UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For Quarter Ended February 28, 1997
Commission file number 1-9532
AUDIOVOX CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-1964841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 Marcus Blvd., Hauppauge, New York 11788
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 231-7750
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Number of shares of each class of the registrant's Common Stock
outstanding as of the latest practicable date.
Class Outstanding at April 7, 1997
Class A Common Stock 17,253,533 Shares
Class B Common Stock 2,269,054 Shares
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
February 28, November 30,
1997 1996
(unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 14,819 $ 12,350
Accounts receivable, net 90,538 118,408
Inventory, net 76,266 72,785
Receivable from vendor 15,442 4,565
Prepaid expenses and other current assets 11,597 7,324
Deferred income taxes 5,241 5,241
Total current assets 213,903 220,673
Investment securities 26,263 27,758
Equity investments 8,990 8,463
Property, plant and equipment, net 7,530 6,756
Debt issuance costs, net - 269
Excess cost over fair value of assets
acquired and other intangible assets, net 791 804
Other assets 5,807 3,449
$ 263,284 $ 268,172
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 24,572 $ 28,192
Accrued expenses and other current liabilities 16,647 18,961
Income taxes payable 18,660 7,818
Bank obligations 6,702 4,024
Documentary acceptances 2,664 3,501
Total current liabilities 69,245 62,496
Bank obligations - 31,700
Deferred income taxes 9,980 10,548
Long-term debt, less current installments 6,418 28,165
Total liabilities 85,643 132,909
Minority interest 1,405 1,137
Stockholders' equity:
Preferred stock 2,500 2,500
Common Stock:
Class A; 30,000,000 authorized; 16,901,339 and
14,040,414 issued on February 28, 1997, and
November 30, 1996, respectively 170 141
Class B; 10,000,000 authorized; 2,260,954
issued 22 22
Paid-in capital 142,741 107,833
Retained earnings 18,733 14,529
Cumulative foreign currency translation
and adjustment (1,250) (1,176)
Unrealized gain on marketable securities, net 13,320 10,277
Total stockholders' equity 176,236 134,126
Commitments and contingencies
$ 263,284 $ 268,172
See accompanying notes to consolidated financial statements.
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except share and per share data)
Three Months Ended
February 28, February 29,
1997 1996
(unaudited) (unaudited)
Net sales $ 166,614 $ 122,493
Cost of sales 138,612 102,616
Gross profit 28,002 19,877
Operating expenses:
Selling 11,701 7,509
General and administrative 8,919 7,605
Warehousing, assembly and repair 2,866 2,405
23,486 17,519
Operating income 4,516 2,358
Other income (expenses):
Interest and bank charges (916) (2,204)
Equity in income of equity investments 146 110
Management fees and related income 47 50
Gain on sale of investment 23,779 985
Debt conversion expense (12,686) -
Other, net 442 (208)
10,812 (1,267)
Income before provision for income taxes 15,328 1,091
Provision for income taxes 11,125 612
Net income $ 4,203 $ 479
Net income per common share (primary) $ 0.24 $ 0.05
Net income per common share (fully diluted) $ 0.23 $ 0.05
Weighted average number of common shares
outstanding, primary 17,725,630 9,285,188
Weighted average number of common shares
outstanding, fully diluted 18,530,932 9,325,588
See accompanying notes to consolidated financial statements.
AUDIOVOX CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
February 28, February 29,
1997 1996
(unaudited) (unaudited)
Cash flows from operating activities:
Net income $ 4,203 $ 479
Adjustments to reconcile net income to net cash
used in operating activities:
Debt conversion expense 12,386 -
Depreciation and amortization 437 813
Provision for bad debt expense (16) 59
Equity in income of equity investments (795) (110)
Minority interest 265 109
Gain on sale of investment (23,779) (985)
Provision for (recovery of) deferred
income taxes, net (2,433) 341
Provision for unearned compensation 69 90
Gain on disposal of property, plant and equipment, net (3) (9)
Changes in:
Accounts receivable 26,745 21,025
Inventory (3,400) 2,715
Accounts payable, accrued expenses and other current
liabilities (6,075) (3,653)
Receivable from vendor (10,876) (4,651)
Income taxes payable 10,818 394
Prepaid expenses and other assets (4,196) (104)
Net cash provided by operating activities 3,350 16,513
Cash flows from investing activities:
Purchases of property, plant and equipment, net (1,103) (768)
Proceeds from sale of investment 30,182 1,000
Purchase of equity investment - 79
Net cash provided by investing activities 29,079 311
Cash flows from financing activities:
Net repayments under line of credit agreements (29,089) (21,351)
Net borrowings under documentary acceptances (836) 44
Principal payments on long-term debt - (4,371)
Debt issuance costs (13) (50)
Principal payments on capital lease obligation - (81)
Proceeds from release of restricted cash - 5,959
Net cash used in financing activities (29,938) (19,850)
Effect of exchange rate changes on cash (22) (6)
Net decrease in cash and cash equivalents 2,469 (3,032)
Cash and cash equivalents at beginning of period 12,350 7,076
Cash and cash equivalents at end of period $ 14,819 $ 4,044
See accompanying notes to consolidated financial statements.
AUDIOVOX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
February 28, 1997 and February 29, 1996
(Dollars in thousands, except share and per share data)
(1) The accompanying consolidated financial statements were
prepared in accordance with generally accepted accounting
principles and include all adjustments which, in the opinion
of management, are necessary to present fairly the
consolidated financial position of Audiovox Corporation and
subsidiaries (the "Company") as of February 28, 1997 and
November 30, 1996 and the results of operations and
consolidated statements of cash flows for the three month
periods ended February 28, 1997 and February 29, 1996.
Accounting policies adopted by the Company are identified in
Note 1 of the Notes to Consolidated Financial Statements
included in the Company's 1996 Annual Report filed on Form
10-K.
(2) The information furnished in this report reflects all
adjustments (which include only normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
statement of the results for the interim period. The interim
figures are not necessarily indicative of the results for the
year.
(3) The following is supplemental information relating to the
consolidated statements of cash flows:
Three Months Ended
February 28, February 29,
1997 1996
Cash paid during the period:
Interest (excluding bank
charges) $1,701 $ 950
Income taxes $2,783 $ 48
On February 9, 1996, the Company's 10.8% Series AA and 11.0%
Series BB Convertible Debentures matured. As of February 9,
1996, $1,100 of the Series BB Convertible Debentures converted
into 206,046 shares of Common Stock.
As of February 28, 1997, the Company recorded an unrealized
holding gain relating to available-for-sale marketable
securities, net of deferred taxes, of $13,320 as a separate
component of stockholders' equity.
The Company issued a credit of $1,250 on open accounts
receivable and issued 250,000 shares of its Class A Common
Stock, valued at five dollars per share, in anticipation of an
exchange for a 20% interest in Bliss-tel Company, Limited
(Bliss-tel).
(4) The Financial Accounting Standards Board has issued Statement
128, "Earnings per Share" (Statement 128). Statement 128
establishes standards for computing and presenting earnings
per share (EPS). The Statement simplifies the standards for
computing EPS and makes them comparable to international EPS
standards. The provisions of Statement 128 are effective for
financial statements issued for periods ending after December
1, 1997, including interim periods. The Statement does not
permit early application and requires restatement of all
prior-period EPS data presented. Adoption of Statement 128
will not effect the Company's consolidated financial position
or results of operations, however the impact on previously
report EPS data is currently unknown.
(5) The Company formed Audiovox Venezuela C.A. (Audiovox
Venezuela), an 80%-owned subsidiary, for the purpose of
expanding its international business. The Company made an
initial investment of $478 which was used by Audiovox
Venezuela to obtain certain licenses, permits and fixed
assets.
(6) The Company is in the process of purchasing a 20% equity
investment in Bliss-tel in exchange for 250,000 shares of the
Company's Class A Common Stock and a credit for open accounts
receivable of $1,250. The issuance of the common stock
resulted in an increase to additional paid in capital of
approximately $1,248. The investment in Bliss-tel will be
accounted for under the equity method of accounting.
(7) Subsequent to the first quarter of 1997, the Company formed
Audiovox Specialized Applications, LLC, a 50%-owned equity
investment, a consolidation of the Company's Heavy Duty Sound
division, ASA Electronics and Audiovox Specialty Markets Co.
The new company will market audio, video and security products
to the heavy truck, RV, van, limousine, bus, marine,
agricultural and aviation industries.
In connection with this investment, the Company entered into
a stock purchase agreement with the other investor (Investor)
in Audiovox Specialized Applications, LLC. The agreement
provides for the sale of 352,194 shares of Class A Common
Stock at $6.61 per share (aggregate proceeds of $2,328,002) by
the Company to the Investor. The transaction resulted in an
increase to additional paid-in-capital of $2,324,478. The
selling price of the shares are subject to adjustment in the
event the Investor sells shares during a 90 day period,
beginning with the effective date of the registration
statement filed with the Securities and Exchange Commission to
register such shares, at a loss. The adjustment to the
selling price will equal the loss incurred by the Investor up
to a maximum of 50% of the shares. In the event the Company
does make an adjustment to the shares, additional goodwill
will be recorded as the adjustment represents contingent
consideration.
(8) Receivable from vendor includes a $9,000 prepayment to TALK
for merchandise to be shipped during the second quarter of
1997.
(9) The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of the
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
AUDIOVOX CORPORATION
By:s/John J. Shalam
John J. Shalam
President and Chief
Executive Officer
Dated: July 8, 1997
By:s/Charles M. Stoehr
Charles M. Stoehr
Senior Vice President and
Chief Financial Officer
