EARNINGS .07
ROY, Utah --Jan. 21, 1999--Iomega Corporation (NYSE: IOM) today
reported fourth quarter earnings of $19 million, or $0.07 per diluted share,
compared to a third quarter 1998 loss of $(14.8) million, or $(0.06) per
diluted share, and fourth quarter 1997 earnings of $36.1 million, or $0.13 per
diluted share.
Revenue for the fourth quarter of $501 million represented an increase of 28
percent over third quarter 1998 revenue of $392 million and a decrease of
eight percent from fourth quarter 1997 revenue of $547 million. Fourth
quarter revenue included record Americas revenue of $313 million, European
revenue of $154 million, and Asia Pacific revenue of $34 million.
''I am pleased that we were able to deliver on our goal of fourth quarter
profitability,'' said Jodie Glore, president and chief executive officer, Iomega
Corporation. ''And I'm extremely pleased with our balance sheet
improvements. We generated over $100 million in positive cash flow and
reduced inventory by an additional 16 percent beyond the improvements
made in the third quarter.
''As a result we exited the year with a strong balance sheet which will be
critical to our future plans. Going forward we will be focused on growth,
profitability, and asset management.''
''Our fourth quarter results are a strong indicator of the progress we have
made, but we still have work to do,'' continued Mr. Glore. ''Due to first
quarter seasonality and component constraints associated with ramping
new products, we expect our first quarter 1999 results to be approximately
breakeven with the possibility of a small profit or loss.''
Fourth quarter 1998 gross margin increased to $139 million or 28 percent of
sales, compared to $88 million or 22 percent of sales in the third quarter.
This gross margin improvement was driven primarily by cost reductions in
both the Zip and Jaz product lines and initial sales of Iomega's new Zip USB
and Zip 250 drives. Gross margin in the fourth quarter of 1997 was $183
million or 33 percent of sales.
Selling, general & administrative (''SG&A'') expenses were $81.4 million or
16 percent of sales for the fourth quarter of 1998, compared to third quarter
1998 SG&A expense of $72.6 million, or 19 percent of sales. SG&A
expenses were down 22 percent when compared with fourth quarter 1997.
Research and development expenses of $24 million were flat with both the
third quarter of 1998 and the fourth quarter of 1997. Total operating expense
of $106 million in the fourth quarter compares to third quarter operating
expense of $96 million (excluding purchased in-process technology) and is
down 17 percent from $128 million in the fourth quarter of 1997.
Iomega continues to implement its Six Sigma quality initiatives announced
earlier this year and expects significant cost savings to result in 1999.
Growth in Iomega's Zip and Jaz disk unit shipments in the fourth quarter of
1998 significantly outpaced drive shipments. Both Zip and Jaz disk unit
shipments increased 47 percent in the fourth quarter of 1998 compared to
the fourth quarter of 1997, while Zip drive units increased 26 percent and Jaz
drive unit shipments decreased seven percent, for the same time periods.
Total Zip product revenue for the fourth quarter was $353 million and total
Jaz product revenue was $123 million. Revenue for the quarter included
record disk revenue of $206 million, drive revenue of $287 million and other
miscellaneous revenue of $8 million. Iomega's Clik! Digital Camera bundle
configuration began shipping in mid-December but fourth quarter 1998 Clik!
revenue was immaterial.
Iomega's Clik! Mobile Computing bundle and its Clik! Plus bundle, for mobile
computers and digital cameras, began shipping today.
For the year, revenue was $1.7 billion, approximately flat with 1997 revenue.
The net loss for the year of $(54) million, or $(0.20) per diluted share,
compares with 1997 net income of $115 million, or $0.42 per diluted share.
Cash and temporary investments as of December 31, 1998 were $90
million, which compares to $46 million, as of September 27, 1998. Cash
flow for the quarter was $106 million, driven by a reduction in days sales
outstanding (DSO) and inventory and the receipt of expected tax refunds.
Cash flow for the year was negative $146 million, including costs relating to
the acquisition of Nomai S.A. in the third quarter.
''We shipped some exciting new products last quarter,'' commented Mr.
Glore. ''Our Zip USB and Zip 250 drives will be significant revenue
contributors in 1999 and our new Clik! drives and disks are opening up new
markets for Iomega.
''The change to a functional organization that we separately announced
today is designed to improve our top line growth rate with an increased
focus on global market access and customer applications, as well as our
overall organizational effectiveness.''
Iomega Corporation (NYSE: IOM) manufactures and markets the
award-winning Zip®, Jaz® Clik! (TM) 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 iomega.com.
Special Note: The statements in this release related to a focus on growth,
profitability, and strong asset management in 1999, expected savings in
1999 from Six Sigma quality initiatives, anticipated revenue growth from new
products, anticipated 1999 first quarter results, first quarter seasonality,
anticipated component constraints associated with new products, and the
impact of organizational changes on the Company's top line growth rate,
global market access, customer applications, and overall organizational
effectiveness 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 storage solutions, the impact of competition from other suppliers
of data storage products, the success of the Company in ramping
production and marketing new products, the impact of the Company's
change to a functional organization and associated management changes,
the Company's success in realizing the benefits intended by such
organizational change and it success in realizing cost savings from its Six
Sigma quality initiatives, the impact of the Company's acquisition of Nomai
S.A., the Company's ability to maintain stringent quality assurance
standards and enhanced customer services, the availability of product
components that meet the Company's requirements, 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, filed March 31, 1998 and its most recent quarterly
reports filed with the SEC.
Note to Editors: Iomega, Zip, Jaz, and the stylized ''i'' logo are registered
trademarks of, and Ditto and Clik! are trademarks of, Iomega Corporation.
All other products and brand names are the property of their respective
owners. For maximum reliability, use only genuine Zip disks featuring the
genuine Zip symbol in your Zip drive. |
