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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 30, 1998
Imation Corp.
(Exact name of registrant as specified in its charter)
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DELAWARE 1-14310 41-1838504
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
1 IMATION PLACE
OAKDALE, MINNESOTA 55128
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (651) 704-4000
None
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
Imation Corp. ("Imation" or the "Company") announced on August 3,
1998 that it had entered into an agreement with Eastman Kodak Company
("Kodak") for Kodak to acquire Imation's worldwide medical imaging
businesses (the "Transaction"). On December 1, 1998, the Company announced
that a closing with respect to the Transaction occurred on November 30,
1998 (the "Closing"). In connection with the Closing, Kodak acquired the
assets and assumed the liabilities of Imation's medical imaging businesses
in North America, Latin America and Asia, including manufacturing
facilities in Oregon, Minnesota and California and all the outstanding
common shares of Cemax-Icon, Inc., a wholly-owned subsidiary of Imation
("Cemax-Icon"). The closings of the sale of Imation's medical imaging
businesses in Europe (the "European Businesses") to Kodak are scheduled to
occur on a country-by-country basis as the businesses are integrated into
Kodak's accounting and information systems through April 1, 1999 and in any
event not later than May 31, 1999. Under the terms of the Asset Purchase
Agreement (as defined below), following the Closing, Kodak is entitled to
the operating results and cash flows of the European Businesses.
Under the terms of the Asset Purchase Agreement dated as of July
31, 1998 and amended and restated as of November 30, 1998, between Imation
and Kodak (as amended and restated, the "Asset Purchase Agreement"), Kodak
paid Imation approximately $371 million in cash, which included
approximately $341 million for Imation's medical imaging businesses other
than the European Businesses (including reimbursement of Imation for
certain payments made by Imation to the former shareholders of Cemax-Icon)
and a $30 million prepayment for the European Business in Italy. At the
Closing, Kodak also paid Imation $18 million in cash representing a
nonrefundable deposit under the Ferrania Supply Agreement (as defined
below). Imation is entitled to receive in cash additional proceeds of
approximately $143 million upon the closings of the European Businesses. At
the Closing, Imation entered into a Distribution Agreement dated as of
November 30, 1998 with Kodak under which Imation will act as Kodak's
exclusive distributor for the European Businesses during the period from
the Closing through the closings of each of the European Businesses.
The closings of the European Businesses are subject to certain
limited closing conditions, including the condition that there be no
injunction prohibiting the acquisition of such European Businesses at the
time of such acquisition. Antitrust clearance of the Transaction in Europe
has been received from the European Union.
Imation management estimates, on a preliminary basis, that the
Company will have an after-tax gain on the Transaction, which is to be
recognized in the fourth quarter of 1998, of approximately $65-75 million,
net of estimated transaction costs.
Approximately 1,600 Imation employees worldwide will transfer to
Kodak in connection with the completion of the Transaction, including
Kodak's acquisition of the European Businesses. Under a transitional
services agreement, for a period of up to two years and on a
country-by-country basis, Imation will provide Kodak with certain services
needed to support the acquired businesses while they are being integrated
into Kodak. These services include information technology, logistics,
finance, telecommunications, office space, human resources and site
services. Kodak will reimburse the Company on a fully burdened cost basis
for these services.
Imation will retain its manufacturing facility in Ferrania,
Italy, where the Company will manufacture x-ray and wet laser medical
imaging film for Kodak for a minimum of two years under a supply agreement
which became effective on November 30, 1998 (the "Ferrania Supply
Agreement"). Under the terms of the Asset Purchase Agreement, Kodak is
obligated to make a cash payment to Imation of up to $25 million no later
than the date the Ferrania Supply Agreement terminates. Under a separate
supply agreement, Kodak will supply document imaging products to Imation
from its White City, Oregon manufacturing facility for up to five years.
The Company intends to use its sale proceeds to pay down
outstanding debt and certain lease obligations totaling approximately $360
million at November 30, 1998 and expects to establish a new credit facility
by the end of 1998. The Company anticipates it will also utilize a portion
of the sale proceeds to repurchase its common stock from time to time in
the open market or through private transactions. Imation has authorization
for the repurchase of up to 3.5 million shares out of the approximately 39
million shares of its common stock currently outstanding.
In addition, upon the Closing, the civil litigation between
Imation, Kodak and Minnesota Mining & Manufacturing Company ("3M") and
their respective subsidiaries relating to the alleged disclosure to Imation
and 3M of Kodak trade secrets by Harold Worden, a former employee of Kodak,
was dismissed in the United States and Italy.
Principal products included in the medical imaging businesses
are: DryView(TM) laser imaging systems and film, wet laser imaging systems
and film, Imation chest system, Trimax(TM) x-ray films, conventional x-ray
film processing systems and film, and Cemax-Icon digital picture-archiving
and communication systems (PACS) products. In addition to the medical
imaging assets, Kodak also acquired Imation's DryViewTM Imagesetting Film
business in the graphic arts industry and the document imaging sales and
service business in Germany.
The Asset Purchase Agreement is attached hereto as Exhibit 2.1.
The press releases issued by Imation and Kodak on December 1, 1998 with
respect to the
Transaction are attached hereto as Exhibits 99.1 and 99.2, respectively,
which are incorporated by reference herein.
Item 7. Financial Statements and Exhibits
Pro forma unaudited financial statements for the Company giving
effect to the Transaction, including pro forma unaudited statements of
operations for the year ended December 31, 1997 and for the nine month
period ended September 30, 1998 and a pro forma unaudited balance sheet as
of September 30, 1998 are attached hereto as Exhibit 3.1, which is
incorporated by reference herein.
Exhibit Description
2.1 Asset Purchase Agreement dated as of July 31, 1998 and amended
and restated as of November 30, 1998, between Imation Corp. and
Eastman Kodak Company
3.1 Pro Forma Unaudited Financial Statements
99.1 Imation Press Release dated December 1, 1998
99.2 Kodak Press Release dated December 1, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
IMATION CORP.
(Registrant)
Date: December 15, 1998 By:
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Robert L. Edwards
Senior Vice President,
Strategy, Planning, Chief
Financial Officer and Chief
Administrative Officer
EXHIBIT INDEX
Exhibit Description
2.1 Asset Purchase Agreement dated as of July 31, 1998 and amended
and restated as of November 30, 1998, between Imation Corp. and
Eastman Kodak Company
3.1 Pro Forma Unaudited Financial Statements
99.1 Imation Press Release dated December 1, 1998
99.2 Kodak Press Release dated December 1, 1998