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:
Guy A. Paglinco Laura Boorn
Vice President, Investor Relations Manager
Chief Financial Officer (972) 884-2302
(973) 428-2085
EPOCH FINANCIAL GROUP, INC.
Victor Thompson or
Todd Atenhan
(888) 917-5105
Monday, November 15, 2004
FOR IMMEDIATE RELEASE
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EMERSON RADIO ANNOUNCES FISCAL 2005 SECOND QUARTER FINANCIAL RESULTS
CONSOLIDATED REVENUES INCREASE FOR THIRD CONSECUTIVE QUARTER
LICENSING REVENUES INCREASES 31.9% AND 28.9% FOR THREE AND SIX MONTH PERIODS
SPORTING GOODS SEGMENT REPORTS SIGNIFICANTLY IMPROVED
THREE AND SIX MONTH RESULTS
PARSIPPANY, NJ, November 15, 2004 -- Emerson Radio Corp. (AMEX:MSN) today
reported consolidated financial results for the quarter ended September 30, 2004
(second quarter of fiscal 2005).
SEGMENT HIGHLIGHTS:
Three Months Ended Three Months Ended
In Thousands September 30, 2004 September 30, 2003
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Consumer Sporting Consumer Sporting
Electronics Goods Electronics Goods
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Net revenues $ 59,880 $ 23,249 $ 56,440 $ 22,433
Operating income (loss) $ 1,625 $ 1,002 $ 2,255 $ (168)
Net Income (loss) $ 511 $ 950 $ 894 $ (349)
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Emerson Radio News Release Page 2
Six Months Ended Six Months Ended
September 30, 2004 September 30, 2003
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Consumer Sporting Consumer Sporting
Electronics Goods Electronics Goods
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Net revenues $107,706 $ 48,353 $ 88,090 $ 44,954
Operating income $ 3,980 $ 2,298 $ 1,950 $ 106
Net Income $ 1,685 $ 2,187 $ 447 $ (293)
CONSUMER ELECTRONICS SEGMENT - REVENUES INCREASE 6% DESPITE RECEIVING DELAYS IN
WEST COAST PORTS
Net Revenues for the second quarter of fiscal 2005 increased 6.1% to $59.9
million from $56.4 million for the second quarter of fiscal 2004 and to $107.7
million for the six month period ended September 30, 2004 from $88.1 million, a
22.3% increase from the prior year ended. The increases in net revenues were the
result of increases in orders from our primary customers and the expansion of
our customer base.
Gross margins increased to 14.8% from 13.1% and to 16.1% from 14.1% for the
three and six months ended September 2004 as compared to the same periods in the
prior year. Increased margins in both periods were the result of sales of higher
margin products and increased licensing revenues, which increased $655,000, or
31.9%, to $2.7 million for the second quarter of fiscal 2005 and $1.5 million,
or 28.9%, to $6.7 million on a year-to-date basis for fiscal 2005 as compared to
the same periods in fiscal 2004.
Operating income for the three and six month periods ended September 30, 2004
was reduced by a non-cash charge in the amount of $1.6 million related to the
exercise of certain options and the issuance of warrants. Operating income for
the second quarter of fiscal 2005 was $1.6 million as compared to $2.3 million
in the same period in the prior year, and increased to $4.0 million from $2.0
million for the six months ended September 30, 2004 as compared to the same six
month period in the prior year.
Geoffrey P. Jurick, Chairman & Chief Executive Officer of Emerson Radio, stated,
"While delays in receiving products due to West Coast Port slow-downs and
various retailers' preferences for just in time stocking programs caused
revenues to shift from the September 2004 quarter into the following quarter, we
were pleased to record a substantial increase in revenues on a year-to-date
basis over that of the prior year. Our revenue increases were the result of
strong core products sales to our traditional customer base as well as
successful expansion to new accounts. We are also experiencing continued strong
growth for Emerson branded product categories by our licensing partners."
Mr. Jurick continued, "Gross margins improved for both the quarter and on a
year-to-date basis due to increases in our gross margins on product sales and
strong licensing revenues The increase in our S,G &A costs is primarily
attributable to various business development programs. While our consumer
electronic business turned in a strong quarter, operating income was reduced as
a result of a non-cash charge of $1.6 million related to the exercises of
certain options and the issuance of warrants. The non-cash charge resulted
mainly from the exercises of options and is not expected to re-occur in the
future. As a result of the aforementioned factors, the electronics segment has
generated a solid financial performance for the first six months of fiscal 2005
as measured by net income which totaled $1.7 million, as compared to net income
of $447,000 for the first six months of fiscal 2004."
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Emerson Radio News Release Page 3
SPORTING GOODS SEGMENT - NET INCOME INCREASES $1.3 MILLION FOR THE QUARTER
Sport Supply Group's ("SSG") net revenues improved 3.6% to $23.2 million for the
fiscal 2005 September quarter from $22.4 million for the fiscal 2004 September
quarter, and by 7.6% on a year-to-date basis to $48.4 million from $45.0 million
for the comparable period of fiscal 2004.
SSG's gross margins increased to 29.0% for the fiscal 2005 September quarter
from 27.0% for the fiscal 2004 September quarter and to 29.4% for the first six
months of fiscal 2005 from 27.2% for the comparable period of fiscal 2004 mainly
due to pricing improvements.
Operating income and net income improved to $1.0 million and $950,000,
respectively, in the second quarter of fiscal 2005 from losses of $168,000 and
$349,000, respectively, for the second quarter of fiscal 2004. On a year-to date
basis for fiscal 2005, operating income and net income improved to $2.3 million
and $2.2 million, respectively, as compared to $106,000 and a loss of $293,000
for fiscal 2004.
Discussing SSG, Mr. Jurick continued, "We are very pleased with the results of
our turnaround efforts initiated in September 2003. Our plan envisioned
returning SSG to profitability by increasing revenues and gross profit margins
while simultaneously reducing our operating expenses as a percentage of our
revenues. During the first six months of fiscal 2005, our plan for SSG has been
executed as envisioned."
CONSOLIDATED RESULTS
As a result of the above noted segment results, consolidated net revenues for
the three and six months ended September 30, 2004 increased by 5.4% to $83.1
million from $78.9 million , and by 17.3% to $156.1 million from $133.0 million,
respectively, as compared to the same periods in fiscal 2004.
Consolidated gross margins for the three and six months ended September 30, 2004
increased to 18.8% from 17.0% and to 20.2% from 18.5%, respectively, as compared
to the same periods in fiscal 2004.
Discussing the consolidated results, Mr. Jurick continued, "From a balance sheet
perspective, additional working capital requirements necessary to meet
customers' continued just in time stocking programs and seasonal selling needs
in the consumer electronics segment, resulted in higher consolidated inventory
levels on a year over year basis. The increases in inventory and receivables
balances are consistent with expectations, and should decline to lower levels
upon completion of the holiday selling season. While working capital has been
utilized for seasonal activity, the company has ample liquidity to fund all of
its cash requirements."
Mr. Jurick stated, "Emerson's consolidated results for the September 2004
quarter and on a six month basis reflected solid performances in both segments.
The Consumer Electronics segment continues to make advancements with its
existing and developing customers, expansion of its product lineup, and strong
licensing revenue growth from Emerson's licensing partners. Our Sporting Goods
Segment is executing very well by increasing revenue and margins while reducing
its costs. As a result of the above factors, the consolidated net income and
diluted net income per share were $989,000 and $0.04 per share, respectively,
for the second quarter of fiscal 2005 and $2.8 million and $0.10 per share,
respectively, for the six month period ended September 30, 2004 (both reported
results being net of the above mentioned stock based costs of $1.2 million after
tax provisions, or $0.04 per share.)."
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Emerson Radio News Release Page 4
Mr. Jurick concluded, "While we continue to operate in competitive environments
in both our sporting goods and consumer electronics segments, we are confidently
expecting further revenue growth. Based upon our fiscal year-to-date results and
the progress we are experiencing in our various programs, including the
increasing interest in our Nickelodeon line, we believe our consolidated
December 2004 quarter revenues will improve in excess of 20% over the same
period last year thus marking the fourth consecutive quarter of revenue growth."
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 News Release Page 5
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months Ended
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September 30, September 30, September 30, September 30,
2004 2003 2004 2003
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NET REVENUES $ 83,129 $ 78,873 $ 156,059 $ 133,044
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COSTS AND EXPENSES:
Cost of sales 67,495 65,422 124,529 108,389
Other operating costs and expenses 1,377 1,293 2,930 2,549
Selling, general and administrative expenses 10,171 10,081 20,934 19,399
Acquisition costs (104) (29) (175) 614
Stock based costs 1,563 19 1,563 37
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80,502 76,786 149,781 130,988
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OPERATING INCOME 2,627 2,087 6,278 2,056
Interest expense, net (381) (400) (675) (822)
Minority interest in net (income) loss
of consolidated subsidiary (472) 136 (1,078) 82
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INCOME BEFORE INCOME TAXES AND DISCONTINUED
OPERATIONS 1,774 1,823 4,525 1,316
Provision (benefit) for income taxes 785 1,042 1,731 975
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INCOME FROM CONTINUING OPERATIONS 989 781 2,794 341
LOSS from discontinued operations, net of tax -- (100) -- (105)
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NET INCOME $ 989 681 $ 2,794 $ 236
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BASIC NET INCOME (LOSS) PER SHARE
Continuing operations $ 0.04 0.03 0.10 $ 0.01
Discontinued operations -- (0.01) -- --
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$ 0.04 $ 0.02 $ 0.10 $ 0.01
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DILUTED NET INCOME (LOSS) PER SHARE
Continuing operations $ 0.04 0.03 0.10 $ 0.01
Discontinued operations -- (0.01) -- --
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$ 0.04 $ 0.02 $ 0.10 $ 0.01
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WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 27,076 27,560 26,855 27,488
Diluted 27,218 28,428 27,242 28,458
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Emerson Radio News Release Page 6
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
September 30, March 31,
2004 2004
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Cash and cash equivalents $ 5,078 $ 6,369
Accounts receivable 37,733 19,948
Inventory 59,665 46,997
Other current assets 17,306 14,052
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TOTAL CURRENT ASSETS 119,782 87,366
Property and equipment 7,405 7,822
Other assets 21,912 23,481
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TOTAL ASSETS $149,099 $118,669
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Current liabilities $ 76,171 $ 40,637
Long-term borrowings 4,492 15,027
Minority interest 16,872 15,793
Stockholders' equity 51,564 47,212
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TOTAL LIABILITIES AND EQUITY $149,099 $118,669
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