CONTINGENCIES AND COMMITMENTS

9 Months Ended

Sep. 30, 2012

Contingencies And Committment [Abstract]

CONTINGENCIES AND COMMITMENTS

15.CONTINGENCIES AND COMMITMENTS

Legal Proceedings

In July 2012, the Corporation reachedasettlement in the amount of $5.2 million with a former executive with regards to a gender bias lawsuit filed in 2003.  The settlement was paid during the third quarter of 2012.   All payments to settle this lawsuit have been made and no further payments are required.

The Corporation has been named in a number of lawsuits that allege injury from exposure to asbestos. To date, the Corporation has not been found liable for or paid any material sum of money in settlement in any case. The Corporation believes its minimal use of asbestos in our past and current operations and the relatively non-friable condition of asbestos in our products makes it unlikely that it will face material liability in any asbestos litigation, whether individually or in the aggregate. The Corporation maintains insurance coverage for these potential liabilities and believes adequate coverage exists to cover any unanticipated asbestos liability.

The Corporation is party to a number of legal actions and claims, none of which individually or in the aggregate, in the opinion of management, are expected to have a material effect on the Corporations' results of operations or financial position.

Environmental Matters

The Corporation's environmental obligations have not changed significantly from December 31, 2011. The aggregate environmental liability was $21.6 million at September 30, 2012 and $20.5 million at December 31, 2011. All environmental reserves exclude any potential recovery from insurance carriers or third-party legal actions.

The Corporation, through its Electro-Mechanical Division (EMD) business unit, has three Pennsylvania Department of Environmental Protection (PADEP) radioactive materials licenses that are utilized in the continued operation of the EMD business. In connection with these licenses, the PADEP required financial assurance from the Corporation in the amount of $4.2 million, which is currently in the form of a parent company guarantee. The Corporation is currently in the process of determining a new decommissioning cost estimate in order to comply with the new Nuclear Regulatory Commission (NRC) Decommissioning Planning Rule, which has been adopted by the Commonwealth of Pennsylvania. The new Decommissioning Planning Rule will go into effect on December 17, 2012. The Corporation is considering providing alternative forms of financial assurance such as a letter of credit, surety bond, or insurance policy in order to comply with the new NRC Decommissioning Planning Rule.

Letters of Credit and Other Arrangements

The Corporation enters into standby letters of credit agreements and guarantees with financial institutions and customers primarily relating to guarantees of repayment on certain Industrial Revenue Bonds, future performance on certain contracts to provide products and services, and to secure advance payments the Corporation has received from certain international customers. At September 30, 2012 and December 31, 2011, the Corporation had contingent liabilities on outstanding letters of credit of $42.8 million and $55.8 million, respectively.

AP1000 Program

The Corporation's Electro-Mechanical Division is the reactor coolant pump (RCP) supplier for the Westinghouse AP1000 nuclear power plants under construction in China and the United States. The first two RCPs under the China AP1000 program shipped during the third quarter of 2012, which were originally designated to ship during the fourth quarter of 2011. The delay in shipments subjects us to incentive payment and liquidated damages risk. However, based upon our current negotiations with the customer, the Corporation believes that all future delivery dates will be revised tomitigate any performance risk and that any damage or incentive provisions will be revised accordingly. Based upon the information available, the Corporation does not believe that the ultimate outcome will result in a material impact to its results of operations, financial condition, or cash flows.

U.S. Government Defense Budget/Sequestration

In August 2011, the Budget Control Act (the Act) reduced the United States Department of Defense (U.S. DoD) top line budget by approximately $490 billion over 10 years starting in 2013. In addition, barring Congressional action, further budget cuts (or sequestration) as outlined in the Act will be implemented starting in January 2013. Sequestration would lead to additional reductions of approximately $500 billion from the Pentagon's top line budget over the next decade, resulting in aggregate reductions of about $1 trillion over 10 years. In June 2012, the Office of Management and Budget announced that the budget for Overseas Contingency Operations and any unobligated balances in prior year funds will also be included in aggregate reductions. The U.S. DoD has taken the position that such reductions would generate significant operational risks and may require the termination of certain, as yet undetermined, procurement programs. Any reduction in levels of U.S. DoD spending, cancellations or delays impacting existing contracts or programs, including through sequestration, could have a material impact on the Corporation's operating results.