Imation provides details of restructuring program

Charges hurt year-end financial results

Oakdale, MN-based Imation has spelled out its corporate restructuring. In a plan that will trim 1700 jobs from the company by the end of 1998, Imation will make a number of moves, including the intended sale of its CD-ROM business. Imation had estimated that there would be 1000 to 1500 layoffs when the company announced the restructuring plan in October (SCAN 11/12/97).

As part of the plan, Imation will restructure its European organization to focus on the U.K., Germany, France, Italy, Spain, and the Netherlands. Other European markets will be served through an expanded network of new and existing distributors and dealers.

The company also plans to reduce and consolidate operations at manufacturing facilities, including the shifting of manufacturing locations for certain product lines. In addition, selected reductions of R&D in certain mature businesses are planned. Imation expects the restructuring actions will result in a benefit in fiscal 1998 of about $35 million, most of which will occur in the second half of the year.

Charges related to the restructuring weighed down the company's fourth-quarter and fiscal 1997 financial results. Imation posted revenues of $569.8 million for the quarter (end-December), a dip of 2% compared with the $581.6 million reported a year ago. Net income was $900,000, before $199.9 million in pre-tax restructuring and special charges that led to a net loss of $157.8 million. Imation had a net loss of $600,000 last year, including a $12 million acquisition-related write-off.

Chairman and CEO Bill Monahan pointed to pricing pressures and competition in low-end data storage, printing plates and film, and conventional medical imaging as negative factors in the fourth quarter. He said the company's DryView dry-process laser printers continue to do well, with 3500 systems installed by the end of 1997.

Imation's year-end figures were also off slightly. The company had net revenues of $2.2 billion, compared with $2.3 billion in 1996. The company's net loss was $180.1 million, including $241.6 million in pre-tax restructuring and other special charges. Imation had a net loss of $20.5 million last year.

In medical imaging-related news, Imation last month announced the signing of a five-year deal to be the primary provider of imaging equipment, accessories, and film to HealthSouth. HealthSouth is the largest provider of outpatient surgery and rehabilitative services in the U.S., and operates 85 imaging centers.

Finally, Imation announced last week that it has been awarded a contract to install a fully digital PACS network at the University Hospital of Maastricht in the Netherlands. The installation is being phased in over four years, with the goal of making the 650-bed hospital totally filmless. Imation will be installing PACS technology acquired through its purchase of Cemax-Icon last year.