Audiovox 2004 Annual Report Download - page 105

AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2002, 2003 and 2004
(Dollars in thousands, except share and per share data)
damages and injunctive relief in an amount to be determined by the court.
The Company has answered the amended complaint, asserted various
affirmative defenses and interposed counterclaims alleging
non−infringement, invalidity and non−enforceability. The parties have
reached a settlement in principle which provides for a release of any
claims regarding issued patents as of the effective date and a standstill
period of one year with respect to any other claims.
The consolidated class actions transferred to a Multi−District Litigation
Panel of the United States District Court of the District of Maryland
against the Company and other suppliers, manufacturers and distributors of
hand−held wireless telephones alleging damages relating to exposure to
radio frequency radiation from hand−held wireless telephones is still
pending. On March 16, 2005, the United States Court of Appeals for the
Fourth Circuit reversed the District Court's order dismissing the
complaints on grounds of federal pre−emption. The Fourth Circuit remanded
the actions to each of their respective state courts, except for the Naquin
litigation which was remanded to the local Federal Court. Defendants intend
to file a petition for certiorari with the U.S. Supreme Court.
The Company and ACC, along with other manufacturers of wireless phones and
cellular service providers, were named as defendants in two class action
lawsuits alleging non−compliance with FCC ordered emergency 911 call
processing capabilities. These lawsuits were consolidated and transferred
to the United States District Court for the Northern District of Illinois,
which in turn referred the cases to the Federal Communications Commission
("FCC") to determine if the manufacturers and service providers are in
compliance with the FCC's order on emergency 911 call processing
capabilities. During the third quarter of 2004, the FCC confirmed that
plaintiffs' interpretation of the FCC's second order on emergency 911 call
processing capabilities was incorrect and as a result, plaintiffs have
filed a consolidated amended complaint in the United States District Court
for the Northern District of Illinois. Defendants have moved to dismiss the
consolidated amended complaint, but to date, the motion has not been heard.
The Company and ACC intend to vigorously defend this matter. However, no
assurances regarding the outcome of this matter can be given at this point
in the litigation.
(18) Unaudited Quarterly Financial Data
Selected unaudited, quarterly financial data of the Company for the years
ended November 30, 2003 and 2004 appears below:
Quarter Ended
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Feb. 28 May 31 Aug. 31 Nov. 30
−−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−−−
2003 (a)
Net sales $ 80,256 $ 111,902 $ 135,239 $ 190,295
Gross profit 13,650 16,231 22,723 33,625
Income (loss) from continuing operations (894) 899 2,283 5,704
Income (loss) from discontinued operations 2,102 1,175 (1,636) 1,606
−−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−−−
Net income $ 1,208 $ 2,074 $ 647 $ 7,310
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