Memorex 2011 Annual Report Download

Download and view the complete annual report

Please find the complete 2011 Memorex annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

STRATEGIC TRANSFORMATION
Investing For Growth
Annual Report and Form 10-K
2011

Table of contents

  • Page 1
    STRATEGIC TRANSFORMATION Investing For Growth 2011 AnnuaS Report and Form 10-K

  • Page 2
    ... acquired Nine TechnoSogy's Data DedupSication engine, a key software technoSogy pSatform that wiSS provide further differentiation and cSoud connectivity for our new Sine of storage appSiances. Audio and Video Information (AVI) In AVI, we continue our focus on differentiated products. We recognize...

  • Page 3
    ... Act). Yes ' No Í Aggregate market value of voting and non-voting stock of the registrant held by non-affiliates of the registrant, based on the closing price of $9.44 as reported on the New York Stock Exchange on June 30, 2011, was $355.5 million. The number of shares outstanding of the registrant...

  • Page 4
    ... DATA CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE CONTROLS AND PROCEDURES OTHER INFORMATION PART III DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE EXECUTIVE COMPENSATION SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED...

  • Page 5
    PART I Item 1. General Imation Corp., a Delaware corporation, is a global scalable storage and data security company. Our portfolio includes tiered storage and security offerings for business and products designed to manage audio and video information in the home. Imation reaches customers in more ...

  • Page 6
    ...storage products include primarily optical drives and audio and video tape media. Secure and Scalable Storage Secure storage products and software include USB flash drives and external hard drives designed to meet the most stringent security standards to protect data at rest with Federal Information...

  • Page 7
    ...Memorex brand was acquired by Imation in 2006. Memorex brand products include recordable CDs, DVDs and Blu-ray discs, CD players, alarm clocks, portable boom boxes, iPod and iPhone accessories, headphones and speakers. Memorex brand products are sold primarily in North America. The rights to the TDK...

  • Page 8
    ... in secure and scalable storage products include SanDisk, Lexar, PNY and Kingston brands in flash media, Western Digital and Seagate in external and removable hard drives, and Tandberg Data and Overland Data in scalable data appliances. These companies generally compete with us in all our business...

  • Page 9
    ... relating to the marketing, distribution, sales, customer service and support of removable recording media products, accessory products and ancillary products being sold under the TDK Life on Record brand name (TDK Recording Media), from TDK, including the assets or capital stock of TDK's operating...

  • Page 10
    ... of magnetic tape that do not yet have specific commercialized products in the market. We also invest in research related to our strategic focus on data protection and management, storage hardware, audio and video information products, removable hard drive systems and related software. As noted...

  • Page 11
    ... accounting management positions with 3M Company. Availability of SEC Reports The Securities and Exchange Commission (SEC) maintains a website that contains reports, proxy and information statements, and other information regarding issuers, including Imation Corp., that file electronically with...

  • Page 12
    ...levels of security to adequately store and protect our customers' data. Many of our secure storage products include software and hardware security such as user authentication, data encryption, and portable digital identities which are designed to prevent digital security breaches. If our products do...

  • Page 13
    ..., products and information systems of acquired companies or businesses. We continually evaluate and explore strategic opportunities as they arise, including business combinations, strategic partnerships, collaborations, capital investments and the purchase, licensing or sale of assets. Acquisitions...

  • Page 14
    ...in our stock price and market capitalization or a decrease in the forecasted cash flows of our Mobile Security reporting unit such that they are insufficient, indicating that the carrying value of our acquired goodwill may be impaired. If we are required to record a significant charge to earnings in...

  • Page 15
    ... our operating results. Significant changes in discount rates, rates of return on pension assets, mortality tables and other factors could affect our future earnings, equity and pension funding requirements. Pension obligations and related costs are determined using actual investment results as well...

  • Page 16
    .... We are subject to various pending or threatened legal actions in the ordinary course of our business, especially regarding patents related to our data storage and audio and video information products. We are generally indemnified by our suppliers; litigation, however, is always subject to many...

  • Page 17
    ... in good operating condition suitable for their respective uses and are adequate for our current needs. Facility Function Americas Oakdale, Minnesota (owned) ...Sales/Administrative/Laboratory facility/Corporate headquarters Southaven, Mississippi (leased*) ...Distribution Center Europe Hoofddorp...

  • Page 18
    On January 11, 2011, we signed a patent cross-license agreement with SanDisk to settle two patent cases filed by SanDisk in Federal District Court against our flash memory products, including USB drives and solid state disk (SSD) drives. Under the terms of the cross-license, we will pay SanDisk ...

  • Page 19
    ... is available. The following table sets forth, for the periods indicated, the high and low sales prices of common stock as reported on the New York Stock Exchange. 2011 Sales Prices High Low 2010 Sales Prices High Low Market for Registrant's Common Equity, Related Stockholder Matters and Issuer...

  • Page 20
    ...31/2010 12/31/2011 (Total Return Index) 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 Imation Corp...S&P Midcap 400 Index ......109.30 122.98 The stock performance graph shall not be deemed soliciting material or to be filed with the Securities and Exchange Commission or ...

  • Page 21
    ...14.5 1,130 1,115 1,210 1,570 2,250 See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, for additional information regarding the financial information presented in this table. The acquisitions of TDK Recording Media on July 31, 2007 and Memcorp, Inc. on...

  • Page 22
    ...and data security company. Our portfolio includes tiered storage and security offerings for business and products designed to manage audio and video information in the home. Imation reaches customers in more than 100 countries through a global distribution network and well recognized brands. Optical...

  • Page 23
    ... revenue from audio and video information products to grow as a result of new product offerings during 2012 in all of our regional business segments. Overall, we expect revenue in 2012 to decline when compared with 2011. As we exit 2012 and enter 2013, we target the Company to return to growth...

  • Page 24
    ... million from audio and video information products driven in part by planned rationalization of our video products, offset partially by increases in secure and scalable storage products of $42.1 million. Gross Profit Years Ended December 31, 2011 2010 2009 (In millions) Percent Change 2011 vs. 2010...

  • Page 25
    ... settlement charge of $2.6 million was recognized in 2010. On January 11, 2011, we signed a patent crosslicense agreement with SanDisk to settle the two patent cases filed by SanDisk in Federal District Court against our flash memory products, including USB drives and solid state disk (SSD) drives...

  • Page 26
    ...millions) Goodwill impairment ... $1.6 $23.5 $- During 2011 we acquired substantially all of the assets of BeCompliant Corporation (doing business as Encryptx). The purchase price allocation resulted in goodwill of $1.6 million related to this acquisition, made up of expected strategic synergies...

  • Page 27
    ...to the planned rationalization of certain product lines as part of this program, which are included in cost of goods sold in our Consolidated Statements of Operations. During 2010 we recorded restructuring charges of $3.4 million for severance and related expenses and a pension curtailment charge of...

  • Page 28
    ... headquarters location in order to achieve better focus, gain efficiencies across brands and channels and reduce cost. We recorded $0.3 million of income through the reversal of lease termination accruals related to previously announced programs. Other During 2011 we recorded additional pension...

  • Page 29
    ... taxes. We maintain a valuation allowance related to our U.S. deferred tax assets and, therefore, no tax provision or benefit was recorded related to 2011 U.S. results. Because of the valuation allowance, the effective tax rates for 2011 and 2010 are not meaningful. The change in our income tax...

  • Page 30
    ... Results Our business is organized, managed and internally and externally reported as segments differentiated by the regional markets we serve: Americas, Europe, North Asia and South Asia. Each of these geographic segments has responsibility for selling generally all of our product lines. • Our...

  • Page 31
    ... with 2009 primarily due to higher revenues from secure and scalable storage products of $10.6 million and audio and video information products of $3.3 million, offset partially by decreases in traditional storage products of $5.5 million. Operating income declined in 2010 compared with 2009 driven...

  • Page 32
    ... primarily by decreases in revenue from optical products of $4.6 million and other traditional storage products of $2.8 million, partially offset by higher revenue from audio and video information of $4.4 million. Operating income remained unchanged in 2011 compared with 2010, impacted by higher...

  • Page 33
    ... December 31, 2010, offset by the estimated fair value of future contingent consideration of $9.2 million related to our recent acquisitions. Liquidity and Capital Resources Cash Flows (used in) provided by Operating Activities: Years Ended December 31, 2011 2010 2009 (In millions) Net loss ...$(46...

  • Page 34
    ...Financial Statements for further information regarding our acquisitions. In 2010, we paid $5.0 million to extend our license agreement with ProStor Systems related to RDX removable hard disk systems. The acquisition of certain ProStor assets in 2011 excluded the portion of the business to which this...

  • Page 35
    ... subsidiaries of Imation Corp. (the Guarantors) and are secured by a first priority lien (subject to customary exceptions) on the real property comprising Imation Corp.'s corporate headquarters and all of the personal property of Imation Corp., its subsidiary Imation Enterprises Corp., which is...

  • Page 36
    ... local tax laws. From time to time, we contribute additional amounts, as we deem appropriate. We expect to contribute approximately $7 million to $10 million to our pension plans in 2012 and have $29.3 million recorded in other liabilities related to pension plans as of December 31, 2011. Critical...

  • Page 37
    ... we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made. During the fourth quarter of 2010, we recognized significant restructuring charges related to our U.S. operations. Due to these...

  • Page 38
    ..., 2011, would not be material to our financial position. As additional information becomes available, the potential liability related to pending litigation will be assessed and estimates will be revised as necessary. Intangibles. We record all assets and liabilities acquired in purchase acquisitions...

  • Page 39
    ... by sales channel. During the second quarter of 2010 we realigned our corporate segments and reporting structure and combined our Electronic Products segment with our Americas segment, and we separated our Asia Pacific segment into North Asia and South Asia regions. As a result of the segment change...

  • Page 40
    ... the date such benefits were communicated to the applicable employees and recognized as expense over the employees' remaining service periods. Copyright Levies. In many European Union ("EU") member countries, the sale of recordable optical media is subject to a private copyright levy. The levies are...

  • Page 41
    ...-term assumption, it generally does not change each year. We use historic return trends of the asset portfolio combined with recent market conditions to estimate the future rate of return. The rate of return used in calculating the U.S. pension plan expense for 2011, 2010 and 2009 was 8.0 percent...

  • Page 42
    ... litigation; failure to adequately protect our information systems from cyber-attacks; our ability to meet our revenue growth, gross margin and earnings targets and the volatility of our stock price due to our results or market trends, as well as various factors set forth in Item 1A of this Form 10...

  • Page 43
    ... we attempt to utilize hedging to manage the impact of changes in currency exchange rates, our revenue or costs are adversely impacted when the U.S. dollar sustains a strengthening position against currencies in which we sell products or a weakening exchange rate against currencies in which we incur...

  • Page 44
    Item 8. Financial Statements and Supplementary Data. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Imation Corp.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of ...

  • Page 45
    IMATION CORP. CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2011 2010 2009 (In millions, except per share amounts) Net revenue ...Cost of goods sold ...Gross profit ...Operating expenses: Selling, general and administrative ...Research and development ...Litigation settlements ......

  • Page 46
    IMATION CORP. CONSOLIDATED BALANCE SHEETS As of December 31, 2011 2010 (In millions, except per share...stock, $.01 par value, authorized 25 million shares, none issued and outstanding ...Common stock, $.01 par value, authorized 100 million shares, 42.9 million issued... part of these statements. 43

  • Page 47
    ... matching contribution ...Stock-based compensation related to options ...Share-based payment modification ...Tax impact of stock-based compensation ...Comprehensive loss: Net loss ...Net change in cumulative translation adjustment ...Pension adjustments (net of income tax provision of $3.6) ...Cash...

  • Page 48
    ... cash acquired ...Proceeds from sale of assets ...Net cash (used in) provided by investing activities ...Cash Flows from Financing Activities: Purchase of treasury stock ...Exercise of stock options ...Debt issuance costs ...Net cash used in financing activities ...Effect of exchange rate changes on...

  • Page 49
    ... storage and data security company. Our portfolio includes tiered storage and security offerings for business and products designed to manage audio and video information in the home. Imation reaches customers in more than 100 countries through a global distribution network and well recognized brands...

  • Page 50
    ...and services consumed in developing or obtaining internal-use software, (2) payroll and payroll-related costs for employees who are directly associated with and who devote time to the internal-use software project and (3) interest costs incurred, when material, while developing internal-use software...

  • Page 51
    ...assets. These long-lived assets held and used include the property, building and equipment primarily related to the manufacturing of magnetic tape which was consolidated to the TDK Group Yamanashi manufacturing facility in April 2011. TDK Corporation (TDK) is a related party to Imation. These assets...

  • Page 52
    ... site, revenue is recognized at the time these products are sold by the customer. We base our estimates for returns on historical experience and have not experienced significant fluctuations between estimated and actual return activity. Non-income based taxes collected from customers and remitted to...

  • Page 53
    ...cost of goods sold in the period in which the purchased inventory is sold, allocated using a systematic and rational method. Restructuring Reserves. Employee-related severance charges are largely based upon distributed employment policies and substantive severance plans. Generally, these charges are...

  • Page 54
    ...our income tax provision. Treasury Stock. Our repurchases of shares of common stock are recorded as treasury stock and are presented as a reduction of shareholders' equity. When treasury shares are reissued, we use a last-in, first-out method and the difference between repurchase cost and fair value...

  • Page 55
    ......(Loss) income from discontinued operations ...Net loss ...Denominator: Weighted average number of common stock outstanding during the period ...Dilutive effect of stock-based compensation plans ...Weighted average number of diluted shares outstanding during the period ...Basic (loss) earnings per...

  • Page 56
    ... 2011 we acquired the secure data storage hardware assets of IronKey Systems Inc. (IronKey). The purchase price consisted of a cash payment of $19.0 million. We also entered into a strategic partnership whereby we received a license from IronKey for its secure storage management software and service...

  • Page 57
    ... of the acquired business and incremental gross margin of the acquired business. The earn-out payments will be between $0.0 and $45.0 million. We revalue this contingent consideration each reporting period. Based on our analysis of fair value as of December 31, 2011, the value at acquisition of such...

  • Page 58
    ... impact our 2011 results of operations. Therefore, pro forma disclosures are not presented. Divestiture Presented as Discontinued Operations Discontinued operations are related to the wind down of the GDM joint venture. GDM was a joint venture created to market optical media products with Moser...

  • Page 59
    ... Balance Sheet Information As of December 31, 2011 2010 (In millions) Inventories Finished goods ...Work in process ...Raw materials and supplies ...Total inventories ...Other Current Assets Deferred income taxes ...Restricted cash (Note 2) ...Assets held for sale (Note 7) ...Taxes receivable...

  • Page 60
    ..., market and sell RDX removable hard disk systems through 2020. We recorded the payment as an other intangible asset and are amortizing the payment over a five year period. The acquisition of certain ProStor assets on August 29, 2011 excluded the portion of the business to which this license relates...

  • Page 61
    ... divided between the Americas-Consumer, Americas-Commercial, and Americas-Mobile Security reporting units as determined by sales channel. During 2011 we acquired the assets of MXI Security and assets of IronKey's secure data storage hardware business which resulted in goodwill of $21.9 million...

  • Page 62
    ..., a $1.6 million goodwill impairment charge was recorded during the three months ended March 31, 2011 in the Consolidated Statements of Operations. During 2009 our reporting units for goodwill were our operating segments (Americas, Europe, Asia Pacific, and Electronic Products) with the exception of...

  • Page 63
    ... million to rationalize certain product lines and discontinue tape coating operations at our Weatherford, Oklahoma facility by April 2011 and subsequently close the facility. We signed a strategic agreement with TDK Corporation to jointly develop and manufacture magnetic tape technologies. Under the...

  • Page 64
    ... and modification costs and $0.2 million of other charges. In addition, we also recorded inventory write-offs of $1.6 million related to the planned rationalization of certain product lines as part of this program, which are included in cost of goods sold in our Consolidated Statements of Operations...

  • Page 65
    ... headquarters location in order to achieve better focus, gain efficiencies across brands and channels and reduce cost. We recorded $0.3 million of income through the reversal of lease termination accruals related to previously announced programs. Other During 2011 we recorded additional pension...

  • Page 66
    ...activity by restructuring program: 2011 Manufacturing Redesign Program 2011 Corporate Strategy Program (In millions) Other Total Restructuring Severance and related ...Lease termination costs ...Other ...Total restructuring ...Other Pension settlement/curtailment ...Asset disposals ...Acquisition...

  • Page 67
    ... and other activity by restructuring program: 2011 Manufacturing Redesign Program 2011 2008 Corporate Corporate Strategy Redesign Program Program (In millions) Other Total Restructuring Severance and related ...Lease termination costs ...Total restructuring ...Other Pension settlement/curtailment...

  • Page 68
    ..., subject to the employees continuing service to the Company. For directors, the options generally become exercisable and restricted stock vests in full on the first anniversary of the grant date. Exercise prices for stock options are equal to the fair market value of our common stock on the date of...

  • Page 69
    ... under our 2011 Incentive Plan. No further shares were available for grant under any other Stock Plan. Stock Options The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The assumptions used in the valuation model are supported primarily...

  • Page 70
    ... operating income targets for 2010. Operating income (as defined under the 2010 Annual Bonus Plan) exceeded specified levels; therefore, the full grant will vest 25 percent per year over four years from the date of grant. There was no aggregate intrinsic value at December 31, 2011 as our stock price...

  • Page 71
    ..., we did not recognize the related tax benefit in 2011 and 2010. On March 18, 2010, we announced the retirement of our former Vice Chairman and Chief Executive Officer, effective May 5, 2010. In connection with his retirement from the Company, the Board of Directors also determined to accelerate...

  • Page 72
    ... to the valuation allowance, we did not recognize the related tax benefit in 2011 and 2010. No related stock-based compensation was capitalized as part of an asset for the years ended December 31, 2011, 2010 or 2009. As of December 31, 2011, there was $5.7 million of total unrecognized compensation...

  • Page 73
    ... set forth in applicable benefits laws and local tax laws. From time to time, we contribute additional amounts, as we deem appropriate. In connection with actions taken under our previously announced restructuring programs, the number of employees accumulating benefits under our pension plan...

  • Page 74
    ... ...Service cost ...Interest cost ...Actuarial (gain) loss ...Benefits paid ...Settlements ...Foreign exchange rate changes ...Plan amendments ...Curtailments ...Projected benefit obligation, end of year ...Change in plan assets Fair value of plan assets, beginning of year ...Actual return on plan...

  • Page 75
    ...% 4.77% 1.30% Weighted-average assumptions used to determine net periodic benefit costs were as follows: United States As of December 31, 2011 2010 2009 International As of December 31, 2011 2010 2009 Discount rate ...Expected return on plan assets ...Rate of compensation increase ... 4.75% 8.00...

  • Page 76
    ...-term, prospective rate. The plans' asset allocations by asset category were as follows: United States As of December 31, 2011 2010 International As of December 31, 2011 2010 Short-term investments ...Fixed income securities ...Equity securities ...Absolute return strategy equity funds ...Insurance...

  • Page 77
    ... insurance contracts. Mutual funds and absolute return strategy funds are valued using net asset value (NAV) of shares held as of December 31, 2011. The NAV is a quoted transactional price for participants in the fund which do not represent an active market. In relation to these investments...

  • Page 78
    ... total company performance. No contributions have been made under the variable compensation program for the years ended 2011, 2010 or 2009. We used shares of treasury stock to match employee 401(k) contributions for 2011, 2010 and 2009. Total expense related to the use of shares of treasury stock to...

  • Page 79
    ... an increase in the state tax effective rate, additional reserves for uncertain tax positions and the change in proportion of income by jurisdiction. In 2011, 2010 and 2009 the net cash received (or paid) for income taxes, relating to both continuing and discontinued operations, was ($4.9) million...

  • Page 80
    ... we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made. During the fourth quarter of 2010, we recognized significant restructuring charges related to our U.S. operations. Due to these...

  • Page 81
    ... during the fourth quarter of 2011. Our 2011 provision includes an additional $4.0 million charge to record the U.S. tax liability associated with these earnings. Some of these distributions were loans of funds to the U.S. from our subsidiaries which at this time we expect to repay in future periods...

  • Page 82
    ... as of December 31, 2011 was $15.1 million, excluding accrued interest and penalties described below. If the unrecognized tax benefits were recognized in our consolidated financial statements, $4.6 million would ultimately affect income tax expense and our related effective tax rate. The other $10...

  • Page 83
    ... subsidiaries of Imation Corp. (the Guarantors) and are secured by a first priority lien (subject to customary exceptions) on the real property comprising Imation Corp.'s corporate headquarters and all of the personal property of Imation Corp., its subsidiary Imation Enterprises Corp., which is...

  • Page 84
    ..., assets held for sale and certain fixed assets are recorded at fair value as discussed below. Fair value measurements are categorized into one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets for identical assets); Level...

  • Page 85
    ... amount of our Americas-Commercial reporting unit, including Encryptx, significantly exceeded the implied fair value. This resulted in an impairment charge of $1.6 million, which was included in earnings in 2011. See Note 6 herein for further information regarding the assumptions used to assess this...

  • Page 86
    ..., to hedge our recorded balance sheet exposures. Our financial assets and liabilities that are measured at fair value on a recurring basis were as follows: December 31, 2010 December 31, 2011 Quoted Prices in Significant Quoted Prices in Significant Active Markets Other Active Markets Other for...

  • Page 87
    ... at the time, if any, that TDK and its affiliates cease to own at least 75 percent of the shares issued related to the acquisition of the TDK Recording Media business or cease to be holders of record of at least 10 percent of the common stock as a result of Imation issuing additional shares. 84

  • Page 88
    ... stock outstanding at any time during the TDK Standstill Period other than as a result of a reduction in the number of shares outstanding due to Imation repurchasing shares of common stock and is limited to 22 percent in this event. TDK shall dispose of a sufficient number of shares of common stock...

  • Page 89
    ... and Geographic Data Our business is organized, managed and internally and externally reported as segments differentiated by the regional markets we serve: Americas, Europe, North Asia and South Asia. Each of these geographic segments has responsibility for selling generally all of our product lines...

  • Page 90
    ... DVDs, CDs and Blu-ray disc recordable media. Magnetic products include primarily data storage tape media. Other traditional storage products include primarily optical drives and audio and video tape media. Secure and scalable storage products include flash memory and hard disk drive products...

  • Page 91
    ...operations or cash flows. On January 11, 2011, we signed a patent cross-license agreement with SanDisk to settle two patent cases filed by SanDisk in Federal District Court against our flash memory products, including USB drives and solid state disk (SSD) drives. Under the terms of the cross-license...

  • Page 92
    ...with Philips Electronics N.V., U.S. Philips Corporation and North American Philips Corporation (collectively, Philips). We had been involved in a complex series of disputes in multiple jurisdictions regarding cross-licensing and patent infringement related to recordable optical media. The settlement...

  • Page 93
    ...shares as of December 31, 2011 and 2010. In connection with the acquisition we entered into a Supply Agreement and a Transition Services Agreement with TDK. Under the Transition Services Agreement, TDK provided certain services to assist in the transfer of the TDK Recording Media business to Imation...

  • Page 94
    ... operations ...Net (loss) income ...(Loss) earnings per common share, continuing operations: Basic ...Diluted ...Earnings (loss) per common share, discontinued operations: Basic ...Diluted ...(Loss) earnings per common share, net income: Basic ...Diluted ...2011 Net revenue ...Gross profit...

  • Page 95
    ... of compliance with the policies or procedures may deteriorate. Imation management assessed the effectiveness of Imation's internal control over financial reporting as of December 31, 2011. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the...

  • Page 96
    ... Executive Officer, Western Digital Corporation (a hard disk maker). Ronald T. LeMay, Chief Executive Officer, MachineryLink, Inc. (a farm equipment leasing company), Chairman of AirCell Corporation, now known as Gogo (a designer, manufacturer and marketer of airborne telecommunication systems) and...

  • Page 97
    ...1996 Directors Stock Compensation Program. Item 13. Certain Relationships and Related Transactions and Director Independence. The Sections of the Proxy Statement entitled "Information Concerning Solicitation and Voting - Related Person Transactions and Related Person Transaction Policy", and "Board...

  • Page 98
    ..., Investor Capital Management Asia Limited, Investor Capital Partners - Asia Fund L.P, Global Media Limited, Memorex Holdings Limited and Imation Corp. (incorporated by reference to Exhibit 2.2 to Imation's Form 8-K Current Report filed on January 25, 2006) Purchase Agreement, dated October 5, 2011...

  • Page 99
    ...the quarter ended June 30, 2011) Form of Indemnity Agreement between Imation Corp. and each of its directors (incorporated by reference to Exhibit 10.13 to Annual Report on Form 10-K for the year ended December 31, 1996) 1996 Directors Stock Compensation Program, as amended May 8, 2002 (incorporated...

  • Page 100
    ... Agreements under the 2000 Employee Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to Imation's Form 8-K Current Report filed on February 13, 2006) Form of 2005 Stock Incentive Plan Amendment to 2005 Stock Option Agreements - Non-Employee Directors (incorporated by reference to...

  • Page 101
    Number Description of Exhibit 10.34* 10.35* Form of 2005 Stock Incentive Plan Non-Employee Director Option Agreement (incorporated by reference to Exhibit 10.12 to Imation's Form 8-K Current Report filed on February 13, 2006) Form of 2005 Stock Incentive Plan Amendment to 2005 Restricted Stock ...

  • Page 102
    ...Annual Bonus Plan Target Approval (incorporated by reference to Imation's Form 8-K Current Report filed on November 10, 2010) Description of 2012 Annual Bonus Plan Target Approval (incorporated by reference to Imation's Form 8-K Current Report filed on November 4, 2011) Director Compensation Program...

  • Page 103
    SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IMATION CORP. By: /s/ MARK E. LUCAS Mark E. Lucas President and Chief Executive...

  • Page 104
    ...-fact President, Chief Executive Officer and Director (Principal Executive Officer) Senior Vice President and Chief Financial Officer (Principal Financial Officer) Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer) Director February 28, 2012 February...

  • Page 105
    ... Sarbanes-Oxley Act of 2002 The following financial information from Imation Corp.'s Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on February 28, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations for...

  • Page 106
    ... America Marketing S.A. Imation Mercosur Trading S.A. Imation Funding Corp Imation Government LLC Memorex Products Inc. Imation Online Services Corporation IMN Data Storage LLC Imation Data Storage Holdings CV Imation Europe BV Imation Holding BV TME GmbH Imation U.K. Limited Imation S.r.l. Imation...

  • Page 107
    ..., 333-66030, 333-124634, 333-150693 and 333-173903), of Imation Corp. of our report dated February 28, 2012, relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers...

  • Page 108
    ... alone, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the 2011 Annual Report on Form 10-K of Imation Corp., and any and all amendments thereto, and to file the same, with all exhibits thereto and other...

  • Page 109
    ...in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 110
    ...in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who...

  • Page 111
    ... Act of 2002 In connection with the Annual Report of Imation Corp. (the "Company") on Form 10-K for the period ended December 31, 2011, as filed with the Securities and Exchange Commission (the "Report"), I, Mark E. Lucas, President and Chief Executive Officer of the Company, certify, pursuant to 18...

  • Page 112
    ... Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report of Imation Corp. (the "Company") on Form 10-K for the period ended December 31, 2011, as filed with the Securities and Exchange Commission (the "Report"), I, Paul R. Zeller, Senior Vice President and Chief Financial...

  • Page 113
    ... storage and data security company. The company's portfoSio incSudes tiered storage and security offerings for business and products designed to manage audio and video information in the home. With a 60-year Segacy of technoSogy Seadership, Imation maintains the number one gSobaS market share...

  • Page 114
    ....com: click on Investor Relations click on Financial and Investor Information click on Shareholder Information, and follow the prompts to submit your electronic consent David B. Stevens Chief TechnoSogy Officer and Vice President, Corporate DeveSopment Brocade Communications Systems, Inc. Glen...