Audiovox 2010 Annual Report Download - page 25

Download and view the complete annual report

Please find page 25 of the 2010 Audiovox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 131

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131

Business Overview and Strategy
Audiovox Corporation ("Audiovox", "We", "Our", "Us" or "Company") is a leading international distributor and value added
service provider in the accessory, mobile and consumer electronics industries. We conduct our business through eleven wholly-owned
subsidiaries. Audiovox has a broad portfolio of brand names used to market our products as well as private labels through a large
domestic and international distribution network. We also function as an OEM (“Original Equipment Manufacturer”) supplier to
several customers.
Over the last several years, we have focused on our intention to acquire synergistic businesses with the addition of seven new
subsidiaries. These subsidiaries helped us to expand our core business and broaden our presence in the accessory and OEM
markets. Our most recent acquisition of Invision has provided the opportunity to enter the manufacturing arena. Our intention is to
continue to pursue business opportunities which will allow us to further expand our business model while leveraging overhead and
exploring specialized niche markets in the electronics industry.
Although we believe our product groups have expanding market opportunities, there are 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.
Acquisitions
We have acquired and integrated several acquisitions which are outlined in the Acquisitions section of Part I and presented in detail in
Note 2.
Divestitures
On November 7, 2005, we completed the sale of our majority owned subsidiary, Audiovox Malaysia (“AVM”), to the then
current minority interest shareholder due to increased competition from non-local OEM’s and deteriorating credit quality of local
customers. We sold our remaining equity in AVM in exchange for a $550 promissory note and were released from all of our
Malaysian liabilities, including bank obligations resulting in a loss on sale of $2,079.
Net Sales Growth
Net sales over a five-year period have declined 2.3% from $563,653 for the year ended November 30, 2004 to $550,695 for
the year ended February 28, 2010. During this period, our sales were impacted by the following items:
• The discontinuance of various high volume/low margin product lines such as navigation, GMRS radios and flat-panel
TV’s,
• volatility in core mobile, consumer and accessories sales due to increased competition, lower selling prices and the
decline in the national and global economy.
Partially offset by:
• the introduction of new products and lines such 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 Oehlbach’s accessory business,
• acquisition of Incaar’s OEM business,
• acquisition of Technuity’s accessory business,
• acquisition of Thomson’s audio/video business,
• acquisition of Terk Technologies,
• acquisition of Recoton and growth in Jensen sales.
Critical Accounting Policies and Estimates
General
Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United
States of America. The preparation of these financial statements requires us to make certain estimates, judgments and assumptions that
we believe are reasonable based upon the information available. These estimates and assumptions can be subjective and complex and
may affect the reported amounts of assets and liabilities, revenues and expenses reported in those financial statements. As a result,
actual results could differ from such estimates and assumptions. The significant accounting policies and estimates which we believe
are the most critical in fully understanding and evaluating the reported consolidated financial results include the following:
Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠