XML 40 R20.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Commitments and Contingencies | 12 Months Ended
--- | ---
Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Leases The Company leases office and warehouse space under non-cancelable operating leases that expire through 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,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Lease expense | $ | 7,394 |  |  | $ | 6,168 |  |  | $ | 5,561 |
| Operating Lease Payments |  | Capital Lease Payments |  | Total Payments
| (in thousands)
Fiscal Year Ended June 30, |  |  |  |  |
2017 | $ | 6,828 |  |  | $ | 248 |  |  | $ | 7,076 |
2018 | 3,670 |  |  | — |  |  | 3,670 |
2019 | 1,825 |  |  | — |  |  | 1,825 |
2020 | 1,146 |  |  | — |  |  | 1,146 |
2021 | 478 |  |  | — |  |  | 478 |
Thereafter | 28 |  |  | — |  |  | 28 |
Total future minimum lease payments | 13,975 |  |  | 248 |  |  | 14,223 |
Less: amounts representing interest on capital lease | — |  |  | 2 |  |  | 2 |
Total future minimum principal lease payments | $ | 13,975 |  |  | $ | 246 |  |  | $ | 14,221 |
On April 27, 2007, the Company entered into an agreement to lease approximately 593,000 square feet for distribution, warehousing and storage purposes in a building located in Southaven, Mississippi. On July 6, 2016, the Company entered into an amended lease agreement; see Note 16 - Subsequent Events for further information regarding the new lease terms effective for fiscal year 2017. 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, 2016 are as follows:
|  |  |  |  |  |  | Capital Lease Obligations
| Property & Equipment |  | Accumulated Depreciation |  | Net Book Value |  | Short-Term |  | Long-Term |  | Total
| (in thousands)
IT Infrastructure | $ | 731 |  |  | $ | 487 |  |  | $ | 244 |  |  | $ | 246 |  |  | $ | — |  |  | $ | 246 |
Commitments and Contingencies A majority of the Company’s net revenues in fiscal years 2016, 2015 and 2014 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 legal recovery line item on the Consolidated Income Statements for the year ended June 30, 2014. Capital Projects The Company implemented a new Enterprise Resource Planning ("ERP") system in its European operations, excluding Imago ScanSource, in fiscal year 2015 and in its North American operations in fiscal year 2016. The Company intends to implement the ERP system in other geographies during fiscal year 2017 and expects capital expenditures for this project to approximate $1.5 million. The Company expects total capital expenditures to range from $3.0 million to $8.0 million during fiscal year 2017. Pre-Acquisition Contingencies During the Company's due diligence for the CDC acquisition, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. In connection with these contingencies, the Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition. During fiscal year 2016, the Company released $4.1 million from the escrow account to the sellers after the final earnout payment was made. The amount available after the impact of foreign currency translation, as of June 30, 2016 and 2015 for future pre-acquisition contingency settlements or to be released to the sellers, was $3.5 million and $8.4 million, respectively. The table below summarizes the balances and line item presentation of CDC's pre-acquisition contingencies and corresponding indemnification receivables in the Company's consolidated balance sheet:
| June 30, 2016 |  | June 30, 2015
| (in thousands)
Assets |  |  |
Prepaid expenses and other assets (current) | $ | 2,346 |  |  | $ | 3,156 |
Other assets (noncurrent) | $ | — |  |  | $ | 69 |
Liabilities |  |  |
Other current liabilities | $ | 2,346 |  |  | $ | 3,156 |
Other long-term liabilities | $ | — |  |  | $ | 69 |
The change in classification and amounts of the pre-acquisition contingencies is primarily due to foreign currency translation on a weaker Brazilian real against the U.S. dollar and the expiration of the statute of limitations for identified pre-acquisition contingencies. The amount of reasonably possible undiscounted pre-acquisition contingencies as of June 30, 2016 is estimated to range as high as $3.5 million at this time, of which all exposures are indemnifiable under the share purchase and sale agreement. During the Company's due diligence for the Network1 acquisition, several pre-acquisition contingencies were identified regarding various Brazilian federal and state tax exposures. The Company recorded indemnification receivables that are reported gross of the pre-acquisition contingency liabilities as the funds were escrowed as part of the acquisition. The amount available after the impact of foreign currency translation, as of June 30, 2016 and 2015 for future pre-acquisition contingency settlements or to be released to the sellers, was $4.7 million and $3.2 million, respectively. The table below summarizes the balances and line item presentation of Network1's pre-acquisition contingencies and corresponding indemnification receivables in the Company's consolidated balance sheet:
| June 30, 2016 |  | June 30, 2015
| (in thousands)
Assets |  |  |
Prepaid expenses and other assets (current) | $ | 595 |  |  | $ | 520 |
Other assets (noncurrent) | $ | 9,837 |  |  | $ | 10,769 |
Liabilities |  |  |
Other current liabilities | $ | 595 |  |  | $ | 520 |
Other long-term liabilities | $ | 9,837 |  |  | $ | 10,769 |
The amount of reasonably possible undiscounted pre-acquisition contingencies as of June 30, 2016 is estimated to range from $9.9 million to $31.0 million at this time, of which all exposures are indemnifiable under the share purchase agreement.

X
- References No definition available. + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=68068213&loc=d3e12565-110249 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25496072&loc=d3e14435-108349 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.25) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73718637&loc=d3e25287-109308 + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration