LITIGATION AND CONTINGENCIES

The Company is involved in various environmental claims and other legal actions. The environmental claims include sites where the U.S. Environmental Protection Agency, state or local regulators have notified the Company that it is a potentially responsible party with respect to environmental remediation activities. These claims are subject to ongoing environmental impact studies, assessment, remediation, allocation of costs between responsible parties, where applicable, and concurrence by regulatory authorities and have not yet advanced to a stage where the Company’s liability is fixed. However, after taking into consideration legal counsel’s evaluation of all actions and claims against the Company, it is management’s opinion that the outcome of these matters are not expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

The Company is also involved in routine litigation incidental to its business and is a party to legal actions and claims, including, but not limited to, those related to employment and intellectual property. Some of the legal proceedings include claims for compensatory as well as punitive damages. While the final outcome of these matters cannot be predicted with certainty, considering, among other things, the meritorious legal defenses available and liabilities that have been recorded along with applicable insurance, it is management’s opinion that the outcome of these items are not expected to have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

The Company used Scotchgard™, a product that included compounds commonly referred to as PFAS, in the Company’s former tannery operations. PFAS have recently been detected in ground water samples taken at the former tannery site and near sites where the Company disposed of tannery byproducts. This may result in claims against the Company or other liabilities. The Company is working with state and local regulators to investigate and monitor the situation.

Minimum future royalty and advertising obligations for the fiscal periods subsequent to September 30, 2017 under the terms of certain licenses held by the Company are as follows:



(In millions)	2017		2018		2019		2020		2021		Thereafter
Minimum royalties	$	0.5	$	1.4	$	1.5	$	1.5	$	—	$	—
Minimum advertising	0.7		2.9		3.0		3.1		3.2		10.2

Minimum royalties are based on both fixed obligations and assumptions regarding the Consumer Price Index. Royalty obligations in excess of minimum requirements are based upon future sales levels. In accordance with these agreements, the Company incurred royalty expense of $0.7 million and $1.8 million for the 13 and 39 weeks ended September 30, 2017, respectively. For the 12 and 36 weeks ended September 10, 2016, the Company incurred royalty expense, in accordance with these agreements, of $0.5 million and $1.4 million, respectively.

The terms of certain license agreements also require the Company to make advertising expenditures based on the level of sales of the licensed products. In accordance with these agreements, the Company incurred advertising expense of $0.9 million and $2.5 million for the 13 and 39 weeks ended September 30, 2017, respectively. For the 12 and 36 weeks ended September 10, 2016, the Company incurred advertising expense, in accordance with these agreements, of $0.7 million and $2.3 million, respectively.