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Zoom Telephonics Announces Record Sales
Third Quarter Sales up 83% over Q3 1994 and 37% over Q2 1995

Boston MA, October 20, 1995 - Zoom Telephonics, Inc. (Nasdaq: ZOOM), one of the highest-volume faxmodem companies in the world, today announced record sales and earnings for its third quarter and nine months ending September 30, 1995.

Sales for the quarter of $23,530,876 were up 83% over the prior year and up 37% over the prior quarter. Net income for the quarter of $1,542,001 was up 45% over the prior quarter; and reversed a loss of $259,478 in the third quarter of 1994, Zoom's only loss in the past seven years. Per share earnings of 25 cents for the quarter were the highest ever, 32% over the highest analysts' estimates.

Sales of $60,991,884 for the first nine months of 1995 were up 24% over the prior record set in the first nine months of 1994, and net income of $3,744,894 was up 82%. Fully diluted per share earnings of 61 cents for the first nine months of 1995 were up from 34 cents for the comparable period of 1994.

" This quarter demonstrates that our business plan is working," said Frank Manning, Zoom's President. "Zoom has made major commitments to leading technology including high-speed V.34 faxmodems and PCMCIA, and we are seeing strong sales in these areas. We are committed to international strength, and we've made significant sales and distribution gains throughout the world. We are committed to expanding our OEM sales to complement our very substantial retail shelf space, and the result of this commitment will show in our sales figures in the fourth quarter of 1995."

Sales of Zoom's line of 28,800 bps V.34 faxmodems increased 93% from the second quarter of 1995 to the third quarter.

Sales grew in every region of the world, with the quarter's sales up 72% in North America and up 207% outside North America compared to the third quarter of 1994. Third quarter 1995 sales increased 34% in Western Europe over the second quarter, and increased 66% in Japan. Sales outside North America were 14% of total sales in the third quarter of 1995, versus 8% in the third quarter of 1994, reflecting Zoom's commitment to worldwide expansion.

Zoom's gross margin for the third quarter of 1995 increased to 25.7% of sales from 25.3% of sales for the second quarter, the fourth consecutive quarterly increase in gross margin. Gross margin for the first nine months of 1995 was 24.9%, up from 21.1% during the first nine months of 1994.

Net income for the third quarter of 1995 was 6.6% of sales, up from 6.2% in the second quarter. Net income for the first nine months of 1995 was 6.1% of sales, up from 4.2% for the first nine months of 1994.

Zoom ended the third quarter with a strong balance sheet. Working capital increased to $21.5 million from $18.9 million at the end of the second quarter and $17.1 million at the end of 1994. Accounts receivable increased to $15.3 million, reflecting strong September sales. Inventory and accounts payable increased to $18.5 and $11.9 million, respectively, reflecting an aggressive production plan for the fourth quarter of 1995. Zoom used $2.1 million of its bank line to fund parts purchases, and ended the quarter with $751,005 in cash.

" Zoom entered the fourth quarter with substantial demand for its core products and prospects for strong sales from two new product lines, Internet CompleteTM and ComStarTM," said Frank Manning.

Internet Complete is a complete Internet package including a faxmodem, Internet Phone software for toll-free long-distance calls over the Internet, the Internet Roadmap book, the widely acclaimed Global Network Navigator software, and one month of unlimited use of GNN Internet access. Internet Complete 14.4 has a street price below $100, and Internet Complete 28.8 has a street price below $200.

Zoom is currently shipping two members of the ComStar product line, ComStar 14.4 and ComStar 28.8, with ComStar 28.8 DSVD scheduled for release in November. All three models include a microphone, speaker, and a faxmodem with advanced capabilities including voice mail, answering machine, speed dialer, full-duplex speakerphone, and the ability to communicate both voice and data during a single phone conversation. The full-duplex speakerphone capabilities permit high-quality conferencing and hands-free operation. All ComStar products include VoiceViewTM, which is supported by Windows 95 and permits alternating between voice and data modes when used with VoiceView-enabled software for applications like technical support and on-line shopping. ComStar 28.8 DSVD also includes Digital Simultaneous Voice and Data (DSVD), the emerging standard for permitting a phone conversation during any data call. DSVD works transparently with any communication software, and is useful for collaborative computing, technical support, and on-line games.

Zoom plans to continue to develop advanced products for its large channel of personal computer products retailers and distributors. In addition, Zoom expects substantial growth in its OEM business in the fourth quarter and beyond.

For additional information, please contact Investor Relations, Zoom Telephonics, 207 South Street, Boston, Massachusetts, telephone 617-423-1072, fax 617-338-5015, E-mail address: Investor@Zoomtel.Com.
 

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