Audiovox 2004 Annual Report Download - page 43

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increase was primarily due to a lack of new product introductions in the
comparable prior year. Specifically, the Company introduced new products during
the fourth quarter of fiscal 2003, such as CDM8900 camera and color display
phones with 1x technology. The average selling price of the Company's handsets
increased to $180 per unit for the year ended November 30, 2004 from $163 per
unit in 2003.
Cellular gross profit margins decreased to 3.8% for the year ended November
30, 2004 from 4.7% in 2003, primarily due to increased price competition within
the cellular industry.
Operating expenses of Cellular were $27,644 and $29,759 for the years ended
November 30, 2004 and 2003, respectively, a decrease of $2,115. The decline in
operating expenses of Cellular was due to the closing of Quintex branches in
fiscal 2004 and a decline in commissions as a result of decreased international
sales.
Net Income
The operating structure of the Company for the year ended November 30, 2004
was structured to facilitate the operations of a combined group through November
1, 2004 of Cellular and Electronics. Due to the divestiture of Cellular in the
later part of fiscal 2004 and the internal costs necessary to unwind the
Cellular business, the Company was unable to change the operating structure of
the Company to impact the fiscal 2004 operating results. During fiscal 2005, the
Company will focus its efforts on evaluating the current business structure of
the Company in order to create operating efficiencies with the primary goal of
increasing operating income.
As a result of increased income from discontinued operations, partially
offset by a decline in income from continuing operations, net income for the
year ended November 30, 2004 was $77,200 compared to $11,239 in 2003. Earnings
per share for the year ended November 30, 2004 was $3.52 basic and $3.45 diluted
as compared to $0.51 basic and diluted for 2003. Net income was favorably
impacted by sales incentive reversals of $5,083 and $2,940 for the years ended
November 30, 2004 and 2003, respectively.
The Company believes that the Electronics Group has an expanding market
with a certain level of volatility related to both domestic and international
new car sales, increased competition by manufacturers and general economic
conditions. As a result, all of its products are subject to price fluctuations
which could affect the carrying value of inventories and gross margins in the
future.
Fiscal 2002 Compared to Fiscal 2003
Continuing Operations
The following tables sets forth, for the periods indicated, certain
statement of operations data for the years ended November 30, 2002 and 2003.
Net Sales
Fiscal Fiscal $ %
2002 2003 Change Change
−−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−
Net sales:
Mobile Electronics $ 285,608 $ 355,207 $ 69,599 24.4%
Consumer Electronics 86,472 161,965 75,493 87.3
Other 644 520 (124) (19.3)
−−−−−−−−− −−−−−−−−− −−−−−−−−− −−−−−−−
Total net sales $ 372,724 $ 517,692 $ 144,968 38.9 %
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