ZEOS INTERNATIONAL, LTD. REPORTS THIRD QUARTER RESULTS
ZEOS INTERNATIONAL, LTD. REPORTS THIRD QUARTER RESULTS ST. PAUL, Minn., Oct. 30 /PRNewswire/ -- ZEOS International, Ltd.
(NASDAQ: ZEOS) announced today that for the quarter ended Sept. 30, 1992, it recorded a net loss of $8.1 million or $.94 per fully diluted share on net sales of $51.4 million. Net sales for the comparable 1991 period were $47.4 million and net earnings were $2.4 million or $.30 per fully diluted share. The company's results for the third quarter showed improvement over the second quarter in which the company recorded a net loss of $11.1 million or $1.29 per fully diluted share on net sales of $48.8 million.
The company said the increase in net sales from the previous quarter was due primarily to increased sales in the mass merchant channel during the third quarter which were partially offset by lower sales through the company's direct marketing channel. The net loss for the third quarter reflected the continued intense competition and extreme customer price sensitivity in the personal computer business and the resulting significant downward pressure on prices and gross margins. Gregory E. Herrick, ZEOS International chairman and chief executive officer, said: "Our financial results, like those of most of our competitors, continue to be severely impacted by conditions in our operating environment. Nevertheless, the third quarter results show considerable improvement over the previous quarter. "For example, our cash position improved during the third quarter, from $6.9 million at June 30, 1992, to $8.0 million at Sept. 30. We have no short-term or long-term debt. Furthermore, we have an income tax benefit receivable of $7.9 million relating to the carry back of recent losses that we anticipate receiving in the first quarter of 1993. "In addition, we have instituted a company-wide cost containment program which has reduced fixed costs absorbed into cost of sales by $600,000 and selling and marketing expenses by $2.3 million from the second quarter. "During the third quarter, as part of an overall efficiency plan, we made the decision to complete the consolidation of virtually all of our operations into one facility, resulting in a $1.0 million charge to earnings in the third quarter but expected to reduce overall facilities charges going forward. Finally, we have recently taken steps to augment the company's management team with new talent experienced in the industry and committed to addressing the challenges ahead. In general, we have taken the actions we said we would take in our second quarter earnings release, and we intend to take further, even more far-reaching, actions in the future aimed at ensuring that ZEOS continues forward on a sound financial and operational footing. "While a number of challenges remain, including the continued roll- out of our new Freestyle notebook product, the expansion of our direct channel sales into Europe, the ramp-up of our new, lower priced Occidental computer line and the replacement of our revolving bank line, we believe that the steps we have taken, are taking, and will take in the immediate future will position ZEOS to be a winner, not just a survivor in the personal computer marketplace." The company reported that its sales mix by product category for the third quarter of 1992 consisted predominantly of desktop products, with the balance consisting of notebook and palmtop products and non-systems revenue. The company's sales mix by distribution channel for the third quarter of 1992 consisted of approximately 28 percent from the mass merchant channel and 72 percent from its traditional sources, most notably the direct marketing channel. The company is currently processing orders from its mass merchandiser for the upcoming holiday retail season, though the company expects that net sales to the mass merchant channel during the fourth quarter of 1992 will be lower than those in the third quarter of 1992. ZEOS International, Ltd., headquartered in St. Paul, Minn., manufactures and markets, direct to end users worldwide, ISA and EISA (Industry Standard Architecture and Extended Industry Standard Architecture) personal computer system and workstations based on the Intel 80386 and 80486 and Cyrix 486SLC microprocessor families. The company also provides engineering services through its PC Tech electronic design group and contract manufacturing services under the name NPC Electronics, and distributes passive electronic components through its Parts1 distribution division. ZEOS INTERNATIONAL, LTD. Consolidated Statements of Operations (unaudited) (in thousands, except per share amounts) Periods ended Three months Nine months Sept. 30 1992 1991 1992 1991 Net sales $51,421 $47,355 $159,222 $160,287 Cost of sales 49,180 34,793 153,703 122,587 Gross margin 2,241 12,562 5,519 37,720 Selling and marketing expenses 6,550 6,329 23,717 18,390 General and administrative exps. 2,912 1,902 6,851 6,404 Research and development exps. 921 721 3,288 1,626 Operating profit (loss) (8,142) 3,610 (28,337) 11,300 Interest expense --- 42 8 188 Investments income (72) (157) (499) (196) Earnings (loss) bef. inc. taxes(8,070) 3,725 (27,846) 11,308 Provision for income taxes --- 1,338 6,810 4,182 Net earnings (loss) (8,070) 2,387 (21,036) 7,126 Earnings (loss) per common and common equivalent share: Primary $(0.94) $0.30 $(2.45) $0.99 Fully diluted (0.94) 0.30 (2.45) 0.97 ZEOS INTERNATIONAL, LTD. Condensed Consolidated Statements of Financial Position (dollars in thousands, except per share amounts) Sept. 30, 1992 December 1991 (unaudited) Assets Current assets Cash, cash equivalents, and short-term investments $7,994 $24,662 Accounts receivable, net of allowance for doubtful receivables 13,355 16,807 Inventories 31,272 51,214 Income taxes receivable 7,853 --- Other current assets 2,178 2,880 Total current assets 62,252 95,563 Property and equipment, net 6,218 3,619 Other assets 584 877 Total 69,454 100,059 Liabilities and Shareholders' Equity Current liabilities Short-term bank borrowings 0 0 Accounts payable 16,181 26,396 Other current liabilities 9,240 9,103 Total current liabilities 25,421 35,499 Deferred income taxes 77 153 Shareholder's equity Common stock: .01 per value per share; authorized: 15,000,000 shares; issued and outstanding: 8,622,786 and 8,512,686 shares, respectively 86 85 Additional paid-in capital 48,584 48,000 Retained earnings (deficit) (4,714) 16,322 Total shareholders' equity 43,956 64,407 Total liabilities and shareholder's equity 69,454 100,059 -0- 10/30/92 /CONTACT: John Bakewell, chief financial officer of ZEOS, 612-635-1419, or Roy Winnick of Kekst and Company, 212-593-2655, for ZEOS/ (ZEOS) CO: ZEOS International, Ltd. ST: Minnesota IN: CPR SU: ERN
TM-KD -- NY001 -- 6939 10/30/92 08:01 EST
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|Date:||Oct 30, 1992|
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