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/
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