EX-99.1 2 v103450_ex99-1.htm
 
 
Zoom Technologies Reports Q4 2007 Results
 

Boston, MA, February 13, 2008 -Zoom Technologies, Inc. (NASDAQ: ZOOM), a leading producer of modems and other communication products, today reported net sales of $3.8 million for its fourth quarter ended December 31, 2007, down 23% from $4.9 million for the fourth quarter of 2006.

Zoom reported an operating loss before building sale of $0.9 million for Q4 2007, an improvement compared to an operating loss before building sale of $1.0 million for Q4 2006. Zoom reported a net loss of $0.8 million or $0.09 per diluted share for Q4 2007 compared to net income of $5.1 million or $0.54 per diluted share for Q4 2006. Zoom’s Q4 2006 net income benefited from a $4.8 million operating gain from the sale of its headquarters building and other income of $1.2 million, a portion of Zoom’s gain from the sale of Intermute.

Gross profit was $0.8 million or 22.3% of net sales in Q4 2007 compared to $1.2 million or 23.7% of net sales in Q4 2006. The decrease in gross profit was primarily due to lower sales, which also increased the gross margin impact of fixed costs for personnel and facilities.

Operating expenses were $1.8 million or 46.8% of net sales in Q4 2007 compared to $2.1 million or 43.0% of net sales in Q4 2006. Actions to reduce headcount and overhead expenses combined with reductions in variable selling expenses resulted in decreases in Selling, G&A and R&D expenses.

Zoom’s cash balance on December 31, 2007 was $3.6 million, down from $3.7 million on September 30, 2007. This change was primarily due to Zoom’s Q4 2007 $0.8 million net loss and $0.5 million reduction in current liabilities, substantially offset by a $1.6 million reduction in accounts receivable. Zoom’s current ratio was 3.8 on December 31, 2007, and Zoom’s working capital was $7.8 million. Shareholder equity on December 31, 2007 was $9.12 million, or $0.98 per share. Zoom has no long-term debt.

“Sales declines from Q4 2006 to Q4 2007 were due to weak sales in several countries outside the US, including the UK and Turkey,” said Frank Manning, Zoom’s President and CEO. “A major contributor to weak UK sales was excess inventory at one of our largest customers, and we believe that customer’s product sell-through should resolve this problem by March 2008. Looking at full-year 2007, we see that annual sales were up slightly after many years of a decline driven by the decline in what was once our strongest product category, dial-up modems. In 2007 broadband modem sales generated 58% of our revenues. Zoom’s broadband sales rose 31% in 2007 over 2006, despite the decline in DSL sales to Turkey of $1.3 million from 2006 to 2007. We have succeeded at placing broadband modems at key retailers in the US, the UK, and Spain, and at selling broadband modems to Internet service providers in the US and many other countries. However, we continue to suffer from the fact that the lion’s share of broadband modems are supplied by giant service providers like AT&T and Verizon. We hope that the “bring your own phone” theme from Verizon Wireless, Google, and others will be a theme taken up by giant DSL service providers looking to reduce equipment and support costs, and to provide their customers with more and better equipment choices. Meanwhile Zoom is working on some truly innovative new products, winning new customers, and making investments to help diversify our business such as the recently announced investment in RedMoon.”

 
 
 
Zoom has scheduled a conference call for Wednesday, February 13th at 4:45 p.m. Eastern Time. You may access the conference call by dialing (800) 869-6581 for calls made within the United States and (785) 830-7984 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 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 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 the Company’s strategy, inventory, future products and customers, and investments. 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.
 

 
 
 
ZOOM TECHNOLOGIES, INC.
 
Consolidated Balance Sheets
 
In thousands
 
(Unaudited)
 
   
Dec 31,
  
Dec 31,
  
  
 
2007
  
2006
  
             
ASSETS
            
             
Current assets:
            
             
Cash
  
$
3,648
  
$
7,833
  
Accounts receivable, net
    
2,129
    
3,386
  
Inventories
    
4,452
    
4,512
  
Prepaid expenses and other
    
336
    
269
  
               
Total current assets
    
10,565
    
16,000
  
               
Property and equipment, net
    
172
    
249
  
               
Investment
    
1,179
    
—
 
                 
Total assets
  
$
11,916
  
$
16,249
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
Current liabilities:
              
               
Accounts payable
  
$
2,079
  
$
2,640
  
Accrued expenses
    
415
    
562
  
Deferred gain on sale of real estate
    
341
    
367
  
               
Total current liabilities
    
2,835
    
3,569
  
               
Deferred gain on sale of real estate
    
-
    
358
  
                 
Total liabilities
    
2,835
    
3,927
  
               
Stockholders’ equity:
              
               
Common stock and additional paid-in capital
    
31,601
    
31,369
  
Treasury stock
    
(7
)
  
(7
)
Accumulated other comprehensive income
    
587
    
557
  
Retained earnings (deficit)
    
(23,100
)
  
(19,597
)
                 
Total stockholders’ equity
    
9,081
    
12,322
  
                 
Total liabilities & stockholders’ equity
  
$
11,916
  
$
16,249
  

 
 
 
 
ZOOM TECHNOLOGIES, INC.
 
Consolidated Statements of Operations
 
In thousands, except for per share data
 
(Unaudited)
 
   
Three Months Ended
 
Twelve Months Ended
 
 
 
12/31/07
 
12/31/06
 
12/31/07
 
12/31/06
  
                       
Net sales
  
$
3,801
  
$
4,944
  
$
18,477
  
$
18,322
  
Cost of goods sold
    
2,954
    
3,772
    
14,747
    
15,720
  
                           
Gross profit
    
847
    
1,172
    
3,730
    
2,602
  
                           
Operating expenses:
                          
Selling
    
807
    
1,067
    
3,558
    
3,631
  
General and administrative
    
561
    
610
    
2,423
    
2,847
  
Research and development
    
409
    
448
    
1,825
    
2,157
  
Total Operating Expenses
    
1,777
    
2,125
    
7,806
    
8,636
  
                           
Operating profit (loss) before building sale
    
(930
)
  
(953
)
  
(4,076
)
  
(6,034
)
                           
Gain on sale of real estate
    
96
    
4,752
    
383
    
4,752
  
                           
Operating profit (loss)
    
(834
)
  
3,799
    
(3,693
)
  
(1,282
)
                           
Total Other income (expense), net
    
33
    
1,243
    
190
    
2,259
  
                           
Income (loss) before income taxes
    
(801
)
  
5,042
    
(3,503
)
  
977
  
                           
Income tax expense (benefit)
    
—
    
(53
)
  
—
   
(53
)
                           
Net income (loss)
  
$
(801
)
$
5,095
  
$
(3,503
)
$
1,030
  
                           
Earnings (loss) per share:
                          
                           
Basic earnings (loss) per share
  
$
(0.09
)
$
0.55
  
$
(0.37
)
$
0.11
  
                           
Diluted earnings (loss) per share
  
$
(0.09
)
$
0.54
  
$
(0.37
)
$
0.11
  
                           
Weighted average number of shares outstanding:
                          
                           
Basic
    
9,347
   
9,347
    
9,347
   
9,347
  
                           
Diluted
    
9,347
   
9,357
    
9,347
   
9,349