Memorex 2010 Annual Report Download - page 2

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PRODUCT STRATEGIES
We intend to retain Imation’s strong leadership in Traditional
Storage, including magnetic and optical products, optimizing
profitability, asset returns and cash in a declining market.
Imation’s strategic alliance with TDK to jointly develop and
manufacture advanced tape products is just one example
of improving return on assets in this category. In Emerging
Storage, including flash and removable hard disk drives, we
intend to grow through focused investment in our Defender™
data security and protection offerings, scalable storage for
small and medium businesses (SMBs), and connectivity
solutions for home and businesses. And in Electronics and
Accessories, our strategy is to launch differentiated higher-
margin products, leveraging our portfolio of brands, including
Imation, Memorex, TDK Life on Record, and XtremeMac.
TECHNOLOGY AND INVESTMENT STRATEGIES
We plan to invest in four core technology areas: Secure
Storage, Scalable Storage, Wireless Connectivity, and
Magnetic Tape. These investments include organic initiatives
already under way in our own RD&E (research, development,
and engineering) function, as well as investing in deeper
sales and marketing coverage for VAR (value-added reseller)
and OEM channels and international expansion. We also plan
to grow through acquisitions, with the potential for several
transactions ranging from a few million dollars to $50 million,
focused on data protection, storage hardware, removable
hard drive systems, and related software.
MOVING FORWARD
Imation has made good progress on the Company’s
operational foundation, and we are dedicated to achieving
our goals. We go forward with a strong balance sheet, a clear
vision for our future and actionable strategies to return to
growth in 2012 and beyond.
We will share our progress with you in the quarters ahead
as we implement our direction as a technology company
dedicated to helping people and organizations store, protect,
and connect their digital world.
Sincerely,
In 2010, Imation made progress with operational
improvements needed to establish a stronger foundation
for future growth. With renewed discipline across our global
organization, we delivered sustainable operational efficiencies,
including improved working capital management. This was
evident in our strong cash flows as we finished the year with
almost $305 million in cash, up over $140 million in just one
year. Also in 2010, we implemented an end-to-end product life
cycle process that has enabled us to more closely manage our
product portfolios from concept through end-of-life.
Imation’s 2010 revenues were $1.46 billion, reflecting the
expected continuing decline in Traditional Storage formats
and our more selective participation in Consumer Electronics
and Accessories. Despite our operational strides, we know
that we still have considerable work ahead to return Imation to
sustained growth and profitability. We are confident that the
plan we are implementing will yield that result over time.
A PATH TO GROWTH
Imation’s vision is to be a technology company dedicated to
helping people and organizations store, protect, and connect
their digital world.
With the increase in newly created data dramatically
outpacing the world’s available storage capacity, data storage
remains an attractive market, especially in the growing
Emerging Storage formats. Likewise, as the amount of
sensitive data rises, businesses and government agencies are
facing a critical and largely unmet need to protect their data
with highly secure storage solutions. And as we generate and
use more and more digital content in homes and businesses,
connectivity among digital devices and with the cloud is
becoming increasingly important.
These growing data-driven applications — storage, protection,
and connectivity — form the basis of our strategic direction.
FINANCIAL GOALS
In 2011, Imation will maintain its focus on cash and continued
margin improvement. We do not expect revenues in 2011 to
rise, due to declines in Traditional Storage and rationalization
of low-margin products. We also expect that earnings,
excluding charges, will decline in 2011 due to organic
investments we need to drive long-term growth. But looking
forward, we are well positioned, and plan to invest to capitalize
on opportunities in targeted, growing markets. We will strive
to create lasting value with our goals of returning to top-line
growth by the end of 2012, improving our product gross
margins toward 20 percent, and driving increasing operating
margins to the 4-5 percent level.
DEAR FELLOW IMATION SHAREHOLDER,
Linda W. Hart
Non-Executive
Chairman of the Board
Mark E. Lucas
President and
Chief Executive Officer