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Commitments and Contingencies
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3 Months Ended |
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Mar. 31, 2012
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| Commitments and Contingencies [Abstract] | |
| Commitments and Contingencies |
(5) Commitments and Contingencies
(a) Leases, Related Party Transactions and Other Commitments
We are the tenant under capital leases on four building facilities with an aggregate obligation of approximately $6.6 million as of March 31, 2012. We lease two of the facilities from a company and the other two facilities from a partnership in which certain employees of our subsidiary WBI or their direct relatives have full ownership. The leases were entered into in June 2011 in connection with our acquisition of WBI and each have terms of 15 years with two seven-year renewal options. The annual combined base rent amount is approximately $854 thousand and the leases contain escalation provisions for future years. Beginning in year five, the rent amount will increase by the greater of the Consumer Price Index ("CPI") increase during the first four year period or 12%. For each successive lease year, the rent will increase based on any increase in the CPI for the previous lease year. The leases provide us with an option to purchase three of the facilities for a total of approximately $9 million and an option to purchase the fourth facility for approximately $650 thousand. The closing for these purchase options must occur before December 1, 2025. Depreciation and interest expense for the three months ended March 31, 2012 was approximately $112 thousand and $176 thousand, respectively.
We signed a lease in November 2009 for a building that will serve as our headquarters beginning in the spring of 2012. Certain terms in the lease agreement resulted in the capitalization of construction costs due to specific accounting rules. We have recorded a construction asset and corresponding long-term liability of approximately $26.7 million and $26.4 million, respectively, on the accompanying March 31, 2012 and December 31, 2011 condensed consolidated balance sheets in connection with this lease, which represents the construction costs incurred by the landlord as of the respective balance sheet dates.
(b) Contingencies
We entered into an agreement with a subcontractor in March 2011 to satisfy certain work share requirements (the "Agreement"). The Agreement, requires us to provide the subcontractor with certain levels of subcontracted work over two specified nine-month periods. The first period began March 1, 2011 and ended November 30, 2011. The second period began December 1, 2011 and ends August 31, 2012. As required by the Agreement, we placed $1.5 million in an escrow account to ensure cash payments to the subcontractor if the work share requirements are not satisfied.
Due to delays in contract awards and protests of contracts awarded to us, we were not able to provide any of the first period required work to the subcontractor by November 30, 2011. Accordingly, we recorded an expense of $750 thousand on our financial statements during the third quarter of 2011. The remaining $750 thousand of escrowed funds are classified as other current assets on our March 31, 2012 balance sheet.
We have, in the normal course of business, certain claims against us and against other parties and we may be subject to various governmental investigations. In our opinion, the resolution of these claims and investigations will not have a material adverse effect on our results of operations or financial position. However, the results of any legal proceedings cannot be predicted with certainty.
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