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Commitments and Contingencies
3 Months Ended
Apr. 01, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Lease Commitments
The Company leases office space for its current headquarters in Santa Clara, California and its United Kingdom subsidiary under non-cancelable operating leases that expire at various dates through fiscal 2025. The Company has also entered into lease agreements for additional office space in India and Sweden. The Company recognizes rent expense on a straight-line basis over the lease period.
Rent expense related to the Company’s operating leases was $1.0 million and $0.9 million for the three months ended April 1, 2017 and April 2, 2016, respectively.
No material change in the future minimum lease payments under non-cancelable operating leases has occurred in the three-month period end April 1, 2017 as reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
Purchase Commitments
The Company has agreements with contract manufacturers for the manufacture of its products. The agreement with its primary contract manufacturer allows the contract manufacturer to procure components on the Company’s behalf based upon a production forecast provided by the Company. The Company also purchases raw materials directly from suppliers to be used by the contract manufacturer in the production of the Company’s products.  The Company may be obligated to purchase component inventory that is non-cancelable.  As of April 1, 2017 and December 31, 2016, the Company’s non-cancelable purchase commitments for such component inventory were $19.4 million and $15.7 million, respectively.
Legal Proceedings
On January 27, 2017, a purported shareholder class action was filed in the United States District Court for the Northern District of California against the Company and three of its current and former officers. The plaintiff alleges that the Company made false and misleading statements about the Company’s business, operations, and prospects, including statements about the Company’s guidance, for the fourth quarter of 2016. The complaint seeks unspecified monetary damages, attorneys' fees and costs and other relief. The Company believes this lawsuit is without merit and intends to defend against it vigorously. The matter is still in the very early stages and the Company will defend against the allegations accordingly. Due to the current early stage of the proceedings, the Company cannot reasonably estimate the loss or the range of possible losses, if any.
Indemnification Obligations
Under the indemnification provisions of its standard sales related contracts, the Company agrees to defend its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets, and to pay judgments entered on such claims. The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by its customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement. The Company has not incurred any costs as a result of such indemnifications and has not accrued any liabilities related to such obligations in its condensed consolidated financial statements. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in the company capacities. To date, there have been no claims under any indemnification provisions.