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Commitments and Contingencies
12 Months Ended
Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

8. Commitments and Contingencies

 

We establish contingent liabilities when a particular contingency is both probable and estimable. The Company is not aware of any pending claims or assessments, other than as described below, which may have a material adverse impact on the Company’s financial position or results of operations.

 

Outsource Manufacturers. We have manufacturing agreements with electronics manufacturing service (“EMS”) providers related to the outsourced manufacturing of our products. Certain manufacturing agreements establish annual volume commitments. We are also obligated to repurchase Company-forecasted but unused materials. The Company has non-cancellable, non-returnable, and long-lead time commitments with its EMS providers and certain suppliers for inventory components that will be used in production. The Company’s purchase commitments under such agreements is approximately $13,563 as of December 31, 2016.

 

Uncertain Tax Positions. As further discussed in Note 12, we had $1,189 of uncertain tax positions as of December 31, 2016. Due to the inherent uncertainty of the underlying tax positions, it is not possible to forecast the payment of this liability to any particular year.

 

Legal Proceedings.

 

On or about October 24, 2016, the Company received written notice from the United States Department of Labor, Occupational Health and Safety Administration (“OSHA”) that a complaint had been filed against it by a former employee. Among other things, the former employee’s OSHA complaint alleges harassment, retaliation, and violations of 18 U.S.C.A. Section 1514A, et seq. (the “Sarbanes-Oxley Act”) arising out of the termination of his employment with the Company on or about August 17, 2016 (the “OSHA Complaint”). The Company denies the allegations in the OSHA complaint, has not discovered any evidence of wrongdoing with respect to the allegations previously made by the former employee, and is vigorously defending the claims. On March 2, 2017, the Company received notice that the same former employee who initiated the OSHA Complaint also has filed a complaint with the Utah Labor Commission, Anti-Discrimination& Labor Division (the “Utah Complaint”) alleging that the employee's termination was discriminatory based upon a disability or, in the alternative, retaliatory for substantially the same reasons alleged in the OSHA Complaint. The Company is in the process of assessing the Utah Complaint and intends to vigorously defend it.

 

In 2016, the Company recorded $927 of pretax gross expenses related to the defense of the OSHA Complaint and review of the allegations underlying the former employee’s OSHA complaint.

 

We expect to incur additional expenses related to legal and other professional services rendered in connection with the defense of OSHA Complaint and/or related matters in future periods and will recognize these expenses as services are received. Expenses related to the defense of the OSHA Complaint and/or related matters may include additional liabilities from OSHA’s expected investigation; future governmental investigations and/or enforcement proceedings; future civil litigation; and future unspecified expenses.

 

The Company maintains an Employment Practices Liability policy with Chubb/Federal Insurance Company (the “EPL Policy”). Based on the allegations contained in the OSHA Complaint, the Company has tendered a claim for coverage under the EPL Policy.

 

In addition, the Company is also involved from time to time in various claims and legal proceedings which arise in the normal course of our business. Such matters are subject to many uncertainties and outcomes that are not predictable. However, based on the information available to us, we do not believe any such other proceedings will have a material adverse effect on our business, results of operations, financial position, or liquidity.

 

Conclusion

 

We believe there are no other items that will have a material adverse impact on the Company’s financial position or results of operations. Legal proceedings are subject to all of the risks and uncertainties of legal proceedings and there can be no assurance as to the probable result of any legal proceedings.

 

The Company believes it has adequately accrued for the aforementioned contingent liabilities. If adverse outcomes were to occur, our financial position, results of operations and cash flows could be negatively affected materially for the period in which the adverse outcomes are known.