Audiovox 2006 Annual Report Download - page 77

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 28, 2007
(Dollars in thousands, except share and per-share data)
The Company’s employee stock purchase plan is a non-compensatory plan, and the related
expense is recorded in general and administrative expenses in the consolidated statement of
operations.
c) 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. No contributions were made during the year ended
February 28, 2007, three months ended February 28, 2006 and the year ended
November 30, 2005. A discretionary contribution accrual of $601 was recorded by the
Company for the United States plan for the year ended November 30, 2004. 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 three months of service under a predetermined
formula based on the participant’s contribution level. The Company’s contributions were
$486, $92, $139 and $155 for the year ended February 28, 2007, the three months ended
February 28, 2006 and the years ended November 30, 2005 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.
d) 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 Company has the option of amending
or terminating the Plan at any time.
The investments, which amounted to $7,573 and $6,546 at February 28, 2007 and 2006,
respectively have been classified as trading securities (long-term) and are included in
investment securities on the accompanying consolidated balance sheets as of
February 28, 2007. The corresponding deferred compensation liability is reflected as a
long-term liability on the accompanying consolidated balance sheet as of February 28, 2007
and 2006.
12) Lease Obligations
During 1998, the Company entered into a 30-year capital lease for a building with its principal
stockholder and current 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%. This lease was refinanced in December 2006, which resulted in a $161 reduction to the capital
lease obligation and corresponding asset, and the lease expires on November 30, 2026. On
November 1, 2004 and in connection with the sale of the Cellular business, the Company entered
into an agreement to sub-lease the building to UTStarcom for monthly payments of $46 through
October 31, 2009.
F-37