Audiovox 2008 Annual Report Download - page 120

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Audiovox Specialized Applications, LLC And Subsidiary
(A Limited Liability Company)
Notes To Financial Statements
Note 1. Nature of Business and Significant Accounting Policies
Nature of business:
Audiovox Specialized Applications (the “Company”) "The Mobile Electronics Company" is an international supplier of mobile
electronics in certain niche markets in the Automotive Industry including: Recreational Vehicle, Van/SUV Conversion, Commercial
Vehicle, Heavy Duty Truck, Agricultural, Construction, Bus, Limousine, and Marine industries. Its proprietary line of products
include: Flexvision LCD Entertainment Systems, including DVD and video cassette players; Voyager Rear Observation and Bus
Monitor/PA Systems and radios; Nextgen Modular Chassis Systems; Aquatronics Marine Radios, Speakers, and Housings; Jensen
Marine Radios, Speakers and Housings and other Audio/Video Products; and Heavy Duty Systems, Radios and other Audio
Products. These products are sold to customers throughout the world, generally on 30-day terms. ASA is headquartered in Elkhart,
Indiana and has a public distribution center in California.
Significant accounting policies:
Use of estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Principles of consolidation:
The consolidated financial statements include the accounts of the Company and CruiseTV, LLC ("CruiseTV") a wholly-owned
subsidiary. All significant intercompany accounts have been eliminated in consolidation.
Revenue recognition:
The Company recognizes revenue from product sales at the time of passage of title and risk of loss to the customer either at F.O.B.
Shipping Point or F.O.B. Destination, based upon terms established with the customer. The Company's selling price is fixed and
determined at the time of shipment and collectibility is reasonably assured and not contingent upon the customer's resale of the
product. The customers are generally not given rights of return. In the event customers are granted rights of return, the Company
estimates and records an allowance for future returns. At November 30, 2007 and 2006 no such allowance was deemed
necessary. The product sale is not subject to acceptance or installation by Company or customer personnel.
The Company recognizes shipping costs in selling, general and administrative in the accompanying statements of income. Shipping
costs for the years ended November 30, 2007, 2006 and 2005 were approximately $487,000; $518,000 and $403,000, respectively.
The Company recognizes royalty revenue at the time the related product is purchased by Audiovox Corporation ("Audiovox"), a
member of ASA. Total royalty revenue under this agreement for the years ended November 30, 2007, 2006, and 2005 was
approximately $831,000, $649,000 and $871,000, respectively.
6
Source: AUDIOVOX CORP, 10-K, May 14, 2008