Imation: Fiscal 3Q10 Financial Results
Revenues down 14.7% compared with 3Q09, six times more losses
This is a Press Release edited by StorageNewsletter.com on October 28, 2010 at 3:21 pm| in US$ millions) | 3Q09 | 3Q10 | 9 mo. 09 | 9 mo. 10 |
| Revenues | 401.3 | 342.3 | 1,198 | 1,063 |
| Growth | -15% | -11% | ||
| Net income (loss) | (0.4) | (2.4) | (48.9) | (20.7) |
Imation Corp. released financial results for the quarter ended September 30, 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 Q3 2010 include the following:
- Net revenue of $342.3 million was down 14.7 percent compared with Q3 2009 of $401.3 million.
- Gross margin of 16.2 percent was stable compared with Q3 2009 gross margin of 16.1 percent.
- Selling, general and administrative expenses were $49.3 million, down 2.2 percent compared with Q3 2009.
- Loss from continuing operations was $2.3 million or $0.06 per diluted share compared with a loss from continuing operations of $0.3 million or $0.01 per diluted share in Q3 2009.
- Total cash and cash equivalents were $256.8 million, up $93.4 million from December 31, 2009.
Imation Chief Executive Officer Mark Lucas commented: "We made solid progress on several important parts of our transformation including continued strong double digit revenue growth in emerging storage products, and improved gross margins in both our emerging storage and our electronics and accessories categories. In addition, the efforts we have made in streamlining our operations were visible in the improvement in our working capital and operating expense levels."
"We are committed to returning value to our shareholders and will continue to focus on actions to improve our long-term financial profile," concluded Lucas.
Q3 2010 Results versus Q3 2009
Net revenue for Q3 2010 was $342.3 million, down 14.7 percent from Q3 2009, driven by price erosion of nine percent and overall volume declines of seven percent partially offset by favorable currency impacts of one percent. From a product perspective, the overall revenue decrease was due primarily to declines of 17 percent in traditional storage products and 28 percent in electronics and accessories in part driven by planned rationalization of our video business, partially offset by an increase of 23 percent in emerging storage products. From a regional perspective, revenues in the Americas and Europe declined 17 and 31 percent, respectively, primarily from lower sales of traditional storage products. Revenues increased by 7 percent in North Asia and were flat in South Asia.
Gross margin for Q3 2010 was 16.2 percent compared with Q3 2009 gross margin of 16.1 percent, evidence of margin stabilization.
Operating expenses for Q3 2010 were $53.6 million, down $1.7 million compared to Q3 2009 of $55.3 million.
Restructuring and other charges were $4.3 million in Q3 2010 compared with $7.5 million in Q3 2009. The charges relate to costs from previously announced restructuring programs.
Operating loss was $2.3 million in Q3 2010 compared with operating income of $1.7 million in Q3 2009. Adjusting for the impact of restructuring and other charges, operating income was $2.0 million in Q3 2010 versus operating income of $9.2 million in Q3 2009 (see Table Two).
Loss per diluted share from continuing operations was $0.06 in Q3 2010 compared with a diluted loss per share from continuing operations of $0.01 in Q3 2009. Adjusting for restructuring and other charges in both periods, earnings per diluted share was $0.02 in Q3 2010 compared with earnings per diluted share of $0.14 in Q3 2009 (see Table Two).
Cash balances: Ending cash and cash equivalents were $256.8 million as of September 30, 2010, an increase of $93.4 million from $163.4 million as of December 31, 2009, driven by continued working capital improvements as well as earnings (see Table Five).
9 mo. 9 mo.
2010 2009
Comments
Abstracts of the earnings call transcript:
Paul Zeller, CFO:
"We saw weakness in optical products in both the U.S. and Europe with revenues down about 19% overall, in general, CD showed the most significant declines. In addition, some changes in the optical levy environment in Europe lowered revenues. We collect levies on optical products from customers and remove this to the collecting societies and during the last year, levy rates have declined which lowers our revenues but also lowers our cost by the same amount.
"Magnetic tape revenue decline slowed in Q3 to 11%, the lowest decline rate we’ve seen since the first half of 2008. LTO-5 mid range revenues began to ramp and we saw some strength in the data center. Our emerging storage revenues increased nicely during the quarter up 23%, driven by strong flash drive revenues as well as RDX revenues.
"Consumer electronics and accessory revenues decreased 28% in Q3, the majority of which related to our planned rationalization of video products begun late last year.
"From a segment standpoint, our Americas segment was down 17% in the quarter, driven by continuing declines in traditional storage, as well as video products as I just mentioned. Europe was down 31% year over year, driven by declines in both tape and optical. Optical in particular was impacted by the reduction in levies I just mentioned.
"In addition, our Europe business is more concentrated in our traditional storage category and thus receives less benefit from emerging storage and electronics and accessories. As well, currency translation was a penalty in Europe during the quarter versus the prior year. North Asia revenues grew 7% with strong volume growth. This region was also aided by stronger yen versus the dollar. South Asia revenues were roughly flat compared to Q3 last year.
"On a worldwide basis, our roughly 15% decline in total revenues came from about a 7 point impact from lower volumes, a 9 point impact from price erosion offset by a 1 point positive impact from currency translation."
Subscribe to our free daily newsletter
