Thailand Flood Related Charges

9 Months Ended

Sep. 30, 2012

Thailand Flood Related Charges [Abstract]

Thailand Flood Related Charges

Note 14 – Thailand Flood Related Charges

The Company's facilities in Ayudhaya, Thailand were flooded and remained closed from October 13, 2011 to December 20, 2011. As a result of the flooding and temporary closing of these facilities, the Company recognized estimated property losses of $46.2 million and incurred $13.4 million of flood related costs during the three months ended December 31, 2011. The Company carried property and business interruption insurance with a combined limit for real and personal property as well as business interruption insurance of approximately $300 million. As such, the Company recorded estimated recoveries from insurance for these property losses and flood related costs totaling $56.2 million during the three months ended December 31, 2011. The estimated insurance recoveries included $46.2 million of property losses from the involuntary conversion of property, plant and equipment and inventory and $10.0 million of other costs directly related to the flooding in Thailand.

During the nine months ended September 30, 2012, the Company reduced the estimated property losses and the corresponding estimated recoveries from insurance for these property losses by $5.1 million, and the Company received $55.3 million of insurance proceeds which included $45.3 million for Thailand property losses and $10.0 million for other flood related costs. As of September 30, 2012, the Company has collected its recorded insurance receivable for these property losses and flood related costs.

During the nine months ended September 30, 2012, the Company recognized additional Thailand flood related charges totaling $16.0 million offset by insurance recoveries totaling $4.2 million in excess of previously recognized inventory and property, plan and equipment losses. The Company does not expect to incur significant additional Thailand flood related charges. While all of these charges consist of costs directly attributable to the Thailand flood which the Company expects to recover from its insurance, the Company will record additional insurance recoveries when the appropriate recognition criteria have been met. The Company cannot estimate the timing of the receipt of insurance proceeds it will ultimately realize, and there may be a substantial delay between the incurrence of losses and the recovery under its insurance policies. As a result of the flooding, the Company has been unable to renew or otherwise obtain adequate cost-effective flood insurance to cover assets at its facilities in Thailand. The Company continues to investigate all flood risk-mitigation alternatives in Thailand, including but not limited to coverage through private insurance and the Thailand Disaster Insurance Scheme. In the event the Company was to experience a significant uninsured loss in Thailand or elsewhere, it could have a material adverse effect on its business, financial condition and results of operations.