Fall Association Meeting 23 November 2009

 State of School Finances  SY Budget Process

 Economic uncertainty  Worst seems behind us, but future remains uncertain globally.  India and China: countries with meaningful economic growth in a world of low/no growth in near term.  Regional political turmoil  Continues  Impact on enrollment?

 New enrollment better than expected  School at or near capacity  First budget revision for SY0910 in line with original budget and ~$1.2m of surplus  $18m of “Reserves” with $23m of cash on hand  Receivables position better than last year  No loan payments due this year We are in a comfortable position.

Summary SY0910 Budget – Revision 1 SY0809 BudgetSY0809 ActualSY09110 Revised Revenues Tuition Revenues 23,919,86523,922,67226,243,610 Non-Tuition Revenues 1,440,0001,786,3921,575,000 Revenues 25,359,86525,709,06427,818,610 Operational Expenses Salaries & Benefits 17,065,49316,685,37019,032,165 Non-Salaries & Benefits 7,965,1848,406,3869,907,767 Operational Expenses 21,815,16521,524,55224,847,219 Capital Expenses 1,289,8921,361,2051,789,687 Surplus (Deficit) 2,254,8082,823,3071,181,704

Summary Balance Sheet – June 30, /30/086/30/09 Current assets Cash and Bank Balances 11,071,34913,647,992 Other Current Assets 460,371820,818 Accounts Receivable 23,80256,303 Loans and Advances 1,595,9592,195,093 Total current assets 13,151,48116,720,206 Fixed assets 19,458,65421,416,673 Total assets 32,610,13538,136,879 Current liabilities Accounts payable - others 1,800,2732,263,578 Enrollment deposits 5,516,7875,842,010 Miscellaneous funds 00 Book overdraft 3,7860 Employee Obligations 3,049,8823,134,032 Total current liabilities 10,370,72811,239,620 Loan* 2,000,0006,000,000 Deferred grant 101,52288,492 Reserves 20,137,88520,808,767 Interfund accounts 00 Total liabilities & reserves 32,610,13438,136,879 * Fixed deposits of USD 1,500,000 (Previous Year USD 1,500,000) pledged with the bank against this loan

 Process/Time line  Start: August 09  Final Approval: March 10 Board meeting  Interim checkpoints/feedback/discussions  New elements to supplement process  Top down Budget Parameters in addition to bottom up work  Zero Base Budgeting

 Board guidelines to Administration  Represent the outer limit of what the Board thinks is desirable with respect to certain budget outcomes (e.g. enrollment levels, tuition fee increase)  NOT the final approved budget. Used for modeling purposes  Developed based on  benchmarking study of peer group schools  certain other metrics such as inflation, foreign exchange, school capacity etc  Administration will work within the limits of these parameters as they develop the budget.

AESAmerican Embassy School ASIJAmerican School in Japan CACCairo American College ISK L International School of Kuala Lumpur ISBInternational School of Bangkok SASSingapore American School

AESAmerican Embassy School ASIJAmerican School in Japan CACCairo American College ISKLInternational School of Kuala Lumpur ISBInternational School of Bangkok SASSingapore American School

 Tuition increase (maximum): 2.5%  Enrollment: No-growth (zero growth for cohorts promoted)  New Students: 28% of total enrollment (based on average turnover)  Registration fee: $7,900 per student (maximum)  Exchange rate: 45 rupees to the US dollar  Inflation on US dollar Expenditures: 1%  Inflation on Indian rupee Expenditures: 4%  Balanced budget before HS Project loan repayment ($1.2 million)

 Develop bottom up budget  As if creating various school departments from scratch using a blank slate  Not just increase last year’s expenses by inflation  Process leads to identification and implementation of cost savings  Help develop a budget within the limits represented by the Budget Parameters

SY0809SY0910SY1011 ActualBudgetScenario 1Scenario 2Scenario 3 Notes # of Paying Students 1,355 1,4261,3951,4351,417 # of New Paying Students Tuition Increase 8.0%7.0%2.5%1.9%2.2% Registration Increase 0.0% 25.0% Application Fee Increase 0.0% Rupee Dollar Exchange 45 US Inflation 5.0%1.0% India Inflation 7.0%4.0% Salary Increase %1.0% Beginning Balance 2,545,484 5,368,791 Revenues 25,709,064 27,791,650 28,948,100 29,596,730 29,309,530 Salaries & Benefits 16,685,370 19,083,884 19,996,496 1% + step; added benefits Other Operating Expenses 4,839,182 5,768,571 5,950,886 Capital Expenses 5,361,205 1,712,170 3,000,719 3,392,000 3,362,149 SY0809 included New HS payments Total Expenses 26,885,757 26,564,625 28,948,100 29,339,381 29,309,530 Surplus (Deficit) (1,176,693) 1,227,025 (0) 257,349 (0) Loan Activity (4,000,000) - 1,200,000 SY0809 building loan; 1st repayment ($1.2 million) due in SY1011. Adjusted Surplus (Deficit) 2,823,307 1,227,025 (1,200,000) (942,651) (1,200,000) Ending Balance 5,368,791 6,595,816 4,168,791 4,426,140 4,168,791

 Questions and answers from Association members at the meeting…