Audiovox 2005 Annual Report Download - page 67

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minimum quantities of product during the specified time. Volume
incentive rebates are reversed into income in the period when
the customer did not read the required minimum purchases of
product during the specified time. Unearned sales incentives for
fiscal years ended November 30, 2003, 2004 and 2005 amounted to
$917, $2,187 and $1,007, respectively. Unclaimed sales
incentives are sales incentives earned by the customer but the
customer has not claimed payment from the Company within the
claim period (period after program has ended). Unclaimed sales
incentives for fiscal years ended November 30, 2003, 2004 and
2005 amounted to $886, $1,702 and $1,829, respectively.
The Company reverses earned but unclaimed sales incentives based
upon the expiration of the claim period of each program.
Unclaimed sales incentives that have no specified claim period
are reversed in the quarter following one year from the end of
the program. The Company believes the reversal of earned but
unclaimed sales incentives upon the expiration of the claim
period is a disciplined, rational, consistent and systematic
method of reversing unclaimed sales incentives. A summary of the
activity with respect to sales incentives is provided below:
NOVEMBER 30,
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
2003 2004 2005
−−−−−−−−−−−−− −−−−−−−−−−− −−−−−−−−−−−−
Opening balance $4,626 $ 14,605 $7,584
Accruals** 19,994 17,012 20,609
Payments (8,212) (20,144) (15,531)
Reversals for unearned incentives (917) (2,187) (1,007)
Reversals for unclaimed incentives (886) (1,702) (1,829)
−−−−− −−−−− −−−−−−−−−− −−− −−−−−−−
Ending balance $14,605 $ 7,584 $9,826
======== ======== ======
The majority of the reversals of previously established sales
incentive liabilities pertain to sales recorded in prior
periods.
** Included in accruals for fiscal 2003 and 2005 is $4,111 and
$1,255 of accrued sales incentives acquired from the acquisition
of Recoton and Terk, respectively (Note 4).
(h) Accounts Receivable
The majority of the Company's accounts receivable are due from
companies in the retail, mass merchant and OEM industries.
Credit is extended based on an evaluation of a customer's
financial condition. Accounts receivable are generally due
within 30−60 days and are stated at amounts due from customers,
net of an allowance for doubtful accounts. Accounts outstanding
longer than the contracted payment terms are considered past
due.
F−13