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Emerson Q4 Sales Dip, Year Revenue Up

7/14/2003 03:20:00 PM Eastern

Parsippany, N.J. - Although net revenue for the consumer electronics business at Emerson Radio dropped slightly in the company's fiscal fourth quarter to $27.3 million, down from $28.9 million year-on-year, net CE revenue for the fiscal year jumped 15.4 percent. CE sales for the 12 months, ended March 31, increased to $245.2 million, up from $212.5 million in the year-ago period, primarily due to increases in unit sales of audio products, theme products and licensing revenue. These gains were partially offset by decreases in unit sales of microwave ovens. CE operating income for the 12 months improved 56 percent, reaching $20.5 million, compared with $13.1 million in the year-earlier time frame, due mainly to higher net revenue and rising gross-margin numbers, while selling, general and administrative (SG&A) expense increases remained under control. Gross margin in the 12 months for CE products expanded 190 basis points, to 17.3 percent, up from 15.4 percent a year ago. Net CE income for the 12 months climbed to $27.9 million, up from $21.3 million the previous year, as the company further recognized the benefits of its tax net operating losses. In the fourth quarter, Emerson recorded net losses that were relatively unchanged from last year. Geoffrey P. Jurick, chairman/CEO, said, "This has been a successful year for Emerson on several fronts. A combination of efforts focused on increasing revenues through expanded offerings of core and theme products, additional retail store placements and strengthening our licensee network have provided solid top-line results. "We are pleased with the performance of the consumer electronics business in several key areas. Gross margins continued expanding through the introduction of new models and the use of several inward license agreements. Additionally, outward licensing revenues continue to grow significantly on several fronts domestically and internationally." Emerson Radio — which designs, markets and licenses televisions and other video products, audio, home theater products, microwave ovens, clocks and radios — also has a 53.2 percent-owned subsidiary, Sport Supply Group, which markets sports related equipment. Consolidated net revenue for the fourth quarter remained flat, hitting $58.6 million, down from $59.4 million from the year-ago three months. Net income, however, nearly doubled, to $15.2 million in the fourth quarter, up from $8.3 million year on year. The fourth quarter year-over-year revenue decline partially relates to a difficult retail environment, the uncertainties associated with the war in Iraq and repositioning of Emerson's theme products, said the company. For the 12 months, consolidated net revenue increased 10 percent, hitting $347.8 million, up from $316 million in the year-earlier period. Emerson attributed this to strong increases in the CE segment and revenue remaining relatively unchanged in the sporting goods segment. Consolidated net income increased to $21.5 million in the 12 months, up from $19.4 million in the same period a year ago. The $21.5 million includes a $5.6 million non-cash charge for accounting changes. Consolidated gross profit margin for the 12 months rose 120 basis points, to 20.9 percent, compared with 19.7 percent in the prior fiscal year. SG&A expenses declined 80 basis points, to 14 percent in the 12 months, compared with 14.8 percent year-over-year Looking ahead, Emerson expects fiscal first quarter revenue, for the period ending in June, to be less than the same three months in 2002, due to retailers deferring purchases, given the continued effects of a slow economy. The company expects the addition of theme product introductions in the United States, initiation of product sales in China and significant selling efforts in Europe to contribute strong top-line revenue potential in the upcoming fiscal year.

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