SAN DIEGO, July 23, 2002 - Iomega Corporation (NYSE: IOM) reported net income of [$11.5] million, or [$0.22] per diluted share, for the quarter ended June 30, 2002. This net income included a pre-tax $2.2 million reversal of restructuring charges as well as a $0.7 million decrease in the Company's valuation allowance for net deferred tax assets. This compares to a second quarter 2001 net [loss] of $[35.9] million, or $[0.66] per diluted share. The second quarter 2001 net loss included pre-tax non-restructuring and restructuring charges of $46.0 million and $1.1 million, respectively. Operating income in second quarter 2002 was $[14.2] million compared to an operating loss of $[15.2] million in the same period a year ago, excluding non-restructuring charges and restructuring charges and reversals.
During the second quarter, the Company's total cash, cash equivalents, and temporary investments grew [$30.7] million to [$372.1] million as of June 30, 2002.
Second quarter 2002 revenue of $[145.2] million decreased $[38.5] million, or [21]%, compared to second quarter 2001, primarily due to decreased Zip® and Jaz® product line revenues, partially offset by slightly higher CD-RW revenue. The second quarter 2002 gross margin percentage was [37.8%], compared to [28.2]%, before non-restructuring charges of $[44.9] million, for the second quarter of the prior year. Second quarter 2002 operating expenses were reduced by [39%], from $[67.0] million in second quarter 2001 to $[40.7] million this year, excluding non-restructuring charges and restructuring charges and reversals in both years.
'While we have demonstrated our ability to stabilize our cost structure and have been profitable for the last three quarters, our key challenge remains to reverse the revenue decline and to lay the foundation for future revenue growth,' said Werner Heid, president and CEO, Iomega Corporation. 'As planned, during the quarter, we extended our business with a new line of portable and external hard drive products and a series of Networked Attached Storage (NAS) solutions with breakthrough price and performance features.'
'We are increasing the velocity of product generation and continue to focus resources on enhancing and expanding Iomega's software solutions,' continued Heid. 'Our goal remains to enable all users of Iomega's product platforms, which range from 100 megabytes to 480 gigabytes, to easily store, share, and protect their digital valuables.'
Second quarter 2002 Zip revenue of $[114.3] million decreased $[29.1] million, or [20]%, from second quarter 2001 Zip revenue of $[143.4] million. Iomega's second quarter 2002 Zip drive shipments were [1.0] million units, a decrease of [0.2] million units when compared to second quarter 2001. Second quarter 2002 Zip disk shipments were [6.6] million units, a decrease of [2.0] million units when compared to second quarter 2001. Zip drive unit shipments to OEM customers of [0.6] million decreased [0.1] from second quarter 2001 and represented [57]% of total unit shipments in the second quarter, which compares to [55]% in second quarter
2001. The second quarter 2002 Zip gross margin percentage of [45.0]%
increased from [39.9]%, excluding non-restructuring charges of $4.5 million, in the same period a year ago, reflecting lower costs, a continuing trend from Zip 100MB to Zip 250MB drives and disks and a higher mix of disks to drives. Improved margins and significantly lower operating expenses more than offset the impact of the decrease in sales, resulting in a second quarter 2002 Zip product profit margin (PPM) of $[40.5] million compared with $[34.8] million, excluding $4.5 million in non-restructuring charges, in second quarter 2001.
Second quarter 2002 CD-RW revenue of $[20.3] million increased $[2.1] million from second quarter 2001 CD-RW revenue of $[18.2] million. The second quarter 2002 CD-RW product loss of $[1.1] million compares to a product loss of $[11.0] million, excluding $10.0 million in non-restructuring charges, in the second quarter 2001. The year-over-year improvement was mainly the result of significantly lower fixed manufacturing overhead resulting from the change from an in-house final assembly model to a fully sourced model.
Second quarter 2002 Jaz revenue of $[3.2] million decreased $[10.0] million from second quarter 2001. Jaz PPM in the second quarter was $[1.0] million which compares to $[2.5] million in the second quarter of 2001. The year-over-year decrease in Jaz revenue and PPM was a result of the Company's decision to discontinue the Jaz product line.
Other revenue in second quarter 2002 included Peerless revenue of $[3.4] million, compared with $[3.8] million in the prior year quarter, and $[3.0] million from the initial shipment of portable hard disk drives. Further, the Company shipped $1.5 million of NAS products, of which $0.5 million was recognized and the balance deferred under the Company's revenue recognition policies.
Please refer to the attached supplemental information schedule for unit information by product line and revenue by region.
Reverse Stock Split
All share and per share information included in this release gives retroactive effect to the one-for-five reverse stock split effected as of the close of business on September 28, 2001.
About Iomega
Iomega Corporation provides easy-to-use, high value storage solutions to help people protect, secure, capture, and share their digital valuables. Iomega's award-winning storage products include the popular Zip® 100MB and 250MB drives, high-performance Iomega® HDD portable hard drives that feature capacities from 20GB to 30GB, Iomega® HDD external hard drives that offer capacities of 40GB and will soon offer capacities up to 120GB, and Iomega® external CD-RW drives. Iomega QuikSync? automatic backup software and HotBurn® CD-recording software simplify data protection and sharing at home and in the workplace. For networks, the new line of Iomega® NAS servers offers capacities of 120GB to 480GB. The Company can be reached at 1-888-4-IOMEGA (888-446-6342), or on the Web at http://www.iomega.com.
Voor more information you can contact:
Tara van Oyen Lina van der Wel
Brodeur Worldwide Iomega International S.A.
Tel: +31 20 346 20 00 Geneva, Zwitserland
Fax: +31 20 669 72 65 Tel: +41 22 87 97 241
email: tvanoyen@nl.brodeur.com Fax: +41 22 87 97 402
email: wel@iomega.com
Special Note Regarding Forward-Looking Statements
The statements contained in this release regarding the goal to reduce the revenue decline and to lay the foundation for future revenue growth, the goal to increase the velocity of product generation and to enhance and expand Iomega's software solutions, the goal to enable all end users to easily store, share, and protect their digital valuables, and all other statements that are not purely historical, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are based upon information available to Iomega as of the date hereof, and Iomega disclaims any intention or obligation to update any such forward-looking statements. Actual results could differ materially from the current expectations. Factors that could cause or contribute to such differences include unforeseen difficulties in implementing restructuring activities, the level of retail and OEM market acceptance of and demand for the Company's products, declining consumer confidence levels and general market demand for PCs and consumer electronics products, the Company's success in timely producing and marketing its products, the Company's inability to reverse the revenue decline on the Zip product line, the Company's inability to achieve profitability on its CD-RW product line, technical difficulties, competitive pricing pressures or a lack of market acceptance with respect to any of the Company's new products, the Company's inability to maintain stringent quality assurance standards and enhanced customer service, availability of critical product components, the failure or delay of any sole source supplier, products and technology obsolescence, manufacturing and inventory issues, management turnover, intellectual property rights, competition, litigation, general economic and/or industry-specific conditions and the other risks and uncertainties identified in the reports filed from time to time by Iomega with the U.S. Securities and Exchange Commission, including Iomega's most recent Form 10-Q and Annual Report on Form 10-K.
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Copyright© 2002 Iomega Corporation. All rights reserved. Iomega, Zip, Peerless, Predator, DataSafe, QuikSync, HotBurn, LifeWorks and ioLink are either registered trademarks or trademarks of Iomega Corporation in the United States and/or other countries. Certain other product names, brand names and company names may be trademarks or designations of their respective owners.