us_10_5c_danle_corporation_072310

us_10_5c_danle_corporation_072310 - Case 10-5 Danle...

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Case 10-5 Danle Corporation Danle Corporation (“Danle”), a public company, conducts business activities primarily related to the design, development, manufacture, and assembly of passenger cars, recreational and sport-utility vehicles, minivans, and trucks. Over the past three years, two claims were filed against Danle by automotive mechanics and surviving family members seeking recovery because of their alleged exposure to asbestos. Danle used asbestos in the manufacturing of brake shoes and gaskets because of its heat resistance. The following information summarizes Danle’s exposure to the two asbestos claims over the past three years. The amount of damages sought in the complaints is considered material to the Danle’s financial statements for each period presented. Fiscal Year 2004 In November 2004, Danle was served a complaint in the U.S. District Court alleging that 50 mechanics suffered severe illnesses that led to death or disability as a result of exposure to asbestos from parts manufactured by Danle. The case was brought against Danle as a class-action lawsuit seeking damages totaling approximately $100 million. Danle did not believe the asbestos used in the manufacturing of the brake shoes and gaskets led to the mechanics’ illnesses and immediately retained external legal counsel to vigorously defend the claim made against Danle in this complaint. Since this legal matter was in its early stages of discovery and development, Danle determined that the risk of potential loss at that time was remote and no amount of potential damages could be reasonably estimated. Therefore, Danle made no disclosure of the legal matter in its Form 10-K for the year ended December 31, 2004. Fiscal Year 2005
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This note was uploaded on 04/06/2011 for the course ACCT 5990 taught by Professor Clemenseehoff during the Spring '11 term at Kean.

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us_10_5c_danle_corporation_072310 - Case 10-5 Danle...

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