AMERICAN WELDING SOCIETY, INC., AND AWS FOUNDATION NOTES TO COMBINED FINANCIAL STATEMENTS DECEMBER 31, 2015 7. PROPERTY AND EQUIPMENT, NET (CONTINUED) During 2010, AWS purchased a five story 120,000 square foot office building in the City of Doral, Florida for $19,000,000. The purchase was made with operating cash as well as AWS reserves, hence no financing was involved. AWS completed its move to the new headquarters office in September 2012. As of December 31, 2015, AWS occupied 72.8% of the office building and 27.2% was leased out to tenants. Depreciation expense relating to AWS operations amounted to approximately $1,657,000 for the year ended December 31, 2015 and is reflected under the Operating Fund. Depreciation expense relating to the tenant portion at the new facility amounted to approximately $151,000 for the year ended December 31, 2015 and is reflected under the Property Fund. Other depreciation of approximately $114,000 is reflected under the Foundation. AWS utilizes the services of a property management and leasing company for the Doral facility. The term of the contract was initially for six months and renewable for like periods of time unless terminated in writing by either party by providing written notice 30 days prior to the date for such renewal. Under the terms of the agreement, AWS is to pay the management company an amount equal to 4% of the gross income of the building, but in no event less than $2,500 per month. AWS is to also pay commissions for all units leased by the manager in an amount equal to 2% of the total lease term. Outside brokers also involved in selling leasing space are paid commissions up to 4% of the total lease term. AWS pays supervisory fees for tenant improvements at 3.5% of the contractor’s price to build out. Effective January 1, 2015, supervisory fees have been increased to 6% and the minimum property management fee is $3,500. 8. TEMPORARILY RESTRICTED NET ASSETS At December 31, 2015, net assets of the Foundation in the amount of $16,085,377 are restricted for awards, scholarships and specific programs. Net assets of $470,603 were released from donor restrictions by granting awards, scholarships and funding specific programs for the year ended December 31, 2015. 9. PERMANENTLY RESTRICTED NET ASSETS At December 31, 2015, net assets in the amount of $6,836,153 are permanently restricted endowments to provide a source of funds predominantly for educational, research and other charitable purposes. 10. INTERFUND TRANSFERS Funds are periodically transferred from the Operating Fund to the Reserve Fund and AWS Foundation. For the year ended December 31, 2015, the Operating Fund transferred $9,000,000 to the Reserve Fund, due to positive financial results and cash flows. The Reserve Fund transferred approximately $4,000,000 to AWS Foundation for scholarship matching. For the year ended December 31, 2015, the Operating Fund transferred $166,721 to the Property Fund for capital improvements and other related items and approximately $43,000 to AWS Foundation for other special programs. During the year ended December 31, 2015, AWS transferred $200,000 from the Operating Fund to the Reserve Fund in order to fund an approved supplemental executive retirement plan for AWS’s Executive Director. 11. LEASING ACTIVITIES As of December 31, 2015, AWS, as lessor, has entered into various operating leases with third parties. The operating leases have various terms expiring through 2021. Rental income from leasing activities is recorded as earned over the terms of the leases. Rental income of approximately $755,000 was earned for the year ended December 31, 2015, and is within the Combined Statement of Activities Property Fund. Minimum future rentals to be received on leases subsequent to the year ending December 31, 2015 are approximately as follows: For the years ending December 31, 2016 $ 637,000 2017 348,000 2018 298,000 2019 263,000 2020 265,000 Thereafter 193,000 Total $ 2,004,000 54 WELDING JOURNAL / JUNE 2016
Welding Journal | June 2016
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