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Zones
Announces Financial Results for the Quarter and Year Ended December 31,
2007
AUBURN,
WA -- 01/30/2008 -- Zones, Inc. (the "Company," "Zones"™) (NASDAQ:
ZONS):
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--
|
Fourth
quarter 2007 net sales improved 10.1% to $176.1 million
|
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--
|
2007
net sales were up 17.8% compared to the prior year
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--
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Fourth
quarter 2007 SMB sales grew 28.2% compared to the prior year
|
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--
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2007
SMB sales grew 32.5% compared to 2006
|
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--
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Fourth
quarter 2007 diluted earnings per share increased 30.0% to $0.26
compared
to $0.20 in 2006
|
|
--
|
2007
earnings improved 36.4% to $0.90 per diluted share compared to earnings
of
$0.66 per diluted share in 2006
|
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--
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2007
unassisted sales increased to $215.2 million, or 31.7% of total sales
|
Zones,
a
single-source direct marketing reseller of name-brand information technology
products, today announced its results for the three and twelve-month periods
ended December 31, 2007.
The
Company's fourth quarter 2007 net income was $3.8 million, or $0.26 per diluted
share, compared with net income of $3.0 million, or $0.20 per diluted share,
for
the same quarter a year ago. Total fourth quarter 2007 net sales were $176.1
million compared to $159.9 million in the fourth quarter of 2006.
For
the
year ended December 31, 2007, net income improved to $13.1 million, or $0.90
per
diluted share; this compares to $9.7 million, or $0.66 per diluted share, for
2006. Net sales for the year ended December 31, 2007 increased 17.8% to $679.5
million from $577.0 million for the year ended December 31, 2006.
Firoz
Lalji, CEO, commented, "Our operating performance was solid during 2007 as
we
increased net income 35.6% over last year, and attained an annual operating
profit of 3.1%. Total sales this year expanded 17.8% while sales to our SMB
customers grew a very healthy 32.5%." Mr. Lalji also said, "During 2007 we
invested in the development of a national field sales force which we believe
holds significant promise as a foundation for future sustained
growth."
Operating
Highlights
Consolidated
outbound sales increased 11.2% to $174.8 million in the fourth quarter of 2007
compared to $157.2 million in the same period of 2006. Sales to SMB businesses
grew 28.2% in the quarter, compared with the same quarter a year ago. Unassisted
sales during the quarter were $70.7 million, an increase of 46.1% over the
same
period of 2006, and represented 40.1% of total fourth quarter 2007 net
sales.
Gross
profit margin improved 10 basis points to 12.1% in the fourth quarter of 2007,
compared to 12.0% in the fourth quarter of 2006. The gross profit margin
percentage in the fourth quarter of 2007 was positively affected by product
and
customer mix, vendor programs and pricing. Gross profit margins as a percent
of
sales are expected to vary on a quarterly basis due to vendor programs and
credits, product mix, pricing strategies, customer mix and economic
conditions.
Total
selling, general and administrative expenses as a percent of net sales were
7.8%
in the fourth quarter 2007, which is flat compared to the corresponding period
of 2006 and represented a sequential increase from 7.4% in the third quarter
of
2007. The sequential increase is due to compensation and benefit related
expenses resulting from incentive compensation and employee
benefits.
Asset
Management
The
balance sheet remained strong and the Company ended the year with a cash balance
of $12.0 million. Consolidated working capital was $55.0 million at December
31,
2007, compared with $41.7 million at December 31, 2006.
Inventories
decreased slightly to $21.3 million at December 31, 2007 from $21.4 million
at
December 31, 2006. On hand inventory includes approximately $6.3 million of
inventory for which the Company has binding customer purchase orders. Trade
accounts receivable increased to $71.7 million at December 31, 2007 from $64.2
million at December 31, 2006.
About
Zones, Inc.
Zones,
Inc. is a single-source direct marketing reseller of name-brand information
technology products to the small-to-medium-sized business market, enterprise
accounts and public sector accounts. Zones sells these products through outbound
and inbound account executives, a national field sales force, catalogs and
the
Internet. Zones offers more than 150,000 products from leading manufacturers
including Adobe, Apple, Avaya, Cisco, HP, IBM, Kingston, Lenovo, Microsoft,
NEC,
Nortel Networks, Sony, Symantec and Toshiba.
Incorporated
in 1988, Zones, Inc. is headquartered in Auburn, Washington. Buying information
is available at http://www.zones.com, or by calling 800-258-2088. The Company's
investor relations information can be accessed online at
www.zones.com/IR.
A
live
webcast of the Company's management discussion of the fourth quarter results
will be available on the Company's Web site at www.zones.com/IR under upcoming
events. The webcast will be held today, January 30, 2008 at 2:00 pm
PT.
This
press release may contain statements that are forward-looking. These statements
are made pursuant to the safe harbor provision of the Private Securities
Litigation Reform Act of 1995. These statements are based on current
expectations that are subject to risks and uncertainties that could cause actual
results to differ materially from historical results or those anticipated.
These
risk factors include, without limitation, the effect of fluctuating or
unfavorable economic conditions on IT purchasing trends and price competition,
and the Company's ability to appropriately react to those changing conditions;
future growth; account executive hiring and productivity; increased expenses
of
being a public company; pressure on margin; competition; state tax
uncertainties; rapid technological change and inventory obsolescence; reliance
on vendor relationships; dependence on personnel; potential disruption of
business from information systems failure; reliance on outsourced distribution;
variations in gross profit margin percentages due to vendor programs and
credits, product and customer mix, pricing strategies, and economic conditions;
and other risks and uncertainties detailed in the Company's filings with the
SEC.
ZONES,
INC.
CONSOLIDATED
BALANCE SHEETS
(in
thousands)
(Unaudited)
|
December
31,
|
December
31,
|
|||||||
|
2007
|
2006
|
|||||||
|
ASSETS
|
||||||||
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Current
assets
|
||||||||
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Cash
and cash equivalents
|
$ | 12,004 | $ | 9,191 | ||||
|
Receivables,
net of allowances of $1,993 and $1,936, respectively
|
73,581 | 66,027 | ||||||
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Vendor
Receivables
|
15,139 | 12,228 | ||||||
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Inventories
|
21,278 | 21,385 | ||||||
|
Prepaids
|
861 | 1,076 | ||||||
|
Deferred
tax asset
|
1,377 | 1,473 | ||||||
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Total
current assets
|
124,240 | 111,380 | ||||||
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Property
and equipment, net
|
3,383 | 3,771 | ||||||
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Goodwill
|
5,098 | 5,098 | ||||||
|
Deferred
tax asset
|
411 | 251 | ||||||
|
Other
assets
|
190 | 195 | ||||||
|
Total
assets
|
$ | 133,322 | $ | 120,695 | ||||
|
LIABILITIES
& SHAREHOLDERS' EQUITY
|
||||||||
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Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 37,040 | $ | 42,592 | ||||
|
Inventory
flooring
|
20,252 | 14,385 | ||||||
|
Accrued
liabilities and other
|
11,479 | 12,584 | ||||||
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Income
taxes payable
|
510 | 150 | ||||||
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Total
current liabilities
|
69,281 | 69,711 | ||||||
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Deferred
rent obligation
|
1,733 | 1,502 | ||||||
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Total
liabilities
|
71,014 | 71,213 | ||||||
|
Commitments
and contingencies
|
||||||||
|
Shareholders'
equity:
|
||||||||
|
Common
stock
|
35,676 | 35,983 | ||||||
|
Retained
earnings
|
26,632 | 13,499 | ||||||
|
Total
shareholders' equity
|
62,308 | 49,482 | ||||||
|
Total
liabilities & shareholders' equity
|
$ | 133,322 | $ | 120,695 | ||||
ZONES,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in
thousands, except per share data)
(unaudited)
|
For
the three months ended December 31,
|
For
the twelve months ended December 31,
|
|||||||||||||||
|
2007
|
2006
|
2007
|
2006
|
|||||||||||||
|
Net
sales
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$ | 176,109 | $ | 159,919 | $ | 679,492 | $ | 577,027 | ||||||||
|
Cost
of sales
|
154,744 | 140,753 | 599,223 | 505,508 | ||||||||||||
|
Gross
profit
|
21,365 | 19,166 | 80,269 | 71,519 | ||||||||||||
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Selling,
general and administrative expenses
|
13,704 | 12,516 | 51,201 | 48,434 | ||||||||||||
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Advertising
expense
|
1,804 | 1,872 | 8,038 | 7,159 | ||||||||||||
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Income
from operations
|
5,857 | 4,778 | 21,030 | 15,926 | ||||||||||||
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Other
(income) expense
|
(47 | ) | (11 | ) | 174 | 270 | ||||||||||
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Income
before income taxes
|
5,904 | 4,789 | 20,856 | 15,656 | ||||||||||||
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Provision
for income taxes
|
2,101 | 1,806 | 7,723 | 5,971 | ||||||||||||
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Net
income
|
$ | 3,803 | $ | 2,983 | $ | 13,133 | $ | 9,685 | ||||||||
|
Basic
earnings per share
|
$ | 0.29 | $ | 0.23 | $ | 1.00 | $ | 0.73 | ||||||||
|
Shares
used in computation of basic earnings per share
|
13,146 | 13,208 | 13,139 | 13,195 | ||||||||||||
|
Diluted
earnings per share
|
$ | 0.26 | $ | 0.20 | $ | 0.90 | $ | 0.66 | ||||||||
|
Shares
used in computation of diluted earnings per share
|
14,652 | 14,800 | 14,635 | 14,756 | ||||||||||||
Operating
Highlights
Supplemental
Data
|
Three
months ended
|
Twelve
months ended
|
|||||||||||||||
|
12/31/2007
|
12/31/2006
|
12/31/2007
|
12/31/2006
|
|||||||||||||
|
Operating
Data
|
||||||||||||||||
|
Unassisted
net sales (in 000's)
|
$ | 70,674 | $ | 48,363 | $ | 215,235 | $ | 172,385 | ||||||||
|
Sales
force, end of period
|
342 | 342 | ||||||||||||||
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Average
Productivity
|
||||||||||||||||
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(annualized)
|
||||||||||||||||
|
Per
Account Executive (in 000's)
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$ | 2,060 | $ | 1,870 | $ | 1,987 | $ | 1,687 | ||||||||
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Per
Employee (in 000's)
|
$ | 999 | $ | 968 | $ | 964 | $ | 873 | ||||||||
|
Product
Mix (% of sales)
|
||||||||||||||||
|
Notebook
& PDA's
|
14.5 | % | 12.7 | % | 14.2 | % | 12.4 | % | ||||||||
|
Desktops
& Servers
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19.1 | % | 19.3 | % | 21.3 | % | 20.3 | % | ||||||||
|
Software
|
18.8 | % | 19.7 | % | 18.6 | % | 17.7 | % | ||||||||
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Storage
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7.0 | % | 8.0 | % | 7.0 | % | 9.1 | % | ||||||||
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NetComm
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5.1 | % | 4.5 | % | 5.2 | % | 4.9 | % | ||||||||
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Printers
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8.5 | % | 8.5 | % | 8.2 | % | 8.2 | % | ||||||||
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Monitors
& Video
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10.2 | % | 11.4 | % | 9.7 | % | 10.4 | % | ||||||||
|
Memory
& Processors
|
4.4 | % | 5.8 | % | 4.8 | % | 6.2 | % | ||||||||
|
Accessories
& Other
|
12.4 | % | 10.2 | % | 11.0 | % | 10.8 | % | ||||||||
Contact:
Ronald
McFadden
Zones,
Inc.
Chief
Financial Officer
253-205-3000
The following information was filed by Zones Inc on Tuesday, February 5, 2008 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
View differences made from one year to another to evaluate Zones Inc's financial trajectory
Compare this 10-K Annual Report to its predecessor by reading our highlights to see what text and tables were removed , added and changed by Zones Inc.
1013786 Annual Reports
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10-K Annual Report March 2008
- 10-K Annual Report March 2007
- 10-K Annual Report February 2006
- 10-K Annual Report March 2005
- 10-K Annual Report February 2004
Material Contracts, Statements, Certifications & more
Zones Inc provided additional information to their SEC Filing as exhibits
SEC Filing Exhibit
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CIK: 1013786
Form Type: 10-K Annual Report
Accession Number: 0001140361-08-005668
Submitted to the SEC: Mon Mar 03 2008 5:15:23 PM EST
Accepted by the SEC: Mon Mar 03 2008
Period: Monday, December 31, 2007
Industry: Retail Catalog And Mail Order Houses
External Resources:
Insider Transactions
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