Audiovox 2010 Annual Report Download - page 39

In Fiscal 2010, net income was favorably impacted by the bargain purchase gain of $5,400 related to the Company’s
acquisition of Schwaiger and the net tax benefits of approximately $11,200 as a result of an income tax refund of approximately
$10,000 and reversal of uncertain tax positions. 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 taxes), $4,083 ($0 after taxes) and $4,108 ($2,506
after taxes) in Fiscal 2010, 2009 and 2008, respectively.
During Fiscal 2008, the Company recorded pre-tax income of $3,248 ($1,719 after taxes) recorded in discontinued operations related
to the settlement of a lawsuit.
Liquidity and Capital Resources
Cash Flows, Commitments and Obligations
As of February 28, 2010, we had working capital of $239,787 which includes cash and cash equivalents of $69,511 compared
with working capital of $241,080 at February 28, 2009, which included cash and cash equivalents of $69,504. During the fiscal year,
the Company acquired two businesses with cash payments of approximately $14,657. This was offset by a tax refund receive during
the year related to the Worker Homeownership and Business Assistance Act of 2009 and the net reduction from accounts receivable
and inventory movements. We plan to utilize our current cash position as well as collections from accounts receivable, the cash
generated from our operations and the income on our investments to fund the current operations of the business. However, we may
utilize all or a portion of current capital resources to pursue other business opportunities, including acquisitions. The following table
summarizes our cash flow activity for all periods presented:
Year Year Year
Ended Ended Ended
February 28, February 28, February 29,
2010 2009 2008
Cash provided by (used in):
Operating activities $ 28,222 $ 30,006 $ (64,691)
Investing activities (25,009) (3,991) 93,465
Financing activities (1,222) 4,655 (5,241)
Effect of exchange rate changes on cash (1,984) (507) 335
Net increase (decrease) in cash and cash equivalents $ 7 $ 30,163 $ 23,868
Operating activities provided cash of $28,222 for Fiscal 2010 from: i) net income generated from continuing operations of
$22,483, net of non-cash charges for a gain on a bargain purchase of $5,447, depreciation and amortization of $7,694, and deferred
income tax expense of $1,594; ii) decreased inventory due to improved inventory turns; and iii) increased accounts payable and
accrued expenses due to the timing and payment of invoices and expenses.
Investing activities used cash of $25,009 during Fiscal 2010, primarily due to the purchase of Schwaiger and Invision, capital
expenditures, and a bond investment partially offset by distributions from an equity investee.
Financing activities used cash of $1,222 during Fiscal 2010, primarily from the repayment of bank obligations.
As of February 28, 2010, we had a domestic credit line to fund the temporary short-term working capital needs of the
Company. This line expired on March 31, 2010 and allowed aggregate borrowings of up to $10,000 at an interest rate of Prime (or
similar designations) plus 1% or LIBOR plus 5%. The line was not renewed and replaced by a $15,000 three-year facility at an interest
rate of LIBOR plus 3.5%. In addition, Audiovox Germany has accounts receivable factoring arrangements totaling 23,000 Euro, a
5,000 Euro Asset-Based Lending (“ABL”) credit facility and a 2,000 credit line.
Certain contractual cash obligations and other commercial commitments will impact our short and long-term liquidity. At
February 28, 2010, such obligations and commitments are as follows:
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Source: AUDIOVOX CORP, 10-K, May 14, 2010 Powered by Morningstar® Document Research℠