-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KhzWnSiWKJFj5kxKU8pxXqjxTcYiWWoyl7xNCiQSMJuTQnRe9JZWZJVbUjxSl0b6 C6t2GZDWxPz0ivZOuCOScQ== 0000905718-01-000045.txt : 20010214 0000905718-01-000045.hdr.sgml : 20010214 ACCESSION NUMBER: 0000905718-01-000045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMERSON RADIO CORP CENTRAL INDEX KEY: 0000032621 STANDARD INDUSTRIAL CLASSIFICATION: HOUSEHOLD AUDIO & VIDEO EQUIPMENT [3651] IRS NUMBER: 223285224 STATE OF INCORPORATION: DE FISCAL YEAR END: 0402 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-07731 FILM NUMBER: 1535597 BUSINESS ADDRESS: STREET 1: NINE ENTIN RD STREET 2: PO BOX 430 CITY: PARSIPPANY STATE: NJ ZIP: 07054-0430 BUSINESS PHONE: 9738845800 MAIL ADDRESS: STREET 1: NINE ENTIN RD CITY: PARSIPPANY STATE: NJ ZIP: 07054 FORMER COMPANY: FORMER CONFORMED NAME: MAJOR ELECTRONICS CORP DATE OF NAME CHANGE: 19770921 10-Q 1 0001.txt 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2000 ------------------------------------------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________________ to _____________________ Commission file number 0-25226 EMERSON RADIO CORP. (Exact name of registrant as specified in its charter) DELAWARE 22-3285224 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9 Entin Road Parsippany, New Jersey 07054 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) (973)884-5800 ----------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address, and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of common stock as of February 9, 2001: 31,275,082. PART I - FINANCIAL INFORMATION Item 1. Financial Statements EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except earnings per share data)
Three Months Ended Nine Months Ended --------------------------------------- ----------------- --------------------- December 31, December 31, December 31, December 31, 2000 1999 2000 1999 ----------------- ---------------- ---------------- --------------------- Net revenues $ 60,058 $ 61,319 $239,841 $160,297 Costs and expenses: Cost of sales 47,713 52,987 204,368 140,667 Other operating costs and expenses 399 1,303 3,021 2,953 Selling, general & administrative expenses 6,367 4,877 16,080 12,304 ----------------- ----------------- ------------------ ----------------- 54,479 59,167 223,469 155,924 ----------------- ----------------- ------------------ ----------------- Operating income 5,579 2,152 16,372 4,373 Equity in earnings (loss) of affiliate (867) (425) (1,473) 76 Interest expense, net (517) (563) (1,520) (1,756) ----------------- ----------------- ------------------ ----------------- Income before income taxes 4,195 1,164 13,379 2,693 Provision for income taxes 487 37 1,508 296 ----------------- ----------------- ------------------ ---------------- Net income $ 3,708 $ 1,127 $ 11,871 $ 2,397 ================= ================= ================== ================ Net income per common share Basic $ .12 $ .02 $ .33 $ .05 ================== ================= =================== ================ Diluted $ .10 $ .02 $ .30 $ .04 ================== ================= =================== ================ Weighted average number of common shares outstanding Basic 31,272 47,828 36,303 47,828 ================= ================= ================== ================ Diluted 39,955 55,609 44,535 55,615 ================= ================= ================== ================
The accompanying notes are an integral part of the interim consolidated financial statements. EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands)
December 31, March 31, 2000 2000 -------------------- -------------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 10,852 $ 8,539 Available for sale securities 4 37 Accounts receivable (less allowances of $4,001 and $3,977, respectively) 5,579 4,756 Other receivables 459 4,027 Inventories 23,220 14,384 Prepaid expenses and other current assets 1,754 2,653 -------------------- ----------------- Total current assets 41,868 34,396 Property and equipment - (net of accumulated depreciation and amortization of $3,739 and $3,402, respectively) 1,026 1,034 Investment in affiliates and joint venture 19,980 20,277 Other assets 1,733 2,289 -------------------- ----------------- Total Assets $ 64,607 $ 57,996 ==================== ================= LIABILITIES AND SHAREHOLDER'S EQUITY Current Liabilities: Notes payable $ 2,604 $ 2,914 Current maturities of long-term debt 94 97 Accounts payable and other current Liabilities 20,132 16,499 Accrued sales returns 5,227 4,897 Income taxes payable 1,461 135 -------------------- ----------------- Total current liabilities 29,518 24,542 Long-term debt, less current maturities 20,750 20,750 Other non-current liabilities 75 141 Shareholders' Equity: Preferred shares - 10,000,000 shares authorized; 3,677 shares issued and outstanding 3,310 3,310 Common shares - $.01 par value, 75,000,000 shares authorized; 51,406,615 and 51,331,615 shares issued; 31,275,082 and 46,477,615 shares outstanding 514 513 Capital in excess of par value 113,363 113,289 Cumulative translation adjustment (82) (76) Unrealized loss on marketable securities (36) -- Accumulated deficit (89,613) (101,445) Treasury stock, at cost 20,131,533 and 4,854,000 shares, respectively (13,192) (3,028) -------------------- ----------------- Total shareholders' equity 14,264 12,563 -------------------- ----------------- Total Liabilities and Shareholders' Equity $ 64,607 $ 57,996 ==================== =================
The accompanying notes are an integral part of the interim consolidated financial statements. EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended December 31, December 31, 2000 1999 ------------ ----------- Cash Flows from Operating Activities: Net cash provided by operating activities $ 14,317 $ 3,175 --------- --------- Cash Flows from Investing Activities: Investment in Affiliate (1,158) -- Other (365) (682) --------- -------- Net cash used by investing activities (1,523) (682) ---------- -------- Cash Flows from Financing Activities: Purchase of Common Stock (10,164) -- Net repayments under Line of Credit (310) (2,216) Other ( 7) (46) ---------- -------- Net cash used by financing activities (10,481) (2,262) ---------- -------- Net increase in cash and cash equivalents 2,313 231 Cash and cash equivalents at beginning of year 8,539 3,100 ---------- -------- Cash and cash equivalents at end of period $ 10,852 $ 3,331 ========== ========
The accompanying notes are an integral part of the interim consolidated financial statements. EMERSON RADIO CORP. AND SUBSIDIARIES NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BUSINESS The unaudited interim consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of Emerson Radio Corp.'s (the "Company" or "Emerson") consolidated financial position as of December 31, 2000 and the results of operations for the three and nine month periods ended December 31, 2000 and December 31, 1999. The unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and accordingly do not include all of the disclosures normally made in the Company's annual consolidated financial statements. It is suggested that these unaudited interim consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended March 31, 2000 ("Fiscal 2000"), included in the Company's annual report on Form 10-K. The consolidated financial statements include the accounts of the Company and all of its majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited interim consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates. Due to the seasonal nature of the Company's consumer electronics business, the results of operations for the three and nine month periods ended December 31, 2000 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the full year ending March 31, 2001 ("Fiscal 2001"). The management of the Company considers the Company to have one reportable segment, consumer electronics, and assesses performance on a single segment basis. For Fiscal 2000, and prior year, the Company's financial reporting periods ended the Friday closest to the calendar quarter. Beginning in Fiscal 2001, the Company changed its financial reporting year to end March 31 and the quarters to end on the last day of the month. Such change in the Company's financial reporting year will not have a material effect on the Company's results of operations. NOTE 2 - COMPREHENSIVE INCOME The Company's total comprehensive income for the three and nine month periods ended December 31, 2000 and December 31, 1999 are as follows (in thousands):
Three Months Ended Nine Months Ended --------------------------------- ----------------------------- December December December December 31,2000 31,1999 31,2000 31,1999 --------------- -------------- -------------- ------------ Net income $ 3,708 $ 1,127 $11,871 $2,397 Currency translation adjustment (2) (2) (6) 2 Unrealized gain (loss)on securities, net (8) 87 (36) (280) --------------- -------------- -------------- ---------- Comprehensive income $ 3,698 $ 1,212 $11,829 $2,119 =============== ============== ============== ==========
NOTE 3 - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share amounts):
Three Months Ended Nine Months Ended ------------------------------------------ ---------------------------------------- December 31, December 31, December 31, December 31, 2000 1999 2000 1999 ------------------ ------------------ ------------------ ------------------ Numerator: Net income $ 3,708 $ 1,127 $ 11,871 $ 2,397 Less: preferred stock dividends 13 26 39 78 ------------------ ------------------ ------------------ ------------------ Numerator for basic earnings per share - income available to common stockholders 3,695 1,101 11,832 2,319 Add back to effect assumed conversions: Preferred stock dividends 13 26 39 78 Interest on convertible debentures 441 -- 1,323 -- ------------------ ------------------ ------------------ ------------------ Numerator for diluted earnings per share $ 4,149 $ 1,127 $ 13,194 $ 2,397 ================== ================== ================== ================== Denominator: Denominator for basic earnings per share - weighted average shares 31,272 47,828 36,303 47,828 Effect of dilutive securities: Preferred shares 2,510 7,781 2,510 7,787 Convertible debentures 5,204 -- 5,204 -- Options and warrants 969 -- 518 -- ------------------ ------------------ ------------------ ------------------ Denominator for diluted earnings per share - adjusted weighted average shares and assumed conversions 39,955 55,609 44,535 55,615 ================== ================== ================== ================== Basic earnings per share $ .12 $ .02 $ .33 $ .05 ================== ================== ================== ================== Diluted earnings per share $ .10 $ .02 $ .30 $ .04 ================== ================== ================== ==================
NOTE 4 - CAPITAL STRUCTURE The outstanding capital stock of the Company at December 31, 2000 consisted of common stock and Series A convertible preferred stock. The preferred shares are convertible to common shares until March 31, 2002. During the quarter ended December 31, 2000, there were no conversions or repurchases of the Company's Series A Preferred Stock. During the quarter ended December 31, 1999, the Company repurchased 37 shares of its Series A Preferred Stock. There were no conversions of the Company's Series A Preferred Stock for the quarter ended December 31, 1999. If all existing outstanding preferred shares were converted at December 31, 2000, approximately 2.5 million additional common shares would be issuable. The dividend rates on the Series A Preferred Stock at December 31, 2000 and December 31, 1999 were 1.4% and 2.8%, with $977,000 and $905,000 of dividends in arrears, respectively. The dividend rate is 1.4% until March 31, 2001 at which time no further dividends are payable. At December 31, 2000, the Company had outstanding approximately 1.7 million options with exercise prices ranging from $1.00 to $1.10, and approximately 737,000 outstanding warrants at a conversion price of $1.30. The Company also has outstanding approximately $20.8 million of Senior Subordinated Convertible Debentures due in 2002. See "Note 8 - Long Term Debt". NOTE 5 - INCOME TAXES Income tax provisions for the quarterly periods ended December 31, 2000 and December 31, 1999 relates primarily to its international operations. For the quarter ended December 31, 1999 a provision of $656,000 was recorded which was offset by a tax credit of $619,000, as a result of a favorable court ruling pertaining to a foreign subsidiary. As of March 31, 2000 the Company had federal net operating loss carryforwards of approximately $130.8 million that expire between 2006 and 2019. The utilization of such losses are limited based on Sections 382 and 383 of the Internal Revenue Code. NOTE 6 - INVENTORY Inventories are comprised primarily of finished goods which are stated at the lower of cost (first-in, first-out) or market. NOTE 7 - INVESTMENT IN SPORT SUPPLY GROUP, INC. At December 31, 2000 the Company owned 2,696,400 (37% of the outstanding) shares of common stock of Sport Supply Group, Inc. ("SSG") at a total cost of $17,727,000, of which 2,269,500 shares were purchased in 1996 and the balance of the shares were purchased subsequently. On January 12, 2001 the Company purchased an additional 1,629,629 shares of common stock directly from Sport Supply Group, Inc. at a total purchase price of $2.2 million. Upon completion of this transaction the Company owned 4,326,029 (48.6% of the outstanding) shares of common stock of SSG. In addition, the Company owns warrants to purchase an additional one million shares of SSG's common stock for $7.50 per share ("SSG Warrants") which the Company purchased in 1996 at an aggregate cost of $500,000. If the Company exercises all of the SSG Warrants, including the January 12, 2001 transaction, it will beneficially own approximately 53.8% of SSG's issued and outstanding common shares. The warrants are scheduled to expire in December 2001. Effective March 1997, the Company entered into a Management Services Agreement with SSG, under which various managerial and administrative services are provided between the companies for a fee. The investment in, and results of operations of, SSG are accounted for by the equity method. The Company's investment in SSG includes goodwill which is being amortized on a straight line basis over 40 years. Summarized financial information derived from the annual and quarterly financial reports as filed by SSG with the Securities and Exchange Commission was as follows (in thousands):
(Unaudited) December 31, 2000 March 31, 2000 ----------------- -------------- Current assets $ 42,235 $ 50,488 Property, plant and equipment and other assets 29,383 30,158 Current liabilities 14,502 38,450 Long-term debt 18,799 252 Stockholders' Equity 38,317 41,945
(Unaudited) For the 9 Months Ended For the 9 Months Ended December 31, 2000 December 31, 1999 ----------------------- ---------------------- Net sales $ 77,706 $ 75,756 Gross profit 23,232 28,084 Net income (loss) (3,665) 1,056
NOTE 8 - LONG TERM DEBT As of December 31, 2000 and March 31, 2000, long-term debt consisted of the following (in thousands of dollars):
December 31, March 31, 2000 2000 ----------------- ------------------- 8-1/2% Senior Subordinated Convertible Debentures Due 2002 $ 20,750 $20,750 Equipment notes and other 94 97 --------------------- ------------------ 20,844 20,847 Less current obligations 94 97 --------------------- ------------------ Long-term debt $ 20,750 $ 20,750 ===================== ==================
The Senior Subordinated Convertible Debentures Due 2002 ("Debentures") were issued in August 1995. The Debentures bear interest at the rate of 8 1/2% per annum, payable quarterly, and mature on August 15, 2002. The Debentures are convertible into shares of the Company's common stock at any time prior to redemption or maturity at a conversion price of $3.9875 per share, subject to adjustment under certain circumstances. The Debentures are presently redeemable in whole or in part at the Company's option at a redemption price of 102% of principal, decreasing by 1% per year until maturity. The Debentures are subordinated to all existing and future senior indebtedness (as defined in the Indenture governing the Debentures). The Debentures restrict, among other things, the amount of senior indebtedness and other indebtedness that the Company and, in certain instances, its consolidated subsidiaries, may incur. Each Debenture holder has the right to cause the Company to redeem the Debentures if certain designated events (as defined) should occur. The Debentures are subject to certain restrictions on transfer. NOTE 9 - LEGAL PROCEEDINGS The Company is involved in a number of legal proceedings and claims of various types in the ordinary course of its business. While any such litigation to which the Company is a party contains an element of uncertainty, management presently believes that the outcome of each such proceeding or claim which is pending or known to be threatened, or all of them combined, will not have a material adverse effect on the Company's consolidated financial position. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition Results of Operations Net Revenues Consolidated net revenues for the three and nine month periods ended December 31, 2000 decreased $1.3 million (-2.1%) and increased $79.5 million (49.6%) as compared to the same periods in the fiscal year ended March 31, 2000 ("Fiscal 2000"), respectively. Revenues for the three months ending December 31, 2000 were relatively unchanged as compared to the same period last year primarily from customers shifting their orders into earlier quarters in order to assure a supply of product for the Christmas selling season. In addition, revenues for the three months ended December 31, 2000 benefited from lower actual and estimated sales return as compared to the prior periods. The increase in sales of $79.5 million for the nine months ended December 2000 as compared to the same period in Fiscal 2000 resulted primarily from increases in unit sales of audio products and microwave ovens, partially offset by a reduction in unit sales of the digital versatile disc (DVD) product line. The increase in audio product sales was primarily attributable to the introduction of new products and an increase in distribution channels. The Company anticipates that revenues for Fiscal 2001 will be higher than prior years revenues. The Company reports royalty and commission revenues earned from its licensing arrangements, covering various products and territories, in lieu of reporting the full dollar value of such sales and associated costs. Cost of Sales Cost of sales, as a percentage of consolidated net revenues, was 79.4% and 85.2% for the three and nine month periods ended December 31, 2000 as compared to 86.4% and 87.8% for the same periods in Fiscal 2000, respectively. The decrease in the cost of sales as a percentage of sales for the three months ended December 31, 2000 as compared to the same period in Fiscal 2000 was primarily attributable to: i) a change in the product mix; ii) increased royalty revenue, which does not have an associated cost, and iii) lower actual and estimated sales returns. The decrease in cost of sales as a percentage of sales for the nine months ended December 31, 2000 as compared to the same period in Fiscal 2000 was primarily attributable to a change in the product mix and lower actual and estimated sales returns. While the Company's strategy calls for selling higher margin products, the Company anticipates the cost of sales to remain at the level it achieved for the nine months ending December 31, 2000 primarily due to competitive pricing. Other Operating Costs and Expenses Other operating costs and expenses for the three and nine month periods ended December 31, 2000 were 0.7% and 1.3% as compared to 2.1% and 1.8% for the same periods in Fiscal 2000. The decrease of 1.4% for the three months ended December 31, 2000 as compared to the same period in Fiscal 2000 was primarily due to reduced warehousing and freight costs and reduced fees associated with its return-to-vendor program. For the nine month period ended December 31, 2000 as compared to the same period in the prior year, other operating costs decreased from 1.8% to 1.3% of revenues due primarily to the effect of a higher sales base. Selling, General and Administrative Expenses ("S,G&A") S,G&A as a percentage of net revenues increased from 7.9% to 10.6% for the three months ended December 31, 2000 as compared to the same period in Fiscal 2000 and decreased from 7.7% to 6.7% for the nine months ended December 31, 2000 as compared to the same period in Fiscal 2000. The increase in S,G& A for the three months ended December 31, 2000 was primarily related to provisions related to substandard receivables. The increase in absolute terms for the nine month period ended December 31, 2000 was the result of an increase in advertising, compensation costs and provisions related to substandard receivables, partially offset by lower professional costs. Equity In Earnings (Loss) Of Unconsolidated Affiliate The Company's share in the earnings of an affiliate amounted to a losses of $867,000 and $1,473,000 for the three and nine month periods ended December 31,2000 as compared to a loss of $425,000 and income of $76,000 for the same periods in Fiscal 2000, respectively. Interest Expense Net interest expense decreased by $46,000 and $236,000 for the three and nine month periods ended December 31, 2000 as compared to the same periods in Fiscal 2000. The decrease was attributable primarily to an increase in interest income. Provision for income taxes Provision for income taxes, which are primarily attributable to the Company's international operations, was $487,000 and $1.5 million for the three and nine month periods ended December 31, 2000 as compared to $37,000 and $296,000 for the same periods in Fiscal 2000, respectively. Net Income As a result of the foregoing factors, the Company generated net income of $3.7 million and $11.9 million for the three and nine month periods ended December 31, 2000, as compared to net earnings of $1.1 million and $2.4 million for the same periods in Fiscal 2000, respectively. Liquidity and Capital Resources Net cash provided by operating activities was $14.3 million for the nine months ended December 31, 2000. Cash was provided primarily by increases in net income and accounts payable, and decreases in other receivables, partially offset by an increase in inventory. Net cash utilized by investing activities was $1.5 million for the nine months ended December 31, 2000. Cash was utilized primarily for additional purchases of shares in its unconsolidated affiliate. Net cash used for financing activities was $10.5 million primarily for the purchase of the Company's stock for treasury and the repayment of borrowings. The Company maintains two credit facilities with a Hong Kong based bank: a $5.0 million letter of credit facility and a $35 million back-to-back letter of credit facility with seasonal over-advances. At December 31, 2000, there was $2.5 million and $5.5 million, respectively, of letters of credit outstanding under these facilities. At present, management believes that future cash flow from operations and its existing institutional financing noted above will be sufficient to fund all of the Company's cash requirements for the next twelve months. As of December 31, 2000 the Company had a proposal to purchase $2.2 million of Sport Supply Group, Inc. common stock, on which it subsequently closed on January 12, 2001 (See "Note 7 - Investment in Sport Supply Group, Inc."). The Company had no other material commitments for capital expenditures. Inflation and Foreign Currency Neither inflation nor currency fluctuations had a significant effect on the Company's results of operations during the three or nine months ended December 31,2000. The Company's exposure to currency fluctuations has been minimized by the use of U.S. dollar denominated purchase orders, and by sourcing production in more than one country. The Company purchases virtually all of its products from manufacturers located in various Asian countries. Recent Pronouncements of the Financial Accounting Standards Board During the second quarter of 1998 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137 which deferred the effective date of SFAS No. 133 by one year. SFAS No. 133 will be effective for the Company for Fiscal 2002 and establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and hedging activities. This new standard is not currently anticipated to have a significant impact on the Company's financial statements based on the current financial structure and operations of the Company. In December 1999, the Securities and Exchange Commission staff released Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB No. 101"), which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. The Company is required to adopt SAB No. 101 in the fourth quarter of fiscal 2001. Management believes that the provision of SAB No. 101 may require it to report its estimated sales return on a gross basis rather than a currently utilized net basis. This will require a prior year reclassification to conform with the new presentation, but will not impact the net income as reported on the Consolidated Statements of Operations. At the January 2001 meeting, the Emerging Issues Task Force ("EITF") reached a tentative conclusion on part of Issue 00-25, "Vendor Income Statement Characterization of Consideration from a Vendor to a Retailer". Management believes if the EITF becomes effective its provisions may require a reclassification of certain expenses, the net effect of which will not impact the net income as reported on the Consolidated Statements of Operations. Forward-looking Information This report contains various forward looking statements under the Private Securities Litigation Reform Act of 1995 (the "Reform Act') and information that is based on Management's beliefs as well as assumptions made by and information currently available to Management. When used in this report, the words "anticipate", "believe", "estimate", "expect", "predict", "project", and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, expected or projected. Among the key factors that could cause actual results to differ materially are as follows: (i) the ability of the Company to continue selling products to its largest customers whose net revenues represented 55% and 21% of Fiscal 2000 net revenues; (ii) competitive factors such as competitive pricing strategies utilized by retailers in the domestic marketplace that negatively impacts product gross margins; (iii) the ability of the Company to maintain its suppliers, primarily all of whom are located in Asian countries; (iv) the ability of the Company to comply with the restrictions imposed upon it by its outstanding indebtedness; and (v) general economic conditions and other risks detailed in the Company's annual report on Form 10-K for the fiscal year ended March 31, 2000 and other reports filed with the Securities and Exchange Commission. Due to these uncertainties and risks, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not material. PART II OTHER INFORMATION ITEM 1. Legal Proceedings. ----------------- For further information on litigation to which the Company is a party, reference is made to Part 1 Item-3-Legal Proceedings in the Company's most recent annual report on Form 10-K. ITEM 2. Changes in Securities and Use of Proceeds. ------------------------------------------ None ITEM 3. Default Upon Senior Securities. ------------------------------- (a) None (b) None ITEM 4. Submission of Matters to a Vote of Security Holders. ---------------------------------------------------- Not Applicable. ITEM 5. Other Information. ------------------ (a) None ITEM 6. Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits: None (b) Reports on Form 8-K - During the three month period ended December 31, 2000, no Form 8-K was filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EMERSON RADIO CORP. (Registrant) Date: February 12, 2001 /s/Geoffrey P. Jurick __________________________________ Geoffrey P. Jurick Chairman, Chief Executive Officer and President Date: February 12, 2001 /s/John P. Walker __________________________________ John P. Walker Executive Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----