Iomega Announces Significant Progress Toward Returning to Profitability.ROY, Utah--(BUSINESS WIRE)--Oct. 15, 1998--Zip(R) Drive Shipments up 39%; Zip Disk A 3.5" removable disk drive from Iomega. Zip disks come in 100MB, 250MB and 750MB varieties, with the latter introduced in 2002 using USB and FireWire interfaces. The 250MB drives, introduced in 1998, also read and write 100MB disks. Shipments up 30% Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Reduced by 34%; Inventory Levels Down Sharply Iomega Corporation (company, storage) Iomega Corporation - A storage device manufacturer whose major products are the Zip and Jaz removable disk drives and Ditto tape drives. They became popular with an early product called the Bernoulli Box. (NYSE NYSE See: New York Stock Exchange :IOM IOM See: Index and Option Market ) today reported third quarter revenue of $392 million, a decrease of nine percent from its third quarter 1997 revenue of $432 million. The Company's net loss for the third quarter was $7.6 million, or $(0.03) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share before a non-cash special charge. The $7.6 million net loss includes a $3 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. loss from Nomai S.A.'s ongoing operations and goodwill amortization. In addition, Iomega (Iomega Corporation, San Diego, CA, www.iomega.com) A mass storage company founded in 1980 that offers a variety of optical, hard disk and proprietary disk storage devices. In the early 1980s, Iomega introduced the Bernoulli Box, which was the first high-capacity, removable disk for recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , non-cash special charge in the third quarter totaling $11.1 million related to purchased in-process technology, as part of its July July: see month. 1998 acquisition of Nomai. The total after-tax loss for the third quarter, including this charge, was $14.8 million, or $(0.06) per diluted share. In the third quarter of 1997, Iomega earned $30 million, or $0.11 per diluted share. "Last quarter we promised significant improvements in controlling operating expenses and we delivered," said James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. E. Sierk, president and chief executive officer, Iomega Corporation. "We said we expected to reduce operating expenses by more than $50 million in the second half of the year when compared to the first half of 1998. "We achieved a $49 million reduction in the third quarter alone as compared to the second quarter. In addition to a 34 percent reduction in operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. , inventories decreased by 30 percent to $196 million, and quality and customer satisfaction continue to improve. While we have made significant progress, we know we have more to do. Most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , we are on track to return to profitability in the fourth quarter." By product category, Iomega shipped 2.4 million Zip(R) drives in the third quarter of 1998, an increase of 39 percent over third quarter 1997, and Zip disk unit shipments increased 30 percent over third quarter 1997. Third quarter Zip revenue of $279 million was flat with third quarter 1997. Third quarter 1998 Jaz See Jaz disk. 1. (language) JAZ - An early system on the LGP-30. [CACM 2(5):16, May 1959]. 2. Jaz - Jaz Drive (R) revenue decreased 25 percent to $95 million from $126 million in the third quarter of 1997, but the product line showed improved profitability as compared with the second quarter of 1998. Iomega's Ditto(TM) revenue decreased 50 percent to $13 million from $26 million in the third quarter of 1997. While total drive unit shipments showed a year over year increase, geographically, Iomega's Americas A·mer·i·cas , the See America. revenue declined seven percent to $268 million when compared to third quarter 1997. This decline was primarily due to price reductions on all product lines in the quarter. Compared to third quarter 1997, Iomega's third quarter 1998 European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales were down 19 percent to $88 million and sales in Iomega's Asia Pacific region were down 11 percent to $33 million. Gross margin declined to $88 million, or 22.4 percent of sales for the third quarter of 1998, from $140 million, or 32.5 percent of sales for the third quarter of 1997. The price reductions taken on Zip(R) and Jaz(R) drives and disks in the third quarter of 1998 and a shift toward a higher mix of OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and Zip drive See Zip disk. (hardware, storage) Zip Drive - A disk drive from Iomega Corporation which takes removable 100 megabyte hard disks. Both internal and external drives are manufactured, making the drive suitable for backup, mass storage or for moving files between computers. shipments were the primary causes of the decline in gross margin. Iomega reduced its operating expenses by $49 million or 34 percent in the third quarter, as compared with the second quarter of 1998. Selling, general & administrative ("SG&A") expenses declined to $72.6 million, or 19 percent of sales, for the third quarter of 1998, as compared to $115 million, or 29 percent of sales, for the second quarter of 1998, and were flat on a dollar basis with third quarter 1997. The decrease in SG&A expense as compared with the second quarter, was the result of a company-wide initiative to comprehensively reduce costs which included a reduction in worldwide headcount, a significant decrease in marketing and advertising expenses, and decreases in other discretionary spending. Research and development expenses were up slightly over third quarter 1997 at $24 million, and down 22% from the second quarter of 1998. Iomega continues to implement its Six Sigma Not to be confused with Sigma 6. Six Sigma is a set of practices originally developed by Motorola to systematically improve processes by eliminating defects.[1] A defect is defined as nonconformity of a product or service to its specifications. quality initiatives announced earlier this year and expects significant cost savings to result in 1999. Cash and temporary investments as of September 27, 1998 were $46 million, which compares to $68 million as of June 28, 1998. Cash flow for the quarter was negative $21 million before the $45 million cost of acquiring Nomai S.A. The Company expects to generate positive cash flow in the fourth quarter, but still anticipates being cash flow negative for the year. The Nomai acquisition was financed by $40 million in senior subordinated borrowings from Idanta Partners and other entities affiliated with David J David J. Haskins (b. April 24, 1957, in Northampton, England) is a British alternative rock musician. He was the bassist for the seminal gothic rock band Bauhaus. Life and work . Dunn, chairman of the board, Iomega Corporation. "Our two millionth Jaz(R) drive and our 18 millionth Zip drive are scheduled to ship this week, and later this quarter we expect to begin shipping both our new miniature 40 megabyte One million bytes, or more precisely 1,048,576 bytes. Also MB, Mbyte and M-byte. See mega and space/time. (unit) megabyte - (MB, colloquially "meg") 2^20 = 1,048,576 bytes = 1024 kilobytes. 1024 megabytes are one gigabyte. Clik! drive See PocketZip disk. and our USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. interface Zip(R) drive," continued Mr. Sierk. "The success we've had this quarter in 'right-sizing' our business will enable us to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the success of our award winning product platforms. Looking toward the future, we are very excited about additional new product announcements to come which will further enhance Iomega's position as the worldwide leader in removable storage solutions." For the first nine months of 1998, Iomega's revenue totaled $1.2 billion which is equal to revenue for the first nine months of 1997. Iomega's net loss for the first nine months of 1998, including second and third quarter non-cash special charges, totaled $73.3 million, or $(0.28) per diluted share. For the first nine months of 1997, Iomega earned $79.2 million, or $0.29 per diluted share. Iomega Corporation manufactures and markets the award-winning Zip(R), Jaz(R) and Ditto(TM) drives and disks that help people to organize, manage, create, exchange and share their important information. Used in homes, businesses, government or education, and by creative professionals everywhere, Iomega storage solutions are the enabling technologies preferred by millions. The Company can be reached at 1-800-MY-STUFF (800-697-8833), or on the Web at http://www.iomega.com. Special Note: The statements in this release related to the expected return Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: to profitability in the fourth quarter of 1998, anticipated cost savings in the second half of 1998, expected savings in 1999 from Six Sigma quality initiatives, future cash flow and the anticipated availability of Clik! and USB Zip products in the fourth quarter of 1998 are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . There are a number of important factors that could cause actual results to differ materially from those suggested or indicated by such forward-looking statements. These include, among others, market acceptance of and demand for the Company's storage solutions, the impact of competition from other suppliers of data storage products, the success of the Company's cost reduction programs and its success in realizing cost savings from its Six Sigma quality initiatives, the impact of the Company's acquisition of Nomai S.A., the ability of the Company to reduce inventory levels, the timing of the Company's collection of accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying and its receipt of anticipated refunds, its ability to maintain stringent quality assurance standards and enhanced customer services, the Company's successful completion of pre-release product testing, the availability of product components, the success of the Company's marketing activities, manufacturing and inventory issues, production costs, intellectual property rights, general economic conditions and the other factors described in Iomega's Annual Report to Stockholders for 1997 on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , filed March 31, 1998 and its most recent quarterly reports filed with the SEC. Note to Editors: Iomega, Zip, Jaz, and the stylized styl·ize tr.v. styl·ized, styl·iz·ing, styl·iz·es 1. To restrict or make conform to a particular style. 2. To represent conventionally; conventionalize. "i" logo are registered trademarks of, and Ditto is a trademark of, Iomega Corporation. All other products and brand names are the property of their respective owners. For maximum reliability, use only genuine Zip 100 disks featuring the genuine Zip 100 symbol in your Zip drive. -0-
IOMEGA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
For the Three Months Ended
Sept. 27, Sept. 28,
1998 1997
SALES $391,766 $431,700
COST OF SALES 304,119 291,373
Gross margin 87,647 140,327
OPERATING EXPENSES:
Selling, general and administrative 72,587 72,631
Research and development 23,741 22,571
Purchased in-process technology 11,100 0
Total operating expenses 107,428 95,202
OPERATING INCOME (LOSS) (19,781) 45,125
Interest and other income and
expense, net (2,877) 1,055
INCOME (LOSS) BEFORE INCOME TAXES (22,658) 46,180
BENEFIT (PROVISION) FOR INCOME TAXES 7,881 (16,172)
NET INCOME (LOSS) ($14,777) $30,008
BASIC EARNINGS (LOSS) PER SHARE ($0.06) $0.12(b)
DILUTED EARNINGS (LOSS) PER SHARE ($0.06) $0.11(b)
COMMON SHARES OUTSTANDING 266,920 259,688(b)
COMMON SHARES ASSUMING DILUTION 266,920 283,322(b)
IOMEGA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
For the Nine Months Ended
Sept. 27, Sept. 28,
1998 1997
SALES $1,193,097 $1,193,206
COST OF SALES 909,090 828,141
Gross margin 284,007 365,065
OPERATING EXPENSES:
Selling, general and administrative 304,928(a) 187,807
Research and development 77,177 54,295
Purchased in-process technology 11,100 0
Total operating expenses 393,205 242,102
OPERATING INCOME (LOSS) (109,198) 122,963
Interest and other income and
expense, net (3,358) (1,219)
INCOME (LOSS) BEFORE INCOME TAXES (112,556) 121,744
BENEFIT (PROVISION) FOR INCOME TAXES 39,293 (42,513)
NET INCOME (LOSS) ($73,263) $79,231
BASIC EARNINGS (LOSS) PER SHARE ($0.28) $0.31(b)
DILUTED EARNINGS (LOSS) PER SHARE ($0.28) $0.29(b)
COMMON SHARES OUTSTANDING 265,032 258,673(b)
COMMON SHARES ASSUMING DILUTION 265,032 282,048(b)
(a)SG&A includes the $9.4 million second quarter special charge
relating to the Company's staff reduction and other cost-cutting
measures.
(b)The shares and EPS have been restated for the December 1997 2-for-1
Stock Split and FASB 128 "Earnings Per Share"
IOMEGA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
Sept. 27, June 28,
1998 1998
ASSETS:
Cash and temporary investments $45,557 $68,142
Trade receivables 225,016 143,299
Inventories 195,571 280,411
Other current assets 122,770 92,669
Total current assets 588,914 584,521
Fixed assets (net) 200,735 193,715
Intangible and other assets 39,460 7,031
Total Assets $829,109 $785,267
LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $40,500 $0
Current lease obligations 5,060 5,059
Accounts payable 133,798 123,176
Other current liabilities 129,743 145,469
Total current liabilities 309,101 273,704
Long-term liabilities 78,213 61,343
Convertible notes 45,683 45,683
Stockholders' equity 396,112 404,537
Total Liabilities & Stockholders'
equity $829,109 $785,267
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