July, 2009

OAKDALE, Minn.--(BUSINESS WIRE)--Jul. 22, 2009-- Imation Corp. (NYSE:IMN) today released financial results for the quarter ended June 30, 2009.

Key points for Q2 include the following:

• Revenue of $427.9 million was down 21.8 percent compared with Q2 2008 revenue of $547.0 million.
• Sales, general and administrative (SG&A) expense of $60.1 million was down 17.3 percent or $12.6 million compared with Q2 2008.
• Operating loss of $57.6 million and diluted loss per share of $0.98 in Q2 2009 compared with operating income of $12.2 million and diluted earnings per share of $0.19 in Q2 2008. Operating loss in Q2 2009 included a litigation settlement charge of $49 million or $0.81 per diluted share and restructuring and other charges of $9.8 million or $0.16 per diluted share (see table entitled Reconciliation of GAAP to Adjusted Non-GAAP Results below).
• Operating income was $1.2 million excluding the litigation settlement charge and restructuring and other charges above (see table entitled Reconciliation of GAAP to Adjusted Non-GAAP Results below).
• Total cash and cash equivalents were $89.2 million at June 30, 2009.

Commenting on the results, Imation vice chairman and CEO Frank Russomanno said: “We are pleased that Imation returned to operating profitability in the second quarter, excluding special charges. While the ongoing economic crisis has continued to impact our revenues in both our commercial and consumer channels, our aggressive cost-containment and restructuring actions have been effective, resulting in a SG&A reduction of more than 17 percent, helping to offset the revenue challenges.”

“In Q2, our legacy storage media business, including magnetic tape, continued to experience declines at rates similar to first quarter. Our margins for both magnetic tape and optical media remained stable, driven by the continued benefits of our magnetic manufacturing optimization program and our optical brand consolidation strategy. We saw encouraging growth in our removable hard disk drive business, led by the RDX format, where Imation was selected by two major OEMs as the exclusive supplier of RDX drives and media for their storage systems.”

“Our financial position remains strong with cash of $89.2 million.”

“As we previously announced, we entered into a settlement agreement with Philips to resolve a complex series of disputes in multiple jurisdictions regarding cross-licensing and patent infringement related to recordable optical media. We took a charge of $49.0 million in Q2 related to this litigation settlement. We are pleased to settle this very costly and distracting litigation and to eliminate an ongoing risk for the Company.”

“Going into the second half of the year, we are focused on our strategy to leverage our strong global brand portfolio, including Imation, Memorex, TDK Life on Record and XtremeMac. We will continue to focus on achieving profitable growth with new product offerings for both the commercial and consumer channels, spanning storage, accessories, and consumer electronics,” Russomanno concluded.

A teleconference is scheduled for 9:00 AM Central Daylight Time today, July 22, 2009 (see Webcast and Replay Information at the bottom of this release).

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