Commitments & Contingencies

6 Months Ended

Jun. 30, 2014

Commitments & Contingencies [Abstract]

Commitments & Contingencies

14. COMMITMENTS & CONTINGENCIES

Rental Commitments and Contingencies

We rent space for certain of our 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. Deferred rent is included in the condensed consolidated balance sheets in ‘Accrued expenses and other current liabilities.’

The following table summarizes the composition of rent expense under operating leases for the three and six months ended June 30, 2014 and 2013 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
Minimum rentals (1)	$	28,110	$	24,776	$	55,649	$	49,044
Contingent rentals		7,261		7,148		9,684		9,644
Less: Sublease rentals		(243)		(156)		(447)		(310)
Total rent expense	$	35,128	$	31,768	$	64,886	$	58,378

(1)Minimum rentals include all lease payments as well as fixed and variable common area maintenance (“CAM”), parking and storage fees, which were approximately $2.5 million during the three months ended June 30, 2014 and 2013, respectively, and $4.9 million during the six months ended June 30, 2014 and 2013, respectively.

Purchase Commitments

As of June 30, 2014, we had purchase commitments with certain third party manufacturers for $108.7 million.

Government Tax Audits

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

In April 2014, we received a final notice of assessment on transfer pricing items from the Canadian tax authorities, which closed the ongoing audit of our Canada operations through 2011.The assessment, along with the estimated impact on certain Canadian provinces, was less than the amount of the uncertain tax benefits recorded, and therefore, resulted in a net tax benefit of approximately $2.3 million in the quarter ended June 30, 2014. We have paid the assessment, which included tax and interest for the tax periods through December 31, 2011.

See Note 16—Legal Proceedings for further details regarding potential loss contingencies related to government tax audits and other current legal proceedings.