Audiovox 2008 Annual Report Download - page 17

If Our Sales During the Holiday Season Fall below Our Expectations, Our Annual Results Could Also Fall below Expectations.
Seasonal consumer shopping patterns significantly affect our business. We generally make a substantial amount of our sales and net
income during September, October and November. We expect this trend to continue. December is also a key month for us, due largely
to the increase in promotional activities by our customers during the holiday season. If the economy faltered in these periods, if our
customers altered the timing or frequency of their promotional activities or if the effectiveness of these promotional activities
declined, particularly around the holiday season, it could have a material adverse effect on our annual financial results.
A Decline in General Economic Conditions Could Lead to Reduced Consumer Demand for the Discretionary Products We Sell.
Consumer spending patterns, especially discretionary spending for products such as mobile, consumer and accessory electronics, are
affected by, among other things, prevailing economic conditions, energy costs, raw material costs, wage rates, inflation, consumer
confidence and consumer perception of economic conditions. A general slowdown in the U.S. and certain international economies or
an uncertain economic outlook could have a material adverse effect on our sales and operating results.
Acquisitions and Strategic Investments May Divert Our Resources and Management Attention; Results May Fall Short of
Expectations.
We intend to continue pursuing selected acquisitions of and investments in businesses, technologies and product lines as a key
component of our growth strategy. Any future acquisition or investment may result in the use of significant amounts of cash,
potentially dilutive issuances of equity securities, incurrence of debt and amortization expenses related to intangible
assets. Acquisitions involve numerous risks, including:
•difficulties in the integration and assimilation of the operations, technologies, products and personnel of an acquired business;
•diversion of management’s attention from other business concerns;
•increased expenses associated with the acquisition; and
•potential loss of key employees or customers of any acquired business.
We cannot assure you that our acquisitions will be successful and will not adversely affect our business, results of operations or
financial condition.
We have recorded goodwill and other intangible assets as a result of acquisitions, and changes in future business conditions could
cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income.
Goodwill and other intangible assets recorded on our balance sheet as of February 29, 2008 was $124,435. We evaluate the
recoverability of recorded goodwill and other intangible asset amounts annually, or when evidence of potential impairment
exists. The annual impairment test is based on several factors requiring judgment. Changes in our operating performance or business
conditions, in general, could result in an impairment of goodwill and/or other intangible assets, which could be material to our results
of operations.
We Depend Heavily on Existing Directors, Management and Key Personnel and Our Ability to Recruit and Retain Qualified
Personnel.
Our success depends on the continued efforts of our directors, executives and senior vice presidents, many of whom have worked with
Audiovox for over two decades, as well as our other executive officers and key employees. We have no employment contracts, with
any of our executive officers or key employees, except our President and Chief Executive Officer. The loss or interruption of the
continued full-time service of certain of our executive officers and key employees could have a material adverse effect on our
business.
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Source: AUDIOVOX CORP, 10-K, May 14, 2008