ir020202

BOARD OF TRUSTEES’ REPORT

TO OUR STOCKHOLDERS:

     We are pleased to report that despite the challenges posed by the political crisis and economic slowdown prevailing in the country during the school year 2004-2005, FEU managed to sustain its competitiveness and stability.

         Financially, the results of our operations were highly satisfactory enabling the distribution of higher cash dividends in June 2003 and January 2004.

         School year 2004-2005 was a year of transition. Vice President for Academic Affairs retired from the University after 45 years of dedicated service.  She continues to serve as Consultant on Special Projects. FEU welcomed in her stead Dr. Elizabeth P. Melchor, a former member of the Board of Trustees, whose background in educational administration is extensive.  Mr. Robert F. Kuan, a visionary leader with vast experience in corporate affairs, replaced Dr. Melchor in the Board.  We look forward to profiting from the expertise that Dr. Melchor and Mr. Kuan will bring to the University.

       During the year, the Institute of Nursing passed the Level 2 accreditation by PAASCU.  The Bachelor of Science in Accountancy and the Science programs also passed the Level 1 accreditation by PACUCOA. Liberal Arts, Commerce and Education are aiming to be accredited to Level 3 by PACUCOA in November 2005. 

       The construction of the nine-story Technology Building at the former FEU Hospital site will be completed in August 2005. The building will house approximately 70 classrooms and laboratory rooms, a library, a sports medicine clinic, a multi-purpose hall and two floors for vehicular parking.

       IT facilities in the campus continue to be upgraded.  FEU students, faculty and employees now use electronic IDs to enter the campus.  Two electronic boards (eBB) of information and announcements are installed at strategic points in the campus.  A newly acquired digital test paper checking machine will enable faculty members to get immediate results of standardized examinations given to students.

       To further enhance its services to students and parents, FEU has finalized its arrangements with the Bank of Philippine Islands for on-line payment of tuition and other fees. This arrangement paved the way for the on-line enrollment of freshmen students.  This facility will be made available to all regular students soon.

       FEU continues to be involved with its surrounding community.  It launched an Ecowaste Program to increase community awareness concerning environmental wellness and proper waste disposal. It offers free computer courses to the employees of establishments along Nicanor Reyes Street and Claro M. Recto Avenue. Its outreach program in Silang, Cavite covers livelihood, medical missions, personal wellbeing and the expansion of educational opportunities for the residents.

       Labor-management relations continue to be friendly and harmonious.  The genial relationship has been evidenced by the speedy conclusion of last year’s collective bargaining agreements with the FEUELU and FEUFA without the need for lawyers.  The high morale among our teaching and non-teaching personnel is visible as we maintain competitive salary ranges and benefits for them, in addition to in-service training programs, grants, awards and financial aid to deserving personnel.

       Our students and athletes have been consistent in bringing laurels to FEU.  We have won in many competitions locally and abroad.  In the UAAP, we have shown our strength in basketball, volleyball and track and field.

       On behalf of the Board of Trustees, I wish to thank the FEU officers and administrative staff, the faculty, the employees, the students and the alumni for their support and assistance.  To you, our stockholders, my deep appreciation and personal gratitude for your guidance, trust and confidence. Your contributions continue to lead FEU to the fulfillment of its mission-vision.                                                    
lrm04
                                                                                                                                          LOURDES R. MONTINOLA                                                                                                                                                             Chair                                                                                                                                                                     Board of Trustees                           

FAR EASTERN UNIVERSITY, INC.
BALANCE SHEETS
                                                          March 31  
             2005   2004 
ASSETS
Current Assets
Cash and cash equivalents (Notes 3 and 9) P871,530,821 P722,415,175
Receivables - net (Note 4)           125,140,749           103,516,526
Other current asset                     7,814,883               6,404,265
Total Current Assets        1,004,486,453           832,335,966
Investments and Advances (Notes 5 and 6)           230,243,012           218,099,379
Property and Equipment - net (Note 7)           567,838,936           466,675,859
Other Assets (Note 12)                   19,361,426               5,546,642
            P1,821,929,827 P1,522,657,846
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and other current liabilities (Note 8) P175,487,090 P186,015,335
Deferred income             27,347,214             29,794,507
Income tax payable                   26,171,006             21,565,622
Total Current Liabilities           229,005,310           237,375,464
Trust Funds (Note 9)                   67,395,049             63,113,565
          296,400,359           300,489,029
Stockholders' Equity (Notes 13 and 14)        1,525,529,468        1,222,168,817
            P1,821,929,827 P1,522,657,846
               
See Notes to Financial Statements (2005, 2004)
FAR EASTERN UNIVERSITY, INC.
STATEMENTS OF INCOME
               Years Ended March 31 
          2005 2004 2003
EDUCATIONAL INCOME
Tuition fees - net P1,043,843,540 P850,559,686 P667,191,134
Miscellaneous             12,498,249             23,559,186             17,400,906
                 1,056,341,789           874,118,872           684,592,040
OPERATING EXPENSES (Note 11)             696,104,468           633,148,406           493,662,503
INCOME FROM OPERATIONS             360,237,321           240,970,466           190,929,537
OTHER INCOME
Interest (Notes 3 and 6)             52,905,423             56,197,244             25,021,421
Rental               4,546,485               4,080,997               3,592,507
Miscellaneous                      4,366,433               2,668,698               1,765,348
                      61,818,341             62,946,939             30,379,276
INCOME BEFORE EQUITY IN NET 
EARNINGS OF A SUBSIDIARY 
AND ASSOCIATES           422,055,662           303,917,405           221,308,813
EQUITY IN NET EARNINGS OF A 
SUBSIDIARY AND ASSOCIATES 
  (Note 5)                    12,143,633             19,908,286             16,273,929
INCOME BEFORE INCOME TAX             434,199,295           323,825,691           237,582,742
PROVISION FOR INCOME TAX (Note 12)
Current             37,200,036             28,281,035             20,136,454
Deferred                          215,768              (2,916,269)                            -  
            37,415,804             25,364,766             20,136,454
NET INCOME       P396,783,491 P298,460,925 P217,446,288
EARNINGS PER SHARE (Note 15)
Basic P84.94 P79.56 P76.80
Diluted                              84.94                      79.56                      57.96
               
See Notes to Financial Statements (2005, 2004, 2003)
FAR EASTERN UNIVERSITY, INC.
STATEMENTS OF CASH FLOWS
               Years Ended March 31 
          2005 2004 2003
CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax P434,199,295 P323,825,691 P237,582,742
Adjustments for:
Depreciation and amortization             25,478,559             23,422,218             14,354,299
Recovery in allowance for doubtful 
accounts               2,157,683                            -                              -  
Interest income            (52,905,423)            (56,197,244)            (25,021,421)
Equity in net earnings of a subsidiary 
and associates            (12,143,633)            (19,908,286)            (16,273,929)
Gain on disposal of property and
equipment                 (183,250)                            -                              -  
  Provision for doubtful accounts                            -               12,162,689                            -  
Operating income before working 
capital changes           396,603,231           283,305,068           210,641,691
Decrease (increase) in:
Receivables            (17,427,034)            (68,339,335)              (1,711,605)
Other current asset               (1,410,618)               1,661,915              (1,115,301)
Deferred Tax Asset
Other assets
Increase (decrease) in:
Accounts payable and other
current liabilities            (10,528,245)             67,276,041             48,475,409
    Deferred income                (2,447,293)             17,498,545                            -  
Cash generated from operations           364,790,041           301,402,234           256,290,194
Interest received             46,550,551             56,197,244             25,021,421
Income taxes paid                  (32,594,652)            (25,529,228)            (13,178,622)
Net cash provided by operating activities           378,745,940           332,070,250           268,132,993
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from disposal of property 
and equipment                  515,446                            -                              -  
Additions to property and equipment            (126,973,832)            (71,314,584)            (81,796,080)
Increas                            -                              -                              -  
Increase in other assets            (14,030,552)              (3,016,269)                 (513,510)
Decrease (increase) in investments
and advances                            -              (16,184,228)               3,920,773
Net cash used in investing activities            (140,488,938)            (90,515,081)            (78,388,817)
Forward
               Years Ended March 31 
          2005 2004 2003
CASH FLOWS FROM FINANCING 
ACTIVITIES
Dividends paid (P93,422,840) (P60,081,082) (P43,886,157)
Increase in trust funds               4,281,484               9,320,757               9,001,537
       
             
Net cash used in financing activities              (89,141,356)            (50,760,325)            (34,884,620)
NET INCREASE IN CASH AND
CASH EQUIVALENTS           149,115,646           190,794,844           154,859,556
CASH AND CASH EQUIVALENTS
  AT BEGINNING OF YEAR             722,415,175           531,620,331           376,760,775
CASH AND CASH EQUIVALENTS 
AT END OF YEAR P871,530,821 P722,415,175 P531,620,331
               
See Notes to Financial Statements (2005, 2004, 2003)
FAR EASTERN UNIVERSITY, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
               Years Ended March 31 
2003
 (As restated - 
2005 2004 Note 2)
CAPITAL STOCK - P100 par value        
Authorized - 10,000,000 shares (Note 13)
Issued - 4,708,473 shares in 2005 and 2004 and
2,868,696 shares in 2003
(of which 37,331 shares are 
in treasury) P470,847,300 P286,869,600 P286,869,600
Stock dividends (Note 13)                            -             183,977,700                            -  
                    470,847,300           470,847,300           286,869,600
RETAINED EARNINGS (Note 5)
Unappropriated
Balance at beginning of year, as 
previously reported           317,893,203           456,518,991           282,958,860
Change in the basis of accounting,
    net of tax (Note 2)                              -               26,972,069             26,972,069
Balance at beginning of year,
as restated           317,893,203           483,491,060           309,930,929
Additions (deductions):
Net income for the year           396,783,491           298,460,925           217,446,288
Cash dividends (Note 13)            (93,422,840)            (60,020,082)            (43,886,157)
Stock dividends (Note 13)                            -            (184,038,700)                            -  
Appropriations for expansion 
of facilities                            -            (220,000,000)                            -  
Appropriations for acquisition of 
  laboratory equipment
  Balance at end of year             621,253,854           317,893,203           483,491,060
Appropriated (Note 14)               437,161,414           437,161,414           217,168,973
                 1,058,415,268           755,054,617           700,660,033
Forward
               Years Ended March 31 
2003
 (As restated - 
          2005 2004 Note 2)
REVALUATION INCREMENT IN 
PROPERTY AND EQUIPMENT
Balance at beginning of year, as 
previously reported                     P    -   P31,502,093 P31,502,093
Change in accounting policy 
    (Note 2)                                -