Audiovox 2006 Annual Report Download - page 59

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 28, 2007
(Dollars in thousands, except share and per-share data)
repair costs expense for the year ended February 28, 2007, the three months ended
February 28, 2006 and the years ended November 30, 2005 and 2004 were $8,047, $477,
$6,063 and $3,257, respectively.
Changes in the Company’s product warranties and product repair costs are as follows:
Year
Ended
February 28,
2007
Three Months
Ended
February 28,
2006
Years ended
November 30,
2005 2004
Beginning balance ...................... $ 9,947 $10,329 $11,794 $14,695
Liabilities acquired from acquisition
(Note 4) ............................. 1,705 — — —
Liabilities accrued for warranties issued . . . 8,047 477 6,063 3,257
Warranty claims paid.................... (10,113) (859) (7,528) (6,158)
Ending balance......................... $ 9,586 $ 9,947 $10,329 $11,794
During the year ended November 30, 2004, the Company received a credit of $1,517 from
a vendor as a result of re-negotiating charges for the repair of defective inventory. This
credit has been included as a reduction to the liabilities accrued for warranties issued
during the year ended November 30, 2004.
o) Foreign Currency
Assets and liabilities of those subsidiaries and former equity investees located outside the
United States whose cash flows are primarily in local currencies have been translated at
rates of exchange at the end of the period or historical exchange rates, as appropriate in
accordance with SFAS No. 52, ‘‘Foreign Currency Translation’’. Revenues and expenses
have been translated at the weighted average rates of exchange in effect during the period.
Gains and losses resulting from translation are recorded in the cumulative foreign currency
translation account in accumulated other comprehensive income (loss).
Exchange gains and losses on inter-company balances of a long-term nature are also
recorded in the cumulative foreign currency translation account in accumulated other
comprehensive income (loss).
p) Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled
(Note 9). The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
q) Income (Loss) Per Common Share
Basic income (loss) per common share is based upon the weighted average number of
common shares outstanding during the period. Diluted income (loss) per common share
reflects the potential dilution that would occur if securities or other contracts to issue
common stock were exercised or converted into common stock.
F-19