Audiovox 2000 Annual Report Download - page 13

Forward-looking Statements
This Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. Words such as “may,” “believe,”
“estimate,” “expect,” “plan,” “intend,” “project,” “anticipate,” “contin-
ues,” “could,” “potential,” “predict” and similar expressions may identify
forward-looking statements. The Company has based these forward-
looking statements on its current expectations and projections about
future events, activities or developments. The Company’s actual results
could differ materially from those discussed in or implied by these
forward-looking statements. Forward-looking statements include state-
ments relating to, among other things:
• growth trends in the wireless, automotive and consumer electronic
businesses
• technological and market developments in the wireless, automotive
and consumer electronics businesses
• liquidity
• availability of key employees
• expansion into international markets
• the availability of new consumer electronic products
These forward-looking statements are subject to numerous risks, uncertain-
ties and assumptions about the Company including, among other things:
• the ability to keep pace with technological advances
• significant competition in the wireless, automotive and consumer
electronics businesses
• quality and consumer acceptance of newly introduced products
• the relationships with key suppliers
• the relationships with key customers
• possible increases in warranty expense
• the loss of key employees
• foreign currency risks
• political instability
• changes in U.S. federal, state and local and foreign laws
• changes in regulations and tariffs
• seasonality and cyclicality
• inventory obsolescence and availability
The Company markets its products under the Audiovox brand as well as
private labels to a large and diverse distribution network both domestically
and internationally. The Company operates through two marketing groups:
Wireless and Electronics. Wireless consists of Audiovox Communications
Corp. (ACC), a 95%-owned subsidiary of Audiovox, and Quintex, which is a
wholly-owned subsidiary of ACC. ACC markets wireless handsets and
accessories primarily on a wholesale basis to wireless carriers in the
United States and, to a lesser extent, carriers overseas. Quintex is a small
operation for the direct sale of handsets, accessories and wireless tele-
phone service. For fiscal 2000, sales through Quintex were $63.5 million or
4.5% of Wireless sales. Quintex receives activation commissions and
residual fees from retail sales. Quintex also receives a monthly residual
payment which is based upon a percentage of the customer’s usage.
The Electronics Group consists of wholly-owned subsidiaries, Audiovox
Electronics Corporation (AEC) and American Radio Corp., and three majority-
owned subsidiaries, Audiovox Communications (Malaysia) Sdn. Bhd.,
Audiovox Holdings (M) Sdn. Bhd. and Audiovox Venezuela, C.A. The
Electronics Group markets automotive sound and security systems, elec-
tronic car accessories, home and portable sound products, FRS radios, in-
vehicle video systems, flat-screen televisions, DVD’s and navigation
systems. Sales are made through an extensive distribution network of mass
merchandisers, power retailers and others. In addition, the Company sells
some of its products directly to automobile manufacturers on an OEM basis.
The Company allocates interest and certain shared expenses to the mar-
keting groups based upon estimated usage. General expenses and other
income items that are not readily allocable are not included in the results
of the two marketing groups.
From fiscal 1996 through 2000, several major events and trends have
affected the Company’s results and financial conditions.
Wireless increased its handset sales from 2.1 million units in fiscal 1996
to 8.9 million units in fiscal 2000. This increase in unit sales was primarily
due to:
• the introduction of digital technology, which has allowed carriers to
significantly increase subscriber capacity
• increased number of carriers competing in each market
• reduced cost of service and expanded feature options
• increased selling price of digital handsets
AUDIOVOX CORPORATION AND SUBSIDIARIES
AUDIOVOX 11
MANAGEMENT’SDISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS