VOXX Earnings 2019-05-31

VOXX 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

10-Q 1 voxx-10q_20190531.htm 10-Q voxx-10q_20190531.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-28839

VOXX International Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		13-1964841 (IRS Employer Identification No.)
2351 J Lawson Blvd., Orlando, Florida (Address of principal executive offices)		32824 (Zip Code)

(800) 654-7750 (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol:	Name of Each Exchange on which Registered
Class A Common Stock $.01 par value	VOXX	The Nasdaq Stock Market LLC

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 requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company, as defined in Rule 12b-2 of the Exchange Act.:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of each class of the issuer's common stock outstanding as of the latest practicable date.

Class		As of July 9, 2019
Class A Common Stock		21,938,100 Shares
Class B Common Stock		2,260,954 Shares

VOXX International Corporation and Subsidiaries

Table of Contents

		Page
PART I	FINANCIAL INFORMATION

Item 1	FINANCIAL STATEMENTS
	Consolidated Balance Sheets at May 31, 2019 (unaudited) and February 28, 2019	3
	Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three Months Ended May 31, 2019 and 2018	4
	Unaudited Consolidated Statements of Stockholders’ Equity for the Three Months Ended May 31, 2019 and 2018	5
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended May 31, 2019 and 2018	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	30
Item 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39
Item 4	CONTROLS AND PROCEDURES	39

PART II	OTHER INFORMATION

Item 1	LEGAL PROCEEDINGS	40
Item 1A	RISK FACTORS	40
Item 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	40
Item 6	EXHIBITS	41
SIGNATURES		42

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VOXX International Corporation and Subsidiaries

Consolidated Balance Sheets

(In thousands, except share and per share data)

	May 31, 2019			February 28, 2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	60,004		$	58,236
Accounts receivable, net		61,585			73,391
Inventory, net		103,275			102,379
Receivables from vendors		547			1,009
Prepaid expenses and other current assets		9,572			10,449
Income tax receivable		1,041			921
Total current assets		236,024			246,385
Investment securities		2,994			2,858
Equity investment		21,853			21,885
Property, plant and equipment, net		59,695			60,493
Operating lease, right of use asset		2,187			—
Goodwill		54,785			54,785
Intangible assets, net		117,588			119,449
Deferred income tax assets		78			79
Other assets		2,816			2,877
Total assets	$	498,020		$	508,811
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	32,349		$	31,143
Accrued expenses and other current liabilities		34,395			39,129
Income taxes payable		227			1,349
Accrued sales incentives		11,069			13,574
Current portion of long-term debt		8,554			10,021
Total current liabilities		86,594			95,216
Long-term debt, net of debt issuance costs		5,859			5,776
Finance lease liabilities, less current portion		404			516
Operating lease liabilities, less current portion		1,689			—
Deferred compensation		2,931			2,605
Deferred income tax liabilities		4,148			5,284
Other tax liabilities		1,337			1,332
Other long-term liabilities		3,074			2,981
Total liabilities		106,036			113,710
Commitments and contingencies
Stockholders' equity:
Preferred stock:
No shares issued or outstanding (see Note 20)		—			—
Common stock:
Class A, $.01 par value, 60,000,000 shares authorized, 24,106,194 shares issued and 21,938,100 shares outstanding at both May 31, 2019 and February 28, 2019		242			242
Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding at both May 31, 2019 and February 28, 2019		22			22
Paid-in capital		297,105			296,946
Retained earnings		147,434			148,582
Accumulated other comprehensive loss		(17,848	)		(16,944	)
Treasury stock, at cost, 2,168,094 shares of Class A Common Stock at both May 31, 2019 and February 28, 2019		(21,176	)		(21,176	)
Total VOXX International Corporation stockholders' equity		405,779			407,672
Non-controlling interest		(13,795	)		(12,571	)
Total stockholders' equity		391,984			395,101
Total liabilities and stockholders' equity	$	498,020		$	508,811

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income

(In thousands, except share and per share data)

	Three months ended May 31,
	2019			2018
Net sales	$	93,454		$	100,855
Cost of sales		67,445			73,178
Gross profit		26,009			27,677
Operating expenses:
Selling		9,881			10,694
General and administrative		17,425			16,112
Engineering and technical support		5,807			5,911
Total operating expenses		33,113			32,717
Operating loss		(7,104	)		(5,040	)
Other income (expense):
Interest and bank charges		(997	)		(1,100	)
Equity in income of equity investee		1,440			1,814
Other, net		1,644			661
Total other income, net		2,087			1,375
Loss before income taxes		(5,017	)		(3,665	)
Income tax benefit		(2,645	)		(1,113	)
Net loss		(2,372	)		(2,552	)
Less: net loss attributable to non-controlling interest		(1,224	)		(1,613	)
Net loss attributable to VOXX International Corporation	$	(1,148	)	$	(939	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		(811	)		(2,020	)
Derivatives designated for hedging		(107	)		442
Pension plan adjustments		14			36
Unrealized holding gain on available-for-sale investment securities, net of tax		—			24
Other comprehensive loss, net of tax		(904	)		(1,518	)
Comprehensive loss attributable to VOXX International Corporation	$	(2,052	)	$	(2,457	)
Loss per share - basic: Attributable to VOXX International Corporation	$	(0.05	)	$	(0.04	)
Loss per share - diluted: Attributable to VOXX International Corporation	$	(0.05	)	$	(0.04	)
Weighted-average common shares outstanding (basic)		24,355,791			24,316,103
Weighted-average common shares outstanding (diluted)		24,355,791			24,316,103

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Stockholders' Equity

(In thousands, except share and per share data)

	Class A and Class B Common Stock			Paid-in Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Non- controlling Interests			Treasury Stock			Total Stock- holders' Equity
Balances at February 28, 2019	$	264		$	296,946	$	148,582		$	(16,944	)	$	(12,571	)	$	(21,176	)	$	395,101
Net loss		—			—		(1,148	)		—			(1,224	)		—			(2,372	)
Other comprehensive loss, net of tax		—			—		—			(904	)		—			—			(904	)
Stock-based compensation expense		—			159		—			—			—			—			159
Balances at May 31, 2019	$	264		$	297,105	$	147,434		$	(17,848	)	$	(13,795	)	$	(21,176	)	$	391,984
Balances at February 28, 2018	$	278		$	296,395	$	194,673		$	(14,222	)	$	(5,830	)	$	(21,176	)	$	450,118
Net loss		—			—		(939	)		—			(1,613	)		—			(2,552	)
Other comprehensive loss, net of tax		—			—		—			(1,518	)		—			—			(1,518	)
Adjustment to common stock		(14	)		—		—			—			—			—			(14	)
Stock-based compensation expense		—			107		—			—			—			—			107
Balances at May 31, 2018	$	264		$	296,502	$	193,734		$	(15,740	)	$	(7,443	)	$	(21,176	)	$	446,141

VOXX International Corporation and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

	Three months ended May 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(2,372	)	$	(2,552	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		3,292			2,962
Amortization of debt discount		206			206
Bad debt expense		52			95
(Gain) loss on forward contracts		(107	)		244
Equity in income of equity investees		(1,440	)		(1,814	)
Distribution of income from equity investees		1,472			1,444
Deferred income tax benefit		(1,154	)		(716	)
Non-cash compensation adjustment		326			(600	)
Stock based compensation expense		159			107
Loss (gain) on sale of property, plant and equipment		1			(1	)
Changes in operating assets and liabilities:
Accounts receivable		11,401			14,606
Inventory		(1,278	)		(1,531	)
Receivables from vendors		462			(1,226	)
Prepaid expenses and other		1,099			8
Investment securities-trading		(136	)		788
Accounts payable, accrued expenses, accrued sales incentives and other liabilities		(6,502	)		(6,385	)
Income taxes payable		(1,213	)		(2,350	)
Net cash provided by operating activities		4,268			3,285
Cash flows used in investing activities:
Purchases of property, plant and equipment		(703	)		(179	)
Proceeds from sale of property, plant and equipment		—			1
Issuance of notes receivable		—			(1,700	)
Net cash used in investing activities		(703	)		(1,878	)
Cash flows (used in) provided by financing activities:
Principal payments on finance lease obligation		(108	)		(86	)
Repayment of bank obligations		(1,428	)		(679	)
Borrowings on bank obligations		—			911
Net cash (used in) provided by financing activities		(1,536	)		146
Effect of exchange rate changes on cash		(261	)		(3,466	)
Net increase (decrease) in cash and cash equivalents		1,768			(1,913	)
Cash and cash equivalents at beginning of period		58,236			51,740
Cash and cash equivalents at end of period	$	60,004		$	49,827

See accompanying notes to unaudited consolidated financial statements.

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

(Amounts in thousands, except share and per share data)

(1)	Basis of Presentation

The accompanying unaudited interim consolidated financial statements of VOXX International Corporation and Subsidiaries ("Voxx" or the "Company") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with accounting principles generally accepted in the United States of America and include all adjustments (consisting of normal recurring adjustments), which, in the opinion of management, are necessary to present fairly the consolidated financial position, results of operations, changes in stockholders’ equity, and cash flows for all periods presented. The results of operations are not necessarily indicative of the results to be expected for the full fiscal year or any interim period. These unaudited consolidated financial statements do not include all disclosures associated with consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. Accordingly, these statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto contained in the Company's Form 10-K for the fiscal year ended February 28, 2019.

Effective March 1, 2019, the Company revised its reportable segments to better reflect the way the Company now manages its business. To reflect management's revised perspective, the Company now classifies its operations in the following three reportable segments: Automotive Electronics, Consumer Electronics, and Biometrics. Prior year segment amounts have been reclassified to conform to the current presentation. See Note 22 for the Company's segment reporting disclosures.

(2)	Net (Loss) Income Per Common Share

Basic net (loss) income per common share, net of non-controlling interest, is based upon the weighted-average common shares outstanding during the period. Diluted net (loss) income per common share, net of non-controlling interest, reflects the potential dilution that would occur if common stock equivalent securities or other contracts to issue common stock were exercised or converted into common stock.

There are no reconciling items which impact the numerator of basic and diluted net (loss) income per common share. A reconciliation between the denominator of basic and diluted net (loss) income per common share is as follows:

	Three months ended May 31,
	2019		2018
Weighted-average common shares outstanding (basic)		24,355,791		24,316,103
Effect of dilutive securities:
Restricted stock		—		—
Weighted-average common shares and potential common shares outstanding (diluted)		24,355,791		24,316,103

Restricted stock totaling 627,544 and 439,299 for the three months ended May 31, 2019 and 2018, respectively, were not included in the net (loss) income per diluted share calculation because the exercise price of the restricted stock was greater than the average market price of the Company’s common stock during these periods, or the inclusion of these components would have been anti-dilutive.

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(Amounts in thousands, except share and per share data)

(3)	Investment Securities

As of May 31, 2019, and February 28, 2019, the Company had the following investments:

	May 31, 2019
	Fair Value
Investment Securities
Marketable Equity Securities
Mutual funds	$	2,994
Total Marketable Equity Securities		2,994
Total Investment Securities	$	2,994

	February 28, 2019
	Fair Value
Investment Securities
Marketable Equity Securities
Mutual funds	$	2,858
Total Marketable Securities		2,858
Total Investment Securities	$	2,858

Equity Securities

On March 1, 2018, the Company adopted ASU 2016-01, "Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"), the impact of which resulted in a cumulative effect adjustment of $24, which was recorded in other income (expense) in the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the three months ended May 31, 2018, rather than in retained earnings, as it was not considered material to the Company's consolidated financial statements for the period.

Mutual Funds

The Company’s mutual funds are held in connection with its deferred compensation plan. Changes in the carrying value of these securities are offset by changes in the corresponding deferred compensation liability.

(4)	Fair Value Measurements and Derivatives

The Company applies the authoritative guidance on “Fair Value Measurements," which among other things, requires enhanced disclosures about investments that are measured and reported at fair value. This guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 - Quoted market prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable.

Level 3 - Unobservable inputs developed using the Company's estimates and assumptions, which reflect those that market participants would use.

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(Amounts in thousands, except share and per share data)

The following table presents financial assets measured at fair value on a recurring basis at May 31, 2019:

			Fair Value Measurements at Reporting Date Using
	Total		Level 1		Level 2
Cash and cash equivalents:
Cash and money market funds	$	60,004	$	60,004	$	—
Derivatives:
Designated for hedging	$	19	$	—	$	19
Investment securities:
Mutual funds	$	2,994	$	2,994	$	—
Total investment securities	$	2,994	$	2,994	$	—

The following table presents financial assets and liabilities measured at fair value on a recurring basis at February 28, 2019:

			Fair Value Measurements at Reporting Date Using
	Total		Level 1		Level 2
Cash and cash equivalents:
Cash and money market funds	$	58,236	$	58,236	$	—
Derivatives:
Designated for hedging	$	88	$	—	$	88
Investment securities:
Mutual funds	$	2,858	$	2,858	$	—
Total investment securities	$	2,858	$	2,858	$	—

At May 31, 2019, the carrying amount of the Company's accounts receivable, short-term debt, accounts payable, accrued expenses, bank obligations and long-term debt approximates fair value because of (i) the short-term nature of the financial instrument; (ii) the interest rate on the financial instrument being reset every quarter to reflect current market rates; or (iii) the stated or implicit interest rate approximates the current market rates or are not materially different from market rates.

Derivative Instruments

The Company's derivative instruments include forward foreign currency contracts utilized to hedge a portion of its foreign currency inventory purchases. The forward foreign currency derivatives qualifying for hedge accounting are designated as cash flow hedges and valued using observable forward rates for the same or similar instruments (Level 2). The duration of open forward foreign currency contracts ranges from 1 month - 9 months and are classified in the balance sheet according to their terms. The Company also has an interest rate swap agreement as of May 31, 2019 that hedges interest rate exposure related to the forecasted outstanding balance of its Florida Mortgage, with monthly payments due through March 2026. The swap agreement locks the interest rate on the debt at 3.48% (inclusive of credit spread) through the maturity date of the loan. Interest rate swap agreements qualifying for hedge accounting are designated as cash flow hedges and valued based on a comparison of the change in fair value of the actual swap contracts designated as the hedging instruments and the change in fair value of a hypothetical swap contract (Level 2). We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. Interest rate swaps are classified in the balance sheet as either assets or liabilities based on the fair value of the instruments at the end of the period.

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(Amounts in thousands, except share and per share data)

Financial Statement Classification

The following table discloses the fair value as of May 31, 2019 and February 28, 2019 of derivative instruments:

	Derivative Assets and Liabilities
		Fair Value
	Account	May 31, 2019			February 28, 2019
Designated derivative instruments
Foreign currency contracts	Prepaid expenses and other current assets	$	275		$	172
Interest rate swap agreements	Other long-term liabilities		(256	)		(84	)
Total derivatives		$	19		$	88

Cash Flow Hedges

It is the Company's policy to enter into derivative instrument contracts with terms that coincide with the underlying exposure being hedged. As such, the Company’s derivative instruments are expected to be highly effective. On March 1, 2019, the Company adopted ASU No. 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities, which eliminated the requirement to separately measure and report hedge ineffectiveness. For derivative instruments that are designated and qualify as a cash flow hedge, the entire change in fair value of the hedging instrument included in the assessment of the hedge ineffectiveness is recorded to other comprehensive income (“OCI”). When the amounts recorded in OCI are reclassified to earnings, they are presented in the same income statement line item as the effect of the hedged item. The adoption of ASU No. 2017-12 did not have a material impact on the Company’s consolidated financial statements.

During Fiscal 2019, the Company entered into forward foreign currency contracts, which have a current outstanding notional value of $7,200 and are designated as cash flow hedges at May 31, 2019. The current outstanding notional value of the Company's interest rate swap at May 31, 2019 is $7,989. For cash flow hedges, the gain or loss is reported as a component of Other comprehensive (loss) income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The net (loss) income recognized in Other comprehensive (loss) income for foreign currency contracts is expected to be recognized in Cost of sales within the next twelve months. No amounts were excluded from the assessment of hedge effectiveness during the respective periods. The gain or loss on the Company’s interest rate swap is recorded in Other comprehensive (loss) income and subsequently reclassified into Interest and bank charges in the period in which the hedged transaction affects earnings. As of May 31, 2019, no foreign currency contracts or interest rate swaps originally designated for hedge accounting were de-designated or terminated.

Activity related to cash flow hedges recorded during the three months ended May 31, 2019 and 2018 was as follows:

	Three months ended
	May 31, 2019
	Pretax Gain (Loss) Recognized in Other Comprehensive Income			Pretax (Loss) Gain Reclassified from Accumulated Other Comprehensive Income		Gain (Loss) for Ineffectiveness
Cash flow hedges
Foreign currency contracts	$	218		$	119	$	—
Interest rate swaps		(172	)		—		—

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(Amounts in thousands, except share and per share data)

	Three months ended
	May 31, 2018
	Pretax Gain Recognized in Other Comprehensive Income		Pretax Loss Reclassified from Accumulated Other Comprehensive Income			Gain for Ineffectiveness in Other Income (a)
Cash flow hedges
Foreign currency contracts	$	366	$	(235	)	$	33
Interest rate swaps		11		—			—

(a)

Amount represents the ineffectiveness recorded in the prior year quarter. Prior to the adoption of ASU 2017-12, hedge ineffectiveness (as defined under ASC 815) was recorded in Other income (loss).

(5)	Accumulated Other Comprehensive (Loss) Income

The Company’s accumulated other comprehensive (loss) income consists of the following:

	Foreign Currency Translation Losses			Pension plan adjustments, net of tax			Derivatives designated in a hedging relationship, net of tax			Total
Balance at February 28, 2019	$	(16,222	)	$	(798	)	$	76		$	(16,944	)
Other comprehensive (loss) income before reclassifications		(811	)		14			(20	)		(817	)
Reclassified from accumulated other comprehensive loss		—			—			(87	)		(87	)
Net current-period other comprehensive loss		(811	)		14			(107	)		(904	)
Balance at May 31, 2019	$	(17,033	)	$	(784	)	$	(31	)	$	(17,848	)

During the three months ended May 31, 2019, the Company recorded tax expense related to derivatives designated in a hedging relationship of $32 and pension plan adjustments of $0.

The other comprehensive (loss) income before reclassification of $(811) includes the remeasurement of intercompany transactions of a long-term investment nature of $(159) with certain subsidiaries whose functional currency is not the U.S. dollar, and $(652) from translating the financial statements of the Company's non-U.S. dollar functional currency subsidiaries into our reporting currency, which is the U.S. dollar.

(6)	Supplemental Cash Flow Information

The following is supplemental information relating to the Unaudited Consolidated Statements of Cash Flows, including continuing and discontinued operations:

	Three months ended May 31,
	2019		2018
Cash paid during the period:
Interest (excluding bank charges)	$	337	$	346
Income taxes (net of refunds)		289		1,851

(7)	Accounting for Stock-Based Compensation

The Company has various stock-based compensation plans, which are more fully described in Note 1 of the Company’s Form 10-K for the fiscal year ended February 28, 2019.

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(Amounts in thousands, except share and per share data)

A restricted stock award is an award of common stock that is subject to certain restrictions during a specified period. Restricted stock awards are independent of option grants and are subject to forfeiture if employment terminates for a reason other than death, disability or retirement, prior to the release of the restrictions. The Company has a Supplemental Executive Retirement Plan (SERP), which was established in Fiscal 2014. Shares are granted based on certain performance criteria and vest on the later of three years from the date of grant, or the grantee reaching the age of 65 years. The shares will also vest upon termination of the grantee's employment by the Company without cause, provided that the grantee, at the time of termination, has been employed by the Company for at least 10 years, or as a result of the sale of all of the issued and outstanding stock, or all, or substantially all, of the assets of the subsidiary of which the grantee serves as CEO and/or President. When vested shares are issued to the grantee, the awards will be settled in shares or in cash, at the Company's sole option. The grantee cannot transfer the rights to receive shares before the restricted shares vest. There are no market conditions inherent in the award, only an employee performance requirement, and the service requirement that the respective employee continues employment with the Company through the vesting date. The Company expenses the cost of the restricted stock awards on a straight-line basis over the requisite service period of each employee. For these purposes, the fair market value of the restricted stock is determined based on the mean of the high and low price of the Company's common stock on the grant dates.

The following table presents a summary of the Company's restricted stock activity for the three months ended May 31, 2019:

	Number of Shares		Weighted Average Grant Date Fair Value
Balance at February 28, 2019		627,544	$	6.60
Granted		—		—
Forfeited		—		—
Balance at May 31, 2019		627,544	$	6.60
Vested and unissued at May 31, 2019		156,737	$	9.96

During the three months ended May 31, 2019, the Company recorded $159 in stock-based compensation related to restricted stock awards. As of May 31, 2019, there was approximately $1,400 of unrecognized stock-based compensation expense related to unvested restricted stock awards.

(8)	Supply Chain Financing

The Company has supply chain financing agreements and factoring agreements that were entered into for the purpose of accelerating receivable collection and better managing cash flow. The balances under the agreements are sold without recourse and are accounted for as sales of accounts receivable. Total receivable balances sold for the three months ended May 31, 2019, net of discounts, were $22,649, compared to $22,979 for the three months ended May 31, 2018.

(9)	Research and Development

Expenditures for research and development are charged to expense as incurred. Such expenditures amounted to $1,863 for the three months ended May 31, 2019, compared to $2,358 for the three months ended May 31, 2018, net of customer reimbursements, and are included within Engineering and technical support expenses on the Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income.

VOXX International Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements, continued

(Amounts in thousands, except share and per share data)

(10)	Goodwill and Intangible Assets

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$4.12	24	$100

10-Q	2019-05-31	Quarter: 2019-05-31
10-K	2019-02-28	Annual: 2019-02-28
10-Q	2018-11-30	Quarter: 2018-11-30
10-Q	2018-08-31	Quarter: 2018-08-31
10-Q	2018-05-31	Quarter: 2018-05-31
10-K	2018-02-28	Annual: 2018-02-28
10-Q	2017-11-30	Quarter: 2017-11-30
10-Q	2017-08-31	Quarter: 2017-08-31
10-Q	2017-05-31	Quarter: 2017-05-31
10-K	2017-02-28	Annual: 2017-02-28
10-Q	2016-11-30	Quarter: 2016-11-30
10-Q	2016-08-31	Quarter: 2016-08-31
10-Q	2016-05-31	Quarter: 2016-05-31
10-K	2016-02-29	Annual: 2016-02-29
10-Q	2015-11-30	Quarter: 2015-11-30
10-Q	2015-08-31	Quarter: 2015-08-31
10-Q	2015-05-31	Quarter: 2015-05-31
10-K	2015-02-28	Annual: 2015-02-28
10-Q	2014-11-30	Quarter: 2014-11-30
10-Q	2014-08-31	Quarter: 2014-08-31
10-Q	2014-05-31	Quarter: 2014-05-31
10-K	2014-02-28	Annual: 2014-02-28
10-Q	2013-11-30	Quarter: 2013-11-30

8-K	2019-07-25	Shareholder Vote, Regulation FD, Exhibits
8-K	2019-07-08	Earnings, Officers, Other Events, Exhibits
8-K	2019-06-07	Enter Agreement, Other Events, Exhibits
8-K	2019-05-14	Earnings, Officers, Other Events
8-K	2019-04-29	Other Events
8-K	2019-01-23	Other Events
8-K	2019-01-09	Earnings, Officers, Other Events
8-K	2018-10-10	Earnings, Other Events
8-K	2018-07-19	Shareholder Vote, Regulation FD
8-K	2018-07-10	Earnings, Other Events
8-K	2018-05-14	Earnings, Other Events
8-K	2018-04-19	Enter Agreement, Off-BS Arrangement
8-K	2018-01-09	Earnings, Other Events

NOC	Northrop Grumman	50,090
DOOR	Masonite International	1,400
XERS	Xeris	313
KNDI	Kandi Technologies Group	263
MRNS	Marinus Pharmaceuticals	242
FVCB	FVCBankcorp	229
NTWK	Netsol Technologies	80
WYY	Widepoint	50
WLB	Westmoreland Coal	0
ICGL	Image Chain Group Limited	0

EX-31.1	voxx-ex311_9.htm
EX-31.2	voxx-ex312_8.htm
EX-32.1	voxx-ex321_7.htm
EX-32.2	voxx-ex322_6.htm