Audiovox 1998 Annual Report Download - page 39

circumstances. John J. Shalam, Chief Executive Officer of the
Company, has granted the Company an option to purchase
1,668,875 shares of Class A Common Stock from his personal
holdings. The exercise price of this option is $71⁄8, plus the tax
impact, if any, should the exercise of this option be treated as
dividend income rather than capital gains to Mr. Shalam.
During 1998, the Company purchased approximately
1,324,075 of these warrants at a price of $1.30 per warrant,
pursuant to the terms of a self-tender offer. As of November 30,
1998, 344,800 remaining warrants are outstanding.
During fiscal 1997, the Company granted warrants to pur-
chase 100,000 shares of Class A Common Stock, which have
been reserved, at $6.75 per share. The warrants, which are
exercisable in whole or in part at the discretion of the
holder, expire on January 29, 2002. There were no warrants
exercised as of November 30, 1998.
(e) Profit Sharing Plans
The Company has established two non-contributory
employee profit sharing plans for the benefit of its eligible
employees in the United States and Canada. The plans are
administered by trustees appointed by the Company. A con-
tribution of $150, $500 and $150 was made by the Company
to the United States plan in fiscal 1998, 1997 and 1996,
respectively. Contributions required by law to be made for
eligible employees in Canada were not material.
(14) Net Income (Loss) Per Common
Share
A reconciliation between the numerators and denomina-
tors of the basic and diluted earnings per common share is
as follows:
For the Years Ended
November 30,
1998 1997 1996
Net income (loss) (numerator
for net income (loss) per
common share, basic) ....................... $ 2,972 $ 21,022 $ (26,469)
Interest on 61⁄4% convertible
subordinated debentures,
net of tax ............................................ —185 —
Adjusted net income (numerator
for net income (loss) per
common share, diluted).................... $ 2,972 $ 21,207 $ (26,469)
Weighted average common shares
(denominator for net income
(loss) per common share, basic)....... 19,134,529 18,948,356 9,398,352
Effect of dilutive securities:
Employee stock options and
stock warrants ................................ —237,360 —
Employee stock grants ..................... —70,845 —
Convertible debentures.................... —251,571 —
Weighted average common and
potential common shares
outstanding (denominator for
net income (loss) per common
share, diluted).................................... 19,134,529 19,508,132 9,398,352
Net income (loss) per common
share, basic ........................................ $ 0.16 $ 1.11 $ (2.82)
Net income (loss) per common
share, diluted..................................... $ 0.16 $ 1.09 $ (2.82)
Employee stock options and stock warrants totaling
2,779,363, 1,908,438 and 2,385,875 for the years ended
November 30, 1998, 1997 and 1996, respectively, were not
included in the net earnings per share calculation because
their effect would have been anti-dilutive.
(15) Export Sales
Export sales of approximately $102,659 for the year
ended November 30, 1997, exceeded 10% of sales. Export
sales did not exceed 10% of sales for the years ended
November 30, 1998 and 1996.
(16) Lease Obligations
During 1998, the Company entered into a 30-year lease
for a building with its principal stockholder and chief execu-
tive 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 con-
struction of the building. For financial reporting purposes,
the lease has been classified as a capital lease, and, accord-
ingly, a building and the related obligation of approximately
$6,340 was recorded (Note 7). In connection with the capital
lease, the Company paid certain construction costs on
behalf of it principal stockholder and Chief Executive Officer
in the amount of $1,210. The amount is payable to the
Company with 8% interest.
During 1998, the Company entered into a sale/lease back
transaction with its principal stockholder and Chief
Executive Officer for $2,100 of equipment. No gain or loss
on the transaction was recorded as the book value of the
equipment equaled the fair market value. The lease is for
five years with monthly rental payments of $34. The lease
has been classified as an operating lease.
At November 30, 1998, the Company was obligated
under non-cancelable capital and operating leases for
equipment and warehouse facilities for minimum annual
rental payments as follows:
Capital Operating
Lease Leases
1999 .............................................................. $ 521 $2,115
2000 .............................................................. 522 1,712
2001 .............................................................. 530 1,325
2002 .............................................................. 553 1,113
2003 .............................................................. 554 610
Thereafter..................................................... 13,652 724
Total minimum lease payments ................. 16,332 $7,599
Less: amount representing interest........... 10,017
Present value of net
minimum lease payments....................... 6,315
Less: current installments ........................... 17
Long-term obligation.................................. $ 6,298
Rental expense for the above-mentioned operating lease
agreements and other leases on a month-to-month basis
approximated $2,563, $2,516 and $2,292 for the years ended
November 30, 1998, 1997 and 1996, respectively.
37