Commitments and Contingencies

Leases

We have entered into various operating lease agreements, primarily covering certain of our offices throughout the world, with original lease periods expiring between 2015 and 2024. Facilities rent expense under these operating leases was $4.0 million, $4.9 million, and $5.2 million for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively, which is net of sub-lease income of $0.5 million and $0.1 million for the years ended December 30, 2017 and December 31, 2016, respectively. The sublease income for the year ended December 26, 2015 was immaterial. We are responsible for paying our share of the actual operating expenses and real estate taxes under certain of these lease agreements.

Certain of these arrangements have renewal or expansion options, as well as adjustments for market provisions, such as free or escalating base monthly rental payments. We recognize rent expense under such arrangements on a straight-line basis over the initial term of the lease. The difference between the straight-line expense and the cash paid for rent has been recorded as deferred rent in the consolidated balance sheets.

At December 30, 2017, minimum future lease commitments under all non-cancelable operating leases (including rent escalation clauses) were as follows (in thousands):



	Operating Leases Future Rental Expense		Operating Leases Future Sub-lease Rental Income
2018	$	3,524	$	516
2019	3,662		377
2020	3,832		176
2021	3,787		—
2022	3,834		—
Thereafter	7,796		—
Total	$	26,435	$	1,069

In July 2014, we entered into a lease agreement pursuant to which we agreed to lease office space to be used for our new headquarters (the “Prime Lease”). The Prime Lease is for 108,743 square feet of office space, comprising of the entire fourth, fifth, and sixth floors of the building located at 77 Fourth Avenue, Waltham, Massachusetts, or the Building. The term of the Prime Lease commences on August 4, 2014 and expires 120 months from the date base rent payments first become due, which date is the earlier of January 1, 2015 and the date we commence operations in the space. We recorded deferred rent on the consolidated balance sheet. We recognize rent expense on a straight-line basis over the expected lease term. The total cash obligation for the base rent over the term of the Prime Lease will be $42.9 million, and is included in the table above.

We received $2.3 million as tenant improvements allowance under the terms of our new operating lease, which we recorded as deferred rent are amortizing on a straight-line basis over the term of the lease as an offset to rent expense.

In connection with the Prime Leases, we paid $2.8 million in security deposits recorded within other non-current assets on our consolidated balance sheet as of December 30, 2017.

On April 14, 2016, we entered into a sublease agreement to lease approximately 10,362 square feet of our 108,743 square foot Prime Lease. Additionally, in August 2017 we met the cease-use date requirements for an additional portion of the Prime Lease, consisting of an additional 25,812 square feet. Please refer to Note 14 for further detail on the restructuring charges incurred by us as a result of these restructuring charges.

We recognized total rent expense related to our headquarters of approximately $2.9 million, $3.9 million and $4.2 million for the years ended December 30, 2017, December 31, 2016, and December 26, 2015, respectively.

In March 2016, we entered into a 5-year property lease for a facility in San Mateo County, California, consisting of approximately 2,100 square feet. The lease commenced on April 1, 2016, and we will pay an aggregate of approximately $0.8 million over the 5-year lease period.

In August 2017, we entered into an approximate 2-year property lease for a facility in San Francisco, California. The lease commenced on September 1, 2017, and we will pay an aggregate of approximately $0.7 million over the 2-year lease period.

Legal matters

From time to time we are involved in legal proceedings and other regulatory matters arising in the ordinary course of our business. Each reporting period, we evaluate whether or not a loss contingency related to such matters is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. If a loss is probable and the potential estimate of the loss is a range, we evaluate if there is a point within the range that appears at the time to be a better estimate than any other point in the range, and if so, that amount is accrued. If we conclude that no amount in the range appears to be a better estimate than any other, we accrue the minimum amount in the range. We monitor developments in legal matters that could affect estimates we have previously accrued and update our estimates as appropriate based on subsequent developments.

In the first quarter of fiscal 2017, we received a demand for payments totaling approximately $1.5 million relating to a government inquiry which commenced in 2016. The Company determined that it is probable that it will incur a loss in connection with this matter and has accrued an amount as of December 31, 2016 based on its reasonable estimate of this loss. The Company accrued an additional amount as of the quarter ended April 1, 2017, based on its updated estimate of this loss. In February 2018, we resolved the matter. In connection with the resolution, we have agreed to make payments of approximately $0.5 million, consistent with our accrual for the matter as of December 30, 2017.

Additionally, in the fourth quarter of fiscal 2017, we received a demand for payments totaling approximately $4.9 million plus additional yet to be determined amounts relating to two government inquiries, both of which commenced in 2016. The Company determined that it is probable that it will incur a loss in connection with these matters and has accrued an amount as of December 30, 2017 based on the low end of the range of our reasonable estimate of this loss. The amount accrued was not material to our financial statements for the year ended December 30, 2017.