BOSA Boston Acoustics (MM)

Boston Acoustics, Inc. (NASDAQ:BOSA) today announced its financial results for the first quarter of the 2006 fiscal year, which ended on June 25, 2005. Net sales for the quarter increased approximately 42%, to $18.0 million from $12.6 million compared to the same period a year ago. Net income increased to approximately $924,000 from approximately $461,000 and diluted earnings per share increased to $.21 per share compared to $.11 per share for the same period a year ago. As previously announced on June 8, 2005, Boston Acoustics entered into an Agreement and Plan of Merger (the "Merger Agreement") with D&M Holdings U.S., Inc., a Delaware corporation ("D&M"), and Allegro Acquisition Corp., a wholly owned subsidiary of D&M (the "Merger"). The consummation of the Merger is subject to shareholder approval and other customary conditions; a Shareholders Meeting has been called for August 25, 2005 to consider and act on the proposed Merger. The proposed Merger is discussed in a Current Report on a Form 8-K filed with the Securities and Exchange Commission on June 9, 2005, which Report included a copy of the Merger Agreement, and in a Proxy Statement delivered to the Company's shareholders in connection with the August 25th Shareholder's Meeting. In connection with the Merger, the company incurred expenses of approximately $580,000 during the three-month period ended June 25, 2005. These expenses, reflected as other expenses, included fees and out of pocket expenses totaling approximately $261,000 paid to the Company's financial advisor for rendering its opinion to the Boston Acoustics board of directors, legal fees of approximately $296,000, and approximately $23,000 for audit and other accounting services. -0- *T Three Months End ---------------------------- June 25, 2005 June 26, 2004 ------------- ------------- Net Sales $17,951,953 $12,619,951 Cost of Goods Sold 10,486,445 7,131,958 ------------- ------------- Gross Profit 7,465,508 5,487,993 ------------- ------------- Selling and Marketing Expenses 3,099,098 2,619,638 General and Administrative Expenses 1,220,531 1,030,172 Engineering and Development Expenses 1,140,854 1,206,654 ------------- ------------- Total Operating Expenses 5,460,483 4,856,464 ------------- ------------- Income from Operations 2,005,025 631,529 Interest Income, net 22,192 5,901 Other Income (Expense), net (567,556) 46,297 ------------- ------------- Income before Provision for Income Taxes 1,459,661 683,727 Provision for Income Taxes 536,000 223,000 ------------- ------------- Net Income $923,661 $460,727 ============= ============= Basic Earnings per Share $.22 $.11 Diluted Earnings per Share $.21 $.11 Weighted Average Shares Outstanding Basic 4,199,147 4,166,845 Diluted 4,316,794 4,190,446 Consolidated Balance Sheets June 25, 2005 March 26, 2005 ------------- ------------- Assets Current Assets Cash and cash equivalents $7,913,293 $6,784,588 Accounts receivable, net 11,847,784 11,234,090 Inventories 11,565,831 12,243,617 Deferred income taxes 2,099,000 2,099,000 Prepaid income taxes 858,000 858,000 Prepaid expenses and other current assets 907,028 1,028,474 ------------- ------------- Total current assets 35,190,936 34,247,769 Property and Equipment, net 9,860,107 10,232,741 Other Assets, net 1,277,323 1,274,825 ------------- ------------- Total assets $46,328,366 $45,755,335 ============= ============= Liabilities and Stockholders' Equity Current Liabilities Accounts payable $6,823,473 $7,454,464 Accrued payroll & related expenses 607,201 701,931 Dividends payable - 355,174 Current maturity of line of credit - 9,432 Other accrued expenses 2,099,672 1,552,475 ------------- ------------- Total current liabilities 9,530,346 10,073,476 Stockholders' Equity 36,798,020 35,681,859 ------------- ------------- Total liabilities and stockholders' equity $46,328,366 $45,755,335 ============= ============= *T Founded in 1979, Boston Acoustics, Inc. (NASDAQ:BOSA) designs, manufactures, and markets high performance audio systems for use in home music and home theater systems, after-market and OEM automotive systems, and custom built-in audio systems. Highly regarded for creating The Boston Sound (TM), the company is renowned for delivering superior, competitively priced products emphasizing performance and value. For further information, visit the company's web site at www.bostonacoustics.com. Certain statements in this press release contain certain forward-looking statements concerning Boston Acoustics' operations, economic performance and financial condition. Such forward-looking statements are based on a number of assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Boston Acoustics to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause such differences include, but are not limited to, those discussed in the Company's annual financial statements filed with its Annual Report on Form 10-K for the fiscal year ended March 26, 2005. The words "believe," "expect," "anticipate," "intend," and "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Boston Acoustics has filed a proxy statement with the Securities and Exchange Commission in connection with the merger transaction referenced above. Investors and security holders are urged to read this filing because it contains important information about the merger transaction. Investors and security holders may obtain a free copy of the proxy statement and other documents filed with the SEC by Boston Acoustics at the SEC's Internet site (http://www.sec.gov). Copies of the proxy statement and the filings with the SEC incorporated by reference in the proxy statement can also be obtained, without charge, by directing a request to Boston Acoustics, 300 Jubilee Drive, Peabody, Massachusetts, 01960, Attention: Investor Relations.