SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 14, 2003
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AUDIOVOX CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-28839 13-1964841
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(State or other jurisdiction (Commission (I.R.S. Employer
of Incorporation or File Number) Identification Number)
organization)
150 Marcus Boulevard, Hauppauge, New York 11788
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(631) 231-7750
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Page 1 of 4 Pages
Exhibit Index on Page 3
Item 5. Other Events.
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A. Press Release: On March 14, 2003 Audiovox Corporation (the "Company")
announced the following: that it postponed its conference call; unaudited
financial results for its fiscal year ended November 30, 2002; a restatement of
it first, second and third quarters for fiscal 2002; guidance on its first
quarter fiscal 2003; and, that it had received a waiver from its bank group
waiving compliance of certain financial covenants. A copy of the Press Release
is filed as Exhibit 1 hereto.
B. Waiver to Fourth Amended and Restated Credit Agreement: Effective March
13, 2003, the Company and its Lenders executed a Waiver to the Company's Fourth
Amended and Restated Credit Agreement (the "Waiver").
The Waiver, among other things, (i) reduces the aggregate Commitments of
the Lenders to $200,000,000; (ii) waives compliance by the Company with the
provision of subsection 9.1(a) with respect to delivery of financial statements
for the fiscal year of the company ended November 30, 2002; (iii) waives
compliance by the Company with the requirements of subsection 10.1(a)(i)(B) with
respect to the period of two consecutive fiscal quarters of the Company ending
November 30, 2002; (iv) waives compliance by the Company with the requirements
of subsection 10.1(a)(i)(C) with respect to the fiscal year of the Company ended
November 30, 2001 provided that the amount of the Consolidated Pre-Tax Income
for such fiscal year shall exceed $1.00; and, (iv) waives compliance by the
Company with the requirements of subsection 10.1(a)(iii) with respect to the
fiscal quarters of the Company ended February 28, 2002 and November 30, 2002.
Page 2 of 4 Pages
Exhibit Index on Page 3
Item 7. Exhibits.
Exhibit 1. Press release dated March 14, 2003.
Exhibit 2. Waiver dated as of March 13, 2003 to the Audiovox Corporation
Fourth Amended and Restated Credit Agreement
Page 3 of 4 Pages
Exhibit Index on Page 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AUDIOVOX CORPORATION
Dated: March 14, 2003 By: s/Charles M. Stoehr
--------------------------------
Charles M. Stoehr
Senior Vice President and
Chief Financial Officer
Page 4 of 4 Pages
Exhibit Index on Page 3
FOR IMMEDIATE RELEASE
AUDIOVOX CORPORATION REPORTS
UNAUDITED FISCAL 2002 FINANCIAL RESULTS
Conference call postponed
Hauppauge, NY, March 14, 2003 . . . Audiovox Corporation (Nasdaq: VOXX) today
postponed its conference call and announced unaudited financial results for its
fiscal year ended November 30, 2002.
Conference Call
The Company has postponed its conference call scheduled for 10 a.m. (EST),
Friday, March 14, 2003 and announced that it will not file its annual report on
Form 10-K for 2002 on March 17, 2003, the Securities and Exchange Commission
("SEC") deadline to file its annual report under a 15-day extension. The reason
for this delay in filing is related to the resolution of the Company's response
to an SEC comment letter on the Company's prior Form 10-K and 10-Q Filings.
There can be no assurance that the Company will not be required to make changes
to the financial information set forth herein or prior financial information as
a result of the SEC review.
Audiovox Corporation will be hosting a results conference call after it files
the 10-K for the fiscal year ended November 30, 2002. At such time, a conference
call notice and invitation will be announced.
Fiscal Year 2002 (Unaudited)
For the fiscal year ended November 30, 2002, net sales were $1.1 billion. For
the fiscal year ended November 30, 2002, the Company's majority-owned
subsidiary, Audiovox Communications Corp. (ACC) had revenues of $727.5 million
on sales of 4.9 million units. The average selling price was $136 per unit due
to higher priced, new product introductions during the fourth quarter. Wireless
sales were impacted by reduced consumer demand, price erosion and delivery
delays by some of ACC's suppliers. For the fiscal year-ended November 30, 2002,
the Company's wholly owned subsidiary, Audiovox Electronics Corp. (AEC) posted
sales of $373.8 million. Sales in AEC were positively impacted by continued
growth in the mobile video, security and consumer product categories.
For the fiscal year ended November 30, 2002, net loss and loss per common share
were $10.0 million and $0.46 per share, both basic and diluted, respectively.
For the fiscal year ended November 30, 2002, ACC's loss before taxes was $23.4
million. Income before taxes for AEC was $18.8 million. The Company reports its
operating segments on an income before taxes basis and retains certain expenses
at the corporate level, which are not allocated to the operating segments.
For the fiscal year ended November 30, 2002, the Company reported income before
taxes of $3.7 million. As a result of the additional sale of shares of ACC to
Toshiba Corporation, Audiovox Corporation's majority ownership of ACC was
reduced to 75%. For Federal Income Tax purposes,
- more -
Exhibit 1
Audiovox Corporation Reports Unaudited Fiscal 2002 Financial Results
Page 2 of 4
ACC will no longer be consolidated in the parent company's Federal Tax returns.
The Company has recorded a valuation allowance of $11.3 million on the deferred
tax assets of ACC.
Fourth Quarter Results (Unaudited)
Net sales for the fourth quarter of fiscal 2002 were $317.2 million. Net sales
for ACC were $210.9 million for the fourth quarter with 1.5 million total units
sold at an average selling price of $137. Fourth quarter net sales for AEC were
$106.3 million. The Company reports its operating segments on an income before
taxes basis and retains certain expenses at the corporate level, which are not
allocated to the operating segments.
Net loss and loss per common share for the quarter, which includes a valuation
allowance on ACC's deferred tax assets were $12.4 million and $0.57 basic and
diluted, respectively. ACC's fourth quarter loss before taxes was $7.9 million.
AEC's fourth quarter income before taxes was $3.2 million. The Company reports
its operating segments on an income before taxes basis.
There were several charges taken by ACC during the fourth quarter. The Company
has recorded a valuation allowance of $11.3 million on the deferred tax assets
of ACC. In addition, markdowns were recorded on ACC's inventory and the Company
increased its provision for doubtful accounts for a PCS carrier and for
customers in Venezuela and Argentina, due to the current economic conditions
there.
AEC provided for additional foreign currency translation costs relating to the
Company's Venezuelan subsidiary. The Electronics group also provided an
additional provision for inventory as a result of fourth quarter order
cancellations from some of its mass merchant customers. This markdown reflects
future resale value of the inventory based on current market conditions.
Operating Expenses and other (Unaudited)
For the fiscal year ended November 30, 2002, operating expenses were $102.5
million. Operating expenses included additional provisions for doubtful
accounts, compensation related expenses from the Toshiba purchase of shares in
ACC, additional operating expenses that resulted from the acquisition of the
assets of Code Alarm Inc., increased insurance expenses, and increased audit and
legal fees. Other expenses increased as a result of foreign currency translation
costs related to the Company's Venezuelan subsidiary.
Balance Sheet-Selected Items (Unaudited)
Accounts receivable for the fiscal year ended November 30, 2002 were $184.5
million. Inventory at the end of fiscal 2002 was $292.7 million. ACC inventory
levels were at $184.4 million, due to increased purchases for anticipated first
quarter 2003 sales. AEC inventory levels were at $108.1 million, due to
cancelled fourth quarter sales of certain video products by mass merchandiser
customers.
The Company's shareholder equity was $310.6 million as of November 30, 2002,
which reflects the sale of 20% ACC shares to Toshiba, losses and profits from
operations and the effect of the valuation allowance on ACC's deferred tax
assets.
- more -
Exhibit 1
Audiovox Corporation Reports Unaudited Fiscal 2002 Financial Results
Page 3 of 4
Quarterly Restatement (Unaudited)
After a review of the effect of EITF 01-9 on the Company's financial statements
and adjustments for sales cutoffs, litigation accruals, foreign currency for its
Venezuelan subsidiary, inventory pricing and tax provision, the Company will
restate its first, second and third quarters for fiscal 2002. The net effect of
the restatement for the nine months ended August 31, 2002 is a reduction of
$462,000 in revenue and an increase in net income of $36,000. The following is a
summary of the restatement by quarter, dollars in thousands except per share
data:
Unaudited Unaudited
3 months ended 3 months ended
February 28, 2002 May 31, 2002
As Reported As Restated As Reported As Restated
Net Sales 191,012 186,411 304,603 297,847
Gross Profit 20,231 19,040 23,825 22,916
Operating Expense 25,666 24,459 29,376 27,497
Pretax income/(loss) (5,859) (7,194) 9,547 10,447
Net income/(loss) (3,949) (5,380) 4,455 5,143
Net income/(loss) per
common share
Basic (0.18) (0.24) 0.20 0.23
Diluted (0.18) (0.24) 0.20 0.23
Unaudited Unaudited
3 months ended 9 months ended
August 31, 2002 August 31,2002*
As Reported As Restated As Reported As Restated
Net Sales 291,367 302,262 784,567 784,105
Gross Profit 31,576 31,601 73,217 71,142
Operating Expense 26,832 25,446 79,459 74,987
Pretax income 3,885 5,051 7,572 8,304
Net income/(loss) 1,867 2,646 2,373 2,409
Net income/(loss) per
common share
Basic 0.09 0.12 0.11 0.11
Diluted 0.08 0.12 0.11 0.11
*The Company adopted EITF#01-9 effective May 1, 2002. The effect of this is
included in the second and third quarters and third quarter year to date.
Guidance
For the first fiscal quarter 2003 ended February 28, 2003, the Company's
guidance is for revenues in the range of $290- $305 million as a result of
improved performance in both operating subsidiaries, which represents an
increase of 56% - 61 % over fiscal first quarter 2002.
Exhibit 1
Audiovox Corporation Reports Unaudited Fiscal 2002 Financial Results
Page 4 of 4
The Company's invested cash position as of February 28, 2003 was $42 million. In
addition as of February 28, 2003, the Company had no direct borrowings under its
main bank facility. During March 2003, the Company requested its banking group
to reduce the Company's committed bank lines from $250 million to $200 million,
based on the Company's improved cash flow position and turnover. This reduction
will reduce fees paid on unused portions of the Company's bank lines. The
Company has also received waivers from its bank group on covenant violations
related to income tests for all of fiscal 2002.
Audiovox Corporation is an international leader in the marketing of cellular
telephones, mobile security and entertainment systems, and consumer electronics
products. The Company conducts its business through two subsidiaries and markets
its products both domestically and internationally under its own brands. It also
functions as an OEM (Original Equipment Manufacturer) supplier to several
customers. For additional information, please visit Audiovox on the Web at
http://www.audiovox.com.
Except for historical information contained herein, statements made in this
release that would constitute forward-looking statements may involve certain
risks such as risks resulting from the review of our prior filings by the SEC
and any changes to our financial statements that may result from our ability to
keep pace with technological advances, significant competition in the wireless,
mobile and consumer electronics businesses, quality and consumer acceptance of
newly introduced products, our relationships with key suppliers and customers,
market volatility, non-availability of product, excess inventory, price and
product competition, new product introductions and other risks detailed in the
Company's Form 10-K for the fiscal year ended November 30, 2002 and other
documents on file with the SEC. These factors, among others may cause actual
results to differ materially from the results suggested in the forward-looking
statements.
Company Contacts:
C. Michael Stoehr Glenn Wiener
SVP and CFO Investor and Financial Media Relations
(631) 233-7750 (212) 579-2255 or GWIENER@GWCCO.COM
# # # # #
Exhibit 1
CONFORMED COPY
SEVENTH AMENDMENT AND WAIVER, dated as of March 13, 2003 (this "Amendment
and Waiver"), to the Fourth Amended and Restated Credit Agreement, dated as of
July 28, 1999 (as amended pursuant to the First Amendment and Consent thereto,
dated as of October 12, 1999, the Second Amendment thereto, dated as of December
20, 1999, the Third Amendment thereto, dated as of April 14, 2000, the Fourth
Amendment and Waiver thereto, dated as of June 5, 2001, the Fifth Amendment and
Waiver thereto, dated as of March 14, 2002, and the Sixth Amendment and Consent
thereto, dated as of May 28, 2002, and as the same may further be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Audiovox Corporation, a Delaware corporation (the "Borrower"), the several
banks and other financial institutions from time to time parties thereto
(collectively, the "Lenders"; individually, a "Lender"), and JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), a New York banking corporation, as
administrative and collateral agent for the Lenders (in such capacity, the
"Agent").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit
Agreement;
WHEREAS, the Borrower has requested that the Lenders waive and amend
certain terms in the Credit Agreement in the manner provided for herein; and
WHEREAS, the Agent and the Lenders are willing to agree to the requested
waiver and amendment, on the terms and conditions provided for herein;
NOW, THEREFORE, in consideration of the premises contained herein, the
parties hereto agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are defined
in the Credit Agreement and used herein (and in the recitals hereto) as defined
terms are so used as so defined.
2. Decrease in Commitments. The Borrower, the Lenders and the Agent hereby
agree that, on the Seventh Amendment Effective Date, the aggregate Commitments
of the Lenders will be reduced to $200,000,000.
3. Amendments of Subsection 1.1 (Definitions). Subsection 1.1 of the Credit
Agreement is hereby amended as follows:
Exhibit 2
Page 1
CONFORMED COPY
(a) by deleting therefrom the definitions of the following defined terms in
their respective entireties:
"Applicable Commitment Fee Rate"
"Applicable Margin"
(b) by adding thereto the following definitions in the proper alphabetical
order:
"Applicable Commitment Fee Rate": 0.50%.
"Applicable Margin": 0.75%, with respect to any Base Rate Loan, and 2.75%,
with respect to any Eurodollar Loan.
"Seventh Amendment and Waiver": the Seventh Amendment and Waiver, dated as
of March 13, 2003, to this Agreement.
"Seventh Amendment Effective Date": March 13, 2003.
4. Waiver of Subsection 9.1 (Financial Statements). The Lenders hereby
waive compliance, until March 14, 2003 by the Borrower with the requirements of
subsection 9.1(a) of the Credit Agreement with respect to the fiscal year of the
Borrower ended November 30, 2002.
5. Waivers of Subsection 10.1. (a) The Lenders hereby waive compliance by
the Borrower with the provisions of subsection 10.1(a)(i)(B) of the Credit
Agreement with respect to the period of two consecutive fiscal quarters of the
Borrower ending November 30, 2002.
(b) The Lenders hereby waive compliance by the Borrower with the provisions of
subsection 10.1(a)(i)(C) of the Credit Agreement, so long as Consolidated
Pre-Tax Income exceeds $1.00 with respect to the fiscal year ending November 30,
2002.
(c) The Lenders hereby waive compliance by the Borrower with the provisions of
subsection 10.1(a)(iii) of the Credit Agreement with respect to fiscal quarters
of the Borrower ending February 28, 2002 and November 30, 2002.
6. General Waiver. The Lenders hereby waive any Default or Event of Default
to the extent arising solely out of the restatement (for the reasons disclosed
to the Lenders on or prior to the date hereof) of the Company's financial
statements for the first three quarters of the fiscal year ended November 30,
2002.
7. Representations and Warranties. On and as of the date hereof, the
Borrower hereby confirms, reaffirms and restates the representations and
warranties set forth in Section 7 of the Credit Agreement mutatis mutandis,
except to the extent that such representations and warranties expressly relate
to a specific earlier date in which case the Borrower hereby confirms, reaffirms
and restates such representations and warranties as of such earlier date.
8. Conditions to Effectiveness. This Amendment and Waiver shall become
effective as of the date first written above upon receipt by the Agent of (i)
counterparts to this Amendment and Waiver duly executed by the Borrower and the
Required Lenders, (ii) an amendment
Exhibit 2
Page 2
CONFORMED COPY
fee in the amount of $150,000, for the account of Lenders which have executed
and delivered to the Agent this Amendment and Waiver prior to 12:00 p.m. on
March 13, 2003 (and will be paid to such Lenders pro rata according to their
respective Commitments) and (iii) an Acknowledgement and Consent in the form of
Exhibit A hereto duly executed by each of the Guarantors.
9. Continuing Effect; No Other Waivers. Except as expressly provided
herein, all of the terms and provisions of the Credit Agreement are and shall
remain in full force and effect. The waiver provided for herein is limited to
the specific subsections of the Credit Agreement specified herein and shall not
constitute a consent, waiver or amendment of, or an indication of the Agent's or
the Lenders' willingness to consent to any action requiring consent under or to
waive or amend, any other provisions of the Credit Agreement or the same
subsections for any other date or time period (whether or not such other
provisions or compliance with such subsections for another date or time period
are affected by the circumstances addressed in this Amendment and Waiver).
10. Expenses. The Borrower agrees to pay and reimburse the Agent for all
its reasonable costs and out-of-pocket expenses incurred in connection with the
preparation and delivery of this Amendment and Waiver, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent.
11. Counterparts. This Amendment and Waiver may be executed in any number
of counterparts by the parties hereto (including by facsimile transmission),
each of which counterparts when so executed shall be an original, but all the
counterparts shall together constitute one and the same instrument.
12. GOVERNING LAW. THIS AMENDMENT AND WAIVER SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Exhibit 2
Page 3
CONFORMED COPY
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be executed and delivered by their respective duly authorized officers
as of the date first above written.
AUDIOVOX CORPORATION
By: s/ Charles M. Stoehr
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Name: Charles M. Stoehr
Title: Sr. Vice Pres. And CFO
JPMORGAN CHASE BANK,
as Agent and as a Lender
By: s/ John K. Budzynski
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Name: John K Budzynski
Title: Vice President
FLEET NATIONAL BANK, as a Lender
By: s/ Steven J. Melicharek
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Name: Steven J. Melicharek
Title: S.V.P.
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: s/ Evelyn Kusold
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Name: Evelyn Kusold
Title: AVP
Exhibit 2
Page 4
CONFORMED COPY
CITIBANK, N.A., as a Lender
By: s/ Richard Romano
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Name: Richard Romano
Title: VP
MELLON BANK, N.A., as a Lender
By:
Name:
Title:
GE COMMERCIAL DISTRIBUTION FINANCE,
as a Lender
By: s/ David J. Lynch
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Name: David J. Lynch
Title: VP Operations
ISRAEL DISCOUNT BANK OF NEW YORK,
as a Lender
By: s/ Andrew Ackerman
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Name: Andrew Ackerman
Title: First VP
By: s/ Scott Fishbein
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Name: Scott Fishbein
Title: First VP
Exhibit 2
Page 5
CONFORMED COPY
PNC BUSINESS CREDIT INC., as a Lender
By:
Name:
Title:
WASHINGTON MUTUAL, as a Lender
By: s/ Daniel Liberty
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Name: Daniel Liberty
Title: VP
BANK LEUMI USA, as a Lender
By: s/ Paul Tine /s/ Glen D, Kreutzer
----------------------------------
Name: Paul Tine / Glen D. Kreutzer
Title: VP / Banking Officer
U.S. BANK, N.A., as a
By:
Name:
Title:
Exhibit 2
Page 6
Exhibit A
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned corporations (i) as a guarantor under that certain
Amended and Restated Subsidiaries Guarantee, dated as of March 15, 1994 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee"),
made by each of such corporations in favor of the Collateral Agent, (ii) as a
grantor under that certain Amended and Restated Security Agreement, dated as of
March 15, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Security Agreement"), made by each of such corporations in favor of
the Collateral Agent, and (iii) in the case of Audiovox Holding Corp., as the
pledgor under that certain Pledge Agreement, dated as of February 9, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Pledge
Agreement"), made by Audiovox Holding Corp. in favor of JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), as pledge agent for the secured
parties thereunder, hereby consents to the execution and delivery of the Fifth
Amendment and Waiver to which this Acknowledgment and Consent is attached and
hereby confirms and agrees that the Guarantee, the Security Agreement and the
Pledge Agreement are, and shall continue to be, in full force and effect and are
hereby ratified and confirmed in all respects and the Guarantee, the Security
Agreement, the Pledge Agreement and all of the Subsidiaries Collateral (as
defined in the Security Agreement) and Collateral (as defined in the Pledge
Agreement) do, and shall continue to, secure the payment of all of the
Obligations (as defined in the Guarantee and the Security Agreement, as the case
may be) pursuant to the terms of the Guarantee or the Security Agreement, as the
case may be, or, in the case of the Pledge Agreement, secure the payment of the
Secured Obligations (as defined in the Pledge Agreement) pursuant to the terms
of the Pledge Agreement. Capitalized terms not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement referred to in the
Seventh Amendment and Waiver to which this Acknowledgment and Consent is
attached.
QUINTEX MOBILE COMMUNICATIONS CORP.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: Vice President
Exhibit 2
Page 7
Exhibit A
AMERICAN RADIO CORP.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: Vice President
AUDIOVOX INTERNATIONAL CORP.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: Vice President
AUDIOVOX CANADA LIMITED
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: Vice President
AUDIOVOX HOLDING CORP.
By: s/ Chris Lazarides
-------------------
Name: Chris Lazarides
Title: President
AUDIOVOX ASIA INC.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: President
Exhibit 2
Page 8
Exhibit A
AUDIOVOX LATIN AMERICA LTD.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: President
AUDIOVOX COMMUNICATIONS CORP.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: Secretary
AUDIOVOX ELECTRONICS CORP.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: Secretary
CODE SYSTEMS, INC.
By: s/ Charles M. Stoehr
---------------------
Name: Charles M. Stoehr
Title: CFO
Dated as of March 13, 2003
Exhibit 2
Page 9