Oakdale, Minn. (August 2, 1996) -- Imation Corp. (NYSE:IMN), the new imaging and information company recently spun-off from Minnesota Mining and Manufacturing (NYSE:MMM), today announced results for the second quarter ended June 30, 1996. The results reflect the revenues and expenses of these businesses as they were operated within 3M, including an allocation of certain general corporate expenses of 3M.

As expected, Imation reported a net loss of $37.8 million, or ($.90) per share on revenues of $561.2 million. These results include pre-tax restructuring charges of $43.5 million related to employee separations and special one time charges of $22.5 million primarily related to start-up activities. Excluding these charges, Imation's net income would have been $4.7 million or $.11 per share. For the comparable quarter a year ago, Imation's results would have been a net loss of $3.2 million, or ($.08) per share on revenues of $565.0 million.

For the quarter, international revenues accounted for 49.3 percent of total revenues. Excluding the impact of currency worldwide, revenues were up 1.6 percent, compared with the second quarter of 1995. Spending on research and development (R&D) was $45.6 million, down 21.2 percent from the comparable quarter last year.

Sales, general and administrative spending (SG&A), was $159.2 million including $14.6 million of one-time special charges and $12.7 million of costs for consulting and identity development. Without these one-time charges and costs, SG&A spending would have declined 4.8 percent compared with the second quarter a year ago.

"We are satisfied with our progress in the second quarter," said Bill Monahan, chairman and chief executive officer of Imation. "We are seeing strong market acceptance of Travan™ data cartridges and DryView™ laser imagers -- both new product platforms introduced within the past twelve months. In the coming quarters, we look to the newly introduced LS-120™ diskette and Rainbow™ color proofing systems to contribute to our operating results as well. We begin our new company positioned for leadership in the imaging and information processing industry.

"As we develop our new company, we are concentrating on three areas of change. First, we are building a culture focused on customers and financial results. Second, we are implementing a reduced cost structure, as demonstrated by these results. And third, we are building the foundation for future profitable growth. Our overall financial goal is a $150 million improvement in Imation's economic profit between the beginning of 1996 and the end 1998 and an annual earnings-per-share growth in excess of 15 percent by the end of 1998," Monahan said.

For the six months ended June 30, Imation reported a net loss of $31.7 million or ($.76) per share on revenues of $1,137.3 million, which includes pre-tax restructuring charges of $53.9 million related to employee separations and special one time costs of $22.5 million primarily related to start-up activities. Excluding restructuring and special charges, Imation's net income would have been $16.9 million or $.40 per share. For the comparable period a year ago, Imation's results would have been a net income of $4.3 million, or $.10 per share on revenues of $1,141.7 million.

While management believes that these financial goals are appropriate for Imation, the goals are not forecasts of Imation's future financial performance and there can be no assurance as to the company's ability to achieve them. Certain information contained in this report may constitute forward-looking statements and as such may involve risks and uncertainties. Important factors exist which may cause Imation's actual results to differ from the forward looking statements contained in this report or in other public statements by the company, including the company's ability to meet its cost reduction, revenue growth and asset utilization targets as well as various factors set forth in the company's information statement Form 10, filed with the Securities and Exchange Commission on June 21, 1996, in the section titled "SPECIAL FACTORS.", and "MANAGEMENT DISCUSSION AND ANALYSIS".

Imation was created from the tax-free spin-off by Minnesota Mining and Manufacturing (NYSE:MMM) of its data storage and imaging businesses, announced in November 1995. The company had a total of 41,930,187 shares outstanding as of July 1.

Imation Corp. supplies a variety of products and services worldwide for the information processing industry, specializing in information storage and imaging applications. The company employs approximately 9,700 people worldwide and is based in Oakdale, Minn.

Copyright 1996 Imation. All rights reserved.