Audiovox 1997 Annual Report Download - page 29

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.
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. Compensation expense for the year
ended November 30, 1996 and 1995 was $97 and $113, respectively.
No compensation expense was recorded for the year ended
November 30, 1997.
Information regarding the Company’s stock option plans is sum-
marized below:
Weighted
Average
Number Exercise
of Shares Price
Outstanding at
November 30, 1994 313,000 11.72
Granted 279,000 5.88
Exercised – –
Canceled (33,750) 11.76
Outstanding at
November 30, 1995 558,250 8.80
Granted – –
Exercised – –
Canceled (9,500) 10.17
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
Options exercisable,
November 30, 1997 166,750 12.10
At November 30, 1997 and 1996, 190,250 and 341,250 shares,
respectively, were available for future grants under the terms of these
plans.
The Company adopted SFAS No. 123 in fiscal 1997. The Company
has elected to disclose the pro forma net earnings and earnings per
share as if such method had been used to account for stock-based
compensation costs as described in SFAS No. 123.
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. No options were granted in 1996.
The Company applies APB Opinion No. 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 com-
pensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company’s net income (loss) and
net income (loss) per common share would have been reduced to the
proforma amounts indicated below:
1997 1996
Net income (loss):
As reported $21,022 $(26,469)
Pro forma 18,786 (26,469)
Net income (loss) per common share (primary):
As reported $ 1.09 $ (2.82)
Pro forma 0.97 (2.82)
Net income (loss) per common share (fully diluted):
As reported 1.05 –
Pro forma 0.94 –
Proforma net earnings reflect only options granted in 1997 and
1996. Therefore, the full impact of calculating compensation cost for
stock options under SFAS No. 123 is not reflected in the proforma net
earnings 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.
Summarized information about stock options outstanding as of
November 30, 1997 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
$5.50-$8.00 1,533,000 6.87 9.22 – –
$8.01-$13.00 166,750 12.10 6.50 166,750 $12.10
1,699,750 166,750
(b) Restricted Stock Plan
The Company has restricted stock plans under which key employ-
ees and directors may be awarded restricted stock. Total restricted
stock outstanding, granted under these plans, at November 30, 1997
and 1996 was 78,500 and 79,500, respectively.
The per share weighted average fair value of restricted stock
awards granted in 1995 was $5.88 on the date of the grant. The fair
value was determined to be the fair market value of the Company’s
Class A Common Stock on the date of the grant. No restricted stock
awards were granted in 1997 or 1996.
Compensation expense for the performance accelerated shares is
recorded based upon the quoted market value of the shares on the
date of grant. Compensation expense for the performance restricted
shares is recorded based upon the quoted market value of the shares
on the balance sheet date. Compensation expense for these grants for
the years ended November 30, 1997, 1996 and 1995 were $135, $200
and $127, respectively.
AUDIOVOX CORPORATION AND SUBSIDIARIES
N o t e s t o C o n s o l i d a t e d F i n a n c i a l S t a t e m e n t s
(continued)
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