Audiovox 2003 Annual Report Download - page 126

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2001, 2002 and 2003
(Dollars in thousands, except share and per share data)
The Company also has a 401(k) plan for eligible employees. The Company
matches a portion of the participant's contributions after one year of
service under a predetermined formula based on the participant's
contribution level. The Company's contributions were $160, $114 and
$135 for the year ended November 30, 2001, 2002 and 2003,
respectively. Shares of the Company's Common Stock are not an
investment option in the Savings Plan and the Company does not use
such shares to match participants' contributions.
(f) Deferred Compensation Plan
Effective December 1, 1999, the Company adopted a Deferred
Compensation Plan (the Plan) for a select group of management. The
Plan is intended to provide certain executives with supplemental
retirement benefits as well as to permit the deferral of more of their
compensation than they are permitted to defer under the Profit Sharing
and 401(k) Plan. The Plan provides for a matching contribution equal
to 25% of the employee deferrals up to $20. The Plan is not intended
to be a qualified plan under the provisions of the Internal Revenue
Code. All compensation deferred under the Plan is held by the Company
in an investment trust which is considered an asset of the Company.
The investments, which amounted to $5,280 at November 30, 2003, have
been classified as trading securities and are included in investment
securities on the accompanying consolidated balance sheet as of
November 30, 2003. The return on these underlying investments will
determine the amount of earnings credited to the employees. The
Company has the option of amending or terminating the Plan at any
time. The deferred compensation liability is reflected as a long−term
liability on the accompanying consolidated balance sheet as of
November 30, 2003. Compensation expense and investment income (loss)
are recorded in the accompanying consolidated statements of operations
in connection with this deferred compensation plan.
(17) Lease Obligations
During 1998, the Company entered into a 30−year lease for a building with
its principal stockholder and chief executive officer. A significant
portion of the lease payments, as required under the lease agreement,
consists of the debt service payments required to be made by the principal
stockholder in connection with the financing of the construction of the
building. For financial reporting purposes, the lease has been classified
as a capital lease, and, accordingly, a building and the related obligation
of approximately $6,340 was recorded (Note 20). The effective interest rate
on the capital lease obligation is 8.0%.
(Continued)
125