Audiovox 2005 Annual Report Download - page 100

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claims. As of November 30, 2005, $250 was paid to the Respondents and
the remaining balance (which includes accrued interest), is included in
restricted cash on the accompanying consolidated balance sheet, will be
released upon satisfaction of the aforementioned pre−closing
conditions. The Company recorded a $400 reduction to general and
administrative expenses during the year ended November 30, 2005 as a
result of a related legal claim, which was withdrawn from the court.
Certain 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. No assurances regarding the
outcome of this matter can be given, as the Company is unable to assess
the degree of probability of an unfavorable outcome or estimated loss
or liability, if any. Accordingly, no estimated loss has been recorded
for the aforementioned case.
The products the Company sells are continually changing as a result of
improved technology. As a result, although the Company and its
suppliers attempt to avoid infringing known proprietary rights, the
Company may be subject to legal proceedings and claims for alleged
infringement by its suppliers or distributors, of third partys patents,
trade secrets, trademarks or copyrights. Any claims relating to the
infringement of third−party proprietary rights, even if not
meritorious, could result in costly litigation, divert managements
attention and resources, or require the Company to either enter into
royalty or license agreements which are not advantageous to the Company
or pay material amounts of damages.
Under the asset purchase agreement for the sale of the Cellular
business to UTStarcom, Inc. ("UTSI"), the Company agreed to indemnify
UTSI for any breach or violation by ACC and its representations,
warranties and covenants contained in the asset purchase agreement and
for other matters, subject to certain limitations. Significant
indemnification claims by UTSI could have a material adverse effect on
the Company's financial condition and results of operation. The Company
is not aware of any such claim(s) for indemnification.
(18) Unaudited Quarterly Financial Data
Selected unaudited, quarterly financial data of the Company for the
years ended November 30, 2004 and 2005 appears below:
F−46