3Ware 2004 Annual Report Download - page 99

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APPLIED MICRO CIRCUITS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In May 2002, following JNI’s announcement that it would restate its financial statements, a stockholder
derivative suit was filed against JNI and certain of its officers and directors in the San Diego County Superior
Court, Case No. GIC 789481. The complaint repeated the allegations of the derivative lawsuit filed by Grosset,
and added allegations that the defendants caused or allowed JNI to falsely report its results for the fourth quarter
of fiscal 2001. The special litigation committee, appointed in September 2002, investigated the allegations in this
case as well. In February 2003, the special litigation committee issued a report of its investigation which
concluded that it was not in the best interests of JNI to pursue this action. In February 2003, counsel for the
special litigation committee filed a motion to dismiss this action. In November 2003, the court dismissed the
matter with prejudice. Plaintiffs recently filed a notice of appeal. The securities and derivative lawsuits have all
been tendered to JNI’s insurance carriers.
In September 2003, the plaintiff in the May 2002 derivative lawsuit filed a purported class action suit
against the JNI’s directors in the San Diego County Superior Court, Case No. GIC 817299. The complaint
alleges that the defendants breached their fiduciary duties to JNI stockholders when they approved the merger
with AMCC and also repeated the allegations made in the May 2002 derivative lawsuit. The complaint sought,
among other things, injunctive relief preventing consummation of the merger. A settlement was reached on
October 23, 2003, which did not result in a material cash payment by JNI. A Court hearing has been set for June
2004 to approve the settlement.
In November 2001, a class action lawsuit was filed against JNI and the underwriters of its initial and
secondary public offerings of common stock in the U.S. District Court for the Southern District of New York,
Case No. 01 Civ 10740 (SAS). The complaint alleges that defendants violated the Securities Exchange Act in
connection with JNI’s public offerings. This lawsuit is among over 300 class action lawsuits pending in this
Court that have come to be known as the IPO laddering cases. In June 2003, a proposed partial global settlement,
subsequently approved by JNI’s board of directors, was announced between the securities issuers defendants and
the plaintiffs that would guarantee at least $1 billion to investors who are class members from the insurers of the
issuers. The proposed settlement, if approved by the court and by the securities issuers, would be funded by
insurers of the issuers, and would not result in any payment by JNI or the company.
The Company is also party to various claims and legal actions arising in the normal course of business,
including employee disputes and notification of possible infringement on the intellectual property rights of third
parties.
Although the ultimate outcome of the pending matters is not presently determinable, the Company believes
that the resolution of all such matters, net of amounts accrued, will not have a material adverse effect on its
financial position or liquidity; however, there can be no assurance that the ultimate resolution of these matters
will not have a material impact on its results of operations in any period.
12. Related Party Transactions
In August 2000, the Company made a strategic equity investment of $10 million in Raza Foundries. The
Chief Executive Officer and Chairman of the Board of Directors of Raza Foundries was a member of the
Company’s Board of Directors until April 2003. In the year ended March 31, 2003, the Company recorded
impairment charges of $13.3 million to reduce the carrying value of its strategic equity investments, $10 million
of which relates to this investment.
From time to time the Company charters an aircraft for business travel from an aircraft charter company,
which manages an aircraft owned by a company that AMCC’s chief executive officer controls. The Company
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