the henry j. kaiser family foundation henry j. kaiser family foundation see accompanying notes. page...

Report of Independent Auditors and Financial Statements

The Henry J. Kaiser Family Foundation

December 31, 2015 and 2014

CONTENTS

PAGE

REPORTOFINDEPENDENTAUDITORS..........................................................................................................................................................................................1

FINANCIALSTATEMENTS

Statementsoffinancialposition....................................................................................................................................................................................................2

Statementsofactivitiesandchangesinnetassets................................................................................................................................................................3

Statementsofcashflows..................................................................................................................................................................................................................4

Notestofinancialstatements.........................................................................................................................................................................................................5

REPORTOFINDEPENDENTAUDITORSTotheBoardofTrusteesTheHenryJ.KaiserFamilyFoundation

ReportonFinancialStatements

We have audited the accompanying financial statements of The Henry J.Kaiser Family Foundation (the“Foundation”),whichcomprisethestatementsoffinancialpositionasofDecember31,2015and2014,andtherelatedstatementsofactivitiesandchangesinnetassetsandcashflowsfortheyearsthenendedandtherelatednotestothefinancialstatements.

Management’sResponsibilityfortheFinancialStatements

Management is responsible for the preparation and fair presentation of these financial statements inaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica;thisincludesthedesign, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free frommaterialmisstatement, whether due to fraud orerror.

Auditor’sResponsibility

Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.WeconductedourauditsinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica.Thosestandardsrequirethatweplanandperformtheauditstoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Accordingly,weexpressnosuchopinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.

Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of TheHenry J.Kaiser Family Foundation as of December31, 2015 and 2014, and thechanges in its net assets and its cash flows for the years then ended in accordance with accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.

SanFrancisco,CaliforniaJune20,2016

FINANCIALSTATEMENTS

__________

THEHENRYJ.KAISERFAMILYFOUNDATION

Seeaccompanyingnotes.Page2

STATEMENTSOFFINANCIALPOSITIONDecember31,2015and2014

2015 2014

Cashandcashequivalents 133,537,695$ 7,363,703$Receivableforunsettledinvestmenttransactions ‐ 6,550,653Investmentincomereceivable 902,404 299,416Investments,atfairvalue 492,069,521 593,338,795Contributionsreceivable 7,512,457 8,139,027Accountsreceivable,prepaidemployeebenefits,andotherassets 2,363,436 2,495,078Propertyandequipment,net 31,006,318 32,047,585

Totalassets 667,391,831$ 650,234,257$

LIABILITIESAccountspayable,accruedbenefits,andotherliabilities 6,254,398$ 5,665,963$Derivativeliabilities ‐ 15,705,261Postretirementliability 24,048,403 32,658,485Deferredfederalexcisetaxes 2,926,023 4,510,180Bondspayable 100,000,000 42,000,000Notespayable ‐ 31,500,000

Totalliabilities 133,228,824 132,039,889

NETASSETSUnrestricted 524,089,349 506,963,707Temporarilyrestricted 10,073,658 11,230,661

Totalnetassets 534,163,007 518,194,368

Totalliabilitiesandnetassets 667,391,831$ 650,234,257$

ASSETS

LIABILITIESANDNETASSETS



STATEMENTSOFACTIVITIESANDCHANGESINNETASSETSYearsEndedDecember31,2015and2014

2015 2014

CHANGESINUNRESTRICTEDNETASSETSInvestmentincome

Interest 882,193$ 1,348,526$Dividends 4,331 2,546,414Netrealizedandunrealizedgainsoninvestments 53,485,112 62,954,891Netrealizedandunrealizedlossesonderivativeliabilities ‐ (6,819,259)Investmentexpense (5,150,705) (2,731,993)

Netinvestmentincome 49,220,931 57,298,579

Netassetsreleasedfromrestrictions 7,775,713 6,755,748

Totalinvestmentincomeandnetassetsreleasedfromrestrictions 56,996,644 64,054,327

EXPENSESProgramactivities

Directcharitableexpenses 45,026,660 34,999,373Interestexpenseincurredfromfinancingactivities 1,018,361 2,297,655

Totalprogramactivities 46,045,021 37,297,028

Administrativeexpenses 6,118,693 5,723,972Federal,state,andlocaltaxexpense(benefit) (2,113,738) 2,405,079

Totalexpenses 50,049,976 45,426,079

CHANGEINPOSTRETIREMENTLIABILITY 10,178,974 (11,037,129)

Changeinunrestrictednetassets 17,125,642 7,591,119

Unrestrictednetassets,beginningofyear 506,963,707 499,372,588

Unrestrictednetassets,endofyear 524,089,349 506,963,707

CHANGESINTEMPORARILYRESTRICTEDNETASSETSContributions 6,618,710 4,236,227Netassetsreleasedfromrestrictions (7,775,713) (6,755,748)

Changeintemporarilyrestrictednetassets (1,157,003) (2,519,521)

Temporarilyrestrictednetassets,beginningofyear 11,230,661 13,750,182

Temporarilynetassets,endofyear 10,073,658 11,230,661

Totalchangeinnetassets 15,968,639 5,071,598

Totalnetassets,beginningofyear 518,194,368 513,122,770

Totalnetassets,endofyear 534,163,007$ 518,194,368$



STATEMENTSOFCASHFLOWSYearsEndedDecember31,2015and2014

2015 2014

CASHFLOWSFROMOPERATINGACTIVITIESChangeinnetassets 15,968,639$ 5,071,598$Adjustmentstoreconcilechangeinnetassetstonetcashusedin

operatingactivitiesNetrealizedandunrealizedgainsoninvestments (53,485,112) (62,954,891)Netunrealizedlossesonderivativeliabilities ‐ 6,819,259Depreciation 1,121,439 1,135,785Amortizationoffinancingcosts ‐ 20,459Lossondisposaloffixedassets 2,190 10,462Changesinoperatingassetsandliabilities

Contributionsreceivable 626,570 2,020,067Accountsreceivable,prepaidemployeebenefits,andotherassets 131,642 1,200,904Accountspayable,accruedbenefits,andotherliabilities 588,435 469,079Postretirementliability (8,610,082) 13,128,726Deferredfederalexcisetaxes (1,584,157) 2,140,991

Netcashusedinoperatingactivities (45,240,436) (30,937,561)

CASHFLOWSFROMINVESTINGACTIVITIESPurchasesofinvestments (98,312,424) (89,772,505)Proceedsfromsalesandmaturitiesofinvestments 238,569,310 96,647,891Reductionininvestmentandinvestmentincomereceivables 4,739,904 15,584,372Purchasesofpropertyandequipment (82,362) (727,146)

Netcashprovidedbyinvestingactivities 144,914,428 21,732,612

CASHFLOWSFROMFINANCINGACTIVITIESProceedsfromnewbondissue 100,000,000 ‐PaymenttoretireDCBonds (42,000,000) ‐Paymenttoretirenotepayable (31,500,000) ‐Proceedsfromlineofcredit 35,000,000 35,000,000Paymentsonlineofcredit (35,000,000) (35,000,000)

Netcashprovidedbyfinancingactivities 26,500,000 ‐

Increase(decrease)incashandequivalents 126,173,992 (9,204,949)

Cashandcashequivalents‐beginningofyear 7,363,703 16,568,652

Cashandcashequivalents‐endofyear 133,537,695$ 7,363,703$‐

SUPPLEMENTALDISCLOSURESOFCASHFLOWINFORMATIONCashpaidforinterest 4,308,232$ 2,751,505$

Cashpaidforfederalexcisetaxes ‐$ 459,528$

THEHENRYJ.KAISERFAMILYFOUNDATIONNOTESTOFINANCIALSTATEMENTS

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NOTE1–ORGANIZATIONANDSUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

Organization–TheHenryJ.KaiserFamilyFoundation(the“Foundation”)isahighlyspecializedhealthpolicyresearchandhealthcommunicationsorganizationthatprovidestimelyinformationonhealthissuestopolicymakers,themedia,andthepublicintheUnitedStatesandglobally.

Basis of presentation – The financial statements are presented on the basis of unrestricted, temporarily restricted, andpermanently restricted net assets in accordancewith accounting principles generally accepted in the United States of America(“U.S.GAAP”).AsofDecember31,2015and2014,therewerenopermanentlyrestrictednetassets.

Cash and cash equivalents – Cash and cash equivalents consist primarily of cash andmoneymarket funds. The Foundationconsidersinvestmentswithmaturitiesofthreemonthsorlessatthetimeofpurchasetobecashequivalents.

Estimatedfairvalueoffinancialinstruments–Thecarryingamountsofcashandcashequivalents,accountsreceivable,prepaidemployee benefits, and other assets, contributions receivable, accounts payable, and other liabilities approximate fair valuebecauseoftheshortmaturityoftheseitems.Investmentsandderivativefinancialinstrumentsarereflectedatestimatedfairvalueasdescribedbelow.ThecarryingamountsofthebondspayableandnotepayableatDecember31,2014approximatefairvalueduetothevariableinterestratesandterms,whichwereconsistentwiththosecurrentlyavailabletotheFoundationatthatdate.Thecarrying amountof thebondspayable atDecember31, 2015approximate fair valuedue tominimal change inborrowing ratesbetweenissuancedateandyear‐end.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)Topic820, Fair ValueMeasurement,defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about fair valuemeasurements. Fair value is the amount that would be received to sell an asset, or paid to transfer a liability, in an orderlytransactionbetweenmarketparticipantsatthemeasurementdate(i.e.,theexitprice).Marketpriceobservabilityisimpactedbyanumberoffactors,includingthetypeofinstrument,thecharacteristicsspecifictotheinstrument,andthestateofthemarketplace(including the existence and transparency of transactions between market participants). Instruments with readily availableactivelyquotedpricesorforwhichfairvaluecanbemeasuredfromactivelyquotedpricesinanorderlymarketwillgenerallyhaveahigherdegreeofmarketpriceobservabilityandalesserdegreeofjudgmentusedinmeasuringfairvalue.

Instrumentsmeasuredandreportedatfairvalueareclassifiedanddisclosedinoneofthefollowingcategoriesbasedoninputs:

Level1– Quoted prices are available in active markets for identical instruments as of the reporting date. The type ofinstruments that would generally be included in LevelI include listed equity securities. As required by ASCTopic820,theFoundation,totheextentthatitholdssuchinstruments,doesnotadjustthequotedpricefortheseinstruments,eveninsituationswheretheFoundationholdsalargepositionandasalecouldreasonablyimpactthequotedprice.

Level2– Pricing inputsareobservable for the instruments,eitherdirectlyor indirectly,asof thereportingdate.SomearequotedpricesinmarketswithlimitedactivityandsomearenotthesameasthoseusedinLevel1.Inthecaseofthelatter, fair value is determined through the use of models or other valuation methodologies. The types ofinstrumentsthatwouldgenerallybeincludedinthiscategoryincludeunlistedderivativefinancialinstrumentsandcertain investment funds valued based upon net asset value or publicly traded securities with limited tradingactivity.

Level3– Pricing inputs are unobservable for the instrument and include situations where there is little, if any, marketactivity for the instrument. The inputs into the determination of fair value require significant judgment orestimationbytheFoundation.Thetypesof instrumentsthatwouldgenerallybe includedinthiscategoryincludeequitysecuritiesissuedbyprivateentities.

Incertaincases,theinputsusedtomeasurefairvaluemayfall intodifferentlevelsofthefairvaluehierarchy.Insuchcases,thedeterminationofwhich categorywithin the fairvaluehierarchy is appropriate foranygiven instrument isbasedon the lowestlevelofinputthatissignificanttothefairvaluemeasurement.TheFoundation’sassessmentofthesignificanceofaparticularinputtothefairvaluemeasurementinitsentiretyrequiresjudgmentandconsidersfactorsspecifictotheinstrument.

AValuationCommittee (the “Committee”), ledby theChief InvestmentOfficer/ChiefFinancialOfficer,and including InvestmentStaff, is responsible for establishing valuation policy, reviewing ongoing compliance, and overseeing valuation procedures. TheCommitteemeetsatleastannuallytoreviewthevaluationpolicyandmakedecisionsonanyvaluationsrequiringtheCommittee’sattention.


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Investments–Investmentsarereflectedonthestatementsoffinancialpositionatfairvaluewithchangesinunrealizedgainsandlossesresulting fromchanges in fairvaluereflected in thestatementsofactivitiesandchanges innetassetsasnetrealizedandunrealizedgainsoninvestments.

EquityandfixedincomesecuritiesthatareclassifiedasLevel1arepubliclytradedinvestmentsinactivemarketsandarereportedatthemarketclosingpriceasdeterminedingoodfaithbytheFoundation.

Investmentsinmanagersinvestinginequityandfixedincomesecurities,hedgefunds,privateequity,andrealassets(the“InvesteeFunds”) are reported at fair value. Fair value is based on the information provided by the Investee Funds, which reflects theFoundation’s shareof the fairvalueof thenetassetsof the InvesteeFund. If theFoundationdetermines,basedon itsownduediligence and investment valuationprocedures, that thevaluation for any InvesteeFundbasedon informationprovidedby themanagementofsuchInvesteeFunddoesnotrepresentfairvalue,theFoundationwillestimatethefairvalueoftheInvesteeFundingoodfaithandinamannerthatitreasonablychoosesinaccordancewiththeFoundation’svaluationpolicyasdeterminedbytheValuation Committee. In addition, the Foundation invests directly into fixed income and equity securities of public and privatecompanies(“InternallyManaged”).TheseinvestmentsarevaluedbytheFoundation’sValuationCommittee(SeeNotes2and3).

Thevaluesassigned to investmentsarebaseduponavailable informationanddonotnecessarily representamounts thatmightultimately be realized, since such amounts depend on future circumstances and cannot be reasonably determined until theindividualpositionsareliquidated.

Investmenttransactionsarerecordedonatrade‐datebasisforpubliclytradedinvestmentsoruponclosingofthetransactionforprivateinvestments.

Derivative financial instruments – The Foundation utilizes derivative financial instruments (“derivatives”) in order to gaintactical exposure to equity, foreign exchange, and fixed income factors. Derivative financial instruments are recorded at theirestimated fair value in the accompanying statements of financial position (see Note3). Changes in the underlying value ofderivativefinancialinstrumentsarerecordedinnetrealizedandunrealizedgainsoninvestments.

Contributionsreceivable –Contributions receivable consistofunconditionalpromises togive.Unconditionalpromises togivethatareexpectedtobecollectedinfutureyearsarerecordedatthepresentvalueoftheirestimatedfuturecashflows.Managementbelieves the contributions receivable as of December31, 2015 and 2014, approximate their net present value. Contributionsreceivable of approximately $7,512,000 as of December31, 2015, are expected to be received as follows: $4,706,000 in 2016,$2,767,000in2017,and$39,000in2018.

Propertyandequipment,net–Propertyandequipmentisrecordedatcost,lessanyaccumulateddepreciationandamortization.The Foundation’s policy is to capitalize all property and equipment additions over $5,000. Depreciation and amortization areprovidedonthestraight‐linemethodovertheestimatedusefullivesoftheassets,whichrangefrom3to40years.Long‐livedassetsarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatethatthecarryingamountofsuchassetsmaynotberecoverable.Nosuchimpairmentwasrecordedduring2015or2014.

Unrestrictednetassets–TheFoundationreportsgiftsofcashandotherassetsasunrestrictedsupport,astheyarenotsubjecttodonorstipulationsthatlimittheuseofthedonatedassets.

Temporarilyrestrictednetassets–TemporarilyrestrictednetassetsrepresentcontributionswhoseusebytheFoundationislimited by donor‐imposed stipulations that can be fulfilled and removed by actions of the Foundation pursuant to thosestipulations(seeNote8).

Revenue recognition – Contributions are recognized as revenuewhen received or unconditionally promised. The Foundationreports contributions as restricted support if such contributions are receivedwith donor stipulations that limit the use of thedonatedassets.Whenadonorrestrictionendsorisaccomplished,temporarilyrestrictednetassetsarereclassifiedtounrestrictednetassetsandreportedasnetassetsreleasedfromrestrictions.Temporarilyrestrictedcontributionsarereportedastemporarilyrestrictedsupportandnetassetsreleasedfromrestrictionswhentherestrictionismetinthesameperiodasthecontributionisreceived.

Tax‐exemptstatus–TheFoundationisexemptfromfederalincometaxesunderSection501(c)(3)oftheInternalRevenueCodeand from California franchise and income taxes under Section23701d of the Revenue and Taxation Code. The Foundation hasreceivedanadvancerulingfromtheIRSofpubliccharitystatusfora60‐monthperiodbeginningJanuary1,2014.Previously,theFoundationhadbeenaprivateoperatingfoundation.Asapubliccharity,theFoundationisnolongersubjecttofederalexcisetaxonnetinvestmentincome.


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Income taxes – The Foundation adoptedASCTopic740, IncomeTaxes, in 2007. As ofDecember31, 2015, the Foundation hadanalyzed the inventory of tax positions taken with respect to all applicable income tax issues for all open tax years (in eachrespectivejurisdiction),includingDecember31,2015and2014,andhadconcludedthatnoreserveforuncertaintaxpositionswasrequired.

Concentrationsofcreditrisk–Financial instrumentsthatpotentiallysubjecttheFoundationtocreditriskconsistprimarilyofcashandcashequivalents,accountsreceivable,contributionsreceivable,andinvestments.TheFoundationmaintainscashandcashequivalentswithmajorfinancialinstitutions.Attimes,suchamountsmayexceedFederalDepositInsuranceCorporationlimits.TheFoundation’sinvestmentshavebeenplacedwithhigh‐qualitycounterparties.TheFoundationcloselymonitorstheseinvestmentsandhasnotexperiencedsignificantcreditlosses.TheFoundation’smanagementmonitorscreditlevelsandthefinancialconditionofitsaccountsreceivableandcontributionsreceivableandbelievesthatanadequateprovisionforcreditlosseshasbeenmadeintheaccompanyingfinancialstatements.

Functionalexpenseallocations–Expenses,suchassalariesandpayrolltaxes,travelandmeetingexpense,rent,andinterestareallocated among direct charitable expenses, administrative expenses, and investment expenses based on employee ratios andestimatesmadebytheFoundation’smanagement.

Useofestimates–ThepreparationoffinancialstatementsinconformitywithU.S.GAAPrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesanddisclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromthoseestimates.

Reclassifications –Certain reclassificationshavebeenmade to the2014 financial statements to conform to the2015 financialstatementpresentation.Thesereclassificationshadnoimpactonthechangeinnetassetsornetassetbalances.

NOTE2–INVESTMENTS

AsofDecember31,2015and2014,theFoundation’sinvestmentsconsistedofthefollowing:

Internally Internally

Investee Managed Investee Managed

Funds Funds Total Funds Funds Total

Equitysecurities 104,367,368$ ‐$ 104,367,368$ 109,122,930$ ‐$ 109,122,930$

Fixedincomesecurities 68,971,002 15,322,579 84,293,581 78,662,917 3,183,675 81,846,592

Hedgefunds 117,171,295 ‐ 117,171,295 111,621,947 ‐ 111,621,947

Privateequity 156,130,884 22,215,664 178,346,548 174,074,928 2,499,999 176,574,927

Optionsandderivatives ‐ (15,994,187) (15,994,187) ‐ 1,207,761 1,207,761

Realassets 23,884,916 ‐ 23,884,916 112,964,638 ‐ 112,964,638

470,525,465$ 21,544,056$ 492,069,521$ 586,447,360$ 6,891,435$ 593,338,795$

2015 2014

TheFoundation’s InternallyManagedportfolioconsistsofprivatedebt facilitiesandprivateequity investments thatare illiquidand internally valued. In addition, the Foundation’s derivative exposure, which consists of equity, foreign exchange, and fixedincomeoptionsandcontracts,isincludedintheabovetable.PleaseseeNote3formoreinformationontheFoundation’sderivativeexposure.

The Foundation had commitments under partnership agreements to make additional capital contributions to alternativeinvestmentsofapproximately$96,003,000and$129,306,000asofDecember31,2015and2014,respectively.

Total realized and unrealized gains recorded for Level3 investments are reported in net realized and unrealized gains frominvestmentsinthestatementsofactivitiesandchangesinnetassets.

Duringcalendaryear2015,theFoundationsoldinterestsinavarietyofprivateequityandrealassetpartnershipsresultinginnetrealizedcashproceedsof$178,460,000andsubstantialcashandcashequivalentsbalanceatDecember31,2015.

CertainoftheFoundation’sinvestmentsaredenominatedinforeigncurrenciesthatmaybenegativelyaffectedbymovementsintherateofexchangebetweentheU.S.dollarandsuchforeigncurrencies.


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Theremayalsoberiskassociatedwiththeconcentrationofinvestmentsinonegeographicregionorincertainindustries.

NOTE3–FAIRVALUEMEASUREMENTS

The levels in theASCTopic820 fair valuehierarchy intowhich theFoundation’s investments fall as ofDecember31, 2015and2014,areasfollows:

2015 2014

Level1Equitiesandfixedincomesecurities 416,535$ 11,657,165$

Level2Equitiesandfixedincomesecurities 145,513,560 147,939,957Hedgefunds 76,025,604 70,926,355Optionsandderivatives (186,911) 1,207,761

TotalLevel2 221,352,253 220,074,073

Level3Equitiesandfixedincomesecurities 42,730,854 31,372,400Hedgefunds 41,145,691 40,695,592Privateequity 178,346,548 176,574,927Optionsandderivatives (15,807,276) ‐Realassets 23,884,916 112,964,638

TotalLevel3 270,300,733 361,607,557

Totalinvestments 492,069,521$ 593,338,795$

Theequitiesandfixedincomesecuritiescategoryrepresentsinvestmentswithmanagersinvestinginadiversifiedpoolofpubliclytradedsmall,medium,andlargecapitalizationglobalequitiesandfixedincomesecurities.

Thehedge fundscategoryrepresents investmentswithmanagers investingacrosstheglobe,both longandshort, inavarietyofasset classes including, but not limited to debt and equity securities, real estate, structured products, and foreign exchangeinstruments.Pendingmarketconditions,managershavelatitudetoshiftinvestmentstrategiesandsecuritytypestoexploitmarketinefficiencies,aswellasemployleverage.ThefairvaluesofinvestmentsinthiscategoryhavebeendeterminedusingthenetassetvaluepershareoftheInvesteeFunds.

Theprivateequitycategoryrepresentsinvestmentswithmanagersinvestinginabroadrangeofforeignanddomesticprivately‐ownedcompanies.Underlyingstrategieswithinthiscategoryincludeventurecapital,leveragedbuyouts,anddistresseddebt.Postinvestment,managersworkcloselywithportfoliocompaniestocreatevaluewithinthebusinessesthroughavarietyofstrategies.Investment periods range from three to six years, with initial distributions expected in years five and six.Managers generallyattempt to fully liquidate the portfolio of investmentswithin ten years, althoughmanagersmay extend the time to liquidate ifnecessarytobenefittheportfolio.

The real assets category is comprised of the Foundation’s investments in real estate, forestland, and energy‐related privatepartnerships. The fair values of investments in this category have been determined using the net asset value per share of theinvestmentfunds(“NAV”),orincaseswhereaNAVisnotavailable,recentappraisalinformation.


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TheFoundation’sValuationCommitteevalued the fixed income securitiesandprivate equityportionof the InternallyManagedportfolio at a fair market value of approximately $37,538,000 on a cost basis of approximately $29,625,000. All of theseinvestments are categorized as Level 3 investments. The Committee did not recommend any deviations from the fair valueassessmentsofitsInvesteeFundsoritsoptionsandderivativesportfolio.

ThechangesininvestmentsclassifiedasLevel3fortheyearsendedDecember31,2015and2014,areasfollows:

EquitiesandFixed Options&IncomeSecurities HedgeFunds PrivateEquity Derivatives RealAssets TotalLevel3

Balance,January1,2014 17,305,125$ 39,713,434$ 137,178,652$ ‐$ 106,960,024$ 301,157,235$

ReclasswithinLevel3 13,283,675 ‐ (13,283,675) ‐ ‐ ‐Purchasesandotheracquisitions ‐ ‐ 60,061,238 ‐ 9,211,266 69,272,504Salesandotherdispositions ‐ ‐ (39,402,806) ‐ (19,927,361) (59,330,167)Realizedappreciation ‐ ‐ 8,807,200 ‐ 8,066,667 16,873,867Unrealized(depreciation)appreciation 783,600 982,158 23,214,318 ‐ 8,654,042 33,634,118

Balance,December31,2014 31,372,400 40,695,592 176,574,927 ‐ 112,964,638 361,607,557

Reclassoptionsandderivatives ‐ ‐ ‐ (15,705,261) ‐ (15,705,261)Purchasesandotheracquisitions 8,715,000 ‐ 62,344,534 ‐ 12,810,252 83,869,786Salesandotherdispositions (403,537) ‐ (74,166,712) ‐ (138,000,031) (212,570,280)Realizedappreciation 351,765 ‐ 18,142,572 ‐ 112,660,244 131,154,581Unrealized(depreciation)appreciation 2,695,226 450,099 (4,548,773) (102,015) (76,550,187) (78,055,650)

Balance,December31,2015 42,730,854$ 41,145,691$ 178,346,548$ (15,807,276)$ 23,884,916$ 270,300,733$

Transfersof investmentsbetweendifferent levelsof the fairvaluehierarchyarerecordedasof theendof thereportingperiod.Changes intheunrealizedgains inthe investments includedonthestatementsofactivitiesandchanges innetassetsrelatingtoLevel3investmentsstillheldatDecember31,2015and2014,wereapproximately$26,700,000and$37,435,000,respectively.

Investmentstrategyandredemption information–The followingtablesummarizesthe investmentstrategytypes,unfundedcommitmentsandredemption featuresof the investmentportfolioclassifiedasLevel2or3asofDecember31,2015.The tabledoes not include any option or derivative investments which are held directly by the Foundation. The Foundation hascommitmentsundertheassociatedinvestmentagreementstomakeadditionalcapitalcontributionsasnoted.

RedemptionFrequency(if

Unfunded Currently RedemptionCommitments Eligible) NoticePeriod

Level2Equitiesandfixedincomesecurities 7,000,000$ Quarterly,semi‐ 30‐180daysnotice

annually,annuallyHedgefunds ‐ Quarterly 60‐180daysnotice

Level3Equitiesandfixedincomesecurities 1,335,000 Biennially/Triennially, 90daysnotice

quarterly,annuallyHedgefunds ‐ Triennially 60daysnoticePrivateequity 86,533,710 Illiquid ‐Realassets 1,133,868 Illiquid ‐


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ThelevelsintheASCTopic820fairvaluehierarchyintowhichtheFoundation’sreceivableforunsettledinvestmenttransactionsfellasofDecember31,2015and2014,areasfollows:

2015 2014Level1

Equitiesandfixedincomesecurities ‐$ 7,472$

Level2Hedgefunds ‐ 2,500,000Limitedpartnerships ‐ 1,000,000

TotalLevel3 ‐ 3,500,000

Level3Hedgefunds ‐ 1,207,761Privateequity ‐ 30,420Realassets ‐ 1,805,000

TotalLevel3 ‐ 3,043,181

Totalinvestments ‐$ 6,550,653$

ReceivableforUnsettledInvestmentTransactions

Derivatives–TheFoundationusesderivativeinstrumentstomanageitsexposuretomarketrisks,forincomeenhancementandtoprovideequityexposurewithoutactualownershipoftheunderlyingasset.TheFoundation’smanagementbelievestheuseofsuchinstrumentsinitsinvestmentmanagementprogramisappropriateinprovidingforthelong‐termandshort‐termfinancialneedsoftheFoundation.Thoughtheuseoftheseinstrumentsreducescertaininvestmentrisksandgenerallyaddsvaluetotheportfolio,theinstruments themselvesdo involve some investment and counterparty risk. TheFoundationhas internal policies tomanage itscounterpartyexposureandactivelymonitorsitsmarginexposuretoanycounterpartyonadailybasis.

AsofDecember31,2015and2014,thefairvaluesofderivativesconsistedofthefollowing:

2015 2014

Optionsandderivatives (996,830)$ 1,667,452$Fixedincomeoptionsandderivatives (15,807,276) (513,063)FXoptionsandderivatives 809,919 53,372

(15,994,187)$ 1,207,761$

Priorto2015,theFoundationcategorizedits interestrateswapsasaderivative liabilityassociatedwithitsDistrictofColumbiaRevenueBonds andNorthern Trust Loan.With the Foundation’s 2015Bond issue and subsequent repayment of its District ofColumbiaRevenueBondsandNorthernTrustLoan,thefairvalueoftheinterestrateswapsisincludedininvestments(seeNotes5and6).

Theestimatedfairvaluesoftheequityoptionsandtheinterestrateswapagreementsarebasedonquotesfromthemarketmakersforsimilarinstrumentsand,therefore,areclassifiedasLevel2orLevel3,undertheASCTopic820fairvaluehierarchy.


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NOTE4–PROPERTYANDEQUIPMENT,NET

AsofDecember31,2015and2014,propertyandequipmentconsistedofthefollowing:

2015 2014

Land 7,463,063$ 7,463,063$Buildingsandimprovements 33,409,193 33,409,193Officefurnitureandequipment 7,098,401 7,464,704

47,970,657 48,336,960

Accumulateddepreciation (16,964,339) (16,699,862)

31,006,318 31,637,098

Constructioninprogress ‐ 410,487

Propertyandequipment‐net 31,006,318$ 32,047,585$

Depreciationexpensewas$1,121,439and$1,135,785fortheyearsendedDecember31,2015and2014,respectively.

NOTE5–BONDSPAYABLE

InJune2001,theDistrictofColumbiaissued$42,000,000invariableratetax‐exemptrevenuebonds(DistrictofColumbiaRevenueBonds–TheHenryJ.KaiserFamilyFoundationIssue–Series2001)(the“DCBonds”)onbehalfoftheFoundation.TheDCBondswere repaid in2015with theproceeds from the issuanceof taxable fixed‐ratebonds (seebelow).TheDCBondsbore interest,payablemonthly,inarrears,atvariousweeklyrates,asdefined,whichrangedfrom0.05%to0.14%during2015andfrom0.06%to0.32%during2014.TheDCBondsrepresentedanunsecuredgeneralobligationoftheFoundation.

AsofDecember31,2014,theeffectiveinterestrateoftheDCBondswas0.07%.Interestexpensewasapproximately$18,000and$53,000fortheyearsendedDecember31,2015and2014,respectively. Inconjunctionwiththeagreement, theFoundationwasrequiredtobeincompliancewithcertaincovenants.

InJune2015,theFoundationissued$100,000,000ininterest‐onlytaxablefixedratebonds:$65,000,000ofHenryJ.KaiserFamilyFoundationBond3.356%12/1/2025(the“2025Bonds”)and$35,000,000ofHenryJ.KaiserFoundationBond4.407%12/1/2045(the“2045Bonds”).InterestexpensefortheyearendedDecember31,2015,wasasfollows:

2015

HenryJ.KaiserFamilyFoundationBond3.356%12/1/2025$65million 1,048,884$HenryJ.KaiserFamilyFoundationBond4.407%12/1/2045$35million 564,784

1,613,668$

TheproceedsofthenewbondissuewereusedtoretiretheDCBondsandtheNorthernTrustLoan(seeNote6).ThenewissuanceisunsecuredandratedAAAbyStandardandPoorsatissuance.

Interest rate swap agreements – Prior to 2015, Interest rate swap agreements (“Swaps”) were used by the Foundation tomitigate the risk of changes in interest rates associated with variable interest rate indebtedness. Under such arrangements,variablerateindebtednesswasconvertedtofixedratesbasedonanotionalprincipalamount.TheSwapsrelatedtotheDCBondseffectively fixed the interest rate on a notional amount of $42,000,000 at 3.46% for the remaining term of the DC Bonds (seeNote3). As the Foundation retired its variable interest rate indebtedness and did not retire its Swaps, these Swaps no longermitigateanoperationalrisk,butinsteadreflectaninvestmentthesispredicatedonrisinginterestrates.Assuch,theSwapshavebeen reclassified to investmentwithin the Foundation’s investment portfolio in 2015. Interest expense related to these Swaps,prior to reclassification to investments in2015,wasapproximately$581,000and$1,408,000 for theyearsendedDecember31,2015and2014,respectively.


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NOTE6–NOTESPAYABLE

InFebruary2011, theFoundation secureda $35,000,000, six‐year, variable rate, interest‐only loanwith its custodial bank,TheNorthern Trust Company (the “Northern Trust Loan”), of which $31,500,000 had been drawn as of December31, 2014. TheNorthernTrustLoanwassecuredbytheFoundation’sLevel1equityandfixedincomesecuritiesandcashandcashequivalents,and was repaid in 2015 with proceeds from the issuance of the $100,000,000 taxable fixed‐rate bonds (see Note 5). InterestexpensefortheNorthernTrustLoanwasapproximately$138,000and$273,000fortheyearsendedDecember31,2015and2014,respectively.

InconjunctionwiththeNorthernTrustLoanborrowing,theFoundationalsoenteredintoaninterestrateswapagreementwithNorthern Trust effectively fixing the interest rate of the $31,500,000 loan at 2.94%. This swap agreement was not retired inconjunctionwiththeloanrepaymentandwillexpireinFebruaryof2017.TheSwapshavebeenreclassifiedtoinvestmentwithinthe Foundation’s investment portfolio in 2015 (see Notes 3 and 5). Interest expense related to this swap agreement, prior toreclassificationtoaninvestmentin2015,wasapproximately$438,000and$889,000,respectively.

Lineofcredit–InJanuary2015,theFoundationreneweda$35,000,000revolvinglineofcreditagreementwithBankofAmericaforoperationalpurposes.TheoutstandingbalanceaccruesinterestattheannualrateofLIBORDailyFloatingrateplusfifty(50)basis points and is paid on amonthly basis in arrears on amounts drawn. Additionally, all undrawn amounts are subject to acommitmentfeeoften(10)basispointsannually,alsopaidonamonthlybasisinarrears.TheFoundationrepaidalloutstandingprincipal and interest in December2015, prior to the expiration date of the agreement, which was January2, 2016. Interestexpense for therevolving lineof creditwasapproximately$247,000and$145,000 for theyearsendedDecember31,2015and2014,respectively.

InDecember2015, theFoundation renewed the$35,000,000 revolving lineof credit agreementwithBankofAmericawith thesametermsandconditionsforcalendaryear2016.

NOTE7–FEDERAL,STATE,ANDLOCALTAXES

TheprovisionforcurrentanddeferredtaxesfortheyearsendedDecember31,2015and2014,wasasfollows:

2015 2014

ProvisionforfederalexcisetaxesCurrent 2,106$ 461,057$Deferred (2,131,798) 2,005,492

(2,129,692) 2,466,549

Otherfederal,stateandlocaltaxes 15,954 (61,470)

(2,113,738)$ 2,405,079$

The Foundation has been a private operating foundation exempt from income tax under Internal Revenue Code (the“Code”)§501(c)(3) and, as such, subject to a federal excise tax on net investment income at a rate of 2%, or 1% if certaindistribution criteria aremet. The Foundation received an advance ruling from the IRS of public charity status for a 60‐monthperiodbeginningJanuary1,2014.IftheFoundationsatisfiestherequirementsofsection507(b)(1)(B)oftheCode,theFoundationwill no longer be subject to the federal excise tax on net investment income. For the year ended December31, 2014, theFoundation’s excise tax rate was 2%. In addition, the Foundation records deferred excise taxes, which arise primarily fromunrealized tax‐basis gains on investments. For the year ended December31, 2015, deferred taxes have been calculated at aneffectiverateof2%,whichisthemaximumratepossibletobepaidbytheFoundationonsuchamounts.


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NOTE8–TEMPORARILYRESTRICTEDNETASSETSANDNETASSETSRELEASEDFROMRESTRICTIONS

AsofDecember31,2015and2014,temporarilyrestrictednetassetsconsistedofthefollowing:

2015 2014

U.S.roleinglobalhealth 937,355$ 3,538,408$U.S.healthpolicyanalysisandreporting 7,345,490 6,416,838Publiceducationpartnerships 1,790,813 1,275,415

10,073,658$ 11,230,661$

NetassetsreleasedfromrestrictionsfortheyearsendedDecember31,2015and2014,wereasfollows:

2015 2014

U.S.roleinglobalhealth 2,601,183$ 2,408,124$U.S.healthpolicyanalysisandreporting 2,739,787 2,906,876Publiceducationpartnerships 2,434,743 1,440,748

7,775,713$ 6,755,748$

NOTE9–EMPLOYEERETIREMENTANDOTHERACCRUEDBENEFITS

TheFoundationsponsoredaqualifieddefinedbenefitpensionplanforsubstantiallyallofitsemployees,basedonyearsofserviceandaveragecompensation(compensationofaparticipantaveragedoverthethreeconsecutiveplanyearsthatproducethehighestyearlyaverage).Employeesvestedintheirbenefitsunderthefollowingschedule:20%afterthreeyearsofservice,40%afterfouryearsofservice,and100%afterfiveyearsofservice.

ThedefinedbenefitpensionplanwasamendedonJanuary7,2013,toceaseallfuturebenefitaccrualseffectiveFebruary28,2013,and to fullyvest all activeemployeeswith service throughDecember31,2012.Asa result, thepensionbenefit formuladidnotreflect future salary increases or benefit service after February28, 2013. The Foundation received an IRS determination letterdatedApril14,2015,approvingterminationofthedefinedbenefitpensionplanasofSeptember30,2014.BenefitsandplanassetsweredistributedpriortoDecember31,2015.

Inaddition,theFoundationprovidescertainpostretirementhealthcarebenefitstoeligibleemployees.Estimatedcostisaccruedover periods of employee service on an actuarially determined basis. The Foundation has determined that prescription drugbenefits included in its postretirement health care plan are actuarially equivalent to PartD of theMedicare Prescription DrugImprovementandModernizationActof2003.However,astheamountofsubsidytheFoundationiseligibleforisnotmaterial,noreductionhasbeenmadetothepostretirementobligationsincludedintheaccompanyingfinancialstatements.

TheFoundationusedaDecember31measurementdateforitsdefinedbenefitpensionplananditsotherpostretirementbenefitplan.

TheFoundationalsosponsorsaqualifieddefinedcontributionplancoveringsubstantiallyallofitsemployees.Theplanisfundedbyemployeeandemployercontributions.TheFoundationcontributesanamountbaseduponeligiblecompensationasdefinedintheplan.Pensionexpenserelated to thisplanwasapproximately$2,544,000and$2,454,000 for theyearsendedDecember31,2015and2014,respectively.

Inaddition,accountspayable,accruedbenefits,andotherliabilitiesonthestatementsoffinancialpositionincludedapproximately$714,000 and $608,000 of accrued employee benefits associated with certain unfunded executive compensation plans, whichprovided for life insuranceandcertainotherbenefitsandapproximately$3,589,000and$3,408,000ofaccrued flexible timeoffandsabbaticalleaveasofDecember31,2015and2014,respectively.


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Obligationsand funded status – For the years ended December31, 2015 and 2014, the benefit obligations, the fair value ofassets,andthefundedstatusforthedefinedbenefit,includinganonqualifieddefinedpensionplanforaformerexecutive,andthepostretirementbenefitplansareasfollows:

2015 2014 2015 2014

ProjectedbenefitobligationasofJanuary1 20,175,748$ 17,581,800$ 30,289,301$ 20,821,476$

Servicecost ‐ ‐ 2,087,591 1,234,689Interestcost 746,870 801,666 1,350,382 1,023,250Benefitspaid (19,524,902) (1,617,993) (331,578) (307,237)Actuarial(gain)loss (1,397,716) 3,410,275 (4,607,432) 7,517,123

ProjectedbenefitobligationasofDecember31 ‐ 20,175,748 28,788,264 30,289,301

FairvalueofplanassetsasofDecember31 ‐ 13,151,301 4,739,861 4,655,263

Fundedstatus ‐$ (7,024,447)$ (24,048,403)$ (25,634,038)$

OtherPostretirementBenefitsPensionBenefits

The costs, contributions, and benefits paid for the years ended December31, 2015 and 2014, for the defined benefit and thepostretirementbenefitplansareasfollows:

2015 2014 2015 2014

Benefitcost 4,752,355$ 285,502$ 3,931,537$ 2,056,095$Employercontribution 6,865,000 ‐ 250,000 250,000Expensespaid ‐ (154,933) ‐ ‐Benefitspaid (19,524,902) (1,617,993) (331,578) (307,237)

Amountsnot yet reflected innetperiodicbenefit cost, included in the change innet assets asofDecember31, 2015and2014,consistedofthefollowing:

2015 2014 2015 2014

Priorservicecost ‐$ ‐$ (491,168)$ (554,816)$Accumulatedloss ‐ (4,911,802) (5,980,320) (11,183,844)

Accumulatedothercomprehensiveincome ‐ (4,911,802) (6,471,488) (11,738,660)

Cumulativeemployercontributionsinexcessofnetperiodicbenefitcost ‐ (2,112,645) (17,576,915) (13,895,378)

Netamountrecognizedinstatementsoffinancialposition ‐$ (7,024,447)$ (24,048,403)$ (25,634,038)$

PensionBenefits OtherPostretirementBenefits

ThecomponentsofthepensionbenefitandotherpostretirementbenefitrelatedchangesotherthannetperiodiccostreflectedinthestatementsofactivitiesandchangesinnetassetsfortheyearsendedDecember31,2015and2014,areasfollows:

2015 2014 2015 2014

Amortizationofpriorservicecost $‐ ‐$ (63,648)$ (63,648)$Amortizationofnet(gain)/loss (4,788,315) (393,666) (802,337) (89,602)Net(gain)/loss (123,487) 3,985,657 (4,401,187) 7,598,388

(4,911,802)$ 3,591,991$ (5,267,172)$ 7,445,138$


Amountstobereflectedin2016areasfollows:

OtherPostretirement

PensionBenefits Benefits

Priorservicecost ‐$ 63,648$Accumulatedloss ‐ 224,746

Accumulatedothercomprehensiveincome ‐$ 288,394$

Theaccumulatedbenefitobligationforthedefinedbenefitpensionplanwasapproximately$20,176,000asofDecember31,2014.


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Assumptions–Theweighted‐averageassumptionsusedincomputingtheprojectedbenefitobligationsasofDecember31,2015and2014,areasfollows:

2015 2014 2015 2014

Discountrate n/a 3.90% 4.45% 4.05%


Theweighted‐averageassumptionsusedincomputingthenetperiodicpensioncostfortheyearsendedDecember31,2015and2014,areasfollows:

2015 2014 2015 2014

Discountrate 3.90% 4.75% 4.05% 5.05%Expectedreturnonplanassets 8.00% 8.00% 8.00% 8.00%


Todeveloptheexpectedlong‐termrateofreturnonassetsassumption,theFoundationconsideredthehistoricalreturnsandthefutureexpectationsforreturnsforeachassetclass inthequalifieddefinedbenefitpensionplan’s investmentfund,aswellas itstargetassetallocation.

Thetrendrateforhealthcarebenefitspre‐65/post‐65for2015and2014,was7.25%/11.75%and7.75%/18.00%,respectively.Insubsequentyears,therateofincreaseisassumedtodeclineuntilanultimaterateof5.00%isattainedin2024and2021for2015and2014,respectively.

Planassets–ThereconciliationofthechangesintheplanassetsoftheFoundation’sdefinedbenefitpensionfundandretirementmedicalfundasofDecember31,2015and2014,wasasfollows:

2015 2014 2015 2014

FairvalueasofJanuary1 13,151,301$ 14,434,846$ 4,655,263$ 4,438,671$Actualgainonplanassets (491,399) 489,381 166,176 273,829Employercontributions 6,865,000 ‐ 250,000 250,000Expensespaid ‐ (154,933) ‐ ‐Benefitspaid (19,524,902) (1,617,993) (331,578) (307,237)

FairvalueasofDecember31 ‐$ 13,151,301$ 4,739,861$ 4,655,263$

DefinedBenefitPensionFund RetirementMedicalFund

TheassetallocationoftheFoundation’sdefinedbenefitpensionfundandretirementmedical fundasofDecember31,2015and2014,wasasfollows:

2015 2014 2015 2014AssetClasses

Level1Cashandcashequivalents ‐$ 2,104,208$ 587,157$ 651,737$Marketableequitysecurities ‐ 7,496,242 3,538,506 3,212,132Fixedincomesecurities ‐ 3,419,338 612,066 698,289Other ‐ 131,513 2,132 93,105

TotalLevel1 ‐$ 13,151,301$ 4,739,861$ 4,655,263$

DefinedBenefitPensionFund RetirementMedicalFund

The plans invest inmutual funds that seek a high total return by investing in a portfolio of cash, common stocks, treasuries,corporatebonds,mortgage‐backedinternationalfixedincomesecurities,andmoneymarketinstruments.


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Allocationofplan assetsmay changeover timebasedupon investmentmanagerdeterminationof the relative attractivenessofeach security type. The Foundation periodically assesses allocation of plan assets by investment type and evaluates externalsources of information regarding the long term historical returns and expected future returns for each investment type. TheFoundation’stargetandactualassetallocationatDecember31,2015and2014,areasfollows:

DefinedBenefitPensionFund TargetAllocation ActualAllocation TargetAllocation ActualAllocation

Cashandcashequivalents 0.00% 0.00% 9.00% 16.00%Marketableequitysecurities 0.00% 0.00% 79.00% 57.00%Fixedincomesecurities 0.00% 0.00% 12.00% 26.00%Other 0.00% 0.00% 0.00% 1.00%

0.00% 0.00% 100.00% 100.00%

2015 2014

RetirementMedicalFund TargetAllocation ActualAllocation TargetAllocation ActualAllocation

Cashandcashequivalents 3.00% 12.39% 3.00% 14.00%Marketableequitysecurities 80.00% 74.65% 80.00% 69.00%Fixedincomesecurities 15.00% 12.91% 15.00% 15.00%Other 2.00% 0.04% 2.00% 2.00%

100.00% 100.00% 100.00% 100.00%

2015 2014

EstimatedFutureBenefitPayments–Anticipatedfuturebenefitpayments,whichreflectfutureservices,tobepaideitherfromfuturecontributionstotheplanordirectlyfromplanassets,areasfollows:

OtherPostretirement

YearEndingDecember31, PensionBenefits Benefits

2016 N/A 398,000$2017 N/A 445,0002018 N/A 501,0002019 N/A 592,0002020 N/A 675,0002021‐2025 N/A 4,864,000

NOTE10–LEASECOMMITMENT

TheFoundationleasesofficefacilitiesunderanoncancelableoperatingleaseforatenyearperiod,expiringJuly2021,withoptionstoextendfortwoadditionaltenyearperiods.FutureminimumleasepaymentsundertheofficefacilityleasecommitmentforyearsendingDecember31areasfollows:

YearEndingDecember31,

2016 2,240,000$

2017 2,305,000

2018 2,371,000

2019 2,439,000

2020 2,509,000

Thereafter 1,272,000

Total 13,136,000$

Rentexpense for theoffice facilitieswasapproximately$2,178,000and$2,118,000 for theyearsendedDecember31,2015and2014,respectively.


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NOTE11–SUBSEQUENTEVENT

InDecember2015,theFoundationreneweda$35,000,000revolvinglineofcreditagreementwithBankofAmericaforoperationalpurposes,ofwhich$20,000,000wasdrawnasofJune1,2016.TheoutstandingbalanceaccruesinterestattheannualrateofLIBORDaily Floating rate plus fifty (50) basis points and is paid on a monthly basis in arrears on amounts drawn. Additionally, allundrawnamountsaresubjecttoacommitmentfeeoften(10)basispointsannually,alsopaidonamonthlybasisinarrears.TheFoundationmustrepayalloutstandingprincipalandinterestattheexpirationdateoftheagreement,whichiscurrentlyJanuary2,2017.

ASCTopic855,SubsequentEvents,requiresaccountingforanddisclosuresofeventsthatoccurafterthedateofthestatementsoffinancial position, but before the financial statements are issued or are available to be issued. The Foundation evaluatedsubsequent events through June 20, 2016, the date the financial statements were issued, and determined that no additionaldisclosureswerenecessary.

the henry j. kaiser family foundation henry j. kaiser family foundation see accompanying notes. page...

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