Audiovox 2004 Annual Report Download - page 77

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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)
and included in the gain on the sale of the Cellular business (See
Note 2 of Notes to Consolidated Financial Statements). The currency
translation adjustments are not adjusted for income taxes as they
relate to indefinite investments in non−U.S. subsidiaries and equity
investments.
(v) New Accounting Pronouncements
In November 2004, The Financial Accounting Standards Board (FASB)
issued FASB Statement No. 151 ("Statement 151"), "Inventory Costs, an
amendment of ARB No. 43, Chapter 4". The amendments made by Statement
151 clarified that abnormal amounts of idle facility expense, freight,
handling costs, and wasted materials (spoilage) should be recognized
as current−period charges and requires the allocation of fixed
production overheads to inventory based on the normal capacity of the
production facilities. Statement 151 is effective for inventory costs
incurred during fiscal years beginning after June 15, 2005 or the
Company's fiscal year ended November 30, 2006. The Company does not
expect the adoption of Statement 151 to have a material impact on the
Company's consolidated financial statements.
In December 2004, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 123R ("Statement 123R"), "Share Based
Payment". Statement 123R is a revision of FAS Statement 123,
"Accounting for Stock Based Compensation" and supersedes APB Opinion
No. 25, "Accounting for Stock issued to Employees" (APB No.25).
Statement 123R requires a public entity to measure the cost of
employee services recognized in exchange for an award of equity
instruments based on the grant−date fair value of the award (with
limited exceptions). Statement 123R is effective the first interim or
annual period that begins after June 15, 2005 or the Company's fourth
quarter and fiscal year ended November 30, 2005. The adoption of
Statement 123R will rescind the Company's current accounting for stock
based compensation under the intrinsic method as outlined in APB No.
25. Under APB No. 25, the issuance of stock options to employees
generally resulted in no compensation expense to the Company. The
adoption of Statement 123R would have no impact to the Compay if
adopted at November 30, 2004, but will require the Company to measure
the cost of stock options based on the grant−date fair value of the
award.
In December 2004, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 153, ("Statement 153"), "Exchanges of
Non−monetary Assets−an amendment of APB Opinion No. 29". Statement 153
amends Opinion 29 to eliminate the exception for non−monetary
exchanges of similar productive assets and replaces it with a general
exception for exchanges of non−monetary assets that do not have
commercial substance. A non−monetary exchange has commercial substance
if the future cash flows of the entity are expected to change
significantly as a result of the exchange. Statement 153 is effective
for fiscal periods after June 15, 2005. The Company does not expect
the adoption of Statement 153 to have a material impact on the
Company's consolidated financial statements.
74