Boston Acoustics Announces Third Quarter Results.

Business Editors

PEABODY, Mass.--(BUSINESS WIRE)--Jan. 28, 2002

Boston Acoustics, Inc. (NASDAQ-BOSA) today announced its financial results for the third quarter of Fiscal 2002 ended December 29, 2001.

Net sales for the quarter were $22.6 million compared to $33.7 million for the same period a year ago. Net income was $1.5 million compared to $1.8 million, and diluted earnings per share were $.32 per share compared to $.36 per share for the same period a year ago.

For the nine months ended December 29, 2001, net sales were $63.1 million compared to $91.1 million for the same period a year ago. Net income was $2.4 million compared to $5.2 million, and diluted earnings per share were $0.50 vs. $1.05 per share a year ago. The nine months of Fiscal 2002 covers 39 weeks of sales and earnings compared to 40 weeks for the prior year.

Compared to the corresponding quarter a year ago, the Company's Core segment sales were down 2.5%, but the gross margin and profit dollars for the segment both increased. The Company's OEM/Multimedia segment sales were down 62.4%, reflecting the continuing softness in the Personal Computer business.

CEO Andy Kotsatos stated, "During the third quarter, we continued to improve our operating results. Our percentages of operating income and net income both increased compared to last year, and we reduced our outstanding bank loan by another $1 million to $3.5 million."

Boston Acoustics, Inc. provides audio solutions for home entertainment, automobiles and personal computers. Founded in 1979, Boston Acoustics is located in Peabody, Massachusetts.

                                              Three Months Ended

                                          December 29,    December 30,
                                              2001            2000
Net Sales                                $ 22,634,306    $ 33,682,164
Cost of Goods Sold                         14,751,005      24,152,821
  Gross Profit                              7,883,301       9,529,343
Selling and
 Marketing Expenses                         2,766,884       3,663,246
General and
 Administrative Expenses                    1,308,806       1,468,257
Engineering and
 Development Expenses                       1,293,566       1,233,136
  Total Operating Expenses                  5,369,256       6,364,639
  Income from Operations                    2,514,045       3,164,704
Interest Income (Expense), net                    617        (180,725)
Other expense                                 (92,851)        (54,331)
  Income before Provision
   for Income Taxes                         2,421,811       2,929,648
Provision for Income Taxes                    906,000       1,099,000
  Net Income                             $  1,515,811    $  1,830,648

Basic Earnings per Share                 $        .32    $        .37
Diluted Earnings per Share               $        .32    $        .36
Weighted Average
 Shares Outstanding
    Basic                                   4,674,124       4,918,471
    Diluted                                 4,679,669       5,017,045




                                              Nine Months Ended
                                           (39 weeks)      (40 weeks)
                                          December 29,    December 30,
                                              2001            2000
Net Sales                                $ 63,068,596    $ 91,089,338
Cost of Goods Sold                         43,276,198      64,584,992
  Gross Profit                             19,792,398      26,504,346
Selling and
 Marketing Expenses                         7,942,071       9,732,302
General and
 Administrative Expenses                    3,637,693       3,927,309
Engineering and
 Development Expenses                       3,850,823       4,013,480
  Total Operating Expenses                 15,430,587      17,673,091
  Income from Operations                    4,361,811       8,831,255
Interest Income (Expense), net               (151,973)       (393,104)
Other Expense                                (142,118)        (88,127)
  Income before Provision
 for Income Taxes                           4,067,720       8,350,024
Provision for Income Taxes                  1,645,000       3,132,000
  Net Income                             $  2,422,720    $  5,218,024

Basic Earnings per Share                 $       0.50    $       1.06
Diluted Earnings per Share               $       0.50    $       1.05
Weighted Average
 Shares Outstanding
    Basic                                   4,834,463       4,911,568
    Diluted                                 4,841,992       4,950,456


Consolidated Balance Sheets
                                          December 29,      March 31,
                                              2001            2001
Assets
Current Assets
Cash, cash equivalents
 and investments                         $  6,009,484    $  2,785,846
Accounts receivable, net                   12,853,224      11,426,411
Inventories                                17,679,771      24,622,417
Other current assets                        2,587,979       2,791,844
  Total current assets                     39,130,458      41,626,518
Property and equipment, net                13,480,634      15,392,459
Other assets                                1,105,466       1,012,671
  Total assets                           $ 53,716,558    $ 58,031,648

Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable                         $  9,507,252    $  2,743,371
Accrued payroll &
 related expenses                           1,449,593       1,779,942
Current maturity line of credit             2,000,000       1,500,000
Other current liabilities                   2,323,263       3,101,644
  Total current liabilities                15,280,108       9,124,957
Line of credit, net
 of current maturity                        1,500,000      10,000,000
Minority interest
 in joint venture                              35,530          27,325
Shareholders' equity                       36,900,920      38,879,366
  Total liabilities and
   shareholders' equity                  $ 53,716,558    $ 58,031,648

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 Report on Form 10-K for the fiscal year ended March 31, 2001. 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.