Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

There have been no significant changes to the Company’s commitments and contingencies and occupancy arrangements in the nine months ended September 30, 2014, as compared to those disclosed in Note 12, “Commitments and Contingencies” included in our Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC on March 3, 2014, except as summarized below.

Occupancy Arrangements

Bogart, GA Manufacturing Facility Lease and Buildout

In October 2013, the Company entered into a lease agreement for two 35,000 square foot shell buildings on twelve acres in Bogart, Georgia. The landlord’s construction of the shell buildings was completed late in the second quarter of 2014. In conjunction with the construction, the Company built out the shell buildings to its specifications.

The landlord construction and tenant improvements were made in accordance with the Company’s plans and included substantial outfitting of the building. The scope of the improvements did not qualify as “normal tenant improvements” under the lease accounting guidance. Accordingly, for accounting purposes, the Company was deemed the owner of the buildings during the construction period. As construction progressed, the Company recorded the project construction costs incurred as an asset, along with a corresponding facility lease obligation, on the balance sheet for the total amount of project costs incurred whether funded by the Company or the landlord. At the time the Company began occupying the facilities in the third quarter of 2014, it had recorded total leasehold improvements for the Bogart facility of $14.4 million, $4.1 million of which related to landlord funded construction. The Company is amortizing the facility lease obligation using the effective interest method, and reduced the facility lease obligation by $0.1 million related to payments made in the period.

Lexington, MA Headquarters

On February 20, 2014, the Company entered into a lease amendment to expand the currently leased corporate headquarters located at 33 Hayden Avenue, Lexington, Massachusetts by 29,316 rentable square feet. The Company began occupying the expanded space in June 2014 upon the completion of landlord building modifications. The total combined leased space, including the additional space, totals 80,872 square feet. The initial term of the amendment begins upon the Company occupying the additional space, through December 2019, concurrent with the original lease.