LAKE MARY, FLA. -Focusing on higher-margin and better performing audio and accessories product lines, Recoton Corp. said its year-end and fourth-quarter financial results were highlighted by improved earnings in these two product segments. The company also reported increased operating margins in 2000, despite lower total revenue.
Recoton's audio segment contributed about $17.3 million in earnings before interest and taxes (EBIT) during 2000, compared with an EBIT loss of $5.3 million in 1999. The company's accessories segment contributed nearly $30.8 million of EBIT during 2000, a nearly fourfold increase from the $7.6 million in EBIT reported the previous year.
"The turnaround experienced by these two businesses and their importance to Recoton's overall results and future strategy cannot be stressed enough," said president/CEO Bob Borchardt.
At the same time, Recoton's video game segment incurred an EBIT loss of $13.1 million during 2000, compared with an EBIT gain of $9.3 million in 1999.
Sales of accessories reached $231.7 million for the year ended Dec. 31, about a 4 percent jump, compared with $222.5 million in 1999.
Sales of audio products hit $240 million in 2000, about a 6 percent drop from the $254.9 million recorded a year earlier.
Sales in the gaming segment were $177.6 million, off about 31 percent from the $232.9 million reported in 1999. This was due to the video game market transitioning to new game platforms, while suffering from the initial launch shortages of the Sony PlayStation2 video game platform, said Recoton. The confluence of these factors caused consumers to delay purchases of Recoton's InterAct line of compatible accessory products, the company said.
Concerning InterAct, Recoton and Microsoft have signed a licensing agreement for the manufacturing and distribution of licensed third-party gaming accessories for the Xbox console. (More on this agreement in next week's issue.)
Recoton reported overall net income for the fourth quarter, ended Dec. 31, of $2.5 million, down about 68 percent from the $7.9 million recorded in the year-ago three months. Excluding an extraordinary charge, Recoton said net income for the fourth quarter would have been $5.5 million.
Overall net sales in the fourth quarter were $209.6 million, off about 16 percent, compared with $250.4 million in the same period the previous year.
The company reduced its loss for the 12 months to $4.8 million, down from a $28 million loss in 1999. Excluding the extraordinary charge, the net loss for 2000 would have been $1.9 million. Net sales for the year dropped to $649.3 million, nearly 9 percent, compared with $710.3 million in 1999.
Operating income for the fourth quarter was $18.3 million, about 3 percent higher, compared with $17.8 million in the year-ago quarter. Operating income for the 12 months was $36.3 million, compared with $10.1 million in 1999.
Looking ahead, Borchardt said Recoton's 900MHz wireless headphones that currently are being sold on an OEM basis will be available at retail under the Advent and Jensen brands.