IOMEGA CORPORATION
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Condensed consolidated balance sheets at
April 2, 1995 and December 31, 1994 . . . . . . 2
Condensed consolidated statements of operations
for the three months ended April 2, 1995
and April 3, 1994 . . . . . . . . . . . . . . . 4
Condensed consolidated statements of cash flows
for the three months ended April 2, 1995
and April 3, 1994 . . . . . . . . . . . . . . . 5
Notes to condensed consolidated financial statements . 6
Management's discussion and analysis of financial
condition and results of operations . . . . . . 10
PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . 13
SIGNATURES . . . . . . . . . . . . . . . . . . . . . 14
EXHIBIT INDEX. . . . . . . . . . . . . . . . . . . . 15
<PAGE>
IOMEGA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
April 2, December 31,
1995 1994
--------- ------------
(unaudited)
(In thousands)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 11,663 $16,861
Temporary investments 4,032 2,932
Trade receivables (net) 22,377 18,892
Inventories 20,114 17,318
Income taxes receivable 1,706 1,682
Deferred income taxes (net) 463 477
Other current assets 3,711 2,395
-------- ----------
Total current assets 64,066 60,557
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost 62,034 59,193
Less - accum. depreciation and amort. (44,710) (43,917)
-------- -----------
Net equipment and leasehold improvements 17,324 15,276
DEFERRED INCOME TAXES (NET) 381 -
-------- -----------
$ 81,771 $75,833
======== ===========
</TABLE>
The accompanying notes to condensed consolidated
financial statements are an integral part of these balance sheets.
<PAGE>
IOMEGA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
April 2, December 31,
1995 1994
-------- -----------
(unaudited)
(In thousands)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 12,972 $ 7,228
Other accrued liabilities 19,334 18,511
--------- --------
Total current liabilities 32,306 25,739
SERIES A CONVERTIBLE PREFERRED STOCK,
Authorized 1,200,000 shares,
outstanding 258,713 and 258,816
shares at April 2, 1995 and
December 31, 1994, respectively
(Mandatory Redemption Price $5.00
per share) 1,045 1,031
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value;
authorized 3,300,000 shares,
none issued - -
Series C junior participating
preferred stock, authorized 250,000
shares, none issued - -
Common stock, $.03333 par value;
authorized 30,000,000 shares,
18,808,601 and 18,519,749 shares
outstanding at April 2, 1995 and
December 31, 1994, respectively 627 617
Additional paid-in capital 48,808 48,258
Note receivable from shareholder (283) (597)
Retained earnings (deficit) (732) 785
--------- ---------
Total shareholders' equity 48,420 49,063
-------- ---------
$ 81,771 $ 75,833
======== ========
</TABLE>
The accompanying notes to condensed consolidated
financial statements are an integral part of these balance sheets.
<PAGE>
IOMEGA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
April 2, April 3,
1995 1994
---------- ---------
(In thousands except)
per share data)
<S> <C> <C>
SALES $ 40,112 $34,506
COST OF SALES 28,395 23,906
--------- ---------
Gross Margin 11,717 10,600
OPERATING EXPENSES:
Selling, general and administrative 9,349 9,726
Research and development 4,126 3,694
--------- ---------
Total operating expenses 13,475 13,420
--------- ---------
OPERATING LOSS (1,758) (2,820)
Foreign currency loss (1,044) 351
Interest and other income and expense 1,024 (222)
--------- ---------
LOSS BEFORE INCOME TAXES (1,778) (2,691)
Benefit (provision) for income taxes 280 (2,700)
--------- ----------
NET LOSS $ (1,498) $(5,391)
========== ==========
NET LOSS PER COMMON SHARE $ (0.08) $ (0.29)
========== =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
(1994 includes effects of 5-for-4
stock split (see Note 2)) 18,767 18,484
========== ==========
</TABLE>
The accompanying notes to condensed consolidated
financial statements are an integral part of these statements.
<PAGE>
IOMEGA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
April 2, April 3,
1995 1994
--------- ---------
(In thousands)
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (1,498) $ (5,391)
Non-cash Revenue and Expense Adjustments:
Depreciation and amortization expense 1,843 1,604
Deferred income tax (benefit) provision (367) 2,700
Other 432 58
Changes in Assets and Liabilities:
Trade receivables (net) (3,485) 3,837
Inventories (2,796) 1,357
Income taxes receivable (24) 182
Other current assets (1,316) (184)
Accounts payable 5,744 (2,285)
Accrued liabilities 804 (53)
--------- ---------
Net cash provided from (used in)
operating activities (663) 1,825
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold
improvements (4,302) (1,151)
Purchase of temporary investments (2,090) -
Sale of temporary investments 990 -
Net increase in other assets - (45)
Proceeds from sale of research and development
assets - 2,000
--------- ---------
Net cash provided from (used in)
investing activities (5,402) 804
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of Common Stock 217 38
Tax benefit from early dispositions of
employee stock 53 -
Proceeds from note receivable from shareholder 597 -
-------- --------
Net cash provided from financing activities 867 38
-------- ---------
NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS (5,198) 2,667
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,861 18,804
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 11,663 $ 21,471
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Net payable associated with revaluation of
forward exchange contracts $ (1,182) $ (156)
========== ==========
Sale of common stock for a note $ 283 $ -
========== ==========
</TABLE>
The accompanying notes to condensed consolidated
financial statements are an integral part of these statements.
<PAGE>
IOMEGA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) SIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the accompanying condensed consolidated
financial statements reflect all adjustments (consisting only of normal
recurring adjustments) which are necessary to present fairly the financial
position of Iomega Corporation and subsidiaries (the "Company") as of
April 2, 1995 and December 31, 1994, the results of operations for the
three-month periods ended April 2, 1995 and April 3, 1994, and cash flows
for the three-month periods ended April 2, 1995 and April 3, 1994.
The results of operations for the three-month period ended April 2, 1995
are not necessarily indicative of the results for the entire year.
These unaudited condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes
included in or incorporated into Iomega Corporation's latest Annual Report
on Form 10-K.
Principles of Consolidation -- The condensed consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries after elimination of all material intercompany accounts and
transactions.
Revenue Recognition -- Revenue is recognized when units are shipped to
customers. However, revenue recognition is deferred on shipments to
distributors whose inventory is in excess of normal distributor inventory
requirements. The Company's general policy is not to accept returns of
product except for those products under warranty or for which the customer
has a right of return agreement. The deferral of sales in excess of
normal distributor inventory requirements associated with right of return
agreements totaled $1,296,000 and $1,947,000 at April 2, 1995 and December
31, 1994, respectively, and is recorded in deferred revenue as a component
of other accrued liabilities.
Foreign Currency Translation -- For purposes of consolidating foreign
operations, the Company has determined the functional currency for its
foreign operations is the U.S. dollar. Therefore, translation gains and
losses are included in the determination of income as a component of
interest and other income and expense.
Cash Equivalents and Temporary Investments -- The Company considers all
highly liquid debt instruments purchased with maturities of three or fewer
months to be cash equivalents. Instruments with maturities in excess of
three months are classified as temporary investments. At April 2, 1995
and December 31, 1994, all temporary investments had maturities less than
six months. Accordingly, the Company classifies all cash equivalents and
temporary investments as held to maturity. Cash equivalents and temporary
investments consist primarily of commercial paper, banker's acceptances,
investments in money market mutual funds and certificates of deposit and
are recorded at cost which approximates market value.
The Company's policy is to invest in high quality commercial paper of
reputable companies rated at A2P2 or above. The diversification of risk
is consistent with Company policy to maintain liquidity and ensure the
safety of principal.
Inventories -- Inventories include direct materials, direct labor and
manufacturing overhead costs and are recorded at the lower of cost (first-
in, first-out) or market and consist of the following:
<TABLE>
April 2, December 31,
1995 1994
--------- -----------
(In thousands)
<S> <C> <C>
Raw materials $ 10,370 $ 7,524
Work-in-process 4,943 4,839
Finished goods 4,801 4,955
--------- -----------
$ 20,114 $ 17,318
========= ===========
</TABLE>
Reclassifications -- Certain reclassifications were made to the 1994
condensed consolidated financial statements to conform with the 1995
presentation.
Net Income (Loss) Per Common Share -- Net income (loss) per common share
is based on the weighted average number of shares of common stock and
dilutive common stock equivalent shares outstanding during the respective
periods. Common stock equivalent shares consist primarily of stock
options and convertible preferred stock that have a dilutive effect when
applying the treasury stock method. In periods where losses are recorded,
common stock equivalents would decrease the loss per share and are
therefore not added to weighted average shares outstanding. The
outstanding shares and earnings per share have been restated for all
periods presented to reflect the impact of the Stock Split described in
Note 2.
(2) STOCK SPLIT
On October 27, 1994 the Company's Board of Directors declared a 5-for-4
stock split which was effected in the form of a 25% common stock dividend
and paid on November 23, 1994 to stockholders of record at the close of
business on November 9, 1994 ("Stock Split"). The Company paid cash in
lieu of issuing fractional shares.
The transaction has been accounted for as a stock split. Of the shares of
Common Stock distributed by the Company in connection with the Stock
Split, approximately 3,017,000 were treasury shares and the remainder were
authorized but unissued shares. The cost of the treasury shares and
authorized but unissued shares was recorded as a reduction in paid-in
capital. All earnings per share and outstanding shares have been
retroactively restated in the 1994 financial statements.
(3) INCOME TAXES
The components of and the changes in the net deferred tax assets and
liabilities for the three month period ended April 2, 1995 are as follows
(in thousands):
<TABLE>
Deferred
December 31, (Expense) April 2,
1994 Benefit 1995
------------ ---------- --------
<S> <C> <C> <C>
Deferred tax assets:
Bad debt reserves $ 482 $ (120) $ 362
Inventory reserves 940 (500) 440
Fixed asset reserves 36 (9) 27
Accrued expense reserves 4,596 520 5,116
Unrealized foreign currency - 306 306
Inventory unicap adjustment 160 (59) 101
Foreign net operating loss
carryover 1,493 (177) 1,316
Research credit carryover 5,365 (597) 4,768
Intercompany profit in inventory 95 (27) 68
Other (216) 112 (104)
---------- ---------- -------
Total deferred tax assets 12,951 (551) 12,400
Valuation allowance (12,333) 777 (11,556)
----------- ---------- --------
Deferred tax asset net of
valuation allowance 618 226 844
Deferred tax liabilities:
Accelerated depreciation (141) 141 -
----------- ---------- --------
Net deferred tax asset $ 477 $ 367 $ 844
=========== ========== ========
</TABLE>
Cash paid for income taxes was $23,000 for the first three months of 1995
and $21,000 for the corresponding period in 1994.
(4) OTHER MATTERS
Significant Customers -- During the fiscal quarter ended April 2, 1995,
no single customer accounted for 10% or more of consolidated sales.
During the fiscal quarter ended April 3, 1994, sales to Ingram Micro D,
Inc. accounted for 12% of the Company's sales. No other single customer
accounted for more than 10% of the Company's sales for these periods.
Notes Receivable from Related Parties -- In September 1993, the Company
loaned an executive officer approximately $679,000 on a full recourse
basis as part of the officer's severance package; a portion of the loan
was used by the executive to exercise stock options. This amount of the
loan is included in note receivable from shareholder in the accompanying
consolidated financial statements. The loan was paid in full with accrued
interest during the first quarter of 1995.
In January 1995, the Company loaned another executive officer
approximately $283,000 as part of the officer's severance package. A
portion of the loan was used by the executive to exercise stock options.
The amount of the loan is included in note receivable from shareholder in
the accompanying consolidated financial statements. The Company received
a note from the officer which bears interest at an annual rate of 7.75%
and is payable in full on or before January 1996. The note is with full
recourse and is collateralized by the stock purchased.
(5) FINANCIAL INSTRUMENTS
Cash and Temporary Investments -- The carrying amount approximates fair
value because of the short maturity of those instruments.
Series A Convertible Preferred Stock -- To the best of the Company's
knowledge, there is no active market for the preferred stock. The stock
has a mandatory redemption price of $5.00 per share due in 1997. The
Company accrues the liability for the redemption utilizing an interest
rate method based on the remaining number of shares outstanding and number
of years until redemption. As a result, the Company believes that the
carrying value is the best estimate of market.
Forward Exchange Contracts -- The Company's foreign subsidiaries sell
products in several foreign currencies. In order to hedge its estimated
cash flow (revenues less expenses) which is remitted to the parent
company, the Company has entered into forward exchange contracts to sell
foreign currencies. The contracts mature at February 1996.
The outstanding forward exchange sales contracts at April 2, 1995 are as
follows:
Deutsche Marks 14,720,000 DM
Great Britain Pound 2,620,000 GBP
French Franc 27,200,000 FRF
Spanish Pesta 361,500,000 ESB
Italian Lira 4,000,000,000 ITL
The forward contracts are marked to market by obtaining forward rates from
financial institutions. Gains and losses on foreign currency contracts
intended to be used to hedge operating requirements are reported currently
in income. The Company's risk in these transactions includes the cost of
replacing, at current market rates, these contracts in the event of
default by the counterparty.
<PAGE>
IOMEGA CORPORATION
MANAGEMENT'S DISCUSSION AND AN ALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On October 27, 1994, the Company's Board of Directors declared a 5-for-4 stock
split effected in the form of a 25% common stock dividend paid on November 23,
1994 to stockholders of record at the close of business on November 9, 1994 (the
"Stock Split"). The following discussion gives retroactive effect to the Stock
Split for all periods presented.
As was forecasted, the Company recorded an operating loss in the first quarter
of 1995 due primarily to manufacturing start-up costs associated with the Zip
drive and increased spending to launch and develop new Ditto tape products.
The Company recorded a net loss of $1.5 million, or $0.08 per share,
for the first quarter of 1995 compared to a net loss of $5.4 million, or
$0.29 per share, for the first quarter of 1994. Included in the 1994 first
quarter results was a $2.7 million tax provision related to a reduction in
net deferred tax assets.
RESULTS OF OPERATIONS
Sales for the three-month period ended April 2, 1995 increased by $5.6 million,
or 16%, when compared to the corresponding period of 1994. The increase was
primarily a result of higher Ditto tape product revenues both domestically and
internationally. To a much lesser extent, sales revenues benefitted from the
introduction of the new Zip product line which began shipping at the end of the
first quarter. These increases were partially offset by the anticipated decline
in Bernoulli sales revenue. International sales, primarily to European
customers, accounted for 42.6% of sales for the first quarter of 1995 compared
to 32.8% for the corresponding period in 1994. For the remainder of the year,
management expects increases in sales of Ditto and Zip products, as well as
planned new products, compared to the first quarter of 1995 and expects sales of
Bernoulli products to decline throughout the year compared to the prior year
and first quarter. Although the Company has received positive initial
reaction to its Zip product line from the marketplace, the Company is
unable to predict future sales levels. Initial orders for Zip products have
been encouraging and the Company is monitoring sell through of Zip drives to
determine future plant capacity needs. There can be no assurance that
future sales will materialize as expected.
The Company's gross margin percentage for the first quarter of 1995 was 29.2%
compared to 30.7% for the same period in 1994. The lower margins were a result
of manufacturing start-up costs associated with Zip products, as well as a
higher mix of lower margin Ditto products and the anticipated decline in
Bernoulli sales. Management expects gross margin percentage of its Zip
product line to improve as volumes increase and manufacturing processes are
improved. Management expects Ditto and Zip sales as a percentage of total
sales to increase during the remainder of 1995, which would result in lower
overall margins in the remainder of 1995 when compared to the first quarter.
Management also expects significant additional manufacturing start-up costs
in the second quarter of 1995 in conjunction with the Zip products and other
new products planned for 1995.
Selling, general and administrative expenses represented 23.3% of sales for the
three-month period ended April 2, 1995, compared to 28.2% for the corresponding
period in 1994. These expenses decreased by 3.9% in the first quarter compared
to the corresponding period of 1994. The decreased expenses were due to
restructuring actions implemented during 1993 and 1994. These reductions offset
increased spending in advertising to launch the Zip products. Management
expects expenditures in sales and marketing to increase in future quarters as
advertising expenses are incurred to enhance the awareness of current
products and to launch future products. It is currently anticipated that
increased spending associated with product introductions will continue
throughout the year. General and administrative expenses are expected to
increase slightly during the remainder of the year as compared to the first
quarter of 1995.
Research and development expenses represented 10.3% of sales for the first
quarter of 1995, compared to 10.7% in the corresponding period of 1994.
Research and development expenses increased by 11.7% in the first quarter of
1995 compared to the same period of 1994. These increases were primarily a
result of expenditures related to the development of the Zip and Ditto
products. Management expects research and development expenditures in
absolute dollars to increase as the result of adding technical resources for
future product development.
During the first quarter of 1995, the Company recorded a net foreign currency
loss of $1.0 million as a result of the U.S. dollar weakening against European
currencies. The foreign currency loss was offset by interest income, royalties
and other income.
With regards to the foreign currency loss, since the dollar was at a postwar low
against the deutsche mark, the Company bought more than its customary three
months of forward exchange contracts with the intent of hedging the Company's
cash position in Europe through the end of the year. However, the dollar
continued to decline resulting in a $1.5 million negative impact on earnings
relating to these contracts. This was partially offset by a translation gain on
the European working capital of $.5 million, which resulted in a net foreign
currency loss of $1.0 million in the first quarter. It is difficult to predict
the future of exchange rate movements or whether the volatility in the foreign
exchange markets experienced in the first quarter will continue throughout
1995. The impact on operations of a volatile foreign exchange market will
diminish as cash from Europe is used to pay down the foreign exchange
contracts entered into by the Company during the remainder of 1995.
In the first quarter of 1994, the Company recorded a $2.7 million tax provision
relating to an increase in valuation allowance against deferred tax assets due
to uncertainties and changing business conditions.
LIQUIDITY AND CAPITAL RESOURCES
At April 2, 1995, the Company had cash and temporary investments of $15.7
million, working capital of $31.8 million, and a ratio of current assets to
current liabilities of 2.0 to 1. When compared to December 31, 1994, cash and
temporary investments decreased by $4.1 million. This decrease was primarily a
result of capital expenditures to support new products.
Accounts receivable increased by $3.5 million at April 2, 1995 compared to
December 31, 1994 primarily as a result of higher sales at the end of the first
quarter versus the end of the fourth quarter of 1994. Inventories increased by
$2.8 million at April 2, 1995 compared to December 31, 1994 due to the inventory
buildup for the introduction of new products. The increases in receivables and
inventories were offset by increases in payables and other accrued liabilities
of $6.6 million.
The Company expects to use significant amounts of cash over the next several
months to purchase tooling and manufacturing equipment for Zip and other new
products and advertising and promotional expenses to launch the new products and
increase awareness of existing products. The Company is currently negotiating
with lending institutions to arrange additional funding which will be required
beyond that generated by operations to satisfy the Company's cash needs for
continuing its growth and expansion of product lines. The Company may also
consider other funding sources. However, the timing of fund requirements will
depend on the success of the new Zip product line and other products under
development, as well as on the actual levels of expenditures incurred by the
Company for capital equipment and working capital required to support new
products.
<PAGE>
PART II - OTHER INFORMATION
IOMEGA CORPORATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. The exhibits listed on the Exhibit Index filed as
a part of this Quarterly Report on Form 10-Q are incorporated
herein by reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the quarter for which this report is filed.
<PAGE>
SIGNATURE
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 thereunto duly authorized.
IOMEGA CORPORATION
(Registrant)
/s/ Kim B. Edwards
Dated: May 15, 1995 Kim B. Edwards
President and Chief Executive
Officer
/s/ Leonard C. Purkis
Dated: May 15, 1995 Leonard C. Purkis
Senior Vice President, Finance,
Chief Financial Officer and
Treasurer
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report on Form 10-Q:
Exhibit No. Description
- ------------ ---------------------
10.31 Iomega Incentive Plan.
10.32 Consulting Agreement with John Myers
Exhibit 10.31
IOMEGA INCENTIVE PLAN
PURPOSE:
The 1995 Iomega Incentive Plan is intended to provide financial incentive to
select personnel to attain key program goals that will allow Iomega to
achieve rapid profitable growth starting in the second half of 1995. The
plan is very highly leveraged and focused on seizing the opportunities and
attaining the upsides.
EFFECTIVE DATE
The plan is effective as of January 1, 1995.
PROGRAMS & METRICS
Zip: bonuses are dependent upon the number of units shipped during 1995
and the gross margin percentage actually reported in financial statements
for 1995;
Tape: bonuses are dependent upon the number of units shipped during year
1995 and the gross margin percentage actually reported in financial
statements for year;
Viper: bonuses are based upon the number of units shipped in 1995 and
the gross margin percentage actually reported in financial statements for
the year;
Europe: bonuses are based upon operating profit in dollars as a percent
of European revenue for 1995 and sales revenues for 1995.
Bernoulli: bonuses are based on gross profit for 1995 based on 1995
standard costs and number of units shipped in 1995;
Corporate sales and profit: bonuses are based on sales revenue and
pretax profit for 1995. The pretax profit number will exclude items such
as windfalls or the incurrence of legal expenses in excess of budget.
PLAN CONDITIONS
Plan is subject to change and/or cancellation without notice at any time.
Management may add and delete participants, change participant's level of
participation, and/or change participant's program responsibility, as
management deems appropriate.
No implied obligation exists for future continuation of Plan or continued
participation of any individual.
Participants must be employed by Iomega for the full term of the program
to receive full incentive. Less than full term participation will result
in less than full incentive and the amount will be determined by Iomega.
Exhibit 10.32
CONSULTING SERVICES AGREEMENT
THIS AGREEMENT, made this 8 day of February 1995 , by and between
IOMEGA CORPORATION ("IOMEGA"), and John R. Myers ("CONSULTANT").
1. INDEPENDENT CONSULTING SERVICES
IOMEGA hereby retains CONSULTANT and CONSULTANT hereby agrees to
perform consulting services on a "work-made-for-hire" basis as described in
Exhibit A, which is attached hereto and by this reference made a part hereof.
2. SCHEDULES/DELIVERABLES
Such work-made-for-hire shall be performed and deliverables shall be
completed by CONSULTANT under the schedule set forth in Exhibit A. Time is
of the essence in the performance of this Agreement by CONSULTANT.
3. CONSIDERATION
Consideration for the work-made-for-hire to be performed by CONSULTANT
shall be paid by IOMEGA to CONSULTANT at the times and in the amounts set
forth in Exhibit A.
4. TERM/TERMINATION
This Agreement shall commence on the date hereof and shall remain in
effect until the work is completed pursuant to the schedule set forth in
Exhibit A unless terminated earlier under the provisions of this Section 4.
IOMEGA may terminate this Agreement at any time, with or without cause, upon
prior written notice thereof to CONSULTANT and upon payment for the work
performed to said termination date pursuant to the consideration set forth in
Exhibit A. Either party may terminate for material breach of this Agreement
by the other party upon thirty (30) days prior written notice to the other
party if such breach is not cured within such thirty (30) day period.
5. RELATIONSHIP
CONSULTANT acknowledges that CONSULTANT is solely an independent
contractor hereunder. Accordingly, the relationship of the parties hereto is
not that of an employer-employee and CONSULTANT is not to be considered an
employee of IOMEGA entitled to any IOMEGA employment rights or benefits.
CONSULTANT shall provide CONSULTANT's own invoices for payment on
CONSULTANT's own letterhead unless otherwise set forth in Exhibit A.
6. DEFINITIONS
(a) "PROPRIETARY INFORMATION" means IOMEGA's INVENTIONS,
INTELLECTUAL PROPERTY, and any and all confidential, proprietary or secret
information, including without limitation, information relating to IOMEGA's
INVENTIONS, INTELLECTUAL PROPERTY, products, research, technology, developments,
services, clients, customers, suppliers, employees, business, operations or
activities, and also that of any third party disclosed to IOMEGA.
(b) "INVENTIONS" means any and all inventions, technology, products,
devices, equipment, processes, methods, ideas, improvements, configurations,
discoveries, computer programs, works of authorship, information and data.
(c) "INTELLECTUAL PROPERTY" means any and all United States and foreign
patents, trade secrets, know-how, copyrights, trademarks and service marks
and any and all rights, applications and registrations relating to them.
7. PROPRIETARY INFORMATION
(a) CONSULTANT recognizes that CONSULTANT's relationship with IOMEGA
is one of high trust and confidence by reason of access to any contact with the
PROPRIETARY INFORMATION of IOMEGA during the performance of this Agreement
and agrees to protect such PROPRIETARY INFORMATION of IOMEGA and its clients,
customers, suppliers, and other third parties. CONSULTANT will not, during
the term of this Agreement or at any time thereafter, disclose to others, or
use for CONSULTANT's own benefit or for the benefit of another, any PROPRIETARY
INFORMATION.
(b) CONSULTANT's obligations of confidentiality under this Section 7
will not apply, however, to any PROPRIETARY INFORMATION which:
(i) is described in a patent anywhere in the world, is disclosed
in a printed publication available to the public, or is otherwise in the
public domain through no action or fault of CONSULTANT;
(ii) is generally disclosed to third parties by IOMEGA without
restriction on such third parties, or is approved for release by written
authorization of IOMEGA;
(iii) is not designated in writing by IOMEGA within ten (10) days from
disclosure to CONSULTANT to be of a secret, confidential or proprietary nature;
or
(iv) is shown to IOMEGA by CONSULTANT, within ten (10) days from
disclosure, by underlying documentation to have been known by CONSULTANT before
receipt from IOMEGA and/or to have been developed by CONSULTANT completely
independent of any disclosure by IOMEGA.
(c) Title to all property received by CONSULTANT from IOMEGA, including
all PROPRIETARY INFORMATION, shall remain at all times the sole property of
IOMEGA, and this Agreement shall not be construed to grant to CONSULTANT any
patents, licenses or similar rights to such property and PROPRIETARY
INFORMATION disclosed to CONSULTANT hereunder.
(d) Upon termination of this Agreement or at any other time upon request,
CONSULTANT shall promptly return to IOMEGA all documents, notes, memoranda,
computer storage media, notebooks, drawings, records, reports, files, software
and other tangible materials and property, including all PROPRIETARY INFORMATION
and all manifestations thereof, delivered to or prepared by CONSULTANT or others
under this Agreement, and all copies and reproductions thereof.
(e) CONSULTANT will not use or disclose, in the course of CONSULTANT's
performance under this Agreement, any PROPRIETARY INFORMATION of any previous
employer, client, or third party, nor will CONSULTANT incorporate into any
product or INVENTION of IOMEGA any third party's products, PROPRIETARY
INFORMATION, INVENTIONS or INTELLECTUAL PROPERTY.
8. INVENTIONS AND INTELLECTUAL PROPERTY
(a) Any and all INVENTIONS, (whether or not patentable and whether or
not they are made, conceived or reduced to practice using IOMEGA's data or
facilities) which CONSULTANT shall conceive, develop, reduce to practice or
create (either solely or jointly with others) during the term of this Agreement
and for a period of six (6) months thereafter, and which are related to the
work performed under this Agreement or to the present or planned business of
IOMEGA, shall be considered works-made-for-hire and shall be the sole
property of IOMEGA. CONSULTANT agrees to and hereby assigns to IOMEGA, without
further compensation, any such INVENTIONS and INTELLECTUAL PROPERTY.
(b) CONSULTANT will promptly disclose to IOMEGA all such INVENTIONS
and will assist IOMEGA in obtaining and enforcing, for its own benefit, patents
and any other INTELLECTUAL PROPERTY relating thereto in any country. Upon
request, CONSULTANT will execute all applications, assignments, instruments
and papers and perform all acts necessary or desired by IOMEGA to assign all
such INVENTIONS and INTELLECTUAL PROPERTY relating thereto fully and completely
to IOMEGA and to enable IOMEGA, (including its successors, assigns and nominees)
to secure and enjoy the full benefits and advantages thereof.
9. MISCELLANEOUS
(1) CONSULTANT's obligations under Section 7 and 8 hereof shall survive
and continue after the termination of this Agreement and CONSULTANT's services
to IOMEGA. CONSULTANT will perform such obligations without further
consideration, except for reimbursement of expenses incurred at the request
of IOMEGA. If CONSULTANT is not employed by IOMEGA as a consultant or otherwise
at the time CONSULTANT is requested to perform any obligations under this
Agreement, CONSULTANT shall receive for such performance a reasonable per diem
fee as well as reimbursement of any expenses incurred at the request of IOMEGA.
The absence of a request by IOMEGA for information or for the making of an
oath, or for the execution of any document, shall in no way be construed to
constitute a waiver of IOMEGA's rights under this Agreement.
(b) CONSULTANT recognizes that any breach by CONSULTANT of
CONSULTANT's obligations under this Agreement will result in irreparable
injury to IOMEGA for which damages and other legal remedies will be inadequate.
In seeking enforcement of any of these obligations, IOMEGA will be entitled
(in addition to other remedies) to preliminary and permanent injunctive and
other equitable relief to prevent, discontinue and/or restrain the breach of
this Agreement.
(c) This Agreement shall not require the assignment of any INVENTIONS or
other act in contravention of any applicable law but shall be enforceable to
the extent permitted by such applicable law. If any provision of this
Agreement is invalid or unenforceable, then such provision shall be construed
and limited to the extent necessary, or severed if necessary, in order to
eliminate such invalidity or unenforceability, and the other provisions of this
Agreement shall not be affected thereby.
(d) No delay or omission by either party in exercising any right under
this Agreement will operate as a waiver of that or any other right. A waiver
or consent given by either party on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.
(e) The headings contained in this Agreement are for the convenience of
reference only and shall not be used in any way to interpret this Agreement or
any performance required hereunder.
(f) If either party employs attorneys to enforce any rights arising out
of this Agreement, the prevailing party shall be entitled to recover its
reasonable attorneys' fees, costs and other expenses.
(g) All notices shall be deemed given on the day they are (i) deposited in
the U.S. mails, postage prepaid, certified or registered, return receipt
requested, or (ii) sent by overnight courier, charges prepaid, with a
confirming facsimile, to the addresses shown below the signature line of this
Agreement.
(h) This Agreement is governed by and will be construed in accordance
with the laws of the State of Utah, and the Courts of Utah shall be the
exclusive forum.
(i) This Agreement will be binding upon CONSULTANT's heirs, executors and
administrators and will inure to the benefit of IOMEGA and its successors and
assigns.
(j) This Agreement supersedes all prior agreements, written or oral,
between CONSULTANT and IOMEGA relating to the subject matter of this Agreement.
This Agreement may not be modified, changed or discharged in whole or in part,
except by an agreement in writing signed by CONSULTANT and IOMEGA.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
CONSULTANT:
By: /s/ John R. Myers
Signature
John R. Myers
Name Printed Title
ADDRESS FOR NOTICE: Attn:
IOMEGA:
IOMEGA CORPORATION
By: /s/ Kim B. Edwards
Signature
Kim B. Edwards Pres. & CEO
Name Printed Title
ADDRESS FOR NOTICE: Attn:
Exhibit 10.32
Attachment A
Consulting Agreement
Proposal for consultation to Iomega Corporation. Personal services of John
Myers.
SCOPE
Provide assistance and consultation to the CEO, Kim Edwards, of Iomega as
directed by Kim Edwards.
Initial Focus:
* Internal operations
* Partnering strategies
* Offshore manufacturing
* Procurement
Report to the CEO the findings, recommendations, and actions in each area. Work
with and through the CEO to complete the assessments and initiate appropriate
actions.
TERMS
Daily rate: $1250 per day plus out of pocket expenses.
Scope: 1 day every 3-4 weeks. Actual consulting services rendered will be
under the full discretion of Kim Edwards. This agreement expires 12-31-95.
/s/ Kim B. Edwards /s/ John Myers
Kim Edwards, President & CEO John Myers
Iomega Corporation 109 Bayshore Road,
Unit 1
Nokomis, FL 34275
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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