sarbanes oxley example

8/12/2019 Sarbanes Oxley Example

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Developed for Corporate users,LseMod's Gold Series programs include: LseMod Corporate * LseMod International * (Example could have also been created using LseMod Corporate or LseMod Pro) LseMod Pro * LseMod Purchase (for a lease vs. buy analysis) LseMod Sublease LseMod Sale Leaseback (due out in January 2004) SpacePro (for space programming)

Sheet Sheet Name1 Table of Contents

Scenario

2 Scenario

Sample Reports from LseMod International / Pro / Corporate

Sarbanes-Oxley Detailed Analysis3 Financial Summary

4 P&L Impact Report5 AfterTax Cash Flow6 Assumptions - 17 Assumptions - 2

To select a report: Rightclick on any of the 4 triangles on the bottom of your screen (to the left of the tabs).Leftclick on the report you want to see.

To print: Individual Reports - Use the normal print commands, i.e. File Print, etc.All Reports - Use the normal print commands and in the 1st print menu

under Print what, select Entire workbook.

Table of Contents

This report, including the Tableof Contents, created usingLseMod's proprietary emailprogram that is a part of allLseMod programs.

Need to quantify costs, budgets, andsavings in more detail than ever

before?

Are you spending hours creatingoccupancy scenarios andconsolidations? And then more hourstweaking them?

LseMod can help you!

[email protected] ortoll free: 1-866-757-3663

For best viewing print thisfile on a color printer.

Sarbanes-Oxley sample reports - LseMod International / Corporate / Pro 2003 Lease Cost Solutions Inc. All Rights Reserved.


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SCENARIO

It is our understanding that Sarbanes-Oxley requires a detailed analysis when real estatecosts are charged to restructuring or other non-typical accounting procedures areemployed. LseMod is a tool that can provide that kind of analysis and a detailed printout ofreports that can be kept for future reference.

In this example an analysis is needed to quantify the costs to be charged to restructuringassuming the building remains vacant from January 2004 - August 2004 and then issubleased for the balance of the term.

Making it interesting, we have assumed a full service lease with a prior year Base Year, sothere are pass-through Operating Expenses to the Sublessor, while the Sublessee will havea current year base year. Additionally, there will be a depreciation write-off in January 2004,TI's for the subtenant and a real estate commission.

A detailed analysis is required so that when asked, a report can be produced that shows theanalysis and assumptions associated with it.

If multiple properties need to analyzed and/or different scenarios analyzed, they can belinked into a management summary using LseSum, the companion program that comeswith LseMod.

This type of analysis where a lease commitment and sublease/disposition assumption canbe analyzed in one (1) file by using any of the LseMod Gold Series programs - LseModCorporate, LseMod International, and LseMod Pro. Results produced include a Cash Flowanalysis, NPV and a Profit & Loss Impact (the cost charged to an end-user's budget) as wellas reports showing the assumptions in detail.

To learn more, please contact us at

[email protected] ortoll free: 1-866-757-3663www.LseMod.com

For best viewing of thereports that follow changeExcel's zoom setting to125% if you get ######

www.LseMod.com Page 2 of 7Sarbanes-Oxley sample reports - LseMod International / Corporate / Pro


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FINANCIAL SUMMARY Page 1City: Waltham 1Nov03

Property: 787 Johnson Way Revision 1.0

Year (lease starts 1 / 2004) 2004 2005 2006 2007 2008 2009 Total

Months Leased Each Year 12 12 12 12 5 53

COSTS PER RENTABLE SQUARE FOOT, based on 50,000 Rentable Square Feet Average / Year

P&L COSTS:

Rent * $ 25.10 $ 8.99 $ 9.13 $ 9.26 $ 9.15 $ 12.75

Operating Expenses / Taxes * $ 0.85 $ 0.85 $ 0.85 $ 0.85 $ 0.85 $ 0.85

All Other * $ 5.24 $ 1.19

Depreciation * $ 5.44 $ 1.33 $ 1.33 $ 1.33 $ 1.33 $ 2.26

TOTAL $ 36.64 $ 11.17 $ 11.31 $ 11.44 $ 11.33 $ 0.00 $ 17.05

CAPITAL COSTS:

All Other $ 5.00 $ 1.13

* Annualized cost per square foot per year.

P & L IMPACT

Rent 1,255,208 449,375 456,575 462,866 190,530 2,814,555

Operating Expenses / Taxes 42,500 42,500 42,500 42,500 17,708 187,708

All Other 262,065 262,065

Depreciation 272,222 66,667 66,667 66,667 27,778 500,000

TOTAL PRE-TAX IMPACT 1,831,995 558,542 565,742 572,033 236,017 0 3,764,328

AFTER TAXES @ 35% 1,190,797 363,052 367,732 371,821 153,411 0 2,446,813

CASH FLOW ANALYSIS

EXPENSE ADJUSTMENTS:

P&L Pre-Tax Impact 1,831,995 558,542 565,742 572,033 236,017 3,764,328Less Depreciation (272,222) (66,667) (66,667) (66,667) (27,778) (500,000)

TOTAL ADJUSTMENTS 1,559,773 491,875 499,075 505,366 208,239 0 3,264,328

CAPITAL:

Other Expansion / Sublease 250,000 250,000

TOTAL CASH FLOW 1,809,773 491,875 499,075 505,366 208,239 0 3,514,328

After Taxes @ 35% 1,168,575 296,385 301,065 305,155 125,633 0 2,196,813

Cash Flow -- Before Tax NPV @ 8% 3,123,138

CASH FLOW -- After Tax Net Present Value Discounted @ 8% 1,953,557

The information contained herein has been given to us by sources we deem reliable, but we do not guarantee it. All data should be verified.

Part 1- Shows cost per year (or permonth) on an annual basis.

Part 2- Shows by yearcosts that are charged tothe end-user's budget.

Part 3- Shows by year, the Cash Flow

Capital

NPV Before & After taxes

Total Cost to be bookedto restructuring.

Can be extended to a 15 yr term

Financial Summary Report - In this particular casea better report is the P&L Impact Report since it shows more detail.



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P & L IMPACT Page 1ACity: Waltham 1Nov03


Year (lease starts 1 / 2004) 2004 2005 2006 2007 2008 2009 TotalMonths Leased Each Year 12 12 12 12 5 53

RENT

Base Rent 1,400,000 1,400,000 1,400,000 1,400,000 583,333 6,183,333

Fixed - 1st Increase 21,875 37,500 37,500 37,500 15,625 150,000

Fixed - 2nd Increase 21,875 37,500 37,500 15,625 112,500

Fixed - 3rd Increase 21,875 37,500 15,625 75,000

Fixed - 4th Increase 21,875 15,625 37,500

Sublease Income -166,667 -1,010,000 -1,040,300 -1,071,509 -455,303 -3,743,779

Total 1,255,208 449,375 456,575 462,866 190,530 0 2,814,555

OPERATING EXP. / TAXES

Operating Exp. - Initial Space 42,500 55,655 69,205 83,161 40,640 291,160

Exp. / Taxes - Sublease -13,155 -26,705 -40,661 -22,932 -103,452Total 42,500 42,500 42,500 42,500 17,708 0 187,708

DEPRECIATION 272,222 66,667 66,667 66,667 27,778 500,000

ALL OTHER

Expansion / Subleasing 262,065 262,065

TOTAL P&L PRE-TAX IMPACT 1,831,995 558,542 565,742 572,033 236,017 0 3,764,328

Lease Commitment 1,464,375 1,515,030 1,566,080 1,617,536 686,473 0 6,849,494

Depreciation write-off 250,000 250,000

Total w/Depreciation write-off1,714,375 1,515,030 1,566,080 1,617,536 686,473 0 7,099,494


Usually a back-up report, this report shows the costs by line item charged tothe Profit & Loss statement.

Back-up Report, this report shows the detail behind thenumbers summarized on the Financial Summary.

User created summary oflease commitment.

Rent fromSubleasing

Op. Exp.income fromSubleasing

Rent number shown onFinancial Summary report



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AFTER TAX CASH FLOW ANALYSIS Page 1BCity: Waltham 1Nov03


Year (lease starts 1 / 2004) 2004 2005 2006 2007 2008 2009 TotalMonths Leased Each Year 12 12 12 12 5 53

Months of Rent Abatement

P&L PRE-TAX IMPACT 1,831,995 558,542 565,742 572,033 236,017 3,764,328

RENT ADJUSTMENTS

Effective Base Rent on P&L -1,400,000 -1,400,000 -1,400,000 -1,400,000 -583,333 -6,183,333

Actual Cash Flow Base Rent 1,400,000 1,400,000 1,400,000 1,400,000 583,333 6,183,333

Net Rent Adjustments 0 0 0 0 0 0 0

DEPRECIATION

Capital - Sublease 22,222 66,667 66,667 66,667 27,778 250,000

Depreciation Write-off 250,000 250,000Total 272,222 66,667 66,667 66,667 27,778 0 500,000

CAPITAL

Other Expansion / Subleasing 250,000 250,000

TOTAL CASH FLOW 1,809,773 491,875 499,075 505,366 208,239 0 3,514,328

AFTER TAXES @ 35% 1,168,575 296,385 301,065 305,155 125,633 0 2,196,813

CASH FLOW -- Before Tax NPV @ 8% 3,123,138

CASH FLOW -- After Tax Net Present Value Discounted @ 8% 1,953,557


Usually a back-up report,this report shows the Cash Flow by line item.

Note the Cash Flow

differs from the totalP&L cost due to thewrite-off of $250,000 indepreciation.

Capitalized the ConstructionCosts for subleasing.

Depreciationwrite-off



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ASSUMPTIONS Page 2City: Waltham 1Nov03


FINANCIAL ASSUMPTIONS OPERATING EXPENSES AND TAXES *

NPV Discount Rate (Beginning of Mo. Calc.) 8.0% Base Year Operating Expenses $ 7.92 $ /rsf/yr

Corporate Tax Rate 35.0% Actual Operating Expenses $ 8.77 $ /rsf/yr

P&L Rent - Use Effective or GAAP Rent No Op.Expense Annual % Increase 3.0% (eff. 1/2005)

Base Year Real Estate Taxes in op. exp.

SPACE PROGRAMMING ASSUMPTIONS Actual Real Estate Taxes in op. exp.

Rentable SF to be Leased 50,000 Taxes Annual % Increase

Usable SF to be Leased 50,000 Special Taxes

Add-on Factor, (Loss %) (0%) 0.00% Op. Expenses Tenant Pays Directly:

Tenant Electric

RENT ASSUMPTIONS Janitorial

Commencement Date 1 / 2004 After Hrs. HVAC

Termination Date 5 / 2008 Other

Term of Lease 53 months Total Direct Cost/Year

Base Rental Rate $ 28.00 $ /rsf/yr Annual % IncreaseType of Lease Full Service * Pass through costs start: Op Exp 1/2004; Taxes 1/2004

Months of Rent Abatement none SECURITY DEPOSIT

Landlord Construction Allowance none Amount Paid n/a

Amount Returned

ONE-TIME RENT ADJUSTMENTS

1st Adjustment CANCELLATION / EARLY TERMINATION

2nd Adjustment Cancel Effective (end of month)

Term of Lease (if cancel)

ANNUAL % RENT INCREASES Cost to Cancel

1st Percentage Increase Total Cost to Cancel

2nd Percentage Increase

SPECIAL EXPENSES / CREDITS

FIXED AMOUNT RENT INCREASES BuyOut of Current Lease

1st Increase (6/04) $ 0.75 Restoration2nd Increase (6/05) $ 0.75 Other

3rd Increase (6/06) $ 0.75 Depreciation Write-off $ 250,000 eff. 1/2004

4th Increase (6/07) $ 0.75 Depreciation Carry-over

5th Increase

MOVING EXPENSE

PARKING Cost

Parking Ratio Contingency

Unreserved Spaces Landlord Rebate

Reserved Spaces Total Moving Cost

Total Monthly Parking Cost

Months of Free Parking CONSTRUCTION / NEW BUILDOUT

Annual % Increase Office Space Construction

OTHER MONTHLY EXPENSES Contingency

Storage Rent TOTAL CONSTRUCTION COST

Rented Furniture Landlord Construction Allowance

Other Net Cost to the Company

Total Other Monthly Expenses (Allowance based on 50,000 rsf)

Annual % Increase RATIOS:

Construction Cost / rsf

KEY RATIOS Construction Cost / usf

Average Gross Rent/RSF/Year * $ 31.02 $ /rsf/yr

Average Gross Rent/USF/Year * $ 31.02 $ /usf/yr CONSTRUCTION FINANCING

Average Rent / Year Over Term $ 29.70 $ /rsf/yr Amount Financed

Annuity Rent Discounted @ 8% $ 29.41 $ /rsf/yr Monthly Payment

Impact on Earnings / Share / Year n/a

OTHER FIT-UP / INFRASTRUCTURE Expense Capital

* Rent, Operating Expenses, Taxes Furniture

Voice / DataLegal / Consultants

Other

Analysis prepared by Lease Cost Solutions Inc. Other

Contingency %

Total CostThe information contained herein has been given to us by sources we deem reliable, but we do not guarantee it. All data should be verified.

Assumptions printout of costs

Operating Expenses &Taxes.

Depreciation Write-off



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ASSUMPTIONS Page 3City: Waltham 1Nov03


EXPANSION SPACE SUBLEASE INCOMECommencement Date Commencement Date 9 / 2004

Termination Date Termination Date 5 / 2008

Term of Lease Term of Sublease 45 months

Rentable SF Type of Lease Full Service

Base Rental Rate Rentable SF 50,000

Annual % Rent Increase Base Rental Rate $ 20.00 $ /rsf/yr

Fixed Increase #1 Months of Rent Abatement 2 months

Fixed Increase #2 Annual % Rent Increase 3.0% (eff. 9/2005)

Fixed Increase #3 Fixed Increase #1

Actual Op. Exp. & Taxes Fixed Increase #2

Base Year Op. Exp. & Taxes Fixed Increase #3

Op.Exp. & Tax Annual % Increase Actual Op. Exp. & Taxes $ 8.77 $ /rsf/yr

Landlord Construction Allowance Base Year Op. Exp. & Taxes $ 8.77 $ /rsf/yr

Op.Exp. & Tax Annual % Increase 3.0% (eff. 1/1)

EXPANSION SPACE

CONSTRUCTION COSTS OTHER SUBLEASING COSTS Expense Capital

Construction / Buildout Commissions @7% of rent $ 262,065

Advertising

Contingency Construction Costs @$5/sf $ 250,000

TOTAL CONSTRUCTION COST Legal Fees

Landlord Construction Allowance Other

Net Cost to the Company Contingency % 0% 0%

RATIOS: Total Cost $ 262,065 $ 250,000

Construction Cost / rsf

Construction Cost / usf SUBLEASE - PROFIT SHARING * No

Percentage of Profits to Landlord

EXPANSION SPACE One-Time Costs to be Deducted

OTHER COSTS Expense Capital 100% of Other Subleasing Costs

Other Credit for Marketing/Down TimeOther Other

Other Total Cost

Other Monthly Costs to be Deducted

Other Write-off of Tenant Improvements

Contingency % Other

Total Cost Other

Total Cost per Month

DEPRECIATION ASSUMPTIONS Months Annual % Increase

Construction / New Buildout 53 * (profit shared after cumulative revenue exceeds cumulative costs)

Furniture 60

Voice / Data 36

Other Infrastructure - Capital 53

Const. 1st Expansion Space

Associated Capital Costs

Subleasing - Capital 45


Assumptions Report for Expansion/SubleasingAn optional report, required in this example since assuming a sublease.

Sublease Assumptions

Commissions

Construction Costs

Operating Expenses


sarbanes oxley example

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