Budget and Finance

UNIVERSITY OF CINCINNATI JUNE 30, 2 008

Net Assets

Net assets represent the residual interest in the University’s assets after liabilities are deducted. The University’s net
assets at June 30 for the years 2008, 2007 and 2006 are summarized below:

(in thousands) 2008 2007 2006

Invested in capital assets, net of related debt $ 455,967 $ 478,971 $ 516,992

Restricted:

Nonexpendable 1,202,523 1,265,492 1,115,611

Expendable 391,590 413,063 398,304

Unrestricted (124,565) (186,786) (165,258)

Total net assets $ 1,925,515 $ 1,970,740 $ 1,865,649

The following graph illustrates the components of the University’s net assets:

Net Assets

(in thousands)

(500,000)

500,000

1,000,000

1,500,000

2,000,000

2008 2007 2006

Invested in capital assets, net of related debt Restricted Unrestricted

Capital assets, net of depreciation and related debt, represent the University’s depreciated buildings, equipment and
infrastructure less the outstanding principal balances of debt attributable to the acquisition, construction and
improvement of those assets. The decreases of $23 million in 2008 and $38 million in 2007, respectively, reflect the
University’s continued development and renewal of its capital assets in accordance with the Master Plan, net of
depreciation expense and long term debt.

Restricted nonexpendable net assets include, as a primary component, the University’s permanently invested
endowment funds. It also includes the University’s equity interest in The Health Alliance of Greater Cincinnati. The
$63 million decrease in restricted nonexpendable net assets in 2008 and the $150 million increase in 2007 reflect the
changes in the fair value of investments, net of gifts.

Restricted expendable net assets are subject to externally imposed provisions governing their use. This category of
net assets includes restricted quasi-endowments of $280 million in 2008 and $29 1 million in 2007 that were
temporarily invested in the endowment.

The deficit in unrestricted net assets decreased by $62 million in 2008 due to the University’s strategic actions to
address the deficit position. Specific measures initially implemented in 2007 and continued in 2008 to address the
deficit position include reorganizing around principles of greater accountability, disciplined financial activities, and
integrated budget planning. A large portion of the deficit decrease was attributable to elimination of the College of