Audiovox 2010 Annual Report Download - page 64

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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)
Inventories by major category are as follows:
February 28, February 28,
2010 2009
Raw materials $ 4,428 $ -
Work in process 300 -
Finished goods 97,989 125,301
Inventory, net $ 102,717 $ 125,301
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 28,
2010 2009
Land $ 338 $ 338
Buildings 6,749 6,749
Property under capital lease 6,981 6,981
Furniture, fixtures and displays 3,741 3,496
Machinery and equipment 8,637 6,791
Construction-in-progress - 57
Computer hardware and software 26,884 22,373
Automobiles 752 661
Leasehold improvements 6,299 5,997
60,381 53,443
Less accumulated depreciation and amortization 38,236 33,540
$ 22,145 $ 19,903
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.
Depreciation and amortization of property, plant and equipment amounted to $5,713, $5,653 and $4,609 for the years
ended February 28, 2010, February 28, 2009 and February 29, 2008, respectively. Included in depreciation and
amortization expense is amortization of computer software costs of $1,015, $1,127 and $812 for the years ended
February 28, 2010, February 28, 2009 and February 29, 2008, respectively. Also included in depreciation expense
is $251 of depreciation related to property under a capital lease for the years ended February 28, 2010, February 28,
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠