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COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2011
COMMITMENTS AND CONTINGENCIES

NOTE K — COMMITMENTS AND CONTINGENCIES

Operating leases

The Company has lease agreements for its corporate headquarters, distribution centers, showrooms and sales offices that expire through 2025. These leases generally provide for, among other things, annual base rent escalations and additional rent for real estate taxes and other costs.

Future minimum payments under non-cancelable operating leases are as follows (in thousands):

 

Year ending December 31       

2012

    $ 13,530   

2013

      13,138   

2014

      12,975   

2015

      13,130   

2016

      12,978   

Thereafter

      33,165   
  

 

 

  

Total

    $ 98,916   
  

 

 

  

Rent and related expenses under operating leases were $13.3 million, $13.3 million and $13.5 million for the years ended December 31, 2011, 2010 and 2009, respectively. Sublease rental income was $70,000 and $82,000 for the years ended December 31, 2011 and 2010, respectively. There was no sublease rental income during the year ended December 31, 2009.

Capital leases

The Company had various capital lease arrangements for the leasing of equipment that was primarily utilized in its distribution centers. These leases expired in 2011 and were included in accrued expenses at December 31, 2010.

Royalties

The Company has license agreements that require the payment of royalties on sales of licensed products which expire through 2023. Future minimum royalties payable under these agreements are as follows (in thousands):

 

Year ending December 31       

2012

    $ 5,680   

2013

      408   

2014

      344   

2015

      348   

2016

      225   

Thereafter

      2,251   
  

 

 

  

Total

    $ 9,256   
  

 

 

  

Purchase commitments

As of December 31, 2011, the Company had $6,276,000 of non-cancellable purchase commitments outstanding related to 2012 purchases.

Legal proceedings

Wallace Silversmiths de Puerto Rico, Ltd. (“Wallace de Puerto Rico”), a wholly-owned subsidiary of the Company, operates a manufacturing facility in San Germán, Puerto Rico that is leased from the Puerto Rico Industrial Development Company (“PRIDCO”). In March 2008, the United States Environmental Protection Agency (the “EPA”) announced that the San Germán Ground Water Contamination site in Puerto Rico (the “Site”) had been added to the Superfund National Priorities List due to contamination present in the local drinking water supply.

In May 2008, Wallace de Puerto Rico received from the EPA a Notice of Potential Liability and Request for Information Pursuant to 42 U.S.C. Sections 9607(a) and 9604(e) of the Comprehensive Environmental Response, Compensation, Liability Act. The Company responded to the EPA’s Request for Information on behalf of Wallace de Puerto Rico. In July 2011, Wallace de Puerto Rico received a letter from the EPA requesting access to the property that it leases from PRIDCO, and the Company granted such access.

The Company is not aware of any determination by the EPA that any remedial action is warranted for the Site, and, accordingly, is not able to estimate the extent of any possible liability.

The Company is, from time to time, involved in other legal proceedings. The Company believes that other current litigation is routine in nature and incidental to the conduct of the Company’s business and that none of this litigation, individually or collectively, would have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.