Audiovox 2006 Annual Report Download - page 80

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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)
Limitations
Fair value estimates are made at a specific point in time, based on relevant market
information and information about the financial instrument. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and, therefore, cannot
be determined with precision. Changes in assumptions could significantly affect the estimates.
14) Bliss-tel Initial Public Offering
On December 13, 2004, one of the Company’s former equity investments, Bliss-tel Public
Company Limited (‘‘Bliss-tel’’), issued 230,000,000 shares on the SET (Security Exchange of
Thailand) for an offering price of 6.20 baht per share. Prior to the issuance of these shares, the
Company was a 20%shareholder in Bliss-tel and, subsequent to the offering, the Company owned
30,000,000 shares (or approximately 13%) of Bliss-tel’s outstanding stock. In addition, on
July 21, 2005, the Company received 9,000,000 warrants (‘‘the warrants’’) which may be exercised
beginning on September 29, 2006, and expire on July 17, 2012. Each warrant is exercisable into
one share of Bliss-tel common stock at an exercise price of 8 baht per share. Beginning on
September 1, 2005, the Company accounted for the Bliss-tel investment as an available-for-sale
security in accordance with FASB Statement No. 115 ‘‘Accounting for Certain Investments in
Debt and Equity Securities’’ whereby the unrealized holding gains and losses on Bliss-tel stock
and warrants are included as a component of accumulated other comprehensive income (loss)
(Note 1(e)). The Company reclassified the Bliss-tel investment to an available-for-sale security
from a trading security, on September 1, 2005, as a result of a change in the Company’s strategy
regarding selling the Bliss-tel stock as the Company was unable to find a buyer in the short term.
Prior to September 1, 2005 and following Bliss-tel’s offering, the Company accounted for this
investment as a trading security. Accordingly, the Company recorded a net gain of $4,971 for the
year ended November 30, 2005, which is included in other income on the accompanying
statement of operations. This gain represents the initial value of the Bliss-tel warrants and the
change in value of the underlying stock and warrant during the period, when the investment was
classified as a trading security.
During the year ended February 28, 2007, the Company sold 2,340,600 shares of Bliss-tel stock
resulting in a $178 loss which is included in other income (loss) on the accompanying
consolidated statement of operations. As of February 28, 2007 the Company owns 27,659,400
shares and 9,000,000 warrants in Bliss-tel with an aggregate fair value of $3,755.
15) Financial and Product Information About Foreign and Domestic Operations
Net sales and long-lived assets by location were as follows:
Net Sales
Year
Ended
February 28,
2007
Three
Months
Ended
February 28,
2006
Years ended
November 30,
2005 2004
United States .......................... $391,154 $ 88,255 $466,512 $486,780
South America ......................... 8,517 2,005 8,224 4,535
Germany .............................. 46,291 8,999 52,039 54,832
Other foreign countries.................. 10,728 3,791 12,941 17,506
Total .................................. $456,690 $103,050 $539,716 $563,653
F-40