SOURCE: Emerson Radio Corp.

July 14, 2008 09:47 ET

Emerson Radio Corp. Reports Fiscal 2008 Fourth Quarter and Full Year Results

PARSIPPANY, NJ--(Marketwire - July 14, 2008) - Emerson Radio Corp. (AMEX: MSN) today reported financial results for its fourth quarter and fiscal year ended March 31, 2008.

Net revenues for the fourth quarter of fiscal 2008 were $36.9 million, a decrease of $3.3 million as compared to net revenues in the fourth quarter of fiscal 2007. Revenues during the fourth quarter of fiscal 2008 were driven by strong home appliance product sales offset by lower sales of the Company's traditional audio products and iPod® accessories, as well as lower themed product sales.

Net revenues for fiscal 2008 decreased 21.5% to $223.2 million, compared to $284.4 million during fiscal 2007. Higher home appliance product net revenues, which increased $37.8 million, or 42.1% to $127.6 million in fiscal 2008, were offset by: (i) $32.9 million in revenue in fiscal 2007 related to a one-time holiday promotion by one of the Company's major customers which did not recur in fiscal 2008; (ii) a $26.8 million sales decline in themed products compared to fiscal 2007 primarily due to the discontinuance of Nickelodeon® themed products partially offset by sales of Mattel® themed products which were dampened by $2.4 million in product returns made by one long time distribution partner; and (iii) lower sales volumes of several Emerson branded audio product lines and the iPod® category.

Operating loss for the fourth quarter of fiscal 2008 was $6.1 million compared to operating loss of $5.2 million during the fourth quarter of fiscal 2007. The Company's operating loss for fiscal 2008 was $7.3 million compared to operating income of $7.2 million during fiscal 2007. The decrease during fiscal 2008 was due primarily to lower margins in several audio categories and higher payroll and legal expenses.

Net loss for the fourth quarter of fiscal 2008 was $7.3 million, or $0.27 per diluted share, compared to net loss of $4.6 million, or $0.17 per diluted share, for the fourth quarter of fiscal 2007. Net loss for the fourth quarter of fiscal 2008 was negatively impacted by a $1.9 million loss on impairment of securities during the fourth quarter of fiscal 2008 related to the Company's auction rate preferred securities experiencing failed auctions since February 2008. These preferred securities are AAA rated and 200 percent collateralized, and the assets backing these securities are guaranteed by the U.S. government. As of the date hereof, Emerson's liquidity has not been impaired. Net loss for fiscal 2008 was $9.0 million, or $0.33 per diluted share, compared to net income of $3.5 million, or $0.13 per diluted share, in fiscal 2007. Net loss for fiscal 2008 was impacted by the factors discussed above as well as a settlement with the California Franchise Tax Board for taxes for years 1979-1990.

"Our financial results in fiscal 2008 were negatively impacted by a challenging manufacturing and global economy as well as a number of non-recurring, extraordinary expenses that we believe make annual comparable results less relevant," said John Spielberger, President of North American Operations. "While audio and themed product sales for the year were disappointing, our Home Appliance product category demonstrated robust growth in fiscal 2008, with net revenues increasing 42.1% year over year, driven by continued strong performance of our microwave oven and wine cooler product lines, plus the addition of several new home appliance product categories.

"Looking forward, we're making significant, strategic progress in transforming Emerson Radio into a more competitive, refreshed company with re-designed products across our core product lines and continued development in logical, profitable product extensions and new product categories. We've strengthened key management, we're working to continuously improve our supply chain and we are re-committed to enhancing our product designs and features. These efforts will evolve over the coming quarters, and while the economy will play a role in our performance during this time, we firmly believe we will emerge a stronger company as we continue to execute on our strategic plan."

The Company also announced today that it filed a Current Report on Form 8-K with the Securities and Exchange Commission (SEC), which includes a letter to shareholders that contains additional insight into the Company's financial performance and strategic and operational progress.

About Emerson Radio Corp.

Emerson Radio Corporation (AMEX: MSN), founded in 1948, is headquartered in Parsippany, N.J. The Company designs, markets and licenses, worldwide, a variety of consumer electronics and home appliances including microwaves and wine coolers, clock radios, full lines of televisions and other video products, and audio and home theater 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 per share data)

                                                         Three months
                          Year Ended March 31,          ended March 31,
                        ------------------------- -------------------------
                            2008         2007         2008         2007
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Net revenues
                        ------------ ------------ ------------ ------------
Net revenues                 222,857      284,166       36,888       39,998
                        ------------ ------------ ------------ ------------
Net revenues-related
 party                           373          233            3          233
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
                             223,230      284,399       36,891       40,231
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Costs and Expenses
                        ------------ ------------ ------------ ------------
Cost of sales                200,814      215,175       35,982       37,255
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Cost of sales-related
 party                           232            0            0         -200
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Cost of sales-related
 party purchases                   0       32,890            0            0
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Other operating costs
 and expenses                  6,097        6,492        1,319        2,137
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Selling, general &
 administrative
 expenses                     23,587       22,269        5,680        6,061
                        ------------ ------------ ------------ ------------
(exclusive of non-cash
 compensation shown
 below)
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Acquisition costs
 incurred                          0          190            0          169
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Non Cash Compensation,
 net of recoveries              -177          192          -18           54
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
                             230,553      277,208       42,963       45,476
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Operating income (loss)       -7,323        7,191       -6,072       -5,245
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Other income (expense)
                        ------------ ------------ ------------ ------------
Gain on sale of building         854            0            0            0
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Gains on foreign exchange
 forward contracts               465            0          -50            0
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Interest income
 (expense), net                  140         -692          212         -128
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Interest income-related
 party                           163          638            0          638
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Loss on impairment of
 securities                   -1,952            0       -1,952            0
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Income (loss) before
 income taxes and
 minority interest            -7,653        7,137       -7,862       -4,735
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Provision (benefit) for
 income taxes                  1,427        3,679         -510         -113
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Minority interest in
 loss of consolidated
 subsidiary                       59            0           59            0
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Net income (loss)             -9,021        3,458       -7,293       -4,622
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Net income (loss) per
 share:
                        ------------ ------------ ------------ ------------
Basic                          -0.33         0.13        -0.27        -0.17
                        ------------ ------------ ------------ ------------
Diluted                        -0.33         0.13        -0.27        -0.17
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------
Weighted average shares
 outstanding:
                        ------------ ------------ ------------ ------------
Basic                         27,126       27,087       27,130       27,110
                        ------------ ------------ ------------ ------------
Diluted                       27,126       27,127       27,130       27,110
                        ------------ ------------ ------------ ------------

                        ------------ ------------ ------------ ------------



                   Emerson Radio Corp. and Subsidiaries
                    Consolidated Summary Balance Sheets
                              (in thousands)

                                                    March 31,    March 31,
                                                      2008         2007
                                                  ------------ ------------

                                                  ------------ ------------
ASSETS
                                                  ------------ ------------
Cash and cash equivalents                               14,444        1,851
                                                  ------------ ------------
Restricted cash                                              0        3,000
                                                  ------------ ------------
Cash and cash equivalents (includes cash securing
 bank loans of $0 and $3,000 respectively)              14,444        4,851
                                                  ------------ ------------

                                                  ------------ ------------
Foreign exchange forward contracts                         134            0
                                                  ------------ ------------

                                                  ------------ ------------
Accounts receivable                                     17,289       19,375
                                                  ------------ ------------

                                                  ------------ ------------
Due from affiliates                                        765       24,690
                                                  ------------ ------------

                                                  ------------ ------------
Net inventory                                           24,854       32,463
                                                  ------------ ------------

                                                  ------------ ------------
Deferred tax assets                                      5,412        5,737
                                                  ------------ ------------

                                                  ------------ ------------
Prepaid expenses and other current assets                2,246        3,376
                                                  ------------ ------------
Other receivables                                        2,131        1,536
                                                  ------------ ------------
Other current assets                                     4,377        4,912
                                                  ------------ ------------

                                                  ------------ ------------
TOTAL CURRENT ASSETS                                    67,275       92,028
                                                  ------------ ------------

                                                  ------------ ------------
Property, plant, and equipment, net                      1,902        2,492
                                                  ------------ ------------

                                                  ------------ ------------
Investments in marketable securities                    11,948            0
                                                  ------------ ------------

                                                  ------------ ------------
Trademarks and other intangible assets                     279          311
                                                  ------------ ------------
Deferred tax assets                                      5,927        4,067
                                                  ------------ ------------
Other assets                                               598          510
                                                  ------------ ------------
Other assets                                             6,804        4,888
                                                  ------------ ------------

                                                  ------------ ------------
TOTAL ASSETS                                            87,929       99,408
                                                  ------------ ------------

                                                  ------------ ------------
Short term borrowings                                        0        3,111
                                                  ------------ ------------
Revolver - Current                                           0            0
                                                  ------------ ------------
Current maturities of long-term borrowings                  82          146
                                                  ------------ ------------
Accts payable & other current liabilities               21,737       20,044
                                                  ------------ ------------
Due to affiliates                                          102
                                                  ------------ ------------
Accrued Sales Returns                                      872        1,191
                                                  ------------ ------------
Income taxes payable                                       185          306
                                                  ------------ ------------
Deferred tax liabilities                                     0           47
                                                  ------------ ------------
Current liabilities                                     22,978       24,845
                                                  ------------ ------------

                                                  ------------ ------------
Long-term borrowings                                       142          651
                                                  ------------ ------------

                                                  ------------ ------------
Other Long term debt                                        57           25
                                                  ------------ ------------

                                                  ------------ ------------
Minority interest                                          133            0
                                                  ------------ ------------

                                                  ------------ ------------
Preferred shares                                         3,310        3,310
                                                  ------------ ------------
Common shares                                              529          529
                                                  ------------ ------------
Cap in excess of par value                             117,245      117,371
                                                  ------------ ------------
Acc other comprehensive losses                             -82          -82
                                                  ------------ ------------
Accumulated deficit                                    -32,159      -23,017
                                                  ------------ ------------
Treasury stock                                         -24,224      -24,224
                                                  ------------ ------------
Total shareholders equity                               64,619       73,887
                                                  ------------ ------------

                                                  ------------ ------------
TOTAL LIABILITIES AND EQUITY                            87,929       99,408
                                                  ------------ ------------

Spreadsheet's Author: Brainerd
Last Updated with Excel 97


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