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Audiovox: Klipsch Meeting Plan

Hauppauge, N.Y. – The main
integration of Klipsch and Audiovox is complete, said Audiovox president/CEO
Pat Lavelle.

Lavelle added that Klipsch met
its plan in its first full quarter as an Audiovox-owned company.

In a conference call with
investors, Lavelle again stressed that Audiovox is running Klipsch as a stand-alone
operation, given the different markets they serve. The “normal synergies that
we would get, where in many cases we would take out the complete back end of
the business, we are not doing that with Klipsch,” he said. Nonetheless, he
said, “we continue to look for cost savings in both our domestic and
international operations to drive profitability, things on the back end such as
warehousing, shipping, freight and G&A expenses.”

Likewise, the company has “no
plans of combining efforts on the part of Klipsch and the other Audiovox brands,”
except perhaps for Klipsch-branded OEM mobile audio products because Audiovox
has “good contacts, good relationships with customers.” He said Audiovox “may
look to develop a Klipsch audio program for OEM.”

Other opportunities for Klipsch
include expanded commercial-market sales and international sales, he said. He
pointed to “very good” opportunities that “present themselves for [Klipsch] to
grow with the commercial accounts they already have,” and he added, “We think
that we can expand beyond that.” The enhanced commercial effort is “going to
take some resources on our part in engineering and marketing,” he noted.

For Klipsch, international
markets also “have a very good promise for us,” Lavelle said, pointing in part
to the strength of the euro. “With the euro at $1.43, we are very competitive
in euros in Europe, and there’s a very good demand for our high-end products,”
he said. “The same is true as we look into China. As consumers gain additional
wealth in China, they’ve demonstrated a desire for high-end quality products,
and they’re not bashful about spending. We think that bodes well for our
business in China as well.”

In other comments about the
company’s first-quarter financial performance, Lavelle noted that, “like most
companies, we’ve been faced with the rising manufacturing costs from China.” As
a result, “to maintain profitability, over the last 30 to 60 days we announced
price increases pretty much across the board.”

In mobile electronics, first-quarter
domestic sales were up “slightly,” and the mobile OEM business “posted strong
gains driven by new programs with Ford and increased sales to Porsche,” Lavelle

In other OEM comments, he said
the company has been awarded a 2013 program for rear-seat entertainment for the
Nissan Pathfinder and Infiniti QX4, and Audiovox expects to ship its first
Android rear-seat entertainment system to Bentley in December.