Emerson Radio Corp. Reports Fiscal 2014 Second Quarter Results
HACKENSACK, NJ--(Marketwired - Nov 14, 2013) - Emerson
Radio Corp. (NYSEMKT: MSN) today reported financial results for its
second quarter and six month period ended September 30, 2013.
As reported by the Company in a Form 8-K filed with the SEC on
October 19, 2012, the Company was informed by one its major
customers, that, commencing with the Spring of 2013, this customer
would discontinue purchasing from Emerson two microwave oven
products that had been sold by the Company to this customer.
Emerson continued shipping these two products throughout the
remainder of Fiscal 2013 (the year ended 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 this customer'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, this customer's decision has
had a material adverse effect on the Company's business and results
of operations in the quarter ended September 30, 2013. There can be
no assurance that the Company will be able to increase sales of any
products at levels sufficient to offset the adverse impact of this
customer's decision, if at all.
As a result of the above, during the second quarter and six
month periods of fiscal 2014, sales of these two products by the
Company were nil as compared to approximately $11.9 million and
$24.0 million during the second quarter and six month periods of
fiscal 2013, respectively.
Net revenues for the second quarter of fiscal 2014 were $18.3
million, a decrease of $16.4 million, or 47.2%, as compared to the
second quarter of fiscal 2013 net revenues of $34.7
million. The decline in year-over-year net revenues was driven
by lower year-over-year net product sales and lower year-over-year
licensing revenues.
Net product sales for the second quarter of fiscal 2014 were
$17.3 million, as compared to $32.3 million for the second quarter
of fiscal 2013, a decrease of $15.0 million, or 46.6%. The
lower year-over-year net product sales were principally driven by a
$14.6 million, or 46.8%, decline in net sales of houseware
products, which was the result of lower year-over-year sales of
microwave ovens and compact refrigerators, partially offset by an
increase in year-over-year sales of wine coolers.
Licensing revenue in the second quarter of fiscal 2014 was $1.1
million, as compared to $2.4 million in the second quarter of
fiscal 2013, a decrease of $1.3 million, or 55.3%. The lower
year-over-year licensing revenue was principally the result of
approximately $1.3 million of lower year-over-year licensing
revenue earned from the Company's largest licensee because the
licensee has not yet met or exceeded its annual minimum royalty
payment obligation for fiscal 2014, as compared to the prior year,
when the licensee met its annual minimum royalty payment obligation
during the second quarter of the Company's fiscal year 2013.
Net revenues for the six month period of fiscal 2014 were $43.0
million, a decrease of $37.7 million, or 46.8%, as compared to the
second quarter of fiscal 2013 net revenues of $80.7
million. The decline in year-over-year net revenues was driven
by lower year-over-year net product sales and lower year-over-year
licensing revenues.
Net product sales for the six month period of fiscal 2014 were
$40.7 million, as compared to $77.2 million for the six month
period of fiscal 2013, a decrease of $36.5 million, or
47.2%. The lower year-over-year net product sales were
principally driven by a $36.1 million, or 48.1%, decline in net
sales of houseware products, which was the result of lower
year-over-year sales of microwave ovens and compact refrigerators,
partially offset by an increase in year-over-year sales of wine
coolers.
Licensing revenue in the six month period of fiscal 2014 was
$2.3 million, as compared to $3.6 million in the six month period
of fiscal 2013, a decrease of $1.3 million, or 36.6%. The
lower year-over-year licensing revenue was principally the result
of approximately $1.3 million of lower year-over-year licensing
revenue earned from the Company's largest licensee because the
licensee has not yet met or exceeded its annual minimum royalty
payment obligation for fiscal 2014, as compared to the prior year,
when the licensee met its annual minimum royalty payment obligation
during the second quarter of the Company's fiscal year 2013.
Operating income for the second quarter of fiscal year 2014 was
$0.2 million, a decrease of $2.0 million, or 90.4%, from operating
income of $2.2 million for the second quarter of fiscal year 2013,
due to the lower year-over-year net revenue, higher year-over-year
landed product cost as a percent of selling price, higher
year-over-year SG&A expenses, primarily due to higher legal
fees and tax consulting fees, partially offset by the impairment
write-down in September 2012 of a non-strategic trademark.
Operating income for the six month period of fiscal year 2014
was $1.5 million, a decrease of $5.1 million, or 76.7%, from
operating income of $6.6 million for the six month period of fiscal
year 2013, due to the lower year-over-year net revenue, higher
year-over-year landed product cost as a percent of selling price,
higher year-over-year SG&A expenses, primarily due to higher
legal fees and tax consulting fees, partially offset by the
impairment write-down in September 2012 of a non-strategic
trademark.
Net income for the second quarter of fiscal 2014 was $0.4
million, as compared to $1.9 million for the second quarter of
fiscal 2013, a decrease of $1.5 million, or 80.1%, due primarily to
the year-over-year decrease in operating income. Net income
for the six month period of fiscal 2014 was $1.8 million, as
compared to $5.8 million for the six month period of fiscal 2013, a
decrease of $4.0 million, or 69.6%, due primarily to the
year-over-year decrease in operating income. Diluted earnings
per share for the second quarter of fiscal year 2014 were $0.01, as
compared to $0.07 for the second quarter of fiscal year 2013, a
decrease of $0.06 per diluted share, or 85.7%. Diluted
earnings per share for the six month period of fiscal year 2014
were $0.06, as compared to $0.21 for the six month period of fiscal
year 2013, a decrease of $0.15 per diluted share, or
71.4%.
Duncan Hon, Chief Executive Officer of Emerson Radio, commented,
"Our second quarter and six month fiscal 2014 revenues and net
income declined significantly as compared to the prior year due
primarily to the decision by one of our major customers to
discontinue purchasing, effective Spring 2013, from the Company two
microwave oven products sold throughout fiscal year 2013 by the
Company to this customer, 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. (NYSEMKT: 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 |
|
Six Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2013 |
|
|
2012 |
|
2013 |
|
2012 |
|
|
|
|
|
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net product sales |
|
$ |
17,258 |
|
|
$ |
32,299 |
|
$ |
40,739 |
|
$ |
77,175 |
Licensing revenue |
|
|
1,080 |
|
|
|
2,416 |
|
|
2,251 |
|
|
3,551 |
Net revenues |
|
|
18,338 |
|
|
|
34,715 |
|
|
42,990 |
|
|
80,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
15,635 |
|
|
|
29,102 |
|
|
36,619 |
|
|
68,275 |
Other operating costs and expenses |
|
|
171 |
|
|
|
385 |
|
|
322 |
|
|
793 |
Selling, general and administrative expenses |
|
|
2,325 |
|
|
|
1,737 |
|
|
4,513 |
|
|
3,745 |
Impairment of Trademark |
|
|
-- |
|
|
|
1,326 |
|
|
-- |
|
|
1,326 |
|
|
|
18,131 |
|
|
|
32,550 |
|
|
41,454 |
|
|
74,139 |
Operating income |
|
|
207 |
|
|
|
2,165 |
|
|
1,536 |
|
|
6,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
121 |
|
|
|
67 |
|
|
343 |
|
|
98 |
Income before income taxes |
|
|
328 |
|
|
|
2,232 |
|
|
1,879 |
|
|
6,685 |
(Benefit) provision for income taxes |
|
|
(60 |
) |
|
|
285 |
|
|
122 |
|
|
898 |
Net income |
|
$ |
388 |
|
|
$ |
1,947 |
|
$ |
1,757 |
|
$ |
5,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
0.01 |
|
|
|
0.07 |
|
|
0.06 |
|
|
0.21 |
|
Diluted |
|
|
0.01 |
|
|
|
0.07 |
|
|
0.06 |
|
|
0.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted 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) |
|
|
|
|
|
|
|
|
|
|
9/30/13 |
|
|
3/31/13 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
52,108 |
|
|
$ |
21,412 |
|
Restricted cash |
|
|
73 |
|
|
|
70 |
|
Short term investments |
|
|
15,155 |
|
|
|
45,235 |
|
Accounts receivable, net |
|
|
5,249 |
|
|
|
7,883 |
|
Other receivables |
|
|
231 |
|
|
|
969 |
|
Due from affiliates |
|
|
-- |
|
|
|
1 |
|
Inventory |
|
|
7,299 |
|
|
|
3,454 |
|
Prepaid expenses and other current assets |
|
|
2,833 |
|
|
|
1,873 |
|
Deferred tax assets |
|
|
1,582 |
|
|
|
1,685 |
|
|
|
Total
Current Assets |
|
|
84,530 |
|
|
|
82,582 |
|
Property, plant, and equipment, net |
|
|
229 |
|
|
|
258 |
|
Trademarks, net |
|
|
219 |
|
|
|
219 |
|
Deferred tax assets |
|
|
1,113 |
|
|
|
1,121 |
|
Other assets |
|
|
43 |
|
|
|
104 |
|
|
|
Total
Assets |
|
$ |
86,134 |
|
|
$ |
84,284 |
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Current maturities of long-term borrowings |
|
|
43 |
|
|
|
43 |
|
Accounts payable and other current liabilities |
|
|
8,347 |
|
|
|
7,790 |
|
Accrued sales returns |
|
|
1,077 |
|
|
|
965 |
|
Income taxes payable |
|
|
711 |
|
|
|
1,281 |
|
|
|
Total
Current Liabilities |
|
|
10,178 |
|
|
|
10,079 |
|
Long-term borrowings |
|
|
15 |
|
|
|
30 |
|
Deferred tax liabilities |
|
|
203 |
|
|
|
194 |
|
|
|
Total
Liabilities |
|
|
10,396 |
|
|
|
10,303 |
|
Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred shares -$.01 par value, 10,000,000 shares
authorized at September 30, 2013 and March 31, 2013, respectively;
3,677 shares issued and outstanding at September 30, 2013 and March
31, 2013, respectively; liquidation preference of $3,677,000 at
September 30, 2013 and March 31, 2013, respectively |
|
|
3,310 |
|
|
|
3,310 |
|
|
|
|
|
|
|
|
|
|
Common shares -- $.01 par value, 75,000,000 shares
authorized, 52,965,797 shares issued at September 30, 2013 and
March 31, 2013, respectively; 27,129,832 shares outstanding at
September 30, 2013 and March 31, 2013, respectively |
|
|
529 |
|
|
|
529 |
|
Additional paid-in capital |
|
|
98,785 |
|
|
|
98,785 |
|
Accumulated deficit |
|
|
(2,662 |
) |
|
|
(4,419 |
) |
Treasury stock, at cost, 25,835,965 shares |
|
|
(24,224 |
) |
|
|
(24,224 |
) |
Total Shareholders' Equity |
|
|
75,738 |
|
|
|
73,981 |
|
Total Liabilities and Shareholders' Equity |
|
$ |
86,134 |
|
|
$ |
84,284 |
|
CONTACT: Investor Relations: Barry Smith Investor Relations
Manager (973) 428-2004 EMERSON RADIO CORP. 3 University Plaza,
suite 405 Hackensack, NJ 07601
Emerson Radio (AMEX:MSN)
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