Commitments and Contingencies |
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Commitments and Contingencies |
10. Commitments and Contingencies
From time to time, the Company may be named in legal actions and proceedings in the normal course of business. These actions may seek substantial or
indeterminate compensatory as well as punitive damages or injunctive relief. The Company is also subject to governmental or regulatory examinations or investigations. Liabilities for loss contingencies arising from claims, assessments, litigation,
fines and penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. There are currently no such matters pending that the Company believes could have a material adverse
effect on its consolidated financial condition, operations, or cash flows at December 31, 2021.
Leases
On December 5, 1997, the Company entered into a fifteen-year lease, expiring on April 30, 2013, of office space from an entity controlled by members of the Chairman’s family. On June 11, 2013, the Company modified and extended its lease with M4E, LLC, the
Company’s landlord at One Corporate Center, Rye, NY. The lease term was extended to December 31, 2028 and the base rental remained at $18
per square foot, or $1.1 million, for 2014. For each subsequent year through December 31, 2028, the base rental is determined by the change
in the consumer price index for the New York Metropolitan Area for November of the immediate prior year with the base period as November 2008 for the New York Metropolitan Area.
This lease has been accounted for as a finance lease under FASB ASC Topic 842 (and prior to 2019, as a capital lease under FASB ASC Topic
840, Leases) as it transfers substantially all the benefits and risks of ownership to the Company. The Company has recorded the leased property as
an asset and a lease obligation for the present value of the obligation of the leased property. The leased property is amortized on a straight-line basis from the date of the most recent extension to the end of the lease. The lease obligation is
amortized over the same term using the interest method of accounting. Finance lease improvements are amortized from the date of expenditure through the end of the lease term or the useful life, whichever is shorter, on a straight-line basis. The
lease provides that all operating expenses relating to the property (such as property taxes, utilities, and maintenance) are to be paid by the lessee, GAMCO. These are recognized as expenses in the periods in which they are incurred. Accumulated
amortization on the leased property at December 31, 2021 and 2020 was approximately $5.7 million and $5.5 million, respectively.
The Company also rents office space under operating leases which expire at various dates through December 31, 2030.
The following table summarizes the Company’s leases for the years presented (in thousands, except lease term and discount rate):
The finance lease right-of-use asset, net of amortization, at December 31, 2021 and 2020 was $1.5 million and $1.7 million, respectively, and the operating
right-of-use assets, net of amortization, were $2.6 million and $0.8 million, respectively, and these right-of-use assets were included within
in the consolidated statements of financial condition.The following table summarizes the maturities of lease liabilities at December 31, 2021 (in thousands):
The finance lease contains an escalation clause tied to the change in the New York Metropolitan Area Consumer Price Index which may
cause the future minimum payments to exceed the amounts shown above. Future minimum lease payments have not been reduced by related minimum future sublease rentals of approximately $0.5 million due over the next three years, which are due from
affiliated entities.
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