able border=0 cellpadding=10 cellspacing=0 width=100%>Yahoo! is not affiliated with the authors of this page or responsible for its content.
A U D I O V O X
A U D I O V O X
1 9 9 8 A N N U A L
R E P O R T
T e c h n o l o g y f o r t h e w a y w e l i v e . C O M P A N Y
P R O F I L E
Audiovox Corporation is an international leader in the marketing of wireless products, auto sound, vehicle security, mobile video systems, FRS Radios
(Family Radio Service) and home and portable leisure products.
Marketing of the Companys products in the US is separated into two groups: Communications and Electronics. In addition, Audiovox maintains a
majority ownership of Audiovox Venezuela and Audiovox Malaysia for the distribution of electronics products. Results of these operations are consoli-
dated into the companys revenues.
Audiovox Communications Corp. (ACC), a majority-owned subsidiary of the Company, markets wireless products including cellular telephones in a vari-
ety of different technologies. ACC specializes in distribution of its products to the carrier market with 80% of its 1998 sales going to that outlet.
The Electronic Division divides its sales into Mobile Electronics and Consumer Electronics. The mobile electronics group focuses on the 12-Volt
specialist and car dealer while the consumer group targets the mass merchandisers and national chains. The Electronics division also supports a
considerable OE and private label effort for vehicle manufacturers.
The Company has several equity investments including; a 30.8% ownership in TALK Corporation which manufacturers some of its cellular telephone
and auto sound products; and a 20% ownership interest in Bliss-tel Company, Limited, which distributes cellular telephones and accessories in
Thailand. In addition the Company has a 50%, non-controlling ownership interest in five other companies.
H I G H L I G H T S O F T H E Y E A R
ACC introduces first CDMA phone. Unit sales of digital phones
reach 32% of total in fourth quarter, 18% for the year
ACC signs $100 million contract with PrimeCo for supply of CDMA / PCS phones
Electronics Division achieves QS/ ISO 9001 Registration
Electronics Division signs contract with Nissan for supply of
Mobile Video in 1999 Quest minivans
Audiovox Corporation completes installation of multi-million dollar
management information system (MIS), which gives the Company
global MIS control, fulfillment capability and resolves Y2K issues. S E L E C T E D F I N A N C I A L D A T A
Years Ended November 30, 1998, 1997, 1996, 1995 and 1994
(Dollars in thousands, except per share data)
1998
1997
1996
1995
1994
Net sales ......................................................
$616,695
$639,082
$597,915
$500,740
$486,448
Net income (loss) ........................................
2,972 (a)
21,022 (b)
(26,469) (c)
(11,883) (d)
26,028 (f)
Net income (loss) per
common share, basic..............................
0.16 (a)
1.11 (b)
(2.82) (c)
(1.31) (d)
2.88 (f)
Net income (loss) per
common share, diluted...........................
0.16 (a)
1.09 (b)
(2.82) (c)
(1.31) (d)
2.22 (f)
Total assets ..................................................
279,679
289,827
265,545
308,428
239,098
Long-term obligations, less
current installments.................................
33,724
38,996
70,413
142,802
110,698
Stockholders equity ...................................
177,720 (e)
187,892 (e)
131,499 (e)
114,595 (e)
92,034
(a) Includes a pre-tax charge of $6.6 million for inventory write-downs.
(b) Includes a pre-tax charge of $12.7 million for costs associated with the exchange of $21.5 million of subordinated debentures into 2,860,925 shares of common
stock in addition to tax expense on the exchange of $158,000. Additionally, includes a net gain of $23.2 million on sale of CellStar shares.
(c) Includes a pre-tax charge of $26.3 million for costs associated with the exchange of $41.3 million of subordinated debentures into 6,806,580 shares of common
stock in addition to tax expense on the exchange of $2.9 million.
(d) Includes a pre-tax charge of $2.9 million associated with the issuance of warrants, a pre-tax charge of $11.8 million for inventory write-downs and the down-sizing
of the retail operations and a pre-tax gain on the sale of an equity investment of $8.4 million.
(e) Includes a $4.2 million unrealized gain on marketable securities, net, and a $929,000 gain on hedge of available-for-sale securities in 1998 and a $12.2 million
unrealized gain on marketable securities, net, a $773,000 unrealized gain on equity collar, net, and a $20.8 million increase as a result of the exchange of $21.5
million of subordinated debentures in 1997 and a $10.3 million unrealized gain on marketable securities, net, and a $34.4 million increase as a result of the
exchange of $41.3 million of subordinated debentures in 1996 and a $31.7 million unrealized gain on marketable securities, net, for 1995.
(f) Includes a cumulative effect change of ($178,000) or ($0.02) per share, basic, and ($0.01) per share, diluted. Also includes a pre-tax gain on sale of an equity
investment of $27.8 million and a gain on public offering of equity investment of $10.6 million.
Q U A R T E R L Y F I N A N C I A L D A T A
(Unaudited)
1
Quarter Ended
(In thousands, except share and per share amounts)
Feb. 28
May 31
Aug. 31
Nov. 30
1998
Net sales .......................................................................................... $120,974
$132,411
$154,501
$208,809
Gross profit ......................................................................................
22,259
14,044 (a)
24,878
27,360
Operating expenses ......................................................................
19,724
22,001
20,950
20,995
Income (loss) before provision for (recovery of )
income taxes ..............................................................................
2,236
(8,720) (a)
4,201
6,084
Provision for (recovery of ) income taxes ..................................
597
(4,025)
1,620
2,637
Net income (loss) ............................................................................
1,639
(4,695) (a)
2,581
3,447
Net income (loss) per common share (basic) ............................
0.09
(0.24)
0.14
0.18
Net income (loss) per share (diluted) ..........................................
0.09
(0.24)
0.14
0.18
1997
Net sales ............................................................................................ $ 166,614
$ 148,195
$ 153,124
$ 171,149
Gross profit........................................................................................
28,002
25,055
25,634
28,071
Operating expenses ........................................................................
23,486
21,243
20,606
21,732
Income before provision for income taxes ....................................
15,328 (b)
14,032 (d)
5,565 (f )
8,517 (h)
Provision for income taxes ..............................................................
11,125 (c)
5,678 (e)
2,467 (g)
3,150 (i)
Net income........................................................................................
4,203
8,354
3,098
5,367
Net income per common share (basic) ..........................................
0.24
0.43
0.16
0.28
Net income per share (diluted) ......................................................
0.23
0.43
0.16
0.27
(a) Includes a pre-tax charge of $6.6 million for inventory write-downs.
(b) Includes a pre-tax charge of $12.7 million for costs associated with the exchange of $21.5 million of subordinated debentures into 2,860,925 shares of Class A
Common Stock and a pre-tax gain of $23.8 million on the sale of CellStar shares.
(c) Includes $158,000 for income taxes associated with the exchange of $21.5 million of subordinated debentures into 2,860,925 shares of Class A Common Stock
and income taxes of $9.0 million for the gain on sale of CellStar shares.
(d) Includes $10.2 million of pre-tax gain on the sale of CellStar shares.
(e) Includes $3.9 million of income taxes on the gain on sale of CellStar shares.
(f ) Includes $303,000 of pre-tax gain on the sale of CellStar shares.
(g ) Includes $115,000 of income taxes on the gain on the sale of CellStar shares.
(h ) Includes $3.2 million of pre-tax gain on the sale of CellStar shares.
( i ) Includes $1.2 million of income taxes on the gain on sale of CellStar shares. L E T T E R T O S H A R E H O L D E R S
Although revenues and profits were down in fiscal 98 to $616.7 million and $3.0 million, respectively, we ended the
year on a high note. Third and fourth quarter sales were fueled by the introduction of CDMA digital phones, our first
CDMA/PCS phone and two exciting new product lines in our electronics division-Mobile Video and FRS (Family Radio
Service). Sales of these products allowed us to overcome losses posted in the first half of the year as a result of a write-
down on existing analog phone inventories. In addition, sales of our Malaysian operation which were adversely affected
by the Asian economic crisis also showed signs of returning to profitability by year end.
Audiovox Communications Corp. (ACC), our wireless subsidiary was cited by an independent research company as
the fastest growing digital company in the fourth quarter, 1998. Digital phone sales, non-existent in fourth quarter 97,
represented 32% of unit sales in the fourth quarter and 18% for the year overall. ACC signed a $100 million contract
with PrimeCo to supply CDMA/PCS phones and shipments against that contract began in the fourth quarter. Additional
digital products to be introduced this year include a GSM phone, which will be sold in Europe and South