Audiovox 1999 Annual Report Download - page 30

AUDIOVOX
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Outstanding obligations under the credit agreement at November 30,
1998 and 1999 were as follows:
November 30,
1998 1999
Revolving Credit Notes........................................................ $ 2,500 $ 47,007
Eurodollar Notes.................................................................. 15,000 55,000
$17,500 $102,007
Interest rates are as follows: revolving credit notes at .50% above the
prime rate, which was approximately 8.5%, 7.75% and 8.5% at
November 30, 1997, 1998 and 1999, respectively, and Eurodollar Notes at
1.50% above the Libor rate which was approximately 5.97%, 5.62% and
6.48% at November 30, 1997, 1998 and 1999, respectively. The maximum
commitment fee on the unused portion of the line of credit is .50% as of
November 30, 1999.
The credit agreement contains several covenants requiring, among
other things, minimum levels of pre-tax income and minimum levels of net
worth and working capital. Additionally, the agreement includes restric-
tions and limitations on payments of dividends, stock repurchases and
capital expenditures. During 1998, the Company violated its covenant
regarding maintenance of pre-tax income for the fiscal quarter and six
months ended May 31, 1998 which was waived.
The Company also has revolving credit facilities in Malaysia
(Malaysian Credit Agreement) to finance additional working capital
needs. As of November 30, 1998 and 1999, the available line of credit for
direct borrowing, letters of credit, bankers’ acceptances and other forms
of credit approximated $8,195 and $8,158, respectively. The credit facili-
ties are partially secured by one standby letter of credit totaling $1,300
and two standby letters of credit totaling $5,320, by the Company and
payable upon demand or upon expiration of the standby letters of credit
on January 15, 2000 and August 31, 2000, respectively. The obligations of
the Company under the Malaysian Credit Agreement are secured by the
property and building owned by Audiovox Communications Sdn. Bhd.
Outstanding obligations under the Malaysian Credit Agreement at
November 30, 1998 and 1999 were approximately $4,711 and $5,843,
respectively. At November 30, 1999 interest on the credit facility ranged
from 7.4% to 9.6%. At November 30, 1998, interest on the credit facility
ranged from 9.5% to 12.0%. At November 30, 1997, interest on the credit
facility ranged from 8.25% to 11.10%.
As of November 30, 1998 and 1999, Audiovox Venezuela had notes
payable of 1,500,000 and 1,275,500 Venezuelan Bolivars (approximately
$2,617 and $2,000 at November 30, 1998 and 1999) outstanding to a
bank. Interest on the notes payable is 10.7%. The notes are scheduled to
be repaid within one year and, as such, are classified as short term. The
notes payable are secured by a standby letter of credit in the amount of
$3,000, by the Company and is payable upon demand or upon expiration
of the standby letter of credit on June 30, 2000.
The maximum month-end amounts outstanding under the credit
agreement and Malaysian Credit Agreement borrowing facilities during
the years ended November 30, 1997, 1998 and 1999 were $28,420,
$42,975 and $110,595, respectively. Average borrowings during the years
ended November 30, 1997, 1998 and 1999 were $18,723, $26,333 and
$29,835, respectively, and the weighted average interest rates were
7.7%, 8.7% and 9.6%, respectively.
During 1999, the Company entered into a wholesale financing agree-
ment with a financial institution to finance up to $15,000 of inventory pur-
chases of a particular supplier. Amounts outstanding under this
agreement were $8,150 at November 30, 1999. Borrowings under the
agreement are secured by the inventory purchased. Payments on the bor-
rowings are due within 30 days. Interest is payable after stipulated due
dates at a rate of prime plus 1 1/2%, which was 10% at November 30,
1999. The agreement contains several covenants.
(b) Documentary Acceptances
The Company had various unsecured documentary acceptance lines of
credit available with suppliers to finance inventory purchases. The
Company does not have written agreements specifying the terms and
amounts available under the lines of credit. At November 30, 1998 and
1999, $3,911 and $1,994, respectively, of documentary acceptances were
outstanding of which all was due to TALK.
The maximum month-end documentary acceptances outstanding dur-
ing the years ended November 30, 1997, 1998 and 1999 were $4,162,
$4,809 and $5,033, respectively. Average borrowings during the years
ended November 30, 1997, 1998 and 1999 were $3,199, $3,885 and
$3,755, respectively, and the weighted average interest rates, including
fees, were 6.3%, 6.6% and 6.1%, respectively.
(12) Long-Term Debt
A summary of long-term debt follows:
November 30,
1998 1999
Convertible subordinated debentures:
61⁄4%, due 2001, convertible at $17.70 per share ................ $2,269 $1,020
Subordinated note payable....................................................... 4,062 4,912
6,331 5,932
Less current installments.......................................................... — —
$6,331 $5,932
On March 15, 1994, the Company completed the sale of $65,000,
61⁄4% subordinated debentures due 2001 and entered into an indenture
agreement. The subordinated debentures are convertible into shares of
the Company’s Class A common stock, par value $.01 per share at an ini-
tial conversion price of $17.70 per share, subject to adjustment under cer-
tain circumstances. The indenture agreement contains various covenants.
The bonds are subject to redemption by the Company in whole, or in part,
at any time after March 15, 1997, at certain specified amounts. On May 9,
1995, the Company issued warrants to certain beneficial holders of these
subordinated debentures (Note 15(d)).
On November 25, 1996, the Company completed an exchange of
$41,252 of its $65,000 Subordinated Debentures for 6,806,580 shares of
Class A Common Stock (Exchange). As a result of the Exchange, a charge
of $26,318 was recorded. The charge to earnings represents (i) the differ-
ence in the fair market value of the shares issued in the Exchange and the
fair market value of the shares that would have been issued under the
terms of the original conversion feature plus (ii) a write-off of the debt
issuance costs associated with the Subordinated Debentures (Note 1(h))
plus (iii) expenses associated with the Exchange offer. The Exchange
resulted in taxable income due to the difference in the face value of the
bonds converted and the fair market value of the shares issued and, as
Notes to Consolidated
FINANCIAL STATEMENTS (continued) Audiovox Corporation and Subsidiaries