Audiovox 2004 Annual Report Download - page 65

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2002, 2003 and 2004
(Dollars in thousands, except share and per share data)
2004
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Gross Other−than−
Unrealized Temporary Aggregate
Holding Impairment Fair
Cost Gain (Loss) Charge Value
−−−−−−− −−−−−−−−−−− −−−−−−−−−−− −−−−−−−−−
Short−term investments $124,237 −− −− $124,237
======== ======= ======= ========
CellStar Common Stock $ 2,401 $(1,284) −− $ 1,117
======== ======= ======= ========
Related deferred tax assets/(liabilities) of $(696) and $488 were
recorded at November 30, 2003 and 2004, respectively, as a reduction
to the unrealized holding gain (loss) included in accumulated other
comprehensive income (loss).
A decline in the market value of any available−for−sale security below
cost that is deemed other−than−temporary results in a reduction in
carrying amount to fair value. The impairment is charged to earnings
and a new cost basis for the security is established. During fiscal
2002 and 2003, the Company recorded a $1,158 and $21, respectively,
other−than−temporary impairment of its Shintom common stock due to a
decline in the value of Shintom stock. The Company considers numerous
factors, on a case by case basis, in evaluating whether the decline in
market value of an available−for−sale security below cost is
other−than− temporary. Such factors include, but are not limited to,
(i) the length of time and the extent to which the market value has
been less than cost; (ii) the financial condition and the near− term
prospects of the issuer of the investment; and (iii) whether the
Company's intent to retain the investment for the period of time is
sufficient to allow for any anticipated recovery in market value.
(f) Revenue Recognition
The Company recognizes revenue from product sales at the time of
passage of title and risk of loss to the customer either at FOB
Shipping Point or FOB Destination, based upon terms established with
the customer. Any customer acceptance provisions, which are related to
product testing, are satisfied prior to revenue recognition. There are
no further obligations on the part of the Company subsequent to
revenue recognition except for returns of product from the Company's
customers. The Company does accept returns of products, if properly
requested, authorized, and approved by the Company. The Company
records an estimate of returns of products to be returned by its
customers. Management continuously monitors and tracks such product
returns and records the provision for the estimated amount of such
future returns, based on historical experience and any notification
the Company receives of pending returns. The Company's selling price
to its customers is a fixed amount that is not subject to refund or
adjustment or contingent upon additional rebates.
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