Emerson Radio Corp (MSN, Financial) filed Quarterly Report for the period ended 2009-12-31.
Emerson Radio Corp has a market cap of $65.4 million; its shares were traded at around $2.41 with and P/S ratio of 0.3.
Cost of Sales In absolute terms, cost of sales decreased $16.3 million, or 29.3%, to $39.3 million in the third quarter of fiscal 2010 as compared to $55.6 million in the third quarter of fiscal 2009. In absolute terms, cost of sales decreased $7.8 million, or 5.6%, to $132.6 million in the nine month period of fiscal 2010 as compared to $140.4 million in the nine month period of fiscal 2009. Cost of sales, as a percentage of net revenues, was 81.8% and 92.6% in the third quarters of fiscal 2010 and fiscal 2009, respectively, and 85.3% and 89.2% in the nine month periods of fiscal 2010 and fiscal 2009, respectively. Cost of sales as a percentage of sales revenues less license revenues was 85.4% in the third quarter of fiscal 2010 as compared to 95.1% in the third quarter of fiscal 2009. Cost of sales as a percentage of sales revenues less license revenues was 88.1% in the nine month period of fiscal 2010 as compared to 92.3% in the nine month period of fiscal 2009. The decrease in cost of sales in absolute terms for the third quarter of fiscal 2010 as compared to the third quarter of fiscal 2009 was primarily related to the decrease in net sales volume, lower inventory reserve requirements, lower costs of personnel in Asia involved with product sourcing and quality assurance activities, and lower inventory write-downs. The decrease in cost of sales in absolute terms for the nine month period of fiscal 2010 as compared to the nine month period of fiscal 2009 resulted from the decrease in net sales volume, lower costs of personnel in Asia involved with product sourcing and quality assurance activities, and lower inventory reserve requirements, partially offset by higher purchasing brokerage costs.
Other Operating Costs and Expenses As a percentage of net revenues, other operating costs and expenses were 1.5% in the third quarter of fiscal 2010 versus 3.4% in the third quarter of fiscal 2009. In absolute terms, other operating costs and expenses decreased $1.4 million, or 65.6%, to $0.7 million for the third quarter of fiscal 2010 as compared to $2.1 million in the third quarter of fiscal 2009 as a result of decreased returns processing, warranty and service costs. For the nine month period of fiscal 2010, other operating costs were 1.6% as a percentage of net revenues versus 3.0% for the nine month period of fiscal 2009. In absolute terms, other operating costs and expenses decreased $2.2 million, or 46.3%, to $2.6 million for the nine month period of fiscal 2010 as compared to $4.8 million in the nine month period of fiscal 2009, as a result of decreased returns processing, warranty and service costs.
Selling, General and Administrative Expenses (S,G&A) S,G&A, as a percentage of net revenues, was 7.1% in the third quarter of fiscal 2010 as compared to 7.5% in the third quarter of fiscal 2009. S,G&A, in absolute terms, decreased $1.1 million, or 24.8%, to $3.4 million for the third quarter of fiscal 2010 as compared to $4.5 million for the third quarter of fiscal 2009. The decrease in S,G&A in absolute terms between the third quarter of fiscal 2010 and third quarter of fiscal 2009 was primarily due to lower compensation, marketing, and travel and entertainment costs, partially offset by higher legal expenses. For the nine month period of fiscal 2010, S,G&A was 7.0% of net revenues versus 8.8% of net revenues in the nine month period of fiscal 2009. In absolute terms, S,G&A for the nine month period of fiscal 2010 was $10.8 million, a $3.0 million, or 21.4% decrease from the nine month period of fiscal 2009 level of $13.8 million. The decrease in S,G&A in absolute terms between the nine month period of fiscal 2010 and the nine month period of fiscal 2009 was primarily due to lower compensation, marketing, and travel and entertainment costs, partially offset by higher legal expenses.
Interest Income (Expense), net Interest expense, net, was $1,000 in the third quarter of fiscal 2010 as compared to $21,000 of interest income in the third quarter of fiscal 2009. For the nine month period of fiscal 2010, interest income, net was $21,000 as compared to $227,000 of interest income in the nine month period of fiscal 2009. The period-over-period change to net interest expense in fiscal 2010s third quarter and period-over-period reduction in interest income in fiscal 2010s nine month period is due to interest expense incurred on cash borrowed from Smith Barney by the Company against its auction rate securities beginning in August 2008, as well as lower period-over-period interest income due to lower yields on invested cash.
As of December 31, 2009, the Company had cash and cash equivalents of approximately $38.8 million, compared to approximately $15.7 million at December 31, 2008. Working capital increased to $49.3 million at December 31, 2009 as compared to $46.8 million at December 31, 2008. The increase in cash and cash equivalents of approximately $23.1 million was primarily due to net income generated, reduced inventory and accounts receivable levels, and increased accounts payable and accrued liabilities partly offset by capital expenditures on property, plant and equipment and intangible assets.
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Emerson Radio Corp has a market cap of $65.4 million; its shares were traded at around $2.41 with and P/S ratio of 0.3.
Highlight of Business Operations:
Net Revenues Net revenues for the third quarter of fiscal 2010 were $48.0 million as compared to $60.1 million for the third quarter of fiscal 2009, a decrease of $12.1 million or 20.1%. For the nine month period of fiscal 2010, net revenues were $155.4 million as compared to $157.4 million for the nine month period of fiscal 2009, a decrease of $2.0 million or 1.2%. 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 $0.3 million and $0.1 million in the third quarter of fiscal 2010 and fiscal 2009, respectively, and $1.0 million and $1.2 million for the nine month period of fiscal 2010 and fiscal 2009, respectively.Cost of Sales In absolute terms, cost of sales decreased $16.3 million, or 29.3%, to $39.3 million in the third quarter of fiscal 2010 as compared to $55.6 million in the third quarter of fiscal 2009. In absolute terms, cost of sales decreased $7.8 million, or 5.6%, to $132.6 million in the nine month period of fiscal 2010 as compared to $140.4 million in the nine month period of fiscal 2009. Cost of sales, as a percentage of net revenues, was 81.8% and 92.6% in the third quarters of fiscal 2010 and fiscal 2009, respectively, and 85.3% and 89.2% in the nine month periods of fiscal 2010 and fiscal 2009, respectively. Cost of sales as a percentage of sales revenues less license revenues was 85.4% in the third quarter of fiscal 2010 as compared to 95.1% in the third quarter of fiscal 2009. Cost of sales as a percentage of sales revenues less license revenues was 88.1% in the nine month period of fiscal 2010 as compared to 92.3% in the nine month period of fiscal 2009. The decrease in cost of sales in absolute terms for the third quarter of fiscal 2010 as compared to the third quarter of fiscal 2009 was primarily related to the decrease in net sales volume, lower inventory reserve requirements, lower costs of personnel in Asia involved with product sourcing and quality assurance activities, and lower inventory write-downs. The decrease in cost of sales in absolute terms for the nine month period of fiscal 2010 as compared to the nine month period of fiscal 2009 resulted from the decrease in net sales volume, lower costs of personnel in Asia involved with product sourcing and quality assurance activities, and lower inventory reserve requirements, partially offset by higher purchasing brokerage costs.
Other Operating Costs and Expenses As a percentage of net revenues, other operating costs and expenses were 1.5% in the third quarter of fiscal 2010 versus 3.4% in the third quarter of fiscal 2009. In absolute terms, other operating costs and expenses decreased $1.4 million, or 65.6%, to $0.7 million for the third quarter of fiscal 2010 as compared to $2.1 million in the third quarter of fiscal 2009 as a result of decreased returns processing, warranty and service costs. For the nine month period of fiscal 2010, other operating costs were 1.6% as a percentage of net revenues versus 3.0% for the nine month period of fiscal 2009. In absolute terms, other operating costs and expenses decreased $2.2 million, or 46.3%, to $2.6 million for the nine month period of fiscal 2010 as compared to $4.8 million in the nine month period of fiscal 2009, as a result of decreased returns processing, warranty and service costs.
Selling, General and Administrative Expenses (S,G&A) S,G&A, as a percentage of net revenues, was 7.1% in the third quarter of fiscal 2010 as compared to 7.5% in the third quarter of fiscal 2009. S,G&A, in absolute terms, decreased $1.1 million, or 24.8%, to $3.4 million for the third quarter of fiscal 2010 as compared to $4.5 million for the third quarter of fiscal 2009. The decrease in S,G&A in absolute terms between the third quarter of fiscal 2010 and third quarter of fiscal 2009 was primarily due to lower compensation, marketing, and travel and entertainment costs, partially offset by higher legal expenses. For the nine month period of fiscal 2010, S,G&A was 7.0% of net revenues versus 8.8% of net revenues in the nine month period of fiscal 2009. In absolute terms, S,G&A for the nine month period of fiscal 2010 was $10.8 million, a $3.0 million, or 21.4% decrease from the nine month period of fiscal 2009 level of $13.8 million. The decrease in S,G&A in absolute terms between the nine month period of fiscal 2010 and the nine month period of fiscal 2009 was primarily due to lower compensation, marketing, and travel and entertainment costs, partially offset by higher legal expenses.
Interest Income (Expense), net Interest expense, net, was $1,000 in the third quarter of fiscal 2010 as compared to $21,000 of interest income in the third quarter of fiscal 2009. For the nine month period of fiscal 2010, interest income, net was $21,000 as compared to $227,000 of interest income in the nine month period of fiscal 2009. The period-over-period change to net interest expense in fiscal 2010s third quarter and period-over-period reduction in interest income in fiscal 2010s nine month period is due to interest expense incurred on cash borrowed from Smith Barney by the Company against its auction rate securities beginning in August 2008, as well as lower period-over-period interest income due to lower yields on invested cash.
As of December 31, 2009, the Company had cash and cash equivalents of approximately $38.8 million, compared to approximately $15.7 million at December 31, 2008. Working capital increased to $49.3 million at December 31, 2009 as compared to $46.8 million at December 31, 2008. The increase in cash and cash equivalents of approximately $23.1 million was primarily due to net income generated, reduced inventory and accounts receivable levels, and increased accounts payable and accrued liabilities partly offset by capital expenditures on property, plant and equipment and intangible assets.
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