Final CNS AR 2020 - Flipbook - Page 55
Contractual Obligations and Contingencies
The following table summarizes our contractual obligations at December 31, 2020:
Operating leases . . . . . . . . . . . . . . . . . . $ 12,173
Purchase obligations . . . . . . . . . . . . . . .
Other liability . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . $ 15,243
Operating leases generally consist of noncancellable long-term leases for office space and certain information
Purchase obligations represent executory contracts, which are either noncancellable or cancellable with a penalty. The
Company’s obligations primarily reflected standard service contracts for market data.
Other liability consists of the transition tax liability based on the cumulative undistributed earnings and profits of our
foreign subsidiaries in connection with the enactment of the Tax Act in 2017. This tax liability, paid over eight years on an
interest-free basis, is included as part of income tax payable on our consolidated statement of financial condition.
Due to the uncertainty with respect the timing of future cash flows associated with unrecognized tax benefits at
December 31, 2020, the Company is unable to make reasonably reliable estimates of the period of cash settlement with the
respective taxing authorities. Therefore, $13.6 million of gross unrecognized tax benefits have been excluded from the
contractual obligations table above. See Note 14 to the consolidated financial statements for additional disclosures related to
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or
future effect on our financial condition, results of operations, liquidity or capital resources.
Critical Accounting Policies and Estimates
A thorough understanding of our accounting policies is essential when reviewing our reported results of operations and
our financial condition. The preparation of our consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated
financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes
the estimates used in preparing the consolidated financial statements are reasonable and prudent. Actual results could differ
from those estimates due to factors we cannot fully predict including the extent of the impact on the Company's business
from the ongoing COVID-19 pandemic.
Our significant accounting policies are disclosed in Note 2 to the consolidated financial statements and should be read
in conjunction with the summarized information below. Management considers the following accounting policies critical to
an informed review of our consolidated financial statements as they require management to make certain judgments about
matters that may be uncertain at the time the policies were applied or the estimates determined.
Consolidation of Company-sponsored Funds
The Company evaluates its investments in Company-sponsored funds at inception and thereafter, if there is a
reconsideration event, in order to determine whether to apply the variable interest entity (VIE) model or the voting interest
entity (VOE) model. This evaluation involves the use of judgment and analysis on an entity by entity basis. In performing