SOURCE: Koss Corporation

Koss Corporation

August 06, 2013 17:15 ET

Koss Q4 Net Income Increases on Lawsuit Settlement

MILWAUKEE, WI--(Marketwired - Aug 6, 2013) - Koss Corporation (NASDAQ: KOSS), the U.S. based high-fidelity headphone company, has reported its fiscal year end and fourth quarter results for the year ended June 30, 2013. Sales for the fourth quarter were $9,905,573 compared to $10,887,685 for the same three month period one year ago, a 9.0% decrease. Net income increased to $4,607,433, compared to $931,891 for the fourth quarter last year. Diluted income per common share was $0.62 compared with $0.13 one year ago.

"The fourth quarter last year had strong sales driven by the addition of new customers," Michael J. Koss, President and CEO, said here today. "This year's fourth quarter did not have similar load in shipments of full product lines at new customers. The Fit Series, designed for women with the help of Olympian Dara Torres, was launched in this quarter and we have had very good shipments beginning in late June and continuing into July. Net income was up primarily due to the settlement with our former auditors."

Sales for the twelve months ended June 30, 2013 trended down by 5.5% to $35,764,579 compared with $37,865,767 for the same twelve month period a year ago. Twelve month net income increased to $5,427,715 compared to $2,940,415 for the same twelve months last year. Diluted income per common share was $0.74 compared with $0.40 one year ago. The fiscal years 2013 and 2012 included $7,587,047 and $1,470,818, respectively, of proceeds for insurance and other recoveries that exceeded the costs for legal fees related to previously reported unauthorized transactions. The amount for fiscal year 2013 includes the net recovery relating to the settlement with the Company's former auditors.

"We are excited about the new Fit Series and other products in the pipeline for release in the next year. Our sales initiatives have paid off with good sales to several new customers. However, these efforts could not offset the decline in sales to larger customers in Europe and the U.S. in fiscal 2013," Koss said.

Koss went on to note that the Company had improved margins in the current year after adjusting for amortization of the software development costs for its STRIVA line of products.

"The twelve months of fiscal year 2013 included a full year of amortization for the STRIVA software development costs. The software amortization increased by approximately $1,415,000 of non-cash expense to cost of sales in fiscal 2013, decreasing margins by approximately 4% for the year," Koss said.

The positive impact of the settlement of the lawsuit with the Company's former auditors increased the Company's profits thereby increasing expenses in SG&A tied to profit-based compensation. The settlement of the lawsuit that resulted in gross proceeds of $8,500,000 added $6,380,000 to unauthorized transaction related recoveries net after accounting for the related legal fees.

The Company will pay a dividend of $0.06 cents per share on October 15, 2013, to shareholders of record on September 30, 2013.

Koss Corporation markets a complete line of high-fidelity headphones, speaker-phones, computer headsets, telecommunications headsets, active noise canceling headphones, wireless headphones, and compact disc recordings of American Symphony Orchestras on the Koss Classics label.

This press release contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "forecasts," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of such terms and other comparable terminology. These statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual events or results may differ materially. In evaluating forward-looking statements, you should specifically consider various factors that may cause actual results to vary from those contained in the forward-looking statements, such as general economic conditions, in particular, consumer demand for the Company's and its customers' products, competitive and technological developments, foreign currency fluctuations, and costs of operations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. In addition, such uncertainties and other operational matters are discussed further in the Company's quarterly and annual filings with the Securities and Exchange Commission.

    Three Months Ended     Twelve Months Ended  
    June 30     June 30  
    2013     2012     2013     2012  
Net sales   $ 9,905,573     $ 10,887,685     $ 35,764,579     $ 37,865,767  
Cost of goods sold     6,209,525       6,635,551       22,755,760       23,334,352  
Gross profit     3,696,048       4,252,134       13,008,819       14,531,415  
Operating expenses:                                
  Selling, general and administrative expenses     3,819,317       3,288,050       12,953,475       12,115,472  
  Unauthorized transaction related recoveries, net     (6,543,977 )     (333,782 )     (7,587,047 )     (1,470,818 )
    Total operating expenses     (2,724,660 )     2,954,268       5,366,428       10,644,654  
      Income from operations     6,420,708       1,297,866       7,642,391       3,886,761  
Other income (expense):                                
  Interest income     --       --       11       29,322  
  Interest expense     95,809       (23,738 )     56,079       124,423  
    Total other income (expense), net     95,809       (23,738 )     56,090       153,745  
      Income before income tax provision     6,516,517       1,274,128       7,698,481       4,040,506  
Income tax provision     1,909,084       342,237       2,270,766       1,100,091  
        Net income   $ 4,607,433     $ 931,891     $ 5,427,715     $ 2,940,415  
Income per common share:                                
      Basic   $ 0.62     $ 0.13     $ 0.74     $ 0.40  
      Diluted   $ 0.62     $ 0.13     $ 0.74     $ 0.40  
Dividends declared per common share   $ 0.06     $ 0.06     $ 0.24     $ 0.24  

Contact Information

    Michael J. Koss
    President & CEO
    (414) 964-5000
    Email Contact