Audiovox 2005 Annual Report Download - page 40

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Income from Discontinued Operations
The following is a summary of results included within discontinued
operations:
FISCAL FISCAL
2003 2004
−−−−−−−−−−−−− −−−−−−−−−−−−−−−
Net sales from discontinued operations ................ $ 813,003 $1,162,863
Income from discontinued operations before income taxes 5,323 10,837
Provision for income taxes ............................ 2,111 701
−−−−−−−−−− −−−−−−−−−−
3,212 10,136
−−−−−−−−−− −−−−−−−−−−
Gain on sale of Cellular business, net of tax ......... −− 67,000
−−−−−−−−−− −−−−−−−−−−
Income from discontinued operations, net of tax ....... $ 3,212 $ 77,136
========== ========
Income from discontinued operations, net of tax, provided income of $77,136
and $3,212 for fiscal 2004 and 2003, respectively. The increase in income from
discontinued operations was due to a gain of $67,000 on the sale of the Cellular
business in fiscal 2004 and increased selling prices of Cellular phones.
Net Income
As a result of increased income from discontinued operations, partially
offset by a decline in income from continuing operations, net income for fiscal
2004 was $77,200 compared to $11,239 in 2003. Earnings per share for fiscal 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 (inclusive of discontinued operations) for fiscal 2004 and 2003,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 2005, we had working capital of $340,488, which includes
cash and short−term investments of $122,930 compared with working capital of
$362,018 at November 30, 2004, which included cash and short−term investments of
$167,646. We plan to utilize our current cash position as well as collections
from accounts receivable to fund the current operations of the business.
However, we may utilize all or a portion of the current capital resources to
pursue other business opportunities, including acquisitions.
As of November 30, 2005, we have a domestic credit line to fund the
temporary short−term working capital needs. This line expires on February 28,
2006, and allows aggregate borrowings of up to $25,000 at an interest rate of
Prime (or similar designations) plus 1%. In addition, Audiovox Germany has a
16,000 Euro accounts receivable factoring arrangement and a 6,000 Euro Asset
Based Lending ("ABL") credit facility which expires on October 25, 2006 and is
renewable on an annual basis.
Operating activities used cash of $42,145 for fiscal 2005 compared to cash
provided of $86,194 in 2004. The decrease in cash used in operating activities
as compared to the prior year is primarily due to the current year net loss from
continuing operations of $6,687, the payment of income taxes in connection with
the gain on the sale of the cellular business and accrued expenses, partially
offset by collection of accounts receivable of discontinued operations.
The following significant fluctuations in the balance sheets, excluding the
impact of foreign currency translation, impacted cash flow from operations:
35