Audiovox 2001 Annual Report Download - page 44

Notes to Consolidated Financial Statements (Continued) 42 Audiovox Corporation and Subsidiaries
Statement 123, the Company’s net income (loss) and net income
(loss) per common share would have been reduced to the pro-forma
amounts indicated below: 1999 2000 2001
Net income (loss):
As reported $27,246 $27,229 $ (8,209)
Pro-forma 25,494 22,795 (10,496)
Net income (loss)
per common share (basic):
As reported $ 1.43 $ 1.27 $ (0.38)
Pro-forma 1.33 1.07 (0.48)
Net income (loss)
per common share (diluted):
As reported $ 1.39 $ 1.21 $ (0.38)
Pro-forma 1.30 1.01 (0.48)
Pro-forma net income (loss) reflect only options granted after
November 30, 1995. Therefore, the full impact of calculating compen-
sation cost for stock options under Statement 123 is not reflected in
the pro-forma net income (loss) 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 (loss) may
not be representative of the effects on reported net income (loss) for
future years.
Summarized information about stock options outstanding as of
November 30, 2001 is as follows:
Outstanding Exercisable
Weighted Weighted
Average Average Weighted
Exercise Life Average
Exercise Number Price of Remaining Number Price of
Price Range of Shares Shares in Years of Shares Shares
$ 4.63–$ 8.00 1,140,700 $ 7.21 5.21 1,140,700 $ 7.21
$ 8.01–$13.00 109,200 $11.63 3.33 109,200 $11.63
$13.01–$15.00 1,490,000 $15.00 7.78 894,000 $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
outstanding, 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. 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 2000, 1,979 performance-restricted
shares lapsed. There were no performance-restricted accelerated
shares or performance-restricted shares granted in 2001.
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, 1999 and 2000 were $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 provides 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.
On May 9, 1995, the Company issued 1,668,875 warrants in a private
placement, each convertible into one share of Class A common stock
at $71⁄8, subject to adjustment under certain circumstances. The war-
rants were issued to the beneficial holders as of June 3, 1994, of
approximately $57,600 of the Company’s subordinated debentures in
exchange for a release of any claims such holders may have against
the Company, its agents, directors and employees in connection with
their investment in the subordinated debentures. As a result, the
Company incurred a warrant expense in 1995 of $2,900 and recorded
a corresponding increase to paid-in capital. The warrants are not exer-
cisable after March 15, 2001, unless sooner terminated under certain
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 exer-
cise 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 capi-
tal gains to Mr. Shalam. During 1998, the Company purchased approx-
imately 1,324,075 of these warrants at a price of $1.30 per warrant,
pursuant to the terms of a self-tender offer. In connection with this pur-
chase, the option to purchase 1,324,075 shares from John J. Shalam’s
personal holdings was canceled. During 2001, 314,800 warrants were
exercised and converted into 314,800 shares of common stock. The
remaining 30,000 warrants expired in 2001.