COMMITMENTS AND CONTINGENCIES

12 Months Ended

Jul. 02, 2016

Commitments and Contingencies Disclosure [Abstract]

Leases: As of July 2, 2016 and June 27, 2015, the Company did not have any property and equipment financed under capital leases. The Company had equipment financed through capital leases with a net book value of $1.7 million during fiscal year 2014. The related depreciation expense was $0.3 million for fiscal year 2014. As of July 2, 2016, the Company has operating leases for certain equipment and production facilities, which expire at various dates during the next six years.

Future minimum payments under non-cancelable operating leases at July 2, 2016, are summarized as follows (in thousands):



Fiscal Years Ending	Operating Leases
2017	$	7,666
2018	5,831
2019	2,805
2020	1,261
2021	732
Thereafter	90
Total minimum lease payments	$	18,385

Rental expense under operating leases was approximately $6.6 million, $3.8 million, and $1.8 million during fiscal years 2016, 2015 and 2014, respectively.

Warranty Costs: The Company provides warranties on certain product sales, and allowances for estimated warranty costs are recorded during the period of sale. The determination of such allowances requires the Company to make estimates of product return rates and expected costs to repair or to replace the products under warranty. The Company establishes warranty reserves based on historical warranty costs for each product line combined with liability estimates based on the prior twelve months’ sales activities. As of July 2, 2016 and June 27, 2015, the reserve for warranty costs was approximately $30,000 and $115,000, respectively.

If actual return rates and/or repair and replacement costs differ significantly from estimates, adjustments to recognize additional cost of sales may be required in future periods. Warranty expense for fiscal years 2016, 2015 and 2014 was related to workmanship claims on keyboards and certain EMS products.

Litigation: The Company is party to certain lawsuits or claims in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the financial position, results of operations or cash flow of the Company.

Indemnification Rights: Under the Company’s bylaws, the Company’s directors and officers have certain rights to indemnification by the Company against certain liabilities that may arise by reason of their status or service as directors or officers. The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and officers and former directors in certain circumstances.