FOR IMMEDIATE RELEASE
AUDIOVOX REPORTS FIFTEEN PERCENT SALES INCREASE
IN ITS FISCAL 2008 FIRST QUARTER
HAUPPAUGE, NY, July 10, 2007 - Audiovox Corporation (NASDAQ: VOXX) today
announced results for its fiscal 2008 first quarter ended May 31, 2007. The
Company reported net sales for the fiscal 2008 first quarter of $128.3 million,
an increase of 15.2% compared to $111.3 million reported in the comparable prior
year quarter. Net income was $2.2 million or $0.10 per diluted share compared to
net income of $1.5 million or $0.07 per diluted share in the fiscal 2007 first
quarter.
As of March 1, 2007, the Company changed its reporting structure to reflect its
new realignment and will now be reporting consolidated net sales by two product
categories, Accessories and Electronics.
Accessories sales increased approximately 743.8% to $33.3 million in the fiscal
2008 first quarter, up from $3.9 million in the similar period last year. This
increase was due to incremental sales generated from the recently acquired
Thomson and Oehlbach operations. As a percentage of net sales, accessories
represented 25.9% compared to 3.5% in the fiscal 2007 first quarter. The Company
expects accessory sales to represent a higher percentage of total net sales as
compared to the prior year.
Electronics sales, which include both mobile and consumer electronics were $95.0
million, a decrease of 11.5% compared to $107.4 million reported in the
three-month period ended May 31, 2006. This decline was due to lower sales of
consumer goods, primarily LCD TVs and portable DVDs. Impacting these two
categories were shortages of flat panel displays, which has been experienced
industry-wide. Offsetting these declines were improved year-over-year sales in
the Jensen Mobile, Phase Linear and Satellite Radio product lines. Electronics
sales represented approximately 74.1% of net sales in the fiscal 2008 first
quarter compared to 96.50% in the similar period last year.
Gross margins for the period ended May 31, 2007 were 18.1%, in line with the
prior year period. Gross margins this quarter were favorably impacted by higher
margins associated with the recently acquired accessories companies as well as
improved margins in the Company's core electronic products offering. Offsetting
these improvements were higher warehouse and assembly costs necessary to
facilitate the newly acquired accessories companies as well as increased
inventory provisions related to the recent acquisitions and higher product and
warranty repair costs in the Electronics group.
Operating expenses were $24.8 million as compared to $20.2 million in the
comparable fiscal 2007 quarter, up 22.9%. This increase of $4.6 million is due
to the recently acquired Thomson and Oehlbach operations, which had total
operating expenses of $5.5 million for the three months ended May 31, 2007.
Audiovox Reports Fiscal 2008 First Quarter Results
Page 2 of 6
Net income from continuing operations for the fiscal 2008 first quarter was
$121,000 or $0.01 per diluted share. This compares to net income from continuing
operations of $1.8 million in the fiscal 2007 first quarter. Net income from
discontinued operations was $2.1 million or $0.09 per diluted share compared to
a net loss of $260,000 or a loss of $0.01 per diluted share in the comparable
quarter. The increase in income from discontinued operations is due to the
settlement of the derivative action which resulted in pre-tax income of $3.3
million. The weighted average diluted common shares outstanding for the 2008
fiscal first quarter were 22,847,113 compared to 22,548,039 in the similar
period last year.
Patrick Lavelle, President and CEO of Audiovox stated, "I am particularly
encouraged by the performance of our Accessories Group and the progress we have
made in our realignment efforts. While the impact of our efforts is not fully
reflected in our first quarter performance, given higher costs associated with
the transition, we fully expect that the addition of the accessories product
lines, both domestically and internationally, will have a positive impact to our
top and bottom line performance this fiscal year."
Lavelle continued, "Industry wide shortages of flat panel displays are a concern
today and market challenges remain. Our sales this quarter were impacted by
supply issues and we expect this to continue for the foreseeable future.
However, we have seen strong demand for our satellite radio, mobile multi-media
and Phase Linear products and have seen an increase in gross margins across many
consumer and mobile electronics offerings. When you add our Accessories to the
mix, and given the strong support we've received from our customers and
partners, we believe we are on track to post increased sales, higher gross
profit margins and better bottom-line results compared to last year."
Conference Call Information
- -----------------------------
The Company will be hosting its conference call tomorrow morning on Wednesday,
July 11, 2007 at 10:00 a.m. EDT. Interested parties can participate by visiting
the Company's website, www.audiovox.com, and clicking on the webcast in the
Investor Relations section. For those who will be unable to participate, 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.
Replay Number: (888) 286-8010
International Replay Number: (617) 801-6888
Access Code: 28493994
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 and accessories
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.
Audiovox Reports Fiscal 2008 First Quarter Results
Page 3 of 6
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 February 28, 2007.
Company Contacts
Glenn Wiener
GW Communications for Audiovox
Tel: 212-786-6011 or Email: gwiener@GWCco.com
- Tables to Follow -
Audiovox Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
<table>
<caption>
May 31, February 28,
2007 2007
--------------- ---------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents ................................................. $ 15,461 $ 15,473
Short-term investments .................................................... 108,658 140,872
Accounts receivable, net .................................................. 109,833 86,003
Inventory ................................................................. 116,724 104,972
Receivables from vendors .................................................. 15,754 13,935
Prepaid expenses and other current assets ................................. 15,556 11,427
Income tax receivable ..................................................... 2,769 3,518
Deferred income taxes ..................................................... 2,489 2,492
-------- --------
Total current assets .................................................... 387,244 378,692
Investment securities ........................................................ 14,062 13,179
Equity investments ........................................................... 12,037 11,353
Property, plant and equipment, net ........................................... 19,668 18,019
Goodwill ..................................................................... 24,202 17,514
Intangible assets ............................................................ 57,914 57,874
Deferred income taxes ........................................................ 2,438 1,858
Other assets ................................................................. 616 631
-------- --------
Total assets ............................................................ $518,181 $499,120
======== ========
</table>
Audiovox Corporation and Subsidiaries
Consolidated Balance Sheets (continued)
(In thousands, except share data)
<table>
<caption>
May 31, February 28,
2007 2007
-------------- ---------------
(unaudited)
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ............................................................. $ 38,593 $ 34,344
Accrued expenses and other current liabilities ............................... 30,001 26,564
Accrued sales incentives ..................................................... 10,438 7,410
Bank obligations ............................................................. 3,533 2,890
Current portion of long-term debt ............................................ 1,626 1,524
------------ ------------
Total current liabilities .................................................. 84,191 72,732
Long-term debt .................................................................. 4,929 5,430
Other tax liabilities ........................................................... 4,171 3,347
Capital lease obligation ........................................................ 5,660 5,676
Deferred compensation ........................................................... 8,482 7,573
------------ ------------
Total liabilities .......................................................... 107,433 94,758
Commitments and contingencies
Stockholders' equity:
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, 22,336,546 and
22,005,346 shares issued, 20,643,499 and 20,312,299 shares outstanding
at May 31, 2007 and February 28, 2007, respectively ....................... 223 220
Class B convertible, $.01 par value; 10,000,000 shares authorized,
2,260,954 shares issued and outstanding ................................... 22 22
Paid-in capital .............................................................. 274,464 271,056
Retained earnings ............................................................ 153,462 151,363
Accumulated other comprehensive loss ......................................... (444) (1,320)
Treasury stock, at cost, 1,693,047 shares of Class A common stock ............ (16,979) (16,979)
------------ ------------
Total stockholders' equity ...................................................... 410,748 404,362
------------ ------------
Total liabilities and stockholders' equity ...................................... $ 518,181 $ 499,120
============ ============
</table>
Audiovox Corporation and Subsidiaries
Consolidated Statements of Operations
For the Three Months Ended May 31, 2007 and 2006
(In thousands, except share and per share data)
(unaudited)
<table>
<caption>
2007 2006
------------ --------------
Net sales ........................................................................ $ 128,254 $ 111,299
Cost of sales .................................................................... 105,065 91,200
------------ ------------
Gross profit ..................................................................... 23,189 20,099
------------ ------------
Operating expenses:
Selling ....................................................................... 8,797 7,061
General and administrative .................................................... 13,699 11,325
Engineering and technical support ............................................. 2,262 1,765
------------ ------------
Total operating expenses .................................................... 24,758 20,151
------------ ------------
Operating loss ................................................................... (1,569) (52)
------------ ------------
Other income (expense):
Interest and bank charges ..................................................... (667) (560)
Equity in income of equity investees .......................................... 942 948
Other, net .................................................................... 1,467 1,921
------------ ------------
Total other income ......................................................... 1,742 2,309
------------ ------------
Income from continuing operations before income taxes ............................ 173 2,257
Income tax expense ............................................................... 52 475
------------ ------------
Net income from continuing operations ........................................... 121 1,782
Net income (loss) from discontinued operations, net of tax ....................... 2,111 (260)
------------ ------------
Net income ...................................................................... $ 2,232 $ 1,522
============ ============
Net income (loss) per common share (basic):
From continuing operations .................................................... $ 0.01 $ 0.08
From discontinued operations .................................................. 0.09 (0.01)
------------ ------------
Net income per common share (basic) ............................................. $ 0.10 $ 0.07
============ ============
Net income (loss) per common share (diluted):
From continuing operations .................................................... $ 0.01 $ 0.08
From discontinued operations .................................................. 0.09 (0.01)
------------ ------------
Net income per common share (diluted) ........................................... $ 0.10 $ 0.07
============ ============
Weighted-average common shares outstanding (basic) ............................... 22,775,052 22,369,348
============ ============
Weighted-average common shares outstanding (diluted) ............................. 22,847,113 22,548,039
============ ============
</table>