Emerson Radio Corporation (AMEX: MSN) was founded in 1948. It is one of the United States’ largest volume consumer electronics distributors and has a recognized trademark in continuous use since 1912. The company designs, markets and licenses many product lines worldwide, including products sold, and sometimes licensed, under the brand name G Clef, a homage to Emerson's logo.
Emerson Radio Corp. designs, sources, imports, markets, sells and licenses to certain licensees a variety of houseware and consumer electronic products, both domestically and internationally, under the Emerson and HH Scott brand names. These products include microwave ovens and other houseware products; audio products and clock radios; video products, which include televisions, digital video disc players (DVD) and video accessories, and telephones, certain computer accessories, other consumer electronic products and mobile electronics. The Company’s business consists of selling, distributing and licensing various low and moderately priced consumer electronic and houseware products in various categories.
The Company licenses certain logos and trademarks from third parties for use on various products that the Company designs and distributes. The Company primarily markets and distributes its products in the United States through mass merchandisers. During the fiscal year ended March 31, 2010 (fiscal 2010), Wal-Mart Stores accounted for approximately 53% of its net revenues, and Target Stores accounted for approximately 25% of its net revenues.
Emerson Radio started putting out a medical product, Heart Aid, after purchasing 80 percent of near-bankrupt Cardiac Resuscitator Corp. in 1979. The company spent heavily to develop and produce an improved defibrillator-pacemaker and a pacer. It also took an 18 percent share in a developer of computerized axial tomographic (CAT) scanners. This line of products never made money, and Emerson disposed of its holdings in them during 1987--88.
Emerson Radio's consumer electronics business was faring better. The company's reintroduction of television sets in 1983, purchased from South Korea's Goldstar Electric Co. but sold at a higher price level, caused sales to soar from $94.8 million in fiscal 1983 to $181.6 million in fiscal 1984, when net income came to $9.1 million. That year it introduced a product line of video cassette recorders (VCRs). Emerson's other products at this time were portable, clock, and telephone-clock radios; portable cassette player-recorders; modular and compact stereo systems; and stereo rack systems. A compact disc player and microwave oven were introduced late in 1984. In fiscal 1985 sales doubled again, to $357.5 million, and net income rose to $13.3 million. TV sets and VCR's accounted for two-thirds of sales that year.
In 1985 Emerson Radio moved its headquarters to North Bergen, New Jersey, and acquired H.H. Scott Inc., a manufacturer of high-fidelity audio and visual equipment, selling products under the Scott name until 1991, when the line was discontinued. Emerson began importing and marketing compact refrigerators in 1986. It added camcorders, telephones, and answering machines to its product line in fiscal 1988. Personal computers and facsimile machines were subsequently added, with a major 1990 rollout to more than 500 Wal-Mart stores. Sales reached a peak of $891.4 million two years later. Net income, however, was an unimpressive $10.4 million, considering the company's sales volume, while short-term debt climbed to $162.9 million.
Seeking to Survive in the 1990s
The recession that began in 1990 and the entry into personal computers--which eventually proved a $150 million loser--were disastrous to Emerson Radio. The company incurred a loss of $37.5 million in the last nine months of the year. Shares of stock fell as low as $2, compared to a high of $12.75 in 1987. Several shareholder suits charged some Emerson directors and officials with breach of fiduciary duty and self-dealing. Emerson also fell into technical default on its long-term debt, which was $55.4 million at the end of the year, by exceeding its ratio of liabilities to assets.
A Swiss firm, Fidenas Investment Ltd., began purchasing shares of Emerson Radio stock in 1989. By 1992 it held a 20 percent stake--more than that held by Stephen and William Lane--and began a takeover attempt. The Lane brothers, who were seeking to restructure $180 million in debt, conceded defeat in June 1992. Emerson's financial situation worsened, and in fiscal 1993 the company incurred a loss of $56 million on sales of $741.4 million. When it filed for bankruptcy in October 1993, Emerson had been in default on $223 million in debt for the past two years. It emerged from bankruptcy four months later, with Fidenas paying $75 million for a 60-percent stake. Creditors took a ten percent share in the firm, now based in Parsippany, New Jersey.
In order to cut its costs, Emerson Radio in early 1995 licensed the manufacture of certain video products under the Emerson and G Clef trademarks for a three-year period to Otake Trading Co. Ltd. and the sale of these products in the United States and Canada for the same period to Wal-Mart Stores, Inc. As a result, Emerson's net sales fell from $654.7 million in fiscal 1995 to $245.7 million in fiscal 1996. The licensing agreement provided about $4 million a year in royalty income.
Emerson Radio entered the home theater and car audio fields in 1995. It also entered the $900-million-a-year home and personal security market with a carbon monoxide detector and eventually planned to lend its name to burglar alarms, motion detectors, personal alarms, smoke detectors, and safety lights. The company left this field, however, in fiscal 1997. Emerson also announced it would license the Emerson name to more than 250 audio and video accessories made by Jasco Products Co., an Oklahoma firm selling cables, remote controls, and appliance cleaning devices. In late 1996 the company took a 27 percent stake in Sport Supply Group, Inc., the largest direct-mail distributor of sporting goods equipment and supplies to the U.S. institutional market, for $11.5 million.
On the expiration of Emerson's licensing agreement with Otake, this company was replaced by Daewoo Electronics Co. Ltd., which entered into a four-year agreement with Emerson to manufacture and sell television and video products bearing the Emerson and G Clef trademark to U.S. retailers. Emerson, in 1999, also had five-year license/supply agreements with Cargil International covering the Caribbean and Central and South American markets and WW Mexicana for certain consumer products to be sold in Mexico. In addition, it had a licensing agreement with Telesound Electronics for telephones, answering machines, and caller ID products in the United States and Canada.
After earning net income of $7.4 million in fiscal 1995, Emerson fell into the red the following three years, losing $13.4 million, $24 million, and $1.4 million in fiscal 1996, 1997, and 1998, respectively, on net revenues of $245.7 million, $178.7 million, and $162.7 million. Geoffrey P. Jurick, Fidenas's owner, held 60 percent of Emerson's common stock in December 1998. He had been chief executive officer of the company since 1992 and in 1998 also held the titles of president and chairman of the board.
In December 1998 Oaktree Capital Management, a Los Angeles-based investment firm that held a smaller stake in Emerson Radio, and Kenneth S. Grossman, a private investor, proposed to buy Jurick's holdings in the company for more than $14.6 million. This offer was rejected as inadequate. According to one account, Oaktree's real interest in the company was its stake--now 39 percent, counting warrants--in Sports Supply Group. Emerson announced in August 1999 that it planned to sell this stake to Oaktree for $28.9 million.
Emerson Radio had net income of $289,000 on net revenues of $158.7 million in fiscal 1999 and a long-term debt of $20.8 million at the end of the fiscal year. Some 84 percent of its merchandise in fiscal 1999 was imported, primarily from China, Hong Kong, Malaysia, South Korea, and Thailand. Tonic Electronics (32 percent), Daewoo (22 percent), and Imarflex (12 percent) were its chief suppliers. The company was heavily dependent on two customers: Wal-Mart Stores, which took about 52 percent of its goods in fiscal 1999, and Target Stores, Inc., which took about 24 percent.
Principal Subsidiaries: Emerson Radio (Hong Kong) Ltd.; Emerson Radio International Ltd.
OVERALL
Beta: 1.40
Market Cap (Mil.): $65.60
Shares Outstanding (Mil.): 27.13
Annual Dividend: --
Yield (%): --
FINANCIALS
MSN Industry Sector
P/E (TTM): 3.89 39.17 13.77
EPS (TTM): 201.86 -- --
ROI: 27.51 2.25 1.32
ROE: 29.17 2.68 2.19
Statistics:
Public Company
Incorporated: 1915 as Emerson Phonograph Co.
Employees: 112
Sales: $158.7 million (fiscal 1999)
Stock Exchanges: American
Ticker Symbol: MSN
NAIC: 421620 Consumer Electronics Wholesaling
Name Age Since Current Position
Ho, Christopher 60 2006 Chairman of the Board
Ma, Adrian 65 2007 President, Chief Executive Officer, Director
Hon, Duncan 49 2009 Deputy Chief Executive Officer, Director
Will, Eduard 68 2007 Vice Chairman of the Board
Davis, Andrew 43 2010 Chief Financial Officer, Executive Vice President, Treasurer, Secretary
Mahathir, Mirzan 52 2007 Director
Sethi, Kareem 33 2007 Director
Snellings, Terence 60 2008 Director
Address:
9 Entin Road
Parsippany, New Jersey 07054
U.S.A.
Emerson Radio Corp. designs, sources, imports, markets, sells and licenses to certain licensees a variety of houseware and consumer electronic products, both domestically and internationally, under the Emerson and HH Scott brand names. These products include microwave ovens and other houseware products; audio products and clock radios; video products, which include televisions, digital video disc players (DVD) and video accessories, and telephones, certain computer accessories, other consumer electronic products and mobile electronics. The Company’s business consists of selling, distributing and licensing various low and moderately priced consumer electronic and houseware products in various categories.
The Company licenses certain logos and trademarks from third parties for use on various products that the Company designs and distributes. The Company primarily markets and distributes its products in the United States through mass merchandisers. During the fiscal year ended March 31, 2010 (fiscal 2010), Wal-Mart Stores accounted for approximately 53% of its net revenues, and Target Stores accounted for approximately 25% of its net revenues.
Emerson Radio started putting out a medical product, Heart Aid, after purchasing 80 percent of near-bankrupt Cardiac Resuscitator Corp. in 1979. The company spent heavily to develop and produce an improved defibrillator-pacemaker and a pacer. It also took an 18 percent share in a developer of computerized axial tomographic (CAT) scanners. This line of products never made money, and Emerson disposed of its holdings in them during 1987--88.
Emerson Radio's consumer electronics business was faring better. The company's reintroduction of television sets in 1983, purchased from South Korea's Goldstar Electric Co. but sold at a higher price level, caused sales to soar from $94.8 million in fiscal 1983 to $181.6 million in fiscal 1984, when net income came to $9.1 million. That year it introduced a product line of video cassette recorders (VCRs). Emerson's other products at this time were portable, clock, and telephone-clock radios; portable cassette player-recorders; modular and compact stereo systems; and stereo rack systems. A compact disc player and microwave oven were introduced late in 1984. In fiscal 1985 sales doubled again, to $357.5 million, and net income rose to $13.3 million. TV sets and VCR's accounted for two-thirds of sales that year.
In 1985 Emerson Radio moved its headquarters to North Bergen, New Jersey, and acquired H.H. Scott Inc., a manufacturer of high-fidelity audio and visual equipment, selling products under the Scott name until 1991, when the line was discontinued. Emerson began importing and marketing compact refrigerators in 1986. It added camcorders, telephones, and answering machines to its product line in fiscal 1988. Personal computers and facsimile machines were subsequently added, with a major 1990 rollout to more than 500 Wal-Mart stores. Sales reached a peak of $891.4 million two years later. Net income, however, was an unimpressive $10.4 million, considering the company's sales volume, while short-term debt climbed to $162.9 million.
Seeking to Survive in the 1990s
The recession that began in 1990 and the entry into personal computers--which eventually proved a $150 million loser--were disastrous to Emerson Radio. The company incurred a loss of $37.5 million in the last nine months of the year. Shares of stock fell as low as $2, compared to a high of $12.75 in 1987. Several shareholder suits charged some Emerson directors and officials with breach of fiduciary duty and self-dealing. Emerson also fell into technical default on its long-term debt, which was $55.4 million at the end of the year, by exceeding its ratio of liabilities to assets.
A Swiss firm, Fidenas Investment Ltd., began purchasing shares of Emerson Radio stock in 1989. By 1992 it held a 20 percent stake--more than that held by Stephen and William Lane--and began a takeover attempt. The Lane brothers, who were seeking to restructure $180 million in debt, conceded defeat in June 1992. Emerson's financial situation worsened, and in fiscal 1993 the company incurred a loss of $56 million on sales of $741.4 million. When it filed for bankruptcy in October 1993, Emerson had been in default on $223 million in debt for the past two years. It emerged from bankruptcy four months later, with Fidenas paying $75 million for a 60-percent stake. Creditors took a ten percent share in the firm, now based in Parsippany, New Jersey.
In order to cut its costs, Emerson Radio in early 1995 licensed the manufacture of certain video products under the Emerson and G Clef trademarks for a three-year period to Otake Trading Co. Ltd. and the sale of these products in the United States and Canada for the same period to Wal-Mart Stores, Inc. As a result, Emerson's net sales fell from $654.7 million in fiscal 1995 to $245.7 million in fiscal 1996. The licensing agreement provided about $4 million a year in royalty income.
Emerson Radio entered the home theater and car audio fields in 1995. It also entered the $900-million-a-year home and personal security market with a carbon monoxide detector and eventually planned to lend its name to burglar alarms, motion detectors, personal alarms, smoke detectors, and safety lights. The company left this field, however, in fiscal 1997. Emerson also announced it would license the Emerson name to more than 250 audio and video accessories made by Jasco Products Co., an Oklahoma firm selling cables, remote controls, and appliance cleaning devices. In late 1996 the company took a 27 percent stake in Sport Supply Group, Inc., the largest direct-mail distributor of sporting goods equipment and supplies to the U.S. institutional market, for $11.5 million.
On the expiration of Emerson's licensing agreement with Otake, this company was replaced by Daewoo Electronics Co. Ltd., which entered into a four-year agreement with Emerson to manufacture and sell television and video products bearing the Emerson and G Clef trademark to U.S. retailers. Emerson, in 1999, also had five-year license/supply agreements with Cargil International covering the Caribbean and Central and South American markets and WW Mexicana for certain consumer products to be sold in Mexico. In addition, it had a licensing agreement with Telesound Electronics for telephones, answering machines, and caller ID products in the United States and Canada.
After earning net income of $7.4 million in fiscal 1995, Emerson fell into the red the following three years, losing $13.4 million, $24 million, and $1.4 million in fiscal 1996, 1997, and 1998, respectively, on net revenues of $245.7 million, $178.7 million, and $162.7 million. Geoffrey P. Jurick, Fidenas's owner, held 60 percent of Emerson's common stock in December 1998. He had been chief executive officer of the company since 1992 and in 1998 also held the titles of president and chairman of the board.
In December 1998 Oaktree Capital Management, a Los Angeles-based investment firm that held a smaller stake in Emerson Radio, and Kenneth S. Grossman, a private investor, proposed to buy Jurick's holdings in the company for more than $14.6 million. This offer was rejected as inadequate. According to one account, Oaktree's real interest in the company was its stake--now 39 percent, counting warrants--in Sports Supply Group. Emerson announced in August 1999 that it planned to sell this stake to Oaktree for $28.9 million.
Emerson Radio had net income of $289,000 on net revenues of $158.7 million in fiscal 1999 and a long-term debt of $20.8 million at the end of the fiscal year. Some 84 percent of its merchandise in fiscal 1999 was imported, primarily from China, Hong Kong, Malaysia, South Korea, and Thailand. Tonic Electronics (32 percent), Daewoo (22 percent), and Imarflex (12 percent) were its chief suppliers. The company was heavily dependent on two customers: Wal-Mart Stores, which took about 52 percent of its goods in fiscal 1999, and Target Stores, Inc., which took about 24 percent.
Principal Subsidiaries: Emerson Radio (Hong Kong) Ltd.; Emerson Radio International Ltd.
OVERALL
Beta: 1.40
Market Cap (Mil.): $65.60
Shares Outstanding (Mil.): 27.13
Annual Dividend: --
Yield (%): --
FINANCIALS
MSN Industry Sector
P/E (TTM): 3.89 39.17 13.77
EPS (TTM): 201.86 -- --
ROI: 27.51 2.25 1.32
ROE: 29.17 2.68 2.19
Statistics:
Public Company
Incorporated: 1915 as Emerson Phonograph Co.
Employees: 112
Sales: $158.7 million (fiscal 1999)
Stock Exchanges: American
Ticker Symbol: MSN
NAIC: 421620 Consumer Electronics Wholesaling
Name Age Since Current Position
Ho, Christopher 60 2006 Chairman of the Board
Ma, Adrian 65 2007 President, Chief Executive Officer, Director
Hon, Duncan 49 2009 Deputy Chief Executive Officer, Director
Will, Eduard 68 2007 Vice Chairman of the Board
Davis, Andrew 43 2010 Chief Financial Officer, Executive Vice President, Treasurer, Secretary
Mahathir, Mirzan 52 2007 Director
Sethi, Kareem 33 2007 Director
Snellings, Terence 60 2008 Director
Address:
9 Entin Road
Parsippany, New Jersey 07054
U.S.A.