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:
John D. Florian Robert Maffei
Deputy Chief Financial Officer Investor Relations Manager
(973) 428-2044 (973) 428-2098
EPOCH Financial Group, Inc.
Victor Thompson or
Todd Atenhan
(888) 917-5105
FOR IMMEDIATE RELEASE
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Wednesday, November 15, 2006
EMERSON RADIO ANNOUNCES $22.0 MILLION INCREASE IN NET REVENUE AND $2.5 MILLION
INCREASE IN NET INCOME FOR FISCAL 2007 SECOND QUARTER
PARSIPPANY, N.J. - November 15, 2006 - Emerson Radio Corp. (AMEX:MSN) today
reported a 28.4% gain in net revenue to $99.6 million for the second quarter of
fiscal 2007, compared to $77.6 million in the second quarter of fiscal 2006, and
an increase in net income from continuing operations to $3.8 million, or $0.14
per diluted share, for the second quarter of fiscal 2007, compared to net income
of $1.3 million, or $0.05 per diluted share, for the same period last year. The
revenue increase was driven by an increase in sales of Emerson(R) branded
products of $13.6 million, or 26.7%, to $64.6 million from $51.0 million for the
second quarter of fiscal 2007 as compared to the same period in fiscal 2006.
Included in the second quarter increase were sales of Emerson's newly introduced
iPod(R) compatible products, just introduced this year, of $9.1 million and the
sales of microwaves totaling $26.2 million in the second quarter as compared to
$20.6 for the same period last year. Emerson's themed product sales of $12.7
million represent a decrease of $11.9 million, or 4.8%, as compared to the same
period last year. This revenue decrease was the result of lower sales volume of
the Nickelodeon (R) themed product category. Licensing revenues decreased
slightly to $1.5 million for the second quarter of fiscal 2007 from $2.0 million
in the second quarter of fiscal 2006. The decrease for the three month period
was primarily due to lower sales volume under Emerson's video licensing
agreement.
During the second quarter of fiscal 2007, Emerson had promotional item sales
totaling $20.8 million. This sales agreement represents a major holiday
promotion with one of the Company's major customers, which we expect will result
in total net revenues of $32.9 million in fiscal 2007. In addition to this
increase in net revenues, this promotional sale resulted in an increase in
accounts payable and other current liabilities and accounts receivable of $20.6
million and $20.8 million, respectively, as well as an increase in short term
deposits of $28.8 million due to parts and inventory purchases related to this
sale. In order to fund these purchases, short term borrowings through Emerson's
revolving line of credit increased by $24.0 million for the period ended
September 30, 2006. As of the date of this release, the outstanding balances in
accounts payable and other current liabilities, accounts receivable, short term
deposits and short term borrowings have subsequently been returning to normal
seasonal business levels. There were no promotional item sales during fiscal
2006.
Cost of sales, as a percentage of net revenues, decreased for the second quarter
of fiscal 2007 to 86.8% from 87.8% for the same period of fiscal 2006, and to
86.7% from 86.9% for the six month period of fiscal 2007 compared to the same
period of fiscal 2006. Selling, general and administrative expenses increased
approximately $237,000, or 4.4%, to $5.6 million in the second quarter of fiscal
2007 as compared to $5.4 million for the same period in fiscal 2006. For the six
month period of fiscal 2007, SG&A expenses increased $1.6 million, or 17.4%, to
$10.8 million from $9.2 million in fiscal 2006. The six month increases are due
primarily to increases in sales commissions and freight costs related to the
increase in sales volume, as well as additional advertising expenditures and bad
debt expenses, offset by decreases in personnel costs.
Mr. Eduard Will, Emerson Radio Corp. President - North American Operations
stated, "For the first six months of fiscal 2007 we have experienced significant
revenue growth as compared to the same period last year. Moreover, we are
executing on plan through the first two quarters of fiscal 2007. Our sales of
microwave products increased by over $17 million, representing over a 50%
improvement compared to the same period last year. The introduction of Emerson's
iPOD(R) accessory products along with the new wine cooler line added nearly $15
million in sales increases as compared to the same period last year. These
increases were partially offset by the Nickelodeon (R) themed products category
being reduced by over $11 million. On a year-to-year basis, stockholders' equity
improved by over 10% to $74.6 million."
Mr. Adrian Ma, Chief Executive Officer of Emerson Radio Corp. stated, "Our new
west coast distribution center, leased this year and fully operational in June
2006, has had an immediate impact on reducing our logistics operating costs.
Specific efforts to reduce our other operating and administrative costs are
underway, with savings estimated in the fiscal third and fourth quarters.
Focusing on our customer account management and cost containment, we would
expect to see a further decrease in operating costs as a percent of sales for
fiscal 2007. We will continue to develop and execute business strategies that
leverage Grande's and Emerson's combined strengths to drive and deliver a first
class worldwide electronics distribution network for branded products. We
recently extended our license agreement with Funai through December 2010, and
plans to expand our licensing programs for the Emerson(R) and HHScott(R) brands
into new categories and geographic areas, are currently in progress. We also
continue to exploit the development of potential cross licensing and marketing
opportunities with Grande. Our new, revitalized management team is in place, and
we believe Emerson Radio is well positioned to execute on these strategies and
build shareholder value."
Recent Development
On November 8, 2006, a subsidiary of Grande Holdings made a proposal to Emerson
to sell a 51% interest in Capetronic Group, Ltd., a consumer electronics
manufacturer, to an Emerson subsidiary for $108 million. Grande Holdings
beneficially owns 50.8% of Emerson's common shares outstanding.
Emerson has formed a special committee of independent directors to evaluate the
proposal on behalf of the Company. There can be no assurances that Emerson will
proceed with and/or complete the transaction or as to what the terms with
respect to any such transactions would be, nor can the Company provide a
timeline as to when a resolution, if any, may occur.
Emerson Radio Corp. (AMEX:MSN), founded in 1948, is headquartered in
Parsippany, N.J. The Company designs, markets and licenses, worldwide, full
lines of televisions and other video products, microwaves, clocks, radios, audio
and home theater products. Emerson's web site is www.emersonradio.com
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 News Release Page 4
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS
Unaudited
(In thousands)
Three Months Ended Six Months Ended
September 30 September 30
2006 2005 2006 2005
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NET REVENUES $ 99,588 $ 77,576 $154,829 $116,223
COSTS AND EXPENSES:
Cost of sales 86,678 68,108 134,518 101,022
Other operating costs and expenses 1,426 1,641 3,025 2,840
Selling, general and administrative
expenses (exclusive of non-cash
compensation shown below) 5,620 5,383 10,806 9,222
Acquisition costs -- -- 21 --
Non-cash compensation (recovered) (50) 88 55 170
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93,674 75,220 148,425 113,254
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OPERATING INCOME 5,914 2,356 6,404 2,969
Interest expense, net 212 199 107 606
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INCOME BEFORE INCOME TAXES AND
DISCONTINUED OPERATIONS 5,702 2,157 6,297 2,363
Provision for income taxes 1,898 883 1,912 945
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INCOME FROM CONTINUING OPERATIONS 3,804 1,274 4,385 1,418
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Income from discontinued
operations, net of tax -- -- -- 272
Gain on sale of Sport Supply
Group, Inc., net of tax -- 12,646 -- 12,646
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INCOME FROM DISCONTINUED OPERATIONS -- 12,646 -- 12,918
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NET INCOME $ 3,804 $ 13,920 $ 4,385 $ 14,336
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BASIC NET INCOME PER SHARE:
Continuing operations $ 0.14 $ 0.05 $ 0.16 $ 0.05
Discontinued operations -- 0.47 -- 0.48
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$ 0.14 $ 0.52 $ 0.16 $ 0.53
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DILUTED NET INCOME PER SHARE:
Continuing operations $ 0.14 $ 0.05 $ 0.16 $ 0.05
Discontinued operations -- 0.46 -- 0.48
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$ 0.14 $ 0.51 $ 0.16 $ 0.53
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WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 27,077 27,048 27,071 27,109
Diluted 27,106 27,177 27,123 27,201
Emerson Radio News Release Page 5
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(In thousands)
September 30, 2006 March 31, 2006
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(Unaudited)
Cash and cash equivalents $ 7,842 $ 20,517
Accounts receivable 59,493 18,996
Inventory 51,135 33,003
Other current assets 38,847 9,471
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Total current assets 157,317 81,987
Property and equipment 2,410 2,500
Other assets 6,413 8,015
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Total assets $166,140 $ 92,502
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Current liabilities $ 90,849 $ 21,772
Long-term borrowings 655 575
Stockholders' equity 74,636 70,155
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Total liabilities and equity $166,140 $ 92,502
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