Audiovox 2005 Annual Report Download - page 43

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Treasury Stock
The Board of Directors approved the repurchase of 1,563,000 shares of our
Class A common stock in the open market under a share repurchase program ("the
Program"). No shares were purchased under the Program during fiscal 2004 and
150,000 shares were purchased during fiscal 2005. As of November 30, 2005,
1,219,752 shares were repurchased under the Program at an average price of $8.63
per share for an aggregate amount of $10,524.
Off−Balance Sheet Arrangements
We do not maintain any off−balance sheet arrangements, transactions,
obligations or other relationships with unconsolidated entities that would be
expected to have a material current or future effect upon our financial
condition or results of operations.
IMPACT OF INFLATION AND CURRENCY FLUCTUATION
To the extent that we expand our operations into Europe, Latin America and
the Pacific Rim, the effects of inflation and currency fluctuations could impact
our financial condition and results of operations. While the prices we pay for
products purchased from our suppliers are principally denominated in United
States dollars, price negotiations depend in part on the foreign currency of
foreign manufacturers, as well as market, trade and political factors.
SEASONALITY
We typically experience seasonality in our operations. We generally sell a
substantial amount of our products during September, October and November due to
increased promotional and advertising activities during the holiday season. Our
business is also significantly impacted by the holiday season and electronic
trade shows in December and January.
RELATED PARTY TRANSACTIONS
During 1998, we entered into a 30−year capital lease for a building with
our principal stockholder and chairman, 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 we entered into an agreement to sub−lease the building to UTSI for monthly
payments of $46 through October 31, 2009. We also lease another facility from
our principal stockholder. Rentals for such leases are considered to approximate
prevailing market rates. Total lease payments required under the leases for the
five−year period ending November 30, 2010 are $4,661.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 123R ("Statement 123R"), "Share Based Payment". Statement
123R is a revision of FAS Statement 123, "Accounting for Stock Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock issued to
Employees" (APB No. 25). Statement 123R requires a public entity to measure the
cost of employee services recognized in exchange for an award of equity
instruments based on the grant−date fair value of the award (with limited
exceptions). Statement 123R is effective the first annual period that begins
after June 15, 2005 or our first quarter of fiscal year 2006. The adoption of
Statement 123R will rescind our current accounting for stock based compensation
under the intrinsic method as outlined in APB No. 25. Under APB No. 25, the
issuance of stock options to employees generally resulted in no compensation
expense. The adoption of Statement 123R will require us to measure the cost of
stock options based on the grant−date fair value of the award as discussed in
Note 1 of Notes to Consolidated Financial Statements.
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