Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies (Notes)

Commitments and Contingencies (Notes)

3 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Obligations

Future obligations and commitments, which are comprised of future minimum lease payments, inventory purchase obligations, and contingent consideration, were $11.7 million and $11.8 million at June 30, 2016 and March 31, 2016, respectively.

Purchase obligations relate to inventory that arises in the normal course of business operations. Future obligations and commitments as of June 30, 2016, consisted of the following:



	Payments due within
(in thousands)	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter		Total
Purchase obligations ⁽¹⁾	$	7,979	$	—	$	—	$	—	$	—	$	—	$	7,979
Future minimum operating lease payments	3,106		446		137		29		—		—		3,718
Contingent consideration	47		—		—		—		—		—		47
Future obligations and commitments	$	11,132	$	446	$	137	$	29	$	—	$	—	$	11,744

(1) A reserve for a net loss on firm purchase commitments of $954,000 and $388,000 is recorded on the balance sheet as of June 30, 2016 and March 31, 2016, respectively. The increase as of June 30, 2016 is primarily due to ClearLink DAS purchase commitments. See Note 14, Subsequent Event.

Litigation and Contingency Reserves

The Company and its subsidiaries are involved in various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that may be incorporated in the Company’s products, which are being handled and defended in the ordinary course of business. These matters are in various stages of investigation and litigation, and they are being vigorously defended. Although the Company does not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, litigation is inherently unpredictable. Therefore, judgments could be rendered, or settlements entered, that could adversely affect the Company’s operating results or cash flows in a particular period. The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and it records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of June 30, 2016 and March 31, 2016, the Company has not recorded any contingent liability attributable to existing litigation.

As of March 31, 2015, the Company had total contingency reserves of $0.4 million related to the discontinued operations of ConferencePlus which was sold in fiscal year 2012. In the three months ended June 30, 2015, a pre-tax gain of $0.4 million resulted from the expiration of an indemnity period and release of a contingency reserve related to the sale of ConferencePlus and was recorded in discontinued operations.

Additionally, the Company has a contingent cash consideration payable related to an acquisition. The contingent consideration becomes payable based upon the profitability of the acquired products for post-closing periods through June 30, 2016, and is offset by working capital adjustments and other indemnification claims. The maximum earn-out that could be paid before offsets is $3.5 million. The final calculation performed during the quarter ended June 30, 2016 determined the actual cash payment for the contingent consideration to be $2.1 million. As of June 30, 2016 and March 31, 2016, the fair value of the contingent consideration liability after offsetting a working capital adjustment and an indemnification claim for warranty obligations was $47,000 and $311,000, respectively (See Note 11).