Earnings

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Q4 - Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except Per Share Amounts)
(Unaudited)

                            

                               Three months ended    Twelve months ended
                                  December 31            December 31
                                1996        1995       1996       1995

Net revenues                   $581.6      $557.7    $2,278.2   $2,245.6
Cost of goods sold              377.8       421.8     1,482.8    1,520.9
  Gross profit                  203.8       135.9       795.4      724.7
Operating expenses:
  Selling, general and
   administrative               139.6       133.8       563.0      539.4
  Research and development       51.0        54.2       183.1      222.4
  Restructuring charges           -         111.8        53.9      111.8
    Total                       190.6       299.8       800.0      873.6
Operating income (loss)          13.2      (163.9)       (4.6)    (148.9)
Interest expense and other        2.5         3.7        10.4       17.9
Income (loss) before tax and
  minority interest              10.7      (167.6)      (15.0)    (166.8)
Income tax provision (benefit)   11.3       (70.8)        5.9      (70.5)
Minority interest                 -          (9.3)       (0.4)     (11.3)
Net income (loss)              $ (0.6)     $(87.5)   $  (20.5)  $  (85.0)

Earnings (loss) per share      $ (.02)     $(2.08)   $   (.49)  $  (2.02)

Weighted average shares
outstanding (1)                   40.7        41.9        41.3      42.0

(1)The number of weighted average shares outstanding used in the computation of earnings per share prior to July 1, 1996 are one-tenth the number of 3M shares outstanding based on the distribution of one share of Imation Corp. for ten shares of 3M pursuant to the spin-off on July 1, 1996.

IMATION CORP.
CONSOLIDATED BALANCE SHEETS
(In Millions)
(Unaudited)

December 31, December 31, 1996 1995 ASSETS

Current Assets Cash and equivalents $ 61.7 $ - Accounts receivable - net 467.6 479.5 Inventories 392.8 426.3 Other current assets 94.5 48.8 Total current assets 1,016.6 954.6 Property, plant and equipment - net 480.1 513.2 Other Assets 64.6 73.7 Total Assets $1,561.3 $1,541.5

LIABILITIES AND EQUITY

Current Liabilities Accounts payable $ 182.1 $ 125.9 Accrued payroll 41.9 44.4 Income taxes payable 7.6 - Short-term debt 26.5 - Other current liabilities 151.2 125.9 Total current liabilities 409.3 296.2 Other Liabilities 98.6 96.6 Long-Term Debt 123.1 - Commitments and Contingencies

Shareholders' Equity Common Stock - $.01 par value 0.4 - Additional paid in capital 1,011.5 - Retained earnings 11.2 - Unearned ESOP shares (46.6) - Cumulative translation adjustment (46.2) (46.1) Net investment by 3M - 1,194.8 Total shareholders' equity 930.3 1,148.7 Total Liabilities and Equity $1,561.3 $1,541.5

IMATION CORP.
SUPPLEMENTAL INFORMATION
(Unaudited)
Economic Profit Improvement ($ Millions)

                                    1996-1998           1996
                                       Goal           Progress
Cost Reductions                       $ 90               $30
Revenue Growth                          40                 5
Increased Asset Turns                   20                30 
  Total                               $150               $65

Economic profit is after tax operating profit less a charge for the Company's cost of capital. The Company's goal is to improve economic profit by $150 million in the three year period 1996-1998 over the Company's actual performance in 1995.

Includes $18 million one-time benefit from asset write-offs.

                              U.S.     International       Worldwide
Volume                         6.1          13.9               9.9
Price                         (0.9)         (7.5)             (4.1)
Translation                    -            (3.0)             (1.5)
   Total                       5.2           3.4               4.3

Revenues - Percentage Change - Full Year 1996 vs. 1995

                               U.S.     International       Worldwide
Volume                         5.6          10.1               7.9
Price                         (2.9)         (7.0)             (4.9)
Translation                    -            (2.9)             (1.5)
   Total                       2.7           0.2               1.5


Revenues by Area ($ Millions)

                               Three months ended     Twelve months ended
                                  December 31             December 31
                                1996        1995       1996         1995
Revenue:
    United States              $299.7      $285.0    $1,159.5     $1,128.8
      % of total                51.5%       51.1%      50.9%        50.3%

    International              $281.9      $272.7    $1,118.7     $1,116.8
      % of total                48.5%       48.9%      49.1%        49.7%

IMATION CORP.
SUPPLEMENTAL INFORMATION
(In Millions)
(Unaudited)

Operations & Cash Flow - Additional Information ($ Millions)

                               Three months ended     Twelve months ended
                                  December 31             December 31
                                1996        1995       1996         1995

Gross Margin %                  35.0%       33.4%      35.3%        34.5%
EBITDA                         $69.1       $50.4      $265.4       $206.9
Tax Rate                        49.8%       42.3%      45.9%        42.3%
Capital Expenditures           $51.5       $44.8      $167.4       $180.2
Depreciation                   $43.4       $48.0      $181.1       $189.5


   Gross margin percentages, EBITDA and tax rates exclude all special charges.


Asset Utilization Information

                                 As of
                                 December 31,
                                 1996      1995

Days Sales Outstanding            75        78
Months of Inventory               3.2       3.1



Other Information
Approximate Employee Count at December 31, 1996:             9,400
Shares outstanding on December 31, 1996:                42,879,880
Weighted average shares outstanding used
  in earnings per share computation (4th Qtr)           40,679,771

Revenues - Percentage Change - Fourth Quarter 1996 vs. 1995 Additional information about Imation is available on the company's web site at http://www.imation.com. 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).