Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2015 | Jul. 14, 2015 | Sep. 30, 2014 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Mar. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | MSN | ||
Entity Registrant Name | EMERSON RADIO CORP | ||
Entity Central Index Key | 32,621 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 27,129,832 | ||
Entity Public Float | $ 15,214,783 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Net revenues: | ||
Net product sales | $ 68,984 | $ 70,257 |
Licensing revenue | 7,339 | 7,572 |
Net revenues | 76,323 | 77,829 |
Costs and expenses: | ||
Cost of sales | 62,088 | 63,012 |
Other operating costs and expenses | 661 | 864 |
Selling, general and administrative expenses | 8,829 | 10,434 |
Impairment of trademark | 219 | |
Total costs and expenses | 71,578 | 74,529 |
Operating income | 4,745 | 3,300 |
Other (loss) income: | ||
Loss on settlement of litigation | (4,000) | |
Interest income, net | 215 | 548 |
Nonoperating Income (Expense), Total | 215 | (3,452) |
Income (loss) before income taxes | 4,960 | (152) |
Provision for income tax expense (benefit) | 3,067 | (1,469) |
Net income | $ 1,893 | $ 1,317 |
Basic net income per share | $ 0.07 | $ 0.05 |
Diluted net income per share | $ 0.07 | $ 0.05 |
Weighted average shares outstanding | ||
Basic | 27,130 | 27,130 |
Diluted | 27,130 | 27,130 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2015 | Mar. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 43,485 | $ 26,328 |
Restricted cash | 500 | |
Short term investments | 0 | 32,194 |
Trade accounts receivable, net | 4,275 | 4,354 |
Royalty receivable | 3,522 | 3,865 |
Inventory | 4,519 | 5,438 |
Prepaid purchases | 2,961 | 2,047 |
Prepaid expenses and other current assets | 702 | 1,604 |
Deferred tax assets | 962 | 1,394 |
Total Current Assets | 60,926 | 77,224 |
Property, plant, and equipment, net | 77 | 142 |
Deferred tax assets | 1,058 | 1,753 |
Other assets | 102 | 130 |
Total Non-current Assets | 1,237 | 2,025 |
Total Assets | 62,163 | 79,249 |
Current Liabilities: | ||
Accounts payable and other current liabilities | 2,137 | 3,951 |
Due to affiliates | 500 | |
Income tax payable | 847 | |
Total Current Liabilities | 3,484 | 3,951 |
Long term liabilities | 481 | |
Total Non-current Liabilities | 481 | |
Total Liabilities | 3,965 | 3,951 |
Shareholders' Equity: | ||
Series A Preferred shares - 10,000,000 shares authorized; 3,677 shares issued and outstanding; liquidation preference of $3,677,000 | 3,310 | 3,310 |
Common shares - $0.01 par value, 75,000,000 shares authorized; 52,965,797 shares issued at March 31, 2015 and March 31, 2014, respectively; 27,129,832 shares outstanding at March 31, 2015 and March 31, 2014, respectively | 529 | 529 |
Additional paid-in capital | 79,792 | 98,785 |
Accumulated deficit | (1,209) | (3,102) |
Treasury stock, at cost (25,835,965 shares) | (24,224) | (24,224) |
Total Shareholders' Equity | 58,198 | 75,298 |
Total Liabilities and Shareholders' Equity | $ 62,163 | $ 79,249 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 |
Preferred shares, shares authorized | 10,000,000 | 10,000,000 |
Preferred shares, shares issued | 3,677 | 3,677 |
Preferred shares, shares outstanding | 3,677 | 3,677 |
Preferred shares, liquidation preference | $ 3,677,000 | $ 3,677,000 |
Common shares, par value | $ 0.01 | $ 0.01 |
Common shares, shares authorized | 75,000,000 | 75,000,000 |
Common shares, shares issued | 52,965,797 | 52,965,797 |
Common shares, shares outstanding | 27,129,832 | 27,129,832 |
Treasury stock, shares | 25,835,965 | 25,835,965 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Preferred Stock | Common Shares Issued | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock |
Balance at Mar. 31, 2013 | $ 73,981 | $ 3,310 | $ 529 | $ 98,785 | $ (4,419) | $ (24,224) |
Balance (in shares) at Mar. 31, 2013 | 52,965,797 | |||||
Net income | 1,317 | 1,317 | ||||
Balance at Mar. 31, 2014 | $ 75,298 | 3,310 | $ 529 | 98,785 | (3,102) | (24,224) |
Balance (in shares) at Mar. 31, 2014 | 52,965,797 | 52,965,797 | ||||
Net income | $ 1,893 | 1,893 | ||||
Dividend paid | (18,991) | (18,991) | ||||
Loss on dissolution of subsidiary | (2) | (2) | ||||
Balance at Mar. 31, 2015 | $ 58,198 | $ 3,310 | $ 529 | $ 79,792 | $ (1,209) | $ (24,224) |
Balance (in shares) at Mar. 31, 2015 | 52,965,797 | 52,965,797 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash Flows from Operating Activities: | ||
Net income | $ 1,893 | $ 1,317 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||
Depreciation and amortization | 75 | 88 |
Impairment of trademark | 219 | |
Changes in assets and liabilities: | ||
Accounts receivable | (18) | 3,726 |
Royalty receivable | 343 | (2,896) |
Due from affiliates | 1 | |
Inventory | 919 | (1,984) |
Prepaid purchases | (914) | (1,162) |
Prepaid expenses and other current assets | 902 | (616) |
Deferred tax assets | 1,127 | (535) |
Other assets | 28 | (26) |
Accounts payable and other current liabilities | (1,814) | (3,296) |
Long term liabilities | 481 | |
Asset allowances, reserves and other | 97 | (1,705) |
Capitalized leases | 56 | |
Due to affiliates | 500 | |
Income taxes payable | 847 | (1,281) |
Net cash provided (used) by operating activities | 4,466 | (8,094) |
Cash Flows From Investing Activities: | ||
Short term investment | 32,194 | 13,041 |
Restricted cash | (500) | 70 |
Additions to property, plant and equipment | (10) | (28) |
Loss on dissolution of subsidiary | (2) | |
Net cash provided by investing activities | 31,682 | 13,083 |
Cash Flows from Financing Activities: | ||
Dividend paid | (18,991) | |
Net decrease in short-term capital lease obligations | (43) | |
Net decrease in long-term capital lease obligations | (30) | |
Net cash (used) by financing activities | (18,991) | (73) |
Net increase in cash and cash equivalents | 17,157 | 4,916 |
Cash and cash equivalents at beginning of year | 26,328 | 21,412 |
Cash and cash equivalents at end of year | 43,485 | 26,328 |
Cash paid for: | ||
Interest | 7 | |
Income taxes | $ 58 | $ 1,185 |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2015 | |
Significant Accounting Policies | NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES: Background and Basis of Presentation The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated — the “Company”), and its subsidiaries. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses the Emerson trademark for a variety of products domestically and internationally. It is the Company’s policy to prepare its financial statements in conformity with accounting principles generally accepted in the United States (“US GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. Certain items in prior year financials were reclassified to conform to current year presentation. Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents Highly liquid investments with original maturities of three months or less at the time of purchase are considered to be cash equivalents. Fair Values of Financial Instruments The carrying amounts for cash and cash equivalents, cash securing bank loans, trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term maturity of these financial instruments. The carrying amounts of bank debt approximate their fair values due to their variable rate interest features. Investments The Company determines the appropriate classifications of securities at the time of purchase and evaluates the continuing appropriateness of that classification thereafter. Realized gains and losses are determined on a specific identification basis and are reported separately as a component of income. Decreases and increases in the fair value of securities deemed to be other than temporary are included in earnings. Long-Lived Assets The Company’s long-lived assets include property, plant and equipment. At March 31, 2015, the Company had approximately $77,000 of property, plant and equipment, net of accumulated depreciation. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC Topics 350 “Intangibles” and 360 “Property, Plant and Equipment”. The recoverability of assets held and used is measured by a comparison of the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Future events could cause the Company to conclude that impairment indicators exist and that long-lived assets may be impaired. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. During fiscal 2014, upon completion of an analysis which showed the absence of future expected cash flows, the Company determined that the value of one of its non-strategic trademarks was fully impaired. Thus, the Company recorded an impairment charge of $0.2 million in December 2013 to write off this trademark. Property, Plant and Equipment Property, plant and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets being depreciated. The cost of maintenance and repairs is charged to expense as incurred. Significant renewals and betterments are capitalized and depreciated over the remaining estimated useful lives of the related assets. At time of disposal, the cost and related accumulated depreciation are removed from the Company’s records and the difference between net carrying value of the asset and the sale proceeds is recorded as a gain or loss. Depreciation of property, plant and equipment is provided by the straight-line method as follows: • Machinery, Equipment and Software Three years to seven years • Furniture & Fixtures Seven years • Leasehold Improvements Straight-line basis over the shorter of the useful life of the improvement or the term of the lease Revenue Recognition Distribution of products Revenues from product distribution are recognized at the time title passes to the customer. Under the Direct Import Program, title passes in the country of origin. Under the Domestic Program, title passes primarily at the time of shipment. Estimates for future expected returns are based upon historical return rates and netted against revenues. Management must make estimates of potential future product returns related to current period product revenue. Management analyzes historical returns, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the reserve for sales returns. Management judgments and estimates must be made and used in connection with establishing the sales return reserves in any accounting period. Additional reserves may be required if actual sales returns increase above the historical return rates. Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve. Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Staff Accounting Bulletins 101 “Revenue Recognition in Financial Statements,” and 104 “Revenue Recognition, corrected copy” (“SAB’s 101 and 104”). At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB’s 101 and 104, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB 104’s and 101’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue. If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. Licensing In addition to the distribution of products, the Company grants licenses for the right to use the Company’s trademarks for a stated term for the manufacture and/or sale of consumer electronics and other products under agreements which require payment of either i) a non-refundable minimum guaranteed royalty or, ii) the greater of the actual royalties due (based on a contractual calculation, normally comprised of actual product sales by the licensee multiplied by a stated royalty rate, or “Sales Royalties”) or a minimum guaranteed royalty amount. In the case of (i), such amounts are recognized as revenue on a straight-line basis over the term of the license agreement. In the case of (ii), Sales Royalties in excess of guaranteed minimums are accounted for as variable fees and are not recognized as revenue until the Company has ascertained that the licensee’s sales of products have exceeded the guaranteed minimum. In effect, the Company recognizes the greater of Sales Royalties earned to date or the straight-line amount of minimum guaranteed royalties to date. In the case where a royalty is paid to the Company in advance, the royalty payment is initially recorded as a liability and recognized as revenue as the royalties are deemed to be earned according to the principles outlined above. Cost of Sales Cost of sales includes actual product cost, quality control costs, change in inventory reserves, duty, buying costs, the cost of transportation to the Company’s third party logistics providers’ warehouse from its manufacturers, warehousing costs, and an allocation of those selling, general and administrative expenses that are directly related to these activities. Other Operating Costs and Expenses Other operating costs and expenses include costs associated with returned product received from retailers, warranty costs, warehouse supply expenses, and an allocation of those selling, general and administrative expenses that are directly related to these activities. Because other operating costs and expenses is not included in cost of sales, the reported gross margin may not be comparable to those of other distributors that may include all costs related to the cost of product to their cost of sales and in the calculation of gross margin. Selling, General and Administrative Expenses Selling, general and administrative expenses include all operating costs of the Company that are not directly related to the cost of procuring product or costs not included in other operating costs and expenses. Foreign Currency The assets and liabilities of foreign subsidiaries have been translated at current exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the year. Related translation adjustments are reported as a separate component of shareholders’ equity. Losses and gains resulting from foreign currency transactions are included in the results of operations. The Company generally does not enter into foreign currency exchange contracts to hedge its exposures related to foreign currency fluctuations and there were no foreign exchange forward contracts held by the Company at March 31, 2015 or March 31, 2014. Advertising Expenses Advertising expenses are charged against earnings as incurred and are included in selling, general and administrative expenses. The Company incurred no advertising expenses during fiscal 2015 or fiscal 2014. Sales Allowance and Marketing Support Expenses Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Staff Accounting Bulletins 101 “Revenue Recognition in Financial Statements,” and 104 “Revenue Recognition, corrected copy” (“SAB’s 101 and 104”). At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB’s 101 and 104, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB 104’s and 101’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue. If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. The sales and marketing support accrual activity for fiscal 2015 and fiscal 2014 was as follows (in thousands): Balance at March 31, 2013 $ 1,152 additions 1,529 usages (1,883 ) adjustments (328 ) Balance at March 31, 2014 $ 470 additions 1,504 usages (1,175 ) adjustments (224 ) Balance at March 31, 2015 $ 575 Interest income, net The Company records interest as incurred. The net interest income for fiscal 2015 and 2014 consists of: 2015 2014 (In thousands) Interest expense $ — $ (6 ) Interest income 215 554 Interest income, net $ 215 $ 548 Income Taxes Deferred income taxes are recorded to account for the tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets have been recorded net of an appropriate valuation allowance, to the extent management believes it is more likely than not that such assets will be realized. (See Note 5 “Income Taxes”). Comprehensive Income Comprehensive income is net income adjusted for foreign currency translation adjustments. Earnings Per Common Share Earnings per common share are based upon the weighted average number of common and common equivalent shares outstanding. Outstanding stock options and warrants are treated as common stock equivalents when dilution results from their assumed exercise. Stock-Based Compensation The Company accounts for all share based payments in accordance with ASC Topic 71X, “Compensation”, subtopic 718 “Compensation — Stock Compensation”. Accordingly, the computed fair value is expensed ratably over the requisite vesting period. The Company recorded no stock-based compensation costs during fiscal 2015 or fiscal 2014. There were no stock options granted by the Company in fiscal 2015 or fiscal 2014. Recent Accounting Pronouncements The following Accounting Standards Updates (“ASUs”) were issued by the Financial Accounting Standards Board during the twelve months ended March 31, 2015 or during the interim period between March 31, 2015 and June 23, 2015 which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates: Accounting Standards Update 2015-03, Interest-Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs (Issued April 2015) To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. Accounting Standards Update 2015-02, Consolidation (Topic 810) Amendments to the Consolidation Analysis (Issued February 2015) The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: 1. Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities 2. Eliminate the presumption that a general partner should consolidate a limited partnership 3. Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships 4. Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. Accounting Standards Update 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20) Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (Issued January 2015) This Update eliminates from GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement — Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities. Accounting Standards Update 2014-12, Compensation — Stock Compensation (Topic 718) Derivatives and Hedging (Topic 815): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Issued June 2014) The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. |
Inventories
Inventories | 12 Months Ended |
Mar. 31, 2015 | |
Inventories | NOTE 2 — INVENTORIES: Inventories are stated at the lower of cost or market. Cost is determined using the first-in, first-out method. As of March 31, 2015 and March 31, 2014, inventories consisted exclusively of purchased finished goods. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions | NOTE 3 — RELATED PARTY TRANSACTIONS: From time to time, Emerson engages in business transactions with its controlling shareholder, The Grande Holdings Limited (In Liquidation) (“Grande”), and one or more of Grande’s direct and indirect subsidiaries. Set forth below is a summary of such transactions. Controlling Shareholder The Grande Holdings Limited (In Liquidation) (“Grande”) has, together with S&T International Distribution Limited (“S&T”), a subsidiary of Grande, and Grande N.A.K.S. Ltd., a subsidiary of Grande (together with Grande, the “Reporting Persons”), filed, on June 11, 2014, a Schedule 13D/A with the Securities and Exchange Commission (“SEC”) stating that, as of the filing date, the Reporting Persons had the shared power to vote and direct the disposition of 15,243,283 shares, or approximately 56.2%, of the outstanding common stock of Emerson. As the Reporting Persons, and by extension Grande (as their ultimate parent) have control of a majority of the outstanding shares of common stock of Emerson, Emerson is a Controlled company, as defined in Section 801(a) of the NYSE MKT Rules. On May 31, 2011, upon application of a major creditor, the High Court of Hong Kong appointed Fok Hei Yu (who is also known by the anglicized name Vincent Fok), formerly a director and Chairman of the Board of the Company, and Roderick John Sutton, both of FTI Consulting (Hong Kong) Limited (“FTI”), as Joint and Several Provisional Liquidators over Grande. Accordingly, as of May 31, 2011, the directors of Grande no longer have the ability to exercise control over Grande or the power to direct the voting and disposition of the 15,243,283 shares beneficially owned by Grande. Instead, Mr. Fok and Mr. Sutton, as Provisional Liquidators over Grande, currently have such power. In addition, on March 20, 2013, the Provisional Liquidators provided to Emerson a written statement that they are obligated to liquidate the 15,243,283 shares in the Company beneficially owned by Grande. However, in February 2014, the Provisional Liquidators for and on behalf of Grande issued a public announcement that Grande, among other things, had been in discussions with different investors to pursue a restructuring plan and the resumption of trading of Grande’s shares on the Hong Kong Stock Exchange (“HKSE”). In addition, in May 2014, the Provisional Liquidators for and on behalf of Grande issued a public announcement disclosing that on May 2, 2014, Grande, the Provisional Liquidators and a creditor of Grande entered into an agreement to implement the “Grande Restructuring Proposal” submitted by a creditor of Grande. Based on information contained within the public announcement issued for Grande in May 2014, if the Grande Restructuring Proposal is implemented, Mr. Christopher Ho, who served as the Company’s Chairman of the Board until November 2013 and is currently the sole director of Grande, and his associates would continue to have a majority interest in Grande and would regain the power to direct the voting and disposition of the 15,243,283 shares beneficially owned by Grande. As disclosed in the Schedule 13D/A filed by the Reporting Persons on May 22, 2014, the Grande Restructuring Proposal includes a plan to re-list Grande on the HKSE and provides that many assets of Grande, including its shares of Emerson, would remain part of Grande. According to the public announcement issued for Grande in May 2014, the Grande Restructuring Plan will require approvals, consents and sanctions of the HKSE, courts in Hong Kong and Bermuda, and the creditors and shareholders of Grande. In addition, on June 11, 2014, Grande announced that it had received a summons issued by a creditor of Grande seeking the removal of the Provisional Liquidators. On June 1, 2015 the Provisional Liquidators for and on behalf of Grande issued a public announcement disclosing that by letter dated May 29, 2015, the HKSE decided to allow Grande to proceed with Grande’s “Updated Resumption Proposal”, subject to the satisfaction of certain conditions by December 21, 2015. It is not possible at this time to predict whether Grande can satisfy the conditions established by the HKSE for the resumption or relisting of Grande on HKSE, or whether the Grande Restructuring Proposal will receive all necessary approvals, nor can there be any assurances regarding the timing, terms or effects of implementing the Grande Restructuring Proposal or if the Provisional Liquidators will be removed. However, even though the Provisional Liquidators continue to maintain the ability to exercise the power to direct the voting and disposition of shares, as long as the Provisional Liquidators are pursuing this restructuring proposal that would result in Grande retaining beneficial ownership of the 15,243,283 shares of Emerson common stock, the Provisional Liquidators may not be actively seeking to liquidate those shares. If the Grande Restructuring Proposal is completed as described within the public announcement issued for Grande in May 2014, it is expected that the 15,243,283 shares of Emerson common stock held of record by Grande’s subsidiary, S&T, would remain with S&T and that Grande would once again have the power to direct the voting and disposition of this 56.2% controlling interest in Emerson common stock. It is not possible at this time to predict what impact the removal of the Provisional Liquidators would have on the Grande Restructuring Proposal or Emerson and Emerson cannot predict nor provide any assurances regarding the possible effects on the Company, its shareholders, the trading price of its common stock or any other consequences that could result if the Grande Restructuring Proposal is approved and Grande again has the power to control Emerson. Related Party Transactions Rented Office Space in Hong Kong Transactions with Brighton Marketing Limited, a subsidiary of Grande Until May 2013, at which time these charges ceased, the Company was billed for service charges from Brighton Marketing Limited, a subsidiary of Grande, in connection with the Company’s rented office space in Hong Kong. These charges totaled approximately $1,000 for the twelve month period ended March 31, 2014. Emerson owed Brighton Marketing Limited nil at March 31, 2014 pertaining to these charges. Transactions with The Grande Properties Management Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company The Company is charged for service charges from The Grande Properties Management Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company, in connection with the Company’s rented office space in Hong Kong. Mr. Ho did not stand for re-election to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Ho is no longer a director of the Company or a related party to the Company after November 7, 2013, and, consequently, such service charges from The Grande Properties Management Limited, are not considered Related Party Transactions after November 7, 2013. These charges totaled approximately $11,000 for the period April 1, 2013 through November 7, 2013. The Company owed nil to The Grande Properties Management Limited related to these charges at March 31, 2014. Transactions with Lafe Strategic Services Limited, a related party to Christopher Ho, the former Chairman of the Board of Directors of the Company Beginning July 3, 2012, the Company entered into a rental agreement with Lafe Strategic Services Limited (“Lafe”), which is a related party to Mr. Ho, whereby the Company was leasing out excess space within its rented office space in Hong Kong to Lafe. The rental agreement was on a month-by-month basis, cancellable by either the Company or Lafe on one month’s written notice. The agreement was cancelled by Lafe effective April 1, 2013 at which time Lafe owed Emerson nil in rental payable from the arrangement. Emerson returned the approximately $6,000 to Lafe in July 2013 that Emerson had been holding as a security deposit in accordance with the terms of the agreement. Consulting Services Provided to Emerson by one of its Former Directors Until such agreement was cancelled by the Company effective November 7, 2013, Mr. Eduard Will, a former director of Emerson, was paid consulting fees by the Company for work performed by Mr. Will related to a lawsuit that the Company settled in December 2013 and merger and acquisition research. Mr. Will was not re-elected to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Will is no longer a director of the Company or a related party to the Company after November 7, 2013. During the period April 1, 2013 through November 7, 2013, Emerson paid consulting fees of approximately $68,000 to Mr. Will for such work performed by Mr. Will as well as expense reimbursements and advances, in the aggregate, of approximately $6,000 related to this consulting work and his service as a director of Emerson. At November 7, 2013, the Company owed Mr. Will nil related to these activities. Dividend-Related Issues with S&T On March 2, 2010, the Board declared an extraordinary dividend of $1.10 per common share which was paid on March 24, 2010. In connection with the Company’s determination as to the taxability of the dividend, the Board relied upon information and research provided to it by the Company’s tax advisors and, in reliance on the “stock-for-debt” exception in the Internal Revenue Code Sections 108(e)(8) and (e)(10), concluded that 4.9% of such dividend paid was taxable to the recipients. In August 2012, the Company received a Form 886-A from the IRS which challenges the Company’s conclusions and determines that the Company does not qualify for the above-referenced exception. Accordingly, the IRS has concluded that 100% of the dividend paid was taxable to the recipients. The Company is defending its position and calculations and is contesting the position asserted by the IRS. The Company prepared and, on October 25, 2012, delivered its rebuttal to the IRS contesting the IRS determination. There can be no assurance that the Company will be successful in defending its position. In the event that the Company is not successful in establishing with the IRS that the Company’s calculations were correct, then the shareholders who received the dividend likely will be subject to and liable for an assessment of additional taxes due. Moreover, the Company may be contingently liable for taxes due by certain of its shareholders resulting from the dividend paid by the Company. Initially, the Company withheld from the dividend paid to foreign shareholders an amount equal to the tax liability associated with such dividend. On April 7, 2010, upon a request made to the Company by its foreign controlling shareholder, S&T, the Company entered into an agreement with S&T (the “Agreement”), whereby the Company returned to S&T on April 7, 2010 that portion of the funds withheld for taxes from the dividend paid on March 24, 2010 to S&T, which the Company believed was not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits at that time. The Agreement includes provisions pursuant to which S&T agreed to indemnify the Company for any liability imposed on it as a result of the Company’s agreement not to withhold such funds for S&T’s possible tax liability and a pledge of stock as collateral. The Company continues to assert that such dividend is largely not subject to U.S. tax based on the Company’s good-faith estimate of its accumulated earnings and profits. In addition, the Company also continues to assert that this transaction results in an off-balance sheet arrangement and a possible contingent tax liability of the Company, which, if recognized, would be offset by the calling by the Company on S&T of the indemnification provisions of the Agreement. In February 2011, upon the request of S&T to the Company, the Company and S&T agreed that the collateral pledged as a part of the Agreement would no longer be required and such collateral was returned by the Company to S&T in March 2011 and the Agreement was amended and restated to remove the collateral requirement but retain the indemnification provisions. The Agreement, as amended (the “Amended Agreement”), remains in effect as of today. In September 2014, the Company, with S&T’s consent, withheld $0.5 million in cash, to be pledged as collateral against the Amended Agreement, from the dividend paid to S&T on September 30, 2014 along with such dividend paid on that date to all common stockholders. The Company holds, as of March 31, 2015, $0.5 million in cash collateral from S&T against the Amended Agreement. In the event that (i) the Company is not successful in establishing with the IRS that the Company’s calculations were correct and (ii) S&T is unable or unwilling to pay the additional taxes due or indemnify the Company under the terms of the Amended Agreement, the Company may be liable to pay such additional taxes, which, together with penalties and interest, are currently estimated by the Company to be approximately $4.8 million as of March 31, 2015, $0.5 million of which is collateralized in cash held by the Company as of March 31, 2015 as described above and which is classified by the Company as restricted cash on its balance sheet. Any such liability, should it be required to be recognized by the Company, would likely have a material adverse effect on the Company’s results of operations in the period recognized. S&T is a subsidiary of Grande, which is currently in liquidation (as described above under “ Controlling Shareholder Other Until such shared usage stopped, effective on January 1, 2014, the Company formerly charged Vigers Appraisal & Consulting Ltd. (“Vigers”), a related party of Christopher Ho, the former Chairman of the Board of Directors of the Company, for usage of telephone and data lines maintained by Emerson. Mr. Ho did not stand for re-election to serve as a director of the Company at the Company’s 2013 Annual Meeting of Stockholders held on November 7, 2013. Accordingly, Mr. Ho is no longer a director of the Company or a related party to the Company after November 7, 2013, and, consequently, such service charges from the Company to Vigers are not considered Related Party Transactions after November 7, 2013. During the period April 1, 2013 through November 7, 2013, Emerson invoiced Vigers approximately $3,000 under this arrangement. Vigers owed Emerson nil at November 7, 2013 related to this activity. |
Property, Plant, and Equipment
Property, Plant, and Equipment | 12 Months Ended |
Mar. 31, 2015 | |
Property, Plant, and Equipment | NOTE 4 — PROPERTY, PLANT, AND EQUIPMENT: As of March 31, 2015 and 2014, property, plant and equipment is comprised of the following: 2015 2014 (In thousands) Computer equipment and software 345 338 Furniture and fixtures 194 196 Machinery and equipment 12 267 Leasehold improvements 8 8 559 809 Less accumulated depreciation and amortization (482 ) (667 ) $ 77 $ 142 Depreciation of property, plant, and equipment amounted to approximately $75,000 and $88,000 for the twelve months ended March 31, 2015 and 2014, respectively. During fiscal 2015, the Company disposed of property, plant and equipment with gross book values totaling approximately $259,000. The Company recognized a total net loss of approximately $1,000 on these disposals in fiscal 2015. During fiscal 2014, the Company disposed of property, plant and equipment with gross book values totaling approximately $412,000. The Company recognized a total net gain of approximately $2,000 on these disposals in fiscal 2014. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2015 | |
Income Taxes | NOTE 5 — INCOME TAXES: Income Tax Issues Concerning Overseas Income On April 15, 2013 and June 5, 2013, the Company received correspondence from the Internal Revenue Service (“IRS”) pertaining to the Company’s fiscal 2010 and fiscal 2011, including a (i) Form 5701 and Form 886-A regarding Adjusted Sales Income (collectively referred to as “NOPA 1”) and (ii) Form 5701 and Form 886-A regarding Adjusted Subpart F-Foreign Base Company Sales Income (“FBCSI”) (collectively referred to as “NOPA 2”), which challenged certain tax positions of the Company with respect to the Company’s controlled foreign corporation in Macao (the “Macao CFC”). Although the Company continues to dispute the assessments made by the IRS as set forth in each of NOPA 1 and NOPA 2, in June 2015, following a formal IRS Appeal, the Company and the IRS agreed to settle on the following terms: (1) that the IRS would not pursue the aforementioned NOPA 1 and NOPA 2 income assessments pertaining to fiscal 2010 and fiscal 2011 provided that the Company agreed to treat 30% of the Macao CFC’s income as taxable Subpart F income in the U.S. for fiscal 2010 and fiscal 2011, and (2) that the IRS would impose no penalties for fiscal 2010 and fiscal 2011 (collectively, the “Settlement Agreement”). Based on discussions between the Company, its advisors and the IRS, the Company believes that the IRS intends to apply the Settlement Agreement’s calculation reached for the Company’s fiscal 2010 and fiscal 2011 periods to the Company’s fiscal 2012 and fiscal 2013 periods. Based on the foregoing, the Company estimates that it is subject to additional federal and state income taxes for fiscal 2010 though fiscal 2013 of approximately $3.0 million. Of this amount, approximately $1.6 million was recorded as income tax expense in the fourth quarter of fiscal 2015, $0.5 million was recorded as income tax expense in the fourth quarter of fiscal 2014 and $0.9 million was recorded as income tax expense in the fourth quarter of fiscal 2013. With respect to fiscal 2014 and fiscal 2015, there is some uncertainty as to what the ultimate tax treatment will be of a service fee regularly paid by the Company to the Macao CFC (the “Service Fee”). Therefore, an uncertain tax position under the requirements of ASC 740-10 “Income Tax Accounting” exists, and the Company has recorded an income tax expense and liability of approximately $0.5 million to its March 31, 2015 financial statements, $0.4 million of which was recorded in the third quarter of fiscal 2015 and $0.1 million of which was recorded in the fourth quarter of fiscal 2015, representing the maximum amount of income taxes, penalties and interest that the Company estimates it could owe for fiscal 2014 and fiscal 2015 if the Service Fee is determined to be taxable to the Company as FBCSI under the Internal Revenue Code. Other The Company’s provision for income tax (benefit) expense for fiscal 2015 and fiscal 2014 was as follows: 2015 2014 (In thousands) Current: Federal $ (308 ) $ (450 ) Foreign, state and other 55 (484 ) Prior year federal and state, with interest 1714 0 Uncertain tax positions, federal and state 480 0 Deferred: Federal 672 (467 ) Foreign, state and other 454 (68 ) Provision for income tax (benefit) expense $ 3,067 $ (1,469 ) The Company files a consolidated federal return and certain state and local income tax returns. The difference between the effective rate reflected in the provision for income taxes and the amounts determined by applying the statutory federal rate of 34% to earnings before income taxes for fiscal March 2015 and fiscal 2014 is analyzed below: 2015 2014 (In thousands) Statutory provision $ 1,702 $ (52 ) Foreign subsidiary (798 ) (1,009 ) State taxes 336 (529 ) Permanent differences 61 304 Prior year taxes 1,193 0 True up to prior year taxes (226 ) (158 ) Valuation allowance 0 (234 ) Increase in Uncertain Tax Positions 480 0 NOL Adjustments 319 209 Provision for income tax (benefit) expense $ 3,067 $ (1,469 ) As of March 31, 2015 and March 31, 2014, the significant components of the Company’s deferred tax assets and liabilities were as follows: 2015 2014 (In thousands) Deferred tax assets: Current: Accounts receivable reserves $ 484 $ 842 Inventory reserves 411 401 Accruals 67 151 Total current deferred tax assets 962 1,394 Non-current: Property, plant and equipment 522 669 Net operating loss and credit carry forwards 536 1,084 Total non-current deferred tax assets 1,058 1,753 Total deferred tax assets 2,020 3,147 Deferred tax liabilities: Non-current: Uncertain tax position 0 Total deferred tax liabilities 0 Net deferred tax assets $ 2,020 $ 3,147 The Company has $1.4 million of U.S. federal net operating loss carry forwards (“NOLs”) as of March 31, 2015 that expire in 2034. The Company has $0.3 million of state NOLs as of March 31, 2015 as follows (in millions $): Loss Year (Fiscal) Included in DTA Expiration Year (Fiscal) 2014 $ 0.3 million 2034 The tax benefits related to these state net operating loss carry forwards and future deductible temporary differences are recorded to the extent management believes it is more likely than not that such benefits will be realized. Income of foreign subsidiaries before taxes was $2,367,000 for the fiscal year ended March 31, 2015 as compared to income before taxes of $2,966,000 for the fiscal year ended March 31, 2014, respectively. No provision was made for U.S. or additional foreign taxes on undistributed earnings of foreign subsidiaries. Such earnings have been and will be reinvested but could become subject to additional tax if they were remitted as dividends, or were loaned to the Company or a domestic affiliate, or if the Company should sell its stock in the foreign subsidiaries. It is not practicable to determine the amount of additional tax, if any, that might be payable on undistributed foreign earnings. A reconciliation of the Company’s changes in uncertain tax positions from April 1, 2014 to March 31, 2015 is as follows: In 000’s Total amount of unrecognized tax benefits as of April 1, 2013 $ 121 Gross increases in unrecognized tax benefits as a result of tax positions taken during a prior period 223 Gross decreases in unrecognized tax benefits as a result of tax positions taken during a prior period — Gross increases in unrecognized tax benefits as a result of tax positions taken during the current period 257 Gross decreases in unrecognized tax benefits as a result of tax positions taken during the current period — Decreases in unrecognized tax benefits relating to settlements with taxing authorities — Reductions to unrecognized tax benefits as a result of lapse of statute of limitations (121 ) Total amount of unrecognized tax benefits as of March 31, 2015 480 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies | NOTE 6 — COMMITMENTS AND CONTINGENCIES: Leases: The Company leases warehouse and office space from non-affiliated companies, with annual commitments as follows (in thousands): Fiscal Years Amount 2016 260 2017 167 2018 108 2019 35 Thereafter — Total $ 570 Rent expense resulting from leases with non-affiliated companies aggregated $790,000 and $777,000, respectively, for fiscal 2015 and 2014. Letters of Credit: The Company utilizes the services of one of its banks to issue secured letters of credit on behalf of the Company, as needed, on a 100% cash collateralized basis. At March 31, 2015 and March 31, 2014, the Company had no letters of credit outstanding. Capital Expenditure and Other Commitments: As of March 31, 2015, there were no capital expenditure or other commitments other than the normal purchase orders used to secure product. Employee Benefit Plan: The Company currently sponsors a defined contribution 401(k) retirement plan which is subject to the provisions of the Employee Retirement Income Security Act. The Company matches a percentage of the participants’ contributions up to a specified amount. These contributions to the plan for fiscal 2015 and 2014 were $47,000 and $58,000, respectively, and were charged against earnings for the periods presented. |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Mar. 31, 2015 | |
Stock Based Compensation | NOTE 7 — STOCK BASED COMPENSATION: In 2004, the Company adopted the 2004 Employee Stock Options Plan. The provisions for exercise price, term and vesting schedule are, for the most part, the same as the previous Incentive Stock Option Plan. The 2004 Employee Stock Options Plan expired on its terms during fiscal 2015. The maximum aggregate number of shares of common stock available pursuant to this plan prior to its expiration was 2,500,000 shares. There were no transactions during fiscal 2015 or fiscal 2014, and as of March 31, 2015, there were no options outstanding. At March 31, 2015 and 2014, the weighted average exercise price of exercisable options under the Program was nil. In 2004, the Company’s Board of Directors, and the stockholders subsequently approved the 2004 Non-Employee Director Stock Option Plan, the provisions for exercise price, term and vesting schedule being, for the most part, the same as the 1994 Non-Employee Director Stock Option Plan. The 2004 Non-Employee Director Stock Option Plan expired on its terms during fiscal 2015. The maximum number of shares of Common Stock available under this plan prior to its expiration was 250,000 shares. There were no options granted during the fiscal years ending March 31, 2015 or 2014. As of March 31, 2015, there were no options outstanding. The weighted average exercise price of exercisable options under the Non-Employee Director Stock Option Plan was nil for March 31, 2015 and 2014. A summary of transactions under the plan for the two years ended March 31, 2015 is as follows: Number of Options Weighted Average Exercise Price Outstanding — April 1, 2013 50,000 $ 3.13 Cancelled (50,000 ) $ 3.13 Outstanding — March 31, 2014 0 $ 0.00 Outstanding — March 31, 2015 0 $ 0.00 Exercisable at March 31, 2015 0 $ 0.00 |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Mar. 31, 2015 | |
Shareholders' Equity | NOTE 8 — SHAREHOLDERS’ EQUITY: Common Shares: Authorized common shares total 75,000,000 shares of common shares, par value $0.01 per share, of which, 27,129,832 were issued and outstanding as of March 31, 2015 and 2014. Shares held in treasury at March 31, 2015 and 2014 were 25,835,965. Common Stock Repurchase Program: In September 2003, the Company’s Board authorized a share repurchase programs for 2,000,000 shares. No shares were repurchased in fiscal 2015 or fiscal 2014. As of March 31, 2015, 732,377 shares remain available for repurchase under this program. Series A Preferred Stock: The Company has issued and outstanding 3,677 shares of Series A Preferred Stock, (“Preferred Stock”) $.01 par value, with a face value of $3,677,000, which had no determinable market value as of March 31, 2015. Effective March 31, 2002, the previously existing conversion feature of the Preferred Stock expired. The Series A convertible preferred stock is non-voting, has no dividend preferences and has not been convertible since March 31, 2002; however, it retains a liquidation preference. |
Short Term Investments
Short Term Investments | 12 Months Ended |
Mar. 31, 2015 | |
Short Term Investments | NOTE 9 — SHORT TERM INVESTMENTS: At March 31, 2015 and March 31, 2014, the Company held short-term investments totaling nil and $32.2 million, respectively. The Company held $15.1 million in certificates of deposit which were classified as cash equivalents as of March 31, 2015 and $5.1 million as of March 31, 2014. The $15.1 million in certificates of deposit will mature on July 31, 2015. |
Net Earnings Per Share
Net Earnings Per Share | 12 Months Ended |
Mar. 31, 2015 | |
Net Earnings Per Share | NOTE 10 — NET EARNINGS PER SHARE: The following table sets forth the computation of basic and diluted earnings per share for the years ended March 31, 2015 and March 31, 2014: 2015 2014 (In thousands, except per share data) Numerator: Net income for basic and diluted earnings per share $ 1,893 $ 1,317 Denominator: Denominator for basic earnings per share — weighted average shares 27,130 27,130 Effect of dilutive securities on denominator: Options — — Denominator for diluted earnings per share — weighted average shares and assumed conversions 27,130 27,130 Net income per share: Basic and diluted income per share $ .07 $ .05 For the year ended March 31, 2015, there were no outstanding instruments which were potentially dilutive. |
License Agreements
License Agreements | 12 Months Ended |
Mar. 31, 2015 | |
License Agreements | NOTE 11 — LICENSE AGREEMENTS: The Company is party to numerous license agreements that allow licensees to use its trademarks for the manufacture and/or the sale of consumer electronics and other products and are referred to as “outward licenses”. These license agreements (i) allow the licensee to use the Company’s trademarks for a specific product category, or for sale within specific geographic areas, or for sales to a specific customer base, or any combination of the above, or any other category that might be defined in the license agreement and (ii) may be subject to renewal at the initial expiration of the agreements and are governed by the laws of the United States. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Mar. 31, 2015 | |
Legal Proceedings | NOTE 12 — LEGAL PROCEEDINGS: The Company is not currently a party to any legal proceedings other than litigation matters, in most cases involving ordinary and routine claims incidental to its business. Management cannot estimate with certainty the Company’s ultimate legal and financial liability with respect to such pending litigation matters. However, management believes, based on its examination of such matters, that the Company’s ultimate liability will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. |
Risks and Uncertainties
Risks and Uncertainties | 12 Months Ended |
Mar. 31, 2015 | |
Risks and Uncertainties | NOTE 13 — RISKS AND UNCERTAINTIES: Customer and Licensee Concentration For the twelve months ended March 31, 2015 and March 31, 2014, the Company’s largest two customers, Target and Wal-Mart, and largest licensee, Funai, accounted for approximately 87% and 86% of the Company’s net revenues, respectively, with Target accounting for 51% and 58%, respectively, Wal-Mart accounting for 28% and 22%, respectively, and Funai accounting for 8% and 6%, respectively. A significant decline in net sales to Target or Wal-Mart, or a significant decline in licensing revenue from Funai, would have a material adverse effect on the Company’s business, financial condition and results of operation. Product Concentration For the twelve months ended March 31, 2015, the Company’s gross product sales were comprised of five product types within two categories — housewares products and audio products, and two of these product types, namely microwave ovens and compact refrigerators — both within the housewares category — generated approximately 95% of the Company’s gross product sales, with microwave ovens generating approximately 67% of the total and compact refrigerators generating approximately 28% of the total. For the twelve months ended March 31, 2014, the Company’s gross product sales were comprised of the same five product types within the same two categories — housewares products and audio products, and two of these product types, namely microwave ovens and compact refrigerators — both within the housewares category — generated approximately 93% of the Company’s gross product sales, with microwave ovens generating approximately 62% of the total and compact refrigerators generating approximately 31% of the total. As a results of this dependence, a significant decline in pricing of, or market acceptance of these product types and categories, either in general or specifically as marketed by the Company, would have a material adverse effect on the Company’s business, financial condition and results of operation. Because the market for these product types and categories is characterized by periodic new product introductions, the Company’s future financial performance will depend, in part, on the successful and timely development and customer acceptance of new and enhanced versions of these product types and other products distributed by the Company. There can be no assurance that the Company will continue to be successful in marketing these products types within these categories or any other new or enhanced products. Concentrations of Credit Risk As a percent of the Company’s total trade accounts receivable, net of specific reserves, the Company’s two top customers, Wal-Mart and Target, accounted for 30% and 50% as of March 31, 2015, respectively, and 58% and 36% as of March 31, 2014. The Company periodically performs credit evaluations of its customers but generally does not require collateral, and the Company provides for any anticipated credit losses in the financial statements based upon management’s estimates and ongoing reviews of recorded allowances. The accounts receivable allowance for doubtful accounts on the Company’s total trade accounts receivable balances was $5,000 at March 31, 2015 and $11,000 at March 31, 2014. Due to the high concentration of the Company’s net trade accounts receivables among just two customers, any significant failure by one of these customers to pay the Company the amounts owing against these receivables would result in a material adverse effect on the company’s business, financial condition and results of operation. Supplier Concentration The Company, during the twelve months ended March 31, 2015, procured approximately 96% of its products for resale from its three largest factory suppliers, and of these, the Company procured approximately 66% of these products from one of them. The Company, during the twelve months ended March 31, 2014, procured approximately 87% of its products for resale from its three largest factory suppliers, and of these, the Company procured approximately 64% of these products from one of them. No assurance can be given that ample supply of product would be available at current prices and on current credit terms if the Company were required to seek alternative sources of supply without adequate notice by a supplier or a reasonable opportunity to seek alternate production facilities and component parts and any resulting significant shortage of product supply would have a material adverse effect on the Company’s business, financial condition and results of operation. |
Geographic Information
Geographic Information | 12 Months Ended |
Mar. 31, 2015 | |
Geographic Information | NOTE 14 — GEOGRAPHIC INFORMATION: Net revenues and long-lived assets of the Company for the fiscal years ended March 31, 2015 and March 31, 2014 are summarized below by geographic area (in thousands). Net revenues are attributed to geographic area based on location of customer. Year Ended March 31, 2015 U.S. Foreign Consolidated Net revenues $ 76,323 $ — $ 76,323 Long-lived assets $ 76 $ 103 $ 179 Year Ended March 31, 2014 U.S. Foreign Consolidated Net revenues $ 77,829 $ — $ 77,829 Long-lived assets $ 129 $ 143 $ 272 |
Significant Accounting Polici21
Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2015 | |
Background and Basis of Presentation | Background and Basis of Presentation The consolidated financial statements include the accounts of Emerson Radio Corp. (“Emerson”, consolidated — the “Company”), and its subsidiaries. The Company designs, sources, imports and markets a variety of houseware and consumer electronic products, and licenses the Emerson trademark for a variety of products domestically and internationally. It is the Company’s policy to prepare its financial statements in conformity with accounting principles generally accepted in the United States (“US GAAP”). The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation. Certain items in prior year financials were reclassified to conform to current year presentation. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash Equivalents | Cash Equivalents Highly liquid investments with original maturities of three months or less at the time of purchase are considered to be cash equivalents. |
Fair Values of Financial Instruments | Fair Values of Financial Instruments The carrying amounts for cash and cash equivalents, cash securing bank loans, trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term maturity of these financial instruments. The carrying amounts of bank debt approximate their fair values due to their variable rate interest features. |
Investments | Investments The Company determines the appropriate classifications of securities at the time of purchase and evaluates the continuing appropriateness of that classification thereafter. Realized gains and losses are determined on a specific identification basis and are reported separately as a component of income. Decreases and increases in the fair value of securities deemed to be other than temporary are included in earnings. |
Long-Lived Assets | Long-Lived Assets The Company’s long-lived assets include property, plant and equipment. At March 31, 2015, the Company had approximately $77,000 of property, plant and equipment, net of accumulated depreciation. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC Topics 350 “Intangibles” and 360 “Property, Plant and Equipment”. The recoverability of assets held and used is measured by a comparison of the carrying amount of the asset to the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Future events could cause the Company to conclude that impairment indicators exist and that long-lived assets may be impaired. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and results of operations. During fiscal 2014, upon completion of an analysis which showed the absence of future expected cash flows, the Company determined that the value of one of its non-strategic trademarks was fully impaired. Thus, the Company recorded an impairment charge of $0.2 million in December 2013 to write off this trademark. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets being depreciated. The cost of maintenance and repairs is charged to expense as incurred. Significant renewals and betterments are capitalized and depreciated over the remaining estimated useful lives of the related assets. At time of disposal, the cost and related accumulated depreciation are removed from the Company’s records and the difference between net carrying value of the asset and the sale proceeds is recorded as a gain or loss. Depreciation of property, plant and equipment is provided by the straight-line method as follows: • Machinery, Equipment and Software Three years to seven years • Furniture & Fixtures Seven years • Leasehold Improvements Straight-line basis over the shorter of the useful life of the improvement or the term of the lease |
Revenue Recognition | Revenue Recognition Distribution of products Revenues from product distribution are recognized at the time title passes to the customer. Under the Direct Import Program, title passes in the country of origin. Under the Domestic Program, title passes primarily at the time of shipment. Estimates for future expected returns are based upon historical return rates and netted against revenues. Management must make estimates of potential future product returns related to current period product revenue. Management analyzes historical returns, current economic trends and changes in customer demand for the Company’s products when evaluating the adequacy of the reserve for sales returns. Management judgments and estimates must be made and used in connection with establishing the sales return reserves in any accounting period. Additional reserves may be required if actual sales returns increase above the historical return rates. Conversely, the sales return reserve could be decreased if the actual return rates are less than the historical return rates, which were used to establish the reserve. Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Staff Accounting Bulletins 101 “Revenue Recognition in Financial Statements,” and 104 “Revenue Recognition, corrected copy” (“SAB’s 101 and 104”). At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB’s 101 and 104, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB 104’s and 101’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue. If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. Licensing In addition to the distribution of products, the Company grants licenses for the right to use the Company’s trademarks for a stated term for the manufacture and/or sale of consumer electronics and other products under agreements which require payment of either i) a non-refundable minimum guaranteed royalty or, ii) the greater of the actual royalties due (based on a contractual calculation, normally comprised of actual product sales by the licensee multiplied by a stated royalty rate, or “Sales Royalties”) or a minimum guaranteed royalty amount. In the case of (i), such amounts are recognized as revenue on a straight-line basis over the term of the license agreement. In the case of (ii), Sales Royalties in excess of guaranteed minimums are accounted for as variable fees and are not recognized as revenue until the Company has ascertained that the licensee’s sales of products have exceeded the guaranteed minimum. In effect, the Company recognizes the greater of Sales Royalties earned to date or the straight-line amount of minimum guaranteed royalties to date. In the case where a royalty is paid to the Company in advance, the royalty payment is initially recorded as a liability and recognized as revenue as the royalties are deemed to be earned according to the principles outlined above. |
Cost of Sales | Cost of Sales Cost of sales includes actual product cost, quality control costs, change in inventory reserves, duty, buying costs, the cost of transportation to the Company’s third party logistics providers’ warehouse from its manufacturers, warehousing costs, and an allocation of those selling, general and administrative expenses that are directly related to these activities. |
Other Operating Costs and Expenses | Other Operating Costs and Expenses Other operating costs and expenses include costs associated with returned product received from retailers, warranty costs, warehouse supply expenses, and an allocation of those selling, general and administrative expenses that are directly related to these activities. Because other operating costs and expenses is not included in cost of sales, the reported gross margin may not be comparable to those of other distributors that may include all costs related to the cost of product to their cost of sales and in the calculation of gross margin. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses include all operating costs of the Company that are not directly related to the cost of procuring product or costs not included in other operating costs and expenses. |
Foreign Currency | Foreign Currency The assets and liabilities of foreign subsidiaries have been translated at current exchange rates, and related revenues and expenses have been translated at average rates of exchange in effect during the year. Related translation adjustments are reported as a separate component of shareholders’ equity. Losses and gains resulting from foreign currency transactions are included in the results of operations. The Company generally does not enter into foreign currency exchange contracts to hedge its exposures related to foreign currency fluctuations and there were no foreign exchange forward contracts held by the Company at March 31, 2015 or March 31, 2014. |
Advertising Expenses | Advertising Expenses Advertising expenses are charged against earnings as incurred and are included in selling, general and administrative expenses. The Company incurred no advertising expenses during fiscal 2015 or fiscal 2014. |
Sales Allowance and Marketing Support Expenses | Sales Allowance and Marketing Support Expenses Sales allowances, marketing support programs, promotions and other volume-based incentives which are provided to retailers and distributors are accounted for on an accrual basis as a reduction to net revenues in the period in which the related sales are recognized in accordance with ASC topic 605, “Revenue Recognition”, subtopic 50 “Customer Payments and Incentives” and Securities and Exchange Commission Staff Accounting Bulletins 101 “Revenue Recognition in Financial Statements,” and 104 “Revenue Recognition, corrected copy” (“SAB’s 101 and 104”). At the time of sale, the Company reduces recognized gross revenue by allowances to cover, in addition to estimated sales returns as required by ASC topic 605, “Revenue Recognition”, subtopic 15 “Products”, (i) sales incentives offered to customers that meet the criteria for accrual under ASC topic 605, subtopic 50 and (ii) under SAB’s 101 and 104, an estimated amount to recognize additional non-offered deductions it anticipates and can reasonably estimate will be taken by customers which it does not expect to recover. Accruals for the estimated amount of future non-offered deductions are required to be made as contra-revenue items because that percentage of shipped revenue fails to meet the collectability criteria within SAB 104’s and 101’s four revenue recognition criteria, all of which are required to be met in order to recognize revenue. If additional marketing support programs, promotions and other volume-based incentives are required to promote the Company’s products subsequent to the initial sale, then additional reserves may be required and are accrued for when such support is offered. The sales and marketing support accrual activity for fiscal 2015 and fiscal 2014 was as follows (in thousands): Balance at March 31, 2013 $ 1,152 additions 1,529 usages (1,883 ) adjustments (328 ) Balance at March 31, 2014 $ 470 additions 1,504 usages (1,175 ) adjustments (224 ) Balance at March 31, 2015 $ 575 |
Interest income, net | Interest income, net The Company records interest as incurred. The net interest income for fiscal 2015 and 2014 consists of: 2015 2014 (In thousands) Interest expense $ — $ (6 ) Interest income 215 554 Interest income, net $ 215 $ 548 |
Income Taxes | Income Taxes Deferred income taxes are recorded to account for the tax effects of differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets have been recorded net of an appropriate valuation allowance, to the extent management believes it is more likely than not that such assets will be realized. (See Note 5 “Income Taxes”). |
Comprehensive Income | Comprehensive Income Comprehensive income is net income adjusted for foreign currency translation adjustments. |
Earnings Per Common Share | Earnings Per Common Share Earnings per common share are based upon the weighted average number of common and common equivalent shares outstanding. Outstanding stock options and warrants are treated as common stock equivalents when dilution results from their assumed exercise. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for all share based payments in accordance with ASC Topic 71X, “Compensation”, subtopic 718 “Compensation — Stock Compensation”. Accordingly, the computed fair value is expensed ratably over the requisite vesting period. The Company recorded no stock-based compensation costs during fiscal 2015 or fiscal 2014. There were no stock options granted by the Company in fiscal 2015 or fiscal 2014. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The following Accounting Standards Updates (“ASUs”) were issued by the Financial Accounting Standards Board during the twelve months ended March 31, 2015 or during the interim period between March 31, 2015 and June 23, 2015 which relate to or could relate to the Company as concerns the Company’s normal ongoing operations or the industry in which the Company operates: Accounting Standards Update 2015-03, Interest-Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs (Issued April 2015) To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. Accounting Standards Update 2015-02, Consolidation (Topic 810) Amendments to the Consolidation Analysis (Issued February 2015) The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: 1. Modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities 2. Eliminate the presumption that a general partner should consolidate a limited partnership 3. Affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships 4. Provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. Accounting Standards Update 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225-20) Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items (Issued January 2015) This Update eliminates from GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement — Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities. Accounting Standards Update 2014-12, Compensation — Stock Compensation (Topic 718) Derivatives and Hedging (Topic 815): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Issued June 2014) The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. For all entities, the amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. |
Significant Accounting Polici22
Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Estimated Useful Life of Property Plant and Equipment | Depreciation of property, plant and equipment is provided by the straight-line method as follows: • Machinery, Equipment and Software Three years to seven years • Furniture & Fixtures Seven years • Leasehold Improvements Straight-line basis over the shorter of the useful life of the improvement or the term of the lease |
Sales and Marketing Support Accrual Activity | The sales and marketing support accrual activity for fiscal 2015 and fiscal 2014 was as follows (in thousands): Balance at March 31, 2013 $ 1,152 additions 1,529 usages (1,883 ) adjustments (328 ) Balance at March 31, 2014 $ 470 additions 1,504 usages (1,175 ) adjustments (224 ) Balance at March 31, 2015 $ 575 |
Interest Income Expense Net | The net interest income for fiscal 2015 and 2014 consists of: 2015 2014 (In thousands) Interest expense $ — $ (6 ) Interest income 215 554 Interest income, net $ 215 $ 548 |
Property, Plant, and Equipment
Property, Plant, and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Component of Property Plant and Equipment | As of March 31, 2015 and 2014, property, plant and equipment is comprised of the following: 2015 2014 (In thousands) Computer equipment and software 345 338 Furniture and fixtures 194 196 Machinery and equipment 12 267 Leasehold improvements 8 8 559 809 Less accumulated depreciation and amortization (482 ) (667 ) $ 77 $ 142 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Provision for Income Taxes (Benefit) Expense | The Company’s provision for income tax (benefit) expense for fiscal 2015 and fiscal 2014 was as follows: 2015 2014 (In thousands) Current: Federal $ (308 ) $ (450 ) Foreign, state and other 55 (484 ) Prior year federal and state, with interest 1714 0 Uncertain tax positions, federal and state 480 0 Deferred: Federal 672 (467 ) Foreign, state and other 454 (68 ) Provision for income tax (benefit) expense $ 3,067 $ (1,469 ) |
Effective Rate Reflected in Provision for Income Taxes and Amounts Determined by Applying Statutory Federal Rate | The difference between the effective rate reflected in the provision for income taxes and the amounts determined by applying the statutory federal rate of 34% to earnings before income taxes for fiscal March 2015 and fiscal 2014 is analyzed below: 2015 2014 (In thousands) Statutory provision $ 1,702 $ (52 ) Foreign subsidiary (798 ) (1,009 ) State taxes 336 (529 ) Permanent differences 61 304 Prior year taxes 1,193 0 True up to prior year taxes (226 ) (158 ) Valuation allowance 0 (234 ) Increase in Uncertain Tax Positions 480 0 NOL Adjustments 319 209 Provision for income tax (benefit) expense $ 3,067 $ (1,469 ) |
Components of Deferred Tax Assets and Liabilities | As of March 31, 2015 and March 31, 2014, the significant components of the Company’s deferred tax assets and liabilities were as follows: 2015 2014 (In thousands) Deferred tax assets: Current: Accounts receivable reserves $ 484 $ 842 Inventory reserves 411 401 Accruals 67 151 Total current deferred tax assets 962 1,394 Non-current: Property, plant and equipment 522 669 Net operating loss and credit carry forwards 536 1,084 Total non-current deferred tax assets 1,058 1,753 Total deferred tax assets 2,020 3,147 Deferred tax liabilities: Non-current: Uncertain tax position 0 Total deferred tax liabilities 0 Net deferred tax assets $ 2,020 $ 3,147 |
State Net Operating Loss | The Company has $0.3 million of state NOLs as of March 31, 2015 as follows (in millions $): Loss Year (Fiscal) Included in DTA Expiration Year (Fiscal) 2014 $ 0.3 million 2034 |
Reconciliation of Changes in Uncertain Tax Positions | A reconciliation of the Company’s changes in uncertain tax positions from April 1, 2014 to March 31, 2015 is as follows: In 000’s Total amount of unrecognized tax benefits as of April 1, 2013 $ 121 Gross increases in unrecognized tax benefits as a result of tax positions taken during a prior period 223 Gross decreases in unrecognized tax benefits as a result of tax positions taken during a prior period — Gross increases in unrecognized tax benefits as a result of tax positions taken during the current period 257 Gross decreases in unrecognized tax benefits as a result of tax positions taken during the current period — Decreases in unrecognized tax benefits relating to settlements with taxing authorities — Reductions to unrecognized tax benefits as a result of lapse of statute of limitations (121 ) Total amount of unrecognized tax benefits as of March 31, 2015 480 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Company Leases Warehouse and Office Space from Non-Affiliated Companies with Annual Commitments | The Company leases warehouse and office space from non-affiliated companies, with annual commitments as follows (in thousands): Fiscal Years Amount 2016 260 2017 167 2018 108 2019 35 Thereafter — Total $ 570 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Non Employee Director Stock Options Plan, 2004 | |
Summary of Stock Options | A summary of transactions under the plan for the two years ended March 31, 2015 is as follows: Number of Options Weighted Average Exercise Price Outstanding — April 1, 2013 50,000 $ 3.13 Cancelled (50,000 ) $ 3.13 Outstanding — March 31, 2014 0 $ 0.00 Outstanding — March 31, 2015 0 $ 0.00 Exercisable at March 31, 2015 0 $ 0.00 |
Net Earnings Per Share (Tables)
Net Earnings Per Share (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Computation of Basic and Diluted Earnings per Share | The following table sets forth the computation of basic and diluted earnings per share for the years ended March 31, 2015 and March 31, 2014: 2015 2014 (In thousands, except per share data) Numerator: Net income for basic and diluted earnings per share $ 1,893 $ 1,317 Denominator: Denominator for basic earnings per share — weighted average shares 27,130 27,130 Effect of dilutive securities on denominator: Options — — Denominator for diluted earnings per share — weighted average shares and assumed conversions 27,130 27,130 Net income per share: Basic and diluted income per share $ .07 $ .05 |
Geographic Information (Tables)
Geographic Information (Tables) | 12 Months Ended |
Mar. 31, 2015 | |
Net Revenues and Long-Lived Assets of Company | Net revenues and long-lived assets of the Company for the fiscal years ended March 31, 2015 and March 31, 2014 are summarized below by geographic area (in thousands). Net revenues are attributed to geographic area based on location of customer. Year Ended March 31, 2015 U.S. Foreign Consolidated Net revenues $ 76,323 $ — $ 76,323 Long-lived assets $ 76 $ 103 $ 179 Year Ended March 31, 2014 U.S. Foreign Consolidated Net revenues $ 77,829 $ — $ 77,829 Long-lived assets $ 129 $ 143 $ 272 |
Significant Accounting Polici29
Significant Accounting Policies - Additional Information (Detail) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2013USD ($) | Mar. 31, 2015USD ($)Derivativeshares | Mar. 31, 2014USD ($)Derivativeshares | |
Significant Of Accounting Policies [Line Items] | |||
Property, plant, and equipment, net | $ 77,000 | $ 142,000 | |
Impairment of trademark | $ 200,000 | $ 219,000 | |
Foreign exchange forward contracts held | Derivative | 0 | 0 | |
Advertising expenses | $ 0 | $ 0 | |
Stock based compensation costs | $ 0 | $ 0 | |
Options granted | shares | 0 | 0 |
Estimated Useful Lives of Prope
Estimated Useful Lives of Property Plant and Equipment (Detail) | 12 Months Ended |
Mar. 31, 2015 | |
Machinery, Equipment and Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful life | 3 years |
Machinery, Equipment and Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful life | 7 years |
Furniture and Fixtures | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful life | 7 years |
Leasehold Improvements | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful life | Straight-line basis over the shorter of the useful life of the improvement or the term of the lease |
Sales and Marketing Support Acc
Sales and Marketing Support Accrual Activity (Detail) - Allowance for Promotions - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Valuation and Qualifying Accounts Disclosure [Line Items] | ||
Beginning Balance | $ 470 | $ 1,152 |
additions | 1,504 | 1,529 |
usages | (1,175) | (1,883) |
adjustments | (224) | (328) |
Ending Balance | $ 575 | $ 470 |
Interest Income (Expense) (Deta
Interest Income (Expense) (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Component Of Other Expense Income Nonoperating [Line Items] | ||
Interest expense | $ (6) | |
Interest income | $ 215 | 554 |
Interest income, net | $ 215 | $ 548 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) | 1 Months Ended | 7 Months Ended | 12 Months Ended | |||||
Jul. 31, 2013 | Nov. 07, 2013 | Mar. 31, 2014 | Mar. 31, 2015 | Jun. 11, 2014 | Apr. 01, 2013 | Aug. 31, 2012 | Mar. 02, 2010 | |
Related Party Transaction [Line Items] | ||||||||
Extraordinary dividend declared | $ 1.10 | |||||||
Company's assertion as to the percent of the dividend that is taxable to the recipient | 4.90% | |||||||
Internal Revenue Service's assertion as to the percent of the dividend that is taxable to the recipient, which the company is refuting | 100.00% | |||||||
Restricted cash | $ 500,000 | |||||||
Estimated additional taxes, penalties and interest | $ 4,800,000 | |||||||
Lafe Strategic Services Limited | ||||||||
Related Party Transaction [Line Items] | ||||||||
Security deposit returned | $ (6,000) | |||||||
Amount receivable from related party | $ 0 | |||||||
Mr. Eduard Will, a director of Emerson | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount owed to related party | $ 0 | |||||||
Consulting fees paid to related party | 68,000 | |||||||
Travel advance paid to related party | 6,000 | |||||||
Grande | ||||||||
Related Party Transaction [Line Items] | ||||||||
Grande's (Provisional Liquidator Appointed) Ownership Interest in Emerson number of shares | 15,243,283 | |||||||
Grande's (Provisional Liquidator Appointed) Ownership Interest Percentage | 56.20% | |||||||
Amount owed from Emerson to Brighton Marketing Limited | ||||||||
Related Party Transaction [Line Items] | ||||||||
Service charge from related party | $ 1,000 | |||||||
Amount owed to related party | 0 | |||||||
Grande Properties Management Limited | ||||||||
Related Party Transaction [Line Items] | ||||||||
Service charge from related party | 11,000 | |||||||
Amount owed to related party | $ 0 | |||||||
Vigers Appraisal & Consulting Ltd | ||||||||
Related Party Transaction [Line Items] | ||||||||
Amount receivable from related party | 0 | |||||||
Amount invoiced to related party | $ 3,000 |
Component of Property Plant and
Component of Property Plant and Equipment (Detail) - USD ($) $ in Thousands | Mar. 31, 2015 | Mar. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Computer equipment and software | $ 345 | $ 338 |
Furniture and fixtures | 194 | 196 |
Machinery and equipment | 12 | 267 |
Leasehold improvements | 8 | 8 |
Property, Plant and Equipment, Gross, Total | 559 | 809 |
Less accumulated depreciation and amortization | (482) | (667) |
Property, plant and equipment, net | $ 77 | $ 142 |
Property Plant and Equipment -
Property Plant and Equipment - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 75,000 | $ 88,000 |
Property, plant and equipment disposed, gross book value | 259,000 | 412,000 |
Gain (loss) from disposal of property, plant and equipment | $ (1,000) | $ 2,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | 48 Months Ended | ||||
Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | |
Schedule Of Income Taxes [Line Items] | |||||||
Possible additional federal and state income taxes estimated from the income tax assessment | $ 3,000,000 | ||||||
Provision for income tax expense (benefit) | $ 1,600,000 | $ 500,000 | $ 900,000 | $ 3,067,000 | $ (1,469,000) | ||
Statutory federal rate | 34.00% | 34.00% | |||||
Income (loss) of foreign subsidiaries before taxes | $ 2,367,000 | $ 2,966,000 | |||||
U.S. federal | |||||||
Schedule Of Income Taxes [Line Items] | |||||||
Net operating loss carry forwards, amount | 1,400,000 | $ 1,400,000 | |||||
Net operating loss carryforwards, expiration year | 2,034 | ||||||
Maximum | |||||||
Schedule Of Income Taxes [Line Items] | |||||||
Estimated income tax adjustment liable for taxes, penalties and interest | 100,000 | $ 400,000 | $ 500,000 | ||||
States | |||||||
Schedule Of Income Taxes [Line Items] | |||||||
Net operating loss carry forwards, amount | $ 300,000 | $ 300,000 |
Provision for Income Taxes (Ben
Provision for Income Taxes (Benefit) Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2015 | Mar. 31, 2014 | |
Current: | |||||
Federal | $ (308) | $ (450) | |||
Foreign, state and other | 55 | (484) | |||
Prior year federal and state, with interest | 1,714 | 0 | |||
Uncertain tax positions, federal and state | 480 | 0 | |||
Deferred: | |||||
Federal | 672 | (467) | |||
Foreign, state and other | 454 | (68) | |||
Provision for income tax (benefit) expense | $ 1,600 | $ 500 | $ 900 | $ 3,067 | $ (1,469) |
Effective Rate Reflected in Pro
Effective Rate Reflected in Provision for Income Taxes and Amounts Determined by Applying Statutory Federal Rate (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2015 | Mar. 31, 2014 | |
Reconciliation of Provision of Income Taxes [Line Items] | |||||
Statutory provision | $ 1,702 | $ (52) | |||
Foreign subsidiary | (798) | (1,009) | |||
State taxes | 336 | (529) | |||
Permanent differences | 61 | 304 | |||
Prior year taxes | 1,193 | 0 | |||
True up to prior year taxes | (226) | (158) | |||
Valuation allowance | 0 | (234) | |||
Increase in Uncertain Tax Positions | 480 | 0 | |||
NOL Adjustments | 319 | 209 | |||
Provision for income tax (benefit) expense | $ 1,600 | $ 500 | $ 900 | $ 3,067 | $ (1,469) |
Components of Deferred Tax Asse
Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2015 | Mar. 31, 2014 |
Current: | ||
Accounts receivable reserves | $ 484 | $ 842 |
Inventory reserves | 411 | 401 |
Accruals | 67 | 151 |
Total current deferred tax assets | 962 | 1,394 |
Non-current: | ||
Property, plant and equipment | 522 | 669 |
Net operating loss and credit carry forwards | 536 | 1,084 |
Total non-current deferred tax assets | 1,058 | 1,753 |
Total deferred tax assets | 2,020 | 3,147 |
Non-current: | ||
Uncertain tax position | 0 | |
Total deferred tax liabilities | 0 | |
Net deferred tax assets | $ 2,020 | $ 3,147 |
State Net Operating Loss (Detai
State Net Operating Loss (Detail) - Mar. 31, 2015 - States - USD ($) $ in Millions | Total |
Deferred Tax Assets, Net Operating Losses, Capital Losses, and Tax Credits Carryforwards [Line Items] | |
Net operating loss carry forwards, amount | $ 0.3 |
Fiscal Year 2014 | |
Deferred Tax Assets, Net Operating Losses, Capital Losses, and Tax Credits Carryforwards [Line Items] | |
Net operating loss carryforward, origination year | 2,014 |
Net operating loss carry forwards, amount | $ 0.3 |
Net operating loss carryforwards, expiration year | 2,034 |
Reconciliation of Changes in Un
Reconciliation of Changes in Uncertain Tax Positions (Detail) $ in Thousands | 12 Months Ended |
Mar. 31, 2015USD ($) | |
Reconciliation of Unrecognized Tax Benefits [Line Items] | |
Total amount of unrecognized tax benefits as of April 1, 2013 | $ 121 |
Gross increases in unrecognized tax benefits as a result of tax positions taken during a prior period | 223 |
Gross decreases in unrecognized tax benefits as a result of tax positions taken during a prior period | 0 |
Gross increases in unrecognized tax benefits as a result of tax positions taken during the current period | 257 |
Gross decreases in unrecognized tax benefits as a result of tax positions taken during the current period | 0 |
Decreases in unrecognized tax benefits relating to settlements with taxing authorities | 0 |
Reductions to unrecognized tax benefits as a result of lapse of statute of limitations | (121) |
Total amount of unrecognized tax benefits as of March 31, 2015 | $ 480 |
Leases Annual Commitments (Deta
Leases Annual Commitments (Detail) - Non-Affiliate $ in Thousands | Mar. 31, 2015USD ($) |
Operating Leased Assets [Line Items] | |
Operating leases future minimum payments due in 2016 | $ 260 |
Operating leases future minimum payments due in 2017 | 167 |
Operating leases future minimum payments due in 2018 | 108 |
Operating leases future minimum payments due in 2019 | 35 |
Operating leases future minimum payments due Thereafter | 0 |
Operating leases future minimum payments due | $ 570 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Line Items] | ||
Rent Expense | $ 790,000 | $ 777,000 |
Letters of credit issued percentage of cash collateralized basis | 100.00% | |
Outstanding letters of credit | $ 0 | 0 |
Defined contribution 401(k) retirement plan, employer contribution | $ 47,000 | $ 58,000 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) - $ / shares | 12 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2004 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted | 0 | 0 | ||
Employee Stock Option Plan, 2004 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum aggregate number of shares of common stock available | 2,500,000 | |||
Options outstanding | 0 | |||
Weighted Average Exercise Price, Exercisable | $ 0 | $ 0 | ||
Non Employee Director Stock Options Plan, 2004 | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum aggregate number of shares of common stock available | 250,000 | |||
Options outstanding | 0 | 0 | 50,000 | |
Weighted Average Exercise Price, Exercisable | $ 0 | $ 3.13 | ||
Options granted | 0 | 0 |
Summary of Stock Option (Detail
Summary of Stock Option (Detail) - Non Employee Director Stock Options Plan, 2004 - $ / shares | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of Options, Outstanding Beginning Balance | 50,000 | |
Number of Options, Cancelled | (50,000) | |
Number of Options, Outstanding Ending Balance | 0 | |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ 3.13 | |
Number of Options, Exercisable | 0 | |
Weighted Average Exercise Price, Cancelled | 3.13 | |
Weighted Average Exercise Price, Outstanding, Ending Balance | 0 | |
Weighted Average Exercise Price, Exercisable | $ 3.13 | $ 0 |
Shareholders' Equity - Addition
Shareholders' Equity - Additional Information (Detail) - USD ($) | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2003 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common shares, shares authorized | 75,000,000 | 75,000,000 | |
Common shares, par value | $ 0.01 | $ 0.01 | |
Common shares, shares outstanding | 27,129,832 | 27,129,832 | |
Treasury stock, shares | 25,835,965 | 25,835,965 | |
Number of share authorized under share repurchase program | 2,000,000 | ||
Number of share available for repurchase under share repurchase program | 732,377 | ||
Preferred shares, shares issued | 3,677 | 3,677 | |
Preferred shares, shares outstanding | 3,677 | 3,677 | |
Preferred shares, par value | $ 0.01 | ||
Preferred shares, liquidation preference | $ 3,677,000 | $ 3,677,000 |
Short Term Investments - Additi
Short Term Investments - Additional Information (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Investment [Line Items] | ||
Short term investments | $ 0 | $ 32,194 |
Cash Equivalents | ||
Investment [Line Items] | ||
Certificates of deposit | $ 15,100 | $ 5,100 |
Certificates of deposit maturity date | Jul. 31, 2015 |
Computation of Basic and Dilute
Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator: | ||
Net income for basic and diluted earnings per share | $ 1,893 | $ 1,317 |
Denominator: | ||
Denominator for basic earnings per share - weighted average shares | 27,130 | 27,130 |
Effect of dilutive securities on denominator: | ||
Options | 0 | 0 |
Denominator for diluted earnings per share - weighted average shares and assumed conversions | 27,130 | 27,130 |
Net income per share: | ||
Basic and diluted income per share | $ 0.07 | $ 0.05 |
Net Earnings Per Share - Additi
Net Earnings Per Share - Additional Information (Detail) | 12 Months Ended |
Mar. 31, 2015shares | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Antidilutive securities excluded from computation of earnings per share | 0 |
Risks and Uncertainties - Addit
Risks and Uncertainties - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Unusual Risk or Uncertainty [Line Items] | ||
Allowance for doubtful accounts | $ 5,000 | $ 11,000 |
Customer Concentration Risk | Net Revenues | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 87.00% | 86.00% |
Customer Concentration Risk | Net Revenues | Target | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 51.00% | 58.00% |
Customer Concentration Risk | Net Revenues | Wal-Mart | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 28.00% | 22.00% |
Customer Concentration Risk | Net Revenues | Funai | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 8.00% | 6.00% |
Product Concentration Risk | Net Revenues | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 95.00% | 93.00% |
Product Concentration Risk | Net Revenues | Microwave Ovens | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 67.00% | 62.00% |
Product Concentration Risk | Net Revenues | Compact Refrigerators | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 28.00% | 31.00% |
Credit Concentration Risk | Trade Accounts Receivable, Net of Specific Reserves | Target | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 50.00% | 36.00% |
Credit Concentration Risk | Trade Accounts Receivable, Net of Specific Reserves | Wal-Mart | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 30.00% | 58.00% |
Supplier Concentration Risk [Member] | Products for Resale | Three Largest Factories Suppliers | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 96.00% | 87.00% |
Supplier Concentration Risk [Member] | Products for Resale | One Factory from the Largest Factories | ||
Unusual Risk or Uncertainty [Line Items] | ||
Concentration risk, percentage | 66.00% | 64.00% |
Net Revenues and Long-Lived Ass
Net Revenues and Long-Lived Assets of Company (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Segment Reporting Information [Line Items] | ||
Net revenues | $ 76,323 | $ 77,829 |
Long-lived assets | 179 | 272 |
UNITED STATES | ||
Segment Reporting Information [Line Items] | ||
Net revenues | 76,323 | 77,829 |
Long-lived assets | 76 | 129 |
Foreign | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets | $ 103 | $ 143 |
Uncategorized Items - msn-20150
Label | Element | Value |
Non Employee Director Stock Options Plan, 2004 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price | us-gaap_ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice | $ 0 |