Memorex 2012 Annual Report Download - page 24

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Imation is a global scalable storage and data security company. Our portfolio includes commercial and consumer data
storage and security products as well as 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.
The following discussion is intended to be read in conjunction with Item 1. Business and our Consolidated Financial
Statements and related Notes that appear elsewhere in this Annual Report on Form 10-K. This discussion contains forward-
looking statements that involve risks and uncertainties. Imation’s actual results could differ materially from those anticipated
due to various factors discussed below under “Cautionary Statements Regarding Forward-Looking Statements” in Item 1A.
Risk Factors of this Annual Report on Form 10-K.
Basis of Presentation
The financial statements in this Annual Report on Form 10-K are presented on a consolidated basis and include the
accounts of the Company and our subsidiaries. See Note 2 — Summary of Significant Accounting Policies in our Notes to
Consolidated Financial Statements for further information regarding consolidation. References to “Imation,” the “Company,”
“we,” “us” and “our” are to Imation Corp, and its subsidiaries and consolidated entities. Our Consolidated Financial Statements
are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP).
Overview
Following is a summary of significant items impacting the Company during the year that impacted our operating results,
liquidity and capital structure in 2012:
Strategic Transformation
During the fourth quarter of 2012, we announced the acceleration of our strategic transformation, including the planned
realignment of our global business into two new business units, a cost reduction program and our increased focus on data
storage and security including exploring strategic options for our consumer electronics brands and businesses. As our
traditional media businesses decline, we are accelerating our business transformation to further focus on data storage and
data security. Further, on February 13, 2013, we announced our plans to divest our XtremeMac and Memorex consumer
electronics businesses. We will continue our TDK Life on Record business on a more selective basis.
The realignment of our global business into two new business units will better align the Company with our key
commercial and consumer channels. The two business units will consist of Tiered Storage and Security Solutions (TSS),
which will focus on small and medium business and enterprise and government customers; and Consumer Storage and
Accessories (CSA), which will focus on retail channels. We continued to manage and evaluate results through December 31,
2012 under our historic regional segment presentation but will report segment information under the new structure beginning
with the first quarter of 2013. See Note 14 — Business Segment Information and Geographical Data in our Notes to
Consolidated Financial Statements for more information on our business segments.
In October 2012, the Board of Directors approved a restructuring program in order to realign our business structure and
reduce operating expenses by more than 25 percent over time. This restructuring program addresses product line
rationalization and infrastructure, and includes a reduction of approximately 20 percent of our global workforce. These actions
are being implemented beginning in 2013. We anticipate we will incur cash charges up to $40 million, with total charges
between $50 million and $60 million (excluding charges associated with goodwill and intangible asset impairments), the
majority of which will occur in 2013. See Note 7 — Restructuring and Other Expense in our Notes to Consolidated Financial
Statements for more information on the restructuring program.
In conjunction with the acceleration of our strategic transformation in the fourth quarter of 2012, we evaluated our
intangible assets, including goodwill, for impairment and recorded non-cash impairment charges of $283.8 million in the
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