Audiovox 2003 Annual Report Download - page 106

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2001, 2002 and 2003
(Dollars in thousands, except share and per share data)
required the purchaser to immediately change the name of AX Japan to
RMS Co., Ltd., and the Company resigned from all officer and board of
directors positions. The Company has no further relationship or
obligations, whether contingent or direct to RMS Co., Ltd., formerly
known as AX Japan.
As a result of the completion of this transaction, all assets and
liabilities of AX Japan have been removed from the accompanying
consolidated balance sheet as of November 30, 2002, specifically the
land and the building and the notes payable for the Vitec 150,000 Yen
loan and the Pearl 140,000 Yen loan. As a result of this transaction,
the Company recovered in Yen its initial investment in AX Japan as
well as its loan to finance the purchase of the land and building.
However, the Company recognized a $338 loss on the sale of its shares
in AX Japan, as the sales price was less than the value of the net
assets of AX Japan sold to Vitec. Contributing to the loss on sale
were foreign currency loss and other expenses that will not be
recovered. The loss on the sale of the shares of AX Japan has been
included in other, net, under other income (expense) in the
accompanying consolidated statements of operations for the year ended
November 30, 2002.
(c) Inventory Purchases − Other
Two wireless suppliers, including Toshiba, approximated 75%, 67% and
63% of total inventory purchases for the years ended November 30,
2001, 2002 and 2003, respectively. Although there are a limited number
of manufacturers of its products, management believes that other
suppliers could provide similar products on comparable terms. A change
in suppliers, however, could cause a delay in product availability and
a possible loss of sales, which would affect operating results
adversely.
(6) Business Acquisitions
Code Systems, Inc.
On March 15, 2002, Code Systems, Inc. (Code), a wholly−owned subsidiary of
Audiovox Electronics Corp. (AEC), a wholly−owned subsidiary of the Company,
purchased certain assets of Code, an automotive security product company.
The purpose of this acquisition was to expand brand recognition and improve
OEM production with manufacturers. The results of operations of Code are
included in the accompanying consolidated financial statements from the
date of purchase. The purchase price consisted of approximately $7,100,
paid in cash at the closing, and a debenture (CSI Debenture) whose value is
linked to the future earnings of Code. An adjustment to the allocation of
(Continued)
105