Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

4.Commitments and Contingencies

Two putative class action lawsuits have been filed by purported shareholders of SRS, challenging the proposed merger pursuant to which SRS would become a wholly-owned subsidiary of DTS (the “Merger”).  The lawsuits seek, among other things, to enjoin the defendants from completing the Merger pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated April 16, 2012, by and among DTS, DTS Merger Sub, Inc. and DTS LLC (the “Merger Agreement”).  If the plaintiffs are successful in obtaining an injunction prohibiting us from completing the Merger pursuant to the terms of the Merger Agreement, such an injunction may prevent the completing of the Merger in the expected timeframe (or altogether).

The first putative class action was filed in the Superior Court of the State of California, County of Orange, purportedly on behalf of the public holders of SRS common stock, against SRS, DTS and the members of the board of directors of SRS, alleging, among other things, that the directors, aided and abetted by SRS and DTS, breached their fiduciary duties to the stockholders of SRS in connection with the proposed Merger (the “California Complaint”).  The California Complaint seeks, among other things, to enjoin the defendants from completing the Merger pursuant to the terms of the Merger Agreement, absent implementation of a process to obtain a potentially higher price and/or require additional disclosures by the Company.  The California Complaint also seeks recovery of attorneys’ fees and costs of same.

The second putative class action was filed in the Court of Chancery of the State of Delaware purportedly on behalf of the public stockholders of SRS against DTS, DTS Merger Sub, Inc., DTS, LLC, SRS and the members of the board of directors of SRS, alleging, among other things, that the directors breached their fiduciary duties to the stockholders of SRS in connection with the proposed Merger (the “Delaware Complaint”).  It also alleges that all the defendants aided and abetted the directors’ alleged breaches of fiduciary duties.  The Delaware Complaint seeks, among other things, to enjoin the defendants from completing the Merger pursuant to the terms of the Merger Agreement, absent implementation of any and all methods to obtain a potentially higher price for stockholders, or, if the Merger is consummated, to rescind the Merger and award actual and punitive damages.  The Delaware Complaint also seeks recover of attorneys’ fees and expenses.

In addition, from time to time, the Company is subject to other legal proceedings and claims that arise in the normal course of business. While the outcome of these proceedings and claims cannot be predicted, except as set forth above, we currently are not a party to any other legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, is expected to have a material adverse effect on the Company’s consolidated financial position or results of operations.