Audiovox 2008 Annual Report Download - page 26

On January 4, 2005, we purchased certain assets and liabilities of Terk Technologies Corp. ("Terk") for $15,274, as
adjusted. The purpose of this acquisition was to increase our market share for satellite radio products as well as accessories, such as
antennas for HDTV products.
On July 8, 2003 we acquired, for $40,406, the U.S. audio operations of Recoton and the outstanding capital stock of Recoton German
Holdings GmbH. The primary reason for this transaction was to expand the product offerings of Audiovox in the U.S. and Europe and
to obtain certain long-standing trademarks such as Jensen® and Acoustic Research®.
We continue to monitor economic and industry conditions in order to evaluate potential synergistic business acquisitions that would
allow us to leverage overhead, penetrate new markets and expand our core business and distribution channels.
Refer to Note 3 “Business Acquisitions” of the Notes to Consolidated Financial Statements for additional information regarding the
aforementioned acquisitions.
Divestitures (Discontinued Operations)
On November 7, 2005, we completed the sale of our majority owned subsidiary, Audiovox Malaysia (“AVM”), to the then current
minority interest shareholder due to increased competition from non-local OEM’s and deteriorating credit quality of local
customers. We sold our remaining equity in AVM in exchange for a $550 promissory note and were released from all of our
Malaysian liabilities, including bank obligations resulting in a loss on sale of $2,079.
On November 1, 2004, we completed the divestiture of our Cellular business to UTSI. The Cellular business was a major driver in
our growth over the past twenty years. However, consolidation within the Cellular industry, extensive price competition and the
inability to successfully partner with a manufacturer created a difficult challenge to compete within the Cellular industry. The
competitive nature of the Cellular business caused inconsistency in Cellular results, which led to the sale of selected assets and certain
liabilities of our Cellular business to UTSI for an initial purchase price of $165,170, a working capital adjustment of $8,472 and the
retention of certain account receivables of $148,494 for total gross proceeds of $322,136. After paying outstanding domestic
obligations, taxes and other costs associated with the divestiture, we received net proceeds of approximately $144,053. As a result of
the sale of the Cellular business, we recorded a gain of $67,000 within discontinued operations for the year ended November 30, 2004.
We have used the net proceeds to invest in strategic and complementary acquisitions and invest in our current business.
These divestitures have been presented as discontinued operations, as such, certain reclassifications have been made to prior year
amounts in order to conform to the current period presentation. Refer to Note 2 “Discontinued Operations” of the Notes to
Consolidated Financial Statements for additional information regarding the aforementioned divestitures.
Net Sales Growth
Net sales have a compound growth rate of 9.9% from $361,087 for the year ended November 30, 2002 to $591,355 for the year ended
February 29, 2008. During this period, our sales were impacted by the following items:
•acquisition of Thomson’s Americas consumer electronics accessory business,
•acquisition of Oehlbach’s accessory business,
•acquisition of Incaar’s OEM business,
•acquisition of Technuity’s accessory business,
•acquisition of Thomson’s audio/video business,
•acquisition of Terk Technologies,
•acquisition of Recoton and growth in Jensen sales,
•acquisition of Code-Alarm branded products,
•the introduction of new products and lines such as portable DVD players, flat-panel TVs, satellite radio, GPS navigation
and mobile multi-media devices,
•volatility in core mobile, consumer and accessories sales due to increased competition and lower selling prices.
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Source: AUDIOVOX CORP, 10-K, May 14, 2008