Audiovox 2001 Annual Report Download - page 41

39 Audiovox Corporation and Subsidiaries
1997, at certain specified amounts. On May 9, 1995, the Company
issued warrants to certain beneficial holders of these subordinated
debentures (Note 16(d)).
During fiscal 2000, holders of the Company’s $65,000 subordinated
convertible debentures exercised their option to convert $534 deben-
tures for 30,170 shares of the Company’s Class A common stock. As a
result of this conversion and the conversions that took place prior to
2000, the remaining subordinated debentures of $486 was included as
current installments of long-term debt at November 30, 2000. During
2001, the Company paid $486 to the remaining holders of the
Company’s subordinated convertible debentures as such there is no
convertible debentures outstanding at November 30, 2001.
On October 20, 1994, the Company issued a note payable for 500,000
Japanese yen to finance its investment in TALK (Note 9). The note was
scheduled to be repaid on October 20, 2004 and bore interest at 4.1%.
The note could be repaid by cash payment or by giving 10,000 shares
of its TALK investment to the lender. The lender had an option to
acquire 2,000 shares of TALK held by the Company in exchange for
releasing the Company from 20% of the face value of the note at any
time after October 20, 1995. In October 2000, the Company exercised
its option to repay the note by returning the 10,000 shares of its TALK
investment to the lender. In connection with the transaction, the
Company recognized an extraordinary gain in the amount of $2,189
representing the difference between the loan, which approximated
$4,578, and the Company’s recorded investment in TALK, which
approximated $2,389, at the time of the transaction.
(14) Income Taxes
The components of income (loss) before the provision for (recovery of)
income taxes are as follows: November 30,
1999 2000 2001
Domestic Operations $42,668 $37,119 $(10,329)
Foreign Operations 55 2,846 183
$42,723 $39,965 $(10,146)
Total income tax expense (benefit) was allocated as follows:
November 30,
1999 2000 2001
Statement of operations $15,477 $14,925 $ (3,937)
Stockholders’ equity:
Unrealized holding gain (loss) on
investment securities recognized
for financial reporting purposes 3,540 (6,202) (509)
Unrealized holding gain (loss) on
equity collar recognized for
financial reporting purposes — 570 —
Income tax benefit of employee
stock option exercises (1,101) (1,270) —
Total income tax expense (benefit) $17,916 $ 8,023 $ (4,446)
The provision for (recovery of) income taxes is comprised of:
Federal Foreign State Total
1999:
Current $14,565 $(116) $ 1,593 $16,042
Deferred (118) (431) (16) (565)
$14,447 $(547) $ 1,577 $15,477
2000:
Current $18,471 $ 656 $ 1,832 $20,959
Deferred (4,481) (704) (849) (6,034)
$13,990 $ (48) $ 983 $14,925
2001:
Current $ (1,995) $ 359 $ 1,063 $ (573)
Deferred (2,435) 153 (1,082) (3,364)
$ (4,430) $ 512 $ (19) $ (3,937)
A reconciliation of the provision for income taxes computed at the Federal statutory rate to the reported provision for income taxes is as follows:
November 30,
1999 2000 2001
Tax provision at Federal statutory rates $14,953 35.0% $13,988 35.0% $(4,251) (35.0)%
Undistributed income (losses) from equity investments (373) (0.9) — — ——
State income taxes, net of Federal benefit 1,025 2.4 639 1.6 (12) (0.1)
Decrease in beginning-of-the-year balance of the valuation
allowance for deferred tax assets (989) (2.3) (1,041) (2.6) (227) (1.9)
Foreign tax rate differential 38 0.1 (59) (0.1) 448 3.7
Other, net 823 1.9 1,398 3.4 105 1.0
$15,477 36.2% $14,925 37.3% $(3,937) (32.4)%