Commitments and contingent liabilities

Operating leases: The Company uses various leased facilities and equipment in its operations. The lease terms for these leased assets vary depending on the terms of the applicable lease agreement. At December 31, 2014, the Company had no residual value guarantees related to its operating leases.

Future minimum lease payments as of December 31, 2014 under noncancelable operating leases are as follows:



	Future Lease Payments
	(Dollars in thousands)
2015	$	27,706
2016	23,292
2017	18,846
2018	15,474
2019 and thereafter	32,182

Rental expense under operating leases was $29.4 million, $26.4 million and $24.0 million in 2014, 2013 and 2012, respectively.

The Company entered into a build-to-suit lease pertaining to a U.S. operating facility in August 2013, and construction on the facility commenced in September 2013. The estimated fair value of the Company’s percentage of the construction costs to complete the build-to-suit lease was approximately $28.3 million. For accounting purposes, the Company was deemed the owner of the asset during the construction period and was required to record the estimated fair value of the Company’s percentage of the construction costs as construction in progress during the construction period and a related liability in the same amount. This noncash activity is not reflective of the Company’s cash obligations, but represents the landlord’s costs to construct the Company’s portion of the building and tenant improvements. The construction pertaining to the build-to-suit leased facility was completed in the fourth quarter 2014, at which point the Company derecognized the assets and related liabilities pertaining to the leased operating facility.

Environmental: The Company is subject to contingencies as a result of environmental laws and regulations that in the future may require the Company to take further action to correct the effects on the environment of prior disposal practices or releases of chemical or petroleum substances by the Company or other parties. Much of this liability results from the United States Comprehensive Environmental Response, Compensation and Liability Act, often referred to as Superfund, the United States Resource Conservation and Recovery Act and similar state laws. These laws require the Company to undertake certain investigative and remedial activities at sites where the Company conducts or once conducted operations or at sites where Company-generated waste was disposed.

Remediation activities vary substantially in duration and cost from site to site. These activities, and their associated costs, depend on the mix of unique site characteristics, evolving remediation technologies, the regulatory agencies involved and their enforcement policies, as well as the presence or absence of other potentially responsible parties. At December 31, 2014 and 2013, the Company has recorded discounted liabilities of $1.3 million and $2.5 million, respectively, in accrued liabilities and $6.5 million and $5.8 million, respectively, in other liabilities relating to these matters. Considerable uncertainty exists with respect to these liabilities and, if adverse changes in circumstances occur, potential liability may exceed the amount accrued as of December 31, 2014. The time frame over which the accrued amounts may be paid out, based on past history, is estimated to be 15-20 years.

Litigation: The Company is a party to various lawsuits and claims arising in the normal course of business. These lawsuits and claims include actions involving product liability, intellectual property, employment and environmental matters. As of December 31, 2014 and 2013, the Company has accrued liabilities of approximately $6.0 million and $6.8 million, respectively, in connection with these matters, representing its best estimate of the cost within the range of estimated possible loss that will be incurred to resolve these matters. Of the amounts accrued as of December 31, 2014 and 2013, $2.4 million and $1.4 million, respectively, pertain to discontinued operations.

In 2006, the Company was named as a defendant in a wrongful death product liability lawsuit filed in the Louisiana State District Court for the Parish of Calcasieu, involving a product manufactured by the Company’s former marine business. In September 2014, the case was tried before a jury, which returned a verdict in favor of the Company. The plaintiff subsequently filed a motion for a new trial, which was granted, and the case was re-tried before a jury in December 2014. On December 5, 2014, the jury returned a verdict in favor of the plaintiff, awarding $125,000 in compensatory damages and $23 million in punitive damages, plus pre- and post-judgment interest on the compensatory damages and post-judgment interest on the punitive damages. The Company has filed post-trial motions seeking to overturn the verdict or reduce the amount of damages, which the Company believes are excessive. If the Court denies the motions, the Company intends to pursue an appeal. As of December 31, 2014, the Company has accrued a liability representing its best estimate of any probable loss associated with this matter which, is included in the Company’s accrued liabilities relating to discontinued operations discussed in the preceding paragraph. The Company believes that any liability arising from this matter in excess of $10 million will be covered by the Company’s product liability insurance.

Based on information currently available, advice of counsel, established reserves and other resources, the Company does not believe that the outcome of any outstanding litigation and claims is likely to be, individually or in the aggregate, material to its business, financial condition, results of operations or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s business, financial condition, results of operations or liquidity. Legal costs such as outside counsel fees and expenses are charged to selling, general and administrative expenses in the period incurred.

Tax audits and examinations: The Company and its subsidiaries are routinely subject to tax examinations by various taxing authorities. As of December 31, 2014, the most significant tax examinations in process were in Austria, Canada, Germany and the United States. In conjunction with these examinations and as a regular and routine practice, the Company may establish reserves or adjust existing reserves with respect to uncertain tax positions. Accordingly, developments occurring with respect to these examinations, including resolution of uncertain tax positions, could result in increases or decreases to the Company’s recorded tax liabilities, which could impact the Company’s financial results.

Other: The Company has various purchase commitments for materials, supplies and items of permanent investment incident to the ordinary conduct of business. On average, such commitments are not at prices in excess of current market prices.