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ZAG Industries reports fiscal 1996 third quarter/nine month results.

ROSH HA'AYIN, Israel--(BUSINESS WIRE)--Nov. 26, 1996--

Sales improve over 38 percent in the third quarter and 70 percent in

the nine-month period

ZAG Industries Ltd. (NASDAQ: ZAGIF), which designs, develops and manufactures high-quality plastic consumer products primarily for home improvement, today reported its unaudited fiscal 1996 third quarter/nine months results for the period ended Sept. 30, 1996.

The company completed an initial public offering of 3,105,000 (includes 405,000 share over-allotment) shares of common stock on Nov. 1, 1996. Through the IPO the company has raised over $20 million in net proceeds to be used in capital development projects and promotional activities to further expand sales.

For the third quarter ended Sept. 30, sales increase over 38 percent to $12,458,000 from $9,005,000 in the similar period a year ago. Sales in the 1996 nine-month period improved approximately 70 percent to $35,087,000 compared to $20,662,000 in the similar nine-month period a year ago. The increase in sales resulted from the launch of new products, penetration to new retailers and expanded relationships with existing customers.

Net income in the 1996 third quarter increased over 32 percent to $1,387,000, or $0.22 per share, compared to $1,049,000, or $0.15 in the 1995 third quarter. Net income in the nine-month period increased over 54 percent to $3,752,000, or $0.60 per share, compared to $2,428,000, or $0.38 per share. Gross margins improved to 35 percent in the 1996 third quarter from 33.9 percent in the 1995 third quarter, while in the 1996 nine-month period gross margins improved to 38 percent compared to 33.5 percent in the similar year-ago nine-month period.

Zvi Yemini, chairman and chief executive officer of ZAG, commented, "The third quarter and nine month earnings reflect the results of our continued commitment to become a leader in value-added consumer plastic products through `quality by design'. During the recent quarter, we were able to launch a complete new line of storage bins in four different sizes, the circular saw case designed in conjunction with Home Depot and WalMart and began distributing from the US based warehouse to customers like Target Stores.

"We are excited about our results and see excellent opportunities for growth in new markets, with new products and with new customers. Our strong, collaborative relationships with leading worldwide retailers, combined with our strong and cost-efficient development and manufacturing capabilities, have positioned the company to take advantage of the numerous growth opportunities available to us."

Israel-based ZAG designs, develops, manufactures and markets high-quality plastic consumer products distinguished by their innovative designs and features. The company's products include a wide range of hardware, storage, and gardening accessories including tool boxes, modular drawer systems and gardening tools. The company's products are sold, for both household and professional use, primarily in home improvement, do-it yourself and mass merchandise stores in nearly 40 countries throughout the world. -0-
 ZAG INDUSTRIES
 BALANCE SHEETS
 U.S. Dollars in thousands

 Dec. 31, Sept. 30,
 1995 1995 1996
 Audited Unaudited

ASSETS

CURRENTS ASSETS
Cash and cash
equivalents $ 3,397 $2,106 $1,152
Accounts
 receivable- trade 5,484 6,389 7,642

Other accounts
 receivable 2,080 826 2,628
Inventories 2,408 1,445 5,437
Deferred income
 taxes 134 90 90

Total current
 assets 13,503 10,856 16,949

LONG-TERM RECEIVABLES - - 106

FIXED ASSETS
 Cost 4,395 3,839 12,124
 Less accumulated
 depreciation 787 585 1,666


 3,608 3,254 10,458
Payments on account
 of fixed
 assets 1,383 220 629

 4,991 3,474 11,087

Total assets $ 18,494 $ 14,330 $ 28,142


 ZAG INDUSTRIES LTD.
 BALANCE SHEETS
 U.S. Dollars in thousands

 Dec. 31, Sept. 30,
 1995 1995 1996
 Audited Unaudited

LIABILITIES AND
SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
 Short-term bank debt $ 32 $ 31 $ 103
 Current maturities
 of long-term loans 220 245 233
 Accounts payable:
 Trade 6,650 5,173 7,203
 Related party 1,517 1,915 1,584
 Accrued expenses and
 other liabilities 2,177 1,359 1,884
 Dividend declared -- -- 1,000

Total current liabilities 10,596 8,723 12,007

LONG-TERM LIABILITIES:
 Long-term loans from
 banks, net of current
 maturities 722 295 3,221
 Accrued severance pay,
 net 109 100 360
 Deferred income taxes 126 121 237

Total long-term liabilities 957 516 3,818

SHAREHOLDERS' EQUITY(a)
 Share capital 8 8 20
 Capital surplus 1,675 1,675 4,299
 Retained earnings 5,258 3,408 7,998

Total shareholders'
 equity 6,941 5,091 12,317

 $18,494 $14,330 $28,142

(a) Balance sheet does not include proceeds from the IPO which
occurred in the fourth quarter.

 ZAG INDUSTRIES LTD.
 STATEMENTS OF INCOME
 U.S. Dollars in thousands
 (except per share data)

 Year ended Nine Months ended Three Months Ended
 Dec. 31, Sept. 30, Sept. 30,
 1995 1995 1996 1995 1996
 Audited Unaudited


Sales $31,266 $20,662 $35,087 $9,005 $12,458
Cost of Sales 19,938 13,743 21,786 5,948 8,068

Gross Profit 11,328 6,919 13,301 3,057 4,370

Selling
expenses,net 3,996 2,499 5,407 1,129 1,713

General
and administrative
expenses 1,571 1,058 2,683 443 647

Operating income 5,761 3,362 5,216 1,485 2,010

Financial
expenses, net 72 129 54 68 112

Income before
taxes on income 5,689 3,233 5,162 1,417 1,892

Taxes on income 1,411 805 1,410 368 10

Net income for
the period $4,278 $2,428 $3,752 $1,049 $1,387

Earnings per
 share $ 0.68 $0.38 $0.60 $0.15 $0.22





CONTACT: Investor Contact:

ZAG Industries Ltd.

Jacob Kupperwas, 011 (972 3) 902-0200

or

Media Contacts:

Fleishman-Hillard

Peter Stack/Stan Steinreich

212/265-9150
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