Original GBL Prospectus - Gabelli

GABELLI FUNDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
H. Capital Lease
In December 1997, the Company signed an agreement to lease new primary oÇce space from a company
owned by stockholders of GFI. The Company has recorded a capital lease asset and liability for the fair value
of the leased property. Amortization of the capital lease is computed on the straight-line method over the term
of the lease, which expires on April 30, 2013. 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, the Company.
Future minimum lease payments for this capitalized property at December 31, 1997 are as follows:
(In thousands)
1998 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 720
1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 720
2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 720
2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 720
2002 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 720
Thereafter ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7,896
Total minimum obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,496
Interest ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,471
Present value of net obligationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 7,025
Future minimum lease payments have not been reduced by related minimum future sublease rentals of
approximately $1,885,000, of which approximately $515,000 is due from an aÇliated entity. Lease payments
under this agreement amounted to approximately $50,000 for the year ended December 31, 1997.
Total minimum obligations exclude the operating expenses to be borne by the Company, which are
estimated to be $400,000 per year.
I. Commitments
The Company rents oÇce space under leases which expire at various dates through 2001. Future
minimum lease commitments under these operating leases as of December 31, 1997 are as follows:
(In thousands)
1998 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 880
1999 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 756
2000 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 665
2001 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 593
$2,894
Equipment rentals and occupancy expense amounted to approximately $1,729,000, $1,457,000 and
$1,644,000, respectively, for the years ended December 31, 1995, 1996 and 1997.
J. Related Party Transactions
GFI serves as the investment adviser for the Funds and earns advisory fees based on predetermined
percentages of the average net assets of the Funds. In addition, Gabelli & Company has entered into
distribution agreements with each of the Funds. As principal distributor, Gabelli & Company incurs certain
promotional and distribution costs related to the sale of Fund shares, for which it receives a fee or
reimbursement from the Funds.
The Company had an aggregate investment in the Funds of approximately $40,902,000 and $34,464,000
at December 31, 1996 and 1997, respectively, of which approximately $27,966,000 and $11,305,000,
respectively, is invested in a money market mutual fund.
Gabelli & Company earns a majority of its commission revenue from transactions executed on behalf of
clients of aÇliated companies.
The Company is required to pay the Chairman of the Board and Chief Executive OÇcer a management
fee which is equal to 20% of the pretax proÑts of each of the Company's operating divisions before
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