Audiovox 2004 Annual Report Download - page 46

of restructuring actions for claims made and for further potential
termination claims. The above increase was partially offset by a $190
decrease in salaries due to employee terminations in Venezuela.
Electronics warehouse and technical support increased primarily due to a
$1,385 increase in direct labor and payroll taxes due to the hiring of
additional employees and includes $583 of Audiovox Germany expenses. In
addition, the increase in warehouse and technical support is due to the hiring
of additional engineers as the increase in sales volume has resulted in the
Company providing added customer service. Furthermore, overseas buying office
expenses increased $472 as a result of increased costs associated with operating
this office.
Electronics operating income increased to $29,905 for the year ended
November 30, 2003 as a result of increased sales from new product introductions
and the Recoton acquisition, increased gross profit, partially offset by
increased operating expenses.
The following is a summary of general corporate operating expenses for the
year ended:
Fiscal Fiscal $ %
2002 2003 Change Change
−−−−−−− −−−−−−− −−−−−− −−−−−−
Advertising $ 2,416 $ 3,396 $ 980 40.6%
Professional fees 4,254 4,007 (247) (5.8)
Depreciation 2,095 1,576 (519) (24.8)
Insurance 391 742 351 89.8
Officers' salaries 857 2,606 1,749 204.1
Office salaries and other 3,527 3,993 466 13.2
−−−−−−− −−−−−−− −−−−− −−−−−−
Total administrative operating expenses $13,540 $16,320 $ 2,780 20.5%
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Administrative operating expenses increased primarily due to an increase in
salaries and bonuses as a result of hiring additional employees and increased
wages, as well as an increase in advertising due to an advertising program
intended to promote overall Company awareness through media and public
relations. Other corporate operating expenses are mainly comprised of
accounting, IT and certain executive office salaries.
The increase in Electronics operating income partially offset by an
increase in administrative operating expenses resulted in consolidated operating
income to increase to $13,585 for the year ended November 30, 2003.
Other Income (Expense)
Fiscal Fiscal $
2002 2003 Change
−−−−−−− −−−−−−− −−−−−−−
Interest and bank charges $ (317) $(2,850) $(2,533)
Equity in income of equity investees 1,820 3,274 1,454
Other, net (4,165) 610 4,775
−−−−−−− −−−−−−− −−−−−−−
Total other income (expense) $(2,662) $ 1,034 $ 3,696
======= ======= =======
Interest expense and bank charges increased during fiscal 2003 from
fiscal 2002, primarily due to interest incurred on German debt acquired as a
result of the Recoton acquisition and increased average borrowings from the
Company's primary credit facility for the purchase of Electronics inventory.
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