Imation Outlines Strategy for Profitable Growth Building on Core Data Storage Media Business

Company Reiterates Long-Term Goals of 10 Percent Revenue Growth at 10 Percent Operating Margin

Singapore -- November 21, 2003 — Citing continued strong demand for data storage capacity across business and consumer applications, Imation Corp. (NYSE:IMN) outlined its strategy for profitable growth by leveraging its position in the data storage removable media industry. (To access the company’s presentations, see information at the end of this release).

“We remain confident in the long-term outlook for our industry because the increasing quantity and complexity of digital information is driving exponential growth for data storage,” said Bill Monahan, Imation chairman and chief executive officer. “Our core data storage removable media market is expected to grow five to 10 percent over the next several years, with the large installed based of OEM drives providing an annuity-like revenue stream. In addition to the core business, we continue to establish new growth initiatives, the most recent including a joint development agreement with StorageTek for the development of their next generation tape media and an exclusive worldwide distribution agreement with Exabyte Corp. for their media business.”

“We continue to see positive results from our business model,” Monahan continued. “We had record data storage revenue in the most recent quarter. For the nine months of fiscal 2003, data storage revenues have grown 5.6 percent with a data storage operating margin of 9.7 percent.”

Long-Term Financial Performance Goals

“Our long-term goals are to deliver sustainable revenue growth of 10 percent with operating margins of 10 percent,” Monahan said. “Over the long term, we see overall gross margins ranging between 27 and 30 percent of revenue, selling, general and administrative (SG&A) expenses of approximately 12 percent and research and development (R&D) spending of approximately five percent.” Monahan attributed the company’s confidence to several factors:

• A strong global market position, including a widely recognized brand, 50 years of data storage experience, extensive OEM relationships, broad global distribution, and the industry’s broadest portfolio of data storage media products.
• Technology and manufacturing leadership, including a broad and deep intellectual property portfolio, a solid technology development platform and advanced, industry-leading R&D facilities.
• Strong operational discipline, including a global reputation for manufacturing excellence and Quality Improvement/Cost Reduction initiatives that consistently deliver gross margin improvement.
• Financial strength, including a solid cash position and a debt-free balance sheet that has enabled Imation to invest approximately $100 million in future growth vehicles. These include $49 million for advanced metal particulate coating capabilities, $20 million for an exclusive global brand distribution agreement with Exabyte, $15 million for the acquisition of certain data storage assets of EMTEC Magnetics GmbH, $5 million joint venture investment with Moser Baer for the development of optical media products, and approximately $10 million for future technology initiatives, including a technology development agreement with O-Mass, and growth initiatives with the U.S. government and the China market.

“Imation is solely focused on data storage media, and we have the global market position, operational discipline, technology leadership, financial strength and extensive customer experience to be the leading removable data storage media company worldwide. That’s our goal and our total focus,” Monahan said.

Fourth-Quarter and 2003 Outlook

“As we reported at the end of last quarter, recent industry trends include aggressive price competition accelerating in network tape formats, and the soft economy continuing to hold back IT spending. Open tape formats are increasing their share of the overall market faster than proprietary or semi-proprietary formats are growing, and we see strong growth potential in media areas such as optical and flash over the next decade. Our outlook for the fourth quarter remains unchanged with nine to 13 percent year-over-year data storage revenue growth,” said Frank Russomanno, executive vice president and chief operating officer.

The following section contains forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995. These statements are based on the company's current outlook for fiscal 2003, and are subject to the risks and uncertainties described below.

• The seasonally strong fourth quarter is expected to deliver higher revenues and margins sequentially compared with the third quarter of 2003.
• For the fourth quarter, Data Storage and Information Management segment revenue is estimated to grow nine to 13 percent from the fourth quarter of 2002 to a range of $285 million to $295 million, resulting in data storage revenue of $1.07 billion to $1.08 billion for the full year – representing approximately seven to eight percent growth over 2002.
• Fourth-quarter operating income is expected to be in the range of $23 million to $27 million, resulting in full-year 2003 operating income in the range of $105 million to $109 million.
• Fourth-quarter earnings per share (EPS) from continuing operations is estimated to range between $0.45 and $0.52, bringing full-year 2003 EPS from continuing operations to a range between $2.03 and $2.10.
• Gross margin is estimated to be in the range of 29 to 30 percent of revenue for the full year.
• Research and Development spending is targeted to be approximately five percent of revenues for the full year.
• Selling, General and Administrative spending is estimated to be approximately 15 percent of revenues for the full year.
• The tax rate is estimated to be 33 percent for the year.
• Capital spending is targeted to be up to $75 million for the year.
• Depreciation and amortization is estimated to be approximately $38 million to $40 million for the year.

Industry Growth: The Proliferation of Digital Information Continues
Digital information is critical to both businesses and consumers. According to a recent University of California study, more data will be created in the next three years than the previous 40,000 years combined. The study reports approximately five exabytes of information is created per year, more than 90 percent of which is in digital format. (www.sims.berkeley.edu). (One exabyte is equal to one billion gigabytes. Five exabytes of digital information is equivalent to the information contained in half a million new libraries the size of the Library of Congress). The study estimates that digital photos, music, and images together constitute the largest source of original content creation annually.

Imation recently surveyed more than 200 storage managers and IT directors to explore the trends, perspectives and challenges of data backup, technology choices and disaster recovery (DR). The survey found that:

• 79 percent consider tape crucial to their long-term data retention and archiving strategies
• 85 percent view tape as essential in disaster recovery
• 83 percent say tape is important in supporting their increased data retention to meet regulatory requirements, and
• 61 percent view tape and disk as complementary technologies in a well-designed storage system.

Imation and others in the industry continue to deliver higher-capacity media. By the end of the decade, tape cartridge capacity is expected to grow from 200 to 300 gigabytes to one terabyte. Recordable and rewriteable DVD formats, just entering the market in volume, will increase the capacity of optical media – more than seven times more capacity than a standard CD-R, which is equivalent to more than four gigabytes of storage.
Over the next few years, industry-wide, data storage removable media revenues are estimated to grow five to 10 percent per year.

Investor Meeting Information Available On-line

A replay of the web cast of Imation's Investor/Analyst Meeting can be accessed on the Internet at either http://ir.imation.com or http://www.streetevents.com through Thursday, November 20, 2003.

About Imation

Imation Corp. is a leading developer, manufacturer and supplier of magnetic and optical removable data storage media. With one of the broadest product lines in the industry—spanning from a few megabytes to hundreds of gigabytes of capacity in each piece of media, Imation serves customers in more than 60 countries, in both business and consumer markets. With more than 300 technology scientists and more than 300 data storage patents in the U.S. alone, Imation continues to pioneer today's proven magnetic and optical media technologies.

As of September 2003, Imation employed approximately 2,800 people worldwide. Revenues from outside the U.S. contribute approximately 53 percent of total sales. Additional information about Imation is available on the company’s website at www.imation-southasia.com

Imation and the Imation logo are trademarks of Imation Corp. StorageTek and the StorageTek logo are registered trademarks of Storage Technology Corporation. Other names mentioned may be trademarks of Storage Technology Corporation or other vendors/manufacturers. All other trademarks are the property of their respective owners.

Certain information contained in this press release, which does not relate to historical financial information, including the business outlook, 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 the company's actual results in the future to differ materially from its historical results and those presently anticipated or projected. The company wishes to caution investors not to place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the company undertakes no obligation to update such statement to reflect events or circumstances arising after such date. Among these factors are continuing uncertainty in global economic conditions that make it particularly difficult to predict product demand, the company's ability to meet its cost reduction and revenue growth targets, its ability to introduce new offerings in a timely manner either independently or in association with OEMs or other third parties, its ability to achieve the expected benefits in a timely manner from the Moser Baer relationship, including the Global Data Media joint venture, the competitive pricing environment, foreign currency fluctuations, the outcome of litigation, its ability to secure adequate supply of certain high demand products, the ready availability and price of energy, the market acceptance of newly introduced product and service offerings, the rate of decline for certain existing products as well as various factors set forth in the company's filings with the Securities and Exchange Commission.