Glenn Wiener - President GW Communications Pat Lavelle - President, Chief Executive Officer, Director Charles Stoehr - Chief Financial Officer, Senior Vice President, Director

Sean McGowan - Needham & Company Rob Stone - Cowen & Company Greg Palm - Craig-Hallum Capital Scott Tilghman - B. Riley

Good day, ladies and gentlemen. Welcome to the VOXX Fiscal 2015 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Glenn Wiener. Please go ahead.

Thank you, Kate. Good morning, everyone. Welcome to VOXX International's fiscal 2015 second quarter results conference call. Today's call is being webcast from our website, www.voxxintl.com and can be accessed in the Investor Relations section of the site. We also have a replay available for those who are unable to join us this morning. We filed our Form 10-Q and issued a press release yesterday after the market closed and both documents can be found on our website, again, in the investor relations section, under SEC filings and news releases, respectively. Before turning the call over to Pat Lavelle, I would like to remind everyone that except for historical information contained herein, statements made on today's call and webcast that would constitute forward-looking statements are based on currently available information. The Company assumes no responsibility to update any such forward-looking statements. Risk factors associated with our business are detailed in our Form 10-K for the fiscal year ended February 28, 2014. At this time, I would like to turn the call over to our President and CEO, Pat Lavelle.

Thank you, Glenn. Good morning, everyone. Despite the fact that product delays and softer than expected second-quarter sales have forced us to lower guidance for fiscal '15, I wanted to start this call by saying, we remain optimistic with our potential moving into next year. While we may have some temporary issues, we also have a lot of exciting programs nearly ready for launch as well as some potentially explosive opportunities as we explore new markets and execute contracts over the coming years. I will discuss some of them in more detail after I review the quarter. Sales came in at $177.3 million; $6.5 million lower than last year's second quarter. We were expecting sales to be flat with the prior year, but the retail softness that I spoke about on our last call has continued primarily affecting Premium Audio. On the other hand, our gross margins held coming in at 29.5%, 10 basis points better than last year's second quarter. On the cost side, our operating expenses were down a little over $0.5 million or down 1.1%. While we expect that expenses will increase over the year, we have taken steps to reduce that and now expect to see increases of only 3% to 3.5%, rather than the 4% to 5% I had previously guided to. We reported operating income of $1.1 million versus $2.2 million in last year's second quarter, and we reported a net loss of $2.7 million versus net income of $4.9 million. Note, however, in fiscal '15 second quarter, we took a non-cash currency devaluation charge in Venezuela of approximately $6.7 million as the country continues to have issues and we have essentially stopped operating there. The non-cash charge is related to the devaluing of the bolívar and has no impact on our operations or our cash flow. Additionally, in fiscal 14' second quarter, we had approximately $6.1 million in gains related to a class action settlement and recoveries from one of our customers offset by $1.2 million in patent settlement fees, so there are a lot of moving parts that affected the net income. Let me now address the quarter, so you can see what's driving our business and where we see opportunities for growth. First off, our Automotive segment. Sales came in at $92.9 million, down $4 million compared to last year. The year-over-year decline is largely the result of our program timing as we have some programs active in last year's second quarter, which were not active this year. One, that was temporarily halted, that we expect to resume in the third quarter. There was also roughly $1 million in sales in Venezuela in last year's second quarter that did not repeat this year as we have essentially shut down. Domestic car sales continued to increase and our VOXX Hirschmann subsidiaries developing the next generation of content-rich rear-seat entertainment and the latest in antenna and tuner technology. Gross margins have increased, expenses are lower and operating income for the Automotive segment is up for the comparable periods. Our Premium Audio segment, we reported sales of $39 million versus $40.8 million in last year's second quarter, down a little under $2 million and due primarily to a 30-day delay of the introduction of our new Reference Series speaker line. Our Commercial business is increasing as our sales of sound bars, both of which are anticipated to be growth categories for us. Our new personal music systems are gaining traction as well and we continue to receive great reviews for our in-ear headphones, which are consistently ranked among the top performance headphones in the market. Our margins however continue to come under pressure due primarily to product mix as sound bars and personal music systems grow to represent a larger percentage of sales. Additionally, over the past two quarters, we have been clearing out inventory of some of our older product lines to pave the way for the introduction of the new Reference Series and we now believe that margins in this segment should begin to show improvement. Our expenses were also up primarily in engineering and advertising as we geared up for the launch of the new Reference Series, gaming headphones and Personal Audio. As I have indicated on previous calls, we are not anticipating growth in Premium Audio this year, although margin should improve, expenses are coming down and we continue to expand distribution, which would position us well as we move forward. Within our Consumer Accessories segment, we reported sales of $45.2 million, which is roughly in line with last year's second quarter. margins were down 100 basis points, though our core business is performing to plan. However, we had anticipated some growth due to the planned introductions of myris, our biometrics offering and the 360° action camera, initially slated for late 2Q shipment. We have delayed both launches as we tweak the software to deliver optimum performance from both of these new product categories. They are receiving high-interest and acceptance from our distribution partners who are anxious to get them. We now expect to launch limited quantities of myris in November and our action camera starting in fiscal 2016 with the MicroFly smartphone attachment to follow. The delays will impact our fiscal year sales by approximately $20 million, which will of course require us to lower our guidance. However, we remain confident that both products will contribute to our top-line performance in fiscal '16 and we are gearing up for an aggressive rollout. I also want to add that during the second quarter, we had higher engineering, marketing and overhead expenses to support these programs, without the benefit of sales to offset them. Bluetooth and wireless speakers, reception products and the launch of our 808 audio brand are all performing well domestically and we are experiencing growth in our international accessories brands as we gain additional distribution in certain retail stores and the do-it-yourself channel. While we have anticipate, first quarter sales being down, we did not have that anticipation built into the second quarter, a $6.5 million miss in 2Q, combined with the impact of the delayed product launches leaves us with approximately $26-plus million in sales that will not materialize this year. Subsequently, we have lowered our sales guidance to approximately $800 million range. Regarding margins, we believe that we will meet or exceed the 29% guidance we previously indicated. On the expense side, we had forecasted a 4% to 5% year-over-year increase. Through the first half of the year, expenses are up 1.8% and we have taken additional steps to bring overhead down without sacrificing sales-driven initiatives. For the fiscal year, and as I mentioned earlier, we are now expecting operating expenses to be up between 3% and 3.5%, exclusive of the impairment charge from last year. As a result, EBITDA for the year should be approximately $40 million and adjusted EBITDA approximately $47 million. Before turning the call over to Mike, I would like to provide you with some updates on product development initiatives, new programs and reasons for our optimism. Within Automotive, mid-2016 fiscal, we begin a five-year contract with Daimler-Benz for our new mobile multimedia tuner. This is the first contract for this level of product and we are in discussions with several OEMs now to offer them similar technology. We are also set to deliver a multimedia tuner to Jaguar Land Rover and that is slated to begin in 2015. Our asset base tracking system is an area that we believe will fuel added growth. I have talked to in the past about our intelligent antenna system and our partnership with AT&T. Our smart antenna system is a new product, which is a solar powered antenna with a 15-year life span that we have developed for logistics companies, retailers or any company looking to track assets or shipping containers worldwide. We will be showing our solar powered antenna systems at Intermodal Europe in Rotterdam in November. The VOXX Hirschmann team has signed a Letter of Intent creating a strategic partner with EchoStar Sling Media, where we will be integrating a Sling player directly into our rear seat entertainment products to bring the T.V. content you enjoy in your home directly into the vehicle. Consumers want the content they have at home on the road and our product will deliver the richest content of any rear-seat entertainment system on the market. Within Consumer Accessories, September selling indicates our retail partners are planning for good holiday season across the board for Bluetooth speakers, reception products and headphones. I am particularly excited about the potential that myris has at the corporate enterprise level. Every day, there are reports of data breaches that are in the millions and we believe that biometrics will provide the ultimate data security system. I have already discussed the 360 action camera, but I will reiterate that based on retailer response to our presentations, the growing size of the market, the action camera category will be a driver for us. We are planning aggressive promotions for the launch of this product as well as for the 360 MicroFly, which is a smartphone accessory that will allow your smartphone to take a 360-degree pictures and videos. We showed new home automation systems from Schwaiger and new Magnat headphones designed by Pininfarina at ESSA in Europe. Based on early feedback, these two should do well as we continue development and rollout over the next year. We continue to promote the Klipsch brand with exciting promotions and sponsorships. Just yesterday, The Rock and Roll Hall of Fame announced our sponsorship with them that will begin in March of 2015. We will supply details as we get closer to that date. Finally, our personal music systems and sound bars in the Premium Audio group are well-positioned that retail and they are posting strong sales. Our new Reference line should perform well through the holiday season and help improve overall margins in the category. In summary, our story has not changed. We are investing in R&D, engineering and new product development with an eye on the future and we feel good with our prospects despite some of the headwinds at retail and launch delays. We keep paying down debt and we will continue to do barring any acquisitions we may make. At this point, I will turn the call over to Michael for a more detailed financial review. Then we will open it up for questions. Mike?

Thanks, Pat. Good morning, everyone. We have already provided a lot of detail around our second quarter performance, so I will focus my remarks on our six-month results and balance sheet before we open up the call for questions. All comparisons are for the six-month period ended August 31, 2014 until August 31, 2013. We reported net sales of $364.2 million versus $376.8 million, down 3.3%. Within this, the Automotive segment was down 2.9%, Premium Audio was down 8.4% and Consumer Accessories were up 0.5%. Factors that impacted the results for the six-month periods were very similar to our three months results, but I would like to add a few points. In Automotive, we saw a nice gain in our security aftermarket lines driven by new telematic product offerings and sales of remote starts. The latter driven by new program with Subaru, which started in our second quarter. Satellite radio fulfillment sales declined a bit, but were offset by other fulfillment sales. VOXX Hirschmann sales were down approximately $5.6 million, however the decline is really more about timing given the temporary shutdown of one of our programs which as Pat noted will resume again in our fiscal third quarter. This impacted our domestic OEM operations and it's certainly worth noting that our international business Hirschmann was up driven by increases in both, mobile tuners and antennas. Additionally, the year-over-year decline in Venezuela is approximately $2 million. I will address Venezuela further in my remarks. In Premium Audio, sales were down approximately $6.8 million with declines in Canada and in Europe, as well as general softness at the retail domestically. During the first half of the year, we reduced certain inventories at lower than traditional margins in order to pave the way for the launch of new products, particularly our Reference Series speakers. Our commercial speakers increased year-over-year as did the sound bars and personal music systems. Our business was positively impacted by growth overseas as both Schwaiger and Oehlbach saw increases in sales for the comparable six-month periods. Reception products grew nicely as did our 808 audio speaker lines and many of our new Bluetooth in line and wireless speakers. Offsetting some of the increases were lowest sales of some of our oldest CG products such as clock radios, digital voice recorders as well as traditional AV cables and other power product lines. Our consolidated gross margins for the six months were up 20 basis points, 29% versus 28.8%. We experienced a 230-basis point improvement in our Automotive segment, a 330-basis point decline in Premium Audio and 100 basis point decline in Consumer Accessories. In our Premium Audio segment, margins have been coming for several quarters as there are two factors. The first is product mix as we are selling more sound bars and music system versus traditional audio systems and this will continue. However, the second piece has more to do with inventory management. As mentioned, we have been addressing our inventory in preparation for new product introductions. As a result, our margins have been lower than in the past. However, with the launch of our Reference series and other new products coming to market this quarter, we should start to see gross margins in this statement moving upwards. In our Consumer Accessories segment, margins have come down a bit again, mostly due to product mix. There has recently been certain cost improvements which will impact margins favorably going forward. We had some added costs for new products, particularly for the EyeSee360 and myris product lines without revenues to offset this. We should see stability in margins and hopefully a little improvement as we move forward into next year. In regard to operating expenses, total expenses were up $1.8 million or 1.8% for the six-month period. This is below our internal budget and as Pat indicated, we have taken some steps to lower future overhead throughout the year. Engineering labor was up $2.6 million, principally in Hirschmann, professional fees were up $700,000, advertising expenses were up $1.1 million, engineering advertising directly co-relate to the new products and programs we have introduced or have plans to introduce in the near future. This was offset by lower management salaries, occupancy costs results of our facilities and systems consolidation and those salesmen salaries were roughly staffed up in anticipation of penetrating new markets. Operating income was $672,000 versus $5.7 million, down roughly $5 million. Lower sales were principally the driver, partially offset by the improvements in our gross margins. As we mentioned on last call, there were some big movements in other income in other expense lines which impacted net income. We had approximately a $600,000-decline on interest and bank charges for the bank obligations as we continue to pay down debt. Equity and income of our equity investee related to our joint venture ASA improved by $134,003. As we indicated earlier, we took a non-cash charge of $6.7 million, representing the re-measurement of our Venezuelan bonds as of August 31, 2014. These bonds were initially issued to reset to the ongoing de-valuation of the bolívar rate versus the U.S. dollar. During our second quarter, there were three conversion rates. The bonds were converted at one rate to reset the bolívar amount and the [ dollar value] was translated using a lower bolívar rate. These bonds mature March 2015. At this time in Venezuela, we have reduced our operations and our primary assets are only these bonds and property. The company provides no cash support in Venezuela today. There can be no assurances based upon the current situation there that there won't be further re-measurements or impairments, which could impact the company's financials. Other net primarily included net currency gains of $365,000, interest income of $138, and rental income of $591,000 for fiscal 2015, six-month period. As I mentioned in the first quarter, for the fiscal 2014, we had received $5.2 million in class-action settlement, $900,000 related to recovery of funds and Circuit City that previously written off Klipsch prior to our acquisition, offset by accrual of $1.2 million for estimated patent settlements for the certain third parties. The variance in other net for this two six-month period $4.4 million. As a result of lower operating income, specifically the impact of the net income expenses, we reported a net loss of $2.2 million or less of $0.09 per diluted share This compares to net income of $7 million or net income per diluted share of $0.29. Just to give a little clarity, without the Venezuela charge, we would have reported pre-tax income for the six months of $2.6 million. As for EBITDA, we reported of $7.1 for fiscal 2015 six-month period As compared to $26.6 million for the comparable period's fiscal 2014. On an adjusted basis, without the Venezuela charge, EBITDA would have been $13.8 million versus $19.2 million adjusted last year. The effective tax rate for the six-month ended August 31, 2014 was the tax benefit of 46.3%, as compared to a provision for income taxes of 35.5% in last year's six-month. Now, for our balance sheet, our cash position as of August 31, 2014 was $9.4 million versus $10.6 million as of February 28, 2014. The company continues to monitor its inventory position and inventory as of August 31, 2014 was $153.8 million versus $174.5 million as of August 31, 2013. Our total debt as of August 31, 2014, which is inclusive of all mortgages and capital leases, stood at $102.1 million compared to $115.5 million as of February 28, 2014, an improvement $13.2 million as compared to $132.8 million as of August 31, 2013, a year-over-year improvement of $30.7 million. Our domestic bank obligations were $74 million as of August 31, 2014. This compares to $88 million as of February 28 and $108 million as of August 31, 2013. As of today, our bank debt is $89 million with availability of $111 million. We are now moving into the company's high point of borrowings preparing for fiscal third-quarter which includes a holiday season. Last year at this high point, our bank borrowings were $118.3 million. Free cash flow, now with lowered sales guidance is expected to be approximately $26 million. Our CapEx estimates remain unchanged at $12 million to $13 million this fiscal year, barring any changes in our facility structures. To summarize our guidance, we now anticipate sales of approximately $800 million due to delayed launches and second quarter retail softness. Gross margin estimates remain unchanged at 29% and we have lowered overhead for the year versus our plan and now anticipate operating expenses will increase 3% to 3.5% versus prior guidance of 4% to 5%. EBITDA adjusted for the Venezuela, which is non-cash item, should come in at approximately $47 million. I will reiterate Pat's comments about our outlook. Yes, there are a few factors which caused us to lower our numbers this year, but our outlook and ability to grow organically next year looks promising. At this time, we will be ready to take questions. Pat?

Thank you, Mike. Operator?

(Operator Instructions) Our first question comes from the line of Sean McGowan with Needham & Company. Your line is open. Sean McGowan - Needham & Company: Good morning, gentlemen. Thank you. I have a couple of questions. The first two have to do with trying to get a sense of the size and magnitude of some of these timing items, so the suspension of the program and the 30-day delay that you have referenced. Can you give us just some ballpark figure about how much that accounts for the investment in revenue or the shortfall in the…

When I look at the Automotive business, the one program was temporarily halted due to one of our manufacturers having to relocate all their quality issues and that probably I have to look, but that would be in the $2 million to $3 million-plus range over the period of time we have been halted. Sean McGowan - Needham & Company: Do you expect to get all of that back by the end of the fiscal year?

No. We don't expect to get all of that back by the fiscal. What we expect is that we will resume shipments of those products within our third quarter pending approval by the manufacturer. Sean McGowan - Needham & Company: Okay, so there were some net loss to this fiscal year anyway?

Yes. That's. Sean McGowan - Needham & Company: As there is to that, right? I mean, they are not selling the…

That's exactly right. The other is, look, I would have to look to give you, but it was obviously a delay of the launch. We lost one month's worth of sales where we would have had some sell-through where we would have had some reorders within the quarter. That's a little bit harder number to nail down, but based on the size of the launch, it could have been $1 million, but I would really would have to check that. Would you anticipate being able to get that back once.

Depending on how the program sells through at Christmas. The reception has been good so far, so we are confident that the numbers that we are projecting will come in. If we see some pickup in the Christmas business over years past, then yes there could be some upside to those numbers. Sean McGowan - Needham & Company: Okay. Then another question, I can imagine you are being quite hesitant to get too specific on the timing, but is the delay in the 360s, do you expect that to be a very, very early in fiscal '16 or is it still?

Yes. I can tell you, what we are looking to do is, we need to tweak some of the software. All of these products, whether it would be myris or the 360 have to interface with other hardware. Making sure that it is seamless, it works properly, there is no glitches, requires a tremendous amount of testing and both of these products are very important. We think they are very, very unique. The response that we have got to-date from our retail customers has been very, very good and we want to make sure that when we introduce the products are working properly, you know, free of glitches and we are taking some extra time to make sure that that happens. We believe with the importance of both of these launches, that's a prudent step. Sean McGowan - Needham & Company: All right, okay. Thanks then I just would like a couple of questions for Mike, then. When you were giving those margin trend commentary, that was for the six months in the various segment? Would you mind repeating them, because I didn't catch all of them?

Sure. Hang on a second. Sean McGowan - Needham & Company: Then while you are looking that up, the other final question was, what drove that effective tax rate? I know it's a benefit, but what drove that higher?

The calculation is, is that the Venezuelan funds impact, as did have some taxes. I should pay taxes in Europe, and we had higher loss in the U.S. Sean McGowan - Needham & Company: That's sort of what I am thinking. Okay.

I want to point out to you when you look at the Q, so that everybody is aware of this that we had a stable settlement with the IRS and there will be a lot of tax credits coming through the financial statements in the third quarter. On the gross margin, and we talked about. Last year the margins were up for the six months 29% versus 28.8%, 230 basis points in Automotive segment, increased 330-point decline in premium and 100-basis point declining in Consumer Accessories. Sean McGowan - Needham & Company: Great. Thank you very much.

You are welcome.

Our next question comes from line of Rob Stone with Cowen & Company. Your line is open. Rob Stone - Cowen & Company: Hi, guys. I have a few questions as well. Following up on the gross margins, can you say what in particular drove the strength in the Automotive gross margin? Is that sustainable?

Yes. We believe based on our booked business, it is sustainable. It's really coming from the production facilities being more efficient when we have adjusted overhead within our domestic operations. Last year, we had geared up for a second shift and that increased overhead within the facilities. We have now been able rationalize that and bring down overhead within the production facilities both, domestically and within our international operations. That is what driving the better margin. Okay. Second margin question, in Premium Audio, you noted that the there was a mixed impact from the sound bars and personal music systems much lower roughly are the margins for those products versus the segment margin.

I am not going to get into specifics. Rob Stone - Cowen & Company: Okay.

Obviously within the high-end audio sector, the premium audio sector, the high end audio margins generally run better. When we look at sound bars, we look at music systems. They tend to operate more like consumer electronic products than premium audio products. Therefore the margins skew a little bit lower, so that combined with the fact that we have pulled during the quarter last two quarters pulled back on our sales to clear the shelves of existing products, so we can make way for the Reference Series that that made the situation even worse, but now that we have the Reference Series, and we are introducing our new Yamo concert series, we will see our mix skew a little bit better to where margin should improve. Rob Stone - Cowen & Company: Can you can you characterize, is that going to be a big improvement, a few basis points overall in the blend. Our margins were up more than 200 basis points.

I would look to see a 200 basis points within that segment. Rob Stone - Cowen & Company: Okay. With respect to the action camera, I think you had talked in the past about having a fair amount of promotional spending associated with the launch of that. I know the exact launch timing may still be to be determined, but should we be looking for seasonally some kind of an unusual first half of the level of expenses around the launch. Can you say at least whether it is first half, second half of fiscal '16?

It was always in the second half, okay? Basically, our second-half numbers as far as promotion marketing things like that should not change for the later introduction. Our plan is to introduce this either late in our fiscal '15 or early in our fiscal '16, so really launch expenses things like that will still fall into this year. Rob Stone - Cowen & Company: Okay. I saw it in your prepared remarks. you had suggested that the myris was coming out in limited quantities, but the camera would not be out till the next year.

That's margin. If we introduce on March 1st, the expenses will fall into this current fiscal year. Rob Stone - Cowen & Company: Okay. Then just a final question for Michael, with respect to tax rate, how should we think about an effective tax rate for the balance of the year.

In the Q, Q1 and subsequent events, there will be a $5.9 million coming through in the third quarter. Rob Stone - Cowen & Company: Okay.

Plus interest and then you could in the fourth you could use 36%. Rob Stone - Cowen & Company: Great. Thank you.

You are welcome.

Our next question comes from the line of Steve Dyer with Craig-Hallum Capital, Your line is open. Greg Palm - Craig-Hallum Capital: Hi, guys. I it's actually Greg Palm on for Steve. Thanks for taking our questions. First, I was hoping maybe you could elaborate a bit more on the two major product launches coming up kind of or what are you thinking about for revenue contribution for the combination in fiscal year '16, and kind of how are you launching each of those? Are they both with retail partners or is the myris initially launching just with enterprise?

Well, obviously, what we were looking at this year was somewhere around $20 million in sales that we would have with both products. As we get into a full year's worth of sales, that is going to be a different number. At this point, we don't have that budgeted, so I am not going to venture to put a number out there. As far as myers is concerned, the product is going to launch at first with retail. We do have a number of retail customers who are interested in carrying it and our limited launch will go to retail at first. Then, obviously, we will expand as we close contracts with some enterprise operations. Greg Palm - Craig-Hallum Capital: Is your expectation that the action cam will launch with an exclusive retail partner or will there be several partners with that launch?

At this point most likely it will be several. Greg Palm - Craig-Hallum Capital: Several. Okay.

Yes. Greg Palm - Craig-Hallum Capital: Just one last one, you talked about kind of clearing out old inventory in Premium Audio. Do you feel like you have finished that or should we expect a little bit more margin pressure from the inventory clear out?

No. Basically what we were doing is, we were getting ready for the launch of the new Reference Series, so it was making sure that our customers cleared their shelves, we cleared whatever inventories we had left. We don't have any old inventory laying around, instead of giving markdown money, we just allow the accounts to just sell through. We didn't ship much of the older product into them so that they can clear the shelves and get ready for the launch and that's exactly happened. Greg Palm - Craig-Hallum Capital: Okay. Thanks. That's all for us.

Okay.

Our next question comes from the line of Scott Tilghman with B. Riley. Your line is open. Scott Tilghman - B. Riley: Thanks. Good morning. I have a few things to run through. First, Pat, on the auto side, I am wondering if you can maybe talk about programs that you are pursuing at this point just in broad terms that obviously aren't factoring into the numbers. You give us a few examples of what is coming up, but maybe the ones that you are pursuing. Related to that, unless I missed it, I don't think you called out anything on the OBD programs. I am wondering if there any updates there.

Okay. Well, I will start with the traditional OE business. We continue to win contracts for antennas as natural progression of our business. The tuner business is one where, obviously, you heard me mention about Mercedes-Benz and the Jaguar Land Rover program. This is a technology that, we believe, many of the car manufacturers will gravitate to. We have had had some requests from other companies to look at developing systems for them. We are also in conversation with existing partners in this technology to possibly look at other or additional radios. These are ongoing discussions with current customers that we do business with, maybe not in this particular product, but ones that we have relationships with that would feel comfortable moving in our direction if they think this technology is something for them. As far as the OBD, we have it placed in about 20,000 retail locations at this particular point. We have got to Walmart program under the TracFone brand and we are talking to a number of additional insurance companies that will offer discounts for drivers scoring or user-based insurance. Scott Tilghman - B. Riley: How far along do you feel you are in those discussions?

You know, we have been having discussions with one large insurance company for quite some time. We have the American General or we have the American Insurance Company, we have the General, we have Liberty Mutual, so I think we are in good position to announce another one. Scott Tilghman - B. Riley: On the consumer accessory side, I noticed in the Q, you called some weakness in older categories like clock, radios and digital voice recorders. It seem to me you had largely exited a lot of those legacy products, so the question is what is left there that really doesn't make sense given the strategy of outdated products in more premium products across the three operating segments going forward?

What we have in line? We are pretty much done clearing the line out of end-of-life product. We will continue to sell clock, radios and we will continue to sell other products within the accessory group. However, the newer products, our reception products do very, very well. We lead the market in the United States. Our Bluetooth speakers, outdoor speakers, which is streaming audio are doing very, very well, so that has offset a lot of the end-of-life programs. We don't expect sales of certain categories to really increase, but we don't believe they are end-of-life. They still generate significant business for us, they still generate good margin for us, so they will stay in the line, but they are not ones that really would be growing. Pretty much the close out of lines that have reached end-of-life as I have indicated on last calls, the big shots of lost revenue, they are pretty much gone and pretty much over. Scott Tilghman - B. Riley: On the retail distribution side, one of your partners clearly is against the ropes, scrambling for financing just to get their inventory in front of the holidays. Is there any risk there to you? Then I will just throw on my last question now. That is, Mike, I don't think you called out a year end debt target. I was wondering if there is one. Scott Tilghman - B. Riley: Yes. There is. We are looking between $55 million and $60 million on a commercial bank launch.

Okay. To answer your question, as they moved into Christmas and past Christmas, I don't believe that we are in a position where we have much risk with debt account.

By that way, that's the commercial bank launch you got to add to that to mortgages and debt overseas, which is in the 10-Q. Scott Tilghman - B. Riley: Right.

Okay? Scott Tilghman - B. Riley: Yes. Thank you.

Thanks, Scott.

(Operator Instructions). Our next question comes from the line of Dmitri Gino with Noster. Your line is open. Dmitri Gino - Noster: Hi. Good morning. I was wondering if you can comment a little bit on the competitive environment for the action cameras. I assume that there is quite a few 360 products that are coming to market or being introduced as we speak. Maybe there the field was less crowded early in the year, but it seems like there is more and more products coming, so just wondering if you can sort of comment on the competition.

Okay. Well, obviously, we see all the 360 cameras that are slated to be introduced. We don't believe there is, at this particular point in time, any 3D or 360-degree technology that will actually come to market prior to us. We have seen the statements by some of the other companies, we have seen the product and we know the challenges that they will be faced as they interface their products into other hardware that would have to be used along with it, so we are pretty confident that our system, which as you know is not stitch screens and things like that. Our IP is strong, our camera works very well. Obviously the software development is around having it worked seamlessly with some of the other hardware, so yes there is 360 stuff being talked about, but I believe we will be the first to market with it. Dmitri Gino - Noster: Thank you.

You are welcome.

I would like to turn the call back over to management for closing remarks.

Well, if there are no more questions, again, it was a challenging quarter. There is no question the surprise we have gotten from Venezuela was certainly not welcome. However, the company's core business is intact, our management teams are deep experienced within each one of the subsidiaries that we have and we have within each group a number of new products that, I believe, that will carry us as we move into next year and give us organic growth. We continue to look at acquisitions that makes sense for us, that would strengthen anyone of the segments that we are in. With all the things that we have going on, we are very optimistic about what we see as the potential of this company. I want to thank you for your time this morning and your support of VOXX. Have a good afternoon.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a good day.

Thank you.

Thank you.