Rosetta Stone 2015 Annual Report Download - page 99
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Table of Contents
In August 2011, Rosetta Stone GmbH commenced a separate proceeding for the cancellation of Langenscheidt’s German trademark registration of
yellow as an abstract color mark. In June 2012, the German Patent and Trademark Office rendered a decision in the cancellation proceeding denying our
request to cancel Langenscheidt’s German trademark registration. The German Federal Supreme Court has denied Rosetta Stone GmbH's further appeal but
has not yet issued its written decision denying further appeal. A constitutional complaint was filed with the German Federal Supreme Court in May 2015,
which is still pending.
In October 2015, the parties engaged in further settlement discussions and executed a settlement agreement pursuant to which Rosetta Stone GmbH will
pay a lump sum of $0.4 million in full settlement of all financial claims resulting from the proceedings, including damages and cost reimbursement to
Langenscheidt. Both parties have withdrawn the pending motions. As of December 31, 2015, the Company recorded a liability equal to the full settlement
amount of $0.4 million, which was paid in January 2016.
From time to time, the Company has been subject to various claims and legal actions in the ordinary course of its business. The Company is not
currently involved in any legal proceeding the ultimate outcome of which, in its judgment based on information currently available, would have a material
impact on its business, financial condition or results of operations.
The Company is managed in two operating segments - Enterprise & Education and Consumer. These segments also represent the Company's reportable
segments. Segment contribution includes segment revenue and expenses incurred directly by the segment, including material costs, service costs, customer
care and coaching costs, sales and marketing expenses, and bad debt expense. The Company does not allocate expenses beneficial to all segments, which
include certain general and administrative expenses, facilities and communication expenses, purchasing expenses and manufacturing support and logistic
expenses. These expenses are included in the unallocated expenses section of the table presented below. Revenue from transactions between the Company's
operating segments is not material.
With the exception of goodwill, the Company does not identify or allocate its assets by operating segment. Consequently, the Company does not
present assets or liabilities by operating segment.
F-43