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Iomega Announces Restructuring Details

Media please contact:
Chris Romoser, Iomega Corporation, (858)795-7148 romoser@iomega.com

Analyst/Investors, please contact:
Jim Recob, Iomega Corporation, (801)332-4430 recob@iomega.com


Iomega Announces Restructuring Details

ROY, Utah, August 9, 2001 - Iomega Corporation (NYSE: IOM), the global leader in reliable portable data storage, today provided additional details regarding its restructuring and other actions being commenced in the third quarter. Iomega said that it expects to record restructuring and other charges in the range of $55 to $65 million in the third quarter 2001 in order to align its cost structure with its expected revenue levels, reduce its break-even point and improve operating cash flow.

“We have taken some very difficult but necessary steps to adjust the Company’s operating and cost structure to our expected revenue levels,” said Werner Heid, president and CEO, Iomega Corporation. “Our goal in the short term is to significantly lower the break-even point of this business, stop the revenue decline and improve operational efficiencies. We have the products and the people to succeed in our core mission, which is to deliver reliable and easy-to-use removable storage products with world-class service and quality.”

The third quarter charges will reflect expenses associated with the reduction in the Company’s worldwide workforce; lease terminations and related asset write-downs; termination of contractual obligations; asset write-downs of manufacturing, information technology and other assets; and other miscellaneous charges. Approximately $43 million of these charges are expected to be cash charges that apply to severance-related expenses, lease terminations, contractual obligations, and other cash expenses. The remainder of these charges, $22 million, are expected to be non-cash charges. The Company anticipates these actions, when fully implemented over the remainder of the year, will result in an annual cost reduction of approximately $65 million, beginning in fiscal year 2002.

The Company expects to reduce its global workforce during the second half of 2001 by approximately 1,250 employees, from 3,300 to 2,050. Affected employees worldwide were recently notified, including approximately 780 employees in North America, 90 employees in Europe, and 380 employees in Asia Pacific. The workforce reductions will affect all functional areas, reflecting the Company’s objective of streamlining its supply chain and logistics infrastructure, consolidating labor-intensive tasks into Malaysia, reducing the number and variety of product offerings, reducing staff supporting those products, reducing overall staff in administrative functions, and outsourcing product distribution functions in the United States. The charges associated with the reduction in Iomega’s worldwide workforce are expected to be $16 million.

The Company expects to reduce its commitment to leased facilities in the United States, Europe and Asia Pacific. The charges associated with leased facilities are expected to total approximately $20 million, of which $10 million are related to asset write-downs, and $10 million are associated with lease terminations.

The Company is reviewing various contractual arrangements and expects that charges associated with the termination of these arrangements will be approximately $14 million. The Company also expects charges related to asset write-downs of manufacturing, information technology and other assets to be approximately $12 million. Other miscellaneous charges are expected to be approximately $3 million.

As previously announced, the Company will hold a conference call beginning at 4:30 p.m. Eastern Standard Time today to discuss these restructuring and other actions. A simultaneous webcast of the conference call and replays for two weeks will be available at http://www.iomega.com.

About Iomega

Iomega Corporation (NYSE:IOM) manufactures and markets the award-winning Zip®, Jaz®, PocketZip™ and Peerless™ drives and disks, the HipZip™ digital audio player, the FotoShow™ digital image center, LifeWorks™ software, and Iomega QuikSync™ software; Iomega also markets Iomega CD-RW drives, CompactFlash™ and SmartMedia™ memory cards, DataSafe™ network attached storage (NAS) servers and the Iomega Microdrive™ miniature hard drive. Iomega’s products help people to save, share, manage and create important information such as Internet downloads, audio files, personal photographs, spreadsheets, and slides, while protecting that content from viruses and hackers. Used in homes, businesses, government and educational facilities and by creative professionals everywhere, Iomega storage solutions are the enabling technologies preferred by millions. The Company can be reached at 1-888-4-IOMEGA (888-446-6342), or on the Web at http://www.iomega.com.

NOTE: The statements contained in this release regarding the Company’s restructuring and actions, timing for such restructuring and actions, expected results from the restructuring and actions, total amount of restructuring and other charges, cash and non-cash components of the restructuring and actions, operating expense reductions, expected revenue, profitability and break-even point for the business, stopping the revenue decline, categorization and amount of charges by such categories, workforce reductions, and all 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 forward-looking statements are based upon information available to Iomega as of the date hereof, and Iomega disclaims any intention or obligation to update any such forward-looking statements. Actual results could differ materially from current expectations. Factors that could cause or contribute to such differences include, but are not limited to, worldwide economic conditions, reduced demand for PC products and peripherals, continued decline in the company’s Zip business, continued decline in the Company’s revenue, unsuccessful ramp up of the Peerless product, difficulties by management in successfully executing on the restructuring and other actions, unforeseen liabilities arising from the restructuring and other actions, the successful completion of new product development and testing, market acceptance of, and demand for, new products, manufacturing issues, including component availability and pricing, co-development, production, and distribution issues, product pricing and conformity to specifications, dependence upon third party suppliers, competition, intellectual property rights and 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 Annual Report on Form 10-K for the year ended December 31, 2000, and its most recent Quarterly Report on Form 10-Q.

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Copyright© 2001 Iomega Corporation. All rights reserved. Iomega, Zip, Jaz, PocketZip, Peerless, HipZip, FotoShow, Predator, QuikSync, DataSafe and LifeWorks are either registered trademarks or trademarks of Iomega Corporation in the United States and/or other countries. Microdrive is a trademark of IBM Corporation and is used with permission. Certain other product names, brand names and company names may be trademarks or designations of their respective owners.