Audiovox 1997 Annual Report Download - page 4

This past year has been an exciting one, highlighted by a record
number of cellular telephones sold; the successful launch of
Audiovox Venezuela; a major joint venture agreement and the
introduction of a new product line, MobileVideo.
In addition to those developments, the Company achieved the
highest sales and profits from operations in our history, as sales
exceeded $639 million and profits rose to $21 million during
1997. Strong sales programs and tight operating controls in all of
the Company’s product groups, cellular, auto sound and vehicle
security, contributed to this result.
Our communications subsidiary, Audiovox Communications
Corp., sold a record three million cellular telephones in 1997,
bringing the total number of Audiovox phones in the market-
place to over 10 million. Our Automotive Division exceeded
both sales and profit projections for the year.
During 1997, we completed the successful launch of Audiovox
Venezuela, which finished the year with $10 million in sales and
$1.8 million in pre-tax profits. We also completed the formation
of Audiovox Specialized Applications, LLC from the consolida-
tion of our Heavy Duty Sound division with ASA Electronics
Corporation of Elkhart, Indiana.
In a recent development, a result of the continuing financial cri-
sis in Asia, we withdrew the agreement for the proposed trans-
fer of our auto sound mass merchandiser sales group to a
Korean company. Sales of this group were profitable in 1997 and
are ahead of projections thus far this year. We have decided to
c ont i nue sales to the ma s s merc ha nd i s e rs through our
Automotive Division.
We begin 1998 with the delivery of our first digital cellular tele-
phone in the CDMA format. In addition, our communications
subsidiary is planning delivery of TDMA and GSM/PCS tech-
nology products during 1998. There is no doubt that growth in
wireless during 1998 will be driven by new digital technology
formats as they gain in popularity. The shift from analog to dig-
ital will present both opportunity and challenge to our company
as the competition to bring digital products to market increases.
It is expected that this shift will affect earnings in the first and
second quarters as both demand for analog phones and prices
for those products decline.
In keeping with our long-term goals of expanding our product
lines, our Automotive Division has introduced mobile video
products that we anticipate will be a strong addition to that
Division’s sales. During 1998, we will be closely monitoring the
performance or our Malaysian operation, which we believe, will
be affected by the slow down in that country’s economy brought
on by the financial crisis in Asia.
As we begin this challenging year, I would like to express my
appreciation to the shareholders for their continued confidence
and support. We operate in a highly competitive marketplace
with fast changing technology and continually eroding price
structures. We are constantly aware of the pressures that those
factors bring to bear. Every employee in this company remains
focused on delivering the highest return and I wish to thank
them for their continuous contributions above and beyond my
expectations.
Sincerely,
John J. Shalam
Chairman, President and CEO
to our stockholders
3