Commitments And Contingencies

12 Months Ended

Aug. 31, 2016

Commitments And Contingencies [Abstract]

Commitments And Contingencies

7.COMMITMENTS AND CONTINGENCIES

Information Systems and Warehouse Outsourcing Contract

Prior to July 2016, we had an outsourcing contract with HP Enterprise Services (HPE) to provide information technology system support and product warehousing and distribution services.  Effective July 1, 2016, we entered into a new warehousing services agreement with HPE to provide product kitting, warehousing, and order fulfillment services at an HPE facility in Des Moines, Iowa.  Under the terms of the new contract, we pay HPE a fixed charge of $18,000 per month for account management services and variable charges for other warehousing services based on specified activities, including shipping charges.  The warehouse charges may be increased each year of the contract based upon changes in the Employment Cost Index.  The new warehousing contract with HPE expires on June 30, 2019.

During fiscal years 2016, 2015, and 2014, we expensed $3.8 million, $4.9 million, and $5.2 million for services provided under the terms of the HPE outsourcing contract.  The total amount expensed each year under the HPE contract includes freight charges, which are billed to the Company based upon activity.  Freight charges included in our HPE outsourcing costs totaled $1.8 million, $1.9 million, and $2.2 million during the fiscal years ended August 31, 2016, 2015, and 2014.  Because of the variable component of the agreement, our payments to HPE may fluctuate in future periods based upon sales and levels of specified activities.

Purchase Commitments

During the normal course of business, we issue purchase orders to various vendors for products and services.  At August 31, 2016, we had open purchase commitments totaling $5.2 million for products and services to be delivered primarily in fiscal 2017.  The increase over the previous year is primarily due to purchase orders related to our new enterprise resource planning system that is expected to be placed in service during mid-fiscal 2017 and other information system infrastructure projects.  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, 2016.

Letters of Credit

At August 31, 2016 and 2015, we had standby letters of credit totaling $0.1 million.  These letters of credit were primarily required to secure commitments for certain insurance policies and expire in January 2017.  No amounts were outstanding on the letters of credit at either August 31, 2016 or August 31, 2015.

Legal Matters and Loss Contingencies

We are the subject of certain legal actions, which we consider routine to our business activities.  At August 31, 2016, 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.