EX-99.1 3 exhibit_99-1.txt EXHIBIT 99.1 EXHIBIT 99.1 THE SINGING MACHINE [logo omitted] Investor Contact: Company Contact: Neil Berkman Y.P. Chan Berkman Associates Interim Chief Executive Officer (310) 277 - 5162 (954) 596 - 1000 info@BerkmanAssociates.com www.SingingMachine.com THE SINGING MACHINE COMPANY Second Quarter Release & WebCast Reminder The attached earnings report was released this morning over Business Wire at approximately 7:45 a.m. ET. To hear TODAY's 11:00 a.m. ET conference call WebCast, please connect five minutes before the conference begins. SUBJECT Second Quarter Results CHAIRPERSON Y.P. Chan, Interim Chief Executive Officer DATE Friday, November 7, 2003 TIME 11:00 a.m. ET You can access a simultaneous webcast of the conference call at www.companyboardroom.com/company.asp?client=cb&ticker=smd or from the Investor Relations link at www.SingingMachine.com. A replay will be available after 1:00 p.m. ET at these same Internet addresses. For a telephone replay, dial (800) 633-8284, reservation #21164917 after 1:00 p.m. ET. Questions? Contact Berkman Associates: (310) 277-5162 or info@BerkmanAssociates.com THE SINGING MACHINE COMPANY, INC. 6601 Lyons Road o Building A-7 o Coconut Creek, Florida 33073 o (954) 596-1000 Fax (954) 596-2000 -------------------------------------------------------------------------------- THE SINGING MACHINE [logo omitted] Investor Contact: Neil Berkman Berkman Associates (310) 277 - 5162 info@BerkmanAssociates.com Company Contact: Y.P. Chan Interim Chief Executive Officer (954) 596 - 1000 www.SingingMachine.com FOR IMMEDIATE RELEASE THE SINGING MACHINE COMPANY REPORTS SECOND QUARTER RESULTS COCONUT CREEK, FL, November 7, 2003 THE SINGING MACHINE COMPANY (AMEX: SMD) announced today that revenue for the second quarter of fiscal 2004 ended September 30, 2003 was $31,984,251. This compares to revenue of $32,269,779 for the second quarter of fiscal 2003. The net loss for this year's second quarter was $656,669, or $0.08 per share. For last year's second quarter, net income was $3,827,362, or $0.43 per diluted share. For the six months ended September 30, 2003, revenue increased to $39,364,117 from $36,256,025 for the same period last year. The net loss for the first six months of fiscal 2004 was $2,974,021, or $0.35 per share. This compares to net income of $2,687,716, or $0.30 per diluted share, for the first six months of fiscal 2003. OPERATIONS REVIEW Interim Chief Executive Officer Y.P. Chan said, "We made substantial progress during the second quarter in the implementation of our plan to focus on cash flow management, enhance our operating platform, and build the foundation for Singing Machine's sustainable growth. During the quarter we restructured our bank credit agreement and raised additional capital through the sale of subordinated debt. "While total inventories declined by approximately $4.6 million since the end of fiscal 2003, as of November 1, 2003 we had delivered $12.5 million of the $26 million in inventories carried over from last fiscal year. Of the remaining $13.5 million, we have orders for about $9 million that are scheduled to be delivered to customers over the next few weeks. Thus, the unsold inventory carried over from last year is now only about $4.4 million, and we expect inventories to decline further in the current quarter as we enter our peak selling season. "We continue to identify opportunities to reduce costs and increase operating efficiencies while sustaining our core competencies and industry leadership. With our focus on product development, supply chain management has emerged as a key advantage for Singing Machine in today's increasingly competitive environment where most goods are produced offshore. We offer the widest variety of karaoke systems at price points for every budget, and our reputation for quality and on-time delivery sets us apart from our competitors. We are proud that Singing Machine continues to set the standard of excellence for product features, quality and reliability in the home karaoke industry." (more) THE SINGING MACHINE COMPANY, INC. 6601 Lyons Road o Building A-7 o Coconut Creek, Florida 33073 o (954) 596-1000 Fax (954) 596-2000 -------------------------------------------------------------------------------- THE SINGING MACHINE COMPANY REPORTS SECOND QUARTER RESULTS November 7, 2003 Page Two CONFERENCE CALL Singing Machine has scheduled a conference call today at 11:00 a.m. ET. A simultaneous webcast may be accessed at www.companyboardroom.com/company.asp?client=cb&ticker=smd. A replay will be available at this same Internet address after 1:00 p.m. ET. For a telephone replay, dial (800) 633-8284, reservation #21164917 after 1:00 p.m. ET. ABOUT THE SINGING MACHINE COMPANY Incorporated in 1982, The Singing Machine Company develops and distributes a full line of consumer-oriented karaoke machines and music under The Singing MachineTM, MTVTM, NickelodeonTM, Hardrock AcademyTM and MotownTM brand names. The first to provide karaoke systems for home entertainment in the United States, Singing Machine sells its products in North America, Europe and Asia. FORWARD-LOOKING STATEMENTS This press release contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about the Company's business based, in part, on assumptions made by management and include, but are not limited to statements about projected revenues, net income and net income per share.. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the risk that (1) we will not have sufficient funding to meet our working capital requirements; (2) demand for the Company's products will not meet our expectations; (3) the impact of competitive products and pricing conditions in the karaoke industry and (4) general economic conditions and other risks discussed from time to time in the Company's Securities and Exchange Commission filings and reports, including but not limited to the Company's Amended Annual Report on Form 10-KSB for the year ended March 31, 2003. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. (tables attached) #3445 THE SINGING MACHINE COMPANY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Six Months Ended September 30, September 30, ----------------------------- ----------------------------- 2003 2002 2003 2002 ------------ ------------ ------------ ------------ (as restated) (as restated) NET SALES $ 31,984,251 $ 32,269,779 $ 39,364,117 $ 36,256,025 COST OF SALES 28,180,712 24,367,626 34,166,542 27,526,988 ------------ ------------ ------------ ------------ GROSS PROFIT 3,803,539 7,902,153 5,197,575 8,729,037 OPERATING EXPENSES: Compensation 1,343,812 799,406 2,455,391 1,570,304 Freight & handling 495,955 598,222 721,821 661,276 Selling, general & administrative expenses 3,216,310 1,600,913 5,407,139 2,869,709 ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES 5,056,077 2,998,541 8,584,351 5,101,289 ------------ ------------ ------------ ------------ (LOSS) EARNINGS FROM OPERATIONS (1,252,538) 4,903,612 (3,386,776) 3,627,748 OTHER INCOME (EXPENSES): Other income (90,649) 144,119 (82,980) 163,564 Interest expense (318,895) (109,344) (507,363) (122,509) Interest income -- 339 -- 11,943 ------------ ------------ ------------ ------------ NET OTHER (EXPENSES) INCOME (409,544) 35,114 (590,343) 52,998 ------------ ------------ ------------ ------------ NET (LOSS) EARNINGS BEFORE INCOME TAX (1,622,082) 4,938,726 (3,977,119) 3,680,746 INCOME TAX (BENEFIT) EXPENSE (1,005,413) 1,111,364 (1,003,098) 993,030 ------------ ------------ ------------ ------------ NET (LOSS) EARNINGS $ (656,669) $ 3,827,362 $ (2,974,021) $ 2,687,716 ============ ============ ============ ============ (LOSS) EARNINGS PER SHARE: Basic $ (0.08) $ 0.47 $ (0.35) $ 0.33 Diluted $ (0.08) $ 0.43 $ (0.35) $ 0.30 ============ ============ ============ ============ WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING: Basic 8,490,658 8,119,026 8,389,165 8,090,102 Diluted 8,490,658 8,881,970 8,389,165 8,899,023
THE SINGING MACHINE COMPANY, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
September 30, March 31, 2003 2003 ------------- ----------- ASSETS (unaudited) CURRENT ASSETS: Cash and cash equivalents $ 1,106,003 $ 268,265 Restricted Cash 867,603 838,411 Accounts Receivable, net 21,131,801 5,762,944 Due from manufacturer 1,514 1,091,871 Inventories, net 20,563,086 25,194,346 Prepaid expense and other current assets 1,351,910 1,483,602 Deferred tax asset 1,925,612 1,925,612 ----------- ----------- TOTAL CURRENT ASSETS 46,947,529 36,565,051 PROPERTY AND EQUIPMENT, NET 2,007,911 2,026,252 OTHER NON-CURRENT ASSETS 1,039,594 343,991 ----------- ----------- TOTAL ASSETS $49,995,034 $38,935,294 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Bank overdraft $ 47,790 $ 316,646 Accounts payable 15,639,307 8,486,009 Accrued expenses 2,839,322 1,443,406 Subordinated debt-related parties 1,100,000 400,000 Notes payable 637,122 -- Revolving credit facility 6,513,411 6,782,824 Income taxes payable 2,635,047 3,821,045 ----------- ----------- TOTAL CURRENT LIABILITIES 29,411,999 21,249,930 Convertible Debentures, net 595,423 -- ----------- ----------- TOTAL LIABILITIES 30,007,422 21,249,930 SHAREHOLDERS' EQUITY: Common stock, $0.01 par value; 18,900,000 shares authorized; 8,712,169 and 8,171,678 shares issued and outstanding 87,122 81,717 Additional paid-in capital 10,114,294 4,843,430 Retained earnings 9,786,196 12,760,217 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 19,987,612 17,685,364 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $49,995,034 $38,935,294 =========== ===========