Audiovox 2010 Annual Report Download - page 95

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 28, 2010
(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 expires on November 30, 2026. On November 1, 2004, we entered into an
agreement to sublease the building to Personal Communication Devices, LLC (Formerly UTStarcom) for monthly payments
of $46 until November 1, 2009. The sublease lease agreement has been renewed and requires, for a term of three years,
monthly payments of $50 until November 1, 2012. We also lease another facility from our principal stockholder which
expires on November 30, 2016. Total lease payments required under all related party leases for the five-year period ending
February 28, 2015 are $6,569.
At February 28, 2010, 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
2011 $ 521 $ 4,903
2012 535 3,731
2013 574 2,721
2014 574 2,223
2015 574 2,072
Thereafter 7,629 7,340
Total minimum lease payments 10,407 $ 22,990
Less: minimum sublease income 1,600
Net 8,807
Less: amount representing interest 3,275
Present value of net minimum lease payments 5,532
Less: current installments included in accrued expenses and other current liabilities 82
Long-term capital obligation $ 5,450
Rental expense for the above-mentioned operating lease agreements and other leases on a month-to-month basis
approximated $2,044, $2,412 and $3,138 for the years ended February 28, 2010, February 28, 2009 and February 29, 2008,
respectively.
The Company leases certain facilities and equipment from its principal stockholder and several officers. At February 28,
2010, 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:
2011 $ 714
2012 735
2013 758
2014 781
2015 804
Thereafter 4,233
Total $ 8,025
65
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠