2017 Issued Kimley-Horn Financials - Final with Disclaimer

Home Browse Search

KIMLEY‐HORN AND ASSOCIATES, INC. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 AND 2016 (SEE INDEPENDENT ACCOUNTANT’S REVIEW REPORT) 13 Note 6—Line of credit The Company has a line of credit with a financial institution that bears interest at the 30-day London Interbank Offered Rate (LIBOR) plus 1.35% (2.914% and 2.122% as of December 31, 2017 and 2016, respectively). The accrued interest is paid monthly and the outstanding principal balance is due upon maturity. In addition, the Company pays a quarterly fee for the unused portion of the line. The Company’s assets serve as collateral for this line of credit. The line of credit is a $10,000,000 operating line of credit and expires on May 1, 2020. The Company had no borrowings under the line of credit as of December 31, 2017 and 2016. Note 7—Lease commitments The Company leases office space under operating lease agreements. As of December 31, 2017, the minimum future rentals payable under the noncancellable portions of operating leases were as follows: Years Ending December 31, 2018 20,420,589$ 2019 20,462,524 2020 18,247,476 2021 14,690,151 2022 12,871,483 Thereafter 40,120,967 126,813,190$ Total rent expense under these lease agreements recognized on a straight-line basis over the term of the lease including any periods of free rent was $23,887,276 and $21,818,174 for 2017 and 2016, respectively. During 2014, the Company sold a building to an unrelated entity for $8,500,000. Concurrent with the sale, the Company leased back the building for 15 years at a monthly rate of $54,667 plus annual escalations of 1%. The monthly rates in 2017 and 2016 were $56,323 and $55,765, respectively. Accordingly, the gain on sale of $1,863,835 has been deferred and is being recognized over the 15-year lease term. Note 8—Employee retirement plans The Company has an employee Retirement Savings and Pension Plan, which includes a 401(k) employee deferral and a Company match. The plan also allows for a profit-sharing benefit, which is determined annually by the Board of Directors. The Company has a defined contribution Retirement Annuity Plan whose purpose is to provide a retirement benefit for individuals whose compensation exceeds the salary cap imposed by the Internal Revenue Service when computing retirement benefits.