PARSIPPANY, N.J., June 30, 2005 (PRIMEZONE) -- Emerson Radio Corp. (AMEX:MSN) today announced audited consolidated results for the fiscal fourth quarter and fiscal 2005 year ended March 31, 2005.
Consolidated Year-End Results
Net revenues for fiscal 2005 were $320.7 million, a 21.6 percent increase from the prior fiscal year-end revenues of $263.8 million. The increase in net revenues amounted to approximately $50.8 million, or 28.3 percent, in the consumer electronics segment, and $6.1 million, or 7.3 percent, in the sporting goods segment. Cost of sales remained relatively flat at 81.8 percent for fiscal 2005 vs. 81.7 percent for fiscal 2004. Selling, general and administrative expenses ("SG&A") decreased to 12.9 percent of consolidated net revenues in fiscal 2005 from 15.9 percent of consolidated net revenues in fiscal 2004. Operating income reached $11.3 million for fiscal 2005 compared to an operating loss of $1.0 million for fiscal 2004. Net income of approximately $5.9 million, or $0.22 diluted earnings per share was generated for fiscal 2005 compared to a net loss of $1.1 million or $0.04 dilutive loss per share for fiscal 2004.
Consumer Electronics
Net revenues for fiscal 2005 were $230.8 million compared to $180.0 million for fiscal 2004, an increase of $50.8 million, or 28.3 percent. The change in revenues was attributable to an increase in Emerson(r) branded product sales of $44.3 million to $202.9 million in fiscal 2005 compared to $158.5 million in fiscal 2004; and an increase in themed product sales to $17.1 million in fiscal 2005 compared to $10.4 million in fiscal 2004, or an increase of $6.7 million (63.7 percent) due to increased Nickelodeon-branded product sales volume. Licensing revenues decreased by $169,000 on a year-over-year basis to $10.8 million in fiscal 2005 from $11.0 million in fiscal 2004. Cost of sales, as a percentage of net revenues, increased from 85.4 percent in fiscal 2004 to 85.9 percent in fiscal 2005 primarily due to slightly lower gross margins on both themed and Emerson(r) branded products. SG&A, as a percentage of net revenues, was 7.6 percent in fiscal 2005 compared to 8.8 percent in fiscal 2004. Operating income was $9.4 million in fiscal 2005 compared to $3.1 million in fiscal 2004. The consumer electronics segment generated net income of $5.1 million in fiscal 2005 compared to $60,000 in fiscal 2004.
Sporting Goods
Net revenues for fiscal 2005 were $90.0 million compared to fiscal 2004 net revenues of $83.9 million. Cost of sales, as a percentage of net revenues, decreased to 71.2 percent for fiscal 2005 compared to 73.7 percent for fiscal 2004. SG&A expenses for fiscal 2005 decreased by $2.3 million (8.7 percent) compared to fiscal 2004. As a percentage of net revenues, SG&A decreased to 26.5 percent in fiscal 2005 from 31.2 percent in fiscal 2004. Income from continuing operations was $1.6 million for fiscal 2005 compared to an operating loss of $4.6 million for fiscal 2004. Net income of $1.7 million was reported for fiscal 2005 compared to a net loss of $1.9 million for fiscal 2004.
Management Comments on Results of Operations
Geoffrey P. Jurick, Emerson's chairman and chief executive officer stated, "We are very pleased with the rebound our consumer electronics segment has exhibited this past fiscal year, resulting in five consecutive quarters of revenue growth. While the majority of the growth that Emerson experienced has come from its major accounts, the overall customer base has experienced expansion. The Nickelodeon-themed product category continues its success, which has now expanded to Dora the Explorer(tm) brand for which we also see strong demand going forward.
"While licensing revenues were relatively unchanged during the past fiscal year at approximately $10.8 million, we are continuing to expand our licensing program for the Emerson(r) and HH Scott(r) brand names into new categories as well as to additional territories. We are very encouraged about the potential of the most recent addition to our licensing program -- Petters Consumer Brands LLC. Our business model, which includes direct sales and brand licensing, continues to provide solid results. This combination generated total sales of Emerson(r)-branded products exceeding $870 million for fiscal 2005. We continue to expect enormous potential in licensing in as yet underutilized product categories and untapped geographic markets."
Mr. Jurick commented with regards to the sporting goods segment ("SSG"), "SSG achieved significant improvements from the prior year in virtually all measures of financial performance for the year ended March 31, 2005. SSG's fiscal 2005 results reflect organic revenue growth, margin improvement, operating cost reductions and a significant improvement in operating income compared to a net loss last year. SSG's $1.7 million net income in the current year represents a $3.6 million improvement from the $1.9 million net loss last year. It is important to note that the March 26, 2004, net loss included a $2.7 million gain that was recorded as a result of the sale of the Company's subsidiary Athletic Training Equipment Company. Excluding this one-time gain, net income for the year ended March 31, 2005, improved by $6.3 million."
Mr. Jurick continued, "In summary, the past year has been very encouraging. Both segments have demonstrated significant improvements, while managing their respective balance sheets. Changes in the consumer electronics industry now require more working capital for inventory and accounts receivable needs, but this need has been addressed with the recent completion of a new three-year $42.5 million syndicated credit facility led by PNC Bank, the proceeds of which can be used for working capital needs, general corporate purposes, and share repurchases. With our newly established banking facilities in place, we are confident that both entities are financially and operationally strong to continue the progress that has been made in the past year. While our outlook for revenues over the next six months is encouraging, revenues for the June 2005 quarter will be less than revenues recorded in the quarter ending June 30, 2004. This amounts to a shift in revenues from the early buy-ins by one of our major accounts in the June quarter of fiscal 2005, into the September quarter of fiscal 2006."
Emerson Radio Corp. Joins Russell Microcap Index
Geoffrey P. Jurick, stated that, "Emerson Radio Corp. joined the Russell Microcap Index when Russell Investment Group reconstituted its family of U.S. indexes on June 24, 2005." The Russell Microcap Index, is comprised of the smallest 1,000 securities in the small-cap Russell 2000(r) Index plus the next 1,000 companies, based on a ranking of all U.S. equities by market capitalization. Mr. Jurick commented, "We are pleased to be included in this index as it should provide our company greater visibility and provide enhanced liquidity for our shareholders."
Emerson Radio Corp. (AMEX:MSN), 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, microwaves, clocks, radios, audio and home theater products. Its 53.2% owned subsidiary, Sport Supply Group, Inc. (Pink Sheets: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
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 CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended Three Months Ended
---------- ------------------
March 31, March 31, March 31, March 31,
2005 2004 2005 2004
---- ---- ---- ----
Net revenues $ 320,704 $ 263,774 $ 69,966 $ 54,385
--------- --------- --------- ---------
Costs and expenses:
Cost of sales 262,285 215,454 57,648 44,074
Other operating
costs and
expenses 5,889 5,254 1,832 1,291
Selling, general
and
administrative
expenses 41,304 42,021 10,121 12,057
Acquisition costs
(recovered)
incurred (454) 1,553 (250) 958
Stock based
compensation 377 523 90 --
--------- --------- --------- ---------
309,401 264,806 69,441 58,380
--------- --------- --------- ---------
Operating
income (loss) 11,303 (1,032) 525 (3,995)
Interest expense,
net (1,562) (1,342) 428 (198)
Minority interest
in net (income)
loss of
consolidated
subsidiary (903) 789 (720) 979
--------- --------- --------- ---------
Income (loss)
before income
taxes and
cumulative
effect of
change in
accounting
principle 8,838 (1,585) (623) (3,214)
Provision (benefit)
for income taxes 2,983 2,150 (607) 522
--------- --------- --------- ---------
Income (loss) from
continuing
operations 5,855 (3,735) (17) (3,736)
Income from
discontinued
operations,
net of tax 50 2,661 50 (387)
Cumulative
effect of
change in
accounting
principle -- -- -- --
--------- --------- --------- ---------
Net income (loss) $ 5,905 $ (1,074) $ 33 $ (4,123)
========= ========= ========= =========
Basic net income
(loss) per share
Continuing
operations $ 0.22 $ (0.14) $ -- $ (0.14)
Discontinued
operations -- 0.10 -- (0.01)
--------- --------- --------- ---------
0.22 (0.04) -- (0.15)
========= ========= ========= =========
Diluted net
income (loss)
per share
Continuing
operations $ 0.22 $ (0.14) $ 0.00 $ (0.14)
Discontinued
operations -- 0.10 0.00 (0.01)
--------- --------- --------- ---------
$ 0.22 $ (0.04) $ 0.00 $ (0.15)
========= ========= ========= =========
Weighted average
shares
outstanding
Basic 26,991 27,227 27,154 26,741
Diluted 27,264 27,227 27,154 26,741
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(In thousands)
March 31, March 31,
2005 2004
--------- ---------
Cash and cash equivalents
(includes cash securing
bank loans of $5,620 and
$2,950 respectively) $ 8,574 $ 9,319
Accounts receivable 29,634 19,948
Inventory 53,517 46,997
Other current assets 10,290 11,102
--------- ---------
Total current assets 102,015 87,366
Property and equipment 8,275 7,822
Other assets 20,878 23,481
--------- ---------
Total assets $ 131,168 $ 118,669
--------- ---------
Current liabilities $ 45,899 $ 40,637
Long-term borrowings 14,970 15,027
Minority interest 16,696 15,793
Stockholders' equity 53,603 47,212
--------- ---------
Total liabilities and equity $ 131,168 $ 118,669
--------- ---------