COMMITMENTS AND CONTINGENCIES - Note 6

6 Months Ended

Sep. 30, 2018

Notes to Financial Statements

COMMITMENTS AND CONTINGENCIES - Note 6

6. COMMITMENTS AND CONTINGENCIES

Facility and Equipment Leases

The Company leases its headquarter's office space in San Jose, California, and also leases office space under non-cancelable operating leases in various domestic and international locations. During the first quarter of fiscal 2019, as it took control of its new corporate headquarters to begin the build out, the Company began to record additional rent expenses on a straight-line basis. Total rent expense for the three and six months ended September 30, 2018 was $2.6 million and $5.3 million, respectively. Total rent expense for the three and six months ended September 30, 2017 was $1.4 million and $2.8 million, respectively. Future minimum annual lease payments as of September 30, 2018 were as follows (in thousands):

		Amount
Remaining 2019	$	2,937
2020		6,918
2021		8,936
2022		8,826
2023		8,335
Thereafter		54,678
Total	$	90,630

The Company has entered into a series of noncancelable capital lease agreements for data center and office equipment bearing interest at various rates.

Other Commitments, Indemnifications and Contingencies

From time to time, the Company receives inquiries from various state and municipal taxing agencies with respect to the remittance of sales, use, telecommunications, excise, and income taxes. Several jurisdictions currently are conducting tax audits of the Company's records. The Company collects or has accrued for taxes that it believes are required to be remitted. The amounts that have been remitted have historically been within the accruals established by the Company. The Company adjusts its accrual when facts relating to specific exposures warrant such adjustment.

During the second quarter of fiscal 2019, the Company determined that additional sales taxes were probable of being assessed and estimable in multiple states as a result of preliminary findings from current sales and use tax audits. As a result, the Company estimated an incremental sales tax liability of $4.6 million, which was recorded as general and administrative expense in the consolidated statements of operations in the second quarter of fiscal 2019.

Legal Proceedings

The Company, from time to time, is involved in various legal claims or litigation, including patent infringement claims that can arise in the normal course of the Company's operations. Pending or future litigation could be costly, could cause the diversion of management's attention and could upon resolution, have a material adverse effect on the Company's business, results of operations, financial condition and cash flows.