Imation Corp. announced financial results for its second quarter ended June 30, 2012.
Imation trades on the NASDAQ under the symbol IMN.
For more information visit: www.imation.com
Unedited press release follows:
Imation Reports Second Quarter 2012 Financial Results
OAKDALE, Minn. — Imation Corp. (NYSE:IMN) today released financial results for the quarter ended June 30, 2012.
The Company reported Q2 2012 net revenue of $270.6 million, down 16.2 percent from Q2 2011, an operating loss of $10.3 million including restructuring and other charges of $4.3 million, and a diluted loss per share of $0.32. Excluding restructuring and other charges, Q2 2012 operating loss would have been $6.0 million and diluted loss per share would have been $0.20 (see Tables Five and Six for non-GAAP measures).
Imation President and Chief Executive Officer Mark Lucas commented: “We continue our focus on Imation’s transformation, executing on our strategy to build a platform for long-term growth and improved operating margins. The quarter’s revenue decline is not a surprise to us and stems from the timing lag between anticipated growth in our newer products offsetting the declines from the mature traditional storage categories. Several macro-economic factors were also in play in the second quarter. These included the broad-based European economic downturn, a soft global IT environment, negative currency impacts, and a weak U.S. retail environment,” Lucas continued.
“We are making steady progress on our strategy in line with the plans we have previously outlined. For example, we again delivered gross margin improvement across all major product categories. Revenue from our new and differentiated products within secure and scalable storage grew 48 percent with strong gross margins. Our XtremeMac brand revenue grew globally, and magnetic tape margins reached their highest levels in over a year. Our cash position remains strong, and inclusive of share repurchase activity, we ended the quarter at $211 million. We remain very committed to our strategy and confident that we are on the path to return Imation to revenue growth as we exit 2012,” Lucas concluded.
Q2 2012 Results compared with Q2 2011
Net revenue for Q2 2012 was $270.6 million, down 16.2 percent from Q2 2011. From a regional perspective, Americas revenue decreased 8.6 percent, Europe revenue decreased 27.8 percent including a negative foreign currency impact of 7.4 percent, North Asia revenue decreased 20.0 percent and South Asia revenue decreased 17.5 percent. Overall, the Company’s international revenues were affected by negative currency impacts, as well as planned lower revenues from lower-margin commodity products in secure and scalable storage.
Gross margin for Q2 2012 was 19.4 percent, up from 16.7 percent for Q2 2011. Gross margin was positively impacted by a continuation of the Company’s strategic shift in product mix to higher gross margin products with improved gross margins in all major product categories.
Selling, general and administrative (SG&A) expenses for Q2 2012 were $52.2 million, up $4.3 million compared with Q2 2011 expenses of $47.9 million due primarily to the additional ongoing SG&A expense related to Imation’s acquired businesses and acquisition-related intangible amortization.
Research and development (R&D) expenses for Q2 2012 were $6.2 million, up $1.2 million compared with Q2 2011 expenses of $5.0 million primarily as a result of the Company’s investment to support growth initiatives.
Restructuring and other charges were $4.3 million in Q2 2012 compared with $10.4 million in Q2 2011.
Operating loss was $10.3 million in Q2 2012 compared with an operating loss of $9.3 million in Q2 2011. Excluding the restructuring and other charges described in Tables Five and Six for non-GAAP measures, adjusted operating loss would have been $6.0 million in Q2 2012 compared with adjusted operating income on the same basis of $1.4 million in Q2 2011.
Income tax benefit was $0.1 million in Q2 2012 compared with income tax provision of $0.7 million in Q2 2011. The 2012 income tax benefit relates to the tax benefit outside the United States. The Company maintains a valuation allowance related to its U.S. deferred tax assets and, therefore, no tax provision or benefit was recorded related to its 2012 U.S. results.
Loss per diluted share was $0.32 in Q2 2012 compared with $0.33 in Q2 2011. Excluding the restructuring and other charges described in Tables Five and Six for non-GAAP measures, adjusted loss per diluted share would have been $0.20 in Q2 2012 compared with adjusted loss per diluted share of $0.05 in Q2 2011 (see Tables Five and Six).
Cash and cash equivalents ending balance was $211.1 million as of June 30, 2012, including $2.4 million for share repurchase.
Webcast and Replay Information
A teleconference is scheduled for 9:00 AM Central Time today, July 26, 2012 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 July 26, 2012 until 11:00 PM Central Time on August 3, 2012 by dialing 855-859-2056 (conference ID 64540003). 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 – Operations, Cash Flow and Additional Information
Table Five – Non-GAAP Financial Measures
Table Six – Non-GAAP Financial Measures
Non-GAAP Financial Measures
The Non-GAAP financial measurements (adjusted operating income (loss), adjusted income (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 Tables Five and Six). 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.
About Imation Corp.
Imation (NYSE: IMN) is a global scalable storage and data security company. The Company’s portfolio includes tiered storage and security offerings for business and products designed to manage audio and video information in the home. Imation reaches customers in more than 100 countries through a powerful global distribution network and well recognized brands. Additional information about Imation is available at www.imation.com.
Risk and Uncertainties
Certain information contained in this press release which does not relate to historical 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 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; the ability of our data security products to withstand cyber-attacks; the ability to quickly develop, source, introduce and deliver differentiating and innovative products; our potential dependence on third parties for new product introductions or technologies in order to introduce our own new products; the ready availability and price of energy and key raw materials or critical components including due to 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 including adverse effects of the ongoing sovereign debt crisis in Europe, increased Euro currency exchange rate volatility, and related austerity measures and their potential impact on European economic growth; 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 or any goodwill that we acquire may become impaired; the seasonality and volatility of the markets in which we operate; foreign currency fluctuations; changes in European law or practice related to the imposition or collectability of optical levies; significant changes in discount rates and other assumptions used in the valuation of our pension plans; the possibility that our intangible assets may become impaired; acquisition related contingent consideration, which is recorded at fair value and revalued each period, differs from the obligation recorded during the previous period resulting in income or expense being recorded on the consolidated statements of operations; 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; failure to adequately protect our information systems from cyber-attacks; our ability to meet our revenue growth, gross margin and earnings targets and the volatility of our stock price due to our results or market trends, as well as various factors set forth from time to time in our filings with the Securities and Exchange Commission.
| 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 | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Net revenue | $ | 270.6 | $ | 323.0 | $ | 552.3 | $ | 639.5 | ||||||||||
| Cost of goods sold | 218.2 | 269.0 | 443.8 | 531.5 | ||||||||||||||
| Gross profit | 52.4 | 54.0 | 108.5 | 108.0 | ||||||||||||||
| Operating expense: | ||||||||||||||||||
| Selling, general and administrative | 52.2 | 47.9 | 109.5 | 98.1 | ||||||||||||||
| Research and development | 6.2 | 5.0 | 12.6 | 9.7 | ||||||||||||||
| Goodwill impairment | – | – | – | 1.6 | ||||||||||||||
| Restructuring and other | 4.3 | 10.4 | 5.6 | 11.3 | ||||||||||||||
| Total | 62.7 | 63.3 | 127.7 | 120.7 | ||||||||||||||
| Operating loss | (10.3 | ) | (9.3 | ) | (19.2 | ) | (12.7 | ) | ||||||||||
| Other expense (income): | ||||||||||||||||||
| Interest income | (0.2 | ) | (0.2 | ) | (0.3 | ) | (0.4 | ) | ||||||||||
| Interest expense | 0.9 | 1.0 | 1.8 | 1.9 | ||||||||||||||
| Other, net | 1.1 | 1.7 | 2.6 | 3.1 | ||||||||||||||
| Total | 1.8 | 2.5 | 4.1 | 4.6 | ||||||||||||||
| Loss before income taxes | (12.1 | ) | (11.8 | ) | (23.3 | ) | (17.3 | ) | ||||||||||
| Income tax (benefit) provision | (0.1 | ) | 0.7 | 0.9 | 2.4 | |||||||||||||
| Net loss | $ | (12.0 | ) | $ | (12.5 | ) | $ | (24.2 | ) | $ | (19.7 | ) | ||||||
| (Loss) earnings per common share | ||||||||||||||||||
| Basic | $ | (0.32 | ) | $ | (0.33 | ) | $ | (0.64 | ) | $ | (0.52 | ) | ||||||
| Diluted | (0.32 | ) | (0.33 | ) | (0.64 | ) | (0.52 | ) | ||||||||||
| Weighted average shares outstanding | ||||||||||||||||||
| Basic | 37.7 | 37.8 | 37.6 | 37.9 | ||||||||||||||
| Diluted | 37.7 | 37.8 | 37.6 | 37.9 | ||||||||||||||
| Table Two | ||||||
| IMATION CORP. | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (In millions) | ||||||
| (Unaudited) | ||||||
| June 30, | December 31, | |||||
| 2012 | 2011 | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 211.1 | $ | 223.1 | ||
| Accounts receivable, net | 190.5 | 234.9 | ||||
| Inventories | 196.8 | 208.8 | ||||
| Other current assets | 48.8 | 49.7 | ||||
| Total current assets | 647.2 | 716.5 | ||||
| Property, plant and equipment, net | 54.9 | 55.4 | ||||
| Intangible assets, net | 307.2 | 321.7 | ||||
| Goodwill | 31.3 | 31.3 | ||||
| Other assets | 29.2 | 24.4 | ||||
| Total assets | $ | 1,069.8 | $ | 1,149.3 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 162.8 | $ | 205.2 | ||
| Other current liabilities | 141.9 | 151.2 | ||||
| Total current liabilities | 304.7 | 356.4 | ||||
| Other liabilities | 63.6 | 69.2 | ||||
| Total liabilities | 368.3 | 425.6 | ||||
| Commitments and contingencies | ||||||
| Shareholders’ equity | 701.5 | 723.7 | ||||
| Total liabilities and shareholders’ equity | $ | 1,069.8 | $ | 1,149.3 | ||
| Table Three | |||||||||||||||||
| IMATION CORP. | |||||||||||||||||
| SUPPLEMENTAL SEGMENT AND PRODUCT INFORMATION | |||||||||||||||||
| (Dollars in millions) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three months ended | Three months ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2012 | 2011 | % Change | |||||||||||||||
| Revenue | % Total | Revenue | % Total | ||||||||||||||
| Americas | $ | 130.5 | 48.2 | % | $ | 142.8 | 44.2 | % | -8.6 | % | |||||||
| Europe | 46.3 | 17.1 | % | 64.1 | 19.9 | % | -27.8 | % | |||||||||
| North Asia | 64.1 | 23.7 | % | 80.1 | 24.8 | % | -20.0 | % | |||||||||
| South Asia | 29.7 | 11.0 | % | 36.0 | 11.1 | % | -17.5 | % | |||||||||
| Total | $ | 270.6 | 100.0 | % | $ | 323.0 | 100.0 | % | |||||||||
| Revenue | % Total | Revenue | % Total | ||||||||||||||
| Traditional storage | |||||||||||||||||
| Optical products | $ | 109.8 | 40.6 | % | $ | 129.3 | 40.0 | % | -15.1 | % | |||||||
| Magnetic products | 69.3 | 25.6 | % | 85.3 | 26.4 | % | -18.8 | % | |||||||||
| Other traditional storage | 3.9 | 1.4 | % | 13.0 | 4.0 | % | -70.0 | % | |||||||||
| Total traditional storage | 183.0 | 67.6 | % | 227.6 | 70.4 | % | -19.6 | % | |||||||||
| Secure and scalable storage | 50.0 | 18.5 | % | 55.4 | 17.2 | % | -9.7 | % | |||||||||
| Audio and video information | 37.6 | 13.9 | % | 40.0 | 12.4 | % | -6.0 | % | |||||||||
| Total | $ | 270.6 | 100.0 | % | $ | 323.0 | 100.0 | % | |||||||||
|
Operating Income |
Operating Income | ||||||||||||||||
| (Loss) |
OI % |
(Loss) |
OI % |
||||||||||||||
| Americas | $ | 3.5 | 2.7 | % | $ | 1.1 | 0.8 | % | 218.2 | % | |||||||
| Europe | (3.2 | ) | -6.9 | % | 2.3 | 3.6 | % | -239.1 | % | ||||||||
| North Asia | 0.4 | 0.6 | % | 6.1 | 7.6 | % | -93.4 | % | |||||||||
| South Asia | 0.4 | 1.3 | % | 0.5 | 1.4 | % | -20.0 | % | |||||||||
| Corp/Unallocated (1) | (11.4 | ) | NM | (19.3 | ) | NM | NM | ||||||||||
| Total | $ | (10.3 | ) | -3.8 | % | $ | (9.3 | ) | -2.9 | % | |||||||
| Gross Margin | Gross Margin | ||||||||||||||||
| Traditional storage | 19.8 | % | 18.0 | % | |||||||||||||
| Secure and scalable storage | 20.0 | 13.5 | |||||||||||||||
| Audio and video information | 16.5 | 14.5 | |||||||||||||||
| 19.4 | 16.8 | ||||||||||||||||
| Inventory write-offs related to restructuring programs | 0.0 | (0.1 | ) | ||||||||||||||
| Total | 19.4 | % | 16.7 | % | |||||||||||||
| Six months ended | Six months ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2012 | 2011 | % Change | |||||||||||||||
| Revenue | % Total | Revenue | % Total | ||||||||||||||
| Americas | $ | 256.3 | 46.4 | % | $ | 285.9 | 44.7 | % | -10.4 | % | |||||||
| Europe | 104.7 | 19.0 | % | 126.4 | 19.8 | % | -17.2 | % | |||||||||
| North Asia | 132.4 | 24.0 | % | 154.3 | 24.1 | % | -14.2 | % | |||||||||
| South Asia | 58.9 | 10.6 | % | 72.9 | 11.4 | % | -19.2 | % | |||||||||
| Total | $ | 552.3 | 100.0 | % | $ | 639.5 | 100.0 | % | |||||||||
| Revenue | % Total | Revenue | % Total | ||||||||||||||
| Traditional storage | |||||||||||||||||
| Optical products | $ | 220.8 | 40.0 | % | $ | 257.0 | 40.2 | % | -14.1 | % | |||||||
| Magnetic products | 146.7 | 26.6 | % | 167.8 | 26.2 | % | -12.6 | % | |||||||||
| Other traditional storage | 8.5 | 1.5 | % | 25.6 | 4.0 | % | -66.8 | % | |||||||||
| Total traditional storage | 376.0 | 68.1 | % | 450.4 | 70.4 | % | -16.5 | % | |||||||||
| Secure and scalable storage | 102.8 | 18.6 | % | 108.1 | 16.9 | % | -4.9 | % | |||||||||
| Audio and video information | 73.5 | 13.3 | % | 81.0 | 12.7 | % | -9.3 | % | |||||||||
| Total | $ | 552.3 | 100.0 | % | $ | 639.5 | 100.0 | % | |||||||||
| Operating Income | Operating Income | ||||||||||||||||
| (Loss) |
OI % |
(Loss) |
OI % |
||||||||||||||
| Americas | $ | 3.5 | 1.4 | % | $ | 3.1 | 1.1 | % | 12.9 | % | |||||||
| Europe | (3.9 | ) | -3.7 | % | 3.2 | 2.5 | % | -221.9 | % | ||||||||
| North Asia | 2.1 | 1.6 | % | 9.4 | 6.1 | % | -77.7 | % | |||||||||
| South Asia | 1.3 | 2.2 | % | 0.9 | 1.2 | % | 44.4 | % | |||||||||
| Corp/Unallocated (1) | (22.2 | ) | NM | (29.3 | ) | NM | NM | ||||||||||
| Total | $ | (19.2 | ) | -3.5 | % | $ | (12.7 | ) | -2.0 | % | |||||||
| Gross Margin | Gross Margin | ||||||||||||||||
| Traditional storage | 20.1 | % | 18.6 | % | |||||||||||||
| Secure and scalable storage | 20.0 | 13.5 | |||||||||||||||
| Audio and video information | 17.0 | 13.8 | |||||||||||||||
| 19.6 | 17.1 | ||||||||||||||||
| Inventory write-offs related to restructuring programs | 0.0 | (0.2 | ) | ||||||||||||||
| Total | 19.6 | % | 16.9 | % | |||||||||||||
| NM – Not Meaningful | |||||||||||||||||
(1) Corporate and unallocated amounts include inventory write-offs
related to restructuring programs, goodwill impairment, intangible
accelerated amortization, research and development expense, corporate
expense, stock-based compensation expense, and restructuring and other
charges that are not allocated to the regional markets we serve. We
believe this avoids distorting the operating income for the regional
segments.
| Table Four | ||||||||||||||||||
| IMATION CORP. | ||||||||||||||||||
| OPERATIONS, CASH FLOW AND ADDITIONAL INFORMATION | ||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||
| (Dollars in millions) | June 30 | June 30 | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| Operations | ||||||||||||||||||
| Gross Profit | $ | 52.4 | $ | 54.0 | $ | 108.5 | $ | 108.0 | ||||||||||
| Gross Margin % | 19.4 | % | 16.7 | % | 19.6 | % | 16.9 | % | ||||||||||
| Operating (Loss) Income | $ | (10.3 | ) | $ | (9.3 | ) | $ | (19.2 | ) | $ | (12.7 | ) | ||||||
| Operating (Loss) Income % | -3.8 | % | -2.9 | % | -3.5 | % | -2.0 | % | ||||||||||
| Cash Flow | ||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | 4.1 | $ | 3.8 | $ | (1.9 | ) | $ | (15.3 | ) | ||||||||
| Net cash (used in) provided by investing activities | $ | (3.6 | ) | $ | (26.4 | ) | $ | (4.9 | ) | $ | (30.0 | ) | ||||||
| Net cash (used in) provided by financing activities | $ | (4.3 | ) | $ | (4.5 | ) | $ | (4.3 | ) | $ | (6.2 | ) | ||||||
| Cash and cash equivalents – end of period | $ | 211.1 | $ | 257.8 | $ | 211.1 | $ | 257.8 | ||||||||||
| Capital Spending | $ | 3.1 | $ | 1.9 | $ | 5.1 | $ | 4.5 | ||||||||||
| Depreciation | $ | 2.1 | $ | 2.8 | $ | 4.2 | $ | 5.7 | ||||||||||
| Amortization | $ | 7.3 | $ | 6.2 | $ | 14.5 | $ | 12.2 | ||||||||||
| NM – Not Meaningful | ||||||||||||||||||
|
Asset Utilization Information * |
||||||||||||||||||
| June 30 | December 31 | |||||||||||||||||
| 2012 | 2011 | |||||||||||||||||
| Days Sales Outstanding (DSO) | 59 | 58 | ||||||||||||||||
| Days of Inventory Supply | 79 | 85 | ||||||||||||||||
| Debt to Total Capital | 0.0 | % | 0.0 | % | ||||||||||||||
|
Other Information |
||||||||||||||||||
| Approximate employee count as of June 30, 2012: | 1,100 | |||||||||||||||||
| Approximate employee count as of December 31, 2011: | 1,130 | |||||||||||||||||
| Book value per share as of June 30, 2012: | $ | 18.61 | ||||||||||||||||
| Shares used to calculate book value per share (millions): | 37.7 | |||||||||||||||||
| Imation repurchased approximately 410,0000 shares of its stock during the quarter for $2.4 million. |
||||||||||||||||||
| Authorization for repurchase of approximately 4.6 million shares remains outstanding based on the latest Board authorization. |
||||||||||||||||||
| * |
These operational measures, which we regularly use, are provided |
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|
Days Sales Outstanding is calculated using the count-back method, |
||||||||||||||||||
|
Days of Inventory Supply is calculated using the current period |
||||||||||||||||||
|
Debt to Total Capital is calculated by dividing total debt (long |
||||||||||||||||||
| Table Five | |||||||||||||||||||||||||
| IMATION CORP. | |||||||||||||||||||||||||
| Non-GAAP Financial Measures | |||||||||||||||||||||||||
| (In millions, except for per share amounts) | |||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||||
| June 30, 2012 | June 30, 2011 | ||||||||||||||||||||||||
| GAAP | Adj * | Non-GAAP | GAAP | Adj * | Non-GAAP | ||||||||||||||||||||
| Net revenue | $ | 270.6 | $ | – | $ | 270.6 | $ | 323.0 | $ | – | $ | 323.0 | |||||||||||||
| Cost of goods sold | 218.2 | – | 218.2 | 269.0 | (0.3 | ) | 268.7 | ||||||||||||||||||
| Adjusted gross profit | $ | 52.4 | $ | – | $ | 52.4 | $ | 54.0 | $ | 0.3 | $ | 54.3 | |||||||||||||
| Adjusted gross margin | 19.4 | % | 19.4 | % | 16.7 | % | 16.8 | % | |||||||||||||||||
| Operating (loss) income | $ | (10.3 | ) | $ | 4.3 | $ | (6.0 | ) | $ | (9.3 | ) | $ | 10.7 | $ | 1.4 | ||||||||||
| Adjusted income tax provision (benefit) | $ | (0.1 | ) | $ | – | $ | (0.1 | ) | $ | 0.7 | $ | 0.1 | $ | 0.8 | |||||||||||
| Adjusted (loss) income | $ | (12.0 | ) | $ | 4.3 | $ | (7.7 | ) | $ | (12.5 | ) | $ | 10.6 | $ | (1.9 | ) | |||||||||
| Adjusted (loss) earnings per common share | |||||||||||||||||||||||||
| Diluted | $ | (0.32 | ) | $ | (0.20 | ) | $ | (0.33 | ) | $ | (0.05 | ) | |||||||||||||
| Adjusted weighted average shares outstanding | |||||||||||||||||||||||||
| Diluted | 37.7 | 37.7 | 37.8 | 37.8 | |||||||||||||||||||||
| Six Months Ended | Six Months Ended | ||||||||||||||||||||||||
| June 30, 2012 | June 30, 2011 | ||||||||||||||||||||||||
| GAAP | Adj * | Non-GAAP | GAAP | Adj * | Non-GAAP | ||||||||||||||||||||
| Net revenue | $ | 552.3 | $ | – | $ | 552.3 | $ | 639.5 | $ | – | $ | 639.5 | |||||||||||||
| Cost of goods sold | 443.8 | – | 443.8 | 531.5 | (1.5 | ) | 530.0 | ||||||||||||||||||
| Adjusted gross profit | $ | 108.5 | $ | – | $ | 108.5 | $ | 108.0 | $ | 1.5 | $ | 109.5 | |||||||||||||
| Adjusted gross margin | 19.6 | % | 19.6 | % | 16.9 | % | 17.1 | % | |||||||||||||||||
| Operating (loss) income | $ | (19.2 | ) | $ | 5.6 | $ | (13.6 | ) | $ | (12.7 | ) | $ | 14.4 | $ | 1.7 | ||||||||||
| Adjusted income tax provision (benefit) | $ | 0.9 | $ | – | $ | 0.9 | $ | 2.4 | $ | 0.4 | $ | 2.8 | |||||||||||||
| Adjusted (loss) income from continuing operations | $ | (24.2 | ) | $ | 5.6 | $ | (18.6 | ) | $ | (19.7 | ) | $ | 14.0 | $ | (5.7 | ) | |||||||||
| Adjusted (loss) earnings per common share from continuing operations | |||||||||||||||||||||||||
| Diluted | $ | (0.64 | ) | $ | (0.49 | ) | $ | (0.52 | ) | $ | (0.15 | ) | |||||||||||||
| Adjusted weighted average shares outstanding | |||||||||||||||||||||||||
| Diluted | 37.6 | 37.6 | 37.9 | 37.9 | |||||||||||||||||||||
|
* See Table Six |
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| Table Six | ||||||||||||||||
| IMATION CORP. | ||||||||||||||||
| Non-GAAP Financial Measures | ||||||||||||||||
| (In millions, except for per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Operating (loss) income / Adjusted operating income | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30 | June 30 | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Operating loss: | $ | (10.3 | ) | $ | (9.3 | ) | $ | (19.2 | ) | $ | (12.7 | ) | ||||
| Restructuring and other | ||||||||||||||||
| Restructuring | 3.1 | 1.2 | 4.4 | 2.1 | ||||||||||||
| Gain on sale of fixed assets held for sale | – | – | (0.7 | ) | – | |||||||||||
| Facility Disposal | – | 7.0 | – | 7.0 | ||||||||||||
| Pension settlement | 1.5 | 1.0 | 1.5 | 1.0 | ||||||||||||
| Acquisitions and integration | 0.8 | 1.2 | 1.2 | 1.2 | ||||||||||||
| Intangible asset accelerated amortization | 1.3 | – | 1.3 | – | ||||||||||||
| Acquisition contingent consideration adjustment | (2.8 | ) | – | (2.8 | ) | – | ||||||||||
| Other | 0.4 | – | 0.7 | – | ||||||||||||
| Goodwill impairment | – | – | – | 1.6 | ||||||||||||
| Inventory write-downs related to restructuring programs included in cost of goods sold |
– | 0.3 | – | 1.5 | ||||||||||||
| Total adjustments | 4.3 | 10.7 | 5.6 | 14.4 | ||||||||||||
| Adjusted operating(loss) income – Non-GAAP | $ | (6.0 | ) | $ | 1.4 | $ | (13.6 | ) | $ | 1.7 | ||||||
| Effect on diluted EPS: | ||||||||||||||||
| (Loss) income from operations | $ | (0.32 | ) | $ | (0.33 | ) | $ | (0.64 | ) | $ | (0.52 | ) | ||||
| Restructuring and other | ||||||||||||||||
| Restructuring | 0.09 | 0.03 | 0.12 | 0.06 | ||||||||||||
| Gain on sale of fixed assets held for sale | – | – | (0.02 | ) | ||||||||||||
| Facility Disposal | – | 0.19 | – | 0.18 | ||||||||||||
| Pension settlement | 0.04 | 0.03 | 0.04 | 0.03 | ||||||||||||
| Acquisitions and integration | 0.02 | 0.03 | 0.03 | 0.03 | ||||||||||||
| Intangible asset accelerated amortization | 0.03 | 0.03 | ||||||||||||||
| Acquisition contingent consideration adjustment | (0.07 | ) | (0.07 | ) | ||||||||||||
| Other | 0.01 | – | 0.02 | – | ||||||||||||
| Goodwill impairment | – | – | – | 0.04 | ||||||||||||
| Inventory write-downs | – | 0.01 | – | 0.04 | ||||||||||||
| Adjusted diluted EPS – Non-GAAP | $ | (0.20 | ) | $ | (0.05 | ) | $ | (0.49 | ) | $ | (0.15 | ) | ||||
| EBITDA: | ||||||||||||||||
| Operating loss | $ | (10.3 | ) | $ | (9.3 | ) | $ | (19.2 | ) | $ | (12.7 | ) | ||||
| Depreciation | 2.1 | 2.8 | 4.2 | 5.7 | ||||||||||||
| Amortization | 7.3 | 6.2 | 14.5 | 12.2 | ||||||||||||
| EBITDA | $ | (0.9 | ) | $ | (0.3 | ) | $ | (0.5 | ) | $ | 5.2 | |||||
| Restructuring and other | 4.3 | 2.4 | 5.6 | 3.3 | ||||||||||||
| Goodwill impairment | – | – | – | 1.6 | ||||||||||||
| Inventory write-downs related to restructuring programs included in cost of goods sold |
– | 0.3 | – | 1.5 | ||||||||||||
| Total adjustments | 4.3 | 2.7 | 5.6 | 6.4 | ||||||||||||
| Adjusted EBITDA | $ | 3.4 | $ | 2.4 | $ | 5.1 | $ | 11.6 | ||||||||
EBITDA is defined as operating income less depreciation and amortization. Adjusted EBITDA is defined as EBITDA before goodwill, 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.