Audiovox 2008 Annual Report Download - page 121

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Audiovox Specialized Applications, LLC And Subsidiary
(A Limited Liability Company)
Notes To Financial Statements
All sales transactions are denominated in U.S. dollars.
Sales incentives:
The Company offers sales incentives to its customers primarily in the form of co-operative advertising allowances and rebates. The
Company accounts for sales incentives in accordance with EITF 01-9, “Accounting for Consideration Given by a Vendor to a
Customer (Including a Reseller of Vendor’s Products)” (EITF 01-9). All significant sales incentives require the customer to purchase
the Company’s products during a specified period of time. Claims are settled either by the customer claiming a deduction against an
outstanding account receivable or by the customer requesting a check. Rebates and co-op advertising allowances offered to customers
require that product be purchased during a specified period of time. The amount offered is generally based upon a fixed percentage of
sales revenue to the customer. Since the rebate percentage is generally fixed, the Company records the related rebate at the time of
sale.
Members' equity:
In accordance with the generally accepted method of presenting limited liability company financial statements, the accompanying
financial statements do not include other corporate assets and liabilities of the members, including their obligation for income taxes on
the net income of the limited liability company nor any provision for income tax expense.
It is the Company's intent to distribute funds to members to cover their income tax liabilities. No provision has been made for any
material distributions which may be made subsequent to the balance sheet date.
Subsequent to November 30, 2007, the Company paid approximately $1,010,000 of member distributions.
The LLC operating agreement does not provide for separate classes of ownership. The members share equally in all LLC events and
the related member accounts are considered equal on a fair value basis.
Cash and cash equivalents:
For purposes of the statement of cash flows, the Company considers investments in various repurchase agreements with its bank,
money market accounts and highly liquid debt instruments purchased with a maturity of three months or less to be cash
equivalents. Cash equivalents amounted to approximately $979,000 and $888,000 for the years ended November 30, 2007 and 2006
respectively.
The Company maintains its cash accounts in amounts which, at times, may be in excess of insurance limits provided by the Federal
Deposit Insurance Corporation.
Available-for-sale securities:
Available-for-sale securities consist of investments in marketable debt securities. Debt securities consist primarily of obligations of
municipalities.
7
Source: AUDIOVOX CORP, 10-K, May 14, 2008