Audiovox 2005 Annual Report Download - page 38

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hiring of additional employees to support the increase in sales.
Trade show expenses and advertising expense increased $567 and
$844, respectively, as a result of increased product line and
promotions to support the increase in sales.
o The increase for the international group was due to a $3,113
increase in Audiovox Germany expenses offset by a $216 decrease in
Venezuela. Audiovox Germany expenses increased $1,222 in
commissions, $615 in travel and lodging and $836 in advertising.
The increase in Audiovox Germany expenses is a result of a full
fiscal year of sales in fiscal 2004 as compared to five months of
sales activity in fiscal 2003.
Electronics general and administrative expenses increased due to a $3,802
and $2,382 increase in the domestic and international groups, respectively.
o The increase for the domestic group was primarily due to an
increase of $2,382 in profess−ional fees due to legal costs
incurred to develop, settle and protect patent rights. Corporate
allocations increased $1,079 as a result of the additional
resources necessary to support the increased product lines.
Increased sales and higher director and officer premiums during
fiscal 2004 resulted in a $421 increase in insurance expense and a
$294 increase in occupancy costs than the prior year. The above
increases were partially offset by a $767 decrease in bad debt
expense due to the recovery of a previously reserved bad debt.
o The increase for the international group was due to an increase of
$3,336 in Audiovox Germany expenses offset by a $954 decline in
Venezuela expenses. As a result of the Recoton acquisition in July
2003, Audiovox Germany expenses increased $2,303 in salaries and
$557 in related payroll taxes and $434 in bad debt expense. The
increase in Audiovox German expenses is a result of a full fiscal
year of operating results in fiscal 2004 as compared to five
months of operating results in fiscal 2003 as Recoton was acquired
in July 2003. The decline in Venezuela expenses was primarily due
to a $1,034 decrease in employee benefits because of a 2003
payment made to certain Venezuela employees, which did not recur
in fiscal 2004.
Electronics warehousing and technical support increased due to an increase
in direct labor of $1,671 as a result of: increased average inventory levels
during fiscal 2004, increased sales and personnel required to support the
assimilation of the Recoton technical staff. The continual increase in product
complexity has resulted in hiring additional engineers and providing added
customer service.
The following is a summary of administrative operating expenses:
FISCAL FISCAL $
2003 2004 CHANGE % CHANGE
−−−−−−−−−−−−−− −−−−−−−−−−−− −−−−−−−−−−− −−−−−−−−−−
Advertising $ 3,396 $ 4,168 $ 772 22.7%
Professional fees 4,007 6,522 2,515 62.8
Depreciation 1,576 1,178 (398) (25.3)
Insurance 742 978 236 31.8
Officers' salaries 1,950 4,252 2,302 118.1
Office salaries 4,229 5,532 1,303 30.8%
Other (236) (701) (465) (197.0)
−−−−− −−−−− −−−−− −−−−−
Total administrative operating expenses $ 15,664 $ 21,929 $ 6,265 40.0%
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