Audiovox 2008 Annual Report Download - page 32

Gross Profit
Fiscal Fiscal
2008 2007
Gross profit $ 111,328 $ 79,319
Gross margin percentage 18.8% 17.4%
Gross margins increased by 140 basis points to 18.8% in Fiscal 2008 as compared to 17.4% in the prior year. Gross margins
were favorably impacted by higher margins generated from the recently acquired companies, improved overall margins in our core
business and improved buying programs and inventory management. Gross margins were adversely impacted by increased warehouse
and assembly costs as a result of incremental transition costs necessary to facilitate the newly acquired companies as well as increased
warranty and repair costs, freight and shipping costs and inventory provisions as a result of increased accessories sales. In addition,
reversals of sales incentive expenses favorably impacted gross margins by 0.7% during Fiscal 2008.
Operating Expenses and Operating Income / (Loss)
Fiscal Fiscal $ %
2008 2007 Change Change
Operating Expenses:
Selling $ 35,703 $ 28,220 $ 7,483 26.5%
General and administrative 61,220 48,920 12,300 25.1
Engineering and technical support 9,983 7,256 2,727 37.6
Total Operating Expenses $ 106,906 $ 84,396 $ 22,510 26.7%
Operating income (loss) $ 4,422 $ (5,077) $ 9,499 187.1%
Operating expenses increased $22,510 or 26.7% in Fiscal 2008 as compared to Fiscal 2007. As a percentage of net sales, operating
expenses decreased to 18.1% in Fiscal 2008 from 18.5% in Fiscal 2007 as a result of higher sales and better controls over our fixed
costs. The increase in total operating expenses is due to the incremental costs related to the recently acquired Thomson Accessory,
Oehlbach, Incaar, Technuity and Thomson Audio/Video operations, which contributed total operating expenses of $25,097 in Fiscal
2008 and $1,180 in Fiscal 2007. Operating expenses for our core business was $81,809 in Fiscal 2008, a decrease of $1,407 or 1.7%
over the prior year.
The following table sets forth, for the periods indicated, total operating expenses from our core business and the incremental operating
expenses related to the recently acquired Thomson Accessory, Oehlbach, Incaar, Technuity and Thomson Audio/Video businesses.
Fiscal Fiscal $ %
2008 2007 Change Change
Core operating expenses $ 81,809 $ 83,216 $ (1,407) (1.7) %
Operating expenses from acquired businesses 25,097 1,180 23,917 2,026.9
Total operating expenses $ 106,906 $ 84,396 $ 22,510 26.7%
Selling expenses increased $7,483 or 26.5% primarily due to $10,072 of selling expenses in Fiscal 2008 related to the recently
acquired Thomson Accessory, Oehlbach, Incaar, Technuity and Thomson Audio/Video operations, an increase in the cost of travel
and an increase in commission expense as a result of increases in commissionable sales and salesmen salaries and related benefits.
These increases were partially offset by a decline in advertising expenses due to a decline in the budgeted amounts for general and
print media advertising in Fiscal 2008. Selling expenses for our core business were $25,631 in Fiscal 2008, a decrease of $2,052 or 8%
over the prior year.
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Source: AUDIOVOX CORP, 10-K, May 14, 2008