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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 27, 1998
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STORM TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-21449 77-0239305
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer)
incorporation or organization) Identification No.)
1395 CHARLESTON ROAD 94043
MOUNTAIN VIEW, CALIFORNIA
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (650) 691-6600
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ITEM 5. OTHER EVENTS.
On January 27, 1998, Storm Technology, Inc. announced its operating results
for the quarter and year ended December 31, 1997, which include significant
charges associated with Storm's December 18, 1997 acquisition of certain assets
from Logitech, Inc. and certain Logitech, Inc. affiliates. The Press Release
announcing such results is incorporated herein by exhibit.
ITEM 7. EXHIBITS.
(a) The following exhibit is attached hereto and filed herewith:
99.3 Press Release dated January 27, 1998 announcing Storm Technology,
Inc.'s earnings for the quarter ended December 31, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STORM TECHNOLOGY, INC.
Date: January 30, 1998 By: /s/ Rick McConnell
--------------------------------
Rick McConnell,
Chief Financial Officer and Assistant
Secretary
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INDEX TO EXHIBITS
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Seqntially
Numbered
Exhibit Document Page
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99.3 Press Release dated January 27, 1998 announcing Storm Technology, Inc.'s
earnings for the quarter ended December 31, 1997.
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FOR RELEASE AT OR AFTER 4:00 P.M. EST, JANUARY 27, 1998
CONTACT:
Rick M. McConnell
Storm Technology, Inc.
Chief Financial Officer and
Vice President, Finance &
Administration
650-691-6600
STORM TECHNOLOGY, INC. REPORTS RECORD QUARTERLY AND ANNUAL REVENUES
MOUNTAIN VIEW, CALIF. -- JANUARY 27, 1998 -- Storm Technology, Inc. (NASDAQ:
EASY) today reported record revenues of $13.0 million for the fourth quarter
ended December 31, 1997, an increase of over 50% from the $8.3 million reported
in the fourth quarter of 1996. Net loss for the fourth quarter of 1997 excluding
the impact of Storm's acquisition of Logitech's scanner product line was $4.2
million or $0.38 per share ($15.7 million or $1.45 per share inclusive of the
Logitech transaction), compared to a net loss of $1.3 million or $0.12 per share
in the fourth quarter of 1996.
In the three months ended December 31, 1997, the acquisition of Logitech's
scanner product line resulted in the write-off of $9.2 million of in-process
research and development acquired from Logitech and $2.4 million in inventory
write-downs associated with the consolidation of scanner product offerings after
the Logitech acquisition.
Commenting on the fourth quarter results, L. William Krause, President and Chief
Executive Officer, stated "We are pleased with our continued progress in 1997
toward gaining share in the personal scanner market and growing our top line
revenues. However, in 1998 our emphasis will be on achieving profitability on
an operating basis while continuing to grow our revenues at a rate equal to or
greater than the market."
The acquisition of the Logitech scanner business during December effectively
doubled Storm's worldwide market share helping to achieve critical mass in top
line revenue, expanded distribution in Europe through Logitech's existing
European infrastructure providing Storm access to over 8,000 retail outlets in
the region, and broadened Storm's underlying product portfolio and digital
imaging technology.
(1 of 5)
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Additionally during the quarter, Storm released its first flatbed scanner, the
EasyPhoto ImageWave, enabling Storm to deliver a full line of personal scanner
products with a range of price performance alternatives to its customers.
Shipments of ImageWave exceeded 70,000 units in the quarter, increasing Storm's
overall personal scanner installed base of customers to over 650,000.
For the year ended December 31, 1997, revenues were $34.2 million versus $24.5
million in 1996. The net loss for fiscal 1997 excluding the impact of non-
recurring events was $16.4 million or $1.55 per share ($29.0 million or $2.75
per share inclusive of the Logitech transaction and inventory write-offs in the
first quarter). This compares to a net loss for fiscal 1996 of $5.4 million or
$0.62 per share excluding the impact of the Primax acquisition ($10.4 million or
$1.20 per share including such transaction).
During 1997, Storm achieved a leadership position in snapshot-sized photo
scanners with over 70% share, developed a leading share position of greater than
40% in the page-sized sheetfed market in combination with the Logitech scanner
business, and successfully entered the flatbed segment. In short, the Company
believes it is executing well on its strategy of competing and gaining market
share based on product innovation and price performance leadership which it
believes will lead to becoming profitable in the second half of 1998.
For more detailed information on Storm's fourth quarter 1997 financial results
and future expectations, additional management comments will be available on
Storm's web site at http://www.stormtech.com/Q4ConfNotes.html. You may also
contact the Investor Relations department of the Company at (650) 691-6600.
Forward-looking statements contained in this release are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that these forward-looking statements are subject to a
variety of risks and uncertainties that could cause actual results to differ
materially from those projected in the forward-looking statement, including
risks associated with the development of consumer demand for digital photos on
PC's in general and for the Company's products in particular, the Company's
success in developing, introducing, manufacturing and shipping products in a
timely manner, the purchasing patterns and potential product returns from the
Company's retail distribution, the potential for reduced revenue due to price
protection granted to distributors and resellers, the Company's limited capital
resources, and intense competition from larger, more recognized companies.
Further information on potential factors which may affect the Company's results
are included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 and the Company's Form S-1 registration statement.
(2 of 5)
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ABOUT STORM TECHNOLOGY
Storm Technology, Inc. (http://www.stormtech.com) creates personal scanners that
enable consumers to input, organize, store and use digital images easily with
their computers. With the number one market share in the photo scanner and
sheetfed categories, Storm is a leading product innovator offering consumers the
latest technology with the highest quality at the most affordable prices.
Storm's personal scanners and software are licensed for inclusion with personal
computers, digital cameras, scanners or color printers from leading technology
providers including Adobe, Hewlett-Packard, Kodak, Nikon and Sharp. Storm's
current scanner line, which includes EasyPhoto Reader, EasyPhoto SmartPage Pro,
EasyPhoto ImageWave and EasyPhoto Drive, is carried at major computer retailers
in the U.S., Canada and Europe. Founded in 1990, Storm is based in Mountain
View, California.
Note: Storm Technology, EasyPhoto, EasyPhoto Reader, EasyPhoto SmartPage Pro,
EasyPhoto ImageWave and EasyPhoto Drive are trademarks of Storm Technology,
Inc., which may be registered in certain jurisdictions. All other trade names,
products and services are trademarks or registered trademarks of their
respective holders.
(3 of 5)
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STORM TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------ ---------------
1997 1996 1997 1996
------- ------- ------- -------
REVENUES:
Product $ 12,889 $ 7,954 $ 33,587 $ 23,440
Royalty and other 114 348 615 1,097
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Total revenues 13,003 8,302 34,202 24,537
Cost of product revenues* 14,668 5,617 35,712 17,119
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GROSS PROFIT (LOSS) (1,665) 2,685 (1,510) 7,418
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Operating expenses:
Research and development 1,311 911 4,922 2,901
Marketing and selling 2,444 2,430 8,756 7,837
General and administrative 1,215 870 5,002 2,333
In-process research and
development 9,160 - 9,160 5,000
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Total operating expenses 14,130 4,211 27,840 18,071
-------- -------- -------- --------
Loss from operations (15,795) (1,526) (29,350) (10,653)
Interest income (expense), net 64 226 329 229
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NET LOSS $(15,731) $(1,300) $(29,021) $(10,424)
======== ======== ======== ========
Net loss per common and common
equivalent share $ (1.45) $ (0.12) $ (2.75) $ (1.20)
======== ======== ======== ========
Weighted average number of
common and common equivalent
shares 10,848 10,424 10,538 8,711
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* Cost of product revenues include inventory write-downs of $2.4 million
associated with Storm's acquisition of Log with total inventory write-downs of
$3.5 million for FY97 overall.
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STORM TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(Unaudited)
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December 31, December 31,
1997 1996
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ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 5,310 $ 13,801
Accounts receivable, net 10,204 7,768
Inventories 3,795 4,750
Other current assets 355 247
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Total current assets $ 19,664 $ 26,566
Property and equipment, net 1,523 692
Goodwill 1,655 448
Other assets 40 103
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Total assets $ 22,882 $ 27,809
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 3,903 $ 2,567
Accrued liabilities 3,935 1,444
Trade payables to related parties* 11,831 3,768
Line of credit 1,000 --
Current portion of long-term obligations 151 --
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Total current liabilities 20,820 7,779
Convertible note payable to related party 4,000 --
Long-term obligations 401 --
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Total liabilities 25,221 7,779
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Stockholders' equity (deficit):
Convertible preferred stock 1 --
Common stock 13 10
Additional paid-in capital 45,662 39,117
Deferred compensation (80) (183)
Accumulated deficit (47,935) (18,914)
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Total stockholders' equity (deficit) (2,339) 20,030
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Total liabilities and stockholders' equity (deficit) $ 22,882 $ 27,809
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* This represents accounts payable for product inventory to Primax and Logitech
who are both greater than 10%
