14. Commitments and Contingencies

Operating Lease Commitments

The Company leases various facilities in North America and Asia under operating leases expiring through December 2032, which includes the 15 year lease for a new 410,000 square foot distribution center in Tijuana, Mexico. The Company expects the shell building and ancillary improvements to be completed during the latter part of fiscal 2018. The Company also has short term contracts of one year or less covering its third party warehouses that provide for contingent payments based on the level of sales that are processed through the third party warehouse.

The remaining future minimum rental payments under the above operating leases are as follows:

Year Ending March 31,
2018	$	3,918,000
2019		3,496,000
2020		3,230,000
2021		3,300,000
2022		3,200,000
Thereafter		23,687,000
Total minimum lease payments	$	40,831,000

During the years ended March 31, 2017, 2016 and 2015, the Company incurred total operating lease expenses of $3,495,000, $3,263,000 and $3,030,000, respectively.

Commitments to Provide Marketing Allowances under Long-Term Customer Contracts

The Company has or is renegotiating long-term agreements with many of its major customers. Under these agreements, which in most cases have initial terms of at least four years, the Company is designated as the exclusive or primary supplier for specified categories of the Company’s products. Because of the very competitive nature of the market and the limited number of customers for these products, the Company’s customers have sought and obtained price concessions, significant marketing allowances and more favorable delivery and payment terms in consideration for the Company’s designation as a customer’s exclusive or primary supplier. These incentives differ from contract to contract and can include (i) the issuance of a specified amount of credits against receivables in accordance with a schedule set forth in the relevant contract, (ii) support for a particular customer’s research or marketing efforts provided on a scheduled basis, (iii) discounts granted in connection with each individual shipment of product, and (iv) other marketing, research, store expansion or product development support. These contracts typically require that the Company meet ongoing performance standards. The Company’s contracts with major customers expire at various dates through April 2021. While these longer-term agreements strengthen the Company’s customer relationships, the increased demand for the Company’s products often requires that the Company increase its inventories and personnel. Customer demands that the Company purchase their Remanufactured Core inventory also require the use of the Company’s working capital.

The marketing and other allowances the Company typically grants its customers in connection with its new or expanded customer relationships adversely impact the near-term revenues, profitability and associated cash flows from these arrangements. Such allowances include sales incentives and concessions and typically consist of: (i) allowances which may only be applied against future purchases and are recorded as a reduction to revenues in accordance with a schedule set forth in the long-term contract, (ii) allowances related to a single exchange of product that are recorded as a reduction of revenues at the time the related revenues are recorded or when such incentives are offered, and (iii) allowances that are made in connection with the purchase of inventory from a customer.

The following summarizes the breakout of allowances discussed above, recorded as a reduction to revenues:

	Years Ended March 31,
	2017		2016		2015

Allowances incurred under long-term customer contracts	$	23,684,000	$	29,845,000	$	18,358,000
Allowances related to a single exchange of product		67,262,000		47,451,000		36,112,000
Allowances related to core inventory purchase obligations		5,470,000		2,268,000		15,540,000
Total customer allowances recorded as a reduction of revenues	$	96,416,000	$	79,564,000	$	70,010,000

The following presents the commitments to incur allowances, excluding allowances related to a single exchange of product, which will be recognized as a charge against revenue, and customer Remanufactured Core purchase obligations which will be recognized in accordance with the terms of the relevant long-term customer contracts:

Year Ending March 31,
2018	$	19,965,000
2019		8,729,000
2020		5,224,000
2021		5,224,000
2022		113,000
Total marketing allowances	$	39,255,000