Zomax (NASDAQ:ZOMX)
Historical Stock Chart
From Jul 2019 to Jul 2024
Zomax Announces Second Quarter 2004 Financial Results
MINNEAPOLIS, MN ... August 2, 2004 ... /PRNewswire-FirstCall/ -- Zomax
Incorporated (NASDAQ:ZOMX) today reported financial results for its second
quarter ended June 25, 2004. Revenues in the second quarter were $45.1
million, an increase of 2.5% compared to $44.0 million in the second quarter of
2003. Net earnings for the quarter were $1.3 million, or $0.04 per share, and
include a gain on the sale of a portion of the Company's investment in
Intraware. Excluding this gain, the Company's net loss for the quarter was
($0.4) million, or ($0.01) per share, compared to a net loss on an as reported
basis of ($1.5) million, or ($0.05) per share, in the second quarter of 2003.
On an as adjusted basis, reflecting 2003 royalty agreement revisions as
previously disclosed and illustrated in Table A, the second quarter 2003 net
loss was ($1.0M), or ($0.03) per share.
On a year-to-date basis, 2004 revenues were $95.1 million, an increase of 4.3%
over the comparable period in 2003. Year-to-date net earnings were $0.3
million, or $0.01 per share, compared to a reported net loss of ($3.2) million,
or ($0.10) per share in the comparable period in 2003. Excluding the Intraware
gain from 2004 results, and adjusting 2003 results for the effect of the
royalty agreement revisions, the Company's year-to-date net loss was ($1.4)
million, or ($0.04) per share, in 2004, compared to ($2.3) million, or ($0.07)
per share, in 2003.
The Company's balance sheet continued to gain strength from the first quarter
of 2004, with improvements in both cash and net working capital. The Company's
cash position improved to $69.9 million from $59.4, and net working capital
improved to $94.5 million from $89.4. The Company has no debt.
Commenting on the quarter, Anthony Angelini, President and CEO, stated, "We are
pleased to be able to report continued growth in revenue and earnings over our
2003 results. We are particularly encouraged by improvements we have made in
our gross profit margins in the second quarter. We believe that cost
optimization initiatives we put in place earlier in the year have started to
yield positive results."
Angelini continued, "In addition to making improvements in our operating
results, we continue to carefully look for opportunities to leverage our
balance sheet. Our strong balance sheet and cash position continue to be a one
of our greatest assets, both in terms of our ability to attract and retain key
customers as well as providing us the flexibility to aggressively invest in
growing our business. We are actively working on opportunities to put that cash
to work more productively to produce greater long term returns for our
shareholders."
Moving forward, there are several influences in the marketplace that could
impact the Company's results for the balance of the year. The areas that could
positively or negatively impact its results include a greater opportunity to
increase growth in the industry through organic and external expansion
opportunities, an increase in polycarbonate prices (a petroleum based
commodity) used in the manufacture of CD and DVDs, and a push by personal
computer manufacturers to reduce back-up media included with sales of new
personal computers.
The Company continues to be cautious in the short run as it works to better
understand the effects of changes in the personal computer industry,
realization of its sales pipeline, continued opportunity to impact margin
improvements through cost optimization initiatives and the effect petroleum
price increases on the cost and pricing of CD and DVDs. Therefore, the best
guidance the Company can provide for the third quarter is that operating
results are expected to be similar to the second quarter of this year.
Howard Liszt, Chairman of the Board of Directors, stated, "I am pleased with
the opportunity to serve as Chairman of the Board and lead the Board going
forward. We are excited about the future of Zomax and the new management team.
We are especially encouraged by the steps they are taking toward restoring
growth and profitability in the business. The Board looks forward to providing
management and the shareholders with the leadership, experience and
independence to assist in accelerating Zomax' long term growth."
The Company will host a conference call at 4:30 p.m. (CDT) on Monday, August 2,
2004, to comment further on the financial results for the second quarter 2004
and forward guidance. To participate in this conference call, please call
(719) 457-2693. The conference call will also be available by Webcast.
Participants may log on to the Webcast conference call by visiting the
Company's website at http://www.zomax.com/ .
Use of Non-GAAP Financial Measure
In addition to presenting in this press release our 2003 earnings information
in conformity with Generally Accepted Accounting Principles (GAAP), we have
provided non-GAAP 2003 earnings data that reflects an adjustment to present the
retroactive effect of the revised royalty agreement, signed in the fourth
quarter of 2003, the details of which were previously disclosed in our 2003
Form 10-K. We believe that this non-GAAP financial measure is useful to
investors because the inclusion of this adjustment in our 2003 earnings results
provides a more relevant and reliable comparison to our 2004 operating results
which reflect the reduced royalty rates contained in the revised agreement.
The presentation of this additional information is not meant to be considered a
substitute for financial measures prepared in accordance with GAAP.
Forward-Looking Statements
Certain statements contained in this press release related to our expectations
that cost optimization initiatives initiated earlier this year will continue to
provide opportunities for improved margins, the impact of polycarbonate price
increases on our profitability, the opportunity to increase our growth through
organic and external expansion opportunities, the push by personal computer
manufacturers to reduce back-up media included with sales of new personal
computers, the results of the steps that management is taking to restore growth
and profitability and our expectation that third quarter 2004 results will be
similar to the second quarter 2004 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 the 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, 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 2003 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.
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
12 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".
ZOMAX INCORPORATED
Consolidated Statements of Operations (Unaudited)
(Amounts in thousands, except per share data)
Three Months Ended June Six Months Ended June
2004 2003 2004 2003
Revenue $45,082 $43,997 $95,117 $91,225
Cost of revenue 36,289 37,666 78,985 78,196
Gross profit 8,793 6,331 16,132 13,029
Selling, general and
administrative
expenses 9,597 8,880 18,763 18,213
Operating loss (804) (2,549) (2,631) (5,184)
Gain on sale of
available-for-sale
securities 2,770 - 2,770 -
Other income
(expense),
net 161 (173) 320 (234)
Income (loss)
before
income taxes 2,127 (2,722) 459 (5,418)
Income tax
expense
(benefit) 875 (1,212) 188 (2,183)
Net earnings (loss) $1,252 $(1,510) $271 $(3,235)
Earnings (loss)
per share:
Basic $0.04 $(0.05) $0.01 $(0.10)
Diluted $0.04 $(0.05) $0.01 $(0.10)
Weighted average
common shares
outstanding:
Weighted average
common shares
outstanding 32,790 32,459 32,753 32,674
Dilutive effect
of stock options 283 - 362 -
Weighted average
common and diluted
shares outstanding 33,073 32,459 33,115 32,674
ZOMAX INCORPORATED
Table A - Comparative Adjustments to 2003 Results
(Amounts in thousands, except per share data)
Second Quarter 2003 Six months ended June 2003
Loss per Loss per
Net Loss Share Net Loss Share
As reported $(1,510) $(0.05) $(3,235) $(0.10)
Amount of fourth quarter
2003 royalty benefit
adjustment relating to the
second quarter and the six
months ended June 2003 476 0.02 930 0.03
As adjusted $(1,034) $(0.03) $(2,305) $(0.07)
ZOMAX INCORPORATED
Consolidated Balance Sheets (Unaudited)
(Amounts in thousands)
June December
ASSETS: 2004 2003
Current Assets:
Cash and cash equivalents $69,854 $68,899
Accounts receivable, net 27,765 39,403
Inventories, net 11,238 12,757
Other current assets 10,552 10,069
Total current assets 119,409 131,128
Property and equipment, net 35,016 38,859
Available-for-sale securities 5,390 11,646
Deferred income taxes 33 -
$159,848 $181,633
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable 12,514 20,524
Accrued expenses 12,408 22,028
Total current liabilities 24,922 42,552
Deferred income taxes - 1,315
Total liabilities 24,922 43,867
Shareholders' equity:
Common stock 62,960 62,469
Retained earnings 66,163 65,892
Accumulated other comprehensive
income 5,803 9,405
Total shareholders' equity 134,926 137,766
$159,848 $181,633
DATASOURCE: Zomax Incorporated
CONTACT: Anthony Angelini, President and CEO, or Rob Rueckl, Chief
Financial Officer, both of Zomax Incorporated, +1-763-553-9300
Web site: http://www.zomax.com/