Temple University Japan: The same black box as always.

I would be remiss if I didn’t point out that, sometime over the past week, the Temple University Controller’s Office put out the audited financials for the Fiscal Year 2010. (This year, the relevant footnote is Note N.)

I looked at them a bit tonight, and what I saw was that there really wasn’t anything new. TESS, which as you may recall is Temple University Japan, is showing record revenue. (It’s also showing record expense!) But the report is a U.S. dollar-based report. Revenue for a college is mostly tuition, right? I have a question about how well the school did in yen. I have a feeling it took in less money in the Fiscal Year 2010 than in 2009, and probably isn’t doing much better so far in FY 2011.

Temple is reporting TESS revenue as $26,013,000 for FY 2010. I am going to put a exchange rate of 88 yen to the dollar on that. So this is 2.289 billion yen. (JPY 2, 289,100,000.)

TESS revenue in 2009 was reported as $25,348,000. I am going to put an exchange rate of 96 yen on that figure. So 2,433,400,000 yen. Even though the dollar value is up, the yen value is down about 6%.

Temple would be using FAS 52, now codified as ASC 830. (That will put you to sleep, huh?) So depending on the practice TESS chooses, they are either translating the yen to dollars, on their books, at the rate of the day the contract to offer classes to a student occurs, or at some blended rate for a specific time period.

That’s why I used 88 yen for 2010 and 96 yen for 2009. I know that the yen has been generally going up since July of 2007 (meaning, if you have yen and translate them into dollars, you get more dollars.) If you have yen, 88 yen got you a whole $1 in June 2010. You needed 96 yen to get a dollar in June 2009. (Nowadays, you can get a dollar for 80 yen.)

Since the yen has been averaging a straight line down for some time now, I think the numbers are fair. TESS is collecting less in yen tuition than before. I don’t think the campus is growing, I think it’s shrinking. In part, because the yen is going up. Overseas students have to pay a lot more.

The expense numbers for TESS were:

FY 2010: $24,960,000 (JPY 2.196 billion)

versus

FY 2009: $24,456,000 (JPY 2.348 billion)

Does anyone else think it’s strange that the expense numbers of TESS, year-on-year, mimicked the revenue? You’d figure that rent is a fixed cost. If rent is in the expense, it should be a consistent number, even if the number of students changes. But every year, the revenue moves, and the expense pretty much moves in tandem. It’s like there are no fixed costs.

The only clarification we get in the 2010 report is that Temple now shows a currency adjustment. This would not be for what I described above, but rather, a balance sheet item. Suppose you owe vendors and suppliers a certain amount in yen. In the month you got those services, you had to book a number. If you still owe the money at the end of the “FY” (fiscal year), you have to adjust the number for the fact that it might cost you more (or less) in dollars. That’s what the $587,000 charge is doing there.

[Update: A footnote, click to enlarge. As the Yahoo chart below shows, since July 2007, the yen has been pretty much going up and up. From a low of around 123 to the dollar, it now only takes 80.41 yen to buy the same dollar.