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 December 31, 1999
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
Indicate the number of shares outstanding of common stock as of January 28,
2000: 47,828,215.
PART I - FINANCIAL INFORMATION
<PAGE>
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 Nine Months Ended
-------------------------------------- ------------------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------------ --------------- ------------------ --------------
<S> <C> <C> <C> <C>
Net revenues $ 61,319 $ 31,588 $160,297 $137,476
Costs and expenses:
Cost of sales 52,987 26,949 140,667 121,110
Other operating costs and expenses 1,303 990 2,953 3,153
Selling, general & administrative
expenses 4,877 2,527 12,304 10,024
------------------ --------------- ------------------ ---------
59,167 30,466 155,924 134,287
------------------ --------------- ------------------ ---------
Operating income 2,152 1,122 4,373 3,189
Equity in earnings (loss) of
Affiliate (425) (196) 76 595
Write-down of investment -- -- -- (370)
Interest expense, net (563) (620) (1,756) (1,740)
------------------ --------------- ------------------ ---------
Income before income taxes 1,164 306 2,693 1,674
Provision (benefit) for income taxes
37 (4) 296 17
------------------ --------------- ------------------ ---------
Net income $ 1,127 $ 310 $ 2,397 $ 1,657
Net income per common share
Basic $ .02 $ .01 $ .05 $ .02
Diluted $ .02 $ .01 $ .04 $ .02
Weighted average number of
common shares outstanding
Basic 47,828 48,601 47,828 49,935
Diluted 55,609 59,010 55,615 62,157
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of the interim consolidated
financial statements.
<PAGE>
<TABLE>
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
December 31, April 2,
1999 1999___
ASSETS
(Unaudited)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 3,331 $ 3,100
Available for sale securities (net of fair
value adjustment of $1,578 and $1,298,
respectively) 458 738
Accounts receivable (less allowances of
$5,016 and $3,907, respectively) 7,640 5,143
Other receivables 6,309 6,782
Inventories 14,300 11,608
Prepaid expenses and other current assets 2,967 2,839
-------- --------
Total current assets 35,005 30,210
Property and equipment - (net of
accumulated depreciation and amortization
of $3,160 and $2,777, respectively) 1,230 1,211
Investment in Affiliate and Joint Venture 19,387 19,525
Other assets 2,602 3,449
-------- --------
Total Assets $ 58,224 $ 54,395
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable $ -- $ 2,216
Current maturities of long-term debt 73 50
Accounts payable and other current
liabilities 18,840 16,759
Accrued sales returns 5,234 3,926
Income taxes payable 1,033 400
------- --------
Total current liabilities 25,180 23,351
Long-term debt, less current maturities 20,750 20,750
Other non-current liabilities 92 97
Shareholders' Equity:
Preferred shares - 10,000,000
shares authorized, 3,677 and 3,714
shares issued and outstanding, respectively 3,309 3,343
Common shares - $.01 par value, 75,000,000
shares authorized, 51,331,615 shares issued;
47,828,215 shares outstanding 513 513
Capital in excess of par value 113,284 113,288
Cumulative translation adjustment (76) (78)
Unrealized loss on marketable securities (280) --
Accumulated deficit (102,641) (104,962)
Treasury stock, at cost 3,503,400 shares (1,907) (1,907)
-------- ----------
Total shareholders' equity 12,202 10,197
-------- ----------
Total Liabilities and Shareholders' Equity $ 58,224 $ 54,395
======== ==========
</TABLE>
The accompanying notes are an integral part of the interim consolidated
financial statements.
<PAGE>
<TABLE>
EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Nine Months Ended
December 31, January 1,
1999 1999
Cash Flows from Operating Activities:
<S> <C> <C>
Net cash provided by operating
activities $ 3,175 $ 7,037
-
Cash Flows from Investing Activities:
Net cash used by investing
activities (682) (2,036)
Cash Flows from Financing Activities:
Net cash used by financing
activities (2,262) (2,020)
-------- --------
Net increase in cash and cash
equivalents 231 2,981
Cash and cash equivalents at beginning
of period 3,100 1,208
-------- -------
Cash and cash equivalents at end of period $ 3,331 $ 4,189
======== =======
Supplemental disclosure of cash flow information:
Interest paid $ 1,622 $ 1,718
======== =======
Income taxes paid $ 2 $ 0
======== =======
</TABLE>
The accompanying notes are an integral part of the interim consolidated
financial statements.
<PAGE>
EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 December 31, 1999 and the
results of operations for the three and nine month periods ended December 31,
1999 and January 1, 1999. The unaudited interim consolidated financial
statements 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 2, 1999 ("Fiscal 1999"), 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 three and nine month periods ended
December 31, 1999 are not necessarily indicative of the results of operations
that may be expected for any other interim period or for the full year ending
March 31, 2000 ("Fiscal 2000").
The management of the Company considers the Company to have one
reportable segment, consumer electronics, and assesses performance on a single
segment basis.
Certain amounts in the prior period's consolidated financial statements
have been reclassified to conform to current period's presentation.
<PAGE>
NOTE 2 - COMPREHENSIVE INCOME
The Company's total comprehensive income for the three and nine month
periods ended December 31, 1999 and January 1, 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ----------------------------
December January December January
31,1999 1,1999 31,1999 1,1999
--------------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
Net income $ 1,127 $ 310 $2,397 $1,657
Currency translation adjustment (2) -- 2 --
Unrealized gain (loss)on securities, net
87 (120) (280) (890)
--------------- -------------- -------------- ----------
Comprehensive income $ 1,212 $ 190 $2,119 $ 767
=============== ============== ============== ==========
</TABLE>
NOTE 3 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------------------- ----------------------------------
December 31, January 1, December 31, January 1,
1999 1999 1999 1999
------------------ ------------------ ------------------ ---------------
Numerator:
<S> <C> <C> <C> <C>
Net income $ 1,127 $ 310 $ 2,397 $ 1,657
Less: preferred stock dividends 26 39 78 539
------------------ ------------------ ------------------ -------------
Numerator for basic earnings per
share - income available to
common stockholders 1,101 271 2,319 1,118
Add back to effect assumed conversions:
Preferred stock dividends 26 39 78 132
------------------ ------------------ ------------------ -------------
Numerator for diluted earnings
per share $ 1,127 $ 310 $ 2,397 $ 1,250
================== ================== ================== =============
Denominator:
Denominator for basic earnings
per share - weighted average
shares 47,828 48,601 47,828 49,935
Effect of dilutive securities:
Preferred shares 7,781 10,409 7,787 12,222
================== ================== ================== =============
Denominator for diluted earnings
per share - weighted average
shares and assumed conversions 55,609 59,010 55,615 62,157
================== ================== ================== ==============
Basic earnings per share $ .02 $ .01 $ .05 $ .02
================== ================== ================== =============
Diluted earnings per share $ .02 $ .01 $ .04 $ .02
================== ================== ================== =============
</TABLE>
NOTE 4 - CAPITAL STRUCTURE
The outstanding capital stock of the Company at December 31, 1999
consisted of common stock and Series A convertible preferred stock. The
preferred shares are convertible to common shares until March 31, 2002.
During the quarter ended December 31, 1999, the Company repurchased 37
shares of its Series A Preferred Stock. There were no repurchases for the
quarter ended January 1, 1999. If all existing outstanding preferred shares were
converted at December 31, 1999, approximately 7.8 million additional common
shares would be issuable. The dividend rates on the Series A Preferred Stock at
December 31, 1999 and January 1, 1999 were 2.8% and 4.2%, with $905,000 and
$801,000 of dividends in arrears, respectively. The dividend rate declines by
1.4% each succeeding fiscal year until March 31, 2001, when no further dividends
are payable.
At December 31, 1999, the Company had outstanding approximately 1.4
million options with exercise prices ranging from $1.00 to $1.10. Approximately
987,000 outstanding warrants are convertible into an equal number of shares of
common stock at conversion prices ranging between $1.30 and $4.00.
The Company also has outstanding approximately $20.8 million of Senior
Subordinated Convertible Debentures due in 2002. See "Note 9 - Long Term Debt".
NOTE 5 - INCOME TAXES
Income tax provisions for the quarterly periods ended December 31,
1999 and January 1, 1999 relate to its international operations. For the quarter
ended December 31, 1999 a provision of $656,000 was recorded which was offset by
a tax credit of $619,000, as a result of a favorable court ruling pertaining to
a foreign subsidiary. See "Note 10 - Legal Proceedings".
The Company does not recognize tax benefits for losses incurred by its
domestic operations.
NOTE 6 - INVENTORY
Inventories are comprised primarily of finished goods which are stated
at the lower of cost (first-in, first-out) or market.
NOTE 7 - AVAILABLE-FOR-SALE SECURITIES
Available-for-sale securities are stated at fair value, with the
unrealized gains and losses reported in a separate component of shareholders'
equity. Realized gains and losses and declines in value judged to be
other-than-temporary are included in earnings.
<PAGE>
The following is a summary of available-for-sale equity securities at
December 31, 1999 and April 2, 1999 (in thousands):
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------------ -------------------- -----------------
<S> <C> <C> <C> <C> <C>
Equity Securities:
December 31,1999 $2,036 $-- $1,578 $458
April 2,1999 2,036 -- 1,298 738
</TABLE>
NOTE 8 - INVESTMENT IN SPORT SUPPLY GROUP, INC.
The Company owns 2,269,500 (approximately 31% of the outstanding)
shares of common stock of Sport Supply Group, Inc. ("SSG") that it purchased in
1996 at an aggregate cost of $15,728,000. In addition, the Company acquired in
1996 for $500,000, warrants 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 40% of the SSG common shares.
Effective March 1997, the Company entered into a Management Services Agreement
with SSG, under which SSG provides various managerial and administrative
services to the Company.
The investment in and results of operations of SSG are accounted for by
the equity method. The Company's investment in SSG includes goodwill of
$6,530,000 which is being amortized on a straight line basis over 40 years. At
December 31, 1999, the aggregate market value quoted on the New York Stock
Exchange of SSG common shares equivalent in number to those owned by Emerson was
approximately $15.6 million. Summarized financial information derived from SSG's
financial reports to the Securities and Exchange Commission was as follows (in
thousands):
<TABLE>
<CAPTION>
December 31, 1999 April 2, 1999
------------------------ -----------------------
(Unaudited) (Unaudited)
<S> <C> <C>
Current assets $ 49,110 $ 44,322
Property, plant and equipment and other assets
29,521 30,252
Current liabilities 15,184 14,966
Long-term debt 22,541 19,045
Stockholders' Equity 40,906 40,563
----------------------------- --------------------------
For the 9 Months Ended For the 9 Months Ended
December 31, 1999 January 1, 1999
----------------------------- --------------------------
Net sales $ 75,756 $ 65,477
Gross profit 28,084 25,703
Net income 1,056 2,434
</TABLE>
<PAGE>
NOTE 9 - LONG TERM DEBT
As of December 31, 1999 and April 2, 1999, long-term debt consisted of
the following (in thousands of dollars):
December 31, April 2,
1999 1999___
8 1/2% Senior Subordinated Convertible
Debentures Due 2002 $20,750 $20,750
Equipment notes and other 73 50
------- -------
20,823 20,800
Less current obligations 73 50
------- -------
Long term debt $20,750 $20,750
======= =======
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. Presently the Company may, at its option, redeem the
Debentures in whole or in part at a redemption price of 103% 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 10 - LEGAL PROCEEDINGS
Tax Claim
The Company's wholly owned subsidiary, Emerson Radio (Hong Kong) Ltd.,
received a favorable ruling from the Hong Kong Court of Final Appeals regarding
a tax assessment levied by the Hong Kong Inland Revenue Department. Accordingly,
a tax credit of $619,000 has been recorded in the Company's financial results
for the quarter ended December 31, 1999.
Swiss Proceedings, Involving Certain Directors
In 1994, two creditors of Geoffrey P. Jurick, the Company's Chairman,
Chief Executive Officer and President, Petra and Donald Stelling (the
"Stellings"), filed a complaint with the Swiss Authorities claiming that Mr.
Jurick, Jerome H. Farnum and Peter G. Bunger, also directors of the Company had
engaged in improper activities in connection with the financing of the Company's
Plan of Reorganization. These allegations also had formed the basis for a number
of the claims made by the Creditors which were settled in 1996 in the United
States District Court for the District of New Jersey. In December 1999, the
Swiss Tribunal dismissed all charges against Messrs. Jurick, Farnum and Bunger.
The Swiss Tribunal did find, however, which finding is subject to appeal that
Messrs. Jurick and Farnum had engaged in banking operations in Switzerland
without all appropriate licenses and fined them approximately $12,500 and
$5,000, respectively.
<PAGE>
The Company is involved in a number of other 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 2, 1999 and Form 8-K dated December 16,1999. 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.
NOTE 11 - TERMINATION OF LETTER OF INTENT
On August 3, 1999, the Company and Geoffrey P. Jurick, the Company's
Chairman of the Board, Chief Executive Officer and President, entered into a
letter of intent with Oaktree Capital Management Corp. and certain of its
affiliated entities ("Oaktree"). The letter of intent set forth a proposed
series of transactions which, if consummated, would have resulted in: i) the
Company selling its entire ownership in SSG to Oaktree; ii) the Company
purchasing up to $23 million of its outstanding common stock through a
self-tender; and iii) the resolution of litigation between Mr. Jurick and
certain of his creditors. On December 2, 1999, Oaktree stated in an amended 13D
filing that it did not intend to consummate the transactions described in the
letter of intent.
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 results for any subsequent periods or for the year
ending March 31, 2000. The Company expects its United States sales for the
quarter ending March 31, 2000 to increase as compared to the quarter ended April
2, 1999 due to increased product sales.
Results of Operations
Net Revenues Consolidated net revenues for the three and nine
month periods ended December 31, 1999 increased $29.7 million (94.1%) and $22.8
million (16.6%) as compared to the same periods in Fiscal 1999, respectively.
The increase in revenues for the three months ended December 31,1999 resulted
primarily from increases in unit sales of microwave ovens, audio products,
digital video disc (DVD) products, and home office product categories, partially
offset by a reduction in unit sales in the home theater category. The increase
in revenues for the nine months ended December 31, 1999 resulted primarily from
increases in unit sales of microwave ovens and DVD product category, partially
offset by a decrease in unit sales of audio and home theater products.
<PAGE>
Revenues earned from the licensing of the "[OBJECT OMITTED]" trademark
were $939,000 and $2.5 million in the three and nine month periods ended
December 31, 1999 as compared to $1.0 million and $2.6 million in the same
periods in Fiscal 1999, 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 86.4% and 87.8% for the three and nine month periods ended
December 31, 1999 as compared to 85.3% and 88.1% for the same periods in Fiscal
1999, respectively. The increase in the cost of sales as a percentage of sales
for the three months ended December 31, 1999, as compared to the prior fiscal
year, was primarily attributable to a change in the product mix.
Other Operating Costs and Expenses Other operating costs and expenses
for the three month period ended December 31, 1999 as compared to the same
period in Fiscal 1999 decreased from 3.1% to 2.1% of revenues primarily due to
reduced fees associated with its return-to-vendor program. For the nine month
period ended December 31, 1999 as compared to the same period in the prior year,
other operating costs decreased from 2.3% to 1.8% of revenues due primarily to a
reduction in warranty related expenses.
Selling, General and Administrative Expenses ("S,G&A") S,G&A as a
percentage of revenues was substantially unchanged at 8.0% for the three months
ended December 31,1999 as compared to the same period in Fiscal 1999 and
increased from 7.3% to 7.7% for the nine month period ended December 31, 1999.
In absolute terms, S,G&A increased by $2.4 million for the three month period
ended December 31, 1999, and for the nine month period ended December 31, 1999
increased by $2.3 million as compared to the same period in Fiscal 1999. The
increase of $2.4 million in S,G&A for the three month period was primarily
attributable to an increase in: i)advertising costs; ii) salaries; iii)
professional fees; and iv) charges related to bad debt. The increase of $2.3
million in S,G&A for the nine month period was primarily attributable to an
increase in i) advertising costs; ii) salaries; and iii) professional fees.
Equity In Earnings Of Unconsolidated Affiliate The Company's share in
the earnings of SSG amounted to a loss of $425,000 and income of $76,000 in the
three and nine month periods ended December 31,1999 as compared to a loss of
$196,000 and income of $595,000 for the same periods in the prior fiscal year,
respectively.
Interest Expense Interest expense decreased by $57,000 and increased by
$16,000 in the three and nine month periods ended December 31, 1999 as compared
to the same periods in Fiscal 1999, respectively. The decrease was attributable
to a decrease in average short term borrowings which more then offset the
increase in the cost of borrowings. The decrease in short term borrowings was
due to a decrease in working capital requirements.
Net Income As a result of the foregoing factors, the Company generated
net income of $1,127,000 and $2,397,000 for the three and nine month periods
ended December 31, 1999, as compared to net earnings of $310,000 and $1,657,000
for the same periods in Fiscal 1999, respectively.
<PAGE>
Liquidity and Capital Resources
Net cash provided by operating activities was $3.2 million for the nine
months ended December 31, 1999. Cash was provided primarily by increases in
accounts payable, income taxes payable and the profitability of the Company,
offset by an increase in accounts receivable and inventory.
Net cash utilized by investing activities was $682,000 for the nine
months ended December 31, 1999.
In the nine months ended December 31, 1999, the Company's financing
activities utilized $2.3 million primarily to repay the borrowings under the
Company's U.S. line of credit facility.
The Company maintains an asset-based $10 million U.S. line of credit
facility. In addition, 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 December 31, 1999, the $3.1 million
of the $3.5 million letter of credit facility was fully utilized and $23.5
million was outstanding under the $25 million letter of credit facility.
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.
As of December 31, 1999 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 three or nine months ended
December 31,1999. The Company's exposure to currency fluctuations has been
minimized by the use of U.S. dollar denominated purchase orders, and by sourcing
production from manufacturers located in various Asian countries. Financial
turmoil in the South American economies may have an adverse impact on the
Company's South American licensee.
Year 2000
The Year 2000 issue is primarily the result of computer programs or
databases using a two-digit format, as opposed to four digits, to represent a
calendar year. Prior to December 31,1999, the Company completed a company-wide
study and testing program to locate and cure any Year 2000 issues in the
information systems on which it relies and in the products it offers for sale at
a cost of approximately $500,000.
To date, the Company has not experienced any significant Year 2000
related system failures nor, to our knowledge, have any of our suppliers, or the
products the company currently offers for sale or license. The Company plans on
monitoring its information systems for ongoing Year 2000 compliance; however,
<PAGE>
there can be no assurance that the companies with which the Company does
business will not be adversely affected.
Based on the assessment effort to date, the Company does not believe
that the Year 2000 issue will have a material adverse effect on its financial
condition, results of operations, or cash flows.
Recent Pronouncements of the Financial Accounting Standards Board
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which will be effective for the Company for Fiscal 2001,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and
hedging activities. The Company has not yet determined the effects, if any, of
implementing SFAS No. 133 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 52% and
24% of Fiscal 1999 net revenues; (ii) competitive factors such as competitive
pricing strategies utilized by retailers in the domestic marketplace that
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 outcome of litigation; (v) the ability of the Company to comply with the
restrictions imposed upon it by its outstanding indebtedness; and (vi) general
economic conditions.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not material.
<PAGE>
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings.
For further information on 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, and on Form 8-K dated December
16,1999.
ITEM 2. Changes in Securities and Use of Proceeds.
In December 1999, the Company repurchased 37 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 December 31, 1999.*
(b) Reports on Form 8-K - Current report on Form 8-K dated December
16, 1999, reporting the retention by Sport Supply Group, Inc. of
PaineWebber as its investment banker and the decision by Oaktree
not to exercise its option to purchase the Sport Supply Group,
Inc. common stock held by the Company.
- ----------------------------
*Filed herewith.
<PAGE>
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: January 28, 2000 /s/Geoffrey P. Jurick
_________________________
Geoffrey P. Jurick
Chairman, Chief Executive
Officer and President
Date: January 28, 2000 /s/John P. Walker
__________________________
John P. Walker
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend
</LEGEND>
<CIK> 0000032621
<NAME> EMERSON RADIO CORP.
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