Koss Q1 Net Sales Decline on Weak Exports

Koss Q1 Net Sales Decline on Weak Exports 
MILWAUKEE, WI -- (Marketwired) -- 10/24/13 --  Koss Corporation
(NASDAQ: KOSS), the U.S. based high-fidelity headphone company, has
reported its first quarter results for the quarter ended September
30, 2013.  
Sales for the first quarter were $6,824,339 compared to $8,914,862
for the same three month period one year ago, a 23.4% decrease. Net
income decreased to $79,402, compared to $366,153 for the first
quarter last year. Diluted income per common share for the quarter
was $0.01 compared with $0.05 one year ago. The fiscal years 2013 and
2012 included $708,716 and $382,727, respectively, of insurance
proceeds and other recoveries exceeding the costs for legal fees
related to previously reported unauthorized transactions. 
"The first quarter saw a return of the weakness we experienced last
year in certain export markets," Michael J. Koss, President and CEO,
said here today. "Weak economies in general and an overstock of
inventory at some distributors drove the sales decline. In the U.S.,
the Company experienced a decline in sales at one major retailer due
to more limited product placement compared to a year ago." 
Koss continued, "The Fit Series, designed for women with the help of
Gold Medalist Dara Torres, was launched a few months ago and
continues to gain shelf space at U.S. retailers."  
"The Company has initiated dual product sourcing through the addition
of a factory in Mexico. Margins were lower in the quarter compared to
a year ago due to the impact of ramping up manufacturing operations
in Mexico and the impact of fixed costs on the lower sales volume,"
Koss said. "The start up costs in Mexico decreased gross margins by
approximately 4%. We are excited about the opportunities of
manufacturing in Mexico and the positive impact it will have on our
ability to be more nimble in new product introductions while
decreasing our investment in inventory," Koss said. 
Koss went on to explain, "The Company continues to amortize the
STRIVA software development costs. The software amortization cost has
decreased the Company's gross margin by approximately 4-5% and is
scheduled to be completed by the end of fiscal year 2015."  
The Company will pay a dividend of $0.06 cents per share on January
15, 2014, to shareholders of record on Dece
mber 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    
                                                         September 30       
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
Net sales                                          $ 6,824,339  $ 8,914,862 
Cost of goods sold                                   4,571,370    5,663,690 
                                                   -----------  ----------- 
Gross profit                                         2,252,969    3,251,172 
                                                   -----------  ----------- 
Operating expenses:                                                         
  Selling, general and administrative expenses       2,825,805    3,018,751 
  Unauthorized transaction related recoveries, net    (708,716)    (382,727)
                                                   -----------  ----------- 
    Total operating expenses                         2,117,089    2,636,024 
                                                   -----------  ----------- 
      Income from operations                           135,880      615,148 
Other income:                                                               
  Interest income                                           --           10 
  Interest expense                                      (7,606)     (29,309)
                                                   -----------  ----------- 
    Total other income, net                             (7,606)     (29,299)
                                                   -----------  ----------- 
      Income before income tax provision               128,274      585,849 
Income tax provision                                    48,872      219,696 
        Net income                                 $    79,402  $   366,153 
                                                   ===========  =========== 
Income per common share:                                                    
      Basic                                        $      0.01  $      0.05 
      Diluted                                      $      0.01  $      0.05 
                                                   ===========  =========== 
Dividends declared per common share                $      0.06  $      0.06 
                                                   ===========  =========== 

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