Imation Reports Q3 2009 Financial Results

Imation Corp. today released financial results for the quarter ended September 30, 2009. All financial information included in this press release reflects the continuing operations of the Company’s businesses for all periods presented unless otherwise indicated.

Key points for Q3 include the following:

* Revenue of $401.3 million was down 15.7 percent compared with Q3 2008 revenue of $475.9 million.
* Operating income of $1.7 million and diluted loss per share of $0.01 in Q3 2009 compared with operating loss of $11.0 million and diluted loss per share of $0.20 in Q3 2008. Operating income includes restructuring and related charges in Q3 2009 and Q3 2008 of $7.5 million, or $0.15 per diluted share, and $16.3 million, or $0.27 per diluted share, respectively (see table entitled Reconciliation of GAAP to Adjusted Non-GAAP Results below).
* Total cash and cash equivalents were $111.0 million at September 30, 2009 compared with $96.6 million at December 31, 2008.
* The wind down of the Global Data Media (GDM) joint venture was completed and the GDM current and historic results have been reclassified into discontinued operations.

Commenting on the results, Imation Vice Chairman and CEO Frank Russomanno said, “We are encouraged by our solid results in Q3 as we continue to improve our profitability and cash flows in a difficult economic environment.”

“In our storage business, the rate of decline in our optical revenue moderated from recent quarters and we continued to deliver strong gross margins reflecting the success of our brand consolidation strategy. Our magnetic tape business continued to be under pressure, with revenue declines in the same range as recent quarters. We are pleased with the momentum we are beginning to see in our removable hard drive business, including our selection by major OEMs to supply RDX drives and media for their server products. Our electronics and accessories business has steadily improved this year and we continued to see margin improvement in Q3. As expected, revenues are down in this business, reflecting the challenging retail environment as well as our more selective approach to this category.”

“We continue to see the benefits of the actions we have taken, especially our aggressive cost reduction efforts. In addition, as a result of our previously disclosed settlement with Philips we lowered legal costs. During the quarter we strengthened our financial position by generating $21.8 million of cash with cash ending the quarter at $111 million. We achieved these results despite an initial outflow of $20 million associated with the $53 million legal settlement with Philips.”

“We are encouraged by the results of the actions we have taken thus far, but clearly we have more work to do. As we move into Q4 and beyond, we remain focused on transforming the company and improving our profitability and working capital efficiency in order to drive cash generation across our businesses,” Russomanno concluded

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Imation Promotes Jeffrey Meredith to Vice President of Global Marketing

Imation Corp. today announced the promotion of Jeffrey (Jeff) Meredith to the position of vice president of global marketing and product management for the company. In this role, Meredith leads brand management, product management, and marketing services for Imation’s commercial and consumer businesses worldwide. Imation’s global brand portfolio includes Imation, Memorex, TDK Life on Record, and XtremeMac brands. The company’s global product portfolio, which spans data storage – including magnetic, optical, flash, and removable/external hard disk drive formats – as well as A/V accessories and consumer electronics, reaches commercial users and consumers in more than 60 countries worldwide.

“As Imation transforms into a brand and product management company, the creative and disciplined marketing leadership that Jeff Meredith brings to our global organization is critical,” said Mark Lucas, president and chief operating officer of Imation. “Under Jeff’s leadership, we continue to strengthen our core data storage brand – Imation – while expanding it into new storage offerings that appeal to both professional and consumer users. We are also revitalizing our iconic Memorex brand with a new portfolio of A/V accessories and consumer electronics products geared toward the ‘modern mom.’ And we’re leveraging the TDK Life on Record brand’s audio legacy with a new portfolio of premium audio-related products launching later this year.

“Imation’s emphasis on strong brand management is complemented by a focus on product management and operational excellence. I’m very pleased to have someone of Jeff’s marketing talent and experience leading our global marketing and brand management organization,” said Lucas.

Meredith has more than 17 years experience in engineering, business development, and marketing. He began his career in 1992 as a structural engineer for Gannett Fleming, Incorporated, and later held business development and brand management positions at International Paper Company. In 2001, Meredith joined Lexmark, a leading maker of computer printers and related products, where he held both European and U.S.-based assignments. As worldwide marketing vice president for Lexmark, Meredith had responsibility for global product management and brand marketing for the company’s Consumer Printer Division. Meredith joined Imation in 2008 as executive brand director for Memorex, and was most recently general manager of Imation’s global marketing and brand management function.

Meredith holds a Bachelor of Science in Civil Engineering from Purdue University, and a Master of Business Administration in Marketing and Operations, also from Purdue University.

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Imation Promotes Subodh Kulkarni to Senior Vice President

Imation Corp. (NYSE: IMN) today announced the promotion of Subodh Kulkarni, PhD, to the position of senior vice president of Imation’s global commercial business and chief technology officer (CTO) for the company. Dr. Kulkarni was most recently vice president of the commercial business, manufacturing, and research, development, and engineering (RD&E) for Imation, a position he has held since 2007.

“As Imation has expanded its brand and product portfolio as part of its strategic transformation, Subodh has successfully guided our company’s continued global leadership in data storage across magnetic, optical, flash, and removable/external hard disk drive technologies. He is well known and respected within the storage industry,” said Mark Lucas, president and chief operating officer of Imation.

“As senior vice president, Subodh also leads our global commercial business, which supplies virtually all of the world’s Fortune 500 companies with data storage solutions. While maintaining Imation’s core storage technology leadership, Subodh has also expanded the company’s technology breadth in design and engineering for our growing consumer electronics and accessories business, positioning us well for success as we move forward. We are very fortunate to have someone of Subodh’s experience and passion for technology leadership in this key executive position,” said Lucas.

Kulkarni has more than 20 years in high technology R&D, manufacturing, and global business management. He began his technical career with IBM in 1989 as a research engineer. He joined 3M Company in 1992 as a senior research engineer and in 1996, when Imation spun-off from 3M, moved to Imation where he held a series of technology leadership positions of increasing responsibility. In 2006, Kulkarni was named vice president of manufacturing and R&D in 2007 his responsibilities were expanded to include leadership of the company’s global commercial business.

Kulkarni received a Bachelor of Science degree in chemical engineering from the Indian Institute of Technology. He received his Master of Science and PhD degrees in chemical engineering from the Massachusetts Institute of Technology. He holds eight U.S. patents and his research on silicon surface chemistry and application in integrated circuit fabrication is published in multiple technical publications.

Kulkarni is a member of the Minnesota High Technology Association Board of Directors.

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Imation to Highlight National Media Lab, Storage Portfolio at LandWarNet 2009

Imation Corp. will showcase its National Media Lab (NML) and storage products portfolio in booth 2028 at LandWarNet 2009 today through Thursday at the Greater Ft. Lauderdale / Broward County Convention Center in Ft. Lauderdale, Fla. Sponsored by the Armed Forces Communications and Electronics Association (AFCEA), LandWarNet is the premier forum for bringing government and industry together to openly communicate best business practices and government implementations.

“Imation has long supported the U.S. government as a partner, consultant and supplier, and understands the distinctive storage demands of its departments and agencies,” said Keith Schwartz, director of global strategic growth and public sector, Commercial Business, Imation. “Through the National Media Lab and its commitment to data integrity and preservation, as well as our commitment to develop products that incorporate the latest storage technologies across all types of media, Imation is uniquely poised to help address data issues throughout the information lifecycle.”

Through its NML, Imation helps U.S. government departments and agencies solve complex data storage backup, archive, recovery and security issues. Designed to support unique government requirements where data integrity and preservation are at stake, NML functions as an independent and unbiased source for data storage consulting and information lifecycle management services. Based in an R&D facility at Imation’s world headquarters in Oakdale, Minn., NML is managed by storage experts who analyze and resolve data issues, customize storage solutions, and develop next-generation storage technology. NML storage engineers will be onsite at LandWarNet 2009.

Imation also supports government IT professionals with a vast storage portfolio encompassing Solid State Disk (SSD) drive, removable and external hard drive, tape, and flash technology, and will showcase the following products at LandWarNet 2009:

Imation SSDs and Upgrade Kits feature lightning-fast performance in a durable, energy efficient and affordable solution. The M-Class and S-Class SSDs with Upgrade Kits offer progressive users a complete, easy way to upgrade an existing Hard Disk Drive (HDD) computer system to one that is SSD-based, without buying a new computer.
# Imation RDX removable hard disk cartridges operate just like traditional tape cartridges while providing all the benefits of disk-to-disk systems. Imation RDX is a tape replacement solution that includes a high-capacity, rugged and removable 2.5-inch HDD cartridge as well as a docking station with USB and SATA connections. Offering complete data protection with easy and reliable backup, data security and expandable storage, RDX HDD cartridges are available in 160GB, 320GB and 500GB capacities.
# Imation Odyssey™ is a rugged removable hard disk drive that provides fast backup, accurate restores and full disaster recovery for a wide range of data storage environments, including high-security storage applications, replacing tape for entry-level backup, or anywhere large volumes of data need to be stored quickly and securely and accessed rapidly. The Imation Odyssey removable hard disk cartridge capacities range from 120GB to 320GB.
# Imation’s Apollo™ External Hard Drive portfolio includes the Apollo UX, an ultra-slim 2.5-inch USB hard drive for mobile users, combining high capacity, performance and design. Featuring a durable midnight black-brushed surface with chrome detailing, the Apollo drive is just over half an inch wide, and weighs only 0.35 pounds. It’s available with 320GB or 500GB of capacity. For laptop users, the 2.5-inch Apollo Expert UX is a pocket-sized, portable hard drive with an integrated swivel foot, one-touch backup capabilities, continuous data protection and 500GB capacity. For desktop users, the Apollo Pro UX is a 3.5-inch desktop hard drive with configurable one-touch backup software in capacities up to 1TB.
# Imation Secure Scan, the industry’s first tape scanning product with a locking feature, ensures that LTO media cannot be written to or read from any LTO drive, providing an additional layer of security during transport or off-site storage. Imation Secure Scan also enables customers to proactively assess the health of their LTO libraries, delivering the confidence that data is usable when needed.
# Imation DataGuard rf™ Tape Tracking System brings the range, reliability and accuracy of RFID (radio frequency identification) to tape storage. With its patent-pending RFID Volume and Serial Number (Vol-Ser) Labels, Imation combines proven technology into one robust and secure label that incorporates RFID technology, Vol-Ser number identification and advanced ultra-high frequency (UHF) support with an open system that works with any tape management platform.
# Imation’s portfolio of USB flash drives, including the Atom, Pivot, Pivot Plus and Swivel Flash Drives, are built to last with a wide range of styles, capacities and security levels. The drives are designed to meet the portable storage needs of the most discerning user.

AFCEA International, established in 1946, is a non-profit membership association serving the military, government, industry, and academia as an ethical forum for advancing professional knowledge and relationships in the fields of communications, IT, intelligence, and global security

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Imation Corp. Schedules Third Quarter 2009 Financial Results Conference Call

Imation Corp. is scheduled to release the Company’s third quarter 2009 financial results on Tuesday, October 20, 2009 at 6:00 AM Central Daylight Time (CDT). A teleconference for the financial community and a live webcast are scheduled to begin at 9:00 AM CDT.

The live webcast of the teleconference will be available on the Internet at www.imation.com or www.streetevents.com. A replay of this webcast will be available at either of these websites through Tuesday, October 27, 2009. A taped replay of the teleconference will also be available beginning at 1:00 PM CDT, October 20, 2009 until 5:00 PM CDT October 27, 2009 by dialing 888-211-2648 (access code 1388550).

remarks made during the teleconference will be current at the time of the call and the replay will not be updated to reflect any subsequent developments.

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Imation to Offer World's First Multi-Terabyte Magnetic Tape

Demonstrating its continuing global leadership in removable data storage, Imation Corp. (NYSE: IMN) today announced an industry first: the generation of multi-terabyte native-capacity tape using advanced metal particulate (MP) media and employing the company’s proprietary TeraAngstrom™ technology. Further underscoring its commitment to metal particulate technology and the LTO, or Linear Tape Open format, Imation is also the first and only company to date to license the next-generation of Ultrium™ LTO-5 tape media.

“Imation is excited to announce this important industry milestone – the achievement of multiple terabytes of native capacity on a single MP tape cartridge,” said Subodh Kulkarni, vice president of Imation’s Research, Development, and Engineering, and head of the company’s global Commercial Business. “Metal particulate media is a proven standard in data storage, and with MP-based LTO-5, we will be almost doubling the capacity of the cartridges. Further, LTO-5 tape technology offers a cost-efficient way for businesses to store ever-expanding data, whether for long-term archival or regular backup of active data, given tape’s energy savings and a cost per gigabyte advantages over other methods. Imation is leveraging its long-standing heritage in reliable, secure and durable data storage products and expertise in metal particulate media to ensure that this latest generation of LTO media exceeds standards for data protection and delivers the most data in a single, multi-terabyte data cartridge. We are very pleased to be the first manufacturer licensed for LTO-5.”

Featuring 3.2 TB of compressed storage and data transfer rates of up to 360MB/second, LTO-5 tape cartridges offer significant improvements over prior tape generations. Enhancements in servo technology and improved data compression ensure the same length of tape can store more information, allowing data center managers to keep their existing footprints without adding space to accommodate the growth in primary storage. A leading manufacturer of LTO generations 1, 2, 3 and 4, Imation uses its state-of-the-art TeraAngstrom™ technology to create magnetic media with a significantly smoother surface and a high signal-to-noise ratio (SNR), delivering reduced errors and faster transfer rates. Imation’s TeraAngstrom technology is the advanced MP formulation and manufacturing process used to produce ultra-high capacity storage media at Imation’s Oakdale, Minn. R&D facility, and in its Weatherford, Okla. manufacturing facility, the only facility in the world built specifically for terabyte-class tape coating.

Licensed by the LTO Technology Provider Companies (TPCs) of Hewlett Packard, IBM and Quantum, Imation expects to launch LTO-5 tape cartridges in early 2010, offering significantly faster performance, almost double the capacity of existing LTO-4 cartridges, and improved encryption capabilities for effective backup, restore and archival of critical data.

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Imation Offers First Locking and Diagnostic Product for LTO Tape Formats

Secure Scan enables customers to assess, manage and predict problems before they occur, helping users stretch their magnetic media dollars. As a leader in Ultrium™ LTO tape cartridges and accessories, Imation Corp. announces the North American launch of the industry’s first tape scanning product with a locking feature, Imation Secure Scan. When using the Imation Secure Scan locking feature, LTO media cannot be written to or read from any LTO drive, thus providing an additional layer of security during transport or off-site storage. Further, Imation Secure Scan enables customers to proactively assess the “health” of their LTO libraries, delivering the confidence that their data is usable when needed.

With today’s resource limitations, LTO customers value a product that enables self-assessment of tape media to ensure the usability of data, helps meet their security and regulatory needs, and stretches their magnetic media dollar. Imation Secure Scan enables customers to proactively assess the health of an LTO library at their convenience and diagnose the root cause of possible drive or media errors. This allows them to take a proactive approach in avoiding data loss. Imation Secure Scan provides immediate feedback on the viability of individual cartridges, and enables users to monitor media subsets or entire libraries with statistical graphics and reports.

Using Imation’s proven patent-pending algorithm based on years of scanning experience, customers can now pinpoint real problems with very high accuracy, reducing the risk of false positives or negatives.

“Imation understands how critical it is for data center and IT managers to be certain the data under their care is monitored and protected. Unlike other scanning products available on the market today, our new Imation Secure Scan provides LTO users with a unique locking feature ideal for added security during offsite storage and transportation of media between locations,” said Subodh Kulkarni, vice president, Global Commercial Business, RD&E, and Manufacturing for Imation. “Ever since the early generations of LTO, Imation has offered a library scanning service to assist our customers in monitoring the health of their cartridges. Now, with Imation Secure Scan, we enable our customers to manage cartridges and drives on their own terms. Imation understands LTO drives and the intricacies of tape media, and we bring years of experience – well over one hundred thousand cartridge scans – to the development of our new Secure Scan product.”

Imation Secure Scan comes complete with an integral barcode reader that enables cartridge scans in or out of poly storage boxes, providing immediate feedback on the health of these cartridges and the ability to monitor media subsets as needed. Users can also submit scan information using Imation’s innovative “phone-home” feature that contacts technical service via e-mail for a more in-depth analysis, including a comparison against industry trends and a custom report.

Each Imation Secure Scan product also includes:

* Carrying case
* USB cable
* Software-install CD
* Perpetual software license for scan feature
* One year license for lock/unlock and “phone-home” feature

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