SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-25226
EMERSON RADIO CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3285224
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9 Entin Road Parsippany, New Jersey 07054
(Address of principal executive offices) (Zip Code)
(973)884-5800
(Registrant's telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of common stock as of July 27, 1998:
50,772,615.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except earnings per share data)
<CAPTION>
Three Months Ended
July 3, June 30,
1998 1997
<S> <C> <C>
Net revenues $59,126 $30,443
Costs and expenses:
Cost of sales 51,888 28,399
Other operating costs and expenses 1,266 866
Selling, general & administrative
expenses 5,083 3,627
58,237 32,892
Operating income (loss) 889 (2,449)
Equity in earnings of Affiliate 443 509
Interest expense, net (569) (741)
Income (loss) before income taxes 763 (2,681)
Provision (benefit) for income taxes (1) 41
Net income (loss) $ 764 $(2,722)
Net income (loss) per common share
Basic $ .02 $ (.07)
Diluted $ .02 $ (.07)
Weighted average number of
common shares outstanding
Basic 51,220 40,592
Diluted 69,394 40,592
</TABLE>
The accompanying notes are an integral part of the interim consolidated
financial statements.
<TABLE>
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
<CAPTION>
July 3, April 3,
1998 1998
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 5,619 $ 2,608
Accounts receivable (net allowances of
$5,822 and $4,884, respectively) 3,000 5,247
Other receivables 6,452 6,474
Inventories 11,148 11,375
Prepaid expenses and other current assets 1,852 2,503
Total current assets 28,071 28,207
Property and equipment - (net of
accumulated depreciation and amortization
of $3,310 and $3,152, respectively) 1,240 1,381
Investment in Affiliate and Joint Venture 18,009 17,522
Other assets 4,644 4,810
Total Assets $ 51,964 $ 51,920
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 683 $ --
Current maturities of long-term debt 62 85
Accounts payable and other current
liabilities 10,527 12,256
Accrued sales returns 5,086 4,511
Income taxes payable 168 191
Total current liabilities 16,526 17,043
Long-term debt, net of current maturities 20,750 20,750
Other non-current liabilities 175 179
Shareholders' Equity:
Preferred shares - 10,000,000
shares authorized, 5,137 and 5,237
shares issued and outstanding, respectively 4,623 4,713
Common shares - $.01 par value, 75,000,000
shares authorized, 51,331,615 and 51,044,730
shares issued; 51,065,115 and 51,044,730
shares outstanding, respectively 513 510
Treasury stock, at cost, 266,500 shares and 0
shares respectively. (145) --
Capital in excess of par value 113,293 113,201
Accumulated deficit (103,963) (104,673)
Cumulative translation adjustment 192 197
Total shareholders' equity 14,513 13,948
Total Liabilities and Shareholders' Equity $ 51,964 $ 51,920
</TABLE>
The accompanying notes are an integral part of the interim consolidated
financial statements.
<TABLE>
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands of dollars)
<CAPTION>
Three Months Ended
July 3, June 30,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net cash provided by operating
activities $ 2,521 $ 373
Cash Flows from Investing Activities:
Net cash provided (used) by investing
activities. (44) 13
Cash Flows from Financing Activities:
Net repayments under line of
credit facility 683 (1,113)
Other (149) (157)
Net cash used by financing
activities 534 (1,270)
Net increase (decrease) in cash and cash
equivalents 3,011 (884)
Cash and cash equivalents at beginning
of year 2,608 2,640
Cash and cash equivalents at end of period(a) $ 5,619 $ 1,756
Supplemental disclosure of cash flow information:
Interest paid $ 569 $ 741
Income taxes paid $ 32 $ 31
</TABLE>
(a) Includes $1.0 million of cash and cash equivalents, pledged to assure the
availability of certain letter of credit facilities.
The accompanying notes are an integral part of the interim consolidated
financial statements.
EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(In thousands, except earnings per share data)
NOTE 1 - BUSINESS
The unaudited interim consolidated financial statements reflect all normal
and recurring adjustments that are, in the opinion of management, necessary to
present a fair statement of Emerson Radio Corp.'s (the "Company" or "Emerson")
consolidated financial position as of July 3, 1998 and the results of operations
for the quarters ended July 3, 1998 and June 30, 1997 and have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and accordingly do not include all of the disclosures normally made in the
Company's annual consolidated financial statements. It is suggested that these
unaudited interim consolidated financial statements be read in conjunction with
the consolidated financial statements and notes thereto for the fiscal year
ended April 3, 1998 ("Fiscal 1998"), included in the Company's annual report on
Form 10-K.
The consolidated financial statements include the accounts of the Company
and all of its majority owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation. The preparation
of the unaudited interim consolidated financial statements requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes; actual results could materially
differ from those estimates.
Due to the seasonal nature of the Company's consumer electronics business,
the results of operations for the quarter ended July 3, 1998 are not necessarily
indicative of the results of operations that may be expected for the full year
ending April 2, 1999 ("Fiscal 1999").
Beginning in Fiscal 1998, the Company changed its financial reporting year
to a 52/53 week year ending on the Friday closest to March 31. Accordingly, the
current fiscal year will end on April 2, 1999. Such change in the Company's
financial reporting year will not have a material effect on the Company's
results of operations.
NOTE 2 - EARNINGS (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share amounts):
<TABLE>
For the Three
Months Ended
July 3, June 30,
1998 1997
<S> <C> <C>
Numerator:
Net income (loss) $ 764 $ (2,722)
Less: preferred stock dividends 54 132
Numerator for basic earnings per
share - income available to
common stockholders 710 (2,854)
Added effect of assumed conversions:
Interest on convertible debentures 441 --
Preferred stock dividends 54 --
Numerator for diluted earnings
(loss) per share $ 1,205 $ (2,854)
Denominator:
Denominator for basic earnings
per share - weighted average
shares 51,220 40,592
Effect of dilutive securities:
Convertible debentures 5,204 --
Preferred shares 12,970 --
Denominator for diluted earnings
per share - adjusted weighted
average shares and assumed
conversions 69,394 40,592
Basic earnings (loss) per share $ .02 $ (.07)
Diluted earnings (loss) per share $ .02 $ (.07)
</TABLE>
NOTE 3- CAPITAL STRUCTURE
The outstanding capital stock of the Company at July 3, 1998 consisted of
common stock and Series A convertible preferred stock. The preferred shares are
convertible to common shares until March 31, 2002.
During the quarters ended July 3, 1998 and June 30, 1997, 100 and 550
shares of Series A Preferred Stock were converted into 286,885 and 766,054
shares of common stock, respectively. If all existing outstanding preferred
shares were converted at July 3, 1998, an estimated 13 million additional common
shares would be issuable. Dividends for the preferred stock accrued and were
payable quarterly at a 7% annual rate until March 31, 1997; dividend rates
decline by 1.4% each succeeding year until March 31, 2001 when no further
dividends are payable. The dividend rates at July 3, 1998 and June 30, 1997 were
4.2% and 5.6%, with $801,000 and $618,000 of dividends in arrears respectively.
At July 3, 1998, the Company had outstanding approximately 1.2 million
options with exercise prices ranging from $1.00 to $1.10. Outstanding warrants
with a common stock equivalent total approximately 670,000 shares and have
conversion prices ranging from $1.20 to $4.00.
The Company also has outstanding $20.8 million of Senior Subordinated
Convertible Debentures due in 2002. See "Note 7 - Long Term Debt.".
NOTE 4 - INCOME TAXES
Income tax provisions and benefits for the quarterly periods ended July 3,
1998 and June 30, 1997 consist of taxes related to international operations. The
Company did not recognize tax benefits for losses incurred by its domestic
operations during the quarters ended June 3, 1998 and June 30, 1997.
NOTE 5 - INVENTORY
Inventories are comprised primarily of finished goods. Spare parts inventories,
net of reserves, aggregating $247,000 and $384,000 at July 3, 1998 and April 3,
1998, respectively, are included in "Prepaid expenses and other current assets."
NOTE 6 - INVESTMENT IN SPORT SUPPLY GROUP, INC.
The Company owns 2,200,000 (28% of the outstanding) shares of common stock
of Sport Supply Group, Inc. ("SSG") which it purchased in 1996 at an aggregate
cost of $15,728,000 or $ 6.92 per share. In addition, the Company owns warrants
also purchased by it in 1996 for $500,000 to purchase an additional 1 million
shares of SSG at $7.50 per share ("SSG Warrants"). If the Company exercises all
of the SSG Warrants, it will beneficially own approximately 36% of the SSG
common shares.
The investment in and results of operations of SSG are accounted for by the
equity method. In January 1997, SSG changed its financial reporting year end
from October 31 to September 30. This change in accounting period resulted in
the Company now recording its share of SSG earnings on a concurrent basis.
Previously, the Company recorded its share of SSG's earnings on a two month
delay. The Company's investment in SSG includes goodwill of $3,973,000 which is
being amortized on a straight line basis over 40 years. At July 3, 1998, the
aggregate market value quoted on the New York Stock Exchange of Emerson's shares
of SSG common shares was approximately $18 million. Summarized financial
information derived from SSG's financial reports to the Securities and Exchange
Commission was as follows (in thousands):
<TABLE>
(Unaudited)
July 3, 1998 April 3, 1998
<S> <C> <C>
Current assets $ 30,966 $ 37,282
Property, plant and
equipment and other assets 20,974 19,878
Current liabilities 6,741 8,395
Long-term debt 2,446 7,498
</TABLE>
<TABLE>
(Unaudited)
For the 3 Months For the 3 Months
Ended Ended
July 3, 1998 May 2, 1997
<S> <C> <C>
Net sales $ 25,340 $ 28,312
Gross profit 9,840 10,717
Net income 1,739 1,974
</TABLE>
In July 1997, the Company entered into a Management Services Agreement with
SSG, under which SSG provides various managerial and administrative services to
the Company.
NOTE 7 -LONG TERM DEBT
As of July 3, 1998 and April 3, 1998 long-term debt consisted of the following
in (thousands of dollars):
<TABLE>
July 3, April 3,
1998 1998
<S> <C> <C>
8 1/2% Senior Subordinated Convertible
Debentures Due 2002 $20,750 $20,750
Equipment notes and other 62 85
20,812 20,835
Less current obligations
Long term debt 62 85
$20,750 $20,750
</TABLE>
The Senior Subordinated Convertible Debentures Due 2002 ("Debentures") were
issued in August 1995, bear interest at the rate of 8 1/2% per annum, payable
quarterly, and mature on August 15, 2002. The Debentures are convertible into
shares of the Company's common stock at any time prior to redemption or maturity
at a conversion price of $3.9875 per share, subject to adjustment under certain
circumstances. Beginning August 15, 1998 at the option of the Company, the
Debentures are redeemable in whole or in part at an initial redemption price of
104% of principal, decreasing by 1% per year until maturity. The Debentures are
subordinated to all existing and future senior indebtedness (as defined in the
Indenture governing the Debentures). The Debentures restrict, among other
things, the amount of senior indebtedness and other indebtedness that the
Company, and, in certain instances, its subsidiaries, may incur. Each Debenture
holder has the right to cause the Company to redeem the Debentures if certain
designated events (as defined) should occur.
NOTE 8 --LEGAL PROCEEDINGS
The Company is involved in a number of legal proceedings and claims of
various types, the most significant of which are described in "Part I - Item 3.
Legal Proceedings" of the Company's Form 10-K for the fiscal year ended April 3,
1998 and "Part II -- Other Information Item 1. Legal Proceedings" of this
Quarterly Report on Form 10-Q. While any such litigation contains an element of
uncertainty, management presently believes that the outcome of such proceedings
and claims will not have a material adverse effect on the Company's consolidated
financial position.
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
GENERAL
The Company's operating results and liquidity are impacted by the
seasonality of its business. The Company records the majority of its annual
sales in the fiscal quarters ending in September and December and receives the
largest amount of customer returns in the fiscal quarters ending in March and
June. Therefore, the results of operations discussed below are not necessarily
indicative of the Company's prospective annual results. The Company expects its
United States sales for the fiscal quarter ended September 1998 to be lower than
the second fiscal quarter of Fiscal 1998 due to reduced product sales.
RESULTS OF OPERATIONS
NET REVENUES Consolidated net revenues for the three month period ended
July 3, 1998 increased $28.6 million (94%) as compared to the same period ended
June 30, 1997. The increase in net revenues resulted primarily from increased
unit sales of audio products and microwave ovens, partially offset by
reductions in other product categories. Additionally, a significant reduction in
returned product was recorded in the current period as compared to the same
period in the prior year. The significant reduction in returned product is
attributable to higher returns in the June, 1997 quarter due to the opening of a
return processing center in early 1997 that resulted in delays in processing
returns that flowed into the June 1997 quarter; and an overall more restrictive
return policy by the Company's customers. While the Company expects the latter
to continue, the effect of the processing center was a one time event. Revenues
earned from the licensing of the Emerson and G-Clef trademark were $613,000 and
$1,000,000 in the three month period ended July 3,1998 and June 30,1997,
respectively.
The Company reports royalty and commission revenues earned from its
licensing arrangements, covering various products and territories, in lieu of
reporting the full dollar value of such sales and associated costs.
COST OF SALES Cost of Sales, as a percentage of consolidated net
revenues, was 88% for the three month period ended July 3, 1998 as compared to
93% for the same period in Fiscal 1998. Margins in the current quarter were
significantly improved as a percent of sales primarily as a result of: (i) a
change in the product mix to higher margin products; (ii) a reduction of
inventory overhead costs due to the Company's successful efforts to shift to a
higher portion of its sales to a direct import basis; and (iii) a significant
reduction in returned products and resulting loss on such product. For the
three month period ended July 3, 1998, products representing approximately 87%
of net revenues were directly imported from manufacturers to the Company's
customers as compared to 78% for the same period last year.
The Company's gross profit margins continue to be subject to competitive
pressures arising from pricing strategies associated with the category of the
consumer electronics market in which the Company competes. The Company's
products compete generally in the low-to-medium priced category of the market
which tend to be the most competitive and generate the lowest profit margins.
The Company believes that its marketing agreements, licensing agreements in the
United States and various foreign countries and its distribution agreements in
Canada, Europe and parts of Asia all will have a favorable impact on the
Company's gross profit. The Company continues to promote its direct import
programs to reduce its inventory levels and working capital risks thereby
reducing its inventory overhead costs. In addition, the Company continues to
focus on its higher margin products and continually reviews new products which
can generate higher margins than its current business, either through license
arrangements, acquisitions, joint ventures or on its own.
OTHER OPERATING COSTS AND EXPENSES Other operating costs and expenses
increased $400,000 for the three months ended July 3,1998 as compared to the
same period in Fiscal 1998, primarily as a result of the Company's return-to-
vendor program. Under the return-to-vendor program, the Company, by paying a
fee, is able to return defective product to its suppliers and, to receive in
exchange, a replacement unit.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("S,G&A") S,G&A, as a
percentage of net revenues, were 9% of net revenues for the three month period
ended July 3,1998 as compared to 12% in the same period a year ago. In absolute
terms, S,G&A increased by $1.5 million in the period ended July 3,1998 as
compared to the same period last year. The decrease in S,G&A as a percentage of
net revenues was attributable primarily to a higher revenue base. The increase
in S,G&A in absolute terms was caused primarily by (i) an increase in
promotional programs and (ii) a decrease in the charges incurred in the prior
year for relocation costs of the Company's back office operations from New
Jersey to Texas.
OPERATING INCOME (LOSS) The Company reported operating income of $889,000
for the three month period ended July 3,1998, as compared to an operating loss
of $2.4 million for the same period a year ago. The operating income in the
current year is attributable to a higher revenue base and improved gross profit
margins and a reduction in S,G&A expenses as a percent of revenues.
EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATE The Company's 28% share in
the earnings of SSG amounted to $443,000 for the three month period ended July
3,1998 as compared to $509,000 for the same period last year.
INTEREST EXPENSE Interest expense decreased by $172,000 in the three
months ended July 3,1998 as compared to the same period a year ago. The decrease
was attributable to a significant reduction in short term average borrowings.
The decrease in short term borrowings was due to a reduction in working capital
requirements.
NET INCOME As a result of the foregoing factors, the Company generated
net income of $764,000 for the three months ended July 3,1998, as compared to
a net loss of $2.7 million for the three months ended June 30,1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $2,521,000 for the three
months ended July 3,1998. Cash was provided primarily by a reduction in
accounts receivables along with the profitability of the Company for the period,
partially offset by a decrease in accounts payable. The decrease in accounts
receivable resulted primarily from an increase in the percentage of the
Company's sales which were on a direct shipment basis.
In the three months ended July 3,1998, the Company's financing activities
provided $534,000 of cash as the Company increased its borrowings under its $10
million U.S. line of credit facility from $0 at April 3, 1998 to $683,000 at
July 3, 1998. The Company maintains 2 credit facilities with a Hong Kong based
bank: a $3.5 million letter of credit facility and a $25 million back-to-back
letter of credit facility. At July 3, 1998, there was $1,565,000 and
$9,647,000, respectively, of letters of credit outstanding.
At present, management believes that future cash flow from operations and
its existing institutional financing noted above will be sufficient to fund all
of the Company's cash requirements for the next twelve months. However, the
adequacy of future cash flow from operations is dependent upon the Company
achieving its operating plan. During the three month period ended July 3,1998,
the Company reduced accounts receivable by 48%. The Company intends to maintain
the reduced accounts receivable levels and to continue the sale of its products
on a direct import basis. For the three month period ended July 3, 1998,
products representing approximately 87% of net revenues were directly imported
from manufacturers to the Company's customers as compared to 78% for the same
period last year. The direct import program implemented by the Company is
critical in providing sufficient working capital to meet its liquidity
objectives.
As of July 3, 1998 the Company had no material commitments for capital
expenditures.
INFLATION AND FOREIGN CURRENCY
Neither inflation nor currency fluctuations had a significant effect on the
Company's results of operations during the first quarter of Fiscal 1999. The
Company's exposure to currency fluctuations has been minimized by the use of
U.S. dollar denominated purchase orders, and by sourcing production in more than
one country. The Company purchases virtually all of its products from
manufacturers located in various Asian countries. The economic crises in these
countries and its related impact on their financial markets has not impacted the
Company's ability to purchase product. Should these crises continue, they could
have a material adverse effect on the Company by inhibiting the Company's
relationship with its suppliers and its ability to acquire products for resale.
YEAR 2000
The Company has developed and is in the process of implementing a plan to
modify its management information system to be year 2000 compliant. The Company
currently expects to be substantially complete with this conversion by mid-1999.
The incremental cost of conversion is estimated to be less than $300,000. The
Company does not expect the conversion to have a significant effect on
operations or the Company's financial results. In addition, the year 2000
problem may impact other entities with which the Company transacts business, and
the Company cannot predict the effect of the year 2000 problem on such entities.
RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD
Recent pronouncements of the Financial Accounting Standards Board ("FASB")
which are not required to be adopted and the Company has not adopted them as of
July 3, 1998, include the following Statements of Financial Accounting Standards
("SFAS"):
SFAS No. 130, "Reporting Comprehensive Income," establishes
standards for reporting and display of comprehensive income
(all changes in equity during a period except those resulting from
investments by and distributions to owners) and its components in
the financial statements. This new standard, which will be effective for Fiscal
1999, is not currently anticipated to have a significant impact on the Company's
financial statements based on the current financial structure and operations of
the Company.
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," which will be effective for the Company for Fiscal 1999,
establishes standards for reporting information about operating segments in the
annual financial statements, selected information about operating segments in
interim financial reports and disclosures about products and services,
geographic areas and major customers. This new standard requires the Company to
report financial information on the basis that is used internally for evaluating
segment performance and deciding how to allocate resources to segments, which
may result in more detailed information in the notes to the Company's financial
statements than is currently required and provided. The Company has not yet
determined the effects, if any, of implementing SFAS No. 131 on its reporting of
financial information.
FORWARD-LOOKING INFORMATION
This report contains various forward looking statements under the Private
Securities Litigation Reform Act of 1995 (the "Reform Act') and information that
is based on Management's beliefs as well as assumptions made by and information
currently available to Management. When used in this report, the words
"anticipate", "estimate", "expect", "predict", "project", and similar
expressions are intended to identify forward looking statements. Such statements
are subject to certain risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
expected or projected. Among the key factors that could cause actual results to
differ materially are as follows: (i) the ability of the Company to continue
selling products to its largest customers whose net revenues represented 58% and
16% of Fiscal 1998 net revenues; (ii) competitive factors such as competitive
pricing strategies utilized by retailers in the domestic marketplace which
negatively impacts product gross margins; (iii) the ability of the Company to
maintain its suppliers, primarily all of whom are located in the Far East; (iv)
the Company's ability to replace the licensing income from the Supplier with
commission revenues from Daewoo; (v) the outcome of litigation; (vi) the
availability of sufficient capital to finance the Company's operating plans;
(vii) the ability of the Company to comply with the restrictions imposed upon it
by its outstanding indebtedness; and (viii) general economic conditions.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
EMERSON RADIO CORP. AND SUBSIDIARIES
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
During July 1998, further hearings were held on the
Creditors' motion to terminate the Settlement Agreement in the
Stelling litigation. It is expected that all testimony in that
matter will be concluded in the next month.
In August 1998, the Company voluntarily dismissed with prejudice
its lawsuit against Grace Brothers, Ltd.
For further information on the Stelling litigation and other
litigation to which the Company is a party, reference is made to
Part 1 Item-3-Legal Proceedings in the Company's most recent
annual report on Form 10-K.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During the three months ended July 3, 1998, the Company
issued a total of 286,885 shares of the common stock, upon
conversion of 100 shares of Series A Preferred Stock. No
consideration was received by the Company for the issuance of the
shares of common stock. The shares of common stock were issued
by the Company to certain of its existing holders of Series A
Preferred Stock where no commission or other remuneration was
paid or given directly or indirectly for soliciting such
exchange. The shares of common stock were issued pursuant to
Section 3(a)(9) of the Securities Act of 1933, as amended.
In August 1998, the Company repurchased 1,423 shares of its
outstanding Series A Preferred Stock.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
(a) None
(b) None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
(a) None
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
(27) Financial Data Schedule for quarter ended July 3, 1998.*
(b) Reports on Form 8-K - During the three month period
ended July 3, 1998, no Form 8-K was filed.
____________________________
*Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EMERSON RADIO CORP.
(Registrant)
Date: August 4, 1998 /s/ Geoffrey P. Jurick
Geoffrey P. Jurick
Chairman, Chief Executive Officer and
President
Date: August 4, 1998 /s/ John P. Walker
John P. Walker
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-02-1999
<PERIOD-END> JUL-03-1998
<CASH> 5,619
<SECURITIES> 0
<RECEIVABLES> 8,822
<ALLOWANCES> 5,822
<INVENTORY> 11,148
<CURRENT-ASSETS> 28,071
<PP&E> 4,550
<DEPRECIATION> 3,310
<TOTAL-ASSETS> 51,964
<CURRENT-LIABILITIES> 16,526
<BONDS> 20,750
0
4,623
<COMMON> 513
<OTHER-SE> 9,377
<TOTAL-LIABILITY-AND-EQUITY> 51,964
<SALES> 58,513
<TOTAL-REVENUES> 59,126
<CGS> 51,888
<TOTAL-COSTS> 51,888
<OTHER-EXPENSES> 5,340
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