Commitments and Contingencies
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Legal Contingencies
FPI is a party in legal proceedings related to contract termination and other legal matters and in
this connection, FPI has recorded on its balance sheet a contingent liability in the amount of
$1.3 million arising from litigation. Management believes a loss with respect to this sum is
probable. In addition to the contingent liability recorded, management estimates that the range
for reasonably possible losses related to other legal matters is between $10 and $11 million as of
September 30, 2001.
Lease Commitments
FPI leases certain facilities, machinery, vehicles and office equipment under noncancelable
operating lease agreements that expire over future periods. Many of these lease agreements
provide FPI with the option (after initial lease term) to either purchase the leased item at the
then fair value or to renew the lease for additional periods of time. Future commitments under
these lease agreements approximate $2,400,000 at September 30, 2001.
Planned Construction
As of September 30, 2001, various projects were in progress for the construction of new
industrial facilities and the renovation of existing facilities. In this regard, BOP, on behalf of FPI,
is planning to invest approximately $9.3 million during the next fiscal year for the construction
of buildings and improvements. In addition, during the next fiscal year, FPI is planning to invest
approximately $9.1 million for the purchase of machinery and equipment.
Congressional Limitation on Administrative Expenses
Congress has imposed an annual spending limit on certain administrative expenses relating to
FPI’s central office management. These costs include salaries for management personnel, travel
expenses and supplies. The following is a comparison of actual expenses to the limitation
imposed:
| Congressional limitation on administrative expenses Fiscal years ended September 30 (DOLLARS IN THOUSANDS) |
2001 | 2000 |
|---|---|---|
 |
||
| Congressional limitation on expenses | $3,429 | $3,429 |
| Expenses incurred subject to Congressional limitation | $1,195 | $1,634 |
