Memorex 2013 Annual Report Download - page 100

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
contingency. We also have an estimated $9.4 million of accrued but unpaid levies associated with consumer sales in EU
jurisdictions other than Italy and France that we continue to carry on our books.
We are subject to several pending or threatened legal actions by the individual European national levy collecting
societies in relation to private copyright levies under the Directive. Those actions generally seek payment of the commercial
and consumer optical levies withheld by Imation. Imation has corresponding claims in those actions seeking reimbursement of
levies improperly collected by those collecting societies. We are subject to threatened actions by certain customers of Imation
seeking reimbursement of funds they allege relate to commercial levies that they claim they should not have paid. Although
these actions are subject to the uncertainties inherent in the litigation process, based on the information presently available to
us, management does not expect that the ultimate resolution of these actions will have a material adverse effect on our
financial condition, results of operations or cash flows. We anticipate that additional court decisions may be rendered in 2014
that may directly or indirectly impact our levy exposure in specific European countries which could trigger a review of our levy
exposure in those countries.
Note 16 — Related Party Transactions
As a result of the arrangement to acquire the rights to the TDK Life on Record brand under an exclusive long-term
license from TDK Corporation (TDK), TDK became our largest shareholder and owned approximately 18 percent of our
shares as of December 31, 2013 and 2012. In connection with this arrangement we entered into a supply agreement, dated
July 31, 2007, with TDK (Supply Agreement).
In 2013, 2012 and 2011 we purchased products and services under the Supply Agreement which allows us to purchase
a limited number of LTO Tape media and Blu-ray removable recording media products and accessory products for resale in
the aggregate amounts of approximately $28 million, $38 million and $50 million, respectively, from TDK or its affiliates. The
Supply Agreement will be terminated on March 31, 2014. We did not sell products nor provide services to TDK or its affiliates
in 2013, 2012 or 2011. Trade payables to TDK or its affiliates were $1.6 million and $9.8 million at December 31, 2013 and
2012 respectively. No trade receivables from TDK or its affiliates were outstanding as of December 31, 2013 or December 31,
2012.
In 2011 we discontinued our tape coating operations at our Weatherford, Oklahoma facility and closed the facility. We
signed a strategic agreement with TDK to jointly develop and manufacture magnetic tape technologies in which we
collaborated on the research and development of future tape formats in both companies’ research centers in the U.S. and
Japan. At the end of 2013, TDK announced its intent to cease manufacturing of magnetic tape and as a result we will
transition to source our product from alternate magnetic tape suppliers during 2014.
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