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Report of the Treasurer of the National Academy of Sciences
(18) COMMITMENTS ANDCONTINGENCIES
NAS is committed to several noncancelable operating leases for office space. Future minimum rental payments due under noncancelable operating leases are as follows (dollars in thousands):
Year ending December 31:
Rental expense amounted to approximately $2.6 million and $2.1 million for years ended December 31, 2009 and 2008, respectively.
NAS receives a portion of its revenues directly or indirectly from federal government grants and contracts, all of which are subject to audit by the Defense Contract Audit Agency, which has completed its examinations through December 31, 2005. A contingency exists relating to unexamined periods and final settlements of examined periods to refund any amounts received in excess of allowable costs. Management is of the opinion that no material liability will result from such audits.
NAS is involved in one litigation matter. While the ultimate outcome of the litigation is uncertain, NAS management believes that it has a strong legal position, intends to vigorously defend against any liability, and has concluded that the probable outcome will not have a material impact on NAS.
(19) RISKS AND UNCERTAINTIES
NAS invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported.
(20) SUBSEQUENT EVENT
NAS evaluated subsequent events through May 21, 2010, which is the date the financial statements were available for issuance.
In May 2010, the District of Columbia issued $59.6 million of fixed-rate tax-exempt revenue bonds on behalf of NAS. The bonds mature at various dates through the year 2040, with yields ranging from 1.44% to 4.70%. These bonds were sold to finance the cost to restore a portion of the NAS headquarters building on Constitution Avenue in Washington, D.C. and pay for certain costs of issuance.
In conjunction with the restoration project, NAS has entered into a contract with a guaranteed maximum price of $44.7 million.