COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its facilities under non-cancelable operating leases which expire at various dates through April 2027. In addition, the Company leases vehicles and phones in Israel under non-cancelable operating leases, the last of which expires in 2019. Total rent expense related to these operating leases was $9.7 million, $9.0 million and $9.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Future minimum lease payments under non-cancellable operating leases at December 31, 2016, are as follows (in thousands):



	Operating Leases
Year ending December 31,
2017	$	12,971
2018	12,361
2019	10,631
2020	7,407
2021	2,020
Thereafter	7,923
Total minimum payments	$	53,313

Warranty

The Company accrues for estimated warranty costs at the time of product shipment. Management periodically reviews the estimated fair value of its warranty liability and records adjustments based on the terms of warranties provided to customers, historical and anticipated warranty claims experience, and estimates of the timing and cost of warranty claims. Activities for the Company’s warranty accrual for each fiscal year, which is included in accrued and other current liabilities, is summarized below (in thousands):



	2016			2015			2014
Balance at beginning of period	$	3,913		$	4,242		$	3,606
Accrual for current period warranties	5,655			5,470			7,278
Balance assumed from TVN acquisition	1,012			—			—
Changes in liability related to pre-existing warranties	(173		)	(92		)	3
Warranty costs incurred	(5,545		)	(5,707		)	(6,645		)
Balance at end of period	$	4,862		$	3,913		$	4,242

Standby Letters of Credit and Guarantees

The Company’s financial guarantees consisted of standby letters of credit and bank guarantees. As of December 31, 2016, the Company had $1.0 million of standby letters of credit outstanding primarily related to its credit card facility in Switzerland and, to a lesser extent, performance bond and state requirements imposed on employers. In addition, the Company had $1.9 million of bank guarantees outstanding as of December 31, 2016, of which $1.2 million was related to a building lease for the TVN French Subsidiary, $0.4 million was related to the building leases in Israel, and the remaining amount was mostly related to performance bonds issued to customers of the TVN French Subsidiary.

Indemnification

The Company is obligated to indemnify it’s officers and its directors pursuant to its bylaws and contractual indemnity agreements. The Company also indemnifies some of its suppliers and most of its customers for specified intellectual property matters pursuant to certain contractual arrangements, subject to certain limitations. The scope of these indemnities varies, but, in some instances, includes indemnification for damages and expenses (including reasonable attorneys’ fees). There have been no amounts accrued in respect of the indemnification provisions through December 31, 2016.

Royalties

The Company has licensed certain technologies from various companies. It incorporates these technologies into its own products and is required to pay royalties for such use, usually based on shipment of the related products. In addition, the Company has obtained research and development grants under various Israeli government programs that require the payment of royalties on sales of certain products resulting from such research. During the years ended December 31, 2016, 2015 and 2014 royalty expenses were $4.1 million, $2.9 million and $3.2 million, respectively, and they are included in product cost of revenue in the Company’s Consolidated Statements of Operations.

Purchase Obligations

The Company relies on a limited number of contract manufacturers and suppliers to provide manufacturing services for a substantial majority of its products. Obligations to purchase inventory and other commitments are generally expected to be fulfilled within one year. The Company had approximately $24.0 million of non-cancelable commitments to purchase inventories and other commitments as of December 31, 2016.