EX-99.1 2 v035008_ex99-1.htm Unassociated Document
Exhibit 99.1

 
Zoom Technologies Reports Results for the Fourth Quarter of 2005
 
Boston, MA, February 9, 2006 -Zoom Technologies, Inc. (Nasdaq: ZOOM), a leading manufacturer of modems and other data communication products, today reported net sales of $7.3 million for its fourth quarter ended December 31, 2005, down 13.2% from $8.4 million for the fourth quarter of 2004. Zoom’s net ADSL modem sales showed an 11% year over year growth to $4.6 million in the fourth quarter of 2005. Zoom reported a net loss of $0.9 million or $.09 per diluted share for the fourth quarter of 2005, compared to a net loss of $0.9 million or $.10 per diluted share for the fourth quarter of 2004.
 
Gross profit was $1.2 million or 16.9% of net sales in the fourth quarter of 2005, down from $2.0 million or 23.9% of net sales in the fourth quarter of 2004. The reduced gross profit resulted primarily from the reduction in sales and from lower gross margin on those sales. Gross margin was lower due the negative effect of manufacturing overhead spread over lower sales, the shift of Zoom’s product mix away from dial-up modems, Zoom’s highest margin product category, and the lower proportion of Zoom’s sales through retailers. Zoom’s retailer business typically provides higher margins and higher selling expenses than Zoom’s business through its distributor, service provider, and OEM customers.
 
Operating expenses were $2.2 million or 29.7% of net sales in the fourth quarter of 2005 compared to $3.0 million or 35.4% of net sales in the fourth quarter of 2004. Selling expenses dropped $0.4 million, primarily due to lower personnel costs, lower freight costs, and lower retailer-related selling expenses. General and administrative expenses dropped $0.1 million, primarily due to lower personnel costs partially offset by a $77 thousand increase in the bad debt reserve for a European customer. R&D expenses declined by $0.3 million, primarily due to lower personnel and government approval costs.
 
Zoom’s cash balance on December 31, 2005 was $9.1 million, down from $9.4 million on December 31, 2004. The $0.3 million reduction in cash was primarily due to a $2.1 million net loss for the year offset partially by a reduction in net accounts receivable of $0.7 million and an increase in accounts payable and accrued expenses of $0.6 million. Zoom’s December 31, 2005 balance sheet classifies the $4.9 million mortgage on its headquarters buildings as a current liability since the mortgage was fully due in January 2006. As previously reported, Zoom is in discussions with Wainwright Bank, the mortgage lender, to refinance all or a portion of the loan, and both parties have agreed that this mortgage balloon payment will be deferred while these discussions continue. There can be no assurance as to the outcome of these negotiations. 
 
“We are encouraged by the growth in our DSL business, and by the fact that in Q4 our DSL sales were more than double our dial-up modem sales,” said Frank Manning, Zoom’s President and CEO. “We remain committed to a strong dial-up modem product line, but our product development focus is on DSL and voice over IP. We expect to make a number of exciting new product announcements in the coming months in these areas. Zoom has unusually strong VoIP expertise, and our goal for 2006 is to turn our technology leadership position into significant new VoIP revenues and customers.”
 
 
Zoom has scheduled a conference call for Thursday, February 9th at 9:00 a.m. Eastern Time. You may access the conference call by dialing (800) 289-0436 for calls made within the United States and dialing (913) 981-5507 for calls made from outside the United States. The call will also be simulcast to stock analysts and other interested parties on Zoom’s website (www.zoom.com/Q4) and other financial and investor-oriented websites via the CCBN/StreetEvents network. Shortly after the conference call, a recording of the call will be available on Zoom’s website. For additional information, please contact Investor Relations, Zoom Technologies, 207 South Street, Boston, MA 02111, telephone (617) 423-1072, email investor@zoom.com, or visit Zoom’s website at www.zoom.com.
 
About Zoom Technologies
 
Zoom Technologies, Inc. designs, produces, markets, and supports communications products under the Zoom and Hayes(R) brands, and provides voice over the Internet services under the Global Village brand. Zoom is headquartered in Boston, and its European sales and support center is in the UK. Zoom markets its products in over forty countries, and provides multi-lingual support from its offices in Boston, Florida, and the UK. For more information about Zoom and its products, please see www.zoom.com.
 
###
 
Forward Looking Statements
 
This release contains forward-looking information relating to Zoom’s plans, expectations, and intentions, including statements relating to Zoom’s DSL, VoIP, and other products and product developments, and Zoom’s goals and expectations for 2006, including its ability to turn its VoIP technology leadership position into significant new VoIP revenues and customers. Actual results may be materially different from expectations as a result of known and unknown risks, including: the uncertainty of market acceptance and growth of VoIP and of DSL modem markets; the uncertainty of Zoom’s ability to grow its sales or more successfully penetrate those markets; Zoom’s reliance on a relatively limited number of customers for sale of its DSL modems; Zoom’s increasing reliance on international sales; the uncertainty of the regulatory environment of VoIP products; uncertainty of new product development and introduction, including budget overruns, project delays, and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; other delays in shipments of products; Zoom’s dependence on one or a limited number of suppliers for certain key components; rapid technological change; competition; changes in and other risks set forth in Zoom’s filings with the Securities and Exchange Commission. Moreover, Zoom cannot assure that it will be able to refinance all or a portion of its mortgage on favorable terms if at all. 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.
 
 
ZOOM TECHNOLOGIES, INC.
 
Consolidated Balance Sheets
 
In thousands
 
(Unaudited)

   
Dec 31,
  
Dec 31,
  
   
2005
  
2004
  
             
ASSETS
            
             
Current assets:
            
             
Cash
  
$
9,081
  
$
9,439
  
Accounts receivable, net
    
2,631
    
3,349
  
Inventories
    
5,073
    
5,031
  
Prepaid expenses and other current assets
    
301
    
530
  
               
Total current assets
    
17,086
    
18,349
  
               
Property and equipment, net
    
2,601
    
2,703
  
               
Total assets
  
$
19,687
  
$
21,052
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
Current liabilities:
              
               
Accounts payable
  
$
3,141
  
$
2,007
  
Accrued expenses
    
788
    
1,275
  
Current portion of long-term debt
    
4,890
    
230
  
               
Total current liabilities
    
8,819
    
3,512
  
               
Long-term debt
    
—
    
4,872
  
               
Total liabilities
    
8,819
    
8,384
  
               
Stockholders’ equity:
              
               
Common stock and additional paid-in capital
    
31,109
    
30,662
  
Treasury stock
    
(7
)
  
(7
)
Accumulated other comprehensive income (loss)
    
393
    
523
  
Retained earnings (deficit)
    
(20,627
)
  
(18,510
)
               
Total stockholders’ equity
    
10,868
    
12,668
  
               
Total liabilities & stockholders’ equity
  
$
19,687
  
$
21,052
  
 
 
ZOOM TECHNOLOGIES, INC.
 
Consolidated Statements of Operations
 
In thousands, except for per share data
 
(Unaudited)

 
  
Three Months Ended
  
Years Ended
  
   
12/31/05
 
12/31/04
 
12/31/05
 
12/31/04
  
                       
Net sales
  
$
7,282
  
$
8,386
  
$
25,551
  
$
31,412
  
Cost of goods sold
    
6,048
   
6,379
   
20,885
    
23,346
 
                           
Gross profit
    
1,234
   
2,007
   
4,666
   
8,066
 
                           
Operating expenses:
                          
Selling
    
887
   
1,288
   
4,059
   
4,800
 
General and administrative
    
686
    
822
   
3,553
   
3,620
 
Research and development
    
589
   
862
   
2,699
   
2,927
 
Total operating expenses
    
2,162
   
2,972
   
10,311
   
11,347
  
                           
Operating profit (loss)
    
(928
)
  
(965
)
  
(5,645
)
  
(3,281
)
                           
Other income (expense), net
    
78
   
59
   
3,537
    
209
 
                           
Income (loss) before income taxes
    
(850
)
  
(906
)
  
(2,108
)
  
(3,072
)
                           
Income tax expense (benefit)
    
9
    
-
   
9
   
-
 
                           
Net income (loss)
  
$
(859
)
$
(906
)
$
(2,117
)
$
(3,072
)
                           
Basic earnings (loss) per share:
                          
                           
Earnings (loss) per share
  
$
(0.09
)
$
(0.10
)
$
(0.23
)
$
(0.36
)
                           
Diluted earnings (loss) per share:
                          
                           
Earnings (loss) per share
  
$
(0.09
)
$
(0.10
)
$
(0.23
)
$
(0.36
)
                           
Weighted average number of shares outstanding:
                          
                           
Basic
    
9,347
   
8,900
   
9,206
    
8,590
  
                           
Diluted
    
9,347
   
8,900
   
9,206
   
8,590