Commitments and Contingencies

Leases

We lease facilities for data center capacity and office space under non-cancelable operating lease agreements with various expiration dates. Rent expense associated with data center leases, included in cost of revenues, was $9.5 million and $13.3 million for the years ended December 31, 2013 and 2012, respectively, $3.7 million and $2.1 million for the six months ended December 31, 2011 and 2010 (unaudited), respectively and $4.8 million for fiscal 2011. Rent expense associated with office space leases was $8.1 million and $4.5 million for the years ended December 31, 2013 and 2012, respectively, $1.2 million and $0.5 million for the six months ended December 31, 2011 and 2010 (unaudited), respectively and $2.3 million for fiscal 2011.

Annual future minimum payments under these operating leases as of December 31, 2013 (in thousands) are presented in the table below.



	Data Centers		Office Leases		Total
Fiscal Period:
2014	$	9,797	$	10,314	$	20,111
2015	6,989		13,629		20,618
2016	2,831		14,222		17,053
2017	670		14,754		15,424
2018	636		13,776		14,412
Thereafter	680		51,270		51,950
Total minimum lease payments	$	21,603	$	117,965	$	139,568

Future minimum lease payments under non-cancelable sublease of $3.7 million are included in the table above.

In February 2012, we signed a lease for our new San Diego office that was subsequently amended in December 2013. The lease is for approximately 155,443 square feet of office space with total minimum lease commitments of approximately $27.8 million. The lease commenced in August 2012 and will expire in September 2022.

During the year ended December 31, 2012, we relocated our San Diego office to another facility in San Diego. As part of this move, we incurred $2.5 million in lease abandonment costs, which primarily consists of a loss on disposal of assets recorded upon vacating our prior facility in August 2012. The lease on our prior San Diego facility does not expire until 2019. The cease-use loss was calculated as the present value of the remaining lease obligation offset by estimated sublease rental receipts during the remaining lease period, adjusted for deferred items and estimated lease incentives. As of December 31, 2013 and 2012, our facility exit obligation balance was $1.4 million and $2.3 million, respectively. The lease abandonment costs are included in general and administrative expense on our consolidated statement of comprehensive income (loss).

In September 2012, we signed a lease for a total of 43,590 square feet of office space located in Amsterdam. The square-footage for the first year is approximately 17,857 and increases incrementally over the term of the lease, with total minimum lease commitments of approximately $10.5 million. The lease commenced in October 2012 and has a term of 10.5 years.

In November, 2012, we entered into a lease agreement for 148,704 square feet of office space located in San Jose. The lease commenced in April 2013 and has a term of approximately 11 years. Rent is paid on a monthly basis and will increase incrementally over the term of the lease for total minimum lease payments of approximately $48.8 million.

Legal Proceedings

From time to time, we are party to litigation and other legal proceedings in the ordinary course of business. While the results of any litigation or other legal proceedings are uncertain, management does not believe the ultimate resolution of any pending legal matters is likely to have a material adverse effect on our financial position, results of operations or cash flows, except as discussed below and for those matters for which we have recorded a loss contingency. We accrue for loss contingencies when it is both probable that we will incur the loss and when we can reasonably estimate the amount of the loss.

Generally, our subscription agreements require us to indemnify our customers for third-party intellectual property infringement and other claims. Any adverse determination related to intellectual property claims or other litigation could prevent us from offering our services and adversely affect our financial condition and results of operations.

On February 6, 2014, Hewlett-Packard Company filed a lawsuit against us in the U.S. District Court for the Northern District of California that alleges that some of our services infringe the claims of eight of Hewlett-Packard's patents. Hewlett-Packard is seeking unspecified damages and an injunction. We intend to vigorously defend this lawsuit. We cannot make a reasonable estimate of the potential loss or range of loss, if any, arising from this matter.