AUDIOVOX CORPORATION REPORTS RESULTS FOR THREE MONTHS ENDED FEBRUARY 28, 2006
HAUPPAUGE, NY, APRIL 10, 2006 - Audiovox Corporation (Nasdaq: VOXX) today
announced results for its transition period, ended February 28, 2006.
The Company had previously indicated in its February 13, 2006 press release that
it would be changing its fiscal year end from November 30 to February 28 and
that it would file a Form 10-K for the transition period. However, after
evaluating the internal resources and requirements necessary for the transition
period, the Company has decided to file the transition report for the change in
year-end on Form 10-QT. The report may be viewed by visiting the Company's
website, www.audiovox.com or the Securities and Exchange Commission site,
www.sec.gov.
Audiovox Corporation (the "Company") reported net sales for the transition
period ended February 28, 2006 of $103.1 million, a decrease of 11.1% compared
to net sales of $116.0 million reported in the same period last year ("fiscal
2005 first quarter"). Net income from continuing operations was $0.4 million or
income of $0.02 per diluted share compared to a net loss of $0.6 million or a
loss of $0.02 per diluted share in the comparable prior year period. Including
discontinued operations, the Company reported net income of $0.2 million or net
income per diluted share of $0.01 compared to a net loss of $1.2 million or
$0.05 per diluted share in the similar 2005 period. Net income was favorably
impacted by a tax benefit of $1.9 million during the transition period ended
February 28, 2006.
Mobile Electronics, which represented 68.7% of net sales, reported revenue of
$70.8 million compared to net sales of $74.7 million reported in the comparable
prior year period. Mobile Electronics sales were adversely impacted by a sales
decline in private label products and lower priced satellite radio units
compared to the prior year period. Offsetting these declines were increased
sales generated from the Terk product line, which was acquired in January 2005,
higher sales of Jensen mobile multi-media product lines and higher sales of our
DVD Shuttle system. Consumer Electronics, which represented 31.3% of net sales,
had sales of $32.2 million, a decrease of 22.0% compared to net sales of $41.3
million reported in the comparable 2005 period. This decrease was due primarily
to lower sales of portable DVD and LCD flat panel TV's as a result of a
non-recurrence of one-time retail promotional offers that occurred in the prior
year comparable period.
Gross margins for the period ended February 28, 2006 were 15.2%, as compared to
13.9% reported in the comparable year-ago period and 6.2% reported at fiscal
year-end. The increase in gross profit margins, both year-over-year and
sequentially, was related primarily to higher margins in the mobile video
category as new mobile video products were introduced earlier this year, higher
margins associated with the Jensen product line as well as a reduction in lower
margin products in the portfolio mix which are now considered "discontinued."
Operating expenses for the transition period ended February 28, 2006 were $18.8
million, a decrease of $3.1 million or 14.0% as compared to operating expenses
of $21.9 million reported in the fiscal first quarter ended February 28, 2005.
The reduction in operating expenses was seen in most areas, as SG&A expenses
were down due to lower sales volume and corporate expenses were down due to
reduced advertising costs, officer salaries and professional fees.
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EXHIBIT 99.1
AUDIOVOX REPORTS RESULTS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2006
PAGE 2 OF 5
Patrick Lavelle, President and CEO of Audiovox stated, "Our results this quarter
reflect many of the changes that were implemented over the past six months and
we believe we're on track to restoring historical profitability levels in the
near-future. While our sales were off versus the comparable period last year,
there are several lines that are no longer in the product mix and there were a
number of one-time retail promotions that took place last year and did not
repeat this year. Most of our product lines are performing well and as we gear
up for new product introductions over the next 90 days and beyond, we feel
confident that we will begin posting stronger results, both on the top and
bottom-lines."
Lavelle continued, "We are especially pleased with the outlook for our satellite
radio, mobile video, mobile multi-media and LCD TV line-up in fiscal 2006.
Customer demand has been strong and there has been a lot of interest regarding
our new offerings, which were displayed at CES earlier in the year.
Additionally, there's been a great deal of interest in Home Decor, our new home
speaker concept under the Acoustic Research brand, which is in active market
test this quarter. Acquired brands have been performing well, our partnerships
are strong and our new supply agreements in satellite radio, one of our
identified growth categories, should protect us from market volatility that may
occur. With new products coming to market this Summer, a solid cash position,
strong balance sheet and improved operating structure, we believe Audiovox is
well-positioned for the future."
During the transition period, Audiovox repurchased 168,800 shares of its common
stock for a total purchase price of approximately $2.3 million. This is part of
the Share Repurchase Program previously authorized by the Board of Directors in
September, 2000.
TRANSITION PERIOD CONFERENCE CALL
The Company will be hosting its conference
call tomorrow morning on Tuesday, April 11th 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 (REPLAY): 888-286-8010
INTERNATIONAL CALL-IN NUMBER (REPLAY): 617-801-6888
ACCESS CODE: 19305716
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
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AUDIOVOX REPORTS RESULTS FOR THE PERIOD ENDED FEBRUARY 28, 2006
PAGE 3 OF 5
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/A
for the fiscal year ended November 30, 2005 and its Form 10-QT for the
transition period ended February 28, 2006.
Company Contacts:
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Glenn Wiener
GW Communications for Audiovox
Tel: 212-786-6011 or Email: gwiener@GWCco.com
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AUDIOVOX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
NOVEMBER 30, FEBRUARY 28,
2005 2006
---------------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 14,164 $16,280
Restricted cash 1,474 1,488
Short-term investments 108,766 160,799
Accounts receivable 128,430 88,671
Inventory 129,120 96,150
Receivables from vendors 8,075 9,830
Prepaid expenses and other current assets 6,749 6,023
Deferred income taxes 9,992 8,218
-------- -------
Total current assets 406,770 387,459
Investment securities 11,998 14,709
Equity investments 12,073 11,834
Property, plant and equipment, net 19,717 18,799
Excess cost over fair value of assets acquired 16,138 16,067
Intangible assets 11,060 11,002
Deferred income taxes 6,054 3,989
Other assets 2,054 2,153
-------- -------
Total assets $ 485,864 $ 466,012
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,998 $13,776
Accrued expenses and other current liabilities 24,574 17,907
Accrued sales incentives 9,826 8,512
Income taxes payable 1,770 -
Bank obligations 4,757 5,329
Current portion of long-term debt 1,357 1,371
------- ------
Total current liabilities 66,282 46,895
Long-term debt 6,357 5,924
Capital lease obligation 5,917 5,892
Deferred compensation 6,151 6,569
------ ------
Total liabilities 84,707 65,280
Commitments and contingencies
Total stockholders' equity 401,157 400,732
------- -------
Total liabilities and stockholders' equity $485,864 $ 466,012
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AUDIOVOX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 28
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
2005 2006
---- ----
Net sales $ 115,980 $ 103,050
Cost of sales 99,909 87,400
--------- ---------
Gross profit 16,071 15,650
--------- --------
Operating expenses:
Selling 7,991 6,824
General and administrative 12,414 10,517
Engineering and technical support 1,467 1,468
-------- -------
Total operating expenses 21,872 18,809
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(5,801) (3,159)
Operating loss --------- -------
Other income (expense):
Interest and bank charges (633) (560)
Equity in income of equity investees 353 474
Other, net 4,605 1,769
--------- -------
Total other income, net 4,325 1,683
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Loss from continuing operations before income taxes (1,476) (1,476)
Income tax benefit 924 1,843
-------- -------
Net (loss) income from continuing operations (552) 367
Net loss from discontinued operations, net of tax (653) (184)
-------- -------
Net (loss) income $ (1,205) $ 183
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Net (loss) income per common share (basic):
From continuing operations $ (0.02) $ 0.02
From discontinued operations (0.03) (0.01)
--------- -------
Net (loss) income per common share (basic) $ (0.05) $ 0.01
========= ======
Net (loss) income per common share (diluted):
From continuing operations $ (0.02) $ 0.02
From discontinued operations (0.03) (0.01)
--------- --------
Net (loss) income per common share (diluted) $ (0.05) $ 0.01
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Weighted-average common shares outstanding (basic) 22,051,443 22,526,497
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Weighted-average common shares outstanding (diluted) 22,051,443 22,766,593
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