Commitments And Contingencies

12 Months Ended

Aug. 31, 2014

Commitments And Contingencies [Abstract]

Commitments And Contingencies

8.COMMITMENTS AND CONTINGENCIES

Information Systems and Warehouse Outsourcing Contract

We have an outsourcing contract with HP Enterprise Services (HP) to provide information technology system support and product warehousing and distribution services.  During fiscal 2013, our warehouse and distribution agreement was amended to remove remaining fixed charges on our Salt Lake City warehouse facility.  We are now contractually obligated to pay a monthly fixed charge for warehousing services at an HP facility in Des Moines, Iowa plus a variable charge based on certain warehouse activities.  Because of the variable component of the agreement, our payments to HP may fluctuate in future periods based upon sales and activity levels.  The warehouse and distribution fixed charge increases by two percent each year plus an escalation clause based upon changes in the Employment Cost Index.

The following schedule summarizes our estimated minimum information systems support and fixed warehouse and distribution charges, without the effect of estimated escalation charges, to HP for services over the remaining life of the outsourcing contract, which expires during fiscal 2016 (in thousands):

		Estimated
		Gross
YEAR ENDING		Minimum and
AUGUST 31,		Fixed Charges
2015	$	2,222
2016		1,383
	$	3,605

During fiscal years 2014, 2013, and 2012, we expensed $5.2 million, $5.0 million, and $5.0 million for services provided under the terms of the HP outsourcing contract.  The total amount expensed each year under the HP contract includes freight charges, which are billed to the Company based upon activity.  Freight charges included in our HP outsourcing costs totaled $2.2 million, $2.2 million, and $1.8 million during the years ended August 31, 2014, 2013, and 2012.

The outsourcing contracts contain early termination provisions that we may exercise under certain conditions.  However, in order to exercise the early termination provisions, we would have to pay specified penalties to HP depending upon the circumstances of the contract termination.

Purchase Commitments

During the normal course of business, we issue purchase orders to various vendors for products and services.  At August 31, 2014, we had open purchase commitments totaling $4.1 million for products and services to be delivered primarily in fiscal 2015.  Other purchase commitments for materials, supplies, and other items incidental to the ordinary conduct of business were immaterial, both individually and in aggregate, to the Company’s operations at August 31, 2014.

Legal Matters and Loss Contingencies

During fiscal 2012, a former software vendor performed a license review and claimed that in prior years we had used certain software modules that we were not licensed to use.  After reviewing the claims from the vendor, we determined that the amounts claimed by the vendor were not consistent with our previously existing software licensing agreement.  We settled this complaint during fiscal 2014 for an insignificant amount.

We are also the subject of certain other legal actions, which we consider routine to our business activities.  At August 31, 2014, we believe that, after consultation with legal counsel, any potential liability to us under these other actions will not materially affect our financial position, liquidity, or results of operations.