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Zoom Telephonics Announces Higher Sales, Profits For Its Second Quarter
Third Consecutive Quarter Of Higher Gross Margins

Boston MA, July 19, 1995 - Zoom Telephonics today announced sales for its second quarter ending June 30, 1995 of $17,122,042 compared to $16,985,236 for the second quarter of 1994. Net income for the second quarter of 1995 was $1,062,443 or 18 cents per share, compared to $1,019,122 or 17 cents per share for the second quarter of 1994.

Zoom's gross margin for the second quarter of 1995 was 25.3%, the third consecutive quarterly increase.

Net income increased to 6.2% of sales for the second quarter of 1995 from 6.0% of sales for the same period in 1994. The increase was due primarily to an increase in gross margin from 23.6% to 25.3% as material and labor costs declined faster than selling prices in a market characterized by tight supply of modem chipsets and other semiconductors.

Operating expenses increased to 15.3% of sales in the second quarter of 1995 from 13.5% of sales for the same period in 1994 due to increased selling and R&D expenses. Selling expenses increased from 8.5% of sales to 10.0% as commissions and cooperative advertising increased, reflecting a higher proportion of sales to the high-volume retailer market. R&D increased from 1.5% of sales to 2.2% as Zoom increased its R&D personnel and accelerated its expenditures for regulatory approvals in North America, Europe, and Japan.

Zoom's balance sheet remained strong at the end of the second quarter. The current ratio improved to 3.66 at June 30, 1995 from 2.75 at March 31, 1995. Inventory increased to $12,886,970 during the quarter, reflecting higher anticipated sales and Zoom's desire to hold more inventory in a tight parts supply environment. Zoom ended the quarter with $1,787,431 in cash and an unused $5 million bank line of credit.

"We believe that we're positioned for a very strong second half of 1995," said Frank Manning, Zoom's President.

In June Zoom began shipping a unique electronic printer accessory co-designed by Zoom, Rockwell International, and Hewlett-Packard, manufactured by Zoom, and marketed by HP. Zoom was chosen by HP as the sole supplier of this product from among the top faxmodem suppliers in the world.

During the second quarter Zoom began shipping its first products to Japan, marketed under the Zoom name by Polaroid's Japanese software and peripherals division. In June Zoom also began shipping a new generation of 14.4 and V.34 products to dealers and distributors in Europe, including Vobis, Europe's largest PC products retail store chain. Soon Zoom will begin shipping approved products to South Africa, further evidencing Zoom's continuing international expansion.

Zoom recently received a substantial order from one of the largest personal computer manufacturers, and Zoom expects strong growth in OEM sales during the second half of the year and continuing into 1996. Zoom will also be making major announcements in the near future for three new advanced technology product lines that will begin shipping in the third quarter.

Zoom is currently experiencing high demand for its existing faxmodem products, and has continued to grow its retail shelf space. Windows(tm) 95 should further accelerate faxmodem sales, particularly V.34 sales, and Zoom has developed two new product lines to take advantage of "Plug and Play," an important new feature of Windows 95. Zoom is receiving strong reviews for its V.34 faxmodems. Network World said that Zoom had the best low-priced V.34 faxmodem compared to U.S. Robotics' Courier V.Everything, Motorola, Boca, AT&T, and 7 others. WindowsMagazine's August 1995 edition said: "The Zoom modem lives up to its name. This speedy fellow wins a Recommended seal by virtue of its compatibility with other modems. Its throughput with other manufacturers' modems rivals the speeds other modems achieve only with their own kind."

PC communications is delivering more and more valuable services to the desktop, and Zoom expects to continue as a major force in providing advanced technology, including ISDN, for remote access to the Internet, information services, bulletin boards, and local area networks.


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