Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

The Company leases its office space and certain equipment under noncancelable operating lease agreements with various expiration dates through September 30, 2022. Rent expense for the three months ended September 30, 2014 and 2013 was $2.3 million and $2.0 million, respectively, and for the nine months ended September 30, 2014 and 2013 was $6.9 million and $6.4 million, respectively. The Company recognizes rent expense on a straight-line basis over the lease period and accrues for rent expense incurred but not paid.

Future annual minimum lease payments under all noncancelable operating leases as of September 30, 2014 were as follows (in thousands):

	September 30, 2014
Years Ending December 31,
2014 (remaining three months).	$	2,125
2015	7,244
2016	5,077
2017	4,795
2018	4,450
Thereafter	9,787
Total	$	33,478

Other Contractual Obligations

In August 2013, the Company issued the Notes raising gross proceeds of $150.0 million. The Notes will mature on August 1, 2018, unless earlier repurchased or converted, and bear interest at a rate of 1.50% per year payable semi-annually in arrears on February 1 and August 1 of each year, commencing February 1, 2014.

Litigation

Bionet Systems, LLC, et al. v. Scout Analytics, Inc., et al., in Superior Court, King County, Washington State, and related claims

On January 10, 2014, certain now-former shareholders of Scout Analytics, Inc. (“Scout”) filed a lawsuit against Scout and some of its directors and their employers regarding the then-pending acquisition of Scout by the Company. The plaintiffs have asserted claims against all defendants for breach of fiduciary duty, minority shareholder oppression, corporate waste, injunctive relief and unjust enrichment.  In their complaint, the plaintiffs seek damages and payment of their attorneys’ fees and costs.  On April 17, 2014, the plaintiffs filed a First Amended Complaint, in which they added the Company as a defendant, and asserted claims for tortious interference.

Certain now-former Scout shareholders have also asserted dissenter's rights claims related to the Scout acquisition.  On June 13, 2014, the Company filed a lawsuit in the Superior Court for King County, Washington, in which it seeks a determination by the Court as to the fair value of the shares, and that such shareholder claims have no merit.

The costs of such litigation and dissenter's rights claims are expected to be covered by insurance and/or by either the escrow amounts held back from the merger consideration paid for Scout, or the indemnification obligations of the former Scout shareholders.

The Company may be subject to litigation or other claims in the normal course of business. In the opinion of management, the Company’s ultimate liability, if any, related to any currently pending or threatened litigation or claims is remote, not reasonably possible or not probable, and in any instance, any such liability would not materially affect its consolidated financial position, results of operations, or cash flows.