CONTINGENCIES AND OTHER ACCRUED LOSSES

12 Months Ended

May 31, 2012

CONTINGENCIES AND OTHER ACCRUED LOSSES

NOTE O — CONTINGENCIES AND OTHER ACCRUED LOSSES

Accrued loss reserves consist of the following:

May 31,	2012		2011
(In thousands)
Accrued product liability reserves	$	37,508	$	37,941
Accrued warranty reserves		13,564		15,347
Accrued environmental reserves		3,580		4,357
Total accrued loss reserves — Current	$	54,652	$	57,645
Accrued product liability reserves — noncurrent	$	2,820	$	2,905
Accrued warranty liability — noncurrent		1,187		1,849
Accrued environmental reserves — noncurrent		3,952		4,693
Total accrued loss reserves — Noncurrent	$	7,959	$	9,447

We provide, through our wholly-owned insurance subsidiaries, certain insurance coverage, primarily product liability coverage, to our other subsidiaries. Excess coverage is provided by third-party insurers. Our reserves provide for these potential losses as well as other uninsured claims.

We also offer warranty programs at several of our industrial businesses and have established a product warranty liability. We review this liability for adequacy on a quarterly basis and adjust it as necessary. The primary factors that could affect this liability may include changes in the historical system performance rate as well as the costs of replacement. Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted, as required, to reflect actual experience. It is probable that we will incur future losses related to warranty claims we have received but that have not been fully investigated and related to claims not yet received. While our warranty liability represents our best estimate at May 31, 2012, we can provide no assurances that we will not experience material claims in the future or that we will not incur significant costs to resolve such claims beyond the amounts accrued or beyond what we may recover from our suppliers. Product warranty expense is recorded within selling, general and administrative expense.

The following table includes the changes in our accrued warranty balances:

Year Ended May 31,	2012			2011			2010
(In thousands)
Beginning Balance	$	17,196		$	17,602		$	18,993
Deductions(1)		(18,143	)		(20,335	)		(23,209	)
Provision charged to SG&A expense		15,513			19,899			24,897
Acquisitions		185			30			46
Impact of deconsolidation of SPHC		—			—			(3,125	)
Ending Balance	$	14,751		$	17,196		$	17,602

(1) Primarily claims paid during the year.

In addition, like other companies participating in similar lines of business, some of our subsidiaries are involved in several proceedings relating to environmental matters. It is our policy to accrue remediation costs when it is probable that such efforts will be required and the related costs can be reasonably estimated. These liabilities are undiscounted and are not material to our financial statements during any of the periods presented.