Audiovox 2002 Annual Report Download - page 4

John J. Shalam
Audiovox Corporation 2002 Annual Report
“We are committed to increasing brand recognition and will continue to
aggressively support the Audiovox brand, and as always, every employee of
this corporation remains committed to maximizing profits and increasing
shareholder value.”
TO OUR SHAREHOLDERS:
2002 was a most challenging year for Audiovox, reflecting the absence of strong growth in the telecom industry, continued uncertainty
in the U.S. economy and the lack of consumer confidence. The months since the end of our fiscal year on November 30 were
overshadowed by the anticipation of, and the war with Iraq and further complicated by one of the worst winters in recent years,
which severely affected retail business. It has not been a particularly easy time for any business especially those in the high tech
sector and we were no exception.
As you know, Audiovox Corporation consists of two independent operating subsidiaries covering the wireless and consumer
electronics markets. Although their results are consolidated in our reporting, their businesses are different and I would like to
briefly address their individual performance.
Audiovox Communications Corporation (ACC), our wireless subsidiary suffered a second year of declines in revenue
and substantial losses. Operational losses were impacted by inventory write-downs, and there also was a sub-
stantial tax adjustment, which resulted in an additional non-operating loss.
Rapidly changing technology marks the telecom business making it difficult to maintain appropriate inventory
levels, without risking the possibility that inventory values can deteriorate unexpectedly at each new technolog-
ical advance. Those new products are both the reason for growth and sometimes the reason for inventory
obsolescence. Over just the past few years we have gone from single mode analog technology through
dual and tri mode, 1X, color screens and now camera phones.
Inventory management is a primary objective as we strive to keep inevitable losses caused by fast
paced technology at a minimum. Our current inventory positions are at acceptable levels, and we
believe we are poised to see sales improvements in the second half of this year, as exciting new
model introductions take place.
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