SOURCE: Zoom Telephonics, Inc.

Zoom Telephonics, Inc.

February 23, 2010 17:38 ET

Zoom Telephonics Reports Results for the Fourth Quarter of 2009

BOSTON, MA--(Marketwire - February 23, 2010) - Zoom Telephonics, Inc. (OTCBB: ZMTP), a leading manufacturer of modems and other communication products, today reported net sales of $2.8 million for its fourth quarter ended December 31, 2009, down 4.7% from $2.9 million for the fourth quarter of 2008. Zoom reported an operating loss of $0.4 million for Q4 2009, a significant improvement over the operating loss of $0.9 million in Q4 2008. Zoom reported a net loss of $0.4 million or $0.19 per share for Q4 2009 compared to the net loss of $1.4 million or $0.75 per share for Q4 2008. The Q4 2008 net loss included investment write-downs of $0.5 million.

Gross profit was $0.9 million or 30.8% of net sales in Q4 2009, up from $0.6 million or 20.5% of net sales in Q4 2008. The increase in gross profit was primarily due to manufacturing overhead cost reductions and a shift in sales toward Zoom's higher margin products.

Operating expenses were $1.2 million or 44.3% of net sales in Q4 2009 versus $1.5 million or 52.6% of net sales in Q4 2008. Operating expenses in Q4 2009 were lower than Q4 2008 primarily due to reduced personnel costs, variable selling expenses, and investment banking fees.

Zoom reported net sales of $10.7 million for year 2009, down 25.7% from $14.5 million for year 2008. Zoom's operating loss for 2009 was $2.6 million, an improvement over Zoom's $3.6 million operating loss in 2008, due primarily to lower personnel expenses in 2009.

Zoom's cash balance on December 31, 2009 was $1.224 million, up slightly from the $1.205 cash balance on December 31, 2008, as a $0.9 million decrease in cash from operations was offset by $0.8 million cash received from the Q3 2009 sale of Zoom's interest in Unity Business Networks and $0.1 million cash received from the exercise of employee and Director stock options. Zoom's current ratio was 3.0 on December 31, 2009. Zoom has no long-term debt.

"In 2009 we completed a reverse merger and associated spin-out that helped turn a Zoom stockholder's one thousand dollar investment in Zoom Technologies stock at the start of 2009 into more than fourteen thousand dollars in Zoom Technologies and Zoom Telephonics stock at the end of 2009,"said Frank Manning, President and CEO of Zoom Telephonics. "We worked almost 2 years on that transaction, and we are proud of it. However, it remains important to try to bring the spun-out company I now run, Zoom Telephonics, back to profitability. We managed to reduce our losses in 2009, primarily due to cost cutting. This was most noticeable in the fourth quarter of 2009, which was not burdened by the high costs of our merger/spin-out transaction. Zoom Telephonics is seeing some lift from dial-up modems, but that alone is unlikely to bring profitability. We are excited about our new DOCSIS 3.0 cable modem, which we expect to begin shipping in high volume during the second quarter of 2010. We are also working on a whole new generation of ADSL products, adding wireless-N to our ADSL product line and reducing the cost of goods for our most popular ADSL products. We are continuing to develop wireless-N and 3G products, and we hope to benefit from these high-growth areas. We continue to work on products designed to deliver a rich Internet experience to an HDTV, and we hope to begin shipping the first of these products soon. Only time will tell if our hard work and new product focus will result in the sales growth and profitability we seek."

Zoom has scheduled a conference call for Wednesday, February 24 at 10:00 a.m. Eastern Time. You may access the conference call by dialing (866) 393-7958. The conference ID is 58309720. The call will also be simulcast to stock analysts and other interested parties on Zoom's website, www.zoom.com/Q4, and to other financial and investor-oriented websites. Shortly after the conference call, a recording of the call will be available on Zoom's website. For additional information, please contact Investor Relations, Zoom Telephonics, 207 South Street, Boston, MA 02111, telephone (617) 753-0897, email investor@zoom.net, or visit Zoom's website at www.zoom.com.

About Zoom Telephonics

Zoom Telephonics, Inc. designs, produces, markets, and supports communication products under the Zoom, Hayes®, and Global Village® brands. Zoom is headquartered in Boston, and its European sales and support center is in the UK. Zoom markets its products in over forty countries, and provides multi-lingual support from its offices in Boston and the UK. For more information about Zoom Telephonics and its products, please see www.zoom.com.

Forward Looking Statements

This release contains forward-looking information relating to Zoom Telephonics' plans, expectations, and intentions, including statements relating to Zoom's new products and investments. Actual results may be materially different from expectations as a result of known and unknown risks, including: the potential need for additional funding which Zoom may be unable to obtain; declining demand for certain of Zoom's products; fluctuations in the foreign currency exchange rate in relation to the U.S. dollar; delays, unanticipated costs, interruptions or other uncertainties associated with Zoom's production and shipping capabilities in Mexico; Zoom's reliance on an outsourcing partner to conduct production operations in Mexico; Zoom's dependence on key employees; the uncertainty of future demand from any specific customer or for all of Zoom's customers as a group; Zoom's reliance on a relatively limited number of customers for sale of its products; Zoom's reliance on international sales; the uncertainty of the regulatory environment for Zoom's products; 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; Zoom's dependence on one or a limited number of suppliers for certain key components; rapid technological change; competition; factors affecting Zoom's liquidity; 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 Zoom's expectations or any change in events, conditions or circumstance on which any such statement is based.


                            ZOOM TELEPHONICS, INC.
                         Consolidated Balance Sheets
                                In thousands
                                 (Unaudited)

                                                   12/31/09     12/31/08
                                                  ===========  ===========

ASSETS

Current assets:

  Cash                                            $     1,224  $     1,205
  Accounts receivable, net                              1,199        1,163
  Inventories                                           1,586        2,903
  Prepaid expenses and other                              224          235
                                                  ===========  ===========

      Total current assets                              4,233        5,506

Property and equipment, net                                58          102
Deferred other receivable                                 166            -
Investment                                                  -          960
                                                  ===========  ===========
      Total assets                                $     4,457  $     6,568
                                                  ===========  ===========

LIABILITIES AND STOCKHOLDERS' EQUITY


                                                  ===========  ===========
Current liabilities:
  Accounts payable                                $     1,015  $     1,211
  Accrued expenses                                        375          400
                                                  -----------  -----------

      Total current liabilities                         1,390        1,611

                                                  ===========  ===========
      Total liabilities                                 1,390        1,611
                                                  ===========  ===========

Stockholders' equity:

  Common stock and additional paid-in capital          32,548       31,879
  Treasury stock                                           (7)          (7)
  Accumulated other comprehensive income (loss)           363          345
  Retained earnings (accumulated deficit)             (29,837)     (27,260)

                                                  ===========  ===========
      Total stockholders' equity                        3,067        4,957
                                                  ===========  ===========

                                                  ===========  ===========
      Total liabilities & stockholders' equity    $     4,457  $     6,568
                                                  ===========  ===========




                       ZOOM TELEPHONICS, INC.
               Consolidated Statements of Operations
              In thousands, except for per share data
                            (Unaudited)

                                Three Months Ended    Twelve Months Ended
                                12/31/09   12/31/08   12/31/09   12/31/08
                                =========  =========  =========  =========

Net sales                       $   2,793  $   2,931  $  10,740  $  14,459
Cost of goods sold                  1,932      2,331      7,739     11,467
                                ---------  ---------  ---------  ---------

  Gross profit                        861        600      3,001      2,992

Operating expenses:
  Selling                             473        621      1,856      2,933
  General and administrative          389        523      2,382      2,280
  Research and development            375        398      1,374      1,721
                                ---------  ---------  ---------  ---------
       Total operating expenses     1,237      1,542      5,612      6,934

  Operating profit (loss) before
   building sale                     (376)      (942)    (2,611)    (3,942)

  Gain on sale of real
    estate                             --         53         --        341
                                =========  =========  =========  =========


  Operating profit (loss)            (376)      (889)    (2,611)    (3,601)

Other income (expense), net             1       (509)        39       (546)
                                ---------  ---------  ---------  ---------

  Income (loss) before income
   taxes                             (375)    (1,398)    (2,572)    (4,147)

Income tax expense (benefit)            1         13          5         13


  Net income (loss)             $    (376) $  (1,411) $  (2,577) $  (4,160)
                                =========  =========  =========  =========

Basic and diluted earnings
 (loss) per share:


  Earnings (loss) per share     $   (0.19) $   (0.75) $   (1.32) $   (2.23)

                                =========  =========  =========  =========

Weighted average number of
 shares outstanding:

  Basic and Diluted                 1,981      1,869      1,959      1,869
                                =========  =========  =========  =========

Because Zoom Telephonics' common stock was not publicly traded prior to the
September 22, 2009 Spin-Off, common shares outstanding  of 1,980,978 at
September 22, 2009,  have been  included in the earnings per share
calculation as if the shares were outstanding for all periods prior to
September 22, 2009.

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