XML 52 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
Contingencies and Litigation
 3 Months Ended
Mar. 30, 2013
Contingencies and Litigation [Abstract]  
Contingencies and Litigation
12.       Contingencies and Litigation
 
Right of Recourse
 
 In the ordinary course of business, the Company's subsidiaries in China may receive banker's acceptance drafts from customers in payment of outstanding accounts receivable. These banker's acceptance drafts are non-interest bearing obligations of the issuing bank and mature within six months of the origination date. The Company's subsidiaries in China may use these banker's acceptance drafts prior to the scheduled maturity date to settle outstanding accounts payable with vendors. Banker's acceptance drafts transferred to vendors are subject to customary right of recourse provisions prior to their scheduled maturity date. As of March 30, 2013 and December 29, 2012, the Company had $4,217,000 and $4,170,000, respectively, of banker's acceptance drafts subject to customary right of recourse provisions, which were transferred to vendors and had not reached their scheduled maturity date. Historically, the banker's acceptance drafts have settled upon maturity without any claim of recourse against the Company.
 
Discontinued Operation
 
In 2005, the Company's Kadant Composites LLC subsidiary (Composites LLC) sold substantially all of its assets to a third party. Composites LLC ceased doing business in September 2007 after it had expended all of the cash proceeds from the sale to administer and pay warranty claims related to certain decking and roofing products. All activity related to this business is classified in the results of the discontinued operation in the accompanying condensed consolidated financial statements.
 
On October 24, 2011, the Company, Composites LLC, and other co-defendants entered into an agreement to settle a nationwide class action lawsuit related to allegedly defective composites decking building products manufactured by Composites LLC between April 2002 and October 2003, which was filed and approved in Connecticut state court. As of March 30, 2013, the Company has accrued $33,000 for the payment of remaining claims under the class action settlement and $263,000 in related costs.
 
General
 
From time to time, the Company is subject to various claims and legal proceedings covering a range of matters that arise in the ordinary course of business. Such litigation may include claims and counterclaims by and against the Company for breach of contract, canceled contracts, or alleged breaches of warranty and other contract commitments. For legal proceedings in which a loss is probable and estimable, the Company accrues a loss based on the low end of the range of estimated loss when there is no better estimate within the range. If the Company were found to be liable for any of the claims or counterclaims against it, the Company would incur a charge against earnings for amounts in excess of legal accruals.