Audiovox 2004 Annual Report Download - page 141

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Audiovox Specialized Applications, LLC And Subsidiary
Notes To Financial Statements
At November 30, 2004 and 2003, amounts included in trade receivables and
accounts payable resulting from the above transactions are as follows:
2004 2003
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Trade receivables $ 134,721 $ 679,205
Accounts payable 239,874 238,180
On August 13, 2003, the Company acquired certain assets from Audiovox. The
aggregate purchase price was $3,600,000, of which approximately $596,000 and
$3,004,000 were allocated to working capital and trademark rights respectively.
In May 2004, the Company completed its final allocation of the aggregate
purchase price and increased working capital by approximately $356,000 with a
corresponding decrease to the trademark rights. Audiovox has sublicensed its
rights in relation to the trademark to the Company and cannot terminate these
rights under the terms of the acquisition agreement. The Company has accounted
for the trademark rights as an indefinite lived intangible asset which is
subject to the provision of SFAS 142 as described in Note 1.
The Company leases warehouse, manufacturing, and office facilities from Irions
Investments, LLC, an entity related through common ownership, for approximately
$43,200 per month, plus the payment of property taxes, normal maintenance, and
insurance on the property under an agreement which expires September 2009, with
one five−year option to extend, at the Company's discretion. Monthly lease
payments are reduced by approximately $6,000 at the earlier of March 2007 or
when certain buildings, as defined by the lease agreement, included in the lease
are sold by Irions Investments, LLC.
The Company leases certain equipment from unrelated parties under agreements
that require monthly payments totaling approximately $4,500 and expire through
July 2006.
The total rental expense included in the income statements for the years ended
November 30, 2004, 2003, and 2002 is approximately $505,000, $476,000, and
$450,000, respectively, of which approximately $368,000, $336,000, and $328,000
respectively was paid to Irions Investments, LLC.
The total approximate minimum rental commitment at November 30, 2004 under the
leases is due as follows:
Related Party Other Total
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
During the year ending November 30,
2005 $ 519,000 $ 54,000 $ 573,000
2006 519,000 8,000 527,000
2007 471,000 − 471,000
2008 446,000 − 446,000
Thereafter 335,000 − 335,000
−−−−−−−−−−−− −−−−−−−−− −−−−−−−−−−−−
$ 2,290,000 $ 62,000 $ 2,352,000
============ ========= ============
Exhibit 99.1
12