Audiovox 2008 Annual Report Download - page 77

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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)
On December 4, 2007, the Financial Accounting Standards Board (“FASB”) issued Statement No. 141(R), Business
Combinations (“Statement No. 141(R)”) and Statement No. 160, Accounting and Reporting of Noncontrolling Interests
in Consolidated Financial Statements, an amendment of ARB No. 51 (“Statement No. 160”). These new standards will
significantly change the financial accounting and reporting of business combination transactions and noncontrolling (or
minority) interests in consolidated financial statements. Issuance of these standards is also noteworthy in that they
represent the culmination of the first major collaborative convergence project between the International Accounting
Standards Board and the FASB. Statement No. 141(R) is required to be adopted concurrently with Statement No. 160
and is effective for business combination transactions for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008. Early adoption is prohibited. Application of
Statement No. 141(R) and Statement No. 160 is required to be adopted prospectively, except for certain provisions of
Statement No. 160, which are required to be adopted retrospectively. Business combination transactions accounted for
before adoption of Statement No. 141(R) should be accounted for in accordance with Statement No. 141 and that
accounting previously completed under Statement No. 141 should not be modified as of or after the date of adoption of
Statement No. 141(R). The Company is currently evaluating the impact of Statement No. 141(R) and Statement No. 160,
but does not expect the adoption of these pronouncements to have a material impact on the Company’s financial position
or results of operations.
v) Tax interest and penalties
The Company classifies interest and penalties associated with income taxes as a component of income tax expense
(benefit) on the consolidated statement of operations.
2) Discontinued Operations
a) Sale of Audiovox Malaysia
On November 7, 2005, the Company completed the sale of its majority-owned subsidiary, Audiovox Malaysia (“AVM”),
to the then current minority interest stockholder. The Company discontinued ownership of AVM due to increased
competition from Original Equipment Manufacturers and deteriorating credit quality of local customers. The Company
sold its remaining equity in AVM in exchange for a $550 face-value promissory note ($404 after discount) payable in 60
equal monthly installments with an effective interest rate of 6.2%. As a result of the sale of AVM, the Company was
released from all of its Malaysian liabilities, including bank obligations, and recorded the following loss on the sale for
the year ended November 30, 2005:
Purchase Price $ 404
Equity (after discount) of AVM at time of sale (1,418)
Non-cash cumulative translation losses (1,365)
Income tax benefit 300
Loss on sale of AVM, included in discounted operations $ (2,079)
F-23
Source: AUDIOVOX CORP, 10-K, May 14, 2008