Delaware
|
13-1964841
|
|
(State
or other jurisdiction of incorporation)
|
(I.R.S.
Employer Identification No.)
|
180
Marcus Blvd., Hauppauge, New York
|
11788
|
|
(Address
of principal executive officers)
|
(Zip
Code)
|
Registrant's
telephone number, including area code:
|
(631)
231-7750
|
Large
accelerated filer _____
|
Accelerated
filer X
|
Non-accelerated
filer _____
|
Smaller
reporting company _____
|
Class
|
As of July 9, 2008
|
Class
A Common Stock
|
20,593,660
Shares
|
Class
B Common Stock
|
2,260,954
Shares
|
Table
of Contents
|
||
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1
|
FINANCIAL
STATEMENTS (unaudited)
|
|
Consolidated
Balance Sheets at May 31, 2008 and February 29, 2008
|
3
|
|
Consolidated
Statements of Operations for the Three Months Ended May 31, 2008 and
2007
|
4
|
|
Consolidated
Statements of Cash Flows for the Three Months Ended May 31, 2008 and
2007
|
5
|
|
Notes
to Consolidated Financial Statements
|
6
|
|
Item
2
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
20
|
Item
3
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
28
|
Item
4
|
CONTROLS
AND PROCEDURES
|
28
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1
|
LEGAL
PROCEEDINGS
|
29
|
Item
1A
|
RISK
FACTORS
|
29
|
Item
2
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
29
|
Item
6
|
EXHIBITS
|
30
|
SIGNATURES
|
31
|
May
31,
|
February
29,
|
|||||||
2008
|
2008
|
|||||||
Assets
|
(unaudited)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 69,970 | $ | 39,341 | ||||
Accounts
receivable, net
|
101,746 | 112,688 | ||||||
Inventory
|
146,456 | 155,748 | ||||||
Receivables
from vendors
|
21,823 | 29,358 | ||||||
Prepaid
expenses and other current assets
|
12,864 | 13,780 | ||||||
Deferred
income taxes
|
7,135 | 7,135 | ||||||
Total
current assets
|
359,994 | 358,050 | ||||||
Investment
securities
|
12,771 | 15,033 | ||||||
Equity
investments
|
13,791 | 13,222 | ||||||
Property,
plant and equipment, net
|
22,010 | 21,550 | ||||||
Goodwill
|
23,427 | 23,427 | ||||||
Intangible
assets
|
100,773 | 101,008 | ||||||
Other
assets
|
1,092 | 746 | ||||||
Total
assets
|
$ | 533,858 | $ | 533,036 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 34,194 | $ | 24,433 | ||||
Accrued
expenses and other current liabilities
|
31,270 | 38,575 | ||||||
Income
taxes payable
|
3,290 | 5,335 | ||||||
Accrued
sales incentives
|
11,436 | 10,768 | ||||||
Bank
obligations
|
1,881 | 3,070 | ||||||
Current
portion of long-term debt
|
1,634 | 82 | ||||||
Total
current liabilities
|
83,705 | 82,263 | ||||||
Long-term
debt
|
8,100 | 1,621 | ||||||
Capital
lease obligation
|
5,590 | 5,607 | ||||||
Deferred
compensation
|
4,833 | 4,406 | ||||||
Other
tax liabilities
|
4,740 | 4,566 | ||||||
Deferred
tax liabilities
|
5,123 | 6,057 | ||||||
Other
long term liabilities (see Note 8)
|
4,910 | 5,003 | ||||||
Total
liabilities
|
117,001 | 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, 22,414,212 shares issued,
20,593,660 shares outstanding
|
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
|
274,282 | 274,282 | ||||||
Retained
earnings
|
157,319 | 162,542 | ||||||
Accumulated
other comprehensive income
|
3,414 | 4,847 | ||||||
Treasury
stock, at cost, 1,820,552 shares of Class A common stock
|
(18,404 | ) | (18,404 | ) | ||||
Total
stockholders' equity
|
416,857 | 423,513 | ||||||
Total
liabilities and stockholders' equity
|
$ | 533,858 | $ | 533,036 |
2008
|
2007
|
|||||||
Net
sales
|
$ | 144,583 | $ | 128,254 | ||||
Cost
of sales
|
122,068 | 105,065 | ||||||
Gross
profit
|
22,515 | 23,189 | ||||||
Operating
expenses:
|
||||||||
Selling
|
9,951 | 8,797 | ||||||
General
and administrative
|
17,649 | 13,699 | ||||||
Engineering
and technical support
|
2,804 | 2,262 | ||||||
Total
operating expenses
|
30,404 | 24,758 | ||||||
Operating
loss
|
(7,889 | ) | (1,569 | ) | ||||
Other
income (expense):
|
||||||||
Interest
and bank charges
|
(476 | ) | (667 | ) | ||||
Equity
in income of equity investees
|
900 | 942 | ||||||
Other,
net
|
296 | 1,467 | ||||||
Total
other income
|
720 | 1,742 | ||||||
(Loss)
income from continuing operations before income taxes
|
(7,169 | ) | 173 | |||||
Income
tax (benefit) expense
|
(1,946 | ) | 52 | |||||
Net
(loss) income from continuing operations
|
(5,223 | ) | 121 | |||||
Net
income from discontinued operations, net of tax
|
- | 2,111 | ||||||
Net (loss)
income
|
$ | (5,223 | ) | $ | 2,232 | |||
Net
(loss) income per common share (basic):
|
||||||||
From
continuing operations
|
$ | (0.23 | ) | $ | 0.01 | |||
From
discontinued operations
|
$ | - | $ | 0.09 | ||||
Net (loss)
income per common share (basic)
|
$ | (0.23 | ) | $ | 0.10 | |||
Net
(loss) income per common share (diluted):
|
||||||||
From
continuing operations
|
$ | (0.23 | ) | $ | 0.01 | |||
From
discontinued operations
|
$ | - | $ | 0.09 | ||||
Net
(loss) income per common share (diluted)
|
$ | (0.23 | ) | $ | 0.10 | |||
Weighted-average
common shares outstanding (basic)
|
22,854,614 | 22,775,052 | ||||||
Weighted-average
common shares outstanding (diluted)
|
22,854,614 | 22,847,113 |
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
(loss) income
|
$ | (5,223 | ) | $ | 2,232 | |||
Net
(income) from discontinued operations
|
- | (2,111 | ) | |||||
Net
(loss) income from continuing operations
|
(5,223 | ) | 121 | |||||
Adjustments
to reconcile net (loss) income to net cash provided by (used in)
continuing operating activities:
|
||||||||
Depreciation
and amortization
|
1,870 | 1,167 | ||||||
Bad
debt expense
|
54 | 110 | ||||||
Equity
in income of equity investees
|
(900 | ) | (942 | ) | ||||
Deferred
income tax benefit
|
(62 | ) | - | |||||
Non-cash
compensation adjustment
|
183 | (998 | ) | |||||
Tax
benefit on stock options exercised
|
- | (865 | ) | |||||
Loss
on sale of property, plant and equipment
|
(6 | ) | - | |||||
Changes
in operating assets and liabilities (net of assets and liabilities
acquired):
|
||||||||
Accounts
receivable
|
11,243 | (21,166 | ) | |||||
Inventory
|
9,539 | (9,133 | ) | |||||
Receivables
from vendors
|
7,518 | (1,778 | ) | |||||
Prepaid
expenses and other
|
653 | (901 | ) | |||||
Investment
securities-trading
|
(413 | ) | (910 | ) | ||||
Accounts
payable, accrued expenses, accrued sales incentives and other current
liabilities
|
3,165 | 7,359 | ||||||
Income
taxes payable
|
(1,913 | ) | 839 | |||||
Net
cash provided by (used in) operating activities
|
25,708 | (27,097 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property, plant and equipment
|
(1,868 | ) | (2,401 | ) | ||||
Proceeds
from sale of property, plant and equipment
|
53 | 66 | ||||||
Proceeds
from distribution from an equity investee
|
331 | 257 | ||||||
Purchase
of short-term investments
|
- | (5,600 | ) | |||||
Proceeds
from sale of short-term investments
|
- | 37,750 | ||||||
Purchase
adjustment of acquired businesses
|
(249 | ) | (6,699 | ) | ||||
Net
cash (used in) provided by investing activities
|
(1,733 | ) | 23,373 | |||||
Cash
flows from financing activities:
|
||||||||
Borrowings
from bank obligations
|
6,277 | 662 | ||||||
Repayments
on bank obligations
|
298 | - | ||||||
Principal
payments on capital lease obligation
|
(17 | ) | (16 | ) | ||||
Proceeds
from exercise of stock options
|
- | 2,546 | ||||||
Principal
payments on debt
|
- | (478 | ) | |||||
Tax
benefit on stock options exercised
|
- | 865 | ||||||
Net
cash provided by financing activities
|
6,558 | 3,579 | ||||||
Effect
of exchange rate changes on cash
|
96 | 133 | ||||||
Net
increase (decrease) in cash and cash equivalents
|
30,629 | (12 | ) | |||||
Cash
and cash equivalents at beginning of period
|
39,341 | 15,473 | ||||||
Cash
and cash equivalents at end of period
|
$ | 69,970 | $ | 15,461 |
Weighted
|
||||||||||||
Weighted
|
Average
|
|||||||||||
Average
|
Remaining
|
|||||||||||
Number of
|
Exercise
|
Contractual
|
||||||||||
Shares
|
Price
|
Life
|
||||||||||
Outstanding
and exercisable at February 29, 2008
|
1,567,036 | $ | 13.96 | |||||||||
Granted
|
- | - | ||||||||||
Exercised
|
- | - | ||||||||||
Forfeited/expired
|
(11,250 | ) | 12.28 | |||||||||
Outstanding
and exercisable at May 31, 2008
|
1,555,786 | $ | 13.97 | 1.39 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Weighted-average
common shares outstanding (basic)
|
22,854,614 | 22,775,052 | ||||||
Effect
of dilutive securities:
|
||||||||
Stock
options and warrants
|
- | 72,061 | ||||||
Weighted-average
common shares and potential common shares outstanding
(diluted)
|
22,854,614 | 22,847,113 |
·
|
Level
1 – Quoted prices in active markets that are unadjusted and accessible at
the measurement date for identical, unrestricted assets or
liabilities.
|
·
|
Level
2 – Quoted prices for identical assets and liabilities in markets that are
not active, quoted prices for similar assets and liabilities in active
markets or financial instruments for which significant inputs are
observable, either directly or
indirectly.
|
·
|
Level
3 – Prices or valuations that require inputs that are both significant to
the fair value measurement and
unobservable.
|
Fair
Value Measurements at Reporting Date Using
|
||||||||||||||||
Quoted
|
||||||||||||||||
Prices
in
|
||||||||||||||||
Active
|
||||||||||||||||
Markets
for
|
Significant
|
|||||||||||||||
Identical
|
Other
|
Significant
|
||||||||||||||
Assets
and
|
Observable
|
Unobservable
|
||||||||||||||
Liabilities
|
Inputs
|
Inputs
|
||||||||||||||
(Level
1)
|
(Level
2)
|
(Level
3)
|
||||||||||||||
Cash
and cash equivalents:
|
||||||||||||||||
Cash
and money market funds
|
$ | 69,970 | $ | 69,970 | $ | - | $ | - | ||||||||
Long-term
investment securities:
|
||||||||||||||||
Trading
and available-for-sale marketable securities
|
8,113 | 8,113 | - | - | ||||||||||||
Auction
rate security
|
3,658 | - | - | 3,658 | ||||||||||||
Other
long-term investments
|
1,000 | - | 1,000 | - | ||||||||||||
Total long-term
investment securities
|
12,771 | 8,113 | 1,000 | 3,658 | ||||||||||||
Total
assets measured at fair value
|
$ | 82,741 | $ | 78,083 | $ | 1,000 | $ | 3,658 |
Fair
Value Measurements Using Significant Unobservable Inputs
|
||||
(Level
3)
|
||||
Balance
at February 29, 2008
|
$ | - | ||
Auction
rate security transfered to Level 3
|
4,550 | |||
Total
unrealized loss included in accumulated other comprehensive
income
|
(892 | ) | ||
Balance
at May 31, 2008
|
$ | 3,658 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Net
(loss) income
|
$ | (5,223 | ) | $ | 2,232 | |||
Other
comprehensive income:
|
||||||||
Foreign
currency translation adjustments
|
199 | 885 | ||||||
Unrealized
holding loss on available-for-sale investment securities arising during
the period, net of tax
|
(1,632 | ) | (9 | ) | ||||
Other
comprehensive (loss) income, net of tax
|
(1,433 | ) | 876 | |||||
Total
comprehensive (loss) income
|
$ | (6,656 | ) | $ | 3,108 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Cash
paid during the period:
|
||||||||
Interest
(excluding bank charges)
|
$ | 417 | $ | 615 | ||||
Income
taxes (net of refunds)
|
$ | 244 | $ | 357 |
Purchase
Price (net of cash acquired)
|
$ | 20,373 | ||
Final
working capital credit
|
(317 | ) | ||
Acquisition
related costs
|
1,094 | |||
Total
Purchase Price
|
$ | 21,150 |
Assets
acquired:
|
||||
Accounts
receivable, net
|
$ | 3,949 | ||
Inventory
|
4,967 | |||
Prepaid
expenses and other current assets
|
137 | |||
Property,
plant and equipment, net
|
103 | |||
Other
long-term assets
|
240 | |||
Trademarks
and other intangible assets
|
15,666 | |||
Goodwill
|
5,913 | |||
Total
assets acquired
|
$ | 30,975 | ||
Liabilities
assumed:
|
||||
Accounts
payable
|
$ | 3,689 | ||
Accrued
expenses and other liabilities
|
467 | |||
Deferred
tax liabilities
|
5,637 | |||
Other
liabilities
|
32 | |||
Total
liabilities assumed
|
9,825 | |||
Total
purchase price
|
$ | 21,150 |
Purchase
price
|
$ | 13,188 | ||
Net
asset payment
|
11,093 | |||
Acquisition
related costs
|
655 | |||
24,936 | ||||
Less:
Multimedia license fee
|
(10,000 | ) | ||
Total
net purchase price
|
$ | 14,936 |
Assets
acquired:
|
||||
Inventory
|
$ | 21,547 | ||
Tooling
|
102 | |||
Trademarks
and other intangible assets (less license fee)
|
12,005 | |||
Total
assets acquired
|
$ | 33,654 | ||
Liabilities
assumed:
|
||||
Warranty
accrual
|
$ | 12,848 | ||
Other
liabilities acquired
|
5,870 | |||
Total
liabilities assumed
|
18,718 | |||
Total
purchase price
|
$ | 14,936 |
Three
Months Ended
|
||||
May
31, 2007
|
||||
Net
sales
|
$ | 254,494 | ||
Net
loss
|
(7,650 | ) | ||
Net
loss per share-diluted
|
$ | (0.33 | ) |
Gross
|
Total
Net
|
|||||||||||
Carrying
|
Accumulated
|
Book
|
||||||||||
Value
|
Amortization
|
Value
|
||||||||||
Trademarks/Tradenames
not subject to amortization
|
$ | 85,401 | $ | - | $ | 85,401 | ||||||
Customer
relationships subject to amortization (5-15 years)
|
15,886 | 1,106 | 14,780 | |||||||||
Patents
subject to amortization (5-10 years)
|
695 | 434 | 261 | |||||||||
Contract
subject to amortization (5 years)
|
1,104 | 773 | 331 | |||||||||
Total
|
$ | 103,086 | $ | 2,313 | $ | 100,773 |
Gross
|
Total
Net
|
|||||||||||
Carrying
|
Accumulated
|
Book
|
||||||||||
Value
|
Amortization
|
Value
|
||||||||||
Trademarks/Tradenames
not subject to amortization
|
$ | 86,368 | $ | - | $ | 86,368 | ||||||
Customer
relationships subject to amortization (5-15 years)
|
14,685 | 741 | 13,944 | |||||||||
Patents
subject to amortization (5-10 years)
|
695 | 385 | 310 | |||||||||
Contract
subject to amortization (5 years)
|
1,104 | 718 | 386 | |||||||||
Total
|
$ | 102,852 | $ | 1,844 | $ | 101,008 |
May
31,
|
February
29,
|
|||||||
2008
|
2008
|
|||||||
Current
assets
|
$ | 28,283 | $ | 26,344 | ||||
Non-current
assets
|
4,784 | 4,710 | ||||||
Current
liabilities
|
5,485 | 4,611 | ||||||
Members'
equity
|
27,582 | 26,443 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Net
sales
|
$ | 18,835 | $ | 19,506 | ||||
Gross
profit
|
5,279 | 5,304 | ||||||
Operating
income
|
1,611 | 1,646 | ||||||
Net
income
|
1,801 | 1,884 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Opening
balance
|
$ | 10,768 | $ | 7,410 | ||||
Accruals
|
5,816 | 7,714 | * | |||||
Payments
and credits
|
(4,315 | ) | (3,323 | ) | ||||
Reversals
for unearned sales incentive
|
(45 | ) | (347 | ) | ||||
Reversals
for unclaimed sales incentives
|
(788 | ) | (1,016 | ) | ||||
Ending
balance
|
$ | 11,436 | $ | 10,438 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Opening
balance
|
$ | 17,002 | $ | 9,586 | ||||
Liabilities
accrued for warranties issued during the period
|
2,552 | 2,691 | ||||||
Warranty
claims paid during the period (includes the acquired warranty
liabilities)
|
(8,636 | ) | (2,953 | ) | ||||
Ending
balance
|
$ | 10,918 | $ | 9,324 |
May
31,
|
February
28,
|
|||||||
2008
|
2008
|
|||||||
Bank Obligations
|
||||||||
Domestic
bank obligations (a)
|
$ | - | $ | - | ||||
Euro
asset-based lending obligation (b)
|
1,881 | 3,070 | ||||||
Total
bank obligations
|
$ | 1,881 | $ | 3,070 | ||||
Debt
|
||||||||
Euro
term loan agreement (c)
|
$ | 7,816 | $ | - | ||||
Oehlbach
(d)
|
864 | 850 | ||||||
Other
(e)
|
1,054 | 853 | ||||||
Total
debt
|
$ | 9,734 | $ | 1,703 |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Interest
income
|
$ | 453 | $ | 1,411 | ||||
Rental
income
|
184 | 138 | ||||||
Miscellaneous
|
(341 | ) | (82 | ) | ||||
Total
Other, net
|
$ | 296 | $ | 1,467 |
|
·
|
mobile
multi-media video products, including in-dash, overhead, headrest and
portable mobile video systems,
|
|
·
|
autosound
products including radios, speakers, amplifiers and CD
changers,
|
|
·
|
satellite
radios including plug and play models and direct connect
models,
|
|
·
|
automotive
security and remote start systems,
|
|
·
|
automotive
power accessories,
|
|
·
|
car
to car portable navigation systems,
|
|
·
|
rear
observation and collision avoidance
systems,
|
|
·
|
Liquid
Crystal Display (“LCD”) flat panel
televisions,
|
|
·
|
home
and portable stereos,
|
|
·
|
two-way
radios,
|
|
·
|
digital
multi-media products such as personal video recorders and MP3
products,
|
|
·
|
camcorders,
|
|
·
|
clock-radios,
|
|
·
|
digital
voice recorders,
|
|
·
|
home
speaker systems,
|
|
·
|
portable
DVD players, and
|
|
·
|
digital
picture frames.
|
|
·
|
High-Definition
Television (“HDTV”) Antennas,
|
|
·
|
Wireless
Fidelity (“WiFi”) Antennas,
|
|
·
|
High-Definition
Multimedia Interface (“HDMI”)
accessories,
|
|
·
|
home
electronic accessories such as
cabling,
|
|
·
|
other
connectivity products,
|
|
·
|
power
cords,
|
|
·
|
performance
enhancing electronics,
|
|
·
|
TV
universal remotes,
|
|
·
|
flat
panel TV mounting systems,
|
|
·
|
iPod
specialized products,
|
|
·
|
wireless
headphones,
|
|
·
|
rechargeable
battery backups (UPS) for camcorders, cordless phones and portable video
(DVD) batteries and accessories,
and
|
|
·
|
power
supply systems.
|
Three
Months Ended May 31,
|
$
|
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Electronics
|
$ | 113,719 | $ | 94,984 | $ | 18,735 | 19.7 | % | ||||||||
Accessories
|
30,864 | 33,270 | (2,406 | ) | (7.2 | ) | ||||||||||
Total
net sales
|
$ | 144,583 | $ | 128,254 | $ | 16,329 | 12.7 | % |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Gross
profit
|
$ | 22,515 | $ | 23,189 | ||||
Gross
margins
|
15.6 | % | 18.1 | % |
Three
Months Ended May 31,
|
$ | % | ||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling
|
$ | 9,951 | $ | 8,797 | $ | 1,154 | 13.1 | % | ||||||||
General
and administrative
|
17,649 | 13,699 | 3,950 | 28.8 | ||||||||||||
Engineering
and technical support
|
2,804 | 2,262 | 542 | 24.0 | ||||||||||||
Total
operating expenses
|
$ | 30,404 | $ | 24,758 | $ | 5,646 | 22.8 | % | ||||||||
Operating
loss
|
$ | (7,889 | ) | $ | (1,569 | ) | $ | (6,320 | ) | 402.8 | % |
Three
Months Ended May 31,
|
$ | % | ||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Core
operating expenses
|
$ | 19,493 | $ | 19,247 | $ | 246 | 1.3 | % | ||||||||
Operating
expenses from acquired businesses
|
10,911 | 5,511 | 5,400 | 98.0 | ||||||||||||
Total
operating expenses
|
$ | 30,404 | $ | 24,758 | $ | 5,646 | 22.8 | % |
·
|
$6,391
of expenses for the three months ended May 31, 2008 for the recently
acquired operations of Thomson Accessory, Oehlbach, Incaar, Technuity and
Thomson Audio/Video operations compared to $2,913 for the Thomson
Accessory and Oehlbach operations in the prior year
period,
|
·
|
$569
increase in salaries and related payroll taxes and benefits due to a $998
benefit recorded in the prior year related to a call/put option previously
granted to certain employees as a result of a reduction in the call/put
option liability and general increases to fiscal
wages,
|
·
|
$305
increase in professional fees due to an increase in legal and consulting
fees,
|
·
|
$199
increase in depreciation and amortization due to an increase in capital
expenditures and amortizable intangibles as a result of acquisitions and
investments in new operating
systems.
|
Three
Months Ended May 31,
|
$ | % | ||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Interest
and bank charges
|
$ | (476 | ) | $ | (667 | ) | $ | 191 | (28.6 | ) % | ||||||
Equity
in income of equity investees
|
900 | 942 | (42 | ) | (4.5 | ) | ||||||||||
Other,
net
|
296 | 1,467 | (1,171 | ) | (79.8 | ) | ||||||||||
Total
other income
|
$ | 720 | $ | 1,742 | $ | (1,022 | ) | (58.7 | ) % |
Three
Months Ended May 31,
|
||||||||
2008
|
2007
|
|||||||
Operating
loss
|
$ | (7,889 | ) | $ | (1,569 | ) | ||
Other
income, net
|
720 | 1,742 | ||||||
(Loss)
income from continuing operations before income taxes
|
(7,169 | ) | 173 | |||||
Income
tax (benefit) expense
|
(1,946 | ) | 52 | |||||
Net
(loss) income from continuing operations
|
(5,223 | ) | 121 | |||||
Net
income from discontinued operations, net of tax
|
- | 2,111 | ||||||
Net
(loss) income
|
$ | (5,223 | ) | $ | 2,232 | |||
Net
(loss) income per common share:
|
||||||||
Basic
|
$ | (0.23 | ) | $ | 0.10 | |||
Diluted
|
$ | (0.23 | ) | $ | 0.10 |
·
|
Cash
flows from operating activities for the three months ended May 31,
2008 were
impacted by an decrease in accounts receivable primarily due to the timing
of collections and improved accounts receivable
turnover. Accounts receivable turnover approximated 5.5 during
the three months ended May 31, 2008 compared to 5.3 in the prior
year.
|
·
|
Cash
flows from operations were impacted by a decrease in our inventory
balances due to decreased purchases in connection with our fiscal 2009
operating cycles. Inventory turnover approximated 3.7 during
the three months ended May 31, 2008 compared to 3.8 in the prior
year.
|
·
|
In
addition, cash flows from operating activities for the three months ended
May 31, 2008 were favorably
impacted by a decrease in receivables from vendors due to the collection
of certain balances from certain
vendors.
|
Payments
Due by Period
|
||||||||||||||||||||
Less
than
|
1-3 | 4-5 |
After
|
|||||||||||||||||
Contractual
Cash Obligations
|
Total
|
1
Year
|
Years
|
Years
|
5
Years
|
|||||||||||||||
Capital
lease obligation (1)
|
$ | 11,319 | $ | 522 | $ | 1,043 | $ | 1,121 | $ | 8,633 | ||||||||||
Operating
leases (2)
|
33,517 | 4,521 | 6,981 | 5,521 | 16,494 | |||||||||||||||
Total
contractual cash obligations
|
$ | 44,836 | $ | 5,043 | $ | 8,024 | $ | 6,642 | $ | 25,127 |
Amount
of Commitment Expiration per period
|
||||||||||||||||||||
Total
|
||||||||||||||||||||
Amounts
|
Less
than
|
1-3 | 4-5 |
After
|
||||||||||||||||
Other
Commercial Commitments
|
Committed
|
1
Year
|
Years
|
Years
|
5
years
|
|||||||||||||||
Bank
obligations (3)
|
$ | 1,881 | $ | 1,881 | $ | - | $ | - | $ | - | ||||||||||
Stand-by
letters of credit (4)
|
2,413 | 2,413 | - | - | - | |||||||||||||||
Commercial
letters of credit (4)
|
2,753 | 2,753 | - | - | - | |||||||||||||||
Debt
(5)
|
9,734 | 1,635 | 4,755 | 3,344 | - | |||||||||||||||
Contingent
earn-out payments (6)
|
5,800 | 890 | 3,958 | 952 | - | |||||||||||||||
Unconditional
purchase obligations (7)
|
94,464 | 94,464 | - | - | - | |||||||||||||||
Total
commercial commitments
|
$ | 117,045 | $ | 104,036 | $ | 8,713 | $ | 4,296 | $ | - |
ITEM
3
|
QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
ITEM
4.
|
CONTROLS AND
PROCEDURES
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
ITEM
1A.
|
RISK
FACTORS
|
ITEM
2.
|
UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF
PROCEEDS
|
ITEM
6.
|
EXHIBITS
|
Exhibit Number
|
Description
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a)
of the Securities Exchange Act of 1934 (filed
herewith).
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a)
of the Securities Exchange Act of 1934 (filed
herewith).
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Audiovox Corporation
(the “Company”);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
designed
such internal controls over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the three months ended May 31, 2008) that has materiality
affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
all
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of Audiovox Corporation
(the “Company”);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
b)
|
Designed
such internal controls over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the three months ended May 31, 2008) that has materiality
affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting;
and
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
(1)
|
The
Report fully complies with Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
(1)
|
The
Report fully complies with Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|