11. Commitments and Contingencies

Operating Leases

The Company leases retail stores, corporate offices and showrooms under operating lease agreements expiring on various dates through July 2029. Some of these leases require us to make periodic payments for property taxes, utilities and common area operating expenses. Certain retail store leases provide for rents based upon the minimum annual rental amount and a percentage of annual sales volume. Some leases include lease incentives, rent abatements and fixed rent escalations, which are amortized and recorded over the initial lease term on a straight-line basis from the possession date.

As of December 31, 2018, the future minimum rental payments under non‑cancelable operating leases with lease terms in excess of one year were as follows (in thousands):


2019	$	44,295
2020		39,771
2021		37,722
2022		35,554
2023		31,110
Thereafter		125,863
Total	$	314,315

Rent expense was $14.2 million and $9.4 million for the years ended December 31, 2018 and 2017, respectively.

Capital Leases

The Company leases certain equipment under capital lease agreements expiring on various dates through March 2022. As of December 31, 2018, the future minimum rental payments under non-cancelable capital leases with lease terms in excess of one year were as follows (in thousands):


2019	$	3,522
2020		1,033
2021		654
2022		165
2023		—
Thereafter		—
Total	$	5,374

License Agreements

Under our license agreements, we are generally required to achieve minimum net sales of licensed products, pay guaranteed minimum royalties, and make specified royalty and advertising payments, usually based on a percentage of net sales of licensed products, recognized within cost of goods sold. As of December 31, 2018, our contractual obligations to pay minimum guaranteed royalty and relating advertising commitments were as follows (in thousands):


2019	$	121,843
2020		98,597
2021		78,061
2022		36,567
2023		30,396
Thereafter		119,655
Total	$	485,119

Royalty expense and license related advertising expense were $34.5 million and $4.1 million for the year ended December 31, 2018, respectively. The Company did not incur any royalty expense or license related expense for the year ended December 31, 2017.

Letter of Credit

The Company enters into letters of credit in the ordinary course of business including irrevocable standby and documentary trade letters of credit. The Company had $15.9 million and $130 thousand of outstanding letters of credit as of December 31, 2018 and December 31, 2017, respectively.

Employment Agreements

Certain of the Company’s officers are under employment agreements with minimum required payments. Future minimum payments under these employment agreements total $2.5 million in 2019 and $2.1 million in 2020.

Litigation

In the ordinary course of business, the Company is subject to periodic claims, investigations and lawsuits. Although the Company cannot predict with certainty the ultimate resolution of claims, investigations and lawsuits, asserted against the Company, it does not believe that any currently pending legal proceeding or proceedings to which it is a party could have a material adverse effect on its business, financial condition or results of operations.