Commitments and Contingencies

9 Months Ended

Oct. 28, 2011

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

10. Commitments and Contingencies

Litigation

From time to time, the Company may be involved in certain claims and legal actions arising in the ordinary course of business. As of October 28, 2011, there were no claims or legal actions that management believes will have a material adverse effect on the Company’s financial position, results of operations, or liquidity.

Environmental

In preparation for the sale of the Earlysville, Virginia facility, the Company engaged an environmental consulting firm to survey the property for possible soil or groundwater contamination. This survey revealed impacts to both shallow soils and groundwater that may have resulted from the accidental loss of solvents. As a result of the initial and subsequent surveys, contamination treatment was determined to be necessary at an estimated total cost of $800,000 as of October 28, 2011, as determined by an environmental compliance specialist, and which is included in the environmental liability. Thus, in accordance with U.S. GAAP, the Company capitalized these contamination treatment costs in its fiscal year 2008 financial statements as an increase to property held for sale, net, since such costs will be incurred in preparation for the sale of the Earlysville, Virginia facility.

The Company has had discussions with the former owner of the property concerning responsibility for contamination treatment. The former owner of the property and the Company solicited proposals in 2009 from environmental consulting firms and received a proposal from which management estimates the cost of contamination treatment to be approximately $625,000. Depending on the findings of additional studies, the scope and cost of the contamination treatment may change. Current estimates of future monitoring, oversight and other related costs are estimated between $175,000 and $225,000.  The Company and the former owner of the property are currently negotiating the terms of administrative consent orders with the U.S. Environmental Protection Agency for completion of the contamination characterization and treatment plans. The Company continues to be in communication with the former owner of the property concerning its responsibility to cover the costs of the contamination characterization and treatment. The Company will reassess the accrued liability and record any appropriate adjustments in our financial statements following completion of the characterization process as required by these orders. Costs incurred during the three and nine months ended October 28, 2011 to pay an environmental consulting firm to characterize contamination that may be present in the ground between the Company’s property and nearby homes amounted to $0 and $8,000, respectively. Costs incurred during the three and nine months ended October 29, 2010 to pay an environmental consulting firm to characterize contamination that may be present in the ground between the Company’s property and nearby homes totaled $76,000 and $96,000, respectively.

Commitments

There have been no material changes to our purchase and lease commitments from those disclosed in our Annual Report on Form 10-K for the year ended January 31, 2011. Total rent expense under the facility lease in Charlottesville, Virginia for the three and nine months ended October 28, 2011 was $42,000 and $126,000, respectively. Total rent expense under the facility lease in Charlottesville, Virginia for the three and nine months ended October 29, 2010, was $42,000 and $112,000, respectively. A majority of those costs are included in cost of sales while the balance is included in selling, general and administrative expenses.

On February 15, 2011, the Company decided to close its repair facility in Charlottesville, Virginia and transfer the repair operations to its Clearwater, Florida facility.  As of July 1, 2011, the transfer had been substantially completed. The Company’s decision resulted from its efforts to reduce costs by utilizing the enhanced capacity at its Clearwater facility created through recent “lean manufacturing” and other operational improvement programs.  The Company incurred $16,000 of retention and severance costs during the three months ended October 28, 2011. In addition, the Company incurred relocation and moving costs of $3,000 during the three months ended October 28, 2011.  The Company continues to occupy engineering and program offices within its Charlottesville facility.

On July 12, 2011, the Company entered into a stand-by letter of credit agreement with BMO Harris Bank in the amount of $35,000 related to our commitment to propose on a contract.  This agreement had no effect on reducing the amount of credit available on the Amended and Restated Revolving Credit Line Note as of October 28, 2011.  The agreement expired on December 9, 2011.