Audiovox 2003 Annual Report Download - page 115

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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)
The Company's ability to borrow under its credit facility is a maximum
aggregate amount of $150,000, subject to certain conditions, based
upon a formula taking into account the amount and quality of its
accounts receivable and inventory. The credit agreement contains
several covenants requiring, among other things, minimum levels of
pre−tax income and minimum levels of net worth. Additionally, the
agreement includes restrictions and limitations on payments of
dividends, stock repurchases and capital expenditures.
At November 30, 2002, the Company was not in compliance with certain
of its pre−tax income covenants. Furthermore, as of November 30, 2002,
the Company was also not in compliance with the requirement to deliver
audited financial statements 90 days after the Company's fiscal year
end, and as of February 28, 2003, the requirement to deliver unaudited
quarterly financial statements 45 days after the Company's quarter end
and had not received a waiver. Accordingly, the Company recorded its
outstanding domestic bank obligations of $36,883 in current
liabilities at November 30, 2002.
Subsequent to November 30, 2002, the Company repaid its fiscal 2002
obligation of $36,883 in full and borrowed additional funds during the
fourth quarter of fiscal 2003, resulting in domestic bank obligations
outstanding at November 30, 2003 of $31,709. The Company subsequently
obtained a waiver for the November 30, 2002 and February 28, 2003
violations. The Company was in compliance with all its bank covenants
at November 30, 2003. While the Company has historically been able to
obtain waivers for such violations, there can be no assurance that
future negotiations with its lenders would be successful or that the
Company will not violate covenants in the future, therefore, resulting
in amounts outstanding to be payable upon demand. This credit
agreement has no cross covenants with other credit facilities.
The Company also has revolving credit facilities in Malaysia
(Malaysian Credit Agreement) to finance additional working capital
needs. As of November 30, 2003, the available line of credit for
direct borrowing, letters of credit, bankers' acceptances and other
forms of credit approximated $3,600. The credit facilities are
partially secured by three standby letters of credit of $800 each and
are payable upon demand or upon expiration of the standby letters of
credit in January, July and July 2004, respectively. The obligations
of the Company under the Malaysian Credit Agreement are also secured
by the property and building owned by Audiovox Communications Sdn.
Bhd. Outstanding obligations under the Malaysian Credit Agreement at
November 30, 2002 and 2003 were approximately $3,317 and $2,721,
respectively. At November 30, 2003, interest on the credit facility
ranged from 4.75% to 6.5%. At November 30, 2002, interest on the
credit facility ranged from 4.75% to 6.0%.
(Continued)
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