Imation Corp. Reports $581.6 Million in Revenues and $11.4 Million in Fourth Quarter Net
Income Before $12 Million Write-Off
OAKDALE, Minn.--(BUSINESS WIRE)--Feb. 4, 1997--
Company Also Announces Authorization For Share Repurchase Q4
Revenues Highest In More Than Three Years With Continued Year Over
Year Profit Improvement
Imation Corp , the new imaging and information company spun-off July 1, 1996 from Minnesota Mining and Manufacturing Co , today announced results for the
fourth quarter and twelve months ended December 31, 1996.
Separately, Imation also announced that its Board of Directors has authorized a stock repurchase program for up to two million shares of the company's common
stock.
Revenues for the fourth quarter increased 4.3 percent to $581.6 million compared to $557.7 million in the fourth quarter of the preceding year. Excluding a
write-off for R&D, fourth quarter net income was $11.4 million, or $0.28 per share. This compares to net income of $0.8 million, excluding special charges, or
$0.02 per share for the fourth quarter of 1995.
Reported results for the fourth quarter, including the non- deductible $12 million R&D write-off related to the recent acquisition of Luminous Corporation, showed
a net loss of $0.6 million, or $0.02 per share. Reported results for the same period in 1995, which included pre-tax restructuring and one-time charges of $166.3
million, showed a net loss of $87.5 million, or $2.08 per share.
"Revenues in the fourth quarter are the highest in more than three years and fiscal year 1996 is the first year in the last four that the businesses now making up
Imation have achieved top line growth," said Bill Monahan, Chairman and Chief Executive Officer. "These results demonstrate that we are on track in our efforts to
accelerate growth, develop a competitive cost structure and produce solid operating results."
"We also improved economic profit by $65 million in fiscal 1996, and are well on the way to meeting our $150 million economic profit improvement goal by the end
of 1998. With all the activity related to spinning off from 3M -- creating a new name and identity, and launching a wide range of new products -- we remained
focused on the business, on maintaining customer loyalty, and on building a company organized specifically for the imaging and information industry."
The company's fourth quarter revenues increased 4.3 percent over the same quarter a year ago, with volume growth of 9.9 percent, partially offset by price declines
of 4.1 percent and negative currency impact of 1.5 percent. "Our four new product platforms -- DryView(TM) laser imagers, Travan(TM) data cartridges,
Rainbow(TM) color proofing systems and LS-120 diskettes -- constituted 15.6 percent of revenue in the quarter and 11.3 percent for 1996, consistent with our
plan for the year," Monahan said. "Customer interest and demand accelerated across all four platforms in the fourth quarter. We are well positioned to continue the
momentum, as we look to these four new product platforms to reach our goal of 20 percent of revenue in 1997."
Gross margins, prior to special charges, improved to 35.0 percent and 35.3 percent of revenue for the fourth quarter and the full year, respectively. This compares
to gross margins of 33.4 percent and 34.5 percent for the same periods in 1995, prior to special charges.
Spending on research and development (R&D) in the fourth quarter (prior to the $12 million write-off) was $39.0 million. Selling, general and administrative
spending (SG&A) totaled $139.6 million. Combined, R&D and SG&A before special charges declined 2.8 percent from the comparable quarter a year ago.
Excluding recurring start-up costs of $9.8 million in the fourth quarter, combined spending on R&D and SG&A declined 8.1 percent from the same quarter a year
ago.
In the six month period since the spin-off from 3M, July 1 to December 31, Imation's revenues grew 3.4 percent, compared to the same period in 1995. Net
income before special charges for the same period improved by more than $24 million, from a loss of $1 million in the second half of 1995.
For the twelve months ended December 31, 1996, Imation's net income, excluding special charges, was $40.1 million, or $0.97 per share, compared to net income
of $3.3 million or $0.08 per share in the previous year on a 1.5 percent revenue increase, from $2,245.6 million to $2,278.2 million. Including special charges,
Imation showed a net loss of $20.5 million, or $0.49 per share, compared with a reported net loss of $85.0 million or $2.02 per share in 1995. These results
include pre-tax restructuring and other special charges of $88.4 million and $166.3 million in 1996 and 1995, respectively.
Imation Corp. supplies a variety of products and services worldwide for the imaging and information industry, specializing in imaging and information storage
applications. The company employs approximately 9,400 people and is based in Oakdale, Minn.
Additional information about Imation is available on the company's web site at imation.com. To receive stock quote updates, recent earnings and news
releases, corporate information and related shareholder services, call Imation's toll-free shareholder information line at 1-888-IMN-NYSE (1-888-466-6973).
Certain portions of this news release which do not relate to historical financial information may be deemed to constitute forward looking statements which are
subject to various factors that could cause actual result in the future to differ materially from these statements. Among these factors are the company's ability to meet
its cost reduction and revenue growth targets, its ability to establish itself as an independent public company, competitive industry conditions including historical price
erosion in certain product categories, foreign currency fluctuations, and the market acceptance of newly introduced products as well as various factors set forth in
the Company's Information Statement included in the Form 10 Registration Statement, filed with the Securities and Exchange Commission on June 21, 1996.
Note to Editors: Imation(TM), Travan(TM), and DryView(TM), are registered trademarks of Imation Corp. Rainbow(TM) is a trademark of Imation Corp.
IMATION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
(Unaudited)
Three months ended Twelve months ended
December 31 December 31
1996 1995 1996 1995
Net revenues $581.6 $557.7 $2,278.2 $2,245.6
Cost of goods sold 377.8 421.8 1,482.8 1,520.9
Gross profit 203.8 135.9 795.4 724.7
Operating expenses:
Selling, general and
administrative 139.6 133.8 563.0 539.4
Research and development 51.0 54.2 183.1 222.4
Restructuring charges - 111.8 53.9 111.8
Total 190.6 299.8 800.0 873.6
Operating income (loss) 13.2 (163.9) (4.6) (148.9)
Interest expense and other 2.5 3.7 10.4 17.9
Income (loss) before tax and
minority interest 10.7 (167.6) (15.0) (166.8)
Income tax provision
(benefit) 11.3 (70.8) 5.9 (70.5)
Minority interest - (9.3) (0.4) (11.3)
Net income (loss) $ (0.6) $(87.5) $(20.5) $ (85.0)
Earnings (loss) per share $ (.02) $(2.08) $(.49) $ (2.02)
Weighted average shares
outstanding (1) 40.7 41.9 41.3 42.0
(1) The number of weighted average shares outstanding used in the
computation of earnings per share prior to July 1, 1996 are one-tenth
the number of 3M shares outstanding based on the distribution of one
share of Imation Corp. for ten shares of 3M pursuant to the spin-off
on July 1, 1996.
IMATION CORP.
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)
December 31, December 31,
1996 1995
ASSETS
Current Assets
Cash and equivalents $ 61.7 $ -
Accounts receivable - net 467.6 479.5
Inventories 392.8 426.3
Other current assets 94.5 48.8
Total current assets 1,016.6 954.6
Property, plant and equipment - net 480.1 513.2
Other Assets 64.6 73.7
Total Assets $1,561.3 $1,541.5
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable $ 182.1 $ 125.9
Accrued payroll 41.9 44.4
Income taxes payable 7.6 -
Short-term debt 26.5 -
Other current liabilities 151.2 125.9
Total current liabilities 409.3 296.2
Other Liabilities 98.6 96.6
Long-Term Debt 123.1 -
Commitments and Contingencies
Shareholders' Equity
Common Stock - $.01 par value 0.4 -
Additional paid in capital 1,011.5 -
Retained earnings 11.2 -
Unearned ESOP shares (46.6) -
Cumulative translation adjustment (46.2) (46.1)
Net investment by 3M - 1,194.8
Total shareholders' equity 930.3 1,148.7
Total Liabilities and Equity $1,561.3 $1,541.5
IMATION CORP.
SUPPLEMENTAL INFORMATION
(Unaudited)
Economic Profit Improvement ($ Millions)
1996-1998 1996
Goal Progress
Cost Reductions $ 90 $30
Revenue Growth 40 5
Increased Asset Turns 20 30(a)
Total $150 $65
Economic profit is after tax operating profit less a charge for the
Company's cost of capital. The Company's goal is to improve economic
profit by $150 million in the three year period 1996-1998 over the
Company's actual performance in 1995.
(a) Includes $18 million one-time benefit from asset write- offs.
Revenues - Percentage Change - Fourth Quarter 1996 vs. 1995
U.S. International Worldwide
Volume 6.1 13.9 9.9
Price (0.9) (7.5) (4.1)
Translation - (3.0) (1.5)
Total 5.2 3.4 4.3
Revenues - Percentage Change - Full Year 1996 vs. 1995
U.S. International Worldwide
Volume 5.6 10.1 7.9
Price (2.9) (7.0) (4.9)
Translation - (2.9) (1.5)
Total 2.7 0.2 1.5
Revenues by Area ($ Millions)
Three months ended Twelve months ended
December 31 December 31
1996 1995 1996 1995
Revenue:
United States $299.7 $285.0 $1,159.5 $1,128.8
% of total 51.5% 51.1% 50.9% 50.3%
International $281.9 $272.7 $1,118.7 $1,116.8
% of total 48.5% 48.9% 49.1% 49.7%
IMATION CORP.
SUPPLEMENTAL INFORMATION
(In Millions)
(Unaudited)
Operations & Cash Flow - Additional Information ($ Millions)
Three months ended Twelve months ended
December 31 December 31
1996 1995 1996 1995
Gross Margin %(b) 35.0% 33.4% 35.3% 34.5%
EBITDA(b) $69.1 $50.4 $265.4 $206.9
Tax Rate(b) 49.8% 42.3% 45.9% 42.3%
Capital Expenditures $51.5 $44.8 $167.4 $180.2
Depreciation $43.4 $48.0 $181.1 $189.5
(b) Gross margin percentages, EBITDA and tax rates exclude all
special charges.
Asset Utilization Information
As of
December 31,
1996 1995
Days Sales Outstanding 75 78
Months of Inventory 3.2 3.1
Other Information
Approximate Employee Count at December 31, 1996: 9,400
Shares outstanding on December 31, 1996: 42,879,880
Weighted average shares outstanding used
in earnings per share computation (4th Qtr) 40,679,771
IMATION CORP
HISTORICAL STATEMENTS OF OPERATIONS
Reconciliation of Reported Results to Adjusted Results
Year to Date, Dec 31
Reported Adjusted
Dec 31 Special Dec 31
1996 Charges 1996
Net revenues $ 2,278.2 $ 2,278.2
Cost of goods sold 1,482.8 $ (7.9) 1,474.9
Gross profit 795.4 7.9 803.3
Operating expenses:
Selling, general and
administrative 563.0 (14.6) 548.4
Research and development 183.1 (12.0) 171.1
Restructuring charge 53.9 (53.9) -
Total 800.0 (80.5) 719.5
Operating income (loss) (4.6) 88.4 83.8
Interest expense and other 10.4 - 10.4
Income (loss) before
tax and minority interest (15.0) 88.4 73.4
Income tax provision (benefit) 5.9 27.8 33.7
Minority interest (0.4) - (0.4)
Net income (loss) $ (20.5) $ 60.6 $ 40.1
Earnings per Common Share $ (0.49) $ 1.46 $ 0.97
Wtd Avg Common Shares O/S 41.291 41.291 41.291
Adjusted
Dec 31 Special Dec 31
1995 Charges 1995
Net revenues $2,245.6 $2,245.6
Cost of goods sold 1,520.9 $ (50.2) 1,470.7
Gross profit 724.7 50.2 774.9
Operating expenses:
Selling, general and
administrative 539.4 539.4
Research and development 222.4 (4.3) 218.1
Restructuring charge 111.8 (111.8) -
Total 873.6 (116.1) 757.5
Operating income (loss) (148.9) 166.3 17.4
Interest expense and other 17.9 - 17.9
Income (loss) before
tax and minority interest (166.8) 166.3 (0.5)
Income tax provision (benefit) (70.5) 70.3 (0.2)
Minority interest (11.3) 7.7 (3.6)
Net income (loss) $ (85.0) $ 88.3 $ 3.3
Earnings per Common Share $ (2.02) $ 2.10 $ 0.08
Wtd Avg Common Shares O/S 41.982 41.982 41.982
Adjusted
Percent Dec 31 Dec 31
Change 1996 1995
Net revenues 1.5% 100.0% 100.0%
Cost of goods sold 0.3% 64.7% 65.5%
Gross profit 3.7% 35.3% 34.5%
Operating expenses:
Selling, general and
administrative 1.7% 24.1% 24.0%
Research and development -21.5% 7.5% 9.7%
Restructuring charge N/A 0.0% 0.0%
Total -5.0% 31.6% 33.7%
Operating income (loss) 381.6% 3.7% 0.8%
Interest expense and other -41.9% 0.5% 0.8%
Income (loss) before
tax and minority interest N/A 3.2% 0.0%
Income tax provision (benefit) N/A 1.4% 0.1%
Minority interest N/A 0.0% -0.2%
Net income (loss) 1115.2% 1.8% 0.1%
IMATION CORP
HISTORICAL STATEMENTS OF OPERATIONS
Reconciliation of Reported Results to Adjusted Results
Fourth Quarter, 1996
Reported Adjusted
Dec 31 Special Dec 31
1996 Charges 1996
Net revenues $ 581.6 $ 581.6
Cost of goods sold 377.8 - 377.8
Gross profit 203.8 - 203.8
Operating expenses:
Selling, general and
administrative 139.6 139.6
Research and development 51.0 (12.0) 39.0
Restructuring charge - - -
Total 190.6 (12.0) 178.6
Operating income (loss) 13.2 12.0 25.2
Interest expense and other 2.5 - 2.5
Income (loss) before
tax and minority interest 10.7 12.0 22.7
Income tax provision (benefit) 11.3 - 11.3
Minority interest - - -
Net income (loss) $ (0.6) $ 12.0 $ 11.4
Earnings per Common Share $ (0.02) $ 0.30 $ 0.28
Wtd Avg Common Shares O/S 40.680 40.680 40.680
Adjusted
Dec 31 Special Dec 31
1995 Charges 1995
Net revenues $ 557.7 $ 557.7
Cost of goods sold 421.8 $ (50.2) 371.6
Gross profit 135.9 50.2 186.1
Operating expenses:
Selling, general and
administrative 133.8 133.8
Research and development 54.2 (4.3) 49.9
Restructuring charge 111.8 (111.8) -
Total 299.8 (116.1) 183.7
Operating income (loss) (163.9) 166.3 2.4
Interest expense and other 3.7 - 3.7
Income (loss) before
tax and minority interest (167.6) 166.3 (1.3)
Income tax provision (benefit) (70.8) 70.3 (0.5)
Minority interest (9.3) 7.7 (1.6)
Net income (loss) $ (87.5) $ 88.3 $ 0.8
Earnings per Common Share $ (2.08) $ 2.10 $ 0.02
Wtd Avg Common Shares O/S 41.947 41.947 41.947
Adjusted
Percent Dec 31 Dec 31
Change 1996 1995
Net revenues 4.3% 100.0% 100.0%
Cost of goods sold 1.7% 65.0% 66.6%
Gross profit 9.5% 35.0% 33.4%
Operating expenses:
Selling, general and
administrative 4.3% 24.0% 24.0%
Research and development -21.8% 6.7% 9.0%
Restructuring charge N/A 0.0% 0.0%
Total -2.8% 30.7% 33.0%
Operating income (loss) 950.0% 4.3% 0.4%
Interest expense and other -32.4% 0.4% 0.6%
Income (loss) before
tax and minority interest N/A 3.9% -0.2%
Income tax provision (benefit) N/A 1.9% 0.0%
Minority interest N/A 0.0% -0.3%
Net income (loss) 1325.0% 2.0% 0.1%
CONTACT: Imation Corp.
Brad Allen, 612/704-5818 (Investor Relations)
Brent Bauer, 612/704-3133 (Media) |
