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/
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