Audiovox 2000 Annual Report Download - page 34

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(13) Notes Payable
A summary of notes payable follows:
November 30,
1999 2000
Note payable due to Vitec (Note 5(b)) — $4,514
Note payable due to Pearl (Note 5(b)) — 1,354
—$5,868
The notes bear interest at 5% and are payable in equal monthly install-
ments over a six-month period beginning in October 2000. The Company
exercised its option to delay repayment of the notes for an additional six
months, therefore, payment commences April 2001.
(14) Long-Term Debt
A summary of long-term debt follows:
November 30,
1999 2000
Convertible subordinated debentures:
61/4%, due 2001, convertible at $17.70 per share $1,020 $486
Subordinated note payable 4,912 —
5,932 486
Less current installments — 486
$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 agree-
ment. The subordinated debentures are convertible into shares of the
Company’s Class A common stock, par value $.01 per share at an initial
conversion price of $17.70 per share, subject to adjustment under certain
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 17(d)).
During fiscal 1999 and 2000, holders of the Company’s $65,000 subordi-
nated convertible debentures exercised their option to convert $1,249 and
$534 debentures for 70,565 and 30,170 shares, respectively, of the
Company’s Class A common stock. As a result of these conversions and
the conversions that took place prior to 1999, the remaining subordinated
debentures are $1,020 and $486 as of November 30, 1999 and 2000,
respectively.
On October 20, 1994, the Company issued a note payable for 500,000
Japanese yen (approximately $4,912 on November 30, 1999) to finance its
investment in TALK (Note 10). The note was scheduled to be repaid on
October 20, 2004 and bore interest at 4.1%. The note could be repaid by
cash payment or by giving 10,000 shares of its TALK investment to the
lender. The lender had an option to acquire 2,000 shares of TALK held by
the Company in exchange for releasing the Company from 20% of the
face value of the note at any time after October 20, 1995. In October
2000, the Company exercised its option to repay the note by returning the
10,000 shares of its TALK investment to the lender. In connection with the
transaction, the Company recognized an extraordinary gain in the amount
of $2,189 representing the difference between the loan, which approxi-
mated $4,578, and the Company’s recorded investment in TALK, which
approximated $2,389, at the time of the transaction.
(15) Income Taxes
The components of income (loss) before the provision for income taxes
are as follows:
November 30,
1998 1999 2000
Domestic Operations $ 5,380 $42,668 $37,119
Foreign Operations (1,579) 55 2,846
$ 3,801 $42,723 $39,965
Total income tax expense (benefit) was allocated as follows:
November 30,
1998 1999 2000
Statement of income $ 829 $15,477 $14,925
Stockholders’ equity:
Unrealized holding gain (loss) on
investment securities recognized for
financial reporting purposes (4,928) 3,540 (6,202)
Unrealized holding gain (loss) on equity
collar recognized for financial
reporting purposes (1,043) — 570
Income tax benefit of employee
stock option exercises — (1,101) (1,270)
Total income tax expense (benefit) $(5,142) $17,916 $ 8,023
The provision for (benefit of) income taxes is comprised of:
Federal Foreign State Total
1998:
Current $ 1,499 $(119) $ 351 $ 1,731
Deferred (819) — (83) (902)
$ 680 $(119) $ 268 $ 829
1999:
Current $14,565 $(116) $1,593 $16,042
Deferred (118) (431) (16) (565)
$14,447 $(547) $1,577 $15,477
2000:
Current $18,471 $ 656 $1,832 $20,959
Deferred (4,481) (704) (849) (6,034)
$13,990 $ (48) $ 983 $14,925
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)