Audiovox 2008 Annual Report Download - page 37

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Engineering and technical support expenses increased $1,065 or 17.2% due to an increase in direct labor as a result of wage increases
and increased labor costs.
Other Income (Expense)
Fiscal Fiscal $ %
2007 2006 Change Change
Interest and bank charges $ (1,955) $ (2,405) $ 450 (18.7) %
Equity in income of equity investees 2,937 2,463 474 19.2
Other, net 6,253 6,894 (641) (9.3)
Total other income $ 7,235 $ 6,952 $ 283 4.1%
Interest and bank charges decreased due to reductions in outstanding bank obligations and long term debt. Interest and bank
charges represent expenses for debt and bank obligations of Audiovox Germany and Venezuela and interest for a capital lease.
Equity in income of equity investees increased due to increased equity income of Audiovox Specialized Applications, Inc.
(“ASA”) as a result of increased sales and gross margins in the Jensen Audio and Voyager product lines.
Other income declined due to a one time $2,455 unrealized gain recorded during fiscal 2006 in connection with the Bliss-tel
investment partially offset by an other than temporary impairment charge of $1,758 recorded for the CellStar investment during fiscal
2006. The decline in other income was further offset by increased interest income as a result of increased short-term investment
holdings and higher interest rates as compared to the prior year.
Income Tax Benefit
The effective tax rate for fiscal 2007 was a benefit of 71.1% compared to a benefit of 68.1% in the prior period. The interest income
earned on our short-term investments is tax exempt, which results in our effective tax rate being less than the statutory rate. The tax
benefit for fiscal 2006 was positively impacted by the favorable outcome of $3,307 in tax accrual reductions due to the completion of
certain tax examinations.
Loss from Discontinued Operations
The following is a summary of results included within discontinued operations:
Fiscal Fiscal
2007 2006
Net sales from discontinued operations $ - $ 2,690
Loss from discontinued operations before income taxes (1,163) (774)
Income tax benefit 407 418
(756) (356)
Loss on sale of discontinued operations, net of tax - (2,079)
Loss from discontinued operations $ (756) $ (2,435)
Included in loss from discontinued operations for fiscal 2006 is the financial results of Audiovox Malaysia which was sold on
November 7, 2005. The loss from discontinued operations for fiscal 2007 is primarily due to legal and related costs associated with
contingencies pertaining to our discontinued Cellular business.
33
Source: AUDIOVOX CORP, 10-K, May 14, 2008