Imation Announces Further Manufacturing Optimization Steps
22 Juli 2008 - 1:00PM
PR Newswire (US)
Company to Focus Tape Coating Operations in Weatherford, OK and
Exit Camarillo, CA Plant by Year End OAKDALE, Minn., July 22
/PRNewswire-FirstCall/ -- Imation Corp. (NYSE: IMN) today announced
additional steps to optimize its magnetic tape manufacturing by
focusing all tape coating in its state-of-the-art Weatherford, OK
plant as a further implementation of the Company's manufacturing
strategy. This will result in the exit from its Camarillo, CA plant
by the end of this year. This follows the announcement in May 2007
of the consolidation and outsourcing of tape converting operations,
resulting in the exit of its Wahpeton, ND plant by year end 2008.
Imation's manufacturing plant in Weatherford, OK will remain
dedicated to magnetic tape coating operations. Key elements of
today's announcements include the following: -- Imation will focus
all tape coating operations in its Weatherford plant and cease
manufacturing operations at its Camarillo plant, which it plans to
exit by year-end 2008. This will result in approximately 140
positions out of a current worldwide total of 1,950 being
eliminated by year- end. -- The Company anticipates it will incur
up to $20 million in restructuring and related charges associated
with the Camarillo closure, the majority of which will occur in the
second half of 2008. Approximately half of the charges are
anticipated to be cash payments associated with severance benefits
and costs of exiting the site. The remaining charges will be
non-cash asset write-offs. -- These actions are expected to result
in approximately $15 million to $20 million in annualized cost
eliminations intended to mitigate projected declines in tape gross
profits in future years. However, these benefits will not be
completely realized until the program is fully implemented.
Commenting on today's announcement, Imation's President and Chief
Executive Officer, Frank Russomanno said: "Imation remains
committed to maintaining our leadership position in the removable
data storage industry serving commercial customers. As we said in
the past, this management team will take all steps necessary to
maintain our competitive advantage. "At last year's analyst
strategy briefing, we announced steps to optimize our magnetic
business with the consolidation and outsourcing of our tape
converting operations and our planned exit from our Wahpeton plant
by the end of 2008. This morning we accelerated our optimization
strategy as we announced our plan to focus coating in Weatherford
and the exit of our Camarillo operation by year-end. "The tape
industry has consistently addressed the growth in demand for
storage capacity with higher capacity cartridges resulting in lower
cost per gigabyte. In addition, open format LTO tape continues to
gain share with legacy formats declining at an increasing rate. In
the current economic environment we have seen this trend
accelerate, especially among some of our enterprise class
customers. Finally, lower cost disk and optimization strategies
such as virtual tape and de-duplication remain a factor in certain
sectors of the market. As a result, we expect tape revenue and
margins to continue to be under pressure. "Given these trends, we
recognize that excess manufacturing capacity exists, so we are
taking aggressive actions as part of our strategy to optimize our
tape business and maintain our leadership position. "Several years
ago, we invested $55 million in the most modern coater in the
industry, our TeraAngstrom coater in Weatherford. At that time, we
said we would deliver a Terabyte (TB) of capacity in a cartridge
before the end of the decade. Last week, we passed that milestone.
Our Weatherford plant will be the manufacturing site for all our
coating operations going forward. "Imation is well known and
trusted as a leading developer and manufacturer of magnetic tape
formats. That will not change. We expect the tape business to be an
important market for us in the future and we intend to remain a
leader," Russomanno concluded. About Imation Corp. Imation is a
leading global marketer of brands and developer of products in
digital storage and audio and video electronics. Imation Corp.'s
global brand portfolio, in addition to the Imation brand, includes
the Memorex brand, one of the most widely recognized names in the
consumer electronics industry, famous for the slogan, "Is it live
or is it Memorex?" and the XtremeMac brand. Imation is also the
exclusive licensee of the TDK Life on Record brand, one of the
world's leading recording media brands. Additional information
about Imation is available at http://www.imation.com/. Risk and
Uncertainties Certain information contained in this press release
which does not relate to historical financial information may be
deemed to constitute forward- looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties that
could cause our actual results in the future to differ materially
from our historical results and those presently anticipated or
projected. We wish to caution investors not to place undue reliance
on any such forward-looking statements. Any forward-looking
statements speak only as of the date on which such statements are
made, and we undertake no obligation to update such statements to
reflect events or circumstances arising after such date. Risk
factors include our ability to successfully integrate our recent
acquisitions and achieve the anticipated benefits, including
synergies, in a timely manner; our ability to successfully manage
multiple brands globally; our ability to successfully defend our
intellectual property rights; continuing uncertainty in global and
regional economic conditions; the volatility of the markets in
which we operate; our ability to meet our revenue growth and cost
reduction targets; our ability to successfully implement our global
manufacturing strategy for magnetic data storage products and to
realize the benefits expected from the related restructuring; our
ability to introduce new offerings in a timely manner either
independently or in association with OEMs or other third parties;
our ability to efficiently source, warehouse and distribute our
products globally; our ability to secure and maintain adequate
shelf and display space over time at retailers which conduct
semi-annual or annual line reviews; our ability to achieve the
expected benefits from our strategic relationships and distribution
agreements; the competitive pricing environment and its possible
impact on profitability and inventory valuations; foreign currency
fluctuations; the outcome of any pending or future litigation,
including the pending Philips litigation; our ability to secure
adequate supply of certain high demand products at acceptable
prices; the ready availability and price of energy and key raw
materials or critical components; the market acceptance of newly
introduced product and service offerings; the rate of decline for
certain existing products; the possibility that our goodwill or
other assets may become impaired, as well as various factors set
forth from time to time in our filings with the Securities and
Exchange Commission. DATASOURCE: Imation Corp. CONTACT: Brad Allen
of Imation Corp., +1-651-704-5818 Web site: http://www.imation.com/
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