NOTE 6 - OPERATING LEASE COMMITMENTS

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

NOTE 7 - OPERATING LEASE COMMITMENTS

We have commitments under non-cancelable operating leases and other agreements, primarily for factory and office space, with initial or remaining terms of one year or more as follows:

For the years ending December 31:

	Operating Leases
(in thousands)
2017	$872
2018	878
2019	906
2020	893
2021	484
Thereafter	11
Total	$4,044

Lease and rental expense was $927,000 and $955,000 in 2016 and 2015, respectively.  Rent expense is recorded on a straight line basis, over the term of the lease, for leases that contain fixed escalation clauses. 

During the second quarter of 2015, we amended our lease agreement for the Redmond, Washington headquarters facility effective July 8, 2015. The amended lease resulted in our headquarters relocating to a nearby building, extending the term through April 2021, lowering the square footage to approximately 20,460, providing lease inducement incentives and lowering the rental rate. The lease commitment of approximately $1.7 million will be paid over the term of the lease. As a result of this lease amendment, the remaining balance of the restructure liability relating to the lease of approximately $120,000 was incorporated into our deferred rent liability in July 2015.  The lease base annual rental payments during 2016 and 2015 were approximately $200,000 and $296,000, respectively.

In addition to the Redmond facility, approximately 24,000 square feet is leased at two foreign locations, including our sales, service, operations and engineering office located in Shanghai, China, and our German sales, service and engineering office located in Munich, Germany.

We renewed our lease agreement for what is now our former Shanghai, China facility, effective June 15, 2015, extending the term through December 31, 2015.  Operations continued in this facility through January 31, 2016.  In October 2015, we signed a lease agreement for a new facility located in Shanghai, China which was effective November 1, 2015 and extends through October 31, 2021.  The new lease approximately doubled our space to 19,400 square feet at approximately 54% of the prior lease rental rate.  The lease base annual rental payments during 2016 and 2015 were approximately $233,000 and $324,000, respectively.

During the fourth quarter of 2016, we signed a lease agreement for a new facility located in Munich, Germany which is effective March 1, 2017 and extends through February 28, 2022.  The new lease will slightly increase our space to 4,895 square feet at approximately the same cost per square foot as the current lease. The lease base annual rental payments during 2016 and 2015 were both approximately $61,000.