OAKDALE, Minn.--Jan. 25, 2001--Imation Corp. (NYSE:IMN) today reported net income, excluding special charges, for the fourth quarter ended December 31, 2000 of $14.8 million, or $0.43 per diluted share, on revenue of $308.5 million. This compares to net income of $14.3 million, or $0.39 per diluted share, on revenue of $371.2 million for the same quarter last year. Including previously announced special charges totaling $31.9 million pre-tax, which includes restructuring charges of $2.1 million and $29.8 million of non-cash, capitalized software write-off, the Company reported a net loss of $1.0 million, or $0.03 per diluted share. Operating income, excluding special charges, was $12.8 million for the quarter, ahead of previously provided guidance of $2 to $6 million. This compares to operating income, excluding special charges, for the third quarter 2000 of $1.9 million and to $19.3 million in the year earlier period. For the twelve months ended December 31, 2000, the Company reported income from continuing operations, excluding special charges, of $63.3 million, or $1.79 per diluted share, on revenue of $1.235 billion. This compares to income from continuing operations of $42.3 million, or $1.12 per diluted share, on revenue of $1.413 billion last year. Including special charges for restructuring, capitalized software write-off and the cumulative effect of accounting change, the Company reported a net loss for the twelve months ended December 31, 2000 of $4.4 million, or $0.13 per diluted share. This compares to net income for the prior year, including income from discontinued operations, of $43.9 million, or $1.17 per diluted share. Results for the fourth quarter and full year 2000 reflect an accounting change for the way revenues are recognized under the guidelines of new SEC Staff Accounting Bulletin 101. Quarterly revenue in 2000 has been restated for the change, retroactive to January 1, 2000. The effect of this change on total revenue and income before cumulative effect of accounting change for 2000 is insignificant. A $3.4 million charge is included in restated results for first quarter 2000 reflecting the cumulative after-tax impact of this accounting change as of January 1, 2000. Tax benefits were realized in the quarter as the full year tax rate was adjusted downward to 5 percent. The tax rate for 2001 is projected to increase to approximately 32 percent. Continued working capital improvements were a significant contributor to cash generation in the quarter. Cash flow from operations reached $70.9 million in the quarter and EBITDA, excluding special charges, was $26.4 million. Accounts Receivable declined to $171.4 million and Days Sales Outstanding were 48, down from 59 in the year-ago period and flat with the previous quarter. Inventories declined to $141.2 million, $21.6 million lower sequentially and $50.1 million less than the year-ago quarter. Days of Inventory Supply was reduced to 63, a record low for the Company, down 17 percent from 76 in the year-earlier period and down 6 days sequentially. Cash at the end of the year was $269.7 million. Stock repurchases in the quarter totaled 28,600 shares for $544,500. For the full year, stock repurchases totaled 2.4 million for $66.5 million. Cumulative repurchases under the plan total 6.8 million shares for $153.3 million with the remaining authorization at 3.2 million shares. Outlook for 2001 Commenting on the outlook for 2001, Bill Monahan, chairman and chief executive officer said, "Our priorities for 2001 are to aggressively drive sales to maximize our operating income and cash flow. We will stay focused on improving our manufacturing processes and driving productivity improvements by further implementation of disciplined cost control. We are moving aggressively to commercialize products currently in beta and to develop new offerings with focused R&D expenditures. As we continue to transition our base business to newer offerings, we expect full year 2001 revenues to be roughly flat to up slightly compared to 2000, although we do not expect first half comparisons to be up year-over-year. "Restructuring actions are anticipated to have an increasingly positive effect as we move through 2001. We anticipate that the remaining $5.7 million of the non-cash software write-off will be recorded as a special charge in the first quarter of 2001. A slight implementation delay in the fourth quarter pushed the remainder of the charge into the first quarter. "We are targeting operating income growth of 5 to 10 percent in 2001 over 2000 operating income of $45.9 million. We expect results for the first and second quarters to be below those just reported for the fourth quarter excluding special charges but trending upward to positive year-over-year comparisons in the second half of the year as newer offerings begin to fuel our growth. Non-operating income for 2000 included significant venture capital distributions which we do not anticipate recurring in 2001. As a result, we expect that non-operating income for 2001 will be about half the amount reported for 2000. With the 32 percent tax rate, we expect EPS, excluding special charges, to be below those reported for 2000, despite the improvement in operating income."