Audiovox 2010 Annual Report Download - page 19

Other Risks
Other risks and uncertainties include:
• changes in U.S federal, state and local law,
• our ability to implement operating cost structures that align with revenue growth,
• trade sanctions against or for foreign countries,
• successful integration of business acquisitions and new brands in our distribution network,
• compliance with the Sarbanes-Oxley Act, and
• compliance with complex financial accounting and tax standards.
Item 1B-Unresolved Staff Comments
As of the filing of this annual report on Form 10-K, there were no unresolved comments from the staff of the Securities and
Exchange Commission.
Item 2-Properties
Our Corporate headquarters is located at 180 Marcus Blvd. in Hauppauge, New York. In addition, as of February 28, 2010,
the Company leased a total of 26 operating facilities or offices located in 12 states as well as Germany, China, Malaysia, Canada,
Venezuela, Mexico, Hong Kong and England. The leases have been classified as operating leases, with the exception of one, which is
recorded as a capital lease. These facilities are located in Arkansas, Florida, Georgia, New York, Ohio, Nevada, Mississippi, Virginia,
Illinois, Indiana, Michigan and Massachusetts. These facilities serve as offices, warehouses, distribution centers or retail locations.
Additionally, we utilize public warehouse facilities located in Virginia, Nevada, Mississippi, Illinois, Indiana, Mexico, Germany and
Canada.
Item 3-Legal Proceedings
The Company is currently, and has in the past been, a party to various routine legal proceedings incident to the ordinary
course of business. If management determines, based on the underlying facts and circumstances, that it is probable a loss will result
from a litigation contingency and the amount of the loss can be reasonably estimated, the estimated loss is accrued for. The Company
believes its outstanding litigation matters will not have a material adverse effect on the Company's financial statements, individually
or in the aggregate; however, due to the uncertain outcome of these matters, the Company disclosed these specific matters below:
In November 2004, several purported double derivative, derivative and class actions were filed in the Court of Chancery of
the State of Delaware, New Castle County challenging approximately $27,000 made in payments from the proceeds of the sale of the
Company’s cellular business. These actions were subsequently consolidated into a single derivative complaint (the "Complaint"), In
re Audiovox Corporation Derivative Litigation.
This matter was settled in May 2007 and received final Chancery court approval in June 2007. As a result of the settlement,
the Company received $6,750 in gross proceeds. The gross proceeds were offset by $2,378 in plaintiff legal fees and $1,023 in
accrued legal and administrative costs for defending all remaining ACC legal claims. The items discussed above resulted in a pre-tax
benefit of $3,349 recorded in discontinued operations for the fiscal year ended February 29, 2008.
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 are still pending. 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 party 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
management’s 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.
Item 4-Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter ended February 28, 2010.
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠