According to the statement, Imation reported a first quarter net loss of $2.6 million ($0.07/share), compared to a loss of $11.6 million ($0.31/share) for the same time in 2009. Revenue for the quarter was $365.8 million, down from $396.5 million in Q1 2009.
Shares of Imation were down over 7% at $11.50 by the close of trading Tuesday.
Imation trades on the NASDAQ under the symbol IMN.
For more information visit: www.imation.com
Edited press release follows:
Imation Reports First Quarter 2010 Financial Results
OAKDALE, Minn.–Imation Corp. (NYSE:IMN) today released financial results for the quarter ended March 31, 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 Q1 include the following:
* Revenue of $365.8 million was down 7.7 percent compared with Q1 2009 revenue of $396.5 million, a substantially lower rate of decline from recent quarters.
* Gross margin of 16.9 percent was flat compared with Q1 2009.
* Operating expenses were $57.5 million or 15.7 percent of revenue in Q1 2010, down $12.5 million compared with $70.0 million or 17.7 percent of revenue in Q1 2009.
* Operating income of $0.2 million and diluted loss per share of $0.07 in Q1 2010 compared with operating loss of $8.6 million and diluted loss per share of $0.34 in Q1 2009. Operating income includes restructuring and other charges in Q1 2010 and Q1 2009 of $4.0 million, or $0.07 per diluted share, and $5.5 million, or $0.10 per diluted share, respectively (see table entitled Reconciliation of GAAP to Adjusted Non-GAAP Results below).
* Total cash and cash equivalents were $224.2 million at March 31, 2010 compared with $163.4 million at December 31, 2009, an increase of $60.8 million.
Commenting on the results, Imation Vice Chairman and Chief Executive Officer Frank Russomanno said, “We are pleased with the solid start we have had to the year, continuing the momentum we saw in the second half of 2009.”
“Our cash generation in the quarter was excellent. With our continued focus on working capital management, we added an additional $60.8 million to our cash balance, ending the quarter at $224.2 million in cash.”
“Our emerging storage formats of flash and removable and external hard disk drives had significant revenue growth in the quarter. Also, we saw lower revenue declines in our larger traditional storage areas of magnetic and optical compared to 2009. Our revenue in electronics and accessories declined, reflecting our more selective participation in this category, especially in video products.”
“We continue our Company transformation, developing and launching new products in storage, accessories, and electronics while leveraging our technology leadership, global distribution footprint and portfolio of strong brands – including Imation, Memorex, TDK Life on Record, and XtremeMac.”
“We have weathered what we expect to be the worst of the recession and are emerging with a strong financial foundation in place. We have returned to operating profitability, have dramatically improved our cash flow generation, and remain debt free. I am optimistic as I retire from Imation and our current President and COO Mark Lucas assumes responsibility as the Company’s new CEO next month, that our strong financial foundation provides an excellent platform upon which to build for the future,” concluded Russomanno.
A teleconference is scheduled for 9:00 AM Central Time today, April 27, 2010 (see Webcast and Replay Information at the bottom of this release).
Comparison of GAAP to Non-GAAP Financial Measures
The Non-GAAP financial measurements 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.
Net revenue for Q1 2010 was $365.8 million, down 7.7 percent from Q1 2009, driven by price erosion of approximately ten percent, which is consistent with our historical range, and overall volume declines of approximately one percent, partially offset by favorable currency impacts of approximately three percent. From a product perspective, the overall revenue decrease was driven primarily by declines in optical and magnetic products, partially offset by increases in flash products and removable and external hard drives.
From a segment perspective, revenue in the Americas segment, which represented 37.2 percent of total revenue in the quarter, decreased 10.7 percent from Q1 2009 driven mainly by declines in magnetic and optical products. Revenue from the Asia Pacific segment, which represented 28.1 percent of total revenue in the quarter, decreased 0.2 percent from Q1 2009 driven mainly by declines in magnetic and optical products, partially offset by increases in flash and accessories. Revenue from the Europe segment, which represented 27.7 percent of total revenue in the quarter, decreased 7.5 percent from Q1 2009 driven mainly by declines in optical and magnetic products, partially offset by increases in flash products. Revenue from the Electronic Products segment, which represented 7.0 percent of total revenue in the quarter, decreased 19.0 percent from Q1 2009 driven by planned rationalization of lower gross margin video products.
Gross margin of 16.9 percent of revenue in Q1 2010 remained flat compared to Q1 2009. Gross margins were impacted by lower gross margins on magnetic products, offset by higher margins on optical products.
Operating expenses were $57.5 million or 15.7 percent of revenue in Q1 2010, compared with $70.0 million or 17.7 percent of revenue in Q1 2009. The decrease from Q1 2009 resulted from reduced litigation expense related to the Philips settlement in July 2009 and ongoing restructuring and cost control actions.
Restructuring and other charges were $4.0 million in Q1 2010 compared with $5.5 million in Q1 2009. The restructuring charges in 2009 and 2010 are associated with our previously announced restructuring programs to reduce selling, general and administrative expenses and relate mainly to severance costs. Other charges in 2010 include $2.2 million related to Mr. Russomanno’s retirement announced on March 18, 2010.
Operating income was $0.2 million in Q1 2010 compared with operating loss of $8.6 million in Q1 2009. Adjusting for the impact of restructuring and other charges, operating income was $4.2 million in Q1 2010 compared with an operating loss of $3.1 million in Q1 2009 (see table entitled Reconciliation of GAAP to Adjusted Non-GAAP Results above).
Non-operating expense and income taxes: Non-operating expense was $3.8 million in Q1 2010 compared with $7.6 million in Q1 2009. Q1 2009 included a reserve of $4.0 million related to a note receivable from one of our commercial partners whose financial condition had significantly deteriorated. The effective tax rate was 30.6 percent in Q1 2010 compared with 21.6 percent in Q1 2009. The change was primarily due to the mix of taxable income/loss by country as well as the tax effects associated with our restructuring and other charges.
Diluted loss per share from continuing operations was $0.07 in Q1 2010 compared with $0.34 in Q1 2009. Total diluted loss per share in Q1 2010 was $0.07 compared with $0.31 in Q1 2009. Adjusting for the restructuring and other charges, diluted earnings per share from continuing operations was $0.00 in Q1 2010 compared with diluted loss per share from continuing operations of $0.24 in Q1 2009 (see table entitled Reconciliation of GAAP to Adjusted Non-GAAP Results above).
Cash and cash flows: Ending cash and cash equivalents were $224.2 million as of March 31, 2010, an increase of $60.8 million from $163.4 million as of December 31, 2009, driven by continued improvements in working capital. Days of working capital (receivables plus inventory) were 127 as of March 31, 2010, compared to 135 days as of December 31, 2009. Depreciation and amortization totaled $10.5 million and capital spending was $2.2 million for Q1 2010.
Webcast and Replay Information
A webcast of Imation Corp.’s first 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 April 27, 2010 until 5:00 PM Central Time on May 4, 2010 by dialing 866-837-8032 (access code 1438230). 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 is a leading global developer and marketer of branded offerings that enable people to capture, save and enjoy digital information. Our world-class portfolio of digital storage products, audio and video electronics, and accessories reaches customers through a powerful global distribution network. Our goal is a company with strong commercial and consumer businesses and continued long-term growth and profitability that creates shareholder value. Imation Corp.’s global brand portfolio, in addition to the Imation brand, includes the Memorex brand, one of the most widely recognized names in the consumer electronics industry, famous for the slogan, “Is it live or is it Memorex?” and the XtremeMac brand. Imation is also the exclusive licensee of the TDK Life on Record brand, one of the world’s leading recording media brands. Additional information about Imation is available at www.imation.com