Audiovox 2009 Annual Report Download - page 9

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Accessories products include:
• High-Definition Television (“HDTV”) Antennas,
• Wireless Fidelity (“WiFi”) Antennas,
• High-Definition Multimedia Interface (“HDMI”) accessories,
• home electronic accessories such as cabling,
• other connectivity 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 systems.
We believe our product groups have expanding market opportunities with certain levels of volatility related to domestic and
international markets, new car sales, increased competition by manufacturers, private labels, technological advancements,
discretionary consumer spending and general economic conditions. Also, all of our products are subject to price fluctuations which
could affect the carrying value of inventories and gross margins in the future.
Net sales by product category are as follows:
Year Year Year
Ended Ended Ended
February 28, February 29, February 28,
2009 2008 2007
Electronics $ 449,433 $ 437,018 $ 432,943
Accessories 153,666 154,337 23,747
Total net sales $ 603,099 $ 591,355 $ 456,690
Electronics sales, which include both mobile and consumer electronics, represented approximately 74.5% of net sales in Fiscal 2009
compared to 73.9% in Fiscal 2008, and increased by 2.8% or $12,415 primarily due to increases in consumer electronics sales as a
result of product sales from the Thomson acquisition and increased sales in our OEM group. These increases were partially offset by
declines in sales of mobile audio, security, video and electronics.
Accessories sales, which represented 25.5% of our net sales in Fiscal 2009 compared to 26.1% in Fiscal 2008, decreased
approximately 0.4% or $671.
Gross margins have declined due to discontinuance of certain product lines and increased inventory markdowns. We anticipate an
increase in margins through the introduction of new products with technologies that take advantage of market opportunities created by
the digital convergence of data, navigation and multi-media entertainment as well as future operating improvements.
Licensing and Royalties
We have various license and royalty programs with manufacturers, customers and other electronic suppliers. Such agreements
entitle us to receive license and royalty income for Audiovox products sold by the licensees without adding any significant costs.
Depending on the terms of each agreement, income is based on either a fixed amount per unit or percentage of net sales. Current
license and royalty agreements have duration periods, which range from 1 to 20 years, whereas other agreements are in perpetuity and
certain agreements may be renewed at the end of termination of the agreement. Certain renewals of license and royalty agreements are
dependent on negotiations with licensees as well as current Audiovox products being sold by the licensee.
License and royalty income is recorded upon sale to the end-user and amounted to $4,430, $2,190 and $2,200 for the years ended
February 28, 2009, February 29, 2008 and February 28, 2007, respectively.
7
Source: AUDIOVOX CORP, 10-K, May 14, 2009 Powered by Morningstar® Document Research℠