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Commitments and Contingencies | 3 Months Ended
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Mar. 31, 2018
Commitments and Contingencies [Abstract] |
Commitments and Contingencies | (11) Commitments and Contingencies In the ordinary course of business, the Company is subject to a broad range of claims and legal proceedings that relate to contractual allegations, product liability, tax audits, patent infringement, employment-related matters and environmental matters. The Company establishes accruals for matters which it believes that losses are probable and can be reasonably estimable. Although it is not possible to predict with certainty the outcome of these matters, the Company is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on its condensed consolidated results of operations or financial position. As a result of environmental studies 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. A remedial action plan was approved by the Florida Departme nt of Environmental Protection and groundwater remediation began in the fourth quarter of 2015. During the three months ended March 31, 2018 and 2017, environmental remediation costs incurred were immaterial. At March 31, 2018 and December 31, 201 7, the Company accrued a remaining undiscounted liability of $132 and $265, respectively, related to future remediation costs. At March 31, 201 8 and December 31, 201 7, $132 and $253, r espectively, were recorded as a component of accrued expenses and other current liabilities in the condensed consolidated balance sheets while the remaining amount was recorded as a component of other long-term liabilities. C osts associated with the recorded liability will be incurred to complete the groundwater remediation, with the balance relating to monitoring costs to be incurred over multiple years. The recorded liability is based on assumptions in the remedial action plan. Although the Company sold the Sarasota facility and related property in December 2011, the liability to remediate the site contamination remains the responsibility of the Company. Due t o the ongoing site remediation, the Company is currently required to maintain a $1,489 letter of credi t for the benefit of the buyer. ﻿ Royal v. Stoneridge, Inc. et al. was a legal proceeding in the United States District Court for the Western District of Oklahoma, Case No. 5:14-cv-01410-F. Plaintiffs filed this putative class action against the Company, Stoneridge Control Devices, Inc., and others on December 19, 2014. Plaintiffs allege d that the Company was involved in the vertical chain of manufacture, distribution, and sale of a CD that was incorporated into Dodge Ram trucks purchased by Plaintiffs between 1999 and 2006. Plaintiffs allege d that the Company and Stoneridge Control Devices, Inc. breached various express and implied warranties, including the implied warranty of merchantability. The putative class consisted of all owners of vehicles equipped with the subject CD, which includes various Dodge Ram trucks and other manual transmission vehicles manufactured from 1997–2007, which Plaintiffs allege d is more than one million vehicles. On September 28, 2017, the Company reached an agreement with Plaintiffs to settle the matter. Under the terms of the settlement, which was approved by the Court on January 30, 2018, the Company will provide a replacement CD to each member of the settlement class who files a claim form with evidence of eligibility to participate. The terms of the settlement do not require the Company to provide members of the settlement class with any cash payments or to reimburse any installation costs associated with replacement of the CDs. Counsel for Plaintiffs and the settlement class were awarded attorneys’ fees and costs in an amount of $375. Counsel for Plaintiffs and the settlement class were also awarded incentive payments to each of the three named Plaintiffs in an amount of $5 each. The Company previously accrued $525 as of December 31, 2017 related to this matter. In February 2018, the Company paid the attorneys’ fees and costs and the awarded incentive payments in the amount of $375 and $15, respectively. The total cost of the settlement remains uncertain because it is difficult to predict how many members of the proposed settlement class will request a replacement CD. The Company believes the likelihood of loss is probable and therefore the remaining amount accrued of $93 as of March 31, 2018, within accrued expenses and other current liabilities in the condensed consolidated statement of operations, is an estimate of exposure for potential settlement class members that may request a replacement CD. ﻿ On May 24, 2013, the State Revenue Services of São Paulo issued a tax deficiency notice against PST claiming that the vehicle tracking and monitoring services it provides should be classified as communication services, and therefore subject to the State Value Added Tax – ICMS. The State Revenue Services assessment imposed the 25.0% ICMS tax on all revenues of PST related to the vehicle tracking and monitoring services rendered during the period from January 2009 through December 2010. The Company believes that the vehicle tracking and monitoring services are non-communication services, as defined under Brazilian tax law, subject to the municipal ISS tax, not communication services subject to state ICMS tax as claimed by the State Revenue Services of São Paulo. T h e Brazil Administrative Court issued a final ruling on February 27, 2018 in PST’s favor for the period from January 2009 through December 2010, therefore there is no possibility that the State of Sao Paulo can appeal this judgement and the likelihood of loss is not probable. As a result of the above, as of March 31, 2018 and December 31, 201 7, no accrual has been recorded with respect to the tax assessment. PST has civil, labor and other tax contingencies for which the likelihood of loss is deemed to be reasonably possible, but not probable, by the Company’s legal advisors in Brazil. As a result, no provision has been recorded with respect to these contingencies, which amounted to R$38,100 ($11,500) and R$33,800 ($10,200) at March 31, 2018 and December 31, 201 7, respectively. An unfavorable outcome on these contingencies could result in significant cost to PST and adversely affect its results of operations. ﻿ Insurance Recoveries ﻿ The Company incurred losses and incremental costs related to the damage to assets caused by a storm at its Mexican production facility in the fourth quarter of 2016 and is pursuing recovery of such costs under applicable insurance policies. Anticipated proceeds from insurance recoveries related to losses and incremental costs that have been incurred (“loss recoveries”) are recognized when receipt is probable. Anticipated proceeds from insurance recoveries in excess of the net book value of damaged property, plant and equipment (“insurance gain contingencies”) are recognized when all contingencies related to the claim have been resolved. L oss recoveries related to the damage of inventory and incremental costs included in costs of sales were not significant for the three months ended March 31, 2018 and 2017, respectively. There were no l oss recoveries and insurance gain contingencies recognized in the three months ended March 31, 2018 and 2017 related to the damage of property, plant and equipment included within SG&A expense. As of December 31, 2017, the Company had confirmation of the open insurance claim and recorded a receivable of $1,644. The cash payment was subsequently collected in January 2018. Cash proceeds related to the damage of in ventory and incremental costs were $241 and $500 for the three months ended March 31, 2018 and 2017, respectively, and are included in cash flows from operating activities. C ash proceeds related to the damage of property, plant and equipment of $1,403 are included in cash flows from investing activities for the three months ended March 31, 2018. ﻿ 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 existing and future 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 including insurance coverage. The Company can provide no assurances that it will not experience material claims 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 in the condensed consolidated balance sheets. Product warranty and recall included $3,347 and $3,112 of a long-term liability at March 31, 2018 and December 31, 201 7, respectively, which is included as a component of other long-term liabilities in the condensed consolidated balance sheets. ﻿ The following provides a reconciliation of changes in product warranty and recall liability: ﻿
﻿ |  |  |  |
﻿Three months ended March 31 |  | 2018 |  | 2017
﻿Product warranty and recall at beginning of period | $ | 9,978 | $ | 9,344
﻿Accruals for products shipped during period |  | 2,274 |  | 1,503
﻿Assumed warranty liability related to Orlaco |  | - |  | 1,462
﻿Aggregate changes in pre-existing liabilities due to claim developments |  | 387 |  | 1,572
﻿Settlements made during the period |  | (1,772) |  | (2,314)
﻿Foreign currency translation |  | (19) |  | 97
﻿Product warranty and recall at end of period | $ | 10,848 | $ | 11,664
﻿

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- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -URI http://asc.fasb.org/topic&trid=2127136 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -URI http://asc.fasb.org/topic&trid=2144648 + Details
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