Correction: Fitch Assigns 'F1+' to Stanford Univ CP; Affirms 'AAA/F1+' Rtgs.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 17, 2003

(This is an amended version of a press release issued earlier today, containing revised issuer information for certain outstanding rated obligations of Stanford University.)

Fitch Ratings assigns an 'F1+' rating to approximately $150 million California Educational Facilities Authority (CEFA) tax-exempt commercial paper (CP) revenue notes (Stanford University), for which closing is expected on March 18 with Goldman, Sachs & Co. and Morgan Stanley & Co., Inc. as dealers. Fitch also affirms the outstanding 'AAA', 'AAA/F1+', and 'F1+' ratings for debt of Stanford University (Stanford). Outstanding rated obligations of Stanford totaling approximately $1.2 billion are listed at the conclusion of the release.

Located in northern California, Stanford is one of the world's premier higher education and research institutions. Sustained superior financial, academic, and management attributes underpin Stanford's ratings, causing the Rating Outlook to be Stable.

Stanford's superior credit ratings result from its vast balance sheet resources, outstanding student demand statistics, premier research programs, and strong management practices. As of Dec. 31, 2002, available liquidity provided ample coverage for payment of all potential short-term debt obligations.

Credit risk is minimal, especially considering the recent operational turnaround at Stanford Hospital and Clinics and the Lucile Salter Packard Children's Hospital at Stanford (the hospitals). The university is not a guarantor or obligor of hospital debt. However, since the conclusion of their unsuccessful venture with the University of California, San Francisco, the hospitals had been a drag on consolidated university operations. This changed dramatically in fiscal 2002 as the hospitals produced a 4.8% operating surplus. While challenges remain due to the volatile funding environment for health care, the hospitals' management reports that improvements have resulted from aggressive vendor negotiations, productivity initiatives, and expansion of high-margin services. The hospitals' performance offsets a 0.8% operating deficit in unrestricted university (that is, educational and research) accounts. The negative margin for non-hospital operations was attributed to investment declines, health care benefit costs, operating costs of new facilities, and expenses related to the highly successful Campaign for Undergraduate Education (CUE), which has raised 84% of its $1 billion goal in gifts and pledges as of Jan. 31, 2003.

While Stanford's merged endowment pool generated a negative 2.6% return on investment in the year ended June 30, 2002, this performance compares favorably to most of its peers invested in the bear market. Other institutional attributes offset risks posed by investment declines. At the end of fiscal 2002, Stanford's estimated available cash and investments (Fitch's core institutional liquidity measure, derived from public financial statements) covered annual university and hospital operations by a margin of 2.3:1 and outstanding debt by 4.8:1. Disciplined endowment payout policies are a best management practice given great weight in Fitch's rating guidelines, and Stanford's fiscal 2003 budget targeted both operating and capital spending reductions to prepare for declining investment income in coming years. Consolidated net assets, which equaled $11.1 billion at the end of fiscal 2002, were still $4 billion more than they were five years earlier. Sponsored research, approximately 24% of university and hospital revenues, increased 10% in fiscal 2002. The outlook for federal research funding is stable to positive.

Stanford continues to be among the most selective educational institutions in the world, giving it considerable revenue flexibility. In fiscal 2002, 12.4% of undergraduate applicants were offered admission, and nearly 70% of students admitted elected to attend. Graduate selectivity also is very strong. CUE investments promise to maintain Stanford's academic leadership, which should promote long-term credit stability.

Consistent with the new rating guidelines detailed in a Feb. 3, 2003 report on management practices in higher education, Fitch notes that Stanford's disclosure practices are superior for the sector. Of note is one of the sector's most comprehensive investor relations web sites, currently accessible at http://bondholder-information.stanford.edu.

Stanford's rated obligations include:

-- CEFA $150 million tax-exempt commercial paper revenue notes (Stanford University), 'F1+';

-- Stanford University $128.5 million outstanding taxable commercial paper revenue notes, 'F1+';

-- CEFA $115.0 million outstanding tax-exempt variable-rate demand notes (Stanford University), 'AAA/F1+';

-- CEFA $621.8 million outstanding fixed-rate tax-exempt bonds (Stanford University), 'AAA';

-- Stanford University $300 million outstanding fixed-rate taxable bonds due 2024 and medium-term taxable notes, 'AAA';

-- Stanford University $50 million outstanding taxable auction rate notes, 'AAA'.