Commitments and Contingencies

Leases

The Company leases office and warehouse space under non-cancelable operating leases that expire through November 2020. The Company also leases certain equipment under a capital lease that expires in 2017. Lease expense and future minimum lease payments under operating leases and the single capital lease are as follows:



	Fiscal Year Ended June 30,
	2014		2013		2012
	(in thousands)
Lease expense	$	5,561	$	5,094	$	5,025



	Operating Lease Payments		Capital Lease Payments			Total Payments
	(in thousands)
Fiscal Year Ended June 30,
2015	$	4,734	$	250		$	4,984
2016	4,071		248			4,319
2017	3,439		245			3,684
2018	1,528		—			1,528
2019	889		—			889
Thereafter	1,210		—			1,210
Total future minimum lease payments	15,871		743			16,614
Less: amounts representing interest on capital lease	—		(12		)	(12		)
Total future minimum principal lease payments	$	15,871	$	731		$	16,602

On April 27, 2007, the Company entered into an agreement to lease approximately 600,000 square feet for distribution, warehousing and storage purposes in a building located in Southaven, Mississippi. The lease also provides for a right of first refusal on an additional 147,000 square feet of expansion space. The term of the lease is 120 months with 2 consecutive 5-year extension options.

On June 3, 2014, the Company entered into an equipment lease transaction for certain information technology infrastructure located in the Greenville, South Carolina facility. The Company determined this lease qualifies as a capital lease and accordingly, has recorded a capital lease obligation equal to the present value of the minimum lease payments of $0.7 million. The lease term is 3 years with an expiration date during 2017.

The components of the Company's capital lease as of June 30, 2014 are as follows:



							Capital Lease Obligations
	Property & Equipment		Accumulated Depreciation		Net Book Value		Short-Term		Long-Term		Total
	(in thousands)
IT Infrastructure	$	731	$	—	$	731	$	241	$	490	$	731

Commitments and Contingencies

A majority of the Company’s net revenues in 2014, 2013 and 2012 were received from the sale of products purchased from the Company’s ten largest vendors. The Company has entered into written distribution agreements with substantially all of its major vendors. While the Company’s agreements with most of its vendors contain standard provisions for periodic renewals, these agreements generally permit termination by either party without cause upon 30 to 120 days notice.

The Company or its subsidiaries are, from time to time, parties to lawsuits arising out of operations. Although there can be no assurance, based upon information known to the Company, the Company believes that any liability resulting from an adverse determination of such lawsuits would not have a material adverse effect on the Company’s financial condition or results of operations.

In January 2013, through the Company's wholly-owned subsidiary Partner Services, Inc. ("PSI"), the Company filed a lawsuit in the U.S. District Court in Atlanta, Georgia against our former ERP software systems integration partner, Avanade, Inc. ("Avanade"). In June 2014, the parties reached a Settlement Agreement where both parties agreed to mutually dismiss all claims and counterclaims against the other in exchange for Avanade's payment to the Company of $15.0 million. The Company also reversed $2.0 million in accrued liabilities for unpaid invoices received from Avanade and paid a contingency fee of $1.5 million to the law firm who represented the Company in the lawsuit. The settlement, net of attorney fees and reversal of accrued liabilities is included in the impairment charges (legal recovery) line item on the Consolidated Income Statements.

The Company is in the process of designing and developing a new Enterprise Resource Planning ("ERP") system. In December 2013, the Company retained SAP for software platform and implementation consulting services on the new ERP system. The Company incurred $13.2 million in the form of capital expenditures related to the ERP project. As of June 30, 2014, amounts in accrued expenses and other current liabilities related to capital expenditures totaled $3.0 million. Capital expenditures for fiscal 2015 could range from $17 million to $22 million.