Audiovox 2004 Annual Report Download - page 80

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)
o Acquisition costs for legal, accounting and other of $4,603 were
incurred to effectuate the sale.
The Company also retained certain accounts receivable related to the
Cellular business which approximated $148,494 as of November 1, 2004.
After collections subsequent to the closing, Cellular receivables of
$16,958 remain at November 30, 2004 and such assets have been
classified as current assets of discontinued operations on the
accompanying consolidated balance sheet.
The Company agreed to indemnify UTSI for any breach or violation of
ACC's and its representations, warranties and covenants contained in
the asset purchase agreement and for other matters, subject to certain
limitations. Significant indemnification claims by UTSI could have a
material adverse effect on the Company's financial condition. The
Company is not aware of any such claim(s) for indemnification.
After the closing on November 1, 2004, the following additional
agreements became effective:
o For a period of five−years after November 1, 2004, the Company
entered into a royalty free licensing agreement permitting UTSI
to use the Audiovox brand name on certain products. During such
period, the Company will not conduct, directly or indirectly, in
the Cellular business without the prior written consent of UTSI.
The Company has no separate accounting treatment for the
royalty−free license agreement with UTSI as this agreement cannot
be separated from the sale of net assets to UTSI.
o Certain ACC employee stock options under the 1997 Stock Option
Plan and 1999 Stock Compensation Plan were extended for one year
from the closing. This extension resulted in a non−cash
compensation charge of $98 due to the re−measurement of stock
options in accordance with FIN 44" Accounting for Certain
Transactions involving Stock Compensation".
o The Company will provide certain Information Technology services,
for at least six months after the closing as set forth in a
Transition Services Agreement with UTSI. As consideration for the
performance of these services, UTSI will pay the Company based on
the usage of these services as set forth in the Transition
Services Agreement. Such usage services have been included in
other income in the accompanying statements of operations and
amounted to $79 for the year ended November 30, 2004.
o The Company's credit agreement for domestic bank obligations
expired and became due upon the consummation of the sale of ACC's
assets to UTSI. As such, the Company utilized proceeds from the
sale to repay domestic bank obligations of $99,266 at November 1,
2004 (see Note 9 of Notes to Consolidated Financial Statements).
77