Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

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Commitments and Contingencies
 12 Months Ended
Mar. 31, 2013
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
At March 31, 2013, the Company had in place letter of credit guarantees and performance bonds securing performance obligations of the Company. These arrangements totaled approximately $15,398. Of this amount, $1,978 is secured by cash deposits at the Company's financial institutions. The remaining $13,420 represents a reduction of the available amount of the company's short term and long term revolving lines of credit. Included in prepaid expenses and other current assets at March 31, 2013 and March 31, 2012, was approximately $1,978 and $2,398, respectively, of cash deposits pledged as collateral on performance bonds and letters of credit.

The Company leases various property and equipment under operating leases. Lease expense was approximately $2,362, $2,021, $1,712 and $156 in fiscal 2013, fiscal 2012, the period from May 1, 2010 to March 31, 2011 and the period from April 1 to April 30, 2010, respectively. Future minimum annual lease payments under these leases are as follows for the years ended March 31:

2014
 
$
3,077

2015
 
2,634

2016
 
2,304

2017
 
1,493

2018
 
1,138

Thereafter
 
1,807

 
 
$
12,453




The Company has entered into information technology service agreements with several vendors. The service fees expense amounted to $1,160, $1,026, $1,010 and $92 in fiscal 2013, fiscal 2012, the period from May 1, 2010 to March 31, 2011 and the period from April 1 to April 30, 2010, respectively. The future annual service fees under the service agreements are as follows for the fiscal years ended March 31:

2014
 
$
630

2015
 
453

2016
 
155

2017
 
38

2018
 
—

Thereafter
 
—

 
 
$
1,276



        In addition to the foregoing, we are committed to take delivery of a 700 pieces of nickel alloy tubing monthly over a one year period, at a fixed price, which in total is $3,543

In the ordinary course of conducting its business, the Company becomes involved in various lawsuits and administrative proceedings. Some of these proceedings may result in fines, penalties, or judgment being assessed against the Company, which, from time to time, may have an impact on earnings. We do not currently expect any of the following proceedings will have a material adverse effect on the Company's operations or financial position. We cannot, however, provide any assurances that we will prevail in any of these matters.

Notice of Tax Dispute with the Canada Revenue Agency- On June 13, 2011, we received notice from the Canada Revenue Agency, which we refer to as the "Agency", advising us that they disagree with the tax treatment we proposed with respect to certain asset transfers that were completed in August 2007 by our predecessor owners.  During fiscal 2013, we were informed by the Agency that their initial audit was concluded but they intended to make an assessment under Canada's General Anti Avoidance Rule. Under this rule, the Agency may assess a withholding tax on dividends deemed to have been made on loans made to our Canadian subsidiary during 2007. Such assessment could be $3.0 million plus penalties and interest. At March 31, 2013, we have not recorded a tax liability reserve due for this matter with the Agency as we consider it more likely than not that our tax position will be sustained.  While we will vigorously contest this ruling, we expect that any liability, if any, will be covered under an indemnity agreement with the predecessor owners.



Changes in the Company's warranty reserve are as follows:

Predecessor:
 
 
Balance at March 31, 2010
 
$
699

 
Reserve for warranties issued during the period
 
58

 
Settlements made during the period
 
(1
)
Balance at April 30, 2010
 
$
756

Successor:
 
 
Balance at May 1, 2010
 
$
756

 
Reserve for warranties issued during the period
 
1,662

 
Settlements made during the period
 
(1,093
)
Balance at March 31, 2011
 
$
1,325

 
Reserve for warranties issued during the period
 
445

 
Settlements made during the period
 
(913
)
Balance at March 31, 2012
 
$
857

 
Reserve for warranties issued during the period
 
15

 
Settlements made during the period
 
(320
)
Balance at March 31, 2013
 
$
552



Management Employment Contracts-Our four senior executive officers are subject to employment contracts that provide for benefits under various circumstances of termination which include continued payment of their salary for up to twelve months. As a group, the combined possible salary payment would be $1,000 if they were terminated in connection with circumstances such as a change of control.