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Commitments and Contingencies | 12 Months Ended
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Sep. 30, 2015
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingencies | G. Commitments and Contingencies Long-Term Debt See Note F herein for a discussion of our long-term debt. Leases We lease certain offices, facilities and equipment under operating leases expiring at various dates through 2023. At September 30, 2015, the minimum annual rental commitments under leases having terms in excess of one year were as follows (in thousands):
Years Ending September 30, |  | Operating Leases |
2016 | $ | 3,768 |
2017 |  | 2,844 |
2018 |  | 2,147 |
2019 |  | 1,317 |
2020 |  | 1,325 |
Thereafter |  | 5,586 |
Total lease commitments | $ | 16,987 |
Lease expense for all operating leases was $4.0 million, $3.9 million and $4.7 million for Fiscal 2015, 2014 and 2013, respectively. In Fiscal 2015, we exited one of our previously occupied leased facilities in Acheson, Alberta, Canada. The lease does not expire until October 2019; however, we are currently seeking to sublet the facility. We recorded a $0.8 million loss pertaining to this lease which represents the net difference between the annual lease costs and the anticipated sublease of this facility, as well as the write-off of associated leasehold improvements. In Fiscal 2014, we also exited one of our previously occupied leased facilities in Edmonton, Alberta, Canada. This lease does not expire until July 2023; however, we have sublet that facility through July 2019. We recorded a $1.7 million loss in the fourth quarter of fiscal year 2013 for the net difference between those annual lease costs and the expected receipts from the sublease, as well as the write-off of leasehold improvements. Letters of Credit and Bonds Certain customers require us to post bank letter of credit guarantees or performance bonds issued by a surety. These guarantees and performance bonds assure that we will perform under the terms of our contract. In the event of default, the counterparty may demand payment from the bank under a letter of credit or performance by the surety under a performance bond. To date, there have been no significant expenses related to either letters of credit or performance bonds for the periods reported. We were contingently liable for secured and unsecured letters of credit of $21.1 million as of September 30, 2015. We also had performance and maintenance bonds totaling $318.8 million that were outstanding, with additional bonding capacity of $431.2 million available, at September 30, 2015. We have a $15.2 million facility agreement (Facility Agreement) between Powell (UK) Limited and a large international bank. This Facility Agreement provides Powell (UK) the ability to enter into bank guarantees as well as forward exchange contracts and currency options. At September 30, 2015, we had outstanding guarantees totaling $4.0 million under this Facility Agreement and amounts available under this Facility Agreement were $11.2 million. This facility is renewable in May 2016. The Facility Agreement provides for financial covenants and customary events of default, and carries cross-default provisions with our Amended Credit Facility. If an event of default (as defined in the Facility Agreement) occurs and is continuing, per the terms and subject to the conditions set forth in the Facility Agreement, obligations outstanding under the Facility Agreement may be accelerated and may become or be declared immediately due and payable. As of September 30, 2015, we were in compliance with all of the financial covenants of the Facility Agreement. Litigation We are involved in various legal proceedings, claims and other disputes arising from our commercial operations, projects, employees and other matters which, in general, are subject to uncertainties and in which the outcomes are not predictable. Although we can give no assurances about the outcome of pending or threatened litigation and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity. In March 2013, we settled a lawsuit we had filed against the previous owners of Powell Canada for $1.7 million, which was received in April 2013 and is recorded as gain on settlement in the accompanying Consolidated Statement of Operations. Liquidated Damages Certain of our customer contracts have schedule and performance obligation clauses that, if we fail to meet them, could subject us to liquidated damages. Each individual contract defines the conditions under which the customer may make a claim against us. As of September 30, 2015, our exposure to possible liquidated damages is $5.4 million, of which approximately $1.8 million is probable. Based on our actual or projected failure to meet these various contractual commitments, $1.7 million has been recorded against revenue in our statement of operations. We believe that we will be successful in obtaining change orders or contract extensions that should resolve the potential for any unaccrued liquidated damages; however, should we fail to achieve relief on some or all of these contractual obligations, we could be subject to additional liquidated damages which could impact our future operating results.

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