Audiovox 2003 Annual Report Download - page 130

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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)
Investment Securities
The carrying amount represents fair value, which is based upon quoted
market prices at the reporting date (Note 8).
Long−Term Obligations
The carrying amount of bank debt under the Company's revolving credit
agreement and foreign debt approximates fair value because the
interest rate on the bank 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.
(19) Segment Information
The Company has two reportable segments which are organized by
products: Wireless and Electronics. The Wireless segment markets
wireless handsets and accessories through domestic and international
wireless carriers and their agents, independent distributors and
retailers. The Electronics segment sells autosound, mobile electronics
and consumer electronics, primarily to mass merchants, specialty
retailers, new car dealers, original equipment manufacturers (OEM),
independent installers of automotive accessories and the U.S.
military.
The Company's chief decision maker evaluates performance of the
segments based upon income before provision for income taxes. The
accounting policies of the segments are the same as those described in
the summary of significant accounting policies (Note 1). The Company
allocates interest and certain shared expenses, including treasury,
legal and human resources, to the segments based upon estimated usage.
Intersegment sales are reflected at cost and have been eliminated in
consolidation. A royalty fee on the intersegment sales, which is
eliminated in consolidation, is recorded by the segments and included
in other income (expense). Certain items are maintained at the
Company's corporate headquarters (Corporate) and are not allocated to
the segments. They primarily include costs associated with accounting
and certain executive officer salaries and bonuses and certain items
including investment securities, equity investments, deferred income
(Continued)
129