Imation Outlines Data Storage Focused Strategy ``The Value is in the Data''; Market Demand Strong as Company Focuses on Data Storage Removable Media Industry

Business Wire, June 18, 2002

Business Editors & Technology Writers

NEW YORK--(BUSINESS WIRE)--June 18, 2002

Asserting that "the value is in the data," Chairman and C.E.O. Bill Monahan and the senior management of Imation Corp. (NYSE:IMN) today unveiled the elements of the company's strategy focused on the data storage removable media industry before an audience of investors and analysts.

"With the explosion of digital information critical to a business and important to the lives of consumers, demand for storage capacity is estimated to be doubling every 18 to 24 months," Monahan said. "Data -- how it's accessed, protected, stored and shared -- has taken center stage in business and consumer applications. Imation is extremely well positioned to create value -- for shareholders, customers and in the marketplace -- by who we are and what we do focused on the data storage removable media industry."

"Imation's data storage roots extend back 50 years to the introduction of the first magnetic data storage tape," Monahan said. "Working with leading drive manufacturers, we continue to meet customer needs for high capacity, reliable, efficient removable media to store, back up, move and manage digital information.

"Imation's future is built on a foundation of five elements: our leading market position, solid operational and cost discipline, technology leadership, a strong financial position, and broad customer experience. Imation's vision is to be the trusted expert and recognized global leader in removable data storage across all market sectors. That's our focus. That's our future," Monahan concluded.

Focus on the Core

Imation Corp. was spun out from 3M Company in 1996 as a diverse collection of largely unrelated businesses. Under Monahan's leadership, the company has rationalized its portfolio, divesting non-strategic business units so it is now focused on removable data storage media and adjacent businesses that generated $875.9 million in revenue and $56.4 million in operating income in 2001. The Company, experiencing continued strong demand across all data storage market sectors globally, increased its outlook for the second quarter and full year after the market closed yesterday. Imation is now anticipating data storage revenue growth in the range of 10 percent and operating income in the range of $80 million. (See Imation Corp. Boosts 2nd Quarter and Full Year Outlook, Business Wire, June 17, 2002.)

Industry Context: Removable Data Storage Media

Data storage has become central to the information technology infrastructure. Demand for storage capacity is doubling every 18 to 24 months, according to industry analysts and market researchers. Virtually every business transaction...every customer contact...every Internet hit generates digital information. And the information important to individuals is increasingly in digital form as well -- not just business records and correspondence -- but the music, images and pictures that give depth and texture to individuals' lives -- all are being captured and stored digitally.

The questions end-users ask about storing their data are as varied as the requirements of their applications. "How fast can I access my data? How much can I store in a single device? What is the cost per megabyte and the total cost of managing my data? How secure is my data? How portable is my data?" Different user needs result in a wide variety of storage formats and architectures.

For a broad set of applications, the answer is removable media -- ranging from floppy disks, CDs and DVDs storing from a few megabytes to a few gigabytes of data, through network tape libraries storing from a dozen to a hundred gigabytes on each cartridge, to enterprise data center storage applications that rely on high-speed, high-capacity tape cartridges storing hundreds of gigabytes on each cartridge to manage and safeguard terabytes of critical business data.

Imation, unique among data storage media companies, participates in every market sector.

Leading Market Position

Imation's market share growth is built on a leading market position, a comprehensive portfolio of offerings, and broad geographic and distribution channel coverage. Imation's overall share of the $6 billion removable media market approached 15 percent in 2001 -- a larger share than any single competitor -- and is growing. The Company's product portfolio spans all market sectors from consumer electronics to professional desktops to networks to the data center. Imation operates in approximately 60 countries and 47 percent of revenues come from sales outside the United States. The Company's media products are sold through specialty distributors, value-added resellers, mass retailers, and original equipment manufacturers -- representing the broadest distribution channel coverage to deliver media to end users.

Operational Excellence and Cost Discipline

The sophisticated nature of data storage media today requires exacting manufacturing process expertise. Imation has the people and capabilities to meet these requirements and continues to build on this expertise. In the highly competitive technology industry, pricing pressure is a constant. Imation has successfully maintained its competitive cost position and gross margins year after year through a disciplined quality improvement/cost reduction (QICR) process. All of the company's data storage manufacturing facilities meet the highest ISO 9002 quality standards and the Company's Wahpeton, North Dakota plant was recognized by the editors of Industry Week as among the fourteen best manufacturing plants throughout the United States and Europe.