MILWAUKEE, WI -- (Marketwired) -- 01/29/15

Koss Corporation (NASDAQ: KOSS), the U.S. based high-fidelity headphone company, has reported its second quarter results for the quarter ended December 31, 2014.

"Given the recent challenges, we are encouraged by the increase in sales for the quarter and the fact that the Company reported a profit for both the quarter and the first six months. Sales in certain export markets, especially Scandinavia, increased in the quarter," Michael J. Koss, President and CEO, told employees here today. "Sales in Ukraine, Czech Republic and Japan continued to struggle compared to last year." U.S. sales in the quarter ended December 31, 2014 increased by approximately 2.7% when compared to the same three month period last year. For the first six months of this fiscal year, U.S. sales were down by approximately 2.4% compared to the same period a year ago, primarily due to a large promotional load-in transaction in 2013 that was not repeated in 2014, which was partially offset by solid increases in sales in 2014 to certain distributors, retailers, and original equipment manufacturers.

Sales for the second quarter were $7,040,150 compared to $6,524,215 for the same three month period one year ago, a 7.9% increase. The three month net income was $165,586, compared to a net loss of $3,452,841 for the second quarter last year. In the same quarter last year, the Company recorded an impairment charge of $4,535,747 relating to its STRIVA product line, which included capitalized software, inventory, and related items. Diluted income per common share for the quarter was $0.02 compared with diluted loss per common share of $0.47 for the same three month period one year ago.

Sales for the six months ended December 31, 2014 decreased by 6.3% to $12,509,636 compared with $13,348,554 for the same six month period a year ago. Six month net income was $70,588 compared to a net loss of $3,373,439 for the same six months last year. Diluted income per common share was $0.01 compared with diluted loss per common share of $0.46 for the same six month period a year ago.

"We are beginning to experience a turnaround in some markets with encouraging strength in the U.S. market. Last year's promotional load-in transaction with a domestic customer resulted in net sales for the three and six months ended December 31, 2013 of approximately $990,000 and $1,380,000, respectively. Those net sales had to be covered by other customers in the current quarter," Koss said. "Our cost reduction efforts have allowed us to be profitable at the current sales level and to conserve cash. Various cost reduction projects helped to reduce selling, general and administrative expenses by approximately $1.7 million from last year's levels in the first six months of the year." Koss also noted that Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) from operations, which excludes unauthorized transaction related costs and recoveries as well as stock based compensation expense and impairment charges, was $663,612 for the current quarter, compared to a loss of $379,651 for the same quarter last year. For the six months ended December 31, 2014, EBITDA was $891,576 compared to a loss of $205,599 for the same six month period one year ago.*

The Company determined that based on the financial results, the Company would not declare a dividend for the quarter ending December 31, 2014. The Company will determine whether to declare and the amount of any future dividends on a quarter-by-quarter basis.

* This is a non-GAAP financial measure for which reconciliation is provided along with the financial statements accompanying this release.

Koss Corporation markets a complete line of high-fidelity headphones, wireless Bluetooth® speakers, 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 CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)

                            Three Months Ended         Six Months Ended
                                December 31               December 31
                         ------------------------  ------------------------
                             2014         2013         2014         2013
                         -----------  -----------  -----------  -----------
Net sales                $ 7,040,150  $ 6,524,215  $12,509,636  $13,348,554
Cost of goods sold         4,629,843    4,426,388    8,256,612    8,939,082
Impairment of capitalized
 software, inventory and
 related items                    --    4,535,747           --    4,535,747
                         -----------  -----------  -----------  -----------
Gross profit (loss)        2,410,307   (2,437,920)   4,253,024     (126,275)
                         -----------  -----------  -----------  -----------

Operating expenses:
  Selling, general and
   administrative
   expenses                2,069,746    2,861,659    4,008,739    5,746,140
  Unauthorized
   transaction related
   costs and
   (recoveries), net          25,000      112,171       77,492     (596,545)
                         -----------  -----------  -----------  -----------
    Total operating
     expenses              2,094,746    2,973,830    4,086,231    5,149,595
                         -----------  -----------  -----------  -----------

      Income (loss) from
       operations            315,561   (5,411,750)     166,793   (5,275,870)

Other expense:
  Interest expense            (8,480)      (8,193)     (12,813)     (15,799)
                         -----------  -----------  -----------  -----------

      Income (loss)
       before income tax
       provision
       (benefit)             307,081   (5,419,943)     153,980   (5,291,669)

Income tax provision
 (benefit)                   141,495   (1,967,102)      83,392   (1,918,230)
                         -----------  -----------  -----------  -----------

       Net income (loss) $   165,586  $(3,452,841) $    70,588  $(3,373,439)
                         ===========  ===========  ===========  ===========

Income (loss) per common
 share:
       Basic             $      0.02  $     (0.47) $      0.01  $     (0.46)
                         ===========  ===========  ===========  ===========
       Diluted           $      0.02  $     (0.47) $      0.01  $     (0.46)
                         ===========  ===========  ===========  ===========

Dividends declared per
 common share            $        --  $      0.06  $        --  $      0.12
                         ===========  ===========  ===========  ===========



                              KOSS CORPORATION
       RECONCILIATION OF NET INCOME (LOSS) TO EBITDA FROM OPERATIONS
                                (Unaudited)

                              Three Months Ended        Six Months Ended
                                 December 31              December 31
                           -----------------------  -----------------------
                               2014        2013         2014        2013
                           ----------- -----------  ----------- -----------
Net income (loss)          $   165,586 $(3,452,841) $    70,588 $(3,373,439)
Interest expense                 8,480       8,193       12,813      15,799
Income tax provision
 (benefit)                     141,495  (1,967,102)      83,392  (1,918,230)
Unauthorized transaction
 related costs and
 (recoveries), net              25,000     112,171       77,492    (596,545)
Depreciation of equipment
 and leasehold improvements    167,147     212,359      328,800     422,178
Amortization of product
 software development
 expenditures                       --          --           --     364,539
Impairment of capitalized
 software, inventory and
 related items                      --   4,535,747           --   4,535,747
Stock-based compensation
 expense                       155,904     171,822      318,491     344,352
                           ----------- -----------  ----------- -----------
  EBITDA from operations   $   663,612 $  (379,651) $   891,576 $  (205,599)
                           =========== ===========  =========== ===========

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