Earnings

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IMATION CORP. REPORTS $547.7 MILLION IN REVENUES AND $.30 EARNINGS PER SHARE FOR THE FIRST QUARTER

Operating Income up 19 % Compared to Previous Year, Gross Margin Reaches 36.3% Board Increases Share Repurchase Authorization to Six Million Shares

OAKDALE, Minn. (April 30, 1997) - Imation Corp. (NYSE:IMN), the new imaging and information company, today announced results for the first quarter ended March 31, 1997.

Revenues for the first quarter were $547.7 million with net income of $12.0 million, or $.30 per share, versus revenues of $576.1 million and net income of $6.1 million, or $.14 per share, reported for the first quarter of 1996. The first quarter of 1996 included a pre-tax restructuring charge of $10.4 million or $.15 per share after-tax. The Company generated $7.5 million in economic profit improvement compared with the first quarter of 1996. Economic profit improvement is defined as the change in after-tax operating profit less a charge for the cost of capital.

Strengthening of the U.S. dollar negatively impacted revenues by 3.5 percent. The net impact of foreign currency movements reduced earnings per share in the quarter by $.17, as compared to the first quarter of 1996, approximately twice the impact of recent quarters. Approximately half the revenue decline reported in the quarter was due to the Company's decision to exit certain under-performing businesses.

Commenting on the results, Imation's chairman and chief executive officer, Bill Monahan said: "Six quarters ago, the businesses that make up Imation were operating on a break-even basis. Since then, we have succeeded in establishing stability and improved earnings."

"We are progressing towards our three year financial goal of $150 million improvement in economic profit between 1996 and 1998. However, the recent strengthening of the dollar makes the achievement of revenue growth difficult this year," he added. "Our challenge going forward is profitable growth. We are addressing that challenge through a variety of efforts, including the necessary rationalization of our current portfolio as well as the expansion of our growth portfolio.

"About half the reported revenue decline in the first quarter was due to our selectively exiting some products and markets. A portion of the non-branded duplicator diskette sales and some graphic arts supplies are two examples. Excluding the impact of these planned reductions, we would have seen one percent annual revenue growth on a local currency basis worldwide," he added. "In fact, we showed strong growth in both Asia and Latin America on a local currency basis during the quarter. Europe was soft this quarter, compared with a very strong first quarter last year."

"Our expanded growth portfolio -- including a small contribution from Luminous software products -- reached 16 percent of revenues, up from 11 percent in fiscal 1996," Monahan added.

Gross margins improved to 36.3 percent compared with 35.1 percent in the first quarter of last year, and operating income increased by 19 percent to $28.2 million, or 5.1 percent of revenues compared with $23.7 million, or 4.1 percent of revenues for the comparable quarter a year ago, excluding restructuring charges. The Company's effective tax rate of 45 percent improved by three percentage points compared with the last half of 1996.

The Company disclosed that its Board of Directors recently increased authorization to repurchase the Company's common stock, to a total authorization of six million shares. The Company repurchased approximately 514,000 shares during the first quarter of 1997.

Imation Corp. supplies a variety of products and services worldwide for the imaging and information industry. As of March 31, 1997, the Company employed approximately 9,700 people worldwide, has a presence in more than 60 countries and is based in Oakdale, Minnesota.

Luminous Technology Corporation is a wholly-owned subsidiary of Imation Corp. Based in Seattle, Luminous develops software products, services and technologies for the prepress, print production, and graphic arts industries.

Additional information about Imation is available on the Company's web site at http://www.imation.com or by calling toll-free at 1-888-466-3456. To receive stock quote updates, recent earnings and news releases, corporate information and related shareholder services, call Imation's toll-free shareholder information line at 1-888-IMN-NYSE (1-888-466-6973).

Certain portions of this news release which do not relate to historical financial information may be deemed to constitute forward looking statements which are subject to various factors that could cause actual results in the future to differ materially from these statements. Among these factors are the Company's ability to meet its cost reduction, revenue growth and profitability targets, its ability to establish itself as an independent public company, competitive industry conditions including historical price erosion in certain product categories, foreign currency fluctuations, and the market acceptance of newly introduced products as well as various factors set forth in the Company's filings with the Securities and Exchange Commission, including its 1996 Annual Report on Form 10-K.