Delaware
|
13-1964841
|
|
(State
or other jurisdiction of incorporation)
|
(I.R.S.
Employer Identification No.)
|
180
Marcus Blvd., Hauppauge, New York
|
11788
|
|
(Address
of principal executive officers)
|
(Zip
Code)
|
Large
accelerated filer _____
|
Accelerated
filer X
|
Non-accelerated
filer _____
|
Smaller
reporting company _____
|
Class
|
As
of January 8, 2008
|
Class
A Common Stock
|
20,604,440
Shares
|
Class
B Common Stock
|
2,260,954
Shares
|
Table
of Contents
|
||
Page
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1
|
FINANCIAL
STATEMENTS (unaudited)
|
|
Consolidated
Balance Sheets at November 30, 2008 and February 29, 2008
|
3
|
|
Consolidated
Statements of Operations for the Three and Nine Months Ended November 30,
2008 and 2007
|
4
|
|
Consolidated
Statements of Cash Flows for the Nine Months Ended November 30, 2008 and
2007
|
5
|
|
Notes
to Consolidated Financial Statements
|
6
|
|
Item
2
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
21
|
Item
3
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
32
|
Item
4
|
CONTROLS
AND PROCEDURES
|
32
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1
|
LEGAL
PROCEEDINGS
|
33
|
Item
1A
|
RISK
FACTORS
|
33
|
Item
2
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
33
|
Item
6
|
EXHIBITS
|
34
|
SIGNATURES
|
35
|
November
30,
|
February
29,
|
|||||||
2008
|
2008
|
|||||||
Assets
|
(unaudited)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 13,925 | $ | 39,341 | ||||
Accounts
receivable, net
|
159,594 | 112,688 | ||||||
Inventory
|
149,321 | 155,748 | ||||||
Receivables
from vendors
|
20,618 | 29,358 | ||||||
Prepaid
expenses and other current assets
|
12,585 | 13,780 | ||||||
Deferred
income taxes
|
7,198 | 7,135 | ||||||
Total
current assets
|
363,241 | 358,050 | ||||||
Investment
securities
|
8,559 | 15,033 | ||||||
Equity
investments
|
13,068 | 13,222 | ||||||
Property,
plant and equipment, net
|
20,615 | 21,550 | ||||||
Goodwill
|
29,098 | 23,427 | ||||||
Intangible
assets
|
93,797 | 101,008 | ||||||
Deferred
income taxes
|
2,128 | - | ||||||
Other
assets
|
1,659 | 746 | ||||||
Total
assets
|
$ | 532,165 | $ | 533,036 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 43,014 | $ | 24,433 | ||||
Accrued
expenses and other current liabilities
|
34,728 | 38,575 | ||||||
Income
taxes payable
|
141 | 5,335 | ||||||
Accrued
sales incentives
|
12,633 | 10,768 | ||||||
Bank
obligations
|
2,018 | 3,070 | ||||||
Current
portion of long-term debt
|
1,294 | 82 | ||||||
Total
current liabilities
|
93,828 | 82,263 | ||||||
Long-term
debt
|
5,944 | 1,621 | ||||||
Capital
lease obligation
|
5,551 | 5,607 | ||||||
Deferred
compensation
|
3,312 | 4,406 | ||||||
Other
tax liabilities
|
4,741 | 4,566 | ||||||
Deferred
tax liabilities
|
- | 6,057 | ||||||
Other
long term liabilities
|
4,198 | 5,003 | ||||||
Total
liabilities
|
117,574 | 109,523 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
equity:
|
||||||||
Series
preferred stock, $.01 par value; 1,500,000 shares authorized, no shares
issued or outstanding
|
- | - | ||||||
Common
stock:
|
||||||||
Class
A, $.01 par value; 60,000,000 shares authorized, 22,424,212 and 22,414,212
shares issued, 20,604,460 and 20,593,660 shares outstanding at
November 30, 2008 and February 29, 2008, respectively
|
224 | 224 | ||||||
Class
B convertible, $.01 par value; 10,000,000 shares authorized, 2,260,954
shares issued and outstanding at November 30, 2008 and February 29, 2008,
respectively
|
22 | 22 | ||||||
Paid-in
capital
|
274,484 | 274,282 | ||||||
Retained
earnings
|
161,532 | 162,542 | ||||||
Accumulated
other comprehensive income
|
(3,275 | ) | 4,847 | |||||
Treasury
stock, at cost, 1,819,752 and 1,820,552 shares of Class A
common stock at November 30, 2008 and February 29, 2008,
respectively
|
(18,396 | ) | (18,404 | ) | ||||
Total
stockholders' equity
|
414,591 | 423,513 | ||||||
Total
liabilities and stockholders' equity
|
$ | 532,165 | $ | 533,036 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
sales
|
$ | 195,642 | $ | 183,563 | $ | 487,433 | $ | 460,085 | ||||||||
Cost
of sales
|
156,684 | 148,572 | 400,900 | 373,431 | ||||||||||||
Gross
profit
|
38,958 | 34,991 | 86,533 | 86,654 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling
|
8,370 | 9,828 | 26,598 | 26,534 | ||||||||||||
General
and administrative
|
16,500 | 16,948 | 52,004 | 45,153 | ||||||||||||
Engineering
and technical support
|
2,436 | 2,600 | 8,219 | 7,010 | ||||||||||||
Total
operating expenses
|
27,306 | 29,376 | 86,821 | 78,697 | ||||||||||||
Operating
income (loss)
|
11,652 | 5,615 | (288 | ) | 7,957 | |||||||||||
Other
income (expense):
|
||||||||||||||||
Interest
and bank charges
|
(453 | ) | (723 | ) | (1,439 | ) | (2,087 | ) | ||||||||
Equity
in income (share in losses) of equity investees
|
(484 | ) | 1,011 | 926 | 2,927 | |||||||||||
Other,
net
|
(10 | ) | 816 | 375 | 3,444 | |||||||||||
Total
other income (expense), net
|
(947 | ) | 1,104 | (138 | ) | 4,284 | ||||||||||
Income
(loss) from continuing operations before income taxes
|
10,705 | 6,719 | (426 | ) | 12,241 | |||||||||||
Income
tax expense
|
4,180 | 2,039 | 582 | 3,709 | ||||||||||||
Net
income (loss) from continuing operations
|
6,525 | 4,680 | (1,008 | ) | 8,532 | |||||||||||
Net
income from discontinued operations, net of tax
|
- | - | - | 2,111 | ||||||||||||
Net
income (loss)
|
$ | 6,525 | $ | 4,680 | $ | (1,008 | ) | $ | 10,643 | |||||||
Net
income (loss) per common share (basic):
|
||||||||||||||||
From
continuing operations
|
$ | 0.29 | $ | 0.20 | $ | (0.04 | ) | $ | 0.38 | |||||||
From
discontinued operations
|
- | - | - | 0.09 | ||||||||||||
Net
income (loss) per common share (basic)
|
$ | 0.29 | $ | 0.20 | $ | (0.04 | ) | $ | 0.47 | |||||||
Net
income (loss) per common share (diluted):
|
||||||||||||||||
From
continuing operations
|
$ | 0.29 | $ | 0.20 | $ | (0.04 | ) | $ | 0.38 | |||||||
From
discontinued operations
|
- | - | - | 0.09 | ||||||||||||
Net
income (loss) per common share (diluted)
|
$ | 0.29 | $ | 0.20 | $ | (0.04 | ) | $ | 0.47 | |||||||
Weighted-average
common shares outstanding (basic)
|
22,864,668 | 22,852,781 | 22,858,777 | 22,853,108 | ||||||||||||
Weighted-average
common shares outstanding (diluted)
|
22,867,235 | 22,857,355 | 22,858,777 | 22,880,263 |
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
(loss) income
|
$ | (1,008 | ) | $ | 10,643 | |||
Net
(income) from discontinued operations
|
- | (2,111 | ) | |||||
Net
(loss) income from continuing operations
|
(1,008 | ) | 8,532 | |||||
Adjustments
to reconcile net (loss) income to net cash used in continuing
operating activities:
|
||||||||
Depreciation
and amortization
|
5,324 | 3,782 | ||||||
Bad
debt expense
|
864 | 166 | ||||||
Equity
in income of equity investees
|
(926 | ) | (2,927 | ) | ||||
Deferred
income tax benefit
|
(186 | ) | - | |||||
Non-cash
compensation adjustment
|
526 | (212 | ) | |||||
Non-cash
stock based compensation and warrant expense
|
159 | 609 | ||||||
Gain
(loss) on disposal of property, plant and equipment
|
(8 | ) | 14 | |||||
Tax
benefit on stock options exercised
|
- | (1,020 | ) | |||||
Changes
in operating assets and liabilities (net of assets and liabilities
acquired):
|
||||||||
Accounts
receivable
|
(52,580 | ) | (62,762 | ) | ||||
Inventory
|
(2,153 | ) | (33,995 | ) | ||||
Receivables
from vendors
|
8,491 | (12,696 | ) | |||||
Prepaid
expenses and other
|
(1,018 | ) | 2,602 | |||||
Investment
securities-trading
|
1,104 | (1,042 | ) | |||||
Accounts
payable, accrued expenses, accrued sales incentives and other current
liabilities
|
19,441 | 2,947 | ||||||
Income
taxes payable
|
(4,741 | ) | 3,132 | |||||
Net
cash used in operating activities
|
(26,711 | ) | (92,870 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property, plant and equipment
|
(3,674 | ) | (5,772 | ) | ||||
Proceeds
from sale of property, plant and equipment
|
98 | 43 | ||||||
Proceeds
from distribution from an equity investee
|
1,080 | 1,215 | ||||||
Proceeds
from a liquidating distribution from an available-for-sale
security
|
- | 645 | ||||||
Purchase
of short-term investments
|
- | (13,775 | ) | |||||
Proceeds
from sale of short-term investments
|
- | 146,255 | ||||||
Purchase
of patents
|
(650 | ) | - | |||||
Purchase
of acquired businesses, less cash acquired
|
(440 | ) | (28,387 | ) | ||||
Net
cash (used in) provided by investing activities
|
(3,586 | ) | 100,224 | |||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from (repayments on) bank obligations
|
5,523 | (860 | ) | |||||
Principal
payments on capital lease obligation
|
(55 | ) | (50 | ) | ||||
Proceeds
from exercise of stock options and warrants
|
46 | 3,148 | ||||||
Principal
payments on debt
|
- | (4,240 | ) | |||||
Repurchase
of Class A common stock
|
- | (1,425 | ) | |||||
Tax
benefit on stock options exercised
|
- | 1,020 | ||||||
Other
financing activities
|
9 | - | ||||||
Net
cash provided by (used in) financing activities
|
5,523 | (2,407 | ) | |||||
Effect
of exchange rate changes on cash
|
(642 | ) | 249 | |||||
Net
(decrease) increase in cash and cash equivalents
|
(25,416 | ) | 5,196 | |||||
Cash
and cash equivalents at beginning of period
|
39,341 | 15,473 | ||||||
Cash
and cash equivalents at end of period
|
$ | 13,925 | $ | 20,669 |
Three
Months ended
|
Nine
Months ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Cost
of sales
|
$ | 3 | $ | 5 | $ | 3 | $ | 10 | ||||||||
Selling
expenses
|
36 | 64 | 36 | 128 | ||||||||||||
General
and administrative expenses
|
104 | 202 | 104 | 404 | ||||||||||||
Engineering
and technical support
|
3 | 5 | 3 | 10 | ||||||||||||
Stock-based
compensation expense before income tax benefit
|
$ | 146 | $ | 276 | $ | 146 | $ | 552 |
Three
and nine months ended November 30,
|
||||
2008
|
2007
|
|||
Dividend
yield
|
0%
|
0%
|
||
Weighted-average
expected volatility
|
47.0%
|
47.0%
|
||
Risk-free
interest rate
|
5.00%
|
4.57%
|
||
Expected
life of options/warrants (in years)
|
2.00
|
2.00
- 3.00
|
||
Fair
value of options/warrants granted
|
$1.44
|
$3.26
(3 year option)
|
||
$2.57
(2 year option)
|
Weighted
|
|||||||||
Weighted
|
Average
|
||||||||
Average
|
Remaining
|
||||||||
Exercise
|
Contractual
|
||||||||
Number
of Shares
|
Price
|
Term
|
|||||||
Outstanding
and exercisable at February 29, 2008
|
1,567,036 | $ | 13.96 | ||||||
Granted
|
214,750 | 4.83 | |||||||
Exercised
|
(10,000 | ) | 4.63 | ||||||
Forfeited/expired
|
(314,952 | ) | 13.29 | ||||||
Outstanding
and exercisable at November 30, 2008
|
1,456,834 | $ | 12.82 |
0.92
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Weighted-average
common shares outstanding
|
22,864,668 | 22,852,781 | 22,858,777 | 22,853,108 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Stock
options and warrants
|
2,567 | 4,574 | - | 27,155 | ||||||||||||
Weighted-average
common shares and potential common shares outstanding
|
22,867,235 | 22,857,355 | 22,858,777 | 22,880,263 |
·
|
Level
1 – Quoted prices in active markets that are unadjusted and accessible at
the measurement date for identical, unrestricted assets or
liabilities.
|
·
|
Level
2 – Quoted prices for identical assets and liabilities in markets that are
not active, quoted prices for similar assets and liabilities in active
markets or financial instruments for which significant inputs are
observable, either directly or
indirectly.
|
·
|
Level
3 – Prices or valuations that require inputs that are both significant to
the fair value measurement and
unobservable.
|
Fair
Value Measurements at Reporting Date Using
|
|||||||||||||
Quoted
|
|||||||||||||
Prices
in
|
|||||||||||||
Active
|
|||||||||||||
Markets
for
|
Significant
|
||||||||||||
Identical
|
Other
|
Significant
|
|||||||||||
Assets
and
|
Observable
|
Unobservable
|
|||||||||||
Liabilities
|
Inputs
|
Inputs
|
|||||||||||
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||||||||
Cash
and cash equivalents:
|
|||||||||||||
Cash
and money market funds
|
$ | 13,925 | $ | 13,925 | |||||||||
Long-term
investment securities:
|
|||||||||||||
Trading
and available-for-sale marketable securities
|
3,901 | 3,901 | |||||||||||
Auction
rate security
|
3,658 | 3,658 | |||||||||||
Other
long-term investments
|
1,000 |
1,000
|
|||||||||||
Total long-term
investment securities
|
8,559 | 3,901 |
1,000
|
3,658 | |||||||||
Total
assets measured at fair value
|
$ | 22,484 | $ | 17,826 |
$1,000
|
$ | 3,658 |
Fair
Value Measurements Using Significant Unobservable Inputs
|
||||
(Level
3)
|
||||
Balance
at February 29, 2008
|
$ | 0 | ||
Auction
rate security transferred to Level 3
|
4,550 | |||
Total
unrealized loss included in accumulated other comprehensive
income
|
(892 | ) | ||
Balance
at May 31, 2008, August 31, 2008 and November 30, 2008
|
$ | 3,658 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
income (loss)
|
$ | 6,525 | $ | 4,680 | $ | (1,008 | ) | $ | 10,643 | |||||||
Other
comprehensive (loss) income:
|
||||||||||||||||
Foreign
currency translation adjustments
|
(4,552 | ) | 2,021 | (4,848 | ) | 3,378 | ||||||||||
Unrealized
holding (loss) gain on available-for-sale investment securities arising
during the period, net of tax
|
(1,152 | ) | 471 | (3,276 | ) | 479 | ||||||||||
Other
comprehensive (loss) income, net of tax
|
(5,704 | ) | 2,492 | (8,124 | ) | 3,857 | ||||||||||
Total
comprehensive income (loss)
|
$ | 821 | $ | 7,172 | $ | (9,132 | ) | $ | 14,500 |
Nine
Months Ended
|
||||||||
November
30,
|
||||||||
2008
|
2007
|
|||||||
Cash
paid during the period:
|
||||||||
Interest
(excluding bank charges)
|
$ | 1,224 | $ | 1,904 | ||||
Income
taxes (net of refunds)
|
$ | 3,463 | $ | 1,308 |
Purchase
Price (net of cash acquired)
|
$ | 20,373 | ||
Final
working capital credit
|
$ | (317 | ) | |
Acquisition
related costs
|
1,131 | |||
Total
Purchase Price
|
$ | 21,187 |
Assets
acquired:
|
||||
Accounts
receivable, net
|
$ | 3,920 | ||
Inventory
|
4,007 | |||
Property,
plant and equipment, net
|
103 | |||
Other
long-term assets
|
241 | |||
Trademarks
and other intangible assets
|
6,380 | |||
Goodwill
|
11,326 | |||
Total
assets acquired
|
$ | 25,977 | ||
Liabilities
assumed:
|
||||
Accounts
payable
|
$ | 3,689 | ||
Accrued
expenses and other liabilities
|
624 | |||
Deferred
tax liabilities
|
407 | |||
Other
liabilities
|
70 | |||
Total
liabilities assumed
|
$ | 4,790 | ||
Total
purchase price
|
$ | 21,187 |
Purchase
price
|
$ | 13,188 | ||
Net
asset payment
|
11,093 | |||
Acquisition
related costs
|
925 | |||
25,206 | ||||
Less:
Multimedia license fee
|
(10,000 | ) | ||
Total
net purchase price
|
$ | 15,206 |
Assets
acquired:
|
||||
Inventory
|
$ | 19,178 | ||
Tooling
|
102 | |||
Trademarks
and other intangible assets (less license fee)
|
14,644 | |||
Total
assets acquired
|
$ | 33,924 | ||
Liabilities
assumed:
|
||||
Warranty
accrual
|
$ | 12,848 | ||
Other
liabilities acquired
|
5,870 | |||
Total
liabilities assumed
|
$ | 18,718 | ||
Total
purchase price
|
$ | 15,206 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Net
sales
|
$ | 195,642 | $ | 307,042 | $ | 487,433 | $ | 835,552 | ||||||||
Net
income (loss)
|
6,525 | (3,253 | ) | (1,008 | ) | (12,840 | ) | |||||||||
Net
income (loss) per share-diluted
|
$ | 0.29 | $ | (0.14 | ) | $ | (0.04 | ) | $ | (0.56 | ) |
Balance
at February 29, 2008
|
$ | 23,427 | ||
Purchase
of Technuity
|
5,671 | |||
Balance
at November 30, 2008
|
$ | 29,098 |
Gross
|
||||||||||||
Carrying
|
Amortization
|
Accumulated
|
||||||||||
Value
|
Book
Value
|
Total
Net
|
||||||||||
Trademarks/Tradenames
not subject to amortization
|
$ | 81,937 | - | $ | 81,937 | |||||||
Customer
relationships subject to amortization (5-20 years)
|
9,866 | 1,404 | 8,462 | |||||||||
Trademarks/Tradenames
subject to amortization (3-12 years)
|
1,180 | 222 | 958 | |||||||||
Patents
subject to amortization (5-10 years)
|
1,345 | 526 | 819 | |||||||||
Contract
subject to amortization (5 years)
|
1,104 | 883 | 221 | |||||||||
License
subject to amortization (5 years)
|
1,400 | - | 1,400 | |||||||||
Total
|
$ | 96,831 | $ | 3,035 | $ | 93,797 |
Gross
|
||||||||||||
Carrying
|
Accumulated
|
Total
Net
|
||||||||||
Value
|
Amortization
|
Book
Value
|
||||||||||
Trademarks/Tradenames
not subject to amortization
|
$ | 86,368 | $ | 86,368 | ||||||||
Customer
relationships subject to amortization (5-20 years)
|
14,685 | 741 | 13,944 | |||||||||
Patents
subject to amortization (5-10 years)
|
695 | 385 | 310 | |||||||||
Contract
subject to amortization (5 years)
|
1,104 | 718 | 386 | |||||||||
Total
|
$ | 102,852 | $ | 1,844 | $ | 101,008 |
November
30,
|
February
29,
|
|||||||
2008
|
2008
|
|||||||
Current
assets
|
$ | 26,514 | $ | 26,344 | ||||
Non-current
assets
|
4,650 | 4,710 | ||||||
Current
liabilities
|
5,029 | 4,611 | ||||||
Members'
equity
|
26,135 | 26,443 | ||||||
Nine
Months Ended November 30,
|
||||||||
2008
|
2007
|
|||||||
Net
sales
|
$ | 43,261 | $ | 55,194 | ||||
Gross
profit
|
10,382 | 16,099 | ||||||
Operating
income
|
1,307 | 5,010 | ||||||
Net
income
|
1,850 | 5,853 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Opening
balance
|
$ | 11,796 | $ | 11,403 | $ | 10,768 | $ | 7,410 | ||||||||
Accruals
|
7,488 | 7,385 | * | 19,377 | 22,467 | ** | ||||||||||
Payments
and credits
|
(5,845 | ) | (2,980 | ) | (15,367 | ) | (12,531 | ) | ||||||||
Reversals
for unearned sales incentive
|
(352 | ) | (277 | ) | (524 | ) | (682 | ) | ||||||||
Reversals
for unclaimed sales incentives
|
(454 | ) | (594 | ) | (1,621 | ) | (1,727 | ) | ||||||||
Ending
balance
|
$ | 12,633 | $ | 14,937 | $ | 12,633 | $ | 14,937 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Opening
balance
|
$ | 11,189 | $ | 10,073 | $ | 17,002 | $ | 9,586 | ||||||||
Liabilities
accrued for warranties issued during the period
|
2,653 | 3,009 | 8,678 | 8,178 | ||||||||||||
Warranty
claims paid during the period (includes the acquired warranty
liabilities)
|
(2,622 | ) | (2,886 | ) | (14,460 | ) | (7,568 | ) | ||||||||
Ending
balance
|
$ | 11,220 | $ | 10,196 | $ | 11,220 | $ | 10,196 |
November
30,
|
February
29,
|
|||||||
2008
|
2008
|
|||||||
Bank Obligations
|
||||||||
Domestic
bank obligations (a)
|
$ | - | $ | - | ||||
Euro
asset-based lending obligation (b)
|
2,018 | 3,070 | ||||||
Total
bank obligations
|
$ | 2,018 | $ | 3,070 | ||||
Debt
|
||||||||
Euro
term loan agreements (c)
|
$ | 5,876 | $ | - | ||||
Oehlbach
(d)
|
184 | 850 | ||||||
Other
(e)
|
1,178 | 853 | ||||||
Total
debt
|
$ | 7,238 | $ | 1,703 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Interest
income
|
$ | 229 | $ | 822 | $ | 1,095 | $ | 3,379 | ||||||||
Rental
income
|
136 | 138 | 412 | 414 | ||||||||||||
Miscellaneous
|
(375 | ) | (144 | ) | (1,132 | ) | (349 | ) | ||||||||
Total
other income (expense), net
|
$ | (10 | ) | $ | 816 | $ | 375 | $ | 3,444 |
·
|
mobile
multi-media video products, including in-dash, overhead, headrest and
portable mobile video systems,
|
·
|
autosound
products including radios, speakers, amplifiers and CD
changers,
|
·
|
satellite
radios including plug and play models and direct connect
models,
|
·
|
automotive
security and remote start systems,
|
·
|
automotive
power accessories,
|
·
|
car
to car portable navigation systems,
|
·
|
rear
observation and collision avoidance
systems,
|
·
|
Liquid
Crystal Display (“LCD”) flat panel
televisions,
|
·
|
home
and portable stereos,
|
·
|
two-way
radios,
|
·
|
digital
multi-media products such as personal video recorders and MP3
products,
|
·
|
camcorders,
|
·
|
clock-radios,
|
·
|
digital
voice recorders,
|
·
|
home
speaker systems,
|
·
|
portable
DVD players, and
|
·
|
digital
picture frames.
|
·
|
High-Definition
Television (“HDTV”) Antennas,
|
·
|
Wireless
Fidelity (“WiFi”) Antennas,
|
·
|
High-Definition
Multimedia Interface (“HDMI”)
accessories,
|
·
|
home
electronic accessories such as
cabling,
|
·
|
other
connectivity products,
|
·
|
power
cords,
|
·
|
performance
enhancing electronics,
|
·
|
TV
universal remotes,
|
·
|
flat
panel TV mounting systems,
|
·
|
iPod
specialized products,
|
·
|
wireless
headphones,
|
·
|
rechargeable
battery backups (UPS) for camcorders, cordless phones and portable video
(DVD) batteries and accessories,
|
·
|
power
supply systems and
|
·
|
electronic
equipment cleaning products.
|
Three
and Nine Months Ended
|
||||
November
30, 2008
|
||||
Selling
|
$ | 107 | ||
General
& administrative
|
676 | |||
Engineering
and tech support
|
164 | |||
Total
costs
|
$ | 947 |
Three
Months Ended November 30,
|
$
|
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Electronics
|
$ | 151,972 | $ | 138,959 | $ | 13,013 | 9.4 | % | ||||||||
Accessories
|
43,670 | 44,604 | (934 | ) | (2.1 | ) | ||||||||||
Total
net sales
|
$ | 195,642 | $ | 183,563 | $ | 12,079 | 6.6 | % |
Three
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Gross
profit
|
$ | 38,958 | $ | 34,991 | $ | 3,967 | 11.3 | % | ||||||||
Gross
margin percentage
|
19.9 | % | 19.1 | % |
Three
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Operating
Expenses:
|
||||||||||||||||
Selling
|
$ | 8,370 | $ | 9,828 | $ | (1,458 | ) | (14.8 | ) % | |||||||
General
and administrative
|
16,500 | 16,948 | (448 | ) | (2.6 | ) | ||||||||||
Engineering
and technical support
|
2,436 | 2,600 | (164 | ) | (6.3 | ) | ||||||||||
Operating
expenses
|
27,306 | 29,376 | (2,070 | ) | (7.0 | ) | ||||||||||
Operating
income
|
11,652 | 5,615 | 6,037 | 107.5 |
Three
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Core
operating expenses
|
$ | 22,971 | $ | 29,103 | $ | (6,132 | ) | (21.1 | ) % | |||||||
Operating
expenses from acquired businesses
|
4,335 | 273 | 4,062 | 1,487.9 | ||||||||||||
Total
operating expenses
|
$ | 27,306 | $ | 29,376 | $ | (2,070 | ) | (7.0 | ) % |
Three
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Interest
and bank charges
|
$ | (453 | ) | $ | (723 | ) | $ | 270 | (37.3 | ) % | ||||||
Equity
in income or (share in losses) of equity investees
|
(484 | ) | 1,011 | (1,495 | ) | (147.9 | ) | |||||||||
Other,
net
|
(10 | ) | 816 | (826 | ) | (101.2 | ) | |||||||||
Total
other income (loss), net
|
$ | (947 | ) | $ | 1,104 | $ | (2,051 | ) | (185.8 | ) % |
Three
Months Ended November 30,
|
||||||||
2008
|
2007
|
|||||||
Operating
income
|
$ | 11,652 | $ | 5,615 | ||||
Other
income (loss), net
|
(947 | ) | 1,104 | |||||
Income
from continuing operations before income taxes
|
10,705 | 6,719 | ||||||
Income
tax expense
|
4,180 | 2,039 | ||||||
Net
income
|
$ | 6,525 | $ | 4,680 | ||||
Net
income per common share:
|
||||||||
Basic
|
$ | 0.29 | $ | 0.20 | ||||
Diluted
|
$ | 0.29 | $ | 0.20 |
Nine
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Electronics
|
$ | 377,353 | $ | 341,205 | $ | 36,148 | 10.6 | % | ||||||||
Accessories
|
110,080 | 118,880 | (8,800 | ) | (7.4 | ) % | ||||||||||
Total
net sales
|
$ | 487,433 | $ | 460,085 | $ | 27,348 | 5.9 | % |
Nine
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Gross
profit
|
$ | 86,533 | $ | 86,654 | $ | (121 | ) | (0.1 | ) % | |||||||
Gross
margin percentage
|
17.8 | % | 18.8 | % | -1.0 | % |
Nine
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Operating
Expenses:
|
||||||||||||||||
Selling
|
$ | 26,598 | $ | 26,534 | $ | 64 | 0.2 | % | ||||||||
General
and administrative
|
52,004 | 45,153 | 6,851 | 15.2 | ||||||||||||
Engineering
and technical support
|
8,219 | 7,010 | 1,209 | 17.2 | ||||||||||||
Operating
expenses
|
$ | 86,821 | $ | 78,697 | $ | 8,124 | 10.3 | |||||||||
Operating
income (loss)
|
(288 | ) | 7,957 | (8,245 | ) | (103.6 | ) % |
Nine
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Core
operating expenses
|
$ | 73,559 | $ | 78,422 | $ | (4,863 | ) | (6.2 | ) % | |||||||
Operating
expenses from acquired businesses
|
12,315 | 275 | 12,040 | 4,378.2 | ||||||||||||
Workforce
reduction charges
|
947 | 0 | 947 | N/A | ||||||||||||
Total
operating expenses
|
$ | 86,821 | $ | 78,697 | $ | 8,124 | 10.3 | % |
·
|
$8,621
of expenses for the nine months ended November 30, 2008 for the recently
acquired operations of Technuity and RCA Audio/Video
operations.
|
·
|
An increase
in salaries and related payroll taxes and benefits partially due to a $998
benefit recorded in the prior year related to a call/put option previously
granted to certain employees as a result of a reduction in the call/put
option liability as well as general increases to fiscal
wages,
|
·
|
$1,362
increase in professional fees due to an increase in legal fees as a result
of intellectual property costs and increased consulting fees,
and
|
·
|
$676
in workforce reduction charges.
|
Nine
Months Ended November 30,
|
$ |
%
|
||||||||||||||
2008
|
2007
|
Change
|
Change
|
|||||||||||||
Interest
and bank charges
|
$ | (1,439 | ) | $ | (2,087 | ) | $ | 648 | (31.0 | ) % | ||||||
Equity
in income of equity investees
|
926 | 2,927 | (2,001 | ) | (68.4 | ) | ||||||||||
Other,
net
|
375 | 3,444 | (3,069 | ) | (89.1 | ) | ||||||||||
Total
other (loss) income, net
|
$ | (138 | ) | $ | 4,284 | $ | (4,422 | ) | (103.2 | ) % |
Nine
Months Ended November 30,
|
||||||||
2008
|
2007
|
|||||||
Operating
(loss) income
|
$ | (288 | ) | $ | 7,957 | |||
Other
(loss) income, net
|
(138 | ) | 4,284 | |||||
Income
from continuing operations before income taxes
|
(426 | ) | 12,241 | |||||
Income
tax (benefit) expense
|
582 | 3,709 | ||||||
Net
(loss) income from continuing operations
|
(1,008 | ) | 8,532 | |||||
Net
income from discontinuing operations, net of tax
|
- | 2,111 | ||||||
Net
(loss) income
|
$ | (1,008 | ) | $ | 10,643 | |||
Net
(loss) income per common share:
|
||||||||
Basic
|
$ | (0.04 | ) | $ | 0.47 | |||
Diluted
|
$ | (0.04 | ) | $ | 0.47 |
·
|
Cash
flows from operating activities for the nine months ended November 30,
2008 were impacted by an increase in accounts receivable primarily due to
higher sales volume during the third quarter. However, the
Company experienced increased accounts receivable turnover which
approximated 4.9 during the nine months ended November 30, 2008 compared
to 4.6 during the nine months ended November 30,
2007.
|
·
|
Cash
flows from operations were impacted by an increase in our inventory
balances due to increased purchases in connection with the upcoming
holiday season. However, inventory turnover improved
approximating 4.2 during the nine months ended November 30, 2008 compared
to 4.0 during the nine months ended November 30,
2007.
|
Payments
Due by Period
|
||||||||||||||||||||
Less
than
|
1-3
|
4-5
|
After
|
|||||||||||||||||
Contractual
Cash Obligations
|
Total
|
1
Year
|
Years
|
Years
|
5
Years
|
|||||||||||||||
Capital
lease obligation (1)
|
$ | 11,058 | $ | 521 | $ | 1,043 | $ | 1,147 | $ | 8,347 | ||||||||||
Operating
leases (2)
|
31,155 | 4,112 | 6,554 | 5,096 | 15,393 | |||||||||||||||
Total
contractual cash obligations
|
$ | 42,213 | $ | 4,633 | $ | 7,597 | $ | 6,243 | $ | 23,740 |
Amount
of Commitment Expiration per period
|
||||||||||||||||||||
Total
|
||||||||||||||||||||
Amounts
|
Less
than
|
1-3
|
4-5
|
After
|
||||||||||||||||
Other
Commercial Commitments
|
Committed
|
1
Year
|
Years
|
Years
|
5
years
|
|||||||||||||||
Bank
obligations (3)
|
$ | 2,018 | $ | 2,018 | - | - | - | |||||||||||||
Stand-by
letters of credit (4)
|
2,356 | 2,356 | - | - | - | |||||||||||||||
Commercial
letters of credit (4)
|
1,170 | 1,170 | - | - | - | |||||||||||||||
Debt
(5)
|
7,238 | 1,294 | 3,945 | 1,999 | - | |||||||||||||||
Contingent
earn-out payments (6)
|
5,158 | 890 | 3,621 | 647 | - | |||||||||||||||
Unconditional
purchase obligations (7)
|
42,718 | 42,718 | - | - | - | |||||||||||||||
Total
commercial commitments
|
$ | 60,658 | $ | 50,446 | $ | 7,566 | $ | 2,646 | $ | - |
Exhibit
Number
|
Description
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a)
of the Securities Exchange Act of 1934 (filed
herewith).
|
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a)
of the Securities Exchange Act of 1934 (filed
herewith).
|
|
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).
|
|
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
|
|