The settlement of a lawsuit against American Express allowed Koss Corp. to post a sharp increase in earnings during the third quarter, but the company’s sales were essentially flat while costs increased.
The Milwaukee-based headphone maker reported net income of $896,686, or 12 cents per diluted share, up from $57,218, or 1 cent per share, in the third quarter of 2015. Revenue was up just $503 to $6 million in the third quarter.
The earnings jump came as Koss recorded $1.4 million in recoveries from unauthorized transactions. Koss in February reached a settlement agreement with American Express over the credit card company’s role in former Koss executive Sujata “Sue” Sachdeva’s embezzlement of $34 million.
The settlement called for Koss to receive the gross proceeds of $3 million, offset by some attorneys’ fees and other costs. Also during the quarter, Koss had a lawsuit against Park Bank dismissed. The company is appealing the ruling.
The proceeds of the settlement were partially offset by a 5 percent increase in selling, general and administrative expenses, which were reported as $2.1 million.
Michael J. Koss, chairman and chief executive officer, said sales for the quarter were consistent with last year.
“New distributors and new OEM business are starting to have a positive impact on sales but are being offset by lower sales in a drug store chain and some existing OEM business,” Koss said. “A new product has generated very nice sales in U.S. mass retail and is beginning to get good placement in export markets.”
