Audiovox 2010 Annual Report Download - page 33

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Year Ended February 28, 2010 Compared to the Years Ended February 28, 2009 and February 29, 2008
Continuing Operations
The following table sets forth, for the periods indicated, certain Statement of Operations data for the years ended February
28, 2010 (“Fiscal 2010”), February 28, 2009 (“Fiscal 2009”) and February 29, 2008 (“Fiscal 2008”).
Net Sales
Fiscal Fiscal Fiscal
2010 2009 2008
Electronics $ 375,021 $ 449,433 $ 437,018
Accessories 175,674 153,666 154,337
Total net sales $ 550,695 $ 603,099 $ 591,355
Fiscal 2010
Electronics sales, which include both mobile and consumer electronics declined $74,412 in Fiscal 2010. The Company
had anticipated the decline based on economic conditions and adjusted its inventory positions accordingly. In Fiscal 2009, the
Company announced its decision to exit 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 categories due to insufficient margins. We
partially offset these declines through increased satellite sales as a result of a new agreement with Sirius/XM and the introduction of
our Flo-TV product line.
Accessories sales increased $22,008 due to the Schwaiger acquisition and the introduction of new products and new
customers. These increases were partially offset by lower digital antennae sales caused by high load-ins in Fiscal 2009.
Fiscal 2009
Electronics sales increased in Fiscal 2009 as compared to Fiscal 2008 primarily as a result of 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
electronics products as a result of the local economic downturn, lower car sales and the financial difficulties of the automakers, which
intensified in the fourth quarter of Fiscal 2009.
Accessories sales for Fiscal 2009 were down primarily due to the overall economic environment.
Sales incentive expenses were $27,070, $19,794 and $24,651 for Fiscal 2010, 2009 and 2008, respectively, which included
reversals for unclaimed and unearned sales incentives of $2,559, $4,083 and $4,108, respectively. We believe the reversal of unearned
and earned but unclaimed sales incentives upon the expiration of the claim period is a disciplined, rational, consistent and systematic
method of reversing unearned and earned but unclaimed sales incentives. These sales incentive programs are expected to continue and
will either increase or decrease based upon competition and customer demands.
Gross Profit
Fiscal Fiscal Fiscal
2010 2009 2008
Gross profit $ 106,751 $ 100,268 $ 111,328
Gross margin percentage 19.4% 16.6% 18.8%
Fiscal 2010
Gross margins for Fiscal 2010 increased 280 basis points due to the introduction of new products, the Company’s Schwaiger
acquisition, improvement in inventory provisions related to obsolescence, and the absence of inventory write-downs associated with
the exit of our portable navigation category during Fiscal 2009. As a result of our cost-containment efforts, we have lowered our
inventory handling costs.
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Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠