Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating leases

We rent our facilities and certain equipment and automobiles under non-cancelable operating lease arrangements. Facility leases expire at various dates through 2017 and thereafter and provide for pre-negotiated fixed rental rates during the terms of the lease.

We have a facility in San Jose, Costa Rica used for the digital planning of our clear aligner treatments and interpretation for our iTero scanners. The facility comprises approximately 63,000 square feet of manufacturing and office space. The monthly rent in 2012 for the Costa Rica facility was approximately $87,000.   We renewed the lease in March 2008 for an additional five year term, which commenced in October 2008 and expires in September 2013.

We also have a facility in Juarez, Mexico used to manufacture clear aligners and components of our intra-oral scanners. This facility comprises approximately 68,000 square feet of manufacturing and office space with a monthly rent in 2012 of approximately $32,000. We assumed the lease from International Manufacturing Solutions in December 2008 and it will expire in July 2013.

For our Scanner and CAD/CAM Service, we lease 47,000 square feet of manufacturing and office space in Or Yehuda, Israel, where we produce our handheld intra-oral scanner wand and have operations and general and administrative functions.  The monthly rent for this facility is approximately $90,000 and will expire in October 2017.

Our European headquarters are located in Amsterdam, the Netherlands. In 2011, the original lease agreement was amended to expand our Amsterdam facility to approximately 26,000 square feet of office space. This lease will expire in May 2017 and the monthly rent in 2012 for the Amsterdam facility was approximately $45,000.

Our U.S. headquarters are located in San Jose, California. The facility comprises of approximately 129,000 square feet used for research and development and administration. The lease agreement commenced in June 2010 and expires in August 2017. The monthly rent in 2012 for our corporate headquarters was approximately $150,000.

We recognize rent expense on a straight-line basis over the lease period, and accrued for any rent expense incurred but not paid. Total rent expense was $6.9 million, $6.1 million and $4.7 million, for the years ended December 31, 2012, 2011 and 2010, respectively.

Minimum future lease payments for non-cancelable leases as of December 31, 2012, are as follows (in thousands):

Fiscal Year	Operating leases
2013	7,289
2014	6,387
2015	5,037
2016	4,758
2017	2,247
Thereafter	—
Total minimum lease payments	$	25,718

Off-balance Sheet Arrangements

As of December 31, 2012, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

Indemnification Provisions

In the normal course of business to facilitate transactions in our services and products, we indemnify certain parties: customers, vendors, lessors, and other parties with respect to certain matters, including, but not limited to, services to be provided by us and intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain of our officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. Several of these agreements limit the time within which an indemnification claim can be made and the amount of the claim.

It is not possible to make a reasonable estimate of the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Additionally, we have a limited history of prior indemnification claims and the payments we have made under such agreements have not had a material adverse effect on our results of operations, cash flows, or financial position. However, to the extent that valid indemnification claims arise in the future, future payments by us could be significant and could have a material adverse effect on our results of operations or cash flows in a particular period. As of December 31, 2012, we did not have any material indemnification claims that were probable or reasonably possible.