Iomega (NYSE:IOM)
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SAN DIEGO, Feb. 1 /PRNewswire-FirstCall/ -- Iomega Corporation (NYSE:IOM) today reported net revenue of $76.2 million and a net profit of $4.9 million, or $0.09 per diluted share, for the quarter ended December 31, 2006. In comparison, fourth quarter 2005 net revenue was $70.0 million with a net profit of $1.9 million, or $0.04 per diluted share, and third quarter 2006 net revenue was $53.6 million with a net profit of $0.9 million, or $0.02 per diluted share. Fourth quarter net revenue increased $6.2 million, or 9%, from the same quarter last year primarily due to increases in Consumer Storage Solutions products of $11.9 million, partially offset by the expected decrease in Zip(R) revenue of $6.8 million. Additionally, fourth quarter 2006 net revenue increased $22.6 million, or 42%, from third quarter 2006 revenue primarily due to an increase in Consumer Storage Solutions sales as a result of both widespread market success of Iomega's new external HDD products and normal seasonality.
Gross margin for fourth quarter 2006 was $15.4 million, or 20.2%, as compared to fourth quarter 2005 gross margin of $14.8 million, or 21.2%, and third quarter 2006 gross margin of $12.2 million, or 22.8%. The decrease of 100 basis points from fourth quarter 2005 is primarily due to the expected decline in Zip revenue, partially offset by new lower cost external HDD products, supply chain improvements and other cost reduction actions. The decrease of 260 basis points from the immediately preceding quarter is primarily due to a product mix shift toward Consumer Storage Solutions products, partially offset by improved gross margins on external HDD products.
Pre-tax profit from continuing operations for fourth quarter 2006 was $4.3 million. Excluding a restructuring benefit of $0.8 million and a goodwill impairment charge of $0.8 million, fourth quarter 2006 non-GAAP pre-tax profit from continuing operations remained at $4.3 million. This compares to fourth quarter 2005 non-GAAP pre-tax profit from continuing operations of $0.8 million, when excluding $0.8 million of restructuring charges. Further, this compares to third quarter 2006 non-GAAP pre-tax profit from continuing operations of $2.2 million, when excluding a restructuring benefit of $0.2 million, a goodwill impairment charge of $2.5 million and a benefit of $1.1 million from the dissolution of an inactive European subsidiary.
Cash, cash equivalents and temporary investments at year-end amounted to $68.1 million, a decrease of $1.7 million from the end of third quarter 2006. This decrease is a result of increased inventory in transit as of year-end to satisfy existing backlog that has already been shipped to customers at this time as well as payments associated with previous restructuring actions.
During the fourth quarter, we received a final payment of $0.4 million from an escrow account related to the prior sale of Iomega's equity interest in a private company, ByteTaxi, Inc. This is presented on the income statement as income from discontinued operations, net of taxes, of $0.3 million.
"I am pleased with our financial and operational results in the fourth quarter. We achieved each and every goal we set for ourselves," said Jonathan Huberman, Vice Chairman and CEO. "Since the new management team took the helm during first quarter 2006 and we set out a new strategic path, we have increased revenues and returned the company to profitability. We achieved significant sequential revenue growth and, for the first time in many years, year over year growth. While we were benefited by fourth quarter seasonality, the key business drivers of this growth were our new HDD product line, improved supply chain and the launch of our next generation REV drive. Between these actions and the cost reduction initiatives we took in April, we've posted two consecutive quarterly profits with strong revenue growth as well."
Mr. Huberman continued, "As we look into 2007, our goals are:
1. To continue to grow and deliver sustained profitability,
2. To further increase the size of our external HDD business,
3. To continue to penetrate the high-growth NAS market with new products,
4. To ramp the REV 70GB Backup Drive and push for broad market adoption,
5. To grow our managed service business, and
6. Continue to seek opportunities to leverage Iomega's assets."
Conference Call Information
As previously announced, Iomega will host a conference call with simultaneous audio webcast beginning at 4:30 p.m. Eastern Time today to discuss Iomega's fourth quarter financial results and management's goals and outlook. The webcast may be accessed at http://www.iomega.com/ and will be available for replay through the close of business on February 15, 2007.
About Iomega
Iomega Corporation provides easy-to-use, high value storage solutions to help small- and mid-sized businesses and others protect, secure, capture and share their valuable digital information. OfficeScreen(R), Iomega's managed security service for SMBs, features industry-leading firewall/VPN, SSL VPN and IPSec bundles that create secure wide area networks that connect remote offices and workers to applications and data at a company's headquarters, while countering security threats from hackers, worms and viruses across a company's entire network. Iomega's award-winning storage products include the Iomega(R) REV(R) platform: the new Iomega REV 70GB Backup Drive, available in various computer interface models for server implementations; and the Iomega REV 35GB Backup Drive, available in several computer interface models for desktop backup and archive applications; as well as REV-based automation products such as the REV Loader 560, which utilizes a REV 70GB Backup Drive and up to eight removable REV disks. Iomega also sells high-performance external hard drives, network hard drives and other HDD solutions; as well as other portable storage products. For small and medium business networks, innovative Iomega NAS servers feature capacities of 250GB to 2TB. Iomega also has a comprehensive data recovery services solution for recovering lost data due to hardware failure, file corruption or media damage. The Company can be reached on the Web at http://www.iomega.com/. Resellers can visit Iomega at http://www.iomega.com/ipartner.
Special Note Regarding Forward-Looking Statements
Statements contained in this release regarding the Company's business goals for 2007; and any 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 statements are based upon information available to us as of February 1, 2007; and we disclaim any intention or obligation to update any such statements. Actual results could differ materially from current expectations. Factors that could cause or contribute to such differences include losses of key personnel; lower than anticipated sales of our products; any inability or failure to improve REV product sales, stabilize or improve HDD product gross margins; unexpected technical, manufacturing, or supply issues with our products; our inability to achieve a competitive cost structure; competition; our inability to maintain stringent quality assurance standards and customer satisfaction; difficulties in identifying and completing strategic opportunities to grow our business; intellectual property disputes; adverse final judgments in litigation; general economic and/or industry-specific conditions including significant changes in the landscape of data storage demand, pricing, or competition; faster than expected declines in Zip product sales and gross margins; 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 Annual Report on Form 10-K and quarterly report on Form 10-Q.
Copyright (C) 2007 Iomega Corporation. All rights reserved. Iomega, Zip, REV, OfficeScreen, StorCenter, iStorage, Micro Mini, and HotBurn 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.
Media, please contact:
Chris Romoser, Iomega Corporation, (858) 314-7148,
Analysts/Investors, please contact:
Preston Romm, Iomega Corporation, (858) 314-7188,
IOMEGA CORPORATION
CONDENSED STATEMENTS OF OPERATIONS - QTD
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended
Dec. 31, % of Dec. 31, % of Oct. 1, % of
2006 Sales 2005 Sales 2006 Sales
Sales $76,226 100.0% $70,029 100.0% $53,595 100.0%
Cost of Sales 60,824 79.8% 55,186 78.8% 41,379 77.2%
Gross margin 15,402 20.2% 14,843 21.2% 12,216 22.8%
Operating Expenses:
Selling,
general and
administrative 9,917 13.0% 11,687 16.7% 8,657 16.2%
Research and
development 1,959 2.6% 2,901 4.1% 1,904 3.6%
Goodwill
impairment
charge 793 1.0% 0 0.0% 2,513 4.7%
Restructuring
charges
(reversals) (829) (1.1%) 806 1.2% (211) (0.4%)
Total
operating
expenses 11,840 15.5% 15,394 22.0% 12,863 24.0%
Operating
Income (Loss) 3,562 4.7% (551) (0.8%) (647) (1.2%)
Interest and
other income
and expense,
net(1) 752 1.0% 561 0.8% 1,709 3.2%
Income From
Continuing
Operations Before
Income Taxes 4,314 5.7% 10 0.0% 1,062 2.0%
Benefit
(Provision) for
Income Taxes 286 0.4% 729 1.0% (209) (0.4%)
Net Income From
Continuing
Operations 4,600 6.0% 739 1.1% 853 1.6%
Income From
Discontinued
ByteTaxi, Inc.
Operations (net
of taxes)(2) 272 0.4% 1,158 1.7% 0 0.0%
Net Income $4,872 6.4% $1,897 2.7% $853 1.6%
Net Income
Per Share $0.09 $0.04 $0.02
Diluted Income
Per Share $0.09 $0.04 $0.02
Weighted Average
Common Shares
Outstanding 54,730 51,642 53,382
Weighted Average
Common Shares
Outstanding -
Assuming
Dilution 55,191 51,642 53,389
(1) Q3 2006 includes approximately a $1.1 million gain associated with
the release of various liabilities for a European subsidiary for
which operations ceased in 1999. The Company dissolved this entity
in the third quarter of 2006.
(2) Q4 2005 relates to the sale of Iomega's investment in ByteTaxi, Inc.
Q4 2006 relates to the final payment from an escrow account
associated with the ByteTaxi, Inc. sale.
PRODUCT SALES AND OPERATING INCOME (LOSS) - QTD
(In thousands)
(Unaudited)
For the Three Months Ended
Dec. 31, % of Dec. 31, % of Oct. 1, % of
2006 Sales 2005 Sales 2006 Sales
Sales:
Consumer
Products:
Consumer
Storage
Solutions(1) $52,150 68.4% $40,269 57.5% $30,317 56.6%
Zip 5,472 7.2% 12,310 17.6% 6,245 11.7%
Business
Products:
REV 11,929 15.6% 12,443 17.8% 11,201 20.9%
Network
Storage
Systems(2) 5,093 6.7% 4,730 6.8% 4,473 8.3%
Services(3) 1,536 2.0% 149 0.2% 1,254 2.3%
Other Products 46 0.1% 128 0.2% 105 0.2%
Total Sales $76,226 $70,029 $53,595
Product
Operating
Income (Loss):
Consumer Products:
Consumer
Storage
Solutions(1) $2,331 ($3,394) ($1,744)
Zip(4) 1,510 4,612 767
Business
Products:
REV (1,198) (1,607) (367)
Network
Storage
Systems(2) 690 486 464
Services(3) (464) 131 (53)
Other Products (136) 27 75
Restructuring
(charges)
reversals 829 (806) 211
Operating
Income (Loss) $3,562 ($551) ($647)
(1) Consumer Storage Solutions is comprised of hard disk, optical, floppy
and flash drives.
(2) Includes Network HDD products beginning in Q2 2006 -- previously
classified in Consumer Storage Solutions. Prior period data has been
reclassified for consistency.
(3) Includes the System Integration and Managed Services businesses of
CSCI, Inc. since August 2006, when acquired. Also includes
miscellaneous Iomega services previously classified in Other
Products. Prior period amounts have been reclassified for
consistency.
(4) Q3 2006 and Q4 2006 includes a $2.5 million and a $0.8 million
goodwill impairment charge, respectively.
IOMEGA CORPORATION
CONDENSED STATEMENTS OF OPERATIONS - YTD
(In thousands, except per share data)
(Unaudited)
For the Twelve Months Ended
Dec. 31, % of Dec. 31, % of
2006 Sales 2005 Sales
Sales $229,554 100.0% $264,505 100.0%
Cost of Sales 183,342 79.9% 208,670 78.9%
Gross margin 46,212 20.1% 55,835 21.1%
Operating Expenses:
Selling,
general and
administrative(1) 41,391 18.0% 60,535 22.9%
Research and
development 8,905 3.9% 14,054 5.3%
License and patent
fee income (1,085) (0.5%) (1,301) (0.5%)
Goodwill impairment
charges 8,728 3.8% 0 0.0%
Restructuring
charges 3,529 1.5% 7,579 2.9%
Total operating
expenses 61,468 26.8% 80,867 30.6%
Operating Loss (15,256) (6.6%) (25,032) (9.5%)
Interest and other
income and
expense, net(2) 3,865 1.7% 404 0.2%
Loss From Continuing
Operations Before
Income Taxes (11,391) (5.0%) (24,628) (9.3%)
Benefit for Income
Taxes 2,276 1.0% 945 0.4%
Loss From Continuing
Operations (9,115) (4.0%) (23,683) (9.0%)
Income From
Discontinued
ByteTaxi, Inc.
Operations (net of
taxes)(3) 272 0.1% 930 0.4%
Net Loss ($8,843) (3.9%) ($22,753) (8.6%)
Loss Per Share ($0.17) ($0.44)
Weighted Average
Common Shares
Outstanding 52,855 51,623
(1) 2006 includes $1.0 million of non-restructuring, severance related
costs associated with prior CEO.
(2) 2006 includes approximately a $1.1 million gain associated with the
release of various liabilities for a European subsidiary for which
operations ceased in 1999. The Company dissolved this entity in the
third quarter of 2006.
(3) Relates to the sale of Iomega's investment in ByteTaxi, Inc. 2005
also includes operating losses incurred by ByteTaxi, Inc. prior to
the sale.
PRODUCT SALES AND OPERATING INCOME (LOSS) - YTD
(In thousands)
(Unaudited)
For the Twelve Months Ended
Dec. 31, % of Dec. 31, % of
2006 Sales 2005 Sales
Sales:
Consumer Products:
Consumer Storage
Solutions(1) $134,149 58.4% $133,482 50.5%
Zip 31,153 13.6% 64,101 24.2%
Business Products:
REV 42,798 18.6% 45,932 17.4%
Network Storage
Systems(2) 17,817 7.8% 19,395 7.3%
Services(3) 3,051 1.3% 605 0.2%
Other Products 586 0.3% 990 0.4%
Total Sales $229,554 $264,505
Product Operating
Income (Loss):
Consumer Products:
Consumer Storage
Solutions(1) ($9,335) ($24,843)
Zip(4) 3,384 19,362
Business Products:
REV (6,940) (12,163)
Network Storage
Systems(2) 1,574 (1,491)
Services(3) (290) 227
Other Products(6)(7) 875 1,455
Non-Restructuring
charges(5) (995) 0
Restructuring charges (3,529) (7,579)
Operating Loss ($15,256) ($25,032)
(1) Consumer Storage Solutions is comprised of hard disk, optical, floppy
and flash drives.
(2) Includes Network HDD products beginning in Q2 2006 -- previously
classified in Consumer Storage Solutions. Prior period data has been
reclassified for consistency.
(3) Includes the System Integration and Managed Services businesses of
CSCI, Inc. since August 2006 when acquired. Also includes
miscellaneous Iomega services previously classified in Other
Products. Prior period amounts have been reclassified for
consistency.
(4) 2006 includes $8.7 million of goodwill impairment charges.
(5) Non-restructuring, severance related costs associated with prior CEO
and recorded in SG&A in above income statement.
(6) 2006 includes $0.8 million of income associated with the sale of old
patents.
(7) 2005 includes license and patent income of $1.3 million.
IOMEGA CORPORATION
CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec. 31, Oct. 1, Dec. 31,
2006 2006 2005
ASSETS:
Cash and cash equivalents $56,617 $55,315 $70,943
Restricted cash 88 87 256
Temporary investments 11,443 14,414 24,800
Total cash 68,148 69,816 95,999
Trade receivables 30,418 29,881 28,853
Inventories 42,593 34,803 27,532
Deferred taxes 2,714 5,523 5,523
Other current assets 3,401 3,881 4,998
Total Current Assets 147,274 143,904 162,905
Property and equipment, net 6,553 7,159 8,311
Intangible and other assets 13,554 14,397 12,453
$167,381 $165,460 $183,669
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Accounts payable $35,105 $31,579 $35,500
Income taxes payable 454 832 310
Other current liabilities(a) 32,475 44,715 49,751
Total Current Liabilities 68,034 77,126 85,561
Deferred taxes 9,540 13,174 17,152
Stockholders' equity(a) 89,807 75,160 80,956
$167,381 $165,460 $183,669
(a) Other current liabilities has been reduced and retained earnings has
been increased by $9.5 million due to a reduction of old tax reserves
under SAB 108.
CONDENSED STATEMENTS OF CASH FLOWS - YTD
(In thousands)
(Unaudited)
For the Twelve Months Ended
Dec. 31, Dec. 31,
2006 2005
Cash Flows from Operating Activities:
Net Loss ($8,843) ($22,753)
Revenue and Expense Adjustments(1) 7,607 6,527
(1,236) (16,226)
Changes in Assets and Liabilities:
Trade receivables (279) 2,223
Restricted cash 168 (256)
Inventories (14,195) 2,864
Other current assets 1,604 1,978
Accounts payable (593) 296
Accrued restructuring (2,533) (284)
Other current liabilities and income taxes (5,868) (16,543)
Net cash used in operating activities (22,932) (25,948)
Cash Flows from Investing Activities:
Purchases of property and equipment (1,906) (1,421)
Proceeds from sales of assets 191 745
Proceeds from sale of ByteTaxi
(net of $155,000 cash) 0 2,290
Initial investment in ByteTaxi
(net of $171,000 cash) 0 (44)
Purchase of CSCI, Inc.
(net of $183,000 cash) (4,339) 0
Sales of temporary investments 30,856 33,914
Purchases of temporary investments (17,080) (41,266)
Proceeds from ByteTaxi escrow fund 446 0
Net change in other assets
and other liabilities 7 (660)
Net cash provided by (used in)
investing activities 8,175 (6,442)
Cash Flows from Financing Activities:
Payment of debt 0 (139)
Proceeds from sales of Common Stock 431 69
Net cash provided by (used in)
financing activities 431 (70)
Net Decrease in Cash and
Cash Equivalents (14,326) (32,460)
Cash and Cash Equivalents at
Beginning of Period 70,943 103,403
Cash and Cash Equivalents at End of Period $56,617 $70,943
(1) 2006 includes $8.7 million of non-cash, goodwill impairment charges.
DATASOURCE: Iomega Corporation
CONTACT: Media, Chris Romoser, +1-858-314-7148, , or
Analysts/Investors, Preston Romm, +1-858-314-7188, , both of
Iomega Corporation
Web site: http://www.iomega.com/