Audiovox 2008 Annual Report Download - page 99

Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 29, 2008
(Dollars in thousands, except share and per share data)
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for
which it is practicable to estimate that value:
Short-Term Investment/Investment Securities
The carrying amount represents fair value, which is based upon quoted market prices at the reporting date (see
Note 1(e)).
Bank Obligations
The carrying amount of the Company's foreign debt approximates fair value because the interest rate on the debt is reset
every quarter to reflect current market rates.
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the
financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the
estimates.
13) Bliss-tel Investment
On December 13, 2004, one of the Company's former equity investments, Bliss-tel Public Company Limited ("Bliss-tel"),
issued 2,300,000,000 shares on the SET (Security Exchange of Thailand) for an offering price of 6.20 baht per share. Prior to
the issuance of these shares, the Company was a 20% shareholder in Bliss-tel and, subsequent to the offering, the Company
owned 300,000,000 shares (or approximately 13%) of Bliss-tel's outstanding stock. In addition, on July 21, 2005, the
Company received 90,000,000 warrants ("the warrants") which may be exercised beginning on September 29, 2006, and
expire on July 17, 2012. Each warrant is exercisable into one share of Bliss-tel common stock at an exercise price of 8 baht
per share. Beginning on September 1, 2005, the Company accounted for the Bliss-tel investment as an available-for-sale
security in accordance with Financial Accounting Standards Board Statement No. 115 "Accounting for Certain Investments
in Debt and Equity Securities" whereby the unrealized holding gains and losses on Bliss-tel stock and warrants are included
as a component of accumulated other comprehensive income (loss) (see Note 1(e)). The Company reclassified the Bliss-tel
investment to an available-for-sale security from a trading security, on September 1, 2005, as a result of a change in the
Company’s strategy regarding selling the Bliss-tel stock as the Company was unable to find a buyer in the short term.
Prior to September 1, 2005 and following Bliss-tel’s offering, the Company accounted for this investment as a trading
security. Accordingly, the Company recorded a net gain of $4,971 for the year ended November 30, 2005, which is included
in other income on the accompanying consolidated statements of operations. This gain represents the initial value of the
Bliss-tel warrants and the change in value of the underlying stock and warrant during the period, when the investment was
classified as a trading security.
During the years ended February 29, 2008 and February 28, 2007, the Company sold 131,594,000 and 2,340,600 shares of
Bliss-tel stock resulting in a gain of $1,533 and a loss of $178, respectively, which is included in other income (loss) on the
accompanying consolidated statements of operations. As of February 29, 2008 the Company owns 145,000,000 shares and
90,000,000 warrants in Bliss-tel with an aggregate fair value of $4,966.
In February 2008, Bliss-tel stock split 10:1. Accordingly, all share data has been retroactively restated for the stock split at
February 29, 2008.
F-40
Source: AUDIOVOX CORP, 10-K, May 14, 2008