R | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 41-1838504 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1 Imation Way Oakdale, Minnesota | 55128 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer o | Accelerated filer R | Non-accelerated filer o(Do not check if a smaller reporting company) | Smaller reporting companyo |
PAGE | |
EX-101 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net revenue | $ | 211.7 | $ | 249.2 | $ | 436.1 | $ | 512.5 | ||||||||
Cost of goods sold | 156.5 | 199.6 | 338.8 | 409.3 | ||||||||||||
Gross profit | 55.2 | 49.6 | 97.3 | 103.2 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 46.5 | 47.3 | 95.8 | 99.6 | ||||||||||||
Research and development | 4.3 | 5.5 | 9.7 | 11.1 | ||||||||||||
Restructuring and other | 4.4 | 4.3 | 6.5 | 5.6 | ||||||||||||
Total | 55.2 | 57.1 | 112.0 | 116.3 | ||||||||||||
Operating loss | — | (7.5 | ) | (14.7 | ) | (13.1 | ) | |||||||||
Other expense (income): | ||||||||||||||||
Interest income | — | (0.2 | ) | — | (0.3 | ) | ||||||||||
Interest expense | 0.6 | 0.9 | 1.3 | 1.8 | ||||||||||||
Other, net | 0.1 | 1.1 | (0.1 | ) | 2.6 | |||||||||||
Total | 0.7 | 1.8 | 1.2 | 4.1 | ||||||||||||
Loss from continuing operations before income taxes | (0.7 | ) | (9.3 | ) | (15.9 | ) | (17.2 | ) | ||||||||
Income tax provision | 1.1 | 0.2 | 1.5 | 1.5 | ||||||||||||
Loss from continuing operations | (1.8 | ) | (9.5 | ) | (17.4 | ) | (18.7 | ) | ||||||||
Discontinued operations: | ||||||||||||||||
Loss from operations of discontinued businesses, net of income taxes | (3.3 | ) | (2.5 | ) | (8.8 | ) | (5.5 | ) | ||||||||
Net loss | $ | (5.1 | ) | $ | (12.0 | ) | $ | (26.2 | ) | $ | (24.2 | ) | ||||
Loss per common share — basic: | ||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.25 | ) | $ | (0.43 | ) | $ | (0.50 | ) | ||||
Discontinued operations | (0.08 | ) | (0.07 | ) | (0.22 | ) | (0.15 | ) | ||||||||
Net loss | (0.13 | ) | (0.32 | ) | (0.65 | ) | (0.64 | ) | ||||||||
Loss per common share — diluted: | ||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.25 | ) | $ | (0.43 | ) | $ | (0.50 | ) | ||||
Discontinued operations | (0.08 | ) | (0.07 | ) | (0.22 | ) | (0.15 | ) | ||||||||
Net loss | (0.13 | ) | (0.32 | ) | (0.65 | ) | (0.64 | ) | ||||||||
Weighted average shares outstanding — basic: | 40.5 | 37.7 | 40.5 | 37.6 | ||||||||||||
Weighted average shares outstanding — diluted: | 40.5 | 37.7 | 40.5 | 37.6 | ||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net loss | $ | (5.1 | ) | $ | (12.0 | ) | $ | (26.2 | ) | $ | (24.2 | ) | ||||
Other comprehensive loss, net of tax: | ||||||||||||||||
Net unrealized (losses) gains on derivative financial instruments: | ||||||||||||||||
Net holding gains (losses) arising during the period | 1.8 | (0.4 | ) | 4.6 | 0.9 | |||||||||||
Reclassification adjustment for net realized gains included in net loss | (1.9 | ) | (0.3 | ) | (3.2 | ) | (0.7 | ) | ||||||||
Total net unrealized (losses) gains on derivative financial instruments | (0.1 | ) | (0.7 | ) | 1.4 | 0.2 | ||||||||||
Net pension adjustments: | ||||||||||||||||
Reclassification of adjustments for defined benefit plans recorded in net loss | 0.5 | 0.3 | 0.9 | 0.5 | ||||||||||||
Unrealized foreign currency translation losses | (6.7 | ) | (2.4 | ) | (10.9 | ) | (1.8 | ) | ||||||||
Total other comprehensive loss, net of tax | (6.3 | ) | (2.8 | ) | (8.6 | ) | (1.1 | ) | ||||||||
Comprehensive loss | $ | (11.4 | ) | $ | (14.8 | ) | $ | (34.8 | ) | $ | (25.3 | ) |
June 30, | December 31, | |||||||
2013 | 2012 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 94.4 | $ | 108.7 | ||||
Accounts receivable, net | 158.0 | 220.8 | ||||||
Inventories | 124.9 | 166.0 | ||||||
Other current assets | 82.1 | 61.6 | ||||||
Total current assets | 459.4 | 557.1 | ||||||
Property, plant and equipment, net | 54.2 | 58.9 | ||||||
Intangible assets, net | 73.0 | 81.9 | ||||||
Goodwill | 70.4 | 73.5 | ||||||
Other assets | 22.3 | 22.1 | ||||||
Total assets | $ | 679.3 | $ | 793.5 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 120.5 | $ | 162.7 | ||||
Short-term debt | 20.0 | 20.0 | ||||||
Other current liabilities | 120.3 | 158.4 | ||||||
Total current liabilities | 260.8 | 341.1 | ||||||
Other liabilities | 47.8 | 52.0 | ||||||
Total liabilities | 308.6 | 393.1 | ||||||
Commitments and contingencies (Note 15) | ||||||||
Shareholders’ equity | 370.7 | 400.4 | ||||||
Total liabilities and shareholders’ equity | $ | 679.3 | $ | 793.5 |
Six Months Ended | ||||||||
June 30, | ||||||||
2013 | 2012 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net loss | $ | (26.2 | ) | $ | (24.2 | ) | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 12.4 | 18.7 | ||||||
Stock-based compensation | 3.2 | 3.6 | ||||||
Other, net | (1.8 | ) | 1.7 | |||||
Changes in operating assets and liabilities | 4.7 | (1.7 | ) | |||||
Net cash used in operating activities | (7.7 | ) | (1.9 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (3.5 | ) | (5.1 | ) | ||||
Purchase price adjustment | 1.6 | — | ||||||
Proceeds from sale of assets | 0.2 | 1.4 | ||||||
Net cash used in investing activities | (1.7 | ) | (3.7 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Purchase of treasury stock | (2.5 | ) | (2.4 | ) | ||||
Debt issuance costs | — | (1.9 | ) | |||||
Contingent consideration payments | (0.5 | ) | (1.2 | ) | ||||
Net cash used in financing activities | (3.0 | ) | (5.5 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (1.9 | ) | (0.9 | ) | ||||
Net change in cash and cash equivalents | (14.3 | ) | (12.0 | ) | ||||
Cash and cash equivalents — beginning of period | 108.7 | 223.1 | ||||||
Cash and cash equivalents — end of period | $ | 94.4 | $ | 211.1 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions, except for per share amounts) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Numerator: | ||||||||||||||||
Loss from continuing operations | $ | (1.8 | ) | $ | (9.5 | ) | $ | (17.4 | ) | $ | (18.7 | ) | ||||
Loss from discontinued operations | (3.3 | ) | (2.5 | ) | (8.8 | ) | (5.5 | ) | ||||||||
Net loss | $ | (5.1 | ) | $ | (12.0 | ) | $ | (26.2 | ) | $ | (24.2 | ) | ||||
Denominator: | ||||||||||||||||
Weighted average number of common shares outstanding during the period | 40.5 | 37.7 | 40.5 | 37.6 | ||||||||||||
Dilutive effect of stock-based compensation plans | — | — | — | — | ||||||||||||
Weighted average number of diluted shares outstanding during the period | 40.5 | 37.7 | 40.5 | 37.6 | ||||||||||||
(Loss) earnings per common share — basic | ||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.25 | ) | $ | (0.43 | ) | $ | (0.50 | ) | ||||
Discontinued operations | (0.08 | ) | (0.07 | ) | (0.22 | ) | (0.15 | ) | ||||||||
Net loss | (0.13 | ) | (0.32 | ) | (0.65 | ) | (0.64 | ) | ||||||||
(Loss) earnings per common share — diluted | ||||||||||||||||
Continuing operations | $ | (0.04 | ) | $ | (0.25 | ) | $ | (0.43 | ) | $ | (0.50 | ) | ||||
Discontinued operations | (0.08 | ) | (0.07 | ) | (0.22 | ) | (0.15 | ) | ||||||||
Net loss | (0.13 | ) | (0.32 | ) | (0.65 | ) | (0.64 | ) | ||||||||
Anti-dilutive shares excluded from calculation | 6.2 | 6.4 | 6.5 | 6.2 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net revenue | $ | 12.2 | $ | 21.4 | $ | 23.4 | $ | 39.8 | ||||||||
Loss from operations of discontinued businesses, before income taxes | $ | (3.3 | ) | $ | (2.8 | ) | $ | (8.8 | ) | $ | (6.1 | ) | ||||
Income tax benefit | — | (0.3 | ) | — | (0.6 | ) | ||||||||||
Discontinued operations | $ | (3.3 | ) | $ | (2.5 | ) | $ | (8.8 | ) | $ | (5.5 | ) |
June 30, | December 31, | |||||||
(In millions) | 2013 | 2012 | ||||||
Accounts Receivable | ||||||||
Accounts receivable | $ | 173.9 | $ | 238.8 | ||||
Less reserves and allowances1 | (15.9 | ) | (18.0 | ) | ||||
Accounts receivable, net | $ | 158.0 | $ | 220.8 | ||||
Inventories | ||||||||
Finished goods | $ | 112.4 | $ | 146.9 | ||||
Work in process | 5.7 | 6.4 | ||||||
Raw materials and supplies | 6.8 | 12.7 | ||||||
Total inventories | $ | 124.9 | $ | 166.0 | ||||
Other Current Assets | ||||||||
Non-trade receivables | $ | 17.8 | $ | 15.1 | ||||
Deferred income taxes | 3.4 | 4.7 | ||||||
Prepaid expenses | 4.3 | 5.4 | ||||||
Hedging asset | 6.9 | 5.5 | ||||||
Assets held for sale2 | 24.2 | 2.5 | ||||||
Restricted cash | 2.2 | 7.5 | ||||||
Other | 23.3 | 20.9 | ||||||
Total other current assets | $ | 82.1 | $ | 61.6 | ||||
Property, Plant and Equipment | ||||||||
Property, plant and equipment | $ | 221.7 | $ | 222.6 | ||||
Less accumulated depreciation | (167.5 | ) | (163.7 | ) | ||||
Property, plant and equipment, net | $ | 54.2 | $ | 58.9 |
June 30, | December 31, | |||||||
(In millions) | 2013 | 2012 | ||||||
Other Assets | ||||||||
Deferred income taxes | $ | 10.9 | $ | 9.3 | ||||
Pension assets | 6.2 | 6.6 | ||||||
Credit facility fees | 2.1 | 2.3 | ||||||
Other | 3.1 | 3.9 | ||||||
Total other assets | $ | 22.3 | $ | 22.1 | ||||
Other Current Liabilities | ||||||||
Rebates | $ | 31.4 | $ | 44.8 | ||||
Accrued European consumer copyright levies | 17.6 | 27.7 | ||||||
Accrued payroll | 12.6 | 11.4 | ||||||
Accrued royalties | 6.5 | 7.5 | ||||||
Deferred revenue | 7.7 | 6.9 | ||||||
Accrued employee severance and related | 7.2 | 16.7 | ||||||
Hedging liability | 0.3 | 1.3 | ||||||
Other | 37.0 | 42.1 | ||||||
Total other current liabilities | $ | 120.3 | $ | 158.4 | ||||
Other Liabilities | ||||||||
Pension liabilities | $ | 24.6 | $ | 28.1 | ||||
Deferred revenue | 2.5 | 2.5 | ||||||
Deferred income taxes | 3.4 | 2.1 | ||||||
Other | 17.3 | 19.3 | ||||||
Total other liabilities | $ | 47.8 | $ | 52.0 |
(In millions) | Trade Names | Software | Customer Relationships | Other | Total | |||||||||||||||
June 30, 2013 | ||||||||||||||||||||
Gross carrying amount | $ | 34.2 | $ | 57.8 | $ | 20.2 | $ | 26.4 | $ | 138.6 | ||||||||||
Accumulated amortization | (6.9 | ) | (52.3 | ) | (1.4 | ) | (5.0 | ) | (65.6 | ) | ||||||||||
Intangible assets, net | $ | 27.3 | $ | 5.5 | $ | 18.8 | $ | 21.4 | $ | 73.0 | ||||||||||
December 31, 2012 | ||||||||||||||||||||
Gross carrying amount | $ | 37.7 | $ | 58.4 | $ | 21.2 | $ | 26.8 | $ | 144.1 | ||||||||||
Accumulated amortization | (6.0 | ) | (52.0 | ) | (1.0 | ) | (3.2 | ) | (62.2 | ) | ||||||||||
Intangible assets, net | $ | 31.7 | $ | 6.4 | $ | 20.2 | $ | 23.6 | $ | 81.9 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Amortization expense | $ | 3.3 | $ | 7.3 | $ | 6.9 | $ | 14.5 |
(In millions) | 2013 (Remainder) | 2014 | 2015 | 2016 | 2017 | 2018 | ||||||||||||||||||
Amortization expense | $ | 7.2 | $ | 12.7 | $ | 11.2 | $ | 9.2 | $ | 8.2 | $ | 6.5 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Restructuring | ||||||||||||||||
Severance and related | $ | 0.6 | $ | 2.4 | $ | 1.2 | $ | 2.8 | ||||||||
Lease termination costs | 0.5 | 0.5 | 0.6 | 0.5 | ||||||||||||
Gain on sale of fixed assets held for sale | — | — | — | (0.7 | ) | |||||||||||
Other | 0.5 | 0.2 | 1.3 | 1.1 | ||||||||||||
Total restructuring | $ | 1.6 | $ | 3.1 | $ | 3.1 | $ | 3.7 | ||||||||
Other | ||||||||||||||||
Contingent consideration fair value adjustment | (0.3 | ) | (2.8 | ) | (0.4 | ) | (2.8 | ) | ||||||||
Intangible asset abandonment | — | 1.3 | — | 1.3 | ||||||||||||
Acquisition and integration related costs | 0.8 | 0.8 | 1.2 | 1.2 | ||||||||||||
Pension settlement | 1.5 | 1.5 | 1.5 | 1.5 | ||||||||||||
Other | 0.8 | 0.4 | 1.1 | 0.7 | ||||||||||||
Total | $ | 4.4 | $ | 4.3 | $ | 6.5 | $ | 5.6 |
(In millions) | Severance and Related | Lease Termination Costs | Other | Total | ||||||||||||
Accrued balance at December 31, 2012 | $ | 15.4 | $ | 0.5 | $ | 1.0 | $ | 16.9 | ||||||||
Charges | 1.7 | 0.1 | 0.8 | 2.6 | ||||||||||||
Usage and payments | (5.0 | ) | (0.1 | ) | (0.2 | ) | (5.3 | ) | ||||||||
Currency impacts | (0.2 | ) | — | (0.1 | ) | (0.3 | ) | |||||||||
Accrued balance at March 31, 2013 | $ | 11.9 | $ | 0.5 | $ | 1.5 | $ | 13.9 | ||||||||
Charges | 0.9 | 0.5 | 0.5 | 1.9 | ||||||||||||
Usage and payments | (6.5 | ) | (0.2 | ) | (0.4 | ) | (7.1 | ) | ||||||||
Currency impacts | 0.1 | (0.1 | ) | — | — | |||||||||||
Accrued balance at June 30, 2013 | $ | 6.4 | $ | 0.7 | $ | 1.6 | $ | 8.7 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Stock compensation expense | $ | 1.4 | $ | 1.7 | $ | 3.2 | $ | 3.6 |
Stock Options | Weighted Average Exercise Price | ||||||
Outstanding December 31, 2012 | 5,818,472 | $ | 16.57 | ||||
Granted | 1,026,674 | 3.85 | |||||
Exercised | — | — | |||||
Canceled | (917,002 | ) | 25.99 | ||||
Forfeited | (300,896 | ) | 7.70 | ||||
Outstanding June 30, 2013 | 5,627,248 | $ | 13.18 | ||||
Exercisable as of June 30, 2013 | 3,480,411 | $ | 17.81 |
2013 | ||
Volatility | 42.8 | % |
Risk-free interest rate | 1.0 | % |
Expected life (months) | 72 | |
Dividend yield | — |
Restricted Stock | Weighted Average Grant Date Fair Value Per Share | ||||||
Nonvested as of December 31, 2012 | 1,025,804 | $ | 7.12 | ||||
Granted | 837,443 | 3.75 | |||||
Vested | (501,023 | ) | 7.21 | ||||
Forfeited | (70,965 | ) | 7.27 | ||||
Nonvested as of June 30, 2013 | 1,291,259 | $ | 4.90 |
United States | International | United States | International | |||||||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||||||
Service cost | $ | — | $ | — | $ | 0.1 | $ | 0.1 | $ | — | $ | — | $ | 0.2 | $ | 0.2 | ||||||||||||||||
Interest cost | 0.8 | 0.8 | — | — | 1.5 | 1.6 | — | — | ||||||||||||||||||||||||
Expected return on plan assets | (1.2 | ) | (1.4 | ) | — | — | (2.5 | ) | (2.9 | ) | — | — | ||||||||||||||||||||
Amortization of net actuarial loss | 0.5 | 0.3 | 0.1 | 0.1 | 0.9 | 0.6 | 0.2 | 0.2 | ||||||||||||||||||||||||
Net periodic pension cost (credit) | $ | 0.1 | $ | (0.3 | ) | $ | 0.2 | $ | 0.2 | $ | (0.1 | ) | $ | (0.7 | ) | $ | 0.4 | $ | 0.4 | |||||||||||||
Settlement | 1.5 | 1.5 | — | — | 1.5 | 1.5 | — | — | ||||||||||||||||||||||||
Total pension cost | $ | 1.6 | $ | 1.2 | $ | 0.2 | $ | 0.2 | $ | 1.4 | $ | 0.8 | $ | 0.4 | $ | 0.4 |
June 30, 2013 | December 31, 2012 | |||||||||||||||||||||||
(In millions) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Unobservable Inputs (Level 3) | ||||||||||||||||||
Derivative assets | ||||||||||||||||||||||||
Foreign currency option contracts | $ | — | $ | 6.5 | $ | — | $ | — | $ | 5.5 | $ | — | ||||||||||||
Foreign currency forward contracts | — | 0.4 | — | — | — | — | ||||||||||||||||||
Derivative liabilities | ||||||||||||||||||||||||
Foreign currency option contracts | — | (0.3 | ) | — | — | (1.2 | ) | — | ||||||||||||||||
Foreign currency forward contracts | — | — | — | — | (0.1 | ) | — | |||||||||||||||||
Total | $ | — | $ | 6.6 | $ | — | $ | — | $ | 4.2 | $ | — |
June 30, 2013 | December 31, 2012 | |||||||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||||||
(In millions) | Notional Amount | Other Current Assets | Other Current Liabilities | Notional Amount | Other Current Assets | Other Current Liabilities | ||||||||||||||||||
Cash flow hedges designated as hedging instruments | $ | 119.8 | $ | 6.9 | $ | (0.3 | ) | $ | 248.6 | $ | 5.5 | $ | (1.3 | ) | ||||||||||
Other hedges not receiving hedge accounting | 51.1 | — | — | 46.5 | — | — | ||||||||||||||||||
Total | $ | 170.9 | $ | 6.9 | $ | (0.3 | ) | $ | 295.1 | $ | 5.5 | $ | (1.3 | ) |
(In millions) | MXI Security | Encryptx | Total | |||||||||
Balance as of December 31, 2012 | $ | 0.6 | $ | 0.6 | $ | 1.2 | ||||||
Fair value adjustment | (0.1 | ) | 0.2 | 0.1 | ||||||||
Payments | — | (0.8 | ) | (0.8 | ) | |||||||
Balance as of March 31, 2012 | $ | 0.5 | $ | — | $ | 0.5 | ||||||
Fair value adjustment | (0.3 | ) | — | (0.3 | ) | |||||||
Balance as of June 30, 2012 | $ | 0.2 | $ | — | $ | 0.2 |
Treasury Shares | |||
Balance as of December 31, 2012 | 1,563,321 | ||
Purchases | 616,581 | ||
Exercise of stock options | — | ||
Restricted stock grants and other | (666,113 | ) | |
401(k) matching contribution | (295,996 | ) | |
Balance as of June 30, 2013 | 1,217,793 |
(In millions) | Gains (Losses) on Derivative Financial Instruments | Defined Benefit Plans | Foreign Currency Translation | Total | ||||||||||||
Balance as of December 31, 2012 | $ | 2.7 | $ | (27.8 | ) | $ | (49.1 | ) | $ | (74.2 | ) | |||||
Other comprehensive (loss) income before reclassifications, net of tax 1 | 4.6 | — | (10.9 | ) | (6.3 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of tax | (3.2 | ) | 0.9 | — | (2.3 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 1.4 | 0.9 | (10.9 | ) | (8.6 | ) | ||||||||||
Balance as of June 30, 2013 | $ | 4.1 | $ | (26.9 | ) | $ | (60.0 | ) | $ | (82.8 | ) |
(In millions) | Amounts Reclassified from Accumulated Other Comprehensive Loss | Affected Line Item in the Statement Where Net Loss is Presented | ||||
(Gains) Losses on cash flow hedges | $ | (5.2 | ) | Cost of goods sold | ||
2.0 | Income tax provision | |||||
(3.2 | ) | Net of tax | ||||
Amortization of net actuarial loss | 0.9 | Selling, general and administrative | ||||
— | Income tax provision | |||||
0.9 | Net of tax | |||||
Total reclassifications for the period | $ | (2.3 | ) |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net Revenue | ||||||||||||||||
Consumer Storage and Accessories | ||||||||||||||||
Consumer storage media | $ | 107.3 | $ | 151.1 | $ | 221.5 | $ | 303.8 | ||||||||
Audio and accessories | 9.6 | 9.4 | 17.2 | 18.8 | ||||||||||||
Total Consumer Storage and Accessories | 116.9 | 160.5 | 238.7 | 322.6 | ||||||||||||
Tiered Storage and Security Solutions | ||||||||||||||||
Commercial storage media | 61.8 | 75.1 | 128.7 | 161.3 | ||||||||||||
Storage and security solutions | 33.0 | 13.6 | 68.7 | 28.6 | ||||||||||||
Total Tiered Storage and Security Solutions | 94.8 | 88.7 | 197.4 | 189.9 | ||||||||||||
Total Net Revenue | $ | 211.7 | $ | 249.2 | $ | 436.1 | $ | 512.5 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Operating Income (Loss) | ||||||||||||||||
Consumer Storage and Accessories | $ | 20.8 | $ | 16.0 | $ | 26.7 | $ | 32.6 | ||||||||
Tiered Storage and Security Solutions | (2.9 | ) | (6.0 | ) | (5.9 | ) | $ | (12.5 | ) | |||||||
Total segment operating income | 17.9 | 10.0 | 20.8 | 20.1 | ||||||||||||
Corporate and unallocated | (17.9 | ) | (17.5 | ) | (35.5 | ) | (33.2 | ) | ||||||||
Total operating loss | — | (7.5 | ) | (14.7 | ) | (13.1 | ) | |||||||||
Interest income | — | (0.2 | ) | — | (0.3 | ) | ||||||||||
Interest expense | 0.6 | 0.9 | 1.3 | 1.8 | ||||||||||||
Other, net | 0.1 | 1.1 | (0.1 | ) | 2.6 | |||||||||||
Loss from continuing operations before income taxes | $ | (0.7 | ) | $ | (9.3 | ) | $ | (15.9 | ) | $ | (17.2 | ) |
• | Net revenue from continuing operations of $211.7 million for the three months ended June 30, 2013 was down 15.0 percent compared with $249.2 million in the same period last year. |
• | Operating income from continuing operations was break-even for the three months ended June 30, 2013, compared with an operating loss of $7.5 million in the same period last year. Operating income for the three months ended June 30, 2013 included the reversal of an accrual of $13.6 million for copyright levies as a result of an Italian court ruling (See Note 15 - Litigation, Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements). |
• | Diluted loss per share from continuing operations was $0.04 for the three months ended June 30, 2013 compared with a diluted loss per share of $0.25 for the same period last year. |
• | Net revenue from continuing operations of $436.1 million for the six months ended June 30, 2013 was down 14.9 percent compared with $512.5 million in the same period last year. |
• | Operating loss from continuing operations was $14.7 million for the six months ended June 30, 2013 compared with an operating loss of $13.1 million in the same period last year. Operating loss for the six months ended June 30, 2013 included the reversal of an accrual of $13.6 million for copyright levies as a result of an Italian court ruling (See Note 15 - Litigation, Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements). |
• | Diluted loss per share from continuing operations was $0.43 for the six months ended June 30, 2013 compared with a diluted loss per share of $0.50 for the same period last year. |
• | Cash and cash equivalents totaled $94.4 million as of June 30, 2013 compared with $108.7 million at December 31, 2012. |
• | Cash used in operating activities was $7.7 million for the six months ended June 30, 2013 compared with cash used in operating activities of $1.9 million in the same period last year. |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Net revenue | $ | 211.7 | $ | 249.2 | (15.0 | )% | $ | 436.1 | $ | 512.5 | (14.9 | )% |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Gross profit | $ | 55.2 | $ | 49.6 | 11.3 | % | $ | 97.3 | $ | 103.2 | (5.7 | )% | ||||||||||
Gross margin | 26.1 | % | 19.9 | % | 22.3 | % | 20.1 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Selling, general and administrative | $ | 46.5 | $ | 47.3 | (1.7 | )% | $ | 95.8 | $ | 99.6 | (3.8 | )% | ||||||||||
As a percent of revenue | 22.0 | % | 19.0 | % | 22.0 | % | 19.4 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Research and development | $ | 4.3 | $ | 5.5 | (21.8 | )% | $ | 9.7 | $ | 11.1 | (12.6 | )% | ||||||||||
As a percent of revenue | 2.0 | % | 2.2 | % | 2.2 | % | 2.2 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Restructuring and other | $ | 4.4 | $ | 4.3 | 2.3 | % | $ | 6.5 | $ | 5.6 | 16.1 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Operating loss | $ | — | $ | (7.5 | ) | (100.0 | )% | $ | (14.7 | ) | $ | (13.1 | ) | 12.2 | % | |||||||
As a percent of revenue | — | % | (3.0 | )% | (3.4 | )% | (2.6 | )% |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Interest income | $ | — | $ | (0.2 | ) | (100.0 | )% | $ | — | $ | (0.3 | ) | (100.0 | )% | ||||||||
Interest expense | 0.6 | 0.9 | (33.3 | )% | 1.3 | 1.8 | (27.8 | )% | ||||||||||||||
Other, net | 0.1 | 1.1 | (90.9 | )% | (0.1 | ) | 2.6 | (103.8 | )% | |||||||||||||
Total | $ | 0.7 | $ | 1.8 | (61.1 | )% | $ | 1.2 | $ | 4.1 | (70.7 | )% | ||||||||||
As a percent of revenue | 0.3 | % | 0.7 | % | 0.3 | % | 0.8 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | ||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||
Income tax provision | $ | 1.1 | $ | 0.2 | NM | $ | 1.5 | $ | 1.5 | — | % | ||||||||||
Effective tax rate | NM | (2.2 | )% | (9.4 | )% | (8.7 | )% |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Loss from operations of discontinued businesses, net of income taxes | $ | (3.3 | ) | $ | (2.5 | ) | 32.0 | % | $ | (8.8 | ) | $ | (5.5 | ) | 60.0 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Net revenue | $ | 116.9 | $ | 160.5 | (27.2 | )% | $ | 238.7 | $ | 322.6 | (26.0 | )% | ||||||||||
Operating income | 20.8 | 16.0 | 30.0 | % | 26.7 | 32.6 | (18.1 | )% | ||||||||||||||
As a percent of revenue | 17.8 | % | 10.0 | % | 11.2 | % | 10.1 | % |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Net revenue | $ | 94.8 | $ | 88.7 | 6.9 | % | $ | 197.4 | $ | 189.9 | 3.9 | % | ||||||||||
Operating (loss) | (2.9 | ) | (6.0 | ) | (51.7 | )% | (5.9 | ) | (12.5 | ) | (52.8 | )% | ||||||||||
As a percent of revenue | (3.1 | )% | (6.8 | )% | (3.0 | )% | (6.6 | )% |
Three Months Ended | Six Months Ended | |||||||||||||||||||||
June 30, | Percent Change | June 30, | Percent Change | |||||||||||||||||||
(Dollars in millions) | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Operating loss | $ | (17.9 | ) | $ | (17.5 | ) | 2.3 | % | $ | (35.5 | ) | $ | (33.2 | ) | 6.9 | % |
Six Months Ended | ||||||||
June 30, | ||||||||
(Dollars in millions) | 2013 | 2012 | ||||||
Net loss | $ | (26.2 | ) | $ | (24.2 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities | 13.8 | 24.0 | ||||||
Changes in operating assets and liabilities | 4.7 | (1.7 | ) | |||||
Net cash used in operating activities | $ | (7.7 | ) | $ | (1.9 | ) |
Six Months Ended | ||||||||
June 30, | ||||||||
(Dollars in millions) | 2013 | 2012 | ||||||
Capital expenditures | $ | (3.5 | ) | $ | (5.1 | ) | ||
Purchase price adjustment | 1.6 | — | ||||||
Proceeds from sale of assets | 0.2 | 1.4 | ||||||
Net cash provided by (used in) investing activities | $ | (1.7 | ) | $ | (3.7 | ) |
Six Months Ended | ||||||||
June 30, | ||||||||
(Dollars in millions) | 2013 | 2012 | ||||||
Purchase of treasury stock | $ | (2.5 | ) | $ | (2.4 | ) | ||
Contingent consideration payments | (0.5 | ) | (1.2 | ) | ||||
Debt issue costs | — | (1.9 | ) | |||||
Net cash used in financing activities | $ | (3.0 | ) | $ | (5.5 | ) |
(c) | |||||||||||||
Total Number of | Maximum Number | ||||||||||||
(a) | (b) | Shares Purchased | of Shares that May | ||||||||||
Total Number | Average | as Part of Publicly | Yet Be Purchased | ||||||||||
of Shares | Price Paid | Announced Plans | Under the Plan or | ||||||||||
Period | Purchased | per Share | or Programs | Programs | |||||||||
April 1, 2013 - April 30, 2013 | 10,801 | $ | 3.67 | — | 3,763,839 | ||||||||
May 1, 2013 - May 31, 2013 | 548,253 | 3.87 | 458,307 | 3,305,532 | |||||||||
June 1, 2013 - June 30, 2013 | 160,039 | 4.27 | 158,274 | 3,147,258 | |||||||||
Total | 719,093 | $ | 3.95 | 616,581 | 3,147,258 |
Exhibit Number | Description of Exhibit | |
10.1 | Imation Corp. 2011 Stock Incentive Plan, as amended and restated (2013) (incorporated by reference to Exhibit 4.3 of Imation's Registration Statement on Form S-8 (File No. 333-188429) filed on May 8, 2013) | |
10.2 | Director Compensation Program, effective May 2, 2005 (as amended effective May 8, 2013) | |
10.3 | Additional Form of 2011 Stock Incentive Plan Performance Based Restricted Stock Award Agreement for Executive Officers | |
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following financial information from Imation Corp.’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, filed with the SEC on August 8, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012, (ii) the Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2013 and 2012, (iii) the Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012, and (v) the Notes to Condensed Consolidated Financial Statements.* |
Imation Corp. | |||
Date: | August 8, 2013 | /s/ Paul R. Zeller | |
Paul R. Zeller | |||
Senior Vice President and Chief Financial Officer (duly authorized officer and principal financial officer) |
Exhibit Number | Description of Exhibit | |
10.1 | Imation Corp. 2011 Stock Incentive Plan, as amended and restated (2013) (incorporated by reference to Exhibit 4.3 of Imation's Registration Statement on Form S-8 (File No. 333-188429) filed on May 8, 2013) | |
10.2 | Director Compensation Program, effective May 2, 2005 (as amended effective May 8, 2013) | |
10.3 | Additional Form of 2011 Stock Incentive Plan Performance Based Restricted Stock Award Agreement for Executive Officers | |
31.1 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following financial information from Imation Corp.’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, filed with the SEC on August 8, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012, (ii) the Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2013 and 2012, (iii) the Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012, and (v) the Notes to Condensed Consolidated Financial Statements.* |
Basic Fee | $50,000 |
Non-Executive Chairman | $ 87,500, in addition to the Basic Fee for service as a member of the Board of Directors. |
Committee Chair | Audit & Finance: $25,000 Compensation: $15,000 Nominating & Governance: $10,000 |
Board Meetings/Teleconferences | $ 1,500/$1,000 |
Audit & Finance Meetings/Teleconferences | $ 1,500/$1,000 |
Compensation Committee Meetings/Teleconferences | $ 1,500/$1,000 |
Nomination & Governance Meetings/Teleconferences | $ 1,500/$1,000 |
Annual Stock Based Grants | All Eligible Directors: Dollar value $175,000 in restricted stock Non-Executive Chairman: $87,500 in restricted stock, in addition to the Annual Stock Based Grant for service as a member of the Board of Directors |
1. | I have reviewed this quarterly report on Form 10-Q of Imation Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d -15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d -15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
August 8, 2013 | ||
By: | /s/ MARK E. LUCAS | |
Mark E. Lucas, | ||
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Imation Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a -15(e) and 15d -15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a -15(f) and 15d -15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
August 8, 2013 | ||
By: | /s/ PAUL R. ZELLER | |
Paul R. Zeller, | ||
Senior Vice President and Chief Financial Officer | ||
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 8, 2013 | |
/s/ MARK E. LUCAS | |
Mark E. Lucas, | |
President and Chief Executive Officer | |
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
August 8, 2013 | |
/s/ PAUL R. ZELLER | |
Paul R. Zeller, | |
Senior Vice President and Chief Financial Officer |
Fair Value Measurements
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Derivative Financial Instruments Cash Flow Hedges We attempt to substantially mitigate the risk that forecasted cash flows denominated in foreign currencies may be adversely affected by changes in the currency exchange rates through the use of option, forward and combination option contracts. Gains and losses related to cash flow hedges are deferred in accumulated other comprehensive loss with a corresponding asset or liability. When the hedged transaction occurs, the gains and losses in accumulated other comprehensive loss are reclassified into the Condensed Consolidated Statements of Operations in the same line as the item being hedged. The following table sets forth our cash flow hedges which are measured at fair value on a recurring basis.
Other Derivative Instruments We use foreign currency forward contracts to manage the foreign currency exposure related to our monetary assets and liabilities denominated in foreign currencies. We record the estimated fair value of these forward contracts within other current assets or other current liabilities on our Condensed Consolidated Balance Sheets and because we do not receive hedge accounting for these derivatives, changes in their value are recognized every reporting period in the Condensed Consolidated Statements of Operations. For the three months ended June 30, 2013 and 2012, we recorded foreign currency gains of $0.1 million and losses of $0.7 million, respectively, in other expense (income) in the Condensed Consolidated Statements of Operations. These gains and losses reflect changes in foreign exchange rates on foreign denominated assets and liabilities and are net of gains of $0.8 million and losses of $0.5 million from the related foreign currency forward contracts for the three months ended June 30, 2013 and 2012, respectively. For the six months ended June 30, 2013 and 2012, we recorded foreign currency gains of $0.6 million and losses of $1.7 million, respectively, in other expense (income) in the Condensed Consolidated Statements of Operations. These gains and losses reflect changes in foreign exchange rates on foreign denominated assets and liabilities and are net of gains of $1.1 million and losses of $0.1 million from the related foreign currency forward contracts for the six months ended June 30, 2013 and 2012, respectively. The notional amounts and fair values of our derivative instruments recorded in other current assets and other current liabilities in the Condensed Consolidated Financial Statements were as follows:
On June 30, 2013, we entered into certain hedges not receiving hedge accounting treatment and the estimated fair value of these hedges was immaterial as of June 30, 2013. Contingent Consideration Contingent consideration recorded for earn-out payments related to our acquisitions is immaterial as of June 30, 2013 and December 31, 2012, and is recorded at fair value and remeasured on a recurring basis. We use the income approach in calculating the fair value of our contingent consideration. Changes in the fair value of our contingent consideration are recognized as a fair value adjustment within restructuring and other in our Condensed Consolidated Statements of Operations. These fair value measurements are calculated using the income approach with cash flow projections based on significant inputs not observable in the market and therefore represent Level 3 measurements. See Note 4 - Acquisitions and Divestitures for further discussion of the fair value calculation of our contingent consideration as of June 30, 2013. The following table sets forth a summary of changes in fair value of our contingent consideration Level 3 liabilities:
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Litigation, Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified |
12 Months Ended | 138 Months Ended | 3 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2011
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Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
ECJ Copyright Levy
|
Mar. 31, 2013
ECJ Copyright Levy
|
Dec. 31, 2012
ECJ Copyright Levy
|
Jun. 30, 2013
Italy Copyright Levy
|
Dec. 31, 2012
Italy Copyright Levy
|
Dec. 31, 2011
Italy Copyright Levy
|
|
Loss Contingencies [Line Items] | |||||||||
Copyright levy payment | $ 100 | ||||||||
Copyright levy accrual reversal | 7.8 | ||||||||
Copyright levy liabilities | 17.6 | 27.7 | 17.6 | 29.1 | 27.7 | 13.6 | |||
Amount of copyright Levy overpaid | 39 | ||||||||
Amount of remaining copyright levy overpaid other than copyright levy liabilities | 25.4 | ||||||||
Copyright levy expenses | $ 5.1 | $ 7.4 |
Condensed Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
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Current assets | ||
Cash and cash equivalents | $ 94.4 | $ 108.7 |
Accounts receivable, net | 158.0 | 220.8 |
Inventories | 124.9 | 166.0 |
Other current assets | 82.1 | 61.6 |
Total current assets | 459.4 | 557.1 |
Property, plant and equipment, net | 54.2 | 58.9 |
Intangible assets, net | 73.0 | 81.9 |
Goodwill | 70.4 | 73.5 |
Other assets | 22.3 | 22.1 |
Total assets | 679.3 | 793.5 |
Current liabilities | ||
Accounts payable | 120.5 | 162.7 |
Short-term Debt | 20.0 | 20.0 |
Other current liabilities | 120.3 | 158.4 |
Total current liabilities | 260.8 | 341.1 |
Other liabilities | 47.8 | 52.0 |
Total liabilities | 308.6 | 393.1 |
Commitments and contingencies (Note 15) | ||
Shareholders’ equity | 370.7 | 400.4 |
Total liabilities and shareholders’ equity | $ 679.3 | $ 793.5 |
Supplemental Balance Sheet Information
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Supplemental Balance Sheet Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information
1Accounts receivable reserves and allowances include estimated amounts for customer returns, discounts on payment terms and the inability of certain customers to make the required payment. 2Assets held for sale include assets in our XtremeMac and Memorex consumer electronics businesses transferred to held for sale during 2013 as a result of the planned divestiture of these businesses. See Note 4 - Acquisitions and Divestitures for more information on these planned divestitures.
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Intangible Assets and Goodwill (Tables)
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The components of our amortizable intangible assets were as follows:
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Schedule of Intangible Asset Amortization Expense | Amortization expense for intangible assets consisted of the following:
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Shareholders' Equity
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' Equity Treasury Stock On May 2, 2012, our Board of Directors authorized a share repurchase program that allowed for the repurchase of 5.0 million shares of common stock. For the six months ended June 30, 2013, we have repurchased 0.6 million shares of common stock for $2.5 million. Since the authorization of this program, we have repurchased 1.8 million shares of common stock for $9.0 million, and as of June 30, 2013 we had remaining authorization to repurchase up to 3.2 million additional shares. The treasury stock held as of June 30, 2013 was acquired at an average price of $22.15 per share. Following is a summary of treasury share activity:
Accumulated Other Comprehensive Loss Accumulated other comprehensive loss and related activity consisted of the following:
1Income tax expense of $0.8 million and $2.8 million was recorded for gains on derivative financial instruments for the three and six months ended June 30, 2013. Details of amounts reclassified from Accumulated other comprehensive loss and the line item in the Condensed Consolidated Statement of Operations are as follows:
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Fair Value Measurements - Other Hedges (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Dec. 31, 2012
|
Jun. 30, 2013
Foreign currency forward contracts
|
Jun. 30, 2012
Foreign currency forward contracts
|
Jun. 30, 2013
Foreign currency forward contracts
|
Jun. 30, 2012
Foreign currency forward contracts
|
Jun. 30, 2013
Other Current Assets
|
Dec. 31, 2012
Other Current Assets
|
Jun. 30, 2013
Other Current Liabilities
|
Dec. 31, 2012
Other Current Liabilities
|
Jun. 30, 2013
Hedges designated as hedging instruments
Cash flow hedges
|
Dec. 31, 2012
Hedges designated as hedging instruments
Cash flow hedges
|
Jun. 30, 2013
Hedges designated as hedging instruments
Cash flow hedges
Other Current Assets
|
Dec. 31, 2012
Hedges designated as hedging instruments
Cash flow hedges
Other Current Assets
|
Jun. 30, 2013
Hedges designated as hedging instruments
Cash flow hedges
Other Current Liabilities
|
Dec. 31, 2012
Hedges designated as hedging instruments
Cash flow hedges
Other Current Liabilities
|
Jun. 30, 2013
Other hedges not receiving hedge accounting
|
Dec. 31, 2012
Other hedges not receiving hedge accounting
|
Jun. 30, 2013
Other hedges not receiving hedge accounting
Other Current Assets
|
Dec. 31, 2012
Other hedges not receiving hedge accounting
Other Current Assets
|
Jun. 30, 2013
Other hedges not receiving hedge accounting
Other Current Liabilities
|
Dec. 31, 2012
Other hedges not receiving hedge accounting
Other Current Liabilities
|
Jun. 30, 2013
Other Expense
|
Jun. 30, 2012
Other Expense
|
Jun. 30, 2013
Other Expense
|
Jun. 30, 2012
Other Expense
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||||||||||||||||||||||||
Foreign Currency Transaction Gain, before Tax | $ 0.1 | $ 0.6 | ||||||||||||||||||||||||
Foreign Currency Transaction Loss, before Tax | 0.7 | 1.7 | ||||||||||||||||||||||||
Gain (loss) on foreign currency contracts | 0.8 | (0.5) | 1.1 | (0.1) | ||||||||||||||||||||||
Notional Amount | 170.9 | 295.1 | 119.8 | 248.6 | 51.1 | 46.5 | ||||||||||||||||||||
Derivative assets fair value | 6.9 | 5.5 | 6.9 | 5.5 | 0 | 0 | ||||||||||||||||||||
Derivative liabilities fair value | $ (0.3) | $ (1.3) | $ (0.3) | $ (1.3) | $ 0 | $ 0 |
Restructuring and Other Expense (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
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Restructuring and Related Activities [Abstract] | ||||
Severance and related | $ 0.6 | $ 2.4 | $ 1.2 | $ 2.8 |
Lease termination costs | 0.5 | 0.5 | 0.6 | 0.5 |
Gain on sale of fixed assets held for sale | 0 | 0 | 0 | (0.7) |
Other | 0.5 | 0.2 | 1.3 | 1.1 |
Total restructuring | 1.6 | 3.1 | 3.1 | 3.7 |
Contingent consideration adjustment | (0.3) | (2.8) | (0.4) | (2.8) |
Intangible Asset Abandonment | 0 | 1.3 | 0 | 1.3 |
Acquisition and integration related costs | 0.8 | 0.8 | 1.2 | 1.2 |
Pension settlement | 1.5 | 1.5 | 1.5 | 1.5 |
Other | 0.8 | 0.4 | 1.1 | 0.7 |
Total | 4.4 | 4.3 | 6.5 | 5.6 |
Severance related to discontinued operations | $ 0.3 | $ 1.4 |
Retirement Plans (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs | Components of net periodic pension cost included the following:
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Stock-Based Compensation (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | Stock compensation consisted of the following:
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Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes our stock option activity:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following table summarizes our weighted average assumptions used in the valuation of options:
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Schedule of Share-based Compensation, Restricted Stock Activity | The following table summarizes our restricted stock activity:
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Debt (Details)
|
Jun. 30, 2013
USD ($)
|
Jun. 30, 2013
Domestic Line of Credit
United States
USD ($)
|
Jun. 30, 2013
Foreign Line of Credit
Europe
USD ($)
|
Jul. 16, 2013
Subsequent Event
Foreign Line of Credit
Japan
USD ($)
|
Jul. 16, 2013
Subsequent Event
Foreign Line of Credit
Japan
JPY (¥)
|
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Line of Credit Facility [Line Items] | |||||
Line of Credit Facility, Amount Outstanding | $ 20,000,000 | ||||
Current borrowing capacity | $ 78,400,000 | $ 66,300,000 | $ 12,100,000 | $ 20,000,000 | ¥ 2,000,000,000.0 |
Debt Instrument, Interest Rate at Period End | 2.20% |
Supplemental Balance Sheet Information (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
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---|---|---|---|---|---|---|---|---|
Accounts Receivable | ||||||||
Accounts receivable | $ 173.9 | $ 238.8 | ||||||
Less reserves and allowances | (15.9) | [1] | (18.0) | [1] | ||||
Accounts receivable, net | 158.0 | 220.8 | ||||||
Inventories | ||||||||
Finished goods | 112.4 | 146.9 | ||||||
Work in process | 5.7 | 6.4 | ||||||
Raw materials and supplies | 6.8 | 12.7 | ||||||
Total inventories | 124.9 | 166.0 | ||||||
Other Current Assets | ||||||||
Nontrade Receivables | 17.8 | 15.1 | ||||||
Deferred income taxes | 3.4 | 4.7 | ||||||
Prepaid expenses | 4.3 | 5.4 | ||||||
Hedging asset | 6.9 | 5.5 | ||||||
Assets held for sale | 24.2 | [2] | 2.5 | [2] | ||||
Restricted cash | 2.2 | 7.5 | ||||||
Other | 23.3 | 20.9 | ||||||
Total other current assets | 82.1 | 61.6 | ||||||
Property, Plant and Equipment | ||||||||
Property, plant and equipment | 221.7 | 222.6 | ||||||
Less accumulated depreciation | (167.5) | (163.7) | ||||||
Property, plant and equipment, net | 54.2 | 58.9 | ||||||
Other Assets | ||||||||
Deferred income taxes | 10.9 | 9.3 | ||||||
Pension assets | 6.2 | 6.6 | ||||||
Credit facility fees | 2.1 | 2.3 | ||||||
Other | 3.1 | 3.9 | ||||||
Total other assets | 22.3 | 22.1 | ||||||
Other Current Liabilities | ||||||||
Rebates | 31.4 | 44.8 | ||||||
Accrued European consumer copyright levies | 17.6 | 27.7 | ||||||
Accrued payroll | 12.6 | 11.4 | ||||||
Accrued royalties | 6.5 | 7.5 | ||||||
Deferred revenue | 7.7 | 6.9 | ||||||
Accrued employee severance and related | 7.2 | 16.7 | ||||||
Hedging liability | 0.3 | 1.3 | ||||||
Other | 37.0 | 42.1 | ||||||
Total other current liabilities | 120.3 | 158.4 | ||||||
Other Liabilities | ||||||||
Pension liabilities | 24.6 | 28.1 | ||||||
Deferred revenue | 2.5 | 2.5 | ||||||
Deferred income taxes | 3.4 | 2.1 | ||||||
Other | 17.3 | 19.3 | ||||||
Total other liabilities | $ 47.8 | $ 52.0 | ||||||
|
Stock-Based Compensation (Details) (USD $)
In Millions, except Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | 0 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
plan
|
Jun. 30, 2012
|
Jun. 30, 2013
Stock Incentive Plan 2011
|
May 08, 2013
Subsequent Event
Stock Incentive Plan 2011
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock compensation expense | $ 1.4 | $ 1.7 | $ 3.2 | $ 3.6 | ||
Number of share-based compensation plans | 5 | |||||
Number of shares available for grant | 2,040,696 | |||||
Additional shares authorized for grant | 1,543,000 | |||||
Total number of shares authorized | 6,043,000 | |||||
Grants in period, weighted average grant date fair value (dollars per share) | $ 1.61 |
Stock-Based Compensation - Restricted Stock (Details) (Restricted Stock, USD $)
In Millions, except Share data, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Restricted Stock
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total compensation cost not yet recognized, period for recognition | 1 year 8 months |
Total unrecognized compensation expense related to non-vested stock | $ 5.5 |
Restricted Stock [Roll Forward] | |
Nonvested as of December 31, 2012 (shares) | 1,025,804 |
Granted (shares) | 837,443 |
Vested (shares) | (501,023) |
Forfeited (shares) | (70,965) |
Nonvested as of June 30, 2013 (shares) | 1,291,259 |
Weighted Average Grant Date Fair Value Per Share [Roll Forward] | |
Nonvested as of December 31, 2012 (dollars per share) | $ 7.12 |
Granted (dollars per share) | $ 3.75 |
Vested (dollars per share) | $ 7.21 |
Forfeited (dollars per share) | $ 7.27 |
Nonvested as of June 30, 2013 (dollars per share) | $ 4.90 |
Restructuring and Other Expense (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring and Related Costs | The components of our restructuring and other expense included in the Condensed Consolidated Statements of Operations were as follows:
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Global Processing Improvement Restructuring Program 2012 [Member]
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Restructuring Cost and Reserve [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | Changes in the 2012 GPI Program accruals were as follows:
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Basis of Presentation
|
6 Months Ended |
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Jun. 30, 2013
|
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Basis of Presentation [Abstract] | |
Basis of Presentation | Basis of Presentation The interim Condensed Consolidated Financial Statements of Imation Corp. ("Imation," "the Company," "we," "us" or "our") are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of financial position, results of operations, comprehensive loss and cash flows for the periods presented. Except as otherwise disclosed herein, these adjustments consist of normal, recurring items. The results of operations for any interim period are not necessarily indicative of full year results. The Condensed Consolidated Financial Statements and Notes are presented in accordance with the requirements for Quarterly Reports on Form 10-Q and do not contain certain information included in our annual Consolidated Financial Statements and Notes. The preparation of the interim Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses for the reporting periods. Despite our intention to establish accurate estimates and use reasonable assumptions, actual results may differ from our estimates. The December 31, 2012 Condensed Consolidated Balance Sheet data was derived from the audited Consolidated Financial Statements but does not include all disclosures required by U.S. GAAP. This Form 10-Q should be read in conjunction with our Consolidated Financial Statements and Notes included in our Annual Report on Form 10-K for the year ended December 31, 2012. On February 13, 2013, we announced our plans to divest our XtremeMacTM and MemorexTM consumer electronics businesses. The results of operations for these businesses are presented in our Condensed Consolidated Statements of Operations as discontinued operations for all periods presented. The consumer storage business under the Memorex and TDK Life on RecordTM brands will be retained. See Note 4 - Acquisitions and Divestitures for further information. |
(Loss) Earnings per Common Share
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Loss) Earnings per Common Share | (Loss) Earnings per Common Share Basic (loss) earnings per common share is calculated using the weighted average number of shares outstanding for the period. Diluted (loss) earnings per common share is computed on the basis of the weighted average shares outstanding plus the dilutive effect of our stock-based compensation plans using the “treasury stock” method. Unvested restricted stock and treasury shares are excluded from the calculation of weighted average number of common shares outstanding. Once restricted stock vests, it is included in our common shares outstanding. Potential common shares are excluded from the computation of diluted (loss) earnings per common share when the effect would be anti-dilutive. All potential common shares are anti-dilutive in periods of net loss available to common shareholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company's common stock for the period. The following table sets forth the computation of the weighted average basic and diluted (loss) earnings per share:
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Intangible Assets and Goodwill
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6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible Assets The components of our amortizable intangible assets were as follows:
As of June 30, 2013, $1.7 million of net intangible assets have been reclassified from intangible assets to assets held for sale as a result of the planned divestiture of our XtremeMac and Memorex consumer electronics businesses. See Note 4 - Acquisitions and Divestitures for further information on these divestitures. Amortization expense for intangible assets consisted of the following:
Based on the intangible assets in service as of June 30, 2013, estimated amortization expense for the remainder of 2013 and each of the next five years is as follows:
Goodwill During the six months ended June 30, 2013, we recorded a decrease in goodwill of $1.6 million due to the working capital adjustment to the Nexsan acquisition purchase price. Additionally, goodwill decreased $1.5 million due to foreign currency translation. See Note 4 - Acquisitions and Divestitures for further information regarding the Nexsan acquisition and this adjustment. |
Acquisitions and Divestitures Acquisitions and Divestitures (Notes)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions On December 31, 2012, we acquired Nexsan Corporation (Nexsan), a provider of disk-based storage systems with a portfolio of disk-based and hybrid disk-and-solid-state storage systems, for a purchase price of $120.1 million. The acquisition resulted in $65.5 million of goodwill. During the six months ended June 30, 2013, the purchase price was adjusted to reflect working capital variances in accordance with the merger agreement. This adjustment resulted in a decrease to goodwill of $1.6 million and a cash receipt for this amount. As of June 30, 2013, our purchase price allocation is preliminary pending final evaluation of income tax balances. See Note 6 - Intangible Assets and Goodwill for more information regarding goodwill. We have not shown proforma results for the comparative period for the acquisition of Nexsan as it is not material to our Condensed Consolidated Results of Operations. On June 4, 2011, we acquired the assets of MXI Security (MXI). The purchase price included a contingent consideration arrangement with an estimated fair value of $0.6 million at December 31, 2012. See Note 4 - Acquisitions in our 2012 Annual Report on Form 10-K for further information regarding the contingent consideration. We remeasure the estimated fair value of the remaining contingent consideration each reporting period. At June 30, 2013, our estimated fair value of this contingent consideration was determined to be $0.2 million. We recorded a decrease of $0.3 million and $0.4 million in the fair value of this contingent consideration from December 31, 2012 in the three and six months ended June 30, 2013, respectively, as a benefit in the restructuring and other line in the Condensed Consolidated Statements of Operations. See Note 12 - Fair Value Measurements for further discussion of our valuation technique. On February 28, 2011, we acquired substantially all of the assets of BeCompliant Corporation, doing business as Encryptx (Encryptx). The purchase price included future contingent consideration with an estimated fair value of $0.6 million at December 31, 2012. The final contingent consideration payment of $0.8 million was determined based on certain 2012 milestones and was paid during the first quarter of 2013. In the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2013, $0.5 million was presented in cash flows from financing activities and the remaining $0.3 million was presented in cash flows from operating activities as it pertains to the excess of actual payments over the initially recognized fair value of the contingent consideration. During the three months ended June 30, 2012, we recorded a working capital adjustment to the purchase price in our acquisition of the secure data hardware of IronKey Systems Inc. in the amount of $0.6 million. As the purchase accounting for this acquisition was finalized in 2011, the adjustment was recorded as a charge to restructuring and other in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2012. Discontinued Operations On February 13, 2013, we announced our plans to divest our XtremeMac and Memorex consumer electronics businesses. The consumer storage business under the Memorex and TDK Life on Record brands will be retained. These expected divestitures are part of the acceleration of our strategic transformation that we announced during the fourth quarter of 2012 in conjunction with our plan to increase focus on data storage and security. As a part of exiting these disposal groups, we plan to dispose of the assets directly associated with these businesses, which primarily include inventory, tooling and intangible assets. We are in varying degrees of negotiations for the sale of these assets and believe such sales are probable to be consummated in the next 12 months. We have classified inventory of $18.4 million, intangible assets of $1.7 million and tooling (previously classified as Property, plant and equipment) of $1.7 million as assets held for sale as of June 30, 2013. The operating results for these businesses are presented in our Condensed Consolidated Statements of Operations as discontinued operations for all periods presented and only reflect revenues and expenses that are directly attributable to these businesses that will be eliminated from ongoing operations. See Note 7 - Restructuring and Other for disclosure of severance expense that was recorded relating to these planned divestitures. The key components from discontinued operations were as follows:
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Fair Value Measurements (Tables)
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table sets forth our cash flow hedges which are measured at fair value on a recurring basis.
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Schedule of Derivative Instruments | The notional amounts and fair values of our derivative instruments recorded in other current assets and other current liabilities in the Condensed Consolidated Financial Statements were as follows:
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Acquisitions and Divestitures Acquisitions (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | |||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
|
Dec. 31, 2012
Nexsan Corporation
|
Jun. 30, 2013
MXI Security
|
Jun. 30, 2013
MXI Security
|
Dec. 31, 2012
MXI Security
|
Mar. 31, 2013
BeCompliant Corporation (Encryptx)
|
Dec. 31, 2012
BeCompliant Corporation (Encryptx)
|
Jun. 30, 2013
Cash Flows from Financing Activities
BeCompliant Corporation (Encryptx)
|
Jun. 30, 2013
Cash Flows from Operating Activities
BeCompliant Corporation (Encryptx)
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Business Acquisition, Contingent Consideration [Line Items] | |||||||||||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | $ 120.1 | ||||||||||||
Goodwill | 70.4 | 70.4 | 73.5 | 65.5 | |||||||||
Goodwill, Purchase Accounting Adjustments | 0.6 | 1.6 | 0 | ||||||||||
Contingent consideration obligation | 0.2 | 0.2 | 0.6 | 0.6 | |||||||||
Contingent consideration adjustment | (0.3) | (2.8) | (0.4) | (2.8) | 0.3 | 0.4 | |||||||
Contingent consideration payments | $ (0.5) | $ (1.2) | $ 0.8 | $ 0.5 | $ 0.3 |
Intangible Assets and Goodwill - Goodwill (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
|
Goodwill [Line Items] | ||||
Goodwill, Translation Adjustments | $ 1.5 | |||
Goodwill, Purchase Accounting Adjustments | 0.6 | 1.6 | 0 | |
Goodwill | $ 70.4 | $ 73.5 |