UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 14, 2014
EMERSON RADIO CORP.
(Exact name of registrant as specified in its charter)
Delaware | 001-07731 | 22-3285224 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
3 University Plaza, Suite 405, Hackensack, New Jersey 07601
(Address of principal executive offices, including zip code)
Registrants telephone number, including area code: (973) 428-2000
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
On February 14, 2014, Emerson Radio Corp. (the Company) issued a press release regarding its financial results for the quarter ended December 31, 2014. A copy of this press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.
In accordance with General Instruction B.2. of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Forward Looking Statements
This Current Report on Form 8-K, including Exhibit 99.1, contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by use of terms such as may, will, should, plan, expect, anticipate, estimate and similar words, although some forward-looking statements are expressed differently. Forward-looking statements represent our managements judgment regarding future events. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove to be correct. All statements other than statements of historical fact included in this Current Report on Form 8-K are forward-looking statements. The Company cannot guarantee the accuracy of the forward-looking statements, and you should be aware that the Companys actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under Risk Factors contained in the Companys reports filed with the Securities and Exchange Commission.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
99.1 Press Release dated February 14, 2014. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EMERSON RADIO CORP. | ||
By: | /s/ Andrew L. Davis | |
Andrew L. Davis | ||
Chief Financial Officer |
Dated: February 14, 2014
Exhibit 99.1
NEWS & INFORMATION
FOR: | EMERSON RADIO CORP. | |
3 University Plaza, suite 405 | ||
Hackensack, NJ 07601 | ||
CONTACT: | Investor Relations: | |
Barry Smith | ||
Investor Relations Manager | ||
(973) 428-2004 |
Friday, February 14, 2014
EMERSON RADIO CORP. REPORTS FISCAL 2014 THIRD QUARTER RESULTS
HACKENSACK, N.J. February 14, 2014 Emerson Radio Corp. (NYSE MKT: MSN) today reported financial results for its third quarter and nine month period ended December 31, 2013.
As reported by the Company in a Form 8-K filed with the SEC on October 19, 2012, the Company was informed by one its major customers, that, commencing with the Spring of 2013, this customer would discontinue purchasing from Emerson two microwave oven products that had been sold by the Company to this customer. Emerson continued shipping these two products throughout the remainder of Fiscal 2013 (the year ended March 31, 2013), with sales of such products declining through the fourth quarter of Fiscal 2013. During Fiscal 2013, these two microwave oven products comprised, in the aggregate, approximately $36.1 million, or 29.7%, of the Companys net product sales. Emerson anticipates that the full impact of this customers decision will be realized by the Company in Fiscal 2014, which began on April 1, 2013. As previously disclosed by the Company, the complete loss of, or significant reduction in, business with either of the Companys key customers will have a material adverse effect on the Companys business and results of operations. Accordingly, this customers decision has had a material adverse effect on the Companys business and results of operations in the quarter ended December 31, 2013. There can be no assurance that the Company will be able to increase sales of any products at levels sufficient to offset the adverse impact of this customers decision, if at all.
As a result of the above, during the third quarter and nine month periods of fiscal 2014, sales of these two products by the Company were nil as compared to approximately $8.0 million and $32.0 million during the third quarter and nine month periods of fiscal 2013, respectively.
Net revenues for the third quarter of fiscal 2014 were $20.9 million, a decrease of $3.8 million, or 15.4%, as compared to the third quarter of fiscal 2013 net revenues of $24.7 million. The decline in year-over-year net revenues was driven by lower year-over-year net product sales, slightly offset by higher year-over-year licensing revenues.
Net product sales for the third quarter of fiscal 2014 were $18.4 million, as compared to $22.6 million for the third quarter of fiscal 2013, a decrease of $4.2 million, or 18.4%. The lower year-over-year net product sales were principally driven by a $4.0 million, or 18.4%, decline in net sales of houseware products, which was the result of lower year-over-year sales of microwave ovens and wine coolers, partly offset by higher year-over-year sales of compact refrigerators. Emerson continues to confront increasing pricing pressure, which is a trend that management expects to continue.
Licensing revenue in the third quarter of fiscal 2014 was $2.4 million, as compared to $2.0 million in the third quarter of fiscal 2013, an increase of $0.4 million, or 18.0%, principally on higher year-over-year licensing revenue earned from the Companys largest licensee.
Net revenues for the nine month period of fiscal 2014 were $63.8 million, a decrease of $41.6 million, or 39.4%, as compared to the nine month period of fiscal 2013 net revenues of $105.4 million. The decline in year-over-year net revenues was caused by lower year-over-year net product sales and lower year-over-year licensing revenues.
Net product sales for the nine month period of fiscal 2014 were $59.2 million, as compared to $99.8 million for the nine month period of fiscal 2013, a decrease of $40.6 million, or 40.7%. The lower year-over-year net product sales were principally driven by a $40.1 million, or 41.5%, decline in net sales of houseware products, which was the result of lower year-over-year sales of all products offered by the Company in the category, which is comprised of microwave ovens, compact refrigerators and wine coolers.
Licensing revenue in the nine month period of fiscal 2014 was $4.7 million, as compared to $5.6 million in the nine month period of fiscal 2013, a decrease of $0.9 million, or 16.7%, principally on lower year-over-year licensing revenue earned from the Companys largest licensee due to lower year-over-year sales of products by this licensee bearing the Emerson ® brand name.
Operating income for the third quarter of fiscal year 2014 was $1.1 million, a decrease of $0.9 million, or 46.0%, from operating income of $2.0 million for the third quarter of fiscal year 2013, due to the lower year-over-year net revenue and higher year-over-year SG&A expenses, primarily due to higher legal fees resulting from a lawsuit that was settled by the Company in December 2013.
Operating income for the nine month period of fiscal year 2014 was $2.6 million, a decrease of $6.0 million, or 69.6%, from operating income of $8.6 million for the nine month period of fiscal year 2013, due to the lower year-over-year net revenue, higher year-over-year SG&A expenses, primarily due to higher legal fees and tax consulting fees, partially offset by lower compensation costs and the impairment write-down in September 2012 of a non-strategic trademark.
Net loss for the third quarter of fiscal 2014 was $1.4 million, as compared to net income $1.7 million for the third quarter of fiscal 2013, a decrease of $3.1 million, or 181.6%, due primarily to the payment of a $4 million settlement by the Company in December 2013 of a lawsuit, and the year-over-year decrease in operating income. Net income for the nine month period of fiscal 2014 was $0.4 million, as compared to $7.5 million for the nine month period of fiscal 2013, a decrease of $7.1 million, or 95.0%, due primarily to the year-over-year decrease in operating income and the settlement by the Company in December 2013 of a lawsuit. Diluted loss per share for the third quarter of fiscal year 2014 was $0.05, as compared to diluted earnings per share of $0.06 for the third quarter of fiscal year 2013, a decrease of $0.11 per diluted share, or 183.3%. Diluted earnings per share for the nine month period of fiscal year 2014 were $0.01, as compared to $0.28 for the nine month period of fiscal year 2013, a decrease of $0.27 per diluted share, or 96.4%.
Duncan Hon, Chief Executive Officer of Emerson Radio, commented Our third quarter and nine month fiscal 2014 revenues and net income declined significantly as compared to the prior year due primarily to the decision by one of our major customers to discontinue purchasing, effective Spring 2013, from the Company two microwave oven products sold throughout fiscal year 2013 by the Company to this customer, the last shipments of which were made in February and March 2013, the payment of a $4 million settlement by the Company in December 2013 of a lawsuit and intense competition within all of our product categories. We expect these factors to affect our year-over-year comparisons throughout the remainder of fiscal 2014. The Company continues to seek to implement pricing and product strategy initiatives to improve the Companys results of operations, although there can be no assurance that such initiatives will be successfully implemented or have the desired effects on the Companys results of operations and financial condition.
About Emerson Radio Corp.
Emerson Radio Corp. (NYSE MKT: MSN), incorporated in 1994, is headquartered in Hackensack, N.J. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses its trademarks to others on a worldwide basis for a variety of products. For more information, please visit Emerson Radios web site at www.emersonradio.com.
Forward Looking Statements
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 managements 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 Companys 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
(Unaudited)
(In thousands, except earnings per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net revenues: |
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Net product sales |
$ | 18,443 | $ | 22,608 | $ | 59,182 | $ | 99,783 | ||||||||
Licensing revenue |
2,414 | 2,046 | 4,665 | 5,597 | ||||||||||||
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Net revenues |
20,857 | 24,654 | 63,847 | 105,380 | ||||||||||||
Costs and expenses: |
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Cost of sales |
15,986 | 20,484 | 52,605 | 88,759 | ||||||||||||
Other operating costs and expenses |
361 | 253 | 683 | 1,046 | ||||||||||||
Selling, general and administrative expenses |
3,216 | 1,926 | 7,729 | 5,671 | ||||||||||||
Impairment of trademark |
219 | | 219 | 1,326 | ||||||||||||
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19,782 | 22,663 | 61,236 | 96,802 | |||||||||||||
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Operating income |
1,075 | 1,991 | 2,611 | 8,578 | ||||||||||||
Other (loss) income: |
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Loss on settlement of litigation |
(4,000 | ) | | (4,000 | ) | | ||||||||||
Interest income, net |
98 | 132 | 441 | 230 | ||||||||||||
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(Loss) income before income taxes |
(2,827 | ) | 2,123 | (948 | ) | 8,808 | ||||||||||
(Benefit) provision for income taxes |
(1,446 | ) | 430 | (1,324 | ) | 1,328 | ||||||||||
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Net (loss) income |
($ | 1,381 | ) | $ | 1,693 | $ | 376 | $ | 7,480 | |||||||
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Net (loss) income per share: |
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Basic |
(0.05 | ) | 0.06 | 0.01 | 0.28 | |||||||||||
Diluted |
(0.05 | ) | 0.06 | 0.01 | 0.28 | |||||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
27,130 | 27,130 | 27,130 | 27,130 | ||||||||||||
Diluted |
27,130 | 27,130 | 27,130 | 27,130 |
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands except share data)
12/31/13 | 3/31/13 | |||||||
ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ | 18,698 | $ | 21,412 | ||||
Restricted cash |
| 70 | ||||||
Short term investments |
37,226 | 45,235 | ||||||
Accounts receivable, net |
10,278 | 7,883 | ||||||
Other receivables |
1,735 | 969 | ||||||
Due from affiliates |
| 1 | ||||||
Inventory |
5,683 | 3,454 | ||||||
Prepaid expenses and other current assets |
2,603 | 1,873 | ||||||
Deferred tax assets |
1,567 | 1,685 | ||||||
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Total Current Assets |
77,790 | 82,582 | ||||||
Property, plant, and equipment, net |
210 | 258 | ||||||
Trademarks, net |
| 219 | ||||||
Deferred tax assets |
2,579 | 1,121 | ||||||
Other assets |
19 | 104 | ||||||
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Total Assets |
$ | 80,598 | $ | 84,284 | ||||
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LIABILITIES AND SHAREHOLDERS EQUITY |
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Current Liabilities: |
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Current maturities of long-term borrowings |
43 | 43 | ||||||
Accounts payable and other current liabilities |
4,701 | 7,790 | ||||||
Accrued sales returns |
1,106 | 965 | ||||||
Income taxes payable |
169 | 1,281 | ||||||
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Total Current Liabilities |
6,019 | 10,079 | ||||||
Capital lease obligations |
15 | 30 | ||||||
Deferred tax liabilities |
207 | 194 | ||||||
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Total Liabilities |
6,241 | 10,303 | ||||||
Shareholders Equity: |
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Preferred shares -$.01 par value, 10,000,000 shares authorized at December 31, 2013 and March 31, 2013, respectively; 3,677 shares issued and outstanding at December 31, 2013 and March 31, 2013, respectively; liquidation preference of $3,677,000 at December 31, 2013 and March 31, 2013, respectively |
3,310 | 3,310 | ||||||
Common shares $.01 par value, 75,000,000 shares authorized, 52,965,797 shares issued at December 31, 2013 and March 31, 2013, respectively; 27,129,832 shares outstanding at December 31, 2013 and March 31, 2013, respectively |
529 | 529 | ||||||
Additional paid-in capital |
98,785 | 98,785 | ||||||
Accumulated deficit |
(4,043 | ) | (4,419 | ) | ||||
Treasury stock, at cost, 25,835,965 shares |
(24,224 | ) | (24,224 | ) | ||||
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Total Shareholders Equity |
74,357 | 73,981 | ||||||
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Total Liabilities and Shareholders Equity |
$ | 80,598 | $ | 84,284 | ||||
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