Audiovox Corporation Reports 2005 Fiscal First Quarter Results
Hauppauge, NY...April 12, 2005...Audiovox Corporation (NASDAQ: VOXX) today
announced results for its fiscal first quarter ended February 28, 2005.
Audiovox Corporation (the "Company") reported 2005 fiscal first quarter net
sales from continuing operations of $116.0 million, a decrease of 14% compared
to net sales of $135.4 million reported in the fiscal first quarter of 2004. Net
loss from continuing operations for the fiscal 2005 first quarter was $0.6
million or a loss of $0.02 per share compared to net income of $0.7 million and
earnings per share of $0.03 in the comparable prior year period. Including
discontinued operations, the Company reported a net loss of $1.2 million or a
loss of $0.05 per basic and diluted share compared to net income of $1.9 million
or earnings per share of $0.09 basic and $0.08 diluted reported in the fiscal
first quarter of 2004.
Commenting on today's announcement, John J. Shalam, Chairman, President and
Chief Executive Officer of Audiovox stated, "Despite the first quarter
performance, we remain on target with our sales guidance for the full fiscal
year of 3 - 8 percent growth, excluding any acquisitions that may arise."
Shalam continued, "Several reductions in overhead have already been instituted
and we expect to take further steps in the quarters ahead. And while our margins
and profits were lower than anticipated this quarter, they should rise during
the second half as excess products move out of inventory and newer products in
both the Mobile and Consumer categories are introduced. The market remains
competitive and of course, there are risks, but we anticipate generating
operating margins of 5% by the fourth quarter, consistent with past remarks."
Shalam concluded, "We have no domestic bank debt and approximately $160 million
in cash and short-term investments made in November of last year. It is our goal
to put the capital raised from our prior year sale of our Cellular Business to
use in growing our Company both internally and through acquisition."
Net Sales
Mobile Electronics, which represented 64.4% of net sales, came in at $74.7
million, down 16.2% compared to $89.1 million reported in the comparable prior
year period. This decline was related primarily to the continual price erosion
and competition within the mobile video category.
Consumer Electronics, which represents 35.6% of net sales, had sales of $41.3
million, a decline of 10.7% compared to net sales of $46.3 million reported in
the fiscal first quarter of 2004. This decline was due primarily to a shift in
large load-in orders that moved from first quarter 2004 to second quarter in
2005.
EXHIBIT 99.1
Audiovox Reports 2005 Fiscal First Quarter Results
Page 2 of 6
Gross Margins
Gross margins for the first quarter of 2005 were 13.9% compared to 15.6% for the
quarter ended February 29, 2004, which continue to reflect price erosion in the
mobile video and DVD categories. Gross margins are expected to improve in the
second half.
Income (Loss) from Discontinued Operations
On February 25, 2005, the Company entered into a plan to discontinue ownership
of its majority owned subsidiary, Audiovox Malaysia ("AVM") and sell its
ownership to the current minority interest shareholder. Included in loss from
discontinued operations for the three months ended February 28, 2005 is a
write-down charge of $0.4 million for AVM assets as a result of the intended
sale of AVM. The decline of income from discontinued operations for the quarter
ended February 28, 2005 is due to increased losses of AVM as well as residual
expenses from the prior year sale of the Cellular Business on November 1, 2004.
Net Income (Loss)
As a result of decreased sales and gross margins partially offset by increased
other income, net loss for the three months ended February 28, 2005 was $1.2
million, compared to net income of $1.9 million reported in the first fiscal
quarter of 2004. Earnings (loss) per share for the fiscal 2005 first quarter was
$0.05 (basic and diluted) as compared to $0.09 (basic) and $0.08 (diluted) for
the comparable prior year period.
Liquidity and Capital Resources
As of February 28, 2005, the Company had working capital of $351.3 million,
which includes cash and short-term investments of $158.2 million compared with
working capital of $362.0 million at November 30, 2004, which includes cash and
cash equivalents and short-term investments of $167.7 million. The Company plans
to utilize its current cash position as well as collections from accounts
receivable to fund the current operations of the business. However, the Company
may utilize all or a portion of the current capital resources to pursue other
business opportunities, including acquisitions.
Operating activities provided cash of $3.7 million for the three months ended
February 28, 2005 compared to cash used of $0.2 million in the first fiscal
quarter of 2004. The increase in cash provided by operating activities as
compared to the prior year period is primarily due to the collection of accounts
receivable, including assets of discontinued operations and decreased inventory,
partially offset by a decrease in accounts payable and income taxes. Loss from
continuing operations used $0.6 million for operating activities for the three
months ended February 28, 2005 compared to income provided of $0.7 million in
the comparable period in 2004.
Accounts receivable and inventory were $94.1million and $136.1 million at
February 28, 2005 compared to $118.4 million and $139.3 million at November 30,
2004, respectively.
EXHIBIT 99.1
Audiovox Reports 2005 Fiscal First Quarter Results
Page 3 of 6
Fiscal 2005 Guidance
The Company confirms previous guidance for growth of 3-8% in fiscal 2005, with
improving margins during the second half. The Company expects to report sales of
$140 million to $150 million in the second quarter of 2005.
Conference Call
Audiovox Corporation will be hosting a results conference call later this
morning at 10:00 a.m. EDT. Interested parties may participate in a listen-only
mode via a real-time web cast by visiting the Company's web site at
http://www.audiovox.com.
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.
Company Contacts
Glenn Wiener
GW Communications for Audiovox
Tel: 212-786-6011
Email: gwiener@GWCco.com
EXHIBIT 99.1
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
November 30, February 28,
2004 2005
(unaudited)
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 43,409 $ 18,624
Restricted cash 8,264 8,296
Short-term investments 124,237 139,609
Accounts receivable, net 118,388 94,125
Inventory 139,307 136,065
Receivables from vendors 7,028 5,274
Prepaid expenses and other current assets 14,057 15,074
Deferred income taxes 6,873 6,286
Current assets of discontinued operations 20,582 3,012
------ -----
Total current assets 482,145 426,365
Investment securities 5,988 6,721
Equity investments 12,878 11,024
Property, plant and equipment, net 19,707 20,665
Excess cost over fair value of assets acquired 7,019 17,818
Intangible assets 8,043 8,440
Other assets 413 361
Deferred income taxes 6,220 5,120
Non-current assets of discontinued operations 925 825
--- ---
Total assets $543,338 $497,339
======== ========
EXHIBIT 99.1
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
November 30, February 28,
2004 2005
(unaudited)
----------- -----------
Current liabilities:
Accounts payable $ 26,004 $ 20,263
Accrued expenses and other current liabilities 32,814 25,885
Accrued sales incentives 7,584 5,450
Income taxes payable 42,790 12,349
Bank obligations 5,485 5,900
Current portion of long-term debt 2,497 2,411
Current liabilities of discontinued operations 2,953 2,760
----- -----
Total current liabilities 120,127 75,018
Long-term debt 7,709 7,337
Capital lease obligation 6,001 6,091
Deferred compensation 4,888 5,821
----- -----
Total liabilities 138,725 94,267
------- ------
Minority interest 426 375
--- ---
Commitments and contingencies
Total stockholders' equity 404,187 402,697
------- -------
Total liabilities and stockholders' equity $543,338 $497,339
======== ========
EXHIBIT 99.1
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
For the Three Months Ended February 29, 2004 and February 28, 2005
(In thousands, except share and per share data)
(unaudited)
February 29, February 28,
2004 2005
Net sales $ 135,356 $ 115,980
Cost of sales 114,228 99,909
Gross profit 21,128 16,071
Operating expenses:
Selling 7,141 7,991
General and administrative 12,487 12,414
Warehousing and technical support 969 1,467
Total operating expenses 20,597 21,872
Operating income (loss) 531 (5,801)
Other income (expense):
Interest and bank charges (963) (633)
Equity in income of equity investees 1,071 353
Other, net 624 4,605
Total other income, net 732 4,325
Income (loss) from continuing operations before income taxes 1,263 (1,476)
Income taxes (benefit) 602 (924)
Minority interest 35 -
Net income (loss) from continuing operations 696 (552)
Net income (loss) from discontinued operations, net of tax 1,174 (653)
Net income (loss) $ 1,870 $ (1,205)
Net income (loss) per common share (basic):
From continuing operations $ 0.03 $ (0.02)
From discontinued operations 0.06 (0.03)
Net income (loss) per common share (basic) $ 0.09 $ (0.05)
Net income (loss) per common share (diluted):
From continuing operations $ 0.03 $ (0.02)
From discontinued operations 0.05 (0.03)
Net income (loss) per common share (diluted) $ 0.08 $ (0.05)
Weighted average number of common shares outstanding (basic) 21,922,100 22,051,443
Weighted average number of common shares outstanding (diluted) 22,254,488 22,051,443
EXHIBIT 99.1