Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Dec. 31, 2014 | Feb. 17, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Dec-14 | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | MSN | |
Entity Registrant Name | EMERSON RADIO CORP | |
Entity Central Index Key | 32621 | |
Current Fiscal Year End Date | -28 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 27,129,832 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Net Revenues: | ||||
Net product sales | $19,596 | $18,443 | $57,300 | $59,182 |
Licensing revenue | 3,302 | 2,414 | 5,788 | 4,665 |
Net revenues | 22,898 | 20,857 | 63,088 | 63,847 |
Costs and expenses: | ||||
Cost of sales | 17,247 | 15,986 | 51,441 | 52,605 |
Other operating costs and expenses | 116 | 361 | 560 | 683 |
Selling, general and administrative expenses | 1,841 | 3,216 | 6,572 | 7,729 |
Impairment of trademark | 219 | 219 | ||
Total costs and expenses | 19,204 | 19,782 | 58,573 | 61,236 |
Operating income | 3,694 | 1,075 | 4,515 | 2,611 |
Other income (loss): | ||||
Loss on settlement of litigation | -4,000 | -4,000 | ||
Interest income, net | 42 | 98 | 151 | 441 |
Income (loss) before income taxes | 3,736 | -2,827 | 4,666 | -948 |
Provision (benefit) for income taxes | 882 | -1,446 | 1,114 | -1,324 |
Net income (loss) | $2,854 | ($1,381) | $3,552 | $376 |
Net income (loss) per share: | ||||
Basic | $0.11 | ($0.05) | $0.13 | $0.01 |
Diluted | $0.11 | ($0.05) | $0.13 | $0.01 |
Weighted average shares outstanding: | ||||
Basic | 27,130 | 27,130 | 27,130 | 27,130 |
Diluted | 27,130 | 27,130 | 27,130 | 27,130 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Loss) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Net income (loss) | $2,854 | ($1,381) | $3,552 | $376 |
Other comprehensive income, net of tax | 0 | 0 | 0 | 0 |
Comprehensive income (loss) | $2,854 | ($1,381) | $3,552 | $376 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current Assets: | ||
Cash and cash equivalents | $24,211 | $26,328 |
Restricted cash | 500 | |
Short term investments | 15,033 | 32,194 |
Trade accounts receivable, net | 9,587 | 4,354 |
Royalties receivable | 3,184 | 3,865 |
Inventory | 4,440 | 5,438 |
Prepaid purchases | 2,557 | 2,047 |
Prepaid expenses and other current assets | 1,785 | 1,604 |
Deferred tax assets | 995 | 1,394 |
Total Current Assets | 62,292 | 77,224 |
Property, plant and equipment, net | 95 | 142 |
Deferred tax assets | 1,152 | 1,753 |
Other assets | 86 | 130 |
Total Non-current Assets | 1,333 | 2,025 |
Total Assets | 63,625 | 79,249 |
Current liabilities: | ||
Accounts payable and other current liabilities | 2,850 | 3,951 |
Due to affiliates | 500 | |
Total Current Liabilities | 3,350 | 3,951 |
Deferred tax liabilities | 416 | |
Total Non-current Liabilities | 416 | |
Total Liabilities | 3,766 | 3,951 |
Shareholders' equity: | ||
Preferred shares -$.01 par value, 10,000,000 shares authorized at December 31, 2014 and March 31, 2014, respectively; 3,677 shares issued and outstanding at December 31, 2014 and March 31, 2014, respectively; liquidation preference of $3,677,000 at December 31, 2014 and March 31, 2014, respectively | 3,310 | 3,310 |
Common shares - $.01 par value, 75,000,000 shares authorized, 52,965,797 shares issued at December 31, 2014 and March 31, 2014, respectively; 27,129,832 shares outstanding at December 31, 2014 and March 31, 2014, respectively | 529 | 529 |
Additional paid-in capital | 79,794 | 98,785 |
Accumulated earnings (deficit) | 450 | -3,102 |
Treasury stock, at cost, 25,835,965 shares | -24,224 | -24,224 |
Total Shareholders' Equity | 59,859 | 75,298 |
Total Liabilities and Shareholders' Equity | $63,625 | $79,249 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
Preferred shares, par value | $0.01 | $0.01 |
Preferred shares, shares authorized | 10,000,000 | 10,000,000 |
Preferred shares, shares issued | 3,677 | 3,677 |
Preferred shares, shares outstanding | 3,677 | 3,677 |
Preferred shares, liquidation preference | $3,677,000 | $3,677,000 |
Common shares, par value | $0.01 | $0.01 |
Common shares, shares authorized | 75,000,000 | 75,000,000 |
Common shares, shares issued | 52,965,797 | 52,965,797 |
Common shares, shares outstanding | 27,129,832 | 27,129,832 |
Treasury stock, shares | 25,835,965 | 25,835,965 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Cash Flows from Operating Activities: | ||
Net income | $3,552 | $376 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||
Depreciation and amortization | 57 | 71 |
Changes in assets and liabilities: | ||
Accounts receivable | -5,645 | -1,689 |
Royalties receivable | 681 | -766 |
Due to affiliates | 500 | 1 |
Inventory | 998 | -2,229 |
Prepaid purchases | -510 | -888 |
Prepaid expenses and other current assets | -181 | 158 |
Deferred tax assets and liabilities | 1,416 | -1,327 |
Other assets | 44 | 85 |
Accounts payable and other current liabilities | -1,101 | -3,018 |
Asset allowances, reserves and other | 412 | -636 |
Impairment of trademark | 219 | |
Interest and income taxes payable | -1,112 | |
Net cash provided (used) by operating activities | 223 | -10,755 |
Cash Flows from Investing Activities: | ||
Short term investment | 17,161 | 8,009 |
Restricted cash | -500 | 70 |
Additions to property and equipment | -10 | -23 |
Net cash provided by investing activities | 16,651 | 8,056 |
Cash Flows from Financing Activities: | ||
Dividend paid | -18,991 | |
Net decrease in long-term capital lease obligations | -15 | |
Net cash used by financing activities | -18,991 | -15 |
Net decrease in cash and cash equivalents | -2,117 | -2,714 |
Cash and cash equivalents at beginning of period | 26,328 | 21,412 |
Cash and cash equivalents at end of period | 24,211 | 18,698 |
Cash paid during the period for: | ||
Interest | 7 | |
Income taxes | $55 | $1,171 |
Background_and_Basis_of_Presen
Background and Basis of Presentation | 9 Months Ended |
Dec. 31, 2014 | |
Background and Basis of Presentation | NOTE 1 — BACKGROUND AND BASIS OF PRESENTATION |
The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated — the “Company”), and its subsidiaries. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses the Company’s trademarks for a variety of products domestically and internationally. | |
The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of December 31, 2014 and the results of operations for the three and nine month periods ended December 31, 2014 and December 31, 2013. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited interim consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates. The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2014 (“fiscal 2014”), included in the Company’s annual report on Form 10-K, as amended, for fiscal 2014. | |
The results of operations for the three and nine month periods ended December 31, 2014 are not necessarily indicative of the results of operations that may be expected for any other interim periods or for the full year ended March 31, 2015 (“fiscal 2015”). | |
Whenever necessary, reclassifications are made to conform the prior year’s financial statements to the current year’s presentation. | |
Unless otherwise disclosed in the notes to these financial statements, the estimated fair value of the financial assets and liabilities approximates the carrying value. | |
Subsequent events have been evaluated through February 13, 2015. | |
Sales Allowance and Marketing Support Expenses | |
Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Codification of Staff Accounting Bulletins (“SAB”) Topic 13: Revenue Recognition. | |
At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB Topic 13, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB Topic 13’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue. | |
If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. |
Net_Earnings_Per_Share
Net Earnings Per Share | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Net Earnings Per Share | NOTE 2 — NET EARNINGS PER SHARE | ||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 2,854 | $ | (1,381 | ) | $ | 3,552 | $ | 376 | ||||||||
Denominator: | |||||||||||||||||
Denominator for basic earnings per share — weighted average shares | 27,130 | 27,130 | 27,130 | 27,130 | |||||||||||||
Effect of dilutive securities on denominator: | |||||||||||||||||
Options (computed using the treasury stock method) | — | — | — | — | |||||||||||||
Denominator for diluted earnings per share — weighted average shares and assumed conversions | 27,130 | 27,130 | 27,130 | 27,130 | |||||||||||||
Basic and diluted earnings (loss) per share | $ | 0.11 | $ | (.05 | ) | $ | 0.13 | $ | 0.01 | ||||||||
Shareholders_Equity
Shareholders' Equity | 9 Months Ended |
Dec. 31, 2014 | |
Shareholders' Equity | NOTE 3 — SHAREHOLDERS’ EQUITY |
Outstanding capital stock at December 31, 2014 consisted of common stock and Series A preferred stock. The Series A preferred stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002; however, it retains a liquidation preference. | |
At December 31, 2014, the Company had no options, warrants or other potentially dilutive securities outstanding. | |
September 30, 2014 Extraordinary Cash Dividend | |
On August 21, 2014, the Special Committee of the Board of Directors of Company declared an extraordinary cash dividend of $0.70 per common share payable on September 30, 2014 to shareholders of record of the Company at the close of trading on September 12, 2014 and as a result, the Company paid out a net amount to stockholders of approximately $18.5 million on September 30, 2014. |
Inventory
Inventory | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory | NOTE 4 — INVENTORY | ||||||||
Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. As of December 31, 2014 and March 31, 2014, inventories consisted of the following (in thousands): | |||||||||
December 31, 2014 | March 31, 2014 | ||||||||
Finished goods | $ | 4,440 | $ | 5,438 | |||||
Income_Taxes
Income Taxes | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Income Taxes | NOTE 5 — INCOME TAXES | ||||
Income Tax Issues Concerning Overseas Income | |||||
On April 15, 2013 and June 5, 2013, the Company received correspondence from the IRS including a (i) Form 5701 and Form 886-A regarding Adjusted Sales Income (collectively referred to as “NOPA 1”) and (ii) Form 5701 and Form 886-A regarding Adjusted Subpart F-Foreign Base Company Sales Income (collectively referred to as “NOPA 2”). | |||||
With respect to NOPA 1, the IRS is (i) challenging the position of the Company with respect to the way the Company’s controlled foreign corporation in Macao (the “Macao CFC”) recorded its product sales during Fiscal 2010 and Fiscal 2011 and (ii) asserting that an upward adjustment to the Company’s Fiscal 2010 and Fiscal 2011 taxable income of $4,981,520 and $5,680,182, respectively, is required. | |||||
With respect to NOPA 2, the IRS is challenging the position of the Company with respect to the fact that the Company considered the service fee paid by the Company to the Macao CFC to be non-taxable in the US. The IRS has taken the position that the service fee paid to the Macao CFC by the Company constitutes foreign base company sales income (“FBCSI”). The IRS asserts that the service fee earned by the Macao CFC in connection with its sale of products to the Company should be taxable to the Company as FBCSI. As a result, the IRS determined that an upward adjustment to the Company’s Fiscal 2010 and Fiscal 2011 taxable income of $1,553,984 and $1,143,162, respectively, is required. | |||||
The Company has evaluated the determinations made by the IRS as set forth in each of NOPA 1 and NOPA 2 in order to decide (a) how it will proceed and (b) the potential impact on the Company’s financial condition and operations. Furthermore, although NOPA 1 and NOPA 2 represent potential adjustments to Fiscal 2010 and Fiscal 2011 only, the Company believes it is likely that the IRS will take the position that the same type of adjustments should be made for each of the Company’s subsequent fiscal years. The assessment and payment of such additional taxes, penalties and interest would have a material adverse effect on the Company’s financial condition and results of operations. | |||||
With respect to NOPA 1, the Company is disputing the proposed adjustment with the IRS. In the event that the Company is not successful in its dispute, the Company estimates that it could be liable for a maximum in taxes, penalties and interest of approximately $14.9 million pertaining to NOPA 1, in the aggregate, for its Fiscal 2010 through Fiscal 2014 years. However, because the Company’s current assessment is that its appeal of NOPA 1 is more likely than not to be successful, the Company has not recorded any liability to its December 31, 2014 or March 31, 2014 balance sheets related to NOPA 1. | |||||
With respect to NOPA 2, the Company is disputing the proposed adjustment with the IRS. Originally, the Company had acquiesced to the IRS’s position that the service fee paid to the Macao CFC by the Company would be treated as taxable FBCSI to the Company. However, upon further research conducted while preparing its fiscal year 2014 income tax returns in December 2014, the Company no longer believes that the service fee paid to the Macao CFC by the Company is taxable FBCSI to the Company. As a result, neither the service fee paid to the Macao CFC by the Company during fiscal 2014 of $0.5 million nor the service fee paid to the Macao CFC by the Company during the nine months ending December 31, 2014 of $0.5 million has been included as FBCSI in the Company’s U.S. income tax calculations reflected within the financial statements as of December 31, 2014. If included, these would have the effect of increasing US income taxes owed by the Company by approximately $0.4 million. Although the Company does not agree with the IRS position on NOPA 2 as stated above, there is some uncertainty as to what the ultimate outcome of NOPA 2 may be. Therefore, an uncertain tax position under the requirements of ASC 740-10 “Income Tax Accounting” exists, and the Company has recorded to its December 31, 2014 financial statements, income tax expense and liability of approximately $0.4 million, representing the amount of income taxes, penalties and interest that the Company estimates it could owe for fiscal 2014 and the nine months ending December 31, 2014 if it does not ultimately prevail in its appeal of NOPA 2. The Company is considering its options with respect to the approximately $1.6 million in taxes that it previously paid in the U.S. pertaining to NOPA 2 for fiscal years 2010-2013. | |||||
Other | |||||
At December 31, 2014, the Company had approximately $3.8 million of U.S. federal net operating loss carry forwards and some U.S. state net operating loss carry forwards included in net deferred tax assets that are available to offset future taxable income and can be carried forward for 20 years. Although realization is not assured, management believes it is more likely than not that all of the net deferred tax assets will be realized through tax planning strategies available in future periods and through future profitable operating results. The amount of the deferred tax asset considered realizable could be reduced or eliminated if certain tax planning strategies are not successfully executed or estimates of future taxable income during the carry forward period are reduced. If management determines that the Company would not be able to realize all or part of the net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made. | |||||
The Company’s effective tax rate differs from the federal statutory rate primarily due to expenses that are not deductible for federal income tax purposes, income and losses incurred in foreign jurisdictions and taxed at locally applicable tax rates, and state income taxes. | |||||
The Company is subject to examination and assessment by tax authorities in numerous jurisdictions. A summary of the Company’s open tax years is as follows as of December 31, 2014: | |||||
Jurisdiction | Open tax years | ||||
U.S. federal | 2009-2013 | ||||
States | 2009-2013 | ||||
Based on the outcome of tax examinations or due to the expiration of statutes of limitations, it is reasonably possible that the unrecognized tax benefits related to uncertain tax positions taken in previously filed returns may be different from the liabilities that have been recorded for these unrecognized tax benefits. As a result, the Company may be subject to additional tax expense. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions | NOTE 6 — RELATED PARTY TRANSACTIONS |
From time to time, Emerson has engaged in business transactions with its controlling shareholder, The Grande Holdings Limited (In Liquidation) (“Grande”), and one or more of Grande’s direct and indirect subsidiaries. Set forth below is a summary of such transactions. | |
Controlling Shareholder | |
Grande has, together with S&T International Distribution Limited (“S&T”), a subsidiary of Grande, and Grande N.A.K.S. Ltd., a subsidiary of Grande (together with Grande, the “Reporting Persons”), filed, on July 9, 2014, a Schedule 13D/A with the Securities and Exchange Commission (“SEC”) stating that, as of the filing date, the Reporting Persons had the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 56.2%, of the outstanding common stock of Emerson. As the Reporting Persons, and by extension Grande (as their ultimate parent) have control of a majority of the outstanding shares of common stock of Emerson, Emerson is a Controlled company, as defined in Section 801(a) of the NYSE MKT Rules. | |
On May 31, 2011, upon application of a major creditor, the High Court of Hong Kong appointed Fok Hei Yu (who is also known by the anglicized name Vincent Fok), formerly a director and Chairman of the Board of the Company, and Roderick John Sutton, both of FTI Consulting (Hong Kong) Limited (“FTI”), as Joint and Several Provisional Liquidators over Grande. Accordingly, as of May 31, 2011, the directors of Grande no longer have the ability to exercise control over Grande or the power to direct the voting and disposition of the 15,243,283 shares beneficially owned by Grande. Instead, Mr. Fok and Mr. Sutton, as Provisional Liquidators over Grande, currently have such power. In addition, on March 20, 2013, the Provisional Liquidators provided to Emerson a written statement that they are obligated to liquidate the 15,243,283 shares in the Company beneficially owned by Grande. However, in February 2014, the Provisional Liquidators for and on behalf of Grande issued a public announcement that Grande, among other things, had been in discussions with different investors to pursue a restructuring plan and the resumption of trading of Grande’s shares on the Hong Kong Stock Exchange (“HKSE”). In addition, in May 2014, the Provisional Liquidators for and on behalf of Grande issued a public announcement (the “Grande Public Announcement”), disclosing that on May 2, 2014, Grande, the Provisional Liquidators and a creditor of Grande entered into an agreement to implement a restructuring proposal (the “Grande Restructuring Proposal”) submitted by a creditor of Grande. Based on information contained within the Grande Public Announcement, if this Grande Restructuring Proposal is implemented, Mr. Christopher Ho, who served as the Company’s Chairman of the Board until November 2013 and is currently the sole director of Grande, and his associates would continue to have a majority interest in Grande. As disclosed in the Schedule 13D/A filed by the Reporting Persons on May 22, 2014, the Grande Restructuring Proposal includes a plan to re-list Grande on the HKSE and provides that many assets of Grande, including its shares of Emerson, would remain part of Grande. According to the Grande Public Announcement, the Grande Restructuring Plan will require approvals, consents and sanctions of the HKSE, courts in Hong Kong and Bermuda, and the creditors and shareholders of Grande. In addition, on June 11, 2014, Grande announced that it had received a summons issued by a creditor of Grande seeking the removal of the Provisional Liquidators. | |
It is not possible at this time to predict whether the Grande Restructuring Proposal will receive all necessary approvals, nor can there be any assurances regarding the timing, terms or effects of implementing this restructuring proposal or if the Provisional Liquidator(s) will be removed. However, even though the Provisional Liquidators continue to maintain the ability to exercise the power to direct the voting and disposition of shares, as long as the Provisional Liquidators are pursuing the restructuring proposal that would result in Grande retaining beneficial ownership of the 15,243,283 shares of Emerson common stock, the Provisional Liquidators may not be actively seeking to liquidate those shares. If the Grande Restructuring Proposal is completed as described within the Grande Public Announcement, it is expected that the 15,243,283 shares of Emerson common stock held of record by Grande’s subsidiary, S&T, would remain with S&T and that Grande would once again have the power to direct the voting and disposition of this 56.2% controlling interest in Emerson common stock. It is not possible at this time to predict what impact the removal of the Provisional Liquidators would have on the Grande Restructuring Proposal or Emerson and Emerson cannot predict nor provide any assurances regarding the possible effects on the Company, its shareholders, the trading price of its common stock or any other consequences that could result if the Grande Restructuring Proposal is approved and Grande again has the power to control Emerson. | |
Related Party Transactions | |
Rented Office Space in Hong Kong | |
Transactions with Brighton Marketing Limited, a subsidiary of Grande | |
Until May 2013, at which time these charges ceased, the Company was billed for service charges from Brighton Marketing Limited, a subsidiary of Grande, in connection with the Company’s rented office space in Hong Kong. These charges totaled approximately $1,000 for the nine month period ended December 31, 2013. Emerson owed Brighton Marketing Limited nil at December 31, 2013 and March 31, 2014 pertaining to these charges. | |
Transactions with The Grande Properties Management Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company | |
The Company is charged for service charges from The Grande Properties Management Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company, in connection with the Company’s rented office space in Hong Kong. Mr. Ho did not stand for re-election to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Ho is no longer a director of the Company or a related party to the Company after November 7, 2013, and, consequently, such service charges from The Grande Properties Management Limited, are not considered Related Party Transactions after November 7, 2013. | |
These charges totaled approximately $3,000 for the period October 1, 2013 through November 7, 2013 and approximately $11,000 for the period April 1, 2013 through November 7, 2013. The Company owed nil to The Grande Properties Management Limited related to these charges at November 6, 2013. | |
Transactions with Lafe Strategic Services Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company | |
Beginning July 3, 2012, the Company entered into a rental agreement with Lafe Strategic Services Limited (“Lafe”), which is a related party to Mr. Ho, whereby the Company was leasing out excess space within its rented office space in Hong Kong to Lafe. The rental agreement was on a month-by-month basis, cancellable by either the Company or Lafe on one month’s written notice. The agreement was cancelled by Lafe effective April 1, 2013 at which time Lafe owed Emerson nil in rental payable from the arrangement. Emerson returned the approximately $6,000 to Lafe in July 2013 that Emerson had been holding as a security deposit in accordance with the terms of the agreement. | |
Consulting Services Provided to Emerson by one of its Directors | |
Until such agreement was cancelled by the Company effective November 7, 2013, Mr. Eduard Will, a former director of Emerson, was paid consulting fees by the Company for work performed by Mr. Will related to a lawsuit that the Company settled in December 2013, and merger and acquisition research. Mr. Will was not re-elected to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Will is no longer a director of the Company or a related party to the Company after November 7, 2013. | |
During the period October 1, 2013 through November 7, 2013, Emerson paid consulting fees of approximately $10,000 to Mr. Will for such work performed by Mr. Will as well as a travel advance of approximately $6,000, the travel for which was completed during November 2013. During the period April 1, 2013 through November 7, 2013, Emerson paid consulting fees of approximately $68,000 to Mr. Will for such work performed by Mr. Will as well as expense reimbursements and advances, in the aggregate, of approximately $6,000 related to this consulting work and his service as a director of Emerson. | |
At November 7, 2013, the Company owed Mr. Will nil related to these activities. | |
Dividend-Related Issues with S&T | |
On March 2, 2010, the Board declared an extraordinary dividend of $1.10 per common share which was paid on March 24, 2010. In connection with the Company’s determination as to the taxability of the dividend, the Board relied upon information and research provided to it by the Company’s tax advisors and, in reliance on the “stock-for-debt” exception in the Internal Revenue Code Sections 108(e)(8) and (e)(10), concluded that 4.9% of such dividend paid was taxable to the recipients. | |
In August 2012, the Company received a Form 886-A from the IRS which challenges the Company’s conclusions and determines that the Company does not qualify for the above-referenced exception. Accordingly, the IRS has concluded that 100% of the dividend paid was taxable to the recipients. The Company is defending its position and calculations and is contesting the position asserted by the IRS. The Company prepared and, on October 25, 2012, delivered its rebuttal to the IRS contesting the IRS determination. There can be no assurance that the Company will be successful in defending its position. | |
In the event that the Company is not successful in establishing with the IRS that the Company’s calculations were correct, then the shareholders who received the dividend likely will be subject to and liable for an assessment of additional taxes due. Moreover, the Company may be contingently liable for taxes due by certain of its shareholders resulting from the dividend paid by the Company. | |
Initially, the Company withheld from the dividend paid to foreign shareholders an amount equal to the tax liability associated with such dividend. On April 7, 2010, upon a request made to the Company by its foreign controlling shareholder, S&T, the Company entered into an agreement with S&T (the “Agreement”), whereby the Company returned to S&T on April 7, 2010 that portion of the funds withheld for taxes from the dividend paid on March 24, 2010 to S&T, which the Company believes is not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits. The Agreement includes provisions pursuant to which S&T agreed to indemnify the Company for any liability imposed on it as a result of the Company’s agreement not to withhold such funds for S&T’s possible tax liability and a pledge of stock as collateral. The Company continues to assert that such dividend is largely not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits. In addition, the Company also continues to assert that this transaction results in an off-balance sheet arrangement and a possible contingent tax liability of the Company, which, if recognized, would be offset by the calling by the Company on S&T of the indemnification provisions of the Agreement. | |
In February 2011, upon the request of S&T to the Company, the Company and S&T agreed that the collateral pledged as a part of the Agreement would no longer be required and such collateral was returned by the Company to S&T in March 2011 and the Agreement was amended and restated to remove the collateral requirement but retain the indemnification provisions. The Agreement, as amended (the “Amended Agreement”), remains in effect as of today. | |
In September 2014, the Company and S&T agreed that the Company would withhold $0.5 million in cash, to be pledged as collateral against the Amended Agreement, from the dividend paid to S&T on September 30, 2014 along with such dividend paid on that date to all common stockholders. The Company did make the withholding as described and thus holds, as of September 30, 2014, $0.5 million in cash collateral from S&T against the Amended Agreement. In the event that (i) the Company is not successful in establishing with the IRS that the Company’s calculations were correct and (ii) S&T is unable or unwilling to pay the additional taxes due or indemnify the Company under the terms of the Amended Agreement, the Company may be liable to pay such additional taxes, which, together with penalties and interest, are currently estimated by the Company to be approximately $4.8 million as of December 31, 2014, $0.5 million of which is collateralized in cash held by the Company as of December 31, 2014 as described above. Any such liability, should it be required to be recognized by the Company, would likely have a material adverse effect on the Company’s results of operations in the period recognized. S&T is a subsidiary of Grande, which is currently in liquidation (as described above under “Controlling Shareholder”). Therefore, the ability of the Company to enforce its rights to indemnification under the Amended Agreement and to collect from S&T any additional taxes, interest and penalties due may be severely impaired. | |
Other | |
Until such shared usage stopped, effective on January 1, 2014, the Company formerly charged Vigers Appraisal & Consulting Ltd. (“Vigers”), a related party of Christopher Ho, the former Chairman of the Board of Directors of the Company, for usage of telephone and data lines maintained by Emerson. Mr. Ho did not stand for re-election to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Ho is no longer a director of the Company or a related party to the Company after November 7, 2013, and, consequently, such service charges from the Company to Vigers are not considered Related Party Transactions after November 7, 2013. | |
During the period October 1, 2013 through November 7, 2013, Emerson invoiced Vigers approximately $1,000 under this arrangement. During the period April 2, 2013 through November 7, 2013, Emerson invoiced Vigers approximately $3,000 under this arrangement. Vigers owed Emerson nil at November 7, 2013 related to this activity. |
Borrowings
Borrowings | 9 Months Ended |
Dec. 31, 2014 | |
Borrowings | NOTE 7 — BORROWINGS |
Short-term Borrowings | |
Letters of Credit — The Company uses Hang Seng Bank to issue letters of credit on behalf of the Company, as needed, on a 100% cash collateralized basis. At December 31, 2014, the Company had no outstanding letters of credit. In the event that the Company does have outstanding letters of credit with Hang Seng Bank, a like amount of cash is posted by the Company as collateral against such outstanding letters of credit, and is classified by the Company as Restricted Cash on the balance sheet. | |
Long-term Borrowings | |
At December 31, 2014 and March 31, 2014, the Company had no borrowings. |
Legal_Proceedings
Legal Proceedings | 9 Months Ended |
Dec. 31, 2014 | |
Legal Proceedings | NOTE 8 — LEGAL PROCEEDINGS |
The Company is not currently a party to any legal proceedings other than litigation matters, in most cases involving ordinary and routine claims incidental to our business. Management cannot estimate with certainty the Company’s ultimate legal and financial liability with respect to such pending litigation matters. However, management believes, based on our examination of such matters, that the Company’s ultimate liability will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Short_Term_Investments
Short Term Investments | 9 Months Ended |
Dec. 31, 2014 | |
Short Term Investments | NOTE 9 — SHORT TERM INVESTMENTS |
At December 31, 2014 and March 31, 2014, the Company held short term investments totaling $15.0 million and $32.2 million, respectively. The investments as of December 31, 2014 of $15.0 million are invested in certificates of deposit with durations in excess of three months, all of which matured on January 30, 2015, and which were all reinvested on that date along with accrued interest, such that the Company currently has $15.1 million invested in certificates of deposit, all of which mature on April 30, 2015. |
Background_and_Basis_of_Presen1
Background and Basis of Presentation (Policies) | 9 Months Ended |
Dec. 31, 2014 | |
Preparation of Financial Statements | The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s consolidated financial position as of December 31, 2014 and the results of operations for the three and nine month periods ended December 31, 2014 and December 31, 2013. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited interim consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates. The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly do not include all of the disclosures normally made in the Company’s annual consolidated financial statements. Accordingly, these unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2014 (“fiscal 2014”), included in the Company’s annual report on Form 10-K, as amended, for fiscal 2014. |
Sales Allowance and Marketing Support Expenses | Sales Allowance and Marketing Support Expenses |
Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Codification of Staff Accounting Bulletins (“SAB”) Topic 13: Revenue Recognition. | |
At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB Topic 13, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB Topic 13’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue. | |
If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. |
Net_Earnings_Per_Share_Tables
Net Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Computation of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts): | ||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income (loss) | $ | 2,854 | $ | (1,381 | ) | $ | 3,552 | $ | 376 | ||||||||
Denominator: | |||||||||||||||||
Denominator for basic earnings per share — weighted average shares | 27,130 | 27,130 | 27,130 | 27,130 | |||||||||||||
Effect of dilutive securities on denominator: | |||||||||||||||||
Options (computed using the treasury stock method) | — | — | — | — | |||||||||||||
Denominator for diluted earnings per share — weighted average shares and assumed conversions | 27,130 | 27,130 | 27,130 | 27,130 | |||||||||||||
Basic and diluted earnings (loss) per share | $ | 0.11 | $ | (.05 | ) | $ | 0.13 | $ | 0.01 | ||||||||
Inventory_Tables
Inventory (Tables) | 9 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Inventory | As of December 31, 2014 and March 31, 2014, inventories consisted of the following (in thousands): | ||||||||
December 31, 2014 | March 31, 2014 | ||||||||
Finished goods | $ | 4,440 | $ | 5,438 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 9 Months Ended | ||||
Dec. 31, 2014 | |||||
Summary of Open Tax Years | A summary of the Company’s open tax years is as follows as of December 31, 2014: | ||||
Jurisdiction | Open tax years | ||||
U.S. federal | 2009-2013 | ||||
States | 2009-2013 |
Computation_of_Basic_and_Dilut
Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 |
Numerator: | ||||
Net income (loss) | $2,854 | ($1,381) | $3,552 | $376 |
Denominator: | ||||
Denominator for basic earnings per share - weighted average shares | 27,130 | 27,130 | 27,130 | 27,130 |
Effect of dilutive securities on denominator: | ||||
Options (computed using the treasury stock method) | 0 | 0 | 0 | 0 |
Denominator for diluted earnings per share - weighted average shares and assumed conversions | 27,130 | 27,130 | 27,130 | 27,130 |
Basic and diluted earnings (loss) per share | $0.11 | ($0.05) | $0.13 | $0.01 |
Shareholders_Equity_Additional
Shareholders' Equity - Additional Information (Detail) (USD $) | 6 Months Ended | |
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options outstanding | 0 | |
Warrants outstanding | 0 | |
Other potentially dilutive securities outstanding | 0 | |
Extraordinary cash dividend declared | $0.70 | |
Cash dividend declared date | 21-Aug-14 | |
Cash dividend payable date | 30-Sep-14 | |
Cash dividend record date | 12-Sep-14 | |
Net amount of dividend paid | $18.50 |
Inventory_Detail
Inventory (Detail) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventory [Line Items] | ||
Finished goods | $4,440 | $5,438 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 9 Months Ended | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2011 | Mar. 31, 2010 | |
Schedule Of Income Taxes [Line Items] | ||||
Deferred tax liabilities | $416,000 | |||
Net operating loss carry forwards | 3,800,000 | |||
Tax net operating loss can be carried forward | 20 years | |||
Notice of Proposed Adjustment One | ||||
Schedule Of Income Taxes [Line Items] | ||||
Adjustment to taxable income | 5,680,182 | 4,981,520 | ||
Estimated income tax adjustment liable for taxes, penalties and interest | 14,900,000 | |||
Notice of Proposed Adjustment Two | ||||
Schedule Of Income Taxes [Line Items] | ||||
Adjustment to taxable income | 1,143,162 | 1,553,984 | ||
Service fee paid | 500,000 | 500,000 | ||
Potential increase of US income tax | 400,000 | |||
Deferred tax liabilities | 400,000 | |||
Income tax | $1,600,000 |
Summary_of_Open_Tax_Years_Deta
Summary of Open Tax Years (Detail) | 9 Months Ended |
Dec. 31, 2014 | |
Minimum | States | |
Income Tax Examination [Line Items] | |
Open tax years | 2009 |
Minimum | U.S. federal | |
Income Tax Examination [Line Items] | |
Open tax years | 2009 |
Maximum | States | |
Income Tax Examination [Line Items] | |
Open tax years | 2013 |
Maximum | U.S. federal | |
Income Tax Examination [Line Items] | |
Open tax years | 2013 |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Detail) (USD $) | 1 Months Ended | 7 Months Ended | 9 Months Ended | ||||||||
Jul. 31, 2013 | Nov. 07, 2013 | Nov. 07, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | Aug. 31, 2012 | Mar. 02, 2010 | Apr. 01, 2013 | Jul. 09, 2014 | Mar. 31, 2014 | Nov. 06, 2013 | |
Related Party Transaction [Line Items] | |||||||||||
Extraordinary dividend declared | $1.10 | ||||||||||
Company's assertion as to the percent of the dividend that is taxable to the recipient | 4.90% | ||||||||||
Internal Revenue Service's assertion as to the percent of the dividend that is taxable to the recipient, which the company is refuting | 100.00% | ||||||||||
Restricted cash | $500,000 | ||||||||||
Estimated additional taxes, penalties and interest | 4,800,000 | ||||||||||
Lafe Strategic Services Limited | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Security deposit returned | 6,000 | ||||||||||
Amount receivable from related party | 0 | ||||||||||
Grande | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Grande's (Provisional Liquidator Appointed) Ownership Interest in Emerson number of shares | 15,243,283 | ||||||||||
Grande's (Provisional Liquidator Appointed) Ownership Interest Percentage | 56.20% | ||||||||||
Mr. Eduard Will, a director of Emerson | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Amount owed to related party | 0 | 0 | |||||||||
Consulting fees paid to related party | 10,000 | 68,000 | |||||||||
Travel advance paid to related party | 6,000 | 6,000 | |||||||||
Amount owed from Emerson to Brighton Marketing Limited | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Service charge from related party | 1,000 | ||||||||||
Amount owed to related party | 0 | 0 | |||||||||
Grande Properties Management Limited | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Service charge from related party | 3,000 | 11,000 | |||||||||
Amount owed to related party | 0 | ||||||||||
Vigers Appraisal & Consulting Ltd | |||||||||||
Related Party Transaction [Line Items] | |||||||||||
Amount receivable from related party | 0 | 0 | |||||||||
Amount invoiced to related party | $1,000 | $3,000 |
Borrowings_Additional_Informat
Borrowings - Additional Information (Detail) (USD $) | Dec. 31, 2014 | Mar. 31, 2014 |
Line of Credit Facility [Line Items] | ||
Letters of credit issued percentage of cash collateralized basis | 100.00% | |
Outstanding letters of credit | $0 | |
Long-term borrowings | $0 | $0 |
Short_Term_Investments_Additio
Short Term Investments - Additional Information (Detail) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Mar. 31, 2014 |
Investment [Line Items] | ||
Short-term Investments | 15,033 | $32,194 |
Certificates of Deposit Maturing in January 30, 2015 | ||
Investment [Line Items] | ||
Certificate of deposit, maturity period | 30-Jan-15 | |
Certificates of Deposit Maturing in April 30, 2015 | ||
Investment [Line Items] | ||
Short-term Investments | 15,100 | |
Certificate of deposit, maturity period | 30-Apr-15 |