Included in provisions is estimated future warranty costs. Warranties relate to product liability for goods sold during the year. Normal warranty period is 12 months + one month for shipping.

Other provisions relate to constructive obligations incurred in the ordinary course of business.

TANDBERG is from time to time involved in various legal matters arising in the ordinary course of business. TANDBERG has provided in its accounts for these items based on management’s best judgment based on available information at the time the annual accounts are approved.

On 15 February 2007, TANDBERG entered into an agreement with Collaboration Properties Inc. (CPI) and its parent company Avistar, whereby the parties agreed to settle pending patent litigation and to cross-license each others’ patent portfolios. As part of the settlement, TANDBERG has made a one-time payment of MUSD 12 million and has accrued associated legal costs of MUSD 1.1 in relation to the settlement. The settlement does not alter TANDBERG’s consistent assertion that the claims brought by CPI were without merit, and that its own products and technology are well covered by its own intellectual property rights and patents. However, continuing the litigation would consume valuable resources that can be more productively deployed. TANDBERG’s agreement is a prudent business decision in light of the uncertain outcomes and high cost of litigation in the American courts. The terms of the settlement do not reflect an admission of wrongdoing or improper conduct by either party.