Commitments and Contingencies

12 Months Ended

Jul. 31, 2013

Commitments and Contingencies

Commitments and Contingencies

11. Commitments and Contingencies

Long-Term Contractual Obligations

As of July 31, 2013, aggregate annual required payments over the next five years and thereafter under our contractual obligations that have long-term components are as follows:

	Year Ended July 31,
	(Amounts in thousands)
	2014		2015		2016		2017		2018		Thereafter		Total
Maturities of the credit facilities	$	10,000	$	10,000	$	10,000	$	65,000	$	—	$	—	$	95,000
Expected interest payments under the credit facilities (1)	2,239		1,997		1,756		4		—		—		5,996
Minimum commitments under noncancelable operating leases	3,640		2,849		1,942		1,294		1,113		3,636		14,474
Acquisitions payable	—		45		—		—		—		—		45
Compensation agreements	4,252		1,870		350		75		—		—		6,547
Deferred compensation and other	54		55		43		41		36		27		256
Total contractual obligations	$	20,185	$	16,816	$	14,091	$	66,414	$	1,149	$	3,663	$	122,318

(1) The expected interest payments under the term and revolving credit facility reflect interest rates of 2.41% and 2.50%, which was our weighted average interest rate on outstanding borrowings at July 31, 2013 and reflects the impact of our interest rate swap agreements.

Operating Leases

Minimum commitments under operating leases include minimum rental commitments for our leased manufacturing facilities, warehouses, office space and equipment.

Five of the more significant leases that contain escalation clauses are two building leases for our Water Purification and Filtration business, two building leases for our Healthcare Disposables business and one building lease for our Specialty Packaging business. The two Water Purification and Filtration building leases are for the United States headquarters in suburban Philadelphia, Pennsylvania and the Canadian headquarters in suburban Toronto, Ontario. The lease for the Philadelphia building provides for monthly base rent of approximately $16,200 during fiscal 2014 and escalates annually to approximately $20,100 in fiscal 2025 when it expires. The Toronto building lease provides for monthly base rent of approximately $16,000 in fiscal 2014 until fiscal 2015 when it expires. Both the Philadelphia and Toronto building leases are guaranteed by Cantel. The Healthcare Disposables segment has two significant building leases with escalation clauses that are used for manufacturing and warehousing. One building in Sharon, Pennsylvania provides for monthly base rent of approximately $18,600 during fiscal 2014 and escalates annually to approximately $20,800 in fiscal 2024 when it expires. The second building lease in Santa Fe Springs, California provides for monthly base rent of approximately $18,800 in fiscal 2014, escalating annually thereafter to approximately $19,300 in fiscal 2015 when it expires. Additionally, our Specialty Packaging segment has a significant building lease in Edmonton, Alberta with an escalation clause that is used for manufacturing and warehousing. Such lease provides for monthly base rent of approximately $8,000 escalating to approximately $9,000 for fiscals 2016 through 2021 when it expires.

Rent expense related to operating leases for fiscal 2013 was recorded on a straight-line basis and aggregated $4,147,000, compared with $4,104,000 and $3,924,000 for fiscals 2012 and 2011, respectively.

Acquisitions Payable

In connection with the Byrne Acquisition, we agreed that if the aggregate value of the $10,000,000 of Cantel common stock issued as part of the consideration used to acquire the Byrne Medical Business is less than $10,000,000 on July 31, 2014, we will pay to BMI in cash or stock (at our option) an amount equal to the difference between $10,000,000 and the then value of the shares (based on the closing price of Cantel common stock on the NYSE on July 31, 2014), subject to certain conditions and limitations. Accordingly, at July 31, 2013, we have estimated $45,000 as the fair value of this payable, as more fully described in Notes 3 and 6 to the Consolidated Financial Statements.

Compensation Agreements

We have previously entered into various severance contracts with executives of the Company, including our Corporate executive officers and our subsidiary Chief Executive Officers, which define certain compensation arrangements relating to various employment termination scenarios. In conjunction with the acquisitions of the Byrne Medical Business on August 1, 2011, the SPS Business on November 1, 2012 and the Eagle Pure Water Business on December 31, 2012, we entered into three-year employment agreements with certain executive officers of the acquired businesses.

Deferred Compensation and Other

Deferred compensation and other includes deferred compensation arrangements for certain former Medivators directors and officers and is recorded in other long-term liabilities. Additionally, deferred compensation and other includes an insurance related claim and minimal commitments under noncancelable capital leases.