Imation Quantifies 4Q Restructuring Charges, Will Reduce Headcount by 500
Press release from the issuing company
OAKDALE, Minn. -Jan. 10, 2002-- Imation today quantified fourth quarter restructuring-related charges at $60 to $65 million pretax, associated with the Company's previously announced restructuring program to focus on its data storage business. Imation expects the full amount to be expensed in the fourth quarter ended December 31, 2001. Approximately $37 million of the charges are cash costs, most of which are for severance payments. The remainder is a non-cash charge primarily associated with write-off of various assets. Annualized cost reductions resulting from these actions are expected to total approximately $37 million.
The Company also reiterated its positive outlook for fourth quarter operating income. Based on improving revenue trends for data storage products throughout the quarter, the Company currently expects to meet or exceed previous guidance of $10 to $13 million for fourth quarter operating income and $48 to $51 million for the full year, excluding restructuring-related charges.
Imation expects to release results for the fourth quarter and full year on Tuesday, January 29, 2002.
The Company had previously announced that, following the sale of its color proofing and color software business, it would take material restructuring charges in association with its streamlining process. The sale of the color proofing and color software business to Norwalk, CT based Kodak Polychrome Graphics LLC (KPG), for $50 million in cash, closed on December 31, 2001. As previously indicated, the Company anticipates the sale to be approximately breakeven after taxes and net of estimated transaction costs with cash proceeds in the range of $40 to $45 million. In addition, the Company expects to receive approximately $20 million over two years from KPG for transition services.
The restructuring program will enable Imation to reduce structure and minimize overhead following the sale of the color proofing and color software business. In addition, it will allow the Company to improve the profitability of remaining, non-core businesses and further rationalize manufacturing. As of the end of September 2001, Imation employed approximately 4100 people. The Company expects this restructuring program to reduce headcount by about 500 worldwide in addition to the approximately 500 employees who transferred to KPG.
Commenting on the Company's actions, Chairman and CEO Bill Monahan said, ``The sale of the color proofing business and the subsequent restructuring program are critical steps for Imation. Through these difficult but necessary actions, we look to significantly increase value for Imation shareholders, employees and customers in 2002 and beyond by focusing our resources on the multi-billion dollar data storage industry. Our strong product offerings and global market position place Imation at the critical juncture of exploding demand for digital data storage capacity and renewed end-user focus on the advantages of removable data storage.''
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