11. Subsequent Events

In the first quarter of 2012, the Company became aware that it may have taken actions that could constitute facilitation (within the meaning of applicable sanctions and export control laws) of shipments of foreign produced products to Iran or taken other actions that may be in violation of U.S. export control and economic sanctions laws. The potential violations related to the sale of certain of the Company's tuner products to set-top box manufacturers in Asia to permit conversion of digital television signals to analog signals in international markets using the DVB-T broadcast standard. The DVB-T standard is used in most of Europe, Asia (excluding China), Australia, and Africa as well as in parts of the Middle East, including Iran. While the underlying shipment of the Company's tuners into Iran by foreign manufacturers of these set-top boxes may have been lawful, the Company's potential facilitation may have resulted in violation of applicable sanctions and export control laws without the proper U.S. Government authorization. Upon learning of these potential violations, which were discovered internally, the Company's audit committee retained outside counsel to conduct a review of the Company's sanctions and export control compliance. On February 7, 2012, the Company made voluntary initial filings with the Office of Foreign Assets Control of the United States Department of the Treasury (OFAC) and with the Bureau of Industry and Security of the United States Department of Commerce (BIS), notifying these regulatory agencies that the Company was conducting a review of export control matters and that it would submit any supplemental voluntary self disclosures once the internal review was complete. The initial stage of the review was concluded in March 2012. Outside counsel is now preparing the final voluntary disclosures to be submitted to OFAC and BIS. Based upon the facts known to the Company to date, the Company recorded an expense of $0.8 million, reflected in selling, general, and administrative expense, in the fourth quarter of 2011 for this export compliance matter, representing management's estimated exposure for civil penalties and fines in accordance with applicable accounting literature.

As the Company has voluntarily self-disclosed, OFAC or BIS could conduct their own investigation. Should additional facts be discovered in the future and/or should actual fines or other penalties differ from the Company's estimates, its business, operating results, and financial condition could be materially and negatively affected. In that regard, the Company cannot guarantee that either OFAC or BIS will agree with its assessments of the quantity and nature of the potential violations. As a result, OFAC or BIS could seek to impose higher fines and penalties than those that the Company has estimated to date. The maximum civil monetary penalty for each violation is up to $250,000 or twice the value of the transaction, whichever is greater.