Note 11. Lease Obligations

12 Months Ended

Feb. 29, 2012

Lease Obligations [Abstract]

Leases of Lessee Disclosure [Text Block]

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 and expires on November 30, 2026.  The Company currently subleases the building to Personal Communication Devices, LLC (Formerly UTStarcom) for monthly payments of $50 for a term of three years, terminating on October 31, 2012. We also lease another facility from our principal stockholder which expires on November 30, 2016.  

The Company leases certain facilities from its principal stockholder. At February 29, 2012, minimum annual rental payments on these related party leases, in addition to the capital lease payments, which are included in the table below, are as follows:

2013	$	2,683
2014	2,719
2015	2,752
2016	2,789
2017	1,223
Thereafter	6,468
Total	$	18,634

As a result of the acquisition of Klipsch, the Company assumed a lease for the facility housing the Klipsch headquarters in Indianapolis, IN. The lessor was Woodview, LLC ("Woodview"), of which certain partners are executives of Klipsch. Lease payments were based on current market rates, as determined by independent valuation, through the lease expiration on May 31, 2012. On April 20, 2012, the Company purchased this building from Woodview for $10.9 million. The Company paid $3.1 million cash at closing, plus $106 in closing costs, and assumed the mortgage held by Woodview in the amount of $7.8 million. The mortgage is due in May 2013 and bears interest at 5.85%

Total lease payments required under all related party leases for the five-year period ending February 28, 2017 are $12,166.

At February 29, 2012, the Company was obligated under non-cancellable capital and operating leases for equipment and warehouse facilities for minimum annual rental payments as follows:

	Capital Lease		Operating Leases
2013	$	574	$	6,907
2014	574		5,520
2015	574		4,926
2016	574		4,235
2017	588		1,581
Thereafter	6,466		1,816
Total minimum lease payments	9,350		$	24,985
Less:  minimum sublease income	550
Net	8,800
Less:  amount representing interest	3,453
Present value of net minimum lease payments	5,347
Less: current installments included in accrued expenses and other current liabilities	151
Long-term capital obligation	$	5,196

Rental expense for the above-mentioned operating lease agreements and other leases on a month-to-month basis approximated $4,797, $2,741 and $2,044 for the years ended February 29, 2012, February 28, 2011 and February 28, 2010, respectively.