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 MINNEAPOLIS, Oct. 19 /PRNewswire/ -- ZEOS International, Ltd., (NASDAQ: ZEOS) announced today that for the quarter ended Oct. 2, 1993, it recorded a net loss of $2.3 million or $.27 per fully diluted share on net sales of $56.0 million. Net sales for the comparable 1992 period were $51.4 million and net loss of $8.1 million, including $1.0 million of charges for the consolidation of facilities, or $.94 per fully diluted share. The company's results for the third quarter showed improvement over the second quarter 1993, with net sales increasing by $3.3 million or 6.2 percent and net loss decreasing 32 percent from $3.4 million to $2.3 million or $.40 to $.27 per fully diluted share.
 For the first nine months of 1993, net sales of $169.1 million were up $9.8 million or 6.2 percent compared to net sales of $159.2 million for the comparable period 1992. The company's year-to-date pretax operating loss and net loss of $9.1 million decreased by $18.8 million, or 67 percent and $12.0 million, or 57 percent respectively, in comparison to 1992 year-to-date pretax operating loss and net loss of $27.8 million and $21.0 million respectively. These improvements are primarily the result of increased efficiencies in the manufacturing processes and decreasing operating overheads, over prior year. As a result of the company wide cost containment program, year-to-date operating overheads declined by $8.1 million from the comparable 1992 period.
 The company said the increase in net sales from the previous quarter was due in part to stronger sales to the government sector during the third quarter. The company reported that its sales mix for the third quarter of 1993 consisted of approximately 77 percent from desktop products, 13 percent from notebook products and 10 percent from nonsystem revenue, as compared to 78 percent, 8 percent and 14 percent respectively, in the third quarter 1992.
 Greg Herrick, ZEOS International chairman and chief executive officer, said, "While the marketplace remains intensely competitive, our third quarter results demonstrate the improvements made over the prior year. We continue to focus our efforts on the enhancement of our operational efficiencies and work continues on the financial foundations of the company as well. Through ongoing cost containment efforts, we have made significant progress in maximizing utilization of company resources. In addition, we continued to show revenue growth over the same period in 1992 while reducing overhead expenses by 24 percent in comparison to the same period in 1992."
 During the third quarter, ZEOS updated their entire line of desktop PC's. The main motherboard for these systems provides performance and reliability that is among the best in the computer industry. The motherboard was designed by ZEOS and manufactured by Intel offering the latest in personal computer technology.
 ZEOS International, Ltd., headquartered in Minneapolis, manufactures and markets, direct to end users, ISA and EISA (Industry Standard Architecture 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.
 Consolidated Statements of Operations
 (Dollars in thousands, except for per share amounts)
 3 Months Ended 9 Months Ended
 10/2/93 9/30/92 10/2/93 9/30/92
 Net sales $55,981 $51,421 $169,069 $159,222
 Cost of sales 50,596 49,180 152,625 153,703
 Gross profit 5,385 2,241 16,444 5,519
 Selling and marketing
 expenses 5,668 6,550 19,101 23,717
 General and admini-
 strative expenses 1,686 2,912 5,057 6,851
 Research and develop-
 ment expenses 432 921 1,618 3,288
 Total overhead 7,786 10,383 25,776 33,856
 Operating Loss (2,401) (8,142) (9,332) (28,337)
 Interest expense 6 -- 44 8
 Investment income (69) (72) (309) (499)
 Loss before
 income taxes (2,338) (8,070) (9,067) (27,846)
 Provision for
 income taxes -- -- -- (6,810)
 Net loss ($2,338) ($8,070) ($9,067) ($21,036)
 Loss per common and
 common equivalent
 Primary and fully
 diluted ($.27) ($.94) ($1.05) ($2.45)
 Weighted average common
 and common equivalent
 Primary and fully
 diluted 8,692 8,588 8,675 8,569
 (Dollars in thousands, except per share amounts)
 10/2/93 12/31/92
 Current assets:
 Cash, cash equivalents and
 short-term investments $8,156 $10,682
 Accounts receivable, net
 of allowance for doubtful
 receivables 18,733 14,164
 Inventories 30,741 30,721
 Income tax receivable -- 6,420
 Other current assets 1,324 1,329
 Total current assets 58,954 63,316
 Property and equipment, net 3,336 4,746
 Other assets 407 513
 Total assets $62,697 $68,575
 Current liabilities:
 Short-term bank borrowings -- --
 Accounts payable 24,858 20,253
 Other current liabilities 9,881 11,404
 Total current liabilities 34,739 31,657
 Deferred income taxes 200 200
 Shareholders' Equity:
 Common stock: $.01 par value
 per share; authorized:
 15,000,000 shares; issued
 and outstanding: 8,691,540
 and 8,650,964 shares,
 respectively 87 87
 Additional paid-in capital 48,613 48,506
 Retained earnings deficit (20,942) (11,875)
 Total shareholders' equity 27,758 36,718
 Total liabilities and
 shareholders' equity $62,697 $68,575
 -0- 10/19/93
 /CONTACT: Chuck Henderson, chief financial officer of ZEOS, International, 612-623-9614/

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

CP-PB -- MN005 -- 3722 10/19/93 07:56 EDT
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Publication:PR Newswire
Date:Oct 19, 1993

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