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Zoom Telephonics Reports Sales Increase and Profit for Third Quarter Ending 9/30/99
BOSTON--(BUSINESS WIRE)--Oct. 29, 1999--Zoom Telephonics, Inc. (NASDAQ: ZOOM - news), a leading manufacturer of faxmodems and other data communications products, today reported net income for the third quarter of 1999 of $95 thousand or $.01 per share, versus a net loss of $1.151 million or $.15 per share for the third quarter of 1998. Zoom reported sales of $18.2 million for its third quarter ending September 30, 1999, up 26% from $14.5 million for the third quarter of 1998. This increase was primarily due to a 45% increase in modem unit volume partially offset by a 20% decline in average selling prices.
Zoom's $18.2 million sales for the third quarter of 1999 included approximately $3.5 million in Hayes product sales, more than doubling the Hayes contribution in the second quarter of 1999. Zoom purchased the majority of Hayes assets between March 1999 and July 1999. The production of Hayes products had been halted prior to Zoom's acquisition, and was restarted by Zoom in the second quarter of 1999 for European delivery, late in the second quarter for sales in the USA, and late in the third quarter for sales in China.
Zoom's net income of $95 thousand for the third quarter of 1999 benefited from a strong gross margin improvement resulting from higher sales volume, the continuation of advantageous component purchases, and reduced channel price protection and customer rebates. Expenses increased significantly for the same time period as a result of the newly acquired Hayes U.K. organization, increased R&D investment for future broadband and advanced networking products, and increased market development spending for both the Zoom and Hayes brands.
''We were particularly pleased with the performance of our analog modem business,'' said Frank Manning, Zoom's President and CEO. ''The Zoom and Hayes brands are strong, and our broad product line and commitment to the business have helped us gain market share in a tough competitive environment. Profits in our analog modem business offset significant R&D and market development expenses for broadband and advanced networking products. As investments in these areas turn into attractive products, they will benefit from the superb sales channels, customer support, infrastructure, and production capabilities we have built.''
Zoom ended the quarter with a strong balance sheet, with cash and marketable securities of $9.8 million or $1.32 per share, and stockholders' equity of $4.95 per share.
For additional information, please contact Investor Relations, Zoom Telephonics, 207 South Street, Boston, Massachusetts 02111, telephone (617) 423-1072, fax (617) 338-5015, e-mail address Investor@ zoom.com. Zoom's World Wide Web site is www.zoom.com
This press release contains forward-looking information relating to Zoom's plans, expectations and intentions, including statements relating to the anticipated future contribution of Hayes to Zoom's sales, Zoom's potential in the analog modem market, possible expansion and success in the broadband access market, and the company's future performance. Actual results may be materially different than those expectations as a result of known and unknown risks, including uncertainty of new product development and introduction, Zoom's dependence on one or a limited number of suppliers for certain key components, early stage of development of certain data communications markets, uncertainty of market growth, rapid technological change, and competition, as well as other risks set forth in Zoom's filings with the Securities and Exchange Commission. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Zoom's expectations or any change in events, conditions or circumstance on which any such statement is based.
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ZOOM TELEPHONICS, INC.
Consolidated Balance Sheets
( 000's )
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
1999 1998
(Unaudited)
Assets
Current assets:
Cash $ 5,865 $ 5,325
Marketable securities 3,970 13,529
Accounts receivable, net 10,026 7,244
Inventories 11,317 8,893
Deferred income taxes 3,810 3,290
Prepaid expenses and other 725 230
Total current assets 35,713 38,511
Property and equipment, net 4,072 3,748
Other non-current assets 4,527 1,301
$ 44,312 $ 43,560
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,895 $ 3,326
Accrued expenses 2,699 1,809
Total current liabilities 6,594 5,135
Other non-current liabilities 682 --
Total liabilities 7,276 5,135
Stockholders' equity:
Common stock 25,214 25,191
Retained earnings 11,870 13,180
Foreign currency translation income (25) --
Accumulated other comprehensive income (23) 54
Total stockholders' equity 37,036 38,425
$ 44,312 $ 43,560
ZOOM TELEPHONICS, INC.
Consolidated Statements of Income
( 000's )
(Unaudited)
Three Months Ending
9/30/99 9/30/98
Net sales $ 18,196 $ 14,466
Cost of goods sold 11,115 11,168
Gross profit 7,081 3,298
Operating expenses:
Selling 3,641 2,957
General and administrative 1,620 1,322
Research and development 1,546 1,210
Total operating expenses 6,807 5,489
Operating (loss) profit 274 (2,191)
Other income, net 97 364
Income (loss) before taxes 371 (1,827)
Taxes on income 276 (676)
Net income (loss) $ 95 $ (1,151)
Basic $ 0.01 $ (0.15)
Diluted $ 0.01 $ (0.15)
Basic 7,475 7,475
Diluted 7,541 7,475
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Contact:
Zoom Telephonics, Inc.
Mike White, 617/423-1072
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