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TO OUR SHAREHOLDERS,
Four years ago, Imation announced a strategy to leverage our global footprint and storage roots to become a leading
player in data storage and security solutions. Since then we have made significant progress, including acquiring
companies that have formed the backbone of our storage and security platforms. Additionally and critically, we have
exited unprofitable businesses, expanded others and formed two customer-centric business units. Importantly, we
have reduced operating expenses associated with our legacy tape and optical media businesses by more than
$100 million to align with our new, focused and smaller organization.
A key step in our transformation was our January announcement that we have retained an investment banker to
assist us as we continue to explore ways to unlock the value of our businesses. Although there is no guarantee a
transaction will result, we do expect to evaluate a range of strategic alternatives — with the goal of enhancing
shareholder value and growing our businesses.
2014 IN REVIEW
Our financial performance reflects the fact that we are in a multi-year evolution — from a provider of lower margin
products to higher margin solutions. Sales totaled $730 million in 2014, a 15 percent decrease, as our legacy businesses
continue to be in secular decline. Imation’s operating loss from continuing operations was $2.74 per share, or $1.43
per share, excluding special charges.* We closed the year with almost $115 million in cash, and Imation generated
positive cash flow in the third and fourth quarters.
The objective of our transformation strategy is to build growth platforms for sustainable success long term. We are
working with urgency to make this happen. Among our 2014 achievements, we:
• Drove efficiencies across the organization: A top priority was to carefully manage our legacy media businesses to
generate cash to invest in our growth agenda.
• Stimulated growth: We established Storage and Security Solutions as a significant growth business; after posting
sequential gains in the 2014 second and third quarters, this unit then reported year-over-year (as well as sequential)
revenue increases in the fourth quarter.
• Invested in innovation: Our teams launched new, higher margin data storage and retail storage products to set the
table for ongoing growth.
NEW PRODUCTS IN STORAGE SOLUTIONS AND MOBILE SECURITY
Our Tiered Storage and Security Solutions segment (TSS) includes storage solutions and mobile security, which
represent our priority growth businesses. As such, we have invested appropriately in a robust new product pipeline
and in broadening our customer base to fuel revenue increases. In an exciting development, we recently launched
Secure Data Movement Architecture, or SDMA™, that gives organizations a holistic approach to manage and protect
their most valuable data from tampering, loss or corruption through their entire life cycle. (See details on inside back cover).
In Imation storage solutions, we also have strategically added data storage sales talent for NexsanTM to develop
incremental business in Europe and Asia, as well as engineering resources to expand our product portfolio. Moreover,
we have broadened our global network of value-added resellers to serve growth segments of the data storage
market. We are particularly interested in the hybrid storage market, which is increasing at a 20 percent annual pace.
As a whole, the expanded NST® product family deepens our reach in the data center by addressing mixed-application
workloads cost effectively and in a scalable way. The NST portfolio, combined with the Assureon® line of secure
archive solutions and the E-SeriesTM disk arrays, meet the data storage needs of varied vertical markets, such as
media and entertainment, healthcare and video surveillance.
We also have a significant opportunity in mobile security. We continue to focus on the government and enterprise
markets with our Microsoft®-certified solution that addresses the demand for flexible and secure information access
for the mobile and contract workforce — an application that is seeing sizable growth. Our IronKey® PC on a Stick®
workspaces for Windows to Go® targets organizations that require secure solutions in a Bring Your Own Device
(BYOD) environment. We offer better security and mobility, combined with substantial cost savings, versus laptop
deployment. Throughout 2014, we made important progress with Fortune 500 customers certifying PC on a Stick.
Later in 2015, as Microsoft launches Windows 10 — with its strong enterprise focus — we expect our revenues to build.
The third TSS business is Imation’s storage media, our legacy tape products that we sell in more than 100 countries
through a worldwide distribution network. Because of our 60-year history in tape media, we have built an excellent
reputation in IT departments around the world, giving us the credibility to introduce new products to these customers.
Storage media, due to secular decline, is not a growth vehicle for us, but we are managing the business well, and it
has provided important cash generation to the company.
*See back cover for reconciliation of Non-GAAP financial measure.