Note 10 - Commitments And Contingencies

12 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Text Block]

10. COMMITMENTS AND CONTINGENCIES

(a) Operating Leases

Rental commitments for the remaining terms of non-cancelable leases, which relate to office space, expire at various dates through 2020. Under these leases, minimum commitments are as follows (in thousands):

For the Year Ended June 30,
2013	$	1,190
2014		831
2015		797
2016		721
2017		601
Thereafter		518
	$	4,658

Certain leases provide for additional payments for real estate taxes and insurance and contain escalation clauses related to increases in utilities and services.  Rent expense for the years ended June 30, 2012, 2011 and 2010 amounted to $1,336,000, $1,396,000 and $1,223,000, respectively.

(b) Royalties

In September 1990, the Company entered into an agreement to acquire a perpetual license for a computerized information system for hospital operating rooms.  Under this agreement, the Company is required to pay royalties of 5% to 15% on sales of this software product.  Upon request, the Company is required to assist with a royalty audit.  Expense for royalties was not significant for the years ended June 30, 2012, 2011 and 2010.

(c) Employment agreements

In February 2012, the Company entered into an employment agreement with its CFO which included stock-based compensation that is time and performance based.  Expense related to this stock-based compensation was determined on the date of grant.

In May 2010, the Company renewed employment agreements with three key executives which include stock-based compensation that is performance based and granted in annual tranches.  Expense related to this stock-based compensation is determined for each tranche based upon the fair value of the shares when performance or market related criteria are established annually for each tranche.

(d) Other Contingencies and Uncertainties

Mediware is from time to time involved in routine litigation incidental to the conduct of its business, including employment disputes and litigation alleging product defects, intellectual property infringements, violations of law and breaches of contract and warranties.  Mediware believes that no such routine litigation currently pending against it, if adversely determined, would have a material adverse effect on its consolidated financial position, results of operations or cash flows.

Mediware had been working with a longstanding vendor of third-party software regarding the amounts invoiced by the vendor to Mediware for its use of the vendor’s product.  The vendor investigated whether it should have priced the software licensed to Mediware on a basis different than the vendor had invoiced Mediware over the past several years, which would have resulted in additional required payments to the vendor.  In June 2012 the issue was resolved with the vendor.

As of March 31, 2012, the Company had recorded a $0.2 million accrual related to this matter. During the quarter ended June 30, 2012, the Company agreed to pay the vendor a total of $0.7 million of which the additional accrual of $0.5 million was related to the purchase of additional software licenses to be held in inventory. Accordingly, the accrual at June 30, 2012 was $0.7 million and was paid to the vendor in July 2012.