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ZEOS INTERNATIONAL, LTD. REPORTS FIRST QUARTER RESULTS

 MINNEAPOLIS, April 27 /PRNewswire/ -- ZEOS International, Ltd. (NASDAQ: ZEOS) announced today that for the quarter ended April 3, 1993, it recorded a net loss of $3.3 million or $.38 per fully diluted share on net sales of $60.4 million. The company's results for the first quarter showed improvement over fourth quarter 1992, with net sales increasing $13.5 million or 28.7 percent and its net loss decreasing from $.83 to $.38 per fully diluted share. During the fourth quarter 1992, the company reported a pretax loss of $5.9 million after $1.1 million of nonrecurring charges and a net loss of $7.2 million or $.83 per fully diluted share on net sales of $46.9 million. The company's net sales for the first quarter 1992 were $59.1 million with an operating loss of $3.6 million, a pretax loss of $3.3 million and a net loss of $1.9 million or $.22, including a tax benefit of $1.4 million.
 As a result of continued focus on balance sheet management and a $6.4 million federal tax refund, cash and cash equivalents increased by $13.6 million to $24.3 million compared to a balance at the end of the fourth quarter 1992 of $10.7 million. The company ended the first quarter of 1993 with networking capital of $28.8 million and no outstanding short-term or long-term debt.
 Pretax operating results and net loss for the first quarter improved by $2.6 million and $3.8 million respectively in comparison to the fourth quarter of 1992. These improvements are primarily the result of additional gross margin generated on increased levels of sales, increased efficiencies in manufacturing processes and decreased operating overheads due to the continued emphasis on cost reduction and the consolidation of outside operations. The company attributes the first quarter increase in net sales to demand generated after the introduction of new pricing and the launch of a complete new line of desktop product at the beginning of the quarter. Net sales during the first quarter originated primarily from the company's traditional sources, most notably the direct marketing channel. Distribution to the mass merchant channel was discontinued during the fourth quarter of 1992.
 Gregory E. Herrick, ZEOS International chairman and chief executive officer, said: "While a great deal of work remains to be done on improving our company's financial performance, we are nonetheless pleased with the continued progress which has been made since 1992, particularly in light of the fiercely competitive environment in which we operate.
 "We have succeeded," Herrick continued, "in our efforts to further improve our responsiveness to our customers' needs and those of the marketplace overall. We have remained diligent in our mission to enhance operations, control costs, introduce exciting new products at very affordable prices and otherwise provide exceptional PC system values.
 "While new competitors to our channel of distribution tout their discovery of direct marketing as the wave of the future for personal computer system sales, ZEOS continues to refine and enhance its position as one of America's leading direct marketers in the computer industry," Herrick noted.
 Herrick continued, "This quarter alone saw ZEOS receive a number of important industry accolades for systems from our new lineup including PC World magazine's 'Best Buy' award, PC Computing magazine's 'Best Value' award, Windows magazine's 'Windows Recommended' award plus PC magazine's 'Readers Choice' award for service and reliability.
 "With our improved cash position at the end of the first quarter, our $12.5 million revolving credit facility and no outstanding short- term borrowings or long-term debt, ZEOS is positioned to take advantage of the opportunities in today's market as we work to further enhance our competitiveness and to address the challenges which lie ahead."
 ZEOS International, Ltd., headquartered in Minneapolis, manufactures and markets, direct to end users, ISA and EISA (Industry Standard and Extended Industry Standard Architecture) personal computer systems and workstations based on the Intel 80386SL, 80486SX, SL, DX and DX2 microprocessors worldwide. The company also provides contract product design through its PC Tech subsidiary.
 ZEOS INTERNATIONAL, LTD.
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except per share amounts)
 (Unaudited)
 Three Months Ended
 4/3/93 3/31/92
 Net sales $60,368 $59,051
 Cost of sales 54,292 51,340
 Gross profit 6,076 7,711
 Selling & marketing expenses 7,066 8,305
 General & administrative expenses 1,748 2,047
 Research & development expenses 624 996
 Total overhead 9,438 11,348
 Operating loss (3,362) (3,637)
 Interest expense 25 6
 Investment income (96) (317)
 Loss before income taxes (3,291) (3,326)
 Provision for income taxes 0 (1,419)
 Net loss $(3,291) $(1,907)
 Loss per common and common
 equivalent share:
 Primary & fully diluted $(.38) $(.22)
 Weighted average common and
 common equivalent shares:
 Primary and fully diluted 8,655 8,543
 ZEOS INTERNATIONAL, LTD.
 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 (Dollars in thousands, except per share amounts)
 4/3/93 12/31/92
 (Unaudited)
 ASSETS
 Current assets
 Cash, cash equivalents and
 short-term investments $24,344 $10,682
 Accounts receivable, net of
 allowance for doubtful receivables 13,925 14,164
 Inventories 28,929 30,721
 Income tax receivable 0 6,420
 Other current assets 908 1,329
 Total current assets 68,106 63,316
 Property and equipment, net 4,269 4,746
 Other assets 467 513
 Total assets $72,842 $68,575
 LIABILITIES AND SHAREHOLDERS EQUITY
 Current liabilities
 Short-term bank borrowings $0 $0
 Accounts payable 29,148 20,253
 Other current liabilities 10,045 11,404
 Total current liabilities 39,193 31,657
 Deferred income taxes 200 200
 Shareholders' equity
 Common stock: $.01 par value per share;
 authorized: 15,000,000 shares; issued
 and outstanding: 8,662,464 and
 8,650,964 shares, respectively 87 87
 Additional paid-in capital 48,528 48,506
 Retained earnings deficit (15,166) (11,875)
 Total shareholders' equity 33,449 36,718
 Total liabilities and
 shareholders' equity $72,842 $68,575
 -0- 4/27/93
 /CONTACT: Chuck Henderson, CFO of ZEOS, 612-623-9614/
 (ZEOS)


CO: ZEOS International, Ltd. ST: Minnesota IN: CPR SU: ERN

KH -- MN006 -- 1561 04/27/93 16:08 EDT
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