Memorex 2004 Annual Report Download - page 4

LITTLE&COMPANY
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CLIENT฀IMATION
PROJECT฀04฀ANNUAL฀REPORT
One฀of฀Imation’s฀strengths฀is฀its฀significant฀
cash฀generation฀capability,฀which฀gives฀
us฀flexibility฀and฀a฀very฀solid฀financial฀
position.฀We฀ended฀the฀year฀with฀$440฀
million฀in฀cash฀and฀liquid฀investments,฀
up฀$15฀million฀from฀the฀previous฀year.฀
We฀also฀invested฀more฀than฀$90฀million฀
in฀research฀and฀development฀and฀capital฀
spending฀for฀future฀profitable฀growth,฀฀
and฀returned฀in฀excess฀of฀$100฀million฀
in฀cash฀to฀shareholders฀through฀share฀
buyback฀and฀dividends.
We฀achieved฀several฀noteworthy฀operational฀
milestones฀in฀2004.฀The฀most฀significant฀
was฀the฀opening฀of฀our฀state-of-the-art฀
Tera฀Ångstrom™฀tape฀coating฀facility฀in฀
Oklahoma,฀which฀we฀believe฀positions฀
Imation฀as฀a฀clear฀leader฀in฀magnetic฀tape฀
technology.฀We฀also฀launched฀innovative฀
new฀product฀offerings฀in฀our฀optical฀
business฀in฀2004฀and฀early฀2005฀that฀
differentiate฀Imation฀from฀our฀competitors฀
by฀targeting฀a฀customer฀segment฀we฀
call฀Memory฀Keepers,฀consumers฀who฀
recognize฀the฀value฀of฀their฀digital฀
photos,฀video,฀music฀and฀records฀and฀
who฀want฀optical฀media฀that฀meets฀their฀
need฀for฀quality฀and฀reliability.฀Our฀newly฀
introduced฀USB฀flash฀drive,฀holding฀up฀
to฀two฀gigabytes฀of฀data,฀gained฀industry฀
accolades฀for฀its฀innovative,฀“never฀lose”฀
swivel฀cap฀design.
NEW฀EXECUTIVE฀TEAM฀AT฀IMATION
After฀more฀than฀eight฀years฀of฀leading฀
Imation฀from฀its฀creation฀in฀1996,฀Bill฀
Monahan฀retired฀in฀2004.฀His฀legacy฀—฀฀
a฀resilient฀company฀with฀a฀solid฀business฀
and฀market฀position,฀an฀experienced฀and฀
skilled฀management฀team,฀and฀a฀highly฀
ethical฀culture฀—฀created฀a฀very฀strong฀
foundation฀for฀the฀future.฀I฀personally฀
feel฀fortunate฀to฀have฀been฀asked฀by฀the฀
Imation฀Board฀of฀Directors฀to฀step฀into฀฀
the฀opportunity฀and฀build฀on฀that฀legacy.฀฀
As฀Imation฀shareholders,฀we฀all฀say:฀
“Thank฀you,฀Bill,฀and฀best฀wishes.”
In฀addition฀to฀the฀broad฀and฀deep฀talent฀
that฀existed฀when฀I฀joined฀the฀Imation฀
team,฀I฀am฀fortunate฀to฀have฀two฀experi-
enced฀executives,฀with฀the฀Company฀since฀
spin,฀who฀recently฀assumed฀important฀
roles฀with฀broad฀responsibilities.฀Frank฀
Russomanno,฀executive฀vice฀president฀
and฀chief฀operating฀officer,฀brings฀more฀
*฀ ฀See฀Item฀7฀“Management’s฀Discussion฀and฀Analysis฀of฀Financial฀Condition฀and฀Results฀of฀Operations฀–฀Results฀of฀Operations”฀in฀the฀Company’s฀Form฀10-K฀for฀a฀description฀฀
of฀the฀basis฀of฀presentation฀of฀the฀financial฀information฀presented฀in฀this฀table฀and฀charts.
(1)฀ ฀Other฀revenue฀includes฀Specialty฀Paper฀and฀results฀from฀businesses฀subsequently฀divested.
(2)฀ ฀Adjustments฀to฀income฀from฀continuing฀operations฀before฀cumulative฀effect฀of฀accounting฀change฀include:
฀ •฀ ฀In฀2004,฀$25.2฀million฀in฀pre-tax฀restructuring฀and฀other฀charges.
฀ •฀ ฀In฀2003,฀a฀pre-tax฀gain฀of฀$11.1฀million฀primarily฀related฀to฀outstanding฀transition฀services฀payments฀for฀the฀color฀proofing฀and฀color฀software฀business฀sold฀in฀2001,฀฀
a฀$0.7฀million฀pre-tax฀reversal฀of฀previously฀ ฀
for฀a฀litigati฀ .
Research & Developement Capital Expense
97
$70
28
42
98
$142
67
75
99
$231
109
122
00
$321
158
163
01
$408
206
202
02
$502
257
245
03
$633
313
320
04
$726
370
356
Cumulative Data Storage Research & Development
and Capital Expenditures (dollars in millions) (from 1997 to 2004)
Total Debt Share Repurchase Dividends
Cash & Investments
Cash, Debt and Cumulative Share Repurchase & Dividends* (dollars in millions)
9998 00 01 02 03 04
$64
$58 $0 $87 $153 $154 $164 $193 $297
$195
$28
$270
$24
$390
$13
$475
$5
$425
$0
$440
$0
184
275
9
22
Adjusted(2) Reported
Diluted Earnings Per Share from Continuing Operations*
(reported and adjusted before cumulative effect of accounting change)
00 01 02 03 04
9998
$1.59$1.19
$2.10$2.25$1.86$2.05$1.02($0.02)$1.57($0.25)$1.00($0.46)
Revenue* (dollars in millions)
98 99 00 01 02 04
$45
$1,174
$53
$1,111
03
Data Storage Other(1)
$63
$1,004
$243
$876
$304
$867
$385
$952
$522
$714
2฀ :฀ IMATION฀2004