HAUPPAUGE, N.Y., May 14 /PRNewswire-FirstCall/ -- Audiovox Corporation . Audiovox Corporation today announced results for its fiscal 2009 fourth quarter and year-ended February 28, 2009.
Fiscal Year Comparisons
Net sales for the 2009 fiscal year ended February 28, 2009 were $603.1 million, an increase of approximately $11.7 million or 2.0%, as compared to net sales of $591.4 million reported for the 2008 fiscal year ended February 29, 2008.
Electronics sales, which include both mobile and consumer electronics were $449.4 million in fiscal 2009, an increase of 2.8% as compared to $437.0 million reported in fiscal 2008. This increase was primarily related to higher sales of consumer electronics products, particularly new product categories under the RCA brand, increases in the Company's OEM business and, in its International operations in Venezuela and Mexico as compared to the prior year. Offsetting this increase, were lower sales of mobile electronics products as result of the global economic downturn, lower car sales and the financial difficulties of the automakers, which intensified in the fiscal fourth quarter of 2009. As a percentage of net sales, Electronics represented 74.5% of sales in fiscal 2009 as compared to 73.9% in the comparable fiscal year period.
Accessories sales for the 2009 fiscal year ended February 28, 2009 were $153.7 million, a decrease of 0.4% as compared to $154.3 million reported in the comparable fiscal year period. The small decline in Accessories sales is primarily related to the overall economic environment. As a percentage of net sales, Accessories represented 25.5% and 26.1% of net sales for the periods ended February 28, 2009 and February 29, 2008, respectively.
Gross margins for the fiscal year ended February 28, 2009 were 16.6% compared to 18.8% in the prior fiscal year. Gross profit and gross profit margins were positively impacted by price increases instituted in the second half of fiscal 2009 to offset higher transportation and distribution costs, as well as higher gross margins in certain consumer electronics lines. However, these increases were negatively impacted by a mark down of $2.9 million related to the exit of the portable navigation category, and $3.9 million in charges related to customer bankruptcies.
On a pro forma basis, excluding the $2.9 million mark down for the exit of the navigation business and the bankruptcy related charges of $3.9 million, gross profit and gross profit margin would have been $107.1 million and 17.8%, respectively.
The Company reported operating expenses of $153.7 million for the fiscal year ended February 28, 2009, an increase of $46.8 million, compared to $106.9 million reported in the comparable fiscal year period. The increase in operating expense is principally due to an impairment charge on goodwill and intangibles of $38.8 million. Overhead net of this charge increased by $8.0 million and of this increase, $4.0 million is related to non-standard charges such as IP settlement, other legal fees, increased allowance for doubtful accounts due to bankruptcy provisions and expenses related to an overhead reduction program. The other $4.0 million increase in overhead was principally related to the Thomson A/V and Technuity acquisitions. These increases were partially offset by declines in selling expenses including salaries, commissions and reductions in officer salaries. The Company implemented expense and workforce reduction plans to decrease total operating expenses, the complete effect of which will be felt in fiscal 2010.
Net loss for fiscal 2009 was $71.0 million which included a $15.0 operating loss, $38.8 million in goodwill and intangible impairment charges, $15.0 million in deferred tax valuation and $2.2 in other expenses.
The Company reported a net loss of $71.0 million or a loss per diluted share of $3.11 compared to net income of $8.5 million or net income per diluted share of $0.37 in the fiscal year ended February 29, 2008. Included in fiscal year 2008 was a gain of $1.7 million related to a derivative legal settlement and which is accounted for in discontinued operations.
On a pro forma basis, excluding the impact of the non-standard charges, the Company would have recorded a loss for the year of $4.5 million or a loss of $0.20 per diluted share.
Patrick Lavelle, President and CEO stated, "For the first nine months of our fiscal year, we operated our business at a near break-even level, despite pressures on sales and margins as well as increased expenses driven by rising energy costs and a deteriorating marketplace. Those pressures intensified during our fourth quarter as our channel partners experienced a slow-down in sell through at retail that resulted in post holiday inventory overhang. This in turn, pushed back the timing of certain, new promotions. In addition, the auto sector, which had been weak all year, slowed even further amidst fears of potential bankruptcies."
Lavelle continued, "I am not pleased with the operating loss we posted and the ensuing impairment charges that loss triggered. However, most of the difficulties we faced this year were driven by forces beyond our control, in particular the bankruptcies of key vendors and customers, rising oil prices that drove up transportation and manufacturing costs, and the near collapse of the automotive industry that has resulted in the bankruptcy of Chrysler and the potential bankruptcy of GM."
Lavelle concluded, "Throughout the year, we took steps to combat the ever shifting economic situation; knowing that those adjustments to our business model would not only help us weather the storm but also, help us emerge stronger and better positioned to take advantage of the market as it recovers. We continue to develop new products, rationalizing our portfolio behind the key brands of Audiovox, RCA, Jensen, Energizer and Acoustic Research. Our products are placed in more retail outlets than ever before. We have put in place expense cuts and workforce reductions that have reduced 2010 operating expenses by over $23 million. We remain nearly debt free and have almost $70 million in cash to fund operations, pursue acquisitions and partnerships and grow this company profitably in the years ahead."
Fiscal Fourth Quarter Comparisons
Total net sales for the fourth quarter ended February 28, 2009 were $115.7 million, a decrease of 11.9% as compared to $131.3 million in the fourth quarter ended February 29, 2008.
Accessory sales, which represented 37.7% of net sales for the three months ended February 28, 2009, were $43.6 million compared to $35.5 million or 27.0% of net sales in the prior year period, an increase of $8.1 million or 22.9%. The sales increase was primarily due to higher antenna sales in preparation for the digital TV switch as well as the addition of several new retail partners that resulted in new sales.
Gross margins decreased from 18.8% in the fiscal fourth quarter ended February 29, 2008 to 11.9% in the comparable fiscal period in 2009. Gross profit and gross profit margins were impacted by $2.4 million in related provisions as a result of customer bankruptcies, increased defective and warranty charges and an additional charge as a result of the slow holiday sales season.
Operating expenses were $66.9 million for the three months ended February 28, 2009, compared to $28.2 million for the three months ended February 29, 2008. Included in the fiscal fourth quarter were non-standard charges of $38.8 million in impairment charges and $2.2 million in legal fees and allowances for bankruptcies. During the fiscal fourth quarter operating expenses declined in salaries and general administrative expenses.
The Company reported a loss from continuing operations of $53.2 million for the three months ended February 28, 2009 compared to a loss from continuing operations of $1.8 million in the comparable year-ago period. Net loss for the 2009 fiscal fourth quarter was $70.0 million or a loss per diluted share of $3.06 compared to a net loss of $2.2 million or a loss per diluted share of $0.08 for the three months ended February 29, 2008.
On a pro forma basis, excluding the impact of the non standard charges, the company would have recorded a loss for the fiscal 2009 fourth quarter $8.0 million or a loss per diluted share of $0.35.
Conference Call Information
The Company will be hosting its conference call on Friday, May 15, 2009 at 10:00 a.m. EDT. Interested parties can participate by visiting http://www.audiovox.com/, and clicking on the webcast in the Investor Relations section or via teleconference (toll-free number: 800-798-2801; international number: 617-614-6205; pass code: 39306309). For those who will be unable to participate, a replay 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; pass code: 44811104).
About Audiovox
Audiovox is a recognized leader in the marketing of automotive entertainment, vehicle security and remote start systems, consumer electronics products and consumer electronics accessories. The company is number one in mobile video and places in the top ten of almost every category that it sells. Among the lines marketed by Audiovox are its mobile electronics products including mobile video systems, auto sound systems including satellite radio, vehicle security and remote start systems; consumer electronics products such as MP3 players, digital camcorders, DVRs, clock radios, portable DVD players, extended range two-way radios, multimedia products like digital picture frames and home and portable stereos; consumer electronics accessories such as indoor/outdoor antennas, connectivity products, headphones, speakers, wireless solutions, remote controls, power & surge protectors and media cleaning & storage devices; Energizer-branded products for rechargeable batteries and battery packs for camcorders, cordless phones, digital cameras and DVD players, as well as for power supply systems, automatic voltage regulators and surge protectors. The company markets its products through an extensive distribution network that includes power retailers, 12-volt specialists, mass merchandisers and an OE sales group. The company markets products under the Audiovox, RCA, Jensen, Acoustic Research, Energizer, Advent, Code Alarm, TERK, Prestige and SURFACE brands. For additional information, visit our Web site at http://www.audiovox.com/.
Safe Harbor Statement
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 year ended February 28, 2009.
Contact: Glenn Wiener, GW Communications Tel: 212-786-6011 / Email: gwiener@GWCco.com - Tables Attached - Audiovox Corporation and Subsidiaries Consolidated Balance Sheets February 28, 2009 and February 29, 2008 (In thousands, except share data) 2009 2008 Assets Current assets: Cash and cash equivalents $69,504 $39,341 Accounts receivable, net 104,896 112,688 Inventory 125,301 155,748 Receivables from vendors 12,195 29,358 Prepaid expenses and other current assets 17,973 13,780 Deferred income taxes 354 7,135 Total current assets 330,223 358,050 Investment securities 7,744 15,033 Equity investments 13,118 13,222 Property, plant and equipment, net 19,903 21,550 Goodwill - 23,427 Intangible assets 88,524 101,008 Deferred income taxes 221 - Other assets 1,563 746 Total assets $461,296 $533,036 Audiovox Corporation and Subsidiaries Consolidated Balance Sheets February 28, 2009 and February 29, 2008 (In thousands, except share data) 2009 2008 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $41,796 $24,433 Accrued expenses and other current liabilities 32,575 38,575 Income taxes payable 2,665 5,335 Deferred income tax 1,459 Accrued sales incentives 7,917 10,768 Bank obligations 1,467 3,070 Current portion of long-term debt 1,264 82 Total current liabilities 89,143 82,263 Long-term debt 5,896 1,621 Capital lease obligation 5,531 5,607 Deferred compensation 2,559 4,406 Other tax liabilities 2,572 4,566 Deferred tax liabilities 4,657 6,057 Other long term liabilities 10,436 5,003 Total liabilities 120,794 109,523 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, 22,424,212 and 22,414,212 shares issued, 20,604,460 and 20,593,660 shares outstanding at February 28, 2009 and February 29, 2008, respectively 224 224 Class B convertible, $.01 par value; 10,000,000 shares authorized, 2,260,954 shares issued and outstanding 22 22 Paid-in capital 274,464 274,282 Retained earnings 91,513 162,542 Accumulated other comprehensive income (loss) (7,325) 4,847 Treasury stock, at cost, 1,819,752 and 1,820,552 shares of Class A common stock at February 28, 2009 and February 29, 2008, respectively (18,396) (18,404) Total stockholders' equity 340,502 423,513 Total liabilities and stockholders' equity $461,296 $533,036 Audiovox Corporation and Subsidiaries Consolidated Statements of Operations Quarter and Year Ended February 28, 2009 and February 29, 2008 (In thousands, except share and per share data) Three Three Months Months Year Year Ended Ended Ended Ended February 28, February 29, February 28, February 29, 2009 2008 2009 2008 Net sales $115,666 $131,269 $603,099 $591,355 Cost of sales 101,931 106,595 502,831 480,027 Gross profit 13,735 24,674 100,268 111,328 Operating expenses: Selling 6,907 9,168 33,505 35,703 General and administrative 18,866 16,067 70,870 61,220 Engineering and technical support 2,303 2,973 10,522 9,983 Goodwill & Intangible Asset Impairment 38,814 - 38,814 - Total operating expenses 66,890 28,208 153,711 106,906 Operating income (loss) (53,155) (3,534) (53,443) 4,422 Other income (expense): Interest and bank charges (379) (40) (1,817) (2,127) Equity in income of equity investees 50 663 975 3,590 Other, net (2,044) 1,265 (1,669) 4,709 Total other income, net (2,373) 1,888 (2,511) 6,172 Income (loss) from continuing operations before income taxes (55,528) (1,646) (55,954) 10,594 Income tax (expense) benefit (14,493) (139) (15,075) (3,848) Net income (loss) from continuing operations (70,021) (1,785) (71,029) 6,746 Net income (loss) from discontinued operations, net of tax - (392) - 1,719 Net income (loss) ($70,021) ($2,177) ($71,029) $8,465 Net income (loss) per common share (basic): From continuing operations ($3.06) ($0.08) ($3.11) $0.29 From discontinued operations - ($0.02) - $0.08 Net income (loss) per common share (basic) ($3.06) ($0.10) ($3.11) $0.37 Net income (loss) per common share (diluted): From continuing operations ($3.06) ($0.08) ($3.11) $0.29 From discontinued operations - ($0.02) - $0.08 Net income (loss) per common share (diluted) ($3.06) ($0.10) ($3.11) $0.37 Weighted-average common shares outstanding (basic) 22,865,405 22,854,614 22,860,402 22,853,482 Weighted-average common shares outstanding (diluted) 22,865,405 22,854,614 22,860,402 22,876,112 This earnings release includes information presented on a pro forma basis. These pro forma financial measures are considered "non-GAAP" financial measures within the meaning of the Securities and Exchange Commission Regulation G. The Company believes that this presentation of pro forma results provide useful information to both management and investors by excluding specific items that the Company believes are not indicative of core operating results. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. The reconciliation set forth below is provided in accordance with Regulation G and reconciles the pro forma financial measure with the most directly comparable GAAP based financial measure. Audiovox Corporation and Subsidiaries Reconciliation of GAAP Net (loss) income from continuing operations for the three months and year to date Period Ended February 28, 2009 to the Pro Forma net (loss) income (In thousands, except share and per share data) (unaudited) Three Months Year Ended Ended February 28, February 28, 2009 2009 GAAP net (loss) income from continuing operations ($70,021) ($71,029) Non-recurring Adjustments: Goodwill & Intangible Asset Impairment 38,814 38,814 Bankruptcy costs of customers & vendors 6,474 6,474 Increased professional fees due to IP settlements and other legal charges 2,250 2,250 Discontinued Portable Navigation - 2,900 Severance & Overhead reduction program - 1,000 Deferred tax valuation 14,493 15,075 Non-recurring adjustments 62,031 66,513 Pro forma net (loss) income from continuing operations (7,990) (4,516) GAAP net (loss) income per common share, diluted ($3.06) ($3.11) Pro forma net (loss) income per common share, diluted ($0.35) ($0.20) GAAP Weighted-average common shares outstanding, diluted 22,865,405 22,860,402 Pro forma Weighted-average common shares outstanding, diluted 22,865,405 22,860,402
Audiovox Corporation
CONTACT: Glenn Wiener, GW Communications, +1-212-786-6011,
gwiener@GWCco.com
Web Site: http://www.audiovox.com/
