Audiovox 2010 Annual Report Download - page 37

Fiscal 2010
Other income increased $9,906 primarily as a result of a $5,400 gain from the Company’s Schwaiger acquisition, and the
absence of charges associated with a vendor bankruptcy in the prior year, and a gain recorded on a foreign exchange contract, partially
offset by an other-than-temporary impairment on an equity investment of the Company.
Interest and bank charges decreased due to the reduction of debt in our international subsidiaries.
Equity in income of equity investees increased due to increased equity income of Audiovox Specialized Applications, Inc.
(ASA) as a result of cost containment efforts and improved sales.
Fiscal 2009
Other income decreased due to a decline in interest income as a result of a decline in our short-term investment holdings as a
result of the prior year’s acquisitions, seasonality of current working capital requirements, a decline in rates experienced on the
Company’s investments and the gains on the sale of a portion of our marketable equity securities during Fiscal 2008.
Other expenses increased approximately $6,400 primarily as a result of a charge resulting from the bankruptcy of a vendor
and the discount experienced on the sale of tax credits in our Venezuelan subsidiary.
Interest and bank charges decreased due 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 current
economic conditions.
Income Tax Provision
The effective tax rate in Fiscal 2010 was an income tax benefit of (101.5)% on a pre-tax income from continuing operations
of $11,155 as compared to a provision of 27.0% on a pre-tax loss of ($55,954) from continuing operations in the prior year. The
decrease in the effective tax rate is due to the Company’s ability to record an income tax benefit through a reduction of its valuation
allowance of $10.1 million in connection with the carryback of certain net operating losses as a result of new legislation enacted in
Fiscal 2010 and the recognition of $4.6 million of uncertain tax positions as the result of the expiration of various statute of
limitations.
The effective tax rate in Fiscal 2009 was a provision of 27.0% on a pre-tax loss from continuing operations of ($55,954) as
compared to a provision of 36.3% on a pre-tax income of $10,595 from continuing operations in the prior year. The increase in the
effective tax rate is due to impairment of non-deductible goodwill and the provision of a valuation allowance against the deferred tax
assets as the Company does not believe that it will realize its deferred tax assets on a more-likely-than-not basis.
Net Income
The following table sets forth, for the periods indicated, selected statement of operations data beginning with operating
income (loss) from continuing operations to reported net income (loss) and basic and diluted net income (loss) per common share :
Fiscal Fiscal Fiscal
2010 2009 2008
Operating income (loss) $ 3,760 $ (53,443) $ 4,422
Other income (loss), net 7,395 (2,511) 6,172
Income (loss) from continuing operations before income taxes 11,155 (55,954) 10,594
Income tax benefit (expense) 11,328 (15,075) (3,848)
Net income (loss) from continuing operations 22,483 (71,029) 6,746
Net income from discontinued operations, net of tax - - 1,719
Net income (loss) $ 22,483 $ (71,029) $ 8,465
Net income (loss) per common share:
Basic $ 0.98 $ (3.11) $ 0.37
Diluted $ 0.98 $ (3.11) $ 0.37
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Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠