Audiovox 1999 Annual Report Download - page 33

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AUDIOVOX
repurchased under the Program at an average price of $7.21 and $7.20
per share, respectively, for an aggregate amount of $3,589 and $4,471,
respectively.
As of November 30, 1998 and 1999, 1,963,480 and 1,598,930 shares
of the Company’s Class A common stock are reserved for issuance under
the Company’s Stock Option and Restricted Stock Plans and 4,167,117 and
3,946,522 for all convertible securities and warrants outstanding at
November 30, 1998 and 1999 (Notes 12 and 15).
Undistributed earnings from equity investments included in retained
earnings amounted to $2,324 and $4,219 at November 30, 1998 and 1999,
respectively.
(15) Stock-Based Compensation and
Stock Warrants
(a) Stock Options
The Company has stock option plans under which employees and non-
employee directors may be granted incentive stock options (ISO’s) and
non-qualified stock options (NQSO’s) to purchase shares of Class A com-
mon stock. Under the plans, the exercise price of the ISO’s will not be less
than the market value of the Company’s Class A common stock or 110%
of the market value of the Company’s Class A common stock on the date
of grant. The exercise price of the NQSO’s may not be less than 50% of
the market value of the Company’s Class A common stock on the date of
grant. The options must be exercisable no later than ten years after the
date of grant. The vesting requirements are determined by the Board of
Directors at the time of grant.
Compensation expense is recorded with respect to the options based
upon the quoted market value of the shares and the exercise provisions at
the date of grant. The Company recorded $31 in compensation expense
for the year ended November 30, 1999. No compensation expense was
recorded for the years ended November 30, 1997 and 1998.
Information regarding the Company’s stock options is summarized below:
Weighted
Average
Number Exercise
of Shares Price
Outstanding at November 30, 1996.............................. 548,750 8.78
Granted...................................................................... 1,260,000 7.09
Exercised ................................................................... — —
Canceled.................................................................... (109,000) 10.95
Outstanding at November 30, 1997.............................. 1,699,750 7.38
Granted...................................................................... 10,000 4.63
Exercised ................................................................... — —
Canceled.................................................................... (16,000) 8.79
Outstanding at November 30, 1998.............................. 1,693,750 7.33
Granted...................................................................... 1,542,500 14.98
Exercised ................................................................... (364,550) 7.64
Canceled.................................................................... (500) 13.00
Outstanding at November 30, 1999 ......................... 2,871,200 11.41
Options exercisable, November 30, 1999.............. 1,181,200 7.51
At November 30, 1998 and 1999, 207,302 and 184,775 shares, respec-
tively, were available for future grants under the terms of these plans.
The per share weighted average fair value of stock options granted
during 1997 was $5.73 on the date of the grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:
risk free interest rate of 6.49%, expected dividend yield of 0.0%,
expected stock volatility of 70% and an expected option life of 10 years.
The per share weighted average fair value of stock options granted
during 1998 was $3.45 on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:
risk free interest rate of 5.7%, expected dividend yield of 0.0%, expected
stock volatility of 60% and an expected option life of 10 years.
The per share weighted average fair value of stock options granted
during 1999 was $9.83 on the date of grant using the Black-Scholes
option-pricing model with the following weighted average assumptions:
risk free interest rate of 5.9%, expected dividend yield of 0.0%, expected
stock volatility of 60% and an expected option life of 10 years.
The Company applies Opinion 25 in accounting for its stock option
grants and, accordingly, no compensation cost has been recognized in the
financial statements for its stock options which have an exercise price
equal to or greater than the fair value of the stock on the date of the
grant. Had the Company determined compensation cost based on the fair
value at the grant date for its stock options under Statement 123, the
Company’s net income and net income per common share would have
been reduced to the pro-forma amounts indicated below:
1997 1998 1999
Net income:
As reported.................................................... $21,022 $2,972 $27,246
Pro-forma....................................................... 18,786 1,336 25,494
Net income per common share (basic):
As reported.................................................... $ 1.11 $ 0.16 $ 1.43
Pro-forma....................................................... 0.99 0.07 1.33
Net income per common share (diluted):
As reported.................................................... $ 1.09 $ 0.16 $ 1.39
Pro-forma....................................................... 0.97 0.07 1.30
Pro-forma net income reflect only options granted after November 30,
1995. Therefore, the full impact of calculating compensation cost for
stock options under Statement 123 is not reflected in the pro-forma net
income amounts presented above because compensation cost is reflected
over the options’ vesting period and compensation cost for options
granted prior to December 1, 1995 was not considered. Therefore, the
pro-forma net income may not be representative of the effects on
reported net income for future years.
Summarized information about stock options outstanding as of
November 30, 1999 is as follows:
Outstanding Exercisable
Weighted Weighted
Average Average Weighted
Exercise Exercise Life Average
Price Number Price Remaining Number Price
Range of Shares of Shares In Years of Shares of Shares
$ 4.63–$ 8.00......... 1,259,700 7.12 7.22 1,059,700 7.02
$ 8.01–$13.00......... 121,500 11.77 5.20 121,500 11.77
$13.01–$15.00......... 1,490,000 15.00 9.78 — —
(b) Restricted Stock Plan
The Company has restricted stock plans under which key employees
and directors may be awarded restricted stock. Total restricted stock out-
standing, granted under these plans, at November 30, 1998 and 1999 was