Operating results of Saint Mary’s College continued to improve during the fiscal year ended June 30, 2012. Primary evidence
of this improvement is the $1.8 million increase in unrestricted net assets (or net income) from operations for the fiscal year. This increase is attributed to growth in net undergraduate tuition and fee income and to the strategic management of overall operating expenses.

The College’s strong operating results occurred despite the lingering effects of a slow economic recovery, instability in global financial markets and decreased public support of higher education. These factors did, however, negatively impact the College as evidenced by a $12.7 million decrease in total net assets from non-operating activities as of June 30, 2012 that is attributed to the unrealized losses in the market value of the College’s long- term (endowment) investments and in the market value of the College’s interest rate exchange (or swap) agreement.

Since June 30, 2012, the College’s endowment investments increased from $128.0 million to $136.0 million as of September 30, 2012. This reflects both the continuing volatility in global equity markets as well as the College’s efforts to continue to diversify the endowment’s investments. The College has also made changes to its variable rate demand bond structure since June 30, 2012 to stabilize and simplify it.

In summary, the fiscal year ended June 30, 2012 demonstrated that Saint Mary’s College can continue to improve its operating results despite economic and political uncertainties. However, it also demonstrated the College must continue to adapt to its environment in order to fulfill the potential of its mission.

Strategies that are being deployed by the College to continue to adapt to these environmental uncertainties include the further diversification of endowment investments, the further simplification and stabilization of the debt structure, the strategic expansion of funding for institutional student financial aid, the investment in programs that attract and retain students, the investment in new and renovated facilities, and the expansion of resources for fundraising operations. These and other strategies should help assure that Saint Mary’s College is able to successfully pursue its mission as it celebrates its sesquicentennial year.

Respectfully submitted,
Peter A. Michell
Vice President for Finance and Treasurer 

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Saint Mary's College of California
1928 Saint Mary's Road
Moraga, CA 94575
(925) 631-4000
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