Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

(9) Commitments and Contingencies

Leases

The Company leases managed and co-location facilities for data center capacity and office space under noncancellable operating lease agreements with various expiration dates. The data centers are located in the United States, the Netherlands, the United Kingdom, Switzerland, Canada, and Australia. Expenses at the co-location facilities consist primarily of space, power, cooling and ancillary services. The Company’s managed facilities include the same expenses as co-location facilities as well as expenses related to to leases of equipment, such as servers, networking equipment, and storage infrastructure. Rent expense associated with these facilities, included in cost of revenues, was $3.0 million and $1.5 million for the three months ended June 30, 2012 and 2011, respectively, and $5.7 million and $2.7 million for the six months ended June 30, 2012 and 2011, respectively.

The Company is headquartered in San Diego, California and leases office space in the United States, the United Kingdom, Germany, Australia, the Netherlands, Canada, Denmark, France, Sweden, and Israel. Rent expense associated with these leases was $1.1 million and $0.5 million for the three months ended June 30, 2012 and 2011, respectively, and $1.9 million and $1.8 million for the six months ended June 30, 2012 and 2011, respectively. During the six months ended June 30, 2011, the Company relocated their headquarters and terminated a lease on a former premise. The termination fee of $0.7 million is included in rent expense for the six months ended June 30, 2011.

Annual future minimum payments under these operating leases were as follows as of June 30, 2012 (in thousands):

	Data Centers		Office Leases		Total
Fiscal Period:
Remaining six months of fiscal 2012	$	5,625	$	2,096	$	7,721
Fiscal 2013		7,390		4,924		12,314
Fiscal 2014		4,635		4,266		8,901
Fiscal 2015		546		3,432		3,978
Fiscal 2016		—		3,448		3,448
Thereafter		—		10,507		10,507
Total minimum lease payments	$	18,196	$	28,673	$	46,869

Legal Proceedings

From time to time, the Company is party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows, except for those matters for which the Company has recorded a loss contingency. The Company accrues for loss contingencies when it is both probable that it will incur the loss and when the amount of the loss can be reasonably estimated.

Generally, the Company’s subscription agreements require it to indemnify its customers for third-party intellectual property infringement claims. Any adverse determination related to intellectual property claims or litigation could prevent the Company from offering its service and adversely affect its financial condition and results of operations.