Koss Q3 Net Income Falls on Flat Sales

Koss Q3 Net Income Falls on Flat Sales 
MILWAUKEE, WI -- (Marketwired) -- 04/25/13 --  Koss Corporation
(NASDAQ: KOSS), the U.S. based high-fidelity headphone company, has
announced results for its third quarter ended March 31, 2013.  
Sales for the third quarter were $8,302,113 compared to $8,232,526
for the same period one year ago, a 0.8% increase. Net income fell by
87.1% to $115,441, compared to $896,715 for the third quarter last
year. Diluted earnings per share for the quarter were $0.02 compared
with $0.12 for the same period one year ago. 
Sales for the nine months ended March 31, 2013 were $25,859,006
compared to $26,978,082 for the same period one year ago, a 4.1%
decrease. Net income fell by 59.2% to $820,282, compared to
$2,008,524 for the same period one year ago. Diluted earnings per
share for the nine months were $0.11 compared with $0.27 for the same
period one year ago. 
"Overall we are pleased with the results this quarter, however when
compared to the same quarter last year, several items create a marked
difference on the bottom line," Michael J. Koss, President and CEO,
told employees here today." Although sales remained essentially flat
for the quarter, net income declined considerably. Last year's
quarter benefited from the higher positive impacts of approximately
$726,000 of unauthorized transaction related recoveries and
approximately $199,000 of interest expense reversal for tax positions
related to the unauthorized transactions. In addition, this year's
results include nearly $398,000 of amortization expense for
previously capitalized costs related to the Striva product line,
which was launched last year. These three items amount to a reduction
of approximately $1,323,000 for the quarter which is more than the
$936,298 decline in income before income tax provision." 
Koss added that these same items impacted year-to-date results as
well. Mr. Koss also commented on the improved gross profit margin in
the quarter and improving trend before the impact of amortization
expense related to Striva development costs.  
"We saw some improvements in export sales in the quarter," Mr. Koss
continued, "but Europe continues to lag last year for the nine
months, which we believe relates to the economic difficulty there." 
The Company will pay a dividend of $0.06 cents per share on July 15,
2013, to shareholders of record on June 28, 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
only predictions. 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. 


 
                                                                            
                              KOSS CORPORATION                              
                       CONDENSED STATEMENTS OF INCOME                       
                                (Unaudited)                                 
                                                                            
                         Three Months Ended           Nine Months Ended     
                              March 31                    March 31          
                     --------------------------  -------------------------- 
                         2013          2012          2013          2012     
                     ------------  ------------  ------------  ------------ 
Net sales            $  8,302,113  $  8,232,526  $ 25,859,006  $ 26,978,082 
Cost of goods sold      4,998,121     5,080,992    16,546,236    16,698,801 
                     ------------  ------------  ------------  ------------ 
Gross profit            3,303,992     3,151,534     9,312,770    10,279,281 
                     ------------  ------------  ------------  ------------ 
Operating expenses:                                                         
  Selling, general                                                          
   and administrative                                                       
   expenses             3,111,919     3,017,502     9,134,158     8,827,422 
  Unauthorized                                                              
   transaction                                                              
   related costs and                                                        
   (recoveries), net      152,001      (617,103)   (1,043,070)   (1,137,036)
                     ------------  ------------  ------------  ------------ 
    Total operating                                                         
     expenses           3,263,920     2,400,399     8,091,088     7,690,386 
                     ------------  ------------  ------------  ------------ 
      Income from                                                           
       operations          40,072       751,135     1,221,682     2,588,895 
Other income                                                                
 (expense):                                                                 
  Interest income               1        29,322            11        29,322 
  Interest expense         16,785       212,699       (39,730)      148,161 
                     ------------  ------------  ------------  ------------ 
    Total other                                                             
     income                                                                 
     (expense), net        16,786       242,021       (39,719)      177,483 
                     ------------  ------------  ------------  ------------ 
      Income before                                                         
       income tax                                                           
       (benefit)                                                            
       provision           56,858       993,156     1,181,963     2,766,378 
Income tax (benefit)                                                        
 provision                (58,583)       96,441       361,681       757,854 
                     ------------  ------------  ------------  ------------ 
        Net income   $    115,441  $    896,715  $    820,282  $  2,008,524 
                     ============  ============  ============  ============ 
Income per common                                                           
 share:                                                                     
      Basic          $       0.02  $       0.12  $       0.11  $       0.27 
      Diluted        $       0.02  $       0.12  $       0.11  $       0.27 
                     ============  ============  ============  ============ 
Dividends declared                                                          
 per common share    $       0.06  $       0.06  $       0.18  $       0.18 
                     ============  ============  ============  ============ 

  
CONTACT:
Michael J. Koss
President & CEO
(414) 964-5000
mjkoss@koss.com 
 
 
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