FOR IMMEDIATE RELEASE CONTACT: MICHAEL J. KOSS
OCTOBER 6, 2003 (414) 964-5000
KOSS SALES UP SLIGHTLY
PROFITS SLIP ON DISTRIBUTION SHIFTS
OCTOBER 6, 2003 -- MILWAUKEE, WISCONSIN: Koss Corporation (NASDAQ SYMBOL: KOSS),
the U.S. based high fidelity stereophone leader, has announced the results of
its first quarter for the period ending September 30, 2003. Sales for the first
quarter increased to $9,164,691 compared to $8,954,978 for the same period one
year ago. Net income for the period declined to $1,020,504 from $1,100,778 one
year ago. First quarter diluted earnings per share were $0.26 compared with
$0.29 one year ago.
"Our acquisition of Addax, now renamed BiAudio, did help to pull sales ahead of
the prior year," Michael J. Koss, President and CEO, told employees at a
quarterly profit sharing meeting. "The decline of approximately $80,000 in net
income can be attributed to expenses relating to shifts in servicing our
distribution channels, particularly Canada, as well as a slight efficiency sag
relating to the accelerated integration of the new BiAudio operation."
Michael Koss went on to explain that the Company had changed its method of
servicing the Canadian market during the second half of the prior year and the
expenses for outbound freight and sales commissions have been running slightly
higher than expected and that the BiAudio operation had been absorbed from
Chicago into the Milwaukee based facility.
"We have had several promotional programs for the holiday selling season in this
quarter and the increase in expenses offered to these accounts this year were
not part of last years results," Koss said. "The fact that sales commission
expenses have increased could indicate a stronger improvement in a broader
segment of accounts rather than an improvement in the accounts managed directly
by the Koss internal sales force."
Koss went on to say that the retail based portion of the Company's business
continued to be spotty, but was beginning to show some signs of recovery and
that export sales, particularly to Europe, were up sharply, 83%.
"We are looking forward to the holiday selling season with confidence for the
first time in two years," Koss said, as he displayed a new package featuring
Santa Claus wearing Koss stereophones. "We're hoping that our commitment in
promotional dollars this quarter will 'Knock the Stockings Off' gift giving
music lovers this holiday season."
Koss will pay a dividend of $0.13 cents per share on October 15, 2003, to
shareholders of record September 30, 2003.
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Koss Corporation markets a complete line of high-fidelity stereophones,
speaker-phones, computer headsets, telecommunications headsets, active noise
canceling stereophones, wireless stereophones, 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 AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED SEPTEMBER 30 2003 2002
------------------------------- ----------- -----------
Net Sales $ 9,164,691 $ 8,954,978
Cost of goods sold 5,667,046 5,424,221
----------- -----------
Gross profit 3,497,645 3,530,757
Selling, general and
administrative expense 2,029,734 1,880,652
----------- -----------
Income from operations 1,467,911 1,650,105
Other income (expense)
Royalty income 190,325 163,961
Interest income 4,420 4,279
Interest expense 0 (11,290)
----------- -----------
Income before income tax provision 1,662,656 1,807,055
Provision for income taxes 642,152 706,277
----------- -----------
Net income $ 1,020,504 $ 1,100,778
=========== ===========
Earnings per common share:
Basic $ 0.27 $ 0.30
Diluted $ 0.26 $ 0.29
=========== ===========
Dividends per common share $ 0.13 $ 0.13
=========== ===========
</Table>
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