Temple University Japan: Where is the rent shown?

In the 2009 annual report of Temple University, Temple Japan is called “Temple Educational Support Services” (TESS).

As I’ve been saying for months, Temple Japan’s operations in Tokyo are carried out with the rental cost for the campus itself hidden in Philadelphia expenses. The annual report purports to show Temple Japan as breakeven. But in fact, I strongly believe it loses money year after year—probably in the millions.

(CLICK TO ENLARGE ANY OF THESE.)

Here is a snapshot of the PDF file you will find at the 2009 annual report link. Notice the total expense number of $810,025,000 (numbers are in thousands on it). This is educational and general for all of Temple.

On this next screen shot, which is “Note O”, notice that TESS/Temple Japan’s share of that $810,025,000 is $24,456,000. (The ones circled.)

As you will see from the longer screen shot I took of TESS’ numbers for 2009, that $24 million is about everything Temple says is an expense for TESS. But nowhere in the larger $800 million number do you see anything about “rent”. In fact, you wouldn’t—it’s not an educational or general expense.

Here is a long screenshot. Everything, all the way down. What you notice is, that there really isn’t anything itemized for rent. Why? Because they keep it hidden, somewhere else. It looks like Temple Japan breaks even, but it doesn’t. In fact, it loses millions over the years.

This is Pennsylvania tax money being funneled through Temple to Japan. The Pennsylvanians pay $180 million through their taxes to support Temple. Temple turns around and sets up a “Japan campus”, and then hides the fact that they have to pay rent for the facilities in Tokyo. It looks to anyone who analyzes TESS, that it’s breakeven. But in fact, there is a rental charge that’s hidden.

Now, where is it?

It’s left in the balance sheet of Temple. For example, on the balance sheet, there is an item for capital leases. Capital leases are long-term leases that U.S. rules allow to be treated as something akin to ownership. [Later note: it isn’t the capital lease. It’s buried deeper.] So, in fairness, they are allowed to be reported as an item on the Balance Sheet, not the Income Statement.

What do we find? Yes, Temple overall does happen to have capital leases, (Note G), just not ones that you would report on the income statement—which is where you would see any TESS/Japan activity. So how much of these capital leases belong to Japan operations? The Annual Report is silent. They don’t say. Based off their information, we really don’t know.

My own feeling is that there is a $1 million or $2 million charge that is left off the TESS breakdown. I’ve been blogging about this for a year, and no one at Temple (who vists the site, of course) has bothered to correct me.

I just want to know how much the rent is for Temple Japan, and where it appears on the Annual Report. That’s not a lot to ask, is it?

[Update: Per Mutant Frog‘s Joe Jones’ comment below, I want to add a screen shot of the listed affiliated corporations Temple provides on page 28 of their annual report. He’s got me wondering whether the TESS figures aren’t just all an allocation to Japan, in which case, we may never figure out how deep the sinkhole really is. ]