KDN » Topics » NOTE 10 CONTINGENCIES

This excerpt taken from the KDN 10-K filed Feb 27, 2007.
NOTE 10 CONTINGENCIES
      As previously reported, during 2004, the Company reduced its previously recorded legal fee accrual, for the
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NOTES TO CONSOLIDATED Financial Statements (continued)
Transactions Lawsuit, by $1.7 million. This change in estimate increased 2004 net income by $1.1 million. The deadline for the plaintiffs to take action to prolong the case has expired, therefore, the case has concluded. Expenditures to litigate this matter equaled $0.8 million in 2004.
     The Company is involved in ongoing environmental remediation activities at certain manufacturing sites. As of December 31, 2006, an undiscounted reserve in the amount of $1.0 million, representing the Company’s best estimate for ultimate resolution of these environmental matters, is recorded in other long-term liabilities in the Consolidated Balance Sheet. The environmental reserve equaled $1.4 million at December 31, 2005.
     Various other claims arising in the normal course of business are pending against the Company. The Company’s estimated legal costs expected to be incurred in connection with claims, lawsuits and environmental matters are accrued in the consolidated financial statements.
This excerpt taken from the KDN 10-K filed Mar 2, 2006.
NOTE 10 CONTINGENCIES
      As previously reported, in 2000, an accident involving a MH53E helicopter manufactured by Sikorsky Aircraft Corporation, resulted in four deaths and two injuries during a military training mission. The Company manufactures and sells swashplate bearings used on MH53E helicopters. In 2002, the Company, along with certain other companies, was named as a defendant in a lawsuit filed by the relatives and the estates of the four deceased individuals, and by the two injured individuals. The final settlement agreement and release documents related to this lawsuit have been executed and the lawsuit has been dismissed by the court. The Company made no payments related to this lawsuit.
     As previously reported, during 2004, the Company reduced its previously recorded legal fee accrual, for the Transactions Lawsuit, by $1.7 million. This change in estimate increased 2004 net income by $1.1 million. The deadline for the plaintiffs to take action to prolong the case has expired, therefore, the case has concluded. Expenditures to litigate this matter equaled $0.8 million in 2004 and $2.9 million in 2003.
     The Company is involved in ongoing environmental remediation activities at certain manufacturing sites. One of the manufacturing sites undergoing environmental remediation is a discontinued operation sold in 2001, where the Company retained the environmental liability. The Company is working with the appropriate regulatory agencies to complete the necessary remediation or to determine the extent of the Company’s portion of the remediation necessary. As of December 31, 2005, an undiscounted accrual in the amount of $1.4 million, representing the Company’s best estimate for ultimate resolution of these environmental matters, remains in other long-term liabilities in the consolidated financial statements.
     Various other claims arising in the normal course of business are pending against the Company. The Company’s estimated legal costs expected to be incurred in connection with claims, lawsuits and environmental matters are accrued in the consolidated financial statements.
This excerpt taken from the KDN 10-K filed Mar 11, 2005.
NOTE 9 CONTINGENCIES
      As previously reported, the Company, along with certain other companies, was named as a defendant in a lawsuit filed in 1996 in the United States District Court for the Southern District of New York (the “Transactions Lawsuit”). The Transactions Lawsuit sought damages alleged by

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NOTES TO CONSOLIDATED Financial Statements (continued)
plaintiffs to be an amount of $700 million, plus interest and punitive damages against the defendants collectively. During the second quarter of 2002, a $7.5 million provision was recorded in order to support the Company’s most current and best estimate of the cost to continue to litigate the Transactions Lawsuit. In April 2004, the Court of Appeals issued its Summary Order affirming in all respects an earlier judgment of the District Court, which granted the motion for summary judgment, dismissing the case in its entirety against all defendants. When the chances of this ruling being further appealed by the plaintiffs became remote, the Company reduced its previously recorded Transactions Lawsuit legal fee accrual by $1.7 million in the second quarter 2004 financial statements. This change in estimate increased second quarter net income by $1.1 million. The deadline for the plaintiffs to take action to prolong the case has expired, therefore, the case has concluded. Expenditures to litigate this matter equaled $0.8 million in 2004, $2.9 million in 2003 and $6.6 million in 2002.
     As previously reported, in August 2000, an accident involving a MH53E helicopter manufactured by Sikorsky Aircraft Corporation, resulted in four deaths and two injuries during a military training mission. The Company manufactures and sells swashplate bearings used on MH53E helicopters. In May 2002, the Company, along with Sikorsky Aircraft Corporation, The Armoloy Corporation, Armoloy of Illinois, Inc., Armoloy of Connecticut, Inc. and Investment Holdings, Inc., was named as a defendant in a lawsuit filed by the relatives and the estates of the four deceased individuals, and by the two injured individuals. The litigation currently is pending in the District Court of Nueces County, Texas, 28th Judicial District. Armoloy of Connecticut, Inc. is no longer a party to the litigation. The Company believes it has meritorious defenses to these claims including, but not limited to, the fact that the bearing utilized in the helicopter involved in the accident was inspected and approved prior to shipment by both U.S. government and Sikorsky Aircraft Corporation inspectors. Accordingly, an accrual is not recorded in the consolidated financial statements related to this legal action. Further, the Company’s insurance carrier has retained legal counsel to respond to the lawsuit. The Company believes that the alleged damages claimed in this lawsuit will be fully covered under the Company’s insurance policy.
     The Company is involved in ongoing environmental remediation activities at certain manufacturing sites as well as proceedings relating to the cleanup of waste disposal sites that provide for the allocation of costs among potentially responsible parties. One of the manufacturing sites undergoing environmental remediation is a discontinued operation sold in December 2001, where the Company retained the environmental liability. The Company is working with the appropriate regulatory agencies to complete the necessary remediation or to determine the extent of the Company’s portion of the remediation necessary. During the fourth quarter of 2004, based on the favorable results of remediation efforts to-date, the Company reduced its environmental reserves by $1.1 million. This change in estimate increased net income by $0.7 million. As of December 31, 2004, an undiscounted accrual in the amount of $2.1 million, representing the Company’s best estimate for ultimate resolution of these environmental matters, remains in other long-term liabilities in the consolidated financial statements.
     Various other claims arising in the normal course of business are pending against the Company. The Company’s estimated legal costs expected to be incurred in connection with claims, lawsuits and environmental matters are consistently accrued in the consolidated financial statements.

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