Koss Corp. (KOSS, Financial) filed Quarterly Report for the period ended 2010-03-31.
Koss Corp. has a market cap of $41.34 million; its shares were traded at around $5.6 with a P/E ratio of 25.45 and P/S ratio of 1.08. The dividend yield of Koss Corp. stocks is 4.29%.KOSS is in the portfolios of Chuck Royce of Royce& Associates.
As of March 31, 2010, the outstanding balance on the Companys credit facility with Harris, N.A. was $5.9 million. This balance did not change during the quarter ended March 31, 2010. During the quarter, the Company was able to reduce outstanding amounts due to suppliers by $4.9 million without drawing additional amounts on this credit facility. On May 12, 2010, the Company repaid the entire $5.9 million balance on this credit facility and terminated the loan agreement with Harris, N.A.
On May 12, 2010, the Company entered into a new secured credit facility with JPMorgan Chase Bank, N.A. (Lender). The Credit Agreement dated May 12, 2010 between the Company and the Lender (Credit Agreement) provides for an $8 million revolving secured credit facility with interest rates either ranging from 0.0% to 0.75% over the Lenders most recently publicly announced prime rate or 2.0% to 3.0% over LIBOR, depending on the Companys leverage ratio. The Credit Agreement expires on July 31, 2013 (Maturity Date). Accrued and unpaid interest on loans under the Credit Agreement is due and payable monthly. Lender may accelerate repayment of any amounts outstanding if any event of default, as more fully described in the Credit Agreement, shall occur. In addition to the revolving loans, the Credit Agreement also provides that the Company may, from time to time, request the Lender to issue letters of credit for the benefit of the Company of up to a sublimit of $2 million, and subject to certain other limitations. The loans may be used only for general corporate purposes of the Company.
The Company sells a line of products with a suggested retail price ranging from less than $10 up to $1,000. The gross margin for each of these models is unique in terms of percentages. The price range of the products also produces a different level of actual dollar contribution per unit. For example a product with a gross margin contribution of 50% might yield a $5.00 contribution for one item, while another item may feature a 30% gross margin which could yield $50.00. The Company finds the low priced portion of the market most competitive and therefore most subject to pressure on gross margin percentages, which tends to lower profit contributions. Retail preference for lower priced items can reduce profit margins and contributions. The risk is that a shift in retail customer specifications toward lower priced items can lead to lower gross margins and lower profit contributions per unit of sale. Due to the range of products that the Company sells, the product sales mix can produce a variation in terms of a range of profit margins. Some customers sell a limited range of products that yield lower profit margins than others. Most notably, the budget priced headphone segment of the market below $10.00 retail which is distributed through computer stores, office supply stores, and mass market retailers tend to yield the lowest gross margins. An increase in business with these types of accounts, if coupled with a simultaneous reduction in sales to customers with higher gross margins would reduce profit margins and profitability.
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Koss Corp. has a market cap of $41.34 million; its shares were traded at around $5.6 with a P/E ratio of 25.45 and P/S ratio of 1.08. The dividend yield of Koss Corp. stocks is 4.29%.KOSS is in the portfolios of Chuck Royce of Royce& Associates.
Highlight of Business Operations:
As previously reported, the Company announced that preliminary estimates of the Independent Investigation indicated that the amount of unauthorized transactions since fiscal year 2005 exceeded $31 million. The Companys results of operations have been affected during these years by the unauthorized transactions. Although the unauthorized transactions ended in December 2009, the Company incurred investigation and other legal costs associated with the unauthorized transactions during the quarter ended March 31, 2010. The Company is pursuing reimbursement of these expenses pursuant to its available insurance coverage. The Company received $1 million of insurance proceeds under its fidelity coverage in the quarter. Notwithstanding the disruption resulting from the discovery of the unauthorized transactions in December 2009, the Company operated in the normal course of business during the quarter ended March 31, 2010.As of March 31, 2010, the outstanding balance on the Companys credit facility with Harris, N.A. was $5.9 million. This balance did not change during the quarter ended March 31, 2010. During the quarter, the Company was able to reduce outstanding amounts due to suppliers by $4.9 million without drawing additional amounts on this credit facility. On May 12, 2010, the Company repaid the entire $5.9 million balance on this credit facility and terminated the loan agreement with Harris, N.A.
On May 12, 2010, the Company entered into a new secured credit facility with JPMorgan Chase Bank, N.A. (Lender). The Credit Agreement dated May 12, 2010 between the Company and the Lender (Credit Agreement) provides for an $8 million revolving secured credit facility with interest rates either ranging from 0.0% to 0.75% over the Lenders most recently publicly announced prime rate or 2.0% to 3.0% over LIBOR, depending on the Companys leverage ratio. The Credit Agreement expires on July 31, 2013 (Maturity Date). Accrued and unpaid interest on loans under the Credit Agreement is due and payable monthly. Lender may accelerate repayment of any amounts outstanding if any event of default, as more fully described in the Credit Agreement, shall occur. In addition to the revolving loans, the Credit Agreement also provides that the Company may, from time to time, request the Lender to issue letters of credit for the benefit of the Company of up to a sublimit of $2 million, and subject to certain other limitations. The loans may be used only for general corporate purposes of the Company.
The Company sells a line of products with a suggested retail price ranging from less than $10 up to $1,000. The gross margin for each of these models is unique in terms of percentages. The price range of the products also produces a different level of actual dollar contribution per unit. For example a product with a gross margin contribution of 50% might yield a $5.00 contribution for one item, while another item may feature a 30% gross margin which could yield $50.00. The Company finds the low priced portion of the market most competitive and therefore most subject to pressure on gross margin percentages, which tends to lower profit contributions. Retail preference for lower priced items can reduce profit margins and contributions. The risk is that a shift in retail customer specifications toward lower priced items can lead to lower gross margins and lower profit contributions per unit of sale. Due to the range of products that the Company sells, the product sales mix can produce a variation in terms of a range of profit margins. Some customers sell a limited range of products that yield lower profit margins than others. Most notably, the budget priced headphone segment of the market below $10.00 retail which is distributed through computer stores, office supply stores, and mass market retailers tend to yield the lowest gross margins. An increase in business with these types of accounts, if coupled with a simultaneous reduction in sales to customers with higher gross margins would reduce profit margins and profitability.
Read the The complete Report
