Legal Proceedings

3 Months Ended

Jul. 01, 2012

Legal Proceedings [Abstract]

LEGAL PROCEEDINGS

NOTE 15. LEGAL PROCEEDINGS

On August 2, 2011, a lawsuit was filed in the Superior Court of California in the County of Santa Clara by Mission West Properties, L.P., the lessor for the Hillview Facility naming us as a defendant (Santa Clara County Superior Court case No. 1-11-CV-206456). The lawsuit asserts various monetary and equitable claims, but essentially seeks recovery of remediation and restoration costs in the amount of $3.0 million, which we assert are inflated and unsubstantiated. We also dispute liability in connection with claims by Mission West Properties, L.P. regarding the extent of restoration mandated by the lease. On November 21, 2011, we filed an Amended Cross-Complaint against Mission West Properties, L.P. for the following Causes of Action: (1) Promissory Fraud; (2) Breach of the Covenant of Good Faith and Fair Dealing; (3) Contract Reformation; and (4) for Deposit in Court. The Cross-Complaint also asserts the following causes of action against our former subtenant, Kovio, Inc.: (1) Declaratory Relief and Indemnity; (2) Breach of Contract; and (3) for Deposit in Court. Responsive pleadings have been filed by the Cross-Defendants. Mission West Properties, L.P. has sought leave to amend its Complaint to assert additional claims for fraud, negligent misrepresentation and breach of contract. On July 30, 2012, Court denied the motion without prejudice. Discovery, including depositions of key witnesses, has begun but is currently informally stayed pending resolution of the motion. No substantive hearings in court have taken place. An accrual of $1.2 million has been recorded as the estimated amount to settle claims. Attorney’s fees and costs, which are expensed as incurred, will also be incurred in connection with this litigation.

From time to time, we are involved in various claims, legal actions and complaints arising in the normal course of business. We are not a named party to any currently ongoing lawsuit or formal proceeding that, in the opinion of our management, is likely to have a material adverse effect on our financial position, results of operations or cash flows.