Commitments and Contingencies

Lease Commitments. The Company leases office, distribution and retail facilities, and automobiles, under operating lease agreements which continue in effect through 2028. Some of the leases contain renewal options of anywhere from one to fifteen years. Since the terms of these arrangements meet the accounting definition of operating lease arrangements, the aggregate sum of future minimum lease payments is not reflected on the consolidated balance sheets. Future minimum commitments under the lease agreements are as follows:



Year ending March 31:	Future Minimum Lease Commitments
2017	$	50,763
2018	51,087
2019	43,210
2020	35,179
2021	30,873
Thereafter	104,328
	$	315,440

The following schedule shows the composition of total rental expense:



	Years ended March 31,				Quarter ended (transition period) March 31,		Year ended December 31,
	2016		2015		2014		2013
Minimum rentals	$	61,227	$	61,363	$	14,260	$	47,871
Contingent rentals	16,067		14,707		3,099		12,318
	$	77,294	$	76,070	$	17,359	$	60,189

Purchase Obligations. The Company had $957,887 of outstanding purchase orders with its manufacturers at March 31, 2016. In addition, the Company entered into agreements for the build-out of new retail stores, promotional activities and other services. Future commitments under these purchase orders and other agreements for the year ending March 31, 2017 total $915,465. Included in the fiscal year 2017 amount are remaining commitments, net of deposits, that are also unconditional purchase obligations relating to sheepskin contracts. The Company enters into contracts requiring purchase commitments of sheepskin that its affiliates, manufacturers, factories, and other agents (each or collectively, a Buyer) must make on or before a specified target date. Under certain supplier contracts, the Company pays an advance deposit that is repaid to the Company as a Buyer purchases goods under the terms of these agreements. Included in other current assets on the consolidated balance sheets are approximately $20,000 and $14,000 of advance deposits at March 31, 2016 and March 31, 2015, respectively.

In the event that a Buyer does not purchase certain minimum commitments on or before certain target dates, the supplier may retain a portion of the advance deposit until the amounts of the commitments are fulfilled. These agreements may result in unconditional purchase obligations if a Buyer does not meet the minimum purchase requirements. In the event that a Buyer does not purchase such minimum commitments by the target dates, the Company would be responsible for compliance with any and all minimum purchase commitments under these contracts, and the Company would make additional deposit payments towards the purchase of the remaining minimum commitments and such additional deposits would be returned as the Buyer purchases the remaining minimum commitments. The contracts do not permit net settlement. Minimum commitments for these contracts at March 31, 2016 were as follows:



Contract Effective Date	Final Target Date	Advance Deposit		Total Minimum Commitment		Remaining Deposit		Remaining Commitment, Net of Deposit
May 2015	September 2016	$	—	$	82,800	$	16,651	$	13,374
September 2015	September 2016	—		46,865		—		28,060
September 2015	September 2017	—		7,200		—		5,711
September 2015	September 2017	—		55,200		—		55,200

Litigation. The Company is currently involved in various legal claims arising in the ordinary course of business. Management does not believe that the disposition of these matters, whether individually or in the aggregate, will have a material effect on the Company’s financial position or results of operations.

Contingent Consideration. The purchase price for the Sanuk brand, acquired in July 2011, included contingent consideration payments. The final contingent consideration payment of approximately $19,700, which is 40.0% of the Sanuk brand's gross profit in calendar year 2015, was paid subsequent to March 31, 2016.

The purchase price for the Hoka brand, acquired in September 2012, includes contingent consideration through calendar year 2017, with a maximum of $2,000, of which approximately $1,700 has been paid. The maximum of $2,000 was achieved during the fiscal year ended March 31, 2016. At March 31, 2016, the final contingent consideration payment of approximately $300 is pending final disbursement.

At March 31, 2016, contingent consideration for both brands is included in other accrued expenses in the consolidated balance sheets.

Future Capital Commitments. At March 31, 2016, the Company had approximately $14,000 of material commitments for future capital expenditures primarily related to the acquisition of land adjacent to its corporate headquarters, completed in April 2016, and tenant improvements for retail store space in the US and Asia.

Indemnification. The Company has agreed to indemnify certain of its licensees, distributors, and promotional partners in connection with claims related to the use of the Company's intellectual property. The terms of such agreements range up to 5 years initially and generally do not provide for a limitation on the maximum potential future payments. From time to time, the Company also agrees to indemnify its licensees, distributors and promotional partners in connection with claims that the Company’s products infringe the intellectual property rights of third parties. These agreements may or may not be made pursuant to a written contract. In addition, from time to time, the Company also agrees to standard indemnification provisions in commercial agreements in the ordinary course of business.

Management believes the likelihood of any payments under any of these arrangements is remote and would be immaterial. This determination was made based on a prior history of insignificant claims and related payments. There are no currently pending claims relating to indemnification matters involving the Company's intellectual property.