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Important Tax Information for 3M Spin-Off

July 15, 1996

Dear Stockholder:

On June 18, 1996, the Board of Directors of Minnesota Mining and Manufacturing Company ("3M") declared a dividend payable to the holders of record of 3M common stock, no par value (the "3M Common Stock"), at the close of business on June 28,1996 (the "Record Date"), in the amount of one share of common stock, par value $.01 per share, of Imation Corp. (the "Imation Common Stock"), for every ten shares of 3M Common Stock outstanding on the Record Date. As a result of this dividend, 100 percent of the outstanding shares of Imation Common Stock is being distributed to 3M stockholders on a pro rata basis.

Certificates representing whole shares of Imation Common Stock are being mailed to you with this letter. No certificates or scrip representing fractional shares of Imation Common Stock will be issued. Instead, Norwest Bank Minnesota, N.A., as Distribution Agent, will aggregate all fractional shares into whole shares and sell them in the open market at then-prevailing prices on behalf of 3M stockholders who otherwise would be entitled to receive fractional shares. The proceeds of such sales (net of any commissions incurred in connection therewith) will be distributed in cash to those 3M stockholders who would otherwise be entitled to receive fractional shares.

3M has received a ruling from the Internal Revenue Service that a 3M stockholder will not recognize income, gain, or loss upon the receipt of shares of Imation Common Stock, except in connection with any cash received in lieu of fractional shares, and that a 3M stockholder's tax basis in the shares of 3M Common Stock held at the time of the distribution must be apportioned between such shares of 3M Common Stock and the shares of Imation Common Stock (including any fractional shares) in proportion to the fair market values of each.

This letter provides, among other things, certain information relevant to the determination of the tax basis in your shares of 3M Common Stock and Imation Common Stock. The information provided below should be generally helpful in preparing your United States federal income tax returns. We therefore urge you to keep this letter for future reference. Nevertheless, you should review the subject matter with your tax advisor at the appropriate time.

In order to compute the tax basis in your shares of 3M Common Stock and Imation Common Stock, you must first determine the tax basis in each share of 3M Common Stock you held immediately prior to the distribution. If you acquired these shares at different times, all of your shares of 3M Common Stock may not have the same tax basis, and you will have to make a separate computation with respect to shares of 3M Common Stock acquired at such different times in order to determine the tax basis after the distribution of such shares of 3M Common Stock and the shares of Imation Common Stock distributed thereon. In each case, the pre-distribution tax basis must be allocated between your shares of 3M Common Stock and Imation Common Stock in proportion to their relative fair market values at the time of the distribution. Based upon the trading prices for shares of 3M Common Stock and Imation Common Stock on July 1,1996 (the effective date of the distribution), on the New York Stock Exchange, the following is an acceptable method for allocating the tax basis in your shares of 3M Common Stock held immediately prior to the distribution between your 3M Common Stock and your Imation Common Stock acquired in the distribution as a dividend on such shares:

  • To determine the per-share tax basis in your 3M Common Stock held after the distribution, multiply your pre-distribution per-share tax basis in those shares by .96059.

  • To determine the tax basis in each of your shares of Imation Common Stock received in the distribution (including any fractional shares in lieu of which you receive cash), multiply the tax basis in your shares of 3M Common Stock with respect to which such share of Imation Common Stock or fraction thereof was distributed by .03941.

The receipt of cash in lieu of fractional shares will result in the recognition of gain or loss for U.S. federal income tax purposes, as described more fully in the Information Statement previously mailed to 3M stockholders.

The Internal Revenue Service requires that you sign and attach to your 1996 federal income tax return a statement setting forth certain prescribed information regarding the distribution. We are enclosing a sample statement that, after consulting with your tax advisor, you may want to use for this purpose.

The information in this letter represents our understanding of existing United States federal income tax law and does not constitute tax advice. It does not purport to be complete or to describe tax consequences that may apply to particular categories of stockholders, such as those who received Imation Common Stock through the exercise of an option or otherwise as compensation, who are not citizens or residents of the United States, or who are otherwise subject to special treatment under the Internal Revenue Code of 1986, as amended. You should consult your own tax advisor as to the particular tax consequences to you of the distribution, including the applicability and effect of any state, local, and foreign tax laws.

Livio D. DeSimone
Chairman of the Board and Chief Executive Officer

____________________
Imation

Copyright 1996 Imation. All rights reserved.

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