his annual report is the last under my chairmanship of Caltech 's Board ofTrustees. 1 have known the Institute in various capacities during the last fifty years-as an undergraduate, a graduate student, an alumni volunteer, and a Board member-and I have continued to be impressed by the remarkable people who make up the Caltech community. It has been an honor and plea ure to serve an institution that has been so aptly acclaimed a "national treasure." In the 1984-85 Annual Report I wrote, "What an exciting time to become chairman of the Cal tech Board of Trustees." From the appointmen t of President Tom Everhart in 1987, to the opening of the Beckman Institute in 1989, the dedication of the first oftwo 10-meter Keck Telescopes in 1991, and a continuing stream of world-class research and teaching on the campus, the last nine years have certainly proved that statement true. As chairman, I am grateful for the continued support of a diverse and talented Board. Due in large part to the Board 's efforts, the Institute was able to reach ano ther mile stone-The Campaign for Caltech successfully concluded on December 31, 1993, significantly surpassing its $350 million goal. During the past year, three new Trustees were elected: Eli Broad , the ch airman and chief executive officer of SunAmeri ca Inc.; Mildred Dresselhaus, the Institute Professor of Electrical Engineering and Phys ics at MIT, and a recipient of th National Medal of Science; and Stephen A. Ross, co-chairman, Roll and Ross Asset Management Corporation, and Sterling Professor of Economics and Finance, Yale Unive rsity. We welcome their active participation and wise coun el. In the coming years Caltech will be faced with even greater oppor tunities for achievement and still greater challenges to maintaining its preeminence. T have no doubt that the Institute has the people and the resou rce to surpass its own high standards of accomplishment.
Ruben F. Mettler Chairman of the Board of Trustees 1985-1993
1 A M e ssage from t h e P residen t THE YEAR IN REVIEW
e at Caltech focus on pio neer W ing research, taking risks, and working to make them pay off. We believe that we offer a superlative education to some 900 undergraduate and 1,100 graduate students annually. Thus, it should be a matter of satisfac tion and pride to the entire Caltech community that the Campaign for Cal tech-our effort to raise funds to support the Institute's work- has been successful. By the end of October, the cam paign had exceeded our goal of $350 million; indeed , by the conclusion of the cam paign-December 31, 1993-we had attained more than $394 million. We set out to raise $100 million for endowment priorities and surpassed our goal by 18 percent. We exceeded our goal for endowed professorships-resulting in 18 new chairs-and for unrestricted endowment. We added seven new postdoctoral fe llowships, 12 new graduate fellowships, and 50 new fully endowed under Ruben F. Mettler and Thomas E. Everhart graduate scholarships. In addition, by the end of the campaign we had more than met our capital goal of $ 11 5 million. The second Keck telescope is we ll under w4y, and we will break ground for the Moore Laboratory of Engineering in March 1994. We have received partial funding for a Submillimeter Observatory headquarters
2 building in Hawaii. In advanced planning indeed fortunate to welcome another alumnus is the Avery Center, the new undergraduate, and longtime supporter, Gordon E. Moore, graduate student, and faculty residence that will PhD '54, as the new chairman. offer programs for developing the entrepre As we celebrate the campaign's success, neurial spirit. Moreover, we are pleased to we reaffirm its pur announce a commitment from the Sherman pose: to enhance Fairchild Foundation for a new engineering Cal tech's strength as library. (Although not part of the campaign, a research and teach a parking garage and new central plant needed ing institution. In for the north campus area are nearing comple light of this, we are tion.) Finally, we surpassed our goal of$135 pleased to announce million for programs and current operations by that Profes or of almost $18 million, enhancing our research Physics harles W. and teaching. Peck, PhD '64, Additional funds still need to be raised became the new chair to support endowed fellowships and scholar of the Division of ships, research initiatives/start-up funds, and Physics, Mathematics laboratory modernization. We will continue to and Astronomy on raise funds for these purposes in the coming October 1. He suc months. ceeds Howard Hughes Professor and Professor I want to take this opportunity to express of Physics Gerry Neugebauer, PhD '60, who has the deep appreciat..ion of everyone at Cal tech for stepped down after five effective years in the the support received during the campaign. In position.
particular, 1 wish to acknowledge the m~jor role The quality of our 275 professorial played in the campaign's success by the Caltech faculty remains superb. Sixty-four are members Board of Trustees, especially the late alumnus of the National Academy of Sciences, and 27 James W. Glanville, MS '46, Eng '48, more arc members of the National Academy of recently William F. Kieschnick, and, finally, the Engineering. Thirteen have been named Board's recently retired chairman, alumnus California Scientist of the Year, the most recent Ruben F. Mettler, BS '44, MS '47, and PhD '49. being Hiroo Kanarnori, the .John E. and Hazel S. As chairman, Rube Mettler has been an ener Smits Professor of Geophysics and the director getic leader and a generous friend. We are
3 of Cal tech's Seismological Laboratory, who students, but further efforts are needed. A received the award in 1993. Also in 1993, diverse student body helps provide our students Seymour Benzer, th e J ames G. Boswell Professor with an education that will prepare them for the of Neuroscience, Emeritus, received the Royal global village they will enter. It is worth noting Swedish Academy of Science's Crafoord Prize, that the 1993 Commencement awarded degrees for his work in neurogen etics. In addition, Hans to the largest number of graduates ever-220 W. Liepmann, the Theodore von Karm{m bachelor's, 160 master's, four engineer's, and Professor of Aeronautics, Emeritus, received the 158 doctor's degrees, for a record total of 542. National Medal ofTechnology. He had received The overall plans of the BS graduates this year the National Medal of Science in 1986, so this are similar to previous years in terms of choice latest honor makes him one of only 1 1 of employment or further education; 61 percent Americans to win both awards. (Another is are going directly into a graduate program, with Board Chairman Emeritus Arnold 0. Beckman, 13 graduates having been accepted to MD or PhD '28.) Our MD / PhD programs. junior faculty are The quality of instruction and research distinguished, too. at Caltech will be increasingly important in Forty-one have been the years ahead. In addition to rapid changes in National Science science and technology, our nation faces uncer Foundation Young tainties in foreign policy, economic policy, and Investigators health policy. All arc bound to have an impact (formerly called on universities, directly or indirectly. For exam Presidential Young ple, the allocation of scientific research funds Investigators), and and the public's expectations for research are seven have won changing. Today, the public has far less trust in Packard Fellowships. the allocation process. Congress, reflecting the Looking at public mood, is more divided; some members student life at the are negative toward universities; all allocations Institute, there h ave in these tight budget years are constantly being been significant changes. Our undergraduates questioned. include a greater number of women. We have The public wants research to result in made some progress in admitting more minority new industries and new jobs. They look at recent examples of new industries founded on a scientific or technological base-the integrated-
4 circuit industry, for example, did not exist in may receive more attentio n. Likewise, as we add 1960; today, it is a $65 billion industry. new faculty, we need to think about which areas Communications and information technologies of what fields will h ave the greatest payoff for are undergoing explosive growth and change, Caltech a nd for society. Choosing superb people presenting both challen ges and opportunities. in important-often emerging-fields is h ow we Research universities must meet new expecta have made an impact in the past, a nd is our tions to continue to merit public research surest pathway to continued success. Such peo funding. ple define the future and teach oth ers how to A faculty discussion of the undergradu make it a reality. ate core curriculum h as been undertaken this past year, to ensure that Cal tech offers the best possible curriculum to our talented students. We T homas E. Everhart certainly will continue emphasizing the funda President mentals of scien ce, technology, and the humani ties. However, other areas-such as foreign languages and cultures, and entreprene urship-
5 A Message j1· om the Provost RESEARCH HIGHLIGHTS
altech's research accomplish our acquisition-in cooperation withJPL-of C ments-in areas as varied as state-of-the-art parallel computers, including the astronomy, molecular chemistry, communica Intel Delta, an Intel Paragon, and a Cray T3D. tion theory, and political science, as the follow In regard specifically to teaching, a new ing highlights wi ll show-complement and graduate option has been established in the area
enhance its effectiveness as a teaching institu of control and dynamical systems, and a m~jor tion. Central to excell ent teaching and research effort is under way to change and modernize is the recruitment of new faculty. This recruit the undergraduate core curriculum. ment process at Cal tech is characterized-and Finally, I would like to mention the nega constrained-by high standards, our continuing tive national perception of research universities emphasis on experimental research in the physi that has developed over the past few years, a per cal sciences and engineering, and limits ception that I believe is in large part unjustified. imposed by the high costs of modernizing labo All of us at Caltech-faculty, staff, and stu ratories and adding needed computing power dents-have a role to play in demonstrating to and support personnel. the public that leading-edge research is not only Nevertheless, a significant number of compatible with effective teaching, but essential new faculty have been recruited in recent years. to it, and is not only relevant but vital to solving Most of them are outstanding junior faculty who our societal problems. will help Caltech maintain its position as both a premier research university and a first-rate teaching institution. Computer modeling and simulation are Vice President and Provost increasing in importance in science and engi- \neering, and Caltech continues to be a leading institution in high-performance computing. This success is a result of our growing commu nity of student, staff, and faculty researchers adept in the use of parallel supercomputers, and
6 B io l ogy Of mice and men
0 hown Is a rat brain treated to elicit Parkinson's disease-like symptoms. The picture Is a high-power view
of a graft containing adrenal cells placed Into this brain. Also grafted here were skin cells genetically engineered to secrete a protein that converts he best laid cells the adrenal cells Into nerve cells. Thus, t he animal's own cells were used of mice and men T to produce new nerve cell s Inside the damaged brain. often go awry. When they are brain cells, going awry can lead to ncu rodegene rat.ive diseases such as Alzheimer's, Parkinson's, and amy otrophic lateral sclerosis (Lou Gehrig's disease). By studying the survival, growth, and development of nerve cells in the brains of mice and rats, Caltech biologists are beginning to understand what causes these cells t.o go awry and die. This research may contribute to a beller understanding of why nerve cells die in human brains, particularly during neurodegenera t.ive diseases, and after traumatic injury. In the past few years, the Caltech group and other researchers around the world have the Caltech group found that the injured, their regeneratio n succeeded in identifying a new brains o f these mice were altered in response differs from that of nor family o f proteins (called neuro poi striking ways, confirming the mal mice. In a normal mouse, etic cytokines) that not only con important role the protein plays in when a neuron is injured, it trols the kinds of nerve cells that proper development: the brains of changes the pattern of proteins it develop, but also can rescue dyi ng the knockout mice have a produces, and these changes are cells after injury. shrunken and sick hippocampal important for nerve regrowth and The Caltech research team region, and the appearance of for the immune response following obtained their initial results with nerve cells in the visual cortex is injury. In the knockout mice, how nerve cells growing in tissue cul altered. The hippocampus controls ever, injured neurons behave as ture, but recent studies have learning and memory, so the though they are intact; they con involved new strains of mice, called Caltech group plans to test the tinue to produce the same proteins "knockout mice." Certain genes in learning ability of these mutant in the same amou111.s. Future tests these mice have been mutated, o r mice. Since memory deficits are will look at the rate of regrowth in "knocked out," so that they arc key features of Alzheimer's deme n normal and knockout mi ce. inacti ve and don't produce the tia, the neuropoie tic cytokine dis Because this protein appears protein that they code for. cove red in these studies could to be important, the biologists are In a recent sLUdy of mice in potentially be important for future developing new methods for deliv which a gene for one o f the neu therapeutic uses in this disease. ering the protein to the site of the ropoietic cytokines was mutated to In a further confirmation of injured or dying neurons in animal an inactive form, so that the mice the prote in 's impo rtance, when the models of Alzheimer's and lacked the cell-rescuing protein, nerves of these mutant mice are Parkinson's disease.
7 C h e m. is t ry and C h e mica l J<:nginePdng Probing the DNA "wire"
he fluorescent au ached t.o the end. In one experi T glow in a test ment, wh en a single strand with no tube at Calt ech's Noyes Laboratory metal attached and a ruthenium may be a beacon for important sci labeled strand were mixed in solu ~ lctured Is entific d iscoveries. Set upon an tion and intertwined, the resulting a computer-generated macromolecular ultraviolet light table, a solution of double helix glowed when excited assembly of the DNA double helix. DNA mixed wi th a synthetic com with ultraviolet light. But in a sepa The actual modified DNA strands plex shows a pinkish-orange glow, rate test, when a strand of DNA were made In the Noyes Laboratory, then loses it when another syn with ruthenium attached inter and each contained a short ( 1s base) thetic complex is added . By study acted with a rhodium-labe led strand of DNA with a complex of ing the absence or presence of this strand, so that the resultant double ruthenium or rhodium (metal complex) vibrant color, Caltech researchers heli x had one metal at each end, have devised a way to see whe ther the glow was turned off. attached to each end. an electric current is fl owing T he metal complexes, stacked through the DNA. near each end of the DNA double In a series of experiments com helix, are separated by 40 pleted in fa ll 1993, Caltech angstroms, which in molecular che mists used light to initiate a d imensions is a large distance for now of electric current through a the electron to travel-so large that short pi ece of DNA. This is the first the researchers concluded the time a DNA double helix has been DNA double helix must sen•e as a demonstrated to act as a "molecu "wire" between them. T he scientists lar wire." believe that when the ultraviolet For more than 40 years, scien light excites a ruthenium atom, it tists have known that DNA is a poly shoots an electron down the elec mer com posed of two strands that tron-cloud stacks to the other end wind around each other in a dou where the rhodium atom then acts ble helix. Each segment of the twin as an e lectron acceptor, and turns spirals is called a base pair, and in off the glow. each human cell there are about T he next question is whether three billion base pairs which or not t.hi s is a reaction nature has encode the genetic information taken advantage of, or maybe that makes us what we are. The needs to protect against. T he Caltech researche rs have shown Caltech group's efforts to answer that clouds or electro ns at each such questions may create a whole base pair, layered like a stack of new approach to the design of pennies, create a path for the fl ow DNA-based diagnostics. Such of electrons. effo rts may also help build a better T he key to this finding is two under tanding of DNA structure modified DNA strands made in the and its reactions. laboratory, each containing a short (15 bas ) strand of DNA with a complex of ruthenium or rhodium
8 Engin ee r i n g and Applie d S c iPnr e Revolut tontz:tng electronics for the 11 st century
O hetop Image, pictured on
he engineering of the atomic scale, shows a T structures on the surface of gold deposited atomic scale promises to be the on a silicon wafer. The cornerstone of electronics and bottom Image demonstrates electr
9 GPo l ogicn l a nd Pl a n e tary S c iPnres Ice discovered on scorching-hot planet
{i) adar Images of Mercury made ce is common in our with the Very Large Array (VLA). The Image on the right was made after solar syste m, espe I Mercury had rotated about I 00 degrees. The brightest feature In both cially far from the sun on the cold Images lies on the planet's north pole and has been Interpreted as arising from moons ofjupit er and the other Ice deposits In permanently shadowed craters. outer planets. But a team of scien tists from Caltech andJPL has found evidence of ice on the small, rocky planet nearest the sun, where equatorial temperatures are hot enough to melt a soda-pop can. Using radar to study the planet's surface, the team has shown that it is possible for water to migrate to Mercury's po les, and that water ice is stable and will remain there for billions of years. Icy surfaces can exist on scorching-hot Mercury because the planet has no seasons and a very thin atmosphere. The tilt of the Earth's axis alternately exposes its could freeze and "snow" onto the areas at lower latitudes, which arc north and south poles to warming ground, where the snow could not ice fo r·rnations, but rather sunlight. But because Mercury's re main for the lifetime of the solar "backscatter," or "radar basins." ax is is perpendicular to its orbital system. The research team interpreted plane, the sun is always overhead at The Caltech-JPL scientists these large splotches as possible the equator and on the horizon at used a radio technique called earth impact craters. The rough ground the poles. Therefo re, the slightest rotation synthesis, which uses radar in a crater would refl ect radar bet de pressio n in the gro und ncar the waves as a flashlight to "light up" ter than the smooth surrounding poles is in permanent shad ow. shadowed areas that cannot be ·urfacc. Mercury's surface temperatures at photographed in visible light. The researchers hope the c the poles may be as cold as 125 These scientists examined sections findings will encourage extensive kelvins (-235' Fahrenheit). That is of Mercury that were missed wh en investigation into the radar proper clearly cold enough to retain the Mariner 10 spacecraft mapped ties of cold, icy surfaces, and have frozen water, but where would about half the surface in the mid- scheduled an observation with the water come from on this parched 1970s. In their study, the radio Very Large Array near Socorro, planet? Scientists theorize that astronomers noted the existence of New Mexico, for March 1994 to orne has accumulated from space highly radar-reflective regions ncar look at the south pole of Mercury. matter (asteroids and comets), both poles of Mercury. The scie n They continue to study ice caps o n which contains water molecules tists proposed that, based on the Mars and to explo re further and has been bombarding Mercury details of radio waves reflected , Saturn's largest icy moon, Titan. for billions of years. In addition, these arc most likely composed of gases in the spar e atmosphere water ice. T he ir study also found three large, moderately rencctive
10 Th e 1/ umani t ie .s and S o c i a l Scien c es Southern California - a social research labt
ith its rich blend Califo rnia community. Speakers W of cultures and have included internationall y rec races, Southern California is con ognized scholars in race relations, sidered by many authorities to be a as well as such notable political harbinger of 21st-cen tury civiliza figures as Los Angeles County tion. But surprisingly little is known Supervisor Gloria Molina and about. the political, racial, and Congressman Esteban Torres. cultural dynamics of this complex Open to the public, the RPR semi region. To bridge the gap in knowl nars have attracted large and edge, Caltech professors last fall enthusiastic audiences.
founded the Race, Politics, and The origin of RPR stems in
11 Physi cs, M(d/t ema t ics and As t ·ro11om y Keck captures Image of farthest galaxy known
odern cosmolo camera," Keck was able to record M gists believe the the previously unseen obj ects ncar universe started about 15 billion the galaxy in only half an hour. years ago with the Big Bang, but At the heart of the telescope is the exact cause of that event, plus the high-tech mirror and instru much of what happened following ment. Keck's mirror is a revolution it, remains a mystery. This past ary mosaic design made up of 36 spring, Caltech scientists came hexagonal segments, all computer closer to seeing into the dawn of controlled to act as one. This sort n Its first scien the cosmos than ever before, while of mirror has never been used 0 conducting the first scientific test before in an optical telescope. The t ific run, Keck Telescope enabled of the 10-meter Keck Telescope. ln instrument that recorded the astronomers to undertake the this maide n run, the most powerful images-the near-infrared camera most ambitious exploration of the optical and infrared telescope in (NTRC)-is the first scientific outer limits of our universe-cap the world enabled astronomers to instrument to have been mounted turing an unprecedented Image of take a picture of the most distant on the Keck. Designed and built at the most distant known galaxy. known galaxy, as well as several Caltech, and using a state-of-the-an previously unseen "clumps" around infrared sensor provided by Santa it that may be a cluster of other Barbara Research Center, the cam galaxies. ln capturing this image, era has high spatial resolutio n. lts astronomers saw matter as it sensitivi ty is vastly greater than any appeared about 3 billion years after of its predecessors. the Big Bang. The NIRC had a successful Caltech scientists estimate that "commissioning" run on the Keck the light we now see from galaxy Telescope in November 1993, and 4C41.17 left it when the universe nearly all the capabili ties that were was only 10-25 pe rcent of its cur built into the instrument were rent age. By analyzing the galaxy's tested. As of.January 1994, the spectrum, they determined that it NIRC became the second instru has a redshift of 3.8; this translates ment to be used on a regular basis into a "look-back time"-and dis on the Keck Telescope. The first tance from Earth-Qf about 12 bil instrument, a high-resolution lion light-years, or 72 trillion optical spectrograph, began regu billion miles. lar observations in November 1993. Galaxies have been studied for The observatio ns with the NIRC a long time, but no telescope and the other focal plane instru until Keck-had been able to cap ments will be crucial in furthering ture the details of extremely faint, our understanding of the early fa raway ones in a reasonable universe. amount of time. With its "outstand ing combination of telescope and
12 j Pt P ·ropu l sion La b ora t ory Camera fixes Hubble's myopic vision
(-\ 0 hown outside the Hubble Space Telescope Is a member of the team of astronauts from the space shuttle Endeavour. The team Installed JPL's Wide-Field and
he year 1993 Planetary Camera II , a second-generation camera for the Hubble. T proved to be challenging for the j et Propulsion Laboratory, with a number of proj ects marking important milestones. In December, spacewalking astronauts installedJPL's Wide Field and Planetary Camera II , a second-generation camera for the Hubble Space Telescope. WFPC 11 incorporates special oplics designed to compensate for the spherical aberration in the Hubble telescope's main mirror. T he jupiter-bound Gali leo spacecraft, meanwhile, met another objective with its August flyby of the asteroid Ida. Galileo 1995 the spacecraft will encounter phenomenon in the Pacific Ocean. previously Oew by another asteroid , the region of the sun's north pole. One difficult note in the year Gaspra, in 1991. Launched in The long-lived Voyager mis was the Mars Observer mission. 1989, the spacecraft is due to enter sio n to the outer planets returned Following a launch in September Jupiter orbit in December 1995 new results in 1993 when scientists 1992, contact was lost with the and deliver a descent probe into reported that the two spacecraft spacecraft shonly before it was to the giant planet's turbulent had detected the first evidence of enter Mars orbit in August 1993. As atmosphere. the long-sought-after helio pause the year ended ,J PL planners were After a highly successful the boundary that separates the studying possible future mission orbital tour making radar maps of solar system from interstellar space. for achieving Mars Observer's sci the surface ofVenus, the Magellan T he evidence was in the form of ence objectives. spacecraft embarked on a new intense radio emissions that scien Before that loss, however, the scienlific direction when its orbit tists believe were caused by the Mars Observer spacecraft was able was lowered beginning in May, so interaction of plasmas, which fl ow to participate wi th Galileo and that the spacecraft could study the from the sun, and cold interstellar Ulysses in a three-mission experi planet's gravity field. The lower gas beyond the heliopause. ment to search for signs of gravita orbit allowed Magellan to measure The joint U .S.-French tional waves. For three weeks in Venus's gravity more accurate ly TOPEX/ Poseidon spacecraft was March and April, researchers at higher northern and southern also keeping researchers busy as its looked for slight changes in the fre tali tudes. mission studying ocean sea-level quency of radio signals sen t to the T he joint U .S.- Euro pean changes from Earth orbit contin trio of spacecraft. Ar1y such fre Space Agency spacecraft Ulysses, ued following its August 1992 quency shift could be caused by a launched in 1990, progressed launch. In 1993 scientists affiliated passing gravi tational wave emitted towa rd its J 994 encounter of the with the mission released findings by a collapsing black hole or other sun's southern polar region. In of a recurrence of the El Nino distant celestial eve nt.
13 AWARDS AND HONORS
National awards and hon ors Stale honors
American Academy of Arts and Sciences, Fellow: California Museum of Science and Industry, Roger D. Blandford , Richm·d Chace Tolman Professor of Scien tist of the Year: Theoretical Astmphysics and Executive Oj]icer for Hi roo Kanamori,j ohn E. and HazelS. Smits Professor of Astronomy Geophysics and Direc/.or of the Seismological Labomtmy Ahmed H. Zewail , Linus Pauling Professor of Chemical Physics I nternational awards and hono1·s American Association for the Advancement of Science, fellow: Association Fran~ois-Xavier Bagnoud, Dennis A. Dougherty, Professor of Chemistry fran~ois-Xavier Bagnoud Aerospace Prize: Paul W. Sternberg, Associate Professor of Biology William H. Pickering, Professor of Elect1icall\ngineering, and Associate Investigator, Howard Hughes Medical Emeritus Institute Edward C. Stone, Vice President; Director ofJPL; Professor of Geological Society, Wollaston Medal: Physics Samuel Epstein, William E. Leonhard Professor of Geology, Rochus E. Vogt, R. Stanl.on Avery Distinguished Service Emeritus Professor and Professor of Physics; Direclm~ Laser Indian Academy of Sciences, Raman Chair: Interferometer Oravilation American Academy of Achievement, Gold Plate Award: Rudolph A. Marcus, Arthur Amos NoyPs Professor of Clwmistry American Association for Aerosol Research, David Sinclair Award: Richard C. Flagan, Professor of Chemical EngiuPmng 14 American Association of University Women, Institute of Electrical and Electronics Engineers, Fellow: Recognitio n Award for Emerging Scholars: David B. Rutledge, Professor ofElectrical t.'ngineering .Julia A. Kornfield, Assistant Professor of Chemical Institute of Electrical and Electronics Engineers, Engineering Medal of Honor: American Chemical Society, Karl]. Astrom, Shennan Fairchild Distinguished Scholar 1993 Arthur C. Cope Award: The journal ofEconomic Histqry, Arthur H. Cole Prize: Peter B. Dervan, Bren Professor of Chemistry Philip T. Hoffman , Associate Professor of History and Social American Chemical Society, Science 1994 Arthur C. Cope Award: Pasadena Area Youth Music Council, John D. Roberts, Institute Professor of Chemistry, Emeritus Music Educators of the Year: American Chemical Society, Willard Gibbs Medal: Delores Bing, Director of Chamber Music Peter B. Dervan, Bren Professor of Chemistry William Bing, Director ofInstrumental Music American Chemical Society (New York Section), The Society for Experimental Mechanics, Nichols Medal: Hetenyi Award: Peter B. Dervan, Hren Professor of Chemistry Ares .J. Rosakrs, Professor of Aeronautics and Applied Mechanics American Physical Society, Fluid Dynamics Prize: Theodore Yao-Tsu Wu, Professor ofEngi neering Science American Physical Society, Earle K. Plyler Prize: Foundation a wards Ahmed H. Zewail, Linus Pauling Professor of Chf!'rnical Physics Rita Allen Foundation, Scholar Award: Stephen L. Mayo, Assistant Professor of Biology American Society for Engineering Education, Fellow Member: Arnold and Mabel Beckman Foundation, Tho mas E. Everhart, President; Professor of Electrical Young Investigator Award: Engineering and Applied Physics Erick M. Carreira, Assistant Professor of Chemistry American Society for Engineering Education, Camille and Henry Dreyfus Foundation, Curtis W. McGraw Research Award: New Faculty Award: John F. Brady, Professor of Chemical Engineering and Konstantinos P. Giapis, Assistant Professor of Chemical Executive Officer for Chemical Engineering Engineering American Society for Information Science, Camille and Henry Dreyfus Foundation, James M. Cretsos Leadership Award: Teach er-scholar Award: Vivian A. Hay, Lilrrary Systems Administrator Barbara Imperiali, Assistant Professo-r of Chemistry American Society of Mechanical Engineers, John Randolph Haynes and Dora Haynes Foundation, Pi T au Sigma Medal: Faculty Fellowship: Melany L. Hunt, Assistant Professor of Mechanical Douglas Flamming, Assistant Professor of Histary engineering David and Lucile Packard Foundation, Genetics Society of America, Faculty Fellowship: Thomas Hunt Morgan Medal: Stephen L. Mayo, Assistant Professor of Biology Ray D. Owen, Professor of Biology, Emeritus Alfred P. Sloan Foundation, Research Fellow: Geological Society of America, Arthur L. Day Medal: Barbara Imperiali, Assistant Professor of Chemistry Hugh P. Taylor,Jr., RobertP. SharpProfessorofGeology and Tomasz S. Mrowka, Associate Professor of Mathematics Executive Officer f or Geology Hadassah Magazine, Harold U. Ribalow Prize: Merrill .Joan Gerber, Lectu·rer in Creative Writing 15 University honors Endowed Professorship: John E. Bercaw, Centennial Professor of Chemistry University of Alabama, Madison Marshall Award: Mark E. Davis, Warren and Katharinf' Schlinger Professor of Jacque line K. Barton, Professor of Chemistry Chemical Engineering James II. Strauss, Ethel Wilson Bowles and Robert Bowl-es University of California, Los Angeles; Pmfessor of Biology Professional Achievement Award: Thomas E. Everhart, President; Professor of Electrical Associated Students of the Engineering and Applied Physics California Institute of Technology (ASCIT), Award for Teaching Excellence: University of Chicago, William F. Deverell, Visiting Assistant Professor of History Distinguished Alumni Award for Public Setvice: Marcia B. France, Cracluate Student in Chemistry Edwin S. Munger, ProfessorofCeography, Emeritus Glen A. George, Lecturer in Computer Science and ElPctrical ComeU University, Philip Taft Labor History Prize: Engineering Douglas Flamming, Assistant ProjessO'r of HistO'Iy Henry A Lester, Professor of Biology Mary E. Lidstrom, Professor of Applied Micro/Jiology University of Wisconsin, Whitewater; Anthony C. S. Read head, Professor ofAstronomy Outstanding Recent Alumni Award: Sirna Setaycshgar, Graduate Student in Physics Ri chard A Leske, Research Fellow in Physics HunterS. Snevily, Bateman Research instructor in Mathematics Edward E. Zuko ki, Professor ofj et Propulsion and Institute hon ors Mechanical Engineering Distinguished Alumni Awards: Graduate Student Council, Trent R. Dames '33, MS '34 Awards of Excellence in Teaching: Philip Mwangi Cithinji, MS '61 , Eng '63 James K. Knowles, William R. Kenan, Jr. , Professor and Thomas Hudspeth '41 Professor of Applied Mechanics John McCarthy '48 Charles W. Peck, Professor ofPhysi cs and Chairman of the William W. Moore '33, MS '34 Division ofPhy sics, Mathematics and Astronomy Stephen A. Ross '65 David J. Stevenson, Professor of Planetary Science Alvin V. Tollestrup, PhD '50 and Chairman of the Division of Geological and Planetary Sciences P. P. Vaidyanathan, Professor of El-ectrical Engineering 16 FINANCIAL REPORT T his financial report of the • Individuals, foundations, and corporations California Institute ofTechnology have continued to generously support the has been prepared from the Institute's account Institute. Contributions received through the ing records. It reflects the Institute's financial Campaign for Caltech during fiscal year 1993 position as of September 30, 1993, and the totaled $55.9 million. At the conclusion of the results of its operations for the year then ended. campaign in December 1993, total contributions These statements have been reviewed by the raised, including pledges, amounted to more Audit Committee of the Board ofTrustees, than $394 million, substantially exceeding the whose members are designated by an asterisk in campaign goal of $350 million. the list of board members in the back of this report. The California Institute ofTechnology • United States government contracts and maintains its accounts in accordance with the grants at the campus totaled $111 .2 million, as guidelines suggested by the American Institute compared with $106.1 million in fiscal year of Certified Public Accountants and the 1992. Of that amount, $81.7 million was for National Association of College and University costs that directly relate to specific research pro Business Officers. j ects. The balance of $29.5 million was recovery The Institute maintained its strong financial of indirect costs, such as facilities operation and position during fiscal year 1993 despite the cur maintenance, utilities, libraries, and support rent national economic environment. Caltech staff that cannot be directly attributed to specific owes this strength to a substantial endowment research projects. Caltech continued to experi fund and sound investment policies. The excep ence moderate growth in this area despite tional quality of its teaching and research pro significant reductions in the overall growth grams continues to generate strong support rate of federal research budgets and increasing from private donors and government funding competition for these limited funds. agencies. The following are highlights of fiscal year 1993. 17 DECADE IN REVIEW (in millions) 1983 1988 1993 Operating expenditures Instruction and departmental research $ 37.7 $ 52.4 $ 85.6 Organized research 36.8 65.7 82.5 Scholarships and fellowships 5. 1 8.4 15.3 Insti tutional and student support 14.3 24.7 39.9 Plant operation, maintenance, and utilities 9.6 12.6 16.0 -- Total educational and general $ 103.5 $ 163.8 $ 239.3 Auxiliary enterprises 4.5 7.1 9.6 Total campus $ 108.0 $ 170.9 $ 248.9 Inflation adjusted (1 983 do ll ars) $ 108.0 $ 143.5 $ 173.8 Jet Propulsio n Laboratory direct expenditures $ 425.2 $1,019.3 $ 1,086. 1 Endowme11t and Similar Fu11ds Market value $ 248.3 $ 424.0 $ 605.8 Total return (5 year average) 13.6% 11 .8% 11 .4% Campus Properties New construction $ 2.4 $ 3 1.5 $ 34.4 Renovations and alterations 4.3 9.6 15.6 Maintenance and repairs 3.0 3.6 4.8 Oifts, Ora11ts, and Bequests For curre m operations $ 18.1 $ 30.3 $ 24.2 For endowment 3.0 41.2 12.5 For facilities 2.9 30.5 10.8 For life income and annuity 1.0 3.7 8.4 Studtmt lnfonnatiml T uition rate (in thousands) $ 7.5 $ Jl.l $ 15.0 Enrollment (first term) Undergraduate 874 859 912 Graduate 936 963 1,109 Total 1,8 10 1,822 2,021 Grant aid as a percentage of total costs for undergraduate students 41.0% 47.7% 52.7% Student loans granted $ .7 $ 1.0 $ 2.2 Student loans outstanding 4.7 7.0 IJ.O Degrees granted B.S. 205 184 220 M.S. 154 123 160 Eng. 1 4 Ph. D. 136 146 158 Total 496 453 542 18 • The market value ofCaltech's endowment [ncome from endowment totaled $21.8 mil at September 30, 1993, was $605.8 million, com lion, of which $15.0 million was derived from pared to $580.5 million at September 30, 1992. restricted and $6.8 million from unrestricted The fund is sizable for a small institution such funds. as Caltech with a current undergraduate and The endowment investment policy of graduate student body ofjust over 2,000. the Institute is to: 1) provide income to support The following graph shows the growth Institute operations, 2) achieve long-term appre in endowment over the last ten years: ciation of assets, and 3) preserve endowment principal. With this policy, the Institute endeav ENDOWMENT ors to provide a stream of investment return Millions ofdollars which, after inflation, will strike a fair balance 700 between current and future support of its $60S.B 600 instruction and research programs. 500 • The market value of the life income Market Value and annuity funds was $104.8 million at 400 SJJ6.S September 30, 1993, compared with $93.4 300 million at September 30, 1992, a 12 percent Contributed Value increase. Life income and annuity agreements 200 are a source of meaningful additions to the 100 Institute's endowment and other funds. This form of deferred giving has proved attractive to 0 many donors who wish to support the activities /983 / 985 1987 / 989 /99/ / 993 Fiscal year end of the Institute. Donors receive income on their gifts during their lifetime while also obtaining a charitable tax deduction for their gifts. 19 SUMMARY OF CHANGES IN FUND BALANCES Year ended September 30, 1993 (in thousands) ADDITIONS D EDUCT I ONS (Excluding R.eirnbursnnent ofDirert Costs (Excluding Direct Costs at the at the jft Propulsion Laboratmy) j et Propulrion Laboratory) United States Government l rtStructimt Grants and Cmttracts $ 81,676 Expenditures for activities that are $ 85,589 Reimbursement from various govern part of the instructional program, ment agencies for direct costs of including departmental research. research, instruction, and swdent support. Research Expenditures for activitie specifically 82,481 organized to produce research Plant AcquisitimtS outcomes supported by federal and Additions to campus plant for land, 74,785 private sponsors. buildings, and equipment, and retire ment of indebtedness. Plant Fund Expenditures for buildings, equip Gifts and Nongovenmumt Grants ment, and renewals, plus retirement 59,944 Includes gi fts and grants from private 6 1,448 or plant assets. sources for education and research, Payments on revenue bonds and • and physical facilities. advances for plant purposes, 6,274 including interest. Indirect Costs and Depreciatio n of campus properties. Management Allowance 53,484 22,6-18 Recovery of indirect costs and manage ment allowance under federally spon Institutional and Student Support sored programs at the campus and the Expenditures for business and financial 39,912 Jet Propulsion Laboratory. affairs, swdent services, Institute rela tions, and general administration. Realized Gains Plant Operations Net realized gains on invcstmerlls -38,627 Expenditures, including ut.ilities, for 15,992- sold. the operation anrl maintenance of the campus grounds and facilities. bweslmtmt Income Scholarships and Fellowships Endowment income and investment 32,522 - Awards made to students enrolled in 15,303 income of other funds, including earn - formal course work with no require ings from short-term investments. m(·nt that they perform services or repay the awards. Tuition and Fees Tuition and fees assesst:d students. 29,539- Auxiliary E1llerprises Expenditures, including mainLC'nance, 9,672- of auxiliary enterprises. Auxiliary Enterprises Revenues 1'rom sales by food services, 11 ,350- Other • student housing, and bookstore. Includes payments to life beneficiaries 5,889 with life income and annuity agree ments, and miscellaneous other charges. Other Income from sales and services, and 10,639 - Total DeductiortS $343,674 other miscellaneous revenue. Increase in Fund Balances 50,396 Total AdditimtS $394,070 Total $394,070 20 • Total net assets increased from $988.4 The following pages present a Balance million to $1,038.8 million due primarily to Sheet, Statement of Changes in Fund Balances, increases in endowment principal and Phase II and Statement of Operating Expenditures, construction of the W.M. Keck Observatory in along with Notes to Financial Statements, which Hawaii, scheduled for completion in 1996. comprise the Institute's formal financial state ments. They provide more detail about the sta • Caltech provided $15.3 million in scholar tus at fiscal year-end and transactions during the ships and fellowships, a 7 percent increase over fiscal year. Also included is Price Waterhouse's the previous year. The cost of a Cal tech educa Report of Independent Accountants. tion would be beyond the means of many quali fied students without grant and loan assistance. flttM~u~ Of the total spent for student aid at Caltech, David W. Morrisroe 28 percent came from government sources and Vice President for Business and Finance 72 percent came from Caltech funds. Caltech's and Treasurer contribution permits the Institute to continue its policy of admitting students based on their merit and promise rather than on their ability to pay. Increasing endowment for student aid and fellowships continues to be a major objective for Caltech. 21 California Institute of Te c hnology BALANCE SHEET September 30, 1992 (in thousands) Total All Funds ASSETS Cash $ 369 Accounts receivable: United States government (note B) 172,196 Pledges (note G) 47,550 Other 1,386 Student accounts and notes receivable 14,667 Investments (note C) 613,660 Interfund advances Exhibit I Prepaid expenses and other assets 11,156 Campus properties net of depreciation (note D) 390,119 Total Assets $ 1,251,103 LIABILITIES AND FUND BALANCES Accounts payable and accrued expenses (note B) $ 181,018 Deferred student revenue 11,275 Revocable trust funds and agency funds (note E) 17,642 Annuities payable 2,728 Revenue bonds payable (note H) 50,000 Total Liabilities $ 262,663 Fund balances (Exhibit 2) 988,440 Total Liabilities and Fund Balances $ 1,251,103 Fund balances detail: United States government refundable $ 5,387 Institute funds: Unrestricted 16,071 Discretionary endowment: Unrestricted 63,114 Restricted 68,773 See accompanying Endowment principal 320,980 notes to financial Other restricted 179,920 stalem.enls Invested in plant 334,195 Total Fund Balances $ 988,440 22 September 30, 1993 Endowment Life Income Total - Current Funds- Loan and Similar and Annuity Plant Agency All Funds Unrestricted Restricted Funds Funds Funds Funds Funds $ 550 $ 67 $ 180 $ 12 $ 108 $ 183 194,631 194,631 24,975 6,750 $ 18,225 1,220 820 133 3 146 118 14,701 3,883 10 10,808 630,186 12,528 1,100 2,253 $471 ,689 84,559 55,687 2,370 19,315 4,387 (23,702) 13,912 7,125 3,692 3,087 8 435,672 435,672 $1,315,847 $24,423 $225,811 $ 13,076 $476,076 $ 84,813 $488,969 $2,679 $ 192,545 $ 7,424 $ 183,074 $ 355 $ 318 $ 1,341 $ 33 12,218 12,132 86 18,627 15,981 2,646 4,521 4,52 1 49,100 49,100 $ 277,011 $ 19,556 $183,160 $ 355 $ 20,820 $ 50,441 $2,679 1,038,836 4,867 42,651 $ 13,076 475,721 63,993 438,528 $ 1,315,847 $24,423 $ 225,811 $ 13,076 $ 476,076 $ 84,813 $488,969 $2,679 $ 5,798 $ 5,798 18,666 $ 4,867 $ 13,799 64,448 $ 64,448 67,210 67,2 10 344,063 344,063 172,918 $ 42,651 7,278 $ 63,993 58,996 365,733 365,733 $1,038,836 $ 4,867 $ 42,651 $13,076 $475,721 $ 63,993 $438,528 23 California I nsti tut e of Technology STATEMENT OF CHANGES IN FUND BALANCES Year Ended September 30, 1992 (in thousands) Total All Funds Fund Balances at Beginning of Year $ 958,898 REVENUES AND OTHER ADDITIONS Student tuition and fees $ 26,868 Investment income 35,515 Net gain on disposal of investments 10,933 Gifts 56,506 Exhibit 2 United States government grants and contracts: Reimbursement of direct costs 77,762 Recovery of indirect costs and management allowance 50,618 Other grants and contracts 4,879 Auxiliary enterprises revenues 11,180 United States government adV'c:tnces 447 Campus property acquisitions (including $23,095 in campus operating expenditures) 62,988 Retirement of indebtedness and internal advances 473 Other 9,946 Total Revenues and Other Additions $ 348,115 EXPENDITURES AND OTHER DEDUCTIONS Campus operating expenditures (Exhibit 3) $ (236,634) Campus property acquisitions and renewals (46,656) Retirement of indebtedness and internal advances (473) Retirement and disposal of campus properties (4,266) Interest on advances for plant purposes (1 ,752) Interest on revenue bonds payable (3,006) Payment to life beneficiaries (3,281) Depreciation of campus properties (20,631) Other (1,874) Total Expenditures and Other Deductions $ (318,573) TRANSFERS AMONG FUNDS Gifts allocated Investment gains and discretionary endowment allocated Investment income allocated SeP arromjJanying Allocations for plant purposes notes to financial Terminated trust and annuity agreements stalPmenls Other Total Transfers Among Funds ------Increase for the Year $ 29,542 Fund Balances at Etrd of Year (Exhibit 1) $ 988,440 24 Yl'arEnded September 30, 1993 Endowment Life Income Total - Current Funds - Loan and Similar and Annuity Plan t All Funds Unrestricted Resl'rirted Funds Funds Funds Funds $ 988,440 $ 4,830 $ 41,473 $ 12,234 $452,867 $ 58,152 $418,884 $ 29,539 $ 29,522 $ 17 32,522 9,462 $ 15,817 $ 350 $ 3,420 3,473 38,627 $ 28,05 1 1,624 8,952 55,935 7,383 16,815 6 12,545 8,370 10,816 81,676 81,378 298 53,484 53,484 5,513 1,331 4, 182 11 ,350 11 ,350 447 447 73,402 73,402 1,383 1,383 l0,192 2,548 7,002 180 462 $ 394,070 $ 115,080 $ 125,194 $ 983 $ 40,596 $ 13,414 $ 98,803 $ (248,949) $(123,036) $ (125,913) (54,713) $ (54,71 3) (1 ,383) (1,383) (5,231) (5,231) (1 ,919) ( 1,919) (2,972) (2,972) (3,420) $ (3,420) (22,618) (22,618) (2,469) $ (187) (2,282) $ (343,674) $ (123,036) $ (125,913) $ (187) $ (5,702) $ (88,836) $ (1 ,601) $ (1 39) $ 1,740 16,495 4,088 (20,583) 3,781 (3,781) (9,042) 138 (773) $ 9,677 1,871 $ (1,871 ) (1 ,640) 1,591 $ 46 3 $ 7,993 $ 1,897 $ 46 $ (17,742) $ (1 ,871) $ 9,677 $ 50,396 $ 37 $ 1,178 $ 842 $ 22,854 $ 5,841 $ 19,644 $1,038,836 $ 4,867 $ 42,651 $ 13,076 $475,721 $ 63,993 $438,528 25 Ca l ifornia i nstitu t e of T e chno l ogy STATEMENT OF OPERATING EXPENDITURES (in thousands) Year Ended Year Ended September 30, 1992 -September 30, 1993- Total Total Unrestricted Restricted Educational and general: Instru ctio n and departmental research $ 81,666 $ 85,589 $ 53,832 $ 31,757 Organized research 79,929 82,481 82,481 Scholarships and fellowships 14,296 15,303 4,192 11 ,11) Institutional and stude nt suppo rt 36,125 39,91 2 39,348 564 Exhibit J Plant o peration , maintenance, and utilities 15,034 15,992 .1 5,992 Total Educational and General $ 227,050 $ 239,277 $ 113,364 $125,913 Auxiliary e nterprises 9,584 9,672 9,672 Total Campus Operating Expenditures (Exhibit 2) $ 236,634 $ 248,949 $123,036 $125,913 Direct Costs of Sponsored Research at Jet Propulsion Laboratory ifully reimbursed by the United States government) $1,124,305 $ 1,086,082 See accompanying notes to financial statements 26 California Institute of Technology NOTES TO FINANCIAL STATEMENTS September 30, 1993 NOTE A- SUMMARY OF Income on investments of Administration.JPL land, build SIGNIFICANT ACCOUNTING endowment and similar funds is ings, and equipment are owned POLICIES recorded as current fund rev by the United States government enues for the purposes specified and excluded from the Institute's Basis ofAccounting and Reporting by the donor. Such income is financial statements. However, The financial statements of the supplemented, where necessary, liabilities arising from JPL activi California Institute of by transfers of additional ties are those of the Institute and Technology (the "Institute"), a amounts so as to result in a total reflected in its financial state not-for-profit educational organi return from the investment pool ments as are receivables arising zation, have been prepared in equivalent to 5% of the average from such activities (note B). accordance with the principles of market value of the pool over a The volume of activity atJPL is accrual basis fund accounting for three-year period. This total reflected in the Statement colleges and universities. Under return concept is authorized by of Operating Expenditures these principles, Institute the California Uniform (Exhibit 3). resources are accounted for by Management of Institutional Tax-Exempt Status-The use of separate funds so that visi Funds Act, which allows the pru Institute is a tax-exempt educa bility and control are maintained dent use of realized appreciation tional organization under federal for the benefit of the Institute on investments, thus permitting and state income, gift, estate, and and its sponsors. Funds that have greater flexibility in formulating inheritance tax laws. similar objectives and characteris investment strategies. tics have been combined into Campus Properties and Plant fund groups. Within each fund Funds- Campus properties are NOTE B - UNITED STATES group, fund balances restricted recorded at cost of construction GOVERNMENT CONTRACTS by outside sponsors for specific or acquisition, or at appraisal The Institute has many contracts purposes are so indicated and dis value at date of gift, Jess accumu with the United States govern tinguished from unrestricted lated depreciation, computed on ment that provide for reimburse funds available for use in achiev a su·aight-line basis over the esti ment of costs incurred atJPL and ing any Institute objective. mated useful lives (note D). The the Campus. These contracts fnvestments- Institute invest Institute provides for the renewal gave rise to a substantial portion ments are stated at their approxi and replacement of its campus of the account'> payable and mate market value at date of gift, properties from funds designated accrued expenses in the current or at cost if purchased by the for this purpose. Expenditures funds at September 30, 1993 and Institute, Jess applicable amortiza for maintenance and repairs 1992, and in turn to accounts tion and depreciation of real are generally charged to current receivable from the United States estate, unless there has been an unrestricted funds as plant government. Accounts payable impairment of value not consid operation and maintenance and accrued expenses (and ered temporary (note C). expenditures. related receivables) for JPL Al l investments of endowment Annuities- Annuities payable amounted to approximately $181 and similar funds are carried in to certain donors of the Institute million and $169 million at an investment pool unless special are recorded at the present value September 30, 1993 and 1992, considerations or donor stipula of the liability calculated under respectively. tions require they be held sepa an actuarial method which takes rately. Pool share values are into account the life expectancies computed periodically based of the recipients. upon the total market value of jet Propulsion Laboratory -The the investment pool and total Institute manages and operates number of pool shares invested. the Jet Propulsion Laboratory (JPL) under a cost reimbursable contract with the National Aeronautics and Space 27 NOTE C - INVESTMENTS Institute investments, at carrying (note A) and market (note]) values, comprise the following (in thousands): - September 30, - - Carrying Values- -Market Values- 1992 1993 1992 1993 Marketable securities: Debt securities $ 244,218 $248,130 $260,286 $269,495 Equity securities 260,102 282,889 387,338 415,458 Total Marketable Securities $ 504,320 $531,019 $647,624 $684,953 Short-term commercial obligations 46,161 38,722 43,741 38,767 Real estate, mortgages, notes, and other 63,179 60,445 101,664 102,340 Total investments $ 613,660 $630,186 $793,029 $826,060 Investments shown above include the consolidated investment pool assets as follows (in thousands, except per share values): - September 30, - 1992 1993 Carrying value $ 401 ,436 $423,818 Market value $ 523,373 $546,567 ---- Pool share value at market $ 23.02 $ 23.63 Annualized income earned per pool share $ 0.95 $ 0.84 The Institute also manages a major foundation's investment portfolio with an approximate market value of $226 million at September 30, 1993. These investments arc not included in the amounts shown above. 28 NOTE D - CAMPUS PROPERTIES AND PLANT FUNDS Campus properties consist of the following (in thousands): - Septembt>r 30,- 1992 1993 Land and land improvements $ 20,761 $ 20,899 Buildings 311 ,72 1 279,'2.77 Equipment 262,162 362,639 Campus Properties - cost $594,644 $662,815 Less accumulated depreciation (204,525) (227,143) Campus Properties - net $390,119 $435,672 Depreciation has been calculated, using the straight line me thod, with life years of 20, 40, and I 0 for land improvemen t<;, buildings, and equipme nt, respectively. Depreciation of $20.6 mi ll ion was recorded for fi scal 1992 and $22.6 million for fiscal 1993. In 1991, the W. M. Keck Foundation awarded the Institute $74.6 million toward the construction of a second telescope at the W. M. Keck Observatory in Hawaii. As of September 30, 1993, $56.4 million has been received and approximately $44.8 million expended and included in campus properties. The unexpended portion of $ 11.6 mi ll ion is included in plant funds investments. The pledge balance of $18.2 million is shown as a receiv able (note G) . NOTE E - FUNDS HELD IN TRUST trustee for several revocable by a defined contribution pen trusts, valued at trustor's basis at sion p lan, while non-academic T he Institute is the income bene date of establishment, or at cost, staff are covered by two defin ed fi ciary o f' certain funds, recorded if purchased by the Institme, benefi t pension plans. Re ti re at a nominal value, which are totaling $16.0 million and $15.1 ment bene fi ts under these held in tru t by others and had million at September 30, 1993 defined be nefit pension plans are current marke t values, estimated and 1992, respective ly, in which it based on years of service and by the Institute, of approximately has a remainder interest and career average compensation and $18.6 million and $18.5 mill ion at makes income payme nts for life accrue partially on a fi xed dollar September 30, 1993 and 1992, to the grantors of the trusts. basis, and partially on a variable respectively. T he income derived dollar basis. T he Institute's from the e funds amounted to defined benefit plan funding pol approxim ately $893 thousand NOTE F - RETIREMENT PLANS icy is to contribute amounts sunl and $796 thousand for the years cient to maintain retirement plan ended September 30, 1993 The Institute has three reti re assets at levels adequate to cover and 1992, respective ly. This ment plans covering substantially all accrued benefit liabilities. In income has been included as all of its employees that are addition, the fnstitute's defined investme nt income in the funded by periodic transfers to benefi t plan s will be converted to Statement of Changes in Fund the respective insurance compa new defined contribution plans Balances (Exhibit 2). nies. Academic and senior admin effective j anuary I, 1994. In addition, the fnstitute is the istrative staff arc covered 29 The net pension cost for the year ended September 30, 1993 and funded status at Septe mbe r 30, 1993 for the defined benefit plans are as follows (in thousands): Campus JPL NET P ENSI ON CosT Service cost - benefits earned during the year $ 2,945 $ 12,486 Interest cost on projected benefit obligation 3,522 16,531 Actual return on plan asset~ (4,045) (19,006) Net amortizatio n and deferral 497 2,515 Net pension cost $ 2,919 $ 12,526 F UNDED ST ATUS Actuarial present value of accumulated bene fit obligations, including vested benefits of $72.4 million and $358.0 million, respectively $ 73,725 $364,193 Proj ected benefit obligation $ 79,300 $387,771 Plan assets at fair value (71,973) (353,356) Projected benefit obligation in excess of plan assets $ 7,327 $ 34,415 Unrecognized net gains/ (losses) (6,868) (24,515) Unrecognized net assets at October 1, 1987, being amortized over 16 and 18 years, respectively 53 539 Accrued pension cost $ 512 $ 10,439 T he weighted-average discount All pension costs for JPL arc expected that any payments by rate and assumed rate of increase incl uded in direct costs of spon the Institute to employees would in future compensation levels sored research. be matched by payme nts from used in determining the actuarial DejerrPd Compensation Plan - the insurance company to the present value of the projected T he Institute has an inactive Institute. T he amounts represent benefit obligation are 6.5% deferred compensation plan in g future benefi ts payable (7.25% in 1992) and 5% (6% in whereunder eligible employees and the matching investments 1992), respectively. T he expected elected to defer a portion of their are not reflected in the financial long-term rate of return on assets normal salary, generally until stateme nts. is8%. retirement. T he Institute's liabil Pension costs for the defin ed ity for future benefi ts payable to contribution plan for academic employees under this plan, which and senior administrative staff for approximated $31.8 million and the year ended September 30, $31.6 million at September 30, 1993 were $5.3 million for the 1993 and 1992, respectively, is Campus, and $ 19.8 million for matched by Institute investments JPL. in an annuity contract with a maj or insurance company. It is 30 NOTE G - PLEDGES 2016, and approximately $2 mil NOTE J - DISCLOSURES The Institute records as a receiv lion a year thereafter until 2021, ABOUT FAIR VALUE OF able and as gift revenue in plant when the bonds will be fully FINANCIAL INSTRUMENTS redeemed. funds, unconditional pledges In December 1991, the Financial received with respect to funding Accounting Standards Board of major construction projects issued Standard No. 107, NOTE I - POSTRETIREMENT AND approved by the Board of "Disclosures about Fair Value of POSTEMPLOYMENT BENEFITS Trustees and deemed fully col Financial Tn struments." For those lectible. T he Institute had $25.0 The Institute provides certain financial instruments for which it million in recorded pledges health and life insurance benefits is practical, the following meth remaining to be collected as of to retirees. In December 1990, ods and assumptions were used September 30, 1993. the Financial Accounting to estimate the fair value: At September 30, 1993, the Standards Board issued Standard Cash-The carrying value is Institute had additional pledges No. 106, "Employers' Accounting the fair value. on hand (principally for for Postretirement Benefits Other Student Arcounts and Notes restricted purposes), but not Than Pensions." The standard is ReceivablP- Due to the nature and recorded, totaling approximately effective for the Institute' fiscal terms of these financial instru $40.6 million, of which $12.8 mil year 1994 and requires the ments, which can be subject to lion is expected to be collected in accrual basis of accounting for significant restrictions, it is not fiscal year 1994. It is not practica recognizing the cost of postretire practical to estimate their fair ble to estimate the net realizable me nt benefits other than pen value. value of these pledges. sions. Based on the available Investments- The fair value of actuarial evaluation, the marketable securities and short Institute 's unfunded accumu term commercial obligations is NOTE H - REVENUE lated postretirement obligation estimated based on quoted mar BONDS PAY ABLE will approximate $47 million for ket prices for those or similar On May 29, 1991, the Institute the Campus and $156 million for financial instruments. The fair issued $50 million in California JPL, of which it expects to value of real estate, mortgages, Educational Facilities Authority recover approximately 50% and notes, and other investments is Revenue Bonds for the purpose 100%, respectively, through estimated by professional apprais of financing and refinancing the future charges to United States ers or fnstitute management. acquisition, construction, and government grants and contracts. Rroenue Bonds Payable - The completion of cerlain educa The Institute also provides cer fair value of revenue bonds tional facilities, and to advance tain benefits to former or inactive payable is estimated based on the refund the outstanding principal employees after employment. ln quoted market prices for the amount of the Institute's Series ovember 1992, the Financial bonds or similar financial instru 1985 bonds. T he Series 1991 Accounting Standards Board ments, and approximates the car bonds are repayable with interest, issued Standard No. 112, rying value. from the general revenues of the "Employers' Accounting for Institute over a 30-year period. Postemployment Benefits." Interest rates vary from 4.8% to The standard is effective for the NOTE K- CONTINGENCIES Institute's tiscal year 1995 and 6.4%. Required principal and The Institute is a defendant in requires the accrual basis of interest payments are approxi various legal actions incident to accounting for recognizing the mately $4 million a year for the the conduct of its operations. cost of postemployment benefits. fiscal years 1992 through 2005, The Institute's management does The Institute does not believe approximately $3 million a year not expect that liabilities, if any, that implementation of this stan for fiscal years 2006 through for these legal actions wi ll have a dard will have a material efrect material effect on the Institute's on its financial condition. financial position. 31 REPORT OF INDEPENDENT ACCOUNTANTS Price Waterhouse To the Board of Trustees of the California Institute of Technology Jn our opinion, the accompanying balance sheet and the related statements of changes in fund balances and of operating expenditures (Exhibits 1 through 3) present fairly, in all material respects, the financial position of the California Institute of Technology (the "Institute") at September 30, 1993, and the changes in fund balances and the operating expenditures for the year then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Institute's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and per form the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by manage ment, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. Los Angeles, California December 29, 1993 32 BOARD OF TRUSTEES (as of March 8, 1994) Officers of t he Board Yu,an T. Lee Chaun(cy J. Medbeny IH* Nolll'l Lammlf rmd l"rofessor of Chnnistry Clmimum of the lJqnrrl ( fletiretL) Gordon E. Moon:, Chaimum U11iumtty of California, Rerkt'/;ry BankAmrrim Corpomtior~ 'J'hornas E. Evf'rhar t, Prtsidmc Ronald K. I indc* allfl nank ofAmtrira NT&SA William Kicschnkk, Vice Ciramllrm f. Chairmatr ofthe noord I larry Wt·ttcl Benjamin M Rosen, l'irt Clwmrum /'lrr £/mwfLJ and Maxir1e Lmde Fouwlation Ch1Ut111011 and ClutfExnutmr 0/Jirl!r (1/rtrw/) Ruben F. Mc>ttlcr, Chainnan Emmtus Thr Gam•tt CorfJOmtwn Rttrrrd ( .'hainlllm ami ChiefExmrlivt Ojji.m Trustees 'J'RW fl1r. George l .. A1 h'Yros Gordon E. MooH·• Life Trustees Clullrmrmnnti Clmf h'xemtitlf Officer Chmr>11rw A nul nrorlopmt"nt Company Intel <:orpomlton Rol>crt 0. Ander~on Donald R. lkall Pl·tcr W. Mullin 1-'midrnl C/wmnmr ofthr Boord and Chrrf Fxmtln•t 0/firt.,. l'rmdrrrt rwd Cluef Extcutivt Offirtr 1/rmrln Oil & Ga.1 Cnmpm1y RmktUffllntmwlitmal Corportlliort fl.lrmagrmmt Compmsatwn Group, R. Stanton Av.:ry, Cftamnan limmtm Stc:phen D. lkthtd,Jr. Lo.1A11grlrs, h1c. Formdrr and Chairman Emeritu.f Clraimum f<:mn;lrt.l '~7111 Dirertor Stcplwn R. Onderdonk* A1•n) Dennison Corporation &rlrtel C:roufJ, /11 r Pre~tdnrlmlti Clruf J·.xttulitll' Ojfiur Arnold 0. Bt>ckman, Chain11011 Fmmtu.1 Donald 1.. 1\r 1•11 Erorwlitr C:nntr(>/ Pmduct.\, hu. Fou ntkr Chainruw Chairma11 ofthr 8oc~rd Pamela ll. l'est•nti Her/mum lnstrttmnrl.\, lnr. Tfu•l1'1line CtmrfHwy 'l'ntstee Benjamin F. Biaggini Eli nroad Santa ll!lrbnra Mu1rut1r of Natural Histmy Clwmnm1 (RrtimL) Chm rmlltl mul Chu{ Jo.'xt•nllwe Ojjirn Sidney R. l'rt\'rscu• Sotttlll'm Pacifir Comf>ony SmiAm••'im lnr. Chwmtan and Clm[Eurutillt OJfirtr (R£/mcl) Mrs. Norman Chandler , I forwmry l.ifi' '/'r,.\ll'r Harold Brown, Pmidmt Rmmtu.! Gmv Oil Company Honomry Lifr Clumman oftlw Boord Cmmw/or Stanley R. Rawn.Jr. Thr Mn1ir Cntter (,m/rr fm .\tmtrgar mullntmutitmlfll Studiej (G\lS) Private htllf.\tm Gilbert W Fitzhugh Waltet lhu kl· Arthur Rutk Chnim11111 (/Utirrd) J>r,u;i,/mt Pmrrifllll Menopolitatl L.if' ln.,uranff Compmry Shn>/11111 fiurrltild Foundation, lnr. Arthur Hor.k and Company Clmrlt•s C. Gates Jt•wel Pluuurrl'r Cobb• Benjamin M. Rosen Chamnan oftlw 8o~~rd twd C:lurf Fvcutwt Offirer Pmidmt ,.:mrrita Clwmru/11 Tltr Gatrs C'.orpcrmt inrr Callfomra Statf llnn•mrty. Ful/n'tmr .\n•w Unvn Mmragrmmt Cmnf)(~ny William A He\\iu Trtt\ trr Prufrssor Richard M. Rosenberg Fnnnrr Chamnan, DrrTi' & Ctmrprmy Califm·nia Sti'te l!nitwnity, /41 Angrlt,, Chamnan rmd Ch11f ll"xent/111' Officer rimnrr Ambos.vador wjamaira I larry M. Conga l11mMmnica Carpomllorr Earle M.Jorgenscn Clwimwn and Cfu~J Jo.xrcutwe Ojji.r<-r arui Bank of Amnira NT&SA Clwinnan oftht Boord Hm11t1111kr Mi11111~ Cnmfumy Stephen A. Ross l·:rlrlr M. jorgrmm C',Qmpanv Ric·hard 1'. Cooky Co-Ciuzmnrm Robert S. McNamara Chahwwn of thP J<.'xmllivr Comnui/PP Uoll wulllos.v A .1.1~t flltuwgnnent CorfJomtion Prl'.lilil'lll (Reti•·rd) Smfin,t llttnk .'itn'/i11g t>rofeuor oflimtwmrrs and Finatl( f The Worlli Bank Thomaq II. Cruikshank Yair Unirll'rlity Rudolph A. Peterson Chaimuw ami (.'hirf Hxrcutwe Offirrr Rolwn J. S( hultz Pr•s•IIJ>n/ rmd Cl11r[ ExrrulitJf Officer (lwlrrttl) llrtlltfmrtoll Company Via (.'/wimum (Rftiml) iJcmkA mrrim Ct~rporation Mildred S. Ort''l'ldhau'l (;1'111'1fll Motnrs Cmporalitm mul nank ofAmmm NT&.\A lrnt1tuu PtofrHor of1 \lPrtnral hrgarrrmrtg Oenni~ St;mlill• Simon Ramo mul Pilyun Sprrial .1dt'Uor C'.i>-Fnundrr nrui Otrtrtnr t:mn'itu 1 Mauarlrt•wtrr lmtrtult of'li>rhrwloi{Y Crtdtt f.yorwats, f'mu, Franrr 'JHW!nr. Th1>mas F. Everhart* Walt<'r I Wdsman Ji.unt·.~ E. Robison l'tt,idmt Fomwr C/ltumlflll and Chit[Hxtrrtlltlt Ojjirrr Prrtirlmt Calijtmrw lllflttult of lrrlllwloK) Ammra11 Mftlrral fntmwtiorw~ lnr. I mr\llalt F:nterpn.v.l, lnr. Ri< hard M. Fcrt)' Frank G. Wells Mary I . Scrnntou Prrridrrll Pmulrntaml Clurf Ojmatmg Offim Nonprofit Consullrlnt Kom/Fnry l11tn>wlwrwl Thr Walt DLIIII"' Company Charles II. Townes Camilla C. Frost Allwn D. Wlwdon Nob;>/ Umrralr and l!niver.1ity l"rofe.ssor L~mnitrts Trtt \lt•r oftilt Chandlt"Y Tnt~ I Clwrnllflll rmd Chufb:J'tttlrvt Offirtr (&turd) U111vm.11y ofCtllifomrll, &kt•Ltj' tmd a JJirtrtor and Strrrtory-'l'rnmtrer Uuglres Airrraft C'mnpany Howard G. Vesper Chamli$ Serrrrilie.1· CmnfJally Dilntrrr arut Vier Prt'Sidrnl (lll'lirrd) Donald E. Guinn Cltrorort Corpomtion Cltaintratt Hmmltt.\ Serlior Trust ees Richard R. Von Hagt•n Porifir 'ltlrlil GrnufJ Prrfidmtlimrri.tw Phi lip M. !lawley Roben Anckr~on Uoytl MriiiO/!,f'trflll Corpomtimr Chain1111111111cl Chu'}li.wmtiue Officer (!Vtirrrl) Chairmtw limrritu.s . L<•w R. W~1;scrman Outer lfawlnllaU> Slim.\, lnr. Rorkwrll lntmra/umol C,Qrporatirm Chamrulfl and CltufExHutitw Ojfirn Sh1rley M. llubi1:dln Victor K. At kim M('A bu. Parturr l"rwd"'' William E. Zi>ch 1/ufstrdltr, Kaw & /~'llmgtr Atkim C.Qm/Jany Virr Clminnan ofth• Boarrl Bobhy R. Inman William R. Gould Somrt Applimtiom hrtmwtional Carporattml Prwalf fllvfllnr Chamnannftlrr &J(trrf, Emmtll.\ l•.li S. Jambs Sor~tlrrm C.alifomul Fdmm ComJmrly £ . S . .Jarob.l & Cn. Ralph Landau • Mmri•·T'I ofthi &ard ofTnwm Audit CoOmmiltff. William F. Kirschnick l.utollll'l frrmrfmmted Sidn"Y R Petersotl 11 rlwimran, Dnwi.1 Stttnfillt\ 11rre Prwdmt rmd Cltilj ,.:xrruiiVf Offirlo (Retired) rlraimran, wrd Paul C.Jerllll/1/f' rtllll Oat•td W. Atllmtir Rtrhfirld C.ompony Mom11or me adtJi.IIJry 'memiJrt,. INSTITUTE ADMINISTRATIVE COUNCIL (a .1 of March 8, 1 994) Thomi\~ E. Everhart l'lflldnlt Paul C. jennings l'ir• l"rwdrot and Pruuo.st John N. Ab<-lson !.hamnnn J)iviswn uf Biology l.l'W Allt>n S~cial Amstantto t/11 Ptt.11dmt//1GO Thumil~ W. Anderson l'ire Pmidmt for Institute ll!U.tmm Frt>dC. Amon C:hmror(m Dnri.sion of Chemrstry 1mtl Chnmral F.nginrmrtl( David L. Goodstein Vire l'rrmo.11 JohnJ. lfopfield Chairman ofthe Famlty Johu 0. Ledyard Chairman IJivi.IIOrt of tl" lfummulm mul Son a/ Sri.Jmm Gary A. l.urdcn Vier PmidnuforSiudmt AjJwr1 David W. Morrisroc Via l"rtsirlmtfor Bu © 1994 California Institute of Technology DP~ig;n : Dcn1on Design Associates .. Photography: cover, 2-5, Ruben l'a£; R, ©Jacqueline Banon as1d Michelle " Arkin; 10, © Duane Muhlcman, Bry.tn Butler, and Martin Slade. California Institute of Technology Pasadena, alifornia 91125