Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

We are obligated under non-terminable operating leases for manufacturing facilities, finished good distribution centers, office space, equipment and certain vehicles. Total rental expense on these operating leases for the years ended December 31, 2018, 2017 and 2016, approximated $14.5 million, $13.6 million and $11.4 million, respectively.

The future minimum lease payments for operating leases as of December 31, 2018, consisted of the following (in thousands):



Years Ending	Operating
December 31	Leases

2019	$	13,421
2020	11,319
2021	9,995
2022	8,053
2023	6,953
Thereafter	52,754

Total minimum lease payments	$	102,495

Irish Government Development Agency Grants. As of December 31, 2018, we had entered into several grant agreements with the Irish Government Development Agency. Grants related to the acquisition of property and equipment purchased in Ireland are amortized as a reduction to depreciation expense over lives corresponding to the depreciable lives of such property and equipment. The balance of deferred credits related to such grants as of December 31, 2018 and 2017, was approximately $2.3 million and $2.4 million, respectively. During the years ended December 31, 2018, 2017 and 2016, approximately $142,000, $147,000 and $170,000, respectively, of the deferred credit was amortized as a reduction of operating expenses.

We had committed to repay the Irish government for grants received if we cease production in Ireland prior to the expiration of the grant liability period. The grant liability period is usually between five and eight years from the last claim made on a grant. As of December 31, 2018, the grant liability period had expired and there was no remaining amount which the Irish government could reclaim if we were to cease production in Ireland. We have no plans to cease production in Ireland.

Royalties. As of December 31, 2018, we had entered into a number of agreements to license or acquire rights to certain intellectual property which require us to make royalty payments during the term of the agreements generally based on a percentage of sales. Total royalty expense during the years ended December 31, 2018, 2017 and 2016, approximated $5.3 million, $4.4 million and $3.2 million, respectively. Minimum contractual commitments under royalty agreements to be paid within twelve months of December 31, 2018 were not significant. See Note 3 for discussion of future royalty commitments related to acquisitions.

Litigation. In the ordinary course of business, we are involved in various claims and litigation matters. These claims and litigation matters may include actions involving product liability, intellectual property, contract disputes, and employment or other matters that are significant to our business. Based upon our review of currently available information, we do not believe that any such actions are likely to be, individually or in the aggregate, materially adverse to our business, financial condition, results of operations or liquidity.

In addition to the foregoing matters, in October 2016, we received a subpoena from the U.S. Department of Justice seeking information on certain of our marketing and promotional practices. We are in the process of responding to the subpoena, which we anticipate will continue during 2019. We have incurred, and anticipate that we will continue to incur, substantial costs in connection with the matter. The investigation is ongoing and at this stage we are unable to predict its scope, duration or outcome. Investigations such as this may result in the imposition of, among other things, significant damages, injunctions, fines or civil or criminal claims or penalties against our company or individuals.

In the event of unexpected further developments, it is possible that the ultimate resolution of any of the foregoing matters, or other similar matters, if resolved in a manner unfavorable to us, may be materially adverse to our business, financial condition, results of operations or liquidity. Legal costs for these matters, such as outside counsel fees and expenses, are charged to expense in the period incurred.