[AUDIOVOX CORPORATION LOGO] FOR IMMEDIATE RELEASE AUDIOVOX CORPORATION REPORTS 2005 FISCAL FOURTH QUARTER AND YEAR-END RESULTS o Company to change its fiscal year end from November 30th to February 28th o Conference call scheduled for February 14th at 10:00 a.m. EDT HAUPPAUGE, NY, FEBRUARY 13, 2006 - Audiovox Corporation (Nasdaq: VOXX) today announced results for its fiscal fourth quarter and year-ended November 30, 2005. Audiovox Corporation (the "Company") reported fiscal 2005 fourth quarter net sales of $156.3 million, an increase of 5.0% compared to net sales of $148.8 million reported in the fiscal fourth quarter of 2004. Net loss from continuing operations for the 2005 fiscal fourth quarter was $8.3 million or a loss of $0.37 per diluted share compared to a net loss of $2.3 million or $0.10 per diluted share in the comparable prior year period. Including discontinued operations, the Company reported a net loss of $10.3 million or a loss per diluted share of $0.46, which includes the final charges for the closure of the Company's Malaysia operations, compared to net income of $66.3 million or $3.02 per diluted share in the fiscal fourth quarter of 2004, which includes the $67 million gain from the sale of the Company's cellular group. Mobile Electronics, which represented 59.6% of net sales, reported revenue of $93.2 million compared to net sales of $92.8 million reported in the comparable prior year period. Mobile Electronics sales were impacted by the reduction of selling prices in satellite radio Plug-N-Play units, certain discontinued mobile video products, increased presence by OE car manufacturers and the ongoing shift from video-in-a-bag systems to lower cost, less featured portable DVD players. Offsetting these declines were stronger sales of the Company's Jensen branded mobile multi-media products as well as increased sales from Terk and Code. Consumer Electronics, which represented 40.4% of net sales, had sales of $63.1 million, an increase of 12.7% compared to net sales of $56.0 million reported in the fiscal fourth quarter of 2004 and marked the highest quarterly sales totals for CE in the Company's history. This increase was due primarily to higher sales of LCD flat-panel TV's and portable DVD products. The Company recorded an inventory write down of approximately $10.0 million during the fourth quarter of fiscal 2005 as a result of post holiday season review of our inventory positions and sales projections, market information obtained from industry competitors and customers regarding pricing and product demand at the January 2006 CE trade show and a review of products which are at the end of their product life cycles. Approximately $8.8 million of this write down encompassed the discontinuance of several product lines including Versatile Video, Audiovox Navigation, and the auto sound lines under the Audiovox, Prestige and Rampage brands and the remaining inventories for several OE programs that had reached the end of their life. Gross margins for the fourth fiscal quarter of 2005 were 6.2%, as compared to 16.2% reported in the comparable year-ago period. The decline in gross profit margins was related primarily to the impact of the discontinuance of aftermarket products and product lines, low or no margin on select satellite radio Plug-N-Play units and increased consumer electronics sales at traditionally lower margins. This decline was partially offset by higher margins from the Terk, Jensen and Code product lines and LCD TVs. Operating expenses for the fiscal 2005 fourth quarter were $23.2 million, a decrease of 20.2% as compared to operating expenses of $29.0 million reported in the fiscal fourth quarter last year. Patrick Lavelle, President and CEO of Audiovox stated, "2005 was a challenging year for Audiovox. Two of our major product categories underwent transformations and we added several new products and categories into the mix, which resulted in us evaluating all aspects of our business. In addition, with the divestiture of cellular, the subsequent changes to our corporate structure we were faced with many operational hurdles. We believe 2006 will be a better year for our Company and look forward to communicating our progress with our customers, partners and stockholders." Lavelle continued, "Despite the negatives encountered in 2005, in Q4 we continued to see strong demand for our LCD TV and portable DVD products on the consumer side, and satellite radio and Jensen multi-media products in mobile. We secured new business models in the satellite radio and portable DVD product categories, which should mitigate our exposure from future price erosion and product life cycle concerns that marked the third and fourth quarters." Fiscal Year 2005 Results For the year ended November 30, 2005, the Company reported net sales of $539.7 million, a 4.3% decrease compared to net sales of $563.7 million reported for the year ended November 30, 2004. Mobile Electronics sales, which represented 62.9% of net sales, reported $339.4 million, a decrease of 15.8% compared to net sales of $403.2 million reported for the comparable period last year. Consumer Electronics sales were $200.4 million, an increase of 24.9% compared to net sales of $160.5 million reported in fiscal 2004. Gross margins decreased to 11.3% for the year ended November 30, 2005 as compared to 15.9% for fiscal 2004. Gross margins were impacted by an inventory write down of discontinued aftermarket products and lines, inventory write downs in the satellite radio category as announced in the third quarter and increased sales in consumer electronics at traditionally lower margins. Sales of the Company's LCD TV's, portable DVDs, Code Alarm and Jensen auto sound products partially offset the decline in margins as did sales associated with the Terk product line and recently introduced mobile video systems. Operating expenses for the year ended November 30, 2005 were $88.5 million, a decrease of 2.8% as compared to operating expenses of $91.1 million reported for the year ended November 30, 2004. The Company reported a net loss from continuing operations of $6.7 million for fiscal 2005, as compared to net income of $64 thousand in fiscal 2004. Including discontinued operations, net loss for the year ended November 30, 2005 was $9.6 million, which includes a $2.1 charge from the sale of our Malaysia operations. Net loss per diluted share from continuing operations was $0.30 compared to break-even in fiscal 2004 and net loss per diluted share, including discontinued operations, was $0.43 as compared to net income per diluted share of $3.45 for fiscal 2004, which includes the $67 million gain from the sale of our wireless group. Lavelle continued, "New product fuels our growth and we are especially pleased by the reception our new products received from our customers and channel partners at CES this past January. Many of our new products, in both the mobile and consumer segments, will hit stores in June and July and should have a positive impact on our sales, margins and profits in the second half of the year. Three of the highlights of those new offerings are new satellite radio offerings specifically the Passport products; several multi-media products from Jensen and the relaunch of Acoustic Research with Home Decor, a new and innovative concept in home audio. And finally, we begin 2006 with a strong balance sheet with over $150 million in cash and short-term investments (as of February 13, 2006), and believe we have the right strategy and resources in place, to ensure Audiovox remains a leading player in the electronics industry." In related news, the Company disclosed that it would be changing its fiscal year end from November 30th to February 28th. As such, the Company intends to file a Form 10-K transition report for the three months ended February 28, 2006. Fiscal Fourth Quarter Conference Call The Company will be hosting its fourth quarter and year end conference call tomorrow morning on Tuesday, February 14th at 10:00 a.m. EDT. Interested parties can participate by logging onto the Audiovox website at http://www.audiovox.com under "Investor Relations". For those who will be unable to participate on the call, a replay has been arranged and will be available approximately one hour after the call has been completed and will last for one week thereafter. TOLL-FREE CALL-IN NUMBER: (866) 356-3377 INTERNATIONAL CALL-IN NUMBER: (617) 597-5392 ACCESS CODE: 15867938 About Audiovox Audiovox Corporation is a leading international supplier and value added service provider in the consumer electronics industry. The Company conducts its business through subsidiaries and markets mobile and consumer electronics products both domestically and internationally under several of its own brands. It also functions as an OEM (Original Equipment Manufacturer) supplier to a wide variety of customers, through several distinct distribution channels. For additional information, please visit Audiovox on the Web at http://www.audiovox.com. Safe-Harbor Language Except for historical information contained herein, statements made in this release that would constitute forward-looking statements may involve certain risks and uncertainties. All forward-looking statements made in this release are based on currently available information and the Company assumes no responsibility to update any such forward-looking statements. The following factors, among others, may cause actual results to differ materially from the results suggested in the forward-looking statements. The factors include, but are not limited to, risks that may result from changes in the Company's business operations; our ability to keep pace with technological advances; significant competition in the mobile and consumer electronics businesses; our relationships with key suppliers and customers; quality and consumer acceptance of newly introduced products; market volatility; non-availability of product; excess inventory; price and product competition; new product introductions; the possibility that the review of our prior filings by the SEC may result in changes to our financial statements; and the possibility that stockholders or regulatory authorities may initiate proceedings against Audiovox and/or our officers and directors as a result of any restatements. Risk factors associated with our business, including some of the facts set forth herein, are detailed in the Company's Form 10-K for the fiscal year ended November 30, 2005. Company Contacts Glenn Wiener GW Communications for Audiovox Tel: 212-786-6011 or Email: gwiener@GWCco.com - TABLES TO FOLLOW - AUDIOVOX CORPORATION AND SUBSIDIARIES SELECTED BALANCE SHEET DATA NOVEMBER 30, 2004 AND 2005 (IN THOUSANDS) NOVEMBER 30, NOVEMBER 30, 2004 2005 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 43,409 $ 14,164 Restricted cash 8,264 1,474 Short-term investments 124,237 108,766 Accounts receivable, net 118,388 128,430 Inventory 139,307 129,120 Receivables from vendors 7,028 8,075 Prepaid expenses and other current assets 14,057 6,749 Deferred income taxes 6,873 9,992 Current assets of discontinued operations 20,582 -- --------- --------- Total current assets 482,145 406,770 Investment securities 5,988 11,998 Equity investments 12,878 12,073 Property, plant and equipment, net 19,707 19,717 Excess cost over fair value of assets acquired 7,019 16,138 Intangible assets 8,043 11,060 Deferred income taxes 6,220 6,054 Other assets 413 2,054 Non-current assets of discontinued operations 925 -- --------- --------- Total assets $ 543,338 $ 485,864 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 26,004 $ 23,998 Accrued expenses and other current liabilities 32,814 24,574 Accrued sales incentives 7,584 9,826 Income taxes payable 42,790 1,770 Bank obligations 5,485 4,757 Current portion of long-term debt 2,497 1,357 Current liabilities of discontinued operations 2,953 -- --------- --------- Total current liabilities 120,127 66,282 Long-term debt 7,709 6,357 Capital lease obligation 6,001 5,917 Deferred compensation 4,888 6,151 --------- --------- Total liabilities 138,725 84,707 Minority interest 426 -- Stockholders' equity 404,187 401,157 --------- --------- Total liabilities and stockholders' equity $ 543,338 $ 485,864 ========= ========= AUDIOVOX CORPORATION AND SUBSIDIARIES SELECTED STATEMENTS OF OPERATIONS DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE QUARTER ENDED FOR THE YEAR ENDED NOVEMBER 30, NOVEMBER 30, ------------------------- ------------------------- 2004 2005 2004 2005 ----------- ----------- ----------- ----------- Net sales $ 148,813 $ 156,290 $ 563,653 $ 539,716 Cost of sales 124,748 146,586 473,916 478,877 ----------- ----------- ----------- ----------- Gross profit 24,065 9,704 89,737 60,839 ----------- ----------- ----------- ----------- Operating expenses: Selling 8,852 8,235 31,796 31,799 General and administrative 18,874 13,500 54,576 50,540 Engineering and technical support 1,317 1,438 4,721 6,190 ----------- ----------- ----------- ----------- Total operating expenses 29,043 23,173 91,093 88,529 ----------- ----------- ----------- ----------- Operating income (loss) (4,978) (13,469) (1,356) (27,690) ----------- ----------- ----------- ----------- Other income (expense): Interest and bank charges (1,100) (555) (3,762) (2,478) Equity in income of equity investees 389 397 3,980 2,342 Other, net 868 (85) 2,436 9,730 ----------- ----------- ----------- ----------- Total other income (expense) 157 (243) 2,654 9,594 Income (loss) from continuing operations before income taxes (4,821) (13,712) 1,298 (18,096) Income tax expense (benefit) (2,563) (5,406) 479 (11,409) Minority interest income (expense) (1) -- (755) -- ----------- ----------- ----------- ----------- Net income (loss) from continuing operations (2,259) (8,306) 64 (6,687) Net income (loss) from discontinued operations, net of tax 68,568 (1,990) 77,136 (2,904) ----------- ----------- ----------- ----------- Net income (loss) $ 66,309 $ (10,296) $ 77,200 $ (9,591) =========== =========== =========== =========== Income (loss) per common share (basic): From continuing operations $ (0.10) $ (0.37) $ -- $ (0.30) From discontinued operations 3.12 (0.09) 3.52 (0.13) ----------- ----------- ----------- ----------- Net income (loss) per common share (basic) $ 3.02 $ (0.46) $ 3.52 $ (0.43) =========== =========== =========== =========== Income (loss) per common share (diluted): From continuing operations $ (0.10) $ (0.37) $ -- $ (0.30) From discontinued operations 3.12 (0.09) 3.45 (0.13) ----------- ----------- ----------- ----------- Net income (loss) per common share (diluted) $ 3.02 $ (0.46) $ 3.45 $ (0.43) =========== =========== =========== =========== Weighted average number of common shares outstanding (basic) 21,985,294 22,649,819 21,955,292 22,278,542 =========== =========== =========== =========== Weighted average number of common shares outstanding (diluted) 21,985,294 22,649,819 22,373,134 22,278,542 =========== =========== =========== ===========
