KSWW.OB: The gains from lawsuit settlement will make their next ER look better.
Third quarter 2005 results do not include the net gain of $880,000 generated by the claim settlement previously reported in the Company's press release and accompanying Form 8K, both filed on October 20, 2005. The gain of $880,000 will be recognized in the fourth quarter 2005.
On October 17, 2005, KSW Mechanical Services, Inc., a wholly-owned subsidiary of KSW, Inc. ("the Company"), entered into a Stipulation of Settlement settling a lawsuit commenced in 1999, entitled KSW Mechanical Services, Inc. v. NAB Construction Corp., et. al. ("the Lawsuit"), which had been pending in the Supreme Court of the State of New York, County of Queens. The Company had sued the general contractor and its bonding company on the Co-Op City Project to recover its accounts receivable applicable to the base contract of approximately $437,000, plus unpaid final retainage billings of approximately $1,500,000, plus a claim for unanticipated costs incurred through 1998, in the sum, as presented at trial, of $2,303,727. The Defendant had asserted counterclaims, as presented at trial, totaling $1,440,905, and a claim for $3,000,000 based on the argument that the Company's mechanic's lien was willfully overstated.
The Lawsuit had been tried for 47 days and further trial proceedings were pending. Pursuant to the Stipulation of Settlement, all claims and counterclaims will be discontinued and the Company will receive cash payments totaling $2,900,000, with $1,200,000 payable on or before December 15, 2005, and $850,000 payable on or before March 31, 2006, and $850,000 payable on or before September 30, 2006. The Company will recognize a gain of approximately $888,000 as a result of the Settlement.
