Zomax (NASDAQ:ZOMX)
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Zomax Announces First Quarter 2005 Financial Results
MINNEAPOLIS, MN, May 10, 2005 /PRNewswire-FirstCall/ -- Zomax Incorporated
(NASDAQ:ZOMX), today reported financial results for its first quarter ended
April 1, 2005. Revenues in the quarter were $42.2 million, a decrease of 16%
from the $50.0 million in revenues reported in the first quarter of 2004. Net
loss for the quarter was $4.1 million, or $0.13 per share, compared with a net
loss of $1.5 million, or $0.05 per share in the first quarter of 2004.
Net loss in the first quarter of 2005 includes a pre-tax benefit of $1.8
million, or $0.03 per share, related to an adjustment of the portion of the
Company's litigation reserves that are payable in shares of the Company's
common stock, and pre-tax charges of approximately $0.2 million, or $0.01 per
share, related to restructuring activities in its Ireland operations.
"Our revenues for the first quarter came in within the range we provided late
in March and reflect changes in the timing of customer product launches and
subscription cycles, a decrease in seasonal sell-through for one of our retail
customers and softer demand from our major PC OEM customers," said Anthony
Angelini, President and CEO of Zomax. "With our restructuring initiatives in
place we believe we are well positioned to reach our goal of profitability
during the second half of the year. Our balance sheet remains strong with
approximately $60 million in cash and no debt which we believe gives us the
financial flexibility to drive the long term growth plans for the Company."
Angelini continued, "We have begun to execute on our restructuring plan which
will have a significant and positive impact on our North American and Ireland
financial performance. Our plan is designed to reduce excess costs, streamline
our operating structure and ultimately return Zomax to profitability. We
believe that the majority of the restructuring initiatives will be completed by
the beginning of the third quarter. Once we achieve profitability, we believe
there will be a number of opportunities to achieve top line growth through both
ongoing internal efforts and accretive acquisitions. In addition, with our
recent agreement to settle the pending shareholder class action lawsuit, we
believe that we have made significant progress in resolving legacy issues,
which will allow us to focus more time and efforts on our core business."
Looking ahead to the second quarter of 2005, the Company is forecasting
revenues comparable to the first quarter. Excluding restructuring costs of
between $0.05 and $0.07 per share, the Company expects to incur a net loss of
between $0.09 and $0.13 per share.
Conference Call
Zomax will host a conference call on May 10, 2005 beginning at 4:30 p.m.
Central Time, to discuss the matters outlined in this press release.
To participate in this conference call, please dial 800-257-3401 for domestic
callers or 303-262-2131 for international callers. A replay of the conference
call will be available for seven days by calling 800-405-2236 for domestic
callers or 303-590-3000 for international callers, both using passcode
11030038#. The conference call will also be available by webcast. Participants
may log on to the webcast conference call by pre-registering at
http://www.zomax.com/ and clicking on the webcast link.
About Zomax:
Zomax helps companies more efficiently bring their products and content to
market worldwide. Zomax' solutions enhance the process of sourcing, production,
and fulfillment through a modular suite of supply chain services. These
services include "front-end" customer contact and e-commerce services, material
management, CD/DVD production, assembly and kitting services, JIT physical and
electronic fulfillment and returns management. Founded in 1993, Zomax operates
11 facilities across the United States, Canada, Mexico and Ireland. The
Company's Common Stock is traded on the NASDAQ Stock Market under the symbol
"ZOMX". For more information on Zomax, visit http://www.zomax.com/ or call
(866) 553-9393.
Safe Harbor for Forward-Looking Statements
Certain statements in this press release relating to expected financial results
for the second quarter of 2005, our ability to achieve sustainable
profitability, the timing of the completion of our restructuring activities,
the opportunities to achieve revenue growth through internal initiatives or
accretive acquisitions, our progress toward resolving legacy issues and the
adequacy of our cash balances to drive the long-term growth plan for the
Company are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from the results, performance or
achievements expressed or implied by the forward looking statements. We
caution that any forward-looking statements made by us in this release or in
other announcements made by us are qualified by important factors that could
cause actual results to differ materially from those in the forward-looking
statements. These factors include, without limitation, our ability to
implement our restructuring and consolidation plans designed to achieve cost
reductions in our North American and Ireland operations; the potential negative
impact on our customer relationships as we implement our consolidation plans or
attempt to execute pricing strategies that are not acceptable to the market
place, our ability to accurately predict the amount of time and cost required
to fully complete our restructuring plan, our ability to retain key employees
during and subsequent to the execution of these restructuring activities, the
changes and volatility in the personal computer hardware and software industry,
particularly with respect to the demand for CD and DVD media, from which a
significant portion of our revenues are derived; macroeconomic factors that
influence the demand for personal computer hardware and software and the
resulting demand for our services; consolidation among our customers or
competitors, which could cause disruption in our customer relationships or
displacement of us as a services provider to one or more customers; our ability
to make the proper strategic choices with respect to pursing profitable growth
in our business; increased competition within our industry and increased
pricing pressure from our customers; our dependence on relatively few customers
for a majority of our revenues; fluctuations in our operating results from
quarter-to-quarter, which are influenced by many factors outside of our
control, including variations in the demand for particular services we offer or
the content included in the products we produce for our customers; the
volatility of polycarbonate prices; effects of pending litigation; and other
risks and uncertainties, including those identified and discussed in detail
under the caption "Risks and Uncertainties" in Item 1 of our 2004 Form 10-K.
We undertake no obligation to update or revise any forward-looking statements
we make in this release due to new information or future events. Investors are
advised to consult any further disclosures we make on this subject in our
filings with the Securities and Exchange Commission, especially on Forms 10-K,
10-Q and 8-K, in which we discuss in more detail various important factors that
could cause actual results to differ from expected or historical results.
ZOMAX INCORPORATED
Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended
April 1, March 26,
2005 2004 (1)
Revenue $42,181 $50,035
Cost of revenue 40,385 43,085
Gross profit 1,796 6,950
Selling, general and administrative
expenses 10,227 9,405
Restructuring costs 230 -
Litigation reserve adjustment (1,830) -
Operating loss (6,831) (2,455)
Other income, net 350 159
Loss before income taxes (6,481) (2,296)
Income tax benefit (2,333) (750)
Net loss $(4,148) $(1,546)
Loss per share:
Basic $(0.13) $(0.05)
Diluted $(0.13) $(0.05)
Weighted average common shares
outstanding:
Weighted average common shares
outstanding 32,613 32,716
Dilutive effect of stock options - -
Weighted average common and diluted
shares outstanding 32,613 32,716
(1) As previously disclosed in our 2004 Form 10-K, we have restated our
first quarter 2004 consolidated financial statements for misstatements
discovered in our Ireland subsidiary
ZOMAX INCORPORATED
Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
April 1, Dec. 31,
2005 2004
ASSETS:
Current Assets:
Cash and cash equivalents $39,185 $41,092
Available-for-sale securities 20,500 19,200
Accounts receivable, net 23,848 36,180
Inventories, net 14,197 14,633
Other current assets 11,432 12,114
Total current assets 109,162 123,219
Property and equipment, net 33,161 35,408
Available-for-sale securities 1,673 3,624
Deferred income taxes 8,957 5,903
$152,953 $168,154
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable 13,351 20,710
Accrued expenses 17,620 19,177
Total current liabilities 30,971 39,887
Deferred rent 137 155
Total liabilities 31,108 40,042
Shareholders' equity:
Common stock 62,423 62,134
Retained earnings 52,713 56,861
Accumulated other comprehensive
income 6,709 9,117
Total shareholders' equity 121,845 128,112
$152,953 $168,154
DATASOURCE: Zomax Incorporated
CONTACT: Anthony Angelini, President and CEO, or Rob Rueckl, Chief
Financial Officer, both of Zomax, Inc., +1-763-553-9300, or Investors, Douglas
Sherk, CEO, or Media, Jennifer Beugelmans, Senior Vice President, both of EVC
Group, Inc., +1-415-896-6820
Web site: http://www.zomax.com/