Commitments and Contingencies
|3 Months Ended|
Mar. 31, 2014
|Commitments and Contingencies||
10. COMMITMENTS AND CONTINGENCIES
The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the three months ended March 31, 2014 and 2013 amounted to $902 and $901, respectively. The Company received sub-lease income from subtenants during the three months ended March 31, 2014 and 2013 of $102 and $284, respectively. Therefore, for the three months ended March 31, 2014 and 2013, net rent expense amounted to $800 and $617, respectively, and is included in general and administrative expenses in the Condensed Consolidated Statement of Operations.
As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $2,023 that were reduced to $1,013 on August 31, 2010 and can be further reduced to $506 on August 31, 2014. The letter of credit is collateralized by a certificate of deposit in an equal amount.
In March 2014, the Company entered into a lease agreement for additional office space. The lease commences on May 1, 2014 and expires July 31, 2019. The lease is subject to escalation clauses and provides for a rent-free period of 3 months. Monthly rent expense will be $5. The Company paid a refundable security deposit of $3. Future minimum lease payments and rentals under lease agreements which expire through 2019 are as follows:
The Company has capital leases for certain office equipment. The Company entered into a new capital lease agreement for a telephone system during the three months ended March 31, 2014. The amount financed was $289 and the lease has a term of 5 years, which began on March 1, 2014. Monthly minimum lease payments are $5, and continue through November 30, 2018. The aggregate principal balance of capital leases was $294 and $19 as of March 31, 2014 and December 31, 2013, respectively and is included in other liabilities in the Condensed Consolidated Statements of Financial Condition.
In connection with its acquisition of MCG in October 2008, SLP entered into a contingent consideration agreement whereby the former members of MCG were entitled to contingent consideration equal to 22% of adjusted annual EBITDA in addition to any performance fee payments for each of the five years subsequent to the date of acquisition. As the acquisition was completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of the closing of the acquisition. The contingent consideration related to the MCG acquisition is recorded on the date when the contingency is resolved. Contingent consideration payments of $1,679 (which was accrued as of December 31, 2013) and $0 were made during the three months ended March 31, 2014 and 2013, respectively, related to MCG and are reflected in investing activities in the Condensed Consolidated Statements of Cash Flows.
Quarterly contingent payments related to the Commodity Advisors acquisition were accrued when the contingency was resolved. The total accrual for these payments for the three months ended March 31, 2014 and 2013 was $0 and $99, respectively, which was recorded as compensation expense in the Condensed Consolidated Statements of Operations.
The entire disclosure for commitments and contingencies.
Reference 1: http://www.xbrl.org/2003/role/presentationRef