Audiovox 2003 Annual Report Download - page 101

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2001, 2002 and 2003
(Dollars in thousands, except share and per share data)
Company and realization of the gain is assured.
(bb) Reclassifications
Certain reclassifications have been made to the 2001 and 2002
consolidated financial statements in order to conform to the 2003
presentation.
(2) Restatement of Consolidated Financial Statements
The Company has previously restated its consolidated financial statements
for the fiscal years ended November 30, 2000 and 2001 and for the fiscal
quarters during the year ended November 30, 2001 and the fiscal 2002
quarters ended February 28, 2002, May 31, 2002 and August 31, 2002. In
addition, the Company previously reclassified certain expenses from
operating expenses to cost of sales for fiscal 2001 and for each of the
quarters in the nine months ended August 31, 2002. Please refer to the
Company's previously filed Form 10−K for the year ended November 30, 2002
for details.
(3) Issuance of Subsidiary Shares
On May 29, 2002, Toshiba Corporation (Toshiba) purchased an additional 20%
of Audiovox Communications Corp. (ACC), a majority−owned subsidiary of the
Company. Such purchase accounted for approximately 31 shares at
approximately $774 per share, for approximately $23,900 in cash, increasing
Toshiba's total ownership interest in ACC to 25%. In addition, Toshiba paid
$8,107 in exchange for an $8,107 convertible subordinated note (the Note).
The Note bears interest at a per annum rate equal to 1 3/4% and interest is
payable annually on May 31st of each year, commencing May 31, 2003. The
unpaid principal amount shall be due and payable, together with all unpaid
interest, on May 31, 2007 and automatically renews for an additional five
years. In accordance with the provisions of the Note, Toshiba may convert
the balance of the Note into additional shares of ACC in order to maintain
a 25% interest in ACC, but under no circumstances can Toshiba convert the
Note to exceed a 25% interest in ACC.
In connection with the transaction, the Company, ACC and Toshiba entered
into a stockholders agreement. The stockholders agreement provides for the
composition of the board of directors of ACC and identifies certain items,
other than in the ordinary course of business, that ACC cannot do without
prior approval from Toshiba. The agreement does not require or preclude ACC
from paying dividends on a pro−rata basis. The agreement may be terminated
upon the mutual written agreement of the parties, if the distribution
agreement, which is discussed below, is terminated or if either party
commences a bankruptcy or similar proceeding.
(Continued)
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