##### 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, 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 o
Accelerated filer o
Non-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
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16PART II  OTHER INFORMATION
    
    
    17Item 1. Legal Proceedings
    
    
    17Item 1A. Risk Factors
    
    
    17ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    17ITEM 3. Defaults Upon Senior Securities
    
    
    17ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    17ITEM 5. Other Information
    
    
    17ITEM 6. Exhibits
    
    
    17SIGNATURES
    
    
    18EX-31.1EX-31.2EX-32
  2




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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 3020082009
    
    
    RESTATEDNet revenuesNet revenues
    
    $
    55,599
    
    
    $
    43,827Net revenues-related party
    
    
    
    
    
    
    1355,599
    
    
    
    43,840Costs and expenses:Cost of sales
    
    
    49,603
    
    
    
    37,797Other operating costs and expenses
    
    
    778
    
    
    
    1,125Selling, general and administrative expenses
    
    
    3,789
    
    
    
    4,52954,170
    
    
    
    43,451Operating income
    
    
    1,429
    
    
    
    389Interest income, net
    
    
    10
    
    
    
    142Realized/unrealized holding gains on trading securities
    
    
    
    
    
    
    262Income from continuing operations before income taxes
    
    
    1,439
    
    
    
    793Provision for income taxes
    
    
    278
    
    
    
    1,005Income (loss) from continuing operations
    
    
    1,161
    
    
    
    (212
    )Loss from discontinued operations, net of tax benefit
    
    
    55
    
    
    
    56Net income (loss)
    
    $
    1,106
    
    
    $
    (268
    )Basic net income (loss) per shareContinuing operations
    
    $
    0.04
    
    
    $
    (0.01
    )Discontinued operations
    
    $
    
    
    
    $
    $
    .04
    
    
    $
    (.01
    )Diluted net income (loss) per shareContinuing operations
    
    $
    0.04
    
    
    $
    (0.01
    )Discontinued operations
    
    $
    
    
    
    $
    $
    .04
    
    
    $
    (.01
    )Weighted average shares outstanding:Basic
    
    
    27,130
    
    
    
    27,130Diluted
    
    
    27,130
    
    
    
    27,130
 
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EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
 June 30, 2009
    
    
    March 31, 2009(A)(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23,619
    
    
    $
    22,518Restricted cash
    
    
    3,067
    
    
    
    3,025Net Accounts receivable
    
    
    26,668
    
    
    
    15,970Other receivables
    
    
    1,382
    
    
    
    1,587Due from affiliates
    
    
    76
    
    
    
    78Net Inventory
    
    
    17,913
    
    
    
    20,691Prepaid expenses and other current assets
    
    
    1,288
    
    
    
    2,190Deferred tax assets
    
    
    5,264
    
    
    
    4,872Total current assets
    
    
    79,277
    
    
    
    70,931Property, plant and equipment, net
    
    
    1,212
    
    
    
    1,139Trademarks and other intangible assets, net
    
    
    1,686
    
    
    
    255Due from Affiliates
    
    
    185
    
    
    
    114Investments in marketable securities
    
    
    6,031
    
    
    
    6,031Deferred tax assets
    
    
    6,441
    
    
    
    7,102Other assets
    
    
    435
    
    
    
    472Total assets
    
    $
    95,267
    
    
    $
    86,044LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    5,752
    
    
    $
    5,733Current maturities of long-term borrowings
    
    
    79
    
    
    
    85Accounts payable and other current liabilities
    
    
    26,945
    
    
    
    18,929Due to affiliates
    
    
    20
    
    
    
    66Accrued sales returns
    
    
    1,217
    
    
    
    1,130Income taxes payable
    
    
    143
    
    
    
    155Total current liabilities
    
    
    34,156
    
    
    
    26,098Long-term borrowings
    
    
    48
    
    
    
    59Deferred tax liabilities
    
    
    95
    
    
    
    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
at June 30, 2009 and March 31, 2009;
27,129,832 shares outstanding at June 30,
2009 and March 31, 2009
    
    
    529
    
    
    
    529Capital in excess of par value
    
    
    117,248
    
    
    
    117,243Accumulated other comprehensive losses
    
    
    (82
    )
    
    
    (82
    )Accumulated deficit
    
    
    (35,813
    )
    
    
    (36,976
    )Treasury stock, at cost, 25,835,965 shares
    
    
    (24,224
    )
    
    
    (24,224
    )Total shareholders equity
    
    
    60,968
    
    
    
    59,800Total liabilities and shareholders equity
    
    $
    95,267
    
    
    $
    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




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EMERSON RADIO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Three Months EndedJune 3020082009
    
    
    RESTATEDCash flows from operating activities:Income (loss) from continuing operations
    
    $
    1,161
    
    
    $
    (212
    )Adjustments to reconcile net income to net cash provided by operating activities:Minority interest
    
    
    
    
    
    
    (94
    )Depreciation and amortization
    
    
    256
    
    
    
    198Non cash compensation
    
    
    5
    
    
    
    18Deferred tax expense (benefit)
    
    
    277
    
    
    
    947Asset allowances, reserves and other
    
    
    614
    
    
    
    (1,843
    )Unrealized holding gains on trading securities
    
    
    
    
    
    
    (262
    )Changes in assets and liabilities:Restricted cash
    
    
    (42
    )
    
    
    (2,000
    )Foreign exchange foreign contracts
    
    
    
    
    
    
    134Accounts receivable
    
    
    (10,503
    )
    
    
    (3,156
    )Other receivables
    
    
    205
    
    
    
    606Due from affiliates
    
    
    (69
    )
    
    
    586Inventories
    
    
    2,058
    
    
    
    (969
    )Prepaid expenses and other current assets
    
    
    902
    
    
    
    (70
    )Other assets
    
    
    16
    
    
    
    (35
    )Accounts payable and other current liabilities
    
    
    8,016
    
    
    
    7,269Due to affiliates
    
    
    (46
    )
    
    
    (91
    )Interest and income taxes payable
    
    
    7
    
    
    
    (18
    )Operating activities of continuing operations
    
    
    2,857
    
    
    
    1,008Operating activities of discontinued operations
    
    
    
    
    
    
    (278
    )Net cash provided by operating activities
    
    
    2,857
    
    
    
    730Cash flows from investing activities:Proceeds from partial calls on securities
    
    
    
    
    
    
    1,700Purchase of trademark
    
    
    (1,457
    )
    
    
    Additions to property and equipment
    
    
    (282
    )
    
    
    (165
    )Investing activities of continuing operations
    
    
    (1,739
    )
    
    
    1,535Investing activities of discontinued operations
    
    
    
    
    
    
    33Net cash (used) provided by investing activities
    
    
    (1,739
    )
    
    
    1,568Cash flows from financing activities:Short-term borrowings
    
    
    (6
    )
    
    
    1Borrowings under long-term credit facility
    
    
    26,269
    
    
    
    27,190Repayments of borrowings under long-term credit facility
    
    
    (26,280
    )
    
    
    (27,209
    )Net cash (used) by financing activities
    
    
    (17
    )
    
    
    (18
    )Net increase in cash and cash equivalents
    
    
    1,101
    
    
    
    2,280Cash and cash equivalents at beginning of period
    
    
    22,518
    
    
    
    14,283Cash and cash equivalents at end of period
    
    $
    23,619
    
    
    $
    16,563Cash paid during the period for:Interest
    
    $
    27
    
    
    $
    29Income taxes
    
    $
    0
    
    
    $
    20
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EMERSON RADIO CORP. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
             Three months endedJune 3020082009
    
    
    RESTATEDNet income (loss)
    
    $
    1,106
    
    
    $
    (268
    )Unrealized holding gains arising during period
    
    
    
    
    
    
    (31
    )Less: reclassification adjustment for gains included in net income
    
    
    
    
    
    
    31Comprehensive income (loss)
    
    $
    1,106
    
    
    $
    (268
    )
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Three months endedJune 3020082009
    
    
    RESTATEDNumerator:Net income (loss) from continuing operations for basic and diluted earnings per share
    
    $
    1,161
    
    
    $
    (212
    )Denominator:Denominator for basic earnings per share  weighted average shares
    
    
    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
    
    
    
    27,130Basic and diluted income (loss) from continuing operations per share
    
    $
    0.04
    
    
    $
    (0.01
    )
       June 30, 2009
    
    
    March 31, 2009(Unaudited)Finished goods
    
    $
    22,148
    
    
    $
    24,205Less inventory allowances
    
    
    (4,235
    )
    
    
    (3,514
    )Net inventory
    
    $
    17,913
    
    
    $
    20,691
    7




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Jurisdiction
    
    Open tax yearsU.S. federal
    
    2005-2008States
    
    2005-2008
     Majority Shareholder
 Grandes Ownership Interest in Emerson.
 Related Party Transactions
 Product Sourcing Transactions.
 Sales of goods.
 Leases and Other Real Estate Transactions.
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Toy Musical Instruments.
   Hong Kong Electronics Fairs (HKEF).
  Other.
    9




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Short-term Borrowings
  Long-term Borrowings
  June 30, 2009
    
    
    March 31, 2009(In thousands)(Unaudited)Capitalized lease obligations and other
    
    
    127
    
    
    
    144Less current maturities
    
    
    (79
    )
    
    
    (85
    )Long term debt and notes payable
    
    $
    48
    
    
    $
    59
 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, 2009Investments in marketable securities (classified as trading securities)
    
    $
    6,031Investments in marketable securities
    
    $
    6,031
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Fair ValueMeasurementof Asset usingLevel 3 inputsTradingSecuritiesnon-currentBalance at March 31, 2009
    
    
    6,031Total gains (losses) (realized or unrealized):Realized  included in earnings at June 30, 2009
    
    
    Unrealized  included in earnings at June 30, 2009
    
    
    Redemptions of principal
    
    
    Balance at June 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
    
    
    the loss of any of the Companys key customers or reduction in the purchase of its
products 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;
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
    
    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
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Results of Operations
  Three Months EndedJune 302009
    
    
    2008RESTATEDNet revenues
    
    $
    55,599
    
    
    $
    43,840Cost of sales
    
    
    49,603
    
    
    
    37,797Other operating costs and expenses
    
    
    778
    
    
    
    1,125Selling, general and administrative costs
    
    
    3,789
    
    
    
    4,529Operating income
    
    
    1,429
    
    
    
    389Interest income, net
    
    
    10
    
    
    
    142Unrealized holding gains on trading securities
    
    
    
    
    
    
    262Income before income taxes from continuing operations
    
    
    1,439
    
    
    
    793Provision for income taxes
    
    
    278
    
    
    
    1,005Net income (loss) from continuing operations
    
    
    1,161
    
    
    
    (212
    )
  i)
    
    Home appliances product sales increased $16.2 million, or 54.0%, to $46.2 million in the
first quarter of fiscal 2010 as compared to $30.0 million in the first quarter of fiscal
2009 on increases across all existing product categories except wine coolers, and the
addition of one new category, coffee makers, during fiscal 2009. 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 $7.5 million
in the first quarter of fiscal 2010 as compared to $11.4 million in the first quarter of
fiscal 2009, a decrease of $3.9 million, or 34.2%, primarily resulting from decreased sales
volumes in several audio product lines;iii)
    
    Themed product sales were $500,000 in the first quarter of fiscal 2010 compared to
$600,000 in the first quarter of fiscal 2009, a decrease of $100,000, or 16.7%, primarily
resulting 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 22.2%, to $1.4 million in the
first quarter of fiscal 2010 as compared to $1.8 million in the first quarter of fiscal
2009, due primarily to lower sales volumes in the quarter of licensed video products.;
  14




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Liquidity and Capital Resources
 General
   ®
  Wachovia
  15




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Short-Term Liquidity.
  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
  16




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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. 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.*
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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)/s/ Adrian MaDate: August 19, 2009
    Adrian MaChief Executive Officer
(Principal Executive Officer)/s/ Greenfield PittsDate: August 19, 2009
    Greenfield PittsChief Financial Officer
(Principal Financial and Accounting Officer) 18