Imation to Sell North America Digital Solutions and Services Business
Press release from the issuing company
OAKDALE, Minn.--Aug. 8, 2002--Imation Corp. today announced it has entered into a definitive agreement with DecisionOne to sell its North America Digital Solutions and Services (DSS) business. The transaction is expected to close during the third quarter of 2002, subject to normal closing conditions. While the purchase price was not disclosed, Imation expects the 2002 impact of this transaction to be approximately break-even in terms of both income and cash flows.
Under terms of the agreement, DecisionOne will purchase Imation's service business and document management business in the U.S. and Canada, including the DSS facility in Pine City, Minn. DecisionOne, the largest independent provider of multivendor information technology support in North America, said it intends to manage the acquired business and 3000 North American customer base as a strategic business unit and add to its portfolio of other technology service clients.
"This transaction allows the DSS business to achieve the greatest value for its customers and employees by joining an organization solely focused on technology based services. For Imation, it sharpens our focus on building the value of our core data storage removable media business," said Bill Monahan, chairman and chief executive officer of Imation.
"The acquisition of Imation DSS is part of our strategy to broaden the base of technology that DecisionOne supports and to leverage our assets and efficient operating infrastructure into new markets and new technologies," said George De Sola, chairman and chief executive officer of DecisionOne.
For the six months ended June 30, 2002, the North America Digital Solutions and Services business had $26.0 million in revenue and $1.7 million in operating income. For the year ended December 31, 2001, it had $57.2 million in revenue and a $0.9 million operating loss. As of June 30, 2002, the North American business had approximately 400 employees.
Separate from this transaction, Imation has begun to close down or dispose of DSS operations outside of North America and expects to complete those dispositions in the third quarter. Upon consummating the sale of the North America Digital Solutions and Services business, previous periods will be restated in compliance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" to reclassify the operating results of this business, excluding corporate overhead, to discontinued operations. The Company anticipates that operating income (from continuing operations) will be reduced by approximately $4.0 million for the six months ended June 30, 2002, and approximately $6.5 million for the year ended December 31, 2001, as a result of this reclassification.
The Company had previously stated that operating income in fiscal 2002 is expected to reach the range of $90 million, including one-time gains recorded in the second quarter. The $90 million guidance anticipated the negative impact of discontinued operations restatements described above and remains unchanged by this divestiture.
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