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Emerson Radio Corp. Reports Fiscal 2013 Third Quarter Results

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HACKENSACK, NJ -- (Marketwire) -- 02/14/13 -- Emerson Radio Corp. (NYSE MKT: MSN) today reported financial results for its third quarter and nine month period ended December 31, 2012.

Net revenues for the third quarter of fiscal 2013 were $24.7 million, a decrease of $18.8 million, or 43.3%, as compared to the third quarter of fiscal 2012 net revenues of $43.5 million. The decline in year-over-year net revenues was driven by lower year-over-year net product sales due to pricing pressures, intense competitive activity and a challenging retail sales environment.

Net product sales for the third quarter of fiscal 2013 were $22.6 million, as compared to $41.3 million for the third quarter of fiscal 2012, a decrease of $18.7 million, or 45.2%. The lower year-over-year net product sales were driven by a $17.0 million, or 44.2%, decline in net sales of houseware products, which was the result of lower year-over-year sales of all product offerings within the category due to increased pricing pressures, intense competitive activity and the continuing effects of a challenging retail sales environment, and a $1.7 million, or 59.7%, decline in net sales of audio products, due to lower year-over-year sales of all product offerings within the category.

Licensing revenue in the third quarter of fiscal 2013 was $2.0 million, as compared to $2.2 million in the third quarter of fiscal 2012, a decrease of $0.2 million, or 6.0%. The lower year-over-year licensing revenue was the result of lower year-over-year sales of products bearing the Emerson brand name by its active licensees as well as a lower year-over-year number of licensees.

Net revenues for the nine month period of fiscal 2013 were $105.4 million, a decrease of $31.0 million, or 22.7%, as compared to the nine month period of fiscal 2012 net revenues of $136.4 million. The decline in year-over-year net revenues was driven by lower year-over-year net product sales, slightly offset by higher year-over-year licensing revenues.

Net product sales for the nine month period of fiscal 2013 were $99.8 million, as compared to $131.6 million for the nine month period of fiscal 2012, a decrease of $31.8 million, or 24.2%. The lower year-over-year net product sales were driven primarily by a $26.5 million, or 21.5%, decline in net sales of houseware products, which was the result of lower year-over-year sales of all product offerings within the category due to pricing pressures, intense competitive activity and the continuing effects of a challenging retail sales environment, and a $5.4 million, or 63.0%, decline in net sales of audio products, due to lower year-over-year sales of all product offerings within the category.

Licensing revenue in the nine month period of fiscal 2013 was $5.6 million, as compared to $4.8 million in the nine month period of fiscal 2012, an increase of $0.8 million, or 17.5%. The higher year-over-year licensing revenue was the result of approximately $1.3 million of higher year-over-year licensing revenue earned from the Company's largest licensee Funai Corporation ("Funai"), on higher year-over-year sales by Funai of products bearing the Emerson brand name, partially offset by lower aggregate year-over-year licensing revenues earned by the Company due to a lower year-over-year number of licensees as well as lower year-over-year sales of products bearing the Emerson brand name by its active licensees other than by Funai.

Operating income for the third quarter of fiscal year 2013 was $2.0 million, a decrease of $2.5 million, or 55.4%, from operating income of $4.5 million for the third quarter of fiscal year 2012, due primarily to the substantial declines in net product sales, higher year-over-year landed product cost as a percent of selling price and the slight decrease in year-over-year licensing revenue, partly offset by lower SG&A expenses.

Operating income for the nine month period of fiscal year 2013 was $8.6 million, a decrease of $1.4 million, or 14.3%, from operating income of $10.0 million for the nine month period of fiscal year 2012, due to the substantial declines in net product sales and the impairment write-down in September 2012 of a non-strategic trademark, offset in part by lower year-over-year landed product cost as a percent of selling price, the higher year-over-year licensing revenue and lower year-over-year SG&A expenses, primarily due to decreased compensation and consulting costs.

Net income for the third quarter of fiscal 2013 was $1.7 million, as compared to $3.2 million for the third quarter of fiscal 2012, a decrease of $1.5 million, or 46.6%, due primarily to the year-over-year decrease in operating income. Net income for the nine month period of fiscal 2013 was $7.5 million, as compared to $8.3 million for the nine month period of fiscal 2012, a decrease of $0.8 million, or 9.6%, due primarily to the year-over-year decrease in operating income, the realized gain on sale of marketable security earned in the prior period and the gain on the sale of a building in the prior period. Diluted earnings per share for the third quarter of fiscal year 2013 were $0.06, as compared to $0.12 for the third quarter of fiscal year 2012, a decrease of $0.06 per diluted share, or 50.0%. Diluted earnings per share for the nine month period of fiscal year 2013 were $0.28, as compared to $0.30 for the nine month period of fiscal year 2012, a decrease of $0.02 per diluted share, or 6.7%.

Duncan Hon, Chief Executive Officer of Emerson Radio, commented, "As expected, our third quarter and nine month fiscal 2013 revenues declined significantly as compared to the prior year due to intense competition, including downward pricing pressure, within all of our product categories, as well as the continuing effects of a challenging retail sales environment. We expect such market conditions to persist for the foreseeable future and, as we previously disclosed, anticipate a further reduction in revenues due to the decision by Wal-Mart to discontinue purchasing from the Company two microwave oven products currently sold by the Company to Wal-Mart. Although higher margins for our nine month period helped to slightly mitigate the negative impact to our bottom line profitability on a year-over-year basis, we don't anticipate that this favorable outcome will continue or be indicative of a trend for the full fiscal year. 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 (Unaudited) (In thousands, except earnings per share data) Three Months Ended Nine Months Ended December 31, December 31, 2012 2011 2012 2011 --------- --------- --------- ---------Net revenues:Net product sales $ 22,608 $ 41,274 $ 99,783 $ 131,590Licensing revenue 2,046 2,177 5,597 4,765 --------- --------- --------- ---------Net revenues 24,654 43,451 105,380 136,355Costs and expenses:Cost of sales 20,484 36,657 88,759 119,257Other operating costs and expenses 253 306 1,046 995Selling, general and administrative expenses 1,926 2,025 5,671 6,094Impairment of Trademark - - 1,326 - --------- --------- --------- --------- 22,663 38,988 96,802 126,346 --------- --------- --------- ---------Operating income 1,991 4,463 8,578 10,009Other income:Interest income, net 132 10 230 40Gain on sale of building - 347 - 347Realized gain on sale of marketable security - - - 828 --------- --------- --------- ---------Income before income taxes 2,123 4,820 8,808 11,224Provision for income taxes 430 1,649 1,328 2,953 --------- --------- --------- ---------Net income $ 1,693 $ 3,171 $ 7,480 $ 8,271 ========= ========= ========= =========Net income per share: Basic 0.06 0.12 0.28 0.30 Diluted 0.06 0.12 0.28 0.30Weighted average shares outstanding: Basic 27,130 27,130 27,130 27,130 Diluted 27,130 27,130 27,130 27,130 EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share data) 12/31/12 3/31/12 (A) ----------- ----------- (Unaudited) ASSETSCurrent Assets:Cash and cash equivalents $ 23,288 $ 44,960Restricted cash 102 215Short term investments 35,040 --Accounts receivable, net 5,945 12,134Other receivables 1,820 1,193Due from affiliates -- 1Inventory, net 12,928 11,269Prepaid expenses and other current assets 5,420 2,873Deferred tax assets 2,343 2,304 ----------- ----------- Total Current Assets 86,886 74,949Property, plant, and equipment, net 288 260Trademarks, net 219 1,545Deferred tax assets 1,453 1,668Other assets 34 262 ----------- ----------- Total Assets $ 88,880 $ 78,684 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities:Current maturities of long-term borrowings 42 64Accounts payable and other current liabilities 11,627 9,152Due to affiliates -- 11Accrued sales returns 1,105 1,201Income taxes payable 494 107 ----------- ----------- Total Current Liabilities 13,268 10,535Long-term borrowings 41 72Deferred tax liabilities 189 177 ----------- ----------- Total Liabilities 13,498 10,784Shareholders' Equity:Preferred shares -$.01 par value, 10,000,000 shares authorized at December 31, 2012 and March 31, 2012, respectively; 3,677 shares issued and outstanding at December 31, 2012 and March 31, 2012, respectively; liquidation preference of $3,677,000 at December 31, 2012 and March 31, 2012, respectively 3,310 3,310Common shares -- $.01 par value, 75,000,000 shares authorized, 52,965,797 shares issued at December 31, 2012 and March 31, 2012, respectively; 27,129,832 shares outstanding at December 31, 2012 and March 31, 2012, respectively 529 529Capital in excess of par value 98,785 98,785Accumulated other comprehensive income (losses) 345 (82)Accumulated deficit (3,363) (10,418)Treasury stock, at cost, 25,835,965 shares (24,224) (24,224) Total Shareholders' Equity 75,382 67,900 ----------- ----------- Total Liabilities and Shareholders' Equity $ 88,880 $ 78,684 =========== ===========(A) Reference is made to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2012 filed with the Securities and Exchange Commission on July 13, 2012





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



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