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Yes. I'm very aware of the halo. My argument here has been that the halo effect could be 10X greater if the folded bass horn speakers were getting the kind of chatter and publicity they deserve, but are not now getting. I inferred it's a painfully under deployed asset.

 

We are in general agreement, but I think there is more substance to the Klipsch "heritage" than just a halo.  The KG series was the first blessed by PWK that he didn't personally design and yet blessed.  He blessed them because he knew precisely which of the 8 Card was broken and why, as did Steve.  Some of that has cascaded all the way to the present giving the Klipsch line a real advantage based in good science...PWK's codification of the laws of solid speaker design.  Personally, I think one should be able to approach any Klipsch R&D person, say, "5," and get a precise summary of that point.  That is the real Heritage.

 

Dave

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None of the statements below constitute an official Klipsch statement. These are my personal opinions and thoughts. Please treat them as such...

 

 

No Voxx, No Klipsch...I can't go into too much detail but the reality is that when Fred Klipsch (who PWK sold the company to) decided to sell Klipsch, there were two choices - Klipsch lives through Voxx or it dies an unrecognizable death. I know many of you have fears they will run us into the ground, but, at this point, it is what it is and we ALL need to make the best about it. It's been what - 4 years? Time to move on.

 

Happy Holidays and Happy New Year!

 

Again, none of the statements above constitute an official Klipsch statement. These are my personal opinions and thoughts. Please treat them as such.

 

 

I would agree that there has definitely been too much "personal conjecture" going on in this respect without much of an attempt to provide tangible support for the various conclusions.

 

Actually, from a very quick look at a few Audiovox public filings, there is enough information in the public domain now since the acquisition by Audiovox where the Klipsch financial statements for the three years before the acquisition would tend to confirm a few existing issues (including the valuation allowances against the deferred tax assets) along with a few 'growing pains' as they manage the changing landscape since the acquisition. 

 

Even at July 2007 before the 'credit crisis' there was an 'Accumulated Deficit' (instead of retained earnings) of ~ $13 million for Klipsch that peaked at a $27.3 million Accumulated Deficit in 2009 and after an extremely good year in 2010, the 'Accumulated Deficit' of the company was still ~ $4.8 million.  On a positive note, Klipsch had shown the ability to generate positive operating cash flows and positive working capital ratios for each period presented.

 

http://www.sec.gov/Archives/edgar/data/807707/000080770711000019/klipschexhibit992.htm

http://www.sec.gov/Archives/edgar/data/807707/000080770711000019/klipschexhibit993.htm

 

 

 

While overall allocation of resources and capitalization has to be considered for three reportable segments of Voxx International, the consolidated company, from reading the Audiovox 10-K, 10-Qs and proxy statements, it does appear they have given Klipsch latitude in the legacy management of Klipsch as a significant part of (if not all of) the "premium audio" segment of the overall consolidated corporation and keeping the culture intact.

 

 

Excerpts from the last proxy statement filed.

 

http://www.sec.gov/Archives/edgar/data/807707/000080770714000014/proxy-2014.htm

 

Mr. Fred Klipsch is still a Board of Directors member of Audiovox.

 

Fred S. Klipsch, 72, is the Chairman of Klipsch Group, Inc. ("KGI") and has served in that capacity for twenty-two (22) years and has been a Director of VOXX since July 2011. Mr. Klipsch has also owned and operated several health care companies and in 2002, successfully executed an IPO of Windrose Medical Properties Trust, a health care REIT. Mr. Klipsch is Chairman of School Choice Indiana, Chairman of Hoosiers for Economic Growth, Chairman of the Educational Choice Charitable Trust and of the Education Committee for the Indiana Chamber of Commerce. He received his B.S. from Purdue University and is a Purdue Honorary PhD. recipient. Mr. Klipsch's qualifications to serve on the Board include his extensive business experience in both the public and private sector as well as his leadership roles in several philanthropic organizations.
 

Mr. T. Paul Jacobs was elected President and CEO of Klipsch Group, Inc. ("KGI") in July 2011. Prior thereto he served as the President of both Klipsch Audio Technologies and Jamo International and as Executive Vice President, Chief Operating Officer and Vice President of Worldwide Sales for KGI. Mr. Jacobs also serves on the Audio Board of the Consumer Electronics Association.

 

Mr. David P. Kelley was elected President of Global Sales of Klipsch Group, Inc. ("KGI") in July 2011. Prior thereto, since joining KGI in 1993, Mr. Kelley served as Vice President of Sales, International Sales Manager, National Sales Manager and other positions at KGI. Mr. Kelley is a member of several industry organizations including CEA, CEDIA, PARA and NSCA most notably.
 
Mr. Michael Klipsch was elected President of Global Operations, Executive Vice President and Chief Counsel of Klipsch Group, Inc. ("KGI") in 2011. Mr. Klipsch joined Klipsch Audio Technologies in 1996 as Chief Counsel and later served as Senior Vice President of Operations. Prior to joining Klipsch Audio, Mr. Klipsch was a partner at the law firm of Bingham Summers Welsh & Spilman.
 

 

From the Form 10-K filing, I saw a goodwill impairment charge of ~ $32 million related to the Klipsch acquisition, for which this 'non-cash' loss was a substantial portion of the overall "premium audio" segment loss of ~ $34 million for the fiscal year ended February 28, 2014. 

 

In a 'plain Eglish' way, essentially a goodwill impairment is a reduction of the "asset" on the balance sheet that resulted from the 'premium' paid over the fair value of the assets and liabilities acquired from the Klipsch acquisition.  The impairment charge is a non-cash charge to the income statement with no tangible impact on the ability to generate operating cash flows. 

 

http://www.sec.gov/Archives/edgar/data/807707/000080770714000008/voxx228201410k.htm

 

"Upon completion of the annual Step 1 assessment for the year ended February 28, 2014, the estimated fair value of the Klipsch reporting unit did not exceed its carrying amount, including goodwill. As a result, the second phase of the goodwill impairment test ("Step 2") was performed specific to Klipsch. Under Step 2, the fair value of all Klipsch's assets and liabilities were estimated, including tangible and intangible assets. The implied fair value of the goodwill as a residual was then compared to the recorded goodwill to determine the amount of impairment. As a result of this analysis, an impairment charge of $32,163 [in 'thousands' or $32.2 million] was recorded for goodwill for the fiscal year ended February 28, 2014 in the Company's Consolidated Statement of Operations and Comprehensive Income (Loss) within the Premium Audio segment. No impairment charges were recorded related to goodwill during the fiscal year ended February 28, 2013.
 
The above impairment charges were the result of various indicators that occurred during the fourth quarter of Fiscal 2014. Specifically, certain of our consumer electronic and premium audio product lines experienced significantly lower than expected performance. In addition, indications of near-term shortfalls for certain products within these lines were apparent. Taking these factors into account, along with long-term industry forecasts, the Company had re-evaluated its projections. Further, some of the weighted-average cost of capital rates increased in Fiscal 2014 as a result of higher stock volatility of market participants, as compared to overall market returns. All of these factors led to the Fiscal 2014 impairment charges for goodwill and indefinite lived intangibles."

 

"Gross margins in the Premium Audio segment decreased 170 basis points primarily as a result of declines in international sales due to European market conditions, the discounting of certain products that were phased out by the Klipsch group, as well as due to online price competition. This was partially offset by increases in sales of certain higher margin products, such as soundbars, bluetooth and wireless speakers."

 

"....an increase in research and development expenses at Hirschmann and advertising expenses primarily at Klipsch, as a result of new projects,"

 

 

Audiovox went on to explain the impairment charge, among other aspects of the accounting, in more detail to the satisfaction of the Securities & Exchange Commission in these comment letter responses that also included detailed assumptions used in the valuation.

 

http://www.sec.gov/Archives/edgar/data/807707/000080770714000034/filename1.htm

 

Premium Audio segment (Klipsch). "Management considered various factors, including the recent significant decline in sales, long-term industry forecasts, and planned product line reorganization and expansion when estimating cash flows for its valuation. As a result, we adjusted the growth rates downward, from 4.5% in 2013 to 1.5% in 2014 in the discrete period, and from 2.5% in 2013 to 1.5% in 2014 in the terminal period. The impact of these changes was to lower the fair value of the reporting unit by approximately $39.0 million. The cash flows budgeted for fiscal 2015 were 13% higher than the historical cash flows for fiscal 2014, and 11% and 16% below the historical cash flows for fiscals 2013 and 2012, respectively. The first six months of cash flows for fiscal 2015, on an annualized basis (exclusive of seasonal fluctuations), are approximately 7% below the cash flows budgeted for fiscal 2015."

 

http://www.sec.gov/Archives/edgar/data/807707/000080770714000023/filename1.htm

 

Invision, Klipsch and Hirschmann reporting units. "The step 1 calculation above resulted in equity fair values of $47.0, ($9.2) and $19.8 million for the Invision, Klipsch and Hirschmann reporting units, respectively, as of February 28, 2014. The Company considered the Company’s market capitalization as a corroborative step in assessing the reasonableness of the fair value of the Company and ultimately the reporting units. The fair values of the goodwill reporting units were combined with the estimate of the value of the remaining reporting units and compared to the market capitalization of Voxx International Corporation at February 28, 2014. An estimate of the value of the remaining reporting units was developed by applying an EBITDA multiple to the EBITDA projection of the remaining reporting units. An EBITDA multiple was estimated by evaluating the multiples for market participants."
 
 
From the second quarter Form 10-Q
 
 
Gross margins in the Automotive segment increased 260 and 230 basis points for the three and six months ended August 31, 2014 primarily as a result of improved margins related to tuners and antennas, and sales of devices for the new Car Connection program during the three and six months ended August 31, 2014, as well as a one time duty refund received in the first quarter of Fiscal 2015, impacting margins for the six months ended August 31, 2014. This was offset by decreases in sales in the OEM manufacturing line due to a temporary program suspension due to a customer's safety issues, and continued decreases in sales in Venezuela as a result of economic and political conditions during the three and six months ended August 31, 2014.
 
Gross margins in the Premium Audio segment decreased 520 and 330 basis points for the three and six months ended August 31, 2014 primarily as a result of the discounting of certain Klipsch products in anticipation of the launch of new product at the end of the second quarter, as well as an unfavorable product mix in Europe. This was partially offset by increases in sales of certain higher margin domestic products, such as cinema speakers.
 

 

I suspect the domestic cinema speaker sales could include a few sets of those 904's going into a few forum member homes.

Edited by Fjd
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None of the statements below constitute an official Klipsch statement. These are my personal opinions and thoughts. Please treat them as such...

 [/b][/i]

No one ever reads the preamble...trust me.

BTW...I saw that the Klipsch KMC-3 and X11i were both featured in consumer reports December issue so congrats!

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  • 2 weeks later...

It would be awesome to see Klipsch at college campuses. As others have mentioned, unless you have HEARD Klipsch speakers you dont have an idea of why you would want them. I am 26 and I was very surprised that most theaters in the US have Klipsch speakers. I would never have been into Klipsch in the first place if a rich guy didnt give me a free pair of KSB 1.1 bookshelf speakers for helping him move some furniture. If you had a room at the "welcome" events at campuses with a high end setup playing music it would be a really cool experience. Even a high end setup at the electrical engineering center would make an impact. Especially schools like University of Colorado etc where kids have more of their parent's money to burn than they know what to do with. Klipsch also has an awesome company culture and the more you look into it the more interesting it becomes.

 

Vintage is in in a big way as well and audio fidelity is too once kids actually hear the difference. Record stores are experiencing record sales right now and when I went to CU, Beta nightclub in Denver was by far the most popular club due to their fully horn loaded FunktionOne sound system. (I stuck my head in the bass bin once at a Deadmau5 show but thats a different story...) Also do demo's on how to properly set up a speaker system and a HT system to get kids involved. My buddy had a BOSE system in a box for weeks because he didnt know how to set it up and that was plug and play. Efficient speakers have a huge advantage for Urban youth as well because you can have them on a low SPL and still enjoy all the detail in the music.

 

There is a huge generation gap in the high end audio industry right now and the companies that proactively reach out to the youth are the ones that are going to succeed.

Edited by twk123
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It would be awesome to see Klipsch at college campuses.

 

Say what?

 

If ya can't find them on campus, take them yourself!

 

Year: 1980 and you can see my LaScala on the side.  This was in my dorm which had the two LaScalas and a pair of Electrovoice Interface D's.

 

Yeah, we learned how to study & sleep standing up.

 

:)

post-12967-0-13100000-1420846968_thumb.j

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None of the statements below constitute an official Klipsch statement. These are my personal opinions and thoughts. Please treat them as such...

 

I don't post a lot here (always lurking, though), so I'm not going to pretend like everyone here knows me. In short, I'm the guy who runs social media for Klipsch.  I have been the voice of the Klipsch Twitter, Facebook, Instagram, YouTube Google+, etc accounts for almost three years now.

 

Anyway, in the thread about the big launch we're having at CES 2015, things got a little heated. I don't like to run social media way the traditional way - kissing every customers butt no matter what they say. BUT I do take great pride in being a far more transparent and open representative than you would find at other consumer-oriented brands.

 

In that spirit, I would like to tackle a few subjects and many more in order to continue this transparency and openness. This is gonna be quite rambling and incoherent, but I just want to get a few things out there.

 

I LOVE Klipsch...This is my life. This is how I feed myself (sometimes) and put clothes on my back. I spend way too much time thinking about all of this stuff and that is the same thing for 90% of the people who work there. I love coming into work and it's not like I'm getting rich off this job. I love what the company stood for and what it stands for now.

 

We Love You...From my readings here, I think people are feeling detached from the company here - that we don't care about out. This couldn't be further from the truth. We always ask "Well, what are the forums guys gonna think about X?" Did our marketing drift away from you guys? YES. We admitted that and have taken the necessary steps to appeal both to YOU and the grander audience that we need in order to survive and thrive.

 

We Need You...You want Klipsch to make certain products? You want Klipsch to make more stuff in the United States? TELL YOUR DEALERS! Screaming about it on the forums does almost nothing. We have to make a business case to make a new speaker and that means dealer buy-in. The fact about Klipsch business is that so little of it is done directly. We rely heavily on our dealers to move product because we simply do not have the advertising or marketing budgets to move tons of product on our own.

 

Paul W. Klipsch...Not a single day goes by, where someone does not mention him or his audio principles. When Mark Casavant introduced the latest line to the entire company, PWK was in his very first sentence. His audio principles are literally drilled into us every single. The engineers and product managers are absolutely instructed to make products that stick to these principles. Heck, I even have four photos of him in my so-much-better-than-Chad's cube. PLUS, many of our new marketing initiatives are centered around him aka "Good Poop" blog posts, our CES 2015 audio museum, brand video, etc.  As a marketing department, we are working closer than ever with Jim Hunter whose wealth of PWK knowledge is ridiculous. Jim takes almost every single visitor/guest on a tour of Klipsch HQ in which he provides in-depth commentary of PWK and his speakers. All of this is why I take great offense at some posters here who act like we have forgotten him or don't care about his legacy. That is utter horse manure through and through.

 

Heritage Sales...Certain people seem to take great offense still that we make products that aren't Heritage. Come on, guys! If we didn't make Reference, we would have to lay off everyone. It's really that simple. No one, past or present, would/should/could want that. The ugly truth is that many/most companies would just shut down the line and move on. I know a lot of you guys recognize this already, so I apologize if it seems condescending. We would love to expand on the Heritage line but there needs to be a business case. It doesn't matter if someone from the past would be in charge. The situation would be the same. We can't just make every awesome speaker we think of, unfortunately.

 

Made in America...Reading the above paragraph, one might think "Oh, Alex is a young punk who hates Heritage and just buys a bunch of Chinese-made crap." Deep breath! I love, love, love our Heritage line and Made in America products. I am actually saving up for Heresy speakers that I will surely pass down to my kids (if that ever happens). Oh and right now I am wearing a Gitman shirt, Flint & Tinder denim, Flint + Tinder underwear, and Chippewa Boots - all products made in America. The initiative with the Made in America blog series and partnerships with companies like Tanner Goods, Woodchuck USA, Imogene + Willie, etc is my baby and it's an initiative that has backing from everyone. We want to make more stuff in America. Even Vlad and the headphone team are looking for creative ways to get Hope involved. We'll see what happens.

 

Heritage Opportunity...We have a unique opportunity to take advantage of a growing consumer segment - the hipster with disposable income. A popular trend right now is buying handmade and American-made products that, yes, are a little more expensive than the comparable made in China product. Our friends Tanner Goods charge $450 for their Portland-made backpack and they sell quite a few of them! It's quite remarkable. With our current Heritage lineup, we have a unique opportunity to target these consumers. We are looking for unique channels of distribution for Heritage that goes beyond audio-specific dealers.

 

Heritage Marketing...There is a ridiculous misconception that we haven't marketed Heritage products at all and that's why they're not selling. Wrong, wrong, wrong! I don't know how many of you follow our social media channels or blog, but we talk about our Heritage speakers a ton. Also, be sure to check out the relatively new video we made for the line. Plus, our partnership with Classic Album Sundays is centered around the Heritage Series. If you don't know what it is, CAS is special listening sessions in certain parts of the world where you listen to an album all the way through with Klipschorns or La Scalas and a speaker guest speaker explaining the album. These events are great, but they are expensive, so we can't do it in as many places as we'd like.

 

Klipsch Professional...We are making a new push with Klipsch Professional. We have great opportunities to grow here. You should see a lot of cool stuff coming through this department in the next few years. A lot of the growth will also be done behind the scenes.

 

Concepts...Sometimes we make concepts that we aren't allowed to talk about with you guys. These can be Hope-built products that would certainly peak a lot of your interests. Sometimes, these get canned for lack of dealer support. Watch both our own and third party of the Klipsch at CES carefully! Chad and I are asking for permission to show you guys stuff, so we can drum up support for certain things, but no promises.

 

Website Homepage...Our website currently features a bunch of products that aren't favorites here. That's because they are on discount and we have rarely ever done discounts directly through our website. It is an experiment. In any case, website hero slides will go back to our more heritage-y marketing that we all prefer on 1/1/2015.

 

This industry is tough for high-end...Here's a little taste of the market for you. The average selling price for soundbars + bluetooth speakers dropped over 40% in only year! Isn't that crazy? We don't do the low-end market particularly well and we recognize that. In fact, we have recommitted to the high-end market. See this recent article from the Indiana Business Journal.

 

Mistakes...We have made mistakes both in products and in marketing. There is absolutely not denying it. BUT I think everyone here is really going to like the direction we're going in both these departments going forward. Things have change SIGNIFICANTLY in the three years I've been here and I think, now, it's finally for the better.

 

Soundbars...If you read the article above, you will know that CEO Paul Jacobs said "You can’t replace the experience of a premium home theater system with a sound bar.” Everyone here should be VERY happy about that statement and it's absolutely true. We are committed to superior home theater and two channel solutions. That's our bread and butter. That being said, our soundbars do sound great. I know from personal experience that people on these very forums thought they were hearing professional Klipsch speakers but it was actually a R-20B soundbar. So, with that in mind, let's not always scream and shout that these products can't possibly sound any good, please.

 

No Voxx, No Klipsch...I can't go into too much detail but the reality is that when Fred Klipsch (who PWK sold the company to) decided to sell Klipsch, there were two choices - Klipsch lives through Voxx or it dies an unrecognizable death. I know many of you have fears they will run us into the ground, but, at this point, it is what it is and we ALL need to make the best about it. It's been what - 4 years? Time to move on.

 

Criticism...Parts of this post probably come off as me being quite butt hurt and unable to take any criticism. Part of that is true haha! I should let more things go, but I think that also does show how much I care about this place. Anyway, criticism does make us better. It definitely does. That being said, sometimes this place can be brutally negative even when it doesn't make any sense. We need you guys to be part of the solution. 

 

Anyway, I hope this was worth reading in some way. I really hope it didn't come off as dick-ish or condescending. I know a lot of you recognize already what I just typed out. I am just trying to be open and honest. If you have any questions, fire them over.

 

Happy Holidays and Happy New Year!

 

Again, none of the statements above constitute an official Klipsch statement. These are my personal opinions and thoughts. Please treat them as such.

Id be happy if you would give us a few more "Likes", because i just ran out....AGAIN!

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Yeah...  we lived in a section of campus that had larger dorms BUT, was a bit of a walk to the actual campus.

 

One of the early days of the year, someone across the hall had his little Bose 305's, or 503's (whatever has the two tweeters firing upwards) jamming away.  He was simply blasting those little boxes.

 

My room-mate looked at me with curious eyes....and I said OK.  We put Who are you (Who's Next) and it was the dbx encoded version of it.  Slipped the volume to about 'stupid' and let it rip.

 

Before the song was halfway over, virtually everyone that I'm aware of had dropped what they were doing and we had like 25 heads trying to pop their way into our (open) door but, they couldn't get in because there were 25 open jawed mouths dropped to the floor.

 

Yeah....  if they wanted volume wars, they all realized there was a new king on the block.  Interestingly, we hardly ever (ever ever) had it cranked up.  I simply don't like to crank things when there are others around who might be doing something.

 

I guess it's called respect.

 

Don't however, come over for an audition and expect me to be timid. 

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I think it's great Klipsch sells less expensive speakers like the Synergy Series that I have.

Being disabled and on a fixed income, I cannot afford K-Horns or the larger, beautiful speakers

Klipsch has offered in the past.  I've heard them all and they are classic. 

 

When I bought my Synergy, I went to HH Greg where they stocked the Reference Series

but I could not even afford them.  I bought mine without the benefit of hearing them and

just reputation alone and knowing that buying Klipsch would probably be a good fit for me.

I prefer the sound of horns over other means of sound reproduction.

 

I bought my speakers online from Newegg because of the fantastic price.

I bought 3 for the price of one new retail.

 

This online buying does have an advantage to Klipsch as a company because

they did sell quite a few of them judging from the new reviews people posted

which puts Klipsch into people's homes and in itself is a great form of advertising

when their friends and neighbors come calling and get a listen to the buyer's

new speakers.

 

With Subs and smaller speakers available, selling larger full range speakers

can be a challenge.  Even in this forum, you'll find people using subs with large Klipsch

speakers.  I have a 12" Polk 505 sub and currently have it disconnected because it

really does Not add much to the sound of my F20's.  In fact, I find most powered subs

to be thumpy and distracting from what good sound should be. Even though I have an

entry level Klipsch, they dig pretty low and really don't need any help.  Young people

don't see it this way, they'll take a Bose cube with it's inferior sub box and not understand

or care about the difference, After all, they get most of their music from a phone or a

portable device where they get 5 to 10% of music that is available on a CD.

 

Most music, Listening Stores are a thing of the past.  Marketing has changed.

Companies have to change with the times or get left behind. I'm glad I was able

to buy Klipsch for my families enjoyment.  And they do enjoy them,  everyday.

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