Commitments and Contingent Liabilities

6 Months Ended

Jun. 30, 2013

Commitments and Contingent Liabilities [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

15. COMMITMENTS AND CONTINGENT LIABILITIES

Product Liability Claims

The Company is subject to product warranty claims that arise in the ordinary course of its business.  For certain manufactured products, the Company maintains a product warranty accrual which is adjusted on a monthly basis as a percentage of cost of sales.  This product warranty accrual is periodically adjusted based on the identification or resolution of known individual product warranty claims.  The following table sets forth the Company’s continuing operations product warranty accrual:

		Warranty Liability
Balance at December 31, 2012	$	15,727
Additions to warranty liability		829
Warranty liability utilized		(4,741)
Balance at June 30, 2013	$	11,815

Included within the above table are concrete tie warranty reserves of approximately $11,021 and $14,837 as of June 30, 2013 and December 31, 2012, respectively.

The Company continues to work with the Union Pacific Railroad (UPRR) to identify and replace defective ties related to the warranty claim asserted under CXT Incorporated’s (CXT) 2005 supply contract. During the six months ended June 30, 2013 there were no changes to the Company’s estimate of the number of defective concrete ties that will ultimately require replacement. Replaced ties have been deducted from the Company’s warranty liability.

While the Company believes this is a reasonable estimate of the potential warranty claims,  these estimates could change due to the emergence of new information and/or future events.  There can be no assurance at this point that future potential costs pertaining to these claims or other potential future claims will not have a material impact on the Company’s results of operations.

Environmental and Legal Proceedings

The Company is subject to national, state, foreign, provincial and/or local laws and regulations relating to the protection of the environment.  The Company’s efforts to comply with environmental regulations may have an adverse effect on its future earnings.  In the opinion of management, compliance with the present environmental protection laws will not have a material adverse effect on the financial condition, results of operations, cash flows, competitive position or capital expenditures of the Company.

The Company is also subject to legal proceedings and claims that arise in the ordinary course of its business.  In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial condition or liquidity of the Company.  The resolution, in any reporting period, of one or more of these matters could have a material effect on the Company’s results of operations for that period.

As of June 30, 2013 and December 31, 2012, the Company maintained environmental and litigation reserves approximating $2,133 and $2,141, respectively.

On January 11, 2012, CXT received a subpoena from the United States Department of Transportation Inspector General (IG) requesting records related to its manufacture of concrete railroad ties in Grand Island, NE. CXT and the Company have been cooperating fully with the IG.