Iomega Reports Fourth Quarter Financial Results
REVENUE INCREASED 58% YEAR OVER YEAR
SAN DIEGO, February 5, 2008 - Iomega Corporation (NYSE: IOM) today reported net revenue of $120.6 million and net income of $6.5 million, or $0.12 per diluted share, for the quarter ended December 31, 2007. In comparison, fourth quarter 2006 net revenue was $76.2 million with net income of $4.9 million, or $0.09 per diluted share. Fourth quarter 2007 net revenue increased $44.4 million, or 58%, from the same quarter last year, primarily due to strong growth in Consumer Storage Solutions and Network Storage Systems products of 86% and 76%, respectively. Gross margin for fourth quarter 2007 was $20.9 million, or 17.3%, as compared to fourth quarter 2006 gross margin of $15.4 million, or 20.2%. The increase in gross margin dollars and decrease in gross margin percentage from the same period last year was a result of growth in Consumer Storage Solutions products, and an expected Zip revenue decline of 48% which carries a higher gross margin percentage than Consumer Storage Solutions products.
Fourth quarter 2007 net income included a pre-tax, cash benefit of $3.5 million related to a prior license of intellectual property and pre-tax expenses of $1.2 million for external professional fees associated with the recently announced acquisition of ExcelStor Group. Taken together, this pre-tax net benefit of $2.3 million represents an impact to fourth quarter 2007 net income of approximately $0.03 per diluted share.
Total year 2007 net revenue was $336.6 million with net income of $10.1 million, or $0.18 per diluted share. In comparison, 2006 net revenue was $229.5 million with a net loss of $8.8 million, or ($0.17) per share. This represents a revenue increase of $107.1 million, or 47%, due primarily to strong growth in Consumer Storage Solutions and Network Storage Systems products of 86% and 35%, respectively, partially offset by an expected Zip revenue decline of 49%.
Cash, cash equivalents and temporary investments, inclusive of long-term cash investments, at December 31, 2007 totaled $64.6 million, a decrease of $4.8 million from the end of third quarter 2007. This decrease was a result of timing of working capital needs during the fourth quarter and building inventory required to meet the expected robust demand in first quarter 2008.
"I am pleased with our financial and operational execution for the fourth quarter and the strong revenue performance in our Consumer Storage and Network Storage product lines, both of which achieved substantial year-over-year growth despite the HDD supply constraints the entire industry experienced this quarter," said Jonathan Huberman, Chief Executive Officer, Iomega Corporation. "I am proud of the collective efforts of the Iomega team who delivered an impressive 47% revenue growth in 2007."
2008 Financial Guidance
In December, we issued preliminary revenue guidance for 2008 of $383.6 million and non-GAAP net income of $10.1 million, or $0.18 per diluted share. Given the strong performance we saw in fourth quarter 2007, we now expect full year 2008 revenue of approximately $400 million and non-GAAP net income of $11.0 million, or $0.20 per diluted share. These non-GAAP net income figures exclude any external expenses associated with the acquisition of ExcelStor Group, and any effects of the acquisition itself.
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 2007 financial results and management's goals and business outlook. The webcast may be accessed at http://www.iomega.com and will be available for replay through the close of business on February 19, 2008.
Iomega Corporation, headquartered in San Diego, is a worldwide leader in innovative storage and network security solutions for small- and mid-sized businesses, consumers and others. The Company has sold more than 400 million digital storage drives and disks since its inception in 1980. Today, Iomega's product portfolio includes industry leading network attached storage products, external hard drives, and its own award-winning removable storage technology, the REV® Backup Drive. OfficeScreen®, Iomega's managed security services, which are available in the U.S. and select markets in Europe, provide enterprise quality perimeter security and secure remote network access for SMBs, which help protect small enterprises from data theft and liability. To learn about all of Iomega's digital storage products and managed services solutions, please go to the Web at www.iomega.com. Resellers can visit Iomega at www.ioclub.net.
Special Note Regarding Forward-Looking Statements
Statements contained in this release regarding our expectations concerning the first quarter, regarding margin levels generally obtained, the forecast presented in the section of this release entitled "2008 Financial Guidance" 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 5, 2008; 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, or to stabilize or improve HDD product gross margins; unexpected technical, manufacturing, or supply issues with our products; supply shortages impacting our suppliers; any inability to maintain a competitive cost structure; competition; any inability to maintain stringent quality assurance standards and customer satisfaction; difficulties or costs associated with completing strategic opportunities to grow our business including the pending ExcelStor Group acquisition announced on December 12, 2007; 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 Reports on Form 10-Q. Obtain a copy of Iomega's Q3/2007 Financial Statements.
Important Additional Information for Investors and Stockholders
This press release, to the extent that it discusses Iomega's acquisition of ExcelStor, relates to the proposed acquisition of ExcelStor Great Wall Technology Limited, a Cayman Islands company ("EGWTL"), and Shenzhen ExcelStor Technology Limited, a PRC company ("SETL") by Iomega Corporation ("Iomega" or the "Company") from Great Wall Technology Company Limited, a People's Republic of China company ("GWT"), ExcelStor Group Limited, a Cayman Islands company ("EGL"), ExcelStor Holdings Limited, a British Virgin Islands company ("EHL" and, together with GWT and EGL, the "Selling Shareholders"), pursuant to the terms of a Share Purchase Agreement, dated as of December 12, 2007 among Iomega, the Selling Shareholders, EGWTL, and SETL (the "Proposed Acquisition"). In connection with the ExcelStor transaction, the Company intends to file a proxy statement with the SEC. INVESTORS AND STOCKHOLDERS ARE STRONGLY ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and stockholders may obtain a free copy of the proxy statement (when it becomes available) and other documents filed by the Company at the SEC's website at http://www.sec.gov. A free copy of the proxy statement when it becomes available may also be obtained from the Company, by calling Investor Relations at +1 (801) 332-3585 or by writing to Iomega Corporation, Attn: Investor Relations, 10955 Vista Sorrento Parkway, San Diego, CA 91230.
The Company, EGWTL, SETL, the Selling Shareholders and each of their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in favor of the transaction. Information about the executive officers and directors of the Company and their ownership of the Company's common stock is set forth in the proxy statement for the Company's 2007 Annual Meeting of Stockholders filed with the SEC on April 13, 2007 and the Company's Current Reports on Form 8-K filed with the SEC on September 27, 2007, November 8, 2007, December 12, 2007, December 20, 2007, and January 23, 2008. Certain directors and executive officers of the Company may have direct or indirect interests in the transaction due to securities holdings, pre-existing or future indemnification arrangements, vesting of options or rights to severance payments if their employment is terminated following the transaction. Additional information regarding the Company, EGWTL, SETL, the Selling Shareholders and the interests of each of their respective executive officers and directors in the transaction will be contained in the proxy statement regarding the transaction that will be filed by the Company with the SEC.
Copyright© 2008 Iomega Corporation. All rights reserved. Iomega, Zip, REV, and OfficeScreen 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, +1 (858) 314-7148 firstname.lastname@example.org