For more information visit: www.imation.com
Unedited press release follows:
Imation Announces Steps to Accelerate Strategic Transformation
To wind down all non-European operations in Company’s legacy tape media business and Consumer Storage and Accessories segment
Reaches agreement with TDK Corporation to end exclusive long-term license agreement and for TDK’s return of 6.7 million shares
Appoints Interim Group President, Tiered Storage and Security Solutions
Decisions intended to advance transformation into a stable enterprise poised for long-term sustainable growth
OAKDALE, Minn. — Imation Corp. (NYSE:IMN) (the “Company”) today announced a series of actions designed to accelerate its strategic transformation. The Board of Directors (the “Board”) has authorized plans to wind down the non-European operations of the Company’s legacy tape media business and Consumer Storage and Accessories (“CSA”) segment, and to end the long-term license agreement with TDK Corporation (“TDK”). Imation will leverage cash from the wind down to reinvest in its Tiered Storage and Security Solutions (“TSS”) segment.
Barry L. Kasoff, interim President and Member of the Board of Directors, commented, “After careful consideration, we concluded these wind downs are critical in our ongoing effort to create a leaner, more focused Imation. Our TSS segment is the foundation for the Company’s profitable growth over the long term. The Board, together with management, remains intensely focused on building that business and driving efficiencies throughout the organization to enhance performance.”
“The steps we are taking today are important milestones in our efforts to reestablish Imation as a more competitive company that is well-positioned for growth and success,” said Joseph A. De Perio, non-executive Chairman of the Board. “Exiting certain legacy businesses will improve our near-term financial performance and position the Company for profitable growth. The Board and the management team are all focused on creating sustainable long-term value for stockholders.”
The streamlined Imation will focus on the significant market opportunity for secure data-storage solutions, helping organizations worldwide safeguard high-value data while addressing scale, availability and performance requirements. The Company is also capitalizing on the strong demand for comprehensive solutions for securing the mobile workforce. The Company will also evaluate ways to invest its capital to create equity value for shareholders.
As part of its efforts to become a pure-play data-storage and security company, Imation reached a definitive agreement with TDK under which TDK will relinquish substantially all of its investor rights (including its board nomination rights), Imation’s license rights to the TDK Life on Record trademark will terminate, and TDK will transfer to Imation approximately 6.7 million shares of Imation common stock that TDK currently owns. The transaction is expected to close in the fourth quarter of 2015. To facilitate these transitions, the Company plans to execute Transition Service Agreements with customers to provide for an orderly transition and inventory replenishment through the end of 2015.
Imation also announced that current Board member Robert B. Fernander has been appointed Interim Group President, Tiered Storage and Security Solutions and will oversee the operations of the TSS business segment.
Fernander is a seasoned technology professional with an established track record of enhancing technology-based companies. He currently serves as a strategic advisor for I/O Switch Technologies, Inc., a developer of data center technologies, Storage Strategies NOW, an industry analyst firm that offers written publications and analysis for IT users, business and technology leaders and venture capitalists, and FLM.TV, a company focused on delivering, distributing, and marketing independent films. Fernander served as the CEO and a member of the board of directors of Gnodal Limited, a storage and computer networking company, from 2012 until 2013 when it was acquired by Cray Inc.
The Company anticipates pre-tax restructuring and other charges ranging from $140 million to $160 million, including a non-cash charge of $110 million to $120 million, primarily related to the goodwill and intangible write-off. The majority of these restructuring charges will be incurred in fiscal year 2015 and are primarily for severance as well as the write-down of certain intangible assets, goodwill and fixed assets. The wind downs are expected to be completed by first quarter of fiscal 2016. The Company expects that once the wind downs are complete, the streamlined business will operate at break-even on a run-rate basis in 2016.
Imation’s Board and management team continue to work closely with its advisors to explore all potential strategic alternatives designed to maximize shareholder value.
The Company has enclosed a brief slide presentation related to its current initiatives in the Form 8-K filed today with the SEC. The Company also expects to hold a conference call for analysts and investors in the coming months to further discuss the Company’s strategy and initiatives.
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.