Memorex 2013 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    ... and sales talent, introducing new products and promoting our solutions around the world. To address consumer needs in data storage and accessories, Imation continues to introduce differentiated new products into the retail market, including innovative offerings under the TDK Life on RecordTM brand...

  • Page 3
    ... is a shell company (as defined in Rule 12b-2 of the Exchange 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 $4.23 as reported on the New York Stock Exchange on June 28, 2013, was $159...

  • 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
    ... other removable data storage media such as optical media, flash and solid state drives, removable and external hard disk drives and consumer electronics, including audio and video products with business acquisitions in 2006 and 2007 that included our Memorex and TDK Life on Record brands. Also in...

  • Page 6
    ... Storage and security solutions and Commercial storage media in our TSS business unit. Consumer Storage Media Our consumer storage media includes optical products, USB flash drives, flash cards and external hard disk drives. Our optical products consist of DVDs, CDs and Blu-rayâ„¢ recordable media...

  • Page 7
    ... of data storage and digital technology for many years. Imation brand products include magnetic tape media, recordable CDs, DVDs and Blu-ray discs, flash products and hard disk drives. The Imation brand includes RDX Removable hard disk storage systems. Imation brand products are sold throughout...

  • Page 8
    ... have two major product categories under our CSA segment: Consumer storage media and Audio and accessories and two major product categories under our TSS segment: Commercial storage media and Storage and security solutions. See Note 14 - Business Segment Information and Geographic Data in our Notes...

  • Page 9
    ... that addresses a wide range of customer needs in this market. The optical market is in secular decline as digital streaming, hard disk and flash media replace optical media in some applications such as music and video recording. While our different brands have varying strengths in different regions...

  • Page 10
    ... market requirements. Beginning in 2013 we have reduced our research and development efforts on our legacy products and are focusing on our growth areas by investment in research related to our strategic focus on data protection and management, storage hardware, removable hard drive systems, disk...

  • Page 11
    ... and Chief Executive Officer of Altec Lansing Technologies, a manufacturer of consumer audio equipment from June 2001 to August 2005. Mr. Lucas was a member of the Board of Directors of Imation from April 2007 to February 2009 and served as a member of the Company's Audit and Finance Committee and...

  • Page 12
    ... a provider of data storage products, a leader in hard disk drives and storage solutions. From 2004 to 2006, he served as Director of RAID solutions and external storage for Adaptec Inc. From 2000 to 2004 and following Compaq's acquisition by Hewlett-Packard Company, a computer software and hardware...

  • Page 13
    ... from competitive offerings, timing of new product introductions, effectiveness of marketing programs and maintaining low manufacturing, sourcing and supply chain costs. No assurance can be given with regard to our ability to anticipate and react to changes in market requirements, actions of...

  • Page 14
    ..., personnel, technologies, products and information systems of acquired companies. We may experience delays in the timing and successful integration of acquired technologies and product development, unanticipated costs and expenditures, changing relationships with customers, suppliers and strategic...

  • Page 15
    ...provide appropriate 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...

  • Page 16
    ... litigation matters could result in large costs. 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 often indemnified by our suppliers...

  • Page 17
    ... costs, causing our business and results of operations to suffer. Any interruption or failure of our information systems or any breach of security could adversely affect our business and results of operations. The market price of our common stock is volatile. The market price of our common stock...

  • Page 18
    • conditions and trends in the consumer electronics and data storage industries; • contraction in our operating results or growth rates; • changes in financial estimates by securities analysts relating specifically to us or the industries in which we participate in general; and • ...

  • Page 19
    ... of applicable products, including the Company) when sales of optical media are made to natural persons presumed to be making private copies. Within this disclosure, we use the term "commercial channel sales" when referring to products intended for uses other than private copying and "consumer...

  • Page 20
    ... prior period consumer channel sales should be reversed. Our evaluation is made on a jurisdiction-by-jurisdiction basis and considers ongoing and cumulative developments related to levy litigation and law making activities within each jurisdiction as well as throughout the EU. Cost of goods sold for...

  • Page 21
    ... consumer optical levies withheld by Imation. Imation has corresponding claims in those actions seeking reimbursement of levies improperly collected by those collecting societies. We are subject to threatened actions by certain customers of Imation seeking reimbursement of funds they allege relate...

  • Page 22
    ... by our Board of Directors. Unregistered Sales of Equity Securities 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. 2013 Sales Prices High Low 2012 Sales Prices High Low Market for Registrant...

  • Page 23
    ...each of our common stock, the S&P MidCap 400 Index and the ArcaEx Tech 100 Index and reinvestment of all dividends. Shareholder Return Performance $300 Imation Corp. $250 $200 ... it be incorporated by reference into any past or future filing under the Securities Act or the Exchange Act, except to...

  • Page 24
    ... ...Total shareholders' equity ...Other Information: Current ratio ...Days sales outstanding(1) ...Days of inventory supply(1) ...Return on average assets(2) ...Return on average equity(2) ...Dividends per common share ...Capital expenditures ...Number of employees ...* (1) $860.8 188.7 181.6 18...

  • Page 25
    ... IronKeyâ„¢ mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imationâ„¢, Memorexâ„¢ and TDK Life on Recordâ„¢ brands. Imation reaches customers in more than...

  • Page 26
    ... in 2013, 2012 and 2011, respectively. Our consumer storage media includes optical products, USB flash drives, flash cards and external hard disk drives. Our optical products consist of DVDs, CDs and Blu-rayâ„¢ recordable media. We have the leading global market share for recordable optical media...

  • Page 27
    ...on Record brand. The portfolio continues to evolve as we focus on higher-margin, differentiated accessories products and respond to customer demand. We design products to meet user needs and source these products from manufacturers throughout Asia. The divestiture of our Memorex consumer electronics...

  • Page 28
    ....6 million decline in our commercial storage media products due to revenue declines in tape media products. The accelerated revenue declines we saw in magnetic tape through the middle of 2013 leveled off in the fourth quarter. We believe we are holding our market share in tape media, but it has been...

  • Page 29
    ...consumer storage media products. Gross margin in the TSS reporting segment increased 2.6 points to 20.3 percent as higher revenue and gross margin in our storage and security solutions products from the acquisition of Nexsan were partially offset by lower gross margin on our commercial storage media...

  • Page 30
    ...Mobile Security reporting unit and the Storage Solutions reporting unit, which are one level below our TSS reporting segment. We do not have any goodwill in our CSA reporting segment. Goodwill resulting from the acquisition of the Memory Experts International, Inc. (MXI Security) and IronKey Systems...

  • Page 31
    ...value of this reporting unit are heavily dependent on achieving significant revenue growth of our data solution products developed for our IronKey Workspaces for Microsoft® Windows To Go® which is a new market in which we do not presently generate significant revenue and for which limited external...

  • Page 32
    ...also tested for impairment the long-lived assets, including intangible assets, within the asset groups included in our Mobile Security and Storage Solutions reporting units. In performing these tests, we compared the carrying values of these asset groups with their estimated undiscounted future cash...

  • Page 33
    ... case in Brazil was recognized in 2013. In 2011, we recognized a $2.0 million charge related to a litigation settlement with Advanced Research Corp. Restructuring and Other 2012 Global Process Improvement Restructuring Program On October 22, 2012, the Board of Directors approved our GPI Program...

  • Page 34
    ... million related to a pension curtailment charge and $0.9 million of other charges. During the year ended December 31, 2013, severance expense of $1.6 million related to employees directly associated with XtremeMac and Memorex consumer electronics businesses was recorded in discontinued operations...

  • Page 35
    ... further information on our 2012 impairment losses. Operating loss in 2013 included the reversal of an accrual of $23.1 million for copyright levies as a result of Italian and French court rulings, a $10.6 million loss related to the settlement of our UK pension plan, a $9.8 million gain on the sale...

  • Page 36
    ... of the XtremeMac disposal group to its estimated fair value based on the anticipated sales transaction which occurred on January 31, 2014. This was partially offset by a $0.9 million gain on the sale of the Memorex consumer electronics business which occurred on October 15, 2013. The increase in...

  • Page 37
    ...DVDs, CDs and Blu-ray disc recordable media as well as flash media. Audio and accessories include primarily headphones, audio electronics and accessories. We have two major product categories under our TSS segment: Commercial storage media and Storage and security solutions. Commercial storage media...

  • Page 38
    ... of 2013 leveled off in the fourth quarter. We believe we are holding our market share in tape media, but it has been impacted by industry wide dynamics including competing formats, as well as continuing improvements in compression and deduplication technologies. For our storage solutions products...

  • Page 39
    ... levels, but particularly in our consumer electronics and accessories inventory, as well as the sale of our consumer electronics businesses. Days of inventory supply is calculated using the current period inventory balance divided by an estimate of the inventoriable portion of cost of goods sold...

  • Page 40
    ... in) provided by financing activities ...$(3.4) $ 9.9 $(9.1) On May, 2, 2012 our Board of Directors authorized a share repurchase program that allowed for the repurchase of 5.0 million shares of common stock. The Company's previous authorization, which had 1.2 million shares remaining for purchase...

  • Page 41
    ... of our Board of Directors. Cash used in financing activities included borrowings of $4.9 million and $25.0 million and repayments of $4.9 million and $5.0 million during 2013 and 2012, respectively on our credit facilities primarily for the use in financing our working capital seasonal needs...

  • Page 42
    ... applicable laws; and limitations regarding additional liens, indebtedness, certain acquisitions, investments and dispositions of assets. The Amended Credit Agreement contains a conditional financial covenant that requires Imation Corp. to have a Consolidated Fixed Charge Coverage Ratio (as defined...

  • Page 43
    ... set forth in applicable benefits laws and local tax laws. From time to time, we contribute additional amounts, as we deem appropriate. We expect to contribute approximately $2 million to $4 million to our pension plans in 2014 and have $12.8 million recorded in other liabilities related to pension...

  • Page 44
    ... of certain U.S. and international tax uncertainties; however it is not possible to estimate the potential change at this time. Intangibles. We record all assets and liabilities acquired in purchase acquisitions, including intangibles, at estimated fair value. Intangible assets with a definite...

  • Page 45
    ...value of this reporting unit are heavily dependent on achieving significant revenue growth of our data solution products developed for our IronKey Workspaces for Microsoft® Windows To Go® which is a new market in which we do not presently generate significant revenue and for which limited external...

  • Page 46
    ... of applicable products, including the Company) when sales of optical media are made to natural persons presumed to be making private copies. Within this disclosure, we use the term "commercial channel sales" when referring to products intended for uses other than private copying and "consumer...

  • Page 47
    ... with changing laws and regulations potentially affecting our operating results; failure to adequately protect our information systems from cyber-attacks and the volatility of our stock price due to our results or market trends, as well as various factors set forth from time to time in Item 1A...

  • Page 48
    ....5 million hedged recorded balance sheet exposures. An immediate adverse change of 10 percent in year-end foreign currency exchange rates with all other variables (including interest rates) held constant would reduce the fair value of foreign currency contracts outstanding as of December 31, 2013 by...

  • Page 49
    ... 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 statement of operations, of comprehensive...

  • Page 50
    IMATION CORP. CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended December 31, 2013 2012 2011 (In millions, except per share amounts) Net revenue ...Cost of goods sold ...Gross profit ...Operating expenses: Selling, general and administrative ...Research and development ...Intangible impairments ......

  • Page 51
    IMATION CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Years Ended December 31, 2013...pension adjustments, net of tax: Liability adjustments for defined benefit pension plans ...Reclassification of adjustments for defined benefit plans recorded in net loss ...Total net pension...an integral part of ...

  • Page 52
    ...Preferred 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 ...Additional paid-in capital ...Retained deficit ...Accumulated other comprehensive loss ...Treasury stock, at cost ...Total...

  • Page 53
    ...grants and other ...401(k) matching contribution ...Stock-based compensation related to options . . Net change in cumulative translation adjustment ...Pension adjustments, net of tax Cash flow hedging, net of tax ...Issuance of treasury stock for acquisition ...Balance as of December 31, 2012 ...Net...

  • Page 54
    ... Activities: Capital expenditures ...Proceeds from sale of assets and business ...Recovery of investments ...Acquisitions, net of cash acquired ...Purchase of tradename ...Net cash used in investing activities ...Cash Flows from Financing Activities: Purchase of treasury stock ...Debt issuance costs...

  • Page 55
    ...; IronKeyTM mobile security solutions that address the needs of professionals for secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the ImationTM, MemorexTM and TDK Life on RecordTM brands. Imation reaches customers in more than...

  • Page 56
    ... other comprehensive loss in shareholders' equity until the underlying hedged item is recognized in operations. These gains and losses are generally recognized as an adjustment to cost of goods sold for inventory-related hedge transactions, or as adjustments to foreign currency transaction gains...

  • Page 57
    ... costs include only (1) external direct costs of materials 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...

  • Page 58
    .... We sell a wide range of data storage, mobile security and consumer storage solutions audio products and accessories. Net revenue consists primarily of data storage, mobile security, magnetic, optical, flash media, consumer electronics and accessories sales. We recognize revenue when persuasive...

  • Page 59
    ... 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. Our income tax returns are subject to review by various U.S. and foreign taxing authorities. As such, we record accruals for items that we believe...

  • Page 60
    ... market price of the Company's common stock for the period. See Note 3 - (Loss) Earnings per Common Share for our calculation of weighted average basic and diluted shares outstanding. Recent Accounting Pronouncements In July 2013, the Financial Accounting Standards Board (FASB) issued amendments...

  • Page 61
    ... based primarily on working capital received) and 3,319,324 shares of our common stock which was the equivalent of $15.5 million based on the fair value of our stock on the date of acquisition. Nexsan is a part of our TSS reporting segment. The preliminary purchase price allocation during the...

  • Page 62
    ...Trade names ...Other - developed technology ...Other - research and development technology ...Customer relationships ... $ 3.1 19.4 1.7 18.4 $42.6 5 years 3-7 years NA 12 years Nexsan did not contribute to the revenue or earnings of Imation for the year ended December 31, 2012, as it was acquired...

  • Page 63
    ... 2011, we acquired the secure data storage hardware business of IronKey Systems Inc. (IronKey) for a cash payment of $19.0 million. During 2012, we purchased the IronKey license for its secure storage management software and service and the IronKey brand for secure storage products for $4.0 million...

  • Page 64
    ... Experts International Inc., (MXI). MXI sells encrypted and biometric USB drives, encrypted and biometric hard disk drives, secure portable desktop solutions, and software solutions. MXI products contain various security features such as password authentication, encryption and remote manageability...

  • Page 65
    ..., 2013. Discontinued Operations On February 13, 2013, we announced our plans to divest our XtremeMac and Memorex consumer electronics businesses. The consumer storage business under the Memorex and TDK Life on Record brands and the consumer electronics business under the TDK Life on Record brand are...

  • Page 66
    ... plan to increase focus on data storage and data security and were included in our CSA reporting segment. As a part of exiting these disposal groups... Balance Sheets. On October 15, 2013 we completed the sale of the Memorex consumer electronics business for $9.3 million of total consideration...

  • Page 67
    ... receivable reserves and allowances include estimated amounts for customer returns, discounts on payment terms and the inability of certain customers to make the required payment. Other current liabilities (included as a separate line item in our Consolidated Balance Sheet) includes rebates payable...

  • Page 68
    ... review our long-lived assets and associated asset groups to determine if there is a triggering event which would require that we perform an impairment test. 2013 Intangible Asset Analysis As a part of our annual goodwill impairment test for our Storage Solutions and Mobile Security reporting units...

  • Page 69
    ..., TDK and Imation asset groups are derived primarily from sales of optical and magnetic media with each asset group having its own separately identifiable stream of cash flows. Revenues for the Memcorp asset group are derived primarily from sales of consumer electronics under the Memorex brand name...

  • Page 70
    ... assets during year. The total charge for the accelerated amortization of these intangible assets was $1.9 million which was recorded in restructuring and other in our Consolidated Statements of Operations. As of December 31, 2013, we had $66.9 million of definite-lived intangible assets subject to...

  • Page 71
    ...a terminal growth rate of 3.0 percent. 2012 Goodwill Analysis During the second and third quarters of 2012, we adjusted our internal financial forecast for our Mobile Security reporting unit (referred to as our Americas-Mobile Security reporting unit in 2012) due to changes in the timing of expected...

  • Page 72
    ... and related charges, lease termination costs and other costs related to restructuring programs. Employee-related severance charges are largely based upon distributed employment policies and substantive severance plans. Generally, these charges are reflected in the period in which the Board approves...

  • Page 73
    ... of site clean-up costs under the 2011 Manufacturing Program. In addition to the restructuring charges recorded in restructuring and other, we recorded inventory write-offs of $2.7 million, $2.3 million and $9.1 million related to the planned rationalization of certain product lines as part of our...

  • Page 74
    ... December 31, 2013, severance expense of $1.6 million related to employees directly associated with the XtremeMac and Memorex consumer electronics businesses was recorded in discontinued operations. See Note 4 - Acquisitions and Divestitures for more information on our discontinued operations. Other...

  • Page 75
    ... prices of awards issued under these plans are equal to the fair value of the Company's stock on the date of grant. During the year ended December 31, 2013, we granted 3.1 million SARs under the 2011 Incentive Plan to certain employees associated with our Nexsan and Mobile Security operations...

  • Page 76
    ... December 31: 2013 2012 2011 Volatility ...Risk-free interest rate ...Expected life (months) ...Dividend yield ...The following table summarizes our stock option activity: 43% 45% 44% 1.05% 1.07% 2.13% 72 71 70 -% -% -% Stock Options Weighted Average Exercise Price Weighted Average Remaining...

  • Page 77
    ... 1.5 years. No related stock-based compensation was capitalized as part of an asset for the years ended December 31, 2013, 2012 or 2011. Restricted Stock The following table summarizes our restricted stock activity: Weighted Average Grant Date Fair Value Per Share Restricted Stock Nonvested as of...

  • Page 78
    ... interest credit rate was 2.80 percent for 2013. In accordance with the annual update process, the interest credit rate will be 3.80 percent for 2014. In connection with actions taken under our announced restructuring programs, the number of employees accumulating benefits under our pension plan in...

  • Page 79
    ..., and the funded status of the defined benefit pension plans were as follows: United States International As of December 31, As of December 31, 2013 2012 2013 2012 (In millions) Change in benefit obligation Benefit obligation, beginning of year ...Service cost ...Interest cost ...Actuarial (gain...

  • Page 80
    ... Ended December 31, 2013 2012 2011 2013 2012 2011 (In millions) Service cost ...Interest cost ...Expected return on plan assets ...Amortization of net actuarial loss ...Amortization of prior service credit ...Amortization of transition obligation ...Net periodic pension cost (credit) ...Settlements...

  • Page 81
    ...annual cash flows cover the expected benefit payments of the plan, as well as comparing the results of our modeling to other corporate bond and pension liability indices. Appropriate benchmarks are used to determine the discount rate for the international plans. The expected long-term rate of return...

  • Page 82
    ...: International United States (In millions) 2014 ...2015 ...2016 ...2017 ...2018 ...2019-2023 ... $15.8 3.6 5.0 4.4 4.7 26.3 $1.3 1.4 1.4 1.5 1.5 8.1 The assets in our defined benefit pension plans are measured at fair value on a recurring basis (at least annually). A three-level hierarchy...

  • Page 83
    .... Investments in common stock are valued at the closing price reported on major markets on which the individual securities are traded. Accordingly, these investments are classified as Level 1 financial instruments. Comingled trust funds. These assets are valued using the NAV of shares as of December...

  • Page 84
    ... International December 31, 2012 Quoted Prices in Active Markets for Significant Other Identical Assets Observable (Level 1) Inputs (Level 2) (In millions) Unobservable Inputs (Level 3) Short-term investments Other ...Mutual Funds Equity securities - blended funds ...Fixed income securities...

  • Page 85
    ... the following items: Years Ended December 31, 2013 2012 2011 (In millions) Tax at statutory U.S. tax rate ...State income taxes, net of federal benefit ...Net effect of international operations ...Settlement of UK pension plan ...Valuation allowances ...U.S. tax on foreign earnings ...Stock-based...

  • Page 86
    ...) In 2013, 2012 and 2011 the net cash paid for income taxes, relating to both continuing and discontinued operations, was $4.6 million, $4.4 million and $4.9 million, respectively. Tax laws require certain items to be included in our tax returns at different times than the items are reflected...

  • Page 87
    ... would be limited primarily to required withholding taxes in foreign jurisdictions given that we have a full valuation allowance recorded in the U.S. Our income tax returns are subject to review by various U.S. and foreign taxing authorities. As such, we record accruals for items that we believe...

  • Page 88
    ... at December 31, 2013, 2012 and 2011, respectively. The reversal of accrued interest and penalties would affect income tax expense and our related effective tax rate. Our federal income tax returns for 2010 through 2012 are subject to examination by the Internal Revenue Service (IRS). The IRS...

  • Page 89
    ... 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 90
    ... applicable laws; and limitations regarding additional liens, indebtedness, certain acquisitions, investments and dispositions of assets. The Amended Credit Agreement contains a conditional financial covenant that requires Imation Corp. to have a Consolidated Fixed Charge Coverage Ratio (as defined...

  • Page 91
    ... used in hedging transactions are highly effective in offsetting changes in the cash flows of hedged items. At December 31, 2013 and 2012, our contracts had durations of 12 months or less. The fair value of these contracts is recorded in other current assets and other current liabilities on...

  • Page 92
    ... December 31, 2013 Quoted Prices in Significant Quoted Prices in Significant Active Markets Other Active Markets Other for Identical Observable Unobservable for Identical Observable Unobservable Assets Inputs Inputs Assets Inputs Inputs (Level 1) (Level 2) (Level 3) (Level 1) (Level 2) (Level 3) (In...

  • Page 93
    ..., 2006 to change the final expiration date from July 1, 2016 to February 11, 2013, effectively terminating the Rights Agreement. This amendment had no accounting implications to the Company. Treasury Stock On May, 2, 2012 our Board of Directors authorized a share repurchase program that allowed for...

  • Page 94
    ... primarily optical products such as DVDs, CDs and Blu-ray disc recordable media as well as flash media. Audio and accessories include primarily headphones, audio electronics and accessories. We have two major product categories under our TSS segment: Commercial storage media and Storage and security...

  • Page 95
    ...) Commercial storage media products consist mainly of magnetic data storage tape media and RDX® media. Storage and security solutions includes storage hardware products, services and software for backup and archiving as well as primary storage; encrypted and biometric flash drives and hard disk...

  • Page 96
    ... net revenue for the years ended December 31, 2013, 2012 and 2011, respectively. The following table presents long-lived assets by geographical region: As of December 31, 2013 2012 2011 (In millions) Long-Lived Assets United States ...$150.7 International ...41.6 Total ...$192.3 $166.9 47.4 $214...

  • Page 97
    ..., where Imation's sales of Blu-ray discs are substantially greater than in the U.S. Imation Corporation Japan, Imation's Japanese subsidiary, has sued One-Blue in Japan regarding its unlawful interference with certain of our customer relationships. Imation has notified its manufacturers of their...

  • Page 98
    ... of applicable products, including the Company) when sales of optical media are made to natural persons presumed to be making private copies. Within this disclosure, we use the term "commercial channel sales" when referring to products intended for uses other than private copying and "consumer...

  • Page 99
    ...commercial channel sales as we are not assured of its collectability. Rather, going forward, such amount began to be realized as a reduction to cost of goods sold upon the incurrence of (and for the same amount of) valid levies for consumer channel sales. During the remainder of 2013 we have off-set...

  • Page 100
    ... connection with this arrangement we entered into a supply agreement, dated July 31, 2007, with TDK (Supply Agreement). In 2013, 2012 and 2011 we purchased products and services under the Supply Agreement which allows us to purchase a limited number of LTO Tape media and Blu-ray removable recording...

  • Page 101
    ...) $ (0.65) (0.65) (0.21) (0.21) (0.86) (0.86) $ 0.47 0.47 (0.06) (0.06) 0.41 0.41 $ (0.60) (0.60) (0.49) (0.49) (1.10) (1.10) The sum of the quarterly loss per share may not equal the annual loss per share due to changes in average shares outstanding. 98

  • Page 102
    ... because of changes in conditions, or that the degree 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, 2013. In making this assessment, we used the criteria set forth...

  • Page 103
    ... 14A by April 30, 2014. Item 10. Directors, Executive Officers and Corporate Governance. Board of Directors Information regarding our Board of Directors as of March 13, 2014 is set forth below: David P. Berg, Chief Operating Officer of Carlson Companies, Inc. (a global hospitality and travel...

  • Page 104
    ... Analysis," "Compensation Committee Report," "Compensation of Named Executive Officers" and "Board of Directors - Compensation of Directors" are incorporated by reference into this Form 10-K. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The...

  • Page 105
    ... 19, 2007, by and between Imation Corp. and TDK Corporation (incorporated by reference to Exhibit 2.1 to Imation's Form 8-K Current Report filed on April 25, 2007) Acquisition Agreement, dated January 19, 2006, by and between Imation Corp. and Memorex International Inc. (incorporated by reference to...

  • Page 106
    ..., by and between IMN Data Storage Holdings C.V. and TDK Corporation (incorporated by reference to Exhibit 10.3 to Imation's Form 8-K Current Report filed on August 3, 2007) Supply Agreement, dated July 31, 2007, by and between Imation Corp. and TDK Corporation (incorporated by reference to Exhibit...

  • Page 107
    ..., 1996) 1996 Directors Stock Compensation Program, as amended May 8, 2002 (incorporated by reference to Exhibit 10.1 of Imation's Form 10-Q for the quarter ended June 30, 2002) Imation Corp. 2000 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.7 to Annual Report on Form 10...

  • Page 108
    ... Form of 2005 Stock Incentive Plan Non-Qualified Stock Option Agreement for Executive Officers (incorporated by reference to Exhibit 10.2 to Imation's Form 8-K Current Report filed on May 12, 2008) Form of 2005 Stock Incentive Plan Non-Employee Director Restricted Stock Award Agreement (incorporated...

  • Page 109
    ... Report on Form 10-K for the year ended December 31, 2012) Form of 2011 Stock Incentive Plan Performance Based Restricted Stock Award Agreement for Executive Officers (incorporated by reference to Exhibit 10.3 to Imation's Form 10-Q for the quarter ended June 30, 2013) Director Compensation Program...

  • Page 110
    ...the 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, 2013, filed with the SEC on March 13, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations for...

  • Page 111
    ... 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 Officer Date: March 13, 2014 108

  • Page 112
    ... of the Securities Exchange Act of 1934, this report has been ...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...

  • Page 113
    ...the 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, 2013, filed with the SEC on March 13, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations for...

  • Page 114
    ... S.A. Imation Latin America Marketing S.A. Imation Mercosur Trading S.A. Imation Funding Corp Memorex Products Inc. Imation Online Services Corporation IMN Data Storage LLC IMN Data Storage Holdings CV Imation Holding BV Imation Europe BV TME GmbH Imation U.K. Limited Imation S.r.l. Imation Middle...

  • Page 115
    ... Statement on Form S-3 (Registration No. 333-186061) of Imation Corp. of our report dated March 13, 2014, 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 116
    ..., in any and all capacities, to sign the 2013 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 documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in...

  • Page 117
    ... report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 13, 2014 By: /s/ MARK E. LUCAS Mark E. Lucas, President and Chief Executive Officer

  • Page 118
    ...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 119
    ... Act of 2002 In connection with the Annual Report of Imation Corp. (the "Company") on Form 10-K for the period ended December 31, 2013, 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 120
    ... 2002 In connection with the Annual Report of Imation Corp. (the "Company") on Form 10-K for the period ended December 31, 2013, as filed with the Securities and Exchange Commission (the "Report"), I, Paul R. Zeller, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant...

  • Page 121
    ... secure data transport and mobile workspaces; and consumer storage solutions, audio products and accessories sold under the Imation, Memorexâ„¢ and TDK Life on Recordâ„¢ brands. The company has a 60-year legacy of technology leadership, and maintains the number one global market share in recordable...

  • Page 122
    ... Imation Corp. If you would like to receive our annual report and proxy materials electronically in the future, go to our website: Trudy A. Rautio President and Chief Executive Officer Carlson Companies, Inc. imationcorp.com: click on Investor Relations click on Financial and Investor Information...