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Sensory Science Suffers Larger Q1 Pre-Tax Loss

SCOTTSDALE, ARIZ. — Dual-deck VCR maker Sensory Science Corp. extended its fiscal first-quarter pretax loss to $4.4 million, up from $715,000 in the same three months last year.

Sensory Science blamed the loss on rapidly declining prices in the single-deck VCR market, which negatively affected sell-through of its dual-deck VCRs. As a result, it took aggressive action to reduce prices in the marketplace on its dual-deck VCRs by offering one-time price allowances to retail customers, combined with additional advertising and market development spending.

Sensory Science’s strategy in response to market conditions impacted earnings by more than $1 million, but these steps were taken to positively affect sell-through during the summer and into the holiday season, the company said, claiming success in significantly improving sell-through.

Net sales for the quarter ended June 30 were off about 25 percent, dropping to $10.7 million, down from $14.1 million in the same three months last year.

Sensory Science expects revenues to recover to a record level during the second fiscal quarter, as well as the fiscal year, with a return to quarterly profitability in the fiscal year’s second half.

In the future, the company said, it will designate even more of its resources to integrated convergence products such as media appliances, as well as direct-view and new digital projection TVs. These projects will involve strong partners, and Sensory Science plans to raise capital with the help of these partners to support funding its projects.

Media appliances, which will provide an integrated version of audio/video components with Internet connectivity, will be sold to consumers through traditional retail outlets. Market introduction is slated for first-half 2001.

The company has also scheduled shipping of a dual-deck VCR in a stacked configuration to RadioShack stores this month. Sensory Science and Thomson Multimedia have entered into a marketing agreement that enables RadioShack to sell Sensory Science’s dual-deck VCR under the RCA brand name.

Sensory Science’s new DVT-5000 combination DVD/VCR is on schedule to begin shipping in August. It can play DVDs, audio and video CDs and VHS tapes, and allows viewers to watch a DVD while recording a TV program.