Audiovox 2005 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2005 Audiovox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 111

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111

Short−term investments consist of tax−exempt auction rate notes, which
are available for sale one year or less when purchased. The Company's
overall goal for short−term investments is to invest primarily in low
risk, fixed income securities with the intention of maintaining
principal while generating a moderate return. In accordance with the
Company's investment policy, all short−term investments are invested
in "investment grade" rated securities and all investments have an Aaa
or better rating at November 30, 2005. Trading Securities consist of
mutual funds, which are held in connection with the Company's deferred
compensation plan.
Deferred tax assets of $488 and $678 related to available for
sale securities were recorded at November 30, 2004 and 2005,
respectively, as a reduction to the unrealized holding loss
included in accumulated other comprehensive loss.
During the year ended November 30, 2005, the Company recorded
an−other−than temporary impairment charge of $1,758 for its
investment in CellStar common stock and such charge has been
included in other income on the accompanying Consolidated
Statement of Operations. The Company recorded this charge in the
fourth quarter of fiscal 2005 as a result of the inability of
the investment to regain its marketability, stock listing and
the unlikelihood that the cost of this investment would be
recovered due to the extended decline in stock price. 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.
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. 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. 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
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.
(g) Sales Incentives
The Company offers sales incentives to its customers in the form
of (1) co−operative advertising allowances; (2) market
development funds; (3) volume incentive rebates and (4) other
trade allowances. The Company accounts for sales incentives in
accordance with EITF
F−11