Emerson Radio Corp Reports Operating Results (10-Q)

Emerson Radio Corp (MSN, Financial) filed Quarterly Report for the period ended 2011-06-30.

Emerson Radio Corp. has a market cap of $46.93 million; its shares were traded at around $1.85 with a P/E ratio of 3.33 and P/S ratio of 0.23.

Highlight of Business Operations:

Net Revenues Net revenues for the first quarter of fiscal 2012 were $51.5 million as compared to $67.2 million for the first quarter of fiscal 2011, a decrease of $15.7 million or 23.3%. Net revenues may be periodically impacted by adjustments made to the Companys 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 $253,000 and $131,000 for the first quarters of fiscal 2012 and fiscal 2011, respectively.

Cost of Sales In absolute terms, cost of sales decreased $11.9 million, or 20.7%, to $45.6 million in the first quarter of fiscal 2012 as compared to $57.5 million in the first quarter of fiscal 2011. Cost of sales, as a percentage of net revenues, was 88.5% and 85.7% in the first quarters of fiscal 2012 and fiscal 2011, respectively. Cost of sales as a percentage of net sales revenues less licensing revenues was 91.0% and 87.7% in the first quarters of fiscal 2012 and fiscal 2011, respectively. The increase in cost of sales as a percentage of net sales revenues less licensing revenues for the first quarter of fiscal 2012 as compared to the first quarter of fiscal 2011 was related to higher landed product costs as a percentage of selling price, partially offset by year-over-year reductions in inventory valuation reserves.

Other Operating Costs and Expenses As a percentage of net revenues, other operating costs and expenses were 0.8% in the first quarter of fiscal 2012 and 0.4% in the first quarter of fiscal 2011. In absolute terms, other operating costs and expenses increased $88,000, or 29.4%, to $387,000 for the first quarter of fiscal 2012 as compared to $299,000 in the first quarter of fiscal 2011 as a result of higher warranty and returns processing costs.

Selling, General and Administrative Expenses (S,G&A) S,G&A, as a percentage of net revenues, was 3.3% in the first quarter of fiscal 2012 as compared to 2.9% in the first quarter of fiscal 2011. S,G&A, in absolute terms, decreased $0.2 million, or 12.4%, to $1.7 million for the first quarter of fiscal 2012 as compared to $1.9 million for the first quarter of fiscal 2011. The decrease in S,G&A in absolute terms between the first quarter of fiscal 2012 and first quarter of fiscal 2011 was primarily due to lower compensation, information technology, depreciation and amortization, and advertising expenses, partly offset by lower year-over-year bad debt reserve recoveries.

Interest Income, net Interest income, net, was $31,000 in the first quarter of fiscal 2012 as compared to $10,000 in the first quarter of fiscal 2011.

As of June 30, 2011, the Company had cash and cash equivalents of approximately $21.5 million, as compared to approximately $7.3 million at June 30, 2010. Working capital increased to $54.2 million at June 30, 2011 as compared to $31.2 million at June 30, 2010. The increase in cash and cash equivalents of approximately $14.2 million was primarily due to the net income generated by the Company during the twelve months ended June 30, 2011.

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