Note 9 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Notes

Note 9 - Commitments and Contingencies

Note 9 - Commitments and Contingencies

Letters of Credit

The Company has finance arrangements which facilitate the issuance of letters of credit and bank guarantees. Under the terms of the arrangements, E&S is required to maintain a balance in a specific cash account equal to or greater than the outstanding value of all letters of credit or bank guarantees issued, plus other amounts necessary to adequately secure obligations with the financial institution.  As of December 31, 2013, there were outstanding letters of credit and bank guarantees of $1,110, of which $1,020 is scheduled to expire in 2014 and $90 is scheduled to expire in 2015.  There was $90 and $442 of restricted cash included in other assets as of December 31, 2013 and 2012, respectively.

Loss on Condemnation of Property

 In April 2011, Rocky Mountain Power (“RMP”), a public utility company, filed a complaint against the Company and Wasatch Research Park I, LLC (“Wasatch”) in the Third Judicial District Court, Salt Lake County, UT.  Wasatch owns legal title to the buildings and leasehold interest in the land which the Company occupies (collectively, the “Properties”) pursuant to a series of agreements (the “Agreements”) which also grants the Company the option to repurchase the Properties or a certain portion of the Properties, known as the Substation Building (the “Substation”).  The arrangement between E&S and Wasatch was accounted for as a financing and the lease obligation and repurchase option has been recorded as long-term debt as discussed more fully in Note 7.  The Agreements also provided for a sharing of proceeds between the Company and Wasatch in the event of a sale of the Substation through various scenarios. In the complaint, RMP obtained a decree of condemnation of the Substation that allowed RMP to repurpose the Substation for public use. RMP requested a determination of just compensation for the appropriation of the Substation from the Company and Wasatch, and paid Wasatch a preliminary compensation amount of $231 in 2011. Wasatch and the Company believed that the Substation value was higher than $231 and sought additional compensation from RMP through legal proceedings.

In September 2011, RMP took possession of the Substation and the Company no longer retained use of the assets. The loss of the Substation has had no adverse impact on the Company’s near term operations as RMP will continue to provide adequate power supply under public utility services.  However, for the long term the Company expects its power costs will be greater than they would have been had it retained ownership of the Substation.

During November 2011, the Company and Wasatch entered into an amendment (the “Amendment”) to the Agreements that clarified the sharing of proceeds from the condemnation and the Company’s option to repurchase the Substation. The Amendment affirmed the Company’s forfeiture of its right to repurchase the Substation as a result of RMP taking legal title.  The Amendment provided for Wasatch to retain 100% of the $231 compensation already paid by RMP and for the Company and Wasatch to share equally in any additional compensation in excess of the $231, less legal expenses. The Amendment also required Wasatch to fund the legal expenditures of the proceedings so that any E&S payment for legal expense would be limited to its share of the amount of additional compensation RMP pays for the Substation, if any. Also, the Company’s price to repurchase the entire property was reduced by $152, representing the repurchase price for the Substation only. This reduced the sale/leaseback financing obligation included with long-term debt (see Note 7).

The final determination of the value of the Substation was determined to be $362, which resulted in $131 of additional compensation over the $231 proceeds received in 2011.  In January 2014, the Company received $22 after sharing half of the litigation expenses with Wasatch.