Audiovox 2000 Annual Report Download - page 29

(T)ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE
DISPOSED OF
The Company accounts for its long-lived assets in accordance with the
provisions of Statement of Financial Accounting Standards No. 121,
“Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of “ (Statement 121). Statement 121 requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by comparison of the carrying
amount of an asset to the future net cash flows expected to be generated
by the asset. If such assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of assets. Assets to be dis-
posed of are reported at the lower of the carrying amount or fair value
less cost to sell.
(U)ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company applies the intrinsic value-based method of accounting pre-
scribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting
for Stock Issued to Employees”, and related interpretations, in accounting
for its stock-based compensation plans.
(V)REPORTING COMPREHENSIVE INCOME
Effective December 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, “Reporting Comprehensive Income” (State-
ment 130). Statement 130 requires that all items recognized under account-
ing standards as components of comprehensive income be reported in an
annual financial statement that is displayed with the same prominence as
other annual financial statements. Other comprehensive income may
include foreign currency translation adjustments, minimum pension liability
adjustments and unrealized gains and losses on investment securities clas-
sified as available-for-sale.
(W)RECLASSIFICATIONS
Certain reclassifications have been made to the 1998 and 1999 consoli-
dated financial statements in order to conform to the 2000 presentation.
(2) Business Acquisitions
During 2000, the Company formed Audiovox Japan (AX Japan), a wholly-
owned subsidiary, for the purpose of purchasing land and a building and
entering into a sale/leaseback transaction (Note 5(b)).
During 2000, the Company contributed the net assets of its electronics divi-
sion into a newly-formed, wholly-owned subsidiary, Audiovox Electronics
Corporation (AEC).
(3) Issuance of Subsidiary Shares
On March 31, 1999, Toshiba Corporation, a major supplier, purchased 5%
of the Company’s subsidiary, Audiovox Communications Corp. (ACC), a
supplier of wireless products for $5,000 in cash. The Company currently
owns 95% of ACC; prior to the transaction ACC was a wholly-owned sub-
sidiary. As a result of the issuance of ACC’s shares, the Company recog-
nized a gain of $3,800 in 1999 ($2,204 after provision for deferred taxes).
The gain on the issuance of the subsidiary’s shares have been recognized
in the statements of income in accordance with the Company’s policy on
the recognition of such transactions.
In February 2000, the Board of Directors of Audiovox Communications
Corp. (ACC), declared a dividend payable to its shareholders, Audiovox
Corporation, a 95% shareholder, and Toshiba Corporation (Toshiba), a 5%
shareholder. During 2000, ACC paid Toshiba its share of the dividend,
which approximated $859.
(4) Supplemental Cash Flow Information
The following is supplemental information relating to the consolidated
statements of cash flows:
For the Years Ended
November 30,
1998 1999 2000
Cash paid during the years for:
Interest, excluding bank charges,
net of $801 capitalized in 1998 $1,587 $ 2,994 $ 4,870
Income taxes $4,496 $12,039 $21,069
NON-CASH TRANSACTIONS:
During 1998, a capital lease obligation of $6,340 was incurred when the
Company entered into a building lease (Note 20).
During 1998, the Company sold its equity collar for $1,499. The transac-
tion resulted in a net gain on hedge of available-for-sale securities of
$929 which is reflected as a separate component of stockholders’ equity
(Note 21(a)(2)).
During 1998, 1999 and 2000, the Company exercised its option to convert
1,137,212, 2,882,788 and 800,000 Japanese yen (approximately $8,176,
$24,026 and $7,595) of Shintom Co. Ltd. (Shintom) convertible debentures
(Shintom debentures) into approximately 7,500,000, 48,100,000 and
33,900,000 shares of Shintom common stock, respectively (Note 14).
During the years ended November 30, 1998, 1999 and 2000, the Company
recorded an unrealized holding gain relating to available-for-sale mar-
ketable equity securities, net of deferred income taxes, of $(8,040),
$5,775 and $(10,119), respectively, as a separate component of accumu-
lated other comprehensive income (Note 18).
AUDIOVOX CORPORATION AND SUBSIDIARIES
AUDIOVOX 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)