IOMEGA: Iomega announces fourth quarter earnings growth of
77% on revenue growth of 38%
FEB 4, 1998, M2 Communications - Iomega International S.A., the
European subsidiary of Iomega Corporation (NYSE:IOM), has reported that
sales in Europe grew 76 per cent in 1997 to $520 million, representing
30 per cent of Iomega Corporation's total 1997 revenue of $1.7 billion.
Iomega's European fourth quarter sales grew 55 per cent year-over-year
to $197 million.
"During 1997, Iomega International re-organised in order to reinforce
our leadership and to better meet European demand for our Zip, Jaz and
Ditto personal storage solutions," said Kevin O'Haire, managing
director of Iomega International S.A. "Based on this successful
formula, we plan to continue to invest in 1998 in the European
infrastructure by building the management team; distribution, retail,
corporate and OEM sales; and customer service. 1998 will also see new
marketing initiatives such as a television advertising campaign in the
UK in Q1."
Key European management appointments in late 1997 included John
Gilmore, customer services manager; Leslie Finn, OEM director; Avril
Murphy, Ditto product manager; Cedric Lacroix, retail marketing manager
Central Europe; and Amin Abdulla, interactive website manager. In Q1
1998 the company plans to make additions to the Zip product management
team plus appoint a European manager for the new Clik! family of disks
and drives for the mobile storage market.
Overall, Iomega Corporation reported fourth quarter 1997 net income
of $36 million, or $0.13 per share, a 77 percent increase over fourth
quarter 1996 earnings of $20 million, or $0.07 per share.
Record revenue of $547 million for the fourth quarter of 1997
represented an increase of 38 percent over fourth quarter 1996 revenue
of $397 million.
For the year, revenue grew 43 percent to $1.7 billion, over annual
1996 revenue of $1.2 billion. Net income doubled in 1997 to $115
million from $57 million for 1996, or $0.42 per share versus $0.21 per
share, for the year.
In accordance with changes in U.S. financial reporting requirements,
Iomega is now reporting basic and diluted earnings per share. For the
fourth quarter of 1997, basic earnings per share were $0.14 and diluted
earnings per share were $0.13. For the year, basic earnings per share
were $0.45 and diluted earnings per share were $0.42.
"We are pleased with our year-over-year sales and net income growth,"
said Kim Edwards, Iomega's president and chief executive officer. "We
shipped twice as many Zip drives in 1997 as in 1996, further evidence
of our progress toward making the Zip drive the new standard in the
high capacity removable storage market segment. We have now shipped
over 12 million Zip drives worldwide."
Gross margin for the fourth quarter of 1997 increased to $183
million, or 33.4 percent of sales, from $115 million, or 29.0 percent
of sales, for the fourth quarter of 1996. Selling, general and
administrative ("SG&A") expenses as a percentage of sales increased to
19.0 percent, or $104 million, for the fourth quarter of 1997 as
compared to fourth quarter 1996 SG&A expenses of $68 million, or 17.2
percent of sales. The increase in SG&A expenses is primarily the result
of international expansion, additional headcount, and increased legal
and advertising expenses. Research and development expenses were $24
million, or 4.3 percent of sales, for the fourth quarter of 1997, as
compared to $13 million, or 3.3 percent of sales, for the fourth
quarter of 1996.
The Company achieved positive cash flow of $32 million in the fourth
quarter of 1997 and $137 million for the year.
Iomega's balance sheet as of December 31, 1997, reflected cash and
temporary investments of $196 million, which is an increase of $30
million from third quarter 1997. Total debt decreased to $54 million
from $56 million at September 28, 1997.
"Our combined Zip and Jaz businesses grew 48% over the fourth quarter
last year and 54% on a full-year basis," Mr. Edwards continued. "Our
fourth quarter performance, however, was affected by a slowdown in
demand in Asia and the fact that we postponed shipment of some of our
new products into the first quarter of 1998. In addition, volume
production ramp of other new products was slower than planned."
By product category, Iomega's Zip and Jaz product sales were $519
million in the fourth quarter of 1997. Iomega's Ditto tape product
business declined in the fourth quarter by 28 percent year-over-year
from $39 million to $28 million. Beyond Europe, Iomega's other
geographic regions also experienced year-over-year fourth quarter sales
growth -- sales in Iomega's Americas region increased 23 percent to
$301 million and Iomega's Asia/Pacific sales grew 88 percent
year-over-year to $49 million.
Iomega Corporation provides personal computer storage solutions that
help people manage their computer stuff -- anywhere. These solutions
include: Zip drives and disks; Jaz 1GB and 2GB drives and disks; and
Ditto tape backup drives and tape cartridges. Used in homes, business,
government and education, and by creative professionals, Iomega storage
solutions are available through computer retail stores, resellers and
major distributors. Iomega International S.A. can be contacted via the
following customer inquiry telephone line: in the UK:07000.466342 or on
the world wide web at iomega.com. - more -
Iomega International S.A. is represented in 36 countries in Europe,
Africa and the Middle East through a network of distributors, retailers
and sales offices. Its headquarters are in Geneva, Switzerland. The
company's European network provides sales and technical support direct
to its customer base.
Special Note: The statements in this release related to the Zip drive
becoming the new standard in the high capacity removable storage market
segment, the expected introduction of new products in the first quarter
of 1998, and planned investments in the Company's European
infrastructure and markets are forward-looking statements. 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 drive and removable disk products,
manufacturing issues, including availability of certain key components
of the Iomega Zip drive, product development delays, component quality
issues, intellectual property rights, litigation, production costs,
competition, general economic conditions, and other factors identified
in Iomega's Annual Report as filed on Form 10-K, June 4, 1996
Prospectus and most recent quarterly reports filed with the SEC.
Iomega, Zip, Jaz, the Iomega Logo and the stylized "i" are registered
trademarks of and Ditto is a trademark of, Iomega Corporation. All
other product and brand names are the property of their respective
companies.
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(C)1994-98 M2 COMMUNICATIONS LTDCONTACT: Suzanne Ellis
Tel: +44 (0)1753 790700
e-mail: sellis@brodeuraplus.com
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