COMMITMENTS AND CONTINGENCIES

Operating Leases—The Company’s primary facilities are located in Sunnyvale, California, Shenzhen, China, Singapore, Taipei, Taiwan, Bangalore, India and Woodburn Green, United Kingdom and are leased under non-cancelable operating lease arrangements. Rent expense was $4.7 million, $4.4 million, and $2.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Future minimum lease payments under non-cancelable operating leases are as follows (in thousands):



Years ending December 31,	Amount
2015	$	3,997
2016	3,190
2017	2,789
2018	2,590
2019	2,544
Thereafter	7,489
Operating lease obligations	$	22,599

Litigation— The Company is involved in legal proceedings, claims, and litigation arising in the ordinary course of business. Management is not currently aware of any matters that it expects will have a material adverse effect on the consolidated financial position, results of operations, or cash flows of the Company.

For the year ended December 31, 2014, the Company settled several patent litigation claims for a net gain of $0.8 million, which is included in general and administrative expense in the consolidated statements of operations. The Company did not have any material settlement gains or losses for the years ended December 31, 2013 and 2012.

Purchase Commitments— As of December 31, 2014, the Company had current purchase commitments of $15.2 million for inventory and specific contractual services.

Indemnification Agreements— The Company indemnifies its directors for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the director’s term of service. The Company may terminate the indemnification agreements with its directors upon the termination of their services as directors of the Company, but termination will not affect claims for indemnification related to events occurring prior to the effective date of termination. The maximum amount of potential future indemnification is unlimited; however, the Company has a director insurance liability policy that limits its exposure. The Company believes the fair value of these indemnification agreements is minimal. The Company has also entered into customary indemnification agreements with each of its officers.

The Company indemnifies its channel partners against certain claims alleging that the Company’s products (excluding custom products and/or custom support) infringe a patent, copyright, trade secret, or trademark, provided that a channel partner promptly notifies the Company in writing of the claim and such channel partner cooperates with the Company and grants the Company the authority to control the defense and any related settlement.

The Company has not recorded any liabilities for these agreements as of December 31, 2014 and 2013.

Reimbursement of Penalties— As of December 30, 2014 and 2013, the Company held $5.0 million in escrow to secure an indemnification agreement. If triggered, the Company will indemnify a channel partner for reimbursement of penalties assessed under the IT Act. The IT Act specifies penalties for network service providers in the event of illegal or unauthorized use of computers, computer systems and data stored therein. In the event that Ruckus equipment is the cause of a network service provider breach, the Company is required to indemnify the channel partner, without limitation to the amount, for penalties reimbursed by the channel partner to the network service provider under the IT Act. The indemnification period is six years, which began in April 2013. To date no claims have been made under the IT Act, for which the Company would be potentially liable.

Warranties— The Company generally offers a limited lifetime hardware warranty on its indoor WLAN products and a limited warranty for all other hardware products for a period of up to one year. The Company estimates the costs that may be incurred under its warranties and records a liability for products sold as a charge to cost of revenue. Estimates of future warranty costs are largely based on historical experience of product failure rates and material usage incurred in correcting product failures. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the amounts as necessary.

The warranty liability is included as a component of accrued liabilities in the accompanying consolidated balance sheets. Changes in the warranty liability were as follows (in thousands):



	Years Ended December 31,
	2014			2013			2012
Balance at beginning of year	$	1,038		$	725		$	489
Changes in existing warranty	(216		)	(41		)	47
Warranty expense	955			1,528			784
Obligations fulfilled	(974		)	(1,174		)	(595		)
Balance at end of year	$	803		$	1,038		$	725