| 7. | Commitments and Contingencies |
The Company is involved in environmental remediation and monitoring activities at its Randolph, Wisconsin manufacturing facility and accrues for related costs when such costs are determined to be probable and estimable. The Company is currently expensing annual costs of remediation which have ranged from $50,000 to $105,000 per year over the past five years. The Company’s estimated liability for these costs of $916,000 at May 31, 2013 and 2012, measured on an undiscounted basis over an estimated period of 15 years, is recorded within other long term liabilities in the consolidated balance sheet.
In August 2011 the Company purchased a facility in Lexington, Kentucky for $4,950,000. This purchase provides the Company an additional 128,000 square feet of office, production and warehouse space to accommodate near-term expansion needs. Currently, a portion of the building is leased to outside parties. Lease rental income is expected to be $104,000 for 2014, $38,000 for 2015 and $3,000 for 2016.
In December 2012 the Company purchased a 36,000 square foot facility adjacent to the Company’s facility on the campus of the Scottish Agricultural College in Ayr, Scotland for approximately $1.5 million.
The Company has agreements with unrelated third parties that provide for the payment of license fees and royalties on the sale of certain products. License fees and royalty expense under the terms of these agreements was $1,837,000, $1,371,000 and $1,561,000 for 2013, 2012 and 2011, respectively.
The Company has agreements with unrelated third parties that provide for guaranteed minimum royalty payments to be paid by the Company for certain technologies, as follows: 2014—$907,000, 2015—$1,007,000, 2016—$1,157,000, and 2017 and later—$1,157,000.
The Company leases office and manufacturing facilities under noncancelable operating leases. Rent expense for 2013, 2012 and 2011 was $657,000, $495,000 and $477,000, respectively. Future minimum rental payments for these leases over their remaining terms are as follows: 2014—$467,000, 2015—$247,000, 2016—$247,000, and 2017 and later—$843,000.
The Company is subject to certain legal and other proceedings in the normal course of business that, in the opinion of management, should not have a material effect on its future results of operations or financial position.