SOURCE: Emerson Radio Corp.

November 15, 2007 07:15 ET

Emerson Radio Corp. Reports Fiscal 2008 Second Quarter Results

PARSIPPANY, NJ--(Marketwire - November 15, 2007) - Emerson Radio Corp. (AMEX: MSN) today reported financial results for its fiscal second quarter ended September 30, 2007.

Net revenues for the second quarter of fiscal 2008 were $57.9 million, compared to $99.6 million during the second quarter of fiscal 2007. Net revenues during the second quarter of fiscal 2007, included $20.8 million of one-time holiday promotional item sales to ESI International associated with a major holiday promotion with one of the Company's major customers. Net revenues during the second quarter of fiscal 2008 were impacted by lower sales volumes of Emerson branded products in several audio product lines and the iPod® compatible product category, partially offset by an increase in the microwave ovens and clock radios categories. Themed product sales also declined in the second quarter of fiscal 2008, primarily as a result of the discontinuance of Nickelodeon® themed products, partially offset by sales of Mattel® themed products which began in the fourth quarter of fiscal 2007.

The Company's operating loss for the second quarter was $120,000, compared to operating income of $5.9 million during the same period last year. The decrease was primarily due to lower revenues in the period. Net loss for the second quarter of fiscal 2008 was $3.3 million or $0.12 per diluted share, primarily due to the Company's increased estimated liability for California Franchise Taxes for tax years 1977 - 1990 in the amount of $3.7 million, compared to net income of $3.8 million or $0.14 per diluted share, in the prior year period.

"Our results for the second fiscal quarter were disappointing primarily due to soft demand within our traditional audio category," said John Spielberger, President - North American Operations. "However, we continued to benefit from the diversification of our product portfolio and experienced significant growth across our Housewares category, specifically microwaves and wine coolers, which has increased 23% year-to-date. During the quarter, we introduced a new product in this category, as we began selling toaster ovens through our major retail partners. Finally, we recently strengthened our senior management team through several key appointments aimed at improving our operational efficiency and positioning Emerson for growth over the balance of the fiscal year."

About Emerson Radio Corporation

Emerson Radio Corporation (AMEX: MSN), founded in 1948, is headquartered in Parsippany, N.J. The Company designs, markets and licenses, worldwide, full lines of televisions and other video products, microwaves, clocks, radios, audio and home theater products. Emerson's web site is 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, including the Company's ability to obtain a waiver from its lender and its ability to maintain its AMEX listing. 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 REPORTS

                     EMERSON RADIO CORP. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)
                (In thousands, except earnings per share data)

                                 Three months ended     Six months ended
                                    September 30          September 30,
                                --------------------  --------------------
                                  2007       2006       2007       2006
                                ---------  ---------  ---------  ---------
Net revenues
Net revenues                    $  57,823  $  99,588  $ 110,426  $ 154,829
Net revenues-related party             39         --        124         --
                                ---------  ---------  ---------  ---------
                                   57,862     99,588    110,550    154,829
                                ---------  ---------  ---------  ---------

Costs and expenses:
Cost of sales                      51,393     65,736     96,641    113,576
Cost of sales-related party
 purchases                             --     20,942         --     20,942
Other operating costs and
 expenses                           1,548      1,426      3,344      3,025
Selling, general and
 administrative expenses
 (exclusive of non-cash
  compensation shown below)         5,307      5,620     10,284     10,806
Acquisition costs incurred             --         --         --         21
Non-cash compensation
 (recovered)                         (266)       (50)      (187)        55
                                ---------  ---------  ---------  ---------
                                   57,982     93,674    110,082    148,425
                                ---------  ---------  ---------  ---------

Operating income (loss)              (120)     5,914        468      6,404
Gain on sale of building              854         --        854         --
Interest income (expense), net        (66)      (212)         4       (107)
Interest income-related party          --         --        163         --
                                ---------  ---------  ---------  ---------
Income before income taxes            668      5,702      1,489      6,297
Provision for income taxes          3,952      1,898      4,331      1,912
                                ---------  ---------  ---------  ---------
Net income (loss)               $  (3,284) $   3,804  $  (2,842) $   4,385
                                =========  =========  =========  =========

Net income (loss) per share
Basic                           $   (0.12) $    0.14  $   (0.10) $    0.16
Diluted                         $   (0.12) $    0.14  $   (0.10) $    0.16

Weighted average shares
 outstanding
  Basic                            27,130     27,077     27,122     27,071
  Diluted                          27,130     27,106     27,122     27,123



EMERSON REPORTS


                    EMERSON RADIO CORP. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                (In thousands)

                                                    September   March 31,
                                                     30, 2007     2007(A)
                                                    ----------- -----------
                                                    (Unaudited)

  Cash and cash equivalents (includes cash securing
   bank loans of $3,000)                            $    10,406 $     4,851
  Accounts receivable                                    31,199      19,375
  Due from affiliates                                     1,219      24,690
  Inventory                                              61,362      32,463
  Deferred tax assets                                     4,716       5,737
  Other current assets                                    5,541       4,912
                                                    ----------- -----------
     Total current assets                               114,443      92,028

Property, plant and equipment, net                        1,553       2,492
Other assets                                              5,664       4,888
                                                    ----------- -----------
     Total assets                                   $   121,660 $    99,408
                                                    =========== ===========

Current liabilities                                      50,676      24,845
Long-term borrowings                                        154         651
Other long term debt                                         42          25
Shareholders’ equity                                     70,788      73,887
                                                    ----------- -----------
     Total liabilities and equity                   $   121,660 $    99,408
                                                    =========== ===========



(A) Reference is made to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 filed with the Securities and Exchange Commission in June 2007 and amended in July 2007.

Contact Information

  • CONTACT:

    Emerson Radio Corp.
    Greenfield Pitts
    Chief Financial Officer
    (212) 521-4344

    Investor Relations:
    Robert Maffei
    Investor Relations Manager
    (973) 428-2098

    Brainerd Communicators
    Brad Edwards or
    Denise Roche
    (212) 986-6667