Audiovox 2004 Annual Report Download - page 99

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AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
November 30, 2002, 2003 and 2004
(Dollars in thousands, except share and per share data)
(e) Profit Sharing Plans/ 401(k) Plan
The Company has established two non−contributory employee profit
sharing plans for the benefit of its eligible employees in the United
States and Canada. The plans are administered by trustees appointed by
the Company. A discretional contribution accrual of $600 and $601 was
recorded by the Company for the United States plan in fiscal 2003 and
2004, respectively. No accruals for contributions were recorded by the
Company in fiscal 2002. Contributions required by law to be made for
eligible employees in Canada were not material for all periods
presented.
The Company also has a 401(k) plan for eligible employees. The Company
matches a portion of the participant's contributions after one year of
service under a predetermined formula based on the participant's
contribution level. The Company's contributions were $114, $135 and
$155 for the year ended November 30, 2002, 2003 and 2004,
respectively. Shares of the Company's Common Stock are not an
investment option in the Savings Plan and the Company does not use
such shares to match participants' contributions.
(f) Deferred Compensation Plan
Effective December 1, 1999, the Company adopted a Deferred
Compensation Plan (the Plan) for a select group of management. The
Plan is intended to provide certain executives with supplemental
retirement benefits as well as to permit the deferral of more of their
compensation than they are permitted to defer under the Profit Sharing
and 401(k) Plan. The Plan provides for a matching contribution equal
to 25% of the employee deferrals up to $20. The Plan is not intended
to be a qualified plan under the provisions of the Internal Revenue
Code. All compensation deferred under the Plan is held by the Company
in an investment trust which is considered an asset of the Company.
The investments, which amounted to $4,871 at November 30, 2004, have
been classified as trading securities (long−term) and are included in
investment securities on the accompanying consolidated balance sheet
as of November 30, 2004. The return on these underlying investments
will determine the amount of earnings credited to the employees. The
Company has the option of amending or terminating the Plan at any
time. The deferred compensation liability is reflected as a long−term
liability on the accompanying consolidated balance sheet as of
November 30, 2004. Compensation expense and investment income (loss)
are recorded in the accompanying consolidated statements of operations
in connection with this deferred compensation plan.
(13) Lease Obligations
During 1998, the Company entered into a 30−year capital lease for a
building with its principal stockholder and chief executive officer, which
was the headquarters of the discontinued Cellular operation. Payments on
the capital lease were based upon the construction costs of the building
and the then−current interest rates. The effective interest rate on the
capital lease obligation is 8%. On November 1, 2004 the Company entered
into an agreement to sub−lease the building to UTStarcom
96