FOOL CONFERENCE CALL SYNOPSIS*
Iomega
Corporation
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1821 W. Iomega Way
Roy, UT 84067
(801) 778-1000
http://www.iomega.com
Iomega Corp. announces first quarter earnings growth of 127 percent on revenue growth of 63 percent
ROY, Utah--(BUSINESS WIRE)--April 17, 1997-- Iomega Corp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IOM)") else Response.Write("(NYSE: IOM)") end if %> Thursday reported first quarter earnings of $23 million, or $0.17 per share, a 127 percent increase over first quarter 1996 earnings of $10 million, or $0.08 per share.
Revenue of $361 million increased 63 percent over first quarter 1996 revenue of $222 million, while decreasing slightly by nine percent when compared to Iomega's seasonally strong, record fourth quarter 1996 revenue of $397 million.
"We were encouraged this quarter by the overall strength of Zip(TM) sales and the strength of the U.S. and European retail sales," said Kim Edwards, Iomega's president and chief executive officer. "Our combined Zip and Jaz(R) sales grew by 74 percent over their prior year level. We are especially pleased that over 20 percent of Zip drives shipped in the first quarter went into the OEM channel."
Iomega's sales growth combined with an improved gross margin and continued operating expense control all contributed to the strong earnings performance. Gross margin for the first quarter of 1997 increased to $107 million, or 29.7 percent of sales, from $60 million, or 27.0 percent of sales, for the first quarter of 1996.
Selling, general and administrative ("SG&A") expenses as a percentage of sales remained relatively constant at 15.0 percent, or $54 million, for the first quarter of 1997 as compared to first quarter 1996 SG&A expenses of $33 million, or 14.9 percent. Research and development expenses were $14.7 million, or 4.1 percent of sales, for the first quarter, which compares to $7.0 million, or 3.1 percent of sales, for the first quarter of 1996.
The company had positive cash flow of $15 million in the first quarter. Iomega's balance sheet as of March 30, 1997, reflected cash and cash equivalents of $117 million, which is an increase of $8 million from year-end 1996. Total debt decreased to $96 million from $103 million at the end of 1996.
"We are producing Zip, Jaz and Ditto(TM) drives, as well as Jaz cartridges, in Penang," Edwards continued. "By increasing volume production in Penang, we have reduced costs, which is important to our goal of increasing demand by hitting key consumer price points.
"Effective April 1, we reduced the price on Zip drives to $149.00 and in a separate release today, we announced that we are reducing the price of our internal and external Jaz drives by $100 beginning on May 1.
"We also announced recently that we signed a letter of intent with NEC to license our Zip drive technology. When finalized, this agreement, combined with our recently expanded licensing agreement with Matsushita, will help further our strategy of establishing Zip technology as the removable storage standard."
By product category, Iomega's Zip and Jaz disk-based product sales grew to $323 million in the first quarter of 1997 from $186 million in the first quarter of 1996. Iomega's Ditto tape product sales grew 29 percent to $36 million in the first quarter of 1997 from $28 million in the first quarter last year.
In addition, all of Iomega's geographic regions experienced year-over-year sales growth. Sales in Iomega's Americas region increased 64 percent to $226 million, Iomega's European sales grew 72 percent to $107 million and Iomega's Asia/Pacific sales grew 30 percent to $28 million.
Iomega Corp. provides personal computer storage solutions that help people manage their computer stuff -- anywhere. These solutions include: Zip drives and disks; Jaz one-gigabyte 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. The company can be reached at 800/MY-STUFF (800/697-8833), http://www.iomega.com .
Special Note: Statements in this release related to future pricing goals, Iomega's anticipated agreement with NEC and Iomega's Zip drives becoming the super-floppy standard 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, production costs, competition, the ability of the company and NEC to agree on final terms, intellectual property rights, litigation, 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.
NOTE TO EDITORS: Iomega, Jaz, the Iomega Logo, and Bernoulli are registered trademarks of, and Zip, Ditto and n-hand are trademarks of, Iomega Corp. All other product and brand names are the property of their respective companies.
Iomega Corp.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
March 30, March 31,
1997 1996
Sales $361,344 $221,988
Cost of sales 254,065 162,088
Gross margin 107,279 59,900
Operating Expenses:
Selling, general and
administrative 54,360 33,156
Research and development 14,717 6,991
Total operating expenses 69,077 40,147
Operating income 38,202 19,753
Interest and other income and expense,
net (2,872) (3,161)
Income before income taxes 35,330 16,592
Provision for income taxes (12,316) (6,471)
Net income $23,014 $10,121
Net income per common share $0.17 $0.08(a)
Weighted average shares
outstanding 135,703 128,838(a)
(a) The weighted average shares and EPS have been restated for the May 1996 2 for 1 Stock Split
Iomega Corp.
Consolidated Balance Sheets
(Unaudited)
March 30, Dec. 31,
1997 1996
Assets:
Cash and cash equivalents $116,767 $108,312
Trade receivables 210,674 210,733
Inventories 155,326 171,920
Other current assets 67,038 65,703
Total current assets 549,805 556,668
Fixed assets (net) 133,978 126,042
Other assets 3,072 3,432
$686,855 $686,142
Liabilities and Stockholders' Equity:
Notes payable $7,144 $33,770
Current lease obligations 4,602 4,114
Accounts payable 128,922 145,844
Other current liabilities 104,037 103,255
Total current liabilities 244,705 286,983
Long-term liabilities 38,526 19,176
Convertible notes 45,722 45,733
Stockholders' equity 357,902 334,250
$686,855 $686,142
* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.