COMPANY PRESS RELEASE: Iomega Corporation has reported net income of $3.9 million, or $0.07 per diluted share, for the quarter ended December 31, 2001. This net income included a pre-tax restructuring charge of $4.6 million.
This compares to fourth quarter 2000 net income of $22.0 million, or $0.41 per diluted share, which included $13.9 million attributable to a decrease in the Company’s valuation allowance for net deferred tax assets. Excluding restructuring charges, operating income for the fourth quarter of 2001 was $9.4 million, which compares to $10.4 million in the same period a year ago.
Fourth quarter 2001 revenue of $189.9 million decreased $141.2 million compared to the fourth quarter of 2000, primarily due to decreased Zip®, Jaz® and CD-RW revenues. The fourth quarter 2001 gross margin percentage of 33.4% was essentially flat with the prior year, while fourth quarter operating expenses were cut by 46%, from $100.6 million in fourth quarter 2000 to $54.1 million this year, excluding restructuring charges.
We have made significant progress in our restructuring initiatives and reorganization, but we still have a lot of challenges and work ahead of us, said Werner Heid, president and CEO, Iomega Corporation. Our operating results in the fourth quarter indicate that our restructuring efforts are beginning to bear fruit. While we continue to focus on improving our operational efficiencies, the challenge ahead of us will be to generate sustained profitable growth. We are focused on building upon our profitable core Zip product line and expanding our position in external CD-RW solutions in order to reverse the revenue decline. We are also putting in place initiatives to broaden Iomega’s product line to expand on our position as a leading global provider of solutions for the storage, sharing and protection of digital valuables. I appreciate the dedication and commitment we are receiving from our employees, customers and suppliers as we remain focused on our goal of generating long-term shareholder value.
The $4.6 million in restructuring charges included $2.1 million in severance resulting from reductions in workforce in the US and Europe and $2.5 million primarily associated with lease cancellations and asset write-downs as a result of the Company’s decision to outsource distribution and logistics in Europe.
Fourth quarter 2001 Zip revenue of $145.0 million decreased $76.6 million from fourth quarter 2000 revenues of $221.6 million. Iomega’s fourth quarter Zip drive shipments were 1.2 million units, a decrease of 0.6 million units when compared to the fourth quarter 2000. Fourth quarter Zip disk shipments were 7.4 million units, a decrease of 3.0 million units when compared to the fourth quarter 2000. Zip drive unit sales to OEM customers represented 52% of total unit shipments in the fourth quarter, which compares to 42% in the fourth quarter 2000. Fourth quarter 2001 Zip gross margin percentage of 43% compares to 41% in the same period a year ago, reflecting an improved media mix and lower costs. Improved margins and significantly lower expenses helped to mitigate the impact of the drop in sales, resulting in a fourth quarter 2001 Zip product profit margin (PPM) of $41.6 million compared with $54.9 million in the fourth quarter 2000.
Fourth quarter 2001 Jaz revenue of $11.5 million decreased $25.7 million from the fourth quarter 2000 revenue of $37.2 million. Jaz PPM of $2.7 million decreased $7.3 million when compared to fourth quarter 2000 PPM of $10.0 million. The year-over-year decrease in Jaz revenues and PPM is a result of the Company’s decision to discontinue the Jaz product line.
Fourth quarter 2001 CD-RW revenue of $24.0 million decreased $30.0 million from fourth quarter 2000 revenue of $54.0 million. The lower revenue in the fourth quarter primarily represents the Company’s decision to exit the internal CD-RW drive business. Fourth quarter 2001 CD-RW product loss of $7.7 million compares to a product loss of $4.3 million in the fourth quarter 2000. The increased product loss in the quarter was primarily due to costs associated with price reductions on models that are being phased out.
Revenue for the full year 2001 of $834.3 million decreased $465.9 million when compared to revenue of $1.3 billion in 2000. Net loss for the full year 2001 of $93.3 million, or ($1.74) per diluted share, compares to net income of $169.6 million, or $3.07 per diluted share, in 2000. Excluding restructuring and non-restructuring charges, the pre-tax income for the full year 2001 was $9.9 million, which compares to $164.9 million in 2000. Restructuring and non-restructuring charges recorded in 2001 and 2000 were $116.0 million and $2.6 million, respectively.
The Company’s cash, cash equivalents, and temporary investments balance at December 31, 2001 was $329 million with no long-term debt. During the fourth quarter of 2001, the Company repurchased 1.35 million shares of its common stock for approximately $9.3 million. Cumulative shares repurchased under the buyback program announced on September 8, 2000, are 2.92 million shares for $24.8 million through the end of the fourth quarter 2001.