I need help in restoring iMac to factory setting

I brought imac on mid 2011(mac os x 10.7.5). can any one tell how to restore mac to factory settings i made back up in cd and tried to try install lion by pressing cmd and r while restarting but it did not wipe it clean, all my previous files and setting are still there.

James, in case you are having a problem, these are the steps:
1. Restart the computer holding the Command and R keys
2. In the OS X Utilities window, select Disk Utility and click continue
3. From the sidebar, select your internal disk drive
4. Click the Erase tab near the top of the Disk Utility window
5. Choose Mac OS Extended (Journales) from the pop-up menu
6. Change the name of the disk drive if you want to
7. Click the Erase button near the bottom right of the Disk Utility window
8. In the confirmation dialog that appears, click Erase
9. From the menu bar, choose Disk Utility > Quit Disk Utility
10. In the OS X Utilities winddow, select Reinstall OS X and click Continue
11. In the Install OS X window, click Continue
12. Read and licenss agreement and click Agree
13. In the confirmation dialog that appears, click Agree
14. Select your computer's disk drive form the list of available volumes, click Install
The installer will recreate an OS X Recovery HD, and then restart to the newly created OS X Recovery HD, and then continue with the remainder of the isntall process.  This second part may take a while so be patient.  When it completes, the iMac will restart again into the installed copy of Mac OS X as a new machine.  You will be greeted by the full Setup Assistant.

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