Audiovox 1998 Annual Report Download - page 34

bankers’ acceptances were 2% above the bankers’ accep-
tance rate which was approximately 6.25% at November 30,
1995. Pursuant to an amendment on February 9, 1996, the
interest rates were increased to the following: revolving
credit notes at .50% above the prime rate, which was
approximately 7.75%, 8.5% and 8.25% at November 30,
1998, 1997 and 1996, respectively, and Eurodollar Notes at
2.75% above the Libor rate which was approximately 5.62%,
5.97% and 5.5% at November 30, 1998, 1997 and 1996,
respectively. Interest on bankers’ acceptances remained at
2% above the bankers’ acceptance rate which was approxi-
mately 5.5%, 5.77% and 5.75% at November 30, 1998, 1997
and 1996, respectively. The maximum commitment fee on
the unused portion of the line of credit is .25% as of
November 30, 1998.
The credit agreement contains several covenants requiring,
among other things, minimum levels of pre-tax income and
minimum levels of net worth and working capital. Additionally,
the agreement includes restrictions and limitations on pay-
ments of dividends, stock repurchases and capital expendi-
tures. During 1998, the Company violated its covenant
regarding maintenance of pre-tax income for the fiscal quar-
ter and six months ended May 31, 1998 which was waived.
The Company also has a revolving credit facility with a
Malaysian bank (Malaysian Credit Agreement) to finance
additional working capital needs. As of November 30, 1998
and 1997, the available line of credit for direct borrowing,
letters of credit, bankers’ acceptances and other forms of
credit approximated $8,195 and $8,017, respectively. The
credit facility is partially secured by two standby letters of
credit totaling $5,320, by the Company and is payable upon
demand or upon expiration of the standby letters of credit
on August 31, 1999. The obligations of the Company under
the Malaysian Credit Agreement are secured by the prop-
erty and building owned by Audiovox Communications.
Outstanding obligations under the Malaysian Credit
Agreement at November 30, 1998 and 1997 were approxi-
mately $4,711 and $4,146, respectively. At November 30,
1998, interest on the credit facility ranged from 9.5% to
12.0%. At November 30, 1997, interest on the credit facility
ranged from 8.25% to 11.10%.
On October 28, 1997, Audiovox Venezuela issued a note
payable to a Venezuelan bank in the amount of 994,000
Venezuelan Bolivars (approximately $1,986 at November 30,
1997) to finance additional working capital needs. Interest
on the note payable is 20%. The note was repaid in 1998. As
of November 30, 1998, Audiovox Venezuela has notes
payable of 1,500,000 Venezuelan Bolivars (approximately
$2,617 at November 30, 1998) outstanding. Interest on the
notes payable is 50%. The notes are scheduled to be repaid
within one year and, as such, are classified as short term.
The notes payable are secured by a standby letter of credit
in the amount of $4,000, by the Company and is payable
upon demand or upon expiration of the standby letter of
credit on June 30, 1999.
The maximum month-end amounts outstanding under
the credit agreement and Malaysian Credit Agreement bor-
rowing facilities during the years ended November 30, 1998,
1997 and 1996 were $42,975, $28,420 and $44,213, respec-
tively. Average borrowings during the years ended
November 30, 1998, 1997 and 1996 were $26,333, $18,723
and $33,662, respectively, and the weighted average interest
rates were 8.7%, 7.7% and 8.9%, respectively.
(b) Documentary Acceptances
During 1998, the Company had various unsecured docu-
mentary acceptance lines of credit available with suppliers
to finance inventory purchases. The Company does not have
written agreements specifying the terms and amounts avail-
able under the lines of credit. At November 30, 1998, $3,911
of documentary acceptances were outstanding of which all
was due to TALK.
The maximum month-end documentary acceptances out-
standing during the years ended November 30, 1998, 1997
and 1996 were $4,809, $4,162 and $9,792, respectively.
Average borrowings during the years ended November 30,
1998, 1997 and 1996 were $3,885, $3,199 and $5,845, respec-
tively, and the weighted average interest rates, including
fees, were 6.6%, 6.3% and 5.1%, respectively.
(10) Long-Term Debt
A summary of long-term debt follows:
November 30,
1998 1997
Convertible subordinated debentures:
61⁄4%, due 2001, convertible at
$17.70 per share..................................... $2,269 $2,269
Subordinated note payable .......................... 4,062 3,922
6,331 6,191
Less current installments ............................... ——
$6,331 $6,191
On March 15, 1994, the Company completed the sale of
$65,000, 61⁄4% Subordinated Debentures due 2001 and
entered into an Indenture Agreement. 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 con-
tains various covenants. The bonds are subject to redemp-
tion 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 13(d)).
On November 25, 1996, the Company completed an
exchange of $41,252 of its $65,000 Subordinated
Debentures for 6,806,580 shares of Class A Common Stock
(Exchange). As a result of the Exchange, a charge of $26,318
was recorded. The charge to earnings represents (i) the dif-
ference in the fair market value of the shares issued in the
32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
AUDIOVOX CORPORATION AND SUBSIDIARIES