Audiovox 2003 Annual Report Download - page 86

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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)
be made of such write−downs. At November 30, 2003, Wireless had on
hand approximately 15,600 units of previously written−down inventory,
with an extended value of approximately $800.
For certain inventory items, the Company is entitled to receive price
protection in the event the selling price to its customers is less
than the purchase price from the manufacturer. The Company records
such price protection, as necessary, at the time of the sale of the
units. For fiscal 2001, 2002 and 2003, price protection of $4,550,
$27,683 and $13,031, respectively, was recorded as a reduction to cost
of sales as the related inventory was sold.
(h) Investment Securities
The Company classifies its equity securities in one of two categories:
trading or available− for−sale. Trading securities are bought and held
principally for the purpose of selling them in the near term. All
other securities not included in trading are classified as
available−for−sale.
Trading and available−for−sale securities are recorded at fair value.
Unrealized holding gains and losses on trading securities are included
in earnings. Unrealized holding gains and losses, net of the related
tax effect, on available−for−sale securities are excluded from
earnings and are reported as a component of accumulated other
comprehensive income until realized. Realized gains and losses from
the sale of available−for−sale securities are determined on a specific
identification basis.
A decline in the market value of any available−for−sale security below
cost that is deemed other−than−temporary results in a reduction in
carrying amount to fair value. The impairment is charged to earnings
and a new cost basis for the security is established (such a charge
was recorded during fiscal 2002 and fiscal 2003 − Note 8). Dividend
and interest income are recognized when earned. The Company considers
numerous factors, on a case by case basis, in evaluating whether the
decline in market value of an available−for−sale security below cost
is other−than−temporary. Such factors include, but are not limited to,
(i) the length of time and the extent to which the market value has
been less than cost; (ii) the financial condition and the near−term
prospects of the issuer of the investment; and (iii) whether the
Company's intent to retain the investment for the period of time is
sufficient to allow for any anticipated recovery in market value.
(Continued)
85