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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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