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KIMLEY‐HORN AND ASSOCIATES, INC.  <br />NOTES TO THE FINANCIAL STATEMENTS  <br />  <br />  <br />DECEMBER 31, 2018 AND 2017  <br />(SEE INDEPENDENT ACCOUNTANT’S REVIEW REPORT)  <br />  <br />  <br />13 <br />Note 6—Line of credit  <br />  <br />The Company has a line of credit with a financial institution that bears interest at the 30-day London Interbank <br />Offered Rate (LIBOR) plus 1.35% (3.870% and 2.914% as of December 31, 2018 and 2017, respectively). The <br />accrued interest is paid monthly and the outstanding principal balance is due upon maturity. In addition, the <br />Company pays a quarterly fee for the unused portion of the line. The Company’s assets serve as collateral for <br />this line of credit. <br /> <br />The line of credit is a $10,000,000 operating line of credit and expires on May 1, 2020. The Company had no <br />borrowings under the line of credit as of December 31, 2018 and 2017. <br /> <br />Note 7—Lease commitments  <br />  <br />The Company leases office space under operating lease agreements. <br /> <br />As of December 31, 2018, the minimum future rentals payable under the noncancellable portions of operating <br />leases are as follows: <br /> <br />Years Ending December 31, <br />2019 23,882,499$ <br />2020 23,715,096 <br />2021 21,945,977 <br />2022 19,989,417 <br />2023 16,254,918 <br />Thereafter 57,416,557 <br />163,204,464$ <br /> Total rent expense under these lease agreements recognized on a straight-line basis over the term of the lease <br />including any periods of free rent was $27,233,563 and $23,887,276 for 2018 and 2017, respectively. <br /> <br />During 2014, the Company sold a building to an unrelated entity for $8,500,000. Concurrent with the sale, the <br />Company leased back the building for 15 years at a monthly rate of $54,667 plus annual escalations of 1%. The <br />monthly rates in 2018 and 2017 were $56,886 and $56,323, respectively. Accordingly, the gain on sale of <br />$1,863,835 has been deferred and is being recognized over the 15-year lease term. <br /> <br />Note 8—Employee retirement plans  <br />  <br />The Company has an employee Retirement Savings and Pension Plan, which includes a 401(k) employee deferral <br />and a Company match. The plan also allows for a profit-sharing benefit, which is determined annually by the Board <br />of Directors. <br /> <br />The Company has a defined contribution Retirement Annuity Plan whose purpose is to provide a retirement benefit <br />for individuals whose compensation exceeds the salary cap imposed by the Internal Revenue Service when <br />computing retirement benefits.