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Emerson Radio Corp Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 16, 2010 09:13AM

Emerson Radio Corp (MSN) filed Quarterly Report for the period ended 2010-06-30. Emerson Radio Corp has a market cap of $67.82 million; its shares were traded at around $2.5 with a P/E ratio of 5.95 and P/S ratio of 0.33. The dividend yield of Emerson Radio Corp stocks is 44%.

MSN is in the portfolios of Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Net Revenues — Net revenues for the first quarter of fiscal 2011 were $67.2 million as compared to $55.6 million for the first quarter of fiscal 2010, an increase of $11.6 million or 20.8%. Net revenues may be periodically impacted by adjustments made to the Company’s sales allowance and marketing support accrual to record unanticipated customer deductions from accounts receivable or to reduce the accrual by any amounts which were accrued in the past but not taken by customers through deductions from accounts receivable within a certain time period. In the aggregate, these adjustments had the effect of increasing net revenues and operating income by approximately $131,000 and $310,000 for the first quarters of fiscal 2011 and fiscal 2010, respectively.

Cost of Sales — In absolute terms, cost of sales increased $7.9 million, or 16.0%, to $57.5 million in the first quarter of fiscal 2011 as compared to $49.6 million in the first quarter of fiscal 2010. Cost of sales, as a percentage of net revenues, was 85.7% and 89.2% in the first quarters of fiscal 2011 and fiscal 2010, respectively. Cost of sales as a percentage of sales revenues less license revenues decreased to 87.7% in the first quarter of fiscal 2011 from 91.6% in the first quarter of fiscal 2010. The increase in cost of sales in absolute terms for the first quarter of fiscal 2011 as compared to the first quarter of fiscal 2010 was primarily related to the increase in sales volume and lower purchase return credits, partially offset by lower allocated selling, general and administrative expenses associated with this activity and lower inventory valuation adjustments.

Other Operating Costs and Expenses — As a percentage of net revenues, other operating costs and expenses were 0.4% in the first quarter of fiscal 2011 and 1.4% in the first quarter of fiscal 2010. In absolute terms, other operating costs and expenses decreased $479,000, or 61.6%, to $299,000 for the first quarter of fiscal 2011 as compared to $778,000 in the first quarter of fiscal 2010 as a result of decreased costs associated with product returns and lower allocated selling, general and administrative expenses associated with this activity.

Selling, General and Administrative Expenses (“S,G&A”) — S,G&A, as a percentage of net revenues, was 2.9% in the first quarter of fiscal 2011 as compared to 6.8% in the first quarter of fiscal 2010. S,G&A, in absolute terms, decreased $1.9 million, or 49.1%, to $1.9 million for the first quarter of fiscal 2011 as compared to $3.8 million for the first quarter of fiscal 2010. The decrease in S,G&A in absolute terms between the first quarter of fiscal 2011 and first quarter of fiscal 2010 was primarily due to changes in the bad debt reserve, lower salary and benefits, rent, advertising and legal expenses.

Net Income from continuing operations — As a result of the foregoing factors, the Company realized net income from continuing operations of $5.9 million in the first quarter of fiscal 2011 as compared to $1.2 million in the first quarter of fiscal 2010.

As of June 30, 2010, the Company had cash and cash equivalents of approximately $7.3 million, compared to approximately $23.6 million at June 30, 2009. Working capital decreased to $31.2 million at June 30, 2010 as compared to $45.1 million at June 30, 2009. The decrease in cash and cash equivalents of approximately $16.3 million was primarily due to the payment of an extraordinary dividend in March 2010 of $29.8 million and the purchase of the Company’s new headquarters building of approximately $2.6 million, partially offset by the net income generated by the Company during the twelve months ending June 30, 2010 of $16.1 million.

Read the The complete Report



Stocks Discussed: MSN,
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