EX-99.1 2 v082465_ex99-1.htm Unassociated Document

EXHIBIT 99.1
 
  
 
 
Zoom Technologies Reports Results for the Second Quarter of 2007
 
Boston, MA, July 31, 2007 -Zoom Technologies, Inc. (NASDAQ: ZOOM), a leading producer of modems and other communication products, today reported net sales of $4.3 million for its second quarter ended June 30, 2007, down 4% from $4.5 million for the second quarter of 2006. Zoom reported a net loss of $1.3 million or $0.14 per share for Q2 2007, a significant improvement over the net loss of $1.9 million or $0.20 per share for Q2 2006.
 
Zoom’s sales in the UK and North America for Q2 2007 were up 20% and 6% respectively over Q2 2006, but these gains were not enough to offset a $0.34 million reduction in sales to Turkey.
 
Gross profit was $0.5 million or 10.8% of net sales in Q2 2007, up from $0.2 million or 4.9% of net sales in Q2 2006. The increase in gross profit was primarily due to the move of Zoom’s Boston final assembly operations to Tijuana, Mexico, which lowered manufacturing personnel, space and occupancy costs by $0.25 million from Q2 2006 to Q2 2007. Gross profit also improved as a result of lower obsolescence expense in Q2 2007 compared to Q2 2006.
 
Operating expenses were $2.0 million or 45.5% of net sales in Q2 2007, down from $2.1 million or 47.2% of net sales in Q2 2006, primarily due to reductions in G&A and R&D expenses.
 
Zoom’s cash balance on June 30, 2007 was $5.8 million, down from $7.8 million on December 31, 2006. This change was primarily due to a $2.1 million loss for the first half of 2007 and a $1.3 million reduction in liabilities, partially offset by a $0.9 million decrease in accounts receivable and a $0.3 million decrease in inventory. Zoom’s current ratio improved to 5.3 on June 30, 2007 from 4.5 on December 31, 2006. Zoom has no long-term debt.
 
“We are unhappy with our losses, but encouraged by the progress we’ve made over the past year,” said, Frank Manning, Zoom’s President and CEO. “We have significantly reduced expenses; and we have increased shelf space in both the US and UK, our largest markets. Last quarter our largest customer in the UK started a very successful promotion of our wireless-G DSL modem, a product they had not carried previously. That promotion actually hurt Zoom’s Q2 2007 gross margin, but we expect that product’s margins to improve going forward. In addition, in Q2 2007 we were able to get our dial-up modems back into Best Buy. After buying no Zoom products for two years Best Buy, formerly Zoom’s largest customer, now carries four of our products - our wireless-G DSL modem, a cable modem, and two dial-up modems. Zoom also continues to introduce new products. Last quarter we introduced our first “DSL in the FastLane” product, our first product for Skype, and a miniature USB dial-up modem that is selling very well. We are in the midst of a program designed to lower our cost of goods for our major DSL modems, and we expect to complete that program by the end of Q3 2007. Outside of our base business, we are actively looking for investments that accelerate our growth into new areas that are synergistic with our existing business. Today in a separate release we are announcing one of those investments.”
 
Zoom has scheduled a conference call for Tuesday, July 31st at 10:00 a.m. Eastern Time. You may access the conference call by dialing (800) 262-1292 for calls made within the United States and (719) 457-2680 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/Q2) and to 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) 753-0698, email investor@zoom.com, or visit Zoom’s website at www.zoom.com.
 
 
 
 
 
About Zoom Technologies
 
Zoom Technologies, Inc. designs, produces, markets, and supports communication products under the Zoom, Hayes®, and Global Village® brands. 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 sales of wireless DSL products in the UK, Zoom’s sales of wireless products and cable and dial-up modems in the United States, sales of Zoom’s “DSL in the FastLane” product and Zoom’s expected DSL cost reductions. Actual results may be materially different from expectations as a result of known and unknown risks, including: the need for additional funding which Zoom may be unable to obtain; declining demand for certain of Zoom’s products; delays, unanticipated costs, interruptions or other uncertainties associated with Zoom’s production and shipping capabilities in Mexico; Zoom’s reliance on an outsourcing partner to conduct production operations in Mexico; Zoom’s dependence on key employees; the uncertainty of future demand from any specific customer or for all of Zoom’s customers as a group; Zoom’s reliance on a relatively limited number of customers for sale of its products; Zoom’s reliance on international sales; the uncertainty of the regulatory environment for Zoom’s 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; Zoom’s dependence on one or a limited number of suppliers for certain key components; rapid technological change; competition; factors affecting Zoom’s liquidity; and 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 TECHNOLOGIES, INC.
 
Consolidated Balance Sheets
 
In thousands
 
(Unaudited)
 
   
June 30,
  
Dec 31,
  
 
  
2007
  
2006
  
             
Assets
              
               
Current assets:
              
               
Cash
  
$
5,808
  
$
7,833
  
Accounts receivable, net
    
2,501
    
3,386
  
Inventories
    
4,217
    
4,512
  
Prepaid expenses and other
    
263
    
269
  
               
Total current assets
    
12,789
    
16,000
  
               
Property and equipment, net
    
202
    
249
  
                 
Total assets
  
$
12,991
  
$
16,249
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
Current liabilities:
              
               
Accounts payable
  
$
1,571
  
$
2,640
  
Accrued expenses
    
480
    
562
  
Deferred gain on sale of real estate
    
367
    
367
  
               
Total current liabilities
    
2,418
    
3,569
  
               
Deferred gain on sale of real estate
    
166
    
358
  
               
Total liabilities
    
2,584
    
3,927
  
               
Stockholders’ equity:
              
               
Common stock and additional paid-in capital
    
31,518
    
31,369
  
Treasury stock
    
(7
)
  
(7
)
Accumulated other comprehensive income (loss)
    
582
    
557
  
Retained earnings (deficit)
    
(21,686
)
  
(19,597
)
               
Total stockholders’ equity
    
10,407
    
12,322
  
               
Total liabilities & stockholders’ equity
  
$
12,991
  
$
16,249
  

 
3
 
 
ZOOM TECHNOLOGIES, INC.
 
Consolidated Statements of Operations
 
In thousands, except for per share data
 
(Unaudited)
 
 
   
Three Months Ended
  
Six Months Ended
  
   
6/30/07
  
6/30/06
  
6/30/07
  
6/30/06
  
                       
Net sales
  
$
4,342
  
$
4,518
  
$
9,096
  
$
9,799
  
Cost of goods sold
    
3,871
    
4,295
    
7,506
    
8,611
  
                           
Gross profit
    
471
    
223
    
1,590
    
1,188
  
                           
Operating expenses:
                          
Selling
    
878
    
878
    
1,772
    
1,782
  
General and administrative
    
607
    
698
    
1,245
    
1,547
  
Research and development
    
491
    
557
    
982
    
1,189
  
Sub-total
    
1,976
    
2,133
    
3,999
    
4,517
  
                           
Operating profit (loss) before building sale
    
(1,505
)
  
(1,910
)
  
(2,409
)
  
(3,629
)
                           
Gain on sale of real estate
    
96
    
-
    
192
    
-
  
                           
Operating profit (loss)
    
(1,409
)
  
(1,910
)
  
(2,217
)
  
(3,329
)
                           
Other income (expense), net
    
70
    
53
    
128
    
97
  
                           
Income (loss) before income taxes
    
(1,339
)
  
(1,857
)
  
(2,089
)
  
(3,232
)
                           
Income tax expense (benefit)
    
—
    
—
   
—
   
—
 
                           
Net income (loss)
  
$
(1,339
)
$
(1,857
)
$
(2,089
)
$
(3,232
)
                           
Basic and diluted earnings (loss) per share:
                          
                           
Earnings (loss) per share
  
$
(0.14
)
$
(0.20
)
$
(0.22
)
$
(0.35
)
                           
                           
Weighted average number of shares outstanding:
                          
                           
Basis and Diluted
    
9,347
   
9,347
    
9,347
   
9,347
  

 
 
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