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Commitments and Contingencies
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Mar. 31, 2014
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies |
Commitments and Contingencies
At March 31, 2014, the Company had in place letter of credit guarantees and performance bonds securing performance obligations of the Company. These arrangements totaled approximately $13,347. Of this amount, $1,307 is secured by cash deposits at the Company's financial institutions. The remaining $12,040 represents a reduction of the available amount of the Company's short term and long term revolving lines of credit. Included in prepaid expenses and other current assets at March 31, 2014 and March 31, 2013, was approximately $1,307 and $1,978, respectively, of cash deposits pledged as collateral on performance bonds and letters of credit.
The Company leases various property and equipment under operating leases. Lease expense was approximately $3,033, $2,362, and $2,021 in fiscal 2014, fiscal 2013 and fiscal 2012, respectively. Future minimum annual lease payments under these leases are as follows for the fiscal years ended March 31:
The Company has entered into information technology service agreements with several vendors. The service fees expense amounted to $2,060, $1,160, and $1,026 in fiscal 2014, fiscal 2013 and fiscal 2012, respectively. The future annual service fees under the service agreements are as follows for the fiscal years ended March 31:
In the ordinary course of conducting its business, the Company becomes involved in various lawsuits and administrative proceedings. Some of these proceedings may result in fines, penalties, or judgment being assessed against the Company, which, from time to time, may have an impact on earnings. As of March 31, 2014, management believes that adequate reserves have been established for any probable losses.
We do not currently expect any of the following proceedings will have a material adverse effect on the Company's operations or financial position. We cannot, however, provide any assurances that we will prevail in any of these matters.
Notice of Tax Dispute with the Canada Revenue Agency. On June 13, 2011, we received notice from the Canada Revenue Agency, which we refer to as the "Agency," advising us that they disagree with the tax treatment we proposed with respect to certain asset transfers that were completed in August 2007 by our Predecessor owners. During fiscal 2013, we were informed by the Agency that their initial audit was concluded but they intended to make an assessment under Canada's General Anti Avoidance Rule. Under this rule, the Agency may assess a withholding tax on dividends deemed to have been made on loans made to our Canadian subsidiary during 2007. Such assessment could total $3,000 plus penalties and interest. At March 31, 2014, we have not recorded a tax liability reserve due for this matter with the Agency as we consider it more likely than not that our tax position will be fully sustained. While we intend to vigorously contest any assessment the Agency may make against us in this matter, we expect that any liability will be covered under an indemnity agreement with the Predecessor owners.
Russia Tax Audit. Our income tax returns for the three years ended December 31, 2012 are subject to ongoing audits with the Russian tax authority. As of March 31, 2014, we were issued an assessment by the Russian tax authority for which we will file an objection. As of March 31, 2014, we have accrued $167 in our consolidated financial statements for the amount we believe to be payable to the Russian tax authority. See Note 14, “Income Taxes.”
Changes in the Company's warranty reserve are as follows:
Management Employment Contracts- Our four named executive officers were subject to employment agreements that provided for the payment of benefits in connection with certain qualifying termination events, which included continued payment of their base salary for up to twelve months and any earned but unpaid bonus for the current fiscal year. As a group, the combined possible severance payment would have been $1,463 in continued base salary and earned but unpaid bonus for the fiscal year ended March 31, 2014 if they were terminated in connection with a qualifying termination event as of March 31, 2014. Effective May 1, 2014, we entered into new employment agreements with our four named executive officers. The new employment agreements provide for the payment of benefits in connection with certain qualifying termination events, which include continuation of base salary for 6 to 18 months, depending on the qualifying termination event, and any earned but unpaid bonus for the current fiscal year. If such qualifying termination event occurs under the new employment agreements, the senior executive officers as a group would be entitled to receive between $568 and $1,705 in continuation of base salary, plus any accrued but unpaid bonus for the current fiscal year.
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