Parsippany, N.J. - Deteriorating economic conditions in the U.S. market sliced the consumer electronics business at Emerson Radio by about 12 percent, down to $53.6 million in its fiscal third quarter, compared with $61.8 million in the year-ago period.
However, third-quarter net income for the CE segment rose 35 percent, to $6.2 million, up from $4.6 million in the same three months in 2000. Included in the $6.2 million is a $2.9 million one-time gain.
Emerson reduced Selling, General and Administrative (SG&A) costs for the CE segment in the third quarter by 100 basis points, to 9.5 percent, compared with 10.5 percent in the same three months the previous year. This was due primarily to reductions in advertising costs and salaries.
Gross margin in the company's CE business in the third quarter ended Dec. 31, however, fell 90 basis points, to 19.2 percent, down from 20.1 percent one year earlier. This was due mainly to higher provisions associated with anticipated product returns.
For the nine months, CE segment revenue reached $186.1 million, down from the $240.6 million reported in the same period in 2000.
Net income for the nine months in the CE segment was flat, reaching $13.6 million in the third quarter, compared with $13.3 million in the first nine months of 2000. The 2001 net income includes a $2.9 million one-time gain.
'We are pleased that our year-to-date gross, operating and net margins in our consumer electronics segment have improved over last year's nine-month levels,' said Geoffrey P. Jurick, chairman/CEO.
Jurick also said Emerson's net pre-petition exposure with bankrupt Kmart is about $2.8 million, after applying a $1.3 million charge.
Jurick, who is pleased with the company's strong growth in its various licensing arrangements, pointed to increasing licensing revenue, primarily associated with video products, that has increased 85 percent year to date, to $5 million, up from $2.7 million in the first nine months of 2000.
Emerson forecasts that full-year fiscal 2002 revenue for the CE segment is expected to be less than fiscal 2001 revenue of $264.3 million.
Emerson Electric, which also operates a much smaller Sporting Goods segment, reported consolidated revenue of $70.6 million in the third quarter, declined 11.8 percent from the $80 million recorded in the comparable period in 2000.
Consolidated third-quarter net income increased to $4.1 million, compared with $3.7 million in the year-ago period. The $4.1 million includes a $645,000 charge and a $2.9 million gain.
For the nine months, consolidated Emerson revenue reached $259.3 million, down from $321.6 million in the same period the previous year.
Net income for the nine months was $11.1 million, compared with $11.9 million in the same nine months in 2000.