Commitments and Contingencies

In May 2013, CertusView Technologies, LLC (“CertusView”), a wholly-owned subsidiary of the Company, filed suit against S & N Communications, Inc. and S & N Locating Services, LLC (“defendants”) in the United States District Court for the Eastern District of Virginia alleging infringement of certain United States patents. In January 2015, the District Court granted defendants’ motion for judgment on the pleadings for failure to claim patent-eligible subject matter, and entered final judgment on those claims the same day. CertusView filed a Notice of Appeal in February 2015 with the Court of Appeals for the Federal Circuit. In May 2015, the District Court re-opened the case to allow defendants to proceed with inequitable conduct counterclaims. In July 2015, the Court of Appeals dismissed the appeal in that court pending resolution of proceedings in the District Court. An unfavorable outcome for the inequitable conduct counterclaims may result in an award of attorneys’ fees, costs, and expenses. It is too early to evaluate the likelihood of an outcome to this matter. The Company intends to vigorously defend itself against the remaining counterclaims and appeal the judgment.

In November 2013, the wife of a former employee of Nichols Construction, LLC (“Nichols”), a wholly-owned subsidiary of the Company, commenced a lawsuit against Nichols in the Circuit Court of Barbour County, West Virginia. The lawsuit, filed on behalf of the former employee’s estate, is based upon a “deliberate intent” claim pursuant to West Virginia Code in connection with the employee's death at work. The plaintiff seeks unspecified damages and other relief. In December 2013, Nichols removed the case to the United States District Court for the Northern District of West Virginia, and in January 2015, filed a motion for summary judgment with respect to certain of the “deliberate intent” issues in the lawsuit. In May 2015, the parties agreed to settle the matter for $0.6 million. The Court has vacated the pending trial schedule and ordered the parties to file a Petition with the Court for a hearing to approve the settlement considering that the primary beneficiary is a minor. The proposed settlement is included in insurance recoveries/receivables related to accrued claims as of July 25, 2015. The hearing date has not been set, but it is expected to take place in September 2015.

From time to time, the Company is party to various other claims and legal proceedings. It is the opinion of management, based on information available at this time, that such other pending claims or proceedings will not have a material effect on its financial statements.

For claims within the Company's insurance program, it retains the risk of loss, up to certain limits, for matters related to automobile liability, general liability, workers' compensation, employee group health, and damages associated with underground facility locating services, and the Company has established reserves that it believes to be adequate based on current evaluations and experience with these types of claims. For these claims, the effect on the Company's financial statements is generally limited to the amount needed to satisfy insurance deductibles or retentions.

Commitments

The Company and its subsidiaries have operating leases covering office facilities, vehicles, and equipment that have original noncancelable terms in excess of one year. Certain of these leases contain renewal provisions and generally require the Company to pay insurance, maintenance, and other operating expenses. Total expense incurred under these operating lease agreements was $18.5 million, $17.7 million, and $15.3 million for fiscal 2015, 2014, and 2013, respectively. These amounts are inclusive of the lease transactions with related parties presented in Note 16, Related Party Transactions. The Company also incurred rental expense of approximately $20.4 million, $20.4 million, and $19.0 million for fiscal 2015, 2014, and 2013, respectively, related to facilities, vehicles, and equipment which are being leased under original terms that are one year or less. The future minimum obligation under the leases with noncancelable terms in excess of one year, including transactions with related parties, is as follows:



	Future Minimum Lease Payments
	(Dollars in thousands)
2016	$	17,016
2017	11,807
2018	6,867
2019	3,724
2020	2,540
Thereafter	6,627
Total	$	48,581

Performance Bonds and Guarantees - The Company has obligations under performance and other surety contract bonds related to certain of its customer contracts. Performance bonds generally provide a customer with the right to obtain payment and/or performance from the issuer of the bond if the Company fails to perform its contractual obligations. As of July 25, 2015 and July 26, 2014, the Company had $294.9 million and $446.8 million of outstanding performance and other surety contract bonds, respectively.

The Company periodically guarantees certain obligations of its subsidiaries, including obligations in connection with obtaining state contractor licenses and leasing real property and equipment.

Letters of Credit - The Company has standby letters of credit issued under its Credit Agreement as part of its insurance program. These standby letters of credit collateralize the Company’s obligations to its insurance carriers in connection with the settlement of potential claims. As of July 25, 2015 and July 26, 2014, the Company had $54.4 million and $49.4 million, respectively, of outstanding standby letters of credit issued under the Credit Agreement.