Imation Announces Further Manufacturing Optimization Steps

Company to Focus Tape Coating Operations in Weatherford, OK and Exit
Camarillo, CA Plant by Year End

OAKDALE, Minn., July 22 /PRNewswire-FirstCall/ -- Imation Corp. (NYSE:
IMN) today announced additional steps to optimize its magnetic tape
manufacturing by focusing all tape coating in its state-of-the-art
Weatherford,
OK plant as a further implementation of the Company's manufacturing strategy.
This will result in the exit from its Camarillo, CA plant by the end of this
year. This follows the announcement in May 2007 of the consolidation and
outsourcing of tape converting operations, resulting in the exit of its
Wahpeton, ND plant by year end 2008. Imation's manufacturing plant in
Weatherford, OK will remain dedicated to magnetic tape coating operations.
Key elements of today's announcements include the following:
-- Imation will focus all tape coating operations in its Weatherford
plant and cease manufacturing operations at its Camarillo plant, which it
plans to exit by year-end 2008. This will result in approximately 140
positions out of a current worldwide total of 1,950 being eliminated by year-
end.
-- The Company anticipates it will incur up to $20 million in
restructuring and related charges associated with the Camarillo closure, the
majority of which will occur in the second half of 2008. Approximately half of
the charges are anticipated to be cash payments associated with severance
benefits and costs of exiting the site. The remaining charges will be non-cash
asset write-offs.
-- These actions are expected to result in approximately $15 million to
$20 million in annualized cost eliminations intended to mitigate projected
declines in tape gross profits in future years. However, these benefits will
not be completely realized until the program is fully implemented.
Commenting on today's announcement, Imation's President and Chief
Executive Officer, Frank Russomanno said: "Imation remains committed to
maintaining our leadership position in the removable data storage industry
serving commercial customers. As we said in the past, this management team
will take all steps necessary to maintain our competitive advantage.
"At last year's analyst strategy briefing, we announced steps to optimize
our magnetic business with the consolidation and outsourcing of our tape
converting operations and our planned exit from our Wahpeton plant by the end
of 2008. This morning we accelerated our optimization strategy as we announced
our plan to focus coating in Weatherford and the exit of our Camarillo
operation by year-end.
"The tape industry has consistently addressed the growth in demand for
storage capacity with higher capacity cartridges resulting in lower cost per
gigabyte. In addition, open format LTO tape continues to gain share with
legacy formats declining at an increasing rate. In the current economic
environment we have seen this trend accelerate, especially among some of our
enterprise class customers. Finally, lower cost disk and optimization
strategies such as virtual tape and de-duplication remain a factor in certain
sectors of the market. As a result, we expect tape revenue and margins to
continue to be under pressure.
"Given these trends, we recognize that excess manufacturing capacity
exists, so we are taking aggressive actions as part of our strategy to
optimize our tape business and maintain our leadership position.
"Several years ago, we invested $55 million in the most modern coater in
the industry, our TeraAngstrom coater in Weatherford. At that time, we said we
would deliver a Terabyte (TB) of capacity in a cartridge before the end of the
decade. Last week, we passed that milestone. Our Weatherford plant will be the
manufacturing site for all our coating operations going forward.
"Imation is well known and trusted as a leading developer and manufacturer
of magnetic tape formats. That will not change. We expect the tape business to
be an important market for us in the future and we intend to remain a leader,"
Russomanno concluded.
About Imation Corp.
Imation is a leading global marketer of brands and developer of products
in digital storage and audio and video electronics. Imation Corp.'s global
brand portfolio, in addition to the Imation brand, includes the Memorex brand,
one of the most widely recognized names in the consumer electronics industry,
famous for the slogan, "Is it live or is it Memorex?" and the XtremeMac brand.
Imation is also the exclusive licensee of the TDK Life on Record brand, one of
the world's leading recording media brands. Additional information about
Imation is available at http://www.imation.com.
Risk and Uncertainties
Certain information contained in this press release which does not relate
to historical financial information may be deemed to constitute forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that could cause our actual results in the future to differ
materially from our historical results and those presently anticipated or
projected. We wish to caution investors not to place undue reliance on any
such forward-looking statements. Any forward-looking statements speak only as
of the date on which such statements are made, and we undertake no obligation
to update such statements to reflect events or circumstances arising after
such date. Risk factors include our ability to successfully integrate our
recent acquisitions and achieve the anticipated benefits, including synergies,
in a timely manner; our ability to successfully manage multiple brands
globally; our ability to successfully defend our intellectual property rights;
continuing uncertainty in global and regional economic conditions; the
volatility of the markets in which we operate; our ability to meet our revenue
growth and cost reduction targets; our ability to successfully implement our
global manufacturing strategy for magnetic data storage products and to
realize the benefits expected from the related restructuring; our ability to
introduce new offerings in a timely manner either independently or in
association with OEMs or other third parties; our ability to efficiently
source, warehouse and distribute our products globally; our ability to secure
and maintain adequate shelf and display space over time at retailers which
conduct semi-annual or annual line reviews; our ability to achieve the
expected benefits from our strategic relationships and distribution
agreements; the competitive pricing environment and its possible impact on
profitability and inventory valuations; foreign currency fluctuations; the
outcome of any pending or future litigation, including the pending Philips
litigation; our ability to secure adequate supply of certain high demand
products at acceptable prices; the ready availability and price of energy and
key raw materials or critical components; the market acceptance of newly
introduced product and service offerings; the rate of decline for certain
existing products; the possibility that our goodwill or other assets may
become impaired, as well as various factors set forth from time to time in our
filings with the Securities and Exchange Commission.
SOURCE Imation Corp.

Brad Allen of Imation Corp., +1-651-704-5818