Commitments and Contingencies

3 Months Ended

Mar. 31, 2014

14. Commitments and Contingencies

The Company leases its facilities, certain equipment, and automobiles under non-cancelable operating lease agreements. Those lease agreements existing as of March 31, 2014 expire at various dates during the next five years.

The Company recognized rent expense of $0.4 million and $0.5 million in its condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013, respectively.

Purchases for inventories are highly dependent upon forecasts of customer demand. Due to the uncertainty in demand from its customers, the Company may have to change, reschedule, or cancel purchases or purchase orders from its suppliers. These changes may lead to vendor cancellation charges on these purchases or contractual commitments.

The following table summarizes the Company’s principal contractual commitments as of March 31, 2014 (in thousands):

					Other
	Operating		Purchase		Contractual
	Lease		Commitments		Commitments		Total
2014 (remaining 9 months)	$	1,260	$	10,950	$	420	$	12,630
2015		1,097		102		36		1,235
2016		968		—		2		970
2017		753		—		—		753
2018		76		—		—		76
Thereafter		—		—		—		—
	$	4,154	$	11,052	$	458	$	15,664

The Company provides warranties on certain product sales, which range from 12 to 24 months, and allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty. The Company currently establishes warranty reserves based on historical warranty costs for each product line combined with liability estimates based on the prior 12 months’ sales activities. If actual return rates and/or repair and replacement costs differ significantly from the Company’s estimates, adjustments to recognize additional cost of sales may be required in future periods. Historically the warranty accrual and the expense amounts have been immaterial.

- Definition

The entire disclosure for significant arrangements with third parties, which includes operating lease arrangements and arrangements in which the entity has agreed to expend funds to procure goods or services, or has agreed to commit resources to supply goods or services, and operating lease arrangements. Descriptions may include identification of the specific goods and services, period of time covered, minimum quantities and amounts, and cancellation rights.

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