##### 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 September 30, 2009
 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 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)9 Entin Road Parsippany, New Jersey
    
    07054(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




---



##### 



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
    
    
    20Item 4. Controls and Procedures
    
    
    20PART II  OTHER INFORMATION
    
    
    20Item 1. Legal Proceedings
    
    
    20Item 1A. Risk Factors
    
    
    20ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20ITEM 3. Defaults Upon Senior Securities
    
    
    20ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    21ITEM 5. Other Information
    
    
    21ITEM 6. Exhibits
    
    
    21SIGNATURES
    
    
    21EX-31.1EX-31.2EX-32
  2




---



##### Table of Contents



Item 1. Financial Statements.
 EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except earnings per share data)
 Three Months Ended
    
    
    Six Months EndedSeptember 30,
    
    

September 30,20082009
    
    
    RESTATED
    
    
    2009
    
    
    2008Net
revenues:Net revenues
    
    $
    51,774
    
    
    $
    53,529
    
    
    $
    107,373
    
    
    $
    97,356Net revenues-related party
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    1551,774
    
    
    
    53,531
    
    
    
    107,373
    
    
    
    97,371Costs and expenses:Cost of sales
    
    
    43,701
    
    
    
    47,024
    
    
    
    93,304
    
    
    
    84,822Other operating costs and expenses
    
    
    1,077
    
    
    
    1,586
    
    
    
    1,855
    
    
    
    2,711Selling, general and administrative
    
    
    3,643
    
    
    
    4,733
    
    
    
    7,432
    
    
    
    9,26248,421
    
    
    
    53,343
    
    
    
    102,591
    
    
    
    96,795Operating income
    
    
    3,353
    
    
    
    188
    
    
    
    4,782
    
    
    
    576Interest income, net
    
    
    12
    
    
    
    63
    
    
    
    22
    
    
    
    206Unrealized holding (losses) on trading securities
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    (21
    )Realized gains on trading securities
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    532Income
 from continuing operations before income taxes
    
    
    3,365
    
    
    
    500
    
    
    
    4,804
    
    
    
    1,293Provision for income taxes
    
    
    144
    
    
    
    349
    
    
    
    422
    
    
    
    1,354Income (loss) from continuing operations
    
    
    3,221
    
    
    
    151
    
    
    
    4,382
    
    
    
    (61
    )Loss from discontinued operations, net of tax benefit
    
    
    
    
    
    
    (125
    )
    
    
    (55
    )
    
    
    (181
    )Net
income (loss)
    
    $
    3,221
    
    
    $
    26
    
    
    
    4,327
    
    
    $
    (242
    )Basic net income (loss) per share:Continuing operations
    
    $
    .12
    
    
    $
    .01
    
    
    $
    .16
    
    
    $
    Discontinued operations
    
    
    
    
    
    
    (.01
    )
    
    
    
    
    
    
    (.01
    )$
    .12
    
    
    $
    
    
    
    $
    .16
    
    
    $
    (.01
    )Diluted net income (loss) per share:Continuing operations
    
    $
    .12
    
    
    $
    .01
    
    
    $
    .16
    
    
    $
    Discontinued operations
    
    
    
    
    
    
    (.01
    )
    
    
    
    
    
    
    (.01
    )$
    .12
    
    
    $
    
    
    
    $
    .16
    
    
    $
    (.01
    )Weighted average shares outstanding:Basic and diluted
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130
 
 3




---



##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
 September 30,
    
    
    March 31,2009
    
    
    2009(A)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    28,997
    
    
    $
    22,518Restricted cash
    
    
    2
    
    
    
    3,025Accounts receivable, net
    
    
    18,733
    
    
    
    15,970Other receivables
    
    
    1,447
    
    
    
    1,587Due from affiliates
    
    
    11
    
    
    
    78Inventory, net
    
    
    22,255
    
    
    
    20,691Prepaid expenses and other current assets
    
    
    1,480
    
    
    
    2,190Deferred tax assets
    
    
    4,648
    
    
    
    4,872Total current assets
    
    
    77,573
    
    
    
    70,931Property, plant and equipment, net
    
    
    1,074
    
    
    
    1,139Trademarks and other intangible assets, net
    
    
    1,667
    
    
    
    255Due from Affiliates
    
    
    185
    
    
    
    114Investments in marketable securities
    
    
    6,031
    
    
    
    6,031Deferred tax assets
    
    
    7,200
    
    
    
    7,102Other assets
    
    
    312
    
    
    
    472Total assets
    
    $
    94,042
    
    
    $
    86,044LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    5,668
    
    
    $
    5,733Current maturities of long-term borrowings
    
    
    68
    
    
    
    85Accounts payable and other current liabilities
    
    
    22,541
    
    
    
    18,929Due to affiliates
    
    
    41
    
    
    
    66Accrued sales returns
    
    
    1,236
    
    
    
    1,130Income taxes payable
    
    
    148
    
    
    
    155Total current liabilities
    
    
    29,702
    
    
    
    26,098Long-term borrowings
    
    
    43
    
    
    
    59Deferred tax liabilities
    
    
    103
    
    
    
    87Shareholders equity:Preferred shares  10,000,000 shares
authorized; 3,677 shares issued and
outstanding; liquidation preference of $3,677
    
    
    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
    
    
    117,253
    
    
    
    117,243Accumulated other comprehensive losses
    
    
    (82
    )
    
    
    (82
    )Accumulated deficit
    
    
    (32,592
    )
    
    
    (36,976
    )Treasury stock, at cost, 25,835,965 shares
    
    
    (24,224
    )
    
    
    (24,224
    )Total shareholders equity
    
    
    64,194
    
    
    
    59,800Total liabilities and shareholders equity
    
    $
    94,042
    
    
    $
    86,044
 
 (A)
    
    Reference is made to the Companys Annual Report on Form 10-K for the fiscal year ended March
31, 2009 filed with the Securities and Exchange Commission in July 2009 and amended in July
2009.  4




---



##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Six Months EndedSeptember 302009
    
    

2008Cash flows from operating activities:Income (loss) from continuing operations
    
    $
    4,382
    
    
    $
    (61
    )Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    432
    
    
    
    389Non cash compensation
    
    
    10
    
    
    
    36Deferred tax expense
    
    
    142
    
    
    
    1,192Asset allowances, reserves and other
    
    
    (442
    )
    
    
    (1,539
    )Gains on sales of investments
    
    
    
    
    
    
    (532
    )Unrealized holding gains on trading securities
    
    
    
    
    
    
    21Changes in assets and liabilities:Restricted cash
    
    
    3,023
    
    
    
    (3,023
    )Foreign exchange foreign contracts
    
    
    
    
    
    
    134Accounts receivable
    
    
    (2,460
    )
    
    
    (8,592
    )Other receivables
    
    
    140
    
    
    
    753Due from affiliates
    
    
    (4
    )
    
    
    724Inventories
    
    
    (1,317
    )
    
    
    (18,991
    )Prepaid expenses and other current assets
    
    
    710
    
    
    
    (314
    )Other assets
    
    
    50
    
    
    
    (24
    )Accounts payable and other current liabilities
    
    
    3,612
    
    
    
    14,857Due to affiliates
    
    
    (25
    )
    
    
    (82
    )Interest and income taxes payable
    
    
    (7
    )
    
    
    9Operating activities of continuing operations
    
    
    8,246
    
    
    
    (15,043
    )Operating activities of discontinued operations
    
    
    
    
    
    
    (727
    )Net cash
provided (used) by operating activities
    
    
    8,246
    
    
    
    (15,770
    )Cash flows from investing activities:Proceeds from partial calls on securities
    
    
    
    
    
    
    4,000Purchase of trademark
    
    
    (1,469
    )
    
    
    Additions to property and equipment
    
    
    (200
    )
    
    
    (201
    )Investing activities of continuing operations
    
    
    (1,669
    )
    
    
    3,799Investing activities of discontinued operations
    
    
    
    
    
    
    62Net cash (used) provided by investing activities
    
    
    (1,669
    )
    
    
    3,861Cash flows from financing activities:Short-term borrowings
    
    
    
    
    
    
    5,726Repayments of short-term borrowings
    
    
    (82
    )
    
    
    (1,624
    )Borrowings under long-term credit facility
    
    
    57,032
    
    
    
    63,737Repayments of borrowings under long-term credit facility
    
    
    (57,048
    )
    
    
    (63,777
    )Net cash (used) provided by financing activities
    
    
    (98
    )
    
    
    4,062Net increase (decrease) in cash and cash equivalents
    
    
    6,479
    
    
    
    (7,847
    )Cash and cash equivalents at beginning of period
    
    
    22,518
    
    
    
    14,283Cash and cash equivalents at end of period
    
    $
    28,997
    
    
    $
    6,436Cash paid during the period for:Interest
    
    $
    58
    
    
    $
    89Income taxes
    
    $
    4
    
    
    $
    41
  5




---



##### Table of Contents



EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
               6




---



##### Table of Contents



Three months ended
    
    
    Six months endedSeptember 30
    
    
    September 3020082009
    
    
    RESTATED
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    3,221
    
    
    $
    26
    
    
    $
    4,327
    
    
    $
    (242
    )Unrealized holding losses arising during period
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    21Less: reclassification adjustment for losses included in net income
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    (21
    )Comprehensive income (loss)
    
    $
    3,221
    
    
    $
    26
    
    
    $
    4,327
    
    
    $
    (242
    )
 7




---



##### Table of Contents



Three months ended
    
    
    Six months endedSeptember 30
    
    
    September 3020082009
    
    
    RESTATED
    
    
    2009
    
    
    2008Numerator:Net income (loss) from continuing operations for basic and diluted
earnings per share
    
    $
    3,221
    
    
    $
    151
    
    
    $
    4,382
    
    
    $
    (61
    )Denominator:Denominator for basic earnings per share  weighted average shares
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130Effect of dilutive securities on denominator:Options and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings per share  weighted average shares
and assumed conversions
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130
    
    
    
    27,130Basic and diluted earnings (loss) from continuing operations per share
    
    $
    .12
    
    
    $
    
    
    
    $
    .16
    
    
    $
    (0.01
    )
       September 30, 2009
    
    
    March 31, 2009(Unaudited)Finished goods
    
    $
    25,522
    
    
    $
    24,205Less inventory allowances
    
    
    (3,267
    )
    
    
    (3,514
    )Net inventory
    
    $
    22,255
    
    
    $
    20,691
   8




---



##### Table of Contents



Jurisdiction
    
    Open tax yearsU.S. federal
    
    
    2005-2009States
    
    
    2005-2009
    Majority Shareholder
 Grandes Ownership Interest in Emerson.
 Related Party Transactions
 Product Sourcing Transactions.
 Sales of goods.
 9




---



##### Table of Contents



Leases and Other Real Estate Transactions.
   Toy Musical Instruments.
   Hong Kong Electronics Fairs (HKEF).
  10




---



##### Table of Contents



Other.
         Short-term Borrowings
  Long-term Borrowings
  September 30, 2009
    
    
    March 31, 2009(In thousands)(Unaudited)Capitalized lease obligations and other
    
    
    111
    
    
    
    144Less current maturities
    
    
    (68
    )
    
    
    (85
    )Long term debt and notes payable
    
    $
    43
    
    
    $
    59
 Credit Facility
 11




---



##### Table of Contents



NOTE 9  LEGAL PROCEEDINGS
 In re: Emerson Radio Shareholder Derivative Litigation.
  12




---



##### Table of Contents



NOTE 10  MARKETABLE SECURITIES:
        Fair Value Measurement at Reporting Date Using:
 September 30, 2009Significant Unobservable Inputs (Level 3)
    
    (in thousands)Investments in marketable securities (classified as trading securities)
    
    $
    6,031Investments in marketable securities
    
    $
    6,031
  13




---



##### Table of Contents



Fair ValueMeasurementof Asset usingLevel 3 inputs(in thousands)TradingSecurities non-currentBalance at March 31, 2009
    
    
    6,031Total gains (losses) (realized or unrealized):Realized  included in earnings at September 30, 2009
    
    
    Unrealized  included in earnings at September 30, 2009
    
    
    Redemptions of principal
    
    
    Balance at September 30, 2009
    
    $
    6,031
 NOTE 11  DISCONTINUED OPERATIONS:
   
 Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition
   Forward-Looking Information
   14




---



##### Table of Contents




    
    the loss of any of the Companys key customers or reduction in the price or volume of its
products purchased by any such customers;
    
    the Companys inability to maintain effective internal controls or the failure by its
personnel to comply with such internal controls;
    
    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 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;
    
    the seasonality of the Companys business, as well as changes in consumer spending and
economic conditions;
    
    the failure of third party sales representatives to adequately promote, market and sell
the Companys products;
    
    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;
    
    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, 2009 and other filings with the Securities and Exchange
Commission (the SEC).
  Company Filings
 www.emersonradio.com
 15




---



##### Table of Contents



Results of Operations
  Three Months Ended
    
    
    Six Months EndedSeptember 30
    
    
    September 302009
    
    
    2008
    
    
    2009
    
    
    2008Net revenues
    
    $
    51,774
    
    
    $
    53,531
    
    
    $
    107,373
    
    
    $
    97,371Cost of sales
    
    
    43,701
    
    
    
    47,024
    
    
    
    93,304
    
    
    
    84,822Other operating costs and expenses
    
    
    1,077
    
    
    
    1,586
    
    
    
    1,855
    
    
    
    2,711Selling, general and administrative expenses
    
    
    3,643
    
    
    
    4,733
    
    
    
    7,432
    
    
    
    9,262Operating income
    
    
    3,353
    
    
    
    188
    
    
    
    4,782
    
    
    
    576Interest income (expense), net
    
    
    12
    
    
    
    63
    
    
    
    22
    
    
    
    206Unrealized holding (losses) on trading securities
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    (21
    )Realized gains on trading securities
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    532Income from continuing operations before income taxes
    
    
    3,365
    
    
    
    500
    
    
    
    4,804
    
    
    
    1,293Provision for income taxes
    
    
    144
    
    
    
    349
    
    
    
    422
    
    
    
    1,354Net income (loss) from continuing operations
    
    $
    3,221
    
    
    $
    151
    
    
    $
    4,382
    
    
    $
    (61
    )
 Net
Revenues
 i)
    
    Home appliances product sales increased $1.4 million, or 3.7%, to $40.1 million in the
second quarter of fiscal 2010 as compared to $38.7 million in the second quarter of fiscal
2009 on increases in toaster ovens and microwave ovens, partially offset by decreases in
wine coolers, coffee makers and small refrigerators. For the six month period of fiscal
2010, home appliances product sales were $88.9 million, an increase of $18.9 million, or
26.9%, from $70.0 million in the six month period of fiscal 2009, on increases in all
product categories with the exception of wine coolers. Home appliance product sales consist
of microwave ovens, small refrigerators, toaster ovens, wine coolers and coffee makers;ii)
    
    Emerson(R) branded products sales, excluding home appliances products, were $8.7 million
in the second quarter of fiscal 2010 as compared to $7.9 million in the second quarter of
fiscal 2009, an increase of approximately $800,000, or 10.1%. For the six month period of
fiscal 2010, Emerson® branded products sales, excluding home appliances products, were $15.7
million, a decrease of $3.7 million, or 19.1% from $19.4 million in the six month period of
fiscal 2009, primarily resulting from decreased sales volumes in several audio product
lines;iii)
    
    Themed product sales were $1.5 million in the second quarter of fiscal 2010 compared to
$3.6 million in the second quarter of fiscal 2009, a decrease of $2.1 million, or 57.0%. For
the six month period of fiscal 2010, themed product sales were $2.1 million, a decrease of
$2.3 million, or 52.2%, from $4.4 million in the six month period of fiscal 2009, The
decrease in both periods results from the winding down of the Companys licensing
arrangement with Mattel® to distribute themed products bearing the Barbie®, Hot Wheels® and
Funkey® brand names. The licensing arrangement with Mattel terminates on December 31, 2009,
at which time the Company plans to cease distributing themed products;iv)
    
    Licensing revenues decreased approximately $400,000, or 21.8%, to $1.5 million in the
second quarter of fiscal 2010 as compared to $1.9 million in the second quarter of fiscal
2009. For the six month period of fiscal 2010, licensing revenues decreased approximately
$700,000, or 20.6%, to $2.9 million as compared to $3.6 million for the six month period of
fiscal 2009 due primarily to lower sales volumes in the quarter of licensed video products;
 16




---



##### Table of Contents



Cost of Sales
 Gross Profit Margins
 Other Operating Costs and Expenses
 Selling, General and Administrative Expenses (S,G&A)
 Interest Income, net
 Realized/unrealized holding gains on trading securities
 Provision for Income Taxes
 Net Income (loss) from continuing operations
 17




---



##### Table of Contents



Liquidity and Capital Resources
 General
   ®
  Wachovia
    Short-Term Liquidity.
  Recently Issued Accounting Pronouncements
  18




---



##### Table of Contents



The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162
 Inflation, Foreign Currency, and Interest Rates
  19




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Disclosure controls and procedures
   (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.
 (a)
    
    None
 20




---



##### Table of Contents



ITEM 4. Submission of Matters to a Vote of Security Holders.
  
 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.*
 
 *
    
    filed herewith 
   EMERSON RADIO CORP.
(Registrant)Date: November 11, 2009
    /s/ Adrian MaAdrian MaChief Executive Officer
(Principal Executive Officer)Date: November 11, 2009
    /s/ Greenfield PittsGreenfield PittsChief Financial Officer
(Principal Financial and Accounting Officer) 21