Audiovox 2008 Annual Report Download - page 97

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 29, 2008
(Dollars in thousands, except share and per share data)
11) 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
("UTSI") for monthly payments of $46 through October 31, 2009.
At February 29, 2008, the Company was obligated under non-cancelable capital and operating leases for equipment and
warehouse facilities for minimum annual rental payments as follows:
Capital Operating
Lease Leases
2009 $ 522 $ 4,205
2010 521 3,385
2011 521 2,763
2012 535 2,535
2013 574 2,095
Thereafter 8,777 8,267
Total minimum lease payments 11,450 $ 23,250
Less: minimum sublease income 920
Net 10,530
Less: amount representing interest 4,853
Present value of net minimum lease payments 5,677
Less: current installments included in accrued expenses and other current liabilities 70
Long-term capital obligation $ 5,607
Rental expense for the above-mentioned operating lease agreements and other leases on a month-to-month basis
approximated $3,138, $2,319, $536 and $2,097 for the years ended February 29, 2008, February 28, 2007, the three months
ended February 28, 2006 and the year ended November 30, 2005, respectively.
The Company leases certain facilities and equipment from its principal stockholder and several officers. At February 29,
2008, minimum annual rental payments on these related party leases, in addition to the capital lease payments, which are
included in the above table, are as follows:
2009 $ 673
2010 693
2011 714
2012 735
2013 758
Thereafter 3,048
Total $ 6,621
F-38
Source: AUDIOVOX CORP, 10-K, May 14, 2008