UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 29, 2002
Commission File Number 0-28429
ZOMAX INCORPORATED
(Name of registrant as specified in its charter)
MINNESOTA | | 41-1833089 |
(State or other jurisdiction of
incorporation) | | (I.R.S. Employer
Identification No.) |
5353 NATHAN LANE PLYMOUTH, MN | | 55442 |
(Address of principal executive offices) | | (zip code) |
(763) 553-9300
(Registrant’s telephone number, including area code)
Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
As of May 3, 2002, the issuer had 33,011,965 shares of Common Stock, no par value, outstanding.
ZOMAX INCORPORATED
INDEX
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ZOMAX INCORPORATED
Consolidated Balance Sheets
(in thousands)
| | Mar. 29, 2002 | | Dec. 28, 2001 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
Current Assets: | | | | | |
Cash and cash equivalents | | $ | 69,656 | | $ | 74,999 | |
Accounts receivable, net of allowance for doubtful accounts of $1,816 and $2,234 | | 30,296 | | 30,328 | |
Inventories | | 9,600 | | 11,142 | |
Deferred income taxes | | 3,183 | | 3,183 | |
Prepaid and other expenses | | 6,645 | | 3,855 | |
Total current assets | | 119,380 | | 123,507 | |
| | | | | |
Property and equipment, net | | 37,915 | | 39,913 | |
Other assets | | 82 | | 86 | |
| | | | | |
Total assets | | $ | 157,377 | | $ | 163,506 | |
| | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | |
| | | | | |
Current Liabilities: | | | | | |
Current portion of notes payable | | $ | 2,977 | | $ | 2,976 | |
Accounts payable | | 8,670 | | 12,964 | |
Accrued expenses: | | | | | |
Accrued royalties | | 7,280 | | 6,424 | |
Accrued compensation | | 4,496 | | 5,743 | |
Other | | 4,618 | | 1,794 | |
Income taxes payable | | 685 | | 3,717 | |
Total current liabilities | | 28,726 | | 33,618 | |
| | | | | |
Notes payable, net of current portion | | 2,977 | | 3,720 | |
Deferred income taxes | | 1,745 | | 1,744 | |
Total liabilities | | 33,448 | | 39,082 | |
| | | | | |
Shareholders' Equity: | | | | | |
Common stock, no par value, 100,000 authorized shares, 33,008 and 32,833 shares issued and outstanding | | 63,900 | | 63,214 | |
Retained earnings | | 66,341 | | 67,126 | |
Accumulated other comprehensive loss | | (6,312 | ) | (5,916 | ) |
Total shareholders' equity | | 123,929 | | 124,424 | |
| | | | | |
Total liabilities and shareholders' equity | | $ | 157,377 | | $ | 163,506 | |
The accompanying notes are an integral part of these consolidated financial statements.
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ZOMAX INCORPORATED
Consolidated Statements of Operations
(Unaudited)
(in thousands, except for per share data)
| | Three Months Ended | |
| | Mar. 29, 2002 | | Mar. 30, 2001 | |
Sales | | $ | 45,985 | | $ | 62,796 | |
Cost of sales | | 37,041 | | 47,923 | |
Gross profit | | 8,944 | | 14,873 | |
Selling, general and administrative expenses | | 10,451 | | 8,501 | |
Operating income (loss) | | (1,507 | ) | 6,372 | |
Equity in losses of unconsolidated entity | | — | | (200 | ) |
Interest expense | | (69 | ) | (208 | ) |
Interest income | | 336 | | 778 | |
Other income (expense), net | | 9 | | (132 | ) |
Income (loss) before income taxes | | (1,231 | ) | 6,610 | |
| | | | | |
Provision (benefit) for income taxes | | (446 | ) | 2,396 | |
| | | | | |
Net income (loss) | | $ | (785 | ) | 4,214 | |
| | | | | |
Earnings (loss) per share | | | | | |
Basic | | $ | (0.02 | ) | $ | 0.13 | |
Diluted | | $ | (0.02 | ) | $ | 0.13 | |
| | | | | |
Weighted average common shares outstanding | | 32,969 | | 32,117 | |
Dilutive effect of stock options and warrants | | — | | 770 | |
Weighted average common and diluted shares outstanding | | 32,969 | | 32,887 | |
The accompanying notes are an integral part of these consolidated financial statements.
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ZOMAX INCORPORATED
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
| | Three Months Ended | |
| | March 29, 2002 | | March 30, 2001 | |
Operating Activities | | | | | |
Net income (loss) | | $ | (785 | ) | $ | 4,214 | |
Adjustments to reconcile net income to net cash provided by operating activities— | | | | | |
Depreciation and amortization | | 2,232 | | 2,684 | |
Equity in losses of unconsolidated entity | | — | | 200 | |
Stock based compensation | | (32 | ) | — | |
Changes in operating assets and liabilities: | | | | | |
Accounts receivable | | (56 | ) | (1,382 | ) |
Inventories | | 1,522 | | 4,651 | |
Prepaid and other expenses | | (2,797 | ) | 172 | |
Accounts payable | | (4,348 | ) | (4,877 | ) |
Accrued expenses | | 2,500 | | (397 | ) |
Income taxes payable | | (3,031 | ) | 847 | |
Net cash provided by (used in) operating activities | | (4,795 | ) | 6,112 | |
| | | | | |
Investing Activities: | | | | | |
Purchase of property and equipment | | (290 | ) | (1,623 | ) |
Change in other assets | | — | | 38 | |
Net cash used in investing activities | | (290 | ) | (1,585 | ) |
| | | | | |
Financing Activities: | | | | | |
Issuance of common stock | | 718 | | 1,153 | |
Repayment of notes payable | | (744 | ) | (1,630 | ) |
Net cash used in financing activities | | (26 | ) | (477 | ) |
| | | | | |
Effect of exchange rate changes on cash and cash equivalents | | (232 | ) | (1,066 | ) |
| | | | | |
Net increase (decrease) in cash | | (5,343 | ) | 2,984 | |
| | | | | |
Cash and Cash Equivalents: | | | | | |
Beginning of period | | 74,999 | | 63,577 | |
End of period | | $ | 69,656 | | $ | 66,561 | |
| | | | | |
Supplemental Cash Flow Disclosures: | | | | | |
Cash paid for interest | | $ | 69 | | $ | 211 | |
Cash paid for income taxes | | $ | 2,586 | | $ | 1,578 | |
The accompanying notes are an integral part of these consolidated financial statements.
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Zomax Incorporated
Notes to Consolidated Financial Statements
(Unaudited)
1. Business Description
Zomax Incorporated (Zomax or the Company) is a leading international outsource provider of process management services. The Company’s fully integrated services include “front-end” e-commerce support; customer contact center and customer support solutions; DVD authoring services; CD and DVD mastering; CD and DVD replication; supply chain and inventory management; graphic design; print management; assembly; packaging; warehousing; distribution and fulfillment; and returned merchandise authorization (RMA) processing.
2. Basis of Presentation
The accompanying interim consolidated financial statements of the Company are unaudited; however, in the opinion of management, all adjustments necessary for a fair presentation (consisting of only normal recurring adjustments) have been reflected in the interim periods presented. Due principally to the seasonal nature of the Company’s business, results may not be indicative of results for a full year. The accompanying consolidated financial statements should be read in conjunction with the Company’s Form 10-K for the year ended December 28, 2001.
3. Recently Issued Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations” SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives (but with no maximum life). The amortization provisions of SFAS 142 apply to goodwill and intangible assets acquired prior to July 1, 2001. The Company adopted SFAS 142 effective the first day of fiscal 2002. The adoption of SFAS 142 had no effect on the Company’s financial position or results of operations as the Company had no remaining goodwill or other intangibles as of March 29, 2002. Amortization expense for the three months ended March 30, 2001, was $0.1 million.
4. Shareholders’ Equity
The Company’s board of directors authorized a stock repurchase plan in October 2000, which allows the Company to repurchase up to 2,000,000 common shares. No shares have been repurchased during 2002.
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On March 22, 2002, the Company filed a Form S-4 for a shelf registration of 15 million shares of common stock. These securities can only be used for acquisitions of businesses the Company may seek to acquire from time to time.
5. Comprehensive Income
The table below presents comprehensive income (loss), defined as changes in the equity of the Company excluding changes resulting from investments by and distributions to shareholders (in thousands).
| | Three Months Ended | |
| | March 29, 2002 | | March 30, 2001 | |
| | | | | |
Net income (loss) | | $ | (785 | ) | $ | 4,214 | |
Change in cumulative translation Adjustment | | (396 | ) | (1,546 | ) |
Comprehensive income (loss) | | $ | (1,181 | ) | $ | 2,668 | |
6. Acquisition
On February 21, 2002, Zomax signed an Asset Purchase Agreement to purchase the business and substantially all the assets of Software Logistics Corporation (iLogistix). iLogistix provides supply chain services to leading technology companies and has operating facilities in the United States, The Netherlands, Singapore, Taiwan, Mexico, Ireland and Brazil.
The closing of the transaction was scheduled for February 28, 2002, subject to significant closing conditions. As of March 19, 2002, certain significant conditions to closing were not satisfied by iLogistix; therefore, the Company terminated the Asset Purchase Agreement. The Company incurred transaction expenses of $1.3 million, net of tax, or approximately $.04 cents per share. The Company had also made an escrow of approximately $3.9 million which the Company believes iLogistix is required to refund with interest. This escrow is recorded in prepaid and other expenses in the Company’s consolidated balance sheet.
On March 19, 2002, iLogistix filed a lawsuit in United States Bankruptcy Court for the Northern District of California against the Company for specific performance under the Asset Purchase Agreement and for unspecified damages and declaratory relief. Subsequently, iLogistix dismissed its claim for specific performance. The Company has submitted an answer to iLogisitx’ legal action averring that the Asset Purchase Agreement had been properly terminated and that the legal action by iLogistix is without merit. The Company is also seeking attorney’s fees and restitution of $3.9 million escrow in connection with the proposed iLogistix transaction.
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7. Industry Segment and Operations by Geographic Areas
The Company operates in one industry segment. The geographic distributions of the Company’s sales, operating income (loss) and assets for the periods ended March 29, 2002 and March 30, 2001 are summarized as follows (in thousands):
| | Three Months Ended | |
| | March 29, 2002 | | March 30, 2001 | |
Total revenues: | | | | | |
United States | | $ | 40,335 | | $ | 46,879 | |
Ireland | | 7,869 | | 14,479 | |
Canada | | 5,505 | | 6,636 | |
Eliminations | | (7,724 | ) | (5,198 | ) |
| | $ | 45,985 | | $ | 62,796 | |
Operating income (loss): | | | | | |
United States | | $ | 2,430 | | $ | 6,154 | |
Ireland | | 267 | | 872 | |
Canada | | 596 | | 1,353 | |
Corporate and eliminations | | (4,800 | ) | (2,007 | ) |
| | $ | (1,507 | ) | $ | 6,372 | |
Captial expenditures: | | | | | |
United States | | $ | 207 | | $ | 436 | |
Ireland | | 29 | | 1,061 | |
Canada | | 54 | | 126 | |
| | $ | 290 | | $ | 1,623 | |
Depreciation and amortization: | | | | | |
United States | | $ | 1,536 | | $ | 1,957 | |
Ireland | | 394 | | 420 | |
Canada | | 302 | | 307 | |
| | $ | 2,232 | | $ | 2,684 | |
Assets: | | | | | |
United States | | $ | 48,629 | | $ | 56,837 | |
Ireland | | 35,287 | | 37,054 | |
Canada | | 18,405 | | 15,780 | |
Total assets | | 102,321 | | 109,671 | |
Corporate and eliminations | | 55,056 | | 54,844 | |
| | $ | 157,377 | | $ | 164,515 | |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company is a leading international outsource service provider of process management services. The Company’s fully integrated services include: “front end” e-commerce support; customer contact center and customer support solutions; DVD authoring services; CD and DVD mastering; CD and DVD replication; supply chain and inventory management; graphic design; print management; CD and DVD printing; assembly; packaging; warehousing; distribution and fulfillment; and RMA processing services. The Company has facilities in the United States, Canada and Ireland.
The Company’s business has been characterized by short lead times for customer orders. For this reason and because of the timing of orders, delivery intervals and the possibility of customer changes in delivery schedules, the Company’s backlog as of any particular date is not a meaningful indicator of future financial results.
Critical Accounting Policies
Zomax prepares the consolidated financial statements in conformity with accounting principles generally accepted in the United States. As such, the Company is required to make certain estimates, judgments and assumptions that the Company believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The critical accounting policies, which Zomax believes are the most critical to aid in fully understanding and evaluating its reported financial results, include the following:
Revenue recognition. The Company records sales revenue at the time merchandise is shipped or as services are rendered. For certain customers, merchandise is invoiced upon completion of orders, with shipment occurring based on written customer instructions. In these cases, the customer accepts title to the goods as of the date of the Company’s invoice. In each case of bill and hold sales, the Company ensures that the transaction complies with the conditions and considerations contained in Accounting and Auditing Enforcement Release No. 108 of the Securities and Exchange Commission (SEC).
The Company records amounts being charged to customers for shipping and handling as revenue in accordance with Emerging Issues Task Force (EITF) Issue 00-10, “Accounting for Shipping and Handling Fees and Costs.” Prior to 2000, the Company had netted the shipping and handling revenue with the costs of shipping and handling in cost of sales.
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Accounts Receivable. Zomax performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness. The Company continuously monitors collections and payments from customers and maintains a provision for estimated credit losses based upon historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that it will continue to experience the same credit loss rates as in the past. Since the Company’s accounts receivable are concentrated in a relatively few number of customers, a significant change in the liquidity or financial position of any one of these customers could have a material adverse impact on the collectability of the Company’s accounts receivables and future operating results.
Inventories. Inventories are valued at the lower of cost or market value. Generally, Zomax does not take inventory risk as the industry practice is build to order. In some cases, however, Zomax may have inventory risk due to overruns or other factors. The carrying value of inventories have been reduced by an allowance for excess and obsolete inventories. The estimated allowance is based on management’s review of inventories on hand compared to estimated future usage and sales.
Recently issued accounting pronouncements. In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets”. SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Under SFAS 142, goodwill and intangible assets with indefinite lives are no longer amortized, but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives (but with no maximum life). The amortization provisions of SFAS No. 142 apply to goodwill and intangible assets acquired after June 30, 2001. With respect to goodwill and intangible assets acquired prior to July 1, 2001. The adoption of SFAS No. 142 had no effect on the Company’s financial position or results of operations as the Company has no remaining goodwill or other intangibles as of March 29, 2002.
Results of Operations
Sales. The Company’s sales were $46.0 million for the first quarter of 2002, a decrease of 26.8% from $62.8 million in the first quarter of 2001. The decrease primarily relates to a reduction of unit volume of 20.6% and a decrease in the average unit price of 9.9%. Sales in the first quarter of 2002 continue to be negatively affected by the slowdown in personal computer and software spending and worldwide economic uncertainty. The Company does not currently foresee any material change in sales for the second quarter of 2002.
Cost of sales. Cost of sales as a percentage of sales was 80.6% and 76.3% for the first quarter of 2002 and 2001, respectively. The first quarter increase in the cost of sales as a percentage of sales was primarily due to fixed costs increasing as a percentage of sales due to the decrease in sales and change in product mix.
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Selling, general and administrative expenses. Selling, general and administrative expenses as a percentage of sales were 22.7% and 13.5% for the first quarter of 2002 and 2001, respectively. Selling, general and administrative expenses include a one-time pre-tax charge of $2.1 million relating to the termination of the iLogistix transaction. Excluding this charge, selling, general and administrative expenses decreased $0.1 million to $8.4 million, or 18.2% as a percentage of sales, in the first quarter of 2002, as compared to $8.5 million in the first quarter of 2001.
Equity in losses of unconsolidated entity. The Company owns an equity interest in Microgistix, Inc., an Internet based reseller of software, and accounts for this investment using the equity method of accounting. In December 2001, the Company wrote off its remaining investment in Microgistix; therefore, it is no longer required to recognize its share of the losses in the financial statements, in accordance with APB No. 18. The Company recognized a loss of $0.2 million in the first quarter of 2001. This loss represented its share of the Microgistix’s net loss and the amortization of excess purchase price over the fair value of the underlying net assets acquired.
Interest income and expense. Interest income was $0.3 million and $0.8 million for the first quarter of 2002 and 2001, respectively. Interest expense was $0.1 million and $0.2 million for the first quarter of 2002 and 2001, respectively. Interest income decreased due to lower interest rates. There was a decrease in interest expense as a result of lower outstanding loan balances and lower interest rates.
Other income (expenses), net. Other income/expense consists of foreign currency gains/losses.
Provision (benefit) for income taxes. The effective income tax rate for the first quarter of 2002 was 36.2%, as compared to 36.2% for the first quarter of 2001.
Net income (loss). Net loss for the first quarter of 2002 was $0.8 million, compared to net income of $4.2 million in 2001. Loss per share was $.02 for the first quarter of 2002, compared to diluted earnings per share of $.13 in first quarter of 2001.
Liquidity and Capital Resources
As of March 29, 2002, the Company had working capital of $90.7 million, compared to working capital of $90.0 million as of December 28, 2001. As of March 29, 2002, the Company had cash and cash equivalents totaling $69.7 million.
Cash used in operating activities for the first three months of 2002 was $4.8 million, compared to cash provided by operating activities of $6.1 million during the first three months of 2001. The lower operating cash flow in 2002 was primarily due to the net loss and the escrow of $3.9 million related to the iLogistix transaction.
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Cash used in investing activities during the first three months of 2002 and 2001 was $0.3 million and $1.6 million, respectively. The cash used in both periods was primarily for the purchase of property and equipment.
Cash used in financing activities during the first three months of 2002 was comprised of $0.7 million arising from the issuance of common stock, offset by $0.7 million repayment of notes payable. In 2001, the Company received $1.2 million from the issuance of common stock, and repaid principal on notes payable totaling $1.6 million.
As of March 29, 2002, the Company had a revolving line of credit facility with available borrowings up to $25.0 million. Such borrowings are limited to an amount based on a formula using eligible accounts receivable and inventories. There were no borrowings outstanding under the revolving line of credit facility at March 29, 2002.
Future liquidity needs will depend on, among other factors, the timing of capital expenditures and expenditures in connection with any acquisitions, changes in customer order volume and the timing and collection of receivables. The Company believes that existing cash balances, anticipated cash flow from operations and amounts available under existing credit facilities will be sufficient to fund its operations for the foreseeable future.
Inflation
Historically, inflation has not had a material impact on the Company. The cost of the Company’s products, however, is influenced by the cost of raw materials and labor. There can be no assurance that the Company will be able to pass on any increased costs to its customers in the future.
Seasonality
The demand for CDs and related services is seasonal, with demand increasing in the fall due to the new school year and holiday season purchases. This seasonality could result in significant quarterly variations in financial results, with the third and fourth quarters generally being the strongest in terms of revenue.
Outlook
The statements contained in this Outlook section and elsewhere in this Form 10-Q are based on current expectations. These statements are forward-looking and are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. Such statements can be identified by the use of terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “possible,” “plan,” “project,” “will,” “forecast” and similar words or expressions. The Company’s forward-looking statements generally relate to its growth strategy, financial results, sales efforts and cash requirements. There are certain important factors that could cause results to differ materially from those anticipated by some of the statements made
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herein. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including among others those identified below.
Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the Company’s forward-looking statements, such factors include, among others, (i) the Company’s ability to sustain and manage its growth and implement its business strategy, including the integration of newly acquired and geographically dispersed operations; (ii) the Company’s ability to attract and retain a skilled and qualified workforce in diverse locations; (iii) the Company’s reliance on a few key customer and strategic relationships, including those with Microsoft; (iv) the trend of consolidation in the industry and the ability of the Company to effectively compete in an intensely competitive environment; (v) the development of new products or technologies by competitors, technological obsolescence and other changes in competitive factors; (vi) risks associated with establishing and maintaining international operations; (vii) the risks associated with price declines; (viii) the Company’s dependence on its ability to obtain and maintain licenses to use patented technology in its manufacturing operations; and (ix) general economic factors over which the Company has no control.
The Company believes the worldwide demand for CD’s has declined due to the economic slowdown in the PC and software markets. Unit prices may continue to decline given the overcapacity state of the industry.
If CD market demand continues to decline, the Company’s revenues will be directly and adversely impacted and the manufacturing capacity installed will be further underutilized. Pricing strategies of competitors and general economic factors, such as consumer confidence and inflation, directly impact the Company. A substantial part of the Company’s revenue is derived from a small number of key customers, and revenues will be significantly lower than expected if the Company cannot retain these customers. In addition, if the Company does not respond rapidly to technological changes, it is subject to the loss of some of its customer base, which will materially and adversely effect revenue.
The Company undertakes no obligation to update any forward-looking statements, but investors are advised to consult any further disclosures by the Company on this subject in its filings with the Securities and Exchange Commission, especially on Forms 10-K, 10-Q and 8-K (if any), in which the Company discusses in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties or potentially inaccurate assumptions.
ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency. A portion of the Company’s operations are located in the foreign jurisdictions of Ireland and Canada. The Company’s financial results could be significantly affected by factors, including, but not limited to, changes in foreign currency or weak economic
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conditions in these and other foreign markets in which our products are sold. In addition, product sales and services are affected by the value of the U.S. dollar relative to other currencies.
Foreign currency gains and losses are reflected in the Company’s financial statements. The net exchange gain was nil for the first quarter ended March 29, 2002. The Company believes that it will continue to incur exchange gains and losses from foreign operations in the future.
Interest. As of March 29, 2002, the Company had total outstanding debt of $6.0 million, with interest rates that are tied to the prime rate or LIBOR. Therefore, the Company is subject to exposure to interest rate risk for these borrowings based on fluctuations in the interest rates. Based upon the outstanding indebtedness as of March 29, 2002, an increase in the interest rates of 1.0% would cause a corresponding increase in our annual interest expense of approximately $0.1 million.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On February, 1, 2002 and March 1, 2002, the Company issued to two employees ten year options to purchase 25,000 and 20,000 shares of common stock for $7.25 and $6.86 per share, respectively. Each of the employee’s options will vest and become exercisable over five years. The option grants were exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, which provides an exemption for transactions not involving a public offering.
ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | |
| | |
| (a) | Exhibits. | |
| | |
| None | |
| | |
| (b) | Reports on Form 8-K. | |
| | |
| During the quarter ended March 29, 2002, the Company filed a Form 8-K dated March 19, 2002, to report the termination of its agreement to purchase the assets of iLogistix. | |
| | |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | ZOMAX INCORPORATED |
| | | |
| | | |
Date: May 10, 2002 | | By: | /s/ James T. Anderson |
| | | James T. Anderson, Chairman and Chief Executive Officer (principal executive officer) |
| | | |
| | | |
| | | |
| | By: | /s/ J. John Gelp |
| | | J. John Gelp, Executive Vice President and Chief Financial Officer (principal financial and accounting officer) |
| | | |
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