancellor and President, who are ex officio members. Under the Post-secondary Learning Act, Campus Alberta Sector Regulation, the University is a comprehensive academic and research institution offering undergraduate and graduate degree programs as well as a full range of continuing education programs and activities. The University is a registered charity, and under section 149 of the Income Tax Act (Canada), is exempt from the payment of income tax. This tax exemption does not extend to its wholly-owned subsidiary, University Technologies International Inc.

2. Summary of Significant Accounting Policies and Reporting Practices

a) General - GAAP and Use of Estimates

These financial statements have been prepared in accordance with Canadian generally accepted accounting principles for not for profit organizations. The measurement of certain assets and liabilities is contingent upon future events; therefore, the preparation of these financial statements requires the use of estimates, which may vary from actual results. University Management uses judgment to determine such estimates. Employee future benefit liabilities, amortization of capital assets and floating rate notes are the most significant items based on estimates. In Management’s opinion, the resulting estimates are within reasonable limits of materiality and are in accordance with the significant accounting policies summarized below. These significant accounting policies are presented to assist the reader in evaluating these financial statements and, together with the following notes, should be considered an integral part of the financial statements.

b) Investment in Subsidiaries and Joint Venture

The financial statements include the accounts of the following entities using the equity method of accounting:

� the combined results of University Technologies Group o University Technologies International Inc. (UTI), o University Technologies International Limited Partnership (UTI LP), a limited partnership held in trust

by the University, and o UTI LP’s wholly owned subsidiaries,

� the accounts of The Arctic Institute of North America (AINA), a non-profit organization controlled by the University.

UTI LP operates to facilitate the transfer of intellectual property from the University to private business. AINA operates under the authority of the Act of the Federal Parliament (9-10 George VI, Chapter 45) to initiate, encourage and support northern research and to advance the study of arctic conditions and problems.

The financial statements use the equity method to record the University’s proportionate share of the following joint venture:

� Canada School of Energy and Environment (46.2% interest) – a joint venture with two other universities to promote coordination and collaboration in research and education related to the implementation of Alberta’s energy and environment strategies.

These investments are recorded as other long-term assets (Note 5).

41

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

c) Financial Instruments The University’s financial assets and liabilities are generally classified and measured as follows:

The University’s financial instruments are recognized on their trade date and transaction costs related to all financial instruments are expensed as incurred. Valuations of publicly traded securities are based on quoted market bid prices at the close of business on the statement of financial position date. For securities where market quotes are not available, estimation techniques are used to determine fair value. Estimation techniques used include discounted cash flows, internal models that utilize observable market data or comparisons with other securities that are substantially the same. The University does not use foreign currency forward contracts or any other type of derivative financial instruments for trading or speculative purposes. As permitted for Not-for-Profit Organizations, the University has elected to not apply the standards on derivatives embedded in non-financial contracts, and the University has elected to continue to follow CICA 3861: Disclosure and Presentation.

Financial statements are exposed to credit risk, interest rate risk, foreign exchange risk, market risk, commodity price risk and liquidity risk. Each of these risks is managed through the University’s collection procedures, investment guidelines, banking arrangements and other internal policies, guidelines and procedures. Market Risk

The University is subject to market risk, foreign currency and interest rate risk with respect to its investment portfolio. To manage these risks, the University has established a target mix of investment types designed to achieve the optimal returns within reasonable risk tolerance.

Liquidity Risk

The University maintains a short-term line of credit that is designed to ensure available funds to meet current and forecasted financial requirements as cost effectively as possible. As at March 31st, 2011 the University has committed borrowing facilities of $16,000 none of which has been drawn.

Credit Risk

The credit risk from accounts receivable is relatively low as the majority of balances are due from government agencies and corporate sponsors. Credit risk from tuition is managed through restricted enrolment activities for students with delinquent balances and maintaining standard collection procedures.

Interest Rate Risk

Interest rate risk is the risk to the University’s earnings that arise from the fluctuations in interest rates and the degree of volatility of these rates. The risk is managed by contractually setting interest rates with banking institutions.

Commodity Price Risk

The University is exposed to commodity price risk as a result of substantial electricity and natural gas usage required to operate the institution’s facilities. The University has entered into long-term utility contracts to manage its risk exposure from fluctuating utility prices (note 15).

Foreign Exchange Risk The University has entered into a contract with the Qatari government to operate a campus in Qatar. Foreign exchange risk has been mitigated through negotiating payment of University management fees in Canadian dollars. Expenses incurred are recovered from the government of Qatar and claims are adjusted to reflect currency fluctuations, thus reducing exchange risk exposure to the University.

Financial Statement Components Classification Measurement Cash and Cash Equivalents Held for Trading Fair Value Investments Held for Trading Fair Value Accounts Receivable Loans and Receivables Cost Accounts Payable and Accrued Liabilities Other Liabilities Cost Long-term Liabilities Other Liabilities Amortized Cost

42

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

d) Inventories

Inventories held for resale are valued at the lower of cost and net realizable value. Inventories held for consumption are valued at cost or net replacement cost. Cost is determined by weighted average. e) Capital Assets and Collections

Capital assets purchased are recorded at cost. In-kind contributions are recorded at fair value when a fair value can be reasonably determined. Permanent collections are not amortized and include the portion of library assets with permanent value, museum specimens, archival materials, maps, and works of art held for education, research and public exhibition purposes.

Construction in progress includes the costs directly attributable to the construction including engineering, legal fees, and interest on specific debt attributed to the construction of capital assets. Capital assets, once placed into service, are amortized on a straight-line basis over the assets’ estimated useful lives. The estimated useful lives are as follows:

Buildings, utilities and site improvements 20 - 40 years Furnishings, equipment and systems 3 – 10 years Learning resources 10 years

f) Capital Lease Receivable

Substantially all of the benefits and risks of ownership of the portion of the University Research Centre Building as described in the lease agreement have been transferred to the lessee. This transaction has been accounted for as a sales type capital lease. The carrying amount of this lease is valued based on the implicit interest rate and the expected lease payments over its remaining term. The University’s net investment in the lease is presented in Other Assets (note 5). g) Revenue Recognition

The financial statements record the following items as revenue - at the following times:

� Unrestricted contributions - when received or receivable, if the amount can be reasonably estimated and collection is reasonably assured.

� Unrestricted investment income - when earned; this includes interest, dividends and realized and unrealized gains and losses.

� Pledges - when collected. � Revenues received for services and products - when the services or products are substantially provided and collection

is reasonably assured. � Tuition fees - when the instruction is delivered. � Donations of materials – are recorded at fair value when a fair value can be reasonably determined and when

materials would otherwise have been purchased. � Restricted contributions - based on the deferral method.

Deferral method

Contributions, including investment income on the contributions, which are restricted for purposes other than endowment or capital asset acquisitions, are deferred and recognized as revenue when the conditions of the contributions are met. Contributions to acquire capital assets with limited lives are first recorded as deferred contributions, capital when received, and when expended, they are transferred to unamortized deferred capital contributions and amortized to revenue over the useful lives of the related assets.

43

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

Endowment contributions are recognized as direct increases in endowment net assets. Investment earnings, under agreements with benefactors or the Post-Secondary Learning Act allocated to endowment principal, are also recognized as direct increases in endowment net assets. Endowment investment earnings that are allocated for spending are deferred and recognized as revenue when the conditions of the endowment are met. Contributions restricted for the acquisition of land and permanent collections are first recorded as deferred contributions when received, and when expended, they are recognized as direct increases in investment in capital assets and collections.

h) Foreign Currency Translation

Financial assets and liabilities recorded in foreign currencies are translated to Canadian dollars at the year-end exchange rate. Revenues and expenses are translated at average daily exchange rates. Gains or losses from these translations are included in investment income.

i) Employee Future Benefits Pension The University participates with other employers in the Public Service Pension Plan (PSPP) and the Universities Academic Pension Plan (UAPP). These pension plans are multi-employer defined benefit pension plans that provide pensions for the University’s participating employees based on years of service and earnings.

Pension expense for the UAPP is actuarially determined using the projected benefit method prorated on service and is allocated to each participant based on their respective percentage of pensionable earnings. Actuarial gains or losses on the accrued benefit obligation are amortized over the expected average remaining service life. The University does not have sufficient plan information on the PSPP to follow the standards for defined benefit accounting, and therefore follows the standards for defined contribution accounting. Accordingly, pension expense recorded for the PSPP is comprised of employer contributions to the plan that are required for its employees during the year; which are calculated based on actuarially pre-determined amounts that are expected to provide the plan’s future benefits. Supplementary retirement plans The pension expense for defined benefit supplementary retirement plans is actuarially determined using the projected benefit method prorated on service. Actuarial gains or losses on the accrued benefit obligation are amortized over the expected service lifetime for each plan participant.

j) Capital Disclosures

The University defines its capital as the amounts included in deferred contributions (note 9), endowment net assets (note 11) and unrestricted net assets. A significant portion of the University’s capital is externally restricted and the University’s unrestricted capital is funded by Alberta Advanced Education and Technology, other government funding agencies and donations. The University has investment policies (note 4), spending policies, and cash management procedures to ensure the University can meet its capital obligations. Under the Post-Secondary Learning Act, the University must receive ministerial or Lieutenant Governor in Council approval for a deficit budget, mortgage and debenture borrowing and the sale of any land, other than donated land, that is held by and being used for the purposes of the University.

k) Contributed Services

Volunteers as well as members of the staff of the University contribute an indeterminable number of hours per year to assist the institution in carrying out its mission. Such contributed services are not recognized in the financial statements.

44

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

l) Future Accounting Changes

The Public Sector Accounting Board (PSAB) has issued a framework for financial reporting by government not-for-profit organizations. The framework includes CICA 4400: Not-For-Profit Organizations, which has been incorporated into the Public Sector Accounting (PSA) handbook as the PS 4200 series of standards. This framework will be effective for fiscal years beginning on or after January 1, 2012. Government not-for-profit organizations have been given the choice to apply either PS 4200 series of standards plus the PSA Handbook; or PSA handbook without the PS 4200 series of standards. The Government of Alberta has not yet made a decision on which option Alberta Public Post-Secondary Institutions, as government not-for-profit entities, will adopt. Therefore the University cannot determine the impact of this change on its financial statements. When the decision is made the University will identify the differences in the standards that will impact the financial statements and quantify the differences. The University will also determine whether any specific exemptions and exceptions applicable to the first time adoption of PSA standards by government not-for-profit organizations will be applicable to the University.

3. Cash and Cash Equivalents

Cash and cash equivalents, with a maximum maturity of 90 days at date of purchase are as follows:

2011 2010 Cash (1) $ (844) $ 5,948 Money market funds, short-term notes and treasury bills 535,804 570,114 Balance, end of the year $ 534,960 $ 576,062

(1) The bank overdraft is a temporary condition existing at year end and represents cheques issued by the University not yet cleared by the University’s bank. Subsequent to year end, the majority of these cheques were presented for payment and cleared by the bank.

4. Investments

The composition and fair value of investments are as follows:

2011 2010 Money market funds, short-term notes, and treasury bills $ 6,412 $ 1,028

Canadian bonds 299,910 255,117

Canadian equity 180,509 150,104

Foreign equity 169,568 150,486

Floating Rate Notes (ABCP) 35,880 31,844

Other 80,726 50,994

$ 773,005 $ 639,573

Short-term investments 255,214 190,331

Long-term investments 517,791 449,242

Balance, end of the year $ 773,005 $ 639,573

The average effective yields and the terms to maturity are as follows: � Money market funds, short-term notes, and treasury bills: 1.06% (2010 - 1.06%); term to maturity: less than one

year.

45

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

� Canadian government and corporate bond funds: 3.50% (2010 – 3.40%) term to maturity: range from less than one year to more than 10 years.

Floating Rate Notes (formerly Asset Backed Commercial Paper - ABCP) At March 31, 2011, the University holds $57,484 (2010 - $57,608) in floating rate notes which comprise the following:

Note Type Face Value Estimated fair value Scheduled repayment Maturity

Synthetic Assets $ 46,560 $ 35,047 6 years July 15, 2056

IA Tracking Notes 10,924 833 2 - 26 years 2 - 26 years

Total $ 57,484 $ 35,880

Synthetic Assets are considered investment grade, rated BBB or higher, with the exception of C notes that are rated BB for which the University holds $1.4 million in face value.

In the absence of a well-functioning market for floating rate notes, the University has estimated the fair value of these investments using a discounted cash flow valuation model. The model involves assumptions regarding the difference between the expected yield, based on similarly rated securities adjusted for illiquidity and market complexity, and the appropriate market-discount attributable to such investments. The spread between the expected yield and the estimated discount rate ranges from 404 basis points for the Class A-1 notes and 504 basis points for the Class C notes. An increase in spread of 100 basis points would result in a reduction to the fair value of $2,718. IA Tracking Notes are generally unrated and therefore have been valued at the current market value provided by an independent, publicly available source. Management believes this is a fair approximation of their current market value. The eventual timing and amount of future cash flows attributable to these assets may vary significantly from Management’s current best estimates. It is possible that the ultimate fair value of these assets may vary significantly from current estimates and that the magnitude of any such difference could be material to the financial results.

5. Other Long-term Assets 2011 2010 Capital lease receivable (1) $ 14,438 $ 14,737 Other long-term assets 2,629 2,522 Investment in subsidiaries and joint ventures (2) 5,981 5,643 Current portion in Accounts Receivable (321) (298) Balance, end of the year $ 22,727 $ 22,604

(1) The University and Alberta Health Services (AHS) entered into a 25-year agreement for AHS to lease space in the

University Research Centre Building. This lease has been accounted for as a capital lease. The future minimum lease payments receivable, based on an implicit interest rate of 7.4% per annum, for the next five fiscal years are as follows: 2012 to 2013 - $1,384 per year; 2014 - $1,424; 2015 to 2016 - $1,453.

46

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

(2) Financial Information with respect to the University’s share of its subsidiaries and joint venture is disclosed below:

University Technologies

Group Arctic Institute of North America Canada School of Energy and

Environment

2011 2010 2011 2010 2011 2010

Assets $ 5,579 $ 4,933 $ 4,078 $ 2,238 $ 3,147 $ 4,557

Liabilities 1,631 1,163 2,046 365 3,147 4,557

Equity 3,948 3,770 2,032 1,873 - -

Revenues 2,544 8,186 1,296 895 1,390 1,651

Expenses 2,324 2,800 1,185 1,172 1,390 1,651 Net Income (loss) for the year 220 5,386 111 (277) - - Cash provided (used in) operating activities 905 5,098 1,181 (121) (1,103) (2,221) Cash provided (used in) financing activities

- (3,824) 504 15 - -

Cash used in investing activities (549) (715) (502) (116) (2,222) -

Increase (decrease) in cash & cash equivalents $ 356 $ 559 $ 1,183 $ (222) $ (3,325) $ (2,221) 6. Capital Assets and Collections 2011 2010 Accumulated Net book Accumulated Net book Cost amortization value Cost amortization value Buildings, utilities and site improvements $ 1,828,053 $ 567,080 $ 1,260,973 $ 1,559,993 $ 528,549 $ 1,031,444 Furnishings, equipment and systems 634,506 495,689 138,817 565,464 458,279 107,185 Learning resources 178,766 134,752 44,014 171,853 128,103 43,750 Land 14,058 - 14,058 14,058 - 14,058 Library permanent collections 4,683 - 4,683 4,370 - 4,370 Other permanent collections 8,770 - 8,770 8,388 - 8,388 Balance, end of the year $ 2,668,836 $ 1,197,521 $ 1,471,315 $ 2,324,126 $ 1,114,931 $ 1,209,195

Included in buildings, utilities and site improvement is $412,681 (2010 - $468,942) and in furnishings, equipment and systems is $15,846 (2010 - $4,674) recorded as construction in progress, which is not amortized as the assets are not yet available for use. Acquisitions during the year included in-kind contributions (such as learning resources, equipment, software, buildings and land) in the amount of $10,572 (2010 - $7,110).

47

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

7. Employee Future Benefit Liabilities

Employee future benefit liabilities are comprised of the following:

2011 2010 Universities Academic Pension Plan (UAPP) $ 61,918 $ 58,321 Long-term Disability 451 403 Supplemental Retirement Pension Plan 6,055 4,967 Balance, end of the year $ 68,424 $ 63,691

a) Defined benefit plans accounted for on a defined benefit basis

UAPP The UAPP is a multi-employer contributory joint defined benefit pension plan for academic and professional staff members. An actuarial valuation of the UAPP was carried out as at December 31, 2008 and was then extrapolated to March 31, 2011, resulting in a UAPP deficiency of $992,933 (2010 $924,067) consisting of a pre-1992 deficiency ($700,812) and a post-1991 deficiency ($292,121). The University’s portion of the UAPP deficiency has been allocated based on its percentage of the plan’s total employer contributions for the year. The unfunded deficiency for service prior to January 1, 1992 is financed by additional contributions of 1.25% (2010 1.25%) of salaries by the Government of Alberta. Employees and employers equally share the balance of the contributions of 2.03% (2010 2.03%) of salaries required to eliminate the unfunded deficiency by December 31, 2043. The actuarial valuation shows that the present value of the Government of Alberta’s obligation for the future additional contributions was $315,424 at March 31, 2011. The unfunded deficiency for service after March 31, 1991 is financed by special payments of 5.09% (2009 4.64%) of pensionable earnings shared equally between employees and employers until December 31, 2021.

48

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

Supplementary retirement plans (SRP) The University provides non-contributory defined benefit supplementary retirement benefits to executives. An actuarial valuation of these benefits was carried out at March 31, 2011. The expenses and financial position of these defined benefit plans are as follows:

2011 2010 Long-term Supplementary Long-term Supplementary UAPP disability (1) retirement (1) UAPP disability (1) retirement Expenses Current service cost $ 21,889 $ - $ 322 $ 23,189 $ - $ 462 Interest cost 8,445 48 279 13,087 37 215 Amortization of net actuarial losses (gains) 5,143 (170) (3) 13,126 (105) 11 Amortization of past service cost - 294 9 - 207 37 Curtailment - - 221 - - - Settlement gain - - - - - (236)

Termination benefit - - 479 - - - Total expenses $ 35,477 $ 172 $ 1,307 $ 49,402 $ 139 $ 489 Financial Position Accrued benefit obligation: Balance, beginning of year $ 474,334 $ 1,127 $ 5,353 $ 499,240 $ 989 $ 6,281 Current service cost 21,889 - 322 23,189 - 462 Interest cost 33,476 48 279 34,242 37 215 Benefits paid (22,126) (123) (220) (22,729) (101) (156) Past service costs - 678 - - 787 121 Actuarial gain (88) (498) - (59,608) (585) (1,300) Experience loss - - 49 - - - Settlement gain - - - - - (270) Curtailment loss - - 230 - - - Termination Benefit - - 479 - - - Balance, end of year 507,485 1,232 6,492 474,334 1,127 5,353 Plan assets 387,648 - - 357,893 - - Funded status - plan deficit (119,837) (1,232) (6,492) (116,441) (1,127) (5,353) Unamortized past service costs - 2,373 75 - 1,988 84 Unamortized net actuarial (gain) loss 57,919 (1,592) 362 58,120 (1,264) 302 Accrued benefit liability $ (61,918) $ (451) $ (6,055) $ (58,321) $ (403) $ (4,967)

(1) The University plans to use its working capital to finance these future obligations.

49

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

The significant actuarial assumptions used to measure the accrued benefit obligation are as follows:

2011 2010 Long-term Supplementary Long-term Supplementary UAPP disability retirement UAPP disability retirement Accrued benefit obligation: Discount rate 6.50% 4.50% 5.00% 6.90% 4.50% 5.00% Long-term average compensation increase 3.50% n/a 4.00% 3.50% n/a 4.00% Benefit cost:

Discount rate 6.90% 4.50% 5.00% 6.70% 4.00%

3.2% first ten years, 5.3% thereafter

Long-term average compensation increase 3.50% n/a 4.00% 3.00% n/a 4.00% Alberta inflation (long-term) (2) (year 1, thereafter; years 1-2, thereafter) 2.25% n/a 2.50% 2.25% n/a

0.93% first ten years, 1.75%

thereafter Estimated average remaining service life 11.3 yrs 7.88 yrs (1) 11.3 yrs 9 yrs (1)

(1) SRP actuarial gains and losses and past service costs are amortized over the remaining contract terms of the participants.

(2) SRP lump-sum payments upon retirement are based on assumptions, including inflation, which are prescribed each month by the Canadian Institute of Actuaries, and as such, those assumptions are not set by the University.

(b) Defined benefit plans accounted for on a defined contribution basis PSPP The Public Service Pension Plan (PSPP) is a multi-employer contributory defined benefit pension plan for support staff members. As the University does not have sufficient information to follow the accounting standards for defined benefit plans, it is accounted for on a defined contribution basis. The pension expense recorded in these financial statements is $14,371 (2010 $11,578). An actuarial valuation of the PSPP was carried out as at December 31, 2008 and was then extrapolated to December 31, 2010. At December 31, 2010, the PSPP reported an actuarial deficiency of $2,067,151 (2009 $1,729,196).

50

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

8. Long-term Liabilities Maturity Interest Amount outstanding Collateral date rate % 2011 2010

Debentures payable to Alberta Capital Finance Authority*: Debenture for Cascade Hall 1 May 2025 6.250% $ 12,628 $ 13,129 Debenture for Human Performance Lab 1 March 2011 4.349% - 892 Debenture for Health Renovation Innovation Centre/Parkade 1 April 2031 4.935% 5,337 5,485 Debenture for Child Development Centre/Parkade 1 June 2032 5.249% 1,804 1,848 Debenture for International Residence House 1 September 2032 4.689% 24,339 24,984 Debenture for International Residence House 1 June 2039 5.100% 28,956 29,400 Debenture for Residence Renewal Program 1 September 2026 4.429% 11,900 5,700

Debenture for Phase VI Residence 1 March 2040 4.734% 60,000 30,000 Debenture for Downtown Campus 2 March 2031 4.269% 15,000 -

Mortgages payable to Canada Mortgage and Housing Corporation: Mortgage for Dining Centre, Kananaskis and Rundle Halls 1 March 2016 5.125% 526 616 Bank loans payable: Mortgage for University Research Centre 1 May 2012 0.00% 642 1,192 161,132 113,246 Obligations under capital leases 1,228 891 162,360 114,137 Less current portion (4,917) (3,951) Balance, end of the year $ 157,443 $ 110,186

(1) title to land, building; (2) none * Alberta Capital Finance Authority is a related party The principal portion of long-term debt repayments required over the next five years is as follows: 2012 - $4,364; 2013 – $4,460; 2014 - $4,584; 2015 - $4,810; 2016 - $5,047 and thereafter - $137,867. Interest incurred on long-term obligations was $6,237 (2010 $3,635), of which $2,016 (2010 $979) was capitalized.

51

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

9. Deferred Contributions

Deferred contributions represent unspent externally restricted grants and donations. Changes in the deferred contributions balances are as follows:

2011 2010

Capital Research

and other Capital Research

and other Balance, beginning of the year $ 162,059 $ 391,665 $ 185,458 $ 327,125 Grants and donations received 108,956 365,913 186,521 355,308 Investment income 6,084 18,909 - - Recognized as revenue (1,537) (263,195) (188) (253,411) Transferred to unamortized deferred capital contributions (note 10) (198,101) (86,674) (209,346) (37,357) Transferred to investment in capital assets, not subject to amortization (337) - (386) - Balance, end of the year $ 77,124 $ 426,618 $ 162,059 $ 391,665 10. Unamortized Deferred Capital Contributions

Unamortized deferred capital contributions represent the unamortized grants and donations received to fund capital acquisitions. The amortization of unamortized deferred capital contributions is recorded as revenue in the statement of operations. The changes in the unamortized deferred capital contributions balance are as follows:

2011 2010 Balance, beginning of the year $ 902,374 $ 708,170 Additions from deferred contributions, research and other (note 9) 86,674 36,931 Additions from deferred contributions, capital (note 9) 198,101 209,346 Amortization to revenue (59,859) (52,073) Balance, end of the year $ 1,127,290 $ 902,374 11. Endowments

Endowments consist of externally restricted donations received by the University and internal allocations by the University’s Board of Governors, the principal of which is required to be maintained intact in perpetuity. Investment income earned on endowments must be used in accordance with the various purposes established by the donors or the Board of Governors. Benefactors as well as University policy stipulate that the economic value of the endowments must be protected by limiting the amount of income that may be expended and reinvesting unexpended income. Under the Post-secondary Learning Act, the University has the authority to alter the terms and conditions of endowments to enable:

� income earned by the endowment to be withheld from distribution to avoid fluctuations in the amounts distributed and generally to regulate the distribution of income earned by the endowment.

� encroachment on the capital of the endowment to avoid fluctuations in the amounts distributed and generally to regulate the distribution of income earned by the endowment if, in the opinion of the Board of Governors, the encroachment benefits the University and does not impair the long-term value of the fund.

52

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

In any year, if the investment income earned on endowments is insufficient to fund the spending allocation, the spending allocation is funded from the cumulative capitalized income. However, for individual endowment funds without sufficient cumulative capitalized income, endowment principal is used in that year. This amount is expected to be recovered by future investment income. The composition of endowments is as follows:

2011 2010 Balance, beginning of year $ 441,658 $ 340,103 Endowment contributions 23,585 42,403 Transfer to endowments 136 1,208 Transfer from endowments (17,561) (18,075) Investment gain 48,989 76,019 Balance, end of the year $ 496,807 $ 441,658 Cumulative contributions $ 364,100 $ 340,515 Cumulative capitalized income 132,707 101,143 Balance, end of the year $ 496,807 $ 441,658 12. Investment in Capital Assets and Collections

Net assets invested in capital assets and collections represent the net book value of capital assets and collections less unamortized deferred capital contributions and any related debt.

2011 2010 Capital assets and collections at net book value (note 6) $ 1,471,315 $ 1,209,195 Less amounts financed by:

Unamortized deferred capital contributions (note 10) (1,127,290) (902,374) Long-term liabilities related to capital expenditures (150,665) (112,350)

Balance, end of the year $ 193,360 $ 194,471 2011 2010 The changes during the year are as follows: Investment in capital assets and collections, beginning of year $ 194,471 $ 200,144 Acquisition of capital assets and collections 66,793 73,367 Long-term liabilities - repayment 8,874 4,830 Long-term liabilities - new financing (47,189) (55,648) Amortization of investment in capital assets (29,926) (28,608) Net change in investment in capital assets (1,448) (6,059)

Contributions of assets not subject to amortization 337 386 Decrease for the year (1,111) (5,673) Balance, end of the year $ 193,360 $ 194,471

53

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

13. Internally Restricted Net Assets Internally restricted net assets represent amounts set aside by the University’s Board of Governors for specific purposes. Those amounts are not available for other purposes without the approval of the Board and do not have interest allocated to them. Internally restricted net assets are summarized as follows:

Balance at beginning of

year

Appropriations from (returned to)

unrestricted net assets

Disbursements during the year

Balance end of the year

Appropriation for capital activities: $ 2,385 $ 15 $ - $ 2,400 Appropriation for operating activities: 55,728 43,780 10,964 88,544 Appropriation for research activities: 26,355 - 8,810 17,545 Balance, end of the year $ 84,468 $ 43,795 $ 19,774 $ 108,489 14. Contingent Liabilities

(a) The University is a defendant in a number of legal proceedings. Included is a lawsuit filed by former trust employees claiming entitlement to benefits. The outcome of this lawsuit is not determinable at this point in time. The ultimate outcome and liability of all legal proceedings cannot be reasonably estimated at this time. Management has concluded that none of the claims meet the criteria for being recorded under GAAP.

(b) The University has identified potential asset retirement obligations related to the existence of asbestos in a number of its facilities. Although not a current health hazard, upon renovation or demolition of these facilities, the University may be required to take appropriate remediation procedures to remove the asbestos. As the University has no legal obligation to remove the asbestos in these facilities as long as the asbestos is contained and does not pose a public health risk, the fair value of the obligation cannot be reasonably estimated due to the indeterminate timing and scope of the removal. The asset retirement obligations for these assets will be recorded in the period in which there is certainty that the capital project will proceed and there is sufficient information to estimate fair value of the obligation.

(c) At March 31, 2011 the University had entered into agreements that provide guarantees on employee housing loans in the amount of $1,541 (2010 $1,749 restated).

15. Contractual Obligations

The University has contractual obligations which are commitments that will become liabilities in the future when the terms of the contracts or agreements are met.

2011 2010

Service contracts

$ 38,012 $ 52,600 Capital projects 70,030 155,516 $ 108,042 $ 208,116

Included in service contracts are the project commitments for the University administration review and system upgrade project (iS2), contracts to purchase electricity and contracts for natural gas.

54

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

The University’s contract with the IBM consultants working on the iS2 project is approximately $6,472 and will end by September 2011. The total contractual obligations to other third party contractors on the iS2 project from April to December 2011 is $1,400. The University entered into a five-year contract due to expire December 31, 2011 but extended to March 31, 2012, to purchase blocks of electricity in order to manage its exposure to volatility in electrical prices. The approximate contractual obligation for electricity is $7,900 (2010 $17,200). To manage its risk exposure to natural gas, the University has entered into an Energy Purchase Agreement, expiring September 30, 2013, based on an index (floating on the spot market) price with an option to hedge any portion of the requirement at any time. At March 31, 2011, the University had hedged a portion of this contract by fixing the price on a portion of its estimated consumption. Using best estimates of future consumption and forward market prices on March 31, 2011, the approximate contractual obligation for natural gas including executed hedge contracts is $22,240 (2010 $35,400). The University’s commitments for operating leases for the next five years are as follows: 2012 - $4,042; 2013 - $3,789; 2014 - $3,751; 2015 - $3,533; 2016 - $3,444. The University is one of 58 members of CURIE, the Canadian Universities Reciprocal Insurance Exchange, a self-insurance reciprocal established to share the insurable property, liability, and errors and omissions risks of member universities. The projected cost of claims against the exchange is based on actuarial projections and is funded through members’ premiums. As at December 31, 2010 CURIE had a surplus of $9,225 (2009 $10,992). The University participates in five of the underwriting periods, which have an accumulated surplus of $43,288 (2009 $32,032) of which the University’s pro rata share is approximately 5.79% (2009 5.84%). This surplus is not recorded in the financial statements.

16. Budget Comparison (unaudited)

The University’s 2010-11 budget was approved by the Board of Governors and was presented to the Minister of Advanced Education and Technology as part of the University’s submission of its 2010-14 Business Plan. Certain budget figures from the University’s 2010-14 Business Plan have been reclassified to conform to the presentation adopted in the 2011 financial statements.

17. Investment Income

2011 2010

Income on investments held for endowments $ 48,989 $ 76,019

Income on other investments 16,196 13,258

Recovery on Floating Rate Notes (ABCP) 4,051 2,986

Gain (loss) from subsidiaries and joint venture 338 (424)

69,574 91,839

Investment income capitalized to endowments (31,428) (57,944)

Amounts deferred (6,068) (2,385)

Investment income $ 32,078 $ 31,510

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NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

18. Related Party Transactions

a) The University operates under the authority and statutes of the Province of Alberta. Transactions between the University and the Government of Alberta (GOA) are measured at the exchange amount and summarized below.

2011 2010 Revenue from GOA

Advanced Education and Technology: Operating $ 423,858 $ 426,432 Capital 97,899 193,656 Research 10,292 16,006 Access to the Future Fund (matching grants) 556 1,319 Alberta Innovates Bio Solutions 2,313 241 Alberta Innovates Energy and Environment 1,994 1,187 Alberta Innovates Health Solutions 29,911 27,685 Alberta Innovates Technology Futures 7,335 14,246 Other 18,684 12,619

Total Advanced Education and Technology 592,842 693,391 Other GOA departments and agencies grants:

Alberta Health and Wellness 45,407 15,808 Alberta Health Services 7,283 11,474 Other 19,657 2,398

Total other GOA departments and agencies 72,347 29,680 Total contributions received 665,189 723,071 Less: deferred contributions (165,484) (223,488) Government of Alberta grants $ 499,705 $ 499,583

Accounts receivable

Advanced Education and Technology $ 1,281 $ 22,917 Other GOA departments and agencies 13,194 8,438

$ 14,475 $ 31,355 Accounts payable

Advanced Education and Technology $ 537 $ 153 Other GOA departments and agencies 5,192 35

$ 5,729 $ 188

The University has long-term liabilities with Alberta Capital Finance Authority as described in note 8.

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NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

b) Alberta Health Services (AHS) is related to the Province of Alberta since its board is appointed by the Minister of

Health and Wellness. As the University and the Province of Alberta are related parties, AHS is a related party to the University. Transactions between the University and the AHS are summarized as follows:

2011 2010 The University of Calgary pays to AHS in the normal course of operations amounts related to utilities; salaries and benefits; and materials, supplies and overheads. Expenditures incurred: $ 14,014 $ 18,678

The University of Calgary receives from AHS in the normal course of operations amounts related to physicians; research projects, studies and grants, programs; and support services. Revenues included in income: $ 68,557 $ 55,639 Net receivable due to the University of Calgary by AHS: $ 7,843 $ 8,344

The University leases land to AHS for a parkade at the Foothills Medical Centre and the Alberta Children’s Hospital. Effective September 2003 the University and AHS entered into a 25-year agreement for AHS to lease space in the University Research Centre Building. This lease has been accounted for as a capital lease. At March 31, 2011, the carrying value of the lease receivable is $14,438 (2010 $14,737). During the year the University received $1,384 in lease payments (2010 $1,384), $1,086 of which was recognized as interest income (2010 $1,107).

19. Funds Held on Behalf of Others

The University holds the following funds on behalf of others over which the Board has no power of appropriation. Accordingly, these funds are not included in the University’s financial statements.

2011 2010 The Arctic Institute of North America $ 965 $ 1,841 Alberta Sulphur Research 555 79 CDN Research Institute-Law and the Family 388 110 U of C Day Care Centre 364 397 Others 767 798 Total Funds Held on Behalf of Others $ 3,039 $ 3,225

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NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

20. Salary and Employee Benefits

Treasury Board Directive 12-98 under the Financial Administration Act of the Province of Alberta requires the disclosure of certain salary and employee benefits information.

2011 2010 Other Other Base cash non-cash salary (1) benefits (2) benefits (3) (6) Total Total Governance (4) Chair of the Board of Governors $ - $ - $ - $ - $ - Members of the Board of Governors - - - - - Executive President Incumbent (5) (6) (7) (11) (12) 323 - 167 490 - Interim, Past Incumbent (5) (9) 126 24 - 150 127 Past Incumbent (6) (7) (13) - - - - 724 Vice-Presidents:

Provost and Vice-President Academic (6) (7) (11) 328 9 158 495 488 Vice-President Research Interim (5) (9) 71 15 23 109 - Past Incumbent (5) (6) (10) (11) (14) 246 110 292 648 450

Vice-President Finance and Services Incumbent (5) (6) (9) (11) 270 - 86 356 287 Past Incumbent (9) (13) - - - - 93

Vice-President University Relations – Interim, Past Incumbent (5) 9) - - - - 234 Vice-President Facilities Management and Development (6) (9) 343 52 93 488 460

Vice President Development (6) (8) (12) 283 45 104 432 424

1. Base salary includes pensionable base pay. 2. Other cash benefits include administrative honorariums, bonuses and lump sum payments. Other non-cash benefit

for President – Interim, Past Incumbent includes a vacation payout. 3. Other non-cash benefits include the University’s share of all employee benefits and contributions or payments made

on behalf of employees including pension, group life insurance, employee family assistance program, critical illness, supplementary health care, short and long-term disability plans, dental plan, supplemental retirement plan (per footnote (6)) and accidental disability and dismemberment.

4. The Chair and Members of the Board of Governors receive no remuneration for participation on the Board. 5. During the fiscal year, the President - Incumbent position was occupied for nine months and the President – Interim,

Past Incumbent position was held for three months. The VP Research – Interim position was occupied for seven months and the VP Research – Past Incumbent position was occupied for five months. The VP Finance – Incumbent served a full year in this role, compared to nine months in the comparative year. The VP University Relations position was vacant throughout the year.

6. Under the terms of the supplementary retirement plan (SRP), the executive may receive supplemental retirement payments. Retirement arrangement costs as detailed below are not cash payments in the period but are period expenses for rights to future compensation. Costs shown reflect the total estimated cost to provide annual pension income over an actuarially determined post employment period. The SRP provides future pension benefits to participants based on years of service and earnings. The cost of these benefits is actuarially determined using the projected benefit method pro-rated on services, a market interest rate, and management’s best estimate of expected

58

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

costs and the period of benefit coverage. Net actuarial gains and losses of the benefit obligations are amortized over the average remaining service life with respect to each plan participant. Current service cost is the actuarial present value of the benefits earned in the current year. Prior service and other costs include amortization of past service costs on plan initiation, amortization of actuarial gains and losses, and interest accruing on the actuarial liability.

7. Individuals in these roles earned administrative leave benefits during the year that have been included in other non-cash benefits.

8. During the term of their employment contract, the individual in this role may take up to six months of administrative leave subject to the President’s approval of the individual’s administrative leave proposal. The costs associated with the leave benefits are recorded when incurred.

9. The employment contracts for these individuals do not provide for administrative leave benefits. 10. Administrative leave benefits were not paid to this individual. 11. Individuals in these roles received an executive allowance included in other non-cash benefits. 12. Individuals in these roles received a vehicle allowance included in other non-cash benefits. 13. The President – Past Incumbent and VP, Finance – Past Incumbent received a housing allowance included in other

non-cash benefits. 14. The individual in this role received other cash benefits and a clinical supplement in other non-cash benefits.

The current service cost and accrued obligation for each executive under the SRP is outlined in the following table:

Accrued Benefit Obligation

March 31, 2010 Service costs Interest

Costs Actuarial

Loss (Gain)

Accrued Benefit

Obligation March 31, 2011

President $ - $ 54 $ 3 $ - $ 57 Vice-Presidents: Provost and Vice-President Academic 202 54 13 (17) 252 Vice-President Finance and Services 28 37 3 (4) 64 Vice-President Facilities Management and Development 105 60 8 (11) 162

Vice-President Development 325 42 19 (25) 361

The significant actuarial assumptions used to measure the accrued benefit obligation (ABO) are disclosed in Note 7.

59

NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED MARCH 31, 2011 (thousands of dollars)

21. Canada – Alberta Knowledge Infrastructure Program

The Canada – Alberta Knowledge Infrastructure Program (KIP) was established to provide funding in support of capital projects at post secondary institutions in order to offset the impact of the global economic recession by providing employment opportunities. Eligible KIP projects can receive up to 50% of its funding from Government of Canada contributions through direct payments made by the Province. The remaining portion of funding for KIP projects is made up of internal resources, provincial contributions and research grants. The KIP program supports eligible costs incurred from February 24, 2009 to March 31, 2011 for two projects, and until July 31, 2011 for one project that received an extension. Amounts received from the Province of Alberta representing Government of Canada contributions and eligible costs incurred on KIP projects are as follows:

2011 2010 February 24, 2009 to

March 31, 2009 Total Contributions $ 32,899 $ 32,899 - $ 65,798 Eligible Costs $ 60,112 $ 52,127 $ 2,384 $ 114,624

The remaining contractual obligation to complete the projects at March 31, 2011 is $5,183. This amount is included in note 15.

22. Insurance Claims On July 12, 2010, University property was damaged as a result of a hailstorm. During the winter months, the University also suffered some flood damages as a result of frozen pipes. The University maintains adequate insurance coverage to mitigate its financial risk to such events. Damages incurred Included in repairs and maintenance expense is $866 on repairs to the affected buildings, $453 of which is considered an impairment loss and therefore was not capitalized as an asset. Amounts recoverable from Insurance Company The University has unrecorded amounts due from the insurance company, pending settlements, related to the above events. Management is confident that these accounts will be collected shortly after year-end, and in accordance with section 3290 (Contingencies) of the CICA handbook; the University has not recorded this contingent gain.

23. Comparative Figures

Certain 2010 figures have been reclassified to conform to the presentation adopted in the 2011 financial statements.

24. Subsequent Event

60

EXCELLENCE

INNOVATION

SUCCESS

For more information about the content of this report, or to share your comments about it, please contact:

University of Calgary

Office of the Provost provost@ucalgary.ca

ucalgary.ca