Audiovox 2006 Annual Report Download - page 8

We are committed to providing product warranties for all our product lines, which generally
range from 90 days up to the life of the vehicle for the original owner on some automobile-installed
products. To support our warranties, we have independent warranty centers throughout the United
States, Europe and Venezuela. We have a customer service group that provides product information,
answers questions and serves as a technical hotline for installation help for end-users and customers.
Suppliers
We work directly with our suppliers on industrial design, feature sets, development and product
testing in order to ensure that our products are manufactured to our design specifications.
We purchase our products from manufacturers located in several Pacific Rim countries, including
Japan, China, Indonesia, Malaysia, South Korea, Taiwan, Singapore and the United States. In
selecting our manufacturers, we consider quality, price, service and reputation. In order to provide
local supervision of supplier performance such as price negotiations, delivery and quality control, we
maintain buying offices or inspection offices in Malaysia, Taiwan, South Korea, China and Hong Kong.
We consider relations with our suppliers to be good and alternative sources of supply are generally
available within 120 days. We do not have long-term contracts with our suppliers and generally
purchase our products under short-term purchase orders. Although we believe that our alternative
sources of supply are currently available, an unplanned shift to a new supplier could result in product
delays and increased cost, which may have a material impact on our operations.
Competition
The electronics industry is highly competitive across all product categories, and we compete with
a number of well-established companies that manufacture and sell similar products. Brand name,
design, features and price are the major competitive factors within the electronics industry. Our
Mobile Electronic products compete against factory-supplied products, including those provided by,
among others, General Motors, Ford and Daimler Chrysler. Our Mobile Electronic products also
compete in the automotive aftermarket against major companies such as Sony, Panasonic, Kenwood,
Alpine, Directed Electronics, Pioneer, Dual and Delphi. Our Consumer Electronics product lines
compete against major companies, such as JVC, Sony, Panasonic, Phillips, Monster Cable and AIWA.
Financial Information About Foreign and Domestic Operations
The amounts of net sales and long-lived assets, attributable to foreign and domestic operations
for all periods presented are set forth in Note 15 of the Notes to Consolidated Financials Statements,
included herein.
Equity Investment
We have a 50%non-controlling ownership interest in Audiovox Specialized Applications, Inc.
(‘‘ASA’’) which acts as a distributor to specialized markets for specialized vehicles, such as RV’s and
van conversions, of televisions and other automotive sound, security and accessory products. The goal
of this equity investment is to blend financial and product resources with local operations in an effort
to expand our distribution and marketing capabilities.
Employees
As of February 28, 2007, we employed approximately 840 people worldwide. We consider our
relations with employees to be good and no employees are covered by collective bargaining
agreements.
Item 1A — Risk Factors
We have identified certain risk factors that apply to us. You should carefully consider each of the
following risk factors and all of the other information included or incorporated by reference in this
Form 10-K. If any of these risks, or other risks not presently known to us or that we currently believe
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