Commitments and Contingent Liabilities

Operating lease commitments. As of March 2, 2013, the Company was obligated under noncancelable operating leases for buildings and equipment. Certain leases provide for increased rentals based upon increases in real estate taxes or operating costs. Future minimum rental payments under noncancelable operating leases are:



(In thousands)	Fiscal 2014		Fiscal 2015		Fiscal 2016		Fiscal 2017		Fiscal 2018		Thereafter		Total
Total minimum payments	$	7,547	$	6,587	$	6,437	$	4,608	$	3,293	$	4,134	$	32,606

Total rental expense was $13.0 million, $11.9 million and $10.1 million in fiscal 2013, 2012 and 2011, respectively.

At March 2, 2013, the Company had two sale and leaseback agreements, one for a building that provides an option to purchase the building at projected future fair market value upon expiration of the lease in 2014 and one for equipment that provides an option to purchase the equipment at projected future fair market value upon expiration of the lease in 2018. The leases are classified as operating leases in accordance with applicable financial accounting standards. The Company has a deferred gain of $4.7 million under the sale and leaseback transactions, which is included in the balance sheet caption as other current and non-current liabilities. The average annual lease payment over the life of the remaining leases is $2.0 million.

Bond commitments. In the ordinary course of business, predominantly in the Company’s Architectural Services business, the Company is required to provide surety or performance bonds that commit payments to its customers for any non-performance by the Company. At March 2, 2013, $105.8 million of the Company’s backlog was bonded by performance bonds with a face value of $360.4 million. Performance bonds do not have stated expiration dates, as the Company is released from the bonds upon completion of the contract. The Company has never been required to pay on these performance-based bonds with respect to any of the current portfolio of businesses.

Guarantees and warranties. The Company accrues for warranty and claim costs as a percentage of sales based on historical trends and for specific sales credits as they become known and estimable. Actual warranty and claim costs are deducted from the accrual when incurred. Factors that could have an impact on the warranty accrual in any given period include the following: improved manufacturing quality, shifts in product mix and any significant changes in sales volume. The Company’s warranty and claim accruals are detailed below.



(In thousands)	2013			2012
Balance at beginning of period	$	7,210		$	9,887
Additional accruals	4,061			2,766
Claims paid	(2,948		)	(5,443		)
Balance at end of period	$	8,323		$	7,210

Fiscal 2012 claims paid reflected the resolution of remaining specific product quality issues that were identified and accrued during fiscal year 2011.

Letters of credit. At March 2, 2013, the Company had ongoing letters of credit related to its construction contracts and certain industrial development and recovery zone facility bonds. The total value of letters of credit under which the Company was obligated as of March 2, 2013, was approximately $35.8 million. The Company’s total availability under its $100.0 million credit facility is reduced by borrowings under the facility and also by letters of credit issued under the facility. As of March 2, 2013, letters of credit in the amount of $23.4 million had been issued under the facility.

Purchase obligations. The Company has purchase obligations for raw material commitments and capital expenditures. As of March 2, 2013, these obligations totaled $87.9 million.

Non-compete agreements. The Company has entered into non-compete and consulting agreements associated with current and former employees. As of March 2, 2013, future payments of $0.1 million were committed under such agreements.

Foreign Currency Instruments. In December 2012, the Company entered into a foreign exchange forward contract with a U.S. dollar notional value of $24.3 million with the objective of reducing the exposure to fluctuations in the euro related to a planned capital equipment purchase. The fair value of this contract was a net liability of $0.4 million at March 2, 2013 and is included in the balance sheet caption as other current liabilities. The Company reports the effective portion of the gain or loss on a cash flow hedge as a component of other comprehensive income, and any gain or loss is included in the value of the capital asset and will be recognized in earnings over the life of the asset.

Litigation. The Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company’s construction supply and services businesses are routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. The Company is subject to litigation arising out of employment practices, workers compensation, general liability and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.