8x8 2013 Annual Report Download - page 62

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60
Capital Leases
The Company has non-cancelable capital lease agreements for office equipment bearing interest at various rates. At March 31,
2013, future minimum annual lease payments under noncancelable capital leases were as follows (in thousands):
Year ending March 31:
2014
$
22
2015
21
2016
7
Total minimum payments
50
Less: Amount representing interest
(6)
44
Less: Short-term portion of capital lease obligations
(18)
Long-term portion of capital lease obligations
$
26
Capital leases included in office equipment were $110,000 and $139,000 at March 31, 2013 and 2012, respectively. Total
accumulated amortization was $69,000 and $46,000 at March 31, 2013 and 2012, respectively. Amortization expense for
assets recorded under capital leases is included in depreciation expense.
Minimum Third Party Customer Support Commitments
In the third quarter of 2010, the Company amended its contract with one of its third party customer support vendors containing
a minimum monthly commitment of approximately $430,000 effective April 1, 2010. The agreement requires a 150-day notice
to terminate. At March 31, 2013, the total remaining obligation under the contract was $2.2 million.
Minimum Third Party Network Service Provider Commitments
The Company entered into contracts with multiple vendors for third party network service providers which expire on various
dates in fiscal 2014 through 2016. At March 31, 2013, future minimum annual payments under these third party network
service contracts were as follows (in thousands):
Year ending March 31:
2014 $ 2,091
2015 1,579
2016 52
Total minimum payments $ 3,722
Legal Proceedings
The Company, from time to time, is involved in various legal claims or litigation, including patent infringement claims that can
arise in the normal course of the Company’s operations. Pending or future litigation could be costly, could cause the diversion
of management’s attention and could upon resolution, have a material adverse effect on the Company’s business, results of
operations, financial condition and cash flows.
On February 22, 2011, the Company was named a defendant in a lawsuit, Bear Creek Technologies, Inc. v. 8x8, Inc. et al.,
along with 20 other defendants. On August 17, 2011, the Company was dismissed without prejudice from this lawsuit under
Rule 21 of the Federal Rules of Civil Procedure. On August 17, 2011, the Company was sued again by Bear Creek
Technologies, Inc. in the United States District Court for the District of Delaware. The Company believes it has factual and
legal defenses to these claims and is presenting a vigorous defense. Further, on November 28, 2012, the U.S. Patent &
Trademark Office initiated a Reexamination proceeding with a Reexamination Declaration explaining that there is a substantial
new question of patentability, based on four separate grounds, affecting each claim of the patent which is the basis for the
complaint filed against the Company. On March 26, 2013, the USPTO issued a first Office Action in the Reexamination, with
all claims of the ’722 patent being rejected on each of the four separate grounds raised in the Request for Reexamination.