Emerson Radio Corp. Reports Fiscal 2014 First Quarter Results

Marketwired

HACKENSACK, NJ--(Marketwired - Aug 15, 2013) - Emerson Radio Corp. (NYSE MKT: MSN) today reported financial results for its first quarter ended June 30, 2013.

Net revenues for the first quarter of fiscal 2014 were $24.7 million, a decrease of $21.3 million, or 46.4%, as compared to the first quarter of fiscal 2013 net revenues of $46.0 million. The decline in year-over-year net revenues was driven by a $21.5 million, or 49.1%, decline in net sales of houseware products, which was the result of lower year-over-year sales of microwave ovens, compact refrigerators and wine coolers, partly offset by a $0.1 million, or 8.2%, increase in net sales of audio products, due to higher year-over year sales of the company's clock radio and portable audio product offerings and a $0.1 million, or 9.1%, increase in licensing revenues due to higher year-over-year sales by the Company's licensees of branded products under license from the Company during the first quarter of fiscal 2014 as compared to the first quarter of fiscal 2013.

As reported by the Company in a Form 8-K filed with the SEC on October 19, 2012, the Company was informed by its customer Wal-Mart, that, commencing with the Spring of 2013, Wal-Mart would discontinue purchasing from Emerson two microwave oven products that had been sold by the Company to Wal-Mart. Emerson continued shipping these two products throughout the remainder of Fiscal 2013 (the year ending March 31, 2013), with sales of such products declining through the fourth quarter of Fiscal 2013. During Fiscal 2013, these two microwave oven products comprised, in the aggregate, approximately $36.1 million, or 29.7%, of the Company's net product sales. Emerson anticipates that the full impact of Wal-Mart's decision will be realized by the Company in Fiscal 2014, which began on April 1, 2013. As previously disclosed by the Company, the complete loss of, or significant reduction in, business with either of the Company's key customers will have a material adverse effect on the Company's business and results of operations. Accordingly, Wal-Mart's decision has had a material adverse effect on the Company's business and results of operations in the quarter ended June 30, 2013. There can be no assurance that the Company will be able to increase sales of such products at levels sufficient to offset the adverse impact of Wal-Mart's decision, if at all.

As a result of the above, during the first quarter of fiscal 2014, sales of these two products by the Company were nil as compared to approximately $12.1 million during the first quarter of fiscal 2013.

Operating income for the first quarter of fiscal year 2014 was $1.3 million, a decrease of $3.1 million, or 69.9%, from operating income of $4.4 million for the first quarter of fiscal year 2013 due to the lower year-over-year net revenues and higher year-over-year SG&A expenses, due primarily to a year-over-year increase in legal fees, tax consulting fees and a reduced benefit in bad debt recoveries, partially offset by a decrease in compensation costs.

Net income for the first quarter of fiscal 2014 was $1.4 million, as compared to $3.8 million for the first quarter of fiscal 2013, a decrease of $2.4 million, or 64.3%, due to the year-over-year decrease in operating income. Diluted earnings per share for the first quarter of fiscal year 2014 were $0.05, as compared to $0.14 for the first quarter of fiscal year 2013, a decrease of $0.09 per diluted share, or 64.3%.

Duncan Hon, Chief Executive Officer of Emerson Radio, commented, "Our first quarter fiscal 2014 revenues and net income declined significantly as compared to the prior year due primarily to the decision by Wal-Mart to discontinue purchasing, effective Spring 2013, from the Company two microwave oven products sold throughout fiscal year 2013 by the Company to Wal-Mart, the last shipments of which were made in February and March 2013, and intense competition, including downward pricing pressure, within all of our product categories. We expect these factors to affect our year-over-year comparisons throughout the remainder of fiscal 2014. The Company seeks to implement pricing and product strategy initiatives to improve the Company's results of operations, although there can be no assurance that such initiatives will be successfully implemented or have the desired effects on the Company's results of operations and financial condition."

About Emerson Radio Corp.
Emerson Radio Corp. (NYSE MKT: MSN), incorporated in 1994, is headquartered in Hackensack, N.J. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses its trademarks to others on a worldwide basis for a variety of products. For more information, please visit Emerson Radio's web site at www.emersonradio.com.

Forward Looking Statements
This release contains "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, they give no assurance that such expectations will prove to be correct and you should be aware that actual results could differ materially from those contained in the forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, including the risk factors detailed in the Company's reports as filed with the Securities and Exchange Commission. The Company assumes no obligation to update the information contained in this news release.

 
 
 
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
     
    Three Months Ended
June 30,
    2013   2012
             
Net revenues:            
Net product sales     23,481     44,876
Licensing revenue     1,171     1,135
Net revenues   $ 24,652   $ 46,011
             
Costs and expenses:            
Cost of sales     20,984     39,173
Other operating costs and expenses     151     408
Selling, general and administrative expenses     2,188     2,008
      23,323     41,589
Operating income     1,329     4,422
             
Other income:            
Interest income, net     222     31
             
Income before income taxes     1,551     4,453
Provision for income taxes     182     613
Net income   $ 1,369   $ 3,840
             
             
Basic net income per share:     0.05     0.14
             
Diluted net income per share:     0.05     0.14
             
Weighted average shares outstanding:            
  Basic     27,130     27,130
  Diluted     27,130     27,130
               
               
               
EMERSON RADIO CORP. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(In thousands except share data)  
             
             
    6/30/13     3/31/13 (A)  
    (Unaudited)        
ASSETS                
Current Assets:                
Cash and cash equivalents   $ 15,983     $ 21,412  
Restricted cash     --       70  
Short term investments     45,337       45,235  
Accounts receivable, net     14,105       7,883  
Other receivables     1,039       969  
Due from affiliates     --       1  
Inventory     6,064       3,454  
Prepaid expenses and other current assets     5,286       1,873  
Deferred tax assets     1,608       1,685  
  Total Current Assets     89,422       82,582  
Property, plant, and equipment, net     251       258  
Trademarks, net     219       219  
Deferred tax assets     1,078       1,121  
Other assets     69       104  
  Total Assets   $ 91,039     $ 84,284  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current Liabilities:                
Current maturities of long-term borrowings     43       43  
Accounts payable and other current liabilities     13,026       7,790  
Accrued sales returns     1,065       965  
Income taxes payable     1,338       1,281  
Total Current Liabilities     15,472       10,079  
Long-term borrowings     19       30  
Deferred tax liabilities     198       194  
  Total Liabilities     15,689       10,303  
Shareholders' Equity:                
Preferred shares -- 10,000,000 shares authorized; 3,677 shares issued and outstanding; liquidation preference of $3,677,000     3,310       3,310  
Common shares -- $0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued and 27,129,832 shares outstanding at June 30, 2013 and March 31, 2013, respectively     529       529  
Additional paid-in capital     98,785       98,785  
Accumulated deficit     (3,050 )     (4,419 )
Treasury stock, at cost, 25,835,965 shares     (24,224 )     (24,224 )
  Total Shareholders' Equity     75,350       73,981  
  Total Liabilities and Shareholders' Equity   $ 91,039     $ 84,284  
                   

(A) Reference is made to the Company's Annual Report on Form 10-K for the fiscal year   
ended March 31, 2013 filed with the Securities and Exchange Commission on July 16, 2013   

Contact:
FOR:
EMERSON RADIO CORP.
3 University Plaza, Suite 405
Hackensack, NJ 07601

CONTACT:
Investor Relations:
Barry Smith
Investor Relations Manager
(973) 428-2004
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