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KIMLEY‐HORN AND ASSOCIATES, INC.  <br />NOTES TO THE FINANCIAL STATEMENTS  <br />  <br />DECEMBER 31, 2016 AND 2015  <br />(SEE INDEPENDENT ACCOUNTANT’S REVIEW REPORT)  <br />  <br />  <br />12 <br />Note 4—Litigation and claims  <br />  <br />In the normal course of business, the Company is, on occasion, named as a defendant in legal actions. The <br />Company carries professional liability insurance, subject to certain deductibles and policy limits. While <br />management does not believe that the resolution of these claims will have a material adverse effect on the <br />Company’s financial position, results of operations, or cash flows, management acknowledges the uncertainty <br />surrounding the ultimate resolution of these matters. As of December 31, 2016 and 2015, the Company has <br />recorded a liability of $1,850,000 and $1,450,000, respectively, for outstanding claims included in Accounts <br />payable – trade which represents the best estimate of the probable loss associated with these claims. <br /> <br />Note 5—Related party transactions  <br />  <br />The Company provides management and engineering services, administrative support, benefits administration, <br />data processing, and accounting services to affiliated corporations. Included in net professional fees is $22,500 <br />for 2016 and 2015, billed for other management and administrative services. Receivable from affiliates consists <br />of $2,815,088 and $1,895,143 for 2016 and 2015, respectively, due from affiliated corporations for engineering <br />services. <br /> <br />The Company pays income taxes on behalf of APHC, Inc. and its wholly owned subsidiaries, resulting in a tax <br />receivable or liability based on the Company’s financial results. The tax liability due to affiliates was $929,714 <br />and $772,333 as of December 31, 2016 and 2015, respectively. <br /> <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% (2.122% and 1.780% as of December 31, 2016 and 2015, 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, 2017. The Company had no <br />borrowings under the line of credit as of December 31, 2016 and 2015. <br />