HBS closed the books on fiscal 2005 with more revenue and lower expenses than expected. Total revenues reached a new high of $331 million, $9 million more than forecast, and operating expenses totaled $307 million, $5 million less than forecast.

A robust global economy and strong demand for management knowledge fueled revenue growth, more than half of which came from two market-sensitive units — Executive Education and Harvard Business School Publishing. Both units have rebounded strongly from the recession four years ago.

Endowment distributions also added to revenue growth, increasing by $6 million to reach a total of $62 million, reflecting gifts to The Campaign for Harvard Business School and another above-average year of investment returns for the School’s endowment. Campaign gifts and endowment funds enable HBS to make critical investments in teaching, research, and MBA fellowships.

On the operating expense side, employee compensation represented more than half of all expenditures, increasing 10 percent to $153 million. This growth reflected a 29.5 percent University-wide increase in employee health-care and pension benefits.

Capital expenses grew 46 percent to $79 million, marking a peak year for investment in facilities. Two major projects accounted for most of the capital outlay: $38 million for restoration and expansion of Baker Library, and $21 million for Aldrich Hall renovations.

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