Emerson Radio Corp. Reports Full Year Fiscal 2014 and Fourth
Quarter Fiscal 2014 Results
HACKENSACK, NJ--(Marketwired - Jun 25, 2014) - Emerson Radio
Corp. (NYSEMKT: MSN) today reported financial results for its full
year and fourth quarter ended March 31, 2014.
As previously reported by the Company, the Company was informed
by one its major customers, that, commencing in the Spring of 2013,
this customer would discontinue purchasing 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 has been 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 full year and quarter ended March 31, 2014.
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 fourth quarter of Fiscal
2014 and the full Fiscal 2014, there were no sales of these two
products by the Company as compared to approximately $4.1 million
and $36.1 million of net sales of these two products during the
fourth quarter of Fiscal 2013 and the full Fiscal 2013,
respectively.
Net revenues for the fourth quarter of fiscal 2014 were $14.0
million, a decrease of $9.0 million, or 39.3%, as compared to the
fourth quarter of fiscal 2013 net revenues of $23.0
million. The decline in year-over-year net revenues was driven
by lower year-over-year net product sales, partly offset by higher
year-over-year licensing revenues.
Net product sales for the fourth quarter of fiscal 2014 were
$11.1 million, as compared to $21.8 million for the fourth quarter
of fiscal 2013, a decrease of $10.7 million, or 49.3%. The
lower year-over-year net product sales were principally driven by a
$10.6 million, or 50.5%, decline in net sales of houseware
products, which was the result of lower year-over-year sales of
microwave ovens, compact refrigerators and wine
coolers. Emerson continues to confront ongoing pricing
pressures, intense competitive activity and a challenging retail
environment, all of which are trends that management expects to
continue.
Licensing revenue in the fourth quarter of fiscal 2014 was $2.9
million, as compared to $1.2 million in the fourth quarter of
fiscal 2013, an increase of $1.7 million, or 148.2%, principally
due to $1.8 million of higher year-over-year licensing revenue
earned from one the Company's licensees upon the completion of an
audit of, and negotiation with this licensee to pay to the Company
$1.8 million in previously unreported and unpaid royalty fees,
which the licensee paid to the Company in April 2014.
Net revenues for fiscal 2014 were $77.8 million, a decrease of
$50.6 million, or 39.4%, as compared to fiscal 2013 net revenues of
$128.4 million. The decline in year-over-year net revenues was
caused by lower year-over-year net product sales, slightly offset
by higher year-over-year licensing revenues.
Net product sales for fiscal 2014 were $70.3 million, as
compared to $121.6 million for fiscal 2013, a decrease of $51.3
million, or 42.2%. The lower year-over-year net product sales
were principally driven by a $50.7 million, or 43.1%, decline in
net sales of houseware products, which was the result of lower
year-over-year sales of all products offered by the Company in the
category, which is comprised of microwave ovens, compact
refrigerators and wine coolers.
Licensing revenue in fiscal 2014 was $7.6 million, as compared
to $6.8 million in fiscal 2013, an increase of $0.8 million, or
11.9%, principally due to $1.8 million of higher year-over-year
licensing revenue earned from one the Company's licensees upon the
completion of an audit of, and negotiation with this licensee to
pay to the Company $1.8 million in previously unreported and unpaid
royalty fees, which the licensee paid to the Company in April 2014,
partly offset by $0.9 million in lower year-over-year licensing
revenue earned from the Company's largest licensee due to lower
year-over-year sales of products by this licensee bearing the
Emerson ® brand name.
Operating income for both the fourth quarter of fiscal 2014 and
the fourth quarter of fiscal 2013 was $0.7 million.
Operating income for fiscal 2014 was $3.3 million, a decrease of
$6.0 million, or 64.6%, from operating income of $9.3 million for
fiscal 2013, due to the lower year-over-year net revenue and $2.6
million in higher year-over-year SG&A expenses, partially
offset by $1.1 million in lower year-over-year impairment
write-downs of non-strategic trademarks taken in both fiscal 2014
and fiscal 2013. The higher year-over-year SG&A expenses
resulted primarily from approximately $1.2 million in legal and
advisory fees incurred during fiscal 2014 pertaining to activities
of the Special Committee of the Company's Board of Directors and
approximately $0.6 million in higher year-over-year legal fees
related to a lawsuit in which the Company was a co-defendant from
July 2011 until the Company settled in December 2013, approximately
$0.2 million in higher year-over-year tax advisory fees related to
an audit of certain of the Company's past tax returns by the
Internal Revenue Service ("IRS"), and approximately $0.2 million in
consulting fees incurred during fiscal 2014 to evaluate the
Company's current operations.
Net income for the fourth quarter of fiscal 2014 was $0.9
million, as compared to a net loss of $1.5 million for the fourth
quarter of fiscal 2013, an increase of $2.4 million, due primarily
to the recording by the Company of a $2.3 million income tax
provision in the fourth quarter of fiscal 2013.
Net income for fiscal 2014 was $1.3 million, a decrease of $4.7
million, or 78.0%, from net income of $6.0 million in fiscal 2013,
due primarily to the year-over-year decrease in operating income
and the payment of $4.0 million by the Company in December 2013 to
settle the aforementioned lawsuit, partly offset by the provision
in fiscal 2014 of an income tax benefit as compared to the
provision in fiscal 2013 of income tax expense.
Diluted earnings per share for the fourth quarter of fiscal 2014
was $0.04, as compared to a diluted loss per share of $0.06 for the
fourth quarter of fiscal 2013, an increase of $0.10 per diluted
share.
Diluted earnings per share for fiscal 2014 were $0.05 as
compared to $0.22 for fiscal 2013, a decrease of $0.17 per diluted
share, or 77.3%.
Duncan Hon, Chief Executive Officer of Emerson Radio, commented
"Our 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 payment of a
$4 million settlement by the Company in December 2013 of a lawsuit;
the $2.6 million in higher year-over-year SG&A expenses as
discussed above; and ongoing pricing pressures, intense competitive
activity and a challenging retail environment faced by the Company
during fiscal 2014. The Company expects that the pricing and
competitive pressures, and difficult retail conditions are trends
that will continue. The Company continues to seek to implement
pricing, product strategy initiatives and licensing opportunities
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.
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|
EMERSON RADIO CORP. AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except earnings per share data) |
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Twelve Months Ended |
|
|
March 31, |
|
|
March 31, |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net product sales |
|
|
11,075 |
|
|
|
21,845 |
|
|
|
70,257 |
|
|
|
121,628 |
Licensing revenue |
|
|
2,907 |
|
|
|
1,171 |
|
|
|
7,572 |
|
|
|
6,768 |
Net revenues |
|
$ |
13,982 |
|
|
$ |
23,016 |
|
|
$ |
77,829 |
|
|
$ |
128,396 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
10,407 |
|
|
|
19,872 |
|
|
|
63,012 |
|
|
|
108,631 |
Other operating costs and expenses |
|
|
181 |
|
|
|
309 |
|
|
|
864 |
|
|
|
1,355 |
Selling, general and administrative expenses |
|
|
2,705 |
|
|
|
2,088 |
|
|
|
10,434 |
|
|
|
7,759 |
Impairment of trademark |
|
|
- |
|
|
|
- |
|
|
|
219 |
|
|
|
1,326 |
|
|
|
13,293 |
|
|
|
22,269 |
|
|
|
74,529 |
|
|
|
119,071 |
Operating income |
|
|
689 |
|
|
|
747 |
|
|
|
3,300 |
|
|
|
9,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on settlement of litigation |
|
|
-- |
|
|
|
-- |
|
|
|
(4,000 |
) |
|
|
-- |
Interest income, net |
|
|
107 |
|
|
|
110 |
|
|
|
548 |
|
|
|
340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
796 |
|
|
|
857 |
|
|
|
(152 |
) |
|
|
9,665 |
Provision for income tax (benefit) expense |
|
|
(145 |
) |
|
|
2,338 |
|
|
|
(1,469 |
) |
|
|
3,666 |
Net income (loss) |
|
$ |
941 |
|
|
$ |
(1,481 |
) |
|
$ |
1,317 |
|
|
$ |
5,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) per share: |
|
|
0.04 |
|
|
|
(0.06 |
) |
|
|
0.05 |
|
|
|
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income (loss) per share: |
|
|
0.04 |
|
|
|
(0.06 |
) |
|
|
0.05 |
|
|
|
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
31-Mar-14 |
|
|
31-Mar-13 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
26,328 |
|
|
$ |
21,412 |
|
Restricted cash |
|
|
-- |
|
|
|
70 |
|
Short term investments |
|
|
32,194 |
|
|
|
45,235 |
|
Trade accounts receivable, net |
|
|
4,354 |
|
|
|
6,375 |
|
Royalties and other receivables |
|
|
3,865 |
|
|
|
969 |
|
Due from affiliates |
|
|
-- |
|
|
|
1 |
|
Inventory, net |
|
|
5,438 |
|
|
|
3,454 |
|
Prepaid purchases |
|
|
2,047 |
|
|
|
885 |
|
Prepaid expenses and other current assets |
|
|
1,604 |
|
|
|
988 |
|
Deferred tax assets |
|
|
1,394 |
|
|
|
1,685 |
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
|
77,224 |
|
|
|
81,074 |
|
Property, plant, and equipment, net |
|
|
142 |
|
|
|
258 |
|
Trademarks, net |
|
|
-- |
|
|
|
219 |
|
Deferred tax assets |
|
|
1,753 |
|
|
|
1,121 |
|
Other assets |
|
|
130 |
|
|
|
104 |
|
|
|
|
|
|
|
|
|
|
|
Total Non-current Assets |
|
|
2,025 |
|
|
|
1,702 |
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
79,249 |
|
|
|
82,776 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Short-term capital lease obligations |
|
|
-- |
|
|
|
43 |
|
Accounts payable and other current liabilities |
|
|
3,951 |
|
|
|
7,247 |
|
Income taxes payable |
|
|
-- |
|
|
|
1,281 |
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities |
|
|
3,951 |
|
|
|
8,571 |
|
Long-term capital lease obligations |
|
|
-- |
|
|
|
30 |
|
Deferred tax liabilities |
|
|
-- |
|
|
|
194 |
|
|
|
|
|
|
|
|
|
|
|
Total Non-current Liabilities |
|
|
-- |
|
|
|
224 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities |
|
|
3,951 |
|
|
|
8,795 |
|
Shareholders' Equity: |
|
|
|
|
|
|
|
|
Series A 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 - $0.01 par value,
75,000,000 shares authorized; 52,965,797 shares issued
and 27,129,832 shares outstanding at March 31, 2014 and March
31, 2013, respectively |
|
|
529 |
|
|
|
529 |
|
Additional paid-in capital |
|
|
98,785 |
|
|
|
98,785 |
|
Accumulated deficit |
|
|
(3,102 |
) |
|
|
(4,419 |
) |
Treasury stock, at cost (25,835,965 shares) |
|
|
(24,224 |
) |
|
|
(24,224 |
) |
|
|
|
|
|
|
|
|
|
|
|
Total
Shareholders' Equity |
|
|
75,298 |
|
|
|
73,981 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity |
|
|
79,249 |
|
|
|
82,776 |
|
FOR: EMERSON RADIO CORP. 3 University Plaza, suite 405
Hackensack, NJ 07601 CONTACT: Investor Relations: Barry Smith
Investor Relations Manager (973) 428-2004
Emerson Radio (AMEX:MSN)
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