Audiovox 2008 Annual Report Download - page 36

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Operating Expenses and Operating / (Loss)
Fiscal Fiscal $ %
2007 2006 Change Change
Operating Expenses:
Selling $ 28,220 $ 30,632 $ (2,412) (7.9) %
General and administrative 48,920 48,643 277 0.6
Engineering and technical support 7,256 6,191 1,065 17.2
Total Operating Expenses $ 84,396 $ 85,466 $ (1,070) (1.3) %
Operating Loss $ (5,077) $ (25,048) $ 19,971 (79.7) %
Operating expenses decreased $1,070 or 1.3% for Fiscal 2007, as compared to 2006. As a percentage of net sales, operating
expenses increased to 18.5% for Fiscal 2007 from 16.2% in 2006 due to the decline in sales during the period. Operating expenses for
Fiscal 2007 includes stock-based compensation expense of $432, legal settlements of $1,588 and $1,180 of expenses from the newly
acquired Thomson accessory business.
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 business.
Fiscal Fiscal $ %
2007 2006 Change Change
Core operating expenses $ 83,216 $ 85,466 $ (2,250) (2.6) %
Operating expenses from acquired businesses 1,180 - 1,180 100
Total operating expenses $ 84,396 $ 85,466 $ (1,070) (1.3) %
Selling expenses decreased $2,412 or 7.9% primarily due to a $1,924 decrease in commission expense as a result of the decline in
commissionable sales. The remaining decline in selling expenses is primarily due to a decline in consumer and print media
advertisements.
General and administrative expenses increased $277 or 0.6% due to the following:
•$719 increase in occupancy costs as a result of transition services costs necessary to support the newly acquired Thomson
operations.
•$1,517 increase in employee benefits due to increased health care costs under the Company’s medical and dental plan as
well as increased employer contributions to the 401(k) plan.
The above increases in general and administrative expenses were partially offset by the following:
•$476 decrease in professional fees due to reduced audit, legal and consulting costs, partially offset by $1,588 in legal
settlements from claims by licensors during fiscal 2007,
•$817 decrease in bad debt expense due to a decline in the accounts receivable balance and improved collectibility
efforts. The Company does not consider this to be a trend in the overall accounts receivable,
•increased MIS billings of $489 for services performed in connection with a transition service agreement.
32
Source: AUDIOVOX CORP, 10-K, May 14, 2008