FOR IMMEDIATE RELEASE
Audiovox Corporation Reports Fiscal First Quarter 2004 Results
o Q1 '04 sales increase 27% as both operating units post sequential gains in
revenues
o Electronics sales increase 70% due to growth in consumer electronics and
sound categories
o (Basic) Earnings per share up 50% - Q1 '04 EPS of $0.09 vs. Q1 '03 of $0.06
o No conference call scheduled due to ongoing negotiations related to
potential sale of Wireless Subsidiary
HAUPPAUGE, N.Y., April 14 /PRNewswire-FirstCall/ -- Audiovox Corporation
(Nasdaq: VOXX) today announced results for its fiscal first quarter ended
February 29, 2004. Net sales for the first quarter of fiscal 2004 were $376.9
million, an increase of 27% over $296.8 million reported in the comparable
fiscal 2003 period.
Audiovox Electronics Group (AEC) reported net sales of $136.5 million, an
increase of approximately 70% versus $80.3 million reported in the comparable
period last year. This increase was largely due to increased sales in the sound
and consumer electronics product lines in addition to sales of $15.7 million
related to Audiovox Germany, which was formed in July 2003. Sales for Consumer
Electronics products increased 121% to $36.5 million versus $16.5 million in the
fiscal first quarter last year. This increase was driven by strong customer
demand for DVD players and flat- panel TV's, products introduced during fiscal
2003. Fiscal first quarter sales in the Sound category increased 303% to $50.3
million versus $12.5 million in the comparable prior year period, as the new
brands acquired from the Recoton acquisition and increased sales in the
satellite radio product line contributed to the success. Mobile Electronics
posted a 3% drop off in post holiday sales of video-in- a-bag products as
compared to the prior year, though the Company does not expect the decrease in
this category to be a future trend.
The Company's majority owned subsidiary, Audiovox Communications Corporation
(ACC) posted net sales of $240.3 million, an increase of 11% as compared to
$216.6 million reported in the fiscal first quarter last year. Unit sales of
wireless handsets increased 5.6% to approximately 1.258 million, up from 1.191
million in the first quarter of fiscal 2003. This increase was primarily due to
new product introductions of camera phones with CDMA 1x technology. The average
selling prices of the company's handsets increased to $179 per unit for the
three months ended February 29, 2004 from $171 in February 28, 2003 due to
higher selling prices of new product introductions.
Earnings per share for the fiscal first quarter of 2004 were $0.09 basic and
$0.08 diluted compared to $0.06 basic and $0.05 diluted in the fiscal first
quarter of 2003. Net income for the three months ended February 29, 2004 was
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Exhibit 99.1
Audiovox Corporation Reports Fiscal First Quarter 2004 Results
Page 2 of 5
was approximately $1.9 million as compared to $1.2 million in the comparable
period in 2003. Earnings were affected by strong sales in both divisions and
increased other income but offset by decreased gross margins and increased
operating expenses.
Commenting on the quarter's performance, John Shalam, Chairman, President and
CEO of Audiovox Corporation stated, "We were able to post higher sales and
profits in the first quarter despite the fact that the first fiscal quarter is
typically our slowest in terms of sales. I am especially pleased with the strong
growth in our Electronics group specifically in the consumer electronics product
lines, which posted a year-over-year sales increase of over 100%. Strategic
acquisitions made in the sound category are beginning to have an impact on our
top-line performance and we are excited about several programs in place for the
second half of the year. On the Wireless front, demand for our newer digital
products remained strong and we continued to strengthen relationships with the
leading CDMA carriers in North America."
Gross Profit
Gross profit margins for the fiscal first quarter of 2004 fell slightly to 8.3%
from 8.6% in the fiscal first quarter last year as both groups experienced a
decline. The decline was due primarily to lower margins on older phone models,
DVD players and FRS Radios as well as increased sales of lower margin consumer
electronics. While margins for both groups declined, the change in the mix of
sales between Wireless and Electronics has affected the consolidated margins in
a favorable way as traditionally higher margin Electronics represented a larger
percentage of consolidated sales.
Operating Expenses
Operating expenses increased to $28.7 million for the three months ended
February 29, 2004, as compared to $21.0 million in the first fiscal quarter of
2003. As a percentage of net sales, operating expenses increased to 7.6% versus
7.1% in the comparable period last year. Major components of this increase were
in commissions, advertising, executive and office salaries and professional
fees, primarily in the Electronics Group as a result of recent acquisitions and
general growth in business. Wireless operating expenses increased $0.2 million
during the fiscal first quarter 2004, however, as a percentage of net sales,
declined to 3.3% compared to 3.6% in the fiscal first quarter of 2003. Operating
income for the three months ended February 29, 2004 was $2.6 million, compared
to $4.5 million in the prior year.
Balance Sheet-Selected Items
Accounts receivable as of February 29, 2004 was $183.8 million compared to
$266.4 million at November 30, 2003. Inventory as of February 29, 2004 was
$265.9 million versus $219.7 million at November 30, 2003, with ACC inventory
levels as of February 29, 2004 at $128.2 million and AEC inventory levels at
$137.7 million. The company's stockholder equity as of February 29, 2004 was
$328.0 million.
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Exhibit 99.1
Audiovox Corporation Reports Fiscal First Quarter 2004 Results
Page 3 of 5
Potential Sale of Audiovox Communications Corporation (ACC)
On February 19, 2004, the Company announced that it had signed a non-binding
letter of intent to sell a controlling interest in its Wireless subsidiary, ACC,
to Curitel Communications, Inc., a leading South Korean mobile phone maker
(Curitel). As announced on that date, Audiovox Corporation must also consider
all proposals submitted.
Due to the ongoing negotiations and the material impact a potential sale might
have on the Company's operations and forward-looking statements, there will be
no conference call held at this time. If and when a transaction is concluded,
the company will provide further commentary.
About Audiovox
Audiovox Corporation is an international leading company in consumer electronics
and communications. The Company conducts its business through 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.
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 statement. 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 as well as the
wireless business; 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
fourth quarter and year ended November 30, 2003 and Form 10-Q for the fiscal
first quarter ended February 29, 2004.
Company Contact: Public and Investor Relations Contact:
- ----------------- --------------------------------------
C. Michael Stoehr, SVP/CFO Glenn Wiener
Audiovox Corporation GW Communications
(631) 231-7750 (212) 786-6011 or gwiener@GWCco.com
- Tables to Follow -
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended February 28, 2003 and February 29, 2004
(In thousands, except share and per share data)
(unaudited)
Three Months Ended
-----------------------------------
February 28, February 29,
2003 2004
------------ ------------
Net sales $ 296,818 $ 376,884
Cost of sales 271,350 345,518
------------ ------------
Gross profit 25,468 31,366
------------ ------------
Operating expenses:
Selling 7,303 9,920
General and administrative 12,305 17,106
Warehousing and technical support 1,399 1,703
------------ ------------
Total operating expenses 21,007 28,729
------------ ------------
Operating income 4,461 2,637
------------ ------------
Other income (expense):
Interest and bank charges (1,105) (1,435)
Equity in income of equity investees 371 1,003
Other, net (1,099) 851
------------ ------------
Total other income (expense), net (1,833) 419
------------ ------------
Income before provision for income taxes and minority interest 2,628 3,056
Provision for income taxes 1,040 800
Minority interest expense income (expense) (380) (386)
------------ ------------
Net income $ 1,208 $ 1,870
============ ============
Net income per common share (basic) $ 0.06 $ 0.09
============ ============
Net income per common share (diluted) $ 0.05 $ 0.08
============ ============
Weighted average number of common shares outstanding (basic) 21,830,480 21,922,100
============ ============
Weighted average number of common shares outstanding (diluted) 22,021,548 22,254,488
============ ============
Exhibit 99.1
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share data)
November 30, February 29,
2003 2004
------------ ------------
(unaudited)
Assets
Current assets:
Cash $ 4,702 $ 4,981
Accounts receivable, net 266,421 183,782
Inventory, net 219,664 265,917
Receivables from vendors 7,830 14,018
Prepaid expenses and other current assets 12,371 15,412
Deferred income taxes 9,531 8,437
--------- ---------
Total current assets 520,519 492,547
Investment securities 9,512 9,977
Equity investments 13,142 11,613
Property, plant and equipment, net 20,242 20,069
Excess cost over fair value of assets acquired 7,532 7,022
Intangible assets 8,043 8,043
Other assets 713 650
--------- ---------
$ 579,703 $ 549,921
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 94,864 $ 80,011
Accrued expenses and other current liabilities 42,816 40,230
Accrued sales incentives 21,894 10,481
Income taxes payable 13,218 10,872
Bank obligations 39,940 40,599
Current portion of long-term debt 3,433 2,555
--------- ---------
Total current liabilities 216,165 184,748
Long-term debt 18,289 17,236
Capital lease obligation 6,070 6,054
Deferred income taxes 3,178 2,360
Deferred compensation 5,280 6,096
--------- ---------
Total liabilities 248,982 216,494
--------- ---------
Minority interest 4,993 5,378
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $50 par value; 50,000 shares authorized and outstanding,
liquidation preference of $2,500 per share 2,500 2,500
Series preferred stock $.01 par value, 1,500,000 shares authorized; no shares
issued or outstanding -- --
Common stock:
Class A $.01 par value; 60,000,000 shares authorized; 20,728,382 and
20,735,846 shares issued at November 30, 2003 and February 29, 2004,
respectively; and 19,655,645 and 19,664,889 shares outstanding at
November 30, 2003 and February 29, 2004, respectively 207 207
Class B $.01 par value convertible; 10,000,000 shares authorized; 2,260,954
shares issued and outstanding 22 22
Paid-in capital 252,104 252,203
Retained earnings 80,635 82,505
Accumulated other comprehensive loss (1,229) (891)
Treasury stock, at cost, 1,072,737 and 1,070,957 shares of Class A common stock
at November 30, 2003 and February 29, 2004, respectively (8,511) (8,497)
--------- ---------
Total stockholders' equity 325,728 328,049
--------- ---------
Total liabilities and stockholders' equity $ 579,703 $ 549,921
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Exhibit 99.1