Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
Commitments and Contingencies:
Obligations
The Company has a three-year lease that began in October 2017 for the corporate headquarters in Aurora, Illinois. This location houses corporate administration, sales, marketing and the CNS segment product distribution, engineering and manufacturing. The Company has a long-term deferred lease liability of $59,000 presented in other long-term liabilities on the Consolidated Balance Sheets as of March 31, 2019 and 2018, to account for an exit obligation associated with this lease.
The ISM segment leases an engineering and service center in Dublin, Ohio, which runs through 2019. The IBW office lease expires in the second quarter of fiscal year 2021. 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 for both fiscal years 2019 and 2018. In fiscal year 2018, rent expense was offset by $0.1 million of sublease income. There was no sublease income in fiscal year 2019. In fiscal years 2018, $0.1 million of lease payments reduced accrued reorganization.
Future minimum lease obligations as of March 31, 2019 consisted of the following:
A reserve for a net loss on firm purchase commitments of $167,000 and $130,000 is recorded on the balance sheet as Accrued expenses as of March 31, 2019 and 2018, 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.
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 two patent infringement claims and is asserting possible indemnity rights under contracts with the Company. The customer has settled one matter, and initially won summary judgment for all claims in the other, but on appeal the decision was reversed. 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 summary judgment case, the customer provided an initial allocation of their defense costs. The Company recently obtained additional information to evaluate the facts for both cases and has agreed on principle to a combined settlement amount of $0.3 million, but have not agreed on the timing of payment. The parties are discussing final terms and conditions and are close to settlement, with some indemnity rights reserved. As of March 31, 2019, the combined settlement is unpaid and accrued on the Consolidated Balance Sheets presented in Accrued expenses. Both of these claims relate to a business which was previously sold and therefore the related expense is presented as discontinued operations in fiscal year 2019.
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