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Sensory Science Shows 4Q Loss

Sensory Science slipped back into the red in its fiscal fourth quarter and reported sharply lower earnings for the year, despite significant sales increases to record highs for both periods.

The marketer of Go-Video dual-deck VCRs, Cal Audio components and Loewe digital TVs indicated it would get an immediate earnings boost from the decision to sell its money-losing video security business.

For the three months to March 31 the company posted a net loss of $658,500, against year-earlier earnings of $999,400, while sales, at just over $15 million, rose 18.9%. Full-year net of $1.08 million was down 65% from the $3.51 million of fiscal 1998, while sales rose 39% to $63.6 million.

Excluding the losses from its security business, Sensory Science said, its net loss from continuing operations for the quarter was $305,000, as opposed to last year’s $1.3 million profit. On the same basis, fiscal-1999 earnings were $1.7 million, down from $3.4 million.

In addition to the security business loss, earnings were impacted by some $2 million in R&D and new product launch expenses, including those for the Loewe TVs.

Sensory Science said dual-deck VCRs accounted for 92% of its sales for the year, but it expects the share to drop to 73% in fiscal 2000 as the TV line captures a 13% share, up from 3%.

Also, other new products the company is preparing to ship to market, including its first DVD player and an MP3 Internet music player, are seen representing 9% of sales in the current fiscal year.

CEO Roger Hackett said Sensory Science is again aiming for at least a 30% sales growth for full fiscal 2000. That indicates it expects sales of digital TVs to jump to about $10.7 million from the year-earlier $1.9 million, dual-deck VCR sales rise to $60.3 million from $58.5 million, and new products to add $7.4 million to revenue.

Hackett said the assets of the security business, including all Samsung-branded product, are slated to be sold to division management. Sensory Science will retain and eventually sell off $500,000 of GVI-branded inventory.

The $583,600 fiscal-1999 loss from the discontinued business includes a $289,900 reserve to cover the expected loss on its disposition.

“We are clearly affecting our bottom line over the short term with our investments in new products, but I expect that we will return to quarter-on-quarter net income growth in the quarter beginning July 1,” Hackett stated.