(13.) COMMITMENTS AND CONTINGENCIES

Litigation

In April 2013, the Company commenced an action against AVX Corporation and AVX Filters Corporation (collectively “AVX”) alleging that AVX had infringed on the Company’s patents by manufacturing and selling filtered feedthrough assemblies used in implantable pacemakers and cardioverter defibrillators that incorporate the Company’s patented technology. Two juries in the U.S. District Court for the District of Delaware have returned verdicts finding that AVX infringed on three of the Company’s patents and awarded the Company $37.5 million in damages. In March 2018, the U.S. District Court for the District of Delaware vacated the original damage award and ordered a retrial on damages. In the January 2019 retrial on damages, the jury awarded the Company $22.2 million in damages. That matter is subject to post-trial proceedings. To date, the Company has recorded no gains in connection with this litigation.

The Company is a party to various other legal actions arising in the normal course of business. The Company does not expect that the ultimate resolution of any other pending legal actions will have a material effect on its consolidated results of operations, financial position, or cash flows. However, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, which the Company currently believes to be immaterial, will not become material in the future.

Environmental Matters

In January 2015, Lake Region Medical (“LRM”), which was acquired by the Company in October 2015, was notified by the New Jersey Department of Environmental Protection (“NJDEP”) of NJDEP’s intent to revoke a no further action determination made by NJDEP in favor of LRM in 2002 pertaining to a property on which a subsidiary of LRM operated a manufacturing facility in South Plainfield, New Jersey beginning in 1971. LRM sold the property in 2004 and vacated the facility in 2007. In response to NJDEP’s notice, the Company further investigated the matter and submitted a technical report to NJDEP in August of 2015 that concluded that NJDEP’s notice of intent to revoke was unwarranted. After reviewing the Company’s technical report, NJDEP issued a draft response in May 2016, stating that NJDEP would not revoke the no further action determination at that time, but would require some additional site investigation to support the Company’s conclusion. The Company met with NJDEP representatives to discuss the appropriate scope of the requested additional investigation, and the requested additional investigation is ongoing. The Company does not expect this environmental matter will have a material effect on its consolidated results of operations, financial position or cash flows.

License Agreements

The Company is a party to various license agreements for technology that is utilized in certain of its products. The most significant of these agreements are the licenses for basic technology used in the production of wet tantalum capacitors, filtered feedthroughs and MRI compatible lead systems. Expenses related to license agreements were $1.6 million, $1.1 million, and $1.0 million, for 2018, 2017 and 2016, respectively, and are primarily included in Cost of Sales.

Product Warranties

The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The change in product warranty liability for fiscal years 2018 and 2017 was comprised of the following (in thousands):



	2018			2017
Beginning balance	$	2,820		$	2,764
Additions to warranty reserve, net of reversals	620			917
Warranty claims settled	(840		)	(861		)
Ending balance	$	2,600		$	2,820

Operating Leases

The Company is a party to various operating lease agreements for buildings, machinery, equipment and software. The Company primarily leases buildings, which accounts for the majority of the future lease payments. Lease expense includes the effect of escalation clauses and leasehold improvement incentives which are accounted for ratably over the lease term. Operating lease expense for fiscal years 2018, 2017 and 2016 was as follows (in thousands):



	2018		2017		2016
Operating lease expense	$	10,753	$	14,320	$	12,127

(13.) COMMITMENTS AND CONTINGENCIES (Continued)

At December 28, 2018, the Company had the following future minimum lease payments under non-cancelable operating leases (in thousands):



	2019		2020	2021	2022	2023	After 2023
Future minimum lease payments	$	8,562	7,290	7,348	5,269	5,112	14,589

Self-Insurance Liabilities

As of December 28, 2018, and at various times in the past, the Company self-funded its workers' compensation and employee medical and dental expenses. The Company has established reserves to cover these self-insured liabilities and also maintains stop-loss insurance to limit its exposures under these programs. Claims reserves represent accruals for the estimated uninsured portion of reported claims, including adverse development of reported claims, as well as estimates of incurred but not reported claims. Claims incurred but not reported are estimated based on the Company’s historical experience, which is continually monitored, and accruals are adjusted when warranted by changes in facts and circumstances. The Company’s actual experience may be different than its estimates, sometimes significantly. Changes in assumptions, as well as changes in actual experience could cause these estimates to change. Insurance and claims expense will vary from period to period based on the severity and frequency of claims incurred in a given period. The Company’s self-insurance reserves totaled $4.2 million and $5.8 million as of December 28, 2018 and December 29, 2017, respectively. These accruals are recorded in Accrued Expenses and Other Long-Term Liabilities in the Consolidated Balance Sheets.

Foreign Currency Contracts

The Company periodically enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate fluctuations in its international operations. The Company has designated these foreign currency forward contracts as cash flow hedges. The estimated Accumulated Other Comprehensive Income related to the Company’s foreign currency contracts that is expected to be reclassified into earnings within the next twelve months is a $0.7 million loss.

The impact to the Company’s results of operations from its forward contracts for fiscal years 2018, 2017 and 2016 was as follows (in thousands):



	2018			2017		2016
Increase (decrease) in sales	$	(758	)	$	1,327	$	—
Increase (decrease) in cost of sales	(944		)	84		3,516
Ineffective portion of change in fair value	—			—		—

Information regarding outstanding foreign currency contracts designated as cash flow hedges as of December 28, 2018 is as follows (dollars in thousands):



Aggregate Notional Amount		Start Date	End Date	$/Foreign Currency		Fair Value			Balance Sheet Location
$	12,621	Jan 2019	Jun 2019	1.1686	Euro	$	(149	)	Accrued Expenses
10,991		Jan 2019	Jun 2019	0.0523	Peso	(494		)	Accrued Expenses
10,535		Jan 2019	Jun 2019	1.1705	Euro	(141		)	Accrued Expenses
11,019		Jan 2019	Jun 2019	0.0483	Peso	(316		)	Accrued Expenses
10,499		Jul 2019	Dec 2019	0.0500	Peso	368			Accrued Expenses