Audiovox 2006 Annual Report Download - page 19

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Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
(‘‘MD&A’’)
This section should be read in conjunction with ‘‘Cautionary Statements’’ and ‘‘Risk Factors’’ in
Item 1A of Part I, and Item 8 of Part II, ‘‘ Consolidated Financial Statements and Supplementary
Data.’’
We begin Management’s Discussion and Analysis of Financial Condition and Results of
Operations with an overview of the business, including our strategy to give the reader a summary of
the goals of our business and the direction in which our business is moving. This is followed by a
discussion of the Critical Accounting Policies and Estimates that we believe are important to
understanding the assumptions and judgments incorporated in our reported financial results. In the
next section, we discuss our Results of Operations for the year ended February 28, 2007 compared to
the year ended February 28, 2006, and for the year ended November 30, 2005 compared to the year
ended November 30, 2004. We then provide an analysis of changes in our balance sheet and cash
flows, and discuss our financial commitments in the sections entitled ‘‘Liquidity and Capital Resources,
including Contractual and Commercial Commitments’’. We conclude this MD&A with a discussion of
‘‘Related Party Transactions’’ and ‘‘Recent Accounting Pronouncements’’.
Business Overview and Strategy
Audiovox Corporation (‘‘Audiovox’’, ‘‘We’’, ‘‘Our’’, ‘‘Us’’ or ‘‘Company’’) is a leading
international distributor and value added service provider in the accessory, mobile and consumer
electronics industries. We conduct our business through five wholly-owned subsidiaries: American
Radio Corp., Audiovox Electronics Corporation (‘‘AEC’’), Audiovox German Holdings GmbH
(‘‘Audiovox Germany’’), Audiovox Venezuela, C.A and Code Systems, Inc. (‘‘Code’’). We market our
products under the Audiovox
®
brand name and other brand names, such as Acoustic Research
®
,
Advent
®
, Ambico
®
, Car Link
®
, Chapman
®
, Code-Alarm
®
, Discwasher
®
, Heco
®
, Jensen
®
, Mac
Audio
®
, Magnate
®
, Movies 2 Go
®
, Phase Linear
®
, Prestige
®
, Pursuit
®
, RCA
®
, Recoton
®
, Road
Gear
®
and Spikemaster
®
, as well as private labels through a large domestic and international
distribution network. We also function as an OEM (‘‘Original Equipment Manufacturer’’) supplier to
several customers and presently have one reportable segment (‘‘Electronics’’), which is organized by
product category.
Mobile electronics products include:
• mobile multi-media video products, including in-dash, overhead, headrest and portable mobile
video systems,
• autosound products including radios, speakers, amplifiers and CD changers,
• satellite radios including plug and play models and direct connect models,
• automotive security and remote start systems,
• car to car portable navigation systems,
• rear observation and collision avoidance systems,
• automotive power accessories,
• Home electronic accessories such as cabling and performance enhancing electronics, and
• Accessories such as remotes, iPod specialized products, wireless headphones and other
connectivity products.
Consumer electronics products include:
• LCD and Plasma flat panel televisions,
• Home and portable stereos,
• HDTV Antennas, WiFi Antennas and HDMI accessories,
18