Note 9 - Commitments and Contingencies

12 Months Ended

Sep. 30, 2011

Commitments and Contingencies Disclosure [Text Block]

9.   COMMITMENTS AND CONTINGENCIES

LEASES

We rent office facilities and equipment under various operating leases. Rent expense for all operating leases was $1.6 million, $1.5 million and $0.3 million for the fiscal years ended September 30, 2011, 2010 and 2009, respectively.

The following table sets forth the future minimum lease commitments under operating leases at September 30, 2011 (amounts in thousands):

September 30,	Future Commitments for Operating Leases
2012	$	1,388
2013		1,222
2014		888
2015		866
2016		866
Thereafter		4,332
Total	$	9,562

We rent forklifts and water treatment equipment under various capital leases.  Lease expense for all capital leases for the fiscal years ended September 30, 2011, 2010 and 2009 was $0.1 million, $0.1 million and $0.2 million, respectively.

LEGAL

Legal contingencies have a high degree of uncertainty. When losses from contingencies can be reasonably  estimated and become probable, reserves are established. The reserves reflect management’s estimate of the probable cost of ultimate resolution of the matters and are revised accordingly as facts and circumstances change and, ultimately, when matters are brought to closure. If any litigation matter is resolved unfavorably, the Company could incur obligations in excess of management’s estimate of the outcome, and such resolution could have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity. In addition, we may incur additional legal costs in connection with pursuing and defending such actions.

The Company is exposed to various claims and legal proceedings arising out of the normal course of its business. Although there can be no assurance, in the opinion of management, the ultimate outcome of these claims and lawsuits should not have a material adverse effect on the Company’s consolidated financial condition, results of operations or liquidity.

SOURCES OF SUPPLY

As part of its growth strategy, the Company has developed and manufactures its own precursor acrylic fibers and all of its carbon fibers and technical fibers. The primary source of raw material for the precursor is ACN (acrylonitrile), which is a commodity product with multiple sources. An increase in raw material inputs coupled with an increase in demand for ACN kept prices high during fiscal 2011.