NOTE 13.  COMMITMENTS AND CONTINGENCIES 

 

The Company is involved in various legal disputes and other legal proceedings that arise from time to time in the ordinary course of business.  Based on currently available information, the Company does not believe that it is reasonably possible that the disposition of any of the legal disputes the Company or its subsidiaries is currently involved in will have a material adverse effect upon the Company’s consolidated financial condition, results of operations or cash flows.  It is possible that, as additional information becomes available, the impact on the Company could have a different effect. 

 

The Company leases office, warehouse and distribution space under non-cancelable operating leases.  As leases expire, it can be expected that, in the normal course of business, certain leases will be renewed or replaced.  Certain lease agreements include escalating rents over the lease terms.  The Company expenses rent on a straight-line basis over the lease term which commences on the date the Company has the right to control the property.  The cumulative expense recognized on a straight-line basis in excess of the cumulative payments is included in accounts payable and accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheets. 

 

Total rent expense of the Company for the years ended December 31, 2012, 2011, and 2010 was $1,944,  $1,538, and $1,367, respectively.  Total rent expense of the Predecessor Company for the period from July 1, 2009 to May 28, 2010 was $689. 

 

 

 

 

 

 

 

 

 

Future minimum lease payments required under noncancelable operating leases that have initial or remaining noncancelable lease term in excess of one year at December 31, 2012 are as follows:

 

 

 

On September 28, 2012, Gregory Mountain Products, a wholly owned subsidiary of the Company, entered into a definitive agreement (the “A&F Agreement”) to acquire Gregory Mountain Products’ Japanese distribution assets from Kabushiki Kaisha A&F (“A&F”). 

 

As part of the terms of the A&F Agreement, the parties agreed to terminate their prior agreement and commencing on January 1, 2013, Gregory will acquire from A&F all responsibilities relating to the sale, marketing and distribution of Gregory Mountain Products’ products in Japan in exchange for the payment of $750 to A&F, of which $500 is payable on or before January 1, 2013, and $250 on or before December 31, 2013. Gregory has also agreed to purchase 100% of A&F’s then existing “in-line” inventory of Gregory products as of December 31, 2012, which was $999. The A&F Agreement also provides for certain other agreements and arrangements between the parties relating to the transition of the sales, marketing and distribution responsibilities to Gregory Mountain Products as well as certain understandings concerning A&F’s and Gregory Mountain Products’ relationship in the future. 

 

The Company has not recognized revenue of $999 on inventory shipped during the year ended December 31, 2012 related to the agreement to purchase 100% of A&F’s then existing “in-line” inventory of Gregory products as of December 31, 2012.