VOXX International Annual Report 2017

Plain-text annual report

VOXX INTERNATIONAL CORP FORM 10-K (Annual Report) Filed 05/15/17 for the Period Ending 02/28/17 Address 180 MARCUS BLVD HAUPPAUGE, NY 11788 6312317750 CIK 0000807707 Telephone Symbol VOXX SIC Code 5065 - Electronic Parts and Equipment, Not Elsewhere Classified Industry Auto Vehicles, Parts & Service Retailers Sector Consumer Cyclicals Fiscal Year 02/29 http://www.edgar-online.com © Copyright 2017, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KAnnual Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934For the fiscal year ended February 28, 2017Commission file number 0-28839VOXX INTERNATIONAL CORPORATION(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization)13-1964841(IRS Employer Identification No.) 2351 J. Lawson Boulevard, Orlando, Florida(Address of principal executive offices) 32824(Zip Code) (800) 645-7750(Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class: Name of Each Exchange on which Registered Class A Common Stock $.01 par value The Nasdaq Stock Market LLC Securities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o No xIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.Yes o No xIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past90 days.Yes x No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.oIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerginggrowth company. See definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 ofthe Exchange Act. (check one):Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o Emerging growth company o1If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange ActoIndicate by check mark whether the Registrant is a shell company (as defined in rule 12b-2 of the Act).Yes o No xIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files).Yes x No oThe aggregate market value of the common stock held by non-affiliates of the Registrant was $60,726,890 (based upon closing price on the Nasdaq Stock Marketon August 31, 2016 ).The number of shares outstanding of each of the registrant's classes of common stock, as of May 12, 2017 was:ClassOutstanding Class A common stock $.01 par value21,899,370Class B common stock $.01 par value2,260,954DOCUMENTS INCORPORATED BY REFERENCEPart III - (Items 10, 11, 12, 13 and 14) Proxy Statement for Annual Meeting of Stockholders to be filed on or before June 9, 2017.2VOXX INTERNATIONAL CORPORATIONIndex to Form 10-K Table of Contents PART I Item 1Business4Item 1ARisk Factors11Item 1BUnresolved Staff Comments19Item 2Properties19Item 3Legal Proceedings19Item 4Removed and Reserved19 PART II Item 5Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities20Item 6Selected Consolidated Financial Data21Item 7Management's Discussion and Analysis of Financial Condition and Results of Operations22Item 7AQuantitative and Qualitative Disclosures About Market Risk40Item 8Consolidated Financial Statements and Supplementary Data40Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure40Item 9AControls and Procedures40Item 9BOther Information44 PART III Item 10Directors, Executive Officers and Corporate Governance44Item 11Executive Compensation44Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters44Item 13Certain Relationships and Related Transactions, and Director Independence44Item 14Principal Accounting Fees and Services44 PART IV Item 15Exhibits, Financial Statement Schedules44 SIGNATURES1033CAUTIONARY STATEMENT RELATING TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACTOF 1995This Annual Report on Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7, and theinformation incorporated by reference contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933 and Section 21E ofthe Securities Exchange Act of 1934. We intend those forward looking-statements to be covered by the safe harbor provisions for forward-looking statements. Allstatements regarding our expected financial position and operating results, our business strategy, our financing plans and the outcome of any contingencies areforward-looking statements. Any such forward-looking statements are based on current expectations, estimates, and projections about our industry and ourbusiness. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "should," "would," or variations of those words and similarexpressions are intended to identify such forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actualresults to differ materially from those stated in or implied by any forward-looking statements. Factors that could cause actual results to differ materially fromforward-looking statements include, but are not limited to, matters listed in Item 1A under "Risk Factors" of this annual report. The Company assumes noobligation and does not intend to update these forward-looking statements.NOTE REGARDING DOLLAR AMOUNTS AND FISCAL YEARIn this annual report, all dollar amounts are expressed in thousands, except for share prices and per-share amounts. Unless specifically indicated otherwise, allamounts and percentages in our Form 10-K are exclusive of discontinued operations.The Company’s current fiscal year began March 1, 2016 and ended February 28, 2017 .PART IItem 1-BusinessVOXX International Corporation ("Voxx," "We," "Our," "Us," or the "Company") is a leading international manufacturer and distributor in the Automotive,Premium Audio and Consumer Accessories industries. The Company has widely diversified interests, with more than 30 global brands that it has acquired andgrown throughout the years, achieving a powerful international corporate image and creating a vehicle for each of these respective brands to emerge with its ownidentity. We conduct our business through eighteen wholly-owned subsidiaries: Audiovox Atlanta Corp., VOXX Electronics Corporation, VOXX AccessoriesCorp., Audiovox Consumer Electronics, Inc. ("ACE"), Audiovox German Holdings GmbH ("Voxx Germany"), Audiovox Venezuela, C.A., Audiovox CanadaLimited, Voxx Hong Kong Ltd., Audiovox International Corp., Audiovox Mexico, S. de R.L. de C.V. ("Voxx Mexico"), Code Systems, Inc., Oehlbach KabelGmbH ("Oehlbach"), Schwaiger GmbH ("Schwaiger"), Invision Automotive Systems, Inc. ("Invision"), Klipsch Holding LLC ("Klipsch"), Car CommunicationHolding GmbH ("Hirschmann"), Omega Research and Development, LLC ("Omega") and Audiovox Websales LLC, as well as a majority owned subsidiary,EyeLock LLC ("EyeLock"). We market our products under the Audiovox® brand name and other brand names and licensed brands, such as 808®, AR for Her,Acoustic Research®, Advent®, Ambico®, Car Link®, Chapman®, Code-Alarm®, Discwasher®, Energy®, Heco®, Hirschmann Car Communication®, Incaar ™ ,Invision®, Jamo®, Jensen®, Klipsch®, Mac Audio ™ , Magnat®, Mirage®, myris®, Oehlbach®, Omega®, Phase Linear®, Prestige®, Pursuit®, RCA®, RCAAccessories, Schwaiger®, Recoton®, Terk® and VoxxHirschmann as well as private labels through a large domestic and international distribution network. Wealso function as an OEM ("Original Equipment Manufacturer") supplier to several customers, as well as market a number of products under exclusive distributionagreements, such as SiriusXM satellite radio products; Singtrix®, the next generation in karaoke and 360 Fly ® Action Cameras. VOXX International Corporation was incorporated in Delaware on April 10, 1987 under its former name, Audiovox Corp., as successor to a business founded in1960 by John J. Shalam, our Chairman and controlling stockholder. Our extensive distribution network and long-standing industry relationships have allowed usto benefit from growing market opportunities and emerging niches in the electronics business.The Company operates in three segments based upon the Company's products and internal organizational structure. The operating segments consist of theAutomotive, Premium Audio and Consumer Accessories segments. The Automotive segment designs, manufactures, distributes and markets rear-seatentertainment devices, satellite radio products, automotive security, remote start systems, digital TV tuners, mobile antennas, mobile multimedia devices,aftermarket/OE-styled radios, car-link smartphone telematics applications, collision avoidance systems and location-based services. The Premium Audio segmentdesigns, manufactures, distributes and markets home theater systems, high-end loudspeakers, outdoor speakers, iPod/computer speakers, business music systems,cinema speakers, flat panel speakers, Bluetooth speakers, soundbars, headphones and DLNA (Digital Living Network Alliance) compatible devices. The ConsumerAccessories segment designs, manufactures, markets and distributes4remote controls; wireless and Bluetooth speakers; Singtrix karaoke products; 360 Fly® Action Cameras; EyeLock iris identification and security related products;personal sound amplifiers; and A/V connectivity, portable/home charging, reception and digital consumer products. See Note 14 to the Company's ConsolidatedFinancial Statements for segment and geographic area information.We make available financial information, news releases and other information on our web site at www.voxxintl.com. There is a direct link from the web site to theSecurities and Exchange Commission's ("SEC") filings web site, where our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports onForm 8-K and any amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free ofcharge as soon as reasonably practicable after we file such reports and amendments with, or furnish them to, the SEC. In addition, we have adopted a Code ofBusiness Conduct and Ethics which is available free of charge upon request. Any such request should be directed to the attention of: Chris Lis Johnson, CompanySecretary, 180 Marcus Boulevard, Hauppauge, New York 11788, (631) 231-7750.AcquisitionsWe have acquired and integrated the following acquisitions, discussed below, into our existing business structure:Effective September 1, 2015 ("the Closing Date"), Voxx completed its acquisition of a majority voting interest in substantially all of the assets and certain specifiedliabilities of Eyelock, Inc. and Eyelock Corporation (collectively the “Seller”) through a newly-formed entity, Eyelock LLC, for a total purchase consideration of$31,880 , which consisted of a cash payment of $15,504 , assignment of the fair value of the indebtedness owed to the Company by the Seller of $4,676 and thefair value of the non-controlling interest of $12,900 , reduced by $1,200 for amounts owed to the LLC by the selling shareholders. EyeLock is a market leader ofiris-based identity authentication solutions and this acquisition allows the Company to enter into the growing biometrics market. Refer to Note 2 "BusinessAcquisitions" of the Notes to Consolidated Financial Statements for additional information regarding the EyeLock acquisition in Fiscal 2016.On March 14, 2012, Voxx International (Germany) GmbH, a wholly owned subsidiary of Voxx, acquired all of the issued and outstanding shares of CarCommunication Holding GmbH and its worldwide subsidiaries ("Hirschmann") for a total purchase price of approximately $114,000 (based on the rate ofexchange as of the close of business on the closing date) plus related transaction fees, expenses and working capital adjustments. Hirschmann is a recognized tier-1supplier of communications and infotainment solutions and antenna solutions, primarily to the automotive industry, and counts among its global customers Audi,BMW, DAF, Daimler, PSA, Renault, Volkswagen Group and AT&T, among others. Hirschmann delivers technologically advanced automotive antenna systemsand automotive digital TV tuner systems and is recognized throughout the industry for its commitment to innovation, having developed the world's first hybrid(analog and digital) TV tuner and the first digital TV tuner for the Chinese automotive market.StrategyOur objective is to grow our business both organically and through strategic acquisitions. We will drive the business organically by continued product developmentin new and emerging technologies that should increase gross margins, and improve operating income. We are focused on expanding sales both domestically andinternationally and broadening our customer and partner base as we bring these new products to our target markets. In addition, we plan to continue to acquiresynergistic companies that would allow us to leverage our overhead, penetrate new markets and expand existing product categories. Notwithstanding the above, ifthe appropriate opportunity arises, the Company will explore the potential divestiture of a product line or business.The key elements of our strategy are as follows:Continue to build and capitalize on the VOXX family of brands. We believe the "VOXX" portfolio of brands is one of our greatest strengths and offers ussignificant opportunity for increased market penetration. Today, VOXX International has over 30 global brands in its portfolio, which provides the Company withthe ability to bring to market products under brands that consumers know to be quality. In addition, with such a wide brand portfolio, we can manage channels andsell into multiple outlets as well as leverage relationships with distributors, retailers, aftermarket car dealers and expeditors, and to global OEMs. Finally, we areopen to opportunities to license some of the brands as an additional use of the brands and as a growth strategy.Continue to maintain diversified, blue chip customer base. Voxx distributes products through a wide range of specialty and mass merchandise channels, and hasarrangements with tier-1 auto OEMs. OEM products account for approximately 38% of Fiscal 2017 sales. The top-five customers represented 29% of sales, and nosingle customer accounted for over 10% of Fiscal 2017 sales.Capitalize on niche product and distribution opportunities in our target markets. Throughout our history, we have used our extensive distribution and supplynetworks to capitalize on niche product and distribution opportunities in the automotive, premium5audio and consumer accessories categories. We will continue that focus as we remain committed to innovation, developing products internally and through ouroutsourced technology and manufacturing partners to provide our customers with products that are in demand by consumers.Combine new, internal manufacturing capabilities with our proven outsourced manufacturing with industry partners . For years, VOXX International employed anoutsourced manufacturing strategy that enabled the Company to deliver the latest technological advances without the fixed costs associated with manufacturing.With recent acquisitions, the Company has added manufacturing capabilities to produce select product lines, such as high-end speakers, rear-seat entertainmentsystems, digital TV tuners and antennas, and security related products. This blend of internal and outsourced manufacturing enables the Company to driveinnovation, control product quality and speed time-to-market.Use innovative technology generation capabilities to enable us to build a robust pipeline of new products. Voxx has invested significantly in R&D, and hasincreased R&D expenditures from $15,890 in Fiscal 2013 to $32,725 in Fiscal 2017, net of reimbursements. The Company saw significant increases in Fiscal 2017due in part to the acquisition of a controlling interest in EyeLock on September 1, 2015, as it was the first full year that EyeLock was reported in the Company'sconsolidated results of operations. Voxx uses a mix of internal and external R&D, internal and external manufacturing, and has a number of valuable trademarks,copyrights, patents, domain names and other intellectual property. Through Voxx's increased focus on R&D, the Company has built a pipeline of new productsacross all three segments, principally within the Automotive and Consumer Accessories segments.Leverage our domestic and international distribution network. We believe that today VOXX International Corporation has the most expansive distributionnetwork. Our distribution network, which includes various types of retailers and chain stores, mass merchandisers, distributors, system integrators, communicationnetwork providers, smart grid manufacturers, banks, cinema operators, cell phone providers, the U.S. military, car dealers and OEM's should allow us to increaseour market penetration. We intend to capitalize on new and existing distribution outlets to further grow our business across our three operating segments, bothdomestically and abroad.Grow our international presence. We continue to expand our international presence through our local subsidiaries in Europe, as well as operations in Canada andHong Kong. We also continue to export from our domestic operations in the United States. Our strategy remains to diversify our exposure to any particulargeography, while expanding our product offerings and distribution touch points across the world.Pursue strategic and complementary acquisitions. We continue to monitor economic and industry conditions in order to evaluate potential strategic and synergisticbusiness acquisitions that are expected to allow us to leverage overhead, penetrate new markets and expand our existing business distribution. Over the past severalyears, the Company has employed an M&A strategy to build its brand portfolio and enhance its product offering in higher margin product categories, while at thesame time, exiting lower margin and commoditized product lines, resulting in improved bottom-line performance. The Company is focused on continuing to groworganically, but may pursue opportunistic acquisitions to augment our automotive segment (primarily with OEM accounts), consumer accessories and premiumaudio.Improve bottom-line performance and generate sustainable shareholder returns. The Company has instituted an aggressive strategy in recent years to shift itsproduct mix to higher-margin product categories, while controlling costs and strategically investing in its infrastructure. The Company remains focused on growingits business organically, continuing to enhance its gross profit margins and leveraging its fixed overhead structure to generate sustainable returns for itsstockholders.Maintain disciplined acquisition criteria. Virtually all of our acquisitions over the past decade have been made to strengthen our product offerings, customer reachand growth potential across our operating business segments. Our strategy remains to acquire complimentary businesses, products and/or assets in our Automotive,Premium Audio and Consumer Accessories operating segments. Additionally, acquisitions should have a gross margin structure equal to or higher than ourconsolidated gross margins, and we will continue to look for acquisitions where we can leverage our corporate overhead and resources. Furthermore, it is importantthat management remains with Voxx as part of the acquisition, as their domain expertise, knowledge of both the inner workings of their respective companies andthe end-markets they serve are paramount to successfully running operations and achieving growth. We also pursue acquisitions that will be accretive for theCompany and its shareholders in the first year such acquisitions are made.Rapidly integrate acquired businesses. One of the more compelling factors as to why acquired businesses choose VOXX International Corporation is that we areperceived as both a financial and strategic partner. We are operators, and companies view their association with us as a positive for the future of their businesses inthat we can provide resources and support that others in our sector, or in the Private Equity community, cannot. Our strategy upon acquisition, and in the years thatfollow, is to leverage6our corporate strengths and integrate acquisitions into our operations. We provide accounting, MIS, warehouse and logistics support, as well as a host of value-added services that enable acquired companies to lower their cost basis and improve profitability. In recent years, we have consolidated facilities in our Germanoperations and in Indiana, where we brought our RCA® and Klipsch operating groups together.IndustryWe participate in selected product categories in the automotive, premium audio and consumer accessories markets within the electronics industry. These marketsare large and diverse, encompass a broad range of products and offer the ability to specialize in niche product groups. The introduction of new products andtechnological advancements are the major growth drivers in these markets. Based on this, we continue to introduce new products across all segments, with anincreased focus on niche product offerings.ProductsThe Company currently reports sales data for the following three operating segments:Automotive products include:▪mobile multi-media video products, including in-dash, overhead and headrest systems,▪autosound products including radios and amplifiers,▪satellite radios including plug and play models and direct connect models,▪smart phone telematics applications,▪automotive security and remote start systems,▪automotive power accessories,▪rear observation and collision avoidance systems,▪TV tuners and antennas,▪location based services, and▪power lift gates.Premium Audio products include:▪premium loudspeakers,▪architectural speakers,▪commercial speakers,▪outdoor speakers,▪flat panel speakers,▪wireless speakers,▪Bluetooth speakers,▪home theater systems,▪business music systems,▪streaming music systems,▪on-ear and in-ear headphones,▪wireless and Bluetooth headphones,▪soundbars and sound bases, and▪DLNA (Digital Living Network Alliance) compatible devices. Consumer Accessories products include:▪High-Definition Television ("HDTV") antennas,▪Wireless Fidelity ("WiFi") antennas,▪High-Definition Multimedia Interface ("HDMI") accessories,▪security related products,▪home electronic accessories such as cabling,▪other connectivity products,▪power cords,▪performance enhancing electronics,▪TV universal remotes,▪flat panel TV mounting systems,7▪iPod specialized products,▪wireless headphones,▪wireless speakers,▪Bluetooth speakers,▪action cameras,▪karaoke products,▪infant/nursery products,▪power supply systems and charging products,▪electronic equipment cleaning products,▪personal sound amplifiers,▪set-top boxes,▪home and portable stereos, and▪digital multi-media products, such as personal video recorders and MP3 products.We believe our segments have expanding market opportunities with certain levels of volatility related to domestic and international markets, new car sales,increased competition by manufacturers, private labels, technological advancements, discretionary consumer spending and general economic conditions. Also, allof our products are subject to price fluctuations, which could affect the carrying value of inventories and gross margins in the future.Net sales by segment, gross profit and net assets are as follows: Fiscal Fiscal Fiscal 2017 2016 2015Automotive$337,241 $351,665 $396,422Premium Audio166,789 140,508 165,812Consumer Accessories176,216 187,272 194,104Corporate/Eliminations796 1,301 1,160Total net sales$681,042 $680,746 $757,498 Gross profit$201,515 $195,685 $223,870Gross margin percentage29.6% 28.7% 29.6% Total assets$668,486 $667,190 $677,513Patents, Trademarks/Tradenames, Licensing and RoyaltiesThe Company regards its trademarks, copyrights, patents, domain names, and similar intellectual property as important to its operations. It relies on trademark,copyright and patent law, domain name regulations, and confidentiality or license agreements to protect its proprietary rights. The Company has registered, orapplied for the registration of, a number of patents, trademarks, domain names and copyrights by U.S. and foreign governmental authorities. Additionally, theCompany has filed U.S. and international patent applications covering certain of its proprietary technology. The Company renews its registrations, which vary induration, as it deems appropriate from time to time.The Company has licensed in the past, and expects that it may license in the future, certain of its proprietary rights to third parties. Some of the Company'sproducts are designed to include intellectual property licensed or otherwise obtained from third parties. While it may be necessary in the future to seek or renewlicenses relating to various aspects of the Company's products, the Company believes, based upon past experience and industry practice, such licenses generallycould be obtained on commercially reasonable terms; however, there is no guarantee such licenses could be obtained at all. We intend to operate in a way that doesnot result in willful infringement of the patents, trade secrets and other intellectual property rights of other parties. Nevertheless, there can be no assurance that aclaim of infringement will not be asserted against us or that any such assertion will not result in a judgment or order requiring us to obtain a license in order tomake, use, or sell our products.License and royalty programs offered to our manufacturers, customers and other electronic suppliers are structured using a fixed amount per unit or a percentage ofnet sales, depending on the terms of the agreement. Current license and royalty agreements have duration periods which range from 1 to 12 years or continue inperpetuity. Certain agreements may be renewed at termination8of the agreement. The Company's license and royalty income is recorded upon sale and amounted to $1,669 , $1,463 and $1,610 for the years ended February 28,2017 , February 29, 2016 and February 28, 2015 , respectively.Distribution and MarketingWe sell our products to:•power retailers,•mass merchants,•regional chain stores,•premium department stores,•lifestyle retailers,•specialty and internet retailers,•independent 12 volt retailers,•distributors,•new car dealers,•automotive and vehicle manufacturers,•automotive, vehicle and transportation equipment manufacturers (OEM's),•system integrators,•communication network providers,•smart grid manufacturers,•banks,•the U.S. military,•cinema operators,•sporting goods equipment retailers, and•cell phone carriers.We sell our products under OEM arrangements with domestic and/or international subsidiaries of automobile manufacturers such as Volkswagen, Audi, BMW,DAF Daimler, Scania, Volvo trucks, Peugeot, Ford Motor Company, Chrysler, General Motors Corporation, Toyota, Kia, Mazda, Subaru, Nissan, Porsche andBentley. These arrangements require a close partnership with the customer as we develop products to meet specific requirements. OEM products accounted forapproximately 38% of net sales for the year ended February 28, 2017 and 37% for both years ended February 29, 2016 and February 28, 2015 .Our five largest customers represented 29% of net sales for the year ended February 28, 2017 and 31% during both years ended February 29, 2016 andFebruary 28, 2015 . No one customer accounted for more than 10% of the Company's sales for the years ended February 28, 2017 , February 29, 2016 orFebruary 28, 2015 .We also provide value-added management services, which include:•product design and development,•engineering and testing,•sales training and customer packaging,•in-store display design,•installation training and technical support,•product repair services and warranty,•nationwide installation network,•consignment,•fulfillment,•warehousing, and•specialized manufacturing.We have flexible shipping policies designed to meet customer needs. In the absence of specific customer instructions, we ship products within 24 to 48 hours fromthe receipt of an order from public warehouses, as well as owned and leased facilities throughout the United States, Canada, China, Hong Kong, the Netherlands,Hungary and Germany. The Company also employs a direct ship model from our suppliers for select customers upon their request.Product Development, Warranty and Customer ServiceOur product development cycle includes:9•identifying consumer trends and potential demand,•responding to those trends through product design and feature integration, which includes software design, electrical engineering, industrial design andpre-production testing. In the case of OEM customers, the product development cycle may also include product validation to customer quality standards,and•evaluating and testing new products in our own facilities to ensure compliance with our design specifications and standards.Utilizing our company-owned and third party facilities in the United States, Europe and Asia, we work closely with customers and suppliers throughout the productdesign, testing and development process in an effort to meet the expectations of consumer demand for technologically-advanced and high quality products. OurTroy, Michigan; Orlando, Florida; Neckartenzlingen, Germany; Nürnberg, Germany; Fulda, Germany; Shanghai, China and Békéscsaba, Hungary facilities areISO/TS 16949:2009, ISO 14001:2004 and/or ISO 9001:2008 certified, which requires the monitoring of quality standards in all facets of business.We are committed to providing product warranties for all of our product lines, which generally range from 90 days to seven years. The Company also provideswarranties for certain vehicle security products for the life of the vehicle for the original owner. To support our warranties, we have independent warranty centersin the United States and Europe. Our customer service group, along with our Company websites, provides product information, answers questions and serves as atechnical hotline for installation help for end-users and customers.SuppliersWe work directly with our suppliers on industrial design, feature sets, product development and testing in order to ensure that our products and component partsmeet our design specifications.We purchase our products and component parts from manufacturers principally located in several Pacific Rim countries, including China, Hong Kong, Indonesia,Malaysia, Thailand, Vietnam, South Korea, Taiwan and Singapore, as well as the United States, Canada, Mexico and Europe. In selecting our manufacturers, weconsider quality, price, service, reputation, financial stability, as well as labor practices, disruptions, or shortages. In order to provide coordination and supervisionof supplier performance such as price negotiations, delivery and quality control, we maintain buying and inspection offices in China and Hong Kong. We considerrelations with our suppliers to be good and alternative sources of supply are generally available within 120 days. We have few long-term contracts with oursuppliers and we generally purchase our products under short-term purchase orders. Although we believe that alternative sources of supply are currently available,an unplanned shift to a new supplier could result in product delays and increased cost, which may have a material impact on our operations.CompetitionThe electronics industry is highly competitive across all product categories, and we compete with a number of well-established companies that manufacture andsell similar products. Brand name, design, advancement of technology and features as well as price are the major competitive factors within the electronicsindustry. Our Automotive products compete against factory-supplied products, including those provided by, among others, Volkswagen, Audi, General Motors,Ford and Chrysler, as well as against major companies in the automotive aftermarket, such as Sony, Panasonic, Kenwood, Directed Electronics, Autopage, Myronand Davis, Phillips, Insignia, and Pioneer and other Tier 1 OEM's, such as Laird and Kathrein. Our Premium Audio products compete against major companiessuch as Polk, Definitive, Bose, Sonos, Sonance, and Bowers and Wilkins. Our Consumer Accessories product lines compete against major companies such asSony, Phillips, Emerson Radio, Jasco, Belkin and GoPro.Financial Information about Foreign and Domestic OperationsThe amounts of net sales and long-lived assets, attributable to foreign and domestic operations for all periods presented are set forth in Note 14 of the Notes toConsolidated Financial Statements, included herein.Equity InvestmentWe have a 50% non-controlling ownership interest in ASA Electronics, LLC ("ASA") which acts as a distributor of mobile electronics specifically designed forniche markets within the automotive industry, including: RV's; buses; and commercial, heavy duty, agricultural, construction, powersport, and marine vehicles.Employees10As of February 28, 2017 , we employed approximately 2,060 people worldwide, of which approximately 964 were covered under collective bargainingagreements. We consider our relations with employees to be good as of February 28, 2017 .Item 1A-Risk FactorsWe have identified certain risk factors that apply to us. Each of the following risk factors should be carefully considered, as well as all of the other informationincluded or incorporated by reference in this Form 10-K. If any of these risks, or other risks not presently known to us or that we currently believe not to besignificant, develop into actual events, then our business, financial condition, liquidity, or results of operations could be adversely affected. If that happens, themarket price of our common stock would likely decline, and you may lose all or part of your investment.The Automotive, Premium Audio and Consumer Accessories businesses are highly competitive and face significant competition from Original EquipmentManufacturers (OEMs) and direct imports by our retail customers.The market for mobile electronics, premium audio products and consumer accessories is highly competitive across all product lines. We compete against manyestablished companies, some of whom have substantially greater financial and engineering resources than we do. We compete directly with OEMs, includingdivisions of well-known automobile manufacturers, in the autosound, auto security, mobile video and accessories markets. We believe that OEMs have diversifiedand improved their product offerings and place increased sales pressure on new car dealers with whom they have close business relationships to purchase OEM-supplied equipment and accessories. To the extent that OEMs succeed in their efforts, this success would have a material adverse effect on our sales of automotiveentertainment and security products to new car dealers. In addition, we compete with major retailers who may at any time choose to direct import products that wemay currently supply.We face intense competition from other biometrics solutions providers. A significant number of established companies have developed or are developing and marketing software and hardware for biometrics products and applicationsthat currently compete with or will compete directly with our iris-based identity authentication solutions. We believe that additional competitors will enter thebiometrics market and become significant long-term competitors, and that, as a result, competition will increase. Companies competing with us may introducesolutions that are competitively priced, have increased performance or functionality or incorporate technological advances we have not yet developed orimplemented.We have few long-term sales contracts with our customers that contain guaranteed customer purchase commitments.Sales of many of our products are made by purchase orders and are terminable at will by either party. We do have long-term sales contracts with certain customers;however, these contracts do not require the customers to guarantee specific levels of product purchases over the term of the contracts. The unexpected loss of all ora significant portion of sales to any one of our large customers could have a material adverse effect on our performance.Sales in our Automotive, Premium Audio and Consumer Accessories businesses are dependent on new products, product development and consumeracceptance.Our Automotive, Premium Audio and Consumer Accessories businesses depend, to a large extent, on the introduction and availability of innovative products andtechnologies. If we are not able to continually introduce new products that achieve consumer acceptance, our sales and profit margins may decline.The impact of future selling prices and technological advancements may cause price erosion and adversely impact our profitability and inventory value.Since we do not manufacture all of our products and do not conduct a majority of our own research, we cannot assure you that we will be able to sourcetechnologically advanced products in order to remain competitive. Furthermore, the introduction or expected introduction of new products or technologies maydepress sales of existing products and technologies. This may result in declining prices and inventory obsolescence. Since we maintain a substantial investment inproduct inventory, declining prices and inventory obsolescence could have a material adverse effect on our business and financial results.Our estimates of excess and obsolete inventory may prove to be inaccurate, in which case the provision required for excess and obsolete inventory may beunderstated or overstated. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changesin demand or technological developments could have a significant impact on the value of our inventory and operating results.11A commercial market for biometrics technology is still developing. There can be no assurance our iris-based identity authentication technology will besuccessful or achieve market acceptance. A component of our strategy to grow revenue includes expansion of our iris-based identity authentication solutions into commercial markets. To date, biometricstechnology has received only limited acceptance in such markets. Although the recent appearance of biometric readers on popular consumer products, such assmartphones, has increased interest in biometrics as a means of authenticating and/or identifying individuals, commercial markets for biometrics technology are inthe process of developing and evolving. Biometrics-based solutions compete with more traditional security methods including keys, cards, personal identificationnumbers and security personnel. Acceptance of biometrics as an alternative to such traditional methods depends upon a number of factors including:•the cost, performance and reliability of our products and services and the products and services offered by our competitors;•the continued growth in demand for biometrics solutions within the government and law enforcement markets as well as the development and growth ofdemand for biometric solutions in markets outside of government and law enforcement;•customers’ perceptions regarding the benefits of biometrics solutions;•public perceptions regarding the intrusiveness of these solutions and the manner in which organizations use the biometric information collected;•public perceptions regarding the confidentiality of private information;•proposed or enacted legislation related to privacy of information;•customers’ satisfaction with biometrics solutions; and•marketing efforts and publicity regarding biometrics solutions.There is no guarantee that patent/royalty rights will be renewed or licensing agreements will be maintained.Certain product development and revenues are dependent on the ownership and or use of various patents, licenses and license agreements. If the Company is notable to successfully renew or renegotiate these rights, we may suffer from a loss of product sales or royalty revenue associated with these rights or incur additionalexpense to pursue alternative arrangements.There is no guarantee that our research and development expenses will be reimbursed.We enter into development and long-term supply agreements with certain of our OEM customers and may be reimbursed for these development services, whichoffsets a portion of our research and development expense. This reimbursement is based upon achieving certain milestones in the development agreement. We maynot always be able to achieve these milestones or control the time-frame in which the milestones are met. As a result, our research and development expenses maynot always be offset by these reimbursements, which may materially affect our operating results. For Fiscal 2017 , 2016 and 2015 , the Company recorded $6,636 ,$8,313 and $7,269 , respectively, of development service reimbursements as a reduction of research and development expense.We plan to continue to expand the international marketing and distribution of our products, which will subject us to risks associated with internationaloperations, including exposure to foreign currency fluctuations.As part of our business strategy, we intend to continue to increase our international sales, although we cannot assure you that we will be able to do so.Approximately 34% of our net sales currently originate in markets outside the U.S. While geographic diversity helps to reduce the Company's exposure to risk inany one country or part of the world, it also means that we are subject to the full range of risks associated with significant international operations, including, butnot limited to:•changes in exchange rates for foreign countries, which may reduce the U.S. dollar value of revenues, profits and cash flows we receive from non-U.S.markets or increase our supply costs, as measured in U.S. dollars, in those markets;•exchange controls and other limits on our ability to import raw materials or finished product or to repatriate earnings from overseas;•political and economic instability, social or labor unrest or changing macroeconomic conditions in our markets;•foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources; and•other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax consequences or other imposition ofonerous trade restrictions, price controls or other government controls.These risks could have a significant impact on our ability to sell our products on a competitive basis in international markets and may have a material adverseeffect on our results of operations, cash flows and financial condition.12In an effort to reduce the impact on earnings of foreign currency rate movements, we engage in a combination of cost-containment measures and selective hedgingof foreign currency transactions. However, these measures may not succeed in offsetting any negative impact of foreign currency rate movements on our businessand results of operations. For example, since 2010, Venezuela has been designated as hyperinflationary and the resulting currency devaluations in Venezuela inthat initial year affected our business and results of operations. The government of Venezuela has also devalued its currency several times since 2013, which hasalso affected our business and results of operations. Going forward, additional government actions, including further currency devaluations, foreign exchangeprice controls or labor unrest in Venezuela could have further adverse impacts on the Company.Substantial political and economic uncertainty in Venezuela puts our local assets at risk.We have a subsidiary in Venezuela, whose operations are currently suspended due to the economic and political climate in that country. We hold fixed assets atthis subsidiary totaling $3,731 and incurred impairment charges related to our long-lived assets in Venezuela of $9,304 during Fiscal 2015. If conditions continueto deteriorate, we may be at risk of additional losses to our capital assets, including further declines in fair value or government confiscation of certain assets.Concerns regarding the European debt crisis, market perceptions concerning the instability of the Euro and the European economy and concerns surroundingthe economic conditions in China could adversely affect our business, results of operations and financing.Concerns persist regarding the debt burden of certain Eurozone countries and their ability to meet future financial obligations, the overall stability of the Euro andthe suitability of the Euro as a single currency given the diverse economic and political circumstances within individual Eurozone countries. There have also beenconcerns regarding the slowing of the Chinese economy, as well as the economic effect of tensions in the relationship between China and surrounding Asiancountries. These concerns or market perceptions regarding these and related issues could adversely affect the value of the Company's Euro-denominated assets andobligations. In addition, concerns over the effect of this financial crisis on financial institutions in Europe, China and globally could have an adverse impact on theeconomy generally, and more specifically on the consumers' demand for our products.In addition, in June 2016, voters in the United Kingdom approved an advisory referendum to withdraw from the European Union (commonly referred to as“Brexit”). The Brexit vote and the perceptions as to the impact of the withdrawal of the United Kingdom from the European Union may adversely affect businessactivity, political stability and economic conditions not only in the United Kingdom, but in the European Union and elsewhere.We are responsible for product warranties and defects.Whether we outsource manufacturing or manufacture products directly for our customers, we provide warranties for all of our products for which we haveprovided an estimated liability. Therefore, we are highly dependent on the quality of our suppliers’ products.If we experience an increase in warranty claims, or if our costs associated with such warranty claims increase significantly, we will begin to incur liabilities forpotential warranty claims after the sale of our products at levels that we have not previously incurred or anticipated. In addition, an increase in the frequency of ourwarranty claims or amount of warranty costs may harm our reputation and could have a material adverse effect on our financial condition and results of operations.Our success will depend on a less diversified line of business.Currently, we generate substantially all of our sales from the Automotive, Premium Audio and Consumer Accessories businesses. We cannot assure you that wecan grow the revenues of our Automotive, Premium Audio and Consumer Accessories businesses or maintain profitability. As a result, the Company's revenuesand profitability will depend on our ability to maintain and generate additional customers and develop new products. A reduction in demand for our existingproducts and services would have a material adverse effect on our business. The sustainability of current levels of our Automotive, Premium Audio and ConsumerAccessories businesses and the future growth of such revenues, if any, will depend on, among other factors:•the overall performance of the economy and discretionary consumer spending,•competition within key markets,•customer acceptance of newly developed products and services, and•the demand for other products and services.We cannot assure you that we will maintain or increase our current level of revenues or profits from the Automotive, Premium Audio and Consumer Accessoriesbusinesses in future periods.13OEM sales are dependent on the economic success of the automotive industry.A portion of our OEM sales are to automobile manufacturers. In the past, some domestic OEM manufacturers have reorganized their operations as a result ofgeneral economic conditions. There is no guarantee that additional automobile manufacturers will not face similar reorganizations in the future. If additionalreorganizations do take place and are not successful, it could have a material adverse effect on a portion of our OEM business.We depend on a small number of key customers for a large percentage of our sales.The electronics industry is characterized by a number of key customers. Specifically 29% of our sales were to five customers in Fiscal 2017 and 31% in 2016 andFiscal 2015 . The loss of one or more of these customers could have a material adverse impact on our business.If our sales during the holiday season fall below our expectations, our annual results could also fall below expectations.Seasonal consumer shopping patterns significantly affect our business. We generally make a substantial amount of our sales and net income during September,October and November. We expect this trend to continue. December is also a key month for us, due largely to the increase in promotional activities by ourcustomers during the holiday season. If the economy faltered in these periods, if our customers altered the timing or frequency of their promotional activities or ifthe effectiveness of these promotional activities declined, particularly around the holiday season, it could have a material adverse effect on our annual financialresults.Our business could be affected by weather-related factors.Our results of operations may be adversely affected by weather-related factors. Severe winter weather conditions may deter or prevent patrons from reachingfacilities where our products are sold. Although our budget assumes certain seasonal fluctuations in our revenues to ensure adequate cash flow during expectedperiods of lower revenues, we cannot ensure that weather-related factors will not have a material adverse effect on our operations.A decline in general economic conditions could lead to reduced consumer demand for the discretionary products we sell.Consumer spending patterns, especially discretionary spending for products such as mobile, consumer and accessory electronics, are affected by, among otherthings, prevailing economic conditions, energy costs, raw material costs, wage rates, inflation, consumer confidence and consumer perception of economicconditions. A general slowdown in the U.S. and certain international economies or an uncertain economic outlook could have a material adverse effect on our salesand operating results.We are increasingly dependent on the continuous and reliable operation of our information technology systems, and a disruption of these systems, resultingfrom cyber security attacks or other events, could adversely affect our business.We increasingly depend on our information technology, or IT, infrastructure in order to achieve our business objectives. If we experience a problem that impairsthis infrastructure, such as a computer virus, a problem with the functioning of an important IT application, or an intentional disruption of our IT systems by a thirdparty, the resulting disruptions could impede our ability to record or process orders, manufacture and ship in a timely manner, or otherwise carry on our business inthe ordinary course. Any such events could cause us to lose customers or revenue and could require us to incur significant expense to eliminate these problems andaddress related security concerns.Computer viruses, malware, and other “hacking” programs and devices may cause significant damage, delays or interruptions to our systems and operations or tocertain of the products we sell, resulting in damage to our reputation and brand names. They may also attack our infrastructure, industrial machinery, software orhardware causing significant damage, delays or other service interruptions to our systems and operations. “Hacking” involves efforts to gain unauthorized access toinformation or systems or to cause intentional malfunctions, loss or corruption of data, software, hardware or other computer equipment. In addition, increasinglysophisticated malware may target real-world infrastructure or product components, including certain of the products that we currently or may in the future sell byattacking, disrupting, reconfiguring and/or reprogramming industrial control software. We may incur significant costs to protect our systems and equipment againstthe threat of, and to repair any damage caused by, computer viruses and hacking. Moreover, if a computer virus or hacking affects our systems or products, ourreputation and brand names could be materially damaged and use of our products may decrease.We are subject to governmental regulations.14We always face the possibility of new governmental regulations which could have a substantial effect on our operations and profitability. The Dodd-Frank WallStreet Reform and Consumer Protection Act contains provisions to improve transparency and accountability concerning the supply of certain minerals, known as“conflict minerals,” originating from the Democratic Republic of Congo and adjoining countries. There are costs associated with complying with these disclosurerequirements, including for due diligence to determine the sources of conflict minerals used in our products and other potential changes to products, processes orsources of supply as a consequence of such verification activities. The implementation of these rules could adversely affect the sourcing, supply and pricing ofmaterials used in our products. As there may be only a limited number of suppliers offering "conflict free" conflict minerals, we cannot be sure that we will be ableto obtain necessary conflict minerals from such suppliers in sufficient quantities or at competitive prices. Also, we may face reputational challenges if wedetermine that certain of our products contain minerals not determined to be conflict free or if we are unable to sufficiently verify the origins for all conflictminerals used in our products through the procedures we may implement.We have debt outstanding and must comply with restrictive covenants in our debt agreements.Our existing debt agreements contain a number of significant covenants, which limit our ability to, among other things, borrow additional money, pay dividends,dispose of assets and acquire new businesses. These covenants also require us to maintain a specified fixed charge coverage ratio. If the Company is unable tocomply with these covenants, there would be a default under these debt agreements. Changes in economic or business conditions, results of operations or otherfactors could cause the Company to default under its debt agreements. A default, if not waived by our lenders, could result in acceleration of our debt and possiblebankruptcy.We provide financial support to one of our subsidiaries through an intercompany loan agreement and may need to secure additional financing for our ownoperations, but we cannot be sure that additional financing will be available.We have entered into intercompany loan agreements with our majority owned subsidiary, EyeLock LLC, which is expected to continue to require additionalfunding beyond one year. In funding the loans to EyeLock LLC, we have less cash flow available to support our domestic operations and other activities. If we areunable to generate sufficient cash flows in the future to support our operations and service our debt as a result of funding EyeLock LLC, we may be required torefinance all or a portion of our existing debt or to obtain additional financing. There can be no assurance that any refinancing will be possible or that anyadditional financing could be obtained on acceptable terms. The inability to service or refinance our existing debt or to obtain additional financing would have amaterial adverse effect on our financial position, liquidity, and results of operations.Our capital resources may not be sufficient to meet our future capital and liquidity requirements.We believe our current funds and available credit lines would provide sufficient resources to fund our existing operations for the foreseeable future. However, wemay need additional capital to operate our business if:•market conditions change,•our business plans or assumptions change,•we make significant acquisitions,•we need to make significant increases in capital expenditures or working capital,•our restrictive covenants do not provide sufficient credit, or•we need to continue to provide financial support to EyeLock LLC for an extended period of time.Our inability to timely file audited historical financial statements of EyeLock Inc. and EyeLock Corporation with the SEC may adversely affect our ability toraise, and the cost of raising, future capital. As a result of our acquisition of substantially all of the assets and certain liabilities of EyeLock Inc. and EyeLock Corporation on September 1, 2015, we wererequired to file with the SEC certain audited historical financial statements relating to EyeLock Inc. and EyeLock Corporation. These financial statements were notavailable to be filed by the date on which they were required to be filed, November 18, 2015. Therefore, we are currently ineligible to use Form S-3, a streamlinedregistration form, to register securities for twelve calendar months from the date on which we filed these historical financial statements, which was on June 10,2016. During this period of ineligibility, if we determine it to be necessary or advisable to raise additional capital, we would need to use Form S-1 to registersecurities with the SEC or we would instead need to issue such securities in private placements. These alternatives generally entail greater total costs to us andmore time to complete than the use of Form S-3 and any take-down offering associated with an effective registration statement on Form S-3. As a result, our abilityto raise, and the cost of raising, future capital could be adversely affected.15We have recorded, or may record in the future, goodwill and other intangible assets as a result of acquisitions, and changes in future business conditions couldcause these investments to become impaired, requiring substantial write-downs that would reduce our operating income.Goodwill and other intangible assets recorded on our balance sheet as of February 28, 2017 was $279,501 . We evaluate the recoverability of recorded goodwilland other intangible asset amounts annually, or when evidence of potential impairment exists. The annual impairment test is based on several factors requiringjudgment. Changes in our operating performance, business conditions, or restrictions on our field of use resulted in an impairment of certain intangible assetstotaling $9,070 in Fiscal 2016, and could result in additional future impairments, which could be material to our results of operations.A portion of our workforce is represented by labor unions. Collective bargaining agreements can increase our expenses. Labor disruptions could adverselyaffect our operations.As of February 28, 2017 , approximately 37 of our U.S. full-time employees and 927 of our European full-time employees were covered by collective bargainingagreements. We cannot predict whether labor unions may be successful in organizing other portions of our workforce or what additional costs we could incur as aresult.We depend on our suppliers to provide us with adequate quantities of high quality competitive products and/or component parts on a timely basis.We have few long-term contracts with our suppliers. Most of our products and component parts are imported from suppliers under short-term purchase orders.Accordingly, we can give no assurance that:•our supplier relationships will continue as presently in effect;•our suppliers will be able to obtain the components necessary to produce high-quality, technologically-advanced products for us;•we will be able to obtain adequate alternatives to our supply sources, should they be interrupted;•if obtained, alternatively sourced products of satisfactory quality would be delivered on a timely basis, competitively priced, comparably featured oracceptable to our customers;•our suppliers have sufficient financial resources to fulfill their obligations;•our suppliers will be able to obtain raw materials and labor necessary for production;•shipments from our suppliers will not be affected by labor disputes within the shipping and transportation industries;•our suppliers could be impacted by natural disasters directly or via their supply chains; and•as it relates to products we do not manufacture, our suppliers will not become our competitors.On occasion, our suppliers have not been able to produce the quantities of products or component parts that we desire. Our inability to manufacture and/or supplysufficient quantities of products that are in demand could reduce our profitability and have a material adverse effect on our relationships with our customers. If anyof our supplier relationships were terminated or interrupted, we could experience an immediate or long-term supply shortage, which could have a material adverseeffect on our business.Because we purchase a significant amount of our products from suppliers in Pacific Rim countries, we are subject to the economic risks associated withinherent changes in the social, political, regulatory and economic conditions in these countries, as well as our own.We import most of our products from suppliers in the Pacific Rim. Countries in the Pacific Rim have experienced significant social, political and economicupheaval over the past several years. Due to the large concentrations of our purchases in Pacific Rim countries, particularly China, Hong Kong, South Korea,Vietnam, Malaysia and Taiwan, any adverse changes in the social, political, regulatory and economic conditions in these countries may materially increase the costof the products that we buy from our foreign suppliers or delay shipments of products, which could have a material adverse effect on our business. In addition, ourdependence on foreign suppliers forces us to order products further in advance than we would if our products were manufactured domestically. This increases therisk that our products will become obsolete or face selling price reductions before we can sell our inventory.Additionally, U.S. President Trump, certain members of the U.S. House of Representatives, and key U.S. administrative officials and policy makers have suggestedrenegotiation of The North American Free Trade Agreement and the implementation of tariffs, duties, border taxes or other similar assessments that could impactthe level of trade between the U.S. and Mexico. President Trump also has publicly stated that he may seek to impose tariffs, duties, border taxes or other similarassessments on products imported from China. If any such tariffs, duties, border taxes or other assessments are imposed on the products we import into the UnitedStates, it would increase the total cost of these products and may decrease demand for such products. In addition, we may16not be able to fully pass on the added cost of such tariffs, taxes, duties or assessments to our customers, which may adversely affect our business, financialcondition and results of operations.Our products could infringe the intellectual property rights of others and we may be exposed to costly litigation.The products we sell are continually changing as a result of improved technology. Although we and our suppliers attempt to avoid infringing known proprietaryrights of third parties in our products, we may be subject to legal proceedings and claims for alleged infringement by us, our suppliers or our distributors, or of athird party’s patents, trade secrets, trademarks or copyrights.Any claims relating to the infringement of third-party proprietary rights, even if not meritorious, could result in costly litigation, divert management’s attention andresources, or require us to either enter into royalty or license agreements which are not advantageous to us or pay material amounts of damages. In addition, partiesmaking these claims may be able to obtain an injunction, which could prevent us from selling our products. We may increasingly be subject to infringement claimsas we expand our product offerings.Our cash and cash equivalents could be adversely affected if the financial institutions in which we hold our cash and cash equivalents fail.Our cash and cash equivalents consist of demand deposits and highly liquid money market funds with original maturities of three months or less at the time ofpurchase. We maintain the cash and cash equivalents with major financial institutions. Some deposits with these banks exceed the Federal Deposit InsuranceCorporation ("FDIC") insurance limits or similar limits in foreign jurisdictions. While we monitor daily the cash balances in the operating accounts and adjust thebalances as appropriate, these balances could be impacted if one or more of the financial institutions with which we deposit fails or is subject to other adverseconditions in the financial or credit markets. To date, we have experienced no loss or lack of access to our invested cash or cash equivalents; however, we canprovide no assurance that access to our invested cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets.Acquisitions and strategic investments may divert our resources and management attention; results may fall short of expectations.We intend to continue pursuing selected acquisitions of and investments in businesses, technologies and product lines as a key component of our growthstrategy. Any future acquisition or investment may result in the use of significant amounts of cash, potentially dilutive issuances of equity securities, or theincurrence of debt and amortization expenses related to intangible assets. Acquisitions involve numerous risks, including:•difficulties in the integration and assimilation of the operations, technologies, products and personnel of an acquired business;•diversion of management’s attention from other business concerns;•increased expenses associated with the acquisition, and•potential loss of key employees or customers of any acquired business.We cannot assure you that our acquisitions will be successful and will not adversely affect our business, results of operations or financial condition.We invest in marketable securities and other investments as part of our investing activities. These investments fluctuate in value based on economic,operational, competitive, political and technological factors. These investments could be subject to loss or impairment based on their performance.The Company has, in the past, incurred other-than-temporary impairments on its investments and continues to monitor its investments in non-controlledcorporations for potential future impairments. In addition, there is no guarantee that the fair values recorded for other investments will be sustained in the future.We depend heavily on existing directors, management and key personnel and our ability to recruit and retain qualified personnel.Our success depends on the continued efforts of our directors, executives and senior vice presidents, many of whom have worked with VOXX InternationalCorporation for several decades, as well as our other executive officers and key employees. We have employment contracts with most of our executive officers.The loss or interruption of the continued full-time service of certain of our executive officers and key employees could have a material adverse effect on ourbusiness.17In addition, to support our continued growth, we must effectively recruit, develop and retain additional qualified personnel both domestically and internationally.Our inability to attract and retain necessary qualified personnel could have a material adverse effect on our business.Our stock price could fluctuate significantly.The market price of our common stock could fluctuate significantly in response to various factors and events, including:•operating results being below market expectations,•announcements of technological innovations or new products by us or our competitors,•loss of a major customer or supplier,•changes in, or our failure to meet, financial estimates by securities analysts,•industry developments,•economic and other external factors,•general downgrading of our industry sector by securities analysts,•inventory write-downs, and•ability to integrate acquisitions.In addition, the securities markets have experienced significant price and volume fluctuations over the past several years that have often been unrelated to theoperating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our common stock.John J. Shalam, our Chairman, controls a significant portion of the voting power of our common stock and can exercise control over our affairs .Mr. Shalam beneficially owns approximately 55% of the combined voting power of both classes of common stock. This will allow him to elect our Board ofDirectors and, in general, determine the outcome of any other matter submitted to the stockholders for approval. Mr. Shalam's voting power may have the effect ofdelaying or preventing a change in control of the Company.We have two classes of common stock: Class A common stock is traded on the Nasdaq Stock Market under the symbol VOXX and Class B common stock, whichis not publicly traded and substantially all of which is beneficially owned by Mr. Shalam. Each share of Class A common stock is entitled to one vote per share andeach share of Class B common stock is entitled to ten votes per share. Class A shareholders vote separately for the election/removal of the Class A directors, whileboth classes vote together as a single class on all other matters and as otherwise may be required by Delaware law. Since our charter permits shareholder action bywritten consent, Mr. Shalam may be able to take significant corporate actions without prior notice and a shareholder meeting.We exercise our option for the "controlled company" exemption under NASDAQ rules.The Company has exercised its right to the "controlled company" exemption under NASDAQ rules which enables us to forego certain NASDAQ requirementswhich include: (i) maintaining a majority of independent directors; (ii) electing a nominating committee composed solely of independent directors; (iii) ensuringthe compensation of our executive officers is determined by a majority of independent directors or a compensation committee composed solely of independentdirectors; and (iv) selecting, or recommending for the Board's selection, director nominees, either by a majority of the independent directors or a nominatingcommittee composed solely of independent directors. Although we do not maintain a nominating committee and do not have a majority of independent directors,the Company notes that at the present time we do maintain a compensation committee comprised solely of independent directors who approve executivecompensation, and the recommendations for director nominees are governed by a majority of independent directors. However, election of the "controlledcompany" exemption under NASDAQ rules allows us to modify our position at any time.Other Risks Other risks and uncertainties include:•changes in U.S. federal, state and local law,•our ability to implement operating cost structures that align with revenue growth,•trade sanctions against or for foreign countries,•successful integration of business acquisitions and new brands in our distribution network,•compliance with the Sarbanes-Oxley Act, and18•compliance with complex financial accounting and tax standards, both foreign and domestic.Item 1B-Unresolved Staff CommentsAs of the filing of this annual report on Form 10-K, there were no unresolved comments from the staff of the Securities and Exchange Commission.Item 2-PropertiesOur Corporate headquarters is located at 2351 J. Lawson Blvd. in Orlando, Florida. In addition, as of February 28, 2017 , the Company leased a total of 22operating facilities or offices located in 8 states as well as Germany, China, Canada, Mexico, Hong Kong, and France. The leases have been classified as operatingleases. Within the United States, these facilities are located in Florida, Georgia, New York, Ohio, New Jersey, Texas, Arkansas and Michigan. The Company alsoowns 9 of its operating facilities or offices located in New York, Indiana, Florida, and Arkansas in the United States, as well as in Germany, Venezuela andHungary. These facilities serve as offices, warehouses, manufacturing facilities and distribution centers. Additionally, we utilize public warehouse facilities locatedin Virginia, Nevada, Indiana, Florida, Mexico, China, the Netherlands, Germany and Canada.Item 3-Legal ProceedingsThe Company is currently, and has in the past, been a party to various routine legal proceedings incident to the ordinary course of business. If managementdetermines, based on the underlying facts and circumstances, that it is probable a loss will result from a litigation contingency and the amount of the loss can bereasonably estimated, the estimated loss is accrued for. The Company does not believe that any of its outstanding litigation matters will have a material adverseeffect on the Company's financial statements, individually or in the aggregate.The products the Company sells are continually changing as a result of improved technology. As a result, although the Company and its suppliers attempt to avoidinfringing known proprietary rights, the Company may be subject to legal proceedings and claims for alleged infringement by patent, trademark or otherintellectual property owners. Any claims relating to the infringement of third-party proprietary rights, even if not meritorious, could result in costly litigation,divert management’s attention and resources, or require the Company to either enter into royalty or license agreements which are not advantageous to theCompany, or pay material amounts of damages.Item 4-Removed and ReservedNone19PART IIItem 5-Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationThe Class A Common Stock of Voxx is traded on the Nasdaq Stock Market under the symbol "VOXX." The following table sets forth the low and high sale priceof our Class A Common Stock, based on the last daily sale in each of the last eight fiscal quarters:Year ended February 28, 2017 High LowFirst Quarter $4.92 $2.97Second Quarter 3.36 2.53Third Quarter 5.70 2.50Fourth Quarter 5.30 4.15 Year ended February 28, 2016 High LowFirst Quarter $9.65 $7.95Second Quarter 9.21 7.29Third Quarter 7.93 5.05Fourth Quarter 6.16 3.40DividendsWe have not paid or declared any cash dividends on our common stock. We have retained, and currently anticipate that we will continue to retain, all of ourearnings for use in developing our business. Future cash dividends, if any, will be paid at the discretion of our Board of Directors and will depend, among otherthings, upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and such other factors as ourBoard of Directors may deem relevant giving consideration to any requirements or restrictions under the Company's credit agreement (see Note 7(a) to the Notes tothe Consolidated Financial Statements).HoldersThere are 913 holders of record of our Class A Common Stock and 4 holders of Class B Convertible Common Stock.Issuer Purchases of Equity Securities In May 1999, we were authorized by the Board of Directors to repurchase up to 1,563,000 shares of Class A Common Stock in the open market under a sharerepurchase program (the "Program"). In July 2006, the Board of Directors authorized an additional repurchase up to 2,000,000 shares of Class A Common Stockin the open market in connection with the Program. During the year ended February 28, 2017 , the Company did not purchase any shares. As of February 28, 2017, the cumulative total of acquired shares (net of reissuances of 11,655 ) pursuant to the program was 2,168,074 , with a cumulative value of $21,176 . Theremaining authorized share repurchase balance is 1,383,271 at February 28, 2017 . Performance GraphThe following table compares the annual percentage change in our cumulative total stockholder return on our Class A common stock during a period commencingon February 29, 2012 and ending on February 28, 2017 with the cumulative total return of the Nasdaq Stock Market (U.S.) Index and our SIC Code Index, duringsuch period.20*$100 invested on 2/29/12 in stock or index, including reinvestment of dividends.Item 6-Selected Consolidated Financial DataThe following selected consolidated financial data for the last five years should be read in conjunction with the consolidated financial statements and related notesand "Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-K. 21 YearEnded YearEnded YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016(1) February 28, 2015(2) February 28, 2014(3) February 28, 2013Consolidated Statement of Operations Data Net sales$681,042 $680,746 $757,498 $809,709 $835,577Operating (loss) income(172) (11,570) 16,594 (37,375) 41,696Net income (loss) attributable to VoxxInternational Corporation4,422 (2,682) (942) (26,597) 22,492 Net income (loss) per common share: Basic$0.18 $(0.11) $(0.04) $(1.10) $0.96Diluted$0.18 $(0.11) $(0.04) $(1.10) $0.95 As of As of As of As of As of February 28, February 29, February 28, February 28, February 28, 2017 2016 (1) 2015 (2) 2014 (3) 2013Consolidated Balance Sheet Data Total assets$668,486 $667,190 $677,513 $747,150 $829,272Working capital143,281 132,167 154,312 179,077 200,703Long-term obligations (4)147,104 139,412 133,970 170,786 228,197Stockholders' equity391,315 395,894 396,140 429,584 444,536 (1)Fiscal 2016 amounts reflect the acquisition of a controlling interest in all of the assets and certain liabilities of EyeLock Inc. and EyeLock Corporation (seeNote 2 of the Notes to Consolidated Financial Statements), as well as intangible asset impairment charges.(2)Fiscal 2015 amounts include Venezuela currency devaluation and impairment charges related to Venezuela investment properties.(3)Fiscal 2014 amounts include a goodwill impairment charge, as well as impairment charges related to intangible and long-lived assets.(4)Long-term obligations include long-term debt, capital lease obligations, deferred compensation, deferred and other tax liabilities, as well as other long termliabilities.Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")This section should be read in conjunction with the "Cautionary Statements" and "Risk Factors" in Item 1A of Part I, and Item 8 of Part II, "Consolidated FinancialStatements and Supplementary Data."We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations with an overview of the business, including our strategy togive the reader a summary of the goals of our business and the direction in which our business is moving. This is followed by a discussion of the CriticalAccounting Policies and Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. Inthe next section, we discuss our Results of Operations for the year ended February 28, 2017 compared to the years ended February 29, 2016 and February 28, 2015. Next, we present adjusted EBITDA and diluted adjusted EBITDA per common share for the year ended February 28, 2017 compared to the years endedFebruary 29, 2016 and February 28, 2015 in order to provide a useful and appropriate supplemental measure of our performance. We then provide an analysis ofchanges in our balance sheet and cash flows, and discuss our financial commitments in the sections entitled "Liquidity and Capital Resources." We conclude thisMD&A with a discussion of "Related Party Transactions" and "Recent Accounting Pronouncements."Business Overview and Strategy22VOXX International Corporation ("Voxx," "We," "Our," "Us," or the "Company") is a leading international distributor, manufacturer and value added serviceprovider in the automotive, premium audio and consumer accessory industries. We conduct our business through eighteen wholly-owned subsidiaries and onemajority owned subsidiary. Voxx has a broad portfolio of brand names used to market our products as well as private labels through a large domestic andinternational distribution network. We also function as an OEM ("Original Equipment Manufacturer") supplier to several customers, as well as market a numberof products under exclusive distribution agreements.In recent years, we have focused on our intention to acquire synergistic businesses with the addition of several new subsidiaries. These subsidiaries have helped usto expand our core business and broaden our presence in the accessory and OEM markets. Our acquisitions of Hirschmann, Klipsch and Invision have providedthe opportunity to enter the manufacturing arena, and our acquisition of a controlling interest in EyeLock Inc. and EyeLock Corporation has allowed us to enter thegrowing and innovative biometrics market. Our intention is to continue to pursue business opportunities which will allow us to further expand our business modelwhile leveraging overhead and exploring specialized niche markets in the electronics industry.The Company aligns its subsidiaries in three operating and reporting segments, based upon our products and internal organizational structure. The operating andreporting segments consist of the Automotive, Premium Audio and Consumer Accessories segments. The characteristics of our operations that are relied on inmaking and reviewing business decisions within these segments include the similarities in our products, the commonality of our customers, suppliers and productdevelopers across multiple brands, our unified marketing and distribution strategy, our centralized inventory management and logistics, and the nature of thefinancial information used by our Chief Operating Decision Maker ("CODM"). The CODM reviews the financial results of the Company based on theperformance of the Automotive, Premium Audio and Consumer Accessories groups.The Company’s domestic and international business is subject to retail industry conditions and the sales of new and used vehicles. Recent worldwide economicconditions have had an adverse impact on consumer spending. If the global macroeconomic environment does not continue to improve or if it deteriorates further,this could have a negative effect on the Company’s revenues and earnings. In an attempt to offset the recent market conditions, the Company continues to explorestrategies and alternatives to reduce its operating expenses, such as the consolidation of facilities and IT systems, and has been introducing new products to obtaina greater market share. The Company continues to focus on cash flow and anticipates having sufficient resources to operate during Fiscal 2018 and Fiscal 2019 .Although we believe our product groups have expanding market opportunities, there are certain levels of volatility related to domestic and international markets,new car sales, increased competition by manufacturers, private labels, technological advancements, discretionary consumer spending and general economicconditions. Also, all of our products are subject to price fluctuations which could affect the carrying value of inventories and gross margins in the future.AcquisitionsWe have acquired and integrated several acquisitions, the most recent of which is outlined in the Acquisitions section of Part I and presented in detail in Note 2 tothe Notes to the Consolidated Financial Statements.Net Sales GrowthNet sales over a five-year period have decreased (18.5)% from $835,577 for the year ended February 28, 2013 to $681,042 for the year ended February 28, 2017. During this period, our sales were impacted by the following items: •Volatility in core Automotive, Premium Audio and Consumer Accessories sales due to increased competition, lower selling prices, changes in technologyand demand, and the volatility of the national and global economy;•the discontinuance and reduction of various high volume/low margin product lines such as camcorders, clock radios, digital players, digital voicerecorders, and portable DVD players;•the sale of certain branded product inventory of the Company to a third party in order to license the brand name for a commission;•political and economic volatility in Venezuela; and•Euro devaluation against the U.S. Dollar.Partially offset by:23•the introduction of new products and lines across the Automotive, Premium Audio and Consumer Accessories segments, such as digital antennas andmobile multi-media devices; mobile iPad and iPod interfaces; various Bluetooth and wireless speaker products; neckband, on-ear, in-ear and over-earheadphones; action cameras; and nursery products.Critical Accounting Policies and EstimatesGeneralOur consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. The preparation ofthese financial statements requires us to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available.These estimates and assumptions can be subjective and complex and may affect the reported amounts of assets and liabilities, revenues and expenses reported inthose financial statements. As a result, actual results could differ from such estimates and assumptions. The significant accounting policies and estimates which webelieve are the most critical in fully understanding and evaluating the reported consolidated financial results include the following:Revenue RecognitionWe recognize revenue from product sales at the time title and risk of loss passes to the customer either at FOB Shipping Point or FOB Destination, based uponterms established with the customer. Any customer acceptance provisions, which are related to product testing, are satisfied prior to revenue recognition. We haveno further obligations subsequent to revenue recognition except for returns of product from customers. We do accept returns of products, if properly requested,authorized and approved. We continuously monitor and track such product returns and record the provision for the estimated amount of such future returns at pointof sale, based on historical experience.Sales IncentivesWe offer sales incentives to our customers in the form of (1) co-operative advertising allowances; (2) market development funds; (3) volume incentive rebates;and (4) other trade allowances. We account for sales incentives in accordance with ASC 605-50 "Customer Payments and Incentives" ("ASC 605-50"). Except forother trade allowances, all sales incentives require the customer to purchase our products during a specified period of time. All sales incentives require customersto claim the sales incentive within a certain time period (referred to as the "claim period"). All costs associated with sales incentives are classified as a reduction ofnet sales.The accrual balance for sales incentives at February 28, 2017 and February 29, 2016 was $13,154 and $12,439 , respectively. Although we make our best estimateof sales incentive liabilities, many factors, including significant unanticipated changes in the purchasing volume and the lack of claims from customers could havea significant impact on the liability for sales incentives and reported operating results.Unearned sales incentives are volume incentive rebates where the customer did not purchase the required minimum quantities of product during the specified time.Volume incentive rebates are reversed into income in the period when the customer did not reach the required minimum purchases of product during the specifiedtime. Unclaimed sales incentives are sales incentives earned by the customer but the customer has not claimed payment within the claim period (period afterprogram has ended). Unclaimed sales incentives are investigated in a timely manner after the end of the program and reversed if deemed appropriate. Accounts ReceivableWe perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and current credit worthiness, as determined by areview of current credit information. We continuously monitor collections from our customers and maintain a provision for estimated credit losses based uponhistorical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within management'sexpectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates that have been experienced in thepast. Since our accounts receivable are concentrated in a relatively few number of large customers, a significant change in the liquidity or financial position of anyone of these customers could have a material adverse impact on the collectability of accounts receivable and our results of operations.The Company has supply chain financing agreements and factoring agreements with certain financial institutions for the purpose of accelerating receivablecollection and better managing cash flow. Under the agreements, the Company has agreed to sell certain of its accounts receivable balances to these institutions,who have agreed to advance amounts equal to the net accounts receivable24balances due, less a discount as set forth in the respective agreements. The balances under these agreements are accounted for as sales of accounts receivable, asthey are sold without recourse. Cash proceeds from these agreements are reflected as operating activities included in the change in accounts receivable in theCompany's Consolidated Statements of Cash Flows. Total balances sold, net of discounts, for the years ended February 28, 2017 , February 29, 2016 andFebruary 28, 2015 were $257,482 , $273,883 and $182,155 , respectively. Fees incurred in connection with the agreements totaled $1,170 , $1,129 and $866 for theyears ended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively, and are recorded as interest expense by the Company.InventoryWe value our inventory at the lower of the actual cost to purchase (primarily on a weighted moving average basis, with a portion valued at standard cost, whichapproximates actual costs on the first in, first out basis) or the current estimated market value of the inventory. Market value of inventory does not exceed the netrealizable value of the inventory and is not less than the net realizable value of such inventory, less an allowance for a normal profit margin. We regularly reviewinventory quantities on-hand and record a provision in cost of sales for excess and obsolete inventory based primarily on selling prices, indications from customersbased upon current price negotiations, and purchase orders. Our industry is characterized by rapid technological change and frequent new product introductionsthat could result in an increase in the amount of obsolete inventory quantities on-hand. In addition, and as necessary, specific reserves for future known oranticipated events may be established. During the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , we recorded inventory write-downsof $2,371 , $1,256 and $2,877 , respectively.Estimates of excess and obsolete inventory may prove to be inaccurate, in which case we may have understated or overstated the provision required for excess andobsolete inventory. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes indemand or technological developments could have a significant impact on the carrying value of inventory and our results of operations.Asset ImpairmentsAs of February 28, 2017 , intangible assets totaled $176,289 and property, plant and equipment totaled $77,922 (excluding Venezuelan investment properties of$3,679 , which are discussed below). Management makes estimates and assumptions in preparing the consolidated financial statements for which actual results willemerge over long periods of time. This includes the recoverability of long-lived assets employed in the business, including assets of acquired businesses. Theseestimates and assumptions are closely monitored by management and periodically adjusted as circumstances warrant. For instance, expected asset lives may beshortened or an impairment recorded based upon a change in the expected use of the asset or performance of the related asset group. At the present time,management intends to continue the development, marketing and selling of products associated with its intangible assets, and there are no known restrictions on thecontinuation of their use, other than the ruling received in the fourth quarter of Fiscal 2016 (see Note 1(k)).Certain indefinite lived trademarks were impaired during the second and fourth quarter of Fiscal 2016, resulting in impairment charges of $6,210 and $2,860 ,respectively. No impairment losses were recorded related to indefinite lived intangible assets during Fiscal 2015 and Fiscal 2017.The cost of other intangible assets with definite lives and long-lived assets are amortized on a straight-line basis over their respective lives. Management hasdetermined that the current lives of these assets are appropriate. Management has determined that there were no indicators of impairment that would cause thecarrying values related to intangible assets with definite lives to exceed their expected future cash flows at February 28, 2017 . Approximately 60.2% of our indefinite-lived trademarks ($64,961) are at risk of impairment as of February 28, 2017 . The Company uses an income approach,based on the relief from royalty method, to value the indefinite-lived trademarks as part of its impairment test. This impairment test involves the use of accountingestimates and assumptions, changes in which could materially impact our financial condition or operating performance if actual results differ from such estimatesand assumptions. The critical assumptions in the discounted cash flow model include revenues, long-term growth rates, royalty rates, and discount rates.Management exercises judgment in developing these assumptions. Certain of these assumptions are based upon industry projections, facts specific to thetrademarks and consideration of our long-term view for the trademark and the markets we operate in. If we were to experience sales declines, a significant changein operating margins which may impact estimated royalty rates, an increase in our discount rates, and/or a decrease in our projected long-term growth rates, therewould be an increased risk of impairment of these indefinite-lived trademarks.Voxx’s goodwill totaled $103,212 as of February 28, 2017 . Goodwill is tested for impairment as of the last day of each fiscal year at the reporting unit level.Application of the goodwill impairment test requires judgment, including the identification of reporting25units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and estimation of the fair value of each reporting unit. Basedon the Company's goodwill impairment assessment, all the reporting units with goodwill had estimated fair values as of February 28, 2017 that exceeded theircarrying values. As a result of the annual assessment, no impairment charges were recorded related to goodwill during Fiscal 2017, Fiscal 2016 or Fiscal 2015.Goodwill allocated to our Klipsch, Hirschmann and Invision reporting units was 45.1% ( $46,533 ), 47.8% ( $49,306 ) and 7.1% ( $7,373 ), respectively. The fairvalues of the Klipsch, Hirschmann and Invision reporting units are greater than their carrying values by approximately 336% ($50,308), 135% ($23,543) and 12%($3,296), respectively, as of February 28, 2017 . The Company uses a discounted cash flow model to value the reporting unit as part of its impairment test. Thisimpairment test involves the use of accounting estimates and assumptions, changes in which could materially impact our financial condition or operatingperformance if actual results differ from such estimates and assumptions. The critical assumptions in the discounted cash flow model are revenues, operatingmargins, working capital and a discount rate (developed using a weighted average cost of capital analysis). Management exercises judgment in developing theseassumptions. Certain of these assumptions are based upon industry projections, facts specific to the reporting unit, market participant assumptions and data, andconsideration of our long-term view for the reporting unit and the markets we operate in. If the Klipsch reporting unit were to experience sales declines, sustainedpricing pressures, unfavorable operating margins, lack of new product acceptance by consumers, changes in consumer trends and preferred shopping channels, lessthan anticipated results for the holiday season, an increase to the discount rate, and/or a decrease in our projected long-term growth rates used in the discountedcash flow model, there would be an increased risk of goodwill impairment for the Klipsch reporting unit. If the Hirschmann reporting unit experienced an increaseto the discount rate and/or a significant change in contract-based projections used in the discounted cash flow model, there would be an increased risk of goodwillimpairment for the Hirschmann reporting unit. If the Invision reporting unit experienced an increase to the discount rate, a lack or delay in new product acceptance,or a change in our projected long-term growth rates used in the discounted cash flow model, there would be an increased risk of goodwill impairment for theInvision reporting unit.Long-lived assets and certain identifiable intangibles are reviewed for impairment in accordance with ASC 360 whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carryingamount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability of long-lived assets is measured by comparing thecarrying amount of the assets to their estimated fair market value. If such assets are considered to be impaired, the impairment to be recognized is measured by theamount by which the carrying amount of the assets exceeds the fair value of the assets.The Company holds certain long-lived assets in Venezuela, which are held for investment purposes. During the fourth quarter of Fiscal 2015, the Company madean assessment of the recoverability of these properties in Venezuela as a result of the country's continued economic deterioration, which included the introductionof the SIMADI currency rate and simultaneous merger of the SICAD 1 and SICAD 2 rates in February 2015 (refer to Impact of Inflation and CurrencyFluctuations for discussion). In testing the recoverability of its investment properties, the Company considered the undiscounted cash flows expected to be receivedfrom these properties, the length of time the properties have been held, the volatile market conditions, the Company’s financial condition, and the intent and abilityto retain its investments for a period of time sufficient to allow for any anticipated recovery in fair value. The undiscounted cash flows included certain accountingestimates and assumptions, including projected rent increases and consideration of further devaluation of the currency. We concluded that the future undiscountedcash flows did not recover the net book value of the long-lived assets. Based on these results, the Company further obtained independent third party appraisals ofeach of the properties to determine their fair values. The Company concluded, as a result of all analyses performed, that these properties were impaired as ofFebruary 28, 2015, and recorded an impairment charge of $(9,304) , which is included in Other Income (Expense) on the Consolidated Statement of Operationsand Comprehensive Income (Loss) for the fiscal year ended February 28, 2015. The remaining value of the Company's properties held for investment purposes inVenezuela is $3,679 as of February 28, 2017 . The Company continues to monitor the economic conditions and recoverability of these assets as necessary. Anychanges in accounting estimates and assumptions could result in further impairment charges from these long-lived assets.WarrantiesWe offer warranties of various lengths depending upon the specific product. Our standard warranties require us to repair or replace defective product returned byboth end users and customers during such warranty period at no cost. We record an estimate for warranty related costs in cost of sales, based upon actual historicalreturn rates and repair costs at the time of sale. The total estimated liability for future warranty expense, which has been included in accrued expenses and othercurrent liabilities, amounted to $5,761 at February 28, 2017 and $8,807 at February 29, 2016 . While warranty costs have historically been within expectations andthe provisions established, we cannot guarantee that we will continue to experience the same warranty return rates or repair costs that have been experienced in thepast. A significant increase in product return rates, or a significant increase in the costs to repair products, could have a material adverse impact on our operatingresults.26Stock-Based CompensationWe use the Black-Scholes option pricing model to compute the estimated fair value of stock-based awards. The Black-Scholes option pricing model includesassumptions regarding dividend yields, expected volatility, expected option term and risk-free interest rates. The assumptions used in computing the fair value ofstock-based awards reflect our best estimates, but involve uncertainties relating to market and other conditions, many of which are outside of our control. Weestimate expected volatility by considering the historical volatility of our stock, the implied volatility of publicly traded stock options in our stock and ourexpectations of volatility for the expected term of stock-based compensation awards. For restricted stock awards, the fair value of the award is the price on the dateof grant. As a result, if other assumptions or estimates had been used for options or restricted stock awards granted in the current and prior periods, the total stock-based compensation expense of $753 that was recorded for the year ended February 28, 2017 could have been materially different. Furthermore, if differentassumptions are used in future periods, stock-based compensation expense could be materially impacted in the future.Income TaxesWe account for income taxes in accordance with the guidance issued under Statement ASC 740, "Income Taxes" with consideration for uncertain tax positions. We record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable todifferences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax creditcarryforwards. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise, we consider all positive and negativeevidence including the results of recent operations, scheduled reversal of deferred tax liabilities, future taxable income and tax planning strategies. Deferred taxassets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to berecovered or settled (see Note 8). The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes theenactment date.The Company accounts for uncertain tax positions in accordance with the authoritative guidance issued under ASC 740, which addresses the determination ofwhether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. The Company may recognize the tax benefitfrom an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on thetechnical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that hasa greater than fifty percent likelihood of being realized upon ultimate settlement. The Company provides loss contingencies for federal, state and international taxmatters relating to potential tax examination issues, planning initiatives and compliance responsibilities. The development of these reserves requires judgmentsabout tax issues, potential outcomes and timing, which if different, may materially impact the Company's financial condition and results of operations. TheCompany classifies interest and penalties associated with income taxes as a component of Income Tax Expense (Benefit) on the Consolidated Statement ofOperations and Comprehensive Income (Loss).During Fiscal 2017, the Company recorded an income tax provision of $1,759 related to federal, state and foreign taxes. The Company's effective tax rate differsfrom the U.S. federal statutory rate of 35% primarily due to the impact of the reversal of uncertain tax positions under ASC 740 related to settlement of an incometax examination, non-controlling interest, an income tax provision resulting from the increase in deferred tax liabilities related to indefinite-lived intangible assets,and tax rate differences due to the mix of domestic and foreign earnings. During Fiscal 2017, the Company maintains a valuation allowance against its U.S.deferred tax assets and certain foreign jurisdictions. Any decline in the valuation allowance could have a favorable impact on our income tax provision and netincome in the period in which such determination is made.Results of OperationsIncluded in Item 8 of this annual report on Form 10-K are the Consolidated Balance Sheets as of February 28, 2017 and February 29, 2016 and the ConsolidatedStatements of Operations and Comprehensive Income (Loss), Consolidated Statements of Stockholders’ Equity and Consolidated Statements of Cash Flows for theyears ended February 28, 2017 , February 29, 2016 and February 28, 2015 . In order to provide the reader meaningful comparison, the following analysis providescomparison of the audited year ended February 28, 2017 with the audited years ended February 29, 2016 , and February 28, 2015 . We analyze and explain thedifferences between periods in the specific line items of the Consolidated Statements of Operations and Comprehensive Income (Loss).Year Ended February 28, 2017 Compared to the Years Ended February 29, 2016 and February 28, 201527Continuing OperationsThe following table sets forth, for the periods indicated, certain Statement of Operations data for the years ended February 28, 2017 ("Fiscal 2017 "), February 29,2016 ("Fiscal 2016 ") and February 28, 2015 ("Fiscal 2015 ").Net Sales Fiscal Fiscal Fiscal 2017 2016 2015Automotive$337,241 $351,665 $396,422Premium Audio166,789 140,508 165,812Consumer Accessories176,216 187,272 194,104Corporate796 1,301 1,160Total net sales$681,042 $680,746 $757,498 Fiscal 2017Automotive sales, which include both OEM and aftermarket automotive electronics, represented 49.5% of the net sales for the year ended February 28, 2017 ,compared to 51.7% in the prior year. The Company experienced a decrease in automotive sales due to several factors during the year, including the completion andwinding down of certain OEM programs during Fiscal 2017 that had experienced strong performance in the comparative prior year period. Remote start productswere negatively impacted for the year ended February 28, 2017 , as a result of warmer Winter seasons in both Fiscal 2016 and Fiscal 2017, resulting in severalcustomers carrying excess inventory into the Company's Fiscal 2017 year and lower overall sales of these products for the year, as well as due to the fact that morevehicles are being built equipped with remote start capabilities. Sales of satellite radios during the year ended February 28, 2017 also decreased as a result of morevehicles being built equipped with these products. The Company also experienced decreases in aftermarket overhead and headrest DVD player sales as a result ofprice reductions and competition within these product lines. Finally, during Fiscal 2016, the Company sold all of its Jensen Mobile product inventory, consisting ofcar speakers and amplifiers, to a third party in order to license the brand name for a commission. This resulted in reduced sales of these products for the year endedFebruary 28, 2017 of approximately $6,500. As an offset to these decreases, the Company began a new OEM program with Subaru, resulting in an increase indomestic OEM sales, and has had increased tuner sales internationally for the year ended February 28, 2017 , primarily due to the start of a new program during thefirst quarter of Fiscal 2017.Premium Audio sales represented 24.5% of net sales for the year ended February 28, 2017 as compared to 20.6% in the prior year. Sales in Premium Audioincreased 18.7% for the year ended February 28, 2017 primarily as a result of the introduction of several new products, including various lines of HD wirelessdesktop and bookshelf size speakers, wireless soundbars and multi-room streaming audio systems. These products were launched between the fourth quarter ofFiscal 2016 and the third quarter of Fiscal 2017 and have been experiencing strong sales for the segment during the year ended February 28, 2017 . The Companyalso saw increases in sales in several of its existing lines of home entertainment speakers due to successful marketing and promotional activity, as well as increasedcommercial speaker sales as a result of new distribution agreements and growth in China. Additionally, headphone sales have increased as a result of promotionsoffered during the year ended February 28, 2017 that were not provided in the prior year, as well as due to the launch of four new unique headphone productsduring the third quarter of Fiscal 2017, consisting of neckband headphones, as well as new on-ear, in-ear and over-ear headphones. These increases were partiallyoffset by decreases in European sales during the year ended February 28, 2017 as a result of a slower market overseas.Consumer Accessories represented 25.9% of our net sales for the year ended February 28, 2017 , compared to 27.5% in the prior year. The Company experienced adecrease in consumer accessory sales due to several factors during the year, including the decrease in sales of wireless speakers, as compared to the year endedFebruary 29, 2016. While the sales of wireless speakers in this segment have remained strong in Fiscal 2017, the Company had higher sales in the prior year due toload in shipments of certain new wireless speaker products in order to fill its customers' inventory pipelines, which were not repeated in the current year. Therewere additional declines in wireless speaker sales as a result of certain promotions of new product that were offered during the prior year but not repeated in Fiscal2017, as well as the timing of certain customer Spring shipment orders that were delayed to Fiscal 2018. There was also a decrease during the year endedFebruary 28, 2017 in sales of hook-up products; remotes; clock radios; docking stations; reception products, such as antennas; and power products, such as cablesand surge protectors, due to competition, changes in demand and changes in technology. Additionally, the segment experienced a decrease in sales of its Singtrixkaraoke product, primarily as a result of promotional activity in the prior fiscal year that did not repeat in Fiscal 2017, as well as large customer load in shipmentsin the prior year that did not repeat, and slower international consumer accessories sales28for several product lines. As an offset to these decreases, the segment experienced increases in sales during the year ended February 28, 2017 related to newproducts, such as the Company's Project Nursery baby monitors, which launched in the second quarter of Fiscal 2017, and the 360Fly® Action Camera, whichlaunched in the third quarter of Fiscal 2016 and has had an expansion in distribution, as well as the introduction of new models since its launch date.Internationally, the Company did experience an increase in sales of certain products related to the roll out of an upgrade to the digital broadcasting platform inEurope, which will require new equipment.Fiscal 2016Automotive sales, which include both OEM and aftermarket automotive electronics, represented 51.7% of the net sales for the year ended February 29, 2016 ,compared to 52.3% in the prior year. A significant portion of the decrease in sales figures for the Automotive group was due to foreign exchange. The Eurodevalued against the U.S. Dollar beginning in the second quarter of Fiscal 2015 and accelerated during the third and fourth quarters of Fiscal 2015 through the endof Fiscal 2016. During these periods, the Euro to U.S. Dollar rate dropped from approximately 1.36 on May 31, 2014 to 1.09 on February 29, 2016 , representing a20% decrease in value, which negatively impacted the translation of our Euro denominated sales when comparing the year ended February 29, 2016 to the yearended February 28, 2015, and resulting in a decrease of approximately $28,200 in Automotive segment sales. In addition, the Company experienced a decrease insales related to its remote start business during the year ended February 29, 2016 due to load in sales realized in the prior year for a program launched with Subaruthat leveled out in Fiscal 2016, the completion of remote start programs with two other vehicle manufacturers, as well as an unseasonably warm start to theFall/Winter season, which negatively impacted the sale of remote start products. The Company has also experienced a decline in sales for its Car Connectionprogram for the year ended February 29, 2016 , which began selling devices to retailers during the first half of Fiscal 2015, with significant load in sales, and adecrease in satellite radio fulfillment and portable DVD player sales, as more cars are now being manufactured with these products and the Company began tophase out its portable DVD product offerings during the prior fiscal year. In addition, during the first quarter of Fiscal 2015, the Company sold all of its JensenMobile product inventory to a third party, consisting of car speakers and amplifiers, in order to license the brand name for a commission, which has resulted inreduced sales of these products for the year ended February 29, 2016 , as compared to the prior year period. As an offset to these decreases, the Company saw anincrease in its OEM manufacturing line sales for the year ended February 29, 2016 , due primarily to the launch of a new program with Cadillac for rear seatentertainment, as well as the relaunch of a previously suspended OEM program due to customer safety issues and an increase in tuner and antenna sales.Premium Audio sales represented 20.6% of net sales for the year ended February 29, 2016 , as compared to 21.9% the prior year. Sales in Premium Audiodecreased 15.3% for the year ended February 29, 2016 . A portion of the decline is attributable to the Euro to U.S. Dollar exchange rate, which negatively impactedthe translation of our Euro denominated sales when comparing the year ended February 29, 2016 to the year ended February 28, 2015, as noted above, resulting inan approximate decrease of $6,000, respectively, in Premium Audio sales. Sales have also decreased in this segment as a result of lower sales of Bluetoothspeakers, headphones and soundbars as a result of competition, the discontinuation of business with certain retailers in an effort to better manage product pricing,as well as prior year load in sales of new product that was not repeated in the current year. These decreases were partially offset by increases in commercial sales,as well as in the sale of subwoofers for the year ended February 29, 2016 .Consumer Accessories sales represented 27.5% of our net sales for the year ended February 29, 2016 , as compared to 25.6% in the prior year. A portion of thedecline in sales is attributable to the Euro to U.S. Dollar exchange rate, which negatively impacted the translation of our Euro denominated sales when comparingthe year ended February 29, 2016 to the year ended February 28, 2015, as noted above, resulting in an approximate decrease of $5,700 in Consumer Accessorysales. The segment also experienced decreases in sales for the year ended February 29, 2016 in headphones, remote controls, clock radios and hook-up products,such as cables, due to competition, changes in demand and changes in technology. There was also a decrease in sales of tablets during the year ended February 29,2016 as compared to the year ended February 28, 2015, as a result of the phasing out of this product in Fiscal 2016. In addition, there was a decrease in ConsumerAccessory segment sales for the year ended February 29, 2016 as a result of the prior year sale of all inventory on hand at the Company's Mexico subsidiary in thefirst quarter of Fiscal 2015 due to the transition of this subsidiary from a distributor model to a representative office. These decreases were offset by significantincreases in sales of wireless and Bluetooth speakers during the year ended February 29, 2016 , as well as sales of the Singtrix karaoke product launched in thefourth quarter of Fiscal 2015 and the new 360Fly® Action Camera launched in the third quarter of Fiscal 2016.Gross Profit and Gross Margin Percentage 29 Fiscal Fiscal Fiscal 2017 2016 2015Automotive$104,229 $103,347 $120,543 30.9% 29.4% 30.4%Premium Audio55,053 46,582 52,873 33.0% 33.2% 31.9%Consumer Accessories41,537 45,490 49,221 23.6% 24.3% 25.4%Corporate696 266 1,233 $201,515 $195,685 $223,870 29.6% 28.7% 29.6%Fiscal 2017Gross margins in the Automotive segment increased 150 basis points for the year ended February 28, 2017 . The segment experienced an increase in sales of itshigh margin tuner products as a result of a new program that started during the first quarter of the fiscal year, as well as decreased sales of lower margin productssuch as satellite radio fulfillments and a decrease in sales of its lower margin Jensen products, whose inventory was sold in the prior year, contributing to overallmargin improvements for the segment. This was offset by decreased sales of higher margin products during the year ended February 28, 2017 , such as remote startand aftermarket overhead and headrest DVD products, as well as certain products within the OEM manufacturing line.Gross margins in the Premium Audio segment decreased 20 basis points for the year ended February 28, 2017 compared to the prior year. For the year endedFebruary 28, 2017 , the segment experienced a significant increase in sales of the Company's newest wireless soundbars and speakers, which earn lower marginsfor the segment. The Company also offered heavy holiday promotions of its newest soundbar products and incurred significant expedited freight charges in order tofulfill customer demand for the holiday season, as well as offered discounts on an older headphone product line being phased out to make way for its latest productlaunches, which caused margins to be reduced further. As an offset to these decreases, margins improved primarily due to the fact that in the prior year, thissegment experienced heavy promotions on several product close outs and obsolete items in order to make way for newer product, which did not repeat in thecurrent fiscal year. The segment has also seen an increase in sales for the year ended February 28, 2017 of certain higher margin products, such as homeentertainment speakers and premium loudspeakers.Gross margins in the Consumer Accessories segment decreased 70 basis points for the year ended February 28, 2017 compared to the prior year. For the yearended February 28, 2017 , margins were negatively impacted by decreased sales of certain higher margin products, including remotes, hookup, reception andpower products, as well as the Singtrix karaoke product and wireless speakers. Margins were also impacted by the launch of the new 360Fly® Action Camera,which contributed to a substantial increase in sales for the year ended February 28, 2017 , but produce overall lower margins for the segment. This was partiallyoffset by an increase in sales of higher margin products, such as the Company's new line of baby monitors and international product sales related to the roll out ofan upgrade to the digital broadcasting platform in Europe.Fiscal 2016Gross margins in the Automotive segment decreased 100 basis points for the year ended February 29, 2016 . The segment experienced lower margins related to itstuner and antenna sales during the year ended February 29, 2016 , as compared to the prior year period. In addition, there were lower sales in the segment's highmargin remote start business and higher sales in the OEM manufacturing line which generated lower margins during the year ended February 29, 2016 , ascompared to the prior year. This was offset by lower sales of some of the segment's low margin products such as satellite radio fulfillments, portable DVD playersand the Company's Jensen Mobile inventory, all of which contributed to margin improvements for the year ended February 29, 2016 .Gross margins in the Premium Audio segment increased 130 basis points for the year ended February 29, 2016 compared to the prior year. During the year endedFebruary 28, 2015, the Premium Audio group made significant downward price adjustments to products that were phasing out in order to make way for a newproduct line. In addition, many of the new product introductions during Fiscal 2015 were accompanied by up front promotional funding and discounts, as well asdiscounts for demo products, which did not recur during the year ended February 29, 2016 . These Fiscal 2016 margin improvements were partially offset by lowersales prices for products such as Bluetooth speakers, headphones and soundbars for the year ended February 29, 2016 .30Gross margins in the Consumer Accessories segment decreased 110 basis points partially as a result of decreased sales of certain higher margin products during theyear, including remote controls, headphones and hookup products, as well as due to the launch of the new 360Fly® Action Camera, which contributed to anincrease in Consumer Accessories sales for the year ended February 29, 2016 , but generated lower margins for the segment. The margins were also negativelyimpacted by the absence of a duty refund that was received in the second quarter of Fiscal 2015, but did not repeat in the current year. This was partially offset byan increase in sales of some of the segment's higher margin products, such as wireless and Bluetooth speakers and the Singtrix karaoke product, which launched atthe end of Fiscal 2015, as well as a decrease in sales of lower margin products, such as tablets.Operating Expenses Fiscal Fiscal Fiscal 2017 2016 2015Operating Expenses: Selling$48,205 $48,513 $54,136General and administrative107,882 111,382 114,849Engineering and technical support45,600 37,490 37,157Intangible asset impairment charges— 9,070 —Restructuring expense— — 1,134Acquisition related costs— 800 —Total Operating Expenses$201,687 $207,255 $207,276 Fiscal 2017Operating expenses decreased $5,568 in Fiscal 2017 as compared to Fiscal 2016 . The Company has experienced decreases in salary, payroll and benefits expensesfor the full year ended February 28, 2017 as a result of Company-wide headcount reductions made throughout Fiscal 2016, as well as due to changes to theCompany's medical plan that resulted in additional benefit expense decreases in Fiscal 2017. The Company also experienced decreases in professional fees due tofewer legal matters in comparison to the prior year, the absence of acquisition costs related to EyeLock LLC that were incurred in Fiscal 2016, lower movingexpenses as a result of the relocation to a new Company-owned manufacturing facility and executive office in Lake Nona, FL in Fiscal 2016, and lower occupancyexpenses, primarily as a result of the renegotiation of the lease for the Company's shared services office in New York. The Company has also made increasedefforts in the current year to streamline and reduce travel and entertainment expense, which has resulted in an overall decrease in such expenditures for the yearended February 28, 2017 . Additionally, the Company has not incurred any impairment charges for the year ended February 28, 2017 , as compared to the priorfiscal year, in which $9,070 of intangible asset impairment charges were incurred.As an offset to these operating expense decreases, there have been significant increases in research and development expenditures during the year endedFebruary 28, 2017 , related to the Company's Hirschmann, Klipsch and Invision subsidiaries, all of which increased their research and development spending incomparison to the prior year, as well as due to the EyeLock LLC subsidiary, which has been included in the Company's operations for the full fiscal year. Since theacquisition of a majority voting interest in substantially all of the assets and certain liabilities of EyeLock Inc. and EyeLock Corporation in the third quarter ofFiscal 2016, this new subsidiary has incurred significant research and development expenses related to its iris-based authentication solutions for the continuedexpansion of the applications of the technology. Additionally, Hirschmann received fewer reimbursements of development services, which are recorded as areduction of research and development expense, and thus further resulted in overall higher net research and development expenses for the year. The Company alsoincurred an increase in bad debt expense for the year ended February 28, 2017 , primarily as a result of the bankruptcy of one of the Company's customers, and anincrease in depreciation and amortization expenses both as a result of a full year of depreciation of the Company's new manufacturing facility and executive officesin Florida, which was completed during the fourth quarter of Fiscal 2016, and a full year of amortization of intangible assets acquired in conjunction with theEyeLock acquisition. For the year ended February 28, 2017 , there has also been an increase in salary and benefit expenses related to the full year inclusion ofEyeLock LLC, as well as the Company's efforts to build EyeLock LLC's sales force.Fiscal 201631Operating expenses decreased $21 in Fiscal 2016 as compared to Fiscal 2015 . The Company's operating expenses have been significantly impacted by the drop inforeign exchange for Euro translation to the U.S. Dollar for the year ended February 29, 2016 , as compared to the year ended February 28, 2015. The impact of theEuro to U.S. Dollar rate decrease resulted in an approximate decrease of $12,400 in operating expenses for the comparative fiscal years. There have also beendecreases in operating expenses for the year ended February 29, 2016 due to lower commission expense as a result of lower sales and lower salary and relatedpayroll expense, primarily as a result of a Company-wide headcount reduction announced in Fiscal 2015, which also included a non-recurring restructuring chargein the fourth quarter of Fiscal 2015. Company spending on items such as office expenditures and travel and entertainment were lower for the year-ended February29, 2016 due to conservative cost cutting measures and there was a reduction in IT expense due to certain services at Hirschmann that were previously outsourced,but have been brought in-house during Fiscal 2016. The Company has also experienced lower overall advertising expense as a result of the timing of campaignsand promotions, as well as lower depreciation expense due to the absence of a building under capital lease that was terminated during the fourth quarter of Fiscal2015 and the decreased value of buildings in Venezuela as a result of Fiscal 2015 impairments.As an offset to these decreases, the Company has experienced increases to operating expenses primarily due to impairment charges recorded during Fiscal 2016related to certain trademarks of the Company. The impairment charges were a result of certain indicators that occurred during the second and fourth quarters ofFiscal 2016. Specifically, during the second quarter of the fiscal year, certain of our premium audio product lines experienced lower than expected performancedue to certain marketing strategies and the re-evaluation of marketing positions. Taking these factors into consideration, along with long-term industry forecasts,the Company re-evaluated its projections, recording an impairment charge of $6,210. During the fourth quarter of the fiscal year, the Company received ajudgment related to the field of use for one of its trademarks, which restricts the Company's rights to use the tradename for select products, resulting in animpairment charge of $2,860. During the fiscal year, the Company also experienced an increase in professional fees related to certain legal matters being pursuedby the Company, an increase in salary expense at Hirschmann as a result of the hiring of additional engineers, as well as severance expense for certain positionseliminated in the current fiscal year. Finally, as a result of the Company's acquisition of a majority voting interest in substantially all of the assets and certainliabilities of EyeLock, Inc. and EyeLock Corporation on September 1, 2015 (see Note 2), the Company incurred acquisition related costs, as well as additionalamortization expense related to intangible assets acquired and salary and research and development expenses related to the operations of this new subsidiary for theyear ended February 29, 2016 .Other (Expense)Income Fiscal Fiscal Fiscal 2017 2016 2015Interest and bank charges$(7,488) $(8,075) $(6,851)Equity in income of equity investee6,797 6,538 5,866Venezuela currency devaluation, net(8) (2) (7,104)Venezuela long-lived asset impairment charges— — (9,304)Gain on bargain purchase— 4,679 —Other, net(572) 632 1,495Total other (expense) income$(1,271) $3,772 $(15,898)Fiscal 2017Interest and bank charges represent expenses for the Company's bank obligations, interest related to capital leases, and amortization of deferred financing costs.These charges decreased for the year ended February 28, 2017 as compared to the prior year. During the fourth quarter of Fiscal 2016, the Company wrote offapproximately $1,300 of deferred financing costs as a result an amendment to the Company's credit facility, which was charged to interest expense and was notrepeated in the current year. As an offset to this decrease in interest and bank charges, the Company has experienced increases in these expenses for the year endedFebruary 28, 2017 primarily due to interest expense related to the Company's outstanding Florida mortgage, which was entered into during Fiscal 2016 in order tofinance the construction of the Company's manufacturing facility and executive offices in Lake Nona, FL. This mortgage was entered into in July 2015 and was notoutstanding during much of the first half of Fiscal 2016. During the year ended February 28, 2017 , the Company also carried a higher outstanding balance on itsAmended Credit Facility as compared to the prior year period and as such, incurred higher interest charges related to this facility.32Equity in income of equity investee represents the Company's share of income from its 50% non-controlling ownership interest in ASA Electronics, LLC ("ASA").The increase in income for the year ended February 28, 2017 was a result of an improvement in ASA's product mix.On September 1, 2015, Voxx completed the acquisition of a majority voting interest in substantially all of the assets and certain specified liabilities of Eyelock, Inc.and Eyelock Corporation (collectively, "the Seller"), through a newly-formed entity Eyelock LLC. The excess of the assets and liabilities acquired over the amountpaid for Voxx's interest in EyeLock resulted in a bargain purchase gain of $4,679 recognized for the year ended February 29, 2016.Other, net, for the year ended February 28, 2017 includes net losses on foreign currency of $501 (excluding Venezuela), interest income of $142 and rental incomeof $646. Other, net, for the year ended February 29, 2016 included net gains on foreign currency of $110 (excluding Venezuela), interest income of $814 and rentalincome of $450. The decrease in interest income during the year ended February 28, 2017 compared to the year ended February 29, 2016 relates to income earnedon notes receivable from EyeLock. Inc. during Fiscal 2016 through the acquisition date of September 1, 2015.Fiscal 2016Interest and bank charges represent expenses for the Company's bank obligations, interest related to capital leases, and amortization of deferred financing costs.The increase in these expenses for the year ended February 29, 2016 , is due primarily to the write-off of approximately $1,300 of deferred financing costs as aresult of the amendment of the Company's credit facility in January 2016, which lowered the borrowing base of the loan, as well as the drawing of funds from theCompany's construction loan, which was entered into during Fiscal 2016 in order to finance the construction of the Company's new manufacturing facility andexecutive offices in Lake Nona, FL.Equity in income of equity investee represents the Company's share of income from its 50% non-controlling ownership interest in ASA Electronics, LLC ("ASA").The increase in income for Fiscal 2016 was a result of an improvement in ASA's product mix.Venezuela currency devaluation, net, for the year ended February 28, 2015 included a total charge of $7,396 representing the remeasurement loss related to theCompany's Venezuelan bonds that were remeasured during Fiscal 2015 using a rate of 6.3 Bolivar Fuerte/$1. This came as a result of the Company obtaining newinformation during the second quarter of Fiscal 2015 that the bond redemption rate would be at the official exchange rate of 6.3 Bolivar Fuerte/$1.Venezuela long-lived asset impairment charges for the year ended February 28, 2015 represent charges incurred related to properties held for investment purposesat the Company's subsidiary. During the fourth quarter of Fiscal 2015, the Company made an assessment of the recoverability of its properties in Venezuela as aresult of the country's continued economic deterioration, which included the introduction of the SIMADI rate in February 2015 and the simultaneous merger of theSICAD 1 and SICAD 2 rates. In testing the recoverability of its investment properties, the Company considered the undiscounted cash flows expected to bereceived from these properties, as well as other indicators and concluded that the future undiscounted cash flows did not recover the net book value of the long-lived assets. Based on these results, the Company further obtained independent third party appraisals of each of the properties to determine their fair values andconcluded, as a result of all analyses performed, that these properties were impaired as of February 28, 2015. There were no additional impairments of theseproperties recognized during Fiscal 2016.The gain on bargain purchase recognized in Fiscal 2016 was related to the Company's acquisition of a majority voting equity interest in substantially all of theassets and certain specified liabilities of Eyelock, Inc. and Eyelock Corporation on September 1, 2015 and was a result of the assessment of the fair value of thetangible and identifiable intangible assets acquired and liabilities assumed in the acquisition.Other, net, for the year ended February 29, 2016 includes net gains on foreign currency of $110 (excluding Venezuela), interest income of $814 and rental incomeof $450. Other, net, for the year ended February 28, 2015 included net gains on foreign currency of $599 (excluding Venezuela), interest income of $376 and rentalincome of $1,045. The increase in interest income during Fiscal 2016 relates to income earned on notes receivable from EyeLock. Inc. through the acquisition dateof September 1, 2015. Rental income decreased in Fiscal 2016 primarily as a result of the absence of sublease rental income related to a capital lease that wasterminated in the fourth quarter of Fiscal 2015.Income Tax ProvisionThe effective tax rate in Fiscal 2017 was an income tax provision of (121.9)% on pre-tax loss from operations of $(1,443) as compared to a benefit of 22.3% on apre-tax loss of $(7,798) from continuing operations in the prior year. The effective tax rate in Fiscal 2017 differs from the statutory rate of 35% primarily due to theimpact of the reversal of uncertain tax positions under33ASC 740 related to settlement of an income tax examination, non-controlling interest, an income tax provision resulting from the increase in deferred tax liabilitiesrelated to indefinite-lived intangible assets, and tax rate differences due to the mix of domestic and foreign earnings. During Fiscal 2017 , the Company maintaineda valuation allowance against its U.S. deferred tax assets and certain foreign jurisdictions. Any decline in the valuation allowance could have a favorable impact onour income tax provision and net income in the period in which such determination is made.The effective tax rate of 22.3% in Fiscal 2016 differs from the statutory rate of 35% primarily due to the impact of the bargain purchase gain, the non-controllinginterest related to EyeLock and the U.S. effect of foreign operations, including tax rate differences in foreign jurisdictions. During Fiscal 2016, the Companyrecorded a valuation allowance against its U.S. deferred tax assets and maintains a valuation in certain foreign jurisdictions. Any decline in the valuation allowancecould have a favorable impact on our income tax provision and net income in the period in which such determination is made.The effective tax rate of 235.3% in Fiscal 2015 differs from the statutory rate of 35% primarily due to the impact of the impairment of non-deductible goodwill andother non-deductible expenses, partially offset by an income tax benefit related to the worthless stock deduction of a foreign affiliate and the U.S. effect of foreignoperations, including tax rate differences in foreign jurisdictions. Net IncomeThe following table sets forth, for the periods indicated, selected statement of operations data beginning with operating income from operations to reported netincome and basic and diluted net income per common share: Fiscal Fiscal Fiscal 2017 2016 2015Operating (loss) income$(172) $(11,570) $16,594Other (expense) income, net(1,271) 3,772 (15,898)(Loss) income from operations before income taxes(1,443) (7,798) 696Income tax expense (benefit)1,759 (1,735) 1,638Net loss$(3,202) $(6,063) $(942)Less: net loss attributable to non-controlling interest(7,624) (3,381) —Net income (loss) attributable to Voxx International Corporation$4,422 $(2,682) $(942) Net income (loss) per common share: Basic$0.18 $(0.11) $(0.04)Diluted$0.18 $(0.11) $(0.04)Fiscal 2017 net income was favorably impacted by lower interest and bank charges, as well as the absence of acquisition costs and intangible asset impairmentcharges incurred during the prior fiscal year. As an offset, the net income was unfavorably impacted by losses incurred by EyeLock LLC, the Company's majorityowned subsidiary, during the first full year that the subsidiary was included in the Company's operations, as well as an income tax provision.During Fiscal 2016 , net loss was unfavorably impacted by acquisition costs and intangible asset impairment charges incurred during the fiscal year, as well aslosses incurred by EyeLock LLC from the date of acquisition through February 29, 2016. As an offset, the net loss was favorably impacted by a bargain purchasegain recognized on the acquisition of a controlling interest in substantially all of the assets and certain liabilities of EyeLock Inc. and EyeLock Corporation, as wellas an income tax benefit for the year ended February 29, 2016 .During Fiscal 2015 , net loss was unfavorably impacted by currency devaluation charges affecting the Company's Venezuelan sovereign bonds, long-lived assetimpairment charges related to investment properties in Venezuela and restructuring charges incurred during the year ended February 28, 2015. As an offset, the netloss was favorably impacted by lower cost of sales for the year ended February 28, 2015, which resulted in favorable gross margins.EBITDA, Adjusted EBITDA and Adjusted Diluted EBITDA per Common Share34EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per common share are not financial measures recognized by GAAP. EBITDA represents net income(loss), computed in accordance with GAAP, before interest expense and bank charges, taxes, and depreciation and amortization. Adjusted EBITDA representsEBITDA adjusted for stock-based compensation expense, impairment charges, certain foreign currency remeasurements, restructuring charges, as well as costs andbargain purchase gains relating to our acquisitions. Depreciation, amortization, stock-based compensation, bargain gains and impairment charges are non-cashitems. Diluted adjusted EBITDA per common share represents the Company's diluted earnings per common share based on Adjusted EBITDA.We present EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per common share in this Form 10-K because we consider them to be useful andappropriate supplemental measures of our performance. Adjusted EBITDA and diluted adjusted earnings per common share help us to evaluate our performancewithout the effects of certain GAAP calculations that may not have a direct cash impact on our current operating performance. In addition, the exclusion of certaincosts or gains relating to non-recurring events allows for a more meaningful comparison of our results from period-to-period. These non-GAAP measures, as wedefine them, are not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative toother companies. EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per common share should not be assessed in isolation from, are not intended torepresent, and should not be considered to be more meaningful measures than, or alternatives to, measures of operating performance as determined in accordancewith GAAP.Reconciliation of GAAP Net Income to EBITDA, Adjusted EBITDA and Diluted Adjusted EBITDA per Common Share Fiscal Fiscal Fiscal 2017 2016 2015Net income (loss) attributable to VOXX International Corporation $4,422 $(2,682) $(942)Adjustments: Interest expense and bank charges (1) 6,860 7,960 6,851Depreciation and amortization (1) 17,064 15,228 15,565Income tax expense (benefit) 1,759 (1,735) 1,638EBITDA 30,105 18,771 23,112Adjustments: Stock-based compensation attributable to stock options and restricted stock 753 859 521 Venezuela bond remeasurement — — 7,396 Impairment of investment properties in Venezuela — — 9,304 Restructuring charges — — 1,134 Intangible and long-lived asset impairment charges — 9,070 — Acquisition related costs — 800 — Gain on bargain purchase — (4,679) —Adjusted EBITDA $30,858 $24,821 $41,467Diluted income (loss) per common share $0.18 $(0.11) $(0.04)Diluted adjusted EBITDA per common share $1.27 $1.03 $1.70(1) For purposes of calculating Adjusted EBITDA for the Company, interest expense, bank charges, as well as depreciation and amortization expense added backto net income (loss) have been adjusted in order to exclude the minority interest portion of these expenses attributable to EyeLock LLC.Liquidity and Capital ResourcesCash Flows, Commitments and ObligationsAs of February 28, 2017 , we had working capital of $143,281 which includes cash and cash equivalents of $7,800 compared with working capital of $132,167 atFebruary 29, 2016 , which included cash and cash equivalents of $ 11,767 . We plan to utilize our current cash position as well as collections from accountsreceivable, the cash generated from our operations and the income on our investments to fund the current operations of the business. However, we may utilize allor a portion of current capital resources35to pursue other business opportunities, including acquisitions or to pay down our debt. The following table summarizes our cash flow activity for all periodspresented: YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Cash (used in) provided by: Operating activities$(1,790) $27,521 $47,428Investing activities(12,130) (38,587) (22,882)Financing activities9,695 13,695 (24,878)Effect of exchange rate changes on cash258 690 (1,823)Net (decrease) increase in cash and cash equivalents$(3,967) $3,319 $(2,155)Net cash used in/provided by operating activities:Operating activities used cash of $1,790 for Fiscal 2017 primarily as a result of an increase in inventory, as well as accounts receivable, partially offset by adecrease in vendor receivables and an increase in accounts payable. During Fiscal 2016, operating activities provided cash of $27,521 primarily as a result of decreased customer accounts receivable and inventory due to a decreasein sales, as well as the factoring of certain trade accounts receivable balances during the year ended February 29, 2016 (see Note 1(h) of the Consolidated FinancialStatements), partially offset by decreased accounts payable. During Fiscal 2015, operating activities provided cash of $47,428 as a result of increased accounts payable, partially offset by increased inventory and decreasedcustomer accounts receivable, due primarily to lower sales, as well as the factoring of certain trade accounts receivable balances at February 28, 2015 (see Note1(h) of the Consolidated Financial Statements). Net cash used in investing activities:Investing activities used cash of $12,130 during Fiscal 2017 , primarily due to capital additions related to new computer equipment, as well as the in-progressadditions to the Company's shared service facility in Hauppauge, NY.During Fiscal 2016, investing activities used cash of $38,587 primarily due to capital additions and the Company's acquisition of a controlling interest insubstantially all of the assets and certain liabilities of Eyelock, Inc. and EyeLock Corporation on September 1, 2015 (see Note 2).During Fiscal 2015, investing activities used cash of $22,882 , primarily due to capital additions and the Company's investments in Eyelock, Inc. and 360Fly, Inc.(formerly EyeSee360, Inc.).Net cash provided by/used in financing activities:Financing activities provided cash of $9,695 during Fiscal 2017 , due to borrowings of bank obligations net of repayments, primarily in relation to the Company'sAmended Credit Facility.During Fiscal 2016, financing activities provided cash of $13,695 , primarily due to borrowings from our Amended Facility net of repayments, as well asborrowings from the construction loan used to build the Company's new manufacturing facility and executive offices in Lake Nona, Florida.During Fiscal 2015, financing activities used cash of $24,878 , primarily due to repayments of bank obligations net of borrowings, as well as the repurchased oftreasury stock.From March 1, 2016 through April 25, 2016, the Company had a senior secured credit facility ("the Credit Facility") with an aggregate availability of $125,000,consisting of a revolving credit facility of $125,000, with a $30,000 multicurrency revolving credit facility sublimit, a $15,625 sublimit for letters of credit and a$6,250 sublimit for swingline loans. The Credit Facility was due on January 9, 2019; however, it was subject to acceleration upon the occurrence of an Event ofDefault (as defined in the Credit Agreement).On April 26, 2016, the Company amended and restated the Credit Facility ("Amended Credit Facility"). The Amended Credit Facility provides for a revolvingcredit facility with committed availability of up to $140,000 , which may be increased, at the36option of the Company, up to a maximum of $175,000 , and a term loan in the amount of $15,000 . The Amended Credit Facility also includes a $15,000 sublimitfor letters of credit and a $15,000 sublimit for swingline loans. The availability under the revolving credit line within the Amended Credit Facility is subject to aborrowing base, which is based on eligible accounts receivable, eligible inventory and certain real estate, subject to reserves as determined by the lender, and isalso limited by amounts outstanding under the Florida Mortgage (see Note 7(b)). As of February 28, 2017 , $80,605 was outstanding under the revolving creditfacility. The remaining availability under revolving credit line of the Amended Credit Facility was $25,363 as of February 28, 2017 . The balance outstanding onthe term loan at February 28, 2017 was $12,188 . The term loan is repayable in consecutive quarterly installments of $938 through April 1, 2020. All other amountsoutstanding under the Amended Credit Facility will mature and become due on April 26, 2021.Generally, the Company may designate specific borrowings under the Amended Credit Facility as either Base Rate Loans or LIBOR Rate Loans, except thatswingline loans may only be designated as Base Rate Loans. Loans under the Amended Credit Facility designated as LIBOR Rate Loans shall bear interest at a rateequal to the then-applicable LIBOR Rate plus a range of 1.75% - 2.25% . Loans under the Amended Credit Facility designated as Base Rate Loans shall bearinterest at a rate equal to the applicable margin for Base Rate Loans of 0.75% - 1.25% , as defined in the agreement. Amounts outstanding in respect of the termloan shall bear interest at a rate equal to either (as selected by the Company pursuant to the agreement) (a) the then-applicable LIBOR Rate (not to be less than0.00% ) plus 4.25% or (b) the then-applicable Base Rate plus 3.25% .The Amended Credit Facility requires compliance with a financial covenant calculated as of the last day of each month, consisting of a Fixed Charge CoverageRatio. The Amended Credit Facility also contains covenants that limit the ability of the Loan Parties and certain of their Subsidiaries which are not Loan Parties to,among other things: (i) incur additional indebtedness; (ii) incur liens; (iii) merge, consolidate or dispose of a substantial portion of their business; (iv) transfer ordispose of assets; (v) change their name, organizational identification number, state or province of organization or organizational identity; (vi) make any materialchange in their nature of business; (vii) prepay or otherwise acquire indebtedness; (viii) cause any Change of Control; (ix) make any Restricted Junior Payment; (x)change their fiscal year or method of accounting; (xi) make advances, loans or investments; (xii) enter into or permit any transaction with an Affiliate of anyBorrower or any of their Subsidiaries; (xiii) use proceeds for certain items; (xiv) issue or sell any of their stock; (xv) consign or sell any of their inventory oncertain terms. In addition, if excess availability under the Amended Credit Facility were to fall below certain specified levels, as defined in the agreement, thelenders would have the right to assume dominion and control over the Company's cash. As of February 28, 2017 , the Company was in compliance with this cashdominion covenant.The Obligations under the Loan Documents are secured by a general lien on and security interest in substantially all of the assets of the Borrowers and certain ofthe Guarantors, including accounts receivable, equipment, real estate, general intangibles and inventory. The Company has guaranteed the obligations of theborrowers under the Amended Credit Facility.As of February 28, 2017 , a total of $ 92,793 was outstanding under the Amended Credit Facility compared to $72,300 at February 29, 2016 . The increase in theoutstanding credit facility balance as of February 28, 2017 is principally a result of fulfilling the Company's seasonal working capital needs, as well as to supportthe EyeLock LLC subsidiary. Additionally, in April 2016, the Company repaid its Woodview Trace mortgage in full, in conjunction with the amendment of theCredit Facility, as described above, utilizing funds from the Amended Credit Facility.We also utilize supply chain financing arrangements and factoring agreements as an integral part of our financing for working capital, which accelerates receivablecollection and helps to better manage cash flow. Under the agreements, the Company has agreed to sell certain of its accounts receivable balances to bankinginstitutions who have agreed to advance amounts equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. Thebalances under these agreements are accounted for as sales of accounts receivable, as they are sold without recourse. Cash proceeds from these agreements arereflected as operating activities included in the change in accounts receivable in the Company's Consolidated Statements of Cash Flows. Fees incurred inconnection with the agreements are recorded as interest expense by the Company.Certain contractual cash obligations and other commitments will impact our short and long-term liquidity. At February 28, 2017 , such obligations andcommitments are as follows:37 Amount of Commitment Expiration per Period (9) Less than 1-3 4-5 AfterContractual Cash Obligations Total 1 Year Years Years 5 YearsCapital lease obligation (1) $1,932 $532 $992 $408 $—Operating leases (2) 7,963 5,456 1,740 416 351Total contractual cash obligations $9,895 $5,988 $2,732 $824 $351 Other Commitments Bank obligations (3) $97,700 $8,657 $7,500 $81,543 $—Stand-by letters of credit (4) 1,306 1,306 — — —Other (5) 13,745 1,560 4,572 999 6,614Contingent earn-out payments and other (6) 73 73 — — —Pension obligation (7) 8,840 237 699 533 7,371Unconditional purchase obligations (8) 107,386 107,386 — — —Total commercial commitments $229,050 $119,219 $12,771 $83,075 $13,985Total Commitments $238,945 $125,207 $15,503 $83,899 $14,336(1)Represents total principal payments due under capital lease obligations which have a current (included in other current liabilities) and long term principalbalance totaling $532 and $1,400 , respectively at February 28, 2017 .(2)We enter into operating leases in the normal course of business.(3)Represents amounts outstanding under the Company's Amended Credit Facility, Hirschmann's line of credit and the Voxx Germany Euro asset-based lendingfacility at February 28, 2017 .(4)We issue standby letters of credit to secure certain purchases and insurance requirements. These letters of credit are issued during the ordinary course ofbusiness through major domestic banks as requested by certain suppliers. (5)This amount includes balances outstanding under an assumed mortgage on a facility in connection with the Klipsch acquisition and balances outstanding underloans and mortgages for the construction of our manufacturing facility in Florida and for facilities purchased at Schwaiger and Voxx Germany. (6)Represents profit-sharing payments in connection with the Invision acquisition.(7)Represents the liability for an employer defined benefit pension plan covering certain eligible Hirschmann employees, as well as a retirement incentive accrualfor certain Hirschmann employees.(8)Open purchase obligations represent inventory commitments. These obligations are not recorded in the consolidated financial statements until commitmentsare fulfilled and such obligations are subject to change based on negotiations with manufacturers.We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash on hand, cash provided by operations,available borrowings under bank lines of credit and possible future public or private debt and/or equity offerings. At times, we evaluate possible acquisitions of, orinvestments in, businesses that are complementary to ours, which transactions may require the use of cash. We believe that our cash, other liquid assets, operatingcash flows, credit arrangements, access to equity capital markets, taken together, provides adequate resources to fund ongoing operating expenditures. In the eventthat they do not, we may require additional funds in the future to support our working capital requirements or for other purposes and may seek to raise suchadditional funds through the sale of public or private equity and/or debt financings as well as from other sources. No assurance can be given that additionalfinancing will be available in the future or that if available, such financing will be obtainable on terms favorable when required.Off-Balance Sheet ArrangementsWe do not maintain any off-balance sheet arrangements, transactions, obligations or other relationships with unconsolidated entities that would be expected to havea material current or future effect upon our financial condition or results of operations.38Impact of Inflation and Currency FluctuationTo the extent that we expand our operations in Europe, Canada, Latin America and the Pacific Rim, the effects of inflation and currency fluctuations could impactour financial condition and results of operations. While the prices we pay for products purchased from our suppliers are principally denominated in United Statesdollars, price negotiations depend in part on the foreign currency of foreign manufacturers, as well as market, trade and political factors. The Company also hasexposure related to transactions in which the currency collected from customers is different from the currency utilized to purchase the product sold in its foreignoperations, and U. S. dollar denominated purchases in its foreign subsidiaries. The Company enters forward contracts to hedge certain euro-related transactions.The Company minimizes the risk of nonperformance on the forward contracts by transacting with major financial institutions. During Fiscal 2017 , 2016 and 2015, the Company held forward contracts specifically designated for hedging (see Note 1(e) of the Notes to Consolidated Financial Statements). As of February 28,2017 and February 29, 2016 , unrealized gains of $ 455 and $ 1,220 , respectively, were recorded in other comprehensive income associated with these contracts.Effective January 1, 2010, according to the guidelines in ASC 830, Venezuela was designated as a hyper-inflationary economy. A hyper-inflationary economydesignation occurs when a country has experienced cumulative inflation of approximately 100 percent or more over a 3 year period. The hyper-inflationarydesignation requires the local subsidiary in Venezuela to record all transactions as if they were denominated in U.S. dollars. The Company transitioned to hyper-inflationary accounting on March 1, 2010 for Venezuela and continues to account for the subsidiary under this method.From February 2013 through February 2016, the official exchange rate of the Venezuelan Bolivar Fuerte was 6.3 per U.S. dollar; however, since January 2014, theVenezuelan government has created multiple alternative exchange rates designated to be used for the purchase of goods and services deemed non-essential. InFebruary 2015, the Venezuelan government introduced a new currency system, referred to as the Marginal Currency System, or SIMADI rate. This market-basedexchange system consisted of a mechanism from which both businesses and individuals were allowed to purchase and sell foreign currency at the price set by themarket. At February 29, 2016 and February 28, 2015 this rate was approximately 205 and 177 Bolivar Fuerte/$1, respectively. A net currency exchange loss of$(2) was recorded for the year ended February 29, 2016 . A net currency exchange loss of $(7,104) was recorded for the year ended February 28, 2015, whichincluded the remeasurement loss on the Company's Venezuelan bonds, which matured in March 2015, of $(7,396) , and is included in Other Income (Expense) onthe Consolidated Statement of Operations and Comprehensive Income (Loss). In March 2016, the Venezuelan government enacted further changes to its foreigncurrency exchange mechanisms, including a 59% devaluation of the official government exchange rate (re-named DIPRO) from 6.3 bolivars to 10 BolivarFuerte/$1. The SIMADI exchange rate was replaced by the DICOM exchange rate, which the Venezuelan government reported would be allowed to float to meetmarket needs. As of February 28, 2017 , the DICOM rate was deemed to be the appropriate rate to use for remeasuring its Venezuelan subsidiary’s financialstatements. As of February 28, 2017 , the published DIPRO and DICOM rates offered were 10.0 and 699.9 bolivars to the U.S. dollar, respectively. A net currencyexchange loss of $(8) was recorded for the year ended February 28, 2017 , representing currency devaluation, which is included in Other Income (Expense) on theConsolidated Statements of Operations and Comprehensive Income (Loss).The Company has certain U. S. dollar denominated assets and liabilities in its Venezuelan subsidiary, including our U.S. dollar denominated intercompany debt,which has been subject to currency fluctuations associated with the devaluation of the VBF, the most recent devaluation taking place in March 2016.SeasonalityWe typically experience seasonality in our operations. We generally sell a substantial amount of our products during September, October and November due toincreased promotional and advertising activities during the holiday season. Our business is also significantly impacted by the holiday season.Related Party TransactionsDuring 1996, we entered into a 30-year capital lease for a building with our principal stockholder and chairman, which was the headquarters of the discontinuedCellular operation sold in 2004. The lease expiration date was November 30, 2026. In Fiscal 2015, the building was purchased from Voxx's principal stockholderby an unrelated third party, causing the lease between Voxx and the stockholder to be terminated. As a result of the transaction, the Company realized a gain of$846, net of tax and net of a termination penalty of $573 paid to the stockholder at the termination date. The gain was recorded in paid in capital on theConsolidated Balance Sheet at February 28, 2015. We also leased another facility from our principal stockholder which was accounted for as an operating leaseand had an expiration date of November 30, 2016. This facility was sold to an unrelated third party during the second quarter of Fiscal 2017. The Company has norelated party leases as of February 28, 2017 .39Recent Accounting PronouncementsWe are required to adopt certain new accounting pronouncements. See Note 1(w) of the Notes to the Consolidated Financial Statements of this Annual Report onForm 10-K.Item 7A-Quantitative and Qualitative Disclosures about Market RiskThe market risk inherent in our market instruments and positions is the potential loss arising from adverse changes in marketable equity security prices, interestrates and foreign currency exchange rates.Marketable SecuritiesMarketable securities at February 28, 2017 , which are recorded at fair value of $4,100 , include an unrealized gain of $6 and have exposure to price fluctuations.This risk is estimated as the potential loss in fair value resulting from a hypothetical 10% adverse change in prices quoted by stock exchanges and amounts to $410as of February 28, 2017 . Actual results may differ.Interest Rate RiskOur earnings and cash flows are subject to fluctuations due to changes in interest rates on investment of available cash balances in money market funds andinvestment grade corporate and U.S. government securities. In addition, our bank loans expose us to changes in short-term interest rates since interest rates on theunderlying obligations are either variable or fixed. In connection with our Florida Mortgage, we have debt outstanding in the amount $9,113 at February 28, 2017 .Interest on the Florida Mortgage is charged at 70% of 1-month LIBOR plus 1.54%. We have an interest rate swap for the Florida Mortgage with a notional amountof $9,113 at February 28, 2017 which locks the interest rate at 3.48% (inclusive of credit spread) through the mortgage end date of March 2026.Foreign Exchange RiskWe are subject to risk from changes in foreign exchange rates for our subsidiaries and marketable securities that use a foreign currency as their functional currencyand are translated into U.S. dollars. These changes result in cumulative translation adjustments, which are included in Accumulated Other Comprehensive Income(Loss). At February 28, 2017 , we had translation exposure to various foreign currencies with the most significant being the Euro, Hong Kong Dollar, MexicanPeso, Hungarian Forint and Chinese Yuan. The potential decrease in sales and net income resulting from a hypothetical 10% adverse change in quoted foreigncurrency exchange rates for the year ended February 28, 2017 amounts to approximately $25,593 and $796, respectively. Actual results may differ.The Company continues to monitor the political and economic climate in Venezuela. Venezuela did not have any sales for the year ended February 28, 2017 .Approximately $142 of assets invested in Venezuela are cash related and are subject to government foreign exchange controls. The Company also maintains$3,679 in real estate property in Venezuela that could be subject to government foreign exchange controls upon their ultimate sale.Item 8-Consolidated Financial Statements and Supplementary DataThe information required by this item begins on page 39 of this Annual Report on Form 10-K and is incorporated herein by reference.Item 9-Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNot applicable.Item 9A-Controls and Procedures Evaluation of Disclosure Controls and Procedures VOXX International Corporation and subsidiaries (the "Company") maintains disclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in the reports that the Company files or submits under the Securities and Exchange Act is recorded, processed, summarized, and reportedwithin the time periods specified in accordance with the SEC's rules and regulations, and that such information is accumulated and communicated to theCompany’s management, including its40Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required financial disclosures. As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’smanagement, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls andprocedures pursuant to the Securities and Exchange Act Rule 13a-15. Based upon this evaluation as of February 28, 2017 , the Chief Executive Officer and ChiefFinancial Officer concluded that the Company’s disclosure controls and procedures were deemed to be effective and adequately designed. Management's Report on Internal Control Over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting; as such term is defined in theSecurities and Exchange Act Rules 13a-15(f) and 15d-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting principles and includes those policies and procedures that: •Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company; and•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that couldhave a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectivenessto future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate. Under the supervision, and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Companyevaluated the effectiveness of the Company’s internal control over financial reporting as of February 28, 2017 based on the framework set forth by the 2013Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "2013 COSO Framework").Based on that evaluation, management concluded that the Company's internal control over financial reporting was effective as of February 28, 2017 based on thecriteria established in the 2013 COSO Framework.The certifications of the Company’s Chief Executive Officer and Chief Financial Officer included in Exhibits 31.1 and 31.2 to this Annual Report on Form 10-Kincludes, in paragraph 4 of such certifications, information concerning the Company’s disclosure controls and procedures and internal control over financialreporting. Such certifications should be read in conjunction with the information contained in this Item 9A. Controls and Procedures, for a more completeunderstanding of the matters covered by such certifications. The effectiveness of the Company’s internal control over financial reporting as of February 28, 2017 has been audited by Grant Thornton LLP, an independentregistered public accounting firm who also audited the Company’s Consolidated Financial Statements. Grant Thornton LLP’s report on the effectiveness of theCompany’s internal control over financial reporting is included below.41REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and StockholdersVOXX International CorporationWe have audited the internal control over financial reporting of VOXX International Corporation (a Delaware corporation) and subsidiaries(the “Company”) as of February 28, 2017, based on criteria established in the 2013 Internal Control-Integrated Framework issued by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintainingeffective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinionon the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financialreporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based onthe assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit providesa reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, orthat the degree of compliance with the policies or procedures may deteriorate.In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 28, 2017,based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidatedfinancial statements of the Company as of and for the year ended February 28, 2017, and our report dated May 15, 2017 expressed anunqualified opinion on those financial statements./s/ GRANT THORNTON LLPMelville, New YorkMay 15, 20174243Changes in Internal Controls Over Financial ReportingThere were no material changes in our internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during themost recently completed fiscal fourth quarter ended February 28, 2017 covered by this report, that have materially affected, or are reasonably likely to materiallyaffect, our internal controls over financial reporting.Item 9B - Other InformationNot ApplicablePART IIIThe information required by Item 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownershipof Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and DirectorIndependence) and Item 14 (Principal Accounting Fees and Services) of Form 10-K, will be included in our Proxy Statement for the Annual meeting ofStockholders, which will be filed on or before June 9, 2017 , and such information is incorporated herein by reference.PART IVItem 15-Exhibits, Financial Statement Schedules(1 and 2) Financial Statements and Financial Statement Schedules. See Index to Consolidated Financial Statements attached hereto.(3) Exhibits. A list of exhibits is included subsequent to Schedule II on page S-1.44VOXX INTERNATIONAL CORPORATIONINDEX TO CONSOLIDATED FINANCIAL STATEMENTSFinancial Statements:PageReport of Independent Registered Public Accounting Firm46Consolidated Balance Sheets as of February 28, 2017 and February 29, 201647Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended February 28, 2017, February 29, 2016and February 28, 201548Consolidated Statements of Stockholders’ Equity for the years ended February 28, 2017, February 29, 2016 and February 28, 201550Consolidated Statements of Cash Flows for the years ended February 28, 2017, February 29, 2016 and February 28, 201551Notes to Consolidated Financial Statements53Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts10045REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMBoard of Directors and StockholdersVOXX International CorporationWe have audited the accompanying consolidated balance sheets of VOXX International Corporation (a Delaware corporation) andsubsidiaries (the “Company”) as of February 28, 2017 and February 29, 2016, and the related consolidated statements of operations andcomprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended February 28, 2017. Ouraudits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under Item 15.These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements and financial statement schedule based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of VOXXInternational Corporation and subsidiaries as of February 28, 2017 and February 29, 2016, and the results of their operations and their cashflows for each of the three years in the period ended February 28, 2017 in conformity with accounting principles generally accepted in theUnited States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidatedfinancial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’sinternal control over financial reporting as of February 28, 2017, based on criteria established in the 2013 Internal Control-IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 15, 2017expressed an unqualified opinion./s/ GRANT THORNTON LLPMelville, New YorkMay 15, 201746VOXX International Corporation and SubsidiariesConsolidated Balance SheetsFebruary 28, 2017 and February 29, 2016(In thousands, except share data) February 28, 2017 February 29, 2016Assets Current assets: Cash and cash equivalents$7,800 $11,767Accounts receivable, net90,641 87,055Inventory, net153,053 144,028Receivables from vendors665 2,519Prepaid expenses and other current assets19,593 17,256Income tax receivable1,596 1,426Total current assets273,348 264,051Investment securities10,388 10,206Equity investments21,926 21,949Property, plant and equipment, net81,601 79,422Goodwill103,212 104,349Intangible assets, net176,289 185,022Deferred income taxes23 23Other assets1,699 2,168Total assets$668,486 $667,190Liabilities and Stockholders' Equity Current liabilities: Accounts payable$61,143 $55,790Accrued expenses and other current liabilities42,476 50,748Income taxes payable3,077 4,081Accrued sales incentives13,154 12,439Current portion of long-term debt10,217 8,826Total current liabilities130,067 131,884Long-term debt, net of debt issuance costs97,747 88,169Capital lease obligation1,400 1,381Deferred compensation4,224 4,011Deferred tax liabilities30,155 30,374Other tax liabilities3,194 4,997Other long-term liabilities10,384 10,480Total liabilities277,171 271,296Commitments and contingencies Stockholders' equity: Preferred stock: No shares issued or outstanding (see Note 10)— —Common stock: Class A, $.01 par value; 60,000,000 shares authorized, 24,067,444 shares issued and 21,899,370 shares outstanding atboth February 28, 2017 and February 29, 2016256 256Class B Convertible, $.01 par value, 10,000,000 shares authorized, 2,260,954 shares issued and outstanding22 22Paid-in capital295,432 294,038Retained earnings159,369 154,947Non-controlling interest1,310 8,524Accumulated other comprehensive loss(43,898) (40,717)Treasury stock, at cost, 2,168,074 shares of Class A Common Stock at both February 28, 2017 and February 29, 2016(21,176) (21,176)Total stockholders' equity391,315 395,894Total liabilities and stockholders' equity$668,486 $667,190See accompanying notes to consolidated financial statements.47VOXX International Corporation and SubsidiariesConsolidated Statements of Operations and Comprehensive Income (Loss)Years Ended February 28, 2017 , February 29, 2016 and February 28, 2015(In thousands, except share and per share data)48 Year Ended Year Ended Year Ended February 28, 2017 February 29, 2016 February 28, 2015Net sales$681,042 $680,746 $757,498Cost of sales479,527 485,061 533,628Gross profit201,515 195,685 223,870 Operating expenses: Selling48,205 48,513 54,136General and administrative107,882 111,382 114,849Engineering and technical support45,600 37,490 37,157Intangible asset impairment charges— 9,070 —Restructuring expense— — 1,134Acquisition related costs— 800 —Total operating expenses201,687 207,255 207,276 Operating (loss) income(172) (11,570) 16,594 Other (expense) income: Interest and bank charges(7,488) (8,075) (6,851)Equity in income of equity investee6,797 6,538 5,866Venezuela currency devaluation, net(8) (2) (7,104)Impairment of Venezuela investment properties (see Note 1(p))— — (9,304)Gain on bargain purchase— 4,679 —Other, net(572) 632 1,495Total other (expense) income, net(1,271) 3,772 (15,898) (Loss) income before income taxes(1,443) (7,798) 696Income tax expense (benefit)1,759 (1,735) 1,638Net loss$(3,202) $(6,063) $(942)Less: net loss attributable to non-controlling interest(7,624) (3,381) —Net income (loss) attributable to Voxx International Corporation$4,422 $(2,682) $(942) Other comprehensive (loss) income: Foreign currency translation adjustments(3,194) (5,702) (33,170)Derivatives designated for hedging, net of tax210 (2,440) 3,258Pension plan adjustments, net of tax(180) 640 (1,423)Unrealized holding (loss) gain on available-for-sale investment securities arising duringthe period, net of tax(17) 20 (27)Other comprehensive loss, net of tax(3,181) (7,482) (31,362)Comprehensive income (loss) attributable to Voxx International Corporation$1,241 $(10,164) $(32,304) Net income (loss) per common share attributable to Voxx International Corporation - basic$0.18 $(0.11) $(0.04) Net income (loss) per common share attributable to Voxx International Corporation - diluted$0.18 $(0.11) $(0.04) Weighted-average common shares outstanding (basic)24,160,324 24,172,710 24,330,361Weighted-average common shares outstanding (diluted)24,240,310 24,172,710 24,330,361See accompanying notes to consolidated financial statements.49VOXX International Corporation and SubsidiariesConsolidated Statements of Stockholders' EquityYears Ended February 28, 2017 , February 29, 2016 and February 28, 2015(In thousands, except share data) Class Aand Class BCommonStock Paid-inCapital RetainedEarnings AccumulatedOtherComprehensiveIncome (Loss) Non-controllingInterests TreasuryStock TotalStock-holders'EquityBalances at February 28, 2014 $277 $290,960 $158,571 $(1,873) $— $(18,351) $429,584Net loss — — (942) — — — (942)Other comprehensive loss, net of tax — — — (31,362) — — (31,362)Termination of capital lease withprincipal shareholder, net of tax — 846 — — — — 846Exercise of stock options into 15,000shares of common stock — 101 — — — — 101Stock-based compensation expense — 521 — — — — 521Repurchase of 315,443 shares ofcommon stock — — — — — (2,620) (2,620)Issuance of 1,260 shares of treasurystock — (1) — — — 13 12Balances at February 28, 2015 277 292,427 157,629 (33,235) — (20,958) 396,140Net loss — — (2,682) — (3,381) — (6,063)Fair value of non-controlling interest — — — — 12,900 — 12,900Receivable from selling shareholders — — — — (1,200) — (1,200)Other comprehensive loss, net of tax — — — (7,482) — — (7,482)Exercise of stock options into 64,204shares of common stock 1 436 — — — — 437Stock-based compensation expense — 1,179 — — 205 — 1,384Repurchase of 39,529 shares ofcommon stock — — — — — (227) (227)Issuance of 905 shares of treasurystock — (4) — — — 9 5Balances at February 29, 2016 278 294,038 154,947 (40,717) 8,524 (21,176) 395,894Net loss — — 4,422 — (7,624) — (3,202)Other comprehensive loss, net of tax — — — (3,181) — — (3,181)Stock-based compensation expense — 1,394 — — 410 — 1,804Balances at February 28, 2017 $278 $295,432 $159,369 $(43,898) $1,310 $(21,176) $391,315 See accompanying notes to consolidated financial statements. 50VOXX International Corporation and SubsidiariesConsolidated Statements of Cash FlowsYears Ended February 28, 2017 , February 29, 2016 and February 28, 2015 (Amounts in thousands) YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Cash flows from operating activities: Net loss$(3,202) $(6,063) $(942)Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization18,294 15,838 15,565Amortization of deferred financing costs820 2,404 1,117Impairment charges— 9,070 9,304Bad debt expense2,126 774 505Interest on notes receivable from EyeLock, Inc.— (677) —Gain on forward contracts(947) (3,753) (653)Loss on interest rate swap unwind114 — —Equity in income of equity investee(6,797) (6,538) (5,866)Distribution of income from equity investees6,820 6,237 4,846Deferred income tax expense (benefit), net19 (4,644) 2,003Loss (gain) on disposal of property, plant and equipment7 (449) 472Non-cash compensation adjustment1,419 202 850Non-cash stock based compensation expense753 859 521Venezuela currency devaluation on investment securities— 23 7,396Gain on sale of intangible asset— (30) —Gain on bargain purchase— (4,679) —Changes in operating assets and liabilities (net of assets and liabilities acquired): Accounts receivable(6,684) 13,683 36,393Inventory(10,227) 11,285 (22,973)Receivables from vendors2,287 1,613 368Prepaid expenses and other(1,973) 8,510 (6,200)Investment securities-trading(178) 595 (278)Accounts payable, accrued expenses, accrued sales incentives and other current liabilities(1,564) (18,151) 10,463Income taxes receivable/payable(2,877) 1,412 (5,463)Net cash (used in) provided by operating activities(1,790) 27,521 47,428Cash flows from investing activities: Purchases of property, plant and equipment(12,177) (19,636) (17,195)Proceeds from sale of property, plant and equipment47 328 91Proceeds from sale of intangible asset— 150 —Purchase of long-term investment— — (6,000)Decrease in notes receivable (see Note 2)— (4,176) —Proceeds from sale of short term investment— 251 —Purchase of acquired businesses, less cash acquired (see Note 2)— (15,504) —Proceeds from repayment of long-term note— — 222Net cash used in investing activities(12,130) (38,587) (22,882)Cash flows from financing activities: Borrowings from bank obligations60,672 248,797 243,160Repayments on bank obligations(50,452) (234,429) (264,333)Principal payments on capital lease obligation(525) (425) (479)Payments for capital lease termination— — (573)Proceeds from exercise of stock options and warrants— 436 101Deferred financing costs— (457) (134)Purchase of treasury stock— (227) (2,620)Net cash provided by (used in) financing activities9,695 13,695 (24,878)Effect of exchange rate changes on cash258 690 (1,823)Net (decrease) increase in cash and cash equivalents(3,967) 3,319 (2,155)Cash and cash equivalents at beginning of year11,767 8,448 10,603Cash and cash equivalents at end of year$7,800 $11,767 $8,448Supplemental Cash Flow Information: Non-cash investing activities: Capital lease obligations$1,041 $1,109 $—Mortgage settlement funded by long-term obligation5,590 — —Deferred financing costs funded by long-term obligation1,779 — —Acquisition of long-term investment— 1,453 —Cash paid during the period for: Interest, excluding bank charges$3,930 $3,114 $3,011Income taxes (net of refunds)4,409 1,673 2,676 51See accompanying notes to consolidated financial statements.52VOXX International Corporation and SubsidiariesNotes to Consolidated Financial StatementsFebruary 28, 2017(Amounts in thousands, except share and per share data)1)Description of Business and Summary of Significant Accounting Policiesa) Description of BusinessVOXX International Corporation ("Voxx," "We," "Our," "Us" or "the Company") is a leading international manufacturer and distributor in theAutomotive, Premium Audio and Consumer Accessories industries. The Company has widely diversified interests, with more than 30 globalbrands that it has acquired and grown throughout the years, achieving a powerful international corporate image and creating a vehicle for each ofthese respective brands to emerge with its own identity. We conduct our business through eighteen wholly-owned subsidiaries: AudiovoxAtlanta Corp., VOXX Electronics Corporation, VOXX Accessories Corp., Audiovox Consumer Electronics, Inc. ("ACE"), Audiovox GermanHoldings GmbH ("Voxx Germany"), Audiovox Venezuela, C.A., Audiovox Canada Limited, Audiovox Hong Kong Ltd., AudiovoxInternational Corp., Audiovox Mexico, S. de R.L. de C.V. ("Audiovox Mexico"), Code Systems, Inc., Oehlbach Kabel GmbH ("Oehlbach"),Schwaiger GmbH ("Schwaiger"), Invision Automotive Systems, Inc. ("Invision"), Klipsch Holding LLC ("Klipsch"), Car CommunicationHolding GmbH ("Hirschmann"), Omega Research and Development, LLC ("Omega") and Audiovox Websales LLC, as well as one majority-owned subsidiary, EyeLock LLC ("EyeLock"). We market our products under the Audiovox® brand name, other brand names and licensedbrands, such as 808®, AR for Her®, Acoustic Research®, Advent®, Ambico®, Car Link®, Chapman®, Code-Alarm®, Energy®, Heco®,Hirschmann Car Communication®, Incaar ™ , Invision®, Jamo®, Jensen®, Klipsch®, Mac Audio ™ , Magnat®, Mirage®, myris®, Oehlbach®,Omega®, Phase Linear®, Prestige®, Pursuit®, RCA®, RCA Accessories®, Schwaiger®, Recoton®, Terk® and Voxx/Hirschmann, as well asprivate labels through a large domestic and international distribution network. We also function as an OEM ("Original EquipmentManufacturer") supplier to several customers, as well as market a number of products under exclusive distribution agreements, such as SiriusXMsatellite radio products; Singtrix®, the next generation in karaoke; and 360Fly™ Action Cameras. b) Principles of Consolidation, Reclassifications and Accounting PrinciplesThe consolidated financial statements include the financial statements of VOXX International Corporation and its wholly and majority-ownedsubsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company acquired a controllinginterest in all of the assets and certain liabilities of EyeLock Inc. and EyeLock Corporation effective September 1, 2015, through a newly formedentity, EyeLock LLC ("EyeLock"). The consolidated financial statements include the operations of EyeLock beginning September 1, 2015.The Company follows FASB Accounting Standards Codification 810-10-65-1 to report a non-controlling interest in the consolidated balancesheets within the equity section, separately from the Company’s retained earnings. Non-controlling interest represents the non-controllinginterest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, EyeLock. Non-controlling interest is adjustedfor the non-controlling interest holder’s proportionate share of the earnings or losses and other comprehensive income (loss), if any, and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance. Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accountedfor using the equity method. The Company's share of its equity method investee's earnings or losses is included in Other Income (Expense) inthe accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). The Company eliminates its pro rata share ofgross profit on sales to its equity method investee for inventory on hand at the investee at the end of the year. Investments in which the Companydoes not exercise significant influence over the investee are accounted for under the cost method.Certain amounts in prior years have been reclassified to conform to the current year presentation.53The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United Statesof America. c) Use of EstimatesThe preparation of these consolidated financial statements requires the Company to make estimates and assumptions that affect reported amountsof assets, liabilities, revenue and expenses. Such estimates include the allowance for doubtful accounts and inventory valuation, recoverabilityof deferred tax assets, reserve for uncertain tax positions, valuation of long-lived assets, accrued sales incentives, warranty reserves, stock-basedcompensation, valuation and impairment assessment of investment securities, goodwill, trademarks and other intangible assets, and disclosure ofcontingent assets and liabilities at the date of the consolidated financial statements. Actual results could differ from those estimates.d) Cash and Cash Equivalents Cash and cash equivalents consist of demand deposits with banks and highly liquid money market funds with original maturities of three monthsor less when purchased. Cash and cash equivalents amounted to $7,800 and $11,767 at February 28, 2017 and February 29, 2016 ,respectively. Cash amounts held in foreign bank accounts amounted to $7,122 and $10,425 at February 28, 2017 and February 29, 2016 ,respectively. Many of these amounts are in excess of government insurance. The Company places its cash and cash equivalents in institutionsand funds of high credit quality. We perform periodic evaluations of these institutions and funds.e) Fair Value Measurements and DerivativesThe Company applies the authoritative guidance on "Fair Value Measurements," which among other things, requires enhanced disclosures aboutinvestments that are measured and reported at fair value. This guidance establishes a hierarchal disclosure framework that prioritizes and ranksthe level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number offactors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quotedprices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability anda lesser degree of judgment used in measuring fair value.Investments measured and reported at fair value are classified and disclosed in one of the following categories:Level 1 - Quoted market prices in active markets for identical assets or liabilities.Level 2 - Inputs other than Level 1 inputs that are either directly or indirectly observable.Level 3 - Unobservable inputs developed using the Company's estimates and assumptions, which reflect those that market participants woulduse.The following table presents assets and liabilities measured at fair value on a recurring basis at February 28, 2017 :54 Fair Value Measurements at Reporting DateUsing Level 1 Level 2Cash and cash equivalents: Cash and money market funds$7,800 $7,800 $—Derivatives Designated for hedging$335 $— $335 Investment securities: Trading securities$4,094 $4,094 $—Available-for-sale securities6 6 —Other investments at amortized cost (a)6,288 — —Total investment securities$10,388 $4,100 $—The following table presents assets and liabilities measured at fair value on a recurring basis at February 29, 2016 : Fair Value Measurements at Reporting DateUsing Level 1 Level 2Cash and cash equivalents: Cash and money market funds$11,767 $11,767 $—Derivatives Designated for hedging$30 $— $30Investment securities: Trading securities$3,917 $3,917 $—Available-for-sale securities18 18 —Other investments at amortized cost (a)6,271 — —Total investment securities$10,206 $3,935 $—(a)Included in this balance are investments in two non-controlled corporations accounted for at cost (See Note 1(f)). The fair value of theseinvestments would be based upon Level 3 inputs. At February 28, 2017 and February 29, 2016 , it is not practicable to estimate the fair values ofthese items.The carrying amount of the Company's accounts receivable, short-term debt, accounts payable, accrued expenses, bank obligations and long-term debt approximates fair value because of (i) the short-term nature of the financial instrument; (ii) the interest rate on the financial instrumentbeing reset every quarter to reflect current market rates, and (iii) the stated or implicit interest rate approximates the current market rates or arenot materially different than market rates.Derivative InstrumentsThe Company's derivative instruments include forward foreign currency contracts utilized to hedge a portion of its foreign currency inventorypurchases, local operating expenses, as well as its general economic exposure to foreign currency fluctuations created in the normal course ofbusiness. The Company also has an interest rate swap agreement as of February 28, 2017 that hedges interest rate exposure related to theforecasted outstanding balance of its Florida Mortgage with monthly payments due through March 2026. Two interest rate swap agreements thathedged interest rate exposure related to the Company's Amended Credit Facility expired on April 30, 2016 and February 28, 2017, respectively,each with a fair value of $0 on the date of expiration. A third agreement, which hedged interest rate exposure related to the forecastedoutstanding balance of one of its mortgage notes, was unwound during the first quarter of Fiscal 2017 when that mortgage was paid in full (seeNote 7(f)). The fair value of this interest rate swap agreement on the date it was unwound was $(114) , which was charged to interest expense inthe Company's Consolidated Statements of Operations and Comprehensive55Income (Loss) during the year ended February 28, 2017 . The swap agreement related to the Company's Florida Mortgage locks the interest rateon the debt at 3.48% (inclusive of credit spread) through the maturity date of the mortgage. The forward foreign currency derivatives qualifyingfor hedge accounting are designated as cash flow hedges and valued using observable forward rates for the same or similar instruments (Level2). The duration of open forward foreign currency contracts range from 1 - 12 months and are classified in the balance sheet according to theirterms. Interest rate swap agreements qualifying for hedge accounting are designated as cash flow hedges and valued based on a comparison ofthe change in fair value of the actual swap contracts designated as the hedging instruments and the change in fair value of a hypothetical swapcontract (Level 2). We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same orsimilar financial instruments. Interest rate swaps are classified in the balance sheet as either non-current assets or non-current liabilities based onthe fair value of the instruments at the end of the period.It is the Company's policy to enter into derivative instrument contracts with terms that coincide with the underlying exposure being hedged. Assuch, the Company's derivative instruments are expected to be highly effective. Hedge ineffectiveness, if any, is recognized as incurred throughOther Income (Expense) in the Company's Consolidated Statements of Operations and Comprehensive Income (Loss) and amounted to $177 ,$93 and $(85) for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 respectively.Financial Statement ClassificationThe Company holds derivative instruments that are designated as hedging instruments. The following table discloses the fair value as ofFebruary 28, 2017 and February 29, 2016 for derivative instruments: Derivative Assets and Liabilities Fair Value Account February 28, 2017 February 29, 2016Designated derivative instruments Foreign currency contracts Accrued expenses and othercurrent liabilities $(21) $(98) Prepaid expenses and othercurrent assets 654 989Interest rate swap Other long term liabilities (298) (862) Prepaid expenses and othercurrent assets — 1 Total derivatives $335 $30Cash flow hedgesDuring Fiscal 2017 , the Company entered into forward foreign currency contracts, which have a current outstanding notional value of $42,667at February 28, 2017 and are designated as cash flow hedges. The current outstanding notional value of the Company's interest rate swap atFebruary 28, 2017 was $9,113 . For cash flow hedges, the effective portion of the gain or loss is reported as a component of other comprehensiveincome and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.Activity related to cash flow hedges recorded during the twelve months ended February 28, 2017 and February 29, 2016 was as follows:56 February 28, 2017 February 29, 2016 Gain (Loss)Recognized inOtherComprehensiveIncome Gain (Loss)Reclassifiedinto Cost ofSales Gain (Loss)forIneffectivenessin OtherIncome Gain (Loss)Recognized inOtherComprehensiveIncome Gain (Loss)Reclassifiedinto Cost ofSales Gain (Loss)forIneffectivenessin OtherIncomeCash flow hedges Foreign currencycontracts$455 $934 $177 $1,220 $3,473 $93Interest rate swaps$(449) $(114) $— $(792) $— $—The net gain recognized in other comprehensive income for foreign currency contracts is expected to be recognized in cost of sales within thenext fifteen months. No amounts were excluded from the assessment of hedge effectiveness during the respective periods. During the year endedFebruary 28, 2017 , no contracts originally designated for hedge accounting were de-designated. During the year ended February 29, 2016, sevencontracts originally designated for hedge accounting were de-designated, resulting in a gain of $64 recorded in Other Income (Expense) for theyear ended February 29, 2016 within the Company's Consolidated Statement of Operations and Comprehensive Income (Loss). These contractshave all been settled as of February 28, 2017 . As of February 28, 2017 , no contracts originally designated for hedge accounting wereterminated.f) Investment Securities In accordance with the Company's investment policy, all long and short-term investment securities are invested in "investment grade" ratedsecurities. As of February 28, 2017 and February 29, 2016 , the Company had the following investments: February 28, 2017 February 29, 2016 CostBasis Unrealizedholdinggain/(loss) FairValue CostBasis Unrealizedholdinggain/(loss) FairValueInvestment Securities Marketable Securities Trading Deferred Compensation$4,094 $— $4,094 $3,917 $— $3,917Available-for-sale Cellstar— 6 6 — 18 18Total Marketable Securities4,094 6 4,100 3,917 18 3,935Other Long-Term Investments6,288 — 6,288 6,271 — 6,271Total Investment Securities$10,382 $6 $10,388 $10,188 $18 $10,206Long-Term InvestmentsTrading SecuritiesThe Company’s trading securities consist of mutual funds, which are held in connection with the Company’s deferred compensation plan (seeNote 11). Unrealized holding gains and losses on trading securities offset those associated with the corresponding deferred compensationliability.Available-For-Sale Securities57The Company’s available-for-sale marketable securities include a less than 20% equity ownership in CLST Holdings, Inc. ("Cellstar").Unrealized holding gains and losses, net of the related tax effect (if applicable), on available-for-sale securities are reported as a component ofAccumulated Other Comprehensive Income (Loss) until realized. Realized gains and losses from the sale of available-for-sale securities aredetermined on a specific identification basis and reported in Other Income (Expense).A decline in the market value of any available-for-sale security below cost that is deemed other-than-temporary results in a reduction in carryingamount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. No other-than-temporary losseswere incurred for the years ended February 28, 2017 , February 29, 2016 or February 28, 2015 .Other Long-Term InvestmentsOther long-term investments include investments in two non-controlled corporations accounted for by the cost method. The Company'sinvestment in Rx Networks totaled $1,835 and $1,819 at February 28, 2017 and February 29, 2016 , respectively, and we held 10.2% of theoutstanding shares of this company as of February 28, 2017 . The Company's investment in 360fly, Inc. (formerly EyeSee360, Inc.), consistingof shares of the investee's preferred stock totaled $4,453 at both February 28, 2017 and February 29, 2016 . The Company holds 4.7% of theoutstanding shares of 360fly, Inc. as of February 28, 2017 . The total balance of these two investments at February 28, 2017 was $6,288 . Noadditional investments or loans were made in or to Rx Networks or 360Fly, Inc. in Fiscal 2017.g) Revenue Recognition The Company recognizes revenue from product sales at the time title and risk of loss passes to the customer either at FOB shipping point or FOBdestination, based upon terms established with the customer. The Company's selling price to its customers is a fixed amount that is not subject torefund or adjustment or contingent upon additional rebates. Any customer acceptance provisions, which are related to product testing, aresatisfied prior to revenue recognition. There are no further obligations on the part of the Company subsequent to revenue recognition except forproduct returns from the Company's customers. The Company does accept product returns, if properly requested, authorized, and approved bythe Company. The Company records an estimate of product returns by its customers and records the provision for the estimated amount of suchfuture returns at point of sale, based on historical experience.The Company includes all costs incurred for shipping and handling as cost of sales and all amounts billed to customers as revenue. During theyears ended February 28, 2017 , February 29, 2016 , and February 28, 2015 , freight costs expensed through cost of sales amounted to $15,495 ,$15,395 and $17,530 , respectively and freight billed to customers amounted to $729 , $796 and $1,167 , respectively.h) Accounts Receivable The majority of the Company's accounts receivable are due from companies in the retail, mass merchant and OEM industries. Credit is extendedbased on an evaluation of a customer's financial condition. Accounts receivable are generally due within 30-60 days and are stated at amountsdue from customers, net of an allowance for doubtful accounts. Accounts outstanding longer than the contracted payment terms are consideredpast due. Accounts receivable is comprised of the following:58 February 28, 2017 February 29, 2016Trade accounts receivable and other$98,883 $94,912Less: Allowance for doubtful accounts7,009 6,780Allowance for cash discounts1,233 1,077 $90,641 $87,055 The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customers'current credit worthiness, as determined by a review of their current credit information. The Company continuously monitors collections andpayments from its customers and maintains a provision for estimated credit losses based upon historical experience and any specific customercollection issues that have been identified. While such credit losses have historically been within management's expectations and the provisionsestablished, the Company cannot guarantee it will continue to experience the same credit loss rates that have been experienced in the past. TheCompany writes off uncollectible accounts receivable when collection efforts have been exhausted. Since the Company's accounts receivable areconcentrated in a relatively few number of customers, a significant change in the liquidity or financial position of any one of these customerscould have a material adverse impact on the collectability of the Company's accounts receivable and future operating results.The Company has four supply chain financing agreements and factoring agreements with certain financial institutions to accelerate receivablecollection and better manage cash flow. Under the agreements, the Company has agreed to sell these institutions certain of its accountsreceivable balances. For those accounts receivables tendered to the banks and that the banks choose to purchase, the banks have agreed toadvance an amount equal to the net accounts receivable balances due, less a discount as set forth in the respective agreements. The balancesunder these agreements are sold without recourse and are accounted for as sales of accounts receivable. Cash proceeds from these agreements arereflected as operating activities included in the change in accounts receivable in the Company's Consolidated Statements of Cash Flows. Totalbalances sold under the agreements, net of discounts, for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 were$257,482 , $273,883 and $182,155 , respectively. Fees incurred in connection with the agreements totaled $1,170 , $1,129 and $866 for the yearsended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively, and are recorded within Interest and Bank Charges in theConsolidated Statements of Operations. i) InventoryThe Company values its inventory at the lower of the actual cost to purchase (primarily on a weighted moving-average basis with a portionvalued at standard cost, which approximates actual costs on the first-in, first-out basis) or the current estimated market value of the inventory.Market value of inventory does not exceed the net realizable value of the inventory and is not less than the net realizable value of such inventory,less an allowance for a normal profit margin. The Company regularly reviews inventory quantities on-hand and records a provision for excessand obsolete inventory based primarily on selling prices, indications from customers based upon current price negotiations and purchaseorders. The Company's industry is characterized by rapid technological change and frequent new product introductions that could result in anincrease in the amount of obsolete inventory quantities on-hand. In addition, and as necessary, specific reserves for future known or anticipatedevents may be established. The Company recorded inventory write-downs of $2,371 , $1,256 and $2,877 for the years ended February 28, 2017, February 29, 2016 and February 28, 2015 , respectively.Inventories by major category are as follows:59 February 28, 2017 February 29, 2016Raw materials$43,791 $46,941Work in process5,225 4,457Finished goods104,037 92,630Inventory, net$153,053 $144,028j) Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation. Property under a capital lease is stated at the present value ofminimum lease payments. Major improvements and replacements that extend service lives of the assets are capitalized. Minor replacements, androutine maintenance and repairs are charged to expense as incurred. Upon retirement or disposal of assets, the cost and related accumulateddepreciation are removed from the Consolidated Balance Sheets. A summary of property, plant and equipment, net, is as follows: February 28, 2017 February 29, 2016Land$8,893 $8,656Buildings49,837 49,008Property under capital lease3,643 2,661Furniture and fixtures4,673 5,442Machinery and equipment32,254 32,861Construction-in-progress5,530 1,362Computer hardware and software41,551 39,353Automobiles1,270 1,398Leasehold improvements2,561 6,679 150,212 147,420Less accumulated depreciation and amortization68,611 67,998 $81,601 $79,422 Depreciation is calculated on the straight-line method over the estimated useful lives of the assets as follows: Buildings and improvements 20-40 yearsFurniture and fixtures 5-15 yearsMachinery and equipment 5-10 yearsComputer hardware and software 3-5 yearsAutomobiles 3 yearsLeasehold improvements are depreciated over the shorter of the lease term or estimated useful life of the asset. Assets acquired under capitalleases are amortized over the term of the respective lease. Accumulated amortization of assets under capital lease totaled $1,901 and $1,480 atFebruary 28, 2017 and 2016 , respectively. During Fiscal 2015, the Company terminated one of its capital leases, which had been leased from arelated party (See Note 12).Depreciation and amortization of property, plant and equipment amounted to $10,130 , $9,200 and $10,187 for the years ended February 28,2017 , February 29, 2016 and February 28, 2015 , respectively. Included in depreciation and amortization expense is amortization of computersoftware costs of $1,473 , $1,329 and $1,200 for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively.Also included60in depreciation and amortization expense is $558 , $449 and $455 of amortization expense related to property under capital leases for the yearsended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively.Refer to Note 1(p) for discussion of long-lived asset impairment charges recorded for the year ended February 28, 2015 related to buildings heldby the Company's Venezuela subsidiary.k) Goodwill and Intangible Assets Goodwill and other intangible assets consist of the excess over the fair value of assets acquired (goodwill), and other intangible assets (patents,contracts, trademarks/tradenames, developed technology and customer relationships). Values assigned to the respective assets are determined inaccordance with ASC 805 "Business Combinations" ("ASC 805") and ASC 350 "Intangibles – Goodwill and Other" ("ASC 350"). Goodwill is calculated as the excess of the cost of purchased businesses over the value of their underlying net assets. Generally, the primaryvaluation method used to determine the fair value ("FV") of acquired businesses is the Discounted Future Cash Flow Method ("DCF"). A five-year period is analyzed using a risk adjusted discount rate.The value of potential intangible assets separate from goodwill are independently evaluated and assigned to the respective categories. Thelargest categories from our recently acquired business are Developed Technology, Trademarks, and Customer Relationships. The FV’s oftrademarks acquired are determined using the Relief from Royalty Method based on projected sales of the trademarked products. The FV’s ofcustomer relationships and developed technology are determined using the Multi-Period Excess Earnings Method which includes a DCFanalysis, adjusted for a required return on tangible and intangible assets. The Company categorizes this fair value determination as Level 3(unobservable) in the fair value hierarchy, as described in Note 1(e).The guidance in ASC 350, including management’s business intent for its use; ongoing market demand for products relevant to the category andtheir ability to generate future cash flows; legal, regulatory or contractual provisions on its use or subsequent renewal, as applicable; and the costto maintain or renew the rights to the assets, are considered in determining the useful life of all intangible assets. If the Company determines thatthere are no legal, regulatory, contractual, competitive, economic or other factors which limit the useful life of the asset, an indefinite life will beassigned and evaluated for impairment as indicated below. Goodwill and other intangible assets that have an indefinite useful life are notamortized. Intangible assets that have a definite useful life are amortized over their estimated useful life.ASC 350 requires that goodwill and intangible assets with indefinite useful lives be tested for impairment at least annually or more frequently ifan event occurs or circumstances change that could more likely than not reduce the fair value of a reporting unit below its carrying amount. Intangible assets with estimable useful lives are required to be amortized over their respective estimated useful lives and reviewed forimpairment if indicators of impairment exist . To determine the fair value of goodwill and intangible assets, there are many assumptions andestimates used that directly impact the results of the testing. Management has the ability to influence the outcome and ultimate results based onthe assumptions and estimates chosen. If a significant change in these assumptions and/or estimates occurs, the Company could experienceimpairment charges, in addition to those noted below, in future periods. Goodwill is tested using a two-step process. The first step is to identify a potential impairment, and the second step measures the amount of theimpairment loss, if any. Goodwill is considered impaired if the carrying amount of the reporting unit's goodwill exceeds its estimated fair value.For intangible assets with indefinite lives, primarily trademarks, the Company compared the fair value of each intangible asset with its carryingamount. Intangible assets with indefinite lives are considered impaired if the carrying value exceeds the fair value. The cost of other intangibleassets with definite lives is amortized on a straight-line basis over their respective lives. Voxx's reporting units that carry goodwill are Hirschmann, Invision and Klipsch. The Company has three operating segments based upon itsproducts and internal organizational structure (see Note 14). These operating segments are the Automotive, Premium Audio and ConsumerAccessories segments. The Hirschmann and61Invision reporting units are located within the Automotive segment and the Klipsch reporting unit is located within the Premium Audio segment.The Company performed its annual impairment test for goodwill as of February 28, 2017 . The discount rates (developed using a weightedaverage cost of capital analysis) used in the goodwill test ranged from 12.4% to 13.0% . Based on the Company's goodwill impairmentassessment, all reporting units with goodwill had estimated fair values as of February 28, 2017 that exceeded their carrying values. No goodwillimpairment charges were recorded during the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 . The goodwill balancesof Hirschmann, Invision and Klipsch at February 28, 2017 are $49,306 , $7,373 and $46,533 , respectively.The Company also tested its indefinite-lived intangible assets as of February 28, 2017 . The respective fair values were estimated using a Relief-from-Royalty Method, applying royalty rates of 1.0% to 7.0% for the trademarks after reviewing comparable market rates, the profitability of theproducts associated with relative intangible assets, and other qualitative factors. We determined that risk-adjusted discount rates ranging from12.2% to 35% were appropriate as a result of weighted average cost of capital analyses. As a result of this analysis, it was determined that theCompany's indefinite-lived intangible assets were not impaired at February 28, 2017 .During the second quarter of Fiscal 2016, the Company re-evaluated its projections for its Klipsch reporting unit, based on lower thananticipated results due to certain marketing strategies and re-evaluation of its market position for certain product lines. Accordingly, this wasconsidered an indicator of impairment requiring the Company to test the related indefinite-lived tradename for impairment, and perform a step 1impairment analysis on the goodwill for this reporting unit. The discount rates (developed using a weighted average cost of capital analysis) usedin this goodwill and intangible analysis were 13.1% and 13.8% , respectively. The long-term growth rate was 2.0% . As a result of this analysis,the Company determined that the tradename for this reporting unit was impaired and recorded an impairment charge of $6,210 in the secondquarter of Fiscal 2016. Further, as a result of the Company's Fiscal 2016 annual indefinite-lived testing procedures, it was determined that one ofits Consumer Accessories tradenames was impaired at February 29, 2016 and recorded an impairment charge of $2,860 in the fourth quarter ofFiscal 2016. This impairment charge was the result of a judgment received in the fourth quarter of Fiscal 2016 related to the field of use for thistrademark, which restricted the Company's rights to use the tradename for select products. The Company determined that this indicator ofimpairment required the Company to evaluate the related long-lived assets at the lowest level for which there are separately identifiable cashflows. After further analysis, no additional impairments of long-lived assets were recorded for the year ended February 29, 2016.No impairment charges were recorded related to definite or indefinite-lived intangible assets for the year ended February 28, 2015.Management has determined that the current lives of its long-lived assets are appropriate. Management has determined that there were no otherindicators of impairment that would cause the carrying values related to intangible assets with definite lives to exceed their expected future cashflows at February 28, 2017 . Goodwill The change in the carrying amount of goodwill is as follows: 62 February 28, 2017 February 29, 2016 February 28, 2015Beginning of period$104,349 $105,874 $117,938Foreign currency differences(1,137) (1,525) (12,064)End of period$103,212 $104,349 $105,874 Gross carrying amount$135,375 $136,512 $138,037Accumulated impairment losses(32,163) (32,163) (32,163)Net carrying amount$103,212 $104,349 $105,874 February 28, 2017 February 29, 2016 February 28, 2015Automotive Beginning of period$57,816 $59,341 $71,405Foreign currency differences(1,137) (1,525) (12,064)End of period$56,679 $57,816 $59,341 Gross carrying amount$56,679 $57,816 $59,341Accumulated impairment charge— — —Net carrying amount$56,679 $57,816 $59,341 Premium Audio Beginning of period$46,533 $46,533 $46,533Impairment charge— — —End of period$46,533 $46,533 $46,533 Gross carrying amount$78,696 $78,696 $78,696Accumulated impairment charge(32,163) (32,163) (32,163)Net carrying amount$46,533 $46,533 $46,533 Total goodwill, net$103,212 $104,349 $105,874Note: The Company's Consumer Accessories segment did not carry a balance for goodwill at February 28, 2017 , February 29, 2016 , or February 28, 2015 .Intangible Assets 63 February 28, 2017 GrossCarryingValue AccumulatedAmortization Total NetBookValueFinite-lived intangible assets: Customer relationships (5-20 years)$64,780 $27,830 $36,950Trademarks/Tradenames (3-12 years)415 395 20Developed technology (11.5 years)31,290 4,081 27,209Patents (5-13 years)8,494 4,775 3,719License (5 years)1,400 1,400 —Contracts (5 years)2,141 1,732 409Total finite-lived intangible assets$108,520 $40,213 68,307Indefinite-lived intangible assets Trademarks 107,982Total net intangible assets $176,289 February 29, 2016 GrossCarryingValue AccumulatedAmortization Total NetBookValueFinite-lived intangible assets: Customer relationships (5-20 years)$65,290 $23,527 $41,763Trademarks/Tradenames (3-12 years)415 389 26Developed technology (11.5 years)31,290 1,360 29,930Patents (5-10 years)8,638 4,079 4,559License (5 years)1,400 1,400 —Contracts (5 years)2,141 1,615 526Total finite-lived intangible assets$109,174 $32,370 76,804Indefinite-lived intangible assets Trademarks 108,218Total net intangible assets $185,022The weighted-average remaining amortization period for amortizing intangibles as of February 28, 2017 is approximately 9 years. The Companyexpenses the renewal costs of patents as incurred. The weighted-average period before the next patent renewal is approximately 6 years.Amortization expense for intangible assets amounted to $8,164 , $6,638 and $5,378 for the years ended February 28, 2017 , February 29, 2016and February 28, 2015 , respectively. At February 28, 2017 , the estimated aggregate amortization expense for all amortizable intangibles foreach of the succeeding five fiscal years is as follows:Fiscal Year Amount2018 $8,0832019 7,9172020 7,8772021 7,7252022 7,640l) Sales Incentives64The Company offers sales incentives to its customers in the form of (1) co-operative advertising allowances; (2) market development funds;(3) volume incentive rebates and (4) other trade allowances. The Company accounts for sales incentives in accordance with ASC 605-50"Customer Payments and Incentives" ("ASC 605-50"). Except for other trade allowances, all sales incentives require the customer to purchasethe Company's products during a specified period of time. All sales incentives require customers to claim the sales incentive within a certaintime period (referred to as the "claim period") and claims are settled either by the customer claiming a deduction against an outstanding accountreceivable or by the customer requesting a cash payout. All costs associated with sales incentives are classified as a reduction of net sales. Thefollowing is a summary of the various sales incentive programs:Co-operative advertising allowances are offered to customers as reimbursement towards their costs for print or media advertising in which theCompany’s product is featured on its own or in conjunction with other companies' products. The amount offered is either a fixed amount or isbased upon a fixed percentage of sales revenue or a fixed amount per unit sold to the customer during a specified time period.Market development funds are offered to customers in connection with new product launches or entrance into new markets. The amount offeredfor new product launches is based upon a fixed amount, or percentage of sales revenue to the customer or a fixed amount per unit sold to thecustomer during a specified time period. Volume incentive rebates offered to customers require minimum quantities of product to be purchased during a specified period of time. Theamount offered is either based upon a fixed percentage of sales revenue to the customer or a fixed amount per unit sold to the customer. TheCompany makes an estimate of the ultimate amount of the rebate their customers will earn based upon past history with the customers and otherfacts and circumstances. The Company has the ability to estimate these volume incentive rebates, as the period of time for a particular rebate tobe claimed is relatively short. Any changes in the estimated amount of volume incentive rebates are recognized immediately using a cumulativecatch-up adjustment. The Company accrues the cost of co-operative advertising allowances, volume incentive rebates and market developmentfunds at the latter of when the customer purchases our products or when the sales incentive is offered to the customer.Unearned sales incentives are volume incentive rebates where the customer did not purchase the required minimum quantities of product duringthe specified time. Volume incentive rebates are reversed into income in the period when the customer did not reach the required minimumpurchases of product during the specified time. Unclaimed sales incentives are sales incentives earned by the customer but the customer has notclaimed payment within the claim period (period after program has ended). Unclaimed sales incentives are investigated in a timely manner afterthe end of the program and reversed if deemed appropriate. The Company believes the reversal of earned but unclaimed sales incentives uponthe expiration of the claim period is a systematic, rational, consistent and conservative method of reversing unclaimed sales incentives. Other trade allowances are additional sales incentives the Company provides to customers subsequent to the related revenue being recognized.The Company records the provision for these additional sales incentives at the latter of when the sales incentive is offered or when the relatedrevenue is recognized. Such additional sales incentives are based upon a fixed percentage of the selling price to the customer, a fixed amount perunit, or a lump-sum amount. The accrual balance for sales incentives at February 28, 2017 and February 29, 2016 was $13,154 and $12,439 , respectively. Although theCompany makes its best estimate of its sales incentive liability, many factors, including significant unanticipated changes in the purchasingvolume of its customers and the lack of claims made by customers, could have a significant impact on the sales incentives liability and reportedoperating results. A summary of the activity with respect to accrued sales incentives is provided below: 65 YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Opening balance$12,439 $14,097 $17,401Accruals36,413 28,428 34,159Payments and credits(35,590) (30,009) (37,352)Reversals for unearned sales incentives(108) (77) (103)Reversals for unclaimed sales incentives— — (8)Ending balance$13,154 $12,439 $14,097The majority of the reversals of previously established sales incentive liabilities pertain to sales recorded in prior periods.m) Advertising Excluding co-operative advertising, the Company expensed the cost of advertising, as incurred, of $8,796 , $8,864 and $10,722 for the yearsended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively.n) Research and DevelopmentExpenditures for research and development are charged to expense as incurred. Such expenditures amounted to $32,725 , $26,458 and $20,777for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively, net of customer reimbursement, and areincluded within Engineering and Technical Support expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss).The Company enters into development and long-term supply agreements with certain of its OEM customers. Reimbursements of thedevelopment services are recorded based upon the milestone method of revenue recognition provided certain criteria are met. Amounts due fromthe OEM customers for development services are reflected as a reduction of research and development expense because the performance ofcontract development services is not central to the Company's operations. For the years ended February 28, 2017 , February 29, 2016 andFebruary 28, 2015 , the Company recorded $6,636 , $8,313 and $7,269 , respectively, of development service reimbursements as a reduction ofresearch and development expense based upon the achievement of a milestone. o) Product Warranties and Product Repair CostsThe Company generally warranties its products against certain manufacturing and other defects. The Company provides warranties for all of itsproducts ranging from 90 days to several years. Warranty expenses are accrued at the time of sale based on the Company's estimated cost torepair expected product returns for warranty matters. This liability is based primarily on historical experiences of actual warranty claims as wellas current information on repair costs and contract terms with certain manufacturers. The warranty liability of $5,761 and $8,807 is recorded inAccrued Expenses in the accompanying Consolidated Balance Sheets as of February 28, 2017 and February 29, 2016 , respectively. In addition,the Company records a reserve for product repair costs which is based upon the quantities of defective inventory on hand and an estimate of thecost to repair such defective inventory. The reserve for product repair costs of $1,697 and $913 is recorded as a reduction to inventory in theaccompanying Consolidated Balance Sheets as of February 28, 2017 and February 29, 2016 , respectively. Warranty claims and product repaircosts expense for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 were $6,192 , $8,028 and $7,948 , respectively.Changes in the Company's accrued product warranties and product repair costs are as follows:66 YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Beginning balance$9,720 $10,012 $12,478Liabilities acquired during acquisitions— 100 —Liabilities accrued for warranties issued during the year and repair cost6,192 8,028 7,948Warranty claims settled during the year(8,454) (8,420) (10,414)Ending balance$7,458 $9,720 $10,012p) Foreign Currency Assets and liabilities of subsidiaries located outside the United States whose cash flows are primarily in local currencies have been translated atrates of exchange at the end of the period or historical exchange rates, as appropriate in accordance with ASC 830, "Foreign Currency Matters"("ASC 830"). Revenues and expenses have been translated at the weighted-average rates of exchange in effect during the period. Gains andlosses resulting from translation are recorded in the cumulative foreign currency translation account in Accumulated Other ComprehensiveIncome (Loss). For the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , the Company recorded total net foreigncurrency transaction (losses)/gains in the amount of $(509) , $108 and $(6,504) , respectively. The Company has a subsidiary in Venezuela. Venezuela is currently experiencing significant political and civil unrest and economic instability,and has been troubled with various foreign currency and price controls. The country has experienced high rates of inflation over the last severalyears. The President of Venezuela has the authority to legislate certain areas by decree, which allows the government to nationalize certainindustries or expropriate certain companies and property. These factors may have a negative impact on our financial condition. In 2003,Venezuela created the Commission of Administration of Foreign Currency ("CADIVI") which establishes and administers currency controls andtheir associated rules and regulations. These controls include creating a fixed exchange rate between the Bolivar and the U.S. Dollar, and theability to restrict the exchange of Bolivar Fuertes for U.S. Dollars and vice versa.Effective January 1, 2010, according to the guidelines in ASC 830, Venezuela was designated as a hyper-inflationary economy. A hyper-inflationary economy designation occurs when a country has experienced cumulative inflation of approximately 100 percent or more over a 3year period. The hyper-inflationary designation requires the local subsidiary in Venezuela to record all transactions as if they were denominatedin U.S. dollars. The Company transitioned to hyper-inflationary accounting on March 1, 2010 for Venezuela and continues to account for thesubsidiary under this method.From February 2013 through March 2016, the official exchange rate of the Venezuelan Bolivar Fuerte was 6.3 per U.S. dollar; however, sinceJanuary 2014, the Venezuelan government has created multiple alternative exchange rates designated to be used for the purchase of goods andservices deemed non-essential. In February 2015, the Venezuelan government introduced a new currency system, referred to as the MarginalCurrency System, or SIMADI rate. This market-based exchange system consisted of a mechanism from which both businesses and individualswere allowed to purchase and sell foreign currency at the price set by the market. The SIMADI rate was used by the Company at February 29,2016 and February 28, 2015 and was approximately 205 and 177 Bolivar Fuerte/$1, respectively. A net currency exchange loss of $(2) wasrecorded for the year ended February 29, 2016. A net currency exchange loss of $(7,104) was recorded for the year ended February 28, 2015,which included the re-measurement loss on the Company's Venezuelan bonds, which matured in March 2015, of $(7,396) , and is included inOther Income (Expense) on the Consolidated Statement of Operations and Comprehensive Income (Loss). In March 2016, the Venezuelangovernment enacted further changes to its foreign currency exchange mechanisms, including a 59% devaluation of the official governmentexchange rate (re-named DIPRO) from 6.3 bolivars to 10.0 bolivars to the U.S. dollar. Additionally, the SIMADI exchange rate was replaced bythe DICOM exchange rate, which the Venezuelan government reported would be allowed to float to meet market needs. The Company hasevaluated all of the facts and circumstances surrounding its Venezuelan operations and determined that as of February 28, 2017 , the DICOMrate is the appropriate rate to67use for remeasuring the subsidiary’s financial statements. As of February 28, 2017 , the published DIPRO and DICOM rates offered were 10.0and 699.9 bolivars to the U.S. dollar, respectively. A net currency exchange loss of $(8) was recorded for the year ended February 28, 2017 ,representing currency devaluation, which is included in Other Income (Expense) on the Consolidated Statements of Operations andComprehensive Income (Loss).The Company holds certain long-lived assets in Venezuela, which include a warehouse the subsidiary has used for its automotive operations,which are currently suspended, as well as other rental properties. All of these properties are held for investment purposes as of February 28, 2017. During Fiscal 2015, the Company made an assessment of the recoverability of these properties in Venezuela as a result of the country'scontinued economic deterioration, which included the introduction of the SIMADI rate in February 2015, as discussed above. In testing therecoverability of its investment properties, the Company considered the undiscounted cash flows expected to be received from these properties,the length of time the properties have been held, the volatile market conditions, the Company’s financial condition, and the intent and ability toretain its investments for a period of time sufficient to allow for any anticipated recovery in fair value and concluded that the future undiscountedcash flows did not recover the net book value for the long-lived assets. Based on these results, the Company further obtained independent thirdparty appraisals for each of the properties to determine their fair values. The Company concluded, as a result of all analyses performed, that theseproperties were impaired as of February 28, 2015 and recorded an impairment charge of $(9,304) , which is included in Other Income (Expense)on the Consolidated Statement of Operations and Comprehensive Income (Loss) for the year then ended. The value of the Company's propertiesheld for investment purposes in Venezuela was $3,679 and $3,816 as of February 28, 2017 and February 29, 2016 , respectively. No additionalimpairments were recorded in Fiscal 2017 or Fiscal 2016. The Company continues to monitor closely the continued economic instability,increasing inflation and currency restrictions imposed by the government and will continue to evaluate its local properties. Further devaluationsor regulatory actions could further impair the carrying value of these properties.q) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future taxconsequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respectivetax basis and operating loss and tax credit carryforwards. In evaluating our ability to recover our deferred tax assets within the jurisdiction fromwhich they arise, we consider all positive and negative evidence including the results of recent operations, scheduled reversal of deferred taxliabilities, future taxable income and tax planning strategies. Deferred tax assets and liabilities are measured using enacted tax rates expected toapply to taxable income in the years in which those temporary differences are expected to be recovered or settled (see Note 8). The effect ondeferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.Uncertain Tax Positions The Company adopted guidance included in ASC 740 "Income Taxes" ("ASC 740") as it relates to uncertain tax positions. The guidanceaddresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financialstatements. Under ASC 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that thetax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognizedin the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood ofbeing realized upon ultimate settlement. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting ininterim periods and disclosure requirements. Tax interest and penalties The Company classifies interest and penalties associated with income taxes as a component of Income Tax Expense (Benefit) on theConsolidated Statement of Operations and Comprehensive Income (Loss).68r) Net Income Per Common Share Basic net income per common share is based upon the weighted-average number of common shares outstanding during the period. Diluted netincome per common share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised orconverted into common stock. There are no reconciling items which impact the numerator of basic and diluted net income per common share. A reconciliation between thedenominator of basic and diluted net income per common share is as follows: YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Weighted-average number of common shares outstanding (basic)24,160,324 24,172,710 24,330,361Effect of dilutive securities: Stock options, warrants and restricted stock79,986 — —Weighted-average number of common and potential common shares outstanding (diluted)24,240,310 24,172,710 24,330,361 Restricted stock, stock options and warrants totaling 237,930 , 383,881 and 412,236 for the years ended February 28, 2017 , February 29, 2016and February 28, 2015 , respectively, were not included in the net income per common share calculation because the exercise price of theseoptions and warrants was greater than the average market price of the Company's common stock during the periods, or the inclusion of thesecomponents would have been anti-dilutive.s) Other (Expense) Income Other (expense) income is comprised of the following: YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Foreign currency (loss) gain (excluding Venezuela)$(501) $110 $599Interest income142 814 376Rental income646 450 1,045Miscellaneous(859) (742) (525)Total other, net$(572) $632 $1,495Included in interest income for the year ended February 29, 2016 is income related to notes receivable from EyeLock, Inc. through theacquisition date of September 1, 2015 (see Note 2). The decrease in rental income for the years ended February 28, 2017 and February 29, 2016as compared to the year ended February 28, 2015 is primarily due to the absence of sublease income related to a capital lease the Companyterminated in the fourth quarter of Fiscal 2015 (see Note 12).t) Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed ofLong-lived assets and certain identifiable intangibles are reviewed for impairment in accordance with ASC 360 whenever events or changes incircumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured bya comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability oflong-lived assets is measured by comparing the carrying amount of the assets to their estimated fair market value. If such assets are69considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds thefair value of the assets. Refer to Note 1(p) for the discussion of the impairment of long-lived assets held in Venezuela for the year endedFebruary 28, 2015. There were no impairments of long-lived assets recorded during the years ended February 28, 2017 and February 29, 2016 .u) Accounting for Stock-Based Compensation The Company has a stock-based compensation plan under which employees and non-employee directors may be granted incentive stock options("ISO's") and non-qualified stock options ("NQSO's") to purchase shares of Class A common stock. Under the plan, the exercise price of theISO's granted to a ten percent stockholder cannot be less than 110% of the fair market value of the Company's Class A common stock or greaterthan 110% of the market value of the Company's Class A common stock on the date of grant. The exercise price of all other Options and StockAppreciation Right ("SAR") awards may not be less than 100% of the fair market value of the Company's Class A common stock on the date ofgrant. If an option or SAR is granted pursuant to an assumption of, or substitution for, another option or SAR pursuant to a CorporateTransaction, and in a manner consistent with Section 409A of the Code, the exercise or strike price may be less than 100% of the fair marketvalue on the date of grant. The plan permits for options to be exercised at various intervals as determined by the Board of Directors. However,the maximum expiration period is ten years from date of grant. The vesting requirements are determined by the Board of Directors at the time ofgrant. Exercised options are issued from authorized Class A common stock. As of February 28, 2017 , approximately 1,226,000 shares wereavailable for future grants under the terms of these plans.Options are measured at the fair value of the award at the date of grant and are recognized as an expense over the requisite service period.Compensation expense related to stock-based awards with vesting terms are amortized using the straight-line attribution method. The Company granted 125,000 options in October 2014, which vested on October 16, 2015, expire two years from date of vesting (October 16,2017), have an exercise price equal to $7.76 , $0.25 above the sales price of the Company’s stock on the day prior to the date of grant, have acontractual term of 3.0 years and a grant date fair value of $2.78 per share determined based upon a Black-Scholes valuation model. Theseoptions are included in the outstanding options and warrants table below and are exercisable at February 28, 2017 .In addition, the Company issued 15,000 warrants in October 2014 to purchase the Company’s common stock with the same terms as those of theoptions above as consideration for future legal and professional services. These warrants are included in the outstanding options and warrantstable below and are exercisable at February 28, 2017 .The per share weighted-average fair value of stock options granted during the year ended February 28, 2015 was $2.78 on the date of grant.There were no stock options granted during the years ended February 28, 2017 .and February 29, 2016.The fair value of stock options and warrants on the date of grant, and the assumptions used to estimate the fair value of the stock options andwarrants using the Black-Scholes option valuation model granted during the year was as follows: YearEnded February 28, 2015Dividend yield 0%Volatility 56.0%Risk-free interest rate 0.80%Expected life (years) 3.070The expected dividend yield is based on historical and projected dividend yields. The Company estimates expected volatility based primarily onhistorical price changes of the Company’s stock equal to the expected life of the option. The Company uses monthly stock prices as theCompany’s stock experiences low-volume trading. We believe that daily fluctuations are distortive to the volatility and as such will continue touse monthly inputs in the future. The risk free interest rate is based on the U.S. Treasury yield in effect at the time of the grant. The expectedoption term is the number of years the Company estimates the options will be outstanding prior to exercise based on employment terminationbehavior. The Company recognized stock-based compensation expense (before deferred income tax benefits) for awards granted under the Company’sstock option plans in the following line items in the Consolidated Statement of Operations and Comprehensive Income (Loss) during the yearsended February 29, 2016 and February 28, 2015 : YearEnded YearEnded February 29, 2016 February 28, 2015Cost of sales$12 $9Selling expense55 39General and administrative expenses143 111Engineering and technical support16 3Stock-based compensation expense before income tax benefits$226 $162During the year ended February 28, 2017 , there were no stock-based compensation costs or professional fees recorded by the Company and theCompany had no unrecognized compensation costs at February 28, 2017 related to stock options and warrants. Net income was impacted by$142 (after tax) and $102 (after tax) in stock based compensation expense or $0.01 and $0.00 per diluted share for the years ended February 29,2016 and February 28, 2015 , respectively.Information regarding the Company's stock options and warrants are summarized below: Numberof Shares Weighted-AverageExercisePriceOutstanding and exercisable at February 28, 201479,204 $6.85Granted140,000 7.76Exercised(15,000) 6.79Forfeited/expired— —Outstanding and exercisable at February 28, 2015204,204 7.46Granted— —Exercised(64,204) 6.79Forfeited/expired(8,750) 7.76Outstanding and exercisable at February 29, 2016131,250 7.76Granted— —Exercised— —Forfeited/expired(15,000) 7.76Outstanding and exercisable at February 28, 2017116,250 $7.76Summarized information about stock options outstanding as of February 28, 2017 is as follows:71 Stock Options Outstanding and ExercisableExercise Price Range Numberof Shares Weighted-AverageExercisePriceof Shares Weighted-AverageLifeRemainingin Years7.76 -7.76 116,250 $7.76 0.63The aggregate pre-tax intrinsic value (the difference between the Company’s average closing stock price for the last quarter of Fiscal 2017 andthe exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holdersexercised their options on February 28, 2017 was $0 . This amount changes based on the fair market value of the Company’s stock. The totalintrinsic values of options exercised for the years ended February 29, 2016 and February 28, 2015 were $128 and $26 , respectively. There wereno stock options exercised for the year ended February 28, 2017 .A restricted stock award is an award of common stock that is subject to certain restrictions during a specified period. Restricted stock awards areindependent of option grants and are subject to forfeiture if employment terminates for a reason other than death, disability or retirement, prior tothe release of the restrictions. Shares under restricted stock grants are not issued to the grantees before they vest. The grantees cannot transfer therights to receive shares before the restricted shares vest.In Fiscal 2014, the Company established the Supplemental Executive Retirement Plan ("SERP") (refer to Note 11(a)) and granted 84,588 sharesof restricted stock under this plan. During Fiscal 2015, Fiscal 2016 and Fiscal 2017, an additional 118,058 , 79,268 and 165,619 shares ofrestricted stock were granted under the SERP, respectively. These shares were granted based on certain performance criteria and vest on the laterof three years from the date of grant (or three years from the date of participation in the SERP with respect to the Fiscal 2014 grants), or thegrantee reaching the age of 65 years. The shares will also vest upon termination of the grantee's employment by the Company without cause,provided that the grantee, at the time of termination, has been employed by the Company for at least 10 years. When vested shares are issued tothe grantee, the awards will be settled in shares or in cash, at the Company's sole option. There are no market conditions inherent in the award,only an employee performance requirement, and the service requirement that the respective employee continues employment with the Companythrough the vesting date. The Company expenses the cost of the restricted stock awards on a straight-line basis over the requisite service periodof each employee or a maximum of 12.75 years. For these purposes, the fair market value of the restricted stock awards, $13.62 , $7.77 , $8.13and $2.69 , respectively, were determined based on the mean of the high and low price of the Company's common stock on the grant dates.The following table presents a summary of the Company's restricted stock activity for the year ended February 28, 2017 :72 Number of shares Weighted Average Grant DateFair ValueOutstanding at February 28, 201484,588 $13.62Granted118,058 7.77Forfeited— —Outstanding at February 28, 2015202,646 $10.21Granted79,268 8.13Forfeited(10,090) 10.08Outstanding at February 29, 2016271,824 $9.61Granted165,619 2.69Forfeited— —Outstanding at February 28, 2017437,443 $6.99Vested and unissued at February 28, 201756,181 $13.62During the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 the Company recorded $753 , $633 and $359 ,respectively, in stock-based compensation related to restricted stock awards. As of February 28, 2017 , unrecognized stock-based compensationexpense related to unvested restricted stock awards was $1,342 and will be recognized over the requisite service period of each employee or amaximum of 12.75 years .v) Accumulated Other Comprehensive Loss 73 ForeignExchange Losses Unrealizedlosses oninvestments, netof tax Pension planadjustments, netof tax Derivativesdesignated in ahedgingrelationship TotalBalance at February 28,2014$235 $(74) $(1,319) $(715) $(1,873)Other comprehensive (loss)income beforereclassifications(33,170) (27) (1,423) 3,638 (30,982)Reclassified fromaccumulated othercomprehensive loss— — — (380) (380)Net current-period othercomprehensive (loss)income(33,170) (27) (1,423) 3,258 (31,362)Balance at February 28,2015$(32,935) $(101) $(2,742) $2,543 $(33,235)Other comprehensive (loss)income beforereclassifications(5,702) 20 640 28 (5,014)Reclassified fromaccumulated othercomprehensive loss— — — (2,468) (2,468)Net current-period othercomprehensive (loss)income(5,702) 20 640 (2,440) (7,482)Balance at February 29,2016$(38,637) $(81) $(2,102) $103 $(40,717)Other comprehensive (loss)income beforereclassifications(3,194) (17) (180) 742 (2,649)Reclassified fromaccumulated othercomprehensive loss— — — (532) (532)Net current-period othercomprehensive (loss)income(3,194) (17) (180) 210 (3,181)Balance at February 28,2017$(41,831) $(98) $(2,282) $313 $(43,898)During the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , the Company recorded tax related to unrealized losses oninvestments of $0 , pension plan adjustments of $(106) , $312 and $678 , respectively and derivatives designated in a hedging relationship of$(97) , $(636) and $1,240 , respectively.Included in foreign exchange losses for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 was $(874) , $(3,992) and$(10,720) , respectively, resulting from translating the financial statements of the Company's non-U.S. Dollar functional currency subsidiariesinto our reporting currency, which is the U.S. dollar, as well as approximately $(1,982) , $(2,722) and $(20,537) , respectively, resulting from theremeasurement of an intercompany loan, payable in Euro, which is of a long-term investment nature. Remaining gains or losses pertain to theremeasurement of intercompany transactions of a long-term nature with certain subsidiaries whose functional currency is not the U.S. Dollar.Intercompany loans and transactions that are of a long-term investment nature are remeasured and resulting gains and losses shall be reported inthe same manner as translation adjustments. Within foreign exchange losses in other comprehensive (loss) income for the years endedFebruary 28, 2017 , February 29, 2016 and February 28, 2015 , the Company recorded (losses) gains of $(3,200) , $(4,177) , and $(31,173) ,respectively, related to the Euro; $176 , $(788) , and $(1,026) , respectively, related to the Canadian Dollar; $(142) , $(692) and $(820) ,respectively, for the Mexican Peso, as well as $(28) , $(45) and $(151) , respectively, for various other currencies. These adjustments werecaused by the strengthening/(weakening) of the U.S. Dollar against the Euro, Canadian Dollar and the Mexican Peso between (2)% and 10% inFiscal 2017, 3% and 21% in Fiscal 2016, and 13% and 21% in Fiscal 2015.w) New Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenues fromContracts with Customers (Topic 606)," which outlines a single comprehensive model for entities to use in accounting for revenue arising fromcontracts with customers and supersedes most current74revenue recognition guidance, including industry-specific guidance. The standard requires entities to recognize revenue to depict the transfer ofpromised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange forthose goods and services. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financialstatements comprehensive information about the nature, amounts, timing and uncertainty of revenue and cash flows arising from a company'scontracts with customers. ASU 2014-09 defines a five-step process to achieve this core principle and in doing so, it is possible that morejudgment and estimates may be required within the revenue recognition process than are required under existing guidance, including identifyingperformance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating thetransaction price to separate performance obligations, among others.Retrospective or modified retrospective application of the accounting standard is required. In August, 2015, the FASB issued ASU 2015-14,“Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” an amendment deferring the effective date of ASU 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply theguidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reportingperiod. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016. The FASB issued additionalamendments to the initial guidance in March 2016, April 2016, May 2016, December 2016 and February 2017 within ASU 2016-08, ASU 2016-10, ASU 2016-11 ASU 2016-12, ASU 2016-20 and ASU 2017-05. We expect to adopt the provisions of ASU 2014-09 effective March 1, 2018.Preliminarily, the Company expects to use the modified retrospective method upon adoption of the standard. The Company has reviewedselected customer contracts representing certain of our revenue streams for the current fiscal year. The assessment of the impact on revenue andexpenses based on these reviews to determine the impact to the Company's results of operations, financial position and cash flows as a result ofthis guidance is ongoing. The Company will continue to review customer contracts during Fiscal 2018. Any preliminary assessments are subjectto change.In April 2015, the FASB issued ASU 2015-03, “Interest- Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of DebtIssuance Costs.” The update simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balancesheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition andmeasurement guidance for debt issuance costs are not affected by the amendments in this update. For public companies, this update waseffective for interim and annual periods beginning after December 15, 2015, and is to be applied retrospectively. In August 2015, the FASBissued ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of Credit Arrangements." Thisstandard states that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequentlyamortizing these costs when they relate to a line-of-credit arrangement. The Company adopted these standards in the first quarter of Fiscal 2017and elected to present all debt issuance costs as a direct deduction from the carrying amount of debt. The amounts of debt issuance costs that arepresented as reductions of Long-term debt as of February 28, 2017 and February 29, 2016 are $3,481 and $2,522 , respectively.In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory.” The new standard amends the guidelines for themeasurement of inventory from lower of cost or market to the lower of cost and net realizable value (NRV). NRV is defined as the estimatedselling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Under existingstandards, inventory is measured at lower of cost or market, which requires the consideration of replacement cost, NRV and NRV less an amountthat approximates a normal profit margin. This ASU eliminates the requirement to determine and consider replacement cost or NRV less anapproximately normal profit margin for inventory measurement. The new standard is effective prospectively for fiscal years beginning afterDecember 15, 2016. The Company will adopt this standard in the first quarter of Fiscal 2018 and does not expect a material impact on our resultsof operations and financial position.In January 2016, the FASB issued ASU 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities, " which amendscertain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equityinvestments to be measured at fair value with75changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result inconsolidation of the investee). This standard will be effective for fiscal years beginning after December 15, 2017, including interim periodswithin those fiscal years. The Company is currently evaluating the impact the adoption of ASU 2016-01 will have on its consolidated financialstatements.In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." ASU 2016-02 requires that a lessee recognize the assets and liabilitiesthat arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the leaseliability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less,a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Intransition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modifiedretrospective approach. This amendment will be effective for fiscal years beginning after December 15, 2018, including interim periods withinthose fiscal years. Early application is permitted. The Company does not intend to early adopt this standard and has not yet determined the effectof the adoption of this standard on the Company’s consolidated financial position and results of operations.In March 2016, the FASB issued ASU 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on ExistingHedge Accounting Relationships (a consensus of the Emerging Issues Task Force)." ASU 2016-05 clarifies that a change in the counterparty to aderivative instrument that has been designated as a hedging instrument under Topic 815 does not, in and of itself, require dedesignation of thathedging relationship provided that all other hedge accounting criteria continue to be met. ASU 2016-05 is effective for the Company for fiscalyears beginning after December 15, 2016, and interim periods within those fiscal years. The adoption of ASU 2016-05 will not have a materialimpact on the Company's consolidated financial statements.In March 2016, FASB issued ASU No. 2016-07, "Investments - Equity Method and Joint Ventures: Simplifying the Transition to the EquityMethod of Accounting," which eliminates the retroactive adjustments to an investment upon it qualifying for the equity method of accounting asa result of an increase in the level of ownership interest or degree of influence by the investor. ASU 2016-07 requires that the equity methodinvestor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt theequity method of accounting as of the date the investment qualifies for equity method accounting. ASU 2016-07 is effective for fiscal yearsbeginning after December 15, 2016, and interim periods within those fiscal years. The adoption of ASU 2016-07 will not have a material effecton the Company's consolidated financial statements.In March 2016, the FASB amended the existing accounting standards for stock-based compensation, ASU 2016-09, "Compensation-StockCompensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." The amendments impact several aspects ofaccounting for share-based payment transactions, including the income tax consequences, forfeitures, classification of awards as either equity orliabilities, and classification on the statement of cash flows. The Company adopted the amendments in Fiscal 2017 without significant impact tothe Company's consolidated financial statements.In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230) - Classification of Cash Receipts and CashPayments," which addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cashpayments are presented and classified in the statement of cash flows. The guidance is effective for interim and annual periods beginning afterDecember 15, 2017, and early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company'sconsolidated financial statements.In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,”which is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This updateremoves the current exception in GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related totransfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on thetransfer of inventory within the consolidated entity until it is sold to a third party remains76unaffected. The amendments in this update are effective for public entities for annual reporting periods beginning after December 15, 2017.Early adoption is permitted. The Company is currently assessing the impact of the future adoption of this standard on its consolidated financialstatements.In October 2016, the FASB issued ASU No. 2016-17, “Consolidation (Topic 810): Interests Held Through Related Parties That are UnderCommon Control.” This update amends the consolidation guidance on how a reporting entity that is the single decision maker of a variableinterest entity (“VIE”) should treat indirect interests in the entity held through related parties that are under common control with the reportingentity when determining whether it is the primary beneficiary of that VIE. The primary beneficiary of a VIE is the reporting entity that has acontrolling financial interest in a VIE and, therefore, consolidates the VIE. A reporting entity has an indirect interest in a VIE if it has a directinterest in a related party that, in turn, has a direct interest in the VIE. The amendments in this ASU are effective for public business entities forfiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company does not expect the adoptionof this ASU to have a material impact on its consolidated financial statements.In November 2016, the FASB issued ASU No. 2016-18 , "Statement of Cash Flows (Topic 230)" to reduce diversity in practice related to theclassification and presentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. Therevised guidance requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cashequivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance willbe applied on a retrospective basis beginning with the earliest period presented. The amendments in this ASU are effective for annual andinterim periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of this ASU to havea material impact on its consolidated financial statements.In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business," with theobjective to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets versus businesses.The amendments in ASU 2017-01 provide a screen to determine when a set of assets and activities is not a business. The screen requires thatwhen substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group ofsimilar identifiable assets, the set is not a business. This screen is expected to reduce the number of transactions that need to be further evaluated.If the screen is not met, the amendments in ASU 2017-01 (i) require that to be considered a business, a set of assets and liabilities acquired mustinclude, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output; and (ii) remove theevaluation of whether a market participant could replace missing elements. The amendments in this ASU are effective for annual and interimperiods beginning after December 15, 2017 and should be applied prospectively. Early adoption is permitted for transactions for which theacquisition date occurs before the issuance date of ASU 2017-01, only when the transaction has not been reported in financial statements thathave been issued or made available for issuance. The Company is currently assessing the impact of the adoption of this pronouncement on itsconsolidated financial statements.In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for GoodwillImpairment." Under the new guidance, if a reporting unit's carrying value amount exceeds its fair value, an entity will record an impairmentcharge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standardeliminates today's requirement to calculate goodwill impairment using Step 2, which calculates an impairment charge by comparing the impliedfair value of goodwill with its carrying amount. The standard does not change the guidance on completing Step 1 of the goodwill impairmenttest. The amendments in this ASU are effective for annual or any interim goodwill impairments tests in fiscal years beginning afterDecember 15, 2019 and should be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performedon testing dates after January 1, 2017. The Company is currently evaluating the impact of the new standard on our consolidated financialstatements.In March 2017, the FASB issued ASU No. 2017-07, "Compensation-Retirement Benefits: Improving the Presentation of Net Periodic PensionCost and Net Periodic Postretirement Benefit Cost." The new standard requires that an employer disaggregate the service cost component of netbenefit cost. Also, these amendments provide guidance on how to present the service cost component and the other components of net benefitcosts77in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. The guidance is effectivefor fiscal years beginning after December 15, 2017. The Company does not expect the adoption of this ASU to have a material impact on itsconsolidated financial statements.2 ) Business Acquisitions EyeLockEffective September 1, 2015 ("the Closing Date"), Voxx completed its acquisition of a 54% voting equity interest in substantially all of the assets andcertain specified liabilities of Eyelock, Inc. and Eyelock Corporation (collectively the “Seller”), a market leader of iris-based identity authenticationsolutions, through a newly-formed entity Eyelock LLC. Eyelock LLC acquired substantially all of the assets and certain specified liabilities of the Sellerfor a total purchase consideration of $31,880 , which consisted of a cash payment of $15,504 , assignment of the fair value of the indebtedness owed tothe Company by the Seller of $4,676 and the fair value of the non-controlling interest of $12,900 , reduced by $1,200 for amounts owed to the LLC by theselling shareholders. Additionally, units in Eyelock LLC were issued to certain executives of EyeLock LLC. The fair value of these units is recorded ascompensation expense over the requisite service period of two years. This acquisition allows the Company to enter into the growing biometrics market.The fair value of the non-controlling interest was determined, with the assistance of a third party valuation expert, by grossing up the considerationtransferred for the controlling interest by the voting equity interest percentage (adjusted for certain distribution thresholds required until a return of capitalis achieved). The Company considered all the rights and preferences of the different classes of security holders and determined that there was no evidenceof any disproportionate allocation of cash flow between the controlling and non-controlling interest at the date of acquisition. The adjusted controllinginterest percentage in the fair value calculation amounted to 61% . The non-controlling interest of $12,900 , valued at 39% , did not contain any furtherdiscount for lack of control. The Company believes the bargain gain implied in the transaction would eliminate any further discount for lack of control.In connection with the closing, the Company entered into a Loan Agreement with Eyelock LLC. The terms of the Loan Agreement allowed Eyelock LLCto borrow up to $12,000 , at an interest rate of 10% . During the second and third quarters of Fiscal 2017, the Company issued two convertible promissorynotes to EyeLock LLC, allowing EyeLock to borrow up to a total of $12,000 in additional funds. The outstanding principal balance of these twopromissory notes are convertible at the sole option of Voxx into units of EyeLock LLC. The convertible promissory notes bear interest at 10% , and canbe used for working capital purposes related to new business opportunities. If Voxx chooses not to convert into equity, the outstanding loan principal willbe repaid at a multiple ranging from 1.35 to 1.45 based on the repayment date. Amounts outstanding under the first loan agreement, as well as theconvertible promissory note executed during the second quarter of Fiscal 2017 are due on September 1, 2017, while amounts outstanding under theconvertible promissory note executed during the third quarter of Fiscal 2017 are due on November 1, 2017. All three agreements include customaryevents of default and are collateralized by all of the property of Eyelock LLC.The following table summarizes the allocation of the purchase price over the fair values of the assets acquired and liabilities assumed, as of the ClosingDate:78 September 1, 2015Assets acquired: Accounts receivable $77 Inventory 304 Property, plant and equipment 259 Intangible assets 43,780 Total assets acquired $44,420 Liabilities assumed: Accounts payable and accrued expenses $729 Deferred tax liability 2,756 Bridge loans payable to Voxx 3,176 Other long-term liabilities 1,200 Net assets acquired 36,559 Less: purchase price 31,880Gain on bargain purchase $4,679The acquisition of substantially all of the assets of Eyelock Inc. and Eyelock Corporation resulted in a bargain purchase gain of $4,679 , which wasrecognized in the Company's Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended February 29, 2016. Prior to therecognition of the bargain purchase gain, the Company reassessed the fair value of the tangible and identifiable intangible assets acquired and liabilitiesassumed in the acquisition. The Company believes it was able to acquire those assets of Eyelock Inc. and EyeLock Corporation for less than their fairvalue due to the distressed financial position of the company, its inability to secure additional financing to support its ongoing operations, and the lack ofpotential bidders for the entity prior to Voxx's acquisition.The fair values assigned to the intangible assets acquired and their related amortization periods are as follows: September 1, 2015 Amortization Period(Years)Developed technology$31,290 11.5 yearsTradename8,435 IndefiniteCustomer relationships3,470 15.5 yearsNon-compete agreement585 5.0 years $43,780 The fair values of the intangible assets acquired are measured using Level 3 inputs and are determined using variations of the income approach such as thediscounted cash flows, multi-period excess earnings and relief from royalty valuation methods. Significant inputs and assumptions used in determiningthe fair values of the intangible assets acquired include management’s projections of future revenues, earnings and cash flows from Eyelock LLC, aweighted average cost of capital and distributor rates, customer attrition rates, royalty rates and technological obsolescence rates.Acquisition related costs relating to this transaction of $800 were expensed as incurred during the year ended February 29, 2016, and are included inacquisition-related costs on the Consolidated Statements of Operations and Comprehensive Income (Loss). Net sales attributable to EyeLock LLC in theCompany's consolidated statements of operations for the year ended February 28, 2017 were approximately $243 .Pro-forma Financial Information79The following unaudited pro-forma financial information for the years ended February 29, 2016 and February 28, 2015 represents the results of theCompany's operations as if EyeLock LLC was included for the entire years of Fiscal 2016 and Fiscal 2015. The unaudited pro-forma financialinformation does not necessarily reflect the results of operations that would have occurred had the Company constituted a single entity during suchperiods. Year Ended February 29, 2016 February 28, 2015Net sales: As reported$680,746 $757,498Pro forma681,861 763,317Net loss: As reported$(2,682) $(942)Pro forma(12,098) (6,073)Basic loss per share: As reported$(0.11) $(0.04)Pro forma(0.50) (0.25)Diluted loss per share: As reported$(0.11) $(0.04)Pro forma$(0.50) $(0.25)Average shares - basic24,172,710 24,330,361Average shares - diluted24,172,710 24,330,361The above pro-forma results include certain adjustments for the periods presented to adjust the financial results and give consideration to the assumptionthat the acquisition occurred on the first day of Fiscal 2015. These adjustments include costs such as an estimate for amortization associated withintangible assets acquired, the removal of interest expense, as well as rent and utility expenses on debt and property leases not assumed, and themovement of expenses and gains specific to the acquisition from Fiscal 2016 to Fiscal 2015. These pro-forma results of operations have been estimatedfor comparative purposes only and may not reflect the actual results of operations that would have been achieved had the transaction occurred on the datepresented or be indicative of results to be achieved in the future.3)Variable Interest EntitiesA variable interest entity ("VIE") is an entity that either (i) has insufficient equity to permit the entity to finance its activities without additionalsubordinated financial support, or (ii) has equity investors who lack the characteristics of a controlling financial interest. Under ASC 810, an entity thatholds a variable interest in a VIE and meets certain requirements would be considered to be the primary beneficiary of the VIE and required to consolidatethe VIE in its consolidated financial statements. In order to be considered the primary beneficiary of a VIE, an entity must hold a variable interest in theVIE and have both:• the power to direct the activities that most significantly impact the economic performance of the VIE; and• the right to receive benefits from, or the obligation to absorb losses of, the VIE that could be potentially significant to the VIE.Effective September 1, 2015, Voxx acquired a majority voting interest in substantially all of the assets and certain specified liabilities of Eyelock, Inc. andEyelock Corporation, a market leader of iris-based identity authentication solutions, through a newly-formed entity, Eyelock LLC (See Note 2). We havedetermined that we hold a variable interest in EyeLock LLC as a result of:• our majority voting interest and ownership of substantially all of the assets and certain liabilities of the entity; and80• a loan agreement with EyeLock LLC, executed in conjunction with the acquisition, as well as two convertible promissory notesexecuted in the second and third quarters of Fiscal 2017, in which the subsidiary may borrow funds from Voxx for working capital purposes (SeeNote 2). The total outstanding balance of these loans as of February 28, 2017 was $22,098 .We concluded that we became the primary beneficiary of EyeLock LLC on September 1, 2015 in conjunction with the acquisition. This was the first datethat we had the power to direct the activities of EyeLock LLC that most significantly impact the economic performance of the entity because we acquireda majority interest in substantially all of the assets and certain liabilities of EyeLock Inc. and EyeLock Corporation on this date, as well as obtained amajority voting interest as a result of this transaction. Although we are considered to have control over EyeLock LLC under ASC 810, as a result of ourmajority ownership interest, the assets of EyeLock LLC can only be used to satisfy the obligations of EyeLock LLC. As a result of our majorityownership interest in the entity and our primary beneficiary conclusion, we consolidated EyeLock LLC in our consolidated financial statements beginningon September 1, 2015. Prior to September 1, 2015, EyeLock Inc. and EyeLock Corporation were not required to be consolidated in our consolidatedfinancial statements, as we concluded that we were not the primary beneficiary of these entities prior to that time.Assets and Liabilities of EyeLock LLCIn accordance with ASC 810, the consolidation of EyeLock LLC was treated as an acquisition of assets and liabilities and, therefore, the assets andliabilities of EyeLock LLC were included in our consolidated financial statements at their fair value as of September 1, 2015. Refer to Note 2 for the fairvalue of the assets and liabilities of EyeLock LLC on the acquisition date and the discussion of purchase accounting procedures performed. The following table sets forth the carrying values of assets and liabilities of EyeLock LLC that were included on our Consolidated Balance Sheet as ofFebruary 28, 2017 and February 29, 2016 :81 February 28, 2017 February 29, 2016Assets Current assets: Cash and cash equivalents $11 $20Accounts receivable, net 295 195Inventory, net 135 304Prepaid expenses and other current assets 189 256Total current assets 630 775Property, plant and equipment, net 276 302Intangible assets, net 39,187 42,249Other assets 96 —Total assets $40,189 $43,326Liabilities and Stockholders' Equity Current liabilities: Accounts payable $710 $746Accrued expenses and other current liabilities 3,506 1,103Total current liabilities 4,216 1,849Long-term debt 22,098 9,104Other long-term liabilities 1,200 1,200Total liabilities 27,514 12,153Commitments and contingencies Partners' equity: Capital 40,891 39,841Retained earnings (28,216) (8,668)Total partners' equity 12,675 31,173Total liabilities and partners' equity $40,189 $43,326The assets of EyeLock LLC can only be used to satisfy the obligations of EyeLock LLC.Revenue and Expenses of EyeLock LLCThe following table sets forth the revenue and expenses of EyeLock LLC that were included in our Consolidated Statements of Operations andComprehensive Income (Loss) for the years ended February 28, 2017 and February 29, 2016 :82 Year ended February 28,2017 Year ended February 29,2016Net sales $243 $143Cost of sales 301 11Gross profit (58) 132Operating expenses: Selling 2,227 877General and administrative 6,956 3,239Engineering and technical support 8,698 4,393Total operating expenses 17,881 8,509Operating loss (17,939) (8,377)Interest and bank charges (1,609) (294) Other, net — 3Loss before income taxes (19,548) (8,668)Income tax expense — —Net loss $(19,548) $(8,668)4)Receivables from VendorsThe Company has recorded receivables from vendors in the amount of $665 and $2,519 as of February 28, 2017 and February 29, 2016 , respectively.Receivables from vendors primarily represent prepayments on product shipments and product reimbursements. 5)Equity InvestmentThe Company has a 50% non-controlling ownership interest in ASA Electronics, LLC and Subsidiary ("ASA"), which acts as a distributor of mobileelectronics specifically designed for niche markets within the Automotive industry, including RV’s; buses; and commercial, heavy duty, agricultural,construction, powersport, and marine vehicles. ASC 810 requires the Company to evaluate non-consolidated entities periodically, and as circumstanceschange, to determine if an implied controlling interest exists. During Fiscal 2017 , the Company evaluated this equity investment and concluded that thisis still a variable interest entity and the Company is not the primary beneficiary. ASA’s fiscal year end is November 30, 2016 , however, the results ofASA as of and through February 28, 2017 have been recorded in the consolidated financial statements.The Company's share of income from ASA for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 was $6,797 , $6,538 and$5,866 , respectively. In addition, the Company received cash distributions from ASA totaling $6,820 , $6,237 and $4,846 during the years endedFebruary 28, 2017 , February 29, 2016 and February 28, 2015 , respectively.Undistributed earnings from equity investments amounted to $16,600 and $16,623 at February 28, 2017 and February 29, 2016 , respectively.Net sales transactions between the Company and ASA were $611 , $1,608 and $2,565 for the years ended February 28, 2017 , February 29, 2016 andFebruary 28, 2015 , respectively. Accounts receivable balances from ASA were $51 and $72 as of February 28, 2017 and February 29, 2016 ,respectively.6)Accrued Expenses and Other Current LiabilitiesAccrued expenses and other current liabilities consist of the following:83 February 28, 2017 February 29, 2016Commissions$598 $818Employee compensation21,483 21,514Professional fees and accrued settlements1,909 3,405Future warranty5,760 8,806Freight and duty2,651 2,935Payroll and other taxes1,603 2,071Royalties, advertising and other8,472 11,199Total accrued expenses and other current liabilities$42,476 $50,748In August 2003, the Company entered into a call/put option agreement with certain employees of Voxx Germany, whereby these employees could acquireup to a maximum of 20% of the Company's stated share capital in Voxx Germany at a call price equal to the same proportion of the actual price paid bythe Company for Voxx Germany. The agreement was amended in April 2014, fixing the put price at €3,000 and the call price at €0 , with the put subjectonly to downward adjustments for losses incurred by Voxx Germany, beginning in Fiscal 2015. The put options become immediately exercisable upon(i) the sale of Voxx Germany or (ii) the termination of employment or death of the employee. Beginning in Fiscal 2015 and for each fiscal year thereafter,the employees will also receive a dividend equal to 20% of Voxx Germany's net after tax profits. Accordingly, the Company recognizes compensationexpense based on 20% of the after tax net profits of Voxx Germany, subject to certain tax treatment adjustments as defined in the agreement, representingthe annual dividend. The balance of the call/put option included in Accrued Expenses and Other Current Liabilities on the Consolidated Balance Sheets atFebruary 28, 2017 and February 29, 2016 was $3,586 and $3,614 , respectively, and is included within employee compensation in the table above.Compensation expense for these options amounted to $405 , $357 and $451 for the years ended February 28, 2017 , February 29, 2016 and February 28,2015 , respectively.7)Financing ArrangementsThe Company has the following financing arrangements: February 28, 2017 February 29, 2016Domestic credit facility (a) $92,793 $72,300Florida mortgage (b) 9,113 9,223Euro asset-based lending obligation (c) 3,905 5,412Schwaiger mortgage (d) 644 892Klipsch note (e) 113 262Woodview Trace mortgage (f) — 5,720Voxx Germany mortgage (g) 3,875 4,710Hirschmann line of credit (h) 1,002 998Total debt 111,445 99,517Less: current portion of long-term debt 10,217 8,826Long-term debt before debt issuance costs 101,228 90,691Debt issuance costs 3,481 2,522 Total long-term debt $97,747 $88,169a) Domestic Bank ObligationsFrom March 1, 2015 through April 25, 2016, the Company had a senior secured revolving credit facility (the "Credit Facility") with an aggregateavailability of $ 125,000 , with a $30,000 multicurrency revolving credit84facility sublimit, a $15,625 sublimit for letters of credit and a $6,250 sublimit for swingline loans. The Credit Facility was due on January 9,2019; however, it was subject to acceleration upon the occurrence of an Event of Default (as defined in the Credit Agreement).On April 26, 2016, the Company amended and restated the Credit Facility ("Amended Credit Facility"). The Amended Credit Facility providesfor a revolving credit facility with committed availability of up to $140,000 , which may be increased, at the option of the Company, up to amaximum of $175,000 , and a term loan in the amount of $15,000 . The Amended Credit Facility also includes a $15,000 sublimit for letters ofcredit and a $15,000 sublimit for swingline loans. The availability under the revolving credit line within the Amended Credit Facility is subjectto a borrowing base, which is based on eligible accounts receivable, eligible inventory and certain real estate, subject to reserves as determinedby the lender, and is also limited by amounts outstanding under the Florida Mortgage (see Note 7(b)). As of February 28, 2017 , $80,605 wasoutstanding under the revolving credit facility. The remaining availability under revolving credit line of the Amended Credit Facility was$25,363 as of February 28, 2017 .The balance outstanding on the term loan at February 28, 2017 was $12,188 . The term loan is repayable in consecutive quarterly installments of$938 through April 1, 2020. All other amounts outstanding under the Amended Credit Facility will mature and become due on April 26, 2021;however, it is subject to acceleration upon the occurrence of an Event of Default (as defined in the Amended Credit Agreement). The Companymay prepay any amounts outstanding at any time, subject to payment of certain breakage and redeployment costs relating to LIBOR Rate Loans;provided that the term loan shall not be voluntarily prepaid except as set forth in the agreement. The commitments under the Amended CreditFacility may be irrevocably reduced at any time, without premium or penalty as set forth in the agreement.Generally, the Company may designate specific borrowings under the Amended Credit Facility as either Base Rate Loans or LIBOR Rate Loans,except that swingline loans may only be designated as Base Rate Loans. Loans under the Amended Credit Facility designated as LIBOR RateLoans shall bear interest at a rate equal to the then-applicable LIBOR Rate plus a range of 1.75% - 2.25% . Loans under the Amended CreditFacility designated as Base Rate Loans shall bear interest at a rate equal to the applicable margin for Base Rate Loans of 0.75% - 1.25% , asdefined in the agreement. Amounts outstanding in respect of the term loan shall bear interest at a rate equal to either (as selected by the Companypursuant to the agreement) (a) the then-applicable LIBOR Rate (not to be less than 0.00% ) plus 4.25% , or (b) the then-applicable Base Rateplus 3.25% . As of February 28, 2017 , the weighted average interest rate on the Amended Credit Facility was 3.24% .The Amended Credit Facility requires compliance with a financial covenant calculated as of the last day of each month consisting of a FixedCharge Coverage Ratio. The Amended Credit Facility also contains covenants that limit the ability of the loan parties and certain of theirsubsidiaries which are not loan parties to, among other things: (i) incur additional indebtedness; (ii) incur liens; (iii) merge, consolidate ordispose of a substantial portion of their business; (iv) transfer or dispose of assets; (v) change their name, organizational identification number,state or province of organization or organizational identity; (vi) make any material change in their nature of business; (vii) prepay or otherwiseacquire indebtedness; (viii) cause any change of control; (ix) make any restricted junior payment; (x) change their fiscal year or method ofaccounting; (xi) make advances, loans or investments; (xii) enter into or permit any transaction with an affiliate of any borrower or any of theirsubsidiaries; (xiii) use proceeds for certain items; (xiv) issue or sell any of their stock; (xv) consign or sell any of their inventory on certainterms. In addition, if excess availability under the Amended Credit Facility were to fall below certain specified levels, as defined in theagreement, the lenders would have the right to assume dominion and control over the Company's cash. As of February 28, 2017 , the Companywas in compliance with this cash dominion covenant.The obligations under the loan documents are secured by a general lien on and security interest in substantially all of the assets of the borrowersand certain of the guarantors, including accounts receivable, equipment, real estate, general intangibles and inventory. The Company hasguaranteed the obligations of the borrowers under the Amended Credit Facility.Charges incurred on the unused portion of the Amended Credit Facility and its predecessor revolving credit facility during the years endedFebruary 28, 2017 , February 29, 2016 and February 28, 2015 totaled $241 , $32185and $297 , respectively, and are included within Interest and Bank Charges on the Consolidated Statement of Operations and ComprehensiveIncome (Loss).The Company has accounted for the April 2016 amendment as a modification of debt and has added the costs incurred to amend the agreement,totaling $1,779 , to the remaining financing costs related to the previous credit facility. These deferred financing costs are included in Long-termdebt on the accompanying Consolidated Balance Sheets as a contra-liability balance, and are amortized through Interest and Bank Charges in theConsolidated Statements of Operations and Comprehensive Income (Loss) over the five year term of the Amended Credit Facility. During Fiscal2016, the Company made an amendment to the Credit Facility, which was also accounted for as a modification of debt; however, as theCompany reduced the available credit in conjunction with this amendment, unamortized deferred financing costs of $1,309 were written off andcharged to Interest and Bank Charges in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the year endedFebruary 29, 2016. During the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , the Company amortized $789 ,$1,074 and $1,117 of these costs, respectively.b) Construction MortgageOn July 6, 2015, VOXX HQ LLC, the Company’s wholly owned subsidiary, closed on a $9,995 industrial development revenue tax exemptbond under a loan agreement in favor of the Orange County Industrial Development Authority (the “Authority”) to finance the construction ofthe Company's manufacturing facility and executive offices in Lake Nona, Florida (the “Construction Loan”). Wells Fargo Bank, N.A. ("WellsFargo") was the purchaser of the bond and U.S. Bank National Association is the trustee under an Indenture of Trust with the Authority. Voxxborrowed the proceeds of the bond purchase from the Authority during construction as a revolving loan, which converted to a permanentmortgage upon completion of the facility in January 2016 (the "Florida Mortgage"). The Company makes principal and interest payments toWells Fargo, which began March 1, 2016 and will continue through March of 2026. The Florida Mortgage bears interest at 70% of 1-monthLIBOR plus 1.54% ( 2.08% at February 28, 2017 ) and is secured by a first mortgage on the property, a collateral assignment of leases and rentsand a guaranty by the Company. The financial covenants of the Florida Mortgage are as defined in the Company’s Amended Credit Facility withWells Fargo dated April 26, 2016.The Company incurred debt financing costs totaling approximately $332 as a result of obtaining the Florida Mortgage, which are recorded asdeferred financing costs and included in Long-term Debt as a contra-liability balance on the accompanying Consolidated Balance Sheets and arebeing amortized through Interest and Bank Charges in the Consolidated Statements of Operations and Comprehensive Income (Loss) over theten year term of the Florida Mortgage. During the years ended February 28, 2017 and February 29, 2016 , the Company amortized $31 and $21of these costs, respectively.On July 20, 2015, the Company entered into an interest rate swap agreement in order to hedge interest rate exposure related to the FloridaMortgage and pays a fixed rate of 3.48% under the swap agreement (See Note 1 e)).c) Euro Asset-Based Lending ObligationForeign bank obligations include a Euro accounts receivable factoring arrangement, which has a credit limit of up to 60% of eligible non-factored accounts receivable (see Note 1(h)) and a Euro Asset-Based Lending ("ABL") credit facility, which has a credit limit of €8,000 , for theCompany's subsidiary, VOXX Germany, which expires on July 31, 2017. The rate of interest is the three month Euribor plus 1.6% ( 1.3% atFebruary 28, 2017 ). As of February 28, 2017 , the amount of non-factored accounts receivable exceeded the amounts outstanding under thisobligation.d) Schwaiger Mortgage In January 2012, the Company's Schwaiger subsidiary purchased a building, entering into a mortgage note payable. The mortgage note bearsinterest at 3.75% and will be fully paid by December 2019. e) Klipsch Notes86This balance represents a mortgage on a facility included in the assets acquired in connection with the Klipsch acquisition on March 1, 2011 andassumed by Voxx. The balance will be fully paid by the end of Fiscal 2018.f) Woodview Trace MortgageDuring Fiscal 2013, the Company purchased the building housing Klipsch's headquarters in Indianapolis, IN. The interest rate on the mortgagewas equal to the 1-month LIBOR plus 2.25% and the Company had an interest rate swap agreement in order to hedge interest rate exposure,paying a fixed rate of 3.92% under the agreement. On April 26, 2016, in conjunction with the amendment and restatement of the Company'sCredit Facility, the outstanding balance of this mortgage was paid in full.g) Voxx Germany MortgageIncluded in this balance is a mortgage on the land and building housing Voxx Germany's headquarters in Pulheim, Germany, which was enteredinto in January 2013. The mortgage bears interest at 2.85% , payable in twenty-six quarterly installments through June 2019.h) Hirschmann Line of CreditIn December, 2014, Hirschmann entered into an agreement for a €8,000 working capital line of credit with a financial institution. The line ofcredit is payable on demand and is mutually cancelable. The rate of interest is the three month Euribor plus 2% ( 1.7% at February 28, 2017 ).Hirschmann and Voxx Germany are joint and severally liable for the line of credit balance, which is also guaranteed by VOXX InternationalCorporation.The following is a maturity table for debt and bank obligations outstanding at February 28, 2017 for each of the following fiscal years: 2018$10,21720196,03620206,03620214,250202278,292Thereafter6,614Total$111,445The weighted-average interest rate on short-term debt was 2.33% for Fiscal 2017 and 3.44% for Fiscal 2016 . Interest expense related to the Company'sfinancing arrangements for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 was $4,469 , $3,732 and $3,880 , respectively,of which $2,723 , $2,126 and $1,957 was related to the Amended Credit Facility for the years ended February 28, 2017 , February 29, 2016 andFebruary 28, 2015 , respectively.8) Income TaxesThe components of income before the provision (benefit) for income taxes are as follows: YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Domestic Operations$(10,956) $(11,499) $(3,278)Foreign Operations9,513 3,701 3,974 $(1,443) $(7,798) $69687The provision (benefit) for income taxes is comprised of the following: YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Current provision (benefit) Federal$(2,118) $(415) $(5,337)State238 10 (428)Foreign3,520 3,530 4,722Total current provision (benefit)$1,640 $3,125 $(1,043)Deferred provision (benefit) Federal$658 $(5,540) $2,524State279 1,395 765Foreign(818) (715) (608)Total deferred provision (benefit)$119 $(4,860) $2,681Total provision (benefit) Federal$(1,460) $(5,955) $(2,813)State517 1,405 337Foreign2,702 2,815 4,114Total provision (benefit)$1,759 $(1,735) $1,638The effective tax rate before income taxes varies from the current statutory U.S. federal income tax rate as follows: YearEnded YearEnded YearEnded February 28, 2017 February 29, 2016 February 28, 2015Tax provision at Federal statutory rates$(504) 35.0 % $(2,729) 35.0 % $243 35.0 %State income taxes, net of Federal benefit(752) 52.2 1,100 (14.0) 891 127.9Change in valuation allowance5,895 (408.7) 1,344 (17.2) 4,330 622.0Change in tax reserves(5,974) 414.3 101 (1.3) (6,076) (872.8)Non-controlling interest2,668 (185) 1,183 (15.2) — —Bargain purchase gain— — (1,638) 21 — —US effects of foreign operations330 (22.9) (309) 3.9 1,503 215.9Permanent differences and other274 (19.0) (442) 5.7 (1,371) (196.9)NOL carryback1,413 (98.0) — — 2,486 357.1Change in tax rate(110) 7.6 172 (2.2) 198 28.4Research & development credits(625) 43.3 (453) 5.8 (272) (39.1)Tax credits(856) 59.3 (64) 0.8 (294) (42.2)Effective tax rate$1,759 (121.9)% $(1,735) 22.3 % $1,638 235.3 % The U.S. effects of foreign operations include differences in the statutory tax rate of the foreign countries as compared to the statutory tax rate in the U.S. 88Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting andtax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: February 28, 2017 February 29, 2016Deferred tax assets: Accounts receivable$642 $388Inventory3,757 3,711Accruals and reserves6,851 3,849Deferred compensation1,492 1,424Warranty reserves1,421 2,373Unrealized gains and losses1,740 614Net operating losses9,557 6,440Foreign tax credits2,616 2,712Other tax credits2,937 2,393Deferred tax assets before valuation allowance31,013 23,904Less: valuation allowance(18,199) (12,341)Total deferred tax assets12,814 11,563Deferred tax liabilities: Property, plant and equipment(445) (1)Intangible assets(38,894) (38,543)Partnership investments(588) (1,678)Prepaid expenses(2,353) (1,465)Deferred financing fees(666) (227)Total deferred tax liabilities(42,946) (41,914)Net deferred tax liability$(30,132) $(30,351)In assessing the realizability of deferred tax assets, Management considers whether it is more-likely-than-not that some portion or all of the deferred taxassets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in whichtemporary differences become deductible and/or net operating loss carryforwards can be utilized. We consider the level of historical taxable income,scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance iswarranted.During Fiscal 2017, the Company maintained a valuation allowance against its U.S. deferred tax assets and certain foreign jurisdictions. The Company'svaluation allowance increased by $5,858 during the year ended February 28, 2017 , of which $5,895 was recorded within the provision for income taxesin the accompanying Consolidated Statement of Operations. Any decline in the valuation allowance could have a favorable impact on our income taxprovision and net income in the period in which such determination is made. As of February 28, 2017 , the Company has not provided for U.S. federal and foreign withholding taxes on approximately $54,675 of its foreignsubsidiaries, cumulative undistributed earnings in Germany as such earnings are indefinitely reinvested overseas. If these future earnings are repatriated tothe United States, or if the Company determines that such earnings will be remitted in the foreseeable future, additional tax provisions may be required.Due to the complexities of the tax laws and the assumptions that would have to be made, it is not practicable to estimate the amounts of income taxprovisions that may be required. The amount of unrecognized deferred tax liabilities for temporary differences related to investments in undistributedearnings is not practicable to determine at this time. The Company has U.S. federal net operating losses of $16,271 , which expire in Fiscal 2035 through 2037 if not utilized. The Company has foreign taxcredits of $3,024 which expire in tax year 2025 through 2027. The Company has research and development tax credits of $2,120 , which expire in taxyears 2024 through 2032. The Company has various foreign89net operating loss carryforwards, state net operating loss carryforwards, and state tax credits that expire in various years and amounts through tax year2037.A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:Balance at February 28, 2014$14,565Additions based on tax positions taken in the current and prior years7,538Settlements(142)Decreases based on tax positions taken in the prior years(6,562)Other(824)Balance at February 28, 2015$14,575Additions based on tax positions taken in the current and prior years1,366Settlements—Decreases based on tax positions taken in the prior years(915)Other(554)Balance at February 29, 2016$14,472Additions based on tax positions taken in the current and prior years3,147Settlements—Decreases based on tax positions taken in prior years(6,470)Other(305)Balance at February 28, 2017$10,844Of the amounts reflected in the table above at February 28, 2017 , $10,844 , if recognized, would reduce our effective tax rate. If recognized, $8,103 ofthe unrecognized tax benefits are likely to attract a full valuation allowance, thereby offsetting the favorable impact to the effective tax rate. Ourunrecognized tax provision non-current consolidated balance sheet liability, including interest and penalties, is $3,194 . The Company records accruedinterest and penalties related to income tax matters in the provision for income taxes in the accompanying Consolidated Statement of Operations andComprehensive Income (Loss). For the years ended February 28, 2017 , February 29, 2016 and February 28, 2015, interest and penalties on unrecognizedtax benefits were $98 , $23 and $(166) , respectively. The balance as of February 28, 2017 and February 29, 2016 was $746 and $648 , respectively. TheCompany believes that it is reasonably possible that approximately $2,932 of unrecognized tax benefits may be recognized within the next 12 months as aresult of a lapse of the statute of limitations.The Company, or one of its subsidiaries, files its tax returns in the U.S. and certain state and foreign income tax jurisdictions with varying statutes oflimitations. The earliest years' tax returns filed by the Company that are still subject to examination by the tax authorities in the major jurisdictions are asfollows: Jurisdiction Tax Year U.S. 2013Netherlands 2013Germany 20139) Other Long-Term LiabilitiesIncluded in other long-term liabilities are the non-current portions of a pension liability for an employer defined pension plan covering certain eligibleHirschmann employees (see Note 11(f)), as well as a retirement incentive accrual for certain Hirschmann employees.9010)Capital Structure The Company's capital structure is as follows: Shares Authorized Shares Outstanding Security ParValue February 28, 2017 February 29, 2016 February 28, 2017 February 29, 2016 VotingRights perShare LiquidationRightsPreferred Stock $50.00 50,000 50,000 — — — $50 per shareSeries PreferredStock $0.01 1,500,000 1,500,000 — — — Class A CommonStock $0.01 60,000,000 60,000,000 21,899,370 21,899,370 one Ratably with ClassBClass B CommonStock $0.01 10,000,000 10,000,000 2,260,954 2,260,954 ten Ratably with ClassAThe holders of Class A and Class B common stock are entitled to receive cash or property dividends declared by the Board of Directors. The Board ofDirectors can declare cash dividends for Class A common stock in amounts equal to or greater than the cash dividends for Class B common stock.Dividends other than cash must be declared equally for both classes. Each share of Class B common stock may, at any time, be converted into one shareof Class A common stock.Stock held in treasury by the Company is accounted for using the cost method which treats stock held in treasury as a reduction to total stockholders'equity and amounted to 2,168,074 shares at both February 28, 2017 and February 29, 2016 . The cost basis for subsequent sales of treasury shares isdetermined using an average cost method. During the year ended February 29, 2016 , the Company repurchased 39,529 shares for an aggregate cost of$227 . During the year ended February 28, 2017 , the Company purchased no shares. As of February 28, 2017 , 1,383,271 shares of the Company'sClass A common stock are authorized to be repurchased in the open market.11)Other Stock and Retirement Plans a) Restricted Stock Plan and Supplemental Executive Retirement PlanThe Company has restricted stock plans under which key employees and directors may be awarded restricted stock. Awards under the restrictedstock plan may be performance-accelerated shares or performance-restricted shares (See Note 1(u)).As of February 28, 2017 , approximately 1,226,000 shares of the Company's Class A common stock are reserved for issuance under theCompany's Restricted and Stock Option Plans.During Fiscal 2014, the Company established a Supplemental Executive Retirement Plan ("SERP") to provide additional retirement income to itsChairman and select executive officers. Subject to certain performance criteria, service requirements and age restrictions, employees whoparticipate in the SERP will receive restricted stock awards. The restricted stock awards vest on the later of three years from the date ofparticipation in the SERP, or the grantee reaching the age of 65 years (refer to Note 1(u)).b) Profit Sharing PlansThe Company has established two non-contributory employee profit sharing plans for the benefit of its eligible employees in the United Statesand Canada. The plans are administered by trustees appointed by the Company. No discretionary contributions were made during the yearsended February 28, 2017 , February 29, 2016 and February 28, 2015 . Contributions required by law to be made for eligible employees inCanada were not material for all periods presented. c) 401(k) Plans91The VOXX International 401(k) plan is for all eligible domestic employees. The Company matches a portion of the participant's contributionsafter three months of service under a predetermined formula based on the participant's contribution level. Shares of the Company's CommonStock are not an investment option in the Savings Plan and the Company does not use such shares to match participants' contributions. Duringthe years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , the Company contributed, net of forfeitures, $408 , $623 and$629 to the 401(k) Plan. d) Cash Bonus Profit Sharing Plan During Fiscal 2009, the Board of Directors authorized a Cash Bonus Profit Sharing Plan that allows the Company to make profit sharingcontributions for the benefit of eligible employees, for any fiscal year based on a pre-determined formula on the Company's pre-tax profits. Thesize of the contribution is dependent upon the performance of the Company. A participant’s share of the contribution is determined pursuant tothe participant’s eligible wages for the fiscal year as a percentage of total eligible wages for all participants. There were no contributions made tothe plan for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 .e) Deferred Compensation Plan Effective December 1, 1999, the Company adopted a Deferred Compensation Plan (the Plan) for Vice Presidents and above. The Plan isintended to provide certain executives with supplemental retirement benefits as well as to permit the deferral of more of their compensation thanthey are permitted to defer under the Profit Sharing and 401(k) Plans. The Plan provides for a matching contribution equal to 25% of theemployee deferrals up to $20 . On February 1, 2008, the Company suspended all matching contributions to contain operating expenses. Thematching contributions have remained suspended for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 . The Plan isnot intended to be a qualified plan under the provisions of the Internal Revenue Code. All compensation deferred under the Plan is held by theCompany in an investment trust which is considered an asset of the Company. The Company has the option of amending or terminating the Planat any time. The investments, which amounted to $4,094 and $3,917 at February 28, 2017 and February 29, 2016 , respectively, have been classified as long-term marketable securities and are included in investment securities on the accompanying consolidated balance sheets and a correspondingliability is recorded with $250 recorded in accrued expenses and the balance in deferred compensation which is classified as a long-term liability.Unrealized gains and losses on the marketable securities and corresponding deferred compensation liability net to zero in the accompanyingConsolidated Statements of Operations and Comprehensive Income (Loss).f) Defined Benefit Pension PlanThe Company sponsors an employer financed defined benefit pension plan ("the plan") at its Hirschmann subsidiary, which covers eligibleregular full-time employees. The plan provides for retirement and disability benefits for participating employees, which are only granted if theparticipating employee is at least 25 years of age and has completed ten years of service. The retirement age as it pertains to the plan is 65.Benefits available under the plan are generally determined by years of service and the levels of compensation during those years. In October1994, the benefits under this plan were closed to new participants and pension benefits continue to accrue only for previously existing planmembers still employed by Hirschmann. The discount rate used for the valuation of the pension obligation at February 28, 2017 andFebruary 29, 2016 was 1.7% and 2.0% , respectively. No contributions were made to the plan during the years ended February 28, 2017 ,February 29, 2016 or February 28, 2015 , and the plan has no assets. The unfunded balance of the plan at February 28, 2017 and February 29,2016 is equal to the total plan liability of $7,612 and $7,379 , respectively.Following is the reconciliation of the pension benefit obligation for the years ended February 28, 2017 and February 29, 2016 .92Pension benefit obligationFiscal 2017 Fiscal 2016Beginning balance$7,379 $8,072Interest cost142 129Benefits paid(178) (159)Actuarial loss (gain)420 (426)Effect of foreign exchange(151) (237)Ending balance$7,612 $7,379As of February 28, 2017 and February 29, 2016 the following amounts were recognized in the balance sheet and in accumulated othercomprehensive income:Balance SheetFebruary 28, 2017 February 29, 2016As a current liability$210 $193As a non-current liability$7,402 $7,186 Accumulated Other Comprehensive IncomeFiscal 2017 Fiscal 2016Actuarial loss (gain)$420 $(426)Pension expense for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 comprised the following: Fiscal 2017 Fiscal 2016 Fiscal 2015Interest cost$142 $129 $208 $142 $129 $208Pension expense is recorded within General and Administrative Expenses on the Consolidated Statement of Operations and ComprehensiveIncome (Loss). At February 28, 2017 , the benefits expected to be paid by the Company to retirees participating in the plan in each of the next five fiscal yearsand thereafter are as follows:2018$2102019228202022720212662022266Thereafter6,415 $7,61212)Lease Obligations During 1996, the Company entered into a 30-year capital lease for a building with its principal shareholder and current chairman, which was theheadquarters of the discontinued Cellular operation and had an expiration date of November 30, 2026. During Fiscal 2015, the building was purchasedfrom Voxx's principal shareholder by an unrelated third party, causing the lease between Voxx and the shareholder to be terminated. As a result of thetransaction, the Company realized a gain of $846 , net of tax and net of a termination penalty of $573 paid to the shareholder at the termination date. Thegain was recorded in Paid in Capital on the Consolidated Balance Sheet as of February 28, 2015. Total rental income93earned from the sublease of this building for the year ended February 28, 2015 was $462 . We also leased another facility from our principal stockholderwhich was accounted for as an operating lease and had an expiration date of November 30, 2016. This facility was sold to an unrelated third party duringthe second quarter of Fiscal 2017. The Company has no related party leases as of February 28, 2017 .At February 28, 2017 , the Company was obligated under non-cancellable operating leases for equipment and warehouse facilities for minimum annualrental payments for each of the succeeding fiscal years: OperatingLeases2018 $5,4562019 1,3232020 4172021 2352022 181Thereafter 351Total minimum lease payments $7,963Rental expense for the above-mentioned operating lease agreements and other rental agreements on a month-to-month basis was $5,066 , $5,143 and$5,648 for the years ended February 28, 2017 , February 29, 2016 and February 28, 2015 , respectively.The Company has capital leases with a total lease liability of $1,932 at February 28, 2017 . These leases have maturities through Fiscal 2022.13)Financial Instruments a) Off-Balance Sheet Risk Commercial letters of credit are issued by the Company during the ordinary course of business through major domestic banks as requested bycertain suppliers. The Company also issues standby letters of credit principally to secure certain bank obligations and insurance policies. TheCompany had no open commercial letters of credit at February 28, 2017 and February 29, 2016 . Standby letters of credit amounted to $1,306and $917 at February 28, 2017 and February 29, 2016 . The terms of these letters of credit are all less than one year. No material loss isanticipated due to nonperformance by the counter parties to these agreements. The fair value of the standby letters of credit is estimated to be thesame as the contract values based on the short-term nature of the fee arrangements with the issuing banks. At February 28, 2017 , the Company had unconditional purchase obligations for inventory commitments of $107,386 . These obligations are notrecorded in the consolidated financial statements until commitments are fulfilled and such obligations are subject to change based onnegotiations with manufacturers.b) Concentrations of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade receivables. TheCompany's customers are located principally in the United States, Canada, Europe and Asia Pacific and consist of, among others, distributors,mass merchandisers, warehouse clubs and independent retailers. The Company generally grants credit based upon analyses of customers'financial conditions and previously established buying and payment patterns. For certain customers, the Company establishes collateral rights inaccounts receivable and inventory and obtains personal guarantees from certain customers based upon management's credit evaluation. Certaincustomers in Europe and Latin America have credit insurance equaling their credit limits. 94At February 28, 2017 and February 29, 2016 , one customer accounted for approximately 4% and 5% of accounts receivable, respectively. Noone customer account for more than 10% of net sales during the years ended February 28, 2017 , February 29, 2016 or February 28, 2015 . TheCompany's five largest customers represented 29% of net sales during year ended February 28, 2017 and 31% for both the years endedFebruary 29, 2016 and February 28, 2015 . A portion of the Company's customer base may be susceptible to downturns in the retail economy, particularly in the consumer electronicsindustry. Additionally, customers specializing in certain automotive sound, security and accessory products may be impacted by fluctuations inautomotive sales.14)Financial and Product Information About Foreign and Domestic Operations SegmentThe Company operates in three distinct segments based upon our products and our internal organizational structure. The three operating segments, whichare also the Company's reportable segments, are Automotive, Premium Audio and Consumer Accessories.Our Automotive segment designs, manufactures, distributes and markets rear-seat entertainment devices, satellite radio products, automotive security,remote start systems, digital TV tuners, mobile antennas, mobile multimedia devices, aftermarket/OE-styled radios, car link-smartphone telematicsapplication, collision avoidance systems and location-based services.Our Premium Audio segment designs, manufactures, distributes and markets home theater systems, high-end loudspeakers, outdoor speakers,iPod/computer speakers, business music systems, cinema speakers, flat panel speakers, Bluetooth speakers, soundbars, headphones and DLNA (DigitalLiving Network Alliance) compatible devices.Our Consumer Accessories segment designs, markets and distributes remote controls; wireless and Bluetooth speakers; karaoke products; action cameras;iris identification and security related products; personal sound amplifiers; infant/nursery products; and A/V connectivity, portable/home charging,reception and digital consumer products.Each operating segment is individually reviewed and evaluated by our Chief Operating Decision Maker (CODM), who allocates resources and assessesperformance of each segment individually. The Company's Chief Executive Officer has been identified as the CODM. The CODM evaluates performanceand allocates resources based upon a number of factors, the primary profit measure being income before income taxes of each segment. Certain costs androyalty income are not allocated to the segments and are reported as Corporate/Eliminations. Costs not allocated to the segments include professional fees,public relations costs, acquisition costs and costs associated with executive and corporate management departments including salaries, benefits,depreciation, rent and insurance.The segments share many common resources, infrastructures and assets in the normal course of business. Thus, the Company does not report assets orcapital expenditures by segment to the CODM.The accounting principles applied at the consolidated financial statement level are generally the same as those applied at the operating segment level andthere are no material intersegment sales. The segments are allocated interest expense, based upon a pre-determined formula, which utilizes a percentage ofeach operating segment's intercompany balance, which is offset in corporate/eliminations.Segment data for each of the Company's segments are presented below:95 Automotive PremiumAudio ConsumerAccessories Corporate/Eliminations TotalFiscal Year Ended February 28, 2017 Net sales$337,241 $166,789 $176,216 $796 $681,042Equity in income of equity investees6,797 — — — 6,797Interest expense and bank charges3,492 5,295 4,716 (6,015) 7,488Depreciation and amortization expense7,230 3,688 4,702 2,674 18,294Income (loss) before income taxes21,358 8,316 (20,300) (10,817) (1,443) Fiscal Year Ended February 29, 2016 Net sales$351,665 $140,508 $187,272 $1,301 $680,746Equity in income of equity investees6,538 — — — 6,538Interest expense and bank charges5,811 8,979 5,766 (12,481) 8,075Depreciation and amortization expense7,327 3,477 2,904 2,130 15,838Income (loss) before income taxes (a)17,857 (8,945) (17,044) 334 (7,798) Fiscal Year Ended February 28, 2015 Net sales$396,422 $165,812 $194,104 $1,160 $757,498Equity in income of equity investees5,866 — — — 5,866Interest expense and bank charges6,310 9,079 6,431 (14,969) 6,851Depreciation and amortization expense8,646 3,651 1,192 2,076 15,565Income (loss) before income taxes (b)2,196 2,979 (3,840) (639) 696(a)Included in the income (loss) before taxes for the year ended February 29, 2016 within the Consumer Accessories segment is the $4,679 gain on bargainpurchase recognized in conjunction with the EyeLock transaction, as well as an impairment loss on intangible assets totaling $2,860 . Included in theincome (loss) before taxes for the year ended February 29, 2016 within the Premium Audio segment is an impairment loss on intangible assets totaling$6,210 .(b)Included in the income (loss) before taxes for the year ended February 28, 2015 within the Automotive segment is the $(7,396) re-measurement lossrelated to the Company's Venezuela government issued sovereign bonds and the impairment charge of $(9,304) related to investment properties inVenezuela.No one customer accounted for more than 10% of consolidated net sales during the years ended February 28, 2017 , February 29, 2016 or February 28,2015 .Geographic net sales information in the table below is based on the location of the selling entity. Long-lived assets, primarily fixed assets, are reportedbelow based on the location of the asset.96 United States Germany Other TotalFiscal Year Ended February 28, 2017 Net sales$449,865 $226,368 $4,809 $681,042Long-lived assets49,937 27,700 3,964 81,601 Fiscal Year Ended February 29, 2016 Net sales$461,606 $211,701 $7,439 $680,746Long-lived assets47,092 28,341 3,989 79,422 Fiscal Year Ended February 28, 2015 Net sales$500,847 $246,173 $10,478 $757,498Long-lived assets35,835 29,952 3,996 69,78315)Contingencies The Company is currently, and has in the past, been a party to various routine legal proceedings incident to the ordinary course of business. Ifmanagement determines, based on the underlying facts and circumstances, that it is probable a loss will result from a litigation contingency and theamount of the loss can be reasonably estimated, the estimated loss is accrued for. The Company does not believe that any of its current outstandinglitigation matters will have a material adverse effect on the Company's financial statements, individually or in the aggregate. The products the Company sells are continually changing as a result of improved technology. As a result, although the Company and its suppliers attemptto avoid infringing known proprietary rights, the Company may be subject to legal proceedings and claims for alleged infringement by patent, trademarkor other intellectual property owners. Any claims relating to the infringement of third-party proprietary rights, even if not meritorious, could result incostly litigation, divert management’s attention and resources, or require the Company to either enter into royalty or license agreements which are notadvantageous to the Company, or pay material amounts of damages.16)Unaudited Quarterly Financial DataSelected unaudited, quarterly financial data of the Company for the years ended February 28, 2017 and February 29, 2016 appear below: 97 Quarters Ended Feb 28, 2017 Nov 30, 2016 Aug 31, 2016 May 31, 20162017 Net sales $167,387 $198,937 $159,262 $155,456Gross profit 50,708 58,213 46,493 46,101Net (loss) income attributable to Voxx International Corporation (90) 5,800 3,020 (4,308) Net income (loss) per common share (basic) 0.00 0.24 0.12 (0.18) Net income (loss) per common share (diluted) 0.00 0.24 0.12 (0.18) Quarters Ended Feb 29, 2016 Nov 30, 2015 Aug 31, 2015 May 31, 20152016 Net sales $169,683 $192,506 $154,174 $164,383Gross profit 46,824 55,843 44,975 48,043Net (loss) income attributable to Voxx International Corporation (a) (5,351) 7,777 (4,394) (714) Net (loss) income per common share (basic) (0.22) 0.32 (0.18) (0.03) Net (loss) income per common share (diluted) (0.22) 0.32 (0.18) (0.03) Net income per common share is computed separately for each quarter. Therefore, the sum of such quarterly per share amounts may differ from the totalfor the years.(a) Included in net (loss) income for the quarter ended August 31, 2015 are impairment charges of $6,210 related to intangible assets. Included in net(loss) income for the quarter ended November 30, 2015 is the gain on bargain purchase of $4,679 related to the EyeLock transaction. Included in net(loss) income for the quarter ended February 29, 2016 are impairment charges of $2,860 related to intangible assets.9817)Subsequent EventsOn April 6, 2017, the Company entered into a definitive purchase agreement with AAMP of America to acquire the inventory, inclusive of all intellectualproperty, including patents and trademarks of Rosen Electronics products for approximately $2,000 .99SCHEDULE IIVOXX INTERNATIONAL CORPORATION AND SUBSIDIARIESValuation and Qualifying AccountsYears ended February 28, 2017 , February 29, 2016 and February 28, 2015(In thousands)Column A Column B Column C Column D (b) Column EDescription Balance atBeginningof Year GrossAmountCharged toCosts andExpenses Reversals ofPreviouslyEstablishedAccruals Deductions (a) Balanceat Endof YearYear ended February 28, 2017 Allowance for doubtful accounts $6,780 $949 $— $720 $7,009Cash discount allowances 1,077 32,589 — 32,433 1,233Accrued sales incentives 12,439 36,413 (108) 35,590 13,154Reserve for warranties and product repair costs 9,720 6,192 — 8,454 7,458 $30,016 $76,143 $(108) $77,197 $28,854Year ended February 28, 2016 Allowance for doubtful accounts $6,491 $1,044 $— $755 $6,780Cash discount allowances 1,190 24,630 — 24,743 1,077Accrued sales incentives 14,097 28,428 (77) 30,009 12,439Reserve for warranties and product repair costs 10,012 8,028 — 8,320 9,720 $31,790 $62,130 $(77) $63,827 $30,016Year ended February 28, 2015 Allowance for doubtful accounts $6,889 $(375) $— $23 $6,491Cash discount allowances 1,189 29,040 — 29,039 1,190Accrued sales incentives 17,401 34,159 (111) 37,352 14,097Reserve for warranties and product repair costs 12,478 7,948 — 10,414 10,012 $37,957 $70,772 $(111) $76,828 $31,790(a)For the allowance for doubtful accounts, cash discount allowances, and accrued sales incentives, deductions represent currency effects, chargebacks andpayments made or credits issued to customers. For the reserve for warranties and product repair costs, deductions represent currency effects and payments forlabor and parts made to service centers and vendors for the repair of units returned under warranty.(b)Column D includes $100 of liabilities acquired during our EyeLock acquisition in Fiscal 2016.100ExhibitNumber Description 3.1 Amended and Restated Certificate of Incorporation of the Company as filed with the Delaware Secretary of State on April 17, 2000(incorporated by reference to the Company's Annual Report on Form 10-K for the year ended November 30, 2000) 3.2 Certificate of Ownership and Merger (incorporated by reference to the Company's Form 8-K filed on December 6, 2011) 3.3 Amended and Restated Bylaws of the Company (incorporated by reference to the Company's Form 8-K filed on December 6, 2011) 10.1 Employment agreement, dated January 12, 2017, by and between VOXX International Corporation and Charles M. Stoehr (filed herewith) 10.2 Employment agreement, dated January 12, 2017, by and between VOXX International Corporation and Loriann Shelton (filed herewith) 10.3 Employment agreement, dated January 12, 2017, by and between VOXX International Corporation and Thomas Malone (filed herewith) 21 Subsidiaries of the Registrant (filed herewith) 23 Consent of Grant Thornton LLP (filed herewith) 31.1 Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act of 1934 (filedherewith) 31.2 Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act of 1934 (filedherewith) 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnishedherewith) 32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnishedherewith) 99.1 Consolidated Financial Report of Audiovox Specialized Applications LLC (ASA) as of November 30, 2016 and 2015 and for the YearsEnded November 30, 2016, 2015 and 2014 (filed herewith) 99.2 Audit Opinion of Grant Thornton LLP for Audiovox Specialized Applications LLC (ASA) as of and for the year ended November 30, 2014(filed herewith) 99.3 Consent of RSM U.S. LLP (filed herewith) 99.4 Consent of Grant Thornton LLP (filed herewith) 101101 The following materials from VOXX International Corporation's Annual Report on Form 10-K for the period ended February 28, 2017,formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii), the Consolidated Statements ofOperations and Comprehensive Income (Loss), (iii) the Consolidated Statements of Stockholders' Equity, (iv) the Consolidated Statements ofCash Flows, and (v) Notes to Consolidated Financial Statements. (d) All other schedules are omitted because the required information is shown in the financial statements or notes thereto or because they are not applicable.102SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. VOXX INTERNATIONAL CORPORATION May 15, 2017By: /s/ Patrick M. Lavelle Patrick M. Lavelle, President and Chief Executive Officer103Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated. Signature Title Date /s/ Patrick M. LavellePatrick M. Lavelle President; Chief Executive Officer(Principal Executive Officer) and DirectorMay 15, 2017 /s/ Charles M. StoehrCharles M. Stoehr Senior Vice President,Chief Financial Officer (PrincipalFinancial and Accounting Officer) and DirectorMay 15, 2017 /s/ John J. ShalamJohn J. Shalam Chairman of the Board of DirectorsMay 15, 2017 /s/ Paul C. Kreuch, Jr.Paul C. Kreuch, Jr. DirectorMay 15, 2017 /s/ Denise GibsonDenise Gibson DirectorMay 15, 2017 /s/ Peter A. LesserPeter A. Lesser DirectorMay 15, 2017 /s/ John Adamovich, Jr.John Adamovich, Jr. DirectorMay 15, 2017 /s/ Ari ShalamAri Shalam DirectorMay 15, 2017104EMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January 12, 2017 (the “EffectiveDate”), by and between VOXX INTERNATIONAL CORPORATION , a Delaware corporation (“Employer”), and CHARLESM. STOEHR , an individual (the “Executive”).RECITALSWHEREAS , Employer desires to continue to employ Executive in the capacity of Senior Vice President/Chief FinancialOfficer of Employer pursuant to the terms set forth in this Agreement.WHEREAS , Executive desires to continue to work for Employer with the duties and responsibilities pursuant to thisAgreement.Subject to the foregoing paragraph, the parties, intending to be legally bound, agree as follows:§ 1. Definitions.For the purposes of this Agreement, the following terms have the meanings specified or referred to in this § 1.“Affiliate” means a corporation or other entity controlling, controlled by or under common control with the Employer.“Agreement” has the meaning set forth in the preamble.“Base Compensation” has the meaning set forth in § 3(a).“Benefits” has the meaning set forth in § 3(c).“Board of Directors” means the Board of Directors of Voxx.“Business” means the consumer electronics and accessories business as engaged in from time to time by the Employer andits Affiliates.“Cause” means: (i) the Executive’s continued willful failure to perform in a material respect (other than any such failureresulting from incapacity due to Disability) the explicitly stated duties to be performed by the Executive under this Agreement for aperiod of 10 days following delivery of written notice to the Executive from the Chief Executive Officer of Employer specifying inreasonable detail key elements of such failure; (ii) the appropriation (or attempted appropriation) of a material business opportunityof the Employer or its Affiliates, including attempting to secure or securing any personal profit in connection with any transactionentered into on behalf of the Employer or its Affiliate; (iii) the willful disclosure by the Executive of Confidential Information of theEmployer or any of its Affiliates, other than in the ordinary course of business in connection with the performance of the Executive’sduties in accordance with this Agreement; (iv) the misappropriation (or attempted misappropriation) of any of the Employer’s or anyof its Affiliates funds or property; or (v) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, anyoffense that is a felony.“Change in Control ” shall be deemed to have occurred if:(i) there shall occur (i) any consolidation or merger of Employer in which Employer is not the continuing orsurviving corporation or pursuant to which the shares of Employer (the “Shares”) would be converted into cash, securities orother property, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) ofassets accounting for more than 50% of the total assets of Employer or more than 50% of the total revenues of Employer,other than, in case of either (i) or (ii), a consolidation or merger with, or transfer to, a corporation or other entityof which, or of the parent entity of which, immediately following such consolidation, merger or transfer, more than 50% ofthe combined voting power of the then outstanding voting securities of such entity entitled to vote generally in the election ofdirectors (or other governing body) is then beneficially owned (within the meaning of Rule 13d-3 under the SecuritiesExchange Act of 1934 (the “Exchange Act”)) by one or more of the individuals and entities who were such owners of Sharesimmediately prior to such consolidation, merger or transfer;(ii) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliateof Voxx, becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, ofmore than 50% of the combined voting power of the then outstanding voting securities of Employer; or“Confidential Information” means any and all information concerning the business and affairs of the Employer and itsAffiliates including, but not limited to, customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financialstatements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans,business and marketing plans, strategic plans, product plans, the names and backgrounds of key personnel, personnel training andtechniques and materials, however documented and all notes, analysis, compilations, studies, summaries and other material preparedby or for the Employer and its Affiliates containing or based, in whole or in part, on any information included in the foregoing.“Disability” means a condition where for physical or mental reasons the Executive is unable to perform the Executive’sduties (as determined in accordance with the procedures set forth in the next sentence) and such condition in the reasonablejudgment of the Employer, as substantiated by a medical doctor in the manner provided below, is expected to continue for suchperiod of time as to require replacement of the Executive in order to carry out the business of the Employer. The determination thatthe physical or mental state of the Executive constitutes a Disability shall be made by a medical doctor who is not an employee ofthe Employer and who is reasonably selected by the Employer and reasonably acceptable to the Executive (unless the Employer andthe Executive reach mutual agreement regarding the existence of a Disability) and such determination shall be binding on bothparties. The Executive must submit to a reasonable number of examinations by the designated medical doctor and the Executivehereby authorizes the disclosure and release to the Employer of such determination and all supporting medical records. Any and allout of pocket expenses incurred by the Executive in connection with the determination by the designated medical doctor of aDisability shall be paid for or reimbursed by the Employer. Action on behalf of the Executive may be taken by the Executive’sguardian or duly authorized attorney-in-fact for purposes of submitting the Executive to medical examinations and approvingauthorization of disclosure. The Executive shall be deemed to have a Disability if the Executive for any reason is unable to performthe Executive’s duties for 120 consecutive days or for 180 days during any 12-month period.“Effective Date” means the date first written above in this Agreement.“Employer” means Voxx International Corporation.“Employment Period” means the term of the Executive’s employment under this Agreement.“Executive” has the meaning set forth in the preamble.“Good Reason” means (a) a material reduction in the Executive’s Base Compensation opportunity below the amountspecified in Section 3 of this Agreement (other than a reduction applicable to all other similarly situated participants), (b)Executive’s resignation within one hundred eighty (180) days following Executive’s written notice to the Employer of a change ofExecutive’s primary place of work from Hauppauge, New York; (c) a material reduction in the Executive’s level of responsibility,(d) an assignment of duties inconsistent with the Executive's position as a key executive, (e) a Change in Control, or (f) Executive’svoluntary retirement, any time after two (2) years after the Effective Date, with the intent to no longer seek full time employment(the “Voluntary Retirement”).“Inventions” has the meaning set forth in § 6(d).“Market Jurisdictions” means Worldwide.“Non-Compete Period” has the meaning set forth in § 7(b)(i).“Notice of Termination” has the meaning set forth in § 5(b).“Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limitedliability company, joint venture, estate, trust, association, organization or governmental body.“Proprietary Items” has the meaning set forth in § 6(b)(iv).“Termination Date” has the meaning set forth in § 2(b).“Works” has the meaning set forth in § 6(e).§ 2. Employment Terms and Duties.(a) Employment. The Employer hereby employs the Executive, and the Executive hereby accepts employment by theEmployer, upon the terms and conditions set forth in this Agreement.(b) Term . The Executive's employment under this Agreement shall continue from the Effective Date throughFebruary 28, 2020, unless terminated earlier pursuant to § 5 below (the “Initial Term”). Thereafter, this Agreement shallautomatically renew for additional one (1) year terms (each, a “Renewal Term”) unless, not less than one hundred eighty (180) daysprior to the expiration of the Intitial or Renewal Term, as the case may be, either party notifies the other in writing of their intentionnot to renew this Agreement.(c) Rights and Powers; Duties . The Executive shall initially serve as the Senior Vice President/Chief FinancialOfficer of the Employer. The Executive shall provide executive, administrative, and managerial services to the Employer and shallhave such duties and powers as are prescribed by the Chief Executive Officer of Employer. The Executive shall devote full time andattention, skill and energy exclusively to the business of the Employer, shall use best efforts to promote the success of theEmployer’s and its Affiliate’s business and shall cooperate fully in the advancement of the best interests of the Employer and itsAffiliates. Nothing in this § 2(c), however, shall prevent the Executive from engaging in additional activities in connection withpersonal investments and community affairs, from serving on boards of directors of businesses, as long as such activities are not incompetition with the Employer or its Affiliates and/or do not create a conflict of interest and as long as such additional activities orservices are not inconsistent with or intrusive on the Executive's duties under this Agreement.(d) Key Man Insurance . If requested by the Employer, the Executive shall cooperate with the Employer inestablishing and maintaining “key man” insurance with respect to the Executive’s services, including submitting to any medicalexaminations reasonably necessary or advisable to establish. or maintain such insurance. The “key man” insurance to be establishedand maintained under this § 2(d) shall be paid for by the Employer.§3. Compensation.(a) Base Compensation . The Executive shall be paid by the Employer and/or its Affiliates base salary at an annualrate of $400,000 commencing on the Effective Date (the “Base Compensation”), which will be payable according to theEmployer's customary payroll practices.(b) Bonuses . Executive will receive an annual bonus based on 0.75% of consolidated pre-tax earnings (includingcertain adjustments).(c) Benefits . The Executive shall, during the Employment Period, be permitted to participate in such Code Section401(k), pension; profit sharing, bonus, life insurance, disability insurance, hospitalization, dental, major medical and other employeebenefit plans of the Employer that may be in effect from time to time, to the extent the Executive is eligible under the terms of thoseplans, but not less favorable to the Executive than currently in effect (collectively, the “Benefits”).(d) Vacation . The Executive shall, during the Employment Period, be entitled to the number of weeks of paidvacation per full calendar year as set forth in the Employer’s then current vacation policy. Vacation time may not be carried over.(e) Life Insurance . The Executive shall, during the Employment Period, be provided a term life policy in the amountof $1,000,000 (or such reduced amount as may be required by the Company’s insurer due to age coverage constraints) paid for bythe Employer with the beneficiary selected by the Executive.(f) Automobile. The Employer shall lease an automobile of the Executive’s choosing, for use by the Executive, andshall pay all insurance relating to the automobile. In the event the amount of the monthly lease payment exceeds $1,000, Executiveshall be responsible to Employer for the excess amount. At the end of the term of the lease, Executive shall have the option topurchase the automobile.§4. Expenses. The Employer shall reimburse the Executive for all reasonable and necessary out-of-pocket expenses incurred bythe Executive in connection with the performance of services under this Agreement, subject to any recordkeeping, reporting orsimilar requirements imposed pursuant to policies and procedures of the Employer in effect from time to time.§5. Termination.(a) Events of Termination . The Employment Period and the Executive’s rights under this Agreement or otherwise as anemployee of the Employer shall terminate (except as otherwise provided in this § 5):(i) automatically upon the death of the Executive;(ii) upon the Disability of the Executive immediately upon written notice from either party to the other party;(iii) if for Cause, immediately upon delivery of a Notice of Termination from the Chief Executive Officer ofEmployer to the Executive, or at such later time as such notice may specify;(iv) if without Cause, upon prior written notice from the Chief Executive Officer of Employer to theExecutive, effective at such time as such notice may specify;(v) if by the Executive other than for Good Reason, upon the Executive’s resignation 30 days followingwritten notice from the Executive to the Board of Directors; or(vi) if by the Executive for Good Reason, upon and in accordance with the following conditions. In order toterminate for Good Reason, the Executive must give the Board of Directors a Notice of Termination at least 60 calendar daysin advance of the Executive’s intent to terminate employment for Good Reason setting forth the specific actions by theEmployer which triggered the notice and the Notice of Termination must be received by the Chief Executive Officer ofEmployer no more than ninety (90) calendar days after the complained-of-action(s) occurred which constitute the basis forGood Reason. Upon receipt of the Notice of Termination and for a period of fifteen (15) calendar days thereafter, the Boardof Directors shall consider the complained-of-action(s) set forth therein and if such complained-of-action(s) constitute GoodReason shall cure or remedy the actions set forth therein. If the Employer adequately remedies or cures the actions giving riseto the Notice of Termination within such 15-day period, then the resignation by the Executive shall not be for Good Reason.(b) Notice of Termination . Any termination by the Employer for Cause or by the Executive for Good Reason shall becommunicated by a Notice of Termination to the Executive or the Board of Directors, as applicable. For purposes of this Agreement,a “Notice of Termination” means a written notice which (1) indicates the specific termination provision in this Agreement reliedupon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis fortermination of the Executive’s employment under the provision so indicated, and (iii) the date of termination. The failure by theExecutive or the Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing ofCause or Good Reason shall not waive any right of the Executive or the Employer, respectively, hereunder or preclude the Executiveor the Employer, respectively, from asserting any fact or circumstance in enforcing the Executive’s or the Employer’s rightshereunder.(c) Termination Pay . Subject to the terms of §§ 7 and 8 below, effective upon termination of employment of theExecutive for any reason, except as required under applicable law, the Employer shall be obligated to pay to the Executive (or, in theevent of the Executive’s death, the Executive’s designated beneficiary) only such compensation as is specified in this § 5(c). TheExecutive’s designated beneficiary will be such individual or trust, located at such address, as the Executive may designate by noticein writing to the Employer from time to time or, if the Executive fails to give notice to the Employer of such a beneficiary, theExecutive’s estate. Notwithstanding the preceding sentence, the Employer shall have no duty under any circumstances to determinewhether any Person holding herself, himself or itself out as the beneficiary is in fact entitled to any termination payment but mayrely upon the representations of such Person.(i) Termination by the Employer Without Cause or by the Executive for Good Reason . Subject toSubparagraph 5(c)(ii), if the Executive’s employment is terminated by the Employer without Cause or by the Executive forGood Reason (except in the case of Executive’s Voluntary Retirement as specifically provided below), the Employer shallpay to the Executive in accordance with the Employer’s then current payroll practices one (1) year of Base Compensation;plus any earned and unpaid Base Compensation for the period ending on termination; plus the incentive bonus prorated as ofthe date of termination. In the case of Executive’s Voluntarily Retirement which qualifies as an event of Good Reason, theEmployer shall pay to the Executive one (1) year of Base Compensation, reduced by the market value of Executive’s SERPas of the date of Executive’s Voluntary Retirement. In addition, the Employer shall (A) pay for and continue disabilityinsurance and health insurance benefits provided to the Executive and the Executive’s dependents immediately prior to thetermination of the Executive’s employment for a period of one year, (B) in accordance with past practice, reimburse theExecutive for expenses incurred in accordance with § 4; and (C) pay for and continue life insurance policy in accordancewith §3(e) for a period of one year. The Executive’s entitlement to the compensation and benefits described in this subsection(i) is specificallysubject to the execution and delivery by the Executive of a release agreement in form and substance reasonably acceptable tothe Employer.(ii) Termination upon Disability . If the Executive’s employment is terminated as a result of the Executive’sDisability, the Employer shall (A) pay the Executive an amount equal to any disability payments provided pursuant to thebenefits package available to the Executive; (B) pay to the Executive in accordance with the Employer’s then current payrollpractices one (1) year of Base Compensation; plus any earned and unpaid Base Compensation for the period ending ontermination plus any earned and unpaid annual bonus prorated as of the date of disability; (C) in accordance with theEmployer’s past practice, reimburse the Executive for expenses incurred in accordance with § 4; and (D) pay for andcontinue life insurance policy in accordance with §3(e) for a period of one year.(iii) Termination on Death . If the Executive’s employment is terminated because of the Executive’s death,the Employer shall pay to the beneficiary of the Executive any earned but unpaid Base Compensation for the period endingon the date of the Executive’s death; plus any earned and unpaid annual bonus prorated as of the date of death. In addition,the Employer, in accordance with the Employer’s past practice, shall reimburse the Executive or the Executive’s heirs orestate for expenses incurred in accordance with § 4.(iv) Termination by the Employer for Cause . If the Executive’s employment is terminated by the Employerfor Cause, the Executive shall be entitled only to receive the Executive’s earned but unpaid Base Compensation through thedate of termination. In addition, the Employer, in accordance with the Employer’s past practice, shall reimburse theExecutive for expenses incurred in accordance with § 4.(v) Termination by the Executive without Good Reason . If the Executive’s employment is terminated bythe Executive for any reason (other than for Good Reason), the Executive shall be entitled to receive the Executive's earnedbut unpaid Base Compensation through the date of such termination. In addition, the Employer, in accordance with theEmployer’s past practice, shall reimburse the Executive for expenses incurred in accordance with § 4.§ 6. Non-Disclosure and Intellectual Property Covenant(a) Acknowledgments by the Executive . The Executive acknowledges that (i) during the Employment Period and as a partof the Executive's employment, the Executive will be afforded access to Confidential Information; (ii) public disclosure of suchConfidential Information could have an adverse effect on the Employer and its business; and (iii) the provisions of this § 6 arereasonable and necessary to prevent the improper use or disclosure of Confidential Information.(b) Agreements of the Executive . In consideration of the compensation and benefits to be paid or provided to theExecutive by the Employer under this Agreement, the Executive covenants that:(i) During and indefinitely following the Employment Period, except in the performance of the Executive’sduties in accordance with this Agreement in the ordinary course of business, the Executive shall hold in confidence theConfidential Information and shall not use or disclose it to any Person except with the specific prior written consent of theChief Executive Officer of Employer.(ii) Any trade secrets of the Employer its Affiliates will be entitled to all of the protections and benefits underthe Uniform Trade Secrets Act (or similar legislation) as adopted by the State where the Executive is located and any otherapplicable law. If any information that the Employer deems to be a trade secret is found by a court of competent jurisdictionnot to be a trade secret forpurposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of thisAgreement.(iii) None of the obligations and restrictions set forth in (i) or (ii), above, applies to any part of theConfidential Information that the Executive demonstrates (A) was or becomes generally available to the public other than asa result of a direct or indirect disclosure by the Executive; (B) is required to be disclosed pursuant to an enforceable courtorder; or (C) is required to be disclosed by applicable law.(iv) The Executive shall not remove from the Employer’s premises (except to the extent such removal is forpurposes of the performance of the Executive’s duties at home or while traveling, or except as otherwise specificallyauthorized by the Chief Executive Officer of Employer) any document, record, notebook, plan, model, component, device orcomputer software or code, whether embodied in a disk or in any other form (collectively, the “Proprietary Items”). TheExecutive recognizes that, as between the Employer and the Executive, all of the Proprietary Items, whether or notdeveloped by the Executive, are the exclusive property of the Employer. Upon termination of this Agreement by either party,or upon the request of the Employer during the Employment Period, the Executive shall return to the Employer all of theProprietary Items in the Executive’s possession or subject to the Executive’s control, and the Executive shall not retain anycopies, abstracts, sketches or other physical embodiment of any of the Proprietary Items.(c) Disputes or Controversies . The Executive recognizes that should a dispute or controversy arising from or relating tothis Agreement be submitted for adjudication to any court, arbitration panel or other third party, the preservation of the secrecy ofConfidential Information may be jeopardized. All pleadings, documents, testimony and records relating to any such adjudication willbe maintained in secrecy and will be available for inspection by the Employer, the Executive and their respective attorneys andexperts, who will agree, in advance and in writing, to receive and maintain all such information in secrecy.(d) Inventions . The Executive agrees that all discoveries, concepts, and ideas, whether patentable or not relating to anyactivities of the Employer including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, andformulas, as well as related improvements or know-how (“Inventions”) made or conceived by the Executive, either solely or jointlywith others (i) during the Executive’s employment by the Employer or (ii) within one (1) year after termination of such employment,whether or not such Inventions are made or conceived during the hours of the Executive’s employment or with the use of theEmployer's facilities, materials, or personnel, shall be and shall remain the property of the Employer, whether patentable or not, andthe Executive will, without royalty or any other consideration: (a) inform the Employer promptly and fully of such Inventions bywritten reports, setting forth in detail the Invention, the procedures employed, and the results achieved; (b) assign to the Employer allof the Executive’s rights, title, and interests in and to any Inventions, any applications for United States and foreign Letters Patentcovering the Inventions, any United States and foreign Letters Patent granted upon the applications, and any renewals thereof; (c)assist the Employer or its nominees, at the expense of the Employer, to obtain any United States and foreign Letters Patent for anyInventions as the Employer may elect; and (d) execute, acknowledge, and deliver to the Employer at its expense any writtendocuments and instruments, and do any other acts, such as giving testimony in support of the Executive’s inventorship, as may benecessary in the opinion of the Employer to obtain and maintain United States and foreign Letters Patent upon any Inventions and tovest the entire rights, title and interests in the Employer and to confirm the complete ownership by the Employer of any Inventions,patent applications, and patents.(e) Works . The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to anyactivities of the Employer including, but not limited to, flow charts and computerprogram source code and object code, regardless of the medium in which it is fixed, as well as notes, drawings, memoranda,correspondence, records, notebooks, instructions, and text (“Works”) created or conceived by the Executive, either solely or jointlywith others (i) during the Executive’s employment by the Employer or (ii) within one (1) year after termination of such employment,whether or not such, Works are made or conceived during the hours of the Executive’s employment or with use of the Employer’sfacilities, materials, or personnel, shall be and shall remain the property of the Employer, and the Executive will, without royalty orany other consideration, promptly disclose in writing to the Employer all Works. The Executive shall cooperate fully with theEmployer and its officers and counsel, at the Employer’s direction and expense, in obtaining, maintaining, and enforcing worldwidecopyright protection on such Works. Any such Works created by the Executive is a “work made for hire” under the copyright law,and the Employer may file applications to register copyright in such Works as author and copyright owner thereof. If, for any reason,a Work created by the Executive is excluded from the definition of a “work made for hire” under the copyright law, then theExecutive shall assign, and does hereby assign, to the Employer the entire rights, title, and interests in and to such Work, includingthe copyright therein. The Executive shall take whatever steps and do whatever acts the Employer requests including, but not limitedto, placement of the Employer proper copyright notice on Works created by the Executive to secure or aid in securing copyrightprotection in such Works, and shall assist the Employer or its nominees in filing applications to register claims of copyright in suchWorks.§ 7. Non-Competition and Non-Interference.(a) Acknowledgements by the Executive . The Executive acknowledges that: (i) the informationto be disclosed to the Executive and the services to be performed by the Executive under this Agreement are of a special, unique,extraordinary and intellectual character; (ii) the Employer competes with other businesses that are located in the MarketJurisdictions; (iii) the restricted period of time and the geographic limitations set forth below are reasonable in view of the nature ofthe business in which the Employer is engaged and the Executive’s knowledge of the Employer’s operations the Executive hasgained and will gain by virtue of the Executive’s position; and (iv) the provisions of this §7 are reasonable and necessary to protectthe Employer’s business.(b) Covenants of the Executive . In consideration of the acknowledgments by the Executive, and in consideration ofthe payments, compensation and benefits to be paid or provided to the Executive by the Employer, the Executive covenants that theExecutive will not, directly or indirectly:(i) during (A) the Employment Period and for one (1) year thereafter (the “Non-Compete Period”); and (B) theperiod Executive may be receiving payments under Section 5(c)(ii), except in the course of the Executive’s employmenthereunder, directly or indirectly, in a competitive capacity, engage or invest in, own, manage, operate, finance, control orparticipate in the ownership, management, operation, financing or control of, be employed by, associated with or in anymanner connected with, lend the Executive’s name or any similar name to, lend Executive’s credit to or render services oradvice to, or plan or prepare to do any of the foregoing with any business whose products or activities compete in whole or inpart with the Business in any Market Jurisdiction; provided , however , that the Executive may purchase or otherwise acquireup to (but not more than) two percent (2%) of any class of securities of any entity (but without otherwise participating in theactivities of such entity) if such securities are listed on any national or regional securities exchange or have been registeredunder § 12(g) of the Securities Exchange Act of 1934, as amended.(ii) whether for the Executive’s own account or the account of any other Person: (A) at any time during theEmployment Period and for 2 years thereafter, directly or indirectly, interfere with, solicit, employ or otherwise engage, asan employee, independent contractor or otherwise, any Person who is or was an employee of the Employer or its Affiliate atany time during the last 2 yearsof the Employment Period or in any manner induce or attempt to induce any employee of the Employer or its Affiliate toterminate his or her employment with the Employer or its Affiliate; or (B) at any time during the Employment Period and ina competitive capacity for one (1) year thereafter, interfere with the Employer’s or its Affiliate’s relationship with anyPerson, including, but not limited to, any Person who at any time during the Employment Period was a customer, contractoror supplier of the Employer or its Affiliate; or(iii) at any time during or after the Employment Period, disparage the Employer or its Affiliates or theirrespective shareholders, board of directors, members, managers, officers, employees or agents.If any term, provision or covenant in this § 7(b) is held to be unreasonable, arbitrary or against public policy, a court maylimit the application of such term, provision or covenant or modify such term, provision or covenant and proceed to enforce this §7(b) as so limited or modified, which limited or modified term, provision or covenant will be effective, binding and enforceableagainst the Executive.The period of time applicable to any covenant in this § 7(b) shall be extended by the duration of any actual or threatenedviolation by the Executive of such covenant.The Executive shall, while the covenant under this § 7(b) is in effect, give notice to the Employer, within ten (10) days afteraccepting any other employment, of the identity of the Executive’s new employer. The Employer may notify such employer that theExecutive is bound by this Agreement and, at the Employer’s election, furnish such employer with a copy of this Agreement orrelevant portions thereof.The Executive shall have the right and option to be released from the covenant not to compete set forth in §7(b)(i) aboveupon written notice to Employer accompanied by a refund of all severance payments made as of the date of such notice by Employerto Executive, whereupon Employer’s obligation to pay Executive severance under §5(c) hereunder shall immediately terminate andbe of no further force and effect and Executive shall be released from §7(b)(i) above.§ 8. General Provisions.(a) Injunctive Relief and Additional Remedy . The Executive acknowledges that the injury that would be suffered by theEmployer as a result of a breach of the provisions of this Agreement (including any provision of §§ 6 and 7) would be irreparableand that an award of monetary damages to the Employer for such a breach would be an inadequate remedy. Consequently, theEmployer will have the right, in addition to any other rights, at law or in equity, it may have to obtain injunctive relief to restrain anybreach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Employer will not beobligated to post bond or other security in seeking such relief. Without limiting the Employer’s rights under this § 8(a) or any otherremedies of the Employer, if the Executive has breached or violated or threatens to breach of violate any of the provisions of §§ 6 or7 the Employer will have the right to cease making any payments otherwise due to the Executive under this Agreement and recoverpayments previously made to the Executive under this Agreement. Further, if any term, provision or covenant in §§ 6 or 7 is held tobe unreasonable, arbitrary, against public policy, or otherwise unenforceable, Executive acknowledges and agrees that the paymentsrequired to be made to the Executive shall be waived and that the Executive relinquishes any rights to such payment or any otherforms of payment post-dating the Executive’s separation from the Employer.(b) Covenants of §§ 6 and 7 Are Essential and Independent Covenants . The covenants by the Executive in §§ 6 and 7are essential elements of this Agreement, and without the Executive's agreement to comply with such covenants, the Employerwould not have entered into this Agreement or employed or continued the employment of the Executive. The Employer and theExecutive have been advised in all respectsconcerning the reasonableness and propriety of such covenants, with specific regard to the nature of the business conducted by theEmployer. The Executive’s covenants in §§ 6 and 7 are independent covenants and the existence of any claim by the Executiveagainst the Employer under this Agreement or otherwise will not excuse the Executive’s breach of any covenant in §§ 6 or 7. If theExecutive’s employment hereunder expires or is terminated, this Agreement will continue in full force and effect as is necessary orappropriate to enforce the covenants and agreements of the Executive in §§ 6 and 7 in accordance with their terms and conditions.(c) Representations and Warranties by the Executive . The Executive represents and warrants to the Employer that theexecution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive’sobligations hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ,injunction or order of any court, arbitrator or governmental agency applicable to the Executive; or (ii) conflict with, result in thebreach of any provisions of or the termination of or constitute a default under any agreement to which the Executive is a party or bywhich the Executive is or may be bound. The Executive acknowledges that the Executive has had a full and complete opportunity toconsult with counsel of the Executive’s choosing concerning this Agreement and that the Employer has not made any representationsor warranties to the Executive concerning this Agreement other than those specifically stated in this Agreement, if any.(d) Waiver . The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither thefailure nor any delay by either party in exercising any right, power or privilege under this Agreement will operate as a waiver of suchright, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or furtherexercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted byapplicable law, (i) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver orrenunciation of the claim or right unless in writing signed by the other party (ii) no waiver that may be given by a party will beapplicable except in the specific instance for which it is given and (iii) no notice to or demand on one party will be deemed to be awaiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without noticeor demand as provided in this Agreement.(e) Binding Effect . This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and theirrespective successors, assigns, heirs and legal representatives.(f) Notices . All notices, consents, waivers and other communications under this Agreement must be in writing and will bedeemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), or (ii) when received by theaddressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addressesset forth below (or to such other addresses as a party may designate by notice to the other party):If to Employer: Voxx International Corporation2351 J. Lawson Blvd.Orlando, FL 32824Attn: Patrick M. LavelleCopy to: Larry N. Stopol, Esq.Levy, Stopol & Camelo, LLP1425 RXR PlazaUniondale, NY 11556If to the Executive: Charles M. Stoehr262 Sunset AvenueWesthampton Beach, NY(g) Entire Agreement: Amendments . This Agreement contains the entire agreement between the parties with respect tothe subject matter hereof and supersede all prior agreements and understandings, oral or written, between the parties hereto withrespect to the subject matter hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by theparties hereto.(h) Governing Law and Forum . This Agreement will be governed by the laws of the State of New York without regardto conflicts of laws principles. Any controversy, dispute or claim arising out of or in connection with this agreement or the breachhereof shall be resolved by arbitration in the City and State of New York in accordance with the rules of the American ArbitrationAssociation. Judgment upon the award reached by the Arbitrator(s) may be enforced in any court having jurisdiction thereof.(i) Section Headings, Construction . The headings of Sections in this Agreement are provided for convenience only andwill not affect its construction or interpretation. All references to “§” refer to sections in this Agreement. All words used in thisAgreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, theword “including” does not limit the preceding words or terms.(j) Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competentjurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalidor unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.(k) Counterparts . This Agreement may be executed in counterparts, which when taken together shall constitute one andthe same Agreement.(l) Attorneys’ Fees . In the event any dispute or controversy arising from or relating to this Agreement is submitted to anycourt, arbitration panel or other party, the prevailing party in such dispute or controversy shall be entitled to reimbursement from thenon-prevailing party for the actual fees and expenses incurred by the prevailing party in connection with such dispute or controversy(including, but not limited to, reasonable attorney’s fees, costs and disbursements).IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first writtenabove.EMPLOYER :VOXX INTERNATIONAL CORPORATIONBy: /s/ Patrick M. Lavelle Patrick M. LavelleTitle: Chief Executive OfficerEXECUTIVE :/s/ Charles M. Stoehr Charles M. Stoehr, individuallyEMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January 12, 2017 (the “EffectiveDate”), by and between VOXX INTERNATIONAL CORPORATION , a Delaware corporation (“Employer”), and LORIANNSHELTON , an individual (the “Executive”).RECITALSWHEREAS , Employer desires to continue to employ Executive in the capacity of Senior Vice President/Chief OperatingOfficer of Employer pursuant to the terms set forth in this Agreement.WHEREAS , Executive desires to continue to work for Employer with the duties and responsibilities pursuant to thisAgreement.Subject to the foregoing paragraph, the parties, intending to be legally bound, agree as follows:§ 1. Definitions.For the purposes of this Agreement, the following terms have the meanings specified or referred to in this § 1.“Affiliate” means a corporation or other entity controlling, controlled by or under common control with the Employer.“Agreement” has the meaning set forth in the preamble.“Base Compensation” has the meaning set forth in § 3(a).“Benefits” has the meaning set forth in § 3(c).“Board of Directors” means the Board of Directors of Voxx.“Business” means the consumer electronics and accessories business as engaged in from time to time by the Employer andits Affiliates.“Cause” means: (i) the Executive’s continued willful failure to perform in a material respect (other than any such failureresulting from incapacity due to Disability) the explicitly stated duties to be performed by the Executive under this Agreement for aperiod of 10 days following delivery of written notice to the Executive from the Chief Executive Officer of Employer specifying inreasonable detail key elements of such failure; (ii) the appropriation (or attempted appropriation) of a material business opportunityof the Employer or its Affiliates, including attempting to secure or securing any personal profit in connection with any transactionentered into on behalf of the Employer or its Affiliate; (iii) the willful disclosure by the Executive of Confidential Information of theEmployer or any of its Affiliates, other than in the ordinary course of business in connection with the performance of the Executive’sduties in accordance with this Agreement; (iv) the misappropriation (or attempted misappropriation) of any of the Employer’s or anyof its Affiliates funds or property; or (v) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, anyoffense that is a felony.“Change in Control ” shall be deemed to have occurred if:(i) there shall occur (i) any consolidation or merger of Employer in which Employer is not the continuing orsurviving corporation or pursuant to which the shares of Employer (the “Shares”) would be converted into cash, securities orother property, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) ofassets accounting for more than 50% of the total assets of Employer or more than 50% of the total revenues of Employer,other than, in case of either (i) or (ii), a consolidation or merger with, or transfer to, a corporation or other entityof which, or of the parent entity of which, immediately following such consolidation, merger or transfer, more than 50% ofthe combined voting power of the then outstanding voting securities of such entity entitled to vote generally in the election ofdirectors (or other governing body) is then beneficially owned (within the meaning of Rule 13d-3 under the SecuritiesExchange Act of 1934 (the “Exchange Act”)) by one or more of the individuals and entities who were such owners of Sharesimmediately prior to such consolidation, merger or transfer;(ii) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliateof Voxx, becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, ofmore than 50% of the combined voting power of the then outstanding voting securities of Employer; or“Confidential Information” means any and all information concerning the business and affairs of the Employer and itsAffiliates including, but not limited to, customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financialstatements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans,business and marketing plans, strategic plans, product plans, the names and backgrounds of key personnel, personnel training andtechniques and materials, however documented and all notes, analysis, compilations, studies, summaries and other material preparedby or for the Employer and its Affiliates containing or based, in whole or in part, on any information included in the foregoing.“Disability” means a condition where for physical or mental reasons the Executive is unable to perform the Executive’sduties (as determined in accordance with the procedures set forth in the next sentence) and such condition in the reasonablejudgment of the Employer, as substantiated by a medical doctor in the manner provided below, is expected to continue for suchperiod of time as to require replacement of the Executive in order to carry out the business of the Employer. The determination thatthe physical or mental state of the Executive constitutes a Disability shall be made by a medical doctor who is not an employee ofthe Employer and who is reasonably selected by the Employer and reasonably acceptable to the Executive (unless the Employer andthe Executive reach mutual agreement regarding the existence of a Disability) and such determination shall be binding on bothparties. The Executive must submit to a reasonable number of examinations by the designated medical doctor and the Executivehereby authorizes the disclosure and release to the Employer of such determination and all supporting medical records. Any and allout of pocket expenses incurred by the Executive in connection with the determination by the designated medical doctor of aDisability shall be paid for or reimbursed by the Employer. Action on behalf of the Executive may be taken by the Executive’sguardian or duly authorized attorney-in-fact for purposes of submitting the Executive to medical examinations and approvingauthorization of disclosure. The Executive shall be deemed to have a Disability if the Executive for any reason is unable to performthe Executive’s duties for 120 consecutive days or for 180 days during any 12-month period.“Effective Date” means the date first written above in this Agreement.“Employer” means Voxx International Corporation.“Employment Period” means the term of the Executive’s employment under this Agreement.“Executive” has the meaning set forth in the preamble.“Good Reason” means (a) a material reduction in the Executive’s Base Compensation opportunity below the amountspecified in Section 3 of this Agreement (other than a reduction applicable to all other similarly situated participants), (b)Executive’s resignation within one hundred eighty (180) days following Executive’s written notice to the Employer of a change ofExecutive’s primary place of work from Hauppauge, New York; (c) a material reduction in the Executive’s level of responsibility,(d) an assignment of duties inconsistent with the Executive's position as a key executive, (e) a Change in Control, or (f) Executive’svoluntary retirement, any time after two (2) years after the Effective Date, with the intent to no longer seek full time employment(the “Voluntary Retirement”).“Inventions” has the meaning set forth in § 6(d).“Market Jurisdictions” means Worldwide.“Non-Compete Period” has the meaning set forth in § 7(b)(i).“Notice of Termination” has the meaning set forth in § 5(b).“Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limitedliability company, joint venture, estate, trust, association, organization or governmental body.“Proprietary Items” has the meaning set forth in § 6(b)(iv).“Termination Date” has the meaning set forth in § 2(b).“Works” has the meaning set forth in § 6(e).§ 2. Employment Terms and Duties.(a) Employment. The Employer hereby employs the Executive, and the Executive hereby accepts employment by theEmployer, upon the terms and conditions set forth in this Agreement.(b) Term . The Executive's employment under this Agreement shall continue from the Effective Date throughFebruary 28, 2020, unless terminated earlier pursuant to § 5 below (the “Initial Term”). Thereafter, this Agreement shallautomatically renew for additional one (1) year terms (each, a “Renewal Term”) unless, not less than one hundred eighty (180) daysprior to the expiration of the Intitial or Renewal Term, as the case may be, either party notifies the other in writing of their intentionnot to renew this Agreement.(c) Rights and Powers; Duties . The Executive shall initially serve as the Senior Vice President/Chief OperatingOfficer of the Employer. The Executive shall provide executive, administrative, and managerial services to the Employer and shallhave such duties and powers as are prescribed by the Chief Executive Officer of Employer. The Executive shall devote full time andattention, skill and energy exclusively to the business of the Employer, shall use best efforts to promote the success of theEmployer’s and its Affiliate’s business and shall cooperate fully in the advancement of the best interests of the Employer and itsAffiliates. Nothing in this § 2(c), however, shall prevent the Executive from engaging in additional activities in connection withpersonal investments and community affairs, from serving on boards of directors of businesses, as long as such activities are not incompetition with the Employer or its Affiliates and/or do not create a conflict of interest and as long as such additional activities orservices are not inconsistent with or intrusive on the Executive's duties under this Agreement.(d) Key Man Insurance . If requested by the Employer, the Executive shall cooperate with the Employer inestablishing and maintaining “key man” insurance with respect to the Executive’s services, including submitting to any medicalexaminations reasonably necessary or advisable to establish. or maintain such insurance. The “key man” insurance to be establishedand maintained under this § 2(d) shall be paid for by the Employer.§3. Compensation.(a) Base Compensation . The Executive shall be paid by the Employer and/or its Affiliates base salary at an annualrate of $450,000 commencing on the Effective Date (the “Base Compensation”), which will be payable according to theEmployer's customary payroll practices. (b) Bonuses . Executive will receive a guaranteed annual bonus in the amount of $50,000 and will be eligible for anadditional annual cash bonus of $37,500 upon achievement of consolidated pre-tax earnings of $5 million plus an additional $37,500for achievement of each additional $5 million of consolidated pre-tax earnings (including certain adjustments) thereafter.(c) Benefits . The Executive shall, during the Employment Period, be permitted to participate in such Code Section401(k), pension; profit sharing, bonus, life insurance, disability insurance, hospitalization, dental, major medical and other employeebenefit plans of the Employer that may be in effect from time to time, to the extent the Executive is eligible under the terms of thoseplans, but not less favorable to the Executive than currently in effect (collectively, the “Benefits”).(d) Vacation . The Executive shall, during the Employment Period, be entitled to the number of weeks of paidvacation per full calendar year as set forth in the Employer’s then current vacation policy. Vacation time may not be carried over.(e) Life Insurance . The Executive shall, during the Employment Period, be provided a term life policy in the amountof $1,000,000 (or such reduced amount as may be required by the Company’s insurer due to age coverage constraints) paid for bythe Employer with the beneficiary selected by the Executive.(f) Automobile. Executive will receive a lease allowance in the amount of $1,000 per month. Upon terminationpursuant to §§ 5(a)(ii) 5(a)(iv) or 5(a)(vi), Employer shall continue payment of the lease allowance for remainder of the term of theExecutive’s lease, the remainder of which shall not exceed thirty-six (36) months. If Executive dies during the term of thisAgreement, the Employer’s lease allowance obligation shall immediately terminate and the Executive’s legal representative shall beentitled to either retain the leased vehicle or transfer the lease and deliver the leased vehicle over to the Employer, which shall thenundertake the remaining payment obligations under the lease.§4. Expenses. The Employer shall reimburse the Executive for all reasonable and necessary out-of-pocket expenses incurred bythe Executive in connection with the performance of services under this Agreement, subject to any recordkeeping, reporting orsimilar requirements imposed pursuant to policies and procedures of the Employer in effect from time to time.§5. Termination.(a) Events of Termination . The Employment Period and the Executive’s rights under this Agreement or otherwise as anemployee of the Employer shall terminate (except as otherwise provided in this § 5):(i) automatically upon the death of the Executive;(ii) upon the Disability of the Executive immediately upon written notice from either party to the other party;(iii) if for Cause, immediately upon delivery of a Notice of Termination from the Chief Executive Officer ofEmployer to the Executive, or at such later time as such notice may specify;(iv) if without Cause, upon prior written notice from the Chief Executive Officer of Employer to theExecutive, effective at such time as such notice may specify;(v) if by the Executive other than for Good Reason, upon the Executive’s resignation 30 days followingwritten notice from the Executive to the Board of Directors; or(vi) if by the Executive for Good Reason, upon and in accordance with the following conditions. In order toterminate for Good Reason, the Executive must give the Board of Directors a Notice of Termination at least 60 calendar daysin advance of the Executive’s intent to terminate employment for Good Reason setting forth the specific actions by theEmployer which triggered the notice and the Notice of Termination must be received by the Chief Executive Officer ofEmployer no more than ninety (90) calendar days after the complained-of-action(s) occurred which constitute the basis forGood Reason. Upon receipt of the Notice of Termination and for a period of fifteen (15) calendar days thereafter, the Boardof Directors shall consider the complained-of-action(s) set forth therein and if such complained-of-action(s) constitute GoodReason shall cure or remedy the actions set forth therein. If the Employer adequately remedies or cures the actions giving riseto the Notice of Termination within such 15-day period, then the resignation by the Executive shall not be for Good Reason.(b) Notice of Termination . Any termination by the Employer for Cause or by the Executive for Good Reason shall becommunicated by a Notice of Termination to the Executive or the Board of Directors, as applicable. For purposes of this Agreement,a “Notice of Termination” means a written notice which (1) indicates the specific termination provision in this Agreement reliedupon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis fortermination of the Executive’s employment under the provision so indicated, and (iii) the date of termination. The failure by theExecutive or the Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing ofCause or Good Reason shall not waive any right of the Executive or the Employer, respectively, hereunder or preclude the Executiveor the Employer, respectively, from asserting any fact or circumstance in enforcing the Executive’s or the Employer’s rightshereunder.(c) Termination Pay . Subject to the terms of §§ 7 and 8 below, effective upon termination of employment of theExecutive for any reason, except as required under applicable law, the Employer shall be obligated to pay to the Executive (or, in theevent of the Executive’s death, the Executive’s designated beneficiary) only such compensation as is specified in this § 5(c). TheExecutive’s designated beneficiary will be such individual or trust, located at such address, as the Executive may designate by noticein writing to the Employer from time to time or, if the Executive fails to give notice to the Employer of such a beneficiary, theExecutive’s estate. Notwithstanding the preceding sentence, the Employer shall have no duty under any circumstances to determinewhether any Person holding herself, himself or itself out as the beneficiary is in fact entitled to any termination payment but mayrely upon the representations of such Person.(i) Termination by the Employer Without Cause or by the Executive for Good Reason . Subject toSubparagraph 5(c)(ii), if the Executive’s employment is terminated by the Employer without Cause or by the Executive forGood Reason (except in the case of Executive’s Voluntary Retirement as specifically provided below), the Employer shallpay to the Executive in accordance with the Employer’s then current payroll practices one (1) year of Base Compensation;plus any earned and unpaid Base Compensation for the period ending on termination; plus the incentive bonus prorated as ofthe date of termination. In the case of Executive’s Voluntarily Retirement which qualifies as an event of Good Reason, theEmployer shall pay to the Executive one (1) year of Base Compensation, reduced by the market value of Executive’s SERPas of the date of Executive’s Voluntary Retirement. In addition, the Employer shall (A) pay for and continue disabilityinsurance and health insurance benefits provided to the Executive and the Executive’s dependents immediately prior to thetermination of the Executive’s employment for a period of one year, (B) in accordance with past practice, reimburse theExecutive for expenses incurred in accordance with § 4; and (C)pay for and continue life insurance policy in accordance with §3(e) for a period of one year. The Executive’s entitlement tothe compensation and benefits described in this subsection (i) is specifically subject to the execution and delivery by theExecutive of a release agreement in form and substance reasonably acceptable to the Employer.(ii) Termination upon Disability . If the Executive’s employment is terminated as a result of the Executive’sDisability, the Employer shall (A) pay the Executive an amount equal to any disability payments provided pursuant to thebenefits package available to the Executive; (B) pay to the Executive in accordance with the Employer’s then current payrollpractices one (1) year of Base Compensation; plus any earned and unpaid Base Compensation for the period ending ontermination plus any earned and unpaid annual bonus prorated as of the date of disability; (C) in accordance with theEmployer’s past practice, reimburse the Executive for expenses incurred in accordance with § 4; and (D) pay for andcontinue life insurance policy in accordance with §3(e) for a period of one year.(iii) Termination on Death . If the Executive’s employment is terminated because of the Executive’s death,the Employer shall pay to the beneficiary of the Executive any earned but unpaid Base Compensation for the period endingon the date of the Executive’s death; plus any earned and unpaid annual bonus prorated as of the date of death. In addition,the Employer, in accordance with the Employer’s past practice, shall reimburse the Executive or the Executive’s heirs orestate for expenses incurred in accordance with § 4.(iv) Termination by the Employer for Cause . If the Executive’s employment is terminated by the Employerfor Cause, the Executive shall be entitled only to receive the Executive’s earned but unpaid Base Compensation through thedate of termination. In addition, the Employer, in accordance with the Employer’s past practice, shall reimburse theExecutive for expenses incurred in accordance with § 4.(v) Termination by the Executive without Good Reason . If the Executive’s employment is terminated bythe Executive for any reason (other than for Good Reason), the Executive shall be entitled to receive the Executive's earnedbut unpaid Base Compensation through the date of such termination. In addition, the Employer, in accordance with theEmployer’s past practice, shall reimburse the Executive for expenses incurred in accordance with § 4.§ 6. Non-Disclosure and Intellectual Property Covenant(a) Acknowledgments by the Executive . The Executive acknowledges that (i) during the Employment Period and as a partof the Executive's employment, the Executive will be afforded access to Confidential Information; (ii) public disclosure of suchConfidential Information could have an adverse effect on the Employer and its business; and (iii) the provisions of this § 6 arereasonable and necessary to prevent the improper use or disclosure of Confidential Information.(b) Agreements of the Executive . In consideration of the compensation and benefits to be paid or provided to theExecutive by the Employer under this Agreement, the Executive covenants that:(i) During and indefinitely following the Employment Period, except in the performance of the Executive’sduties in accordance with this Agreement in the ordinary course of business, the Executive shall hold in confidence theConfidential Information and shall not use or disclose it to any Person except with the specific prior written consent of theChief Executive Officer of Employer.(ii) Any trade secrets of the Employer its Affiliates will be entitled to all of the protections and benefits underthe Uniform Trade Secrets Act (or similar legislation) as adopted by the Statewhere the Executive is located and any other applicable law. If any information that the Employer deems to be a trade secretis found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will,nevertheless, be considered Confidential Information for purposes of this Agreement.(iii) None of the obligations and restrictions set forth in (i) or (ii), above, applies to any part of theConfidential Information that the Executive demonstrates (A) was or becomes generally available to the public other than asa result of a direct or indirect disclosure by the Executive; (B) is required to be disclosed pursuant to an enforceable courtorder; or (C) is required to be disclosed by applicable law.(iv) The Executive shall not remove from the Employer’s premises (except to the extent such removal is forpurposes of the performance of the Executive’s duties at home or while traveling, or except as otherwise specificallyauthorized by the Chief Executive Officer of Employer) any document, record, notebook, plan, model, component, device orcomputer software or code, whether embodied in a disk or in any other form (collectively, the “Proprietary Items”). TheExecutive recognizes that, as between the Employer and the Executive, all of the Proprietary Items, whether or notdeveloped by the Executive, are the exclusive property of the Employer. Upon termination of this Agreement by either party,or upon the request of the Employer during the Employment Period, the Executive shall return to the Employer all of theProprietary Items in the Executive’s possession or subject to the Executive’s control, and the Executive shall not retain anycopies, abstracts, sketches or other physical embodiment of any of the Proprietary Items.(c) Disputes or Controversies . The Executive recognizes that should a dispute or controversy arising from or relating tothis Agreement be submitted for adjudication to any court, arbitration panel or other third party, the preservation of the secrecy ofConfidential Information may be jeopardized. All pleadings, documents, testimony and records relating to any such adjudication willbe maintained in secrecy and will be available for inspection by the Employer, the Executive and their respective attorneys andexperts, who will agree, in advance and in writing, to receive and maintain all such information in secrecy.(d) Inventions . The Executive agrees that all discoveries, concepts, and ideas, whether patentable or not relating to anyactivities of the Employer including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, andformulas, as well as related improvements or know-how (“Inventions”) made or conceived by the Executive, either solely or jointlywith others (i) during the Executive’s employment by the Employer or (ii) within one (1) year after termination of such employment,whether or not such Inventions are made or conceived during the hours of the Executive’s employment or with the use of theEmployer's facilities, materials, or personnel, shall be and shall remain the property of the Employer, whether patentable or not, andthe Executive will, without royalty or any other consideration: (a) inform the Employer promptly and fully of such Inventions bywritten reports, setting forth in detail the Invention, the procedures employed, and the results achieved; (b) assign to the Employer allof the Executive’s rights, title, and interests in and to any Inventions, any applications for United States and foreign Letters Patentcovering the Inventions, any United States and foreign Letters Patent granted upon the applications, and any renewals thereof; (c)assist the Employer or its nominees, at the expense of the Employer, to obtain any United States and foreign Letters Patent for anyInventions as the Employer may elect; and (d) execute, acknowledge, and deliver to the Employer at its expense any writtendocuments and instruments, and do any other acts, such as giving testimony in support of the Executive’s inventorship, as may benecessary in the opinion of the Employer to obtain and maintain United States and foreign Letters Patent upon any Inventions and tovest the entire rights, title and interests in the Employer and to confirm the complete ownership by the Employer of any Inventions,patent applications, and patents.(e) Works . The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to anyactivities of the Employer including, but not limited to, flow charts and computer program source code and object code, regardless ofthe medium in which it is fixed, as well as notes, drawings, memoranda, correspondence, records, notebooks, instructions, and text(“Works”) created or conceived by the Executive, either solely or jointly with others (i) during the Executive’s employment by theEmployer or (ii) within one (1) year after termination of such employment, whether or not such, Works are made or conceivedduring the hours of the Executive’s employment or with use of the Employer’s facilities, materials, or personnel, shall be and shallremain the property of the Employer, and the Executive will, without royalty or any other consideration, promptly disclose in writingto the Employer all Works. The Executive shall cooperate fully with the Employer and its officers and counsel, at the Employer’sdirection and expense, in obtaining, maintaining, and enforcing worldwide copyright protection on such Works. Any such Workscreated by the Executive is a “work made for hire” under the copyright law, and the Employer may file applications to registercopyright in such Works as author and copyright owner thereof. If, for any reason, a Work created by the Executive is excluded fromthe definition of a “work made for hire” under the copyright law, then the Executive shall assign, and does hereby assign, to theEmployer the entire rights, title, and interests in and to such Work, including the copyright therein. The Executive shall takewhatever steps and do whatever acts the Employer requests including, but not limited to, placement of the Employer propercopyright notice on Works created by the Executive to secure or aid in securing copyright protection in such Works, and shall assistthe Employer or its nominees in filing applications to register claims of copyright in such Works.§ 7. Non-Competition and Non-Interference.(a) Acknowledgements by the Executive . The Executive acknowledges that: (i) the informationto be disclosed to the Executive and the services to be performed by the Executive under this Agreement are of a special, unique,extraordinary and intellectual character; (ii) the Employer competes with other businesses that are located in the MarketJurisdictions; (iii) the restricted period of time and the geographic limitations set forth below are reasonable in view of the nature ofthe business in which the Employer is engaged and the Executive’s knowledge of the Employer’s operations the Executive hasgained and will gain by virtue of the Executive’s position; and (iv) the provisions of this §7 are reasonable and necessary to protectthe Employer’s business.(b) Covenants of the Executive . In consideration of the acknowledgments by the Executive, and in consideration ofthe payments, compensation and benefits to be paid or provided to the Executive by the Employer, the Executive covenants that theExecutive will not, directly or indirectly:(i) during (A) the Employment Period and for one (1) year thereafter (the “Non-Compete Period”); and (B) theperiod Executive may be receiving payments under Section 5(c)(ii), except in the course of the Executive’s employmenthereunder, directly or indirectly, in a competitive capacity, engage or invest in, own, manage, operate, finance, control orparticipate in the ownership, management, operation, financing or control of, be employed by, associated with or in anymanner connected with, lend the Executive’s name or any similar name to, lend Executive’s credit to or render services oradvice to, or plan or prepare to do any of the foregoing with any business whose products or activities compete in whole or inpart with the Business in any Market Jurisdiction; provided , however , that the Executive may purchase or otherwise acquireup to (but not more than) two percent (2%) of any class of securities of any entity (but without otherwise participating in theactivities of such entity) if such securities are listed on any national or regional securities exchange or have been registeredunder § 12(g) of the Securities Exchange Act of 1934, as amended.(ii) whether for the Executive’s own account or the account of any other Person: (A) at any time during theEmployment Period and for 2 years thereafter, directly or indirectly, interfere with, solicit, employ or otherwise engage, asan employee, independent contractor or otherwise, any Person who is or was an employee of the Employer or its Affiliate atany time during the last 2 years of the Employment Period or in any manner induce or attempt to induce any employee of theEmployer or its Affiliate to terminate his or her employment with the Employer or its Affiliate; or (B) at any time during theEmployment Period and in a competitive capacity for one (1) year thereafter, interfere with the Employer’s or its Affiliate’srelationship with any Person, including, but not limited to, any Person who at any time during the Employment Period was acustomer, contractor or supplier of the Employer or its Affiliate; or(iii) at any time during or after the Employment Period, disparage the Employer or its Affiliates or theirrespective shareholders, board of directors, members, managers, officers, employees or agents.If any term, provision or covenant in this § 7(b) is held to be unreasonable, arbitrary or against public policy, a court maylimit the application of such term, provision or covenant or modify such term, provision or covenant and proceed to enforce this §7(b) as so limited or modified, which limited or modified term, provision or covenant will be effective, binding and enforceableagainst the Executive.The period of time applicable to any covenant in this § 7(b) shall be extended by the duration of any actual or threatenedviolation by the Executive of such covenant.The Executive shall, while the covenant under this § 7(b) is in effect, give notice to the Employer, within ten (10) days afteraccepting any other employment, of the identity of the Executive’s new employer. The Employer may notify such employer that theExecutive is bound by this Agreement and, at the Employer’s election, furnish such employer with a copy of this Agreement orrelevant portions thereof.The Executive shall have the right and option to be released from the covenant not to compete set forth in §7(b)(i) aboveupon written notice to Employer accompanied by a refund of all severance payments made as of the date of such notice by Employerto Executive, whereupon Employer’s obligation to pay Executive severance under §5(c) hereunder shall immediately terminate andbe of no further force and effect and Executive shall be released from §7(b)(i) above.§ 8. General Provisions.(a) Injunctive Relief and Additional Remedy . The Executive acknowledges that the injury that would be suffered by theEmployer as a result of a breach of the provisions of this Agreement (including any provision of §§ 6 and 7) would be irreparableand that an award of monetary damages to the Employer for such a breach would be an inadequate remedy. Consequently, theEmployer will have the right, in addition to any other rights, at law or in equity, it may have to obtain injunctive relief to restrain anybreach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Employer will not beobligated to post bond or other security in seeking such relief. Without limiting the Employer’s rights under this § 8(a) or any otherremedies of the Employer, if the Executive has breached or violated or threatens to breach of violate any of the provisions of §§ 6 or7 the Employer will have the right to cease making any payments otherwise due to the Executive under this Agreement and recoverpayments previously made to the Executive under this Agreement. Further, if any term, provision or covenant in §§ 6 or 7 is held tobe unreasonable, arbitrary, against public policy, or otherwise unenforceable, Executive acknowledges and agrees that the paymentsrequired to be made to the Executive shall be waived and that the Executiverelinquishes any rights to such payment or any other forms of payment post-dating the Executive’s separation from the Employer.(b) Covenants of §§ 6 and 7 Are Essential and Independent Covenants . The covenants by the Executive in §§ 6 and 7are essential elements of this Agreement, and without the Executive's agreement to comply with such covenants, the Employerwould not have entered into this Agreement or employed or continued the employment of the Executive. The Employer and theExecutive have been advised in all respects concerning the reasonableness and propriety of such covenants, with specific regard tothe nature of the business conducted by the Employer. The Executive’s covenants in §§ 6 and 7 are independent covenants and theexistence of any claim by the Executive against the Employer under this Agreement or otherwise will not excuse the Executive’sbreach of any covenant in §§ 6 or 7. If the Executive’s employment hereunder expires or is terminated, this Agreement will continuein full force and effect as is necessary or appropriate to enforce the covenants and agreements of the Executive in §§ 6 and 7 inaccordance with their terms and conditions.(c) Representations and Warranties by the Executive . The Executive represents and warrants to the Employer that theexecution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive’sobligations hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ,injunction or order of any court, arbitrator or governmental agency applicable to the Executive; or (ii) conflict with, result in thebreach of any provisions of or the termination of or constitute a default under any agreement to which the Executive is a party or bywhich the Executive is or may be bound. The Executive acknowledges that the Executive has had a full and complete opportunity toconsult with counsel of the Executive’s choosing concerning this Agreement and that the Employer has not made any representationsor warranties to the Executive concerning this Agreement other than those specifically stated in this Agreement, if any.(d) Waiver . The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither thefailure nor any delay by either party in exercising any right, power or privilege under this Agreement will operate as a waiver of suchright, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or furtherexercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted byapplicable law, (i) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver orrenunciation of the claim or right unless in writing signed by the other party (ii) no waiver that may be given by a party will beapplicable except in the specific instance for which it is given and (iii) no notice to or demand on one party will be deemed to be awaiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without noticeor demand as provided in this Agreement.(e) Binding Effect . This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and theirrespective successors, assigns, heirs and legal representatives.(f) Notices . All notices, consents, waivers and other communications under this Agreement must be in writing and will bedeemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), or (ii) when received by theaddressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addressesset forth below (or to such other addresses as a party may designate by notice to the other party):If to Employer: Voxx International Corporation2351 J. Lawson Blvd.Orlando, FL 32824Attn: Patrick M. LavelleCopy to: Larry N. Stopol, Esq.Levy, Stopol & Camelo, LLP1425 RXR PlazaUniondale, NY 11556If to the Executive: Loriann Shelton8 Emily Ct.Moriches, NY 11955(g) Entire Agreement: Amendments . This Agreement contains the entire agreement between the parties with respect tothe subject matter hereof and supersede all prior agreements and understandings, oral or written, between the parties hereto withrespect to the subject matter hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by theparties hereto.(h) Governing Law and Forum . This Agreement will be governed by the laws of the State of New York without regardto conflicts of laws principles. Any controversy, dispute or claim arising out of or in connection with this agreement or the breachhereof shall be resolved by arbitration in the City and State of New York in accordance with the rules of the American ArbitrationAssociation. Judgment upon the award reached by the Arbitrator(s) may be enforced in any court having jurisdiction thereof.(i) Section Headings, Construction . The headings of Sections in this Agreement are provided for convenience only andwill not affect its construction or interpretation. All references to “§” refer to sections in this Agreement. All words used in thisAgreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, theword “including” does not limit the preceding words or terms.(j) Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competentjurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalidor unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.(k) Counterparts . This Agreement may be executed in counterparts, which when taken together shall constitute one andthe same Agreement.(l) Attorneys’ Fees . In the event any dispute or controversy arising from or relating to this Agreement is submitted to anycourt, arbitration panel or other party, the prevailing party in such dispute or controversy shall be entitled to reimbursement from thenon-prevailing party for the actual fees and expenses incurred by the prevailing party in connection with such dispute or controversy(including, but not limited to, reasonable attorney’s fees, costs and disbursements).IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first writtenabove.EMPLOYER :VOXX INTERNATIONAL CORPORATIONBy: /s/ Patrick M. Lavelle Patrick M. LavelleTitle: Chief Executive OfficerEXECUTIVE :/s/ Loriann Shelton Loriann Shelton, individuallyEMPLOYMENT AGREEMENTTHIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January 12, 2017 (the “EffectiveDate”), by and between VOXX INTERNATIONAL CORPORATION , a Delaware corporation (“Employer”), and THOMAS C.MALONE , an individual (the “Executive”).RECITALSWHEREAS , Employer desires to continue to employ Executive in the capacity of Senior Vice President of Employerpursuant to the terms set forth in this Agreement.WHEREAS , Executive desires to continue to work for Employer with the duties and responsibilities pursuant to thisAgreement.Subject to the foregoing paragraph, the parties, intending to be legally bound, agree as follows:§ 1. Definitions.For the purposes of this Agreement, the following terms have the meanings specified or referred to in this § 1.“Affiliate” means a corporation or other entity controlling, controlled by or under common control with the Employer.“Agreement” has the meaning set forth in the preamble.“Base Compensation” has the meaning set forth in § 3(a).“Benefits” has the meaning set forth in § 3(c).“Board of Directors” means the Board of Directors of Voxx.“Business” means the consumer electronics and accessories business as engaged in from time to time by the Employer andits Affiliates.“Cause” means: (i) the Executive’s continued willful failure to perform in a material respect (other than any such failureresulting from incapacity due to Disability) the explicitly stated duties to be performed by the Executive under this Agreement for aperiod of 10 days following delivery of written notice to the Executive from the Chief Executive Officer of Employer specifying inreasonable detail key elements of such failure; (ii) the appropriation (or attempted appropriation) of a material business opportunityof the Employer or its Affiliates, including attempting to secure or securing any personal profit in connection with any transactionentered into on behalf of the Employer or its Affiliate; (iii) the willful disclosure by the Executive of Confidential Information of theEmployer or any of its Affiliates, other than in the ordinary course of business in connection with the performance of the Executive’sduties in accordance with this Agreement; (iv) the misappropriation (or attempted misappropriation) of any of the Employer’s or anyof its Affiliates funds or property; or (v) the conviction of, or the entering of a guilty plea or plea of no contest with respect to, anyoffense that is a felony.“Change in Control ” shall be deemed to have occurred if:(i) there shall occur (i) any consolidation or merger of Employer in which Employer is not the continuing orsurviving corporation or pursuant to which the shares of Employer (the “Shares”) would be converted into cash, securities orother property, or (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) ofassets accounting for more than 50% of the total assets of Employer or more than 50% of the total revenues of Employer,other than, in case of either (i) or (ii), a consolidation or merger with, or transfer to, a corporation or other entityof which, or of the parent entity of which, immediately following such consolidation, merger or transfer, more than 50% ofthe combined voting power of the then outstanding voting securities of such entity entitled to vote generally in the election ofdirectors (or other governing body) is then beneficially owned (within the meaning of Rule 13d-3 under the SecuritiesExchange Act of 1934 (the “Exchange Act”)) by one or more of the individuals and entities who were such owners of Sharesimmediately prior to such consolidation, merger or transfer;(ii) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than an affiliateof Voxx, becomes the beneficial owner (within the meaning of Rule 13d-3 of the Exchange Act), directly or indirectly, ofmore than 50% of the combined voting power of the then outstanding voting securities of Employer; or“Confidential Information” means any and all information concerning the business and affairs of the Employer and itsAffiliates including, but not limited to, customer lists, supplier lists, Inventions, Works, Proprietary Items, trade secrets, financialstatements, business and financial projections and budgets, historical and projected sales, capital spending budgets and plans,business and marketing plans, strategic plans, product plans, the names and backgrounds of key personnel, personnel training andtechniques and materials, however documented and all notes, analysis, compilations, studies, summaries and other material preparedby or for the Employer and its Affiliates containing or based, in whole or in part, on any information included in the foregoing.“Disability” means a condition where for physical or mental reasons the Executive is unable to perform the Executive’sduties (as determined in accordance with the procedures set forth in the next sentence) and such condition in the reasonablejudgment of the Employer, as substantiated by a medical doctor in the manner provided below, is expected to continue for suchperiod of time as to require replacement of the Executive in order to carry out the business of the Employer. The determination thatthe physical or mental state of the Executive constitutes a Disability shall be made by a medical doctor who is not an employee ofthe Employer and who is reasonably selected by the Employer and reasonably acceptable to the Executive (unless the Employer andthe Executive reach mutual agreement regarding the existence of a Disability) and such determination shall be binding on bothparties. The Executive must submit to a reasonable number of examinations by the designated medical doctor and the Executivehereby authorizes the disclosure and release to the Employer of such determination and all supporting medical records. Any and allout of pocket expenses incurred by the Executive in connection with the determination by the designated medical doctor of aDisability shall be paid for or reimbursed by the Employer. Action on behalf of the Executive may be taken by the Executive’sguardian or duly authorized attorney-in-fact for purposes of submitting the Executive to medical examinations and approvingauthorization of disclosure. The Executive shall be deemed to have a Disability if the Executive for any reason is unable to performthe Executive’s duties for 120 consecutive days or for 180 days during any 12-month period.“Effective Date” means the date first written above in this Agreement.“Employer” means Voxx International Corporation.“Employment Period” means the term of the Executive’s employment under this Agreement.“Executive” has the meaning set forth in the preamble.“Good Reason” means (a) a material reduction in the Executive’s Base Compensation opportunity below the amountspecified in Section 3 of this Agreement (other than a reduction applicable to all other similarly situated participants), (b)Executive’s resignation within one hundred eighty (180) days following Executive’s written notice to the Employer of a change ofExecutive’s primary place of work from Hauppauge, New York; (c) a material reduction in the Executive’s level of responsibility,(d) an assignment of duties inconsistent with the Executive's position as a key executive, (e) a Change in Control, or (f) Executive’svoluntary retirement, any time after two (2) years after the Effective Date, with the intent to no longer seek full time employment(the “Voluntary Retirement”).“Inventions” has the meaning set forth in § 6(d).“Market Jurisdictions” means Worldwide.“Non-Compete Period” has the meaning set forth in § 7(b)(i).“Notice of Termination” has the meaning set forth in § 5(b).“Person” means any individual, corporation (including any non-profit corporation), general or limited partnership, limitedliability company, joint venture, estate, trust, association, organization or governmental body.“Proprietary Items” has the meaning set forth in § 6(b)(iv).“Termination Date” has the meaning set forth in § 2(b).“Works” has the meaning set forth in § 6(e).§ 2. Employment Terms and Duties.(a) Employment. The Employer hereby employs the Executive, and the Executive hereby accepts employment by theEmployer, upon the terms and conditions set forth in this Agreement.(b) Term . The Executive's employment under this Agreement shall continue from the Effective Date throughFebruary 28, 2020, unless terminated earlier pursuant to § 5 below (the “Initial Term”). Thereafter, this Agreement shallautomatically renew for additional one (1) year terms (each, a “Renewal Term”) unless, not less than one hundred eighty (180) daysprior to the expiration of the Intitial or Renewal Term, as the case may be, either party notifies the other in writing of their intentionnot to renew this Agreement.(c) Rights and Powers; Duties . The Executive shall initially serve as the Senior Vice President of the Employer. TheExecutive shall provide executive, administrative, and managerial services to the Employer and shall have such duties and powers asare prescribed by the Chief Executive Officer of Employer. The Executive shall devote full time and attention, skill and energyexclusively to the business of the Employer, shall use best efforts to promote the success of the Employer’s and its Affiliate’sbusiness and shall cooperate fully in the advancement of the best interests of the Employer and its Affiliates. Nothing in this § 2(c),however, shall prevent the Executive from engaging in additional activities in connection with personal investments and communityaffairs, from serving on boards of directors of businesses, as long as such activities are not in competition with the Employer or itsAffiliates and/or do not create a conflict of interest and as long as such additional activities or services are not inconsistent with orintrusive on the Executive's duties under this Agreement.(d) Key Man Insurance . If requested by the Employer, the Executive shall cooperate with the Employer inestablishing and maintaining “key man” insurance with respect to the Executive’s services, including submitting to any medicalexaminations reasonably necessary or advisable to establish. or maintain such insurance. The “key man” insurance to be establishedand maintained under this § 2(d) shall be paid for by the Employer.§3. Compensation.(a) Base Compensation . The Executive shall be paid by the Employer and/or its Affiliates base salary at an annualrate of $225,000 commencing on the Effective Date (the “Base Compensation”), which will be payable according to theEmployer's customary payroll practices.(b) Bonuses . Executive will receive a bonus as set forth on Exhibit “A” attached.(c) Benefits . The Executive shall, during the Employment Period, be permitted to participate in such Code Section401(k), pension; profit sharing, bonus, life insurance, disability insurance, hospitalization, dental, major medical and other employeebenefit plans of the Employer that may be in effect from time to time, to the extent the Executive is eligible under the terms of thoseplans, but not less favorable to the Executive than currently in effect (collectively, the “Benefits”).(d) Vacation . The Executive shall, during the Employment Period, be entitled to the number of weeks of paidvacation per full calendar year as set forth in the Employer’s then current vacation policy. Vacation time may not be carried over.(e) Life Insurance . The Executive shall, during the Employment Period, be provided a term life policy in the amountof $1,000,000 (or such reduced amount as may be required by the Company’s insurer due to age coverage constraints) paid for bythe Employer with the beneficiary selected by the Executive.(f) Automobile. Executive will receive a lease allowance in the amount of $1,000 per month. Upon terminationpursuant to §§ 5(a)(ii) 5(a)(iv) or 5(a)(vi), Employer shall continue payment of the lease allowance for remainder of the term of theExecutive’s lease, the remainder of which shall not exceed thirty-six (36) months. If Executive dies during the term of thisAgreement, the Employer’s lease allowance obligation shall immediately terminate and the Executive’s legal representative shall beentitled to either retain the leased vehicle or transfer the lease and deliver the leased vehicle over to the Employer, which shall thenundertake the remaining payment obligations under the lease.§4. Expenses. The Employer shall reimburse the Executive for all reasonable and necessary out-of-pocket expenses incurred bythe Executive in connection with the performance of services under this Agreement, subject to any recordkeeping, reporting orsimilar requirements imposed pursuant to policies and procedures of the Employer in effect from time to time.§5. Termination.(a) Events of Termination . The Employment Period and the Executive’s rights under this Agreement or otherwise as anemployee of the Employer shall terminate (except as otherwise provided in this § 5):(i) automatically upon the death of the Executive;(ii) upon the Disability of the Executive immediately upon written notice from either party to the other party;(iii) if for Cause, immediately upon delivery of a Notice of Termination from the Chief Executive Officer ofEmployer to the Executive, or at such later time as such notice may specify;(iv) if without Cause, upon prior written notice from the Chief Executive Officer of Employer to theExecutive, effective at such time as such notice may specify;(v) if by the Executive other than for Good Reason, upon the Executive’s resignation 30 days followingwritten notice from the Executive to the Board of Directors; or(vi) if by the Executive for Good Reason, upon and in accordance with the following conditions. In order toterminate for Good Reason, the Executive must give the Board of Directors a Notice of Termination at least 60 calendar daysin advance of the Executive’s intent to terminateemployment for Good Reason setting forth the specific actions by the Employer which triggered the notice and the Notice ofTermination must be received by the Chief Executive Officer of Employer no more than ninety (90) calendar days after thecomplained-of-action(s) occurred which constitute the basis for Good Reason. Upon receipt of the Notice of Termination andfor a period of fifteen (15) calendar days thereafter, the Board of Directors shall consider the complained-of-action(s) setforth therein and if such complained-of-action(s) constitute Good Reason shall cure or remedy the actions set forth therein. Ifthe Employer adequately remedies or cures the actions giving rise to the Notice of Termination within such 15-day period,then the resignation by the Executive shall not be for Good Reason.(b) Notice of Termination . Any termination by the Employer for Cause or by the Executive for Good Reason shall becommunicated by a Notice of Termination to the Executive or the Board of Directors, as applicable. For purposes of this Agreement,a “Notice of Termination” means a written notice which (1) indicates the specific termination provision in this Agreement reliedupon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis fortermination of the Executive’s employment under the provision so indicated, and (iii) the date of termination. The failure by theExecutive or the Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing ofCause or Good Reason shall not waive any right of the Executive or the Employer, respectively, hereunder or preclude the Executiveor the Employer, respectively, from asserting any fact or circumstance in enforcing the Executive’s or the Employer’s rightshereunder.(c) Termination Pay . Subject to the terms of §§ 7 and 8 below, effective upon termination of employment of theExecutive for any reason, except as required under applicable law, the Employer shall be obligated to pay to the Executive (or, in theevent of the Executive’s death, the Executive’s designated beneficiary) only such compensation as is specified in this § 5(c). TheExecutive’s designated beneficiary will be such individual or trust, located at such address, as the Executive may designate by noticein writing to the Employer from time to time or, if the Executive fails to give notice to the Employer of such a beneficiary, theExecutive’s estate. Notwithstanding the preceding sentence, the Employer shall have no duty under any circumstances to determinewhether any Person holding herself, himself or itself out as the beneficiary is in fact entitled to any termination payment but mayrely upon the representations of such Person.(i) Termination by the Employer Without Cause or by the Executive for Good Reason . Subject toSubparagraph 5(c)(ii), if the Executive’s employment is terminated by the Employer without Cause or by the Executive forGood Reason (except in the case of Executive’s Voluntary Retirement as specifically provided below), the Employer shallpay to the Executive in accordance with the Employer’s then current payroll practices one (1) year of Base Compensation;plus any earned and unpaid Base Compensation for the period ending on termination; plus the incentive bonus prorated as ofthe date of termination. In the case of Executive’s Voluntarily Retirement which qualifies as an event of Good Reason, theEmployer shall pay to the Executive one (1) year of Base Compensation, reduced by the market value of Executive’s SERPas of the date of Executive’s Voluntary Retirement. In addition, the Employer shall (A) pay for and continue disabilityinsurance and health insurance benefits provided to the Executive and the Executive’s dependents immediately prior to thetermination of the Executive’s employment for a period of one year, (B) in accordance with past practice, reimburse theExecutive for expenses incurred in accordance with § 4; and (C) pay for and continue life insurance policy in accordancewith §3(e) for a period of one year. The Executive’s entitlement to the compensation and benefits described in this subsection(i) is specifically subject to the execution and delivery by the Executive of a release agreement in form and substancereasonably acceptable to the Employer.(ii) Termination upon Disability . If the Executive’s employment is terminated as a result of the Executive’sDisability, the Employer shall (A) pay the Executive an amount equal to any disability payments provided pursuant to thebenefits package available to the Executive; (B) pay to the Executive in accordance with the Employer’s then current payrollpractices one (1) year of Base Compensation; plus any earned and unpaid Base Compensation for the period ending ontermination plus any earned and unpaid annual bonus prorated as of the date of disability; (C) in accordance with theEmployer’s past practice, reimburse the Executive for expenses incurred in accordance with § 4; and (D) pay for andcontinue life insurance policy in accordance with §3(e) for a period of one year.(iii) Termination on Death . If the Executive’s employment is terminated because of the Executive’s death,the Employer shall pay to the beneficiary of the Executive any earned but unpaid Base Compensation for the period endingon the date of the Executive’s death; plus any earned and unpaid annual bonus prorated as of the date of death. In addition,the Employer, in accordance with the Employer’s past practice, shall reimburse the Executive or the Executive’s heirs orestate for expenses incurred in accordance with § 4.(iv) Termination by the Employer for Cause . If the Executive’s employment is terminated by the Employerfor Cause, the Executive shall be entitled only to receive the Executive’s earned but unpaid Base Compensation through thedate of termination. In addition, the Employer, in accordance with the Employer’s past practice, shall reimburse theExecutive for expenses incurred in accordance with § 4.(v) Termination by the Executive without Good Reason . If the Executive’s employment is terminated bythe Executive for any reason (other than for Good Reason), the Executive shall be entitled to receive the Executive's earnedbut unpaid Base Compensation through the date of such termination. In addition, the Employer, in accordance with theEmployer’s past practice, shall reimburse the Executive for expenses incurred in accordance with § 4.§ 6. Non-Disclosure and Intellectual Property Covenant(a) Acknowledgments by the Executive . The Executive acknowledges that (i) during the Employment Period and as a partof the Executive's employment, the Executive will be afforded access to Confidential Information; (ii) public disclosure of suchConfidential Information could have an adverse effect on the Employer and its business; and (iii) the provisions of this § 6 arereasonable and necessary to prevent the improper use or disclosure of Confidential Information.(b) Agreements of the Executive . In consideration of the compensation and benefits to be paid or provided to theExecutive by the Employer under this Agreement, the Executive covenants that:(i) During and indefinitely following the Employment Period, except in the performance of the Executive’sduties in accordance with this Agreement in the ordinary course of business, the Executive shall hold in confidence theConfidential Information and shall not use or disclose it to any Person except with the specific prior written consent of theChief Executive Officer of Employer.(ii) Any trade secrets of the Employer its Affiliates will be entitled to all of the protections and benefits underthe Uniform Trade Secrets Act (or similar legislation) as adopted by the State where the Executive is located and any otherapplicable law. If any information that the Employer deems to be a trade secret is found by a court of competent jurisdictionnot to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered ConfidentialInformation for purposes of this Agreement.(iii) None of the obligations and restrictions set forth in (i) or (ii), above, applies to any part of theConfidential Information that the Executive demonstrates (A) was or becomes generally available to the public other than asa result of a direct or indirect disclosure by the Executive; (B) is required to be disclosed pursuant to an enforceable courtorder; or (C) is required to be disclosed by applicable law.(iv) The Executive shall not remove from the Employer’s premises (except to the extent such removal is forpurposes of the performance of the Executive’s duties at home or while traveling, or except as otherwise specificallyauthorized by the Chief Executive Officer of Employer) any document, record, notebook, plan, model, component, device orcomputer software or code, whether embodied in a disk or in any other form (collectively, the “Proprietary Items”). TheExecutive recognizes that, as between the Employer and the Executive, all of the Proprietary Items, whether or notdeveloped by the Executive, are the exclusive property of the Employer. Upon termination of this Agreement by either party,or upon the request of the Employer during the Employment Period, the Executive shall return to the Employer all of theProprietary Items in the Executive’s possession or subject to the Executive’s control, and the Executive shall not retain anycopies, abstracts, sketches or other physical embodiment of any of the Proprietary Items.(c) Disputes or Controversies . The Executive recognizes that should a dispute or controversy arising from or relating tothis Agreement be submitted for adjudication to any court, arbitration panel or other third party, the preservation of the secrecy ofConfidential Information may be jeopardized. All pleadings, documents, testimony and records relating to any such adjudication willbe maintained in secrecy and will be available for inspection by the Employer, the Executive and their respective attorneys andexperts, who will agree, in advance and in writing, to receive and maintain all such information in secrecy.(d) Inventions . The Executive agrees that all discoveries, concepts, and ideas, whether patentable or not relating to anyactivities of the Employer including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, andformulas, as well as related improvements or know-how (“Inventions”) made or conceived by the Executive, either solely or jointlywith others (i) during the Executive’s employment by the Employer or (ii) within one (1) year after termination of such employment,whether or not such Inventions are made or conceived during the hours of the Executive’s employment or with the use of theEmployer's facilities, materials, or personnel, shall be and shall remain the property of the Employer, whether patentable or not, andthe Executive will, without royalty or any other consideration: (a) inform the Employer promptly and fully of such Inventions bywritten reports, setting forth in detail the Invention, the procedures employed, and the results achieved; (b) assign to the Employer allof the Executive’s rights, title, and interests in and to any Inventions, any applications for United States and foreign Letters Patentcovering the Inventions, any United States and foreign Letters Patent granted upon the applications, and any renewals thereof; (c)assist the Employer or its nominees, at the expense of the Employer, to obtain any United States and foreign Letters Patent for anyInventions as the Employer may elect; and (d) execute, acknowledge, and deliver to the Employer at its expense any writtendocuments and instruments, and do any other acts, such as giving testimony in support of the Executive’s inventorship, as may benecessary in the opinion of the Employer to obtain and maintain United States and foreign Letters Patent upon any Inventions and tovest the entire rights, title and interests in the Employer and to confirm the complete ownership by the Employer of any Inventions,patent applications, and patents.(e) Works . The Executive agrees that all works of authorship fixed in a tangible medium of expression relating to anyactivities of the Employer including, but not limited to, flow charts and computer program source code and object code, regardless ofthe medium in which it is fixed, as well as notes, drawings, memoranda, correspondence, records, notebooks, instructions, and text(“Works”) created or conceived bythe Executive, either solely or jointly with others (i) during the Executive’s employment by the Employer or (ii) within one (1) yearafter termination of such employment, whether or not such, Works are made or conceived during the hours of the Executive’semployment or with use of the Employer’s facilities, materials, or personnel, shall be and shall remain the property of the Employer,and the Executive will, without royalty or any other consideration, promptly disclose in writing to the Employer all Works. TheExecutive shall cooperate fully with the Employer and its officers and counsel, at the Employer’s direction and expense, inobtaining, maintaining, and enforcing worldwide copyright protection on such Works. Any such Works created by the Executive is a“work made for hire” under the copyright law, and the Employer may file applications to register copyright in such Works as authorand copyright owner thereof. If, for any reason, a Work created by the Executive is excluded from the definition of a “work made forhire” under the copyright law, then the Executive shall assign, and does hereby assign, to the Employer the entire rights, title, andinterests in and to such Work, including the copyright therein. The Executive shall take whatever steps and do whatever acts theEmployer requests including, but not limited to, placement of the Employer proper copyright notice on Works created by theExecutive to secure or aid in securing copyright protection in such Works, and shall assist the Employer or its nominees in filingapplications to register claims of copyright in such Works.§ 7. Non-Competition and Non-Interference.(a) Acknowledgements by the Executive . The Executive acknowledges that: (i) theinformation to be disclosed to the Executive and the services to be performed by the Executive under this Agreement are of aspecial, unique, extraordinary and intellectual character; (ii) the Employer competes with other businesses that are located in theMarket Jurisdictions; (iii) the restricted period of time and the geographic limitations set forth below are reasonable in view of thenature of the business in which the Employer is engaged and the Executive’s knowledge of the Employer’s operations the Executivehas gained and will gain by virtue of the Executive’s position; and (iv) the provisions of this §7 are reasonable and necessary toprotect the Employer’s business.(b) Covenants of the Executive . In consideration of the acknowledgments by the Executive, and in consideration ofthe payments, compensation and benefits to be paid or provided to the Executive by the Employer, the Executive covenants that theExecutive will not, directly or indirectly:(i) during (A) the Employment Period and for one (1) year thereafter (the “Non-Compete Period”); and (B) theperiod Executive may be receiving payments under Section 5(c)(ii), except in the course of the Executive’s employmenthereunder, directly or indirectly, in a competitive capacity, engage or invest in, own, manage, operate, finance, control orparticipate in the ownership, management, operation, financing or control of, be employed by, associated with or in anymanner connected with, lend the Executive’s name or any similar name to, lend Executive’s credit to or render services oradvice to, or plan or prepare to do any of the foregoing with any business whose products or activities compete in whole or inpart with the Business in any Market Jurisdiction; provided , however , that the Executive may purchase or otherwise acquireup to (but not more than) two percent (2%) of any class of securities of any entity (but without otherwise participating in theactivities of such entity) if such securities are listed on any national or regional securities exchange or have been registeredunder § 12(g) of the Securities Exchange Act of 1934, as amended.(ii) whether for the Executive’s own account or the account of any other Person: (A) at any time during theEmployment Period and for 2 years thereafter, directly or indirectly, interfere with, solicit, employ or otherwise engage, asan employee, independent contractor or otherwise, any Person who is or was an employee of the Employer or its Affiliate atany time during the last 2 years of the Employment Period or in any manner induce or attempt to induce any employee of theEmployeror its Affiliate to terminate his or her employment with the Employer or its Affiliate; or (B) at any time during theEmployment Period and in a competitive capacity for one (1) year thereafter, interfere with the Employer’s or its Affiliate’srelationship with any Person, including, but not limited to, any Person who at any time during the Employment Period was acustomer, contractor or supplier of the Employer or its Affiliate; or(iii) at any time during or after the Employment Period, disparage the Employer or its Affiliates or theirrespective shareholders, board of directors, members, managers, officers, employees or agents.If any term, provision or covenant in this § 7(b) is held to be unreasonable, arbitrary or against public policy, a court maylimit the application of such term, provision or covenant or modify such term, provision or covenant and proceed to enforce this §7(b) as so limited or modified, which limited or modified term, provision or covenant will be effective, binding and enforceableagainst the Executive.The period of time applicable to any covenant in this § 7(b) shall be extended by the duration of any actual or threatenedviolation by the Executive of such covenant.The Executive shall, while the covenant under this § 7(b) is in effect, give notice to the Employer, within ten (10) days afteraccepting any other employment, of the identity of the Executive’s new employer. The Employer may notify such employer that theExecutive is bound by this Agreement and, at the Employer’s election, furnish such employer with a copy of this Agreement orrelevant portions thereof.The Executive shall have the right and option to be released from the covenant not to compete set forth in §7(b)(i) aboveupon written notice to Employer accompanied by a refund of all severance payments made as of the date of such notice by Employerto Executive, whereupon Employer’s obligation to pay Executive severance under §5(c) hereunder shall immediately terminate andbe of no further force and effect and Executive shall be released from §7(b)(i) above.§ 8. General Provisions.(a) Injunctive Relief and Additional Remedy . The Executive acknowledges that the injury that would be suffered by theEmployer as a result of a breach of the provisions of this Agreement (including any provision of §§ 6 and 7) would be irreparableand that an award of monetary damages to the Employer for such a breach would be an inadequate remedy. Consequently, theEmployer will have the right, in addition to any other rights, at law or in equity, it may have to obtain injunctive relief to restrain anybreach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Employer will not beobligated to post bond or other security in seeking such relief. Without limiting the Employer’s rights under this § 8(a) or any otherremedies of the Employer, if the Executive has breached or violated or threatens to breach of violate any of the provisions of §§ 6 or7 the Employer will have the right to cease making any payments otherwise due to the Executive under this Agreement and recoverpayments previously made to the Executive under this Agreement. Further, if any term, provision or covenant in §§ 6 or 7 is held tobe unreasonable, arbitrary, against public policy, or otherwise unenforceable, Executive acknowledges and agrees that the paymentsrequired to be made to the Executive shall be waived and that the Executive relinquishes any rights to such payment or any otherforms of payment post-dating the Executive’s separation from the Employer.(b) Covenants of §§ 6 and 7 Are Essential and Independent Covenants . The covenants by the Executive in §§ 6 and 7are essential elements of this Agreement, and without the Executive's agreement to comply with such covenants, the Employerwould not have entered into this Agreement or employed or continued the employment of the Executive. The Employer and theExecutive have been advised in all respects concerning the reasonableness and propriety of such covenants, with specific regard tothe nature of thebusiness conducted by the Employer. The Executive’s covenants in §§ 6 and 7 are independent covenants and the existence of anyclaim by the Executive against the Employer under this Agreement or otherwise will not excuse the Executive’s breach of anycovenant in §§ 6 or 7. If the Executive’s employment hereunder expires or is terminated, this Agreement will continue in full forceand effect as is necessary or appropriate to enforce the covenants and agreements of the Executive in §§ 6 and 7 in accordance withtheir terms and conditions.(c) Representations and Warranties by the Executive . The Executive represents and warrants to the Employer that theexecution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive’sobligations hereunder will not, with or without the giving of notice or the passage of time, or both: (i) violate any judgment, writ,injunction or order of any court, arbitrator or governmental agency applicable to the Executive; or (ii) conflict with, result in thebreach of any provisions of or the termination of or constitute a default under any agreement to which the Executive is a party or bywhich the Executive is or may be bound. The Executive acknowledges that the Executive has had a full and complete opportunity toconsult with counsel of the Executive’s choosing concerning this Agreement and that the Employer has not made any representationsor warranties to the Executive concerning this Agreement other than those specifically stated in this Agreement, if any.(d) Waiver . The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither thefailure nor any delay by either party in exercising any right, power or privilege under this Agreement will operate as a waiver of suchright, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or furtherexercise of such right, power or privilege or the exercise of any other right, power or privilege. To the maximum extent permitted byapplicable law, (i) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver orrenunciation of the claim or right unless in writing signed by the other party (ii) no waiver that may be given by a party will beapplicable except in the specific instance for which it is given and (iii) no notice to or demand on one party will be deemed to be awaiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without noticeor demand as provided in this Agreement.(e) Binding Effect . This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and theirrespective successors, assigns, heirs and legal representatives.(f) Notices . All notices, consents, waivers and other communications under this Agreement must be in writing and will bedeemed to have been duly given when (i) delivered by hand (with written confirmation of receipt), or (ii) when received by theaddressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addressesset forth below (or to such other addresses as a party may designate by notice to the other party):If to Employer: Voxx International Corporation2351 J. Lawson Blvd.Orlando, FL 32824Attn: Patrick M. LavelleCopy to: Larry N. Stopol, Esq.Levy, Stopol & Camelo, LLP1425 RXR PlazaUniondale, NY 11556If to the Executive: Thomas C. Malone16 Miller Farms DrMiller Place, NY 11764(g) Entire Agreement: Amendments . This Agreement contains the entire agreement between the parties with respect tothe subject matter hereof and supersede all prior agreements and understandings, oral or written, between the parties hereto withrespect to the subject matter hereof. This Agreement may not be amended orally, but only by an agreement in writing signed by theparties hereto.(h) Governing Law and Forum . This Agreement will be governed by the laws of the State of New York without regardto conflicts of laws principles. Any controversy, dispute or claim arising out of or in connection with this agreement or the breachhereof shall be resolved by arbitration in the City and State of New York in accordance with the rules of the American ArbitrationAssociation. Judgment upon the award reached by the Arbitrator(s) may be enforced in any court having jurisdiction thereof.(i) Section Headings, Construction . The headings of Sections in this Agreement are provided for convenience only andwill not affect its construction or interpretation. All references to “§” refer to sections in this Agreement. All words used in thisAgreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, theword “including” does not limit the preceding words or terms.(j) Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competentjurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalidor unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.(k) Counterparts . This Agreement may be executed in counterparts, which when taken together shall constitute one andthe same Agreement.(l) Attorneys’ Fees . In the event any dispute or controversy arising from or relating to this Agreement is submitted to anycourt, arbitration panel or other party, the prevailing party in such dispute or controversy shall be entitled to reimbursement from thenon-prevailing party for the actual fees and expenses incurred by the prevailing party in connection with such dispute or controversy(including, but not limited to, reasonable attorney’s fees, costs and disbursements).IN WITNESS WHEREOF, the parties have executed and delivered this Employment Agreement as of the date first writtenabove.EMPLOYER :VOXX INTERNATIONAL CORPORATIONBy: /s/ Patrick M. Lavelle Patrick M. LavelleTitle: Chief Executive OfficerEXECUTIVE :/s/ Thomas C. Malone Thomas C. Malone, individuallyExhibit 21SUBSIDIARIES OF REGISTRANTSubsidiariesJurisdiction of Incorporation VOXX Accessories Corp.DelawareVOXX Electronics Corp.DelawareAudiovox Atlanta Corp.GeorgiaAudiovox Venezuela C.A.VenezuelaAudiovox German Holdings GmbHGermanyAudiovox Canada LimitedCanadaKlipsch Holding LLCDelawareVoxxHirschmann CorporationDelawareVOXX International (Germany) GmbHGermanyCONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe have issued our reports dated May 15, 2017, with respect to the consolidated financial statements, schedule and internal control overfinancial reporting in the Annual Report of Voxx International Corporation on Form 10-K for the year ended February 28, 2017. We consentto the incorporation by reference of said reports in the Registration Statements of Voxx International Corporation on Form S-8 (File No. 333-138000 and File No. 333-184365) and on Form S-3 (File No. 333-187427 and File No. 333-91455)./s/ GRANT THORNTON LLPMelville, New YorkMay 15, 2017Exhibit 31.1CERTIFICATION PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)OF THE SECURITIES EXCHANGE ACT OF 1934I, Patrick M. Lavelle, certify that:1.I have reviewed this annual report on Form 10-K of VOXX International Corporation (the “Company”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b.Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.May 15, 2017 /s/Patrick M. Lavelle Patrick M. Lavelle President and Chief Executive OfficerExhibit 31.2CERTIFICATION PURSUANT TO RULE 13a-14(a) AND RULE 15d-14(a)OF THE SECURITIES EXCHANGE ACT OF 1934I, Charles M. Stoehr, certify that:1.I have reviewed this annual report on Form 10-K of VOXX International Corporation (the “Company”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b.Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; andb.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.May 15, 2017 /s/ Charles M. Stoehr Charles M. Stoehr Senior Vice President and Chief Financial OfficerExhibit 32.1CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of VOXX International Corporation (the “Company”) on Form 10-K for the period ended February 28, 2017 (the “Report”)as filed with the Securities and Exchange Commission on the date hereof, I, Patrick M. Lavelle, President and Chief Executive Officer of the Company, certify,pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1)The Report fully complies with Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.May 15, 2017 /s/ Patrick M. Lavelle Patrick M. Lavelle *A signed original of this written statement required by Section 906 has been provided to VOXX International Corporation and will be retained by VOXXInternational Corporation and furnished to the Securities and Exchange Commission or its staff upon request.The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter63 of Title 18, United States Code) and is not being filed as part of the Form 10-K or as a separate disclosure documentExhibit 32.2CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of VOXX International Corporation (the “Company”) on Form 10-K for the period ended February 28, 2017 (the “Report”)as filed with the Securities and Exchange Commission on the date hereof, I, C. Michael Stoehr, Senior Vice President and Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:1)The Report fully complies with Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.May 15, 2017 /s/ Charles M. Stoehr Charles M. Stoehr *A signed original of this written statement required by Section 906 has been provided to VOXX International Corporation and will be retained by VOXXInternational Corporation and furnished to the Securities and Exchange Commission or its staff upon request.The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter63 of Title 18, United States Code) and is not being filed as part of the Form 10-K or as a separate disclosure documentASA Electronics, LLCAnd SubsidiariesConsolidated Financial Report11/30/16Contents Independent Auditor's Report1 Financial Statements Consolidated balance sheets3Consolidated statements of income4Consolidated statements of members' equity5Consolidated statements of cash flows6Notes to the consolidated financial statements7 RSMRSM US LLP Independent Auditor's ReportTo the MembersASA Electronics, LLC and SubsidiariesElkhart, IndianaReport on the Financial StatementsWe have audited the accompanying consolidated financial statements of ASA Electronics, LLC and Subsidiaries, which comprise the consolidatedbalance sheet as of November 30, 2016 and 2015, and the related consolidated statements of income, consolidated members’ equity andconsolidated cash flows for the years then ended and the related notes to the financial statements (collectively, the financial statements).Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generallyaccepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditingstandards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The proceduresselected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether dueto fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation ofthe financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well asevaluating the overall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.OpinionIn our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ASA Electronics LLC andSubsidiaries, as of November 30, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in accordance withaccounting principles generally accepted in the United States of America./s/ RSM US LLP1Elkhart, IndianaJanuary 30, 20172ASA Electronics, LLC and SubsidiariesBalance SheetsNovember 30, 2016 and 2015 2016 2015 ASSETS Current Assets Cash and cash equivalents$8,580,901 $16,047,361Available-for-sale securities13,600,862 4,412,999Trade receivables, net7,663,577 8,810,852Inventories15,631,069 16,265,038Prepaid expenses362,661 537,365Total current assets45,839,070 46,073,615 Leasehold Improvements and Equipment, at depreciated cost3,039,609 3,060,175 Intangible Assets, trademark rights2,742,123 2,742,123 $51,620,802 $51,875,913 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable$1,331,783 $1,820,025Accrued expenses Payroll and related taxes2,245,193 2,061,520Warranty2,050,759 1,991,483Other956,539 985,199Total current liabilities6,584,274 6,858,227 Commitments and Contingencies Long-Term liabilities Warranty362,988 332,264 Total liabilities6,947,262 7,190,491 Members' Equity44,673,540 44,685,422Total liabilities and member's equity$51,620,802 $51,875,913See notes to consolidated financial statements.3ASA Electronics, LLC and SubsidiariesStatements of IncomeNovember 30, 2016 , 2015 and 2014 2016 2015 2014 Net sales$93,691,981 $92,484,168 $92,651,340 Cost of goods sold69,527,065 70,040,887 71,028,347 Gross profit24,164,916 22,443,281 21,622,993 Selling, general and administrative expenses10,573,451 9,999,150 10,203,961 Operating income13,591,465 12,444,131 11,419,032 Other income (expense): Interest income, net77,045 60,016 58,373Other(29,681) (31,252) 382,597 47,364 28,764 440,970Net income$13,638,829 $12,472,895 $11,860,002See notes to consolidated financial statements.4ASA Electronics, LLC and SubsidiariesStatements of Members' EquityNovember 30, 2016 , 2015 and 2014 2016 2015 2014 Balance, beginning$44,685,422 $42,692,821 $40,188,092Net income13,638,829 12,472,895 11,860,002Member distributions(13,650,711) (10,480,294) (9,355,273)Balance, ending$44,673,540 $44,685,422 $42,692,821See notes to consolidated financial statements.5ASA Electronics, LLC and SubsidiariesStatements of Cash FlowsNovember 30, 2016 , 2015 and 2014 2016 2015 2014 Cash Flows From Operating Activities Net income$13,638,829 $12,472,895 $11,860,002Adjustments to reconcile net income to net cash provided by operatingactivities: Depreciation1,588,567 1,273,380 1,149,988Inventory write downs and reserves250,643 127,738 568,979Loss on sale of property and equipment23,138 26,425 55,703Change in assets and liabilities: Decrease (increase) in: Trade receivables1,147,275 (816,541) (941,655)Inventories383,326 2,436,655 (2,682,688)Prepaid expenses174,704 (153,543) 215,559(Decrease) increase in: Accounts payable(488,242) (1,081,812) 1,514,907Accrued expenses245,013 77,236 56,245Other— — 395Net cash provided by operating activities16,963,253 14,362,433 11,797,435 Cash Flows From Investing Activities Purchase of property and equipment(1,593,439) (1,767,178) (1,414,620)Proceeds from sale of property and equipment2,300 3,500 6,533Proceeds from sale of available-for-sale securities5,195,005 4,180,213 5,710,000Purchase of available-for-sale securities(14,382,868) (1,980,213) (6,323,000)Net cash (used in) provided by investing activities(10,779,002) 436,322 (2,021,087) Cash Flows From Financing Activities Member distributions(13,650,711) (10,480,294) (9,355,274)(Decrease) increase in cash and cash equivalents(7,466,460) 4,318,461 421,074 Cash and cash equivalents, beginning16,047,361 11,728,900 11,307,826 Cash and cash equivalents, ending$8,580,901 $16,047,361 $11,728,900See notes to consolidated financial statements.6ASA Electronics, LLC And SubsidiariesNotes To Financial StatementsNote 1 - Nature of Business and Significant Accounting PoliciesNature of business: Since 1977, ASA Electronics, LLC (“ASA” or the “Company”) has built a reputation for developing mobile electronicsspecifically designed and tested to withstand the rigors of niche markets in the Automotive Industry including: Recreational Vehicle; CommercialVehicle, Heavy Duty Truck, Agricultural, Construction, Bus, Powersports and Marine industries. Its proprietary line of products include: Jensen 12Volt LCD and LED flat panel televisions, stereos, and speakers, Voyager Observation Systems, and Advent rooftop air conditioners. In 2015, ASAdesigned the Jensen iN-Command system that replaces the control panel in the RV that historically was made up of rocker switches and buttons toa touch pad system that can be operated remotely using an app on a smart phone or tablet. These high quality mobile electronics and appliancesare designed and tested in a research and development lab located at the Company’s corporate offices. ASA’s engineering team works inconjunction with its customers’ designers, engineers and sales team to develop customized solutions. In 2012, ASA expanded its product offeringsto also distribute products from Polk Audio . Polk Audio, also established in the 1970’s, is an award-winning designer and manufacturer of highperformance audio products, who has become the market share leader in premium home and marine speakers, sound bars, amplifiers, and otherhigh end audio products. The addition of Polk products compliments ASA’s existing product lineup and provides a full spectrum of audio/videooptions for our customers. The various products offered by ASA are sold throughout the world to Original Equipment Manufacturers as well as therespective Aftermarket segments. In addition to the headquarters in Elkhart, Indiana, ASA also has two public distribution centers in Oregon andCalifornia, and a trading office in Shenzhen, China.Significant accounting policies:Recent Accounting Pronouncements: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASUsupersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilitieson the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classificationaffecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15,2018, including interim periods within those fiscal years.In July 2015, the FASB issued ASU 2015-11 , Inventory (Topic 330): Simplifying the Measurement of Inventory . The amendments in the ASUrequire entities that measure inventory using the first-in, first-out or average cost methods to measure inventory at the lower of cost and netrealizable value. Net realizable value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs ofcompletion, disposal and transportation. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within thosefiscal years, beginning after December 15, 2016 on a prospective basis.Use of estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States ofAmerica (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosureof contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from those estimates.Principles of consolidation: The consolidated financial statements include the accounts of the Company and wholly-owned subsidiaries. Allsignificant intercompany accounts have been eliminated in consolidation.Revenue recognition: The Company recognizes revenue from product sales at the time of passage of title and risk of loss to the customer either atF.O.B. Shipping Point or F.O.B. Destination, based upon terms established with the customer. The Company’s selling price is fixed and determinedat the time of shipment and collectability is reasonably assured and not contingent upon the customer’s resale of the product. The customers aregenerally not given rights of return. In the event customers are granted rights of return, the Company estimates and records an allowance for futurereturns. At November 30, 2016 and 2015, no such allowance was deemed necessary. Product7ASA Electronics, LLC And SubsidiariesNotes To Financial Statementssales are generally not subject to acceptance or installation by Company or customer personnel.All revenue transactions are denominated in U.S. dollars.Shipping and delivery: The Company recognizes shipping and delivery costs in selling, general and administrative expenses in the accompanyingconsolidated statements of income. These costs for the years ended November 30, 2016, 2015 and 2014 were approximately $382,000; $420,000and $529,000 respectively.Sales incentives: The Company offers sales incentives to its customers primarily in the form of cooperative advertising allowances and rebates. Allsignificant sales incentives require the customer to purchase the Company’s products during a specified period of time, and are based on either afixed dollar amount or set percentage of sales. Claims are settled either by the customer claiming a deduction against an outstanding accountreceivable or by the customer a requesting check. Since the incentive percentage or amount can be reasonably estimated, the Company recordsthe related incentive at the time of sale. The Company has also entered into the RV Aftermarket segment, with several of those customer’s havingdollar specific co-op advertising programs for participation in trade shows, placement in catalogues, countertop display units, and other marketingprograms. These co-op advertising programs are reviewed and adjusted, as necessary, on a quarterly basis. As of November 30, 2016 and 2015,sales incentive accruals reflected as a liability on the consolidated balance sheets was approximately $643,000 and $612,000 respectively. TheCompany records all sales incentive as an offset to sales on the consolidated statements of income.Members’ equity and subsequent event: In accordance with the generally accepted method of presenting limited liability company financialstatements, the accompanying consolidated financial statements do not include other corporate assets and liabilities of the members, including theirobligation for income taxes on the net income of the limited liability company nor any provision for income tax expenses.It is the Company’s intent to distribute funds to members to cover their income tax liabilities. Subsequent to November 30, 2016, the Company paidapproximately $3,844,000 of member distributions relating to the fourth quarter.The LLC operating agreement does not provide for separate classes of ownership. VOXX International (VOXX) and ASA Electronics Corporationshare equally in all LLC events and the related member accounts are considered equal on a fair value basis.Cash and cash equivalents: For purposes of the statement of cash flows, the Company considers investments in various repurchase agreementswith its bank, money market accounts and treasury bills with a maturity of three months or less from the date of purchase to be cash equivalents.Cash equivalents amounted to, approximately $7,131,000 and $12,884,000 at November 30, 2016 and 2015 respectively.The Company maintains its cash accounts which, at times, may be in excess of insurance limits provided by the Federal Deposit InsuranceCorporation.Trade receivables: Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of alloutstanding amounts on a monthly basis. Trade receivables in the accompanying balance sheets at November 30, 2016 and 2015 are stated net ofan allowance for doubtful accounts of approximately $60,000 and $65,000 respectively. Management determines the allowance for doubtfulaccounts by identifying troubled accounts and using historical experience applied to an aging of accounts. Trade receivables are written off whendeemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Generally, a trade receivable is consideredto be past due if any portion of the receivable balance is outstanding for more than 30 days from its date.Inventories: The Company values its inventory at the lower of the actual cost to purchase (primarily on a weighted moving average basis) and/orthe current estimated market value of the inventory less expected costs to sell the inventory. The Company regularly reviews inventory quantitieson-hand and records a provision for excess and obsolete inventory based primarily from selling prices, indications from customers based uponcurrent price8ASA Electronics, LLC And SubsidiariesNotes To Financial Statementsnegotiations and lower market prices. The Company’s industry is characterized by rapid technological change and frequent new productintroductions that could result in an increase in the amount of obsolete inventory quantities on-hand.During the years ended November 30, 2016, 2015 and 2014, the Company recorded write downs of inventory of approximately $251,000; $128,000and $569,000 respectively, related to lower of cost or market adjustments. These charges to income are included in cost of goods sold in theaccompanying consolidated statements of income. As of November 30, 2016 and 2015 the Company maintained an inventory write down reserve ofapproximately $22,000 and none respectively.Depreciation: Depreciation of leasehold improvements is computed over the lesser of the underlying lease term or the estimated useful lives andequipment is computed principally by the straight-line method over the following estimated useful lives: YearsLeasehold improvements 5-9Machinery and equipment 5-10Tooling and molding 1-3Transportation equipment 5Office furniture and fixtures 10Computer equipment 3Booth displays 7Tooling is amortized on a per unit basis. The Company estimates annual sales volume produced and life expectancy of the tooling to determine theper unit amortization amount. This per unit amount increases inventory cost upon receipt into a U.S. warehouse and is subsequently charged to costof goods sold upon sale of the related product.Warranties: The Company provides a limited warranty primarily for a period of up to two years for its products. The Company’s standard warrantiesrequire the original equipment manufacturer, its dealers or the end user to repair or replace defective products during such warranty periods at nocost to the consumer. The Company estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount ofsuch costs at the time product revenue is recognized. The related expense is included in cost of goods sold in the accompanying consolidatedstatements of income. Factors that affect the Company’s warranty liability include the number of units sold, historical and anticipated rates ofwarranty claims, the historical lag time between product sales and product claims, and cost per claim. The Company periodically assesses theadequacy of its recorded warranty liabilities and adjusts the amounts as necessary. The Company utilizes historical trends and analytical tools toassist in determining the appropriate loss reserve levels.Changes in the Company’s warranty liability during the years ended November 30, 2016, 2015 and 2014 are as follows: 2016 2015 2014 Balance, beginning of year$2,323,747 $2,686,747 $2,462,000Accruals for products sold1,385,371 1,114,862 2,091,840Payments made(1,292,237) (1,477,862) (1,867,093)Balance, end of year$2,416,881 $2,323,747 $2,686,7479ASA Electronics, LLC And SubsidiariesNotes To Financial StatementsIncome taxes: As a limited liability Company, the Company’s taxable income is allocated to members in accordance with their respectivepercentage ownership. However, a provision for Hong Kong profit tax, China enterprise income tax, China value added tax, and U.S. state incometax for the years ended November 30, 2016 and 2015, in the amounts of approximately 33,400 and $23,200 respectively, has been recorded.Management evaluated the Company’s tax positions and concluded that the Company had taken no uncertain tax positions that require adjustmentto the financial statements to comply with the provisions of this guidance. With few exceptions, the Company is no longer subject to taxexaminations by the U.S. federal, state, or local tax authorities for years before 2013.Long-lived assets and other intangible assets: The Company acquired certain trademark rights from VOXX in August 2003. In connection withthe acquisition, VOXX sublicensed its rights in relation to the trademark to the Company and cannot terminate these rights under the terms of theacquisition agreement. The Company has accounted for trademark rights as an indefinite lived intangible asset. Accounting standards require thatintangible assets with indefinite useful lives be tested for impairment at least annually or more frequently if an event occurs or circumstances changethat could more likely than not reduce the fair value below its carrying amount. When determining the fair value of trademark rights, the Companyuses the relief from royalty method which requires the determination of fair value based on if the Company was licensing the right to the trademarkin exchange for a royalty fee. The Company utilizes the income approach to determine future revenues to which to apply a royalty rate. The royaltyrate is based on market approach concepts. In considering the value of trademark rights, the Company looks to relative age, consistent use, quality,expansion possibilities, relative profitability and relative market potential. The Company has performed its annual impairment test for the yearsended November 30, 2016 and 2015 and no impairment was identified.In accordance with accounting standards, the Company reviews its long-lived assets periodically to determine potential impairment. If indicators arepresent, the Company compares the carrying value of the long-lived assets with the estimated future net undiscounted cash flows expected to resultfrom the use of the assets, including cash flows from disposition. Should the sum of the expected future net cash flows be less that the carryingvalue, the Company would recognize an impairment loss at that date. An impairment loss would be measured by comparing the amount by whichthe carrying value exceeds the fair value of the long-lived assets. There was no impairment of long-lived assets for the years ended November 30,2016 and 2015.Subsequent events: The Company has evaluated subsequent events for potential recognition and/or disclosure through January 30, 2017, thedate the financial statements were available to be issued.Note 2 - Fair Value MeasurementsFair value measurements: Accounting standards specify a hierarchy of valuation techniques based upon whether the inputs to those valuationtechniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observableinputs), or reflect the Company’s own assumptions of market participant valuation (unobservable inputs). In accordance with the accountingstandards, these two types of inputs have created the following fair value hierarchy:Level 1Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets orliabilities.Level 2Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in activemarkets or financial instruments for which significant inputs are observable, either directly or indirectly.Level 3Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.10ASA Electronics, LLC And SubsidiariesNotes To Financial StatementsThe standard requires the use of observable market data if such data is available without undue cost and effort. For the years ended November 30,2016 and 2015, the application of valuation techniques applied to similar assets and liabilities has been consistent.The following methods and assumptions were used to estimate the fair value of financial instruments for which it is practicable to estimate thatvalue.Cash and cash equivalents, accounts receivable, accounts payable: The carrying amounts approximate fair value due to the short maturity ofthose instruments.Available-for-sale securities: Available-for-sale securities consist of investments in marketable debt securities and United States Treasury Bills.Debt securities consist primarily of obligations of municipalities and corporate industrial revenue bonds, which are not subject to significant risk orfluctuation. The Companies who issue the bond are the first line of defense, secondly the principal of the bond is backed by a bank line of credit, andlastly the investment brokerage company conducts due diligence on the financial ability of issuer and bank to repay at the bond’s maturity.Management determines the appropriate classification of securities at the date individual investment securities are acquired and the appropriatenessof such classification is reassessed at each consolidated balance sheet date. Since the Company neither buys investment securities in anticipationof short-term fluctuation in market prices nor commits to holding debt securities to their maturities, the investments have been classified asavailable-for-sale in accordance with accounting standards. Available-for-sale securities are stated at fair value, and unrealized holding gains andlosses, if material, are reported as a separate component of members' equity.The amount classified as current assets on the accompanying consolidated balance sheets represents the amount of marketable debt securities andUnited States Treasury Bills expected to be sold during the next year. A decline in the market value of any available-for-sale security below cost that is deemed other than temporary results in a reduction in carryingamount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. The Company considers numerousfactors, on a case by case basis, in evaluating whether the decline in market value of an available-for-sale security below cost is other-than-temporary. Such factors include, but are not limited to, (i) the length of time and the extent to which the market value has been less than cost, (ii) thefinancial condition and the near-term prospects of the issuer or the investment and, (iii) whether the Company’s intent to retain the investment for theperiod of time is sufficient to allow for any anticipated recovery in market value. During the year ended November 30, 2016, the Company did nothold any investments that had such a decline in value.The marketable debt securities contain a put feature that allows the Company to periodically sell the bonds to a brokerage house at par value. Thebonds also have a floating interest rate which is reset on a periodic basis and are backed by third party letters of credit. As of November 30, 2016,the bonds had a weighted-average yield of 0.74%. To estimate their fair value, the Company considered the par value of the bonds, potential defaultprobabilities, market yield curves and the seven day put feature.The following is a summary of the Company’s investment as of November 30, 2016 and 2015:11ASA Electronics, LLC And SubsidiariesNotes To Financial Statements 2016 Level 1 Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value United States Treasury Bills$4,987,892 $5,970 $— $4,993,862 Level 2Marketable Debt Securities$8,607,000 $— $— $8,607,000 2015 Level 2 Gross Gross Unrealized Unrealized Fair Cost Gains Losses Value Marketable Debt Securities$4,412,999 $— $— $4,412,999The Cost and fair value of debt securities by contractual maturities as of November 30, 2016 are as follows: Fair Cost Value Due between 0 to 3 years $5,917,892 $5,923,862Due after three years 7,677,000 7,677,000 $13,594,892 $13,600,862Maturities may differ from contractual maturities because the issuers of certain debt securities have the right to prepay their obligations withoutpenalty.A summary of proceeds from the sale of available-for-sale securities and investment earnings for the years ended November 30, 2016 , 2015 , and2014 is as follows: 2016 2015 2014 Proceeds from the sale of available-for-sale securities$5,195,005 $4,180,213 $5,710,000 Interest earned$77,045 $60,016 $58,373Note 3 - Leasehold Improvements and EquipmentThe cost of leasehold improvements and equipment and the related accumulated depreciation at November 30, 2016 and 2015 are as follows:12ASA Electronics, LLC And SubsidiariesNotes To Financial Statements 2016 2015 Leasehold improvements$1,213,093 $1,171,479Machinery and equipment1,655,039 1,607,523Tooling and molding4,989,998 4,456,921Transportation equipment620,201 620,201Office furniture and fixtures513,007 511,647Computer equipment1,955,105 1,687,089Booth displays198,992 198,992Construction in progress1,016,756 776,812 12,162,191 11,030,664Less accumulated depreciation9,122,582 7,970,489 $3,039,609 $3,060,175Note 4 - Pledged Assets and Notes PayableThe terms of a loan agreement with a bank permit the Company to borrow a maximum of $10,000,000. At November 30, 2016, no amounts wereoutstanding under this agreement. Borrowing under the agreement bear interest at prime minus .50% or LIBOR plus 2.00%, at the Company’soption, are collateralized by accounts receivable and inventories, and are subject to a tangible net worth covenant. The agreement expires June 30,2017.Note 5 - Major VendorsFor the years ended November 30, 2016, 2015 and 2014 the Company purchased approximately 74%, 77% and 72% respectively, of its productsfor resale from their top five vendors. The top five vendors varied during the years presented.Note 6 - Transactions with Related Parties, Lease Commitments and Subsequent EventThe Company is affiliated with various entities through common ownership by VOXX. Transactions with VOXX, its affiliates and subsidiaries for theyears ended November 30, 2016 , 2015 , and 2014 are approximately as follows: 2016 2015 2014 Net product sales$— $6,370 $2,683Purchases547,498 1,911,843 2,675,451 2016 2015 2013 Trade accounts receivable$— $438 $313Accounts payable8,379 8,878 369,523The Company leases warehouse, manufacturing, and office facilities from Irions Investments, LLC, an entity relatedASA Electronics, LLC And SubsidiariesNotes To Financial Statementsthrough common ownership, for approximately $49,000 per month, plus the payment of property taxes, normal maintenance, and insurance on theproperty under an agreement which expires August 2017, with two five-year options to extend, at the Company's discretion. The lease with IrionsInvestments contains a clause that increases the monthly rent amount each year, and is based on the Consumer Price Index (CPI). In August 2016,the Company exercised a 5 year lease term extension which extends the expiration date to August 2021. Finally, the Company leases office spacein the Shenzhen province of China, with a monthly rent of $8,300 through May 31, 2018.The Company leases certain equipment from unrelated parties under agreements that require monthly payments totaling approximately $300 andexpire through September 2017.The total rental expense included in the consolidated statements of income for the years ended November 30, 2016, 2015 and 2014 isapproximately $705,000, $695,000 and $712,000 respectively, of which approximately $577,000, $570,000 and $555,000 respectively, was paid toIrions Investments, LLC.ASA utilizes two public warehouses, with locations in California and Oregon. The leases at both locations are considered month to month and canbe terminated with 90 days’ notice. As a result, the commitment schedule below includes three months of outside warehouse rent charges for 2017only.The total approximate minimum rental commitment at November 30, 2016 including the subsequent event under the leases is due as follows: Related Party Other Total Year ending November 30, 2017$580,368 107,374 $687,7422018580,368 49,839 630,2072019580,368 — 580,3682020580,368 — 580,3682021580,368 — 580,368 $2,901,840 $157,213 $3,059,053Note 7 - Employee Benefit PlansThe Company has profit-sharing and 401(k) plans for the benefit of all eligible employees. The Company's contributions are discretionary and arelimited to amounts deductible for federal income tax purposes. Discretionary contributions were approximately $324,000, $304,000 and $326,000 forthe years ended November 30, 2016, 2015 and 2014 respectively.The Company also maintains a discretionary employee bonus plan for the benefit of its key executive, operating officers, managers and selectsalespersons. The total bonus expense included in the consolidated statements of income for the years ended November 30, 2016, 2015 and 2014is approximately $2,696,000, $2,504,000 and $2,709,000 respectively.The Company offers a health plan for its employees, which is self-insured for medical and pharmaceutical claims up to $35,000 per participant, thefirst $50,000 of specific claims incurred are paid by company (aggregating specific), and a Company-wide aggregate of approximately $537,000.The Company maintains stop loss insurance coverage for claims that exceed the self-insurance limits. The total health plan expense included in theconsolidated statements of income for the years ended November 30, 2016, 2015 and 2014 is approximately $726,000, $765,000 and $539,000respectively. These expense figures include medical, vision and dental claims, employee life insurance premiums and third party administration fees,in addition to wellness program expenses and Company contributions to Health Savings Accounts.14ASA Electronics, LLC And SubsidiariesNotes To Financial StatementsNote 8 - LitigationAt times, the Company may be a party to certain legal proceedings. The proceedings are, in the opinion of management, ordinary routine mattersincidental to the normal course of business conducted by the Company. Although the outcome of these matters is uncertain, the Company believesany potential settlement would not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.Note 9 - Major CustomersNet sales to customers comprising 10% of more of total net sales for the years ended November 30, 2016 and 2015 and the related tradereceivables balance at those dates are approximately as follows: Net SalesTrade Receivable Balance 2016201520162015Customer A$14,548,000$10,970,000$1,022,000$1,121,000Customer B13,890,00015,535,000873,0001,365,000 $28,438,000$26,505,000$1,895,000$2,486,000REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTSGrant Thornton LLP175 W Jackson Boulevard, 20th FloorChicago, IL 60604-2687T 312.856.0200F 312.565.4719GrantThornton.comlinkd.in/GrantThorntonUStwitter.com/GrantThorntonUSMembersASA Electronics, LLC and SubsidiariesWe have audited the accompanying consolidated financial statements of ASA Electronics, LLC (a Delaware limited liability company) and subsidiaries (theCompany), which comprise the consolidated balance sheet as of November 30, 2014, and the related consolidated statements of income, changes in members’equity, and cash flows for the year then ended, and the related notes to the financial statements.Management’s responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generallyaccepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditingstandards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The proceduresselected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due tofraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidatedfinancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness1of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ASA Electronics, LLC andsubsidiaries as of November 30, 2014, and the results of their operations and their cash flows for the year then ended in accordance with accounting principlesgenerally accepted in the United States of America.Other mattersWe also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of theCompany as of and for the year ended November 30, 2013, and our report dated January 24, 2014, expressed an unmodified opinion on those 2013 consolidatedfinancial statements.The consolidated financial statements of the Company as of and for the year ended November 30, 2012, were audited by other auditors in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Those auditors expressed an unmodified opinion on those 2012 consolidatedfinancial statements in their report dated February 1, 2013.GRANT THORNTON LLPChicago, Illinois01/26/20152Consent of Independent AuditorsWe consent to the incorporation by reference in Registration Statement on Form S-8 (Nos. 333-138000 and 333-184365) and on Form S-3(Nos. 333-187427 and 333-91455) of Voxx International Corporation and Subsidiaries of our report dated January 30, 2017, relating to ouraudit of the consolidated financial statements of ASA Electronics, LLC, which appear in this Annual Report on Form 10-K of VoxxInternational Corporation and Subsidiaries for the year ended February 28, 2017./s/ RSM US LLPElkhart, IndianaMay 15, 2017CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTSWe have issued our report dated January 26, 2015, with respect to the consolidated financial statements of ASA Electronics, LLC included inthe Annual Report of Voxx International Corporation on Form 10-K for the year ended February 28, 2017. We consent to the incorporationby reference of said report in the Registration Statements of Voxx International Corporation on Form S-8 (File No. 333-138000 and File No.333-184365) and on Form S-3 (File No. 333-187427 and File No. 333-91455)./s/ GRANT THORNTON LLPChicago, IllinoisMay 15, 2017

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