Audiovox 2005 Annual Report Download - page 69

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As a result of the Company's: a) post holiday season review of
inventory and sales projections, b) review of products which were
at the end of their product life cycle at the completion of the
fourth quarter and c) market information obtained from industry
competitors and customers regarding pricing and product demand at
the January 2006 Consumer Electronics trade show, the Company
decided to discontinue certain product lines resulting in a
$9,972 inventory charge in the fourth quarter of fiscal 2005,
which is primarily related to a $8,775 charge due to the
discontinuance of certain products within select product lines.
In addition, the Company recorded a $3,789 inventory writedown
during the third quarter of fiscal 2005 primarily for satellite
radio plug and play products as a result of sudden reduced
pricing by a competitor.
The Company's estimates of excess and obsolete inventory may
prove to be inaccurate, in which case the Company may have
understated or overstated the provision required for excess and
obsolete inventory. Although the Company makes every effort to
ensure the accuracy of its forecasts of future product demand,
any significant unanticipated changes in demand, price or
technological developments could have a significant impact on the
value of the Company's inventory and its reported operating
results.
(j) Debt Issuance Costs
Costs incurred in connection with the previous restructuring of
bank obligations were capitalized. These charges were amortized
over the lives of the respective agreements resulting in
amortization expense of $528 and $1,024 for the years ended
November 30, 2003 and 2004, respectively. These capitalized costs
were fully amortized at November 30, 2004.
(k) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation. Property under a capital lease is stated at the
present value of minimum lease payments. Major improvements are
capitalized and minor replacements, maintenance and repairs are
charged to expense as incurred. Upon retirement or disposal of
assets, the cost and related accumulated depreciation are removed
from the consolidated balance sheets.
F−15