Imation to Cut 200 Positions

Imation Corp. released further details of its previously announced plans to reduce operating expenses. The Company’s Board of Directors approved a restructuring program to accelerate alignment of the Company’s cost structure with its strategic direction.

Commenting on the announcement, Imation President and CEO Frank Russomanno said: "We remain committed to our strategy as we accelerate our transformation of Imation into a brand and product marketing company. We have benchmarked ourselves against companies with brand portfolios and those with significant distribution businesses across both commercial and consumer markets, as we examine our business model. Given our year-to-date performance as well as current market and industry conditions it is necessary that we set a goal of aggressively reducing total operating expenses by year-end 2009 to align our business model with our strategic direction."

"We will reduce our operating expenses in excess of ten percent. We will also focus on reducing selling, general and administrative expense by targeting our resources on key accounts and key products, and simplifying our corporate structure globally. At the same time we will continue to invest to re-skill the Company, strengthen our brands and maintain tape technology leadership critical for our future. By taking these steps, we believe we will create the necessary structure and business model for profitable growth as a lean and fast acting company focused on delivering improved operating profit and return on invested capital," Russomanno concluded.

Key points of the program include the following:

The Company anticipates absorbing up to $40 million in restructuring and other charges, of which approximately $25 million will be recorded in Q4 2008. The restructuring and other charges will mainly be cash for severance and related costs and the majority of the program is expected to be completed by the end of 2009.
The restructuring actions covered by these charges will result in estimated annualized cost eliminations targeted at greater than $40 million once fully implemented. These actions will be implemented over time, with the vast majority completed by the end of 2009.
The restructuring actions will result in the elimination of approximately 200 positions around the world.
The Company has revised its outlook for fourth quarter and full year 2008 to reflect the fourth quarter charges.

2008 Business Outlook
Except where noted below as a result of the restructuring and other charges, this outlook is unchanged from the most recent outlook provided on October 21, 2008. This outlook, while based on our best estimates at this time, contains uncertainty due to global economic conditions. In addition, the recent decline in our stock price and deterioration in economic conditions impacting our business outlook increases the possibility of asset impairments in 2008. This business outlook is also subject to the risks and uncertainties described at the end of this release.

Revenue for 2008 is targeted at approximately $2.165 billion to $2.185 billion. We anticipate Q4 revenue in the range of $560 million to $580 million, unchanged from our most recent outlook.
Operating loss for Q4 2008 is targeted to be in the range of $11 million to $18 million. This includes restructuring and related charges of approximately $25 million. Previously, Q4 operating income was targeted in the range of $7 million to $14 million. Diluted loss per share for Q4 is targeted between $0.21 and $0.34 which includes the negative impact of approximately $0.44 from restructuring and related charges. Previously, Q4 diluted earnings per share was targeted between $0.11 to $0.23. Our operating income outlook for Q4 2008 excluding restructuring and related charges is unchanged.
Operating income for FY 2008 is targeted to be in the range of $5 million to $12 million. This includes restructuring and related charges incurred in the first three quarters and anticipated in Q4 which combined total $46 million. Previously, 2008 operating income was targeted in the range of $30 million to $37 million including restructuring and related charges of $21 million incurred through the first three quarters of 2008. Our operating income outlook for FY 2008 excluding restructuring and related charges is unchanged.
Diluted earnings per share for FY 2008 is targeted between $0.00 and $0.12 which includes the negative impact of $0.83 from restructuring and related charges incurred in the first three quarters and anticipated in Q4. Previously, 2008 diluted earnings per share was targeted between $0.44 and $0.56 which includes the negative impact of approximately $0.39 from restructuring and other charges incurred through the first three quarters. Our earnings per share outlook for Q4 and FY 2008 excluding restructuring and related charges is unchanged.
Capital spending is targeted to be approximately $15 million, unchanged from our most recent outlook.
The full year tax rate is anticipated to be in the range of 33 percent to 35 percent, absent any one-time tax items that may occur in the future. This is unchanged from our most recent outlook.
Depreciation and amortization expense is targeted to be approximately $50 million, unchanged from our most recent outlook.