Audiovox 2009 Annual Report Download

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Morningstar® Document Research℠
FORM 10-K
AUDIOVOX CORP - VOXX
Filed: May 14, 2009 (period: February 28, 2009)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    Morningstar Document Research ® ℠FORM 10-K AUDIOVOX CORP - VOXX Filed: May 14, 2009 (period: February 28, 2009) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... ended February 28, 2009 Commission file number 0-28839 AUDIOVOX CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 180 Marcus Blvd., Hauppauge, New York (Address of principal executive offices) (631) 231-7750...

  • Page 3
    ...B common stock $.01 par value DOCUMENTS INCORPORATED BY REFERENCE Part III - (Items 10, 11, 12, 13 and 14) Proxy Statement for Annual Meeting of Stockholders to be filed on or before June 28, 2009. Outstanding 20,604,460 2,260,954 2 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar...

  • Page 4
    ... with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information PART III Item 10 Item 11 Item 12 Item 13 Item 14 Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 5
    ... Audiovox Electronics Corporation ("AEC"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A. and Code Systems, Inc. ("Code"). We market our products under the Audiovox® brand name and other brand names, such as Acoustic Research®, Advent®, Ambico®, Car Link®, Chapman...

  • Page 6
    manufacturer, to market certain product categories acquired in the acquisition for an upfront fee of $10,000, the purchase of certain inventory and future royalty payments. 4 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 7
    ... North America for rechargeable batteries and power supply systems, and to increase the Company's market share in the consumer electronics accessory business. In August 2007, Audiovox Germany completed the acquisition of certain assets of Incaar Limited, a U.K. business that specializes in rear seat...

  • Page 8
    ..., overhead, headrest and portable mobile video systems, autosound products including radios, speakers, amplifiers and CD changers, satellite radios including plug and play models and direct connect models, automotive security and remote start systems, automotive power accessories, rear observation...

  • Page 9
    ... products, power cords, performance enhancing electronics, TV universal remotes, flat panel TV mounting systems, iPod specialized products, wireless headphones, rechargeable battery backups (UPS) for camcorders, cordless phones and portable video (DVD) batteries and accessories, and • power supply...

  • Page 10
    ... retailers, distributors, new car dealers, vehicle equipment manufacturers (OEM), and the U.S. military We sell our products under OEM arrangements with domestic and/or international subsidiaries of automobile manufacturers such as Ford Motor Company, Daimler Chrysler, General Motors Corporation...

  • Page 11
    Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 12
    ... have a 50% non-controlling ownership interest in Audiovox Specialized Applications, Inc. ("ASA") which acts as a distributor of televisions and other automotive sound, security and accessory products to specialized markets for specialized vehicles, such as, but not limited to, RV's, van conversions...

  • Page 13
    9 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 14
    ... introduction and availability of innovative products and technologies. Significant sales of new products in niche markets, such as navigation, satellite radios, flat-panel TVs, mobile video systems and the acquisition of certain consumer electronic accessory businesses, has fueled the recent growth...

  • Page 15
    ... manufactured domestically. This increases the risk that our products will become obsolete or face selling price reductions before we can sell our inventory. We Plan to Expand the International Marketing and Distribution of Our Products, Which Will Subject Us to Additional Business Risks. As part...

  • Page 16
    ... full-time service of certain of our executive officers and key employees could have a material adverse effect on our business. In addition, to support our continued growth, we must effectively recruit, develop and retain additional qualified personnel both domestically and internationally. Our...

  • Page 17
    12 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 18
    ...Germany, China, Malaysia, Canada, Venezuela, Mexico, Hong Kong and England. The leases have been classified as operating leases, with the exception of one, which is recorded as a capital lease. These facilities are located in Arkansas, California, Florida, Georgia, New York, Ohio, Tennessee, Indiana...

  • Page 19
    13 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 20
    ... sale of the Company's Cellular business to UTSI, the Company agreed to indemnify UTSI for any breach or violation by Audiovox Communications Corporation and its representations, warranties and covenants contained in the asset purchase agreement and for other matters, subject to certain limitations...

  • Page 21
    ... and Issuer Purchases of Equity Securities Market Information The Class A Common Stock of Audiovox is traded on the Nasdaq Stock Market under the symbol "VOXX". The following table sets forth the low and high sale price of our Class A Common Stock, based on the last daily sale in each of the last...

  • Page 22
    ... stock during a period commencing on February 29, 2004 and ending on February 28, 2009 with the cumulative total return of the Nasdaq Stock Market (US) Index and our SIC Code Index, during such period. 16 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 23
    ... the acquisition of Terk. 2007 amounts reflect the acquisition of Thomson Accessory business. 2008 amounts reflect the acquisition of Oehlbach, Incaar, Technuity and Thomson A/V (see Note 3 of the Notes to Consolidated Financial Statements). 17 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by...

  • Page 24
    ... Electronics, Inc., Audiovox Accessories Corp. ("AAC"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A and Code Systems, Inc. ("Code"). We market our products under the Audiovox® brand name and other brand names, such as Acoustic Research®, Advent®, Ambico®, Car Link...

  • Page 25
    ... flat panel televisions, home and portable stereos, two-way radios, digital multi-media products such as personal video recorders and MP3 products, camcorders, clock-radios, digital voice recorders, home speaker systems, portable DVD players, and digital picture frames. Accessories products include...

  • Page 26
    ..., acquisition of Code-Alarm branded products, the introduction of new products and lines such as portable DVD players, satellite radio, digital antennas and mobile multi-media devices, • volatility in core mobile, consumer and accessories sales due to increased competition, lower selling prices...

  • Page 27
    20 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 28
    ... in a relatively few number of large customers, a significant change in the liquidity or financial position of any one of these customers could have a material adverse impact on the collectability of accounts receivable and Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 29
    our results of operations. 21 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 30
    ...regularly review inventory quantities on-hand and record a provision, in cost of sales, for excess and obsolete inventory based primarily from selling price reductions subsequent to the balance sheet date, indications from customers based upon current negotiations, and purchase orders. A significant...

  • Page 31
    22 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 32
    ... stock-based awards reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside of our control. We estimate expected volatility by considering the historical volatility of our stock, the implied volatility of publicly traded stock options...

  • Page 33
    ... related to higher sales of consumer electronics products, particularly new product categories under the RCA brand, increases in the Company's OEM business and, in its International operations in Venezuela and Mexico as compared to the prior year. Offsetting this increase were lower sales of mobile...

  • Page 34
    24 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 35
    ... depreciation and amortization and general overhead associated with the Thomson Audio/Video and Technuity Acquisitions. These increases were offset by decreases in executive compensation, sales salaries, commissions, travel and entertainment expenses and insurance. Selling expenses decreased $2,198...

  • Page 36
    ... a non-GAAP financial measure. The Company believes that this presentation of proforma results provides useful information by excluding specific items the Company believes are not indicative of core operating results. 26 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 37
    ...TV's, portable DVD's and digital picture frames. Electronic sales also declined in certain mobile video categories due to increased OEM programs that include the video system as "standard" on more and more vehicles and a decline in new car sales. Accessories sales, which represented 26.1% of our net...

  • Page 38
    ... as a result of the company meeting certain earnings targets and general fiscal wage increases, • $454 increase in a non-cash stock based compensation and warrant expense due to the vesting of options to employees 28 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 39
    ... of expenses in Fiscal 2008 related to the recently acquired Thomson Accessory, Oehlbach, Incaar, Technuity and Thomson Audio/Video operations and an increase in domestic direct labor and related payroll benefits as a result of increased product development efforts and general wage increases. Other...

  • Page 40
    ... other business opportunities, including acquisitions. The following table summarizes our cash flow activity for all periods presented: Year Ended February 28, 2009 Cash provided by (used in): Operating activities Investing activities Financing activities Effect of exchange rate changes on cash Net...

  • Page 41
    ... commitments. These obligations are not recorded in the consolidated financial statements until commitments are fulfilled and such obligations are subject to change based on negotiations with manufacturers. Powered by Morningstar® Document Research℠Source: AUDIOVOX CORP, 10-K, May 14, 2009

  • Page 42
    31 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 43
    ... All of the Company's recent acquisitions fall under the scope of Statement No. 141. The Company will evaluate the impact of Statement No. 141 and Statement No. 160 as they relate to any future acquisitions, as applicable. Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 44
    32 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 45
    ...use interest rate derivative instruments to manage exposure to interest rate changes. In addition, our bank loans expose us to changes in short-term interest rates since interest rates on the underlying obligations are either variable or fixed. 33 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered...

  • Page 46
    ... its internal control over financial reporting as of February 28, 2009. Based on that evaluation, management concluded that the Company's internal control over financial reporting was effective as of February 28, 2009 based on the COSO criteria. Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by...

  • Page 47
    34 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 48
    ... registered public accounting firm who also audited the Company's consolidated financial statements. Grant Thornton LLP's attestation report on the effectiveness of the Company' s internal control over financial reporting is included below. 35 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by...

  • Page 49
    ... PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Audiovox Corporation We have audited Audiovox Corporation (a Delaware corporation) and subsidiaries' (the "Company") internal control over financial reporting as of February 28, 2009, based on criteria established in Internal Control...

  • Page 50
    ... our internal controls over financial reporting. Item 9B - Other Information Not Applicable PART III The information required by Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management...

  • Page 51
    AUDIOVOX CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page 39 40 41 42 44 45 Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 28, 2009 and February 29, 2008 Consolidated Statements of Operations for the years ended ...

  • Page 52
    ... in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated May 14, 2009 expressed an unqualified opinion thereon. /s/ GRANT THORNTON LLP Melville, New York May 14, 2009 39 Source: AUDIOVOX CORP, 10...

  • Page 53
    Audiovox Corporation and Subsidiaries Consolidated Balance Sheets February 28, 2009 and February 29, 2008 (In thousands, except share data) February 28, 2009 February 29, 2008 Assets Current assets: Cash and cash equivalents Accounts receivable, net Inventory Receivables from vendors Prepaid ...

  • Page 54
    See accompanying notes to consolidated financial statements. 40 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 55
    Audiovox Corporation and Subsidiaries Consolidated Statements of Operations Years Ended February 28, 2009, February 29, 2008 and February 28, 2007 (In thousands, except share and per share data) Year Ended February 28, 2009 Net sales Cost of sales Gross profit Operating expenses: Selling General and...

  • Page 56
    ...see disclosure below) Unrealized gain on marketable securities, net of tax effect of $1,239 Other comprehensive income Comprehensive income Exercise of stock options into 131,464 shares of common stock Source: AUDIOVOX CORP, 10-K, May 14, 2009 2,500 $ - 148,427 $ 2,936 - - - - 1,180 - 1,180...

  • Page 57
    ... of 128,100 shares of treasury stock Issuance of 585 shares of treasury stock Balances at February 29, 2008 - $ 246 $ 886 1 274,282 $ 2,714 162,542 $ 4,847 $ (1,431) 6 (18,404) $ 886 2,714 (1,431) 7 423,513 42 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 58
    ...loss) on marketable securities Less: reclassification adjustments for gain (loss) included in net income Net unrealized gain (loss) on marketable securities, net of tax See accompanying notes to consolidated financial statements. 43 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar...

  • Page 59
    Audiovox Corporation and Subsidiaries Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 60
    ... Class A common stock Repurchase of preferred stock Reissue of treasury stock Principal payments on debt Tax expense (benefit) on stock options exercised Net cash provided by (used in) financing activities Effect of exchange rate changes on cash Source: AUDIOVOX CORP, 10-K, May 14, 2009 Year Ended...

  • Page 61
    ... (net of refunds) See accompanying notes to consolidated financial statements. 44 $ 30,163 39,341 69,504 $ 23,868 15,473 39,341 $ (807) 16,280 15,473 $ $ 1,224 $ 3,816 $ 1,795 $ 2,316 $ 1,739 (10,226) Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 62
    ...Electronics, Inc., Audiovox Electronics Corporation ("AEC"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A and Code Systems, Inc. ("Code"). We market our products under the Audiovox® brand name and other brand names, such as Acoustic Research®, Advent®, Ambico®, Car...

  • Page 63
    ... grade" rated securities and all investments have an Aaa or better rating at February 28, 2009. Trading securities consist of mutual funds, which are held in connection with the Company's deferred compensation plan. Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 64
    46 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 65
    ...valuation model used generally depends on the specific asset or liability being valued. The determination of fair value considers various factors including interest rate yield curves and time value underlying the financial instruments. Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar...

  • Page 66
    47 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 67
    ... presents the Company's assets and liabilities that are measured and recorded at fair value on a recurring basis at February 28, 2009 consistent with the fair value hierarchy provisions of SFAS No. 157: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Significant...

  • Page 68
    ... it will continue to experience the same credit loss rates that have been experienced in the past. Since the Company's accounts receivable are concentrated in a relatively few number of customers, a significant change in the Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 69
    liquidity or financial position of any one of these customers could have a material adverse impact on the collectability of the Company's accounts receivable and future operating results. 49 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 70
    ... regularly reviews inventory quantities on-hand and records a provision for excess and obsolete inventory based primarily from selling prices, indications from customers based upon current price negotiations and purchase orders. The Company's industry is characterized by rapid technological change...

  • Page 71
    ... sales, performance of the business group and proximity to acquisition date fair values. At the present time, management intends to continue the development, marketing and selling of products associated with its intangible assets and there are no known restrictions on the continuation of their use...

  • Page 72
    ... assets with indefinite lives were deemed to be impaired. As a result, an impairment of $9,976 was recorded. All impairment charges have been reflected in pre-tax operating income on the Company's financial statements. 51 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 73
    ... with an estimated useful life of ninety-nine months. In addition, the Company recorded ($9,269) and $8,118 to indefinite life and amortizing intangibles, respectively in connection with the final purchase price allocation for its Technuity and Thomson Audio/Video acquisitions. An adjustment of...

  • Page 74
    ... EITF 01-9, the Company records the provision for these additional sales incentives at the later of when the sales incentive is offered or when the related revenue is recognized. Such additional sales incentives are based upon a fixed percentage of the selling price to the customer, a fixed amount...

  • Page 75
    has ended). Unclaimed sales incentives for the years ended February 28, 2009, February 29, 2008 and February 28, 2007 amounted to $2,419, $2,138 and $1,312, respectively. 53 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 76
    ... time of sale based on the Company's estimated cost to repair expected product returns for warranty matters. This liability is based primarily on historical experiences of actual warranty claims as well as current information on repair costs. The warranty liability of $7,779 and $13,272 is recorded...

  • Page 77
    ...a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of...

  • Page 78
    ... price of these options and warrants were greater than the average market price of common stock during the period or these options and warrants were anti-dilutive due to losses during the respective periods. 55 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Research...

  • Page 79
    ... date of grant and be recognized as an expense over the requisite service period. Compensation expense related to stock-based awards with vesting terms are amortized using the straight-line attribution method. 56 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Research...

  • Page 80
    ... recognized stock-based compensation expense (before deferred income tax benefits) for awards granted under the Company's stock option plans in the following line items in the consolidated statement of operations for the years ended February 28, 2009 and February 29, 2008: Source: AUDIOVOX CORP, 10...

  • Page 81
    57 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 82
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements February 28, 2009 (Dollars in thousands, except share and per share data) Year Ended February 28, 2009 Cost of sales Selling expense General and administrative expenses Engineering and technical support Stock-based ...

  • Page 83
    ... of, Present fairly in conformity with generally accepted accounting principles". The Company does not believe the implementation of Statement No. 162 will have a material impact on its consolidated financial statements. 59 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 84
    Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 85
    ... of this acquisition have been included in the consolidated financial statements from the date of acquisition. The purpose of this acquisition was to enhance the Company's market share in the accessory business, which Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 86
    includes rights to the RCA brand and other brand names. 60 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 87
    ... expand the Company's accessory product lines to European Markets. The following summarizes the final allocation of the total purchase price to the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition: Assets acquired: Cash Accounts receivable, net Inventory...

  • Page 88
    61 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 89
    ... Americas for rechargeable batteries and battery packs for camcorders, cordless phones, digital cameras, DVD players and other power supply devices. As consideration for Technuity, the Company paid the following: Purchase Price (net of cash acquired) Final working capital credit Acquisition related...

  • Page 90
    ...U.S., Canada, Mexico, China and Hong Kong consumer electronics audio/video business as well as the rights to the RCA brand for the audio/video field of use. As consideration for Thomson's audio/video business, the Company paid the following: Purchase Price Net asset payment Acquisition related costs...

  • Page 91
    ... 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, van conversions and marine vehicles, of televisions and other automotive sound, security and accessory products. ASA...

  • Page 92
    64 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 93
    .... The following represents summary information of transactions between the Company and ASA: Year Ended February 28, 2009 Net Sales Purchases Royalty expense $ 1,026 76 500 Year Ended February 29, 2008 (unaudited) $ 1,517 139 899 February 28, 2009 Accounts Receivable 6) Accrued Expenses and Other...

  • Page 94
    65 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 95
    ...gross sales as a fee for the accounts receivable factoring arrangement. As of February 28, 2009, the amount of accounts receivable and finished goods available for factoring exceeded the amounts outstanding under this obligation. 66 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar...

  • Page 96
    ...is secured by a pledge of the stock of Audiovox Germany and the Magnat brand name, prohibits the distribution of dividends, and takes precedence to all other intercompany loans with Audiovox Corporation. e) Oehlbach In connection with the Oehlbach acquisition (see Note 3), the Company acquired short...

  • Page 97
    ... tax rates, changes in the allocation and apportionment factors between taxable jurisdictions with differing tax rates of each tax entity, changes in tax rates and other legislation in the various jurisdictions and other items. Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar...

  • Page 98
    68 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 99
    ... which was accounted for as an increase to the Company's opening retained earnings balance as of March 1, 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows: 69 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by...

  • Page 100
    Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 101
    ... are as follows: Jurisdiction U.S. Germany Canada Indiana 9) Capital Structure The Company's capital structure is as follows: Shares Authorized Security Preferred Stock Series Preferred Stock Class A Common Stock Class B Common Stock $ Par Value 50.00 February 28, 2009 50,000 February 29, 2008...

  • Page 102
    ...' contributions. d) Cash Bonus Profit Sharing Plan During fiscal 2009, the Board of Directors authorized a Cash Bonus Profit Sharing Plan that allows the Company to make profit sharing contributions for the benefit of eligible employees, for any fiscal year based on a pre-determined formula on the...

  • Page 103
    year ended February 29, 2008, the Company made a cash bonus profit sharing contribution in the amount of $480 as a result of the Company achieving pre-tax profits in excess of the Cash Bonus Profit Sharing Plan limits. 71 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 104
    ...under the provisions of the Internal Revenue Code. All compensation deferred under the Plan is held by the Company in an investment trust which is considered an asset of the Company. The Company has the option of amending or terminating the Plan at any time. The investments, which amounted to $2,559...

  • Page 105
    ... customer accounted for more than 10% of net sales. A portion of the Company's customer base may be susceptible to downturns in the retail economy, particularly in the consumer electronics industry. Additionally, customers specializing in certain automotive sound, security and accessory products...

  • Page 106
    28, 2009 the Company owns 145,000,000 shares and 90,000,000 warrants in Bliss-tel with an aggregate fair value of $250. 73 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 107
    ...the financial information used by our Executive Officers. Management reviews the financial results of the Company based on the performance of the Electronics Group. Locations Net sales and long-lived assets by location were as follows: Year Ended February 28, 2009 North America Latin America Germany...

  • Page 108
    Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 109
    ... be necessary to cover the cost of this issue. The Company has recorded certain costs associated with this issue as of February 28, 2009, based on information available at the time . The products the Company sells are continually changing as a result of improved technology. As a result, although the...

  • Page 110
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements February 28, 2009 (Dollars in thousands, except share and per share data) 16) Unaudited Quarterly Financial Data Selected unaudited, quarterly financial data of the Company for the years ended February 28, 2009 and ...

  • Page 111
    ...$1,255, $1,705, $325, $646 and $12,848 of liabilities acquired during the Thomson Accessory, Oehlbach, Technuity and Thomson Audio/Video acquisitions, respectively (see Note 3 of the Consolidated Financial Statements). 77 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 112
    ....2 10.3 10.4 10.5 10.6 21 23 31.1 31.2 32.1 32.2 99.1 99.2 (d) All other schedules are omitted because the required information is shown in the financial statements or notes thereto or because they are not applicable. 78 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 113
    ... duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AUDIOVOX CORPORATION May 14, 2009 By: /s/ Patrick M. Lavelle Patrick M. Lavelle, President and Chief Executive Officer 79 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 114
    ...Officer (Principal Executive Officer) and Director Date May 14, 2009 /s/ Charles M. Stoehr Charles M. Stoehr Senior Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) and Director May 14, 2009 /s/ John J. Shalam John J. Shalam Chairman of the Board of Directors...

  • Page 115
    Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 116
    ... OF REGISTRANT Subsidiaries Audiovox Accessories Corp. Audiovox Consumer Electronics, Inc. Audiovox Electronics Corporation American Radio Corp. Audiovox Venezuela C.A. Audiovox German Holdings GmbH Code Systems, Inc. Jurisdiction of Incorporation Delaware Delaware Delaware Georgia Venezuela Germany...

  • Page 117
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated May 14, 2009 with respect to the consolidated financial statements, financial statement schedule and internal control over financial reporting included in the Annual Report of Audiovox Corporation and subsidiaries on...

  • Page 118
    ...whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. May 14, 2009 /s/Patrick M. Lavelle Patrick M. Lavelle Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 119
    ... and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. May 14, 2009 /s/C. Michael Stoehr C. Michael Stoehr Source: AUDIOVOX CORP, 10...

  • Page 120
    ... with the Annual Report of Audiovox Corporation (the "Company") on Form 10-K for the period ended February 28, 2009 (the "Report") as filed with the Securities and Exchange Commission on the date hereof, I, Patick M. Lavelle, President and Chief Executive Officer of the Company, certify, pursuant...

  • Page 121
    ... with the Annual Report of Audiovox Corporation (the "Company") on Form 10-K for the period ended February 28, 2009 (the "Report") as filed with the Securities and Exchange Commission on the date hereof, I, C. Michael Stoehr, Senior Vice President and Chief Financial Officer of the Company, certify...

  • Page 122
    ... Applications, LLC And Subsidiary (A Limited Liability Company) Consolidated Financial Report 11.30.2008 McGladrey & Pullen Certified Public Accountants McGladrey & Pullen, LLP is a member firm of RSM International -- an affiliation of separate and independent legal entities. Source: AUDIOVOX CORP...

  • Page 123
    ...members' equity Consolidated statements of cash flows Notes to financial statements McGladrey & Pullen, LLP is a member firm of RSM International -- an affiliation of separate and independent legal entities. 2 3 4 5 6-14 1 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 124
    ... with U.S. generally accepted accounting principles. /s/ McGladrey & Pullen, LLP Elkhart, Indiana February 17, 2009 McGladrey & Pullen, LLP is a member firm of RSM International - an affiliation of separate and independent legal entities. 1 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by...

  • Page 125
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Balance Sheets November 30, 2008 and 2007 2008 ASSETS Current Assets Cash and cash equivalents Available-for-sale securities Trade receivables Inventories Prepaid expenses Total current assets Leashold ...

  • Page 126
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Statements of Income November 30, 2008, 2007 and 2006 2008 Net sales Cost of goods sold Gross profit Selling, general... $ 3 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 127
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Statements of Members' Equity November 30, 2008, 2007 and 2006 2008 Balance, beginning Net income Member distributions Balance, ending See Notes to Financial Statements $ $ 2007 2006 26,128,658 $ 23,336...

  • Page 128
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Statements of Cash Flows November 30, 2008, 2007 and 2006 2008 Cash Flows From Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: ...

  • Page 129
    ...other Audio/Video Products; and Heavy Duty Systems, Radios and other Audio Products. These products are sold to customers throughout the world, generally on 30-day terms. ASA is headquartered in Elkhart, Indiana and has a public distribution center in California. Significant accounting policies: Use...

  • Page 130
    ...is generally based upon a fixed percentage of sales revenue to the customer. Since the rebate percentage is generally fixed, the Company records the related rebate at the time of sale. Members' equity: In accordance with the generally accepted method of presenting limited liability company financial...

  • Page 131
    ... Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements The Company accounts for these investments in accordance with Financial Accounting Standards Board ("FASB") Statement No. 115. Management determines the appropriate classification of securities...

  • Page 132
    ...equipment manufacturer or its dealers to repair or replace defective products during such warranty periods at no cost to the consumer. The Company estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time product revenue...

  • Page 133
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements Long-lived assets, goodwill and other intangible assets: SFAS No. 142, "Goodwill and Other Intangible Assets", requires that goodwill and intangible assets with indefinite useful lives ...

  • Page 134
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements Note 2. Available-For-Sale Securities The following is a summary of the Company's investment securities... Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 135
    ... the years ended November 30, 2008, 2007, and 2006 are approximately as follows: 2008 Net product sales Royalty revenue Purchases $ 84,000 629,000 481,000 $ 2007 144,000 831,000 879,000 $ 2006 210,000 649,000 1,248,000 12 Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document...

  • Page 136
    ...Audiovox whereby the Company earns a 3% royalty on the member's purchases of certain mobile video product from a third party. The related revenue has been included in net sales on the consolidated statements of income. At November 30, 2008 and 2007, amounts included in trade receivables and accounts...

  • Page 137
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements Note 8. Litigation At times, the Company has pending legal proceedings. These proceedings are, in the opinion of management, ordinary routine matters incidental to the normal business...

  • Page 138
    Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Researchâ„

  • Page 139
    ...the Registration Statements of Audiovox Corporation on Forms S-8 (Registration Nos. 333-138000 and 333-131911) of our report, dated February 17, 2009, on the consolidated financial statements of Audiovox Specialized Applications, LLC which is included in the Annual Report of Audiovox Corporation and...