IMN release in it's entirety:
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Imation Corp. Reports $0.94 Earnings per Share For Fourth Quarter
Including $65 Million Pre-Tax Net Gain From Sale of Medical Imaging
BusinessWire, Tuesday, February 09, 1999 at 07:20
OAKDALE, Minn.--(BUSINESS WIRE)--Feb. 9, 1999--
Data Storage Growth Driven by Network Products and SuperDisk
Media and Drives; Backlog in Storage Products Indicates Strong
Demand; Outlook For First Quarter Remains Cautious; Company to
Resume Share Repurchase
Imation Corp. (NYSE:IMN), today announced results for the fourth
quarter and fiscal year ended December 31, 1998. The company reported
net income of $36.9 million, or $0.94 per share, on revenues of $489.2
million for the quarter, compared with a reported net loss of $157.8
million, or $4.05 per share, on revenues of $569.8 million for the
comparable period a year ago.
Reported fourth quarter results include only two months of
results from Imation's medical imaging business, which was sold to
Eastman Kodak Company (NYSE:EK) effective November 30, 1998. Fourth
quarter results also include a pre-tax net gain of $65 million related
to the sale of the medical imaging business. Without this net gain and
$2.6 million of costs related to the change of the company's credit
facility, and using the same tax rate applied to reported results for
1998, per share earnings for the quarter ending December 31, 1998
would have been $0.06. Excluding restructuring and other one time
charges in the fourth quarter of 1997, per share earnings would have
been $0.02.
The net cash proceeds related to the sale of the medical imaging
business are approximately $490 million. As of December 31, 1998, the
company had received proceeds of $532 million from Kodak related to
the sale of the business. Of this amount, the company is restricted
from using $143 million of the proceeds until the medical imaging
businesses in Europe are legally transferred to Kodak during the first
and second quarters of 1999.
"The fourth quarter and full year 1998 were difficult for
Imation, but were also periods of positive significant change. We are
seeing the results of the efforts from the new management team, more
focused businesses and a clear strategy," said Bill Monahan, Imation's
chairman and CEO.
"We were encouraged by revenue growth in data storage for the
first time in several years, demonstrating the strength of our
offerings. In every end user customer market -- desktop mobile,
network, and data center -- we have exciting new offerings that the
market is demanding. We also are strengthening our position in some of
our older offerings. Demand is particularly strong in the network
space for Travan NS(TM) tape cartridges and DLT tapes which we are
now offering, and on the desktop for standard diskettes and SuperDisk
drives, resulting in backlog on some of these products at the present
time."
"Our digital solutions and services offerings showed significant
improvement off a strong base. We exceeded our profit targets in
operational services for the year while maintaining exceptionally high
customer satisfaction ratings; our more tightly focused print
production software offerings ended the year on a profitable growth
track; and we saw the successful launch of digital asset management
solutions offerings with the first customer contracts."
"In product technologies, our digital color proofing offerings
continue to be well received. While we experienced the effects of some
softness in the printing and publishing market in Q4, our market share
position overall remains strong and the business was able to meet its
profit goals for the year in a difficult environment," Monahan said.
"I remain confident that we are poised for success with a new
management team in place, solid offerings, a more focused company and
a clear strategy. In 1999, our goal is to stem the revenue declines
and achieve modest growth from our solid base businesses. As we
benefit from new product and service offerings and cost reduction
activities, our goal is to achieve operating margins between 3 and 5
percent for the full year, with sequentially improving quarterly
performance. Though we expect to be profitable, first quarter
operating margins will likely be similar to or slightly below the
fourth quarter of 1998 as we deal with unabsorbed overhead from our
medical divestiture," Monahan concluded.
In addition, the company's gross margins for all periods
presented were reduced from those previously reported due to the
retroactive reclassification of certain expenses as costs of goods
sold that were previously classified as selling expenses. The company
has authorization for the repurchase of up to 10 million shares of its
common stock. The company indicated that it intends to resume
repurchase of its common stock, for cash, in the open market and
private transactions from time to time. The company's employee
population totaled 6,400, which is down by 3,400 for the year,
including approximately 1,600 employees transferred to Kodak with the
sale of the medical imaging business.
For the twelve months ended December 31, 1998 the company
reported net income of $57.1 million, or $1.45 per share, on revenues
of $2,046.5 million, compared with a reported net loss of $ 180.1
million, or $4.54 per share, on revenues of $2,201.8 million for 1997.
Without the impact of one time charges and gains, and using the same
tax rates applied to reported results for 1998, per share earnings
would have been $0.37. Excluding restructuring and other one time
charges in the fiscal year 1997, per share earnings would have been
$0.51.
Imation supplies a variety of products and services worldwide for
the information and image management industry, specializing in imaging
and data storage solutions. Imation employs approximately 6,400 people
worldwide and is based in Oakdale, Minn.
Additional information about Imation is available on the
Company's Web site at www.imation.com or by calling Imation
toll-free at 1-888-466-3456. To receive recent earnings and new
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 information contained in this news release which does not
relate to historical financial 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 which could cause the Company's
actual results in the future to differ materially from its historical
results and those presently anticipated or projected. These factors
include, but are not limited to, the successful closing of the
announced sale of businesses, the company's ability to meet its cost
reduction and revenue growth targets, the competitive pricing
environment, foreign currency fluctuations, the ability of Imation to
secure adequate supply of certain high demand products, and the market
acceptance of newly introduced product and service offerings, as well
as various factors set forth in the Company's filings with the
Securities and Exchange Commission, including its 1997 Annual Report
on Form 10-K and subsequent 8-K and 10-Q filings.
Imation is a registered trademark and Travan and SuperDisk are
trademarks of Imation Corp. All other trademarks are the property of
their respective companies.
*T
IMATION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
1998 1997 1998 1997
Net revenues $ 489.2 $569.8 $2,046.5 $2,201.8
Cost of goods sold 335.9 395.3 1,370.2 1,485.6
------ ----- ------- --------
Gross profit 153.3 174.5 676.3 716.2
Operating expenses:
Selling, general and
administrative 115.0 147.1 488.3 526.0
Research and development 33.9 38.3 139.8 194.9
Gain on sale of medical
imaging business and
related charges (65.0) - (65.0) -
Restructuring - 170.0 (16.8) 170.0
---- ----- ----- ------
Total 83.9 355.4 546.3 890.9
Operating income (loss) 69.4 (180.9) 130.0 (174.7)
Other income and expense:
Interest expense 4.2 5.6 20.5 15.7
Losses related to change
in credit facility 2.6 - 2.6 -
Other, net (4.3) 11.8 (3.0) 15.6
---- ------- ----- -----
Total 2.5 17.4 20.1 31.3
Income (loss) before taxes 66.9 (198.3) 109.9 (206.0)
Income tax provision (benefit) 30.0 (40.5) 52.8 (25.9)
----- ------ ----- -------
Net income (loss) $ 36.9 $(157.8) $ 57.1 $(180.1)
===== ====== ====== ======
Basic and diluted earnings
per common share $ 0.94 $(4.05) $ 1.45 $ (4.54)
===== ===== ====== =======
Weighted average basic
shares outstanding 39.7 39.0 39.4 39.7
===== ===== ====== ======
Weighted average diluted
shares outstanding 39.8 39.0 39.5 39.7
===== ===== ====== ======
All periods presented reflect the retroactive reclassification of
certain expenses as cost of goods sold that were previously classified
as selling expenses.
IMATION CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
December 31,
1998 December 31,
(Unaudited) 1997
ASSETS
Current assets
Cash and equivalents $ 64.2 $ 103.5
Accounts receivable - net 326.3 459.3
Inventories 263.7 399.9
Other current assets 265.7(a) 141.7
-------- --------
Total current assets 919.9 1,104.4
Property, plant and equipment - net 233.8 381.6
Other assets 168.5 179.5
-------- --------
Total assets $1,322.2 $1,665.5
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 125.5 $ 182.2
Accrued payroll 23.8 38.3
Short-term debt 25.2 31.3
Other current liabilities 247.6 313.7
-------- --------
Total current liabilities 422.1 565.5
Other liabilities 106.3 98.1
Long-term debt 32.7 319.7
Total shareholders' equity 761.1 682.2
-------- --------
Total liabilities and
shareholders' equity $1,322.2 $1,665.5
(a) Includes $143 million of restricted cash from the sale of the
medical imaging business.
IMATION CORP.
SUPPLEMENTAL INFORMATION
(Unaudited)
Operations & Cash Flow - Additional Information ($ Millions)
Qtr ended Dec 31, Twelve Months ended Dec 31,
1998 1997 1998 1997
Gross Margin % (a) 31.3% 33.3% 33.0% 33.2%
EBITDA (a)(a) $37.6 $49.7 $177.6 $209.0
Capital
Expenditures(a)(a)(a) $82.8 $23.5 $132.4 $116.3
Depreciation $26.4 $34.9 $110.5 $144.2
Amortization $6.8 $1.2 $18.9 $3.3
(a) Includes reclassification of certain expenses as cost of
goods sold that were previously classified as selling expenses. Also,
fourth quarter 1997 and twelve months ended December 31, 1997 exclude
special charges taken in those periods, respectively.
(a)(a) EBITDA is calculated as operating income plus depreciation
and amortization, excluding the impact of special charges, reversals
and the net gain related to the sale of medical imaging business.
(a)(a)(a) Fourth quarter 1998 and twelve months ended December
31, 1998 include capital expenditures related to a special buyout of a
building lease of $67.5 million.
Asset Utilization Information
December 31, December 31,
1998 1997
Days Sales Outstanding 80 76
Months of Inventory 3.2 3.4
Debt to Total Capital 7.1% 34.0%
Other Information
Approximate employee count as of December 31, 1998: 6,400
Book value per share as of December 31, 1998: $ 18.65
Shares used to calculate book value per share (millions): 40.8
Revenues by Area ($ Millions)
Quarter ended December 31, Twelve months ended December 31,
1998 1997 1998 1997
Revenue:
United States $266.1 $305.2 $1,123.2 $1,162.3
% of total 54.4% 53.6% 54.9% 52.8%
International $223.1 $264.6 $923.3 $1,039.5
% of total 45.6% 46.4% 45.1% 47.2%
CONTACT: Imation, Minneapolis
Investor Contact:
Brad Allen
Vice President, Investor Relations
(651) 704-5818
or
Media Contact:
Jason Thunstrom
Public Relations Manager
(651) 704-3164 |
