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<br />BUDGET CONSTRUCTION CO., INe. AND BUDGET HOLDINGS, LLC <br />NOTES TO THE COMBINED FINANCIAL STATEMENTS <br />Years Ended December 31, 2007 and 2006 <br /> <br />NOTE 12 - Indirect costs not allocated to contracts: <br /> <br />Indirect costs consist of both fixed and variable elements of cost, not allocated to contracts as <br />of December 31, 2007 and 2006. <br /> <br />NOTE 13 - Interest expense and Supplemental data to the Combined Statements of Cash Flows: <br /> <br />The Company financed an additional $541,172 of vehicles and construction equipment, and The Affiliate <br />refinanced the mortgage on the properties for $1,900,000 during the year ended December 31, 2007. <br />The Companies financed an additional $1,533,389 of vehicles, heavy construction equipment and land <br />for the year ended December 31, 2006. Interest paid during these years is as follows: <br /> <br />Years Ended December 31, <br />2007 2006 <br /> <br />Interest expense: <br />Credit line facility $ <br />Long-term debt financing and capital lease obligations <br /> <br />30,004 <br />269,878 <br /> <br />$ <br /> <br />14,061 <br />162,233 <br /> <br />$ 299,882 <br /> <br />$ <br /> <br />176,294 <br /> <br />NOTE 14 - Leasing arrangements: <br /> <br />The Company is leasing a vehicle and a construction equipment under long-term non-cancelable <br />operating leases. During the year ended December 31, 2007, the monthly rental under these long-term <br />lease obligations is approximately $1,667. The following is a schedule of future minimum lease <br />payments required under these leases: <br /> <br />Years Ending <br />Decem ber 3 1 , <br />2008 <br />2009 <br /> <br />Amount <br />$ 16,860 <br />3,524 <br /> <br />$ 20,384 <br /> <br />In addition, The Company is renting certain heavy equipment under short-term cancelable rental <br />arrangements. Monthly rentals range between $5,000 and $10,000. <br /> <br />NOTE 15 - Contingent liabilities: <br /> <br />The Company is engaged in certain legal actions arising in the ordinary course of its business, and the <br />outcome of these actions cannot be ascertained at this time. The Company believes the claims are <br />without merit and is vigorously defending the cases. In the opinion of management, these claims will <br />not have a material adverse effect on the financial position of The Company. <br /> <br />15 <br /> <br />Beni tez & Company. CPA'~ <br />