Audiovox 2003 Annual Report Download - page 48
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competition from our competitors and demand by our customers, it could
experience additional write− downs in the future.
Temporary personnel costs decreased $1,904 due to Wireless maintaining less
inventory on hand during fiscal 2003, which resulted in fewer software upgrades
being performed as compared to the prior year. Gross margins were favorably
impacted by reimbursement from a vendor for software upgrades performed on
inventory sold of $1,331 and $557 for fiscal 2002 and 2003, respectively.
Without this reimbursement, gross margins would have been lower by 0.2% and 0.1%
for fiscal 2002 and 2003, respectively. In addition, the Company has recorded
price protection of $27,683 and $13,031 for fiscal 2002 and 2003, respectively,
from a vendor for certain inventory, recorded as a reduction to cost of sales as
the related inventory was sold. Without this price protection, gross profit
margins would have been lower by 4.5% and 1.6% for fiscal 2002 and 2003,
respectively.
Operating Expenses
Operating expenses decreased $4,704 in fiscal 2003 from fiscal 2002. As a
percentage of net sales operating expenses decreased to 3.8% during fiscal 2003
compared to 4.8% in fiscal 2002. Excluding the $3,200 bonus provision recorded
in connection with the Toshiba transaction in 2002 (see Note 3) and $3,492
decrease in bad debt expense (see discussion below), operating expenses would
have increased $1,988 or 7.0% in fiscal 2003 from fiscal 2002.
Selling expenses decreased $189 in fiscal 2003 compared to fiscal 2002,
primarily as a result of:
o Decline in commissions of $651 due to lower commissionable sales, as a
result of a decrease in Quintex sales and restructuring of commission
deals with salesmen.
o As a result of restructuring the above commission deals, base salaries
of salesman increased $299.
o Trade show expenses increased $158 as the Wireless group was attending
more shows and promotions as new products were being introduced.
General and administrative expenses decreased $4,749 in fiscal 2003
compared to the prior year, primarily as a result of:
o A $3,022 decrease in officer's salaries primarily due to a
non−recurring bonus provision and new executive compensation contract
in connection with the Toshiba transaction in 2002 (see Note 3).
o Bad debt expense decreased $3,492 primarily due to the recovery of a
previously charged bad debt and a customer who filed for bankruptcy in
2002, which did not recur in fiscal 2003. The Company does not
consider this decrease in bad debt expense to be a trend in the
overall accounts receivable.
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