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Audiovox Reports Fiscal 3rd-Qtr. Results; Reveals Klipsch Group Deal During CES

1/17/2011 12:01:00 AM Eastern
HAUPPAUGE, N.Y. — Audiovox reported higher sales but lower net income for its fiscal third quarter, ended Nov. 30, 2010.

Audiovox revealed its fiscal third quarter last week, after it announced on opening day of International CES that it intends to buy Klipsch Group, the home-speaker maker whose brands include Klipsch, Jamo, Mirage and Energy.

Net sales for the quarter were $163.2 million, an increase of 4.8 percent, compared with net sales of $155.7 million reported in the comparable year-ago period.

Net income for the quarter was $3.9 million as compared with net income of $12.6 million in the prior year’s fiscal third quarter. The fiscal 2010 third quarter included an income tax benefit of $9 million as compared with an income tax expense of $2 million recorded in the fiscal 2011 third quarter.

Operating income for the quarter was $5.4 million as compared with operating income of $3.1 million in the comparable year-ago period.

By category, electronics sales were $122.7 million for the 2011 fiscal third quarter as compared with $109.7 million in the prior year, an increase of 11.8 percent. Electronics sales were positively impacted by higher sales of mobile electronics products, particularly in automotive security and from new OEM programs, as well as from the company’s Invision acquisition. These increases were partially offset by declines in select retail categories.

Electronic sales represented 75.2 percent of net sales for the quarter, compared with 70.5 percent in the comparable prior-year period.

Accessory sales were $40.5 million for the quarter as compared with $45.9 million for the prior year’s quarter, a decrease of 11.9 percent. At the retail level, the accessories group continues to be impacted by slower sales for electronics products utilizing the company’s accessories, partially offset by modest increases in select remote control lines and in the company’s international operations, Audiovox said.

Accessory sales represented 24.8 percent of net sales for the quarter as compared with 29.5 percent in the comparable prior-year period.

Concerning the Klipsch deal, Audiovox said it recently signed a non-binding term sheet to purchase all of the shares of Klipsch Group and its worldwide subsidiaries.

Audiovox chairman John Shalam told TWICE that a letter of intent to buy has been signed and that the parties are proceeding with due diligence.

The transaction is subject to the completion of due diligence, negotiations, and signing of definitive agreements and requisite approvals, an Audiovox statement said.

Audiovox said it expects to finance the Klipsch purchase through a combination of cash and a committed credit facility. Additional terms of the transaction were not disclosed. — Reporting by Joseph Palenchar and Steve Smith
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