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 1 to 15 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:



Years Ending March 31:	Future Minimum Lease Commitments
2018	$	51,319
2019	49,040
2020	41,261
2021	36,221
2022	31,459
Thereafter	102,170
	$	311,470

The following schedule shows the composition of total rental expense:



	Years Ended March 31,
	2017		2016		2015
Minimum rentals	$	63,050	$	61,227	$	61,363
Contingent rentals	15,281		16,067		14,707
	$	78,331	$	77,294	$	76,070

Purchase Obligations

Product

The Company had $392,716 of outstanding purchase orders with its manufacturers at March 31, 2017. The Company has an extended design and manufacturing process, which requires it to forecast production volumes and estimate inventory requirements many months before consumers make a decision to purchase its products. The Company generally orders product four to eight months in advance of the anticipated shipment dates based primarily on orders received from wholesale customers and through the DTC reportable operating segment. Accordingly, the aggregate amount reflects purchase obligations for products that the Company reasonably expects to fulfill in the ordinary course of business. However, a significant portion of the purchase obligations can be cancelled by the Company under certain circumstances; however, the occurrence of such circumstances is generally limited. As a result, the amount does not necessarily reflect the dollar amount of the Company's binding commitments or minimum purchase obligations, and instead reflects an estimate of its future payment obligations based on information currently available.

Sheepskin

The Company had an aggregate of $122,869 of purchase obligations for sheepskin at March 31, 2017. These obligations generally arise under two-year supply agreements. The aggregate amount reflects the remaining commitments under these purchase orders. 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. 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. There were no additional deposits on remaining minimum commitments as of March 31, 2017. Included in other current assets on the consolidated balance sheets are approximately $12,200 and $20,000 of additional deposits related to prior sheepskin contracts at March 31, 2017 and 2016, respectively.

Minimum commitments for these contracts at March 31, 2017 were as follows:



Contract Effective Date	Final Target Date	Contract Value		Remaining Commitment
May 2015	September 2017	$	55,200	$	36,567
September 2015	September 2017	7,200		2,172
October 2016	September 2017	16,105		13,427
November 2016	September 2017	24,000		17,003
October 2016	September 2018	53,700		53,700

The Company expects that purchases made under these agreements in the ordinary course of business will eventually exceed the minimum commitment levels, and that any deposits will become fully refundable or reflected as a credit against purchases.

Other

The Company had an aggregate of $18,942 of other purchase obligations at March 31, 2017, which generally consisted of material commitments for future capital expenditures, obligations under service contracts, and requirements to pay promotional expenses. Future capital expenditures primarily related to information technology upgrades at the Company's distribution centers in California and tenant improvements for retail store space in the US.

Litigation

From time to time, the Company is involved in various legal proceedings and claims arising in the ordinary course of business. Although the results of legal proceedings and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not, individually or in the aggregate, have a material adverse effect on its business, operating results, financial condition or cash flows. However, regardless of the outcome, litigation can have an adverse impact on the Company because of legal costs, diversion of management time and resources, and other factors.

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 was paid during the year ended March 31, 2017.

The purchase price for the Hoka brand, acquired in September 2012, included contingent consideration through calendar year 2017, with a maximum contingent amount payable of $2,000. The conditions for payment were met during the year ended March 31, 2016; $1,700 was paid as of March 31, 2016, and $300 was paid as of March 31, 2017. The full final contingent consideration has been paid as of March 31, 2017.

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 five 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.