NOTE 14 — COMMITMENTS AND CONTINGENCIES

Contractual Obligations

The following table summarizes scheduled maturities of the Company’s contractual obligations for which cash flows are fixed and determinable as of June 30, 2015:

			Payments Due in Fiscal
(In millions)	Total		2016		2017		2018		2019		2020		Thereafter

Debt service (1)	$	2,970.6	$	104.4	$	378.4	$	59.4	$	58.4	$	57.8	$	2,312.2
Operating lease commitments (2)	1,927.8		299.8		279.4		252.5		205.7		168.6		721.8
Unconditional purchase obligations (3)	2,871.9		1,338.9		358.4		401.5		288.5		389.5		95.1
Gross unrecognized tax benefits and interest — current (4)	5.2		5.2		—		—		—		—		—

Total contractual obligations	$	7,775.5	$	1,748.3	$	1,016.2	$	713.4	$	552.6	$	615.9	$	3,129.1

(1)

Includes long-term and current debt and the related projected interest costs, and to a lesser extent, capital lease commitments. Interest costs on long-term and current debt are projected to be $74.4 million in fiscal 2016 and fiscal 2017, $57.8 million in each of the years from fiscal 2018 through fiscal 2020 and $1,012.2 million thereafter. Projected interest costs on variable rate instruments were calculated using market rates at June 30, 2015. Refer to Note 10 — Debt.

(2)

Minimum operating lease commitments only include base rent. Certain leases provide for contingent rents that are not measurable at inception and primarily include rents based on a percentage of sales in excess of stipulated levels, as well as common area maintenance. These amounts are excluded from minimum operating lease commitments and are included in the determination of total rent expense when it is probable that the expense has been incurred and the amount is reasonably measurable. Such amounts have not been material to total rent expense. Total rental expense included in the accompanying consolidated statements of earnings was $402.2 million, $356.1 million and $332.4 million in fiscal 2015, 2014 and 2013, respectively.

(3)

Unconditional purchase obligations primarily include: inventory commitments, additional purchase price payable and contingent consideration which resulted from the fiscal 2015 acquisitions, earn-out payments related to the acquisition of Bobbi Brown, royalty payments pursuant to license agreements, advertising commitments, capital improvement commitments, non-discretionary planned funding of pension and other post-retirement benefit obligations and commitments pursuant to executive compensation arrangements. Future contingent consideration, earn-out payments and royalty and advertising commitments were estimated based on planned future sales for the term that was in effect at June 30, 2015, without consideration for potential renewal periods.

(4)

Refer to Note 8 — Income Taxes for information regarding unrecognized tax benefits. As of June 30, 2015, the noncurrent portion of the Company’s unrecognized tax benefits, including related accrued interest and penalties was $89.1 million. At this time, the settlement period for the noncurrent portion of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined and therefore was not included.

Legal Proceedings

The Company is involved, from time to time, in litigation and other legal proceedings incidental to its business. Management believes that the outcome of current litigation and legal proceedings will not have a material adverse effect upon the Company’s results of operations, financial condition or cash flows. However, management’s assessment of the Company’s current litigation and other legal proceedings could change in light of the discovery of facts with respect to legal actions or other proceedings pending against the Company, not presently known to the Company or determinations by judges, juries or other finders of fact which are not in accord with management’s evaluation of the possible liability or outcome of such litigation or proceedings. Reasonably possible losses in addition to the amounts accrued for litigation and other legal proceedings are not material to the Company’s consolidated financial statements.

Other Income

During the fiscal 2013 second quarter, the Company amended the agreement related to the August 2007 sale of Rodan + Fields (a brand then owned by the Company) to receive a fixed amount in lieu of future contingent consideration and other rights. As a result of the original and amended terms of this agreement, the Company recognized $23.1 million as other income in the consolidated statement of earnings during fiscal 2013.