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Edited press release follows:
Imation Reports Third Quarter 2010 Financial Results
OAKDALE, Minn.–(October 26, 2010)–Imation Corp. (NYSE:IMN) today released financial results for the quarter ended September 30, 2010. All financial information included in this press release reflects the continuing operations of the Company’s businesses for all periods presented unless otherwise indicated.
Key points for Q3 2010 include the following:
* Net revenue of $342.3 million was down 14.7 percent compared with Q3 2009 of $401.3 million.
* Gross margin of 16.2 percent was stable compared with Q3 2009 gross margin of 16.1 percent.
* Selling, general and administrative expenses were $49.3 million, down 2.2 percent compared with Q3 2009.
* Loss from continuing operations was $2.3 million or $0.06 per diluted share compared with a loss from continuing operations of $0.3 million or $0.01 per diluted share in Q3 2009.
* Total cash and cash equivalents were $256.8 million, up $93.4 million from December 31, 2009.
Imation Chief Executive Officer Mark Lucas commented, “We made solid progress on several important parts of our transformation including continued strong double digit revenue growth in emerging storage products, and improved gross margins in both our emerging storage and our electronics and accessories categories. In addition, the efforts we have made in streamlining our operations were visible in the improvement in our working capital and operating expense levels.”
“We are committed to returning value to our shareholders and will continue to focus on actions to improve our long-term financial profile,” concluded Lucas.
Q3 2010 Results versus Q3 2009
Net revenue for Q3 2010 was $342.3 million, down 14.7 percent from Q3 2009, driven by price erosion of nine percent and overall volume declines of seven percent partially offset by favorable currency impacts of one percent. From a product perspective, the overall revenue decrease was due primarily to declines of 17 percent in traditional storage products and 28 percent in electronics and accessories in part driven by planned rationalization of our video business, partially offset by an increase of 23 percent in emerging storage products. From a regional perspective, revenues in the Americas and Europe declined 17 and 31 percent, respectively, primarily from lower sales of traditional storage products. Revenues increased by 7 percent in North Asia and were flat in South Asia.
Gross margin for Q3 2010 was 16.2 percent compared with Q3 2009 gross margin of 16.1 percent, evidence of margin stabilization.
Operating expenses for Q3 2010 were $53.6 million, down $1.7 million compared to Q3 2009 of $55.3 million.
Restructuring and other charges were $4.3 million in Q3 2010 compared with $7.5 million in Q3 2009. The charges relate to costs from previously announced restructuring programs.
Operating loss was $2.3 million in Q3 2010 compared with operating income of $1.7 million in Q3 2009. Adjusting for the impact of restructuring and other charges, operating income was $2.0 million in Q3 2010 versus operating income of $9.2 million in Q3 2009 (see Table Two).
Loss per diluted share from continuing operations was $0.06 in Q3 2010 compared with a diluted loss per share from continuing operations of $0.01 in Q3 2009. Adjusting for restructuring and other charges in both periods, earnings per diluted share was $0.02 in Q3 2010 compared with earnings per diluted share of $0.14 in Q3 2009 (see Table Two).
Cash balances: Ending cash and cash equivalents were $256.8 million as of September 30, 2010, an increase of $93.4 million from $163.4 million as of December 31, 2009, driven by continued working capital improvements as well as earnings (see Table Five).
Non-GAAP Financial Measures
The Non-GAAP financial measurements (adjusted operating income (loss) and adjusted earnings (loss) per diluted share) are provided to assist in understanding the impact of certain items on Imation’s actual results of operations when compared with prior periods (see Table Two). 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.
Webcast and Replay Information
A teleconference is scheduled for 9:00 AM Central Time today, October 26, 2010. A webcast of Imation Corp.’s third quarter teleconference will be available on the Internet on a listen-only basis at http://ir.Imation.com or http://www.streetevents.com. A taped replay of the teleconference will be available beginning at 1:00 PM Central Time on October 26, 2010 until 5:00 PM Central Time on November 2, 2010 by dialing 866-837-8032 (access code 1479154). 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.
About Imation Corp.
Imation Corp. (NYSE: IMN) is a leading global technology company dedicated to helping people and organizations store, protect and connect their digital world. Our portfolio of data storage and security products, electronics and accessories reaches customers in more than 100 countries through a powerful global distribution network. Imation Corp.’s global brand portfolio includes the Imation, Memorex, XtremeMac, and TDK Life on Record brands. Additional information about Imation is available at www.imation.com.