Commitments And Contingencies

6 Months Ended

Jun. 30, 2013

Commitments And Contingencies

5. COMMITMENTS AND CONTINGENCIES

SEC Matter

Selling & administrative expenses for the three-month period ended June 30, 2013 include approximately $1.9 million of legal fees and other third-party costs related to the previously disclosed SEC matter. These expenses were reduced by approximately $1.5 million of reimbursement by the Company’s directors’ and officers’ liability insurance carrier that is expected to be collected subsequent to June 30, 2013, resulting in a net expense of approximately $0.4 million related to the SEC matter. Selling & administrative expenses for the six-month period ended June 30, 2013 include approximately $3.7 million of legal fees and other third party costs related to the SEC matter. These expenses were reduced by approximately $2.9 million of insurance reimbursement, resulting in a net expense of approximately $0.8 million related to the SEC matter. Selling & administrative expenses for the three- and six-month periods ended June 30, 2012 include approximately $1.5 million and $2.3 million, respectively, of legal fees and other third party costs related to the SEC matter. These expenses were reduced by approximately $1.4 million and $2.1 million, respectively, of insurance reimbursement, resulting in a net expense of approximately $0.1 million and $0.2 million, respectively, for the three- and six-month periods ended June 30, 2012. The Company promptly submits any invoices potentially reimbursable under its directors’ and officers’ liability insurance policies to its carrier for reimbursement. For expenses that are subject to reimbursement, the Company does not generally receive reimbursement for 90 to 120 days. To the extent that the carrier agrees to reimburse the Company for expenses previously recorded in selling & administrative expenses, the Company treats any such reimbursement as a reduction of selling & administrative expenses in the period such reimbursement is determined to be estimable and probable.

The Company expects to continue to incur obligations to advance legal fees and other expenses to the Company’s Chief Financial Officer in connection with the previously disclosed civil action by the SEC against him. The Company is not party to the civil action, but is obligated to provide indemnification in certain circumstances (including advancing certain defense costs) to its Chief Financial Officer in accordance with the Company’s certificate of incorporation and bylaws and its indemnification agreement with him. In addition, the Company expects to continue to incur costs responding to subpoenas and other discovery requests relating to the civil action. The civil action seeks from the Company’s Chief Financial Officer civil money penalties, and an injunction against further violations of certain federal securities laws, a prohibition against his acting as an officer or director of a publicly-traded company, and disgorgement. The Company’s directors’ and officers’ liability insurance carrier has agreed to reimburse the Company for reasonable costs of defense advanced by the Company to its Chief Financial Officer in the SEC civil action. Because the Company is not directly involved in the defense of the proceeding and because of the inherent uncertainty in predicting any future settlement or judicial decision and any indemnification obligation of the Company in connection with any such resolution, the Company is not able to estimate or predict the extent of any indemnification obligation of the Company to its Chief Financial Officer or other costs resulting from the civil action, the amount or timing of and eligibility for reimbursements from the Company’s directors’ and officers’ liability insurance carrier associated with the civil action, any possible loss or possible range of loss associated with the civil action, or any potential effect on the Company’s business, results of operations, cash flows, or financial condition. On July 12, 2013, attorneys for both the SEC and the Company’s Chief Financial Officer filed motions for summary judgment, which may limit the claims to be tried; however, court rulings on the motions are not expected to be issued for several weeks. The case is presently set for trial to begin on November 12, 2013, in the U.S. District Court for the District of Kansas in Kansas City, Kansas.

Litigation

The Company is involved from time to time in legal proceedings and litigation arising in the ordinary course of business. However, the Company is not currently a party to any material legal proceedings.