9. Commitments and Contingencies

Contingent Consideration Related to Acquisitions

In connection with several business acquisitions, if certain sales targets for the acquired products are achieved, the Company would pay additional cash consideration. The Company has recorded a liability for the fair value of this contingent consideration at September 30, 2013, based on the present value of the expected future cash flows using a market participant's weighted average cost of capital of 15.4 percent.

The following table summarizes the contingent consideration liability as of September 30, 2013:


				Fair Value
	Estimated			of Estimated
	Remaining			Remaining
Acquisition (In thousands)	Payments			Payments
Schwintek products	$	6,478	^(a)	$	4,998
Level-Up^®six-point leveling system		4,020	^(b)		3,258
Other acquired products		259	^(c)		226
Total	$	10,757		$	8,482

(a) The remaining contingent consideration for two of the three products expires in March 2014. Contingent consideration for the remaining product will cease five years after the product is first sold to customers. Two of the three products acquired have a combined remaining maximum contingent consideration of $5.5 million, of which the Company estimates $3.4 million will be paid. Other than expiration of the contingent consideration period, the remaining product has no maximum contingent consideration.

(b) Other than expiration of the contingent consideration period in February 2016, this product has no maximum contingent consideration.

(c) Contingent consideration expires at various dates through November 2025. Certain of these products have a combined remaining maximum contingent consideration of $3.1 million, while the remaining products have no maximum contingent consideration.

As required, the liability for this contingent consideration is measured at fair value quarterly, considering actual sales of the acquired products, updated sales projections, and the updated market participant weighted average cost of capital. Depending upon the weighted average costs of capital and future sales of the products which are subject to contingent consideration, the Company could record adjustments in future periods.

In the first nine months of 2013 and 2012, the net impact of the quarterly fair value adjustments and accretion of the liability was an expense of $1.2 million and $1.3 million, respectively, recorded in selling, general and administrative expenses.

The following table provides a reconciliation of the Company's contingent consideration liability for the nine months ended September 30:


(In thousands)	2013			2012
Balance at beginning of period	$	11,519		$	14,561
Acquisitions		-			67
Payments		(4,287	)		(3,253	)
Accretion		1,041			1,324
Fair value adjustments		209			(63	)
Balance at end of the period		8,482			12,636
Less current portion in accrued expenses and other current liabilities		(4,608	)		(5,667	)
Total long-term portion in other long-termliabilities	$	3,874		$	6,969

Litigation

In the normal course of business, the Company is subject to proceedings, lawsuits and other claims. All such matters are subject to uncertainties and outcomes that are not predictable with assurance. While these matters could materially affect operating results when resolved in future periods, it is management's opinion that after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided in the Condensed Consolidated Balance Sheet as of September 30, 2013, would not be material to the Company's financial position or annual results of operations.

Executive Succession and Severance

On May 10, 2013, Fredric M. Zinn retired as President and Chief Executive Officer of Drew. Jason D. Lippert, Chairman and Chief Executive Officer of Lippert Components and Kinro, succeeded Mr. Zinn as Chief Executive Officer of Drew. Scott T. Mereness, President of Lippert Components and Kinro, succeeded Mr. Zinn as President of Drew. In June 2013, the Company also relocated its corporate headquarters from White Plains, New York to Elkhart County, Indiana, the location of the corporate headquarters of Lippert Components and Kinro.

In connection with the Company's executive succession and corporate relocation, the Company recorded pre-tax charges of $1.5 million in the fourth quarter of 2012 and $1.8 million in the first six months of 2013, related to contractual obligations for severance and the acceleration of equity awards held by certain employees whose employment terminated as a result of the executive succession and relocation to Indiana. No charges were recorded in the third quarter of 2013, and no other related charges are expected. The liability for executive succession and severance obligations will be paid through 2015. During the third quarter of 2013, the transition and corporate office relocation were completed. As a result, the Company expects to save an estimated $2 million annually in general and administrative costs beginning in the fourth quarter of 2013.