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Copyright 2012 Deloitte Development LLC All Rights Re served. Case 13- 08 Accounting for a Loss Contingency for a Verdict Overturned on Appeal M International

Copyright 2012 Deloitte Development LLC All Rights Re served. Case 13- 08 Accounting for a Loss Contingency for a Verdict Overturned on Appeal M International (M) and W Inc. ( W, a competitor of M) have been engaged in long- standing litigation over a specific patent infringement matter . Below is a summary timeline of specific events that have taken place related to this matter : In May 2007, W filed a claim against M for patent infringement . For the year ended December 31, 2007, management of M determined th at a loss for this matter was probable and represented t hat the estimate of loss was in the range of $1 5 million to $20 million , with $17 million being the most likely amount of loss within the range. A jury trial took place in September 2009. The jury reached a verdict on September 24, 2009, and a judgment was ordered in favor of W . The judgment required M to pay W $18.5 million . In November 2009, M filed a Notice of Appeal with the Court of Appeals . In December 2010, the Court of Appeals issued a ruling in favor of Ms appeal and reversed the lower court s ruling on the matter. This meant that the Court of Appeals overturned the jury verdict and the $18.5 million judgment against M . On January 6, 2011, W filed a petition for a re -hearing before the same panel of appellate judges against the reversal of r uling by Court of Appeals . On February 10, 2011, the appellate judges declined the petition for a re -hearing . On February 28, 2011, management of M determined this matter was closed upon discussions with in- house legal counsel.

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