D-Link 2004 Annual Report Download - page 63

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35
D-LINK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Continued)
According to current leasing contracts, the minimum future leasing expenses for the land and
offices leased by D-Link and subsidiaries are as below:
Years Amount
2005 $ 131,714
2006 114,353
2007 104,919
2008 157,378
2009 and after 80,959
$ 589,323
(2) As of December 31, 2003 and 2004, D-Link had outstanding letters of credit amounting to
approximately $4,498 thousand and $0 thousand, respectively.
(3) D-Link and Alpha entered into several royalty agreements with certain companies. According to
these agreements, D-Link and Alpha are obligated to pay royalties when D-Link and Alpha sell
products using the technologies specified in the royalty agreements. Total royalty expenses
incurred under these agreements for the years ended December 31, 2003 and 2004, amounted to
$13,321 thousand and $16,363 thousand, respectively.
(4) D-Link brought a suit for breach of copyright and breach of faith against Wang Xue-Hong, Chen
Wen-Ji and Chang Zhi-Ha, who are a director, the general manager and an employee,
respectively, of VIA Technology, Inc. in 2002. After investigation of the suit by the prosecutor,
the result was that the three defendants were subjected to public prosecution for breach of
copyright, breach of faith, and the offense of obstruction of business secrets. D-Link brought an
additional civil action against the three abovementioned defendants and VIA Technology, Inc.,
and claimed for joint and several civil damages. However, D-Link has asked the court to cancel
the private prosecution and civil damages, and agreed to a compromise with the three
abovementioned defendants and VIA Technology, Inc. in August 2004.
(5) Accton Technology Company (“Accton”) brought a suit for breach of the Fair Trading Law
against D-Link. After public prosecution was begun by the prosecutor, Accton brought an
additional civil action against D-Link and asked D-Link for civil indemnification amounting to
$100 million on May 4, 2002, in the Hsin-chu District Court. D-Link was discharged from the
decision of criminal case in 2003. Accton brought a level suit in the Taiwan High Court to
decrease the indemnification amount to $10 million on July 17, 2003, but it was also dismissed
without prejudice.
(6) TC Bank brought a suit against D-Link for the reason that TC Bank had obtained the credit of D-
Link from Thesaurus Co., Ltd. and asked it to pay $ 10,714 thousand plus 5% interest from the
day that the indictment was received by the process agent to the date of refunding. The suit is
still being processed by TC Bank in the Hsin-chu District Court. D-Link believes that
abovementioned event will not have a significant effect on operations.