Commitments and Contingencies

Capital Lease Obligation

In March 2014, the Company exercised an option to renew the lease of a building and the related land on the Company's Chelmsford, Massachusetts campus. The Company has leased this building since 2002. By exercising this option, the Company has also contracted to purchase the building at the end of the lease period. The assets acquired under the lease were recorded at the net present value of the minimum lease payments which was then allocated to the building and the land based on their relative fair values. The cost of the building and the land under the capital lease are included in the Consolidated Balance Sheets as property, plant and equipment at $6.4 million and $2.1 million, respectively. Depreciation expense related to the building is computed using the straight-line method over the estimated useful life of the asset. Accumulated amortization related to the lease was $0.1 million at September 30, 2014.

The obligation related to the capital lease is recorded as a short-term or long-term obligation in the Consolidated Balance Sheets depending on when payments are due. The future minimum lease payments required under the capital lease and the present value of the net minimum lease payments, as of September 30, 2014, are as follows (in thousands):



Year ended September 30,
2015	$	881
2016	881
2017	881
2018	6,901
Total minimum lease payments	9,544
Less amounts representing interest	1,246
Total capital lease obligation	8,298
Less current portion of capital lease obligation	881
Long-term capital lease obligation	$	7,417

Operating Leases Commitments

The Company leases manufacturing and office facilities and certain equipment under operating leases that expire through 2019. Rental expense under operating leases, excluding expense recorded as a component of restructuring, for the fiscal years ended September 30, 2014, 2013 and 2012 was $8.2 million, $8.4 million and $4.8 million, respectively. Future minimum lease commitments on non-cancelable operating leases as of September 30, 2014 are as follows (in thousands):



Year ended September 30, 2015	$	5,140
2016	3,384
2017	1,748
2018	1,401
2019	706
Thereafter	93
	$	12,472

The Company is a guarantor on a lease in Mexico that expires in January 2018. As of September 30, 2014, the remaining payments under this lease are approximately $1.4 million.

Letters of Credit

At September 30, 2014, the Company had $21.1 million of letters of credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from customers in the event that the product is not delivered or warranty obligations are not fulfilled in compliance with the terms of the contract. While the Company does not anticipate that these obligations will be called, they could be called by the beneficiaries at any time before the expiration date of the particular letter of credit should the Company fail to meet certain contractual requirements.

Purchase Commitments

The Company has non-cancelable contracts and purchase orders for inventory of $71.0 million at September 30, 2014.

Contingencies

The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial condition or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company's assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's consolidated financial condition or results of operations in particular quarterly or annual periods.