Audiovox 2004 Annual Report Download - page 142

Audiovox Specialized Applications, LLC And Subsidiary
Notes To Financial Statements
Note 7. Employee Benefit Plans
The Company has profit−sharing and 401(k) plans for the benefit of all eligible
employees. The Company's contributions are discretionary with the Board of
Directors and are limited to amounts deductible for federal income tax purposes.
Discretionary contributions were approximately $270,000, $97,000, and $88,000
for the years ended November 30, 2004, 2003, and 2002 respectively.
The Company also maintains a discretionary employee bonus plan for the benefit
of its key executive and operating officers. The Company has paid or accrued
bonuses of approximately $1,163,000, $709,000, and $695,000 during the years
ended November 30, 2004, 2003, and 2002 respectively.
The Company has a health plan for its employees, which is self−insured for
medical and pharmaceutical claims up to $35,000 per participant and
approximately $518,000 annually in aggregate. Dental and vision coverage is
entirely self−insured. The excess loss portion of the employees' coverage has
been reinsured with a commercial carrier. The total amount of net claims and
insurance premiums for the years ended November 30, 2004, 2003, and 2002 was
approximately $458,000, $408,000, and $402,000 respectively.
Note 8. Business Combination
On March 8, 2002, CruiseTV acquired substantially all of the assets of Datron
Corporation. Datron Corporation was a manufacturer of mobile satellite
television systems for distribution generally in the United States. The
aggregate purchase price was $3,000,000 including $1,500,000 in cash, $1,244,000
in the form of a six−month promissory note, and a deferred payment of $256,000.
The deferred payment is contingent upon the satisfaction of certain warranty
claims in excess of a threshold agreed to in the purchase agreement. The full
amount of the deferred payment was released back to CruiseTV during the year
ended November 30, 2003.
The acquisition has been accounted for as a purchase and the results of
operations since the date of acquisition are included in the financial
statements. The acquisition resulted in goodwill of $300,000, all of which is
amortizable for tax purposes. The goodwill is subject to the provision of SFAS
142 as described in Note 1.
The Company determined that goodwill was impaired due to certain advances in
technology during the year ended November 30, 2004 and the balance of $300,000
was recorded as a charge against net income to selling, general and
administrative expenses.
Unaudited proforma consolidated results of operations for the year ended
November 30, 2002 as though the assets of Datron Corporation had been acquired
as of December 1, 2001 is approximately as follows:
Net sales $ 47,987,000
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Net income $ 3,504,000
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Exhibit 99.1
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