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Morningstar® Document Research℠
FORM 10-K
AUDIOVOX CORP - VOXX
Filed: May 14, 2010 (period: February 28, 2010)
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, 2010 (period: February 28, 2010) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... ended February 28, 2010 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, 2010. Outstanding 20,622,905 2,260,954 2 Source: AUDIOVOX CORP, 10-K, May 14, 2010 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
    ... Electronics Corporation ("AEC"), Audiovox Accessories Corp. ("AAC"), Audiovox Consumer Electronics, Inc. ("ACE"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A., Audiovox Canada Limited, Entretenimiento Digital Mexico, S. de C.V. ("Audiovox Mexico"), Code Systems...

  • Page 6
    4 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 7
    ..., DVD players and other power supply devices. In August 2007, Audiovox Germany acquired certain assets of Incaar Limited, a U.K. business that specializes in rear seat electronics systems. In March 2007, Audiovox Germany acquired the stock of Oehlbach, a European market leader in the accessories...

  • Page 8
    ..., 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...

  • Page 9
    6 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 10
    ...testing, sales training and customer packaging, in-store display design, installation training and technical support, product repair services and warranty, nationwide installation network, warehousing, and specialized manufacturing. 7 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar...

  • Page 11
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 12
    ... States, Canada, Mexico, Central America, Puerto Rico, Europe and Venezuela. Our customer service group along with our Company websites, provide product information, answer questions and serve as technical hotlines for installation help for end-users and customers. Suppliers We work directly with...

  • Page 13
    ... 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 14
    9 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 15
    ... 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 of our business strategy, we intend to increase our international sales, although we cannot...

  • Page 16
    • increased complexity and costs of managing and staffing international operations. 10 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 17
    ... the operations, technologies, products and personnel of an acquired business; • diversion of management's attention from other business concerns; • increased expenses associated with the acquisition; and • potential loss of key employees or customers of any acquired business. We cannot assure...

  • Page 18
    ... to operate our business if market conditions change, our business plans or assumptions change, we make significant acquisitions, or we need to make significant increases in capital expenditures or working capital. Our Stock Price Could Fluctuate Significantly. The market price of our common...

  • Page 19
    ... Our Corporate headquarters is located at 180 Marcus Blvd. in Hauppauge, New York. In addition, as of February 28, 2010, the Company leased a total of 26 operating facilities or offices located in 12 states as well as Germany, China, Malaysia, Canada, Venezuela, Mexico, Hong Kong and England...

  • Page 20
    13 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 21
    ... Equity, Related Stockholder Matters 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...

  • Page 22
    14 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 23
    ...of Thomson Accessory business. 2008 amounts reflect the acquisition of Oehlbach, Incaar, Technuity and Thomson A/V. 2010 amounts reflect the acquisition of Schwaiger and Invision (see Note 2 of the Notes to Consolidated Financial Statements). 15 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by...

  • Page 24
    ... financial information used by our Executive Officers. Management reviews the financial results of the Company based on the performance of the Electronics Group. Outlook The Company's domestic and international business is subject to retail industry conditions and the sales of new and used vehicles...

  • Page 25
    ...as portable DVD players, satellite radio, digital antennas and mobile multi-media devices, • acquisition of Invision's mobile entertainment business, • acquisition of Schwaiger's accessory business, • acquisition of Thomson's Americas consumer electronics accessory business, • acquisition of...

  • Page 26
    17 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 27
    ... or media advertising in which our product is featured on its own or in conjunction with other companies' products. The amount offered is either a fixed amount or is based upon a fixed percentage of sales revenue or fixed amount per unit sold to the customer during a specified time period. Market...

  • Page 28
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 29
    ... specific customer collection issues that have been identified. We record charges for estimated credit losses against operating expenses and charges for price adjustments against net sales in the consolidated financial statements. The reserve for estimated credit losses at February 28, 2010 February...

  • Page 30
    19 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 31
    ... require us to repair or replace defective product returned by both end users and customers during such warranty period at no cost. We record an estimate for warranty related costs, in cost of sales, based upon actual historical return rates and repair costs at the time of sale. The estimated...

  • Page 32
    20 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 33
    ...various high volume/low profit product categories including flat-panel TV's, portable navigation, GMRS and certain digital picture frames. In Fiscal 2010, only residual inventories were sold. The Company chose not to participate in a number of seasonal promotions in both the digital and portable DVD...

  • Page 34
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 35
    ...In the fourth quarter, the Company returned the 10% temporary salary reduction to all employees below the level of vice president. Executive management elected not to participate. The Company continues to review and analyze its overhead in relationship to its revenue. If necessary, further revisions...

  • Page 36
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 37
    ... to the reduction of debt in our international subsidiaries. Equity in income of equity investees decreased due to decreased equity income of Audiovox Specialized Applications, Inc. (ASA) as a result of decreased sales and gross margins related to the commercial, RV and marine industries due to the...

  • Page 38
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 39
    .... During Fiscal 2009, the Company was impacted by several non-standard charges related to the economy, market conditions, customers and other events as outlined in the Annual Report for Fiscal 2009. Net income (loss) was also favorably impacted by sales incentive reversals of $2,559 ($0 after...

  • Page 40
    ... represent inventory 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. We regularly review our cash funding requirements and attempt to meet...

  • Page 41
    ..., price negotiations depend in part on the foreign currency of foreign manufacturers, as well as market, trade and political factors. The Company also has exposure related to transactions in which the currency collected from customers is different from the currency utilized to purchase the product...

  • Page 42
    26 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 43
    ... most recent acquisitions at Schwaiger and Invision. Based on that evaluation, management concluded that the Company's internal control over financial reporting was effective as of February 28, 2010 based on the COSO criteria. Powered by Morningstar® Document Research℠Source: AUDIOVOX CORP, 10...

  • Page 44
    ... 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. 27 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by...

  • Page 45
    ... 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, 2010, based on criteria established in Internal Control...

  • Page 46
    ... 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 47
    AUDIOVOX CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page 31 32 33 34 36 37 Financial Statements: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of February 28, 2010 and February 28, 2009 Consolidated Statements of Operations for the years ended ...

  • Page 48
    ...Company changed its method of accounting for business combinations. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Audiovox Corporation and subsidiaries' internal control over financial reporting as of February 28, 2010, based...

  • Page 49
    Audiovox Corporation and Subsidiaries Consolidated Balance Sheets February 28, 2010 and 2009 (In thousands, except share data) February 28, 2010 February 28, 2009 Assets Current assets: Cash and cash equivalents Accounts receivable, net Inventory Receivables from vendors Prepaid expenses and other ...

  • Page 50
    ...A common stock at February 28, 2010 and February 28, 2009, respectively Total stockholders' equity Total liabilities and stockholders' equity See accompanying notes to consolidated financial statements. $ 364,263 488,978 $ 340,502 461,296 32 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by...

  • Page 51
    Audiovox Corporation and Subsidiaries Consolidated Statements of Operations Years Ended February 28, 2010 February 28, 2009 and February 29, 2008 (In thousands, except share and per share data) Year Ended February 28, 2010 Net sales Cost of sales Gross profit Operating expenses: Selling General and ...

  • Page 52
    ... gain on marketable securities, net of tax effect Other comprehensive income Comprehensive income Exercise of stock options into 131,464 shares of common stock Reversal of tax benefit from stock options exercised Stock-based compensation expense Cumulative effect of a change in accounting principles...

  • Page 53
    Stock-based compensation expense Issuance of 800 shares of treasury stock Balances at February 28, 2009 $ - $ 246 $ 309 (4) 274,464 $ 91,513 $ (7,325) $ 8 (18,396) $ 309 4 340,502 34 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 54
    ... marketable securities, net of tax effect Other comprehensive income Comprehensive income Exercise of stock options into 20,000 shares of common stock Stock-based compensation expense Issuance of 800 shares of treasury stock Balances at February 28, 2010 Accumulated Paid-in Capital Retained Earnings...

  • Page 55
    ... (benefit), net Loss on disposal of property, plant and equipment Tax (benefit) expense on stock options exercised Non-cash compensation adjustment Non-cash stock based compensation expense Realized gain on sale of investment Gain on bargain purchase Impairment loss on marketable securities Changes...

  • Page 56
    ... notes to consolidated financial statements. 36 (1,222) (1,984) 7 69,504 69,511 $ 20 4,655 (507) 30,163 39,341 69,504 $ (805) (5,241) 335 23,868 15,473 39,341 $ $ $ 1,310 $ (7,838) $ 1,224 $ 3,816 $ 1,795 (2,316) Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document...

  • Page 57
    ... Electronics Corporation ("AEC"), Audiovox Accessories Corp. ("AAC"), Audiovox Consumer Electronics, Inc. ("ACE"), Audiovox German Holdings GmbH ("Audiovox Germany"), Audiovox Venezuela, C.A., Audiovox Canada Limited, Entretenimiento Digital Mexico, S. de C.V. ("Audiovox Mexico"), Code Systems...

  • Page 58
    37 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 59
    ... securities: Marketable Securities Trading securities Available-for-sale securities Total marketable securities Other long-term investments Total long-term investment securities $ $ $ $ (a) The foreign currency contract is recorded in prepaid expenses and other current assets on the Company...

  • Page 60
    ... in connection with the Company's deferred compensation plan (see Note 10). Unrealized holding gains and losses on trading securities offset those associated with the corresponding deferred compensation liability. Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research...

  • Page 61
    ...for-sale marketable securities include a less than 20% equity ownership in CLST Holdings, Inc. ("Cellstar") and Bliss-tel Public Company Limited ("Bliss-tel"), and taxable auction rate notes which have long-term maturity dates (October 2038). 39 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by...

  • Page 62
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2010 (Dollars in thousands, except share and per share data) Unrealized holding gains and losses, net of the related tax effect (if applicable), on available-for-sale securities are reported as a...

  • Page 63
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2010 (Dollars in thousands, except share and per share data) g) Revenue Recognition The Company recognizes revenue from product sales at the time of passage of title and risk of loss to the ...

  • Page 64
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2010 (Dollars in thousands, except share and per share data) Inventories by major category are as follows: February 28, 2010 Raw materials Work in process Finished goods Inventory, net $ $ 4,428 ...

  • Page 65
    2009 and February 29, 2008. 42 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 66
    ... operating income on the Company's financial statements. Goodwill The change in the carrying amount of goodwill is as follows: February 28, 2010 Net beginning balance Technuity purchase price allocation Goodwill impairment charge Invision purchase price allocation Source: AUDIOVOX CORP, 10-K, May 14...

  • Page 67
    Net ending balance 43 $ 7,389 $ - Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 68
    ... by the customer requesting a cash payout. All costs associated with sales incentives are classified as a reduction of net sales. The following is a summary of the various sales incentive programs: Amount 1,959 1,643 1,512 1,299 1,299 $ 7,712 $ Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by...

  • Page 69
    44 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 70
    ... period of time. The amount offered is either based upon a fixed percentage of sales revenue to the customer or a fixed amount per unit sold to the customer. The Company makes an estimate of the ultimate amount of the rebate their customers will earn based upon past history with the customer and...

  • Page 71
    The majority of the reversals of previously established sales incentive liabilities pertain to sales recorded in prior periods. 45 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 72
    ... its products against certain manufacturing and other defects. The Company provides warranties for all of its products ranging from 90 days to the lifetime of the product. Warranty expenses are accrued at the time of sale based on the Company's estimated cost to repair expected product returns for...

  • Page 73
    ...on a tax return should be recorded in the financial statements. Under ASC 740, 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 74
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 75
    ...for Stock-Based Compensation The Company has stock option plans under which employees and non-employee directors may be granted incentive stock options ("ISO's") and non-qualified stock options ("NQSO's") to purchase shares of Class A common stock. Under the stock option plans, the exercise price of...

  • Page 76
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2010 (Dollars in thousands, except share and per share data) In addition, the Company issued 17,500 warrants in September of 2009 to purchase the Company's common stock with the same terms as ...

  • Page 77
    ... 28, 2010 Cost of sales Selling expense General and administrative expenses Engineering and technical support Stock-based compensation expense before income tax benefits $ 17 165 951 5 1,138 $ Year Ended February 28, 2009 7 63 234 5 309 $ Year Ended February 29, 2008 16 192 662 16 886 $ $ $ Net...

  • Page 78
    .... Net assets acquired in excess of consideration paid are recorded as a gain. In April 2009, the FASB issued authoritative guidance under ASC 825 which requires disclosure about fair value of financial instruments in interim financial statements in order to provide more timely information about...

  • Page 79
    51 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 80
    ... Company's consolidated financial statements. 2) Business Acquisitions Invision On February 1, 2010, the Company's newly formed subsidiary, Invision Automotive Systems, Inc., purchased the assets of Invision Industries, Inc., a manufacturer of rear seat entertainment systems for OEM's, ports and car...

  • Page 81
    ...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 82
    ... 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 83
    ... On March 1, 2007, Audiovox German Holdings GmbH completed the stock acquisition of Oehlbach Kabel GmbH ("Oehlbach"), a European market leader in the accessories field for $8,134, including acquisition costs of $200 and an Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document...

  • Page 84
    estimated contingent payment of approximately $1,322. 55 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 85
    ... 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 86
    ... The Company has a 50% non-controlling ownership interest in Audiovox Specialized Applications, Inc. ("ASA") which acts as a distributor to markets for specialized vehicles, such as RV's, van conversions and marine vehicles, of televisions and other automotive sound, security and accessory products...

  • Page 87
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2010 (Dollars in thousands, except share and per share data) The following represents summary information of transactions between the Company and ASA: Year Ended February 28, 2010 Net Sales ...

  • Page 88
    ... 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. d) Suntrust On February 1, 2010, the Company entered into a two-year monthly installment loan...

  • Page 89
    ... State Foreign Total deferred (benefit) provision Total provision (benefit) Federal State Foreign Total provision (benefit) 12,446 $ 1,617 (281) 13,782 $ 12,968 2,060 47 15,075 $ $ (9,952) $ (1,192) (184) (11,328) $ 60 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document...

  • Page 90
    ...financial reporting and tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: February 28, 2010 Deferred tax assets: Accounts receivable Inventory Property, plant and equipment Intangible assets Accruals and reserves Unrealized gains and losses Net...

  • Page 91
    ...not materially change within the next twelve months. During Fiscal 2010, the Company recorded an income tax benefit primarily related to a reduction of its valuation allowance in connection with its ability to carryback certain net operating losses to the 2005 tax year as a result of new legislation...

  • Page 92
    ... investments included in retained earnings amounted to $5,946 and $7,792 at February 28, 2010 and February 28, 2009, respectively. 10) Other Stock and Retirement Plans a) Restricted Stock Plan The Company has restricted stock plans under which key employees and directors may be awarded restricted...

  • Page 93
    63 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 94
    Audiovox Corporation and Subsidiaries Notes to Consolidated Financial Statements, continued February 28, 2010 (Dollars in thousands, except share and per share data) b) Employee Stock Purchase Plan In April 2000, the stockholders approved the 2000 Employee Stock Purchase Plan of up to 1,000,000 ...

  • Page 95
    ...2010, minimum annual rental payments on these related party leases, in addition to the capital lease payments, which are included in the above table, are as follows: 2011 2012 2013 2014 2015 Thereafter Total $ 714 735 758 781 804 4,233 8,025 $ 65 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered...

  • Page 96
    ...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, 2010 North America Latin America Germany...

  • Page 97
    66 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 98
    ...as follows: Year Ended February 28, 2010 Electronics Accessories Total net sales 14) Contingencies The Company is currently, and has in the past been, a party to various routine legal proceedings incident to the ordinary course of business. If management determines, based on the underlying facts and...

  • Page 99
    sale of the Company's cellular business. These actions were subsequently consolidated into a single derivative complaint (the "Complaint"), In re Audiovox Corporation Derivative Litigation. 67 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 100
    ... discussed above resulted in a pre-tax benefit of $3,349 recorded in discontinued operations for the year ended February 29, 2008. Simultaneous with the acquisition of Code Systems, Inc. (Code) in March 2002, the Company entered into a purchase and supply agreement with a third party. In exchange...

  • Page 101
    Earnings per share are computed separately for each quarter. Therefore, the sum of such quarterly per share amounts may differ from the total for the years. 68 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 102
    ... $12,848 and $879of liabilities acquired during the Thomson Accessory, Oehlbach, Technuity, Thomson Audio/Video and Invision acquisitions, respectively (see Note 3 of the Consolidated Financial Statements). 69 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 103
    ...10.2 10.3 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. 70 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 104
    ...the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AUDIOVOX CORPORATION May 14, 2010 By: /s/ Patrick M. Lavelle Patrick M. Lavelle, President and Chief Executive Officer 71 Source: AUDIOVOX CORP...

  • Page 105
    ...Officer (Principal Executive Officer) and Director Date May 14, 2010 /s/ Charles M. Stoehr Charles M. Stoehr Senior Vice President, Chief Financial Officer (Principal Financial and Accounting Officer) and Director May 14, 2010 /s/ John J. Shalam John J. Shalam Chairman of the Board of Directors...

  • Page 106
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 107
    ... Audiovox Accessories Corp. Audiovox Consumer Electronics, Inc. Audiovox Electronics Corporation American Radio Corp. Audiovox Venezuela C.A. Audiovox German Holdings GmbH Code Systems, Inc. Audiovox Canada Limited Entretenimiento Digital Mexico, S.de C.V Schwaiger GmbH Invision Automotive Systems...

  • Page 108
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We have issued our reports dated May 14, 2010, 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 109
    ... SECURITIES EXCHANGE ACT OF 1934 I, Patrick M. Lavelle, President and Chief Executive Officer of Audiovox Corporation, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Audiovox Corporation (the "Company"); Based on my knowledge, this report does not contain any untrue statement...

  • Page 110
    ...Chief Financial Officer of Audiovox Corporation, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Audiovox Corporation (the "Company"); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make...

  • Page 111
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 112
    ... with the Annual Report of Audiovox Corporation (the "Company") on Form 10-K for the period ended February 28, 2010 (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 113
    ... with the Annual Report of Audiovox Corporation (the "Company") on Form 10-K for the period ended February 28, 2010 (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 114
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Consolidated Financial Report 11.30.2009 McGladrey & Pullen Certified Public Accountants McGladrey & Pullen, LLP is a member firm of RSM International -- an affiliation of separate and independent legal entities. 1...

  • Page 115
    ... statements of 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 4 5 6 7 8-16 3 Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered...

  • Page 116
    ...Public Accounting Firm To the Members Audiovox Specialized Applications, LLC and Subsidiary Elkhart, Indiana We have audited the accompanying consolidated balance sheets of Audiovox Specialized Applications, LLC and Subsidiary as of November 30, 2009 and 2008, and the related consolidated statements...

  • Page 117
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Balance Sheets November 30, 2009 and 2008 2009 ASSETS Current Assets Cash and cash equivalents Available-for-sale securities Trade receivables Inventories Prepaid expenses Total current assets Leashold ...

  • Page 118
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Statements of Income November 30, 2009, 2008 and 2007 2009 Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Operating income Nonoperating income (expense): ...

  • Page 119
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Statements of Members' Equity November 30, 2009, 2008 and 2007 2009 Balance, beginning Net income Member distributions Balance, ending See Notes to Financial Statements $ $ 2008 2007 26,135,586 $ 26,128...

  • Page 120
    Audiovox Specialized Applications, LLC and Subsidiary (A Limited Liability Company) Consolidated Statements of Cash Flows November 30, 2009, 2008 and 2007 2009 Cash Flows From Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: ...

  • Page 121
    ... (A Limited Liability Company) Notes To Financial Statements Note 1. Nature of Business and Significant Accounting Policies Nature of business: Audiovox Specialized Applications ("ASA") "The Mobile Electronics Company" is an international supplier of mobile electronics in certain niche markets in...

  • Page 122
    ... 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 statements...

  • Page 123
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements Management determines the appropriate classification of securities at the date individual investment securities are acquired and the appropriateness of such classification is reassessed...

  • Page 124
    ...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 125
    ...disclosing in the financial statements tax positions taken or expected to be taken on a tax return. If there are changes in net assets as a result of application of the new standard these will be accounted for as an adjustment to the opening balance of retained earnings. Additional disclosures about...

  • Page 126
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements Note 2. Fair Value Measurements On December 1, 2008, the Company adopted the new accounting standards that define fair value, establish a framework for measuring fair value in ...

  • Page 127
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements The cost and fair value of debt securities...: 2009 Proceeds from the sale of available-for-sale securities Interest earned Note 4. Leasehold Improvements and Equipment $ 19,925,000 74...

  • Page 128
    ...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, 2009 and 2008, amounts included in trade receivables and accounts...

  • Page 129
    Audiovox Specialized Applications, LLC And Subsidiary (A Limited Liability Company) Notes To Financial Statements Note 7. Employee Benefit Plans The Company has profit-sharing and 401(k) plans for the benefit of all eligible employees. The Company's contributions are discretionary and are limited...

  • Page 130
    Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Researchâ„

  • Page 131
    ... of our report, dated March 5, 2010, on the consolidated financial statements of Audiovox Specialized Applications, LLC which is included in the Annual Report of Audiovox Corporation and Subsidiaries on Form 10-K for the year ended February 28, 2010. /s/ MCGLADREY & PULLEN, LLP Elkhart, Indiana May...