Audiovox 2006 Annual Report Download - page 81

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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)
Long-Lived Assets
As of
February 28,
2007
As of
February 28,
2006
United States .................................................. $118,457 $72,594
South America ................................................. 359 1,648
Germany ...................................................... 1,612 1,730
Total .......................................................... $120,428 $75,972
Net sales by product categories for the year ended February 28, 2007, the three months ended
February 28, 2006 and the years ended November 30, 2005 and 2004 were as follows:
Year
Ended
February 28,
2007
Three
Months
Ended
February 28,
2006
Years ended
November 30,
2005 2004
Mobile Electronics...................... $317,355 $ 70,814 $339,355 $403,196
Consumer Electronics ................... 139,335 32,236 200,361 160,457
Total net sales........................ $456,690 $103,050 $539,716 $563,653
16) Related Party Transactions
The Company leases facilities from its principal stockholder (Note 12). In addition, the Company
entered into various transactions with Toshiba Corporation in the prior years (Note 2 and 3).
17) Contingencies
The Company is currently, and has in the past been, a party to various routine legal proceedings
incident to the ordinary course of business. If management determines, based on the underlying
facts and circumstances, that it is probable a loss will result from a litigation contingency and the
amount of the loss can be reasonably estimated, the estimated loss is accrued for. The Company
believes its outstanding litigation matters disclosed below will not have a material adverse effect
on the Company’s financial statements, individually or in the aggregate; however, due to the
uncertain outcome of these matters, the Company disclosed these specific matters below:
In November 2004, several purported double derivative, derivative and class actions were filed in
the Court of Chancery of the State of Delaware, New Castle County challenging approximately
$27,000 made in payments from the proceeds of the Asset Sale to UTStarcom, Inc. These actions
were subsequently consolidated into a single derivative complaint (the ‘‘Complaint’’), In re
Audiovox Corporation Derivative Litigation. The Complaint challenges the payment of $16,000 to
Mr. Christopher pursuant to a Personally Held Intangibles Agreement, an additional $4,000 to
Mr. Christopher pursuant to an Agreement and General Release, $1,916 to Mr. Shalam pursuant
to an amendment to his Long-Term Incentive Award, $5,000 distributed to ACC employees other
than Mr. Christopher and the extension of certain options to Mr. Christopher. The Complaint
alleges that: (i) the payments should be rescinded on grounds including, inter alia, material
misrepresentation, breach of fiduciary duty and mistake, (ii) the recipients of the various
payments were unjustly enriched, and (iii) the directors of Audiovox breached their fiduciary
duties to Audiovox and its shareholders. This matter has been settled in principle for an
estimated payment of $6,750 to the Company (less plaintiffs’ legal fees, costs of notice and
mailing, etc., all to be determined). The settlement will not become final until a hearing and
Court of Chancery approval in May 2007. As this represents a gain contingency, these amounts
will not be recorded until received and such amount will be recorded with in discontinued
operations when received.
F-41