Emerson Fiscal 2001 CE Sales Up 30%

PARSIPPANY, N.J.— Spurred, in part, by increased unit sales of audio products and microwave ovens, fiscal 2001 sales at Emerson Radio climbed 30 percent to $264 million, while operating income jumped 225 percent to $17.3 million, for the 12 months ended March 31.

Emerson attributed the large increase in CE operating income to an increase in revenues, improved gross margins and lower operating and selling, general and administrative (SG&A) expenses as a percent of revenues.

The company said it continues to achieve positive results at gross margin levels, with gross margin as a percentage of sales in fiscal 2001 rising 160 basis points to 14.8 percent, up from 13.2 percent in the previous year.

Due to ongoing cost-containment measures in fiscal 2001, Emerson said it enjoyed a 170 basis-point decline in SG&A, down to 6.6 percent, from 8.3 percent in the previous 12 months.

In the fiscal fourth quarter, seasonally the weakest at Emerson, CE net revenues of $23.9 million resumed historical patterns, said the company. In the same three months last year, certain shipments scheduled for third-quarter delivery were made in the January to March time frame, resulting in an unusually strong fourth quarter, with CE revenues hitting $44 million.

CE operating income in the fourth quarter hit $895,000, down about 7 percent from the $961,000 reported in the year-earlier fourth quarter.

"While the consumer electronics market has slowed somewhat, we have set our sights on a strong fiscal 2002, particularly in terms of profitability and cash flow," said Geoffrey P. Jurick, Emerson's chairman/CEO.

"Building upon fiscal 2001's new consumer electronics sales channels, we expect a substantial increase in business in the new fiscal year," continued Jurick. "Another catalyst for growth comes from our strong line-up of new products. We are also examining suitable acquisitions to complement both of our major lines of businesses."

Emerson — which had entered a video licensing agreement with Japan-based Funai Corp. last fall, under which Funai manufactures, markets and distributes Emerson-brand DVD players and recorders, televisions, TV combos, set-top boxes and VCRs and VCPs in North America — expects to launch DVD/TV combos and digital TVs this year. Also, the company said flat-screen color TV is in the works.

On a consolidated basis, Emerson's financial results include its 50.1 percent ownership in Sport Supply Group, a supplier of sports-related equipment and leisure products, which reported a 3 percent decline in sales to $113 million in fiscal 2001, as well as a net loss of $3.6 million.

"The strength of the core consumer electronics business more than offset SSG's performance," said Jurick, "and the consolidation of our interest had a modest impact on consolidated results.