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Iomega to Lay off 100 in Roy

Iomega to Lay off 100 in Roy

Posted - Sep. 26, 2004 at 9:33 p.m.



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ROY, Utah (AP) -- Iomega Corp. will lay off 100 employees at its Roy plant as part of a restructuring plan that company officials hope will return the foundering technology firm to profitability.

The San Diego-based data storage maker announced last week that it would lay off 145 employees-- 25 percent of its work force and take a charge of up to $7 million as it winds down its DCT technology development program.

The effect of the restructuring was not known at the time of the announcement, but Iomega spokesman Chris Romoser has said since then that 100 jobs will be cut at Roy, leaving about 230 workers at the plant.

Romoser did not say what types of jobs would be affected. He said some positions will be cut immediately, and others will be phased out through the end of the year, depending on the job type.

The company said the steps should help save approximately $30 million to $35 million per year when implementation is complete by the end of the first quarter. However, closing down the DCT unit will likely cause an asset impairment charge of between $4 million and $6 million in the third quarter. Most of these charges are expected to be booked as non-cash, the company said last week.

"We have taken some very difficult but necessary actions to adjust the company's operating and cost structure to our expected revenue levels," said president and chief executive Werner Heid in a statement.

The asset impairment charge is connected to equipment that will not be used and likely not acquired by another party, Iomega said. The restructuring charges are anticipated to be recorded in the second half of 2004, with the majority being taken in the third quarter. Substantially all of the restructuring charges are expected to be booked as cash, with about $3 million linked to cutting roughly 145 jobs.

The restructuring charges are also expected to include approximately $2 million to $4 million associated with unutilized real property leases and related assets.

Iomega was founded in Utah and at one time had more than 600 jobs in Weber County.

The company moved its headquarters to San Diego three years ago.

It cut 125 workers in Roy in August 2003.

Iomega's sales have declined sharply due to the declining popularity of its flagship Zip drive. Zip sales have plunged from $204 million in the first quarter of 2001 to $32.3 million in the second quarter of 2004.

(Copyright 2004 by The Associated Press. All Rights Reserved.)

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