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Commitments And Contingencies
 3 Months Ended
Mar. 29, 2013
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

 

Litigation – The Company is a party to various legal actions arising in the normal course of business. While the Company does not believe that the ultimate resolution of any such pending actions will have a material effect on its results of operations, financial position, or cash flows, litigation is subject to inherent uncertainties. If an unfavorable ruling were to occur, there exists the possibility of a material impact in the period in which the ruling occurs.

 

During 2012, Electrochem and several other unaffiliated parties were named as defendants in a personal injury and wrongful death action filed in the 113th Judicial District Court of Harris County, Texas. The complaint seeks damages alleging marketing defects and failure to warn, negligence and gross negligence relating to a product Electrochem manufactured and sold to a customer, one of the other named defendants, which, in turn, incorporated the Electrochem product into its own product which it sold to its customer, another named defendant.  The cost of defense in this matter is the responsibility of Electrochem's customer.  Electrochem also has product liability insurance coverage. Electrochem believes that no liability will be incurred on this litigation, that it has meritorious defenses and it intends to vigorously defend the matter.  Given the early stages of this action, the amount of loss or range of possible loss cannot be reasonably estimated at this time.

 

Product Warranties – The Company generally warrants that its products will meet customer specifications and will be free from defects in materials and workmanship. The change in aggregate product warranty liability is as follows (in thousands):

 

 AtDecember 28, 2012$2,626
 Reduction to warranty reserve (481)
 Warranty claims paid (24)
 AtMarch 29, 2013$2,121

Contractual Obligations – Contractual obligations are defined as agreements that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum obligations; fixed or minimum price provisions; and the approximate timing of the transaction. The Company's contractual obligations are normally fulfilled within short time horizons. The Company also enters into blanket orders with vendors that have preferred pricing and terms, however these orders are normally cancelable by us without penalty. As of March 29, 2013, the total contractual obligations of the Company are approximately $29.0 million and will primarily be funded by existing cash and cash equivalents, cash flow from operations, or the Credit Facility. The Company also enters into contracts for outsourced services; however, the obligations under these contracts were not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.

 

Operating Leases – The Company is a party to various operating lease agreements for buildings, equipment and software. Estimated future operating lease expense is as follows (in thousands):

 Remainder of2013$ 3,516
 2014  4,403
 2015  3,801
 2016  3,204
 2017  1,215
 Thereafter  1,933
 Total estimated operating lease expense$ 18,072

Foreign Currency Contracts - The Company enters into forward contracts to purchase Mexican pesos in order to hedge the risk of peso-denominated payments associated with the operations at its Tijuana, Mexico facility. The impact to the Company's results of operations from these forward contracts was as follows (in thousands):

  Three Months Ended 
  March 29, March 30, 
  2013 2012 
 Increase (reduction) in Cost of Sales$(172) $78 
 Ineffective portion of change in fair value 0  0 

Instrument Type of Hedge  Aggregate Notional Amount Start Date End Date $/Peso Fair Value Balance Sheet Location
FX Contract Cash flow $ 4,500 Jan-13 Dec-13 0.0727$ 455 Current Assets
FX Contract Cash flow $ 4,500 Jan-13 Dec-13 0.0693$ 704 Current Assets

Self-Insured Medical Plan – The Company self-funds the medical insurance coverage provided to its U.S. based employees. The risk to the Company is being limited through the use of stop loss insurance, which has specific stop loss coverage per associate for claims in the year exceeding $225 thousand per associate with no annual maximum aggregate stop loss coverage. As of March 29, 2013, the Company has $1.5 million accrued related to the self-insurance of its medical plan, which is recorded in Accrued Expenses in the Condensed Consolidated Balance Sheet, and is primarily based upon claim history.