Total rental expense was $7.8 million in 2016, $6.9 million in 2015 and $5.0 million in 2014.
Other Commitments. The Company is committed to pay suppliers under the terms of open purchase orders issued in the normal course of business totaling approximately $86 million at December 30, 2016. The Company also has commitments with certain suppliers to purchase minimum quantities, and under the terms of certain agreements, the Company is committed for certain portions of the supplier’s inventory. The Company does not purchase, or commit to purchase, quantities in excess of normal usage or amounts that cannot be used within one year. The Company estimates that the maximum commitment amount under such agreements does not exceed $29 million.
The Company enters into contracts with vendors to receive services. Commitments under these service contracts with noncancelable terms of more than one year include $4 million in 2017, $3 million in 2018, and $1 million thereafter.
In addition, the Company could be obligated to perform under standby letters of credit totaling $2 million at December 30, 2016. The Company has also guaranteed the debt of its subsidiaries for up to $9 million. All debt of subsidiaries is reflected in the consolidated balance sheets.
Contingencies. The Company is party to various legal proceedings arising in the normal course of business. The Company is actively pursuing and defending these matters and has recorded an estimate of the probable costs where appropriate. Management does not expect that resolution of these matters will have a material adverse effect on the Company, although the ultimate outcome cannot be determined based on available information.
In January 2016, the Company paid $48 million cash to acquire two related companies that manufacture and sell portable and fixed gas analyzers for landfill, biogas and medical applications and landfill gas wellhead equipment. The acquisitions enhance and complement the Company’s position in environmental monitoring and remediation markets served by its Process segment. The purchase price was allocated based on estimated fair values, including $28 million of goodwill, $24 million of other identifiable intangible assets and $4 million of other net liabilities.
On January 20, 2015, the Company completed the acquisition of High Pressure Equipment Holdings, LLC (“HiP”) for $161 million cash. HiP designs and manufactures valves, fittings and other flow control equipment engineered to perform in ultra-high pressure environments. HiP’s products and business relationships enhance Graco’s position in the oil and natural gas industry and complement Graco’s core competencies of designing and manufacturing advanced flow control technologies. HiP had sales of $38 million in 2014. Results of HiP operations have been included in the Company’s Process segment from the date of acquisition, including sales of $22 million in 2016 and $29 million in 2015.
Purchase consideration was allocated to assets acquired and liabilities assumed based on estimated fair values as follows (in thousands):
Cash and cash equivalents
Other current assets
Property, plant and equipment
Deferred income taxes
Identifiable intangible assets
Total assets acquired
Net assets acquired