Audiovox 2008 Annual Report Download - page 27

Strategy
Our objective is to grow our business by acquiring new brands, embracing new technologies, expanding product development and
applying this to a continued stream of new products that should increase gross margins and improve operating income. In addition,
we plan to continue to acquire synergistic companies that would allow us to leverage overhead, penetrate new markets and expand
existing product categories through our business channels.
The key elements of our strategy are as follows:
•Capitalize and increase the Audiovox® family of brands,
•Capitalize on niche product and distribution opportunities in the electronics industry,
•Leverage our distribution network,
•Grow our international presence,
•Pursue strategic and complementary acquisitions,
•Continue to outsource manufacturing to increase operating leverage, and
•Monitor operating expenses.
Critical Accounting Policies and Estimates
General
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of
America. The preparation of these financial statements require us to make certain estimates, judgments and assumptions that we
believe are reasonable based upon the information available. These estimates and assumptions can be subjective and complex and may
affect the reported amounts of assets and liabilities, revenues and expenses reported in those financial statements. As a result, actual
results could differ from such estimates and assumptions. The significant accounting policies and estimates which we believe are the
most critical in fully understanding and evaluating the reported consolidated financial results include the following:
Revenue Recognition
We recognize revenue from product sales at the time of passage of title and risk of loss to the customer either at FOB Shipping Point
or FOB Destination, based upon terms established with the customer. Any customer acceptance provisions, which are related to
product testing, are satisfied prior to revenue recognition. We have no further obligations subsequent to revenue recognition except for
returns of product from customers. We do accept returns of products, if properly requested, authorized and approved. We
continuously monitor and track such product returns and record the provision for the estimated amount of such future returns at point
of sale, based on historical experience and any notification we receive of pending returns.
Sales Incentives
We offer sales incentives to our customers in the form of (1) co-operative advertising allowances; (2) market development funds;
(3) volume incentive rebates and (4) other trade allowances. We account 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”). Except
for other trade allowances, all sales incentives require the customer to purchase our products during a specified period of time. All
sales incentives require customers to claim the sales incentive within a certain time period (referred to as the "claim period") and
claims are settled either by the customer claiming a deduction against an outstanding account receivable or by the customer requesting
a check. All costs associated with sales incentives are classified as a reduction of net sales, and the following is a summary of the
various sales incentive programs:
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Source: AUDIOVOX CORP, 10-K, May 14, 2008