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Audiovox Completes RCA-Brand Acquisition

Hauppauge, N.Y. – Audiovox completed its acquisition of Thomson’s Consumer Electronics Audio Video business outside of Europe on Dec. 31, the company announced today.

The previously announced purchase price of $19.7 million, plus a net asset payment and five-year fee starting in 2010, includes the worldwide rights to the RCA brand for audio and video product, excluding TVs and select other product categories, Audiovox said.

The acquired AV business include DVD players and recorders, portable DVD players, GPS devices, HD and Internet Radios, standalone ATSC terrestrial television converters, clock radios, MP3 and MP4 players, digital cameras, camcorders and other product that falls within the audio/video field of use.

Of those products, Audiovox itself will market RCA-branded MP3 and MP4 players, digital cameras, camcorders and clock radios. The company is entering a license agreement with Chinese manufacturer Multimedia Device Ltd. to market the remaining product categories acquired in the transaction.

In total, Audiovox is acquiring about $400 million in sales from Thomson, but only $150 million of that is in the product categories that Audiovox plans to market itself.

In January 2007, Audiovox acquired Thomson’s America’s consumer electronics accessory business, which included the rights to the RCA brand for consumer electronics accessories. That acquisition also included the Recoton, Spikemaster, Ambico and Discwasher brands for use on any products. The purchase also included the Jensen, Advent, Acoustic Research and Road Gear brands for accessory products that complemented the 2003 purchase of those brands for electronics products.

“Our goal with this (RCA audio-video) acquisition was to further control and consolidate the RCA brand and prevent fractionalization at the retail level,” said Patrick Lavelle, Audiovox president and CEO. “We believe this acquisition will add approximately $150 million in sales and a revenue stream with an up front $10 million payment. In addition, it will allow us to spread fixed overhead over a higher sales base, which will further reduce OPEX percentage, since the acquired overhead will be limited.”

Audiovox plans to establish an Audiovox Mexico subsidiary utilizing the former Thomson facility there, “giving Audiovox a presence in that growing market and allowing us to expand the entire Audiovox line,” he added.

Within the past year, he noted, Audiovox made five acquisitions that should generate about $300-$350 million in sales, but the acquisitions cost only about $100 million. “We believe we have purchased wisely and that these acquisitions should lead to improved operating and financial performance in our next fiscal year.”

The company expects to complete “much” of the integration of Thomson assets into its Consumer Electronics Group by May 31.