Risk Management

12 Months Ended

Dec. 31, 2011

Risk Management [Abstract]

Risk Management

15. RISK MANAGEMENT

Insurance

We evaluate various kinds of risk that we are exposed to in our business. In our evaluation of risk, we evaluate options and alternatives to mitigating such risks. For certain insurable risks we may acquire insurance policies to protect against potential losses or to partially insure against certain risks. For our subsidiary, Rockwell Transportation, Inc., we maintain a partially uninsured workers’ compensation plan. Under the policy, the Company’s self-insurance retention is $350,000 per occurrence and $745,571 in aggregate coverage for the policy year ending July 1, 2012. The total amount at December 31, 2011 by which retention limits exceed the claims paid and accrued is approximately $707,506 for the policy year ending July 1, 2012. Estimated additional future claims subject to payment by the Company of approximately $87,950 have been accrued at December 31, 2011.

At December 31, 2011, approximately $200,000 was held in cash collateral and escrow by the insurance carrier for workers’ compensation insurance. At December 31, 2011 amounts held in cash collateral and escrow are included in prepaid expenses and other non-current assets in the consolidated financial statements. As the transition to this partially insured plan commenced July 1, 2011, no such amounts were accrued or held in escrow as of December 31, 2010.

Litigation

From time to time in the ordinary course of business, we become involved in various lawsuits, claims and proceedings relating to the conduct of our business, including those pertaining to commercial, intellectual property and employment claims. While we cannot reasonably predict the outcome of any lawsuit, claim or proceeding, we intend to vigorously defend these matters. However, if we are unsuccessful in our defense, these matters could result in a material adverse impact to our financial position and results of operations. The Company is a defendant in various legal actions that have arisen in the ordinary course of business. In the opinion of management, eventual resolution of these claims will not have a material effect on the Company’s financial position or results of operations.