CONTINGENCIES AND COMMITTMENTS

12 Months Ended

Jan. 31, 2012

CONTINGENCIES AND COMMITTMENTS [Abstract]

CONTINGENCIES AND COMMITTMENTS [Text Block]

NOTE 16:             CONTINGENCIES AND COMMITTMENTS

Beginning in 2002, the Company began to be named in asbestos-related lawsuits filed against a large number of industrial companies including, in particular, those in the pump and fluid handling industries. In management’s opinion, the complaints typically have been vague, general and speculative, alleging that the Company, along with the numerous other defendants, sold unidentified asbestos-containing products and engaged in other related actions which caused injuries (including death) and loss to the plaintiffs.  Counsel has advised that more recent cases often allege more serious claims of mesothelioma.  The Company believes that it has meritorious defenses to the cases which have been filed and that none of its products were a cause of any injury or loss to any of the plaintiffs.  The Company’s insurers have hired attorneys who, together with the Company, are vigorously defending these cases.  The Company has been dismissed from or settled a large number of these cases. The sum total of all payments through March 22, 2012 to settle cases involving asbestos-related claims was $675,000, all of which has been paid by the Company’s insurers including legal expenses, except for corporate counsel expenses, with an average cost per settled claim, excluding legal fees, of approximately $32,000. As of March 22, 2012, there were a total of 130 cases pending against the Company (with Connecticut, New York, Pennsylvania and West Virginia having the largest number of cases), as compared with 93 cases that were pending as of March 17, 2011, the date which our Annual Report on Form 10-K for the fiscal year ended January 31, 2011 was filed with the Securities and Exchange Commission. During the current fiscal year commencing February 1, 2011 through March 22, 2012, 81 new cases were filed against the Company, and the Company was dismissed from 38 cases and settled two cases.  Most of the pending cases have not advanced beyond the early stages of discovery, although a number of cases are on schedules leading to, or are scheduled for trial.  On April 27, 2011, a liquidation order was entered against Atlantic Mutual Insurance Company, who had been providing defense and indemnity to the Company, and its affiliate, Centennial Insurance Company, who provided umbrella coverage to the Company. It appears that our remaining insurers have assumed the share of the defense and indemnity obligations that Atlantic Mutual Insurance Company had agreed to assume, and despite the liquidation of Atlantic Mutual Insurance Company and Centennial Insurance Company, the Company believes that its insurance coverage is adequate for the cases currently pending against the Company and for the foreseeable future, assuming a continuation of the current volume, nature of cases and settlement amounts; however, the Company has no control over the number and nature of cases that are filed against it, nor as to the financial health of its insurers or their position as to coverage.  The Company also presently believes that none of the pending cases will have a material adverse impact upon the Company’s results of operations, liquidity or financial condition.

At any given time, the Company is typically also party to a small number of other legal proceedings arising in the ordinary course of business.  Although the ultimate outcome of any legal matter cannot be predicted with certainty, based upon the present information, including the Company’s assessment of the facts of each particular claim as well as accruals, the Company believes that no pending proceeding will have a material adverse impact upon the Company’s results of operations, liquidity, or financial condition.

On November 22, 2011, the Company entered into a Separation Agreement and General Release with Gary J. Morgan, the Company’s Senior Vice President-Finance, Chief Financial Officer, Secretary and Treasurer.  The agreement stipulates that provided Mr. Morgan agrees to remain employed through April 30, 2012 and absent a termination of his employment by the Company for certain reasons the Company will provide him with certain specified benefits including severance pay totaling $236,640 payable over a twelve month period. Additionally, if Mr. Morgan is not re-employed under specified conditions at a minimum salary of $160,000 as of April 30, 2013, Mr. Morgan shall be paid $20,000 per month for three months, subject to three months additional payments if Mr. Morgan is not so re-employed as of July 31, 2013. Additionally, under certain circumstances the Company shall pay the COBRA premium for certain healthcare benefits during the time Mr. Morgan receives severance pay. The Company also agreed to accelerate the vesting of certain stock options and to extend the exercise date of Mr. Morgan’s stock options. The agreement also grants Mr. Morgan certain other specified rights and benefits.