EXHIBIT 99.1
(EMERSON LOGO)
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NEWS & INFORMATION
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FOR: EMERSON RADIO CORP.
9 Entin Road
Parsippany, NJ 07054-0430
CONTACT: EMERSON RADIO CORP. OR INVESTOR RELATIONS:
Kenneth A. Corby Laura Boorn
Executive Vice President, Investor Relations Manager
Chief Financial Officer (972) 884-2302
(972) 884-2302
Monday, July 14, 2003
FOR IMMEDIATE RELEASE
EMERSON RADIO ANNOUNCES FOURTH QUARTER & FISCAL 2003
YEAR-END RESULTS
OPERATING INCOME RISES 89% - EARNINGS PER SHARE IMPROVES 44%
CONTINUED STRENGTH IN CONSUMER ELECTRONICS SEGMENT
SPORTING GOODS SEGMENT OPERATING LOSS NARROWS
** SOLID MARGIN IMPROVEMENT IN BOTH SEGMENTS CITED **
PARSIPPANY, N.J. July 14, 2003 -- Emerson Radio Corp. (AMEX:MSN) today reported
consolidated results for the fiscal fourth quarter and year ended March 31, 2003
(fiscal 2003).
CONSOLIDATED YEAR-END RESULTS
o Net Revenues grow 10%,
o Operating Income soars 89% to $19.5 million,
o Over 4.2 million common shares repurchased,
o Bank debt refinanced and reduced by 36%,
o Diluted EPS increases 44% to $.75, before cumulative change in
accounting principle EPS increases 81% to $.94.
For the year ended March 31, 2003, net revenues totaled $347.8 million, an
increase of 10% or $31.7 million from the prior year, associated with strong
increases in the consumer electronics segment and revenues remaining relatively
unchanged in the sporting goods segment. Gross profit margins climbed to 20.9%
from 19.7% in the prior fiscal year, due to higher margins in both segments.
Similarly, SG&A expenses declined to 14% of revenues in fiscal 2003 from 14.8%
in fiscal 2002 as a result of higher revenues, cost containment efforts within
electronics and cost reduction programs from the sporting goods segment.
Consolidated net income before cumulative change in accounting principle for the
year reached $27.1 million or $.94 per diluted share as compared to $19.4
million or $.52 per diluted share for the prior fiscal year. After a recording a
$5.6 million non-cash charge associated with the adoption of goodwill accounting
standards, consolidated net income for the year was $21.5 million or $.75 per
diluted share compared to net income of $19.4 million, or $.52 per diluted share
in the prior fiscal year.
EMERSON RADIO CORP. INVESTOR RELATIONS, NINE ENTIN ROAD, PARSIPPANY, NEW JERSEY
07054
EMERSON REPORTS / 2
Net cash flow (EBITDA) totaled $23.4 million in fiscal 2003 reflecting Emerson's
stringent cash management efforts and affording it the opportunity to repurchase
13% of its outstanding shares and reduce its overall debt levels. Emerson
believes that information concerning EBITDA enhances overall understanding of
its current financial performance as it provides a measurement of cash generated
from operations . Emerson computes EBITDA, which is a non-GAAP financial
measure, as reflected in the table below.
The substantial improvement in profitability and in earnings per share
performance is attributable to continued solid performance in the consumer
electronics segment which included the benefit of a tax net operating loss carry
forward as well as narrowed operating losses at SSG combined with the partial
year effect of share repurchases that occurred in fiscal 2003.
CONSUMER ELECTRONICS - NET REVENUES CLIMB 15.4% TO $245.2 MILLION
Net revenues for fiscal 2003 climbed to $245.2 million from $212.5 million
reported in the prior year primarily due to increases in unit sales of audio
products, theme products and licensing revenues partially offset by decreases in
unit sales of microwave ovens. Gross margins expanded in fiscal 2003 to 17.3% of
net revenues from 15.4% one year earlier. Recently effective accounting
regulations required the Company to reclassify certain advertising expenses by
removing them from SG&A and from net revenues.
Operating income improved 56% to $20.5 million in fiscal 2003 from $13.1 million
reported in the prior year due to higher net revenues and higher gross margins
while controlling SG&A expense increases. Net income grew to $27.9 million from
$21.3 million as the company further recognized the benefits of its tax net
operating losses.
In the fourth quarter, which is seasonally the weakest, net revenues of $27.3
million decreased from $28.9 million reported for the same period in the prior
fiscal year with net losses for the quarter remaining relatively unchanged from
last year.
EMERSON RADIO CORP. INVESTOR RELATIONS,
NINE ENTIN ROAD, PARSIPPANY, NEW JERSEY 07054
EMERSON REPORTS / 3
MANAGEMENT COMMENTS
Geoffrey P. Jurick, Emerson's Chairman & Chief Executive Officer, stated, "This
has been a successful year for Emerson on several fronts. A combination of
efforts focused on increasing revenues through expanded offerings of core and
themed products, additional retail store placements and strengthening our
licensee network have provided solid top line results. We are pleased with the
performance of the consumer electronics business in several key areas. Gross
margins continued expanding through the introduction of new models and the use
of several inward license agreements. Additionally, outward licensing revenues
continue to grow significantly on several fronts domestically and
internationally."
"During the past year we continued to strengthen our product development efforts
for the North American Market and international markets culminating in patent
approvals in the U.S. and several European countries for our SmartSet(R)
technology."
"Furthermore, Emerson refinanced all of its outstanding debt on more favorable
terms while at the same time reducing such debt by over $17.6 million thus
providing Emerson with a substantial reduction in its leverage and cost of
borrowed funds. Retiring Emerson's debentures also removed the dilutive effect
of 5.2 million shares. Finally, Emerson repurchased approximately 4.3 million
common shares in the quarter ended June 30, 2002 thus providing shareholders
with further accretion to earnings per share."
Mr. Jurick continued, "SSG's progress during the fiscal year continues to offer
encouragement as its operating losses narrowed primarily through improved gross
margins and reductions in overhead expenses of approximately $1.3 million.
During this same time period, sales were relatively unchanged as compared to
fiscal 2002. As a result, SSG's net loss prior to the cumulative changes in
accounting principle was reduced to $1.6 million for fiscal 2003 as compared to
$3.6 million in the prior fiscal year. The continued strength of the consumer
electronics business combined with SSG's improved performance favorably impacted
our consolidated results."
Mr. Jurick concluded, "We are pleased that our continued progress was favorably
noted by a number of financial institutions during the course of last year
leading to a substantial increase in the market value of our company."
Kenneth A. Corby, Executive Vice President and Chief Financial Officer stated,
"Emerson's consolidated results reflect solid performance in several fundamental
financial measurements. Annual branded revenues exceeded $900 million globally,
representing a 45% improvement over last year's already solid growth. More and
more product is being placed into retailers and directly marketed, utilizing
various media, to consumers thus creating continued and growing brand awareness.
Themed products performed well and we look towards fiscal 2004 with the intent
to fully leverage Girl PowerTM and the newly entered license agreement with
Nickelodeon featuring several of the related popular characters."
"SSG wrote-off all recorded goodwill pursuant to recently effective accounting
requirements. These non-cash accounting entries resulted in a $7.4 million and
$5.6 million adjustment and are reflected as a cumulative change in accounting
principle on SSG's and Emerson's Consolidated Statement of Operations,
respectively. Emerson recorded additional benefits associated with its tax net
operating loss carryforwards this fiscal year of approximately $11 million
consistent with its prior fiscal year. The solid cash flow performance also
continued to be reflected in the balance sheet as debt to equity, current ratio
and accounts receivable ratio all improved as we reduced consolidated debt by
$17.6 million. These combined results provided cash flow (EBITDA) of
approximately $23.4 million over last year's $15.6 million."
Mr. Corby concluded, "The fourth quarter year over year revenue decline reported
partially relates to a difficult retail environment, the uncertainties
associated with the Iraq war and a repositioning of our themed products. Looking
towards the fiscal June 2004 quarter, we expect revenues to be less than last
year same period due to retailers deferring purchases given the continued
effects of a slow economy. We confidently expect the introduction of additional
theme products in the domestic market, the initiation of sales to China via our
agreement with Sanlian and significant selling efforts in Europe to contribute
strong top line revenue potential in the upcoming fiscal year."
EMERSON RADIO CORP. INVESTOR RELATIONS,
NINE ENTIN ROAD, PARSIPPANY, NEW JERSEY 07054
EMERSON REPORTS / 4
INVESTOR CONFERENCE CALL
Geoffrey P. Jurick, Chairman & Chief Executive Officer and Kenneth A. Corby,
Executive Vice President & Chief Financial Officer, will host a conference call
on Monday, July 14, 2003, at 10:00 a.m. ET, to discuss financial results and
corporate developments. The conference call will be broadcast live over the
Internet via the Investor Relations section of the Company's web site at
www.emersonradio.com. To listen to the live call, go to the web site at least 15
minutes early to download and install any necessary audio software. If you are
unable to listen live, the conference call will be archived and can be accessed
for approximately 30 days.
THIS PRESS RELEASE OTHER THAN THE HISTORICAL INFORMATION, CONSISTS OF
"FORWARD-LOOKING STATEMENTS" (AS DEFINED IN THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995) WHICH ARE IDENTIFIED BY THE USE OF WORDS SUCH AS "BELIEVES",
"EXPECTS", "PROJECTS", AND SIMILAR EXPRESSIONS. WHILE THESE STATEMENTS REFLECT
THE COMPANY'S CURRENT BELIEFS AND ARE BASED ON ASSUMPTIONS THAT THE COMPANY
BELIEVES ARE REASONABLE, THEY ARE SUBJECT TO UNCERTAINTIES AND RISKS THAT COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANTICIPATED RESULTS. THESE RISKS
AND UNCERTAINTIES ARE DETAILED FROM TIME TO TIME IN THE COMPANY'S FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE COMPANY'S REPORTS ON FORM
10-K, 10-Q AND 8-K.
EMERSON RADIO CORP., FOUNDED IN 1948, IS HEADQUARTERED IN PARSIPPANY, N.J. THE
COMPANY DESIGNS, MARKETS AND LICENSES, THROUGHOUT THE WORLD, FULL LINES OF
TELEVISIONS, AND OTHER VIDEO PRODUCTS, MICROWAVE OVENS, CLOCKS, RADIOS, AUDIO
AND HOME THEATER PRODUCTS. ITS 53.2% OWNED SUBSIDIARY, SPORT SUPPLY GROUP, INC.
(OTC:SSPY)IS A DIRECT MARKETER OF SPORTS-RELATED EQUIPMENT AND LEISURE PRODUCTS
TO THE INSTITUTIONAL MARKET, INCLUDING SCHOOLS, COLLEGES, UNIVERSITIES,
GOVERNMENT AGENCIES, MILITARY FACILITIES, ATHLETIC CLUBS, ATHLETIC TEAMS AND
DEALERS, YOUTH SPORTS LEAGUES AND RECREATIONAL ORGANIZATIONS. EMERSON'S WEB SITE
IS WWW.EMERSONRADIO.COM.
EMERSON RADIO CORP. INVESTOR RELATIONS,
NINE ENTIN ROAD, PARSIPPANY, NEW JERSEY 07054
EMERSON REPORTS/5
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<Table>
<Caption>
Year Ended Three Months Ended
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March 31, March 31, March 31, March 31,
2003 2002 2003 2002
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NET REVENUES $ 347,784 $ 316,048 $ 58,629 $ 59,412
--------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 275,238 253,883 44,928 45,578
Other operating costs and expenses 4,347 4,949 1,096 1,181
Selling, general and administrative expenses 48,662 46,902 11,740 11,670
--------- --------- --------- ---------
328,247 305,734 57,764 58,429
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OPERATING INCOME 19,537 10,314 865 983
Litigation settlement, net -- 2,933 -- --
Interest expense, net
(2,511) (3,213) (530) (506)
Minority interest in net loss of
consolidated subsidiary 731 1,712 (265) (358)
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INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 17,757 11,746 70 119
Benefit for income taxes (9,289) (7,661) (15,086) (8,225)
--------- --------- --------- ---------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 27,046 19,407 15,156 8,344
Cumulative effect of change in accounting
Principle 5,546 -- -- --
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NET INCOME $ 21,500 $ 19,407 $ 15,156 $ 8,344
========= ========= ========= =========
NET INCOME PER COMMON SHARE
Basic $ 0.78 $ 0.62 $ 0.55 $ 0.27
Diluted $ 0.75 $ 0.52 $ 0.53 $ 0.22
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 27,716 31,298 27,345 31,233
Diluted 28,640 40,485 28,524 40,357
</Table>
EMERSON REPORTS/6
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(IN THOUSANDS)
<Table>
<Caption>
March 31, March 31,
2003 2002
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Cash and cash equivalents $ 11,413 $ 19,228
Accounts receivable 24,593 29,401
Inventory 45,177 41,657
Other current assets 16,586 13,727
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TOTAL CURRENT ASSETS 97,769 104,013
Property and equipment 9,823 11,116
Other assets 26,970 20,710
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TOTAL ASSETS $134,562 $135,839
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Current liabilities $ 48,668 $ 54,723
Long-term borrowings 18,079 29,046
Minority interest 16,578 17,330
Stockholders' equity 51,237 34,740
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TOTAL LIABILITIES AND EQUITY $134,562 $135,839
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</Table>
EMERSON RADIO CORP. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENT
(IN THOUSANDS)
<Table>
<Caption>
Year Ended
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March 31, March 31,
2003 2002
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Net income $ 21,500 $ 19,407
Add:
Interest expense 2,511 3,213
Tax benefit (9,289) (7,661)
Depreciation and amortization 3,142 3,601
Cumulative change on accounting principle 5,546 --
Gain on litigation -- (2,933)
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Earnings before interest, tax, depreciation
and amortization (EBITDA) $ 23,410 $ 15,627
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</Table>