Audiovox 2008 Annual Report Download - page 65

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 29, 2008
(Dollars in thousands, except share and per share data)
Depreciation and amortization of property, plant and equipment amounted to $4,609, $3,599, $893 and $3,399 for the
years ended February 29, 2008, February 28, 2007, the three months ended February 28, 2006 and the year ended
November 30, 2005, respectively. Included in depreciation and amortization expense is amortization of computer
software costs of $812, $334, $65 and $179 for the years ended February 29, 2008, February 28, 2007, the three months
ended February 28, 2006 and the year ended November 30, 2005, respectively. Also included in depreciation expense is
$251 of depreciation related to property under a capital lease for the year ended February 29, 2008, $240 for the years
ended February 28, 2007 and November 30, 2005, and $60 for the three months ended February 28, 2006.
Accumulated depreciation and amortization includes $2,389 and $2,138 related to property under a capital lease at
February 29, 2008 and February 28, 2007, respectively. Computer software includes approximately $3,302 and $1,240
of unamortized costs as of February 29, 2008 and February 28, 2007, respectively, related to the acquisition and
installation of management information systems for internal use.
j) Goodwill and Other Intangible Assets
Goodwill and other intangible assets consist of the excess over the fair value of assets acquired (goodwill) and other
intangible assets (patents, contracts, trademarks/tradenames and customer relationships).
Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”)
requires that goodwill and intangible assets with indefinite useful lives be tested for impairment at least annually or more
frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of a reporting
unit below its carrying amount. Equity method goodwill, which amounted to $4,602 at February 29, 2008 and February
28, 2007, is evaluated for impairment under Accounting Principles Board No. 18, "The Equity Method of Accounting for
Investments in Common Stock", as amended. SFAS No. 142 also requires that intangible assets with estimable useful
lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with
Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" (“SFAS No. 144”).
For intangible assets with indefinite lives, including goodwill, the Company performed its annual impairment test, as of
the end of the fiscal fourth quarter, which indicated no impairment is required. The cost of other intangible assets with
definite lives are amortized on a straight-line basis over their respective lives.
Goodwill
The change in the carrying amount of goodwill is as follows:
February 29, February 28,
2008 2007
Net beginning balance $ 17,514 $ 16,067
Technuity purchase price allocation (see Note 3) 5,913 -
Purchase of minority interest (see Note 16) - 1,447
Net ending balance $ 23,427 $ 17,514
F-13
Source: AUDIOVOX CORP, 10-K, May 14, 2008