Memorex 2011 Annual Report Download - page 2

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Scalable Storage
In Scalable Storage, we see significant future
opportunity with our new portfolio of appliances
designed specifically for the storage needs of small
and medium businesses. These businesses are looking
for storage solutions that help lower costs, meet
compliance requirements, and protect and retrieve
business data.
In 2011, we made two exciting acquisitions to advance
our Scalable Storage area. First, we acquired assets of
ProStor Systems, adding the InfiniVault™ data archive
appliance and related technologies to our portfolio. We
later acquired Nine Technology’s Data Deduplication
engine, a key software technology platform that will
provide further differentiation and cloud connectivity
for our new line of storage appliances.
Audio and Video Information (AVI)
In AVI, we continue our focus on differentiated
products. We recognize that the increase of digital
information in all forms — documents, photos, music,
and video — creates new opportunities for consumers
to store, protect, and connect with their digital content.
In 2011, we invested in advanced audio and wireless
technologies that we are applying across our line
of Memorex, TDK Life on Record, and XtremeMac
products. Our global retail placements are strong, our
brands are well regarded, and our products are unique.
We expect to continue this positive momentum with
our AVI product line.
LOOKING FORWARD
We are pleased with the significant progress we have
made on our strategic transformation.
We will continue to invest in key technologies to build
out our businesses, add important new skills to our
organization, and bring differentiated products to
market. Our global team is committed to our new
strategy, and excited by the opportunities that it offers.
We look forward to sharing our continued progress with
you in the quarters ahead.
Sincerely,
Imation is in the midst of an exciting strategic
transformation. We are investing in Secure
and Scalable Storage and in Audio and Video
Information (AVI) products as we execute
a new strategy designed to return the
company to long-term growth and improved
operating margins.
OUR STRATEGY
In early 2011, we outlined our new strategic direction in
a two-year plan. Our path forward leverages Imation’s
deep core and leadership positions in data storage, while
building a platform for growth in Secure and Scalable
Storage and AVI.
Imation’s strategy is focused on growth in new, higher-
margin product categories that address the world’s
need to store, protect, and connect digital content. We
intend to build a successful company, investing in Secure
Storage to protect both business and personal data, in
Scalable Storage for small and medium businesses, and
in differentiated AVI products. We also look forward to
maintaining global share leadership in our traditional
storage categories of optical disc and magnetic tape.
2011 FINANCIAL RECAP
Imation’s 2011 revenues were $1.29 billion, reflecting the
expected decline in traditional storage and our decision
to exit certain lower-margin products. We were very
pleased with our gross margin performance throughout
the year, reflecting our ongoing transition to more
differentiated products. Operating loss for the year was
$33.1 million (GAAP), and excluding special charges* of
$34.2 million, we had operating income of $1.1 million.
We have a strong financial position, ending the year with
$223 million in cash and no long-term debt.
EXECUTING ON OUR TRANSFORMATION
Secure Storage
We have launched a new mobile security business with
key technology differentiators and a robust product
portfolio. Our direction is to add security features such
as encryption, authentication, and central management
of devices. These additional security features help
businesses, governments, and consumers protect their
data from loss or theft.
In 2011, we made several key acquisitions in the security
area, including the assets of ENCRYPTX and MXI
Security, and the hardware business of IronKey. These
acquisitions brought new technology and skills that are
enabling Imation to offer a leading portfolio of mobile
data security solutions.
DEAR FELLOW IMATION SHAREHOLDER,
L. White Matthews, III
Non-Executive
Chairman of the Board
Mark E. Lucas
President and
Chief Executive Officer
*Special charges include restructuring and other ($21.5 million),
litigation settlement ($2.0 million), goodwill impairment ($1.6
million) and inventory writedowns ($9.1 million).