UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended November 30, 2003
Commission file number 0-28839
AUDIOVOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-1964841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 Marcus Blvd., Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (631) 231-7750
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of each class: Which Registered
Class A Common Stock $.01 par value Nasdaq Stock Market
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirement for the past 90 days.
Yes X No
----------- ----------
Indicate by check mark whether Registrant is an accelerated filer (as defined in
Exchange Act Rule 12b-2).
Yes X No
----------- ----------
1
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (sec 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
The aggregate market value of the common stock held by non-affiliates of the
Registrant was $159,259,586 (based upon closing price on the Nasdaq Stock Market
on May 30, 2003).
The number of shares outstanding of each of the registrant's classes of common
stock, as of February 20, 2004 was:
Class Outstanding
Class A common stock $.01 par value 20,741,338
Class B common stock $.01 par value 2,260,954
--------------------------------------------------------------------------------
EXPLANATORY NOTE: This amendment to Form 10-K of Audiovox Corporation (the
"Amendment") is being filed to include information required by Part III. This
information is usually incorporated by reference to Audiovox's definitive proxy
statement for its annual stockholders meeting. Inasmuch as the definitive proxy
statement for Audiovox's 2004 annual stockholders meeting will not be filed with
the Securities and Exchange Commission within 120 days of Audiovox's fiscal year
end, such information may not be incorporated by reference and is included in
this Amendment.
2
Table of Contents
PART III ...................................................................................................4
Item 10 - Directors and Executive Officers of the Registrant.............................................4
The Board of Directors and Committees.........................................................4
Compensation Committee Interlocks and Insider Participation...................................5
Audit Committee Report........................................................................5
Section 16(a) Beneficial Ownership Reporting Compliance.......................................6
Item 11 - Executive Compensation.........................................................................6
Compensation Committee Report on Executive Compensation.......................................6
Summary Compensation Table....................................................................8
Employment Agreements.........................................................................9
Option Grants in Last Fiscal Year (2003)......................................................9
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values.............10
Performance Graph............................................................................11
Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.........................................................................12
Item 13 - Certain Relationships and Related Transactions................................................14
Transactions With Management.................................................................14
Item 14 - Principal Accountant Fees and Services........................................................15
SIGNATURES.................................................................................................17
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PART III
Item 10 - Directors and Executive Officers of the Registrant
See the information set forth in the section entitled "Directors and
Executive Officers of the Registrant" in Part I, Item 1 of this Form 10-K/A.
The Board of Directors and Committees
The Board of Directors has standing Executive, Audit and Compensation
Committees.
Board of Directors
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee but does not have a standing nominating committee. The
Board of Directors held five meetings and acted by consent seven times during
the fiscal year ended November 30, 2003. All incumbent directors attended 75% or
more of the aggregate number of Board and related committee meetings during the
year.
Executive Committee
The Executive Committee which held no meetings during fiscal 2003,
consisted of five members, namely, John J. Shalam, Philip Christopher, Charles
M. Stoehr, Paul C. Kreuch, Jr. and Dennis F. McManus. The primary function of
the Executive Committee is to act upon matters when the Board is not in session.
The Committee has full power and authority of the Board in the management and
conduct of the business and affairs of Audiovox Corporation ("Audiovox" or the
"Company").
Audit Committee
The Audit Committee, which held twelve meetings and acted by consent once
in fiscal 2003, consists of four members, namely, Paul C. Kreuch, Jr., Dennis F.
McManus, Irving Halevy and Peter A. Lesser. The Board of Directors has
determined that each of the four members is independent and able to read and
understand fundamental financial statements in accordance with the rules of the
National Association of Securities Dealers ("NASD"). The Board of Directors has
also determined that at least one member of the audit committee has past
employment experience in finance or accounting. The functions of the Audit
Committee are described below under the heading Audit Committee Report.
Compensation Committee
The Compensation Committee, which held one meeting and acted by consent
once in fiscal 2003, consisted of four members, namely, Messrs. Kreuch, McManus,
Halevy and Lesser. The Compensation Committee recommends to the Board of
Directors remuneration arrangements for senior management and the directors,
approves and administers other compensation plans, including the profit sharing
plan of the Company, in which officers, directors and employees participate.
4
Compensation of Directors
For their service, members of the Board of Directors who are not salaried
employees receive an annual retainer of $15,000 and $500 for each meeting
attended.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is currently comprised of four independent
directors, Paul C. Kreuch, Jr., Dennis McManus, Irving Halevy and Peter Lesser.
Audit Committee Report
The following Audit Committee Report, Compensation Committee Report on
Executive Compensation and Performance Graph do not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Audiovox filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates
this information by reference therein.
The Audit Committee of the Board is responsible for providing independent,
objective oversight of the quality and integrity of the Company's accounting and
auditing functions, internal controls and financial reporting practices. The
full responsibilities of the Audit Committee are set forth in its written
charter which was approved by the Company's Board of Directors.
In fulfillment of its responsibilities, the Audit Committee met with
management and the Company's independent auditors, Grant Thornton LLP ("Grant
Thornton"), to review and discuss all financial statements included or to be
included in the Company's annual report for the fiscal year ended November 30,
2003 (the "Financial Statements"). The Audit Committee also discussed with Grant
Thornton the matters required to be discussed by the Statement on Auditing
Standards No. 61, received the written disclosure from Grant Thornton required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees) and discussed with Grant Thornton that firm's independence.
Finally, the Audit Committee continued to monitor the integrity of the
Company's financial reporting processes and its internal procedures and
controls.
Based upon the Audit Committee's discussions with management and the
independent accountants and the Audit Committee's review of the representations
of management and Grant Thornton, the Audit Committee is satisfied that its
responsibilities under the charter for the period ended November 30, 2003, were
met and that the financial reporting processes of the Company are functioning
efficiently.
Members of the Audit Committee
Paul C. Kreuch, Jr. (Chairman)
Dennis F. McManus
Irving Halevy
Peter A. Lesser
5
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers,
directors and persons who own more than ten percent (10%) of a registered class
of our equity securities ("Reporting Persons") to file reports of ownership and
changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange
Commission ("SEC") and the Nasdaq Stock Market ("Nasdaq"). These Reporting
Persons are required by SEC regulation to furnish us with copies of all Form 3,
4 and 5 they file with the SEC and Nasdaq. Based solely upon our review of the
copies of the forms we have received, we believe that all Reporting Persons
complied on a timely basis with all filing requirements applicable to them with
respect to transactions during fiscal 2003.
Item 11 - Executive Compensation
Compensation Committee Report on Executive Compensation
Responsibilities of the Committee
The Compensation Committee of the Board of Directors reviews and approves
compensation for Audiovox Corporation's executive officers and oversees and
administers Audiovox's stock option and restricted stock plans. The Compensation
Committee recommends compensation for the Chief Executive Officer subject to the
Board of Directors approval of such recommendations. The Chief Executive Officer
submits recommended compensation levels for other executive officers of Audiovox
to the Compensation Committee for its review and approval, subject to applicable
employment agreements. Each member of the Compensation Committee is a
non-employee independent Director of Audiovox. The Compensation Committee of the
Board of Directors has furnished the following report on executive compensation
for fiscal 2003.
What is Audiovox's Philosophy of Executive Officer Compensation?
Our compensation programs are designed to attract and retain talented
executives and motivate them to achieve corporate and business objectives that
will increase stockholder value. To attain both near and long term corporate
goals, it is our policy to provide incentives to senior management and reward
outstanding performance and contributions to Audiovox's businesses.
Consequently, Audiovox's compensation program for its executives includes a
competitive base salary, a performance-based annual bonus and stock-based
compensation. This approach to executive compensation enables Audiovox to
attract and retain executives of outstanding ability while ensuring that our
executives' compensation advances the interests of our shareholders.
Consequently, a large proportion of our executives' compensation, the annual
bonus, is dependent in significant part on Audiovox's performance. Although
Audiovox does not have employment agreements with any of its executive officers,
Mr. Christopher's compensation is governed by an employment agreement with
Audiovox Communications Corp. ("ACC"), a majority-owned subsidiary of Audiovox.
(See discussion under the caption "Employment Agreements".)
Base Salary
Salaries for the executive officers are designed to attract and retain
qualified and dedicated executive officers. Annually, the Committee reviews
salary recommendations made by Audiovox's Chief Executive Officer and evaluates
6
individual responsibility levels, experience, performance and length of service.
Base salaries for Audiovox's executive officers are fixed at levels commensurate
with competitive amounts paid to senior executives with comparable
qualifications at companies engaged in the same or similar businesses.
Annual Bonus
Bonus compensation provides Audiovox with a means of rewarding performance
based upon attainment of corporate profitability during the fiscal year. For
fiscal 2003, the Compensation Committee established bonus compensation formulas
for its executives based upon the pre-tax earnings of the Company. The annual
bonus paid to Mr. Lavelle is based upon the achievement of fiscal goals within
Audiovox Electronics Corp. ("AEC"), a wholly-owned subsidiary of Audiovox. Mr.
Christopher's annual bonus for fiscal 2003 was paid pursuant to his employment
agreement.
Stock Options
During fiscal 2003, no stock options were granted to the Company's
employees, including the Company's executive officers.
How is the Chief Executive Officer Compensated?
The Compensation Committee has fixed the base salary of the Chief Executive
Officer based on competitive compensation data, the Committee's assessment of
Mr. Shalam's past performance and its expectation as to his future contributions
in guiding and directing Audiovox and its business. Mr. Shalam's bonus for
fiscal 2003 was calculated on Audiovox's pre-income tax profit before
extraordinary items and other non-recurring transactions of the Company in
accordance with Audiovox's Executive Officer Bonus Plan which was approved by
the shareholders in 2000.
How is Audiovox Addressing Internal Revenue Code Limits on Deductibility of
Compensation?
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public corporations for compensation over $1,000,000 paid for any
fiscal year to the corporation's chief executive officer and four other most
highly compensated executive officers as of the end of any fiscal year. However,
the statute exempts qualifying performance-based compensation from the deduction
limit if certain requirements are met. The Compensation Committee currently
intends to structure performance- based compensation, including stock option
grants and annual bonuses, to executive officers who may be subject to Section
162(m) in a manner that satisfies those requirements. The Board and the
Compensation Committee reserve the authority to award non-deductible
compensation in other circumstances as they deem appropriate. Further, because
of ambiguities and uncertainties as to the application and interpretation of
Section 162(m) and the regulations issued thereunder, no assurance can be given,
notwithstanding the Company's efforts, that compensation intended by the Company
to satisfy the requirements for deductibility under Section 162(m) does in fact
do so.
7
Members of the Compensation Committee
PAUL C. KREUCH, JR.
DENNIS F. MCMANUS
IRVING HALEVY
PETER A. LESSER
The following Summary Compensation Table sets forth the compensation earned
by the individual who served as the Company's Chief Executive Officer during
fiscal year 2003 and the four other most highly compensated executive officers
who were serving as such as of November 30, 2003 (collectively, the "Named
Officers").
Summary Compensation Table
Annual Compensation (1)
-----------------------------------------------
All Other
Name and Principal Position Year Salary(2) Bonus Compensation(3)
--------------------------- ---- --------- ----- ---------------
John J. Shalam
President and CEO 2003 450,000 673,500 12,376
2002 450,677 128,669 11,025
2001 450,000 122,000 9,185
Philip Christopher
Executive Vice President 2003 507,000 112,000 4,179
2002 476,419(4) 1,800,000 2,762
2001 450,000 117,000 8,234
Charles M. Stoehr
Senior Vice President and
CFO 2003 325,000 224,500 5,831
2002 326,418 242,890 4,253
2001 325,000 41,000 8,234
Patrick M. Lavelle
Senior Vice President 2003 200,000 1,588,532 3,814
2002 201,277 1,204,508 1,980
2001 200,000 655,636 7,998
Richard A. Maddia
Vice President,
Information Systems 2003 175,500 75,000 1,976
2002 176,209 37,500 1,213
2001 175,000 65,000 7,409
-------------
(1) No other annual compensation was paid and no restricted stock awards or
options were granted to the named individuals in 2003, 2002 and 2001 and
8
the "Other Annual Compensation", "Restricted Stock" and "Securities
Underlying Options" columns have been omitted.
(2) For fiscal 2003, salary includes: for Mr. Shalam $692 in 401(k) Company
matching contributions; for Mr. Christopher $1,314 in 401(k) Company
matching contributions; for Mr. Stoehr $1,509 in 401(k) Company matching
contributions; for Mr. Lavelle $1,292 in 401(k) Company matching
contributions; and for Mr. Maddia $702 in 401(k) Company matching
contributions.
(3) For fiscal 2003 and 2002, this only includes executive life insurance
premiums paid for the benefit of the named executive. For fiscal 2001, this
includes executive life insurance premiums and profit sharing
contributions.
(4) Mr. Christopher's base salary for the first six (6) months of fiscal 2002
was $450,000. Effective May 29, 2002, Mr. Christopher's base salary was
increased to $500,000 pursuant to an employment agreement (see discussion
below under caption "Employment Agreements").
Employment Agreements
Effective May 29, 2002, ACC entered into an employment agreement with
Philip Christopher (the "Agreement"). The Agreement, unless terminated earlier,
shall continue until May 29, 2007 and thereafter shall automatically extend by
consecutive twelve-month periods unless terminated by ACC on written notice.
Pursuant to the Agreement, Mr. Christopher receives a base salary of
$500,000, subject to annual Consumer Price Index increases, and an annual bonus
equal to two percent (2%) of ACC's annual earnings before income taxes.
The Agreement further provides for equity incentives, vesting of stock
options, reimbursement of reasonable business expenses and use of an automobile.
The Agreement also provided for a bonus pool of $3.2 million in fiscal 2002, of
which Mr. Christopher received $1.8 million (See Bonus disclosure in the Summary
Compensation Table).
In the event ACC terminates Mr. Christopher's employment without cause or
if Mr. Christopher resigns his employment within ninety (90) days after: a
significant adverse change in his authority and responsibilities; a reduction in
his base salary; nonpayment of his bonus; or a material breach by ACC of any
obligation under this Agreement, Mr. Christopher is entitled to receive a
separation payment equal to his salary for the remainder of the contract term,
plus an average annual bonus plus a cash payment of one million dollars. Mr.
Christopher will not be entitled to a separation payment if his employment with
ACC is terminated for any reason after the fifth anniversary of the effective
date.
The Agreement also contains non-competition and non-solicitation covenants
that are effective for one year following termination of employment for any
reason.
Option Grants in Last Fiscal Year (2003)
No options were granted in the fiscal year ended November 30, 2003.
9
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth information concerning option exercises in
fiscal year 2003 and option holdings as of November 30, 2003 with respect to
each of the Named Officers. No stock appreciation rights were outstanding at the
end of 2003.
Number of Value* of
Securities In-the-money
Shares Underlying Options at
Acquired Value Options at November 30,
Name on Exercise Realized ($) November 30, 2003 2003
---- ------------- ------------ ----------------- ---------------
Exercisable/ Exercisable/
Unexercisable Unexercisable
John J. Shalam N/A N/A 525,000/0 $3,614,125/$0
Philip Christopher N/A N/A 1,011,000/0 $2,513,545/$0
Charles M. Stoehr N/A N/A 172,500/0 $ 357,788/$0
Patrick M. Lavelle 34,500 $312,085 211,200/0 $ 70,364/$0
Richard A. Maddia N/A N/A 40,000/0 $ 125,650/$0
-------------
* Based on the fair market value of the Company's Common Stock at November
30, 2003 less the exercise price payable for such shares.
10
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, INDUSTRY INDEX AND BROAD MARKET
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG AUDIOVOX CORPORATION,
NASDAQ MARKET INDEX AND SIC CODE INDEX
[GRAPH OMITTED]
1998 1999 2000 2001 2002 2003
---- ---- ---- ---- ---- ----
AUDIOVOX CORPORATION 100.00 462.14 149.51 112.00 167.61 217.01
SIC CODE INDEX 100.00 110.72 84.64 85.23 73.72 91.46
NASDAQ MARKET INDEX 100.00 163.78 136.01 101.78 79.66 106.17
ASSUMES $100 INVESTED ON NOV. 30, 1998
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING NOV. 30, 2003
The annual changes for the five year period are based on the assumption
that $100 had been invested on December 1, 1998 and that all quarterly dividends
were reinvested. The total cumulative dollar returns shown on the graph
represent the value that such investments would have had on November 30, 2003.
11
Item 12 - Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The following table sets forth, as of March 24, 2004, certain information
with respect to shares beneficially owned by (i) each person who is known by the
Company to be the beneficial owner of more than five percent (5%) of the
Company's outstanding shares of Common Stock, (ii) each of the Company's
directors and the executive officers named in the Summary Compensation Table and
(iii) all current directors and executive officers as a group.
Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example, persons share the
power to vote or the power to dispose of the shares). In addition, shares are
deemed to be beneficially owned by a person if the person has the right to
acquire shares (for example, upon exercise of an option or warrant) within sixty
(60) days of the date as of which the information is provided. In computing the
percentage ownership of any person, the number of shares is deemed to include
the number of shares beneficially owned by such person (and only such person) by
reason of such acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not necessarily
reflect the person's actual voting power at any particular date.
Amount of Percent of
Name and Address Beneficial Outstanding
of Beneficial Owner(1) Ownership (2) Shares
---------------------- ---------------------- ----------------
John J. Shalam................................................ 4,588,129 (3) 19.6%
Philip Christopher............................................ 1,215,474 5.6%
Patrick M. Lavelle............................................ 228,578 1.1%
Charles M. Stoehr............................................. 186,500 *
Richard Maddia................................................ 45,040 *
Ann M. Boutcher............................................... 14,123 *
Paul C. Kreuch, Jr............................................ 12,000 *
Dennis F. McManus............................................. 10,000 *
Irving Halevy................................................. - *
Peter Lesser.................................................. - *
All directors and officers as a group (10 persons)............ 6,299,844 25.3%
Name and Address of Other 5% Holders of Common Stock
Dimensional Fund Advisors, Inc. (4)........................... 1,394,860 6.7%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
Barclays Global Investors, N.A. (5)........................... 1,069,622 5.2%
45 Fremont Street
San Francisco, CA 94105
Kahn Brothers & Co., Inc. (6)................................. 1,693,445 8.2%
1299 Ocean Ave, 11th Floor
Santa Monica, CA 90401
12
-----------
* Represents less than 1%
(1) The address of each person, unless otherwise noted, is c/o Audiovox
Corporation, 150 Marcus Blvd., Hauppauge, NY 11788. In presenting shares
beneficially owned and in calculating each holder's percentage ownership,
only options exercisable by that person within 60 days of March 24, 2004
and no options exercisable by any other person are deemed to be
outstanding.
(2) The number of shares stated as "beneficially owned" includes stock options
currently exercisable as follows: Mr. Shalam - 525,000, Mr. Christopher -
1,011,000, Mr. Lavelle - 211,200, Mr. Stoehr - 172,500, Mr. Maddia -
40,000, Ms. Boutcher - 10,000, Mr. Kreuch - 10,000 and Mr. McManus -
10,000.
(3) Includes 2,144,152 shares of Class B common stock held by Mr. Shalam that
he may convert into Class A common stock at any time. Excludes 116,802
shares of Class B common stock and 2,002 shares of Class A common stock
that are held in irrevocable trusts for the benefit of Mr. Shalam's three
sons.
(4) Information reported is derived from a Schedule 13G dated February 3, 2004
of Dimensional Fund Advisors Inc. and filed with the Securities and
Exchange Commission on February 6, 2004.
(5) Information reported is derived from a Schedule 13G of Barclays Global
Investors, N.A. filed with the Securities and Exchange Commission on
February 27, 2004.
(6) Information reported is derived from a Schedule 13G of Kahn Brothers & Co.,
Inc. filed with the Securities and Exchange Commission on February 10,
2004.
13
Item 13 - Certain Relationships and Related Transactions
Transactions With Management
We lease some of our equipment, office, warehouse and distribution
facilities from entities in which our executive officer owns a controlling
interest. The following table identifies leases that result in payments in
excess of $60,000 to any of the related entities.
Rent Paid
During
Real Property Fiscal
Location Expiration Date Owner of Property Year 2003
------------------------ --------------- ------------------------------- ---------
150 Marcus Blvd.
Hauppauge, NY November 30, 2008 150 Marcus Blvd. Realty LLC (1) $538,144
16808 Marquardt Avenue
Cerritos, CA March 31, 2009 Marquardt Associates (2) 306,206
555 Wireless Blvd.
Hauppauge, NY September 30, 2006 Wireless Blvd. Realty, LLC (3) 570,684
110 Marcus Blvd. Terminated
Hauppauge, NY November 1, 2003 110 Marcus Blvd. Realty LLC (4) 211,874
Equipment
Location
March 31, 2005 Wireless Blvd. Realty, LLC (3) 410,640
555 Wireless Blvd.
Hauppauge, NY
-------------
(1) Property owned by 150 Marcus Blvd. Realty LLC, a New York limited liability
company, of which John J. Shalam owns 1% and Mr. Shalam's three sons own
the remaining 99%.
(2) Property owned by Marquardt Associates, a California partnership, owned 60%
by John J. Shalam and 40% by Ardama Capital LLC, a New York limited
liability company owned by Mr. Shalam's three sons.
(3) Property owned or leased by Wireless Blvd. Realty, LLC, a New York limited
liability company, owned 98% by the Shalam Long Term Trust, 1% by John J.
Shalam and 1% by Mr. Shalam's three sons. The Shalam Long Term Trust is a
grantor trust of which Mr. Shalam is the Grantor and his three sons are the
beneficiaries.
(4) Property owned or leased by 110 Marcus Blvd. Realty, LLC, a New York
limited liability company, of which John J. Shalam owns 1% and Mr. Shalam's
sons own the remaining 99%.
14
We believe that the terms of each of the leases are no less favorable to us
than those that could have been obtained from unaffiliated third parties. To the
extent that conflicts of interest arise between us and such persons in the
future, such conflicts will be resolved by a committee of disinterested
directors.
Item 14 - Principal Accountant Fees and Services
The Audit Committee of the Board of Directors of the Company has appointed
the firm Grant Thornton to serve as independent auditors of the Company for the
fiscal year ending November 30, 2004, subject to ratification of this
appointment by the stockholders of the Company. Grant Thornton was first
appointed in October 2003 and replaced KPMG LLP ("KPMG"), which had served as
independent auditors of the Company for many years. Grant Thornton audited the
Company's financial statements at November 30, 2003 and for the 2003 fiscal
year, and is considered by management of the Company to be well qualified. The
firm has advised the Company that neither it nor any of its members has any
direct or material indirect financial interest in the Company.
For the fiscal year ended November 30, 2003, the Company paid the following
fees to Grant Thornton (and its affiliates) for services rendered during the
year or for the audit in respect of that year:
Fee Type (In Thousands)
--------
Audit Fees(1)........................................ $1,213
Audit-Related Fees(2) ............................... 79
Tax Fees(3) ......................................... 21
All Other Fees....................................... -
------
Total $1,313
======
----------
(1) Fees paid for professional services rendered in connection with the audit
of the annual financial statements and statutory audits of certain
international subsidiaries for each fiscal year.
(2) Includes fees paid for professional services rendered in connection with
the audits of the Company's employee benefit plans and other consulting
services.
(3) Includes fees paid for tax compliance, tax planning and related tax
services.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services by Grant Thornton is compatible with maintaining
auditor independence. In 2003, the Audit Committee adopted a policy concerning
approval of audit and non-audit services to be provided by Grant Thornton . The
policy requires that all services Grant Thornton may provide to the Company,
including audit services and permitted audit-related and non-audit services, be
pre-approved by the Committee. The Chairman of the Audit Committee may approve
certain permitted non-audit services in between Committee meetings, which
services are subsequently reported to and approved by the Committee. In
addition, for particular permitted services, the Chief Financial Officer may
approve the engagement of Grant Thornton provided such engagement will amount to
fees of less than $50,000 and such engagement is reported to the Chairman of the
Committee and reported to and ratified by the Committee at its next meeting.
15
One or more representatives of Grant Thornton will be present at the Annual
Meeting of Stockholders, will have an opportunity to make a statement if he or
she desires to do so and will be available to respond to appropriate questions.
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AUDIOVOX CORPORATION
March 29, 2004 BY: /s/John J. Shalam
------------------------------
John J. Shalam, President
and Chief Executive Officer
17
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
President;
Chief Executive Officer
s/John J. Shalam (Principal Executive Officer) March 29, 2004
--------------------------------
John J. Shalam and Director
Executive Vice President and
s/Philip Christopher Director March 29, 2004
--------------------------------
Philip Christopher
Senior Vice President,
Chief Financial Officer
(Principal Financial and March 29, 2004
s/Charles M. Stoehr Accounting Officer) and
--------------------------------
Charles M. Stoehr Director
s/Patrick M. Lavelle Director March 29, 2004
--------------------------------
Patrick M. Lavelle
s/Ann Boutcher Director March 29, 2004
--------------------------------
Ann Boutcher
s/Richard A. Maddia Director March 29, 2004
--------------------------------
Richard A. Maddia
s/Paul C. Kreuch, Jr. Director March 29, 2004
--------------------------------
Paul C. Kreuch, Jr.
s/Dennis McManus Director
--------------------------------
Dennis McManus March 29, 2004
s/Irving Halevy Director
--------------------------------
Irving Halevy March 29, 2004
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Signature Title Date
---------
/s/Peter A. Lesser Director March 29, 2004
-------------------
Peter A. Lesser
19