Audiovox 2009 Annual Report Download - page 70

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements
February 28, 2009
(Dollars in thousands, except share and per share data)
i) Inventory
The Company values its inventory (finished goods) at the lower of the actual cost to purchase (primarily on a weighted
moving-average basis) and/or the current estimated market value of the inventory less expected costs to sell the
inventory. The Company regularly reviews inventory quantities on-hand and records a provision for excess and obsolete
inventory based primarily from selling prices, indications from customers based upon current price negotiations and
purchase orders. The Company's industry is characterized by rapid technological change and frequent new product
introductions that could result in an increase in the amount of obsolete inventory quantities on-hand. The Company
recorded inventory write-downs of $13,818, $4,925 and $2,977 for the years ended February 28, 2009, February 29,
2008 and February 28, 2007, respectively.
The Company's estimates of excess and obsolete inventory may prove to be inaccurate, in which case the Company may
have understated or overstated the provision required for excess and obsolete inventory. Although the Company makes
every effort to ensure the accuracy of its forecasts of future product demand, any significant unanticipated changes in
demand, price or technological developments could have a significant impact on the value of the Company's inventory
and reported operating results.
j) Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Property under a capital lease is stated at
the present value of minimum lease payments. Major improvements are capitalized and minor replacements,
maintenance and repairs are charged to expense as incurred. Upon retirement or disposal of assets, the cost and related
accumulated depreciation are removed from the consolidated balance sheets.
A summary of property, plant and equipment, net, are as follows:
February 28, February 29,
2009 2008
Land $ 338 $ 338
Buildings 6,749 6,667
Property under capital lease 6,981 6,981
Furniture, fixtures and displays 3,496 3,049
Machinery and equipment 6,791 6,515
Construction-in-progress 57 26
Computer hardware and software 22,373 20,134
Automobiles 661 1,274
Leasehold improvements 5,997 5,898
53,443 50,882
Less accumulated depreciation and amortization 33,540 29,332
$ 19,903 $ 21,550
Depreciation is calculated on the straight-line method over the estimated useful lives of the assets as follows:
Buildings 20-30 years
Furniture, fixtures and displays 5-10 years
Machinery and equipment 5-10 years
Computer hardware and software 3-5 years
Automobiles 3 years
Leasehold improvements are amortized over the shorter of the lease term or estimated useful life of the asset. Assets
acquired under capital leases are amortized over the term of the respective lease. Capitalized computer software costs
obtained for internal use are amortized on a straight-line basis.
50
Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Research℠