(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
Tuesday, August 12, 2003
FOR IMMEDIATE RELEASE
EMERSON RADIO ANNOUNCES FISCAL 2004 FIRST QUARTER FINANCIAL RESULTS
PARSIPPANY, NJ, August 12, 2003 -- Emerson Radio Corp. (AMEX:MSN) today reported
consolidated financial results for the first quarter of fiscal 2004.
SEGMENT HIGHLIGHTS:
<Table>
<Caption>
In Thousands Three Months Ended 6/30/03 Three Months Ended 6/30/02
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Consumer Sporting Consumer Sporting
Electronics Goods Electronics Goods
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Net revenues $ 31,637 $ 25,961 $ 56,808 $ 26,773
Operating income (loss) $ (364) $ 320 $ 5,054 $ 513
Net Income (loss) $ (506) $ 115 $ 2,548 $ (7,232)
</Table>
CONSUMER ELECTRONICS SEGMENT - REVENUE DECLINE
Net Revenues decreased 44.3% to $31.6 million from $56.8 million due to a
decline in revenues in all product categories, a decline in licensing revenues
and increases in product returns. Gross margins decreased to 15.9% in the
current quarter from 18.1% in the same year over year period associated with
gross margin improvements in audio products more than offset by declines in
microwave oven products and the decline in sales of higher margin themed
products. A net loss of $506,000 was incurred for the three month period as
compared to net income of $2.5 million for the same year ago period.
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Emerson Radio News Release Page 2
Geoffrey P. Jurick, Chairman & Chief Executive Officer of Emerson Radio, stated,
"Our consumer electronics segment was impacted by the prolonged slow down in
consumer spending in our industry. Store closures by K mart negatively affected
revenues compared to last year's levels with fewer sell through locations for
our products. This, combined with reductions in inventory levels maintained by
some of our larger accounts in a shift to more just-in-time stocking further
contributed to the revenue decline. Additionally, uncertainties concerning of
the Iraq war and the SARS outbreak affected our business domestically as well as
internationally."
Mr. Jurick continued, "Efforts to expand Emerson's revenues through product
placements into the European. market and through business development in Asia
remain a substantial priority with promising opportunities internationally.
Domestically, we are seeing the early benefits of product placements with
additional accounts including Walgreens, Eckerds Drugstores and Musicland.
Furthermore, we enthusiastically expect to launch our new Nickelodeon themed
products to contribute further to the success of this line-up. Just recently, we
successfully expanded this category to include additional popular products."
SPORTING GOODS SEGMENT
Sport Supply Group's ("SSG") gross margins decreased to 28.4% from 30.4% as a
result of increased competition and market pressure resulting in reduced
pricing. At the same time, first quarter S,G&A decreased by $572,000 from the
same period last year stemming from the impact of previously implemented cost
reduction measures. SSG's operating income declined to $320,000 in the current
first quarter from $513,000 in last year's first quarter.
Discussing SSG's performance, Mr. Jurick continued, "SSG's financial results are
reflective of competitive pressures in the marketplace and the general slowdown
in school and youth organization funding. A portion of revenues this period were
subject to competitive bidding process that negatively affected SSG's margins
and to overall competitive pressures in various other categories. We believe the
continued strategic initiatives to migrate production towards more efficient
Asian and domestic based manufacturers will counteract the effects of such
margin reductions."
CONSOLIDATED RESULTS
Kenneth A. Corby, Executive Vice President & Chief Financial Officer stated,
"This has been a difficult quarter due to the continued economic slowdown and
various other international factors. This being said, we were successful in
improving several of our key financial ratios in year to year comparisons
through relentless management of our assets as reflected in a strengthened
balance sheet. This included an improvement in working capital ratios and more
notably continued debt to equity leverage reductions. From an income statement
perspective, revenue and margin declines were met with reductions in SG&A
expenditures in both segments not including attempted acquisition related costs.
Previously initiated strategic programs reduced SSG's SG&A costs during the
current period and we expect this to continue in future quarters."
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Emerson Radio News Release Page 3
Mr. Corby concluded, "It is too difficult to comment on the full year due to the
uncertainties being brought about by prolonged and continued economic pull back
in consumer spending and by continued conservative retailer buying patterns.
Recent statistical data suggest tax cuts, tax refund checks and cautious
spending by consumers on lower priced products is beginning to look positive. We
expect September quarter revenues to be lower than last year's same period
strong revenues due to these various factors."
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 Tuesday, August 12, 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.
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EMERSON RADIO CORP. AND SUBDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS
(IN THOUSANDS)
<Table>
<Caption>
Three Months Ended
June 30 June 30
2003 2002
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NET REVENUES $ 57,598 $ 83,581
Costs and expenses:
Cost of sales 45,189 65,180
Other operating costs and expenses 1,256 1,297
Selling, general & administrative expenses 11,197 11,537
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57,642 78,014
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OPERATING INCOME (LOSS) (44) 5,567
Interest expense, net (414) (787)
Minority interest in net income
of consolidated subsidiary (54) (98)
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INCOME BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE (512) 4,682
Provision (benefit) for income taxes (67) 2,022
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INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE (445) 2,660
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Cumulative effect of change in accounting
principle -- (5,546)
NET LOSS $ (445) $ (2,886)
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BASIC NET INCOME (LOSS) PER SHARE
Income (loss) before cumulative effect of
change in accounting principle $ (.02) $ .09
Cumulative effect of change in accounting
Principle $ -- $ (.19)
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$ (.02) $ (.10)
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DILUTED NET INCOME (LOSS) PER SHARE
Income (loss) before cumulative effect of
change in accounting principle $ (.02) $ .09
Cumulative effect of change in accounting
Principle $ -- $ (.16)
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$ (.02) $ (.07)
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WEIGHTED SHARES OUTSTANDING
Basic 27,416 29,444
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Diluted 28,482 35,025
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EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(IN THOUSANDS)
<Table>
<Caption>
June 30, March 31,
2003 2002
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Cash and cash equivalents $ 3,698 $ 11,413
Accounts receivable 29,505 24,593
Inventory 54,812 45,177
Other current assets 14,060 16,586
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TOTAL CURRENT ASSETS 102,075 97,769
Property and equipment 9,367 9,823
Other assets 26,272 26,970
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TOTAL ASSETS $ 137,714 $ 134,562
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Current liabilities $ 51,154 $ 48,668
Long-term borrowings 19,068 18,079
Minority interest 16,636 16,578
Stockholders' equity 50,856 51,237
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TOTAL LIABILITIES AND EQUITY $ 137,714 $ 134,562
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