PARSIPPANY, N.J., Aug. 12, 2005 (PRIMEZONE) -- Emerson Radio Corp. (AMEX:MSN) today reported consolidated net income of $415,000 or $0.02 per diluted share for the first quarter of fiscal 2006.
On July 1, 2005, Emerson completed the sale of its interest in Sport Supply Group, Inc. ("SSG"), to Collegiate Pacific Inc. for net proceeds of approximately $30.1 million after estimated disposition costs, which is expected to result in a net gain of approximately $11.7 million ($0.43 per share) being reported in the Company's quarter ended September 30, 2005. As a result of the sale, SSG has been presented as discontinued operations in the June 2005 quarter and Emerson now operates in the consumer electronics segment only.
Net revenues for the first quarter of fiscal 2006 decreased $9.2 million to $38.6 million from $47.8 million for the first quarter of fiscal 2005. Management believes that this revenue decrease was partially due to a shift, from the June to the September quarter, in the sales volume generated from our major customer. Included in the decrease in revenues was a $1.5 million decrease in licensing revenues to $2.5 million for the first quarter of fiscal 2006. This decrease was due to lower sales volume under our licensing agreements.
Cost of sales as a percentage of net revenues increased in fiscal 2006 to 85.2% from 82.4% for fiscal 2005 primarily as a result of a decrease in licensing revenues. Selling, general and administrative expenses decreased approximately $741,000 or 16.2% to $3.8 million in the first quarter of fiscal 2006. Income from continuing operations was $144,000 for the quarter and income from discontinued operations, net of tax resulting from the sporting goods segment for the first quarter of fiscal 2006, was $271,000, resulting in net income of $415,000 for the first fiscal quarter of 2006.
Geoffrey P. Jurick, Chairman & Chief Executive Officer of Emerson Radio, stated, "This past quarter was successful for Emerson on several fronts. On June 28, 2005, Emerson completed a three year $42.5 million credit facility with PNC Bank. On July 1, 2005 Emerson closed the sale of its 53.2% interest in SSG for $32 million in cash, which is expected to result in a net gain of approximately $11.7 million to be reported in the September quarter. The completion of both of these transactions has greatly enhanced our financial capacity and will be utilized for potential strategic acquisitions; debt repayments; stock repurchases; and other opportunities to generate stronger earnings growth."
Mr. Jurick continued "With the completion of these significant transactions behind us, we can now focus our attention on our core business. While sales for the June 2006 fiscal quarter were lower than that of the June 2005 fiscal quarter, we are very encouraged by the outlook for revenues for the quarter ending September 30, 2005, especially from our Nickelodeon line."
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. 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 SUMMARY OF OPERATIONS
Unaudited
(In thousands)
Three Months Ended
June 30, June 30,
2005 2004
-------- --------
Net revenues $ 38,647 $ 47,826
Costs and expenses:
Cost of sales 32,914 39,409
Other operating costs and
expenses 1,199 1,553
Selling, general &
administrative expenses 3,839 4,580
Acquisition costs recovered -- (71)
Stock based costs 82 --
-------- --------
38,034 45,471
-------- --------
Operating income 613 2,355
Interest expense, net (407) (235)
-------- --------
Income before income taxes
and discontinued operations 206 2,120
Provision (benefit)
for income taxes 62 946
-------- --------
Income from continuing operations 144 1,174
Income from discontinued
operations, net of tax 271 630
-------- --------
Net income (loss) $ 415 $ 1,804
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Basic net income
(loss) per share
Continuing operations $ 0.01 $ 0.05
Discontinued operations 0.01 0.02
-------- --------
$ 0.02 $ 0.07
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Diluted net income
(loss) per share
Continuing operations $ 0.01 $ 0.05
Discontinued operations 0.01 0.02
-------- --------
$ 0.02 $ 0.07
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Weighted shares outstanding
Basic 27,172 26,630
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Diluted 27,225 27,261
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EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED SUMMARY BALANCE SHEETS
(In thousands)
June 30, March 31,
2005 2005
-------- --------
(Unaudited)
Cash and cash equivalents $10,601 $ 7,437
Accounts receivable 16,060 15,940
Inventory 45,291 38,156
Other current assets 9,230 8,510
Current assets of discontinued
operations 29,548 31,972
-------- --------
Total current assets 110,730 102,015
Property and equipment 2,302 2,292
Other assets 12,596 12,322
Noncurrent assets of
discontinued operations 13,449 14,539
-------- --------
Total assets $139,077 $131,168
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Current liabilities $53,859 $45,899
Long-term borrowings 11,639 11,960
Noncurrent liabilities
of discontinued operations 2,867 3,010
Minority interest 16,987 16,696
Stockholders' equity 53,725 53,603
-------- --------
Total liabilities and equity $139,077 $131,168
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