Commitments and Contingencies

Operating Leases

We have several non-cancelable operating leases, primarily for our corporate headquarters, certain of our leased manufacturing facilities, warehouses, office space and equipment. Total rental expense related to our operating leases was $8,801, $7,715 and $6,675 for fiscal 2018, 2017 and 2016, respectively.

As of July 31, 2018, future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) for the periods set forth below were as follows:



Fiscal year ending:	Total
2019	$	7,958
2020	6,208
2021	4,666
2022	2,904
2023	2,104
Thereafter	3,593
Total	$	27,433

Contingent Consideration

We have $1,298 recorded as of July 31, 2018 related to the Aexis Medical acquisition, which is for the estimated fair value of contingent consideration payable upon the achievement of certain purchase order targets through March 21, 2020. During fiscal 2017, we decided to exit the Jet Prep business that was acquired in fiscal 2014. At the time of the acquisition, we assumed a contingent obligation payable to the Israeli Government based on future sales. In November 2017, the Israeli Government formally notified us that they would forgive any future amounts payable due to our decision to exit the Jet Prep business. As a result of this formal notification, we reduced the $1,138 contingent obligation to $0 during the first quarter of fiscal 2018, resulting in a benefit through other income for the fiscal year ended July 31, 2018.

Legal Proceedings

In May 2017, Cantel Medical (UK) Limited and Cantel (UK) Limited filed a lawsuit in the UK High Court of Justice against ARC Medical Design Limited (“ARC”) seeking a judgment of invalidity on two of ARC’s patents and additionally/alternatively a declaration of non-infringement of our AmplifEYE^TM Endoscopic device. ARC filed counterclaims alleging that the AmplifEYE^TM device infringed the two patents as well as registered community design marks and unregistered design rights that ARC had in its Endocuff^TM and Endocuff Vision^TM devices. In February 2018, the trial judge entered a judgment in favor of ARC, and we decided not to appeal the decision. We entered into a settlement agreement with ARC in March 2018 under which we agreed not to make, use, sell or offer to sell the AmplifEYE^TMdevice in the European Union until ARC’s rights expire, and reimbursed ARC for a portion of their legal costs. During the third quarter of fiscal 2018, we recorded $2,608 of litigation costs within selling, general and administrative expenses associated with this matter.

In the normal course of business, we are subject to pending and threatened legal actions. It is our policy to accrue for amounts related to these legal matters if it is probable that a liability has been incurred and an amount of anticipated exposure can be reasonably estimated. We do not believe that any of these pending claims or legal actions will have a material effect on our business, financial condition, results of operations or cash flows.