Audiovox 2006 Annual Report Download - page 6

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Consumer electronics products include:
• LCD and Plasma flat panel televisions,
• Home and portable stereos,
• HDTV Antennas, WiFi Antennas and HDMI accessories,
• Two-way radios, digital multi-media products such as personal video recorders and MP3
products,
• Home speaker systems and home theater in a box,
• Portable DVD players, and
• Flat panel TV mounting systems.
Net sales by product category are as follows:
Year
Ended
February 28,
2007
Three Months
Ended
February 28,
2006
Years ended
November 30,
2005 2004
Mobile electronics .................... $317,355 $ 70,814 $339,355 $403,196
Consumer electronics ................. 139,335 32,236 200,361 160,457
Total net sales ..................... $456,690 $103,050 $539,716 $563,653
Core mobile electronics products were adversely affected by lower remote start sales due to the
mild winter and lower selling prices of maturing mobile multimedia products, which was offset by the
addition of one month of accessory sales as a result of the acquisition of the Thomson North
American accessory business in January 2007. In addition, average selling prices on LCD TVs and
Plasma TVs declined during the year ended February 28, 2007. In anticipation of declining sales prices
we limited inventory for the holiday season, which adversely affected consumer electronics sales but
reduced exposure from post holiday inventory write downs.
Gross margins have improved and we anticipate further increases in margins through the
introduction of new products with technologies that take advantage of market opportunities created
by the digital convergence of data, navigation and entertainment.
Licensing and Royalties
We have various license and royalty programs with manufacturers, customers and other electronic
suppliers. Such agreements entitle us to receive license and royalty income for Audiovox products sold
by the licensees without adding any significant costs. Depending on the terms of each agreement,
income is based on either a fixed amount per unit or percentage of net sales. Current license and
royalty agreements have duration periods, which range from 1 to 8 years and certain agreements may
be renewed at the end of termination of the agreement. Renewals of license and royalty agreements
are dependent on negotiations with licensees as well as current Audiovox products being sold by the
licensee.
License and royalty income is recorded upon sale to the end-user and amounted to $2,200, $537,
$1,959 and $2,024 for the year ended February 28, 2007, the three months ended February 28, 2006
and the years ended November 30, 2005 and 2004, respectively.
Distribution and Marketing
We sell our products to:
• power retailers,
• mass merchants,
• regional chain stores,
5