Koss Q4 Net Income Increases on Lawsuit Settlement

Koss Q4 Net Income Increases on Lawsuit Settlement 
MILWAUKEE, WI -- (Marketwired) -- 08/06/13 --  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 yea
r 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. 


 
                                                                            
                              KOSS CORPORATION                              
                       CONDENSED STATEMENTS OF INCOME                       
                                (Unaudited)                                 
                                                                            
                            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:
Michael J. Koss
President & CEO
(414) 964-5000
mjkoss@koss.com