UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 27, 2004
Zoom Technologies, Inc.
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(Exact Name Of Registrant As Specified In Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-18672 51-0448969
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(Commission File Number) (I.R.S. Employer Identification No.)
207 South Street, Boston, MA 02111
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(Address of Principal Executive Offices) (Zip Code)
(617) 423-1072
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(Registrant's Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On October 27, 2004, the Company issued a press release announcing its
financial results for the third quarter ended September 30, 2004. A copy of the
press release is attached hereto as Exhibit 99.1 and is incorporated herein in
its entirety by reference.
LIMITATION ON INCORPORATION BY REFERENCE. The information furnished in this
Item 2.02 shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section, nor shall such information be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, except
as shall be expressly set forth by specific reference in such a filing.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. Except for historical
information contained in the press release attached as an exhibit hereto, the
press release contains forward-looking statements which involve certain risks
and uncertainties that could cause actual results to differ materially from
those expressed or implied by these statements. Please refer to the cautionary
note in the press release regarding these forward-looking statements.
Item 9.01 Financial Statements and Exhibits
Exhibit Number Description
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99.1 Press release dated October 27, 2004 of Zoom Technologies,
Inc. (the "Company") announcing its financial results for
the third quarter ended September 30, 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 27, 2004 ZOOM TECHNOLOGIES, INC.
By: /s/ Robert A. Crist
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Robert A. Crist, Chief
Financial Officer
EXHIBIT INDEX
Exhibit Number Description
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99.1 Press release dated October 27, 2004 of Zoom Technologies,
Inc. (the "Company") announcing its financial results for
the third quarter ended September 30, 2004.
EXHIBIT 99.1
Zoom Technologies Reports Results for the Third Quarter of 2004
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Boston, MA, October 27, 2004 -Zoom Technologies, Inc. (NASDAQ: ZOOM), a
leading manufacturer of modems and other data communication products, today
reported net sales of $7.1 million for the third quarter of 2004, down 21.5%
from $9.1 million for the third quarter of 2003. Zoom's ADSL modem sales for the
third quarter of 2004 more than doubled from the third quarter of 2003, but this
strong growth was not sufficient to offset the decline in dial-up modem sales in
the same time period.
Zoom reported a net loss of $1.0 million or $.12 per diluted share for its
third quarter ended September 30, 2004, compared to Zoom's net income of $.4
million or $.05 per diluted share in the third quarter of 2003, due primarily to
reduced gross profit.
Gross profit was $1.5 million or 21.0% of net sales in the third quarter of
2004, down from $3.0 million or 32.5% of net sales in the third quarter of 2003.
The reduced gross profit resulted primarily from the reduction in sales and from
lower gross margin on those sales. Gross margin was lower primarily due to the
shift of Zoom's product mix away from dial-up modems, Zoom's highest margin
product category, the negative effect of manufacturing absorption spread over
lower sales, and a significant price protection credit in the UK.
Operating expenses were $2.6 million or 36.6% of net sales in the third
quarter of 2004 compared to $2.6 million or 29.1% of net sales in the third
quarter of 2003. Selling expenses dropped $261 thousand, primarily due to lower
dial-up modem sales to US retailers. R&D expenses rose $62 thousand, reflecting
Zoom's ongoing commitment to new product development. General and administrative
expenses rose $169 thousand, primarily due to two one-time settlements which
favorably affected Zoom's bad debt allowance in Q3 2003.
Zoom's cash balance on September 30, 2004 was $10.3 million, up from $9.9
million on December 31, 2003. The exercise of stock options by Zoom employees in
2004 added $2.0 million to Zoom's cash balance. On September 30, 2004 Zoom's
current ratio was 5.9.
"These results show how important it is for Zoom to continue to grow our
ADSL modem sales and to establish success with our VoIP products," said Frank
Manning, Zoom's President and CEO. "In November and December 2004 we expect to
begin shipping a new generation of ADSL modems, and we expect this will help us
to grow our ADSL revenues and improve our ADSL gross margins. Zoom recently
began shipping its first VoIP product, the Zoom ADSL X5v, and we plan to build
on that product's momentum soon by shipping our second VoIP product, the V3,
which is designed for customers who have a cable modem or ADSL modem."
Zoom has scheduled a conference call to further discuss Zoom and Zoom's Q3
2004 results on Wednesday, October 27th at 11:00 a.m. Eastern Time. You may
access the conference call by dialing (800) 915-4836 for calls made within the
United States and dialing (973) 317-5319 for calls outside the United States.
The call will also be simulcast to stock analysts and other interested parties
on Zoom's website (www.zoom.com/Q3) and other financial and investor-oriented
websites via the CCBN / StreetEvents network. Shortly after the conference call,
a recorded broadcast will be available on Zoom's website. For additional
information, please contact Investor Relations, Zoom Technologies, 207 South
Street, Boston, MA 02111, telephone (617) 423-1072, email investor@zoom.com, or
visit Zoom's website at www.zoom.com.
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This release contains forward-looking information relating to Zoom's plans,
expectations and intentions, including statements relating to Zoom's plans to
introduce new VoIP and ADSL products, and any expected improvement in Zoom's
results of operations due to new product introductions. Actual results may be
materially different from those expectations as a result of known and unknown
risks, including Zoom's potential future results; Zoom's ability to obtain
additional financing for working capital and other purposes, if needed; Zoom's
prospects in the dial-up modem market, which has the potential for reduced
sales, lower margins, and less favorable selling terms; the uncertainty of
market growth of VoIP and of cable and ADSL modem markets, and the uncertainty
of Zoom's ability to more successfully penetrate those markets, which have been
challenging markets with significant barriers to entry; Zoom's reliance on a
relatively limited number of customers for sale of its DSL modems; Zoom's
ability to effectively manage its inventory; uncertainty of new product
development and introduction, including budget overruns, project delays and the
risk that newly introduced products may contain undetected errors or defects or
otherwise not perform as anticipated, and other delays in shipments of products;
Zoom's dependence on one or a limited number of suppliers for certain key
components; rapid technological change; Zoom's increasing reliance on
international sales; competition; and other risks set forth in Zoom's filings
with the Securities and Exchange Commission. Zoom cautions readers not to place
undue reliance upon any such forward-looking statements, which speak only as of
the date made. Zoom expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any such statements to reflect any change
in the Zoom's expectations or any change in events, conditions or circumstance
on which any such statement is based.
ZOOM TECHNOLOGIES, INC.
Consolidated Balance Sheets
In thousands
(Unaudited)
Sep 30, Dec 31,
2004 2003
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Assets
Current assets:
Cash $10,340 $ 9,904
Accounts receivable, net 2,699 3,945
Inventories, net 5,369 4,771
Prepaid expenses and other 358 435
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Total current assets 18,766 19,055
Property and equipment, net 2,734 2,919
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Total assets $21,500 $21,974
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,770 $ 2,172
Accrued expenses 1,164 1,012
Current portion of long-term debt 231 224
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Total current liabilities 3,165 3,408
Long-term debt 4,926 5,096
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Total liabilities 8,091 8,504
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Stockholders' equity:
Common stock and additional paid-in capital 30,602 28,581
Treasury stock (7) (7)
Accumulated other comprehensive
income (loss) 418 334
Retained earnings (deficit) (17,604) (15,438)
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Total stockholders' equity 13,409 13,470
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Total liabilities &
Stockholders' equity $21,500 $21,974
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ZOOM TECHNOLOGIES, INC.
Consolidated Statements of Operations
In thousands,except per share data
(Unaudited)
Three Months Ended Nine Months Ended
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9/30/04 9/30/03 9/30/04 9/30/03
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Net sales $ 7,143 $ 9,104 $23,025 $24,179
Cost of goods sold 5,646 6,146 16,966 17,317
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Gross profit 1,497 2,958 6,059 6,862
Operating expenses:
Selling 1,115 1,376 3,512 3,965
General and administrative 781 612 2,797 2,413
Research and development 722 660 2,066 2,155
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Total operating expenses 2,618 2,648 8,375 8,533
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Operating profit (loss) (1,121) 310 (2,316) (1,671)
Other income (expense), net 92 96 150 246
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Income(loss) before income taxes (1,029) 406 (2,166) (1,425)
Income tax expense(benefit) - - - -
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Net income (loss) $(1,029) $ 406 $ (2,166) $(1,425)
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Basic earnings (loss) per share:
Earnings (loss) per share $ (0.12) $ 0.05 $ (0.26) $ (0.18)
Diluted earnings (loss) per share:
Earnings (loss) per share $ (0.12) $ 0.05 $ (0.26) $ (0.18)
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Weighted average number of shares
outstanding:
Basic 8,791 7,857 8,486 7,854
Diluted 8,791 8,081 8,486 7,854
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