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Commitments and Contingencies
 3 Months Ended
Mar. 31, 2012
Commitments and Contingencies

(9) Commitments and Contingencies

 

In the ordinary course of business, the Company is involved in various legal proceedings, workers’ compensation and product liability disputes. The Company is of the opinion that the ultimate resolution of these matters will not have a material adverse affect on the results of operations, cash flows or the financial position of the Company.

 

As a result of an environmental phase one study performed at the Company’s former facility located in Sarasota, Florida, the Company became aware of soil and groundwater contamination at the site. The Company engaged an environmental engineering consultant to assess the level of contamination and to develop a remediation and monitoring plan for the site. Soil remediation at the site was completed during the year ended December 31, 2010. Ground water remediation at the site is expected to begin during the third quarter of 2013, upon approval of a remedial action plan. During the three months ended March 31, 2012 and 2011, the Company did not record any environmental remediation expenses. At March 31, 2012 and December 31, 2011, the Company had accrued an undiscounted liability of $1,921 related to future remediation. The liability is recorded as a component of other long-term liabilities on the condensed consolidated balance sheets. A majority of the costs associated with the recorded liability will be incurred at the start of the groundwater remediation, with the balance relating to monitoring costs to be incurred over a time horizon of multiple years. The recorded liability is based on assumptions of the current site assessment report. In December 2011, the Company sold the Sarasota facility and related property. However, the liability to remediate the site contamination remains the responsibility of the Company. Due to the ongoing site remediation, the closing terms of the sale agreement included a requirement for the Company to maintain a $2,000 letter of credit for the benefit of the buyer.

 

In addition, the Company’s consolidated subsidiary, PST, has civil, labor and tributary contingencies for which the outcome is deemed to be of a possible but not probable loss by its legal advisors, and, therefore, no accrual was recorded. Such contingencies amount to $15,149 at March 31, 2012.

 

Product Warranty and Recall

 

Amounts accrued for product warranty and recall claims are established based on the Company’s best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet dates. These accruals are based on several factors including past experience, production changes, industry developments and various other considerations. The Company can provide no assurances that it will not experience material claims in the future or that it will not incur significant costs to defend or settle such claims beyond the amounts accrued or beyond what the Company may recover from its suppliers. The current portion of product warranty and recall is included as a component of accrued expenses and other current liabilities on the condensed consolidated balance sheets. Product warranty and recall includes $210 and $175 of a long-term liability at March 31, 2012 and December 31, 2011, respectively, which is included as a component of other long-term liabilities on the condensed consolidated balance sheets.

 

The following provides a reconciliation of changes in product warranty and recall liability:

 

 

Three months ended March 31   2012     2011  
                 
Product warranty and recall at beginning of period   $ 5,301     $ 3,831  
Accruals for products shipped during period     856       539  
Aggregate changes in pre-existing liabilities due to claim developments     295       (63 )
Settlements made during the period (in cash or in kind)     (1,030 )     (576 )
Product warranty and recall at end of period   $ 5,422     $ 3,731