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Commitments and Contingencies
9 Months Ended
Mar. 31, 2015
Commitments and Contingencies  
Commitments and Contingencies

 

11. Commitments and Contingencies

 

Operating Leases

 

We lease certain facilities under non-cancellable operating leases with terms in excess of one year. Rental expense on leased facilities under operating leases was approximately $2.2 million and $1.7 million during the three months ended March 31, 2015 and 2014 and $6.0 million and $5.3 million during the nine months ended March 31, 2015 and 2014, respectively.

 

During fiscal 2014, we entered into a lease agreement for our principal executive offices located in Bedford, Massachusetts. The lease commenced on November 1, 2014, has an initial term of 10 years and five months and is for 142,673 square feet of office space. We may extend the term of the lease, subject to certain terms and conditions, for two successive terms of five years each. Base annual rent is subject to escalating payments over the term of the lease and will range between approximately $2.2 million and $3.9 million plus our proportionate share of operating expenses and real estate taxes. As of March 31, 2015, future minimum non-cancelable lease payments amounted to approximately $35.6 million over the lease term. As of March 31, 2015, estimated aggregate capital expenditures related to the build out of our office space in Bedford, Massachusetts were expected to total approximately $8.7 million, of which $7.9 million represented binding contractual obligations. As of March 31, 2015, cumulative payments under these obligations totaled approximately $6.3 million and we expect to make remaining payments of $1.6 million during fiscal 2015. We occupied 105,874 square feet of the Bedford, Massachusetts facility on November 1, 2014 and moved into the remaining 36,799 square feet of space on February 1, 2015.

 

Other

 

In the ordinary course of business, we are, from time to time, involved in lawsuits, claims, investigations, proceedings and threats of litigation, including proceedings related to intellectual property rights. These matters include an April 2004 claim by a customer that certain of our software products and implementation services failed to meet the customer’s expectations. In March 2014, a judgment was issued in favor of the claimant customer against us in the amount of approximately $2.6 million plus interest and a portion of legal fees. We have filed an appeal of the judgment.

 

While the outcome of the proceedings and claims referenced above cannot be predicted with certainty, there were no such matters, as of March 31, 2015 that, in the opinion of management, were reasonably possible to have a material adverse effect on our financial position, results of operations or cash flows. Liabilities, if applicable, related to the aforementioned matters discussed in this Note have been included in our accrued liabilities at March 31, 2015, and were not material to our financial position for the nine months period then ended. We do not believe that, as of March 31, 2015, there is a reasonable possibility of a material loss exceeding the amounts already accrued for the proceedings or matters discussed above. However, the results of litigation (including the above-referenced appeal) and claims cannot be predicted with certainty; unfavorable resolutions are possible and could materially affect our results of operations, cash flows or financial position. In addition, regardless of the outcome, litigation could have an adverse impact on us because of attorneys’ fees and costs, diversion of management resources and other factors.