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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies On December 15, 2009, the Company entered into a lease agreement for approximately 125,000 square feet of office space located at 1050 Enterprise Way in Sunnyvale, California commencing on July 1, 2010 and expiring on June 30, 2020. The office space is used for the Company’s corporate headquarters, as well as engineering, sales, marketing and administrative operations and activities. The annual base rent for these leases includes certain rent abatement and increases annually over the lease term. The Company has two options to extend the lease for a period of 60 months each and a one-time option to terminate the lease after 84 months in exchange for an early termination fee. Pursuant to the terms of the lease, the landlord agreed to reimburse the Company approximately $9.1 million, which was received by the year ended December 31, 2011. The Company recognized the reimbursement as an additional imputed financing obligation as such payment from the landlord is deemed to be an imputed financing obligation. On November 4, 2011, to better plan for future expansion, the Company entered into an amended lease for its Sunnyvale facility for approximately an additional 31,000-square-foot space commencing on March 1, 2012 and expiring on June 30, 2020. Additionally, a tenant improvement allowance to be provided by the landlord was approximately $1.7 million. On September 29, 2012, the Company entered into a second amended Sunnyvale lease to reduce the tenant improvement allowance to approximately $1.5 million. On January 31, 2013, the Company entered into a third amendment to the Sunnyvale lease to surrender the 31,000 square-foot space from the first amendment back to the landlord and recorded a total charge of $2.0 million related to the surrender of the amended lease. On March 8, 2010, the Company entered into a lease agreement for approximately 25,000 square feet of office and manufacturing areas, located in Brecksville, Ohio. The office area is used for the LDT group’s engineering activities while the manufacturing area is used for the manufacture of prototypes. This lease was amended on September 29, 2011 to expand the facility to approximately 51,000 total square feet and the amended lease will expire on July 31, 2019. The Company has an option to extend the lease for a period of 60 months. The Company undertook a series of structural improvements to ready the Sunnyvale and Brecksville facilities for its use. Since these improvements were considered structural in nature and the Company was responsible for any cost overruns, for accounting purposes, the Company was treated in substance as the owner of each construction project during the construction period. At the completion of each construction, the Company concluded that it retained sufficient continuing involvement to preclude de-recognition of the building under the FASB authoritative guidance applicable to the sale leasebacks of real estate. As such, the Company continues to account for the buildings as owned real estate and to record an imputed financing obligation for its obligations to the legal owners. Monthly lease payments on these facilities are allocated between the land element of the lease (which is accounted for as an operating lease) and the imputed financing obligation. The imputed financing obligation is amortized using the effective interest method and the interest rate was determined in accordance with the requirements of sale leaseback accounting. For the years ended December 31, 2015, 2014 and 2013, the Company recognized in its Consolidated Statements of Operations $4.5 million, $4.5 million, and $4.4 million, respectively, of interest expense in connection with the imputed financing obligation on these facilities. At December 31, 2015 and 2014, the imputed financing obligation balance in connection with these facilities was $39.3 million and $39.5 million, respectively, which was primarily classified under long-term imputed financing obligation. As of December 31, 2015 and 2014, the Company had capitalized $40.3 million in property, plant and equipment based on the estimated fair value of the portion of the pre-construction shell, construction costs related to the build-out of the facilities and capitalized interest during construction period. At the end of the initial lease term, should the Company decide not to renew the lease, the Company would reverse the equal amounts of the net book value of the building and the corresponding imputed financing obligation. In November 2011, the Company entered into a lease agreement for approximately 26,000 square feet of office space in San Francisco, California to be used for CRD's office space and is treated as an operating lease. This lease has a commencement date of February 1, 2012 and a lease term of 75 months from the commencement date. The annual base rent includes certain rent abatement and increases annually over the lease term. In connection with the June 3, 2011 acquisition of CRD, the Company was obligated to pay a retention bonus to certain CRD employees and contractors, subject to certain eligibility and acceleration provisions including the condition of employment, in three equal amounts of approximately $16.7 million. All three payments have been paid as of December 31, 2014 with the last portion paid in 2014. On June 29, 2009, the Company entered into an Indenture with U.S. Bank, National Association, as trustee, relating to the issuance by the Company of $150.0 million aggregate principal amount of the 2014 Notes. On July 10, 2009, an additional $22.5 million in aggregate principal amount of 2014 Notes were issued as a result of the underwriters exercising their overallotment option. During the second quarter of 2014, the Company paid upon maturity the entire $172.5 million in aggregate principal amount of the 2014 Notes. On August 16, 2013, the Company entered into an Indenture with U.S. Bank, National Association, as trustee, relating to the issuance by the Company of $138.0 million aggregate principal amount of the 2018 Notes. The aggregate principal amount of the 2018 notes as of December 31, 2015 and 2014 was $138.0 million, offset by unamortized debt discount of $17.1 million and $22.9 million, respectively, on the accompanying consolidated balance sheets. The unamortized discount related to the 2018 Notes is being amortized to interest expense using the effective interest method over the remaining 32 months until maturity of the 2018 Notes on August 15, 2018. See Note 10, “Convertible Notes,” for additional details. As of December 31, 2015, the Company’s material contractual obligations are as follows (in thousands):
| Total |  | 2016 |  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | Thereafter
Contractual obligations (1) |  |  |  |  |  |  |  |  |  |  |  |  |
Imputed financing obligation (2) | $ | 28,376 |  |  | $ | 6,156 |  |  | $ | 6,302 |  |  | $ | 6,447 |  |  | $ | 6,602 |  |  | $ | 2,869 |  |  | $ | — |
Leases and other contractual obligations | 6,646 |  |  | 4,321 |  |  | 1,569 |  |  | 546 |  |  | 210 |  |  | — |  |  | — |
Software licenses (3) | 3,166 |  |  | 2,427 |  |  | 549 |  |  | 190 |  |  | — |  |  | — |  |  | — |
Convertible notes | 138,000 |  |  | — |  |  | — |  |  | 138,000 |  |  | — |  |  | — |  |  | — |
Interest payments related to convertible notes | 4,658 |  |  | 1,553 |  |  | 1,553 |  |  | 1,552 |  |  | — |  |  | — |  |  | — |
Total | $ | 180,846 |  |  | $ | 14,457 |  |  | $ | 9,973 |  |  | $ | 146,735 |  |  | $ | 6,812 |  |  | $ | 2,869 |  |  | $ | — |
______________________________________
(1) | The above table does not reflect possible payments in connection with uncertain tax benefits of approximately $20.8 million including $18.6 million recorded as a reduction of long-term deferred tax assets and $2.2 million in long-term income taxes payable, as of December 31, 2015. As noted below in Note 16, “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 Consolidated Balance Sheets are the interest on the imputed financing obligation and the estimated common area expenses over the future periods. The amount includes the amended Ohio lease and the amended Sunnyvale lease.
(3) | The Company has commitments with various software vendors for non-cancellable agreements generally having terms longer than one year.
Rent expense was approximately $2.7 million, $2.6 million and $3.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. Indemnifications From time to time, the Company indemnifies certain customers as 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 Company generally attempts to limit the maximum amount of indemnification that the Company could be required to make under these agreements to the amount of fees received by the Company, however, this is not always possible. The fair value of the liability as of December 31, 2015 and 2014 is not material.

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