Note 11. Commitments

Leases

We lease office space and equipment under noncancelable operating and capital leases with various expiration dates, some of which contain renewal options.

On March 1, 1996, we entered into a 20-year capital lease for a building in Ashburn, Virginia, that serves as our corporate headquarters. We have accounted for this transaction as a capital lease and have accordingly recorded assets and a corresponding liability of approximately $12.3 million. Effective November 1, 2013, this lease was terminated and and we entered into a 13-year lease that expires in October 31, 2026. The new lease was treated as a modification in accordance with ASC 840, “Leases”. As a result of the new lease, the corresponding capital asset and liability increased by $11.7 million, resulting in a net book value of the capital asset of $13.1 million, and capital obligation of $15.5 million. The lease includes an option to purchase, assign to, or designate a purchaser on June 1, 2014, which requires notice of intent to exercise the option by March 31, 2014.

The following is a schedule by years of future minimum payments under capital leases together with the present value of the net minimum lease payments as of December 31, 2013 (in thousands):

	Property			Equipment			Total
2014	$	1,500		$	33		$	1,533
2015		1,538			30			1,568
2016		1,576			1			1,577
2017		1,616			1			1,617
2018		1,656			----			1,656
Remainder		14,484			----			14,484

Total minimum obligations		22,370			65			22,435
Less amounts representing interest (ranging from 5.8% to 18.8%)		(6,876	)		(1	)		(6,877	)

Net present value of minimum obligations		15,494			64			15,558
Less current portion		(625	)		(32	)		(657	)

Long-term capital lease obligations at December 31, 2013	$	14,869		$	32		$	14,901

In accordance with the new Ashburn lease agreement, the basic rent increases by a fixed 2.5% escalation annually.

Accumulated amortization for property and equipment under capital leases at December 31, 2013 and 2012 is $12.1 million and $11.7 million, respectively.

Future minimum lease payments for all noncancelable operating leases at December 31, 2013 are as follows (in thousands):

2014	$	645
2015		551
2016		410
2017		295
2018		289
Remainder		1,531
Total minimum lease payments	$	3,721

Rent expense charged to operations for 2013, 2012, and 2011, totaled $1.1 million, $1.1 million, and $1.2 million, respectively.

Warranties

We provide product warranties for products sold through certain U.S. Government contract vehicles. We accrue a warranty liability at the time that we recognize revenue for the estimated costs that may be incurred in connection with providing warranty coverage. Warranties are valued using historical warranty usage trends; however, if actual product failure rates or service delivery costs differ from estimates, revisions to the estimated warranty liability may be required. Accrued warranties are reported as other current liabilities on the consolidated balance sheets.

	Balance Beginning of Year		Accruals			Warranty Expenses			Balance End of Year
	(amount in thousands)

Year Ended December 31, 2013	$	226	$	70		$	(183	)	$	113
Year Ended December 31, 2012	$	953	$	(393	)	$	(334	)	$	226
Year Ended December 31, 2011	$	1,079	$	257		$	(383	)	$	953