(7) Commitments and Contingencies

The Company leases office, distribution, retail facilities, and automobiles, under operating lease agreements, which expire through 2028. Some of the leases contain renewal options for approximately one to fifteen years. Future minimum commitments under the lease agreements are as follows:



Year ending December 31:
2014	$	46,060
2015	45,194
2016	42,436
2017	39,129
2018	33,218
Thereafter	116,593
	$	322,630

Rent expense is recorded using the straight-line method to account for scheduled rental increases or rent holidays. Lease incentives for tenant improvement allowances are recorded as reductions of rent expense over the lease term. The rental payments under some of our retail store leases are based on a minimum rental plus a percentage of the store's sales in excess of stipulated amounts. The following schedule shows the composition of total rental expense.



	Years Ended December 31,
	2013		2012		2011
Minimum rentals	$	47,871	$	37,270	$	26,645
Contingent rentals	12,318		9,366		6,085
	$	60,189	$	46,636	$	32,730

Purchase Obligations. The Company had $238,947 of outstanding purchase orders with its manufacturers as of December 31, 2013. 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 December 31, 2014 total $245,168. Included in the 2014 amount are remaining commitments, net of deposits, that are also unconditional purchase obligations relating to sheepskin contracts. The Company enters into contracts requiring minimum purchase commitments of sheepskin that Deckers' affiliates, manufacturers, factories, and other agents (each or collectively, a Buyer) must make on or before a specified target date. Under certain contracts, the Company may pay an advance deposit that shall be repaid to the Company as Buyers purchase goods under the terms of these agreements. Included in other current assets on the consolidated balance sheets is approximately $67,000 and $39,000 of advance deposits as of December 31, 2013 and 2012, 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 shall 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 Buyers purchase the remaining minimum commitments. The contracts do not permit net settlement. Minimum commitments for these contracts as of December 31, 2013 were as follows:



Contract Effective Date	Final Target Date	Advance Deposit	Total Minimum Commitment	Remaining Deposit	Remaining Commitment, Net of Deposit
October 2011	September 2014	$50,000	$286,000	$38,273	$13,034
October 2012	September 2013	—	$83,000	—	$3,265
April 2013	September 2014	$28,931	$42,800	$28,931	$13,869
September 2013	September 2014	—	$50,730	—	$39,958

Subsequent to December 31, 2013 the Company entered into an amendment to the sheepskin contract effective April 2013 for an additional commitment of $21,400. The Company also entered into two new contracts with a final target date of September 30, 2014. One of these contracts requires a minimum purchase commitment of sheepskin of $8,550 and the other contract requires a minimum purchase commitment of UGGpure of $27,600. In the event that the minimum commitment has not been reached by September 30, 2014 the Company will advance funds to cover the remaining commitment under the contract, with such advanced amounts to be refunded upon the future purchase of the minimum purchase commitment by a Buyer.

Indemnification and Legal Contingencies. The Company is currently involved in various legal claims arising from the ordinary course of business. Management does not believe that the disposition of these matters will have a material effect on the Company's financial position or results of operations. In addition, 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. Management believes the likelihood of any payments is remote and would be immaterial. The Company determined the risk was low based on a prior history of insignificant claims. The Company is not currently involved in any indemnification matters in regards to its intellectual property.

Contingent Consideration. In July 2011, the Company acquired the Sanuk brand, and the total purchase price included contingent consideration payments. As of December 31, 2013, the remaining contingent consideration payments, which have no maximum, are as follows:


•	36.0% of the Sanuk brand gross profit in 2013, which was approximately $18,600, and


•	40.0% of the Sanuk brand gross profit in 2015.

As of December 31, 2013 and 2012, contingent consideration for the acquisition of the Sanuk brand of approximately $46,200 and $70,400, respectively, are included within other accrued expenses (approximately $18,600 and $25,400 at December 31, 2013 and 2012, respectively) and long-term liabilities (approximately $27,600 and $45,000 at December 31, 2013 and 2012, respectively) in the consolidated balance sheets.

In September 2012, the Company acquired Hoka, and the total purchase price included contingent consideration payments with a maximum of $2,000. Based on current projections as of December 31, 2013, contingent consideration for the acquisition of the Hoka brand of approximately $1,800 is included within other accrued expenses and long-term liabilities in the consolidated balance sheets.