EXHIBIT 99.1
NEWS & INFORMATION
FOR: | EMERSON RADIO CORP. | |||||
| 610 Fifth Ave | ||||||
| New York, NY 10020 | ||||||
CONTACT: | Emerson Radio Corp. | or: | Investor Relations: | |||
| Greenfield Pitts | Robert Maffei | |||||
| Chief Financial Officer | Investor Relations Manager | |||||
| (212) 521-4344 | (973) 428-2098 | |||||
| Brainerd Communicators | ||||||
| Brad Edwards or | ||||||
| Denise Roche | ||||||
| (212) 986-6667 |
Monday, July 14, 2008
EMERSON RADIO CORP. REPORTS FISCAL 2008 FOURTH QUARTER AND FULL YEAR RESULTS
PARSIPPANY, N.J. — 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 iPodâ 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 decline in themed products net revenues compared to fiscal 2007 primarily due to the discontinuance of Nickelodeonâ themed products partially offset by sales of Mattelâ 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 iPodâ 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 atwww.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)
Consolidated Statements of Operations
(in thousands, except per share data)
| Year Ended March 31, | Three months 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 | — | — | (200 | ) | |||||||||||
| Cost of sales-related party purchases | — | 32,890 | — | — | ||||||||||||
| Other operating costs and expenses | 6,097 | 6,492 | 1,319 | 2,137 | ||||||||||||
| Selling, general & administrative expenses (exclusive of non-cash compensation shown below) | 23,587 | 22,269 | 5,680 | 6,061 | ||||||||||||
| Acquisition costs incurred | — | 190 | — | 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 | — | — | — | ||||||||||||
| Gains on foreign exchange forward contracts | 465 | — | (50 | ) | — | |||||||||||
| Interest income (expense), net | 140 | (692 | ) | 212 | (128 | ) | ||||||||||
| Interest income-related party | 163 | 638 | — | 638 | ||||||||||||
| Loss on impairment of securities | (1,952 | ) | — | (1,952 | ) | — | ||||||||||
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 | — | 59 | — | ||||||||||||
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)
Consolidated Summary Balance Sheets
(in thousands)
| March 31, 2008 | March 31, 2007 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | 14,444 | 1,851 | ||||||
| Restricted cash | — | 3,000 | ||||||
| Cash and cash equivalents (includes cash securing bank loans | 14,444 | 4,851 | ||||||
| of $0 and $3,000 respectively) | ||||||||
| Foreign exchange forward contracts | 134 | — | ||||||
| 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 | — | ||||||
| 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 | — | 3,111 | ||||||
| Revolver — Current | — | — | ||||||
| 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 | — | 47 | ||||||
| Current liabilities | 22,978 | 24,845 | ||||||
| Long-term borrowings | 142 | 651 | ||||||
| Other Long term debt | 57 | 25 | ||||||
| Minority interest | 133 | — | ||||||
| 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 | ||||||