Earnings beat est by two cents: press release follows:
Zomax Optical Media, Inc. Announces Record Sales and Earnings
Increases for Third Quarter 1997
MINNEAPOLIS, Oct. 27 /PRNewswire/ -- Zomax Optical Media, Inc. (Nasdaq: ZOMX) today reported record sales and earnings for its third quarter ended September 26, 1997. For the third quarter, sales increased 121% to $10,519,000 from $4,769,000 while net income increased to $629,000 for the quarter ended September 26, 1997 as compared with net income of $388,000 for the same period in 1996. Earnings per share were $.14 versus $.09 for the same quarter in 1996.
For the nine months ended September 26, 1997, sales increased 107% to $25,494,000 compared to $12,335,000 for the same period in 1996. Net income for the nine months ended September 26, 1997 was $1,270,000 or $.28 per share compared to net income of $785,000 or $.22 per share for the same period in 1996 on 24% more shares outstanding.
James T. Anderson, President and CEO, stated, "Our significant sales increase in the third quarter came from both internal growth and acquisitions. Our internal third quarter sales growth reflects an 83% increase from the third quarter of 1996. I am very pleased with our internal growth and believe it shows our strong commitment to quality and service as well as strong growth in the market segments we service. The third quarter includes the results of Benchmark Media Services Inc., a CD and diskette replicator, and Trotter Technologies, a RMA processing service company, both of which were acquired in the second quarter. These newly acquired businesses accounted for $1,815,000 in total sales for the quarter."
Mr. Anderson noted, "The third quarter statement of operations included the additional cost of outsourcing CDs. The Company outsources CDs when customer demand exceeds its production capability. This allows us to satisfy our customers' needs but margin dollars are lost. During the quarter, the Company successfully completed the installation of mastering equipment. Mastering allows us to bring quality and timeliness under the Company's control and eliminates the expensive outsourcing that was previously done. Zomax believes mastering will enable it to attract new customers who prefer CD manufacturers that also offer mastering and those customers who require very fast turnaround time. In addition, this equipment is DVD (Digital Versatile Disc) ready to meet our needs as we install DVD molding equipment and develop our DVD manufacturing capabilities."
Zomax Optical Media, Inc. is a Minneapolis-based manufacturer and producer of CD-Rom, CD Interactive, CD Video, CD Audio, Floppy Disc and Audio Cassette replication services. The Company services the multimedia needs of a wide range of customers with full turnkey capabilities, including concepting, graphic design, artwork and printing, mastering, pressing, packaging and distribution.
Statements contained in this press release regarding the Company's efforts to offset continuing competitive pressures through increased sales volume and lower production costs are forward-looking, based on current expectations. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. There are certain important factors that could cause results to differ materially from those anticipated, including: strategies of competitors, market demand, the Company's ability to integrate the new mastering into the manufacturing process, general economic factors, such as consumer confidence and inflation, and the Company's ability to successfully assimilate its newly acquired software replication businesses. Investors are cautioned that all forward-looking statements involve risk and uncertainty.
ZOMAX OPTICAL MEDIA, INC.
(Successor to Zomax Optical Media Limited Partnership)
Proforma Statements Of Operations
Three Months Ended Nine Months Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1997 1996 1997 1996
(a)
Sales $10,518,754 $4,768,914 $25,494,404 $12,334,656
Cost of Sales 7,777,232 3,368,574 19,209,847 8,848,216
Gross Profit 2,741,522 1,400,340 6,284,557 3,486,440
Selling, General
and Administrative
Expenses 1,663,179 771,901 4,101,817 2,075,961
Operating Income 1,078,343 628,439 2,182,740 1,410,479
Interest Expense (108,423) (90,451) (294,318) (274,515)
Interest Income 42,158 107,900 179,422 187,140
Income Before
Income Taxes 1,012,078 645,888 2,067,844 1,323,104
Income Taxes 383,000 258,000 798,000 538,000
Net Income $ 629,078 $ 387,888 $ 1,269,844 $ 785,104
Earnings Per Share $ 0.14 $ 0.09 $ 0.28 $ 0.22
Weighted Average
Number of Shares
Outstanding 4,611,591 4,438,906 4,481,409 3,609,228
(a) The proforma statement of operations for 1996 reflects the historical statement of operations data of the predecessor Partnership as if the Partnership had been treated as a taxable entity for income tax purposes (assuming a 39% effective tax rate).
ZOMAX OPTICAL MEDIA, INC.
Summarized Balance Sheets
ASSETS
Sept. 26, 1997 Dec. 27, 1996
Current Assets:
Cash $4,293,435 $6,914,899
Accounts receivable 6,234,720 3,944,929
Inventories 2,730,191 1,262,665
Prepaid expenses 580,682 110,443
Total current assets 13,839,028 12,232,936
Property and equipment 14,344,105 7,574,501
Goodwill 1,188,073 --
Other assets 226,362 147,416
Total assets $29,597,568 $19,954,853
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank Line of Credit $1,094,701 $0
Current portion of notes payable 2,587,978 1,508,607
Accounts payable and
accrued expenses 7,656,448 3,613,956
Total current liabilities 11,339,127 5,122,563
Notes payable, net of
current portion 3,513,193 1,714,374
Shareholders' equity:
Common stock, no par value,
15,000,000 authorized shares,
4,447,840 and 4,385,000 shares
issued and outstanding at
Sept. 26, 1997 and
Dec. 27, 1996, respectively 12,491,074 12,133,585
Retained earnings 2,254,174 984,331
Total shareholders' equity 14,745,248 13,117,916
$29,597,568 $19,954,853
/CONTACT: Jim Anderson, President and CEO, or Jim Flaherty, Chief Financial Officer, 612-553-9300, both of Zomax Optical Media, Inc./ |
