Audiovox 2006 Annual Report Download - page 4

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total purchase price of approximately $6,600, in addition to certain earn-out payments. The purpose of
this acquisition was to expand our electronics accessory product line to international markets.
On January 29, 2007, we completed the acquisition of Thomson’s Americas consumer electronics
accessory business for a total purchase price of approximately $60,485 plus a five year fee related to
the RCA brand in connection with future sales. The purpose of this acquisition was to enhance our
market share in the accessory business, which includes the rights to the RCA brand for consumer
electronics accessories as well as the Recoton, Spikemaster, Ambico and Discwasher brands for use on
any product category and the Jensen, Advent, Acoustic Research and Road Gear brands for
consumer electronics accessories.
On January 4, 2005, we purchased certain assets and liabilities of Terk Technologies Corp.
(‘‘Terk’’) for $15,274, as adjusted. The purpose of this acquisition was to increase our market share for
satellite radio products as well as accessories, such as antennas for HDTV products.
On July 8, 2003 we acquired, for $40,406, the U.S. audio operations of Recoton and the
outstanding capital stock of Recoton German Holdings GmbH. The primary reason for this
transaction was to expand the product offerings of Audiovox and to obtain certain long-standing
trademarks such as Jensen
®
and Acoustic Research
®
.
Refer to Note 4 ‘‘Business Acquisitions’’ of the Notes to Consolidated Financial Statements for
additional information regarding the aforementioned acquisitions.
Divestitures (Discontinued Operations)
On November 7, 2005, we completed the sale of our majority owned subsidiary, Audiovox
Malaysia (‘‘AVM’’) to the then current minority interest shareholder due to increased competition
from non-local OEM’s and deteriorating credit quality of local customers.
On November 1, 2004, we completed the divestiture of our Cellular business (formerly known as
‘‘ACC’’, ‘‘Cellular’’ or ‘‘Wireless’’) to UTStarcom, Inc. (‘‘UTSI’’). After paying outstanding domestic
obligations, taxes and other costs associated with the divestiture, we received net proceeds of
approximately $144,053. We plan to utilize the net proceeds to pursue strategic and complementary
acquisitions or invest in our current operations. However, we may use all or a portion of the net
proceeds for other purposes and are considering all opportunities.
These divestitures have been presented as discontinued operations, as such, certain
reclassifications have been made to prior year amounts in order to conform to the current period
presentation. Refer to Note 2 ‘‘Discontinued Operations’’ of the Notes to Consolidated Financial
Statements for additional information regarding the aforementioned divestitures.
Strategy
Our objective is to grow our business by acquiring new brands and embracing new technologies
and applying those to a continued stream of new products that should increase gross margins and
improve operating income. In addition, we plan to continue to acquire synergistic companies that
would allow us to leverage overhead, penetrate new markets or expand existing business.
The key elements of our strategy are as follows:
Capitalize on the Audiovox
®
family of brands. We believe the ‘‘Audiovox
®
’’ family of brands,
which includes 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
®
, is one of our greatest strengths and
offers us significant opportunity for increased market penetration. To further benefit from the
Audiovox
®
brands, we continue to invest and introduce new products using our brand names.
Capitalize on niche product and distribution opportunities in the electronics industry. We intend
to use our extensive distribution and supply networks to capitalize on niche product and
distribution opportunities in categories like satellite radio, collision avoidance, accessories, home
theater systems, navigation, mobile video, DVD’s, flat panel TVs and GMRS radios.
3