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Imation to Showcase Leading Data Protection Solutions at VMworld 2015

Lock & Key and Secure Data Discovery help protect high-value data from tampering, destruction, loss or leakage

OAKDALE, Minn.--(BUSINESS WIRE)--Aug. 26, 2015-- Imation (NYSE:IMN), a global data storage and information security company, today announced that it will lead the conversation around protecting high-value data at next week’s VMworld® conference in San Francisco. As information and mobility become increasingly critical, so do the methods for storing and protecting that information in virtual environments. Imation will demonstrate how it has developed a family of solutions and its recently announced Secure Data Movement Architecture (SDMA™) to help organizations best identify, store and protect their high-value data while reducing complexity and costs.

Be sure to visit Imation’s booth and attend the company’s events throughout the week:

  • Booth – #2323; Imation solutions will be available for demonstration and discussion
  • Breakfast Event – Join Imation and industry analyst George Crump of Storage Switzerland for a free breakfast and engaging storage discussion on Tuesday, Sept. 1 from 7 to 8:30 a.m. at Sears Fine Foods near Union Square. For more details and to register, click here; space is limited.
  • vBrisket VMworld Party – Join us at SouthPaw BBQ at 7 p.m. on Monday, Aug. 31 to gather with other VMware fanatics. Listen to guest speakers and enjoy some great smoked BBQ. For more details and to register, click here; space is limited.

Because of a growing range of internal and external threats, it’s never been more critical for organizations – especially those with virtualized IT infrastructures – to ensure their high-value data is safe and secure. Imation launched two new solutions earlier this year to help with this:

  • Lock & Key, a new feature of the Imation’s Nexsan Assureon™ secure archive solution, enables organizations to enhance their security strategies by requiring a second factor of authentication for storage administrators to gain access to storage systems. By using their access credentials and an encrypted, tamper-resistant, industry-leading IronKey™ secure storage device, administrators will be able to access a secure management user interface for one or more of Imation’s Nexsan Assureon storage systems no matter where they are.
  • Imation Secure Data Discovery is interactive software that helps IT administrators assess the value of their file data based on the ages and types of files they have. Secure Data Discovery analyzes how many of an organization’s files are considered high-value data, how much disk space those files use and how much primary storage capacity can be saved by offloading less frequently accessed high-value data to secure archive solution for long term protection.

Lock & Key and Secure Data Discovery are components of Imation’s SDMA, which helps IT administrators actively manage their high-value data files and protect them from tampering, destruction, loss or leakage through their entire lifecycle. SDMA empowers end users to manage their own policy for protecting their high-value data in addition to enabling organizational control and management policies. It also addresses the need to safeguard data files throughout the data lifecycle.

Imation also proudly offers the deep Nexsan portfolio of purpose-built storage solutions, which enable users to deploy the right storage products for the right application. The Nexsan product lines are:

  • Imation’s Nexsan Assureon™ is a set of secure storage solutions that reduce storage cost by offloading and deduplicating data from primary storage that is infrequently used or has aged by policy.
  • Imation’s Nexsan E-Series™ is a family of high-density, high-performance and highly reliable storage solutions that can be directly attached or networked to workstations and servers.
  • Imation’s Nexsan NST™ is a set of flexible hybrid storage appliances that scale to meet mid-sized organization application and storage needs with unified NAS and SAN access capabilities in a single solution.

VMworld, hosted by VMware, offers thousands of attendees training, sessions and access to a wealth of technology partners on topics such as virtualization best practices, building a private cloud, leveraging the public cloud, managing desktops as a service, virtualizing enterprise applications and more. For more information, visit www.vmworld.com.

For more information on Imation’s Nexsan storage solutions, visit www.imation.com/nexsan.

About Imation
Imation (NYSE: IMN) is a global data storage and information security company. Our products and solutions help organizations and individuals store, manage and protect their digital content. Imation’s storage and security portfolio includes Nexsan high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey™ mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.

Follow @Nexsan on Twitter.

Imation, the Imation logo, Nexsan, the Nexsan by Imation logo, IronKey, NST, E-Series, Assureon and Memorex are trademarks of Imation Corp. TDK Life on Record is a trademark of TDK Corporation and is used under license. All other trademarks are property of their respective owners.

Source: Imation

For Imation Corp.
Jason Sprenger, 612-327-1886
jsprenger@gamechangercommunications.com

Live Webinar: Straight Talk on Storage

Candid, plain-spoken webinars on today's most pressing data storage challenges.

Imation Strengthens Distribution in U.S. and Canada Through New Partnership with Arrow Electronics

Imation’s partnership with Arrow Electronics to add simplicity to organizations’ search for the best IT solutions

OAKDALE, Minn.--(BUSINESS WIRE)--Aug. 25, 2015-- Imation (NYSE:IMN), a global data storage and information security company, today announced that it has entered into a partnership with Arrow Electronics, a global distributor of electronic components and enterprise computing solutions. Under the agreement, Arrow will distribute Imation’s Nexsan™ product portfolio throughout the United States and Canada, extending Imation’s coverage and reach in line with the company’s growth objectives.

“Arrow Electronics is a leading provider of best-in-class enterprise IT computing solutions across all platforms combined with exemplary customer service. They are well suited to represent Imation’s tiered storage and security solutions," said Barbara Spicek, vice president of global sales at Imation. “With Arrow’s help, we’re excited to maximize the reach of our Nexsan solutions and bring their unique benefits to more end users.”

Imation’s Nexsan product portfolio delivers the right storage products for the right application:

  • Imation’s Nexsan Assureon™ is a set of secure storage solutions that reduce storage cost by offloading and deduplicating data from primary storage that is infrequently used or has aged by policy.
  • Imation’s Nexsan NST™ is a set of flexible hybrid storage appliances that scale to meet mid-sized organization application and storage needs with unified NAS and SAN access capabilities in a single solution.
  • Imation’s Nexsan E-Series™ is a family of high-density, high-performance and highly reliable storage solutions that can be directly attached or networked to workstations and servers.

For more information on Imation’s Nexsan storage solutions, visit www.imation.com/nexsan.

About Imation

Imation (NYSE: IMN) is a global data storage and information security company. Our products and solutions help organizations and individuals store, manage and protect their digital content. Imation’s storage and security portfolio includes Nexsan high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey™ mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.

Follow @Nexsan on Twitter.

Imation, the Imation logo, Nexsan, the Nexsan by Imation logo, IronKey, NST, E-Series, Assureon and Memorex are trademarks of Imation Corp. TDK Life on Record is a trademark of TDK Corporation and is used under license. All other trademarks are property of their respective owners.

Source: Imation

For Imation Corp.
Jason Sprenger, 612-327-1886
jsprenger@gamechangercommunications.com

IBC 2015

10-15 September, RAI Amsterdam, The Netherlands

Imation Announces Changes to Executive Leadership Team and Board of Directors

OAKDALE, Minn.--(BUSINESS WIRE)--Aug. 19, 2015-- Imation Corp. (NYSE:IMN) (the “Company”) today announced the following changes to its executive leadership team and Board of Directors (the “Board”), effective immediately:

  • Independent director Barry L. Kasoff has been appointed by the Board as interim President; and
  • Independent director Joseph A. De Perio has been elected non-executive Chairman of the Board.

These changes follow the departures of former President and CEO, Mark E. Lucas, former Chairman, William LaPerch, and former independent Director, Tony Brausen. Lucas will remain with the Company in a consulting role until the end of the year. The Board, together with Lucas, will continue to work with a leading executive search firm to identify a highly qualified candidate to serve as Imation’s permanent CEO.

“On behalf of the Board and all our shareholders, I want to express our deep gratitude to Mark, Bill and Tony for their dedication and significant contributions to Imation over the years,” said De Perio. “Together with Barry as interim President, we look forward to continuing to take the necessary steps to position the Company for long-term profitable growth, and we wish Mark, Bill and Tony all the best in their future endeavors.”

De Perio continued, “The Board is working with management and our advisers to drive our transformation, and we continue to explore all potential strategic alternatives designed to maximize shareholder value. We look forward to sharing our progress with shareholders in the near term. In addition, the Nominating and Governance Committee is working to evaluate candidates to fill the vacancies on the Board.”

Kasoff currently serves as the President of Realization Services, Inc., a full-service management consulting firm specializing in assisting companies and capital stakeholders in troubled business environments, and has served in such capacity since founding it in 1997. From 1990 until 1997, Kasoff was the general manager of Takarajimasha, a Japanese communications conglomerate. There, he identified and evaluated its investments and supervised the company’s U.S. and European-based operations. Prior to that, Kasoff was the CFO and Vice President of Operations of Selzer Group, a New York investment banking and leveraged buyout group serving public and private companies.

About Imation

Imation (NYSE:IMN) is a global data storage and data security company. Our products and solutions help organizations and individuals store, manage and protect their digital content. Imation’s Storage and Security portfolio includes Nexsan™ high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey™ mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.

Source: Imation Corp.

Imation Corp.
Scott Robinson, 651-704-4311
srobinson@imation.com

ASIS International

September 28 - October 1, 2015, Anaheim, California

Imation to Sell RDX™ Storage Business

Decision results from Imation’s ongoing Strategic Review Process

OAKDALE, Minn.--(BUSINESS WIRE)--Aug. 13, 2015-- Imation Corp. (NYSE:IMN) (the “Company”) today announced an agreement to sell its RDX™ Storage product line, including associated inventory, to Sphere 3D (NASDAQ:ANY) for approximately $6 million. Under terms of the agreement, Imation will receive approximately 1.5 million shares of Sphere 3D common stock, which are subject to registration by Sphere 3D.

“We’re pleased to sell RDX to a company that knows the space and is committed to the business,” said Imation’s Chief Executive Officer Mark Lucas. “Given that Imation licensed the RDX technology from Sphere 3D, RDX’s small- and medium-sized business customers and suppliers should enjoy a seamless transition without any disruption to normal business activities. For Imation, the proposed sale dovetails well with our recent efforts to grow our Storage and Security Solutions offerings while strengthening our balance sheet through the monetization of certain non-core assets.”

RDX Storage, which is part of the Imation’s Commercial Storage Media business, is a technology solution that provides disk backup for data management.

About Imation
Imation (NYSE: IMN) is a global data storage and information security company. Our products and solutions help organizations and individuals store, manage and protect their digital content. Imation’s storage and security portfolio includes Nexsan high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey™ mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.

Source: Imation Corp.

Imation Corp.
Scott Robinson, 651-704-4311
srobinson@imation.com

VeeamON 2015

October 26-29, 2015: Las Vegas, NV

Imation Adopts Shareholder Rights Plan to Protect Net Operating Loss Carryforwards

Will Submit the Plan for Shareholder Approval at the 2016 Annual Meeting of Shareholders

OAKDALE, Minn.--(BUSINESS WIRE)--Aug. 10, 2015-- Imation Corp. (NYSE:IMN) today announced that its Board of Directors has adopted a shareholder rights plan (the “Rights Plan”) designed to preserve the value of its significant net operating loss carryforwards (“NOLs”) and other related tax assets under Section 382 of the Internal Revenue Code (the “Code”). Imation intends to seek shareholder approval of the Rights Plan at its 2016 Annual Meeting of Shareholders.

The Company’s ability to utilize these tax assets would be substantially limited upon an “ownership change” as defined in Section 382 of the Code. In general, an “ownership change” would occur if the Company’s “5% shareholders” (as defined in Section 382 of the Code) increase their ownership in Imation common stock by more than 50 percentage points during a rolling three-year period. The Rights Plan was adopted to reduce the likelihood of an “ownership change” occurring by deterring the acquisition of Company stock by persons or groups that would create such “5% shareholders.”

As part of the Rights Plan, the Board declared a dividend of one right for each outstanding share of its Common Stock to stockholders of record at the close of business on September 10, 2015. Initially, the Rights will not be exercisable and will be attached to all Common Stock and no separate Rights certificates will be distributed. If any person or group (subject to customary exceptions specified in the Rights Plan) acquires beneficial ownership of 4.9% or more of the outstanding shares of the Company’s common stock without the Board’s approval, significant dilution in the economic interest and voting power of such person or group would occur. Existing shareholders who currently beneficially own 4.9% or more of the outstanding shares of common stock will cause this dilutive event to occur only if they acquire beneficial ownership of additional common stock of the Company in an amount in excess of 0.5% of the outstanding shares of common stock. In its discretion, the Board may exempt certain transactions from the provisions of the Rights Plan, including if it determines that the transaction will not jeopardize the deferred tax assets or the transaction will otherwise serve the Company’s best interests. The Rights Plan may be terminated by the Board of Directors at any time prior to the rights becoming exercisable.

The rights expire on August 7, 2018 unless terminated earlier under the terms of the Rights Plan, including if shareholder approval of the Rights Plan is not received by August 7, 2016.

The issuance of the rights is not a taxable event and will not affect the Company’s reported financial condition or results of operations.

The Company will file additional information about the terms and conditions of the Rights Plan with the Securities and Exchange Commission.

About Imation Corp.

Imation (NYSE: IMN) is a global data storage and data security company. Our products and solutions help organizations and individuals store, manage and protect their digital content. Imation’s Storage and Security portfolio includes Nexsan high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.

Source: Imation Corp.

Imation Corp.
Scott Robinson, 651-704-4311
srobinson@imation.com

Imation Reports Second Quarter 2015 Financial Results

OAKDALE, Minn.--(BUSINESS WIRE)--Aug. 10, 2015-- Imation Corp. (NYSE: IMN) today released financial results for the second quarter ended June 30, 2015 that were in line with the Company’s expectations.

Q2 Overview

For the second quarter of 2015, Imation reported net revenue of $150.6 million, gross margin of 19.3 percent, an operating loss from continuing operations of $15.9 million, including special charges of $1.5 million, diluted loss per share from continuing operations of $0.42 and a cash balance of $89.8 million. Foreign currency exchange rates negatively impacted total Q2 2015 revenues by 8.1 percent, or $14.5 million, compared to Q2 2014. Gross margin in the TSS business segment increased by 2.1 percent to 21.0 percent from Q2 2014. The increase is due to a favorable product mix in both the Storage Solution and Mobile Security offerings.

Imation’s Chief Executive Officer Mark Lucas commented, “Our efforts to transform Imation into a global leader in data storage and security continue to progress. We remain intensely focused on taking the necessary steps to position the enterprise for sustainable growth and have retained a restructuring advisor to optimize our cost structure and assist with performance improvement.”

“We continue to invest in our Tiered Storage and Security Solutions segment, which serves as the foundation for the Company’s profitable growth over the long-term. We are maintaining a focus on higher growth markets where we can bring our enterprise quality solutions to our small-to medium-sized business customers within key vertical markets. Of note, sales for our Nexsan™ business grew double digits, excluding currency impact, for the second consecutive quarter. We also continue to see good momentum in customer trials of our IronKey™ products.”

“We remain committed to investing in innovation. During the quarter, we introduced a set of new features for our Nexsan E-Series™ family in order to offer world-class storage solutions that meet the large capacity demands resulting from the exponential growth in data. We continue to enhance our recently launched Secure Data Movement Architecture (SDMA™), our holistic approach to actively managing high-value data files and safeguarding those files from tampering, loss or corruption through their entire lifecycle. During the quarter, we also introduced Imation Secure Data Discovery – an interactive software tool that helps organizations identify their high-value data and determine the most efficient way to store and protect that data.”

Lucas concluded, “We continue to aggressively manage our costs, which is reflected in our reduced cash utilization in the quarter compared to Q1 2015, and to maximize cash flow in our legacy businesses, where we have maintained market share despite the continued secular declines. We are working closely with our Board and our advisers to drive our transformation, and we continue to explore all potential strategic alternatives designed to maximize shareholder value.”

Detailed Q2 2015 Analysis

The following financial results are for continuing operations for the current and prior periods unless otherwise indicated. See Tables Five and Six for a description of non-GAAP financial measures.

Net revenue for Q2 2015 was $150.6 million, down 15.7 percent from Q2 2014. From a segment perspective, TSS declined 11.0 percent and CSA declined 19.8 percent. Within the TSS segment, Storage and Security Solutions declined year-over-year by 1.7 percent, and Commercial Storage Media declined 16.1 percent. The decline in Storage and Security Solutions was primarily due to negative foreign currency impacts. Commercial Storage Media declined due to lower revenue from magnetic tape products. CSA revenue decreased due to the ongoing decline in sales of optical media products, which was in line with industry trends, along with negative foreign currency impacts. Foreign currency exchange rates negatively impacted total Q2 2015 revenues by 8.1 percent compared to Q2 2014.

Gross margin for Q2 2015 was 19.3 percent, 0.3 percentage points better than Q2 2014. CSA gross margin was 17.6 percent, down from 19.0 percent in Q2 2014, primarily driven by product mix. TSS gross margin for Q2 2015 was 21.0 percent, up from 18.9 percent in Q2 2014, driven by higher margins in the Storage and Security Solutions business which reflects the Company’s focus on increasing gross margins as part of its strategic transformation.

Selling, general and administrative expenses in Q2 2015 were $38.6 million, down $5.7 million compared with Q2 2014 expenses of $44.3 million, due to lower spending and currency impacts. Since January 2013, Imation has reduced legacy operating costs by over $109 million.

Research and development (R&D) expenses in Q2 2015 were $4.8 million versus $4.5 million in Q2 2014. The Company continued to invest in new product development in its priority businesses and has aggressively reduced R&D expenses associated with legacy media products.

Special charges were $1.5 million in Q2 2015 compared to special charges of $5.2 million in Q2 2014. Special charges in Q2 2015 were primarily related to costs associated with our strategic review and contested proxy process.

Operating loss from continuing operations was $15.9 million in Q2 2015 compared with an operating loss of $20.1 million in Q2 2014. Excluding the impact of special charges described above, adjusted operating loss would have been $14.4 million in Q2 2015 compared with adjusted operating loss on the same basis of $14.9 million in Q2 2014 (see Tables Five and Six for non-GAAP measures).

Income tax expense was $0.2 million in Q2 2015 compared with an income tax benefit of $1.6 million in Q2 2014. The benefit in Q2 2014 was primarily due to the mix of taxable income by country. The Company maintains a valuation allowance related to its U.S. deferred tax assets and, therefore, no tax expense or benefit was recorded related to its U.S. results in either period.

Loss per diluted share from continuing operations was $0.42 in Q2 2015 compared with a loss per diluted share of $0.48 in Q2 2014. Excluding the impact of special items, adjusted loss per diluted share would have been $0.39 in Q2 2015 compared with a loss per diluted share of $0.35 in Q2 2014 (see Tables Five and Six for non-GAAP measures).

Cash and cash equivalents balance was $89.8 million as of June 30, 2015, down $6.4 million during the quarter, in line with expectations. During the quarter, Imation received $1.2 million from the sale of its Weatherford, Oklahoma facility. The anticipated decline in cash balance reflects the ongoing investment in Storage and Security Solutions growth initiatives and seasonal working capital changes and payments, as well as currency impacts.

Year-To-Date Summary

For the six months ended June 30, 2015, Imation reported net revenue of $306.0 million, down 14.4 percent compared with the same period last year. Operating loss from continuing operations totaled $28.9 million for the six months ended June 30, 2015, including special charges of $2.7 million, and a diluted loss per share from continuing operations of $0.77. For the six months ended June 30, 2014, Imation reported net revenue of $357.5 million, an operating loss from continuing operations of $36.2 million, including special charges of $7.3 million, and a diluted loss per share from continuing operations of $0.89 (See Tables Five and Six for non-GAAP measures).

Webcast and Replay Information

A teleconference is scheduled for 9:00 AM Central Time on August 11, 2015 and will be available on the Internet on a listen-only basis at www.ir.Imation.com or www.streetevents.com. The Company's quarterly financial results will be discussed.

A taped replay of the teleconference will be available beginning at 12:30 PM Central Time on August 11, 2015, until 11:59 PM Central Time on August 18, 2015, by dialing 855-859-2056 or 404-537-3406 (conference ID 85844765). All remarks made during the teleconference will be current at the time of the teleconference, and the replay will not be updated to reflect any subsequent developments.

Description of Tables

Table One - Consolidated Statements of Operations
Table Two - Consolidated Balance Sheets
Table Three - Supplemental Segment and Product Information
Table Four - Additional Information
Table Five - Non-GAAP Financial Measures
Table Six - Non-GAAP Financial Measures

Non-GAAP Financial Measures

The non-GAAP financial measurements (adjusted gross margin, adjusted operating income (loss), adjusted earnings (loss) per diluted share, EBITDA and adjusted EBITDA) are provided as a supplement and should not be construed as an alternative to any GAAP measure of performance or liquidity (see Tables Five and Six). Management believes this will assist investors in making an evaluation of Imation's performance and will assist in understanding the impact of certain items on Imation’s actual results of operations when compared to prior periods. Management understands that there are material limitations on the use of non-GAAP measures. Non-GAAP measures are not substitutes for GAAP measures for the purpose of analyzing financial performance. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. This information should not be construed as an alternative to the reported results, which have been determined in accordance with accounting principles generally accepted in the United States of America.

About Imation Corp.

Imation (NYSE: IMN) is a global data storage and data security company. Our products and solutions help organizations and individuals store, manage and protect their digital content. Imation’s Storage and Security portfolio includes Nexsan high-density, archive and solid-state optimized unified hybrid storage solutions; IronKey mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorex and TDK Life on Record brands. Imation reaches customers in more than 100 countries through a powerful global distribution network. For more information, visit www.imation.com.

Risk and Uncertainties

Certain information contained in this press release which does not relate to historical financial information may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause our actual results in the future to differ materially from our historical results and those presently anticipated or projected. We wish to caution investors not to place undue reliance on any such forward-looking statements. Any forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update such statements to reflect events or circumstances arising after such date. Risk factors include various factors set forth from time to time in our filings with the Securities and Exchange Commission including the following: Our ability to successfully implement our strategy; our ability to grow our business in new products with profitable margins and the rate of revenue decline for certain existing products; our ability to meet future revenue growth, gross margin and earnings targets; the ability to quickly develop, source, introduce and deliver differentiated and innovative products; our potential dependence on third parties for new product introductions or technologies in order to introduce our own new products; our ability to successfully implement restructuring plans; foreign currency fluctuations; the ready availability and price of energy and key raw materials or critical components including the effects of natural disasters and our ability to pass along raw materials price increases to our customers; continuing uncertainty in global and regional economic conditions; our ability to identify, value, integrate and realize the expected benefits from any acquisition which has occurred or may occur in connection with our strategy; the possibility that our goodwill and intangible assets or any goodwill or intangible assets that we acquire may become impaired; the ability of our security products to withstand cyber-attacks; the loss of a major customer, partner or reseller; changes in European law or practice related to the imposition or collectability of optical levies; the seasonality and volatility of the markets in which we operate; significant changes in discount rates and other assumptions used in the valuation of our pension plans; changes in tax laws, regulations and results of inspections by various tax authorities; our ability to successfully defend our intellectual property rights and the ability or willingness of our suppliers to provide adequate protection against third party intellectual property or product liability claims; the outcome of any pending or future litigation and patent disputes; our ability to access financing to achieve strategic objectives and growth due to changes in the capital and credit markets; limitations in our operations that could arise from compliance with the debt covenants in our credit facilities; our ability to retain key employees; increased compliance with changing laws and regulations potentially affecting our operating results; failure to adequately protect our information systems from cyber-attacks; the effect of the announcement of our review of strategic alternatives; the effect of the transition of our Board of Directors; and the volatility of our stock price due to our results or market trends.

Imation, Nexsan, IronKey, Assureon, NST, LINK, Secure Data Movement Architecture, SDMA and Memorex are trademarks of Imation Corp. TDK Life on Record is used under a trademark license from TDK Corporation. All other trademarks are the property of their respective owners.

 
Table One
 
IMATION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except for per share amounts)
(Unaudited)
    Three Months Ended     Six Months Ended
June 30 June 30
2015     2014 2015     2014
Net revenue $ 150.6 $ 178.6 $ 306.0 $ 357.5
Cost of goods sold   121.6     144.7     243.0     289.9  
Gross profit 29.0 33.9 63.0 67.6
 
Operating expense:
Selling, general and administrative 38.6 44.3 79.6 87.7
Research and development 4.8 4.5 9.6 8.8
Restructuring and other   1.5     5.2     2.7     7.3  
Total 44.9 54.0 91.9 103.8
 
Operating loss from continuing operations (15.9 ) (20.1 ) (28.9 ) (36.2 )
 
Other (income) expense:
Interest income (0.1 ) (0.1 ) (0.2 ) (0.2 )
Interest expense 0.6 0.6 1.2 1.2
Other, net expense   0.8     0.8     1.6     1.0  
Total 1.3 1.3 2.6 2.0
 
Loss from continuing operations before income taxes (17.2 ) (21.4 ) (31.5 ) (38.2 )
 
Income tax provision   0.2     (1.6 )   0.3     (1.6 )
 
Loss from continuing operations (17.4 ) (19.8 ) (31.8 ) (36.6 )
 
Discontinued operations:
Loss on sale of discontinued businesses, net of income taxes - (1.2 ) - (1.7 )
Loss from discontinued businesses, net of income taxes   -   (0.4 )   -   (0.6 )
Loss from discontinued operations   -   (1.6 )   -     (2.3 )
 
Net loss $ (17.4 ) $ (21.4 ) $ (31.8 ) $ (38.9 )
 
Loss per common share - basic:
Continuing operations $ (0.42 ) $ (0.48 ) $ (0.77 ) $ (0.89 )
Discontinued operations - (0.04 ) - (0.06 )
Net loss (0.42 ) (0.52 ) (0.77 ) (0.95 )
 
Loss per common share - diluted:
Continuing operations $ (0.42 ) $ (0.48 ) $ (0.77 ) $ (0.89 )
Discontinued operations - (0.04 ) - (0.06 )
Net loss (0.42 ) (0.52 ) (0.77 ) (0.95 )
 
Weighted average shares outstanding:
Basic 41.1 41.2 41.1 41.0
Diluted 41.1 41.2 41.1 41.0
 
 
Table Two
 
IMATION CORP.
CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
       
June 30, December 31,
2015 2014
ASSETS
Current assets:
Cash and cash equivalents $ 89.8 $ 114.6
Accounts receivable, net 103.1 134.4
Inventories 59.5 57.7
Other current assets   22.8   32.7
 
Total current assets 275.2 339.4
 
Property, plant and equipment, net 42.4 45.0
Intangible assets, net 51.6 57.9
Goodwill 36.1 36.1
Other assets   18.2   20.8
 
Total assets $ 423.5 $ 499.2
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 78.0 $ 95.5
Short-term debt 19.6 18.9
Other current liabilities   79.9   98.2
 
Total current liabilities 177.5 212.6
 
Other liabilities 41.6 45.8
       
Total liabilities   219.1   258.4
Commitments and contingencies        
Shareholders' equity   204.4   240.8
 
Total liabilities and shareholders' equity $ 423.5 $ 499.2
 
 
Table Three
 
IMATION CORP.
SUPPLEMENTAL SEGMENT AND PRODUCT INFORMATION
(Dollars in millions)
(Unaudited)
               
 
Three months ended Three months ended
June 30, June 30,
2015 2014 % Change
Revenue % Total Revenue % Total
Consumer Storage and Accessories
Consumer Storage Media $ 66.6 44.2 % $ 84.5 47.3 % -21.2 %
Audio and Accessories   9.7   6.4 %   10.6   5.9 % -8.5 %
Total Consumer Storage and Accessories   76.3   50.6 %   95.1   53.2 % -19.8 %
Tiered Storage and Security Solutions
Commercial Storage Media 45.3 30.1 % 54.0 30.3 % -16.1 %
Storage and Security Solutions   29.0   19.3 %   29.5   16.5 % -1.7 %
Total Tiered Storage and Security Solutions 74.3   49.4 %   83.5   46.8 % -11.0 %
Total $ 150.6   100.0 % $ 178.6   100.0 %
 

 

Operating

Operating

Income (Loss) OI %

Income (Loss)

OI %
Consumer Storage and Accessories $ 0.7 0.9 % $ 3.2 3.4 % -78.1 %
Tiered Storage and Security Solutions (6.2 ) -8.3 % (8.5 ) -10.2 % -27.1 %
Corp/Unallocated (1)   (10.4 ) NM     (14.8 ) NM   -29.7 %
Total operating loss from continuing operations $ (15.9 ) -10.6 % $ (20.1 ) -11.3 %
 
Gross Margin Gross Margin
 
Consumer Storage and Accessories 17.6 % 19.0 %
Tiered Storage and Security Solutions   21.0     18.9  
Total   19.3   %   19.0   %
 
Six months ended Six months ended
June 30, June 30,
2015 2014 % Change
Revenue % Total Revenue % Total
Consumer Storage and Accessories
Consumer Storage Media $ 132.6 43.3 % $ 174.0 48.7 % -23.8 %
Audio and Accessories   18.9   6.2 %   21.1   5.9 % -10.4 %
Total Consumer Storage and Accessories   151.5   49.5 %   195.1   54.6 % -22.3 %
Tiered Storage and Security Solutions
Commercial Storage Media 93.2 30.5 % 105.4 29.5 % -11.6 %
Storage and Security Solutions   61.3   20.0 %   57.0   15.9 % 7.5 %
Total Tiered Storage and Security Solutions 154.5   50.5 %   162.4   45.4 % -4.9 %
Total $ 306.0   100.0 % $ 357.5   100.0 %
 
 
Operating

Operating

Income (Loss)   OI %

Income (Loss)

  OI %
Consumer Storage and Accessories $ 4.6 3.0 % $ 7.3 3.7 % -37.0 %
Tiered Storage and Security Solutions (12.7 ) -8.2 % (17.3 ) -10.7 % -26.6 %
Corp/Unallocated (1)   (20.8 ) NM     (26.2 ) NM   -20.6 %
Total operating loss from continuing operations $ (28.9 ) -9.4 % $ (36.2 ) -10.1 %
 
Gross Margin Gross Margin
 
Consumer Storage and Accessories 20.6 % 19.2 %
Tiered Storage and Security Solutions   20.6     18.6  
Total   20.6   %   18.9   %
 
NM - Not Meaningful
 
(1) Corporate and unallocated amounts may include depreciation and amortization expense, litigation settlement expense, goodwill impairment, intangible impairments, corporate expense, inventory write-offs related to our restructuring programs and restructuring and other expenses which are not allocated to the segments. We believe the presentation of these items in Corporate and Unallocated avoids distorting the operating income for our segments.
 
 
Table Four
 
IMATION CORP.
ADDITIONAL INFORMATION
(Dollars in millions)
(Unaudited)
  Three Months Ended     Six Months Ended
June 30 June 30
Cash and Cash Flow Information 2015     2014 2015     2014
 
Cash and cash equivalents - end of period $ 89.8 $ 114.7 $ 89.8 $ 114.7
Capital spending $ 1.0 $ 1.3 $ 1.8 $ 2.3
Depreciation $ 2.1 $ 2.2 $ 4.2 $ 4.5
Amortization $ 3.1 $ 3.2 $ 6.4 $ 6.4
 
 
Asset Utilization Information *
June 30 December 31
2015 2014
 
Days Sales Outstanding (DSO) 58 55
Days of Inventory Supply 46 44
Debt to Total Capital 8.8 % 7.3 %
 
 
Other Information
 
Approximate employee count as of June 30, 2015: 885
Approximate employee count as of December 31, 2014: 910
Book value per share as of June 30, 2015: $ 4.96
Shares used to calculate book value per share (millions): 41.2
Imation repurchased approximately 225,000 shares of its stock during the second quarter of 2015 for $1.0 million.
 
*   These operational measures, which we regularly use, are provided to assist in the investor's further understanding of our operations.
 

Days Sales Outstanding is calculated using the count-back method, which calculates the number of days of most recent revenue that are reflected in the net accounts receivable balance.

 

Days of Inventory Supply is calculated using the current period inventory balance divided by an estimate of the inventoriable portion of cost of goods sold expressed in days.

 

Debt to Total Capital is calculated by dividing total debt (long term plus short term) by total shareholders' equity and total debt.

 
 
Table Five
 
IMATION CORP.
Non-GAAP Financial Measures
(In millions, except for per share amounts)
(Unaudited)
                       
Three Months Ended Three Months Ended
June 30, 2015 June 30, 2014
GAAP Adj * Non-GAAP GAAP Adj * Non-GAAP
Net revenue $ 150.6 $ - $ 150.6 $ 178.6 $ - $ 178.6
Cost of goods sold   121.6     -   121.6     144.7     -   144.7  
Adjusted gross profit $ 29.0   $ - $ 29.0   $ 33.9   $ - $ 33.9  
 
Adjusted gross margin 19.3 % 19.3 % 19.0 % 19.0 %
 
Adjusted operating loss from continuing operations $ (15.9 ) $ 1.5 $ (14.4 ) $ (20.1 ) $ 5.2 $ (14.9 )
 
Adjusted income tax provision $ 0.2 $ - $ 0.2 $ (1.6 ) $ - $ (1.6 )
 
Adjusted loss from continuing operations $ (17.4 ) $ 1.5 $ (15.9 ) $ (19.8 ) $ 5.2 $ (14.6 )
 
Adjusted loss per common share from continuing
operations - diluted $ (0.42 ) $ (0.39 ) $ (0.48 ) $ (0.35 )
 
Adjusted weighted average shares outstanding - diluted 41.1 41.1 41.2 41.2
 
Six Months Ended Six Months Ended
June 30, 2015 June 30, 2014
GAAP Adj * Non-GAAP GAAP Adj * Non-GAAP
Net revenue $ 306.0 $ - $ 306.0 $ 357.5 $ - $ 357.5
Cost of goods sold   243.0     -   243.0     289.9     -   289.9  
Adjusted gross profit $ 63.0   $ - $ 63.0   $ 67.6   $ - $ 67.6  
 
Adjusted gross margin 20.6 % 20.6 % 18.9 % 18.9 %
 
Adjusted operating loss from continuing operations $ (28.9 ) $ 2.7 $ (26.2 ) $ (36.2 ) $ 7.3 $ (28.9 )
 
Adjusted income tax (benefit) provision $ 0.3 $ - $ 0.3 $ (1.6 ) $ - $ (1.6 )
 
Adjusted loss from continuing operations $ (31.8 ) $ 2.7 $ (29.1 ) $ (36.6 ) $ 7.3 $ (29.3 )
 
Adjusted loss per common share from continuing
operations - diluted $ (0.77 ) $ (0.71 ) $ (0.89 ) $ (0.71 )
 
Adjusted weighted average shares outstanding - diluted 41.1 41.1 41.0 41.0
 

* See Table Six

 
 

Table Six

 

IMATION CORP.

Non-GAAP Financial Measures
(In millions, except for per share amounts)
(Unaudited)
 
Operating income (loss) / Adjusted operating income (loss)
               
Three Months Ended Six Months Ended
June 30 June 30
2015 2014 2015 2014
Operating loss $ (15.9 ) $ (20.1 ) $ (28.9 ) $ (36.2 )
Restructuring and other:
Restructuring 0.5 3.2 1.3 3.8
Other   1.0     2.0     1.4     3.5  
Total adjustments   1.5     5.2     2.7     7.3  
Adjusted operating income (loss) - Non-GAAP $ (14.4 ) $ (14.9 ) $ (26.2 ) $ (28.9 )
 
Effect on diluted EPS:
Loss from operations $ (0.42 ) $ (0.48 ) $ (0.77 ) $ (0.89 )
Restructuring and other:
Restructuring 0.01 0.08 0.03 0.09
Other   0.02     0.05     0.03     0.09  
Adjusted diluted EPS - Non-GAAP $ (0.39 ) $ (0.35 ) $ (0.71 ) $ (0.71 )
 
 
EBITDA:
Operating loss from continuing operations $ (15.9 ) $ (20.1 ) $ (28.9 ) $ (36.2 )
Depreciation 2.1 2.2 4.2 4.5
Amortization   3.1     3.2     6.4     6.4  
EBITDA $ (10.7 ) $ (14.7 ) $ (18.3 ) $ (25.3 )
Restructuring and other   1.5     5.2     2.7     7.3  
Total adjustments   1.5     5.2     2.7     7.3  
Adjusted EBITDA $ (9.2 ) $ (9.5 ) $ (15.6 ) $ (18.0 )
 
EBITDA is defined as operating income (loss) less depreciation and amortization. Adjusted EBITDA is defined as EBITDA before restructuring and other and inventory write-downs related to restructuring programs included in cost of goods sold.
 

The Non-GAAP financial measurements (adjusted operating income (loss), adjusted income (loss), adjusted diluted EPS, EBITDA and adjusted EBITDA) are provided to assist in understanding the impact of certain items on Imation's actual results of operations when compared with prior periods. Management believes this will assist investors in making an evaluation of Imation's performance against prior periods on a comparable basis by adjusting for these items. Management understands that there are material limitations on the use of Non-GAAP measures. Non-GAAP measures are not substitutes for GAAP measures for the purpose of analyzing financial performance. These Non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, generally accepted accounting principles and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures are not based on any comprehensive set of accounting rules or principles. This information should not be construed as an alternative to the reported results, which have been determined in accordance with accounting principles generally accepted in the United States of America.

 

Source: Imation Corp.

Imation Corp.
Scott Robinson, 651-704-4311
srobinson@imation.com

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