Audiovox 2003 Annual Report Download - page 9
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Continue to outsource manufacturing to increase operating leverage. One of
the key components of the Company's business strategy is outsourcing the
manufacturing of its products. This allows the Company to deliver the
latest technological advances without the fixed costs associated with
manufacturing.
Continue to provide value−added services to customers and suppliers. The
Company believes that it provides key services, such as product design,
development and testing, sales support, product repair and warranty and
software upgrading, more efficiently than its customers and suppliers could
provide for themselves. The Company intends to continue to develop its
value− added services as the market evolves and customer needs change.
(c) Financial Information About Industry Segments
The Company's industry segments are the Wireless Group and the Electronics
Group. Net sales, income (loss) before provision for (recovery of) income taxes,
net income (loss) and total assets attributable to each segment for each of the
last three fiscal years are set forth in Note 19 of the Company's consolidated
financial statements included herein.
(d) Narrative Description of Business
Wireless Group
Wireless, which accounts for approximately 61% of the Company's revenues in
fiscal 2003, markets wireless handsets and accessories through domestic and
international wireless carriers and their agents, independent distributors and
retailers.
Wireless products
Wireless sells an array of digital handsets, hand−held computing devices
and accessories in a variety of technologies, principally CDMA. Digital products
represented 99% of Wireless' 2003 total unit sales. Wireless generally markets
its wireless products under the Audiovox(R) brand name or co−brands its products
with its carrier customers, such as Verizon Wireless and Bell Distribution, Inc.
or with the brand name of the supplier.
In addition to handsets, Wireless sells a complete line of accessories that
includes batteries, hands−free kits, battery eliminators, cases and data cables.
In fiscal 2004, Wireless intends to continue to broaden its digital product
offerings and introduce handsets with new features such as wireless handsets
with video, cameras and enhanced Internet capabilities.
Wireless distribution and marketing
Wireless sells wireless products to wireless carriers and the carrier's
respective agents, distributors and retailers. In addition, a majority of its
handsets are designed to meet carrier specifications. In fiscal 2001, the five
largest wireless customers were Verizon Wireless, PrimeCo Personal
Communications LP, Sprint Spectrum LP, Bell Distribution Inc. and Brightpoint,
Inc. One of these customers accounted for 44.8% of Wireless' net sales and 35.0%
of consolidated net sales for fiscal 2001. In fiscal 2002, the five largest
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