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Commitments And Contingencies
12 Months Ended
Aug. 31, 2017
Commitments And Contingencies [Abstract]  
Commitments And Contingencies





8.COMMITMENTS AND CONTINGENCIES



Information Systems and Warehouse Outsourcing Contract



Prior to July 2016, we had an outsourcing contract with HP Enterprise Services 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 an independent warehouse and distribution company to provide product kitting, warehousing, and order fulfillment services at a facility in Des Moines, Iowa.  Under the terms of the new contract, we pay 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 and distribution contract expires on June 30, 2019.



During fiscal years 2017, 2016, and 2015, we expensed $2.6 million, $3.8 million, and $4.9 million for services provided under the terms of our warehouse and distribution outsourcing contract.  The total amount expensed each year under these contracts include freight charges, which are billed to the Company based upon activity.  Freight charges included in the warehouse and distribution outsourcing costs totaled $1.5 million, $1.8 million, and $1.9 million during the fiscal years ended August 31, 2017, 2016, and 2015.  Because of the variable component of the agreement, our payments for warehouse and distribution services 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, 2017, we had open purchase commitments totaling $6.6 million for products and services to be delivered primarily in fiscal 2018.  The increase over prior years is primarily due to commitments for enterprise risk planning software and AAP portal development activities.  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, 2017.



Letters of Credit



At August 31, 2017 and 2016, 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 2018No amounts were drawn on the letters of credit at either August 31, 2017 or August 31, 2016.



Legal Matters and Loss Contingencies



We are the subject of certain legal actions, which we consider routine to our business activities.  At August 31, 2017, 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.