COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Operating Lease

The Company leases office facilities under various non-cancelable operating lease agreements with original lease periods expiring between 2017 and 2026. Rent expense was $1,527,000 and $1,176,000 for the three months ended June 30, 2017 and 2016, respectively. Rent expense was $2,870,000 and $2,296,000 for the six months ended June 30, 2017 and 2016.

Financing Obligation

The Company occupies office space in San Luis Obispo, California, constructed under a 15 year build-to-suit lease arrangement for which the Company is considered the “deemed owner” for accounting purposes. The lease has an initial term of 15 years and the Company has an option to extend the term of the lease for three consecutive terms of five years each. The portion of the lease obligation allocated to the building for accounting purposes is being treated as a financing obligation. The portion of the lease obligation allocated to the land for accounting purposes is being treated as an operating lease. The financing obligation is being settled through the monthly lease payments. In the table below, the remaining future minimum lease payments on the building, leased, include interest of $9,700,000 to be recognized over the remainder of the initial term of the lease agreement. The total financing obligation as of June 30, 2017 is $15,672,000, of which $474,000 is recorded as a current obligation.

Future Minimum Lease Payments

Future minimum lease payments under non-cancelable lease agreements as of June 30, 2017 were as follows (in thousands):



Year Ending December 31,	Operating Leases		Financing Obligation, Building- Leased		Total
2017 (remaining six months)	$	2,282	$	821	$	3,103
2018	4,296		1,679		5,975
2019	4,244		1,729		5,973
2020	4,254		1,781		6,035
2021	3,619		1,835		5,454
Thereafter	11,338		17,527		28,865
Total minimum lease payments	$	30,033	$	25,372	$	55,405

Purchase Commitments

Future unconditional purchase commitments for software subscriptions and data center and communication services as of June 30, 2017 were as follows (in thousands):



Year Ending December 31,
2017 (Remaining six months)	$	1,518
2018	3,862
2019	2,035
2020	481
Total minimum purchase commitments	$	7,896

Litigation

From time to time, the Company may become 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.