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Sensory Science Reports A Net Loss, Slightly Lower Sales In Fiscal 2nd Qtr.

SCOTTSDALE, ARIZ. -Changing market conditions in its core Dual-Deck VCR business have negatively impacted fiscal second-quarter results at Sensory Science, the company reported.

Net sales for the three months were $18.5 million, nearly a 6 percent drop from the $19.6 million net sales reported in second-quarter 1999. The company reported a net loss of $5.4 million for the three months, compared to net income of $26,000 in the year-ago second quarter.

Sensory Science had expected larger shipments of its integrated DVD-VCR. However, due to production delays, larger-volume shipments did not begin to arrive until October, well into the company’s second quarter ended Sept. 30.

“The Dual-Deck VCR market continues to be challenging in light of falling price points and declining volumes throughout the category,” said chairman/CEO Roger Hackett. “However, we are taking steps to shore up this side of the business and return both this segment as well as the company to profitability.

“We believe our recent staff reduction, coupled with our reorganization of the sales force and commitment of additional resources to our marketing efforts, will begin helping the bottom line in the current quarter.”

Hackett said RCA-branded Dual-Decks began shipping to retailers in late August and should begin to add to the company’s bottom line in the third fiscal quarter. Demand for Sensory Science’s DVR-5000 integrated DVD/VCR continues to be strong, he said, and the company anticipates higher shipment levels of this category will offset slower Dual-Deck demand.

Although unit sales of Loewe digital TVs were up, and distribution continued to improve, overall revenue from sets failed to meet expectations, Sensory Science said. The company will begin to introduce in November next-generation Loewe TVs that include state-of-the-art HDTV technology.

Sensory Science said disappointment with the sales volume of its MP3 players has not tempered benefits from media attention and industry awards for its products.

For the six months, the company reported net sales of $29.2 million, down nearly 14 percent from the $33.7 million reported in the first six months of last year. Sensory Science extended its net loss to $9.8 million, compared to a loss of $411,000 in the year-ago six months.