Memorex 2012 Annual Report Download - page 53

IMATION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Background and Basis of Presentation
Background
Imation Corp., a Delaware corporation, was formed in 1996 as a result of the spin-off of substantially all of the
businesses which comprised the data storage and imaging systems groups of 3M Company. As used herein, the terms
“Imation,” “Company,” ‘‘we,” “us,” or “our” mean Imation Corp. and its subsidiaries and consolidated entities unless the context
indicates otherwise. We are a global scalable storage and data security company. Our portfolio includes tiered storage and
security offerings for businesses 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.
Basis of Presentation
The financial statements are presented on a consolidated basis and include the accounts of the Company and our
wholly-owned subsidiaries. See Note 2 — Summary of Significant Accounting Policies for further information regarding
consolidation. Our Consolidated Financial Statements are prepared in conformity with accounting principles generally
accepted in the United States of America (GAAP). All significant inter-company transactions have been eliminated.
Discontinued operations in 2010 reflect the wind down of our Global Data Media joint venture.
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 data 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 have reviewed the requirements for held-for-sale and discontinued operations presentation and
have determined that these businesses did not qualify for this presentation at December 31, 2012. 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, 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 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. See Note 7 — Restructuring and Other Expense 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
quarter. See Note 6 — Intangible Assets and Goodwill for further information on the impairment charges.
50