##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-07731
 EMERSON RADIO CORP.
  DELAWARE
    
    22-3285224(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)85 Oxford Drive, Moonachie, New Jersey
    
    07074(Address of principal executive offices)
    
    (Zip code)
 
 
 þ o
 o o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ o þ




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TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18PART II  OTHER INFORMATION
    
    
    19Item 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19ITEM 3. Defaults Upon Senior Securities
    
    
    19ITEM 4. Removed and Reserved
    
    
    19ITEM 5. Other Information
    
    
    19ITEM 6. Exhibits
    
    
    19SIGNATURES
    
    
    20EX-31.1EX-31.2EX-32
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Item 1. Financial Statements.
 EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except earnings per share data)
 Three Months EndedJune 302010
    
    
    2009Net revenues
    
    $
    67,155
    
    
    $
    55,599Costs and expenses:Cost of sales
    
    
    57,523
    
    
    
    49,603Other operating costs and expenses
    
    
    299
    
    
    
    778Selling, general and administrative expenses
    
    
    1,929
    
    
    
    3,78959,751
    
    
    
    54,170Operating income
    
    
    7,404
    
    
    
    1,429Interest income, net
    
    
    10
    
    
    
    10Income from continuing operations before income taxes
    
    
    7,414
    
    
    
    1,439Provision for income taxes
    
    
    1,535
    
    
    
    278Income from continuing operations
    
    
    5,879
    
    
    
    1,161Loss from discontinued operations, net of tax benefit
    
    
    
    
    
    
    55Net income
    
    $
    5,879
    
    
    $
    1,106Basic net income per shareContinuing operations
    
    $
    0.22
    
    
    $
    0.04Discontinued operations
    
    
    
    
    
    
    Net
    
    $
    0.22
    
    
    $
    0.04Diluted net income (loss) per shareContinuing operations
    
    $
    0.22
    
    
    $
    0.04Discontinued operations
    
    
    
    
    
    
    Net
    
    $
    0.22
    
    
    $
    0.04Weighted average shares outstanding:Basic
    
    
    27,130
    
    
    
    27,130Diluted
    
    
    27,131
    
    
    
    27,130
 
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EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
 June 30, 2010
    
    
    March 31, 2010 (A)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    7,314
    
    
    $
    9,969Restricted cash
    
    
    2,496
    
    
    
    5,083Accounts receivable, net
    
    
    35,626
    
    
    
    20,350Other receivables
    
    
    1,120
    
    
    
    1,037Due from affiliates
    
    
    75
    
    
    
    Inventory, net
    
    
    29,055
    
    
    
    10,952Prepaid expenses and other current assets
    
    
    534
    
    
    
    736Deferred tax assets
    
    
    3,500
    
    
    
    3,383Total current assets
    
    
    79,720
    
    
    
    51,510Property, plant and equipment, net
    
    
    3,047
    
    
    
    3,131Trademarks and other intangible assets, net
    
    
    1,576
    
    
    
    1,606Due from affiliates
    
    
    144
    
    
    
    185Investments in marketable securities
    
    
    6,031
    
    
    
    6,031Deferred tax assets
    
    
    5,289
    
    
    
    6,588Other assets
    
    
    203
    
    
    
    205Total assets
    
    $
    96,010
    
    
    $
    69,256LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    5,625
    
    
    $
    5,629Current maturities of long-term borrowings
    
    
    25
    
    
    
    30Accounts payable and other current liabilities
    
    
    41,476
    
    
    
    20,776Due to affiliates
    
    
    36
    
    
    
    28Accrued sales returns
    
    
    1,118
    
    
    
    957Income taxes payable
    
    
    250
    
    
    
    174Total current liabilities
    
    
    48,530
    
    
    
    27,594Long-term borrowings
    
    
    128
    
    
    
    201Deferred tax liabilities
    
    
    128
    
    
    
    119Shareholders equity:Preferred
shares  10,000,000 shares
authorized; 3,677 shares issued and
outstanding; liquidation
preference of $3,677,000
    
    
    3,310
    
    
    
    3,310Common shares  $.01 par value, 75,000,000
shares authorized; 52,965,797 shares issued
and 27,129,832 shares outstanding
    
    
    529
    
    
    
    529Capital in excess of par value
    
    
    98,785
    
    
    
    98,785Accumulated other comprehensive losses
    
    
    (82
    )
    
    
    (82
    )Accumulated deficit
    
    
    (31,094
    )
    
    
    (36,976
    )Treasury
stock  25,835,965 shares, at cost
    
    
    (24,224
    )
    
    
    (24,224
    )Total shareholders equity
    
    
    47,224
    
    
    
    41,342Total liabilities and shareholders equity
    
    $
    96,010
    
    
    $
    69,256
 
 (A)
    
    Reference is made to the Companys Annual Report on Form 10-K for the fiscal year ended March
31, 2010 filed with the Securities and Exchange Commission on July 14, 2010.  4




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EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Three Months EndedJune 302010
    
    
    2009Cash flows from operating activities:Income from continuing operations
    
    $
    5,879
    
    
    $
    1,161Adjustments to reconcile net income from continuing
operations to net cash provided by operating
activities:Depreciation and amortization
    
    
    155
    
    
    
    256Non cash compensation
    
    
    
    
    
    
    5Deferred tax expense
    
    
    1,191
    
    
    
    277Asset allowances, reserves and other
    
    
    312
    
    
    
    614Changes in assets and liabilities:Accounts receivable
    
    
    (14,733
    )
    
    
    (10,503
    )Other receivables
    
    
    (83
    )
    
    
    205Due from affiliates
    
    
    (34
    )
    
    
    (69
    )Inventories
    
    
    (18,794
    )
    
    
    2,058Prepaid expenses and other current assets
    
    
    202
    
    
    
    902Other assets
    
    
    2
    
    
    
    16Accounts payable and other current liabilities
    
    
    20,700
    
    
    
    8,016Due to affiliates
    
    
    8
    
    
    
    (46
    )Interest and income taxes payable
    
    
    76
    
    
    
    7Net cash (used) provided by operating activities
    
    
    (5,119
    )
    
    
    2,899Cash flows from investing activities:Decrease (increase) in restricted cash
    
    
    2,587
    
    
    
    (42
    )Purchase of trademark
    
    
    
    
    
    
    (1,457
    )Additions to property and equipment
    
    
    (41
    )
    
    
    (282
    )Net cash provided (used) by investing activities
    
    
    2,546
    
    
    
    (1,781
    )Cash flows from financing activities:Repayments of short-term borrowings
    
    
    (9
    )
    
    
    (6
    )Borrowings under long-term credit facility
    
    
    29,707
    
    
    
    26,269Repayments of borrowings under long-term credit facility
    
    
    (29,780
    )
    
    
    (26,280
    )Net cash (used) by financing activities
    
    
    (82
    )
    
    
    (17
    )Net (decrease) increase in cash and cash equivalents
    
    
    (2,655
    )
    
    
    1,101Cash and cash equivalents at beginning of period
    
    
    9,969
    
    
    
    22,518Cash and cash equivalents at end of period
    
    $
    7,314
    
    
    $
    23,619Cash paid during the period for:Interest
    
    $
    28
    
    
    $
    27Income taxes
    
    $
    53
    
    
    $
    
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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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Three months endedJune 302010
    
    
    2009Net income
    
    $
    5,879
    
    
    $
    1,106Unrealized holding gains arising during period
    
    
    
    
    
    
    Less: reclassification adjustment for gains included in net income
    
    
    
    
    
    
    Comprehensive income
    
    $
    5,879
    
    
    $
    1,106
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Three months endedJune 302010
    
    
    2009Numerator:Income from continuing operations for basic and diluted earnings per share
    
    $
    5,879
    
    
    $
    1,161Denominator:Denominator for basic earnings per share  weighted average shares
    
    
    27,130
    
    
    
    27,130Effect of dilutive securities on denominator:Options (computed using the treasury stock method)
    
    
    1
    
    
    
    Denominator for diluted earnings per share  weighted average shares and assumed conversions
    
    
    27,131
    
    
    
    27,130Basic and diluted income from continuing operations per share
    
    $
    0.22
    
    
    $
    0.04
       June 30, 2010
    
    
    March 31, 2010(Unaudited)Finished goods
    
    $
    31,505
    
    
    $
    12,710Less inventory allowances
    
    
    (2,450
    )
    
    
    (1,758
    )Net inventory
    
    $
    29,055
    
    
    $
    10,952
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Jurisdiction
    
    Open tax yearsU.S. federal
    
    2006-2009States
    
    2006-2009
    Majority Shareholder
 Grandes Ownership Interest in Emerson.
 Related Party Transactions
 Product Sourcing Transactions.
 Sales of goods.
 Leases and Other Real Estate Transactions.
 Rented Space in Hong Kong
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Rented Space in the Peoples Republic of China
    Other.
  10




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Short-term Borrowings
  Long-term Borrowings
  June 30, 2010
    
    
    March 31, 2010(In thousands)(Unaudited)Capitalized lease obligations and other
    
    
    153
    
    
    
    231Less current maturities
    
    
    (25
    )
    
    
    (30
    )Long term debt and notes payable
    
    $
    128
    
    
    $
    201
 Credit Facility
  NOTE 9  LEGAL PROCEEDINGS
 In re: Emerson Radio Shareholder Derivative Litigation.
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NOTE 10  MARKETABLE SECURITIES:
        Fair Value Measurement at Reporting Date Using:
 Significant Unobservable Inputs (Level 3)
    
    June 30, 2010Investments in marketable securities (classified as trading securities)
    
    $
    6,031Investments in marketable securities
    
    $
    6,031
  Fair Value Measurement ofAsset using Level 3 inputsTrading Securities non-currentBalance at March 31, 2010
    
    
    6,031Total gains (losses) (realized or unrealized):Realized  included in earnings at June 30, 2010
    
    
    
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Fair Value Measurement ofAsset using Level 3 inputsTrading Securities non-currentUnrealized  included in earnings at June 30, 2010
    
    
    Redemptions of principal
    
    
    Balance at June 30, 2010
    
    $
    6,031
 NOTE 11  DISCONTINUED OPERATIONS:
  
 Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
   Forward-Looking Information
    
    
    the loss of any of the Companys key customers or reduction in the purchase of its
products by any such customers;
    
    the failure by the Company to maintain its relationships with its licensees and
distributors or the failure to obtain new licensees or distribution relationships on
favorable terms;
    
    the inability by the Company to secure a credit facility sufficient to issue its factory
letters of credit subsequent to the expiration of its current credit facility with Wachovia
Bank on December 23, 2010;
    
    the Companys inability to anticipate market trends, enhance existing products or achieve
market acceptance of new products;
    
    the Companys dependence on a limited number of suppliers for its components and raw
materials;
    
    the Companys dependence on third parties to manufacture and deliver its products;
    
    changes in consumer spending and economic conditions;
    
    the failure of third party sales representatives to adequately promote, market and sell
the Companys products;
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
    
    the Companys inability to protect its intellectual property;
    
    the effects of competition;
    
    changes in foreign laws and regulations and changes in the political and economic
conditions in the foreign countries in which the Company operates;
    
    conflicts of interest that exist based on the Companys relationship with Grande;
    
    the Companys ability to maintain effective internal controls over financial reporting,
to prevent material weaknesses or to remediate any weaknesses that may arise;
    
    changes in accounting policies, rules and practices; and
    
    the other factors listed under Risk Factors in the Companys Form 10-K, as amended, for
the fiscal year ended March 31, 2010 and other filings with the Securities and Exchange
Commission (the SEC).
  Company Filings
 www.emersonradio.com
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Results of Operations
  Three Months EndedJune 302010
    
    
    2009Net revenues
    
    $
    67,155
    
    
    $
    55,599Cost of sales
    
    
    57,523
    
    
    
    49,603Other operating costs and expenses
    
    
    299
    
    
    
    778Selling, general and administrative costs
    
    
    1,929
    
    
    
    3,789Operating income
    
    
    7,404
    
    
    
    1,429Interest income, net
    
    
    10
    
    
    
    10Income before income taxes from continuing operations
    
    
    7,414
    
    
    
    1,439Provision for income taxes
    
    
    1,535
    
    
    
    278Net income from continuing operations
    
    
    5,879
    
    
    
    1,161
   i)
    
    Houseware products net sales increased $16.8 million, or 36.4%, to $63.0 million in the
first quarter of fiscal 2011 as compared to $46.2 million in the first quarter of fiscal
2010 on increases across all product categories except coffee makers, principally driven by
growth in microwave ovens and compact refrigerators. Houseware products consists of
microwave ovens, compact refrigerators, toaster ovens, wine coolers, and coffee makers;ii)
    
    Emerson(R) branded products sales, excluding houseware products, were $2.7 million in the
first quarter of fiscal 2011 as compared to $7.5 million in the first quarter of fiscal
2010, a decrease of $4.8 million, or 64.0%, primarily resulting from decreased sales volumes
in several audio product lines;iii)
    
    Themed product sales were $0 in the first quarter of fiscal 2011 compared to $500,000 in
the first quarter of fiscal 2010, a decrease of $500,000, resulting from the expiration of
the Companys licensing arrangement with Mattel® to distribute themed products bearing the
Barbie®, Hot Wheels® and Funkey® brand names;iv)
    
    Licensing revenues in the first quarter of fiscal 2011 were $1.5 million compared to $1.4
million in the first quarter of fiscal 2010, an increase of
$0.1 million or 8.2%.
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Liquidity and Capital Resources
 General
     Wachovia
  17




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Recently Issued Accounting Pronouncements
          Inflation, Foreign Currency, and Interest Rates
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Disclosure controls and procedures
  18




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(b) Changes in Internal Controls Over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 ITEM 3. Defaults Upon Senior Securities.
   
 ITEM 4. Removed and Reserved.
 
 ITEM 5. Other Information.
  
 ITEM 6. Exhibits.
 31.1
    
    Certification of the Companys Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of the Companys Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*32
    
    Certification of the Companys Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
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*
    
    filed herewith**
    
    furnished herewith 
   EMERSON RADIO CORP.
(Registrant)/s/ Adrian MaDate: August 16, 2010
    Adrian MaChief Executive Officer
(Principal Executive Officer)/s/ Greenfield PittsDate: August 16, 2010
    Greenfield PittsChief Financial Officer
(Principal Financial and Accounting Officer) 20