Commitments And Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

Operating Leases

We lease office space, equipment and automobiles under non-cancelable operating leases, which expire at various dates through May 2018. Rent expense for the years ended December 31, 2010, 2011 and 2012 was $1.1 million, $1.0 million and $1.1 million, respectively. We record rent expense on a straight–line basis based on contractual lease payments.

Future minimum lease payments due under all non-cancelable operating leases as of December 31, 2012 are as follows (in thousands):

2013	$	1,301
2014	1,232
2015	1,224
2016	1,130
2017	1,155
Thereafter	488
Total minimum lease payments	$	6,530

For purposes of the table above, the operating lease obligations exclude common area maintenance, real estate taxes and insurance expenses.

Unconditional Purchase Obligations

We have unconditional inventory related purchase obligations to certain suppliers for certain commodities in order to ensure supply of select key components at the most favorable pricing. Additionally, we have non-inventory related purchase obligations that represent purchase commitments made in the ordinary course of business. At December 31, 2012 we had approximately $21.8 million of unconditional purchase obligations.

Legal Proceedings

We are involved in certain legal actions and claims from time to time arising in the ordinary course of business. Management believes the outcome of such litigation and claims could have a material adverse effect on our financial statements. Historically, the outcome of such litigation and claims has not had a material adverse effect on our financial condition or results of operations.

In January 2012, Dot Hill filed an arbitration claim against a customer for unpaid money owed to Dot Hill under the OEM and License Agreement entered into by the parties in July 2010 (the “Agreement”).  Pursuant to the Agreement, the customer licensed portions of our UVS software and bundled it with its hardware and software.  Our customer was required to pay licensing and support fees under the Agreement.  During the second calendar quarter of 2011, the customer stopped making payments, and approximately $1.1 million dollars is owed to us under the Agreement.  Our customer filed a counter claim for $0.6 million, primarily for damages and reimbursement of specific amounts paid under the Agreement. The case was heard at arbitration in late February to early March 2013, and we expect that a judgment will be issued within the next 60 days. We have reviewed this claim, but cannot at this stage in the process determine the likelihood of the outcome. Our initial estimate of our potential exposure ranges between $0.0 million and $0.6 million.