Capital Expenses

Capital expenses for construction and renewal of campus facilities decreased by $29 million to $20 million. The primary capital costs were renewal projects for the McCollum classrooms and Wyss House, the large Aldrich classroom, and upgrades to the Technology Operations Center and HVAC systems. Additional funding came from gift accounts for specific capital projects amounting to $3 million, as well as $7 million in new borrowings. The new debt primarily reflects debt funding for the McCollum and Aldrich work. The comparable fiscal 2006 amounts were $12 million and $38 million, respectively.

Debt

Building debt outstanding at June 30, 2007, was level at $108 million, as new debt of $7 million was offset by $7 million of principal repayments.

Reserves

Unrestricted reserves increased $5 million to $65 million at the end of fiscal 2007. In addition, HBS maintains endowment reserves, with a June 30, 2007, end-of-year value of approximately $94 million, including a $25 million transfer performed in fiscal 2007 (related to the $22 million in “Other Activity”).

Endowment

The market value of the HBS endowment and current use funds increased by nearly 21 percent to $2.8 billion at June 30, 2007, from $2.3 billion a year earlier, reflecting both strong returns and new endowment gifts. Total return on the endowment for fiscal 2007 was +23 percent.

Gifts

Alumni and friends continued to be generous in fiscal 2007. As the School's capital campaign came to a close, cash from gifts decreased to $56 million from the campaign's peak of $123 million in fiscal 2005,but increased by $10 million over the pre-campaign total of $46 million in fiscal 2000. This generosity remained vital in fiscal 2007, as current use gifts and endowment distribution together generated 23 percent of the School's revenues, up from 22 percent last year. Approximately 30 percent of the School's MBA alumni made a gift to the School in fiscal 2007.