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61
D-LINK CORPORATION AND SUBSIDIARIES
Notes to the consolidated financial statements
(Continued)
(e) Concinnitas LLC and George W Hindmn filed a lawsuit against the Company and the Company’s
subsidiary D-Link Systems in November 2014 alleging that some of the Company’s products infringed
its patents. The Company has retained attorneys in the US and is currently building its defense with
product suppliers. Based on its evaluation, the Company does not believe the litigation will have any
significant impact on its current operations.
(f) Iron Gate Security, Inc filed a lawsuit against the Company and the Company’s subsidiary D-Link
Systems in December 2014 alleging that some of the Company’s products infringed its patents. The
Company has retained attorneys in the US and is currently building its defense with product suppliers.
Based on its evaluation, the Company does not believe the litigation will have any significant impact
on its current operations.
(g) Quad Powerline Technologies LLC filed a lawsuit against the Company and the Company’s subsidiary
D-Link Systems in December 2014 alleging that some of the Company’s products infringed its patents.
The Company has retained attorneys in the US and is currently building its defense with product
suppliers. Based on its evaluation, the Company does not believe the litigation will have any
significant impact on its current operations.
(h) Subsidiaries in Brazil had disputes regarding prior years declaration of VAT and tax on industrialized
products with the local tax authorities and had filed administrative litigation and administrative
remedy.
(i) The Company is currently under negotiations with a number of companies regarding the royalty on
patents. In addition to the abovementioned lawsuits, there are other lawsuits that are in the
negotiation process, and therefore the liabilities are unclear. The Company has accrued the possible
expense, and therefore significant losses are unlikely. In addition, the Company’s products are
purchased from an outside source, and therefore when certain products are alleged to infringe on
patents, the Company will ask the supplier to take action in resolving the lawsuit and be responsible for
all costs related to the lawsuit or settlement.
10. Losses due to major disasters: None.
11. Subsequent events: None.
12. Other information
The information on employee, depreciation, and amortization expenses, by function, is summarized as
follows:
2014 2013
Account
Cost of
goods sold
Operating
expense Total
Cost of
goods sold
Operating
expense Total
Employee expenses
Salaries 129,354 3,323,941 3,453,295 126,220 3,293,568 3,419,788
Labor and health
insurance
3,760 184,504 188,264 3,798 163,284 167,082
Pension 10,094 154,523 164,617 9,443 132,659 142,102
Others - 95,022 95,022 - 103,902 103,902
Depreciation 2,298 179,763 182,061 2,580 199,222 201,802
Amortization 159 35,747 35,906 151 33,157 33,308