EX-99.2 4 b407628_ex99-2.txt EXHIBIT 99.2 Exhibit 99.2 Pro Forma Condensed Consolidated Financial Statements The accompanying unaudited pro forma condensed consolidated financial information of the Company is based on and should be read in conjunction with the historical consolidated financial statements and notes thereto appearing in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2005. Because Sport Supply Group, Inc. ("SSG") has not previously been presented as a discontinued operation in the Company's financial statements included with prior filings, the accompanying Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2005 and the Pro Forma Condensed Consolidated Statements of Operations for the fiscal years ending March 31, 2005, 2004 and 2003 reflect adjustments to present SSG as a discontinued operation. These adjustments are included in the column "Adjustments to Reflect Discontinued Operations". In addition, the Pro Forma Condensed Consolidated Balance Sheet as of March 31, 2005 reflects adjustments to present the sale of SSG and the allocation of the related net proceeds as though the sale occurred on that date, and the Pro Forma Condensed Consolidated Statements of Operations for the fiscal year ending March 31, 2005, reflects adjustments to reduce interest expense as though the sale of SSG had occurred on April 1, 2004 and a portion of the net proceeds had been used to repay the entire balance on the Emerson revolving line of credit. These adjustments are included in the column "Adjustments to Reflect Sale of SSG". The accompanying unaudited pro forma condensed consolidated financial information includes all material adjustments necessary to reflect, on a proforma basis, SSG as a discontinued operation, and the impact of the sale of SSG and the allocation of the related net proceeds, and have been presented for illustrative purposes only. They are not necessarily indicative of the future financial position or future results of operations of the Company, or of the financial position or results of operations of the Company that would have actually occurred had the transaction been in effect as of the date or for the periods presented. See Notes to Pro Forma Condensed Financial Statements of Emerson Radio Corp. and Subsidiaries EMERSON RADIO CORP. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2005 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Adjustment To Reflect Adjustments Discontinued to Reflect ASSETS Historical Operations Sale of SSG Pro Forma ---------- ------------- ----------- --------- (A) (B) Current Assets: Cash and cash equivalents $2,954 ($1,137) $18,110 $19,927 Cash securing bank loans 5,620 - 5,620 Accounts receivable 29,634 (13,694) 15,940 Other receivables 1,620 (76) 1,544 Inventories 53,517 (15,361) 38,156 Prepaid expenses and other current assets 3,747 (447) 3,300 Deferred tax assets 4,923 (1,257) 3,666 Current assets of discontinued operations - 31,972 (31,972) - -------- --------- -------- ------- Total current assets 102,015 - (13,862) 88,153 Property, plant, and equipment, net 8,275 (5,983) 2,292 Deferred catalog expenses 1,597 (1,597) - Trademarks and other intangible assets 5,078 (4,478) 600 Deferred tax assets 13,375 (2,130) (C) (3,724) 7,521 Other assets 828 (351) 477 Noncurrent assets of discontinued operations 14,539 14,539 -------- --------- -------- ------- Total Assets $131,168 $ - $ (32,125) $99,043 ======== ========= ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term borrowings $13,044 $ - - $13,044 Current maturities of long-term borrowings 110 (25) - 85 Accounts payable and other current liabilities 30,365 (12,865) - 17,500 Accrued sales returns 2,137 (218) - 1,919 Income taxes payable 243 - - 243 Current liabilities of discontinued operations 13,108 (13,108) -------- --------- -------- ------- Total current liabilities 45,899 - (13,108) 32,791 Long-term borrowings 14,970 (3,010) (11,300) 660 Noncurrent liabilities of discountined operations 3,010 (3,010) Minority interest 16,696 (16,696) - Minority interest in discontinued operations 16,696 (16,696) - Commitments and contingencies - 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; 52,883,131 and 52,310,350 shares issued; 27,203,164 and 26,630,383 shares outstanding, respectively 529 - - 529 Capital in excess of par value 116,788 - - 116,788 Accumulated other comprehensive losses (87) - - (87) Accumulated deficit (43,105) - 11,989 (31,116) Treasury stock, at cost, 25,679,967 shares (23,832) - (23,832) -------- --------- -------- ------- Total shareholders' equity 53,603 - 11,989 65,592 -------- --------- -------- ------- Total Liabilities and Shareholders' Equity $131,168 $ - $(32,125) $99,043 ======== ========= ======== =======
See Notes to Pro Forma Condensed Financial Statements of Emerson Radio Corp. and Subsidiaries EMERSON RADIO CORP. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2005 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Adjustments to Reflect Adjustments to Discontinued Reflect Historical Operations Sale of SSG Pro Forma ---------- --------------- -------------- --------- (A) (B) NET REVENUES $320,704 $(89,921) $ - $230,783 COSTS AND EXPENSES: Cost of sales 262,285 (64,064) 198,221 Other operating costs and expenses 5,889 - 5,889 Selling, general and administrative expenses 41,304 (23,868) 17,436 Acquisition costs recovered (454) - (454) Stock based compensation 377 (128) 249 -------- -------- --------- -------- 309,401 (88,060) - 221,341 -------- -------- --------- -------- OPERATING INCOME 11,303 (1,861) - 9,442 Interest expense, net (1,562) 216 (D) 707 (639) Minority interest in net income of consolidated subsidiary (903) 903 - -------- -------- --------- -------- INCOME BEFORE INCOME TAXES 8,838 (742) 707 8,803 Provision for income taxes 2,983 - (E) 283 3,266 -------- -------- --------- -------- INCOME FROM CONTINUING OPERATIONS $ 5,855 $ (742) $ 424 $ 5,537 ======= ======== ========= ======== BASIC INCOME PER SHARE FROM CONTINUING OPERATIONS $ .22 $ .21 ======= ======== DILUTED INCOME PER SHARE FROM CONTINUING OPERATIONS $ .22 $ .20 ======= ======== WEIGHTED AVERAGE SHARES OUTSTANDING BASIS 26,991 26,991 ======= ======== DILUTED 27,264 27,264 ======= ========
See Notes to Pro Forma Condensed Financial Statements of Emerson Radio Corp. and Subsidiaries EMERSON RADIO CORP. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2004 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Adjustments to Reflect Discontinued Historical Operations Pro Forma ---------- --------------- --------- (A) NET REVENUES $263,774 $(83,822) $179,952 COSTS AND EXPENSES: Cost of sales 215,455 (61,812) 153,643 Other operating costs and expenses 5,254 - 5,254 Selling, general and administrative Expenses 42,021 (26,135) 15,886 Acquisition costs incurred 1,553 - 1,553 Stock based compensation 523 - 523 -------------- ---------------- -------------- 264,806 (87,947) 176,859 -------------- ---------------- -------------- OPERATING INCOME (LOSS) (1,032) 4,125 3,093 Interest expense, net (1,342) 459 (883) Minority interest in net loss of consolidated subsidiary 789 (789) - -------------- ---------------- -------------- INCOME (LOSS) BEFORE INCOME TAXES (1,585) 3,795 2,210 Provision for income taxes 2,150 - 2,150 -------------- ---------------- -------------- INCOME (LOSS) FROM CONTINUING OPERATIONS $ (3,735) $ 3,795 $ 60 ======== ========= ======== BASIC INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS $ (.14) $ - ======== ======== DILUTED INCOME (LOSS) PER SHARE FROM CONTINUING OPERATIONS $ (.14) $ - ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING BASIS 27,227 27,227 ======== ======== DILUTED 27,227 27,227 ======== ========
See Notes to Pro Forma Condensed Financial Statements of Emerson Radio Corp. and Subsidiaries EMERSON RADIO CORP. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2003 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Adjustments to Reflect Discontinued Historical Operations Pro Forma ---------- -------------- --------- (A) NET REVENUES $330,315 $(85,099) $245,216 COSTS AND EXPENSES: Cost of sales 264,037 (61,338) 202,699 Other operating costs and expenses 4,348 - 4,348 Selling, general and administrative expenses 43,196 (25,816) 17,380 Stock based compensation 49 - 49 -------- --------- -------- 311,630 (87,154) 224,476 -------- --------- -------- OPERATING INCOME 18,685 2,055 20,740 Interest expense, net (2,492) 599 (1,021) Minority interest in net loss of consolidated subsidiary 731 (731) - -------- --------- -------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 16,924 1,923 18,847 Provision for income taxes (9,282) 1 (9,281) -------- --------- -------- INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING $ 26,206 $ 1,922 $ 28,128 ======== ========= ======== BASIC INCOME PER SHARE FROM CONTINUING OPERATIONS $ .95 $ 1.01 ======== ======== DILUTED INCOME PER SHARE FROM CONTINUING OPERATIONS $ .91 $ .98 ======== ======== WEIGHTED AVERAGE SHARES OUTSTANDING BASIS 27,716 27,716 ======== ======== DILUTED 28,640 28,640 ======== ========
See Notes to Pro Forma Condensed Financial Statements of Emerson Radio Corp. and Subsidiaries Notes to Pro Forma Condensed Consolidated Financial Statements of Emerson Radio Corp. and Subsidiaries (A) To reflect Sport Supply Group, Inc. ("SSG") as a discontinued operation, including the reclassification of minority interest related to the Company's investment in SSG. (B) To reflect the Company's sale of 4.7 million shares of SSG for cash to Collegiate Pacific Inc. for net proceeds of $29.4 million as if the transaction occurred on March 31, 2005. Such adjustments reflect the repayment of the entire balance of the Emerson revolving debt, consistent with the application of proceeds at the closing date. A net gain of $11,989, after a deferred tax charge of $3,724, has been credited to accumulated deficit. (C) Adjustment reflects that portion of deferred tax assets attributable to the net operating loss carryforward utilized in connection with the gain on the sale of the SSG shares. (D) Adjustment reflects a reduction of interest expense to remove that portion related to the Emerson revolving line of credit that was completely repaid from the net proceeds on the sale of SSG. (E) Provision for income taxes reflects the increase in income taxes at the Company's effective tax rate of 40%, resulting from the reduction of interest expense. See Notes to Pro Forma Condensed Financial Statements of Emerson Radio Corp. and Subsidiaries