Zomax Announces CEO Resignation, SEC Notification

Amid increased sales, service provider reports changes at the top, receipt of "Wells Notice"

Amid increased sales, service provider reports changes at the top, receipt of "Wells Notice"

Minneapolis — February 6, 2004 — Thursday was a "good news/bad news" sort of day for supply chain services provider Zomax, which yesterday reported a fourth-quarter profit against a year-ago loss, but which also announced the resignation of its CEO amidst the possibility that the company could be the subject of a civil enforcement action by the U.S. Securities and Exchange Commission.

Zomax said in a statement that it had received a so-called "Wells Notice" from the Chicago regional office of the SEC alleging violations regarding "false and misleading forward looking statements made to the public and in a quarterly report in the year 2000."

The notice indicated that the Chicago office staff intends to recommend to the SEC that a civil enforcement action be commenced against the company "and certain of its current and former officers," according to Zomax.

Zomax said in its statement that the company and its current and former officers believe they have complied with all applicable rules and regulations. The company also said that the resignation of its current CEO, James Anderson, and the appointment of Anthony Angelini as the new chief executive, "is in no way related to potential actions by the SEC, as discussion of the management succession began before the receipt of the Wells Notice by Zomax."

Angelini, who has been with the company since 1998 and has served as president and chief operating officer for four years, will assume the responsibilities of CEO effective immediately. Anderson, who co-founded the company in 1993 and guided it through its initial public offering, will complete his term as chairman of the board of directors, Zomax said.

In the company statement, Anderson said that we would be taking some time off and might look at building another business. "It's the right time for a change, for Zomax and for me," he said.

Zomax also reported profits of $5.2 million on sales of $61.9 million in the fourth quarter, against a year-ago loss of $275,000 on sales of $50.4 million. For its fiscal year, ended December 26, the company reported a net loss of $0.6 million on revenues of $197.7 million, compared to a net loss of $0.7 million on sales of $185.5 million for fiscal 2002.