Commitments and Contingencies

12 Months Ended

Dec. 31, 2011

Commitments and Contingencies [Abstract]

15. Commitments and Contingencies

Leases

The Company is obligated under certain noncancelable operating leases for office facilities and equipment. Future minimum lease payments under noncancelable operating leases as of December 31, 2011 are as follows:

(in thousands)			Gross Future
			Minimum Lease
			Payments

	2012		$ 917
	2013		781
	2014		520
	2015		487
	2016		500
	Thereafter		844
		Total	$ 4,049

Total rent expense under operating leases for the years ended December 31, 2011, 2010, and 2009 was approximately $1.1 million, $942,000, and $867,000, respectively.

Standby Letters of credit, bank guarantees, surety bonds and performance bonds

As of December 31, 2011, the Company was contingently liable for ten standby letters of credit and three surety bonds totaling $5.6 million which represent bid and performance bonds on eight contracts. The Company has deposited the full value of eight standby letters of credit, $4.2 million, in certificates of deposit, which have been restricted in that the Company does not have access to these funds until the related letters of credit have expired. The cash has been recorded on the Company’s balance sheet at December 31, 2011 as restricted cash. An additional two letters of credit have been collateralized using the Company's line of credit.

The Company has provided a partial guarantee of 10% of ESA’s credit facility with Union National Bank; $1.2 million was deposited into a restricted interest-bearing account with UNB in 2006. The interest earned on the restricted cash is part of the pledged deposit. In January 2010, the Company was notified by UNB that ESA was delinquent in making principal and interest payments on the outstanding borrowings from their credit facility and that UNB had drawn upon the guarantees of the three partners to pay off the delinquency. The Company established a full reserve against the $1.3 million restricted cash account as of December 31, 2010. In 2011 and 2010, Union National Bank withdrew a total of $78,000 and $294,000, respectively, from the cash GSE had on deposit with them as a partial guarantee against ESA’s line of credit. Any interest income earned from this account in 2011 and 2010 was not recorded in interest income but was credited to the reserve balance. At December 31, 2011 the Company had $926,000 remaining in the restricted UNB account which was fully reserved.

Contingencies

Various actions and proceedings are presently pending to which the Company is a party. In the opinion of management, the aggregate liabilities, if any, arising from such actions are not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company.

In 2009, the Company entered into a contract with Slovenské elektrárne, a.s. (“SE”) to provide a full scope simulator for a two unit reactor plant in Slovakia. To date, the Company has recognized $21.0 million of revenue under the terms of the contract. In September 2011, the Company received a $3.0 million change order for this contract which increased its total contractual value to $26.8 million. $2.1 million of the $3.0 million change order related to compensation provided by SE to the Company for a nine and half month delay caused by SE.

In November and December 2011 and January 2012, SE notified the Company of various alleged breaches of the contract. In the notification, SE claimed a contractual penalty for delay in the amount of $1.0 million related to the Company’s failure to complete Factory Acceptance Testing (“FAT”) for the simulator and unspecified potential damages for other alleged breaches of the contract.

F-32

Based upon the schedule for the completion of FAT contained in the contract, which currently does not take into account the acknowledged nine and a half month delay caused by SE, the Company does not believe that it was responsible for the delay in FAT completion. After engaging in discussions with SE, the Company formally responded to all of the claims in January 2012. The Company and SE are currently discussing a resolution of all of their outstanding issues. However, at December 31, 2011, the Company has $5.0 million of recoverable costs and accrued profit not billed, and a $2.9 million performance bond in place to secure completion of the contract.