Koss Corp. reported a a sharp drop in earnings during the fourth quarter to cap off what was otherwise a strong financial year, boosted by a settlement agreement with American Express.
The Milwaukee-based headphone maker reported a net income of $233,487 during its fiscal fourth quarter, or 3 cents per diluted share, down from $354,808, or 5 cents per diluted share, during the fourth quarter last year.
Overall, Koss reported a net income of $1.4 million, or 19 cents per diluted share, during its 2016 financial year, up from $482,613, or 7 cents per diluted share, last year.
The year-over-year increase is due in part to a strong third quarter following a settlement in the company’s lawsuit against American Express over its role in former Koss executive Sujata “Sue” Sachdeva’s embezzlement of $34 million.
In February, Koss reached a settlement agreement with the credit card company and recorded $1.4 million in recoveries from unauthorized transactions.
Though Koss’s $7.2 million in net sales in the fourth quarter was up from $5.7 million in 2015, the increase was partially offset by a more than $1 million spike in cost of goods sold.
“We are very pleased with the strong sales in the fourth quarter and the increase for the year,” said Michael Koss, chief executive officer and chairman of Koss. “The company is beginning to see the results from efforts to grow the export distributor business and export OEM business. Spotty performance across the U.S. markets tempered the overall results. Specialized domestic niche markets can be choppy and we experienced lower activity in several of them this year after some outstanding improvements in fiscal year 2015.”
Koss credited the company’s year-over-year sales growth to $26 million, up from $24.2 million in 2015, to its partnership with a new pan-Asian distributor.
“Our sales in the region are beginning to grow as the new distributor extends Koss products into its retail and distribution network,” he said. “The new distributor was initially focused exclusively on China during the first six months of fiscal year 2016 and has now expanded its efforts throughout the region.”
Growth of its export OEM business and new product introductions also helped to increase sales, he said.