Commitments And Contingencies

9 Months Ended

Jun. 30, 2013

Commitments And Contingencies [Abstract]

Commitments And Contingencies

H.COMMITMENTS AND CONTINGENCIES

Long-Term Debt

See Note F herein for discussion of our long-term debt.

Letters of Credit and Bonds

Certain customers require us to post bank letter of credit guarantees or performance bonds issued by a surety. These guarantees and performance bonds assure that we will perform under the terms of our contract. In the event of default, the counterparty may demand payment from the bank under a letter of credit or performance by the surety under a performance bond. To date, there have been no significant expenses related to either for the periods reported. We were contingently liable for secured and unsecured letters of credit of $18.9 million as of June 30, 2013. We also had performance and maintenance bonds totaling $275.6 million that were outstanding with our sureties, with additional bonding capacity of $124.4 million available, at June 30, 2013.

We have a facility agreement (Facility Agreement) between S&I and a large international bank.  This $7.6 million Facility Agreement provides S&I the ability to enter into forward exchange contracts, currency options and performance bonds.  At June 30, 2013, we had outstanding a total of $4.9 million of guarantees under this Facility Agreement.

The Facility Agreement provides for financial covenants, customary events of default and carries cross-default provisions with our Amended Credit Facility.  If an event of default (as defined in the Facility Agreement) occurs and is continuing, on the terms and subject to the conditions set forth in the Facility Agreement, obligations outstanding under the Facility Agreement may be accelerated and may become or be declared immediately due and payable.  As of June 30, 2013, we were in compliance with all of the financial covenants of the Facility Agreement.

Litigation

We are involved in various legal proceedings, claims and other disputes arising in the ordinary course of business which, in general, are subject to uncertainties and the outcomes are not predictable. Although we can give no assurance about the outcome of pending or threatened litigation and the effect such outcomes may have on us, management believes that any ultimate liability resulting from the outcome of such proceedings, to the extent not otherwise provided or covered by insurance, will not have a material adverse effect on our consolidated financial position or results of operations or liquidity.

In March 2013, we settled a lawsuit we had filed against the previous owners of Powell Canada in the amount of $1.7 million, which was received in April 2013 and is recorded as Other income in the accompanying Condensed Consolidated Statement of Operations..

Construction and Relocation of Certain Operations

We are currently constructing a new facility in Houston, Texas, and one near Edmonton, Alberta, Canada.  We estimate the total cost of these facilities, including the land, will be approximately $75 million, of which $55.7 million has been incurred to date.  The remaining costs are expected to be funded from our existing cash and cash equivalents and future cash flows from operations.  We anticipate that the construction of these new facilities will be completed in the late summer of 2013.  Once completed, we will vacate the existing leased facilities.  We plan to relocate our existing operations and personnel to the two new facilities in the fourth quarter of fiscal year 2013.  Additionally, we will attempt to sublease the current facility we occupy in Canada which has a lease that expires in July 2023.  There are no assurances that we will be able to obtain a sublease that will cover our existing lease costs, which are approximately $1.2 million per year.  We expect to record the estimated loss on sublease, if any, in the fourth quarter of fiscal 2013.