Audiovox 2008 Annual Report Download - page 126

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Audiovox Specialized Applications, LLC And Subsidiary
(A Limited Liability Company)
Notes To Financial Statements
Note 3. Leasehold Improvements and Equipment
The cost of leasehold improvements and equipment and the related accumulated depreciation at November 30, 2007 and 2006 are as
follows:
2007 2006
Leasehold improvements $ 1,012,313 $ 798,267
Machinery and equipment 1,219,853 978,244
Tooling and molding 847,807 754,954
Transportation equipment 402,707 342,155
Office furniture and fixtures 374,282 359,377
Computer equipment 871,681 761,106
Booth displays 215,965 226,307
Construction in progress 154,309 74,290
5,098,917 4,294,700
Less accumulated depreciation 2,976,337 2,444,612
$ 2,122,580 $ 1,850,088
Note 4. Pledged Assets and Notes Payable
The terms of a loan agreement with a bank permit the Company to borrow a maximum of $17,000,000, subject to a borrowing base
determined by eligible accounts receivable and inventories as defined by the agreement. At November 30, 2007, no amount was
outstanding under this agreement. Borrowings under the agreement bear interest at prime minus 1.25% or LIBOR plus an applicable
margin, at the Company's option, are collateralized by accounts receivable, inventories, and equipment, and are due on demand.
Note 5. Major Vendors
For the years ended November 30, 2007, 2006, and 2005, the Company purchased approximately 65%, 56% and 56% respectively of
its products for resale from five vendors, two of which were the same in all three years.
Note 6. Transactions with Related Parties and Lease Commitments
The Company is affiliated with various entities through common ownership by Audiovox. Transactions with Audiovox and related
entities for the years ended November 30, 2007, 2006, and 2005 are approximately as follows:
2007 2006 2005
Net product sales $ 144,000 $ 210,000 $ 573,000
Royalty revenue 831,000 649,000 871,000
Purchases 879,000 1,248,000 1,404,000
12
Source: AUDIOVOX CORP, 10-K, May 14, 2008