SOURCE: Emerson Radio Corp.

November 15, 2010 16:20 ET

Emerson Radio Corp. Reports Fiscal 2011 Second Quarter Results

MOONACHIE, NJ--(Marketwire - November 15, 2010) - Emerson Radio Corp. (NYSE Amex: MSN) today reported financial results for its second quarter and six months ended September 30, 2010.

Net revenues for the second quarter of fiscal 2011 increased slightly to $52.0 million as compared to net revenues in the second quarter of fiscal 2010 of $51.8 million. Our second quarter fiscal 2011 net sales of houseware products, driven by increases in microwave ovens and compact refrigerators, which were partially offset by decreases in toaster ovens and coffee makers, increased by $9.0 million, or 23.3% versus the second quarter of fiscal 2010, and were largely offset by lower year-over-year net sales of audio products and the absence in the current fiscal quarter of themed products sales, which were discontinued in December 2009. Net revenues for the six month period of fiscal 2011 were $119.1 million, an increase of $11.7 million, or 10.9%, over the six month period of fiscal 2010 net revenues of $107.4. Our net sales during the six month period of fiscal 2011 of houseware products, driven by increases in microwave ovens, compact refrigerators and wine coolers, partially offset by decreases in toaster ovens and coffee makers, increased by $25.8 million, or 30.4% over the six month period of fiscal 2010, and were partially offset by lower year-over-year net sales of audio products and the absence during the six month period of fiscal 2011 of themed products sales.

Operating income for the second quarter of fiscal 2011 was $3.3 million as compared to operating income in the first quarter of fiscal 2010 of $3.4 million, a decrease of $0.1 million, or 1.1%. The decrease in second quarter fiscal 2011 operating income over the prior year was driven by higher product-related costs, which were largely offset by lower SG&A expenses. Operating income for the six month period of fiscal 2011 was $10.7 million, an increase of $5.9 million, or 124%, over operating income of $4.8 million for the six month period of fiscal 2010. The increase in operating income for the six month period of fiscal 2011 versus the prior year period was due to the increase in year-over-year net revenues, coupled with a $3.5 million decrease in year-over-year SG&A expenses.

Net income from continuing operations for both the second quarters of fiscal 2011 and fiscal 2010 was $3.2 million, or $0.12 per diluted share. Net income from continuing operations for the six month period of fiscal 2011 was $9.1 million versus $4.4 million for the six month period of fiscal 2010, an increase of $4.7 million, or 108%. Diluted earnings per share for the six month period of fiscal 2011 was $0.34 as compared to $.16 for the six month period of fiscal 2010, an increase of $0.18 per diluted share, or 113%.

Adrian Ma, Chief Executive Officer of Emerson Radio, commented, "During the second fiscal quarter of 2011, our operating income was affected by the anticipated impacts of higher year-over-year factory and freight costs on our profitability, although these increases were almost entirely mitigated by lower year-over-year SG&A expenses. For the balance of fiscal 2011, we anticipate that product-related costs will remain at higher levels than the year ago level, although these impacts should continue for this fiscal year to be tempered by lower year-over-year SG&A expenses. We continue to closely monitor and manage our product lineups, customer relationships and cost structures."

About Emerson Radio Corp.

Emerson Radio Corporation (NYSE Amex: MSN), founded in 1948, is headquartered in Moonachie, 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
                                (Unaudited)
              (In thousands, except earnings per share data)


                                 Three Months Ended     Six Months Ended
                                       30-Sep                30-Sep
                                --------------------- --------------------
                                   2010       2009       2010       2009
                                ---------- ---------- ---------- ---------
Net revenues                        51,966     51,774    119,121   107,373
Costs and expenses:
Cost of sales                       45,892     43,701    103,415    93,304
Other operating costs and
 expenses                              712      1,077      1,011     1,855
Selling, general and
 administrative expenses             2,045      3,643      3,974     7,432
                                ---------- ---------- ---------- ---------
                                    48,649     48,421    108,400   102,591
                                ---------- ---------- ---------- ---------
Operating income                     3,317      3,353     10,721     4,782
Interest income, net                     4         12         14        22
                                ---------- ---------- ---------- ---------
Income from continuing
 operations before income taxes      3,321      3,365     10,735     4,804
Provision for income taxes              98        144      1,633       422
                                ---------- ---------- ---------- ---------
Income from continuing
 operations                          3,223      3,221      9,102     4,382
Loss from discontinued
 operations, net of tax benefit         --         --         --       (55)
                                ---------- ---------- ---------- ---------
Net income                           3,223      3,221      9,102     4,327
                                ========== ========== ========== =========

Basic net income per share
  Continuing operations         $     0.12 $     0.12 $     0.34 $    0.16
  Discontinued operations               --         --         --        --
                                ---------- ---------- ---------- ---------
  Net                           $     0.12 $     0.12 $     0.34 $    0.16
                                ========== ========== ========== =========

Diluted net income (loss) per
 share
  Continuing operations         $     0.12 $     0.12 $     0.34 $    0.16
  Discontinued operations               --         --         --        --
                                ---------- ---------- ---------- ---------
  Net                           $     0.12 $     0.12 $     0.34 $    0.16
                                ========== ========== ========== =========

  Weighted average shares
   outstanding:
  Basic                             27,130     27,130     27,130    27,130
  Diluted                           27,131     27,130     27,131    27,130




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


                                                  30-Jun-10     31-Mar-10
                                                ------------  ------------
                                                (Unaudited)
  ASSETS
Current assets:
  Cash and cash equivalents                     $      2,608  $      9,969
  Restricted cash                                      2,197         5,083
  Accounts receivable, net                            20,447        20,350
  Other receivables                                    1,339         1,037
  Due from affiliates                                     86            --
  Inventory, net                                      34,991        10,952
  Prepaid expenses and other current assets              529           736
  Deferred tax assets                                  3,346         3,383
                                                ------------  ------------
    Total current assets                              65,543        51,510
Property, plant and equipment, net                     2,959         3,131
Trademarks and other intangible assets, net            1,545         1,606
Due from affiliates                                      144           185
Investments in marketable securities                   6,031         6,031
Deferred tax assets                                    5,584         6,588
Other assets                                             219           205
                                                ------------  ------------
    Total assets                                $     82,025  $     69,256
                                                ============  ============

  LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Short-term borrowings                         $      5,598  $      5,629
  Current maturities of long-term borrowings              17            30
  Accounts payable and other current
   liabilities                                        24,143        20,776
  Due to affiliates                                        2            28
  Accrued sales returns                                1,259           957
  Income taxes payable                                   328           174
                                                ------------  ------------
    Total current liabilities                         31,347        27,594
Long-term borrowings                                     104           201
Deferred tax liabilities                                 128           119
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 - $.01 par value, 75,000,000
   shares authorized; 52,965,797 shares issued
   and 27,129,832 shares outstanding                     529           529
  Capital in excess of par value                      98,785        98,785
  Accumulated other comprehensive losses                 (82)          (82)
  Accumulated deficit                                (27,872)      (36,976)
  Treasury stock - 25,835,965 shares, at cost        (24,224)      (24,224)
                                                ------------  ------------
    Total shareholders' equity                        50,446        41,342
                                                ------------  ------------
    Total liabilities and shareholders' equity  $     82,025  $     69,256
                                                ============  ============

Contact Information

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    Robert Maffei
    Investor Relations Manager
    (973) 428-2098