Commitments and Contingencies

12 Months Ended

Aug. 31, 2012

Commitments and Contingencies

9. Commitments and Contingencies

a. Lease Agreements

The Company leases certain facilities under non-cancelable operating leases. Lease agreements may contain lease escalation clauses and purchase or renewal options. The Company recognizes scheduled lease escalation clauses over the course of the applicable lease term on a straight-line basis in the Consolidated Statements of Operations. The future minimum lease payments under non-cancelable operating leases at August 31, 2012 are as follows (in thousands):

Fiscal Year Ending August 31,	Amount
2013	$	60,432
2014		42,301
2015		32,166
2016		24,854
2017		20,680
Thereafter		56,569
Total minimum lease payments	$	237,002

Total operating lease expense was approximately $65.3 million, $61.7 million and $50.7 million for fiscal years 2012, 2011 and 2010, respectively.

b. Warranty Provision

The Company maintains a provision for limited warranty repair of shipped products, which is established under the terms of specific manufacturing contract agreements. The warranty liability is included in accrued expenses on the Consolidated Balance Sheets. The warranty period varies by product and customer industry sector. The provision represents management’s estimate of probable liabilities, calculated as a function of sales volume and historical repair experience, for each product under warranty. The estimate is re-evaluated periodically for accuracy. A rollforward of the warranty liability is as follows (in thousands):

	Amount
Balance at August 31, 2009	$	14,280
Accruals for warranties during the year		3,112
Settlements made during the year		(6,564	)
Balance at August 31, 2010	$	10,828
Accruals for warranties during the year		6,909
Warranty liabilities acquired		3,986
Settlements made during the year		(8,209	)
Balance at August 31, 2011	$	13,514
Accruals for warranties during the year		3,285
Warranty liabilities acquired		—
Settlements made during the year		(5,411	)
Balance at August 31, 2012	$	11,388

c. Legal Proceedings

The Company is party to certain lawsuits in the ordinary course of business. The Company does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company was involved in a commercial dispute with a former industrial and CleanTech customer regarding product warranty claims as well as the collection of a $10.1 million outstanding account receivable of the Company, for which the Company had established a full valuation allowance.

During the fourth quarter of fiscal year 2012, the Company reached a settlement with this former customer under which the Company received $0.5 million and a release from the product warranty claims brought against it in exchange for full settlement of the $10.1 million outstanding accounts receivable and the assignment to the former customer of certain contract rights of the Company which are associated with the former customer’s warranty claims. The $0.5 million was recorded as a reduction to cost of sales.