Audiovox 2000 Annual Report Download - page 37

The per share weighted average fair value of stock options granted during
1998 was $3.45 on the date of grant using the Black-Scholes option-
pricing model with the following weighted average assumptions: risk free
interest rate of 5.7%, expected dividend yield of 0.0%, expected stock
volatility of 60% and an expected option life of 10 years.
The per share weighted average fair value of stock options granted during
1999 was $9.83 on the date of grant using the Black-Scholes option-
pricing model with the following weighted average assumptions: risk free
interest rate of 5.9%, expected dividend yield of 0.0%, expected stock
volatility of 60% and an expected option life of 10 years. There were no
options granted during 2000.
The Company applies Opinion 25 in accounting for its stock option grants
and, accordingly, no compensation cost has been recognized in the finan-
cial 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 compensation cost based on the fair value at the
grant date for its stock options under Statement 123, the Company’s net
income and net income per common share would have been reduced to the
pro-forma amounts indicated below:
1998 1999 2000
Net income:
As reported $2,972 $27,246 $27,229
Pro-forma 1,336 25,494 22,795
Net income per common share (basic):
As reported $ 0.16 $ 1.43 $ 1.27
Pro-forma 0.07 1.33 1.07
Net income per common share (diluted):
As reported $ 0.16 $ 1.39 $ 1.21
Pro-forma 0.07 1.30 1.01
Pro-forma net income reflect only options granted after November 30,
1995. Therefore, the full impact of calculating compensation cost for
stock options under Statement 123 is not reflected in the pro-forma net
income 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. Therefore, the
pro-forma net income may not be representative of the effects on
reported net income for future years.
Summarized information about stock options outstanding as of Novem-
ber 30, 2000 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
$ 4.63–$ 8.00 1,150,700 7.22 6.22 1,150,700 7.22
$ 8.01–$13.00 109,200 11.63 4.33 109,200 11.63
$13.01–$15.00 1,490,000 15.00 8.78 372,500 15.00
(b) Restricted Stock Plan
The Company has restricted stock plans under which key employees and
directors may be awarded restricted stock. Total restricted stock outstand-
ing, granted under these plans, at November 30, 1999 was 13,750. There
were no restricted stock outstanding at November 30, 2000. Awards under
the restricted stock plan may be performance-accelerated shares or
performance-restricted shares. No performance-accelerated shares or per-
formance-restricted shares were granted in 1998. During fiscal 1999,
32,222 performance-accelerated shares and 12,103 performance-restricted
shares were granted. During fiscal 2000, 6,825 performance-accelerated
shares and 4,846 performance-restricted shares were granted. During fiscal
1999 and 2000, 19,796 and 1,979 performance-restricted shares lapsed,
respectively. No performance-restricted shares lapsed in fiscal year 1998.
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 (income) for these grants for the years ended
November 30, 1998, 1999 and 2000 were $(23), $127 and $40, respectively.
(C)EMPLOYEE STOCK PURCHASE PLAN
In April 2000, the stockholders approved the 2000 Employee Stock
Purchase Plan. The stock purchase plan provides eligible employees an
opportunity to purchase shares of the Company’s Class A common stock
through payroll deductions at a minimum of 2% and a maximum of 15%
of base salary compensation. Amounts withheld are used to purchase
Class A common stock on the open market. The cost to the employee for
the shares is equal to 85% of the fair market value of the shares on or
about the quarterly purchase date (December 31, March 31, June 30 or
September 30). The Company bears the cost of the remaining 15% of the
fair market value of the shares as well as any broker fees. This Plan pro-
vides for purchases of up to 1,000,000 shares.
(D)STOCK WARRANTS
In December 1993, the Company granted warrants to purchase 50,000
shares of Class A Common Stock at a purchase price of $14.375 per share
as part of the acquisition of H & H Eastern Distributors, Inc. During fiscal
1999, the warrants were surrendered for cancellation, and the holder
agreed to waive registration rights in exchange for $5.
AUDIOVOX CORPORATION AND SUBSIDIARIES
AUDIOVOX 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)