EX-99.2 4 b414079_ex99-2.txt EXHIBIT 99.2 EXHIBIT 99.2 [EMERSON LOGO] ------------------------------------------------------------------------------- NEWS & INFORMATION ------------------------------------------------------------------------------- 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 Monday July 17, 2006 FOR IMMEDIATE RELEASE --------------------- YEAR-END RESULTS ---------------- EARNINGS PER SHARE FOR THE YEAR ENDED MARCH 31, 2006 $ 0.61 VS. PRIOR YEAR EARNINGS PER SHARE OF $ 0.22 PARSIPPANY, N.J. - JULY 17 2006 - Emerson Radio Corp. (AMEX:MSN) today announced that its earnings for the fiscal year ended March 31, 2006 ("fiscal 2006") totaled $16.6 million or $.61 per share. Of this amount, $3.7 million or $.13 per share represented income from continuing operations with the balance being attributable primarily to the gain realized by Emerson on the sale of its interest in Sport Supply Group, Inc., its previously consolidated partially owned subsidiary. For the fiscal year ended March 31, 2005 ("fiscal 2005"), Emerson earned $5.9 million or $.22 per share; all but $.8 million ($.03 per share) of which was attributable to continuing operations. -1- While net revenues for fiscal 2006 ($233.8 million) were relatively unchanged from those achieved in fiscal 2005 ($230.8 million), the revenue mix changed substantially. Themed product sales tripled in fiscal 2006 to $50.7 million largely due to increased Nickelodeon(R) branded product sales volume. On the other hand, Emerson(R) product sales fell 13.5% to $175.4 million in fiscal 2006 as compared to $202.9 million in fiscal 2005. In addition, licensing revenues decreased by $3.1 million to $7.7 million in fiscal 2006 compared to $10.8 million for fiscal 2005. Cost of sales, as a percentage of net revenues, increased from 85.9% in fiscal 2005 to 87.2% in fiscal 2006 primarily due to lower margins on both themed and Emerson(R) branded products. SG&A, as a percentage of net revenues, was 8.2% in fiscal 2006 as compared to 7.6% in fiscal 2005. Management Comments on Results of Operations Adrian Ma, Emerson's Chairman and Chief Executive Officer stated, "fiscal 2006 was an eventful and challenging year in many ways. We substantially strengthened our balance sheet and liquidity positions through the sale of our interest in Sport Supply Group from which we realized in cash $28.8 million after sale and disposition costs. In addition, we were able to consummate a new five year $45 million global financing agreement with Wachovia Bank, National Association. At March 31, 2006, Emerson had working capital of $60.2 million, virtually no debt and a substantial available line of credit." "As a consequence of our affiliation with The Grande Holdings Limited, a Hong Kong based group of companies engaged in a number of businesses including the manufacture, sale and distribution of audio, video and other consumer electronics and video products and the owner of approximately 46% of Emerson's outstanding shares, we have sharpened our strategic focus. We believe that we will be able to leverage Grande's direct sales force and relationship to expand the reach of our consumer electronic products and that Grande's substantial resources in manufacturing, brand marketing and global distribution will be critical in building Emerson into a first class worldwide electronics distribution network for branded products." "Moreover, we are extremely pleased that Funai has again extended its license agreement with Emerson through December 2010. We will continue to expand our licensing programs for the Emerson(R) and HH Scotts(R) names into new categories as well as new geographical territories. Through our relationship with Grande, we hope to benefit from cross licensing and marketing opportunities internationally, particularly in Europe and Asia." -2- "We now believe that we are well positioned for the future. We expect that our revenues for our first quarter of fiscal 2007 will increase significantly over the comparable period of fiscal 2006. Our iPod(R) compatible products are being widely accepted. And we are well along in building a global management team which should supplement our very loyal and capable United States based management." LATE 10-K FILING Emerson also reported that it was unable to timely file its Annual Report on Form 10-K with the Securities and Exchange Commission due to Emerson's former auditors not providing the consent needed by Emerson to file the report in time. Emerson expects to file its Annual Report on Form 10-K with the Securities and Exchange Commission today. 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. 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. -3- EMERSON REPORTS/4 EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
Year Ended March 31 Three Months Ended March 31 ----------------------- --------------------------- 2006 2005 2006 2005 --------- --------- --------- --------- NET REVENUES $ 233,843 $ 230,783 $ 41,106 $ 42,732 --------- --------- --------- --------- COSTS AND EXPENSES: Cost of sales 204,010 198,221 36,433 38,211 Other operating costs and expenses 6,145 5,889 1,482 1,832 Selling, general and administrative expenses 19,097 17,436 4,287 3,810 Acquisition Costs 48 (454) 48 (250) Non cash compensation 374 249 114 81 --------- --------- --------- --------- 229,674 221,341 42,364 43,684 --------- --------- --------- --------- OPERATING INCOME (LOSS) 4,169 9,442 (1,258) (952) Interest expense (income) 785 1,346 (191) 382 --------- --------- --------- --------- INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS 3,384 8,096 (1,067) (1,334) Provision (benefit) for income taxes (328) 2,983 (1,966) (607) --------- --------- --------- --------- INCOME (LOSS) FROM CONTINUING OPERATIONS 3,712 5,113 899 (727) Income from discontinued operations, net of tax 12,918 792 -- 760 --------- --------- --------- --------- NET INCOME (LOSS) $ 16,630 $ 5,905 $ 899 $ 33 ========= ========= ========= ========= BASIC NET INCOME (LOSS) PER SHARE Continuing operations $ 0.13 $ 0.19 $ 0.02 $ (0.03) Discontinued operations 0.48 0.03 -- 0.03 --------- --------- --------- --------- $ 0.61 $ 0.22 $ 0.02 $ 0.00 ========= ========= ========= ========= DILUTED NET INCOME (LOSS) PER SHARE Continuing operations $ 0.13 $ 0.19 $ 0.02 $ (0.03) Discontinued operations 0.48 0.03 -- 0.03 --------- --------- --------- --------- $ 0.61 $ 0.22 $ 0.02 $ 0.00 ========= ========= ========= ========= WEIGHTED AVERAGE SHARES OUTSTANDING Basic 27,079 26,991 27,048 27,154 Diluted 27,172 27,264 27,048 27,154
-4- EMERSON REPORTS/5 EMERSON RADIO CORP. AND SUBSIDIARIES CONSOLIDATED SUMMARY BALANCE SHEETS (IN THOUSANDS)
March 31, March 31, 2006 2005 -------- -------- Cash and cash equivalents (includes cash securing bank loans of $3,000 and $5,620 respectively $ 20,517 $ 7,437 Accounts receivable 18,996 15,940 Inventory 33,003 38,156 Other current assets 9,471 8,510 Current assets related to discontinued operations -- 31,972 -------- -------- TOTAL CURRENT ASSETS 81,987 102,015 Property and equipment 2,500 2,292 Other assets 8,015 12,322 Non current assets related to discontinued operations -- 14,539 -------- -------- TOTAL ASSETS $ 92,502 $131,168 ======== ======== Current liabilities of continuing operations $ 21,772 $ 32,791 Current liabilities of discontinued operations -- 13,108 Long-term borrowings 575 11,960 Non current liabilities of discontinued operations -- 3,010 Minority interest -- 16,696 Stockholders' equity 70,155 53,603 -------- -------- TOTAL LIABILITIES AND EQUITY $ 92,502 $131,168 ======== ========
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