Contingent Liabilities

9 Months Ended

Feb. 29, 2012

Contingent Liabilities [Abstract]

Contingent Liabilities

NOTE D – Contingent Liabilities

Legal Proceedings

On January 27, 2012, the Fifth Appellate District of the Ohio Court of Appeals upheld a lower court ruling against the Company for professional negligence regarding the wrongful death of an employee of a third-party freight company. The lower court's ruling awarded damages to the plaintiff of approximately $3,700,000; however, our overall exposure related to this matter is limited under our stop-loss insurance policy. As a result, we accrued an additional pre-tax charge of $1,500,000, which was recorded within selling, general and administrative ("SG&A") expense during the three months ended February 29, 2012.

In connection with the acquisition of the BernzOmatic business ("Bernz") of Irwin Industrial Tool Company, a subsidiary of Newell Rubbermaid, Inc., we settled a dispute over our early termination of a supply contract for $10,000,000. Reserves previously recognized in connection with this matter totaled $14,402,000. Refer to "NOTE M – Acquisitions" for additional information regarding our acquisition of the Bernz.

We are defendants in certain other legal actions. In the opinion of management, the outcome of these actions, which is not clearly determinable at the present time, would not significantly affect our consolidated financial position or future results of operations. We also believe that environmental issues will not have a material effect on our capital expenditures, consolidated financial position or future results of operations.

Pressure Cylinders Voluntary Product Recall

On January 10, 2012, we announced a voluntary recall of our MAP-PRO^TM, propylene and MAAP^® cylinders and related hand torch kits. The recall is a precautionary step and involves a valve supplied by a third party that may leak when a torch or hose is disconnected from the cylinder. We are unaware of any incidence of fire or injury caused by this situation. In connection with this matter, for the three months ended November 30, 2011, we recorded certain accruals for our estimated probable costs, including $4,737,000 for product returns and $3,883,000 for recall-related costs. In addition, we wrote-off $1,051,000 of affected inventory.

A progression of the liabilities recorded in connection with this matter during the three months ended February 29, 2012 is summarized in the following table:

(in thousands)	Beginning Balance		Reserves Used			Changes in Estimates		Ending Balance
Product returns	$	4,737	$	(754	)	$	-	$	3,983
Recall-related costs		3,883		(835	)		-		3,048
Total	$	8,620	$	(1,589	)	$	-	$	7,031

Actual costs related to this matter may vary from the estimate. The ultimate cost will depend on several factors, including the actual number of customer returns, the freight costs associated with transporting the cylinders from our customer sites, the number of consumers who respond to the recall, and whether costs will be recovered from the supplier of the valve. Recoveries, if any, will not be recorded until an agreement is reached with the supplier. We expect the majority of the direct costs related to the recall to be paid before the end of fiscal 2012.