NCI Building Systems, reports the following footnote to its \(200710-\mathrm{K}\) related to its manufacturing of metal coil coatings and metal building components.

a. How has NCI reported this potential liability on its balance sheet?

b. Does the \(\$ 0.1\) million accrual "to complete site analysis and testing" relate to a contingent liability? Explain.

Transcribed Image Text:

We have discovered the existence of trichloroethylene in the ground water at our Southlake. Texas facility. Horizontal delineation concentrations in excess of applicable residential assessment levels have not been fully identified. We have filed an application with the Texas Commission of Environmental Quality ("TCFQ") for entry into the voluntary cleanup program. We expect to perform further testing in the first quarter of fiscal 2008. The cost of required remediation, if any, will vary depending on the nature and extent of the contamination which is expected to be determined in the first or second quarter of fiscal 2008. As of October 28, 2007, we have accrued $0.1 million to complete site analysis and testing. At this time, we cannot estimate a loss for any potential remediation costs, but we do not believe there will be a material adverse effect on our Consolidated Financial Statements.