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Leases
3 Months Ended
Mar. 31, 2013
Leases [Abstract]  
Leases

NOTE 10.  LEASES

 

       In April 2012, the Company entered into an office and laboratory lease agreement to lease approximately 52,500 rentable square feet in Newark, California commencing on December 1, 2012. The Company is obligated to lease approximately 8,000 additional rentable square feet commencing no later than December 1, 2015.  The lease will expire on November 30, 2022.  However, the Company has the right to renew the lease for one additional five year term, provided that written notice is made to the landlord no later than 12 months prior to the lease expiration. The Company will have the one-time right to terminate the lease in its entirety effective as of November 30, 2017 by delivering written notice to the landlord on or before December 1, 2016.  In the event of such termination, the Company will pay the landlord the unamortized portion of the tenant improvement allowance, specified additional allowances made by the landlord, waived base rent and leasing commissions, in each case amortized at 8% interest.

 

       The terms of the lease include a tenant improvement allowance of up to $6.3 million covering the approximately 52,500 of space that is currently being leased. As of March 31, 2013, the Company had submitted claims for, and received $5.4 million from the landlord. The $5.4 million in submitted claims has been recorded as short- and long-term liabilities, as appropriate. The liabilities will be ratably reduced over the life of the lease which will reduce rent expense in accordance with the applicable accounting guidance. Claims for the remaining amount of the tenant improvement allowance are expected to be submitted, and recovered in the second quarter of 2013.

 

       The terms of the lease also include an additional tenant improvement allowance of up to $0.8 million covering the approximately 8,000 additional square feet of space that the Company is obligated to lease no later than December 1, 2015.

 

      The Company was allowed to control physical access to the premises upon signing the lease. Therefore, in accordance with the applicable accounting guidance, the lease term was deemed to have commenced in April 2012. Accordingly, the rent free periods and the escalating rent payments contained within the lease are being recognized on a straight-line basis from April 2012. The Company will pay approximately $14.1 million in aggregate as rent over the term of the lease for the above premises. Deferred rent for the new lease was approximately $1.3 million as of March 31, 2013.

 

Rent expense for the new lease was approximately $0.4 million for the three months ended March 31, 2013. Rent expense for the Company’s prior offices located in Menlo Park, California was approximately $0.1 million for the three months ended March 31, 2013.  The Menlo Park lease ended in January 2013. Rent expense for the Menlo Park lease was approximately $0.4 million for the three months ended March 31, 2012.