Audiovox 2008 Annual Report Download - page 15

We cannot assure you that we will maintain or increase our current level of revenues or profits from the Electronics and Accessories
businesses in future periods.
The Electronics and Accessories Businesses are Highly Competitive and Faces Significant Competition from Original Equipment
Manufacturers (OEMs) and Direct Imports By Our Retail Customers.
The market for consumer electronics and accessories is highly competitive across all product lines. We compete against many
established companies who have substantially greater financial and engineering resources than we do. We compete directly with
OEMs, including divisions of well-known automobile manufacturers, in the autosound, auto security, mobile video and accessories
industry. We believe that OEMs have diversified and improved their product offerings and place increased sales pressure on new car
dealers with whom they have close business relationships to purchase OEM-supplied equipment and accessories. To the extent that
OEMs succeed in their efforts, this success would have a material adverse effect on our sales of automotive entertainment and security
products to new car dealers. In addition, we compete with major retailers who may at any time choose to direct import products that
we may currently supply.
We Do Not Have Long-term Sales Contracts with Any of Our Customers.
Sales of our products are made by written purchase orders and are terminable at will by either party. The unexpected loss of all or a
significant portion of sales to any one of our large customers could have a material adverse effect on our performance.
Sales in Our Electronics and Accessories Businesses are Dependent on New Products, Product Development and Consumer
Acceptance.
Our Electronics and Accessories businesses depend, to a large extent, on the introduction and availability of innovative products and
technologies. Significant sales of new products in niche markets, such as navigation, satellite radios, flat-panel TVs, mobile video
systems and the acquisition of certain consumer electronic accessory businesses, has fueled the recent growth of our business. If we
are not able to continually introduce new products that achieve consumer acceptance, our sales and profit margins may decline.
Since We Do Not Manufacture Our Products, We Depend on Our Suppliers to Provide Us with Adequate Quantities of High
Quality Competitive Products on a Timely Basis.
We do not manufacture our products, and we do not have long-term contracts with our suppliers. Most of our products are imported
from suppliers under short-term purchase orders. Accordingly, we can give no assurance that:
•our supplier relationships will continue as presently in effect,
•our suppliers will not become competitors,
•our suppliers will be able to obtain the components necessary to produce high-quality, technologically-advanced products
for us,
•we will be able to obtain adequate alternatives to our supply sources should they be interrupted,
•if obtained, alternatively sourced products of satisfactory quality would be delivered on a timely basis, competitively
priced, comparably featured or acceptable to our customers, and
•our suppliers have sufficient financial resources to fulfill their obligations.
On occasion our suppliers have not been able to produce the quantities of products that we desire. Our inability to supply sufficient
quantities of products that are in demand could reduce our profitability and have a material adverse effect on our relationships with
our customers. If any of our supplier relationships were terminated or interrupted, we could experience an immediate or long-term
supply shortage, which could have a material adverse effect on our business.
12
Source: AUDIOVOX CORP, 10-K, May 14, 2008