Audiovox 2003 Annual Report Download - page 70

Derivative Instruments and Hedging Activities." SFAS No. 149 is effective for
all contracts entered into or modified after June 30, 2003, with certain
exceptions, and for hedging relationships designated after June 30, 2003. The
guidance is to be applied prospectively. The adoption of SFAS No. 149 did not
have a material effect on the Company's financial condition or results of
operations.
In May 2003, the FASB issued SFAS No. 150 (SFAS No. 150), "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity". SFAS No. 150 changes the accounting guidance for certain financial
instruments that, under previous guidance, could be classified as equity or
"mezzanine" equity by now requiring those instruments to be classified as
liabilities (or assets in some circumstances) in the statement of financial
position. Further, SFAS No. 150 requires disclosure regarding the terms of those
instruments and settlement alternatives. SFAS No. 150 is generally effective for
all financial instruments entered into or modified after May 31, 2003, and is
otherwise effective at the beginning of the first interim period beginning after
June 15, 2003. The adoption of SFAS No. 150 did not have a material effect on
the Company's financial condition or results of operations.
In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46),
"Consolidation of Variable Interest Entities, an Interpretation of Arb No. 51",
which addresses consolidation by business enterprises of variable interest
entities (VIEs) either: (1) that do not have sufficient equity investment at
risk to permit the entity to finance its activities without additional
subordinated financial support, or (2) in which the equity investors lack an
essential characteristic of a controlling financial interest. In December 2003,
the FASB completed deliberations of proposed modifications to FIN 46 (Revised
Interpretations) resulting in multiple effective dates based on the nature as
well as the creation date of the VIE. VIEs created after January 31, 2003, but
prior to January 1, 2004, may be accounted for either based on the original
interpretation or the Revised Interpretations. However, the Revised
Interpretations must be applied no later than the first quarter of fiscal year
2004. VIEs created after January 1, 2004 must be accounted for under the Revised
Interpretations. The Company is currently evaluating the impact of FIN 46 on its
financial statements.
In August 2003, the EITF reached a final consensus regarding Issue No.
03−5, "Applicability of AICPA Statement of Position 97−2, Software Revenue
Recognition to Non−Software Deliverables in an Arrangement Containing
More−Than−Incidental Software". EITF 03−5 involves whether non− software
deliverables included in an arrangement that contains software that is
more−than−incidental to the products or services as a whole are included with
the scope of SOP 97−2 "Software Revenue Recognition". This new pronouncement
will not have an impact on the Company's financial condition or results of
operations.
In December 2003, the SEC issued Staff Accounting Bulletin (SAB) No. 104,
"Revenue Recognition" (SAB No. 104), which codifies, revises and rescinds
certain sections of SAB No. 101, "Revenue Recognition", in order to make this
interpretive guidance consistent with current authoritative accounting and
auditing guidance and SEC rules and regulations. The changes noted in SAB No.
104 did not have a material effect on our consolidated results of operations,
consolidated financial position or consolidated cash flows.
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