Commitments And Contingencies

12 Months Ended

Dec. 31, 2015

Commitments And Contingencies [Abstract]

17. COMMITMENTS AND CONTINGENCIES

Rental Commitments and Contingencies

Crocs rents space for its retail stores, offices, warehouses, vehicles, and equipment under operating leases expiring at various dates through 2033. Certain leases contain rent escalation clauses (step rents) that require additional rental amounts in the later years of the term. Rent expense for leases with step rents or rent holidays is recognized on a straight-line basis over the lease term beginning on the lease inception date. Deferred rent is included in the consolidated balance sheets in ‘Accrued expenses and other current liabilities.’



Fiscal years ending December 31,
2016	$	77,127
2017		57,258
2018		46,928
2019		37,621
2020		33,587
Thereafter		105,310
Total minimum lease payments (1)	$	357,831

(1)

Minimum lease payments have not been reduced by minimum sublease rentals of $0.2 million due in the future under non-cancelable subleases. They also do not include contingent rentals, which may be paid under certain retail leases on a basis of percentage of sales in excess of stipulated amounts.

The following table summarizes the composition of rent expense under operating leases for the years ended December 31, 2015, 2014, and 2013:



	Year Ended December 31,
	2015		2014		2013

	(in thousands)
Minimum rentals (1)	$	96,579	$	108,466	$	101,721
Contingent rentals		14,929		16,875		18,178
Less: Sublease rentals		(322)		(868)		(646)
Total rent expense	$	111,186	$	124,473	$	119,253

(1)

Minimum rentals include all lease payments as well as fixed and variable common area maintenance, parking and storage fees, which were approximately $9.1 million, $9.6 million, and $9.7 million during the years ended December 31, 2015, 2014, and 2013, respectively.

Purchase Commitments

In December 2011, Crocs renewed and amended its supply agreement with Finproject S.p.A. (formerly known as Finproject s.r.l.), which provides Crocs the exclusive right to purchase certain raw materials used to manufacture its products. The agreement also provides that Crocs meets minimum purchase requirements to maintain exclusivity throughout the term of the agreement, which expires December 31, 2016. Historically, the minimum purchase requirements have not been onerous and Crocs does not expect them to become onerous in the future. Depending on the material purchased, pricing was based either on contracted price or was subject to quarterly reviews and fluctuates based on order volume, currency fluctuations, and raw material prices. Pursuant to the agreement, Crocs guarantees the payment for certain third-party manufacturer purchases of these raw materials up to a maximum potential amount of €3.5 million (approximately $3.8 million as of December 31, 2015).

As of December 31, 2015 and 2014, Crocs had firm purchase commitments with certain third-party manufacturers of $158.2 million and $202.3 million, respectively.

Government Tax Audits

Crocs is regularly subject to, and is currently undergoing, audits by tax authorities in the United States and several foreign jurisdictions for prior tax years.

See Note 19 – Legal Proceedings for further details regarding potential loss contingencies related to government tax audits and other current legal proceedings.