| Zoom
Telephonics Q2 1996 Sales Up 23%, 6-month Sales Up 45% Boston,
July 24, 1996 - Zoom Telephonics, Inc. (NASDAQ: ZOOM),
a leading manufacturer of faxmodems and other personal computer
communications products, today announced sales for its second
quarter ending June 30,1996 of $21.1 million, up 23% from
$17.1 million in the second quarter of 1995. Six-month sales
grew 45% to $54.4 million from $37.5 million in the first
half of 1995. Second quarter 1996 net income of $257
thousand or $.04 per share was down from $1.06 million or
$.18 per share in the second quarter of 1995. Net income for
the first half of 1996 was $2.47 million or $.36 per share
compared to $2.2 million or $.37 per share in the first half
of 1995. OEM sales grew to 28% of Zoom's sales in
the second quarter of 1996, up from 11% in the second quarter
of 1995. Zoom-brand sales outside North America grew to 22%
of sales in the second quarter of 1996, up from 12% in the
second quarter of 1995. Gross margin declined to 17.7%
in the second quarter of 1996 from 25.4% in the second quarter
of 1995, reflecting an increase in lower-margin OEM sales
and increased price competition. This also affected the first
half of 1996, as gross margin dropped from 24.4% to 21.2%.
Operating expenses for the second quarter of 1996 rose
to 16.2% of sales from 15.3% in the second quarter of 1995
as research and development expenses rose to 2.9% of sales
from 2.2% and general and administrative expenses rose to
4.1% from 3.0%, primarily due to increases in staff to support
growth. Sales and marketing expenses declined to 9.2% of sales
from 10.0% of sales primarily due to the lower selling expenses
associated with OEM sales. The company's operating
margin decreased to 1.4% of sales for the second quarter of
1996 from 10.0% in the second quarter of 1995, primarily due
to the decline in gross margin. "There is still
strong demand for V.34 modems," said Frank Manning, Zoom's
President. "However, price competition has caused our
selling prices to come down faster than our cost of goods.
We continue to reduce our costs to get our gross margins back
in line. We are also introducing higher-margin products including
our new Zoom/MultiLine family and our Zoom Business Products,
which begin shipping in volume during the third quarter. In
addition, in the third quarter we will begin shipping a number
of new 33,600 bps models and our first modems with simultaneous
voice and data capability. Our products continue to get strong
reviews, with our Zoom/FaxModem PCMCIA V.34C selected as PC
World's 'best buy' for 6 straight months, the same modem picked
by PC Laptop as the 'best value', and our V.34 external modem
chosen by Windows Magazine as one of the top 100 hardware
products of the year." Zoom's balance sheet strengthened
during the second quarter. Zoom's current ratio improved from
2.2 to 10.0 during the quarter reflecting $11.6 million in
net proceeds from a public offering in April and reductions
in inventory, accounts receivable, and accounts payable. The
company ended the quarter with $11.1 million in cash, an unused
$10 million bank line of credit, and shareholders' equity
of $6.51 per share. Zoom also announced that its Board
of Directors has authorized the Company's repurchase of up
to $7 million in Zoom stock. Such purchases may be made from
time to time in the open market or in private transactions,
depending on market and business conditions. For additional
information, please contact Investor Relations, Zoom Telephonics,
Inc., 207 South Street, Boston, Massachusetts 02111, telephone:
(617) 423-1072, fax: (617) 338-5015, E-mail address: Investor@Zoomtel.com.
Zoom's World Wide Web site is www.zoomtel.com
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