Commitments and Contingencies |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
Commitments and Contingencies:
Obligations
The Company leases a corporate facility in Aurora, Illinois. This location houses corporate administration, sales, marketing and the CNS segment product distribution, engineering and manufacturing pursuant to a lease that originated in 1997 and ran through September 2017. The rental payments were $2.1 million a year. During the fourth quarter of fiscal year 2017, the Company executed a three-year lease that began in October 2017 for a portion of the space in the current Aurora, Illinois headquarters facility.
In accordance with FASB Technical Bulletin 88-1, Issues Related to Accounting of Leases, as codified in ASC Topic 840, Leases (ASC 840), the Company recorded a long-term deferred lease liability of $59,000 and $4,000 presented in other long-term liabilities and a short-term deferred lease liability of $4,000 and $103,000 presented in accrued expenses on the Consolidated Balance Sheets as of March 31, 2018 and 2017, respectively, to account for the straight-line impact on the rental payments.
The ISMS segment leases an engineering and service center in Dublin, Ohio, which runs through 2019. The IBW segment leases a manufacturing and distribution center and an office in Manchester, New Hampshire. The IBW distribution center lease expired on April 30, 2018. The IBW office lease expires in the second quarter of fiscal 2019. The leases require the Company to pay utilities, insurance and real estate taxes on the facilities. Total rent expense for all facilities was $0.9 million and $1.2 million for fiscal years 2018 and 2017, respectively. In fiscal years 2018 and 2017, rent expense was offset by $0.1 million and $0.2 million of sublease income, respectively. In fiscal years 2018 and 2017, $1.2 million and $1.5 million of lease payments reduced accrued reorganization, respectively.
Future minimum lease obligations as of March 31, 2018 consisted of the following:
A reserve for a net loss on firm purchase commitments of $130,000 and $146,000 is recorded on the balance sheet as Accrued expenses as of March 31, 2018 and 2017, respectively.
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 March 31, 2018 and March 31, 2017, the Company has not recorded any contingent liability attributable to existing litigation.
In the ordinary course of operations the Company receives claims where the Company believes an unfavorable outcome is possible and/or for which is probable and no estimate of possible losses can currently be made. A significant customer was a defendant in patent infringement claims and is asserting possible indemnity rights under contracts with the Company. The customer has settled one matter, which has been dismissed, and won summary judgment for all claims in the other. The customer has informed the Company that the customer intends to seek to recover from the Company a share of the settlement and defense costs. For the dismissed case, the customer provided an initial allocation of their defense costs in a range of up to $160,000 at this time. The Company does not have a best estimate within the range or a true lower limit of the range, and therefore, we can only disclose the range. For the settled case, the Company has not been involved in any settlement discussions nor informed by the customer of any settlement details and therefore management is currently unable to estimate a range of potential loss associated with this claim with any degree of certainty, and the Company is not yet able to calculate the exposure of this claim, which will vary depending upon the settlement reached by the customer and the Company's contribution ratio.
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