COMMITMENTS AND CONTINGENCIES

Leases

The Company leases its facilities under non-cancelable operating leases which expire at various dates through June 2028. In addition, the Company leases vehicles and phones in Israel the last of which expires in 2020. Total rent expense related to these operating leases was $10.1 million, $10.2 million and $9.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. Future minimum lease payments under non-cancellable operating leases at December 31, 2018, are as follows (in thousands):



	Operating Leases
Year ending December 31,
2019	$	13,515
2020	10,139
2021	4,088
2022	2,523
2023	2,220
Thereafter	6,694
Total minimum payments	$	39,179

Warranty

The Company accrues for estimated warranty costs at the time of product shipment. Management periodically reviews the estimated 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):



	2018			2017			2016
Balance at beginning of period	$	4,381		$	4,862		$	3,913
Accrual for current period warranties	6,612			5,117			5,482
Balance assumed from TVN acquisition	—			—			1,012
Warranty costs incurred	(6,124		)	(5,598		)	(5,545		)
Balance at end of period	$	4,869		$	4,381		$	4,862

Bank Guarantees and standby Letters of Credit

As of December 31, 2018 and 2017, the Company has outstanding bank guarantees and standby letters of credit in aggregate of $2.3 million and $2.7 million, respectively, consisting of building leases and performance bonds issued to customers.

During 2017, one of the Company’s subsidiaries entered into a $2.0 million credit facility with a foreign bank for the purpose of issuing performance guarantees. The credit facility is secured by a $2.2 million guarantee issued by the parent company. There were no amounts outstanding under this credit facility as of December 31, 2018 and December 31, 2017.

Indemnification

The Company is obligated to indemnify its 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, 2018.

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. Royalty expenses were $4.2 million, $5.2 million and $4.1 million for the years ended December 31, 2018, 2017 and 2016, respectively, and they are included in 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. The Company had approximately $35.9 million of non-cancelable commitments to purchase inventories and other commitments as of December 31, 2018.