Audiovox 2010 Annual Report Download - page 60

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 28, 2010
(Dollars in thousands, except share and per share data)
The carrying amount of the Company's accounts receivable, short-term debt, accounts payable, accrued expenses, bank
obligations and long-term debt approximates fair value because of (i) the short-term nature of the financial instrument;
(ii) the interest rate on the financial instrument being reset every quarter to reflect current market rates; (iii) the stated or
implicit interest rate approximates the current market rates or are not materially different than market rates and (iv) are
based on quoted prices in active markets.
f) Investment Securities
In accordance with the Company's investment policy, all long and short-term investment securities are invested in
"investment grade" rated securities. As of February 28, 2010, the Company had the following investments:
February 28, 2010 February 28, 2009
Unrealized Unrealized
Cost holding Fair Cost holding Fair
Basis gain/(loss) Value Basis gain/(loss) Value
Short-Term Investments
Foreign currency contract
(a) $ 752 $ - $ 752 $ - $ - $ -
Long-Term Investments
Marketable Securities
Trading
Deferred
Compensation 3,157 - 3,157 2,542 - 2,542
Available-for-sale
Cellstar - 15 15 - 63 63
Bliss-tel 2,825 (2,745) 80 3,825 (3,575) 250
Auction Rate 4,550 (823) 3,727 4,550 (1,135) 3,415
Held-to-maturity
Investment 7,445 (335) 7,110 - - -
Total Marketable Securities 17,977 (3,888) 14,089 10,917 (4,647) 6,270
Other Long-Term
Investment 1,803 - 1,803 1,474 - 1,474
Total Long-Term
Investments 19,780 (3,888) 15,892 12,391 (4,647) 7,744
Total Investments $ 20,532 $ (3,888) $ 16,644 $ 12,391 $ (4,647) $ 7,744
(a) The foreign currency contract is recorded in prepaid expenses and other current assets on the Company’s balance
sheet.
Short-Term Investments
Short-term investments include an investment in forward exchange contracts. In the fourth quarter of Fiscal 2010, our
German subsidiary entered into certain forward contracts to hedge the currency exposure for its U.S. dollar denominated
assets, liabilities and future commitments. The Company minimized the risk of nonperformance on the forward contract
by transacting with a major financial institution in the European market. The gains or losses associated with these
foreign exchange contracts are evaluated and recorded, as applicable, on the measurement date as the contracts are not
specifically connected to any assets, liabilities or future commitments. As of February 28, 2010, the notional amount of
foreign exchange contracts was $14,000. A transaction gain of $753 was recorded during the fourth quarter of Fiscal
2010.
Long-Term Investment Components
Trading Securities
The Company’s trading securities consist of mutual funds, which are held in connection with the Company’s deferred
compensation plan (see Note 10). Unrealized holding gains and losses on trading securities offset those associated with
the corresponding deferred compensation liability.
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠