Audiovox 1998 Annual Report Download - page 31

(3) Supplemental Cash Flow
Information
The following is supplemental information relating to the
consolidated statements of cash flows:
For the Years Ended
November 30,
1998 1997 1996
Cash paid during the years for:
Interest, net of $801
capitalized in 1998..................... $1,587 $ 1,560 $7,666
Income taxes.................................. $4,496 $23,530 $ 272
During 1998, the Company exercised its option to convert
1,137,212 Japanese Yen (approximately $8,176) of Shintom
Co. Ltd. (Shintom) Convertible Debentures (Shintom
Debentures) into approximately 7,500,000 shares of Shintom
Common Stock (Note 6).
During 1998, a capital lease obligation of $6,340 was
incurred when the Company entered into a building lease
(Note 16).
During 1998, the Company sold its equity collar for
$1,499. The transaction resulted in a net gain on hedge of
available-for-sale securities of $929 which is reflected as a
separate component of stockholders’ equity (Note 17).
As of November 30, 1998 and 1997, the Company
recorded an unrealized holding gain relating to available-
for-sale marketable equity securities, net of deferred income
taxes, of $4,154 and $12,194, respectively, as a separate
component of stockholders’ equity (Note 6).
During January 1997, the Company completed an
exchange of $21,479 of its $65,000 61⁄4% convertible subordi-
nated debentures (Subordinated Debentures) into 2,860,925
shares of Class A Common Stock (Note 10).
During 1997, the Company issued a credit of $1,250 on
open accounts receivable and issued 250,000 shares of its
Class A Common Stock, valued at five dollars per share, in
exchange for a 20% interest in Bliss-tel Company, Limited
(Bliss-tel) (Note 8).
During 1997, the Company contributed $6,475 in net
assets in exchange for a 50% ownership interest in Audiovox
Specialized Applications, LLC (ASA) which resulted in $5,595
of excess cost over fair value of net assets (Note 8).
As of November 30, 1997, the Company recorded an
unrealized holding gain relating to the equity collar, net of
deferred income taxes, of $773 as a separate component of
stockholders’ equity (Note 17).
On February 9, 1996, the Company’s 10.8% Series AA and
11.0% Series BB convertible debentures matured. As of
February 9, 1996, $1,100 of the Series BB convertible debentures
converted into 206,046 shares of Common Stock (Note 10).
On November 25, 1996, the Company completed an
exchange of $41,252 of its Subordinated Debentures into
6,806,580 shares of Common Stock (Note 10).
During 1996, the Company contributed $97 of property,
plant and equipment in exchange for a 50% ownership inter-
est in a newly-formed joint venture, Quintex Communications
West, LLC (Quintex West), (Note 8).
(4) Transactions With Major Suppliers
The Company engaged in transactions with Shintom, a
stockholder who owned approximately 1.7% at November 30,
1996 of the outstanding Class A Common Stock and all of
the outstanding Preferred Stock of the Company at
November 30, 1998 and 1997. The Company has a 30.8%
interest in a Japanese company, TALK Corporation (TALK)
(Note 8).
Transactions with Shintom and TALK include financing
arrangements and inventory purchases which approximated
19%, 29% and 26% for the years ended November 30, 1998,
1997 and 1996, respectively, of total inventory purchases. At
November 30, 1998, the Company had recorded $15 of lia-
bility due to TALK for inventory purchases included in
accounts payable. The Company also has documentary
acceptance obligations payable to TALK as of November 30,
1998 and 1997 (Note 9(b)). At November 30, 1998 and 1997,
the Company had recorded a receivable from TALK in the
amount of $734 and $5,000, respectively, payable with inter-
est (Note 8).
TALK, which holds world-wide distribution rights for prod-
uct manufactured by Shintom, has given the Company
exclusive distribution rights on all wireless personal commu-
nication products for all countries except Japan, China,
Thailand and several mid-eastern countries. The Company
granted Shintom a license agreement permitting the use of
the Audiovox trademark to be used with TALK video cas-
sette recorders sold in Japan from August 29, 1994 to
August 28, 1997, in exchange for royalty fees. For the years
ended November 30, 1997 and 1996, no such royalty fees
were earned by the Company.
Inventory purchases from a major supplier approximated
42%, 32% and 28% of total inventory purchases for the years
ended November 30, 1998, 1997 and 1996, respectively.
Although there are a limited number of manufacturers of its
products, management believes that other suppliers could
provide similar products on comparable terms. A change in
suppliers, however, could cause a delay in product availabil-
ity and a possible loss of sales, which would affect operating
results adversely.
(5) Accounts Receivable
Accounts receivable is comprised of the following:
November 30,
1998 1997
Trade accounts receivable ........................ $142,211 $113,498
Receivables from equity
investments (Note 8).............................. 1,035 1,921
143,246 115,419
Less:
Allowance for doubtful accounts.......... 2,944 3,497
Allowance for cellular deactivations..... 875 1,363
Allowance for co-operative
advertising, cash discounts and
market development funds............... 8,307 5,861
$131,120 $104,698
See Note 17(c) for concentrations of credit risk.
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