Audiovox 2005 Annual Report Download - page 33

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Electronics general and administrative expenses increased minimally and was
impacted by the following:
o A decrease of $1,286 in professional fees due to a reduction in legal
settlements and legal costs related to patent infringement cases.
o A $763 decline in employee benefits due to a reduction in medical
claims and includes a $400 reduction as a result of the withdrawal of
a Venezuela legal claim.
o Officer salaries decreased $648 as a result of a decline in variable
compensation due to reduced earnings.
o $680 increase in occupancy costs due to the incremental costs to operate
the Terk facility.
o $869 increase in bad debt expense due to the recoveries of previously
written off bad debt in fiscal 2004, which did not recur in fiscal 2005.
o $462 increase in information technology costs due to the acquisition of
Terk and increased software users.
Engineering and technical support increased due to an increase in direct
labor as a result of the recent Terk acquisition and an increase in product
complexity, which has resulted in hiring additional engineers and providing
additional customer service.
The following is a summary of administrative operating expenses:
FISCAL FISCAL $ %
2004 2005 CHANGE CHANGE
−−−−−−−−− −−−−−−−− −−−−−−−− −−−−−−−
Advertising $ 4,168 $ 4,394 $ 226 5.4%
Professional fees ............ 6,522 5,741 (781) (12.0)
Depreciation ................. 1,178 1,389 211 17.9
Insurance .................... 978 989 11 1.1
Officers' salaries ........... 4,252 992 (3,260) (76.7)
Office salaries .............. 5,532 4,727 (805) (14.6)
Other ........................ (701) (397) 304 43.4
−−−−− −−−−−−− −−−−−−− −−−−−−
Total administrative
operating expenses $ 21,929 $ 17,835 $(4,094) (18.7)%
======== ======== ========
The decrease in administrative operating expenses is primarily due to the
following:
o Decline in officers salaries as a result of a decline in bonuses
and long−term incentive awards as a result of decreased earnings
and the sale of the Cellular business in fiscal 2004.
o Office salaries declined due to a reduction in headcount and
includes a one−time severance charge of $471 for fiscal 2005.
28