Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies (Notes)

Commitments and Contingencies (Notes)

9 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Obligations

Future obligations and commitments, which are comprised of future minimum lease payments, inventory purchase obligations, and contingent consideration, decreased $2.4 million in the nine months ended December 31, 2015, to $14.8 million, from $17.2 million at March 31, 2015. This decrease included a $0.8 million payment of contingent consideration.

Purchase obligations relate to inventory that arises in the normal course of business operations. Future obligations and commitments as of December 31, 2015, consisted of the following:



	Payments due within
(in thousands)	Year 1		Year 2		Year 3		Year 4		Year 5		Thereafter		Total
Purchase obligations ⁽¹⁾	$	8,932	$	—	$	—	$	—	$	—	$	—	$	8,932
Future minimum operating lease payments	3,184		1,573		280		87		—		—		5,124
Contingent consideration	714		—		—		—		—		—		714
Future obligations and commitments	$	12,830	$	1,573	$	280	$	87	$	—	$	—	$	14,770

(1) A reserve for a net loss on firm purchase commitments of $349,000 and $675,000 is recorded on the balance sheet as of December 31, 2015 and March 31, 2015, 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 December 31, 2015, and March 31, 2015, 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. The contingency reserves are classified as Accrued expenses on the Consolidated Balance Sheets. In the nine months ended December 31, 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. As of December 31, 2015 and March 31, 2015, the fair value of the contingent consideration liability after offsetting a working capital adjustment and an indemnification claim for warranty obligations was $0.7 million and $1.6 million, respectively (See Note 11).