(17) RELATED PARTY TRANSACTIONS
The NAS Council has authorized two agreements providing noninterest-bearing, collateralized advances to two employees in connection with the purchase of each employee’s residence. The agreements between the parties were executed in May 2005 and May 2007. They each provide that the repayment obligation will be adjusted to allocate to each party its proportional share of the appreciation or depreciation in the value of the residence, which is based on the relative financing percentage provided by each party. The agreements will terminate upon pay-back of the advance, sale of the property, or the end of each individual’s employment with NAS, which will not exceed 12 years. The estimated present value of the receivables is $3.0 million at December 31, 2011 and 2010, and is included in other assets in the statements of financial position.
(18) COMMITMENTS AND CONTINGENCIES
NAS is committed to several noncancelable operating leases for office space. Future minimum rental payments due under noncancelable operating leases are as follows (in thousands):
|Years ending December 31:|
Rental expense amounted to approximately $4.1 million and $3.0 million for the years ended December 31, 2011 and 2010, respectively.
During the year ended December 31, 2011, NAS exercised an option to terminate one of its leases early. The lease was originally scheduled to end December 31, 2017, and under the revised agreement will end on December 31, 2012. NAS’ obligation under the lease will terminate on that date.
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) SUBSEQUENT EVENT
NAS has evaluated subsequent events from the statement of financial position date through June 1, 2012, the date at which the financial statements were available to be issued, and determined that there are no other items to disclose.