BBSR 2002 Annual Report - Bermuda Institute of Ocean Sciences

4. InvestmentsNOTES TO FINANCIAL STATEMENTS CONTINUEDThe Station’s investments principally consist of funds managed by The Investment Fund for Foundations’ (“TIFF”) Investment Program, Inc.(“TIP”). TIP is a program of commingled funds open to investment by certain not-for-profit organizations.The fair value of the Station’s investments at December 31, 2002 and 2001, as determined by the net asset value provided by TIFF and quotedmarket prices, is as follows:2002 2001TIFF Multi-Asset Fund $3,596,772TIFF Bond Fund $1,414,209TIFF U.S. Equity Fund 2,479,314Donated equity securities, at market ,202,514 ,099,800$3,799,286 $3,993,323The Station participates in TIFF’s income reinvestment program. Accordingly, all interest, dividends and proceeds from sales of investments arereinvested.During the year ended December 31, 2000, pursuant to authorization from the Board of Trustees, interest-bearing advances were made from theinvestment account to the operating account aggregating $700,000. At December 31, 2002 and 2001, respectively, $500,000 and $600,000 of theadvance was outstanding. Interfund interest on the advance totaled $27,500 and $35,000 for the years ended December 31, 2002 and 2001,respectively.5. Property and EquipmentProperty and equipment is carried at cost and is composed of the following at December 31, 2002 and 2001:UsefulLives 2002 2001Land $ ,465,000 $ ,465,000Construction in progress ,195,688 ,049,611Buildings 20 years 5,956,737 5,839,408Furniture, fixtures and equipment 5-10 years 3,356,938 3,399,497R.V. Weatherbird II research vessel 20 years 2,594,270 2,491,020Other fixed assets 5-50 years ,219,800 ,219,80012,788,433 12,464,336Less accumulated depreciation (8,305,872) (7,671,265)$4,482,561 $4,793,071During the years ended December 31, 2002 and 2001, The Station incurred architectural and related fees of $146,077 and $49,611, respectively, inconnection with the planning phase of a new research facility. During the period of construction, costs incurred are reported as construction inprogress. When construction is complete, the capitalized construction costs will be recharacterized as buildings and improvements and depreciatedover their estimated useful lives.Depreciation of property and equipment is computed on a straight-line basis over the estimated useful life of each asset. Depreciation expense forthe years ended December 31, 2002 and 2001 was $742,491 and $739,214 respectively.6. Loan PayableDuring the year ended December 31, 2002, the Station renegotiated its loan extending the repayment term and reducing the interest rate to 1.75%from 2% above the three-month LIBOR rate (3.54% and 4.10% at December 31, 2002 and 2001, respectively). The loan matures on December 31,2008, is denominated in U.S. dollars and is secured by the Station’s real property. Through December 31, 2003, payments of interest only arerequired.Aggregate maturities of the loan payable are $187,650 in 2004, $194,403 in 2005, $201,399 in 2006, $208,646 in 2007 and $831,219 thereafter.Interest expense for the years ended December 31, 2002 and 2001 was $92,127 and $151,005, respectively.29