Audiovox 2005 Annual Report Download - page 68

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Accounts receivable is comprised of the following:
NOVEMBER 30,
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
2004 2005
−−−−−−−−−−−−−−−− −−−−−−−−−−−−−
Trade accounts receivable and other $125,162 $135,354
Less:
Allowance for doubtful accounts 6,271 6,497
Allowance for cash discounts 503 427
−−−−−−−−− −−− −−−−−−−− −−−
$118,388 $128,430
The Company performs ongoing credit evaluations of its customers
and adjusts credit limits based upon payment history and the
customer's current credit worthiness, as determined by a review
of their current credit information. The Company continuously
monitors collections and payments from its customers and
maintains a provision for estimated credit losses based upon
historical experience and any specific customer collection
issues that have been identified. While such credit losses have
historically been within management's expectations and the
provisions established, the Company cannot guarantee it will
continue to experience the same credit loss rates that have been
experienced in the past. Since the Company's accounts receivable
are concentrated in a relatively few number of customers, a
significant change in the liquidity or financial position of any
one of these customers could have a material adverse impact on
the collectability of the Company's accounts receivable and
future operating results.
The following is a roll−forward of the allowance for doubtful
accounts:
NOVEMBER 30,
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
2004 2005
−−−−−−−−−−−−−−−−−− −−−−−−−−−−−−−−−−−−−
Beginning balance $5,558 $ 6,271
Expense 237 1,105
Deductions/writeoffs 476 (879)
−−−−−−− −−−−−−−−
Ending balance $ 6,271 $ 6,497
======= =======
(i) Inventory
The Company values its inventory at the lower of the actual cost
to purchase (primarily on a weighted moving average basis) and/or
the current estimated market value of the inventory less expected
costs to sell the inventory. The Company regularly reviews
inventory quantities on−hand and records a provision for excess
and obsolete inventory based primarily from selling prices,
indications from customers based upon current price negotiations
and purchase orders. The Company's industry is characterized by
rapid technological change and frequent new product introductions
that could result in an increase in the amount of obsolete
inventory quantities on−hand. The Company recorded inventory
write−downs on inventory of $4,397, $5,506 and $16,924 for the
years ended November 30, 2003, 2004 and 2005, respectively.
F−14