Annual report pursuant to Section 13 and 15(d)

Note 13 - Commitments and Contingencies

v3.21.1
Note 13 - Commitments and Contingencies
12 Months Ended
Oct. 31, 2020
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

Note 13. Commitments and Contingencies

 

Operating Leases

 

The Company leases facilities, equipment and vehicles under non-cancelable operating leases with various expiration dates through April 2029. Monthly lease payments range from $100 to $19,564. Total rental expense for the Successor year ended  October 31, 2020 was $6.6 million. Total rental expense for Successor period from December 6, 2018 through October 31, 2019 and the Predecessor period from November 1, 2018 through December 5, 2018 was $4.4 million and $0.7 million, respectively, which also includes the Company’s month-to-month leases.

 

The following is a summary of future minimum lease payments for the years ended October 31:

 

(in thousands)

 

Future Payments

 

2021

  $ 2,139  

2022

    1,868  

2023

    1,370  

2024

    743  

2025

    265  

Thereafter

    835  

Total

  $ 7,220  

 

Capital Leases

 

The Company has a limited number of capital leases related to land and buildings. The capital lease obligation recorded as of  October 31, 2020 was $0.5 million while the net book value of the leased assets as of October 31, 2019 was $0.6 million.

 

The following is a summary of future minimum lease payments together with the present value of those payments for the years ended October 31:

 

(in thousands)

 

Future Payments

 

2021

  $ 107  

2022

    115  

2023

    118  

2024

    120  

2025

    61  

Thereafter

    -  

Total minimum lease payments

    521  

Less the amount representing interest

    (43 )

Present value of minimum lease payments

  $ 478  

 

Insurance

 

As of October 31, 2020, and October 31, 2019, the Company was partially insured for automobile, general and worker's compensation liability with the following deductibles (per occurrence):

 

   

Deductible

 

General liability

  $ 250,000  

General liability (in the case of accident and driver has completed NationsBuilders Insurance Services driver training)

  $ 125,000  

Automobile

  $ 100,000  

Workers' compensation

  $ 250,000  

 

The Company has accrued $5.4 million and $5.0 million, as of  October 31, 2020 and October 31, 2019, respectively, for claims incurred but not reported and estimated losses reported, which is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

 

The Company offers employee health benefits via a partially self-insured medical benefit plan. Participant claims exceeding certain limits are covered by a stop-loss insurance policy. As of October 31, 2020 and October 31, 2019, the Company had accrued $2.4 million and $1.1 million, respectively, for health claims incurred but not reported based on historical claims amounts and average lag time. These accruals are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets. The Company contracts with a third-party administrator to process claims, remit benefits, etc. The third party administrator requires the Company to maintain a bank account to facilitate the administration of claims. The account balance was $0.3 million, as of October 31, 2020 and October 31, 2019, respectively, and is included in cash and cash equivalents in the accompanying consolidated balance sheets.

 

Litigation

 

The Company is currently involved in certain legal proceedings and other disputes with third parties that have arisen in the ordinary course of business. Management believes that the outcomes of these matters will not have a material impact on the Company’s financial statements and does not believe that any amounts need to be recorded for contingent liabilities in the Company’s consolidated balance sheet.

 

Letters of credit

 

The ABL Credit Agreement provides for up to $7.5 million of standby letters of credit. As of October 31, 2020, total outstanding letters of credit totaled $1.2 million, the vast majority of which had been committed to the Company’s general liability insurance provider.