Regardless of the merit of particular claims, litigation may be expensive, time-consuming, disruptive
to the Companys operations and distracting to management. In recognition of these considerations, the Company may enter into arrangements to settle litigation.
In managements opinion, there is not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess
of a recorded accrual, with respect to loss contingencies, including matters related to infringement of intellectual property rights. However, the outcome of litigation is inherently uncertain.
Although management considers the likelihood of such an outcome to be remote, if one or more legal matters were resolved against the Company in a
reporting period for amounts in excess of managements expectations, the Companys consolidated financial statements for that reporting period could be materially adversely affected. Further, such an outcome could result in significant
compensatory, punitive or trebled monetary damages, disgorgement of revenue or profits, remedial corporate measures or injunctive relief against the Company that could materially adversely affect its financial condition and operating results.
The Company is subject to laws and regulations worldwide, changes to which could increase the Companys costs and individually or in the
aggregate adversely affect the Companys business.
The Company is subject to laws and regulations affecting its domestic and international
operations in a number of areas. These U.S. and foreign laws and regulations affect the Companys activities including, but not limited to, in areas of labor, advertising, digital content, consumer protection, real estate, billing,
e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash
repatriation restrictions, data privacy requirements, anti-competition, environmental, health and safety.
By way of example, laws and regulations
related to mobile communications and media devices in the many jurisdictions in which the Company operates are extensive and subject to change. Such changes could include, among others, restrictions on the production, manufacture, distribution and
use of devices, locking devices to a carriers network, or mandating the use of devices on more than one carriers network. These devices are also subject to certification and regulation by governmental and standardization bodies, as well
as by cellular network carriers for use on their networks. These certification processes are extensive and time consuming, and could result in additional testing requirements, product modifications, or delays in product shipment dates, or could
preclude the Company from selling certain products.
Compliance with these laws, regulations and similar requirements may be onerous and expensive,
and they may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such costs, which may rise in the future as a result of changes in these laws and regulations or in their
interpretation, could individually or in the aggregate make the Companys products and services less attractive to the Companys customers, delay the introduction of new products in one or more regions, or cause the Company to change or
limit its business practices. The Company has implemented policies and procedures designed to ensure compliance with applicable laws and regulations, but there can be no assurance that the Companys employees, contractors, or agents will not
violate such laws and regulations or the Companys policies and procedures.
The Companys business is subject to the risks of international operations.
The Company derives a significant portion of its revenue and earnings from its international operations. Compliance with applicable U.S. and
foreign laws and regulations, such as import and export requirements, anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy requirements, environmental laws, labor laws and anti-competition
regulations, increases the costs of doing business in foreign jurisdictions. Although the Company has implemented policies and procedures to comply with these laws and regulations, a violation by the Companys employees, contractors, or agents
could nevertheless occur.
The Company also could be significantly affected by other risks associated with international activities including, but
not limited to, economic and labor conditions, increased duties, taxes and other costs and political instability. Margins on sales of the Companys products in foreign countries, and on sales of products that include components obtained from
foreign suppliers, could be materially adversely affected by international trade regulations, including duties, tariffs and antidumping penalties. The Company is also exposed to credit and collectability risk on its trade receivables with customers
in certain international markets. There can be no assurance the Company can effectively limit its credit risk and avoid losses.
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