COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jul. 04, 2015

11. COMMITMENTS AND CONTINGENCIES

Buying/Sourcing

Pursuant to a buying/sourcing agency agreement, Li & Fung Limited (“Li & Fung”) currently acts as a global buying/sourcing agent. The Company pays Li & Fung an agency commission based on the cost of product purchases using Li & Fung as its buying/sourcing agent. The Company is obligated to use Li & Fung as its buying/sourcing agent for a minimum value of apparel inventory purchases each year. In the first quarter of 2015, the Company amended its buying/sourcing agency agreement with Li & Fung, which included a reduction of the annual minimum value of inventory purchases and a change in the commission rates for certain products, with an initial term through March 31, 2018. The Company’s agreement with Li & Fung is not exclusive.

Leases

In connection with the disposition of the Lucky Brand business, LIZ CLAIBORNE Canada retail stores, the LIZ CLAIBORNE branded outlet stores in the US and Puerto Rico and certain Mexx Canada retail stores, an aggregate of 277 store leases were assigned to or assumed by third parties, for which the Company or certain subsidiaries of the Company may remain secondarily liable for the remaining obligations on 151 such leases. As of July 4, 2015, the future aggregate payments under these leases amounted to $111.0 million and extended to various dates through 2025.

During the second quarter of 2013, the Company entered into a sale-leaseback agreement for its North Bergen, NJ office with a 12-year term and two five-year renewal options. This leaseback was classified as a capital lease and recorded at fair value. As of July 4, 2015, the estimated future minimum lease payments under the noncancelable capital lease were as follows:

In millions
2015	$	1,029
2016	2,089
2017	2,141
2018	2,194
2019	2,247
Thereafter	13,081

Total	22,781
Less: Amounts representing interest and executory costs	(14,420		)

Net present values	8,361
Less: Capital lease obligations included in short-term debt	(485		)

Long-term capital lease obligations	$	7,876

Other

The Company is a party to several pending legal proceedings and claims. Although the outcome of any such actions cannot be determined with certainty, management is of the opinion that the final outcome of any of these actions should not have a material adverse effect on the Company’s financial position, results of operations, liquidity or cash flows.