Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

As of March 31, 2013, the Company’s material contractual obligations are as follows (in thousands):

	Total		Remainderof 2013		2014		2015		2016		2017		Thereafter
Contractual obligations (1)
Imputed financing obligation (2)	$	44,553	$	4,683	$	5,873	$	6,011	$	6,156	$	6,302	$	15,528
Leases and other contractual obligations	8,006		1,902		1,906		1,791		1,049		1,018		340
Software licenses (3)	400		320		80		—		—		—		—
Acquisition retention bonuses (4)	36,509		16,873		18,151		1,485		—		—		—
Convertible notes	172,500		—		172,500		—		—		—		—
Interest payments related to convertible notes	12,937		8,625		4,312		—		—		—		—
Total	$	274,905	$	32,403	$	202,822	$	9,287	$	7,205	$	7,320	$	15,868

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(1) The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $16.8 million including $10.6 million recorded as a reduction of long-term deferred tax assets and $6.2 million in long-term income taxes payable as of March 31, 2013. As noted below in Note 13, “Income Taxes,” although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time.

(2) With respect to the imputed financing obligation, the main components of the difference between the amount reflected in the contractual obligations table and the amount reflected on the Condensed Consolidated Balance Sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. Additionally, the amount includes the amended Ohio lease and the amended Sunnyvale lease.

(3) The Company has commitments with various software vendors for non-cancellable license agreements generally having terms longer than one year. The above table summarizes those contractual obligations as of March 31, 2013 which are also presented on the Company’s Condensed Consolidated Balance Sheet under current and other long-term liabilities.

(4) In connection with its recent acquisitions, the Company is obligated to pay retention bonuses to certain employees and contractors, subject to certain eligibility and acceleration provisions including the condition of employment.  The remaining $33.3 million of CRI retention bonuses payable on June 3, 2013 and 2014 can be paid in cash or stock at the Company’s election.

Building lease expense was approximately $0.9 million and $0.8 million for the three months ended March 31, 2013 and 2012, respectively. Deferred rent of $1.6 million and $0.8 million as of March 31, 2013 and December 31, 2012, respectively, were included primarily in other long-term liabilities.

Indemnification

The Company enters into standard license agreements in the ordinary course of business. Although the Company does not indemnify most of its customers, there are times when an indemnification is a necessary means of doing business. Indemnification covers customers for losses suffered or incurred by them as a result of any patent, copyright, or other intellectual property infringement or any other claim by any third party arising as result of the applicable agreement with the Company. The maximum amount of indemnification the Company could be required to make under these agreements is generally limited to fees received by the Company.

Several securities fraud class actions, private lawsuits and shareholder derivative actions were filed in state and federal courts against certain of the Company’s current and former officers and directors related to the stock option granting actions. As permitted under Delaware law, the Company has agreements whereby its officers and directors are indemnified for certain events or occurrences while the officer or director is, or was serving, at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s term in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. The Company has a director and officer insurance policy that reduces the Company’s exposure and enables the Company to recover a portion of future amounts to be paid. As a result of these indemnification agreements, the Company continues to make payments on behalf of primarily former officers and some current officers. As of March 31, 2013, the Company had made cumulative payments of approximately $32.2 million on their behalf, including $17 thousand in the quarter ended March 31, 2013. As of March 31, 2012, the Company had made cumulative payments of approximately $31.9 million on their behalf, including $30 thousand in the quarter ended March 31, 2012. These payments were recorded under costs of restatement and related legal activities in the condensed consolidated statements of operations.