Audiovox 2001 Annual Report Download - page 43

41 Audiovox Corporation and Subsidiaries
The holders of Class A and Class B common stock are entitled to
receive cash or property dividends declared by the Board of Directors.
The Board can declare cash dividends for Class A common stock in
amounts equal to or greater than the cash dividends for Class B com-
mon stock. Dividends other than cash must be declared equally for
both classes. Each share of Class B common stock may, at any time,
be converted into one share of Class A common stock.
The 50,000 shares of non-cumulative Preferred Stock outstanding are
owned by Shintom and have preference over both classes of common
stock in the event of liquidation or dissolution.
The Company’s Board of Directors approved the repurchase of
1,563,000 shares of the Company’s Class A common stock in the
open market under a share repurchase program (the Program). As
of November 30, 2000 and 2001, 762,492 and 909,537 shares,
respectively, were repurchased under the Program at an average price
of $10.80 and $10.05 per share, respectively, for an aggregate amount
of $6,004 and $7,386, respectively.
As of November 30, 2000 and 2001, 2,926,653 and 2,916,653 shares
of the Company’s Class A common stock are reserved for issuance
under the Company’s Stock Option and Restricted Stock Plans and
372,258 for all convertible securities and warrants outstanding at
November 30, 2000. There were no convertible securities or warrants
outstanding at November 30, 2001 (Notes 13 and 16).
In February 2000, the Company sold, pursuant to an underwritten pub-
lic offering, 2,300,000 shares of its Class A common stock at a price of
$45.00 per share. The Company received $96,573 in net proceeds
after deducting underwriting commission and offering expenses. The
net proceeds from the offering were used to repay a portion of
amounts outstanding under the revolving credit facility.
On April 6, 2000, the stockholders approved a proposal to amend the
Company’s Certificate of Incorporation to increase the number of
authorized shares of Class A common stock, par value $.01, from
30,000,000 to 60,000,000.
Undistributed earnings from equity investments included in retained
earnings amounted to $4,869 and $3,742 at November 30, 2000 and
2001, respectively.
(16) Stock-Based Compensation and Stock Warrants
(a) Stock Options
The Company has stock option plans under which employees and
non-employee directors may be granted incentive stock options (ISO’s)
and non-qualified stock options (NQSO’s) to purchase shares of Class A
common stock. Under the plans, the exercise price of the ISO’s will not
be less than the market value of the Company’s Class A common
stock or greater than 110% of the market value of the Company’s
Class A common stock on the date of grant. The exercise price of the
NQSO’s may not be less than 50% of the market value of the
Company’s Class A common stock on the date of grant. The options
must be exercisable no later than ten years after the date of grant.
The vesting requirements are determined by the Board of Directors at
the time of grant.
Compensation expense is recorded with respect to the options
based upon the quoted market value of the shares and the exercise
provisions at the date of grant. The Company recorded $31 in com-
pensation expense for the year ended November 30, 1999. No
compensation expense was recorded for the years ended November 30,
2000 and 2001.
Information regarding the Company’s stock options is summarized below:
Weighted
Average
Number Exercise
of Shares Price
Outstanding at November 30, 1998 1,693,750 $ 7.33
Granted 1,542,500 14.98
Exercised (364,550) 7.64
Canceled (500) 13.00
Outstanding at November 30, 1999 2,871,200 11.41
Granted — —
Exercised (121,300) 6.84
Canceled — —
Outstanding at November 30, 2000 2,749,900 11.61
Granted — —
Exercised (10,000) 7.69
Canceled — —
Outstanding at November 30, 2001 2,739,900 $11.62
Options exercisable at November 30, 2001 2,153,900 $10.68
At November 30, 2000 and 2001, 206,753 shares were available for
future grants under the terms of these plans.
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 and 2001.
The Company applies APB No. 25 in accounting for its stock option
grants and, accordingly, no compensation cost has been recognized
in the financial statements for its stock options which have an exer-
cise 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