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Commitments And Contingencies
 6 Months Ended
Feb. 28, 2013
Commitments And Contingencies [Abstract]  
Commitments And Contingencies

 

 

Note 9 – Commitments and Contingencies

In the ordinary course of its business operations, the Company is involved, from time to time, in commercial litigation, employment disputes, administrative proceedings and other legal proceedings. The Company has established accruals for certain proceedings based on an assessment of probability of loss. The Company believes that any potential loss in excess of the amounts accrued would not have a material effect on the business or its condensed consolidated financial statements. Such proceedings are exclusive of environmental remediation matters which are discussed separately below.

 

In 1992, the Company entered into a consent decree with the U.S. Environmental Protection Agency (the “EPA”) in which the Company committed to remediate environmental contamination of the groundwater that was discovered in 1982 through 1990 at and adjacent to its Lindsay, Nebraska facility (the “site”).  The site was added to the EPA’s list of priority superfund sites in 1989.  Between 1993 and 1995, remediation plans for the site were approved by the EPA and fully implemented by the Company.  Since 1998, the primary remaining contamination at the site has been the presence of volatile organic chemicals in the soil and groundwater.  To date, the remediation process has consisted primarily of drilling wells into the aquifer and pumping water to the surface to allow these contaminants to be removed by aeration. The Company accrues the anticipated cost of investigation and remediation when the obligation is probable and can be reasonably estimated.  

 

In 2008, the Company and the EPA conducted their periodic five-year review of the status of the remediation of the contamination of the site. In response to the review, the Company and its environmental consultants developed a remedial action work plan. In the first quarter of fiscal 2012, the Company undertook an investigation to assess further potential site remediation and containment actions.  In connection with the receipt of preliminary results of this investigation and other evaluations, the Company estimated that it would incur $7.2 million in remediation and operating costs and accrued that undiscounted amount as an operating expense in the first quarter of fiscal 2012.  The EPA has not approved the Company’s remediation plan. During the first six months of fiscal 2013, the Company did not accrue any additional incremental costs related to environmental remediation liabilities. 

 

Although the Company has accrued all reasonably estimable costs associated with remediation of the site, it is expected that additional testing and environmental monitoring and remediation could be required in the future as part of the Company’s ongoing discussions with the EPA regarding the development and implementation of the remedial action plans.  In addition, the current investigation has not yet been completed and does not include all affected areas on the site.  Due to the current stage of discussions with the EPA and the uncertainty of the remediation actions that may be required with respect to these affected areas, the Company believes that meaningful estimates of costs or range of costs cannot currently be made and accordingly have not been accrued.

 

The EPA is expected to complete its next five-year review of the site by the end of fiscal 2013.  Over the next 12 to 18 months, the Company intends to complete additional investigation of soil and groundwater on site with the expectation that the Company will then come to an agreement with the EPA on an approved remediation plan.  The Company anticipates there could be revisions to the current remediation plan as a result of these processes. Any revisions could be material to the operating results of any fiscal quarter or fiscal year.  The Company does not expect such additional expenses would have a material adverse effect on its liquidity or financial condition.

 

The following table summarizes the undiscounted environmental remediation liability classifications included in the balance sheet as of February 28, 2013, February 29, 2012 and August 31, 2012:

 

 

 

 

 

 

 

 

 

 

 

Environmental Remediation Liabilities

($ in thousands)

 

February 28,

 

February 29,

 

August 31,

Balance Sheet Classification

 

2013

 

2012

 

2012

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$
2,244 

 

$
2,737 

 

$
2,414 

Other noncurrent liabilities

 

 
5,200 

 

 
5,200 

 

 
5,200 

Total environmental remediation liabilities

 

$
7,444 

 

$
7,937 

 

$
7,614