Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies [Abstract]

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, which could result in adverse judgments, settlements, fines, injunctions, or other relief. For any such matters, the condensed consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable. Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and, if material, makes the necessary disclosures. 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 of loss or range of loss can be reasonably estimated. Except as disclosed in Note 13, Subsequent Events, 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 March 31, 2022.

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 March 31, 2022 and December 31, 2021 was approximately $5.8 million and $5.7 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 periods presented (in thousands, except lease term and discount rate):

	Three Months Ended
	March 31,
	2022			2021
Finance lease cost - interest expense	$	267		$	263
Finance lease cost - amortization of right-of-use asset		67			67
Operating lease cost		147			183
Sublease income		(32	)		(15	)
Total lease cost	$	449		$	498

Other information:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from finance lease	$	-		$	-
Operating cash flows from operating leases		152			113
Financing cash flows from finance lease		74			61
Total cash paid for amounts included in the measurement of lease liabilities	$	226		$	174
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-		$	-
Weighted average remaining lease term—finance lease (years)		6.8			7.8
Weighted average remaining lease term—operating leases (years)		3.2			3.2
Weighted average discount rate—finance lease		19.1	%		19.1	%
Weighted average discount rate—operating leases		5.0	%		5.0	%

The finance lease right-of-use asset, net of amortization, at March 31, 2022 and December 31, 2021 was $1.4 million and $1.5 million, respectively, and the operating right-of-use assets, net of amortization, were $2.4 million and $2.6 million, respectively, and these right-of-use assets were included within other assets in the Condensed Consolidated Statements of Financial Condition.

The following table summarizes the maturities of lease liabilities at March 31, 2022 (in thousands):

Year ending December 31,	Finance Leases			Operating Leases			Total Leases
2022 (excluding the three months ended March 31, 2022)	$	1,019		$	610		$	1,629
2023		1,080			571			1,651
2024		1,080			424			1,504
2025		1,080			363			1,443
2026		1,080			363			1,443
Thereafter		2,160			1,278			3,438
Total lease payments	$	7,499		$	3,609		$	11,108
Less imputed interest		(3,442	)		(952	)		(4,394	)
Total lease liabilities	$	4,057		$	2,657		$	6,714

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 $1.1 million due over the next eight years, which are due from affiliated entities.