Business Services Industry
The Singing Machine Company Second Quarter Net Income Increases 86% to a Record $0.44 Per Share; As Revenue Increases 34% to a Record $15.7 Million
Business Wire, Oct 30, 2001
Business Editors
COCONUT CREEK, Fla.--(BUSINESS WIRE)--Oct. 30, 2001
Reaffirms Earnings Guidance for Fiscal Year
The Singing Machine Company (ASE:SMD) announced today that net income for the second quarter of fiscal 2002 ended September 30, 2001 increased 86% to a record $2,325,000, or $0.44 per diluted share, as revenue from the sale of its electronic karaoke equipment and related audio software increased 34% to a record $15,749,000.
For the second quarter of fiscal 2001, net income was $1,248,000, or $0.25 per diluted share, on revenue of $11,787,000.
For the six months ended September 30, 2001, net income increased 38% to a record $2,293,000, or $0.44 per diluted share. This compares to net income of $1,656,000, or $0.33 per diluted share, for last year's first half. Revenue increased 19% to a record $21,273,000 from $17,855,000 for the first six months of fiscal 2001.
"All indications are that fiscal 2002 will be Singing Machine's best year ever. Demand for our karaoke products has remained robust, even following the tragic events of September 11th. Our recent joint promotion at 350 Toys R Us stores across the country was an enormous success. Based on our strong first half performance, the record pace of shipments in October, and our still-strong book of orders, we continue to expect the Company to achieve record net income for the year as a whole of approximately $1.25 per diluted share," said John Klecha, president and chief operating officer.
Klecha continued, "Our joint marketing program with MTV in support of our new line of MTV-branded karaoke machines and music designed specifically to appeal to MTV audiences is proving to be as successful as we had hoped. These products have enjoyed the fastest sales ramp-up of any product in our history. The products include the revolutionary Singing Machine(TM)/MTV STVG-700, the world's first karaoke machine to incorporate a fully-functional television into the unit, and the SMGK-1000, with features and style never before available in a home karaoke unit of its size. Complementing these exciting products is a new line of CDs with graphics (CD G) featuring MTV core music in three formats - pop, rock and R&B. MTV CD Gs contain songs made popular by today's hottest artists, including 'NSYNC, Britney Spears, Blink 182, Limp Bizkit, Destiny's Child and TLC."
Conference Call
Singing Machine has scheduled a conference call today at 10:00 AM ET. A simultaneous WebCast of the conference call may be accessed online at www.CompanyBoardroom.com or at www.SingingMachine.com. A replay will be available immediately following the WebCast at these same Internet addresses. For a telephone replay, dial (800) 633-8284, reservation No. 19935928 beginning at approximately 12:00 PM ET.
About The Singing Machine Company
The Singing Machine Company, Inc. engages in the production and distribution of a full line of consumer-oriented karaoke machines, including CD Graphics machines, as well as CD G and audio karaoke music.
Safe Harbor Statements Under the Private Securities Litigation Reform Act of 1995.
This press release contains forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions, including but not limited to those relating to product demand, pricing, market acceptance, the effect of economic conditions and other risks identified in the Company's filings with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual future results or events may vary materially from those described herein.
THE SINGING MACHINE COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2001 2000 2001 2000
Net sales $15,749,241 $11,786,707 $21,272,851 $17,855,298
Cost of sales 10,438,974 8,481,626 14,101,529 13,031,470
Gross profit 5,310,267 3,305,081 7,171,322 4,823,828
Selling, general
& administrative
expenses 3,075,794 1,506,220 4,883,849 2,546,117
Income from
operations 2,234,472 1,798,861 2,287,473 2,277,711
Other income
(expense):
Other income 125,379 917 143,230 3,946
Interest
(expense) (34,465) (140,094) (134,037) (203,192)
Interest
income 28 11,156 2,475 35,215
Factoring
fees (40) (33,923) (173) (68,498)
Net other
income
(expenses) 90,902 (161,944) 11,494 (232,529)
Income before
provision for
income taxes 2,325,374 1,636,917 2,298,967 2,045,182
Income tax
provision -- 388,848 6,000 388,848
Net income $ 2,325,374 $ 1,248,069 $ 2,292,967 $ 1,656,334
Net income per
common share
Basic $ 0.51 $ 0.29 $ 0.51 $ 0.40
Diluted $ 0.44 $ 0.25 $ 0.44 $ 0.33
Weighted average
common & common
equivalent shares
outstanding
Basic 4,517,104 4,251,033 4,454,857 4,157,677
Diluted 5,322,815 5,037,428 5,214,841 4,961,589
THE SINGING MACHINE COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
September 30, March 31,
2001 2000
(unaudited) (audited)
ASSETS
Current Assets:
Cash $ 2,422,768 $ 1,016,221
Accounts receivable 7,241,745 955,652
Due from factor -- 933,407
Due from vendor -- 699,096
Inventories - net 10,194,450 4,813,461
Prepaid expenses
and other current
assets 1,137,351 598,487
Total Current
Assets 20,996,314 9,016,324
Property and Equipment
Net 296,823 263,791
Other Assets:
Deposit for credit
line 256,008 --
Due from related
party -- 7,692
Due from officers -- 117,425
Investment in and
advances to
unconsolidated
subsidiary 268,537 374,730
Reorganization
intangible net 231,231 277,047
Deferred tax asset 452,673 452,673
Total Other
Assets 1,208,450 1,229,567
TOTAL ASSETS $ 22,501,586 $ 10,509,682
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 3,691,522 $ 821,684
Accrued expenses 3,985,182 746,017
Income taxes payable -- 23,320
Notes payable 569,511 --
Due to related party 2,491,530 --
Total Current Liabilities 10,737,745 1,591,021
Shareholders' Equity
Common stock 47,476 43,590
Additional paid-in capital 3,701,633 3,324,779
Deferred stock-based
guarantee fees -- (171,472)
Retained earnings 8,014,731 5,721,764
Total Shareholders' Equity 11,763,841 8,918,661
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 22,501,586 $ 10,509,682
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