Audiovox 1998 Annual Report Download - page 32

(6) Investment Securities
As of November 30, 1998, the Company’s investment secu-
rities consist primarily of 1,730,000 shares of CellStar Common
Stock, 1,904,000 shares of Shintom Common Stock and
662,788 Japanese Yen of Shintom Debentures, respectively,
which were classified as available-for-sale marketable securi-
ties. As of November 30, 1997, the Company’s investment
securities consist primarily of 1,730,000 shares of CellStar
Common Stock (adjusted for the CellStar 2 for 1 stock split
that occurred during 1998). The cost, gross unrealized gains
and losses and fair value of the investment securities available-
for-sale as of November 30, 1998 were as follows:
Gross Gross
Unrealized Unrealized
Holding Holding Fair
Cost Gain Loss Value
CellStar
Common Stock............... $ 2,715 $8,422 — $11,137
Shintom
Common Stock............... 3,132 — $1,723 1,409
Shintom Debentures.......... 4,543 — — 4,543
$10,390 $8,422 $1,723 $17,089
The Shintom Debentures mature on September 30, 2002.
A related deferred tax liability of $2,546 and $7,473 was
recorded at November 30, 1998 and 1997, respectively, as a
reduction to the unrealized holding gain included as a sepa-
rate component of stockholders’ equity.
During 1998, the Company purchased 400,000 Japanese
Yen (approximately $3,132) of Shintom Debentures. The
Company exercised its option to convert the Shintom
Debentures into shares of Shintom Common Stock. These
shares are included in the Company’s available-for-sale
marketable securities at November 30, 1998.
During 1998, the Company purchased an additional
400,000 Japanese Yen (approximately $2,732) of Shintom
Debentures. The Company exercised its option to convert
the Shintom Debentures into shares of Shintom Common
Stock. The Company sold the Shintom Common Stock
yielding net proceeds of $3,159 and a gain of $427.
During 1998, the Company purchased 1,000,000 Japanese
Yen (approximately $6,854) of Shintom Debentures. The
Company exercised its option to convert 337,212 Japanese
Yen of Shintom Debentures into shares of Shintom Common
Stock. The Company sold the Shintom Common Stock
yielding net proceeds of $2,671 and a gain of $360. The
remaining debentures of 662,788 Japanese Yen are included
in the Company’s available-for-sale marketable securities at
November 30, 1998.
During 1997, the Company sold 1,835,000 shares of CellStar
Common Stock yielding net proceeds of approximately
$45,937 and a gain, net of taxes, of approximately $23,232.
(7) Property, Plant and Equipment
A summary of property, plant and equipment, net, is
as follows:
November 30,
1998 1997
Land............................................................. $ 363 $ 363
Buildings ..................................................... 1,605 2,099
Property under capital lease..................... 7,141 —
Furniture, fixtures and displays................. 3,184 3,418
Machinery and equipment........................ 5,023 4,341
Computer hardware and software............ 9,767 14,307
Automobiles............................................... 633 800
Leasehold improvements.......................... 3,943 3,510
31,659 28,838
Less accumulated depreciation
and amortization.................................... (13,831) (20,285)
$ 17,828 $ 8,553
The amortization of the property under capital lease is
included in depreciation and amortization expense.
Computer software includes approximately $3,149 and
$1,672 of unamortized costs as of November 30, 1998 and
1997, respectively, related to the acquisition and installation
of management information systems for internal use.
Depreciation and amortization of plant and equipment
amounted to $2,089, $1,503 and $2,044 for the years ended
November 30, 1998, 1997 and 1996, respectively. Included in
accumulated depreciation and amortization is amortization
of computer software costs of $350, $19 and $364 for the
years ended November 30, 1998, 1997 and 1996, respec-
tively. Included in accumulated depreciation and amortiza-
tion is amortization of property under capital lease of $160
for the year ended November 30, 1998.
(8) Equity Investments
As of November 30, 1998, the Company had a 30.8% owner-
ship interest in TALK. As of November 30, 1998, the Company’s
72% owned subsidiary, Audiovox Communications, had a
29% ownership interest in Avx Posse (Malaysia) Sdn. Bhd.
(Posse) which monitors car security commands through a
satellite based system in Malaysia. As of November 30,
1998, the Company had a 20% ownership interest in Bliss-tel
which distributes cellular telephones and accessories in
Thailand. Additionally, the Company had 50% non-control-
ling ownership interests in five other entities: Protector
Corporation (Protector) which acts as a distributor of chemi-
cal protection treatments; ASA which acts as a distributor to
specialized markets for RV’s and van conversions, of televi-
sions and other automotive sound, security and accessory
products; Audiovox Pacific Pty., Limited (Audiovox Pacific)
which distributes cellular telephones and automotive sound
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
AUDIOVOX CORPORATION AND SUBSIDIARIES