Note 2 — Contingencies
The Company is involved from
time to time in disputes and other litigation in the ordinary course of business and may encounter other contingencies, which may
include environmental and other matters. The Company presently believes that none of these matters, individually or
in the aggregate, would be likely to have a material adverse impact on its financial position, results of operations or liquidity,
as set forth in these financial statements.
In December 2008, the Company
sold property it owned in Bridgeport, Connecticut to B&E Juices, Inc. for $2.5 million, of which $2.0 million is secured by
a mortgage on the property. The property consists of approximately four acres of land and 48,000 sq. feet of warehouse
space. The property was the site of the Company’s original scissor factory which opened in 1887 and was closed
Under the terms of the sale
agreement, and as required by the Connecticut Transfer Act, the Company is required to remediate any environmental contamination
on the property. During 2008, the Company hired an independent environmental consulting firm to conduct environmental studies in
order to identify the extent of the environmental contamination on the property and to develop a remediation plan. As a result
of those studies and the estimates prepared by the independent environmental consulting firm, the Company recorded an undiscounted
liability of approximately $1.8 million related to the remediation of the property. This accrual includes the costs of required
investigation, remedial activities, and post-remediation operating and maintenance.
The remediation work, which
began in the third quarter of 2009, was completed during the third quarter of 2012. The Company, with the assistance
of its independent environmental consulting firm, must continue to monitor contaminant levels on the property to ensure they comply
with set governmental standards. The Company expects that the monitoring period could last a minimum of two years. At
September 30, 2012, the Company had approximately $148,000 remaining in its accrual for post-remediation monitoring and project
closing costs, of which approximately $30,000 was classified as a current liability at that date.
The change in the accrual for
environmental remediation for the nine months ended September 30, 2012 follows (in thousands):
December 31, 2011
September 30, 2012
Also, as part of the sale, the
Company provided the buyer with a mortgage loan of $2.0 million at six percent interest. The mortgage is payable in monthly installments
of principal and interest with the remaining outstanding balance due in full, one year after remediation and monitoring
on the property have been completed.