##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSIONWashington, D.C.
    20549
    Form 10-K
    (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,
    2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 1-14310
      
 IMATION CORP.
 (Exact name of registrant as
    specified in its charter)
  Delaware

41-1838504(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1 Imation Way
    Oakdale, Minnesota(Address of principal
    executive offices)

55128(Zip Code)   (651) 704-4000
 (Registrants telephone
    number, including area code)
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of each exchange on which registeredCommon Stock, $.01 per share

New York Stock Exchange, Inc.;
    Chicago Stock Exchange, IncorporatedPreferred Stock Purchase Rights

New York Stock Exchange, Inc.;
    Chicago Stock Exchange, Incorporated       Securities registered pursuant to Section 12(g) of the
    Act: None
      o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




---



##### Table of Contents





IMATION CORP.FORM 10-K
    FOR THE YEAR ENDED DECEMBER 31, 2010
  TABLE OF
    CONTENTS
  PagePART IITEM 1


BUSINESS


2ITEM 1A


RISK FACTORS


9ITEM 1B


UNRESOLVED STAFF COMMENTS


13ITEM 2


PROPERTIES


13ITEM 3


LEGAL PROCEEDINGS


13ITEM 4


[REMOVED AND RESERVED]


14PART IIITEM 5


MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


14ITEM 6


SELECTED FINANCIAL DATA


16ITEM 7


MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


17ITEM 7A


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


36ITEM 8


FINANCIAL STATEMENTS AND SUPPLEMENTARY
    DATA


37ITEM 9


CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
    ON ACCOUNTING AND FINANCIAL DISCLOSURE


85ITEM 9A


CONTROLS AND PROCEDURES


85ITEM 9B


OTHER INFORMATION


85PART IIIITEM 10


DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
    GOVERNANCE


86ITEM 11


EXECUTIVE COMPENSATION


87ITEM 12


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


87ITEM 13


CERTAIN RELATIONSHIPS AND RELATED
    TRANSACTIONS, AND DIRECTOR INDEPENDENCE


87ITEM 14


PRINCIPAL ACCOUNTANT FEES AND SERVICES


87PART IVITEM 15


EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


88SIGNATURES


92   1




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##### Table of Contents



PART I  Item 1.
    Business.  General
        Our
    Products
    Traditional
    Storage
      back-up,
 2




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##### Table of Contents



tm
    Emerging
    Storage
  tm tm
  Electronics
    and Accessories
  ® ® ®
    Years Ended December 31,2010


2009


2008% of





% of





% ofRevenue


Total


Revenue


Total


Revenue


Total(Dollars in millions)Traditional storageOptical products

$
619.3



42.4
%

$
738.0



44.8
%

$
851.7



43.0
%Magnetic products


347.8



23.8
%


406.0



24.6
%


548.7



27.7
%Other traditional storage


62.8



4.3
%


77.7



4.7
%


106.2



5.4
%Total traditional storage


1,029.9



70.5
%


1,221.7



74.1
%


1,506.6



76.1
%Emerging storage


207.5



14.2
%


165.4



10.0
%


151.3



7.6
%Electronics and accessories


223.5



15.3
%


262.4



15.9
%


323.1



16.3
%Total

$
1,460.9






$
1,649.5






$
1,981.0   Our
    Brands
       3




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##### Table of Contents



Business
    Segments
              
    Customers,
    Marketing and Distribution
   4




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##### Table of Contents



Market and
    Competition
            Manufacturing
     5




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##### Table of Contents



Raw Materials and
    Other Purchased Products
        Research,
    Development and Engineering
   6




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##### Table of Contents



Intellectual
    Property
      Employees
    Environmental
    Matters
    International
    Operations
    Risk Factors Form 10-K,
  Executive
    Officers of the Registrant
    Greg J. Bosler,
  James C. Ellis,
 7




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##### Table of Contents



Dr. Subodh Kulkarni,
  Mark E. Lucas,
  Scott J. Robinson,
  John L. Sullivan,
  Paul R. Zeller, spin-off
  Availability of
    SEC Reports
  1-800-SEC-0330.
  Form 10-K, Form 10-Q, Form 8-K,
 8




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##### Table of Contents



Item 1A.
    Risk
    Factors.  Our business faces many risks. Form 10-K
  We must make strategic decisions from time to time as to
    the products and technologies in which we invest and if we
    choose the wrong product or technology, our financial results
    could be adversely impacted.
  The future revenue growth of our business depends in part
    on the development and performance of our new
    products.
  Our results of operations include our determinations of
    the amount of taxes owed in the various tax jurisdictions in
    which we operate and are subject to changes in tax laws and
    regulations, and to inspection by various tax
    authorities.
  Because of the rapid technology changes in our industry,
    we may not be able to compete if we cannot quickly develop,
    source, introduce and deliver differentiating and innovative
    products.
  We may be dependent on third parties for new product
    introductions or technologies in order to introduce our own new
    products.
  Negative or uncertain global economic conditions could
    result in a decrease in our sales and revenue and an increase in
    our operating costs, which could adversely affect our business
    and operating results.
 9




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##### Table of Contents



Negative or uncertain global economic conditions increase
    the risk that we could suffer unrecoverable losses on our
    customers accounts receivable, which would adversely
    affect our financial results.
  We may engage in business combinations that are dilutive
    to existing stockholders, result in unanticipated accounting
    charges or otherwise harm our results of operations, and result
    in difficulties in assimilating and integrating the operations,
    personnel, technologies, products and information systems of
    acquired companies or businesses.
      Volatility of demand and seasonality may result in our
    inability to accurately forecast our product purchase
    requirements.
 10




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##### Table of Contents



Our international operations subject us to economic risk
    as our results of operations may be adversely affected by
    changes in political, economic and other conditions and foreign
    currency fluctuations. non-U.S. operations non-U.S. operations non-U.S. operating non-U.S. based,
  Our financial success depends upon our ability to source
    and deliver products to our customers at acceptable quality,
    volume and cost levels.
  Significant changes in discount rates, rates of return on
    pension assets, mortality tables and other factors could affect
    our future earnings, equity and pension funding
    requirements.
  We use a variety of raw materials, supplier-provided
    parts, components,
    sub-systems
    and third-party contract manufacturing services in our
    businesses and significant shortages, supplier capacity
    constraints, supplier production disruptions or price increases
    could increase our operating costs and adversely impact the
    competitive positions of our products.
 11




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##### Table of Contents



Sudden disruptions to the availability of freight lanes
    could have an impact on our operations.
  A material change in customer relationships or in customer
    demand for products could have a significant impact on our
    business.
  Our success depends in part on our ability to obtain and
    protect our intellectual property rights, including the Imation,
    TDK Life on Record, Memorex and XtremeMac brands and to defend
    ourselves against intellectual property infringement claims of
    others.
      If our long-lived assets or any goodwill that we acquire
    become impaired, it may adversely affect our operating
    results.
  Significant litigation matters could result in large
    costs.
  We may be affected by legal, regulatory, or market
    responses to actual or perceived global climate
    change.
  The market price of our common stock is
    volatile.
  
    actual or anticipated fluctuations in our operating results;
    announcements of technological innovations by us or our
    competitors which may decrease the volume and profitability of
    sales of our existing products and increase the risk of
    inventory obsolescence; 12




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##### Table of Contents




    new products introduced by us or our competitors;
    periods of severe pricing pressures due to oversupply or price
    erosion resulting from competitive pressures or industry
    consolidation;
    developments with respect to patents or proprietary rights;
    conditions and trends in the consumer electronics and data
    storage industries;
    contraction in our operating results or growth rates;
    changes in financial estimates by securities analysts relating
    specifically to us or the industries in which we participate in
    general; and
    macroeconomic conditions that affect the market generally.    If we are unable to attract and retain employees and key
    talent our business and financial results may be materially
    impacted.
  Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Facility

FunctionAmericasOakdale, Minnesota (owned)

Sales/Administrative/Laboratory facility/Corporate headquartersSouthaven, Mississippi (leased)

Distribution CenterWeatherford, Oklahoma (owned)

Magnetic tape manufacturingEuropeHoofddorp, Netherlands (leased)

Sales/Administrative/European regional headquartersNeuss, Germany (leased)

Sales/Administrative/Distribution CenterNorth AsiaTokyo, Japan (leased)

Sales/Administrative/North Asia regional headquartersSouth AsiaKings Park, Australia (leased)

Sales/Administrative/Distribution CenterSingapore (leased)

South Asia regional headquarters   Item 3.
    Legal
    Proceedings.   13




---



##### Table of Contents



and/or
        Item 4.
    (Removed
    and Reserved). PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.     14




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##### Table of Contents



2010 Sales Prices


2009 Sales PricesHigh


Low


High


LowFirst quarter

$
11.81


$
8.46


$
14.44


$
6.94Second quarter

$
12.59


$
8.56


$
11.14


$
7.19Third quarter

$
10.72


$
8.41


$
10.17


$
7.34Fourth quarter

$
11.12


$
9.14


$
10.30


$
7.95       Stock Performance
    Graph
    
  (Total Return Index)


12/31/2005


12/31/2006


12/31/2007


12/31/2008


12/31/2009


12/31/2010Imation Corp.


$
100.00




101.38




46.29




30.29




19.46




23.01S&P Midcap 400 Index


$
100.00




108.99




116.28




72.93




98.46




122.93ArcaEx Tech 100 Index


$
100.00




104.68




112.27




72.99




104.43




129.70    15




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##### Table of Contents



Item 6.
    Selected
    Financial Data.*  2010


2009


2008


2007


2006(Dollars in millions, except per share data)Statement of Operations Data:Net revenue

$
1,460.9


$
1,649.5


$
1,981.0


$
1,895.8


$
1,373.0Gross profit


226.4



264.0



338.8



345.8



327.4Selling, general and administrative


202.5



229.7



287.6



218.9



170.0Research and development


16.4



20.4



23.6



38.2



50.0Litigation settlement


2.6



49.0











Goodwill impairment


23.5







32.4



94.1



Restructuring and other


51.1



26.6



28.9



33.3



11.9Operating (loss) income


(69.7
)


(61.7
)


(33.7
)


(38.7
)


95.5(Loss) income from continuing operations


(158.3
)


(44.0
)


(37.8
)


(56.4
)


62.0Net (loss) income


(158.5
)


(42.2
)


(33.3
)


(50.4
)


76.4(Loss) earnings per common share from continuing operations:Basic


(4.19
)


(1.17
)


(1.01
)


(1.52
)


1.79Diluted


(4.19
)


(1.17
)


(1.01
)


(1.52
)


1.76Net (loss) earnings per common share:Basic


(4.19
)


(1.13
)


(0.89
)


(1.36
)


2.21Diluted


(4.19
)


(1.13
)


(0.89
)


(1.36
)


2.17Balance Sheet Data:Cash and cash equivalents

$
304.9


$
163.4


$
96.6


$
135.5


$
252.5Accounts receivable, net


258.8



314.9



378.3



507.1



308.1Inventories


203.3



235.7



363.2



366.1



258.0Property, plant and equipment, net


66.9



109.8



122.4



171.5



178.0Intangible assets, net


320.4



337.3



357.0



371.0



230.2Total assets


1,251.0



1,393.8



1,540.0



1,751.0



1,382.9Accounts payable


219.2



201.4



296.1



350.1



227.3Long-term debt














21.3



Total liabilities


469.3



466.6



595.4



697.2



436.6Total shareholders equity


781.7



927.2



944.6



1,053.8



946.3Other Information:Current ratio


2.1



2.4



2.0



1.8



2.2Days sales outstanding(1)


57



60



63



64



56Days of inventory supply(1)


69



75



112



94



90Return on average assets(2)


(11.8
) %


(3.1
) %


(2.4
) %


(3.6
) %


4.8
%Return on average equity(2)


(18.0
) %


(4.8
) %


(3.7
) %


(5.4
) %


6.8
%Dividends per common share

$



$



$
0.56


$
0.62


$
0.54Capital expenditures

$
8.3


$
11.0


$
13.6


$
14.5


$
16.0Number of employees


1,115



1,210



1,570



2,250



2,070     *
    
    See Item 7. Managements Discussion and Analysis of
    Financial Condition and Results of Operations, for
    additional information regarding the financial information
    presented in this table. The acquisitions of Xtreme Accessories,
    LLC on June 30, 2008, TDK Recording Media on July 31,
    2007, Memcorp, Inc. on July 9, 2007, and Memorex
    International Inc. on April 28, 2006 may affect the
    comparability of financial information in this table. See
    Note 4 in the Consolidated Financial Statements for further
    information. 16




---



##### Table of Contents



(1)
    
    These operational measures, which we regularly use, are provided
    to assist in the investors further understanding of our
    operations. Days sales outstanding is calculated using the
    count-back method, which calculates the number of days of most
    recent revenue that are reflected in the net accounts receivable
    balance. Days of inventory supply is calculated using the
    current period inventory balance divided by an estimate of the
    inventoriable portion of cost of goods sold expressed in days.(2)
    
    Return percentages are calculated using (loss) income from
    continuing operations.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Business Form 10-K.
  Overview
    Strategy
    
    Financial Goals.  In the near-term, we do not
    expect revenues to rise in 2011 due to declines in traditional
    storage products and our intent to rationalize low-margin
    products. We also expect that earnings, excluding charges, will
    decline in 2011 partially due to organic investments needed to
    drive long-term growth. However, we will continue our focus on
    cash and continued margin improvement in 2011. Looking forward,
    our mid-term financial goals include double-digit earnings
    growth in 2012 and a return to top-line growth by the end of
    2012. Longer term, we have a return on invested capital (ROIC)
    target of 10 percent or more, operating income
    profitability target of 4 to 5 percent, and an expectation
    of product gross margins moving toward 20 percent.
    Corporate Strategies.  We intend to use a
    disciplined,
    end-to-end
    product life cycle management process designed to deliver
    products with higher gross margins while phasing out low-margin
    businesses. In 2011, this process is expected to drive new
    product launches with at least 20 percent gross margin as
    an entry target. We also plan to invest in four core product
    technology areas: secure storage, scalable storage,
    wireless/connectivity and magnetic tape. These investments will
    include organic research activities already underway, with an
    increase of more than 30 percent in research, development,
    and engineering (RD&E) resources expected in 2011. We also
    anticipate investments through small to medium acquisitions each
    in the range of several million dollars up to $50 million.
    Product Strategies.  In our traditional storage
    products, which include magnetic tape media and optical media,
    our strategy is to optimize profitability, returns and cash in a
    declining market. In emerging storage, including flash and
    removable hard disk drives, we plan to invest in higher growth
    and margin opportunities, such as our award-winning
    Defendertm

    line of secure removable storage products and scalable storage
    offerings for small to medium size businesses, including
    removable hard disk systems such as RDX. In electronics and
    accessories, our strategy is to launch differentiated, higher
    margin products such as the new XtremeMac and TDK Life on Record
    premium audio lines. Lastly, our strategy includes rationalizing
    low-margin businesses across product categories.
    Investment Strategies.  In 2011, we expect
    incremental organic investment of $15 million, focused on
    technology; expanded sales and marketing coverage for the
    value-added reseller and OEM channels; improved decision-support
    tools in IT; and international expansion, focused on China. We
    also intend to grow through acquisitions focused on data
    protection, storage hardware, removable hard drive systems, and
    related software, with the potential for several small to medium
    acquisitions during 2011. 17




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##### Table of Contents



Factors Affecting
    Comparability of our Financial Results
  Discontinued
    Operations
    Executive
    Summary
  2010
    Consolidated Results of Operations
  
    Revenue of $1,460.9 million in 2010 was down
    11.4 percent compared with revenue of $1,649.5 million
    in 2009 due primarily to lower demand for our traditional
    storage products and the continuing soft economy.
    Gross margin of 15.5 percent in 2010 was down from
    16.0 percent in 2009, due to inventory write-offs of
    $14.2 million which were part of our 2011 manufacturing
    redesign restructuring plan announced January 18, 2011.
    Selling, general and administrative expense was
    $202.5 million in 2010, down $27.2 million, compared
    with $229.7 million in 2009.
    Research and development expense was $16.4 million in 2010,
    down $4.0 million, compared with $20.4 million in 2009.
    We recorded a non-cash goodwill impairment charge of
    $23.5 million in 2010. There were no goodwill impairment
    charges in 2009.
    Restructuring and other expense was $51.1 million in 2010,
    an increase of $24.5 million, compared with
    $26.6 million in 2009, primarily related to the
    restructuring programs announced in January 2011.
    Other expense was $6.7 million in 2010, down
    $8.3 million, compared with $15.0 million in 2009.
    The income tax provision was $81.9 million in 2010,
    compared with an income tax benefit of $32.7 million in
    2009, an increase of $114.6 million. This change was
    primarily due to the establishment of a $105.6 million
    valuation allowance on our U.S. deferred tax assets. Other
    items that had an impact on the 2010 income tax provision
    included a change in the state tax effective rate, reserves for
    uncertain tax positions, foreign earnings subject to
    U.S. taxation, and changes in the mix of income by
    jurisdiction.
    Operating loss was $69.7 million in 2010, compared with
    $61.7 million in 2009.  2010 Cash
    Flow/Financial Condition
  
    Cash and cash equivalents totaled $304.9 million as of
    December 31, 2010 compared with $163.4 million as of
    December 31, 2009.
    Cash flow provided by operating activities was
    $151.4 million for 2010 compared with $67.5 million
    for 2009. 18




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##### Table of Contents



Results of
    Operations
  Net
    Revenue
  Percent ChangeYears Ended December 31,

2010 vs.

2009 vs.2010

2009

2008

2009

2008(In millions)Net revenue

$
1,460.9


$
1,649.5


$
1,981.0



−11.4
%


−16.7
%       Gross
    Profit
  Years Ended December 31,

Percent Change2010

2009

2008

2010 vs. 2009

2009 vs. 2008(In millions)Gross profit

$
226.4


$
264.0


$
338.8



−14.2
%


−22.1
%Gross margin


15.5
%


16.0
%


17.1
%       Selling,
    General and Administrative (SG&A)
  Years Ended December 31,

Percent Change2010

2009

2008

2010 vs. 2009

2009 vs. 2008(In millions)Selling, general and administrative

$
202.5


$
229.7


$
287.6



−11.8
%


−20.1
%As a percent of revenue


13.9
%


13.9
%


14.5
%      19




---



##### Table of Contents



Research and
    Development (R&D)
  Years Ended December 31,

Percent Change2010

2009

2008

2010 vs. 2009

2009 vs. 2008(In millions)Research and development

$
16.4


$
20.4


$
23.6



−19.6
%


−13.6
%As a percent of revenue


1.1
%


1.2
%


1.2
%     Litigation
    Settlement
  Years Ended December 31,2010

2009

2008(In millions)Litigation settlement

$
2.6


$
49.0


$
       Goodwill
    Impairment
  Years Ended December 31,2010

2009

2008(In millions)Goodwill impairment

$
23.5


$



$
32.4    20




---



##### Table of Contents



Restructuring
    and Other
    Years Ended December 31,2010


2009


2008(In millions)RestructuringSeverance and severance related

$
13.0


$
11.2


$
15.7Lease termination costs


1.7



0.7



4.8Total restructuring


14.7



11.9



20.5Pension settlement/curtailment


2.8



11.7



5.7Asset impairments


31.2



2.7



5.0TDK post-closing purchase price adjustment










(2.3
)Other


2.4



0.3



Total

$
51.1


$
26.6


$
28.9   2011
    Manufacturing Redesign Restructuring Program
      2011 Corporate
    Strategy Restructuring Program
   21




---



##### Table of Contents



2008 Corporate
    Redesign Restructuring Program
        Prior Programs
    Substantially Complete
      Other
           22




---



##### Table of Contents



Operating
    Loss
  Years Ended December 31,

Percent Change2010

2009

2008

2010 vs. 2009

2009 vs. 2008(In millions)Operating loss

$
(69.7
)

$
(61.7
)

$
(33.7
)


13.0
%


83.1
%As a percent of revenue


−4.8
%


−3.7
%


−1.7
%         Other
    Expense
  Years Ended December 31,


Percent Change2010


2009


2008


2010 vs. 2009


2009 vs. 2008(In millions)Interest income

$
(0.8
)

$
(0.7
)

$
(3.8
)


14.3
%


−81.6
%Interest expense


4.2



2.9



1.5



44.8
%


93.3
%Other expense, net


3.3



12.8



10.3



−74.2
%


24.3
%Other expense

$
6.7


$
15.0


$
8.0



−55.3
%


87.5
%As a percent of revenue


0.5
%


0.9
%


0.4
%   year-over-year.
  year-over-year.
  Income Tax
    Provision (Benefit)
  Years Ended December 31,2010

2009

2008(In millions)Income tax provision (benefit)

$
81.9


$
(32.7
)

$
(3.9
)Effective tax rate


NM



42.6
%


9.4
%     NM
 23




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##### Table of Contents



Segment
    Results
    
    Our Americas segment includes North America, Central America and
    South America.
    Our Europe segment includes Europe and parts of Africa.
    Our North Asia segment includes Japan, China, Hong Kong, Korea
    and Taiwan.
    Our South Asia segment includes Australia, Singapore, India, the
    Middle East and parts of Africa.  Form 10-K
    Americas
  Years Ended December 31,


Percent Change2010


2009


2008


2010 vs. 2009


2009 vs. 2008(In millions)Net revenue

$
712.9


$
834.2


$
1,002.9



−14.5
%


−16.8
%Operating income


36.8



48.3



58.1



−23.8
%


−16.9
%As a percent of revenue


5.2
%


5.8
%


5.8
%    24




---



##### Table of Contents



Europe
  Years Ended December 31,


Percent Change2010


2009


2008


2010 vs. 2009


2009 vs. 2008(In millions)Net revenue

$
289.8


$
370.5


$
503.1



−21.8
%


−26.4
%Operating (loss) income


(0.6
)


2.4



16.1



NM



−85.1
%As a percent of revenue


−0.2
%


0.6
%


3.2
%     NM
      North
    Asia
  Years Ended December 31,


Percent Change2010


2009


2008


2010 vs. 2009


2009 vs. 2008(In millions)Net revenue

$
315.2


$
306.9


$
308.9



2.7
%


−0.6
%Operating income


14.9



15.3



16.7



−2.6
%


−8.4
%As a percent of revenue


4.7
%


5.0
%


5.4
%      25




---



##### Table of Contents



South
    Asia
  Years Ended December 31,


Percent Change2010


2009


2008


2010 vs. 2009


2009 vs. 2008(In millions)Net revenue

$
143.0


$
137.9


$
166.1



3.7
%


−17.0
%Operating income


4.0



2.6



12.9



53.8
%


−79.8
%As a percent of revenue


2.8
%


1.9
%


7.8
%       Corporate and
    Unallocated
  Years Ended December 31,

Percent Change2010

2009

2008

2010 vs. 2009

2009 vs. 2008(In millions)Operating loss

$
(124.8
)

$
(130.3
)

$
(137.5
)


−4.2
%


−5.2
%         Financial
    Position
     26




---



##### Table of Contents



27




---



##### Table of Contents



Liquidity and
    Capital Resources
  Cash Flows
    provided by Operating Activities:
  Years Ended December 31,2010

2009

2008(In millions)Net loss

$
(158.5
)

$
(42.2
)

$
(33.3
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation


18.2



19.7



25.9Amortization


23.6



23.3



23.4Deferred income taxes


(48.6
)


(2.0
)


0.2Goodwill impairment


23.5







32.4Asset impairments


31.2



2.7



5.0Inventory write-offs


14.2







Stock-based compensation


6.9



7.5



9.5Pension settlement/curtailment


2.8



11.7



5.7Deferred tax asset valuation allowance


105.6







Litigation settlement


2.6



49.0



Other


5.4



9.2



7.2Changes in operating assets and liabilities, net of effects from
    acquisitions


124.5



(11.4
)


8.7Net cash provided by operating activities

$
151.4


$
67.5


$
84.7     Cash Flows
    (used in) provided by Investing Activities:
  Years Ended December 31,2010


2009


2008(In millions)Capital expenditures

$
(8.3
)

$
(11.0
)

$
(13.6
)License agreement


(5.0
)






Acquisitions, net of cash acquired










(15.3
)Acquisition of minority interest










(8.0
)Proceeds from sale of assets


0.2



13.0



0.8Net cash (used in) provided by investing activities

$
(13.1
)

$
2.0


$
(36.1
)        28




---



##### Table of Contents



Cash Flows
    used in Financing Activities:
  Years Ended December 31,2010


2009


2008(In millions)Purchase of treasury stock

$



$



$
(26.4
)Exercise of stock options










0.6Dividend payments










(20.9
)Debt repayment










(31.3
)Debt issuance costs


(1.0
)


(3.2
)


Net cash used in financing activities

$
(1.0
)

$
(3.2
)

$
(78.0
)               
    up to 85 percent of eligible accounts receivable; plus
    up to the lesser of 65 percent of eligible inventory or
    85 percent of the appraised net orderly liquidation value
    of eligible inventory; plus
    up to 60 percent of the appraised fair market value of
    eligible real estate (the Original Real Estate Value), such
    Original Real Estate Value to be reduced each calendar month by
    1/84th, provided, that the Original Real Estate Value shall not
    exceed $40,000,000; plus 29




---



##### Table of Contents




    such other classes of collateral as may be mutually agreed upon
    and at advance rates as may be determined by the Agent; minus
    such reserves as the Agent may establish in good faith.        Off-Balance Sheet
    Arrangements
    Summary of
    Contractual Obligations
  Payments Due by PeriodLess Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In millions)Operating lease obligations

$
17.6


$
9.0


$
7.4


$
1.2


$
Purchase obligations(1)


186.3



186.3











Litigation settlements


27.4



10.9



16.5







Other liabilities(2)


49.0



3.1



5.9



4.2



35.8Total

$
280.3


$
209.3


$
29.8


$
5.4


$
35.8     (1)
    
    The majority of the purchase obligations consist of
    90-day
    rolling estimates. In most cases, we provide suppliers with a
    three to six month rolling forecast of our demand. The
    forecasted amounts are generally not binding on us. However, it
    may take up to 60 days from the purchase order issuance to
    receipt, depending on supplier and inbound lead time.(2)
    
    Timing of payments for the vast majority of other liabilities
    cannot be reasonably determined and, as such, have been included
    in the More Than 5 Years category. Effective
    December 8, 2009, we began an agreement with a third party
    to outsource certain aspects of our information technology
    support. While the agreement is cancelable at any time with
    certain cash penalties, our obligation through the expected
    termination date of January 2016 is included above. 30




---



##### Table of Contents



Critical
    Accounting Policies and Estimates
      Income Tax Accruals and Valuation
    Allowances.
       31




---



##### Table of Contents



Litigation.
  Intangibles.
 32




---



##### Table of Contents



Goodwill.
            Excess of Carrying

Percentage ofReporting unit

Amount Over

Carrying AmountGoodwill

Carrying Amount

Fair Value

Over Fair Value(In millions)Americas-Consumer

$
23.5


$
336.5


$
173.5



206
%     Excess Inventory and Obsolescence.
  Rebates. program-by-program
 33




---



##### Table of Contents



Restructuring Reserves.
  Other Accrued Liabilities.
        non-U.S. plans
    Recently Issued
    Accounting Standards
     34




---



##### Table of Contents



Forward-Looking
    Statements
  Form 10-K,
   35




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.           36




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data. REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    Internal Control 
    Integrated Framework
      PricewaterhouseCoopers
    LLP
   37




---



##### Table of Contents



IMATION CORP.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2010


2009


2008(In millions, except per share amounts)Net revenue

$
1,460.9


$
1,649.5


$
1,981.0Cost of goods sold


1,234.5



1,385.5



1,642.2Gross profit


226.4



264.0



338.8Selling, general and administrative expense


202.5



229.7



287.6Research and development expense


16.4



20.4



23.6Litigation settlement expense


2.6



49.0



Goodwill impairment


23.5







32.4Restructuring and other expense


51.1



26.6



28.9Total


296.1



325.7



372.5Operating loss


(69.7
)


(61.7
)


(33.7
)Other (income) and expenseInterest income


(0.8
)


(0.7
)


(3.8
)Interest expense


4.2



2.9



1.5Other expense, net


3.3



12.8



10.3Total


6.7



15.0



8.0Loss from continuing operations before income taxes


(76.4
)


(76.7
)


(41.7
)Income tax provision (benefit)


81.9



(32.7
)


(3.9
)Loss from continuing operations


(158.3
)


(44.0
)


(37.8
)Discontinued operations:(Loss) income from operations of discontinued businesses,net of income taxes


(0.2
)


1.8



4.5(Loss) income from discontinued operations


(0.2
)


1.8



4.5Net loss

$
(158.5
)

$
(42.2
)

$
(33.3
)(Loss) earnings per common share  basic:Continuing operations

$
(4.19
)

$
(1.17
)

$
(1.01
)Discontinued operations


(0.01
)


0.05



0.12Net loss


(4.19
)


(1.13
)


(0.89
)(Loss) earnings per common share  diluted:Continuing operations

$
(4.19
)

$
(1.17
)

$
(1.01
)Discontinued operations


(0.01
)


0.05



0.12Net loss


(4.19
)


(1.13
)


(0.89
)Weighted average shares outstanding:Basic


37.8



37.5



37.5Diluted


37.8



37.5



37.5Cash dividend paid per common share

$



$



$
0.56    38




---



##### Table of Contents



IMATION CORP.
  CONSOLIDATED
    BALANCE SHEETS
  As of December 31,2010


2009(In millions, except per share amounts)ASSETSCurrent assetsCash and cash equivalents

$
304.9


$
163.4Accounts receivable, net


258.8



314.9Inventories


203.3



235.7Other current assets


74.2



164.4Total current assets


841.2



878.4Property, plant and equipment, net


66.9



109.8Intangible assets, net


320.4



337.3Goodwill






23.5Other assets


22.5



44.8Total assets

$
1,251.0


$
1,393.8LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesAccounts payable

$
219.2


$
201.4Other current liabilities


172.3



170.5Total current liabilities


391.5



371.9Other liabilities


77.8



94.7Total liabilities


469.3



466.6Shareholders equityPreferred stock, $.01 par value, authorized 25 million
    shares, none issued and outstanding






Common stock, $.01 par value, authorized 100 million
    shares, 42.9 million issued


0.4



0.4Additional paid-in capital


1,103.6



1,112.3Retained (deficit) earnings


(153.4
)


5.1Accumulated other comprehensive loss


(60.7
)


(68.9
)Treasury stock, at cost


(108.2
)


(121.7
)Total shareholders equity


781.7



927.2Total liabilities and shareholders equity

$
1,251.0


$
1,393.8    39




---



##### Table of Contents



IMATION CORP.
  CONSOLIDATED
    STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
    (LOSS)
  AccumulatedAdditional


Retained


Other





TotalCommon


Paid-in


(Deficit)


Comprehensive


Treasury


ShareholdersStock


Capital


Earnings


Loss


Stock


Equity(In millions, except per share amounts)Balance as of December 31, 2007

$
0.4


$
1,109.0


$
101.5


$
(44.1
)

$
(113.0
)

$
1,053.8Purchase of treasury stock


















(26.4
)


(26.4
)Exercise of stock options






(0.5
)










1.1



0.6Restricted stock grants and other






(1.2
)










3.8



2.6401(k) matching contribution






(0.7
)










3.3



2.6Stock-based compensation related to options






6.4















6.4Tax impact of stock-based compensation






0.1















0.1Dividend payments










(20.9
)










(20.9
)Comprehensive loss:Net loss










(33.3
)










(33.3
)Net change in cumulative translation adjustment














(14.9
)






(14.9
)Pension adjustments (net of income tax benefit of $14.8)














(24.2
)






(24.2
)Cash flow hedging (net of income tax benefit of $0.6)














(1.8
)






(1.8
)Comprehensive loss






















(74.2
)Balance as of December 31, 2008

$
0.4


$
1,113.1


$
47.3


$
(85.0
)

$
(131.2
)

$
944.6Restricted stock grants and other






(3.8
)










6.3



2.5401(k) matching contribution






(1.9
)










3.2



1.3Stock-based compensation related to options






4.9















4.9Comprehensive loss:Net loss










(42.2
)










(42.2
)Net change in cumulative translation adjustment














4.5







4.5Pension adjustments (net of income tax provision of $5.1)














9.8







9.8Cash flow hedging (net of income tax provision of $0.9)














1.8







1.8Comprehensive loss






















(26.1
)Balance as of December 31, 2009

$
0.4


$
1,112.3


$
5.1


$
(68.9
)

$
(121.7
)

$
927.2Restricted stock grants and other






(7.3
)










9.9



2.6401(k) matching contribution






(1.9
)










3.6



1.7Stock-based compensation related to options






3.8















3.8Share-based payment modification






0.8















0.8Tax impact of stock-based compensation






(4.1
)














(4.1
)Comprehensive loss:Net loss










(158.5
)










(158.5
)Net change in cumulative translation adjustment














3.0







3.0Pension adjustments (net of income tax provision of $3.6)














4.6







4.6Cash flow hedging (net of income tax benefit of $0.2)














0.6







0.6Comprehensive loss






















(150.3
)Balance as of December 31, 2010

$
0.4


$
1,103.6


$
(153.4
)

$
(60.7
)

$
(108.2
)

$
781.7    40




---



##### Table of Contents



IMATION CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended December 31,2010


2009


2008(In millions)Cash Flows from Operating Activities:Net loss

$
(158.5
)

$
(42.2
)

$
(33.3
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation


18.2



19.7



25.9Intangible amortization


23.6



23.3



23.4Deferred income taxes


(48.6
)


(2.0
)


0.2Goodwill impairment


23.5







32.4Asset impairments


31.2



2.7



5.0Inventory write-offs


14.2







Stock-based compensation


6.9



7.5



9.5Pension settlement/curtailment


2.8



11.7



5.7Deferred tax asset valuation allowance


105.6







Litigation settlement


2.6



49.0



Other


5.4



9.2



7.2Changes in operating assets and liabilities, net of effects from
    acquisitions:Litigation settlement payment


(8.2
)


(20.0
)


Accounts receivable


59.7



67.6



129.0Inventories


16.1



132.9



0.2Restricted cash


1.2



(19.2
)


Other assets


53.7



(19.4
)


(20.8
)Accounts payable


13.6



(98.4
)


(61.5
)Other liabilities


(11.6
)


(54.9
)


(38.2
)Net cash provided by operating activities


151.4



67.5



84.7Cash Flows from Investing Activities:Capital expenditures


(8.3
)


(11.0
)


(13.6
)License agreement


(5.0
)






Acquisitions, net of cash acquired










(15.3
)Acquisition of minority interest










(8.0
)Proceeds from sale of assets


0.2



13.0



0.8Net cash (used in) provided by investing activities


(13.1
)


2.0



(36.1
)Cash Flows from Financing Activities:Purchase of treasury stock










(26.4
)Exercise of stock options










0.6Dividend payments










(20.9
)Debt repayment










(31.3
)Debt issuance costs


(1.0
)


(3.2
)


Net cash used in financing activities


(1.0
)


(3.2
)


(78.0
)Effect of exchange rate changes on cash and cash equivalents


4.2



0.5



(9.5
)Change in cash and equivalents


141.5



66.8



(38.9
)Cash and cash equivalents  beginning of year


163.4



96.6



135.5Cash and cash equivalents  end of year

$
304.9


$
163.4


$
96.6    41




---



##### Table of Contents



IMATION CORP.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Background and
    Basis of Presentation  Background
    Basis of
    Presentation
      Note 2 
    Summary of
    Significant Accounting Policies  Use of Estimates.
  Foreign Currency.
  Cash Equivalents.
  Trade Accounts Receivable and
    Allowances. day-to-day
 42




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventories. first-in,
  Derivative Financial Instruments.
  Property, Plant and Equipment.
    Intangible Assets.
      Goodwill.
 43




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Impairment of Long-Lived Assets.
    Revenue Recognition.
  Concentrations of Credit Risk.
  Inventory Related Shipping and Handling
    Costs.
  Research and Development Costs.
  Advertising Costs.
  Rebates.
 44




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Rebates Received.
  Restructuring Reserves.
  Income Taxes.
          Treasury Stock. last-in,
  Stock-Based Compensation.
   45




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Comprehensive Income.
  Weighted Average Basic and Diluted
    Shares Outstanding.
  Recent
    Accounting Pronouncements
          Note 3 
    (Loss) Earnings
    per Common Share   46




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2010


2009


2008(In millions)Numerator:Loss from continuing operations

$
(158.3
)

$
(44.0
)

$
(37.8
)(Loss) income from discontinued operations


(0.2
)


1.8



4.5Net loss

$
(158.5
)

$
(42.2
)

$
(33.3
)Denominator:Weighted average number of common stock outstanding during the
    period


37.8



37.5



37.5Dilutive effect of stock-based compensation plans










Weighted average number of diluted shares outstanding during the
    period


37.8



37.5



37.5Basic (loss) earnings per common share:Continuing operations

$
(4.19
)

$
(1.17
)

$
(1.01
)Discontinued operations


(0.01
)


0.05



0.12Net loss


(4.19
)


(1.13
)


(0.89
)Diluted (loss) earnings per common share:Continuing operations

$
(4.19
)

$
(1.17
)

$
(1.01
)Discontinued operations


(0.01
)


0.05



0.12Net loss


(4.19
)


(1.13
)


(0.89
)Anti-dilutive options excluded from calculation


4.9



4.6



4.1   Note 4 
    Acquisitions and
    Divestiture    2008
    Acquisitions
  Xtreme
    Accessories, LLC
   47




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amount(In millions)Inventory

$
1.4Accounts receivable


0.1Fixed assets


0.2Intangibles


4.6Goodwill


5.0Accounts payable


(4.0
)$
7.3       WeightedAverageAmount


Life(In millions)Trade names

$
2.1



10 yearsIntellectual property


1.3



6 yearsCustomer relationships


0.9



7 yearsNon-compete


0.3



3 years$
4.6     Imation
    Corporation Japan
      Amount(In millions)Cash consideration

$
8.0Interest acquired in historical book value of ICJ


(7.1
)Excess purchase price over historical book value

$
0.9  48




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amount(In millions)Customer relationships

$
0.8Inventory


0.1Goodwill


0.4Deferred tax liability


(0.4
)Excess purchase price over historical book value

$
0.9       Divestiture
    Presented as Discontinued Operations
      Years Ended December 31,2010


2009


2008(In millions)Net revenue

$



$
74.5


$
173.6(Loss) income before income taxes

$
(0.2
)

$
2.1


$
6.4Income tax provision






0.3



1.9Total discontinued operations

$
(0.2
)

$
1.8


$
4.5  49




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 5 
    Supplemental
    Balance Sheet Information  As of December 31,2010


2009(In millions)InventoriesFinished goods

$
175.0


$
210.4Work in process


10.6



8.9Raw materials and supplies


17.7



16.4Total inventories, net

$
203.3


$
235.7Other Current AssetsDeferred income taxes

$
9.1


$
42.7Restricted cash (Note 2)


17.9



19.1Assets held for sale (Note 7)


7.2



7.2Taxes receivable


2.0



35.1Other


38.0



60.3Total other current assets

$
74.2


$
164.4Property, Plant and EquipmentLand

$
1.4


$
1.4Buildings and leasehold improvements


122.2



121.3Machinery and equipment


223.6



227.7Construction in progress


2.1



0.4Total

$
349.3


$
350.8Less accumulated depreciation and leasehold amortization


(282.4
)


(241.0
)Property, plant and equipment, net

$
66.9


$
109.8Other AssetsDeferred income taxes

$
12.2


$
35.5Other


10.3



9.3Total other assets

$
22.5


$
44.8Other Current LiabilitiesRebates

$
53.4


$
66.1Levies


23.6



17.1Accrued payroll


15.6



19.7Litigation settlement  current


10.6



7.9Employee separation costs


10.5



4.3Value added tax


10.5



12.0Other


48.1



43.4Total other current liabilities

$
172.3


$
170.5 50




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  As of December 31,2010


2009(In millions)Other LiabilitiesPension

$
27.0


$
36.3Litigation settlement  long-term


15.1



21.8Deferred income taxes


3.4



3.3Uncertain tax positions


17.5



16.0Other


14.8



17.3Total other liabilities

$
77.8


$
94.7Accumulated Other Comprehensive LossCumulative translation adjustment

$
(47.4
)

$
(50.4
)Pension liability adjustments, net of income tax


(14.2
)


(18.8
)Cash flow hedging and other, net of income tax


0.9



0.3Total accumulated other comprehensive loss

$
(60.7
)

$
(68.9
)   AccountsReceivable*Reserves and AllowancesBalance, as of December 31, 2007

$
28.3Additions


53.9Write-offs, net of recoveries


(45.6
)Balance, as of December 31, 2008

$
36.6Additions


40.1Write-offs, net of recoveries


(48.1
)Balance, as of December 31, 2009

$
28.6Additions


9.0Write-offs, net of recoveries


(17.0
)Balance, as of December 31, 2010

$
20.6     *
    
    Accounts receivable reserves and allowances include estimated
    amounts for customer returns, terms discounts and the inability
    of certain customers to make the required payment. 51




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 6 
    Intangible Assets
    and Goodwill  Intangible
    Assets
    Trade





CustomerNames


Software


Relationships


Other


Total(In millions)December 31, 2010Cost

$
332.4


$
54.2


$
58.8


$
8.3


$
453.7Accumulated amortization


(44.9
)


(49.1
)


(36.2
)


(3.1
)


(133.3
)Net

$
287.5


$
5.1


$
22.6


$
5.2


$
320.4December 31, 2009Cost

$
333.2


$
62.3


$
65.5


$
6.6


$
467.6Accumulated amortization


(34.4
)


(56.8
)


(33.9
)


(5.2
)


(130.3
)Net

$
298.8


$
5.5


$
31.6


$
1.4


$
337.3       Years Ended December 31,2010

2009

2008(In millions)Amortization expense

$
23.6


$
23.3


$
23.4     2011


2012


2013


2014


2015(In millions)Amortization expense

$
24.0


$
23.5


$
18.2


$
13.1


$
11.4  52




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Goodwill
    ElectronicAmericas


Europe


North Asia


South Asia


Products


Total(In millions)Balance as of December 31, 2008:Goodwill

$
64.3


$
39.2


$
10.2


$



$
38.6


$
152.3Accumulated impairment losses


(64.3
)


(39.2
)


(10.2
)






(15.1
)


(128.8
)















23.5



23.5Balance as of December 31, 2009:Goodwill

$
64.3


$
39.2


$
10.2


$



$
38.6


$
152.3Accumulated impairment losses


(64.3
)


(39.2
)


(10.2
)






(15.1
)


(128.8
)















23.5



23.5Operating segment reclassification:Goodwill


38.6















(38.6
)


Accumulated impairment losses


(15.1
)














15.1



Goodwill impairment


(23.5
)


















(23.5
)Balance as of December 31, 2010:Goodwill

$
102.9


$
39.2


$
10.2


$



$



$
152.3Accumulated impairment losses


(102.9
)


(39.2
)


(10.2
)










(152.3
)$



$



$



$



$



$
           Excess of Carrying

Percentage ofReporting Unit

Amount Over

Carrying AmountGoodwill

Carrying Amount

Fair Value

Over Fair Value(In millions)Americas-Consumer

$
23.5


$
336.5


$
173.5



206
%    53




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note 7 
    Restructuring and
    Other Expense    Years Ended December 31,2010


2009


2008(In millions)RestructuringSeverance and severance related

$
13.0


$
11.2


$
15.7Lease termination costs


1.7



0.7



4.8Total restructuring


14.7



11.9



20.5OtherPension settlement/curtailment


2.8



11.7



5.7Asset impairments


31.2



2.7



5.0TDK post-closing purchase price adjustment










(2.3
)Other


2.4



0.3



Total

$
51.1


$
26.6


$
28.9   2011
    Manufacturing Redesign Restructuring Program
       54




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Severanceand Related


Other


Total(In millions)Accrued balance at December 31, 2009

$



$



$
Charges(1)


3.2



45.4



48.6Usage(1)






(45.4
)


(45.4
)Currency impacts










Accrued balance at December 31, 2010

$
3.2


$



$
3.2     (1)
    
    Includes non-cash asset impairment charge of $31.2 million,
    primarily related to our Weatherford facility, and non-cash
    inventory write-offs of $14.2 million. The asset impairment
    charge was included in restructuring and other expense on our
    Consolidated Statements of Operations and inventory write-offs
    were included in cost of goods sold in our Consolidated
    Statements of Operations.  2011 Corporate
    Strategy Restructuring Program
          Severanceand Related


Other


Total(In millions)Accrued balance at December 31, 2009

$



$



$
Charges


3.4



0.3



3.7Usage






(0.3
)


(0.3
)Currency impacts










Accrued balance at December 31, 2010

$
3.4


$



$
3.4   2008 Corporate
    Redesign Restructuring Program
   55




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            LeaseSeverance


Terminationand Related


Costs


Total(In millions)Accrued balance at December 31, 2008

$
3.9


$
0.5


$
4.4Charges


11.2



0.1



11.3Usage


(11.3
)


(0.6
)


(11.9
)Currency impacts


0.5







0.5Accrued balance at December 31, 2009

$
4.3


$



$
4.3Charges


6.4



1.7



8.1Usage


(7.0
)


(0.3
)


(7.3
)Currency impacts


0.2







0.2Accrued balance at December 31, 2010

$
3.9


$
1.4


$
5.3     Prior Programs
    Substantially Complete
       56




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other
          2010
    Activity
    2011


2011


2008Manufacturing


Corporate


CorporateRedesign


Strategy


RedesignProgram


Program


Program


Other


Total(In millions)RestructuringSeverance and severance related

$
3.2


$
3.4


$
6.4


$



$
13.0Lease termination costs










1.7







1.7Total restructuring


3.2



3.4



8.1







14.7OtherPension settlement/curtailment






0.3



2.5







2.8Asset impairments


31.2















31.2Other










0.2



2.2



2.4Total

$
34.4


$
3.7


$
10.8


$
2.2


$
51.1  57




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2009
    Activity
    2008


2008Corporate


CostRedesign


ReductionProgram


Program


Other


Total(In millions)RestructuringSeverance and severance related

$
11.2


$



$



$
11.2Lease termination costs


0.1



0.9



(0.3
)


0.7Total restructuring


11.3



0.9



(0.3
)


11.9OtherPension settlement/curtailment


11.7











11.7Asset Impairments










2.7



2.7Other










0.3



0.3Total

$
23.0


$
0.9


$
2.7


$
26.6   2008
    Activity
    2008


2008


TDKCorporate


Cost


RecordingRedesign


Reduction


MediaProgram


Program


Program


Other


Total(In millions)RestructuringSeverance and severance related

$
4.9


$
5.2


$
4.2


$
1.4


$
15.7Lease termination costs


0.5



0.2



1.4



2.7



4.8Total restructuring


5.4



5.4



5.6



4.1



20.5OtherPension settlement/curtailment


5.7















5.7Asset impairments














5.0



5.0TDK post-closing purchase price adj














(2.3
)


(2.3
)Total

$
11.1


$
5.4


$
5.6


$
6.8


$
28.9   Note 8 
    Stock-Based
    Compensation    Years Ended December 31,2010

2009

2008(In millions)Stock-based compensation

$
6.9


$
7.5


$
9.5    58




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Stock
    Options
   59




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2010

2009

2008Volatility


43
%


41
%


31
%Risk-free interest rate


2.49
%


2.13
%


3.04
%Expected life (months)


66



65



61Dividend yield


0.0
%


0.0
%


2.6
%     WeightedAverageWeighted


Remaining


AggregateStock


Average


Contractual


IntrinsicOptions


Exercise Price


Life (Years)


Value(millions)Outstanding December 31, 2007


3,149,761


$
35.16



6.0


$
Granted


1,237,513



24.39Exercised


(46,330
)


18.33Cancelled


(89,315
)


35.98Forfeited


(147,873
)


35.32Outstanding December 31, 2008


4,103,756


$
32.09



6.2


$
Granted


1,054,599



9.71Exercised






Cancelled


(341,850
)


31.25Forfeited


(221,667
)


28.32Outstanding December 31, 2009


4,594,838


$
27.19



6.2


$
0.1Granted


889,089



10.46Exercised


(1,000
)


8.11Cancelled


(421,146
)


31.19Forfeited


(145,693
)


17.97Outstanding December 31, 2010


4,916,088


$
24.10



5.6


$
0.7      60




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Exercisable Options


Options Expected to VestWeighted








WeightedAverage


Weighted





Average


WeightedRemaining


Average





Remaining


AverageRange of Exercise

Stock


Contractual


Exercise


Stock


Contractual


ExercisePrices

Options


Life (Years)


Price


Options


Life (Years)


Price$6.95 to $14.15


485,134



5.6


$
9.93



1,109,887



9.0


$
10.06$14.16 to $19.20


3,500



0.0



14.94







9.0



10.06$19.21 to $23.95


142,468



1.2



23.04



5,591



7.6



20.64$23.96 to $28.70


608,666



5.7



24.35



291,691



7.3



24.61$28.71 to $39.38


1,236,401



3.5



34.72



69,916



6.4



37.41$39.39 to $41.75


646,887



2.8



40.81







6.4



37.41$41.76 to $46.97


38,125



2.9



44.43



373



6.0



45.89$6.95 to $46.97


3,161,181



4.0


$
29.74



1,477,458



8.5


$
14.28          61




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Restricted
    Stock
    WeightedAverageGrant DateRestricted


Fair ValueStock


Per ShareNonvested as of December 31, 2007


207,229


$
38.52Granted


206,261



24.05Vested


(80,219
)


37.85Forfeited


(28,760
)


37.61Nonvested as of December 31, 2008


304,511


$
28.98Granted


327,654



9.38Vested


(119,074
)


29.44Forfeited


(51,389
)


30.04Nonvested as of December 31, 2009


461,702


$
14.84Granted


524,655



10.45Vested


(209,302
)


15.17Forfeited


(37,859
)


11.15Nonvested as of December 31, 2010


739,196


$
11.34         Note 9 
    Retirement
    Plans  Pension
    Plans
   62




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             63




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    United States


InternationalAs of December 31,


As of December 31,2010


2009


2010


2009(In millions)Change in benefit obligationBenefit obligation, beginning of year

$
96.7


$
110.2


$
59.2


$
57.0Service cost


1.7



2.8



0.6



0.7Interest cost


4.8



5.4



2.8



3.2Actuarial (gain) loss


1.9



0.9



(1.5
)


4.6Benefits paid


(1.6
)


(1.7
)


(2.1
)


(3.4
)Settlements


(9.0
)


(20.9
)






Foreign exchange rate changes










(1.4
)


3.7Plan amendments










1.3



2.4Curtailments


(0.7
)










Special termination benefits (Canada)














(9.0
)Projected benefit obligation, end of year

$
93.8


$
96.7


$
58.9


$
59.2Change in plan assetsFair value of plan assets, beginning of year

$
64.1


$
64.1


$
59.0


$
59.0Actual return on plan assets


9.3



15.8



4.2



4.6Foreign exchange rate changes










(1.7
)


4.4Company contributions


8.1



6.8



1.8



3.4Benefits paid


(1.6
)


(1.7
)


(2.1
)


(3.4
)Settlements


(9.0
)


(20.9
)






Special termination benefits (Canada)














(9.0
)Fair value of plan assets, end of year

$
70.9


$
64.1


$
61.2


$
59.0Funded status of the plan, end of year

$
(22.9
)

$
(32.6
)

$
2.3


$
(0.2
)     United States

InternationalAs of December 31,

As of December 31,2010

2009

2010

2009(In millions)Noncurrent assets

$



$



$
6.4


$
3.5Noncurrent liabilities


(22.9
)


(32.6
)


(4.1
)


(3.7
)Accumulated other comprehensive loss  pre-tax


21.6



27.4



2.7



6.2  64




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    United States


InternationalAs of December 31,


As of December 31,2010


2009


2010


2009(In millions)Net actuarial loss

$
21.6


$
27.0


$
7.3


$
8.0Prior service cost (credit)






0.4



(6.7
)


(3.7
)Transition asset obligation










2.1



1.9Total

$
21.6


$
27.4


$
2.7


$
6.2     United States


InternationalAs of December 31,


As of December 31,2010


2009


2010


2009(In millions)Projected benefit obligation, end of year

$
93.7


$
96.7


$
29.0


$
28.7Accumulated benefit obligation, end of year


93.7



95.9



28.8



26.8Plan assets at fair value, end of year


70.9



64.1



25.1



25.3     United States


InternationalYears Ended December 31,


Years Ended December 31,2010


2009


2008


2010


2009


2008(In millions)Service cost

$
1.7


$
2.8


$
5.6


$
0.6


$
0.7


$
0.8Interest cost


4.8



5.4



6.5



2.8



3.2



3.6Expected return on plan assets


(5.7
)


(6.5
)


(7.9
)


(3.1
)


(3.0
)


(4.5
)Amortization of net actuarial loss


0.4



0.2







0.2



0.4



0.3Amortization of prior service cost


0.1



0.1



0.1



(0.4
)


(0.2
)


(0.3
)Amortization of transition obligation














0.3



0.3



0.3Net periodic benefit cost

$
1.3


$
2.0


$
4.3


$
0.4


$
1.4


$
0.2Settlements and curtailments


2.8



7.1



5.7







4.6



Total pension cost

$
4.1


$
9.1


$
10.0


$
0.4


$
6.0


$
0.2       United States

InternationalAs of December 31,

As of December 31,2010

2009

2010

2009Discount rate


5.00
%


5.50
%


4.77
%


5.12
%Rate of compensation increase


4.75
%


4.75
%


1.30
%


3.51
%  65




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    United States


InternationalAs of December 31,


As of December 31,2010


2009


2008


2010


2009


2008Discount rate


5.30%



5.60%



6.00%



5.00%



5.79%



5.13%Expected return on plan assets


8.00%



8.00%



8.00%



5.52%



5.07%



5.73%Rate of compensation increase


4.75%



4.75%



4.75%



2.98%



3.56%



3.77%   10-year
    United States


InternationalAs of December 31,


As of December 31,2010


2009


2010


2009Short-term investments


3
%



5
%



1
%



4
%Fixed income securities


19
%



16
%



36
%



31
%Equity securities


66
%



72
%



32
%



31
%Absolute return strategy equity funds


12
%



7
%



0
%



0
%Insurance contracts


0
%



0
%



31
%



34
%Total


100
%



100
%



100
%



100
%       United States

International(In millions)2011

$
7.5


$
2.12012


4.9



2.22013


5.8



2.42014


6.0



2.52015


6.1



2.62016-2020


32.8



15.8  66




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                     67




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Quoted Prices inActive Markets for


Significant Other


UnobservableDecember 31,


Identical Assets


Observable Inputs


Inputs2010


(Level 1)


(Level 2)


(Level 3)(In millions)Short-term investments:Money markets

$
1.9


$
1.9


$



$
Commingled trust funds














Mutual funds


0.2







0.2



Other short-term investments


0.2







0.2



Fixed income securities:Mutual funds


35.6



13.2



22.4



Equity securities:Blended mutual funds


26.4



7.9



18.5



Large-cap growth funds


18.3











18.3Small-cap growth funds


6.9



6.9







Small-cap value funds


6.8



6.8







Commingled trust funds


7.2











7.2Growth mutual funds


1.1



1.1







Other investments:Insurance contracts


18.8







18.8



Absolute return strategy funds


8.7











8.7Total

$
132.1


$
37.8


$
60.1


$
34.2     OtherInvestments -Equity -


Equity -


AbsoluteLarge-cap


Comingled


ReturnGrowth


Trust


StrategyFunds


Funds


Funds


Total(In millions)Balance, beginning of year

$
18.3


$
6.2


$



$
24.5Realized gains (losses)


0.6











0.6Unrealized gains (losses) relating to instruments still held at
    the reporting date


2.2



1.0



0.2



3.4Purchases


0.2







8.5



8.7Sales


(3.0
)










(3.0
)Transfer into level 3














Transfer (out) of level 3














Balance, end of year

$
18.3


$
7.2


$
8.7


$
34.2   Employee
    Retirement Savings Plans
   68




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 10 
    Income
    Taxes    Years Ended December 31,2010


2009


2008(In millions)U.S.

$
(114.3
)

$
(116.0
)

$
(51.6
)International


37.9



39.3



9.9Total

$
(76.4
)

$
(76.7
)

$
(41.7
)     Years Ended December 31,2010


2009


2008(In millions)CurrentFederal

$
12.1


$
(27.0
)

$
(9.4
)State


3.8



(6.4
)


(1.8
)International


9.0



2.7



7.1DeferredFederal


44.7



(6.6
)


(5.7
)State


8.6



(0.9
)


(0.5
)International


3.7



5.5



6.4Total

$
81.9


$
(32.7
)

$
(3.9
)  69




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Years Ended December 31,2010


2009


2008(In millions)Tax at statutory U.S. tax rate

$
(26.8
)

$
(26.9
)

$
(14.2
)State income taxes, net of federal benefit


(3.7
)


(5.6
)


(1.0
)Net effect of international operations


(2.8
)


(7.2
)


(2.6
)Valuation allowances


105.2



1.4



2.1U.S. tax on foreign earnings


5.1



0.6



6.9Goodwill impairment










3.7Uncertain tax positions


1.3



3.5



1.0Other


3.6



1.5



0.2Income tax provision (benefit)

$
81.9


$
(32.7
)

$
(3.9
)          70




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31,2010


2009(In millions)Accounts receivable allowances

$
8.1


$
9.3Inventories


13.0



11.1Compensation and employee benefits


10.9



13.6Tax credit carryforwards


20.4



6.9Net operating loss carryforwards


54.2



22.7Accrued liabilities and other reserves


19.1



22.2Pension


6.0



12.1Research and development






2.3Property, plant and equipment


3.2



Intangible assets


5.4



Other, net


5.0



7.7Gross deferred tax assets


145.3



107.9Valuation allowance


(127.4
)


(22.9
)Deferred tax assets


17.9



85.0Property, plant and equipment






(7.5
)Intangible assets






(2.6
)Deferred tax liabilities






(10.1
)Net deferred tax assets

$
17.9


$
74.9          71




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Amount(In millions)Balance at December 31, 2007

$
9.5Additions:Tax positions of prior years


1.1Reductions:Lapse of statute of limitations


(0.1
)Balance at December 31, 2008

$
10.5Additions:Tax positions of prior years


4.4Reductions:Tax positions of prior years


(0.6
)Settlements with taxing authorities


(0.2
)Lapse of statute of limitations


(0.3
)Balance at December 31, 2009

$
13.8Additions:Tax positions of current year


0.3Tax positions of prior years


1.3Reductions:Settlements with taxing authorities


(0.2
)Lapse of statute of limitations


(0.3
)Balance at December 31, 2010

$
14.9  72




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Note 11 
    Debt  sub-limit
  sub-limits
    
    up to 85 percent of eligible accounts receivable; plus 73




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    up to the lesser of 65 percent of eligible inventory or
    85 percent of the appraised net orderly liquidation value
    of eligible inventory; plus
    up to 60 percent of the appraised fair market value of
    eligible real estate (the Original Real Estate Value), such
    Original Real Estate Value to be reduced each calendar month by
    1/84th, provided, that the Original Real Estate Value shall not
    exceed $40,000,000; plus
    such other classes of collateral as may be mutually agreed upon
    and at advance rates as may be determined by the Agent; minus
    such reserves as the Agent may establish in good faith.            Note 12 
    Fair Value
    Measurements  Fair value of
    financial instruments
     74




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Assets and
    Liabilities that are Measured at Fair Value on a Nonrecurring
    Basis
      held-for-sale
    Quoted Prices in


SignificantActive Markets


Otherfor Identical


Observable


Unobservable


Total LossesDecember 31,


Assets


Inputs


Inputs


Included in2010


(Level 1)


(Level 2)


(Level 3)


Earnings(In millions)Long-lived asset held for sale

$
7.2


$



$
7.2


$



$
Goodwill


















23.5Long-lived assets held and used


3.2







2.3



0.9



31.2Total

$
10.4


$



$
9.5


$
0.9


$
54.7   Assets and
    Liabilities that are Measured at Fair Value on a Recurring
    Basis
       75




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Cash Flow
    Hedges
      Other
    Hedges
       76




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Quoted Prices in


SignificantActive Markets


Otherfor Identical


Observable


UnobservableDecember 31,


Assets


Inputs


Inputs2010


(Level 1)


(Level 2)


(Level 3)(In millions)Derivative assetsForeign currency option contracts

$
3.5


$



$
3.5


$
Foreign currency forward contracts














Derivative liabilitiesForeign currency option contracts


(2.3
)






(2.3
)


Foreign currency forward contracts














Total

$
1.2


$



$
1.2


$
       Fair ValueOther


OtherNotional


Current


CurrentAmount


Assets


Liabilities(In millions)Cash flow hedges designated as hedging instruments

$
246.0


$
3.5


$
(2.3
)Other economic hedges not receiving hedge accounting


47.1







Total

$
293.1


$
3.5


$
(2.3
)       Pretax Gain/(Loss) onPretax Gain/(Loss)


Effective Portion ofRecognized in


DerivativeOther


Reclassification from


Pretax Gain/(Loss)Comprehensive


Accumulated Other


Recognized in theIncome on


Comprehensive Income


Consolidated Statement ofEffective Portion


to Cost of Goods


Operations in Otherof Derivative


Sold, Net


Expense, Net(In millions)Cash flow hedges designated as hedging instruments

$
0.5


$
(0.1
)

$
Other economic hedges not receiving hedge accounting










(4.3
)Total

$
0.5


$
(0.1
)

$
(4.3
)  77




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 13 
    Shareholders
    Equity  Shareholder
    Rights Plan
        Treasury
    Stock
   78




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    TreasurySharesBalance as of December 31, 2007


4,526,093Purchases


1,102,800Exercise of stock options


(46,330
)Restricted stock grants and other


(224,559
)401(k) matching contribution


(130,227
)Balance as of December 31, 2008


5,227,777Purchases


Exercise of stock options


Restricted stock grants and other


(264,301
)401(k) matching contribution


(136,771
)Balance as of December 31, 2009


4,826,705Purchases


Exercise of stock options


(1,000
)Restricted stock grants and other


(439,175
)401(k) matching contribution


(174,245
)Balance as of December 31, 2010


4,212,285   Accumulated
    Other Comprehensive Loss
    December 31,


December 31,2010


2009(In millions)Cumulative currency translation adjustment

$
(47.4
)

$
(50.4
)Pension adjustments, net of income tax


(14.2
)


(18.8
)Cash flow hedging and other, net of income tax


0.9



0.3Total accumulated other comprehensive loss

$
(60.7
)

$
(68.9
)     Years Ended December 31,2010


2009


2008(In millions)Net loss

$
(158.5
)

$
(42.2
)

$
(33.3
)Cumulative currency translation adjustment


3.0



4.5



(14.9
)Pension adjustments, net of income taxes


4.6



9.8



(24.2
)Cash flow hedging and other, net of income tax


0.6



1.8



(1.8
)Total comprehensive loss

$
(150.3
)

$
(26.1
)

$
(74.2
)   Note 14 
    Business Segment
    Information and Geographic Data   79




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Our Americas segment includes North America, Central America and
    South America.
    Our Europe segment includes Europe and parts of Africa.
    Our North Asia segment includes Japan, China, Hong Kong, Korea
    and Taiwan.
    Our South Asia segment includes Australia, Singapore, India, the
    Middle East and parts of Africa.  Form 10-K
    Years Ended December 31,2010


2009


2008(In millions)Net RevenueAmericas

$
712.9


$
834.2


$
1,002.9Europe


289.8



370.5



503.1North Asia


315.2



306.9



308.9South Asia


143.0



137.9



166.1Total

$
1,460.9


$
1,649.5


$
1,981.0Operating Income (Loss)Americas

$
36.8


$
48.3


$
58.1Europe


(0.6
)


2.4



16.1North Asia


14.9



15.3



16.7South Asia


4.0



2.6



12.9Corporate and unallocated


(124.8
)


(130.3
)


(137.5
)Total

$
(69.7
)

$
(61.7
)

$
(33.7
)      80




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2010


2009


2008(In millions)Optical products

$
619.3


$
738.0


$
851.7Magnetic products


347.8



406.0



548.7Other traditional storage


62.8



77.7



106.2Total traditional storage


1,029.9



1,221.7



1,506.6Emerging storage


207.5



165.4



151.3Electronics & accessories


223.5



262.4



323.1Total

$
1,460.9


$
1,649.5


$
1,981.0     Years Ended December 31,2010


2009


2008(In millions)Net RevenueUnited States

$
633.1


$
726.9


$
840.6International


827.8



922.6



1,140.4Total

$
1,460.9


$
1,649.5


$
1,981.0   As of December 31,2010


2009


2008(In millions)Long-Lived AssetsUnited States

$
62.4


$
105.1


$
116.9International


4.5



4.7



5.5Total

$
66.9


$
109.8


$
122.4   Note 15 
    Commitments and Contingencies
  Litigation
     81




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Operating
    Leases
    2010


2009


2008(In millions)Minimum lease payments

$
9.6


$
10.3


$
16.7Contingent rentals


7.2



18.0



13.7Rental income


(2.9
)


(2.8
)


(2.4
)Sublease income


(0.5
)


(0.3
)


(0.5
)Total rental expense recognized in income

$
13.4


$
25.2


$
27.5    82




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2011

2012

2013

2014

2015

Thereafter

Total(In millions)Minimum lease payments

$
9.0


$
5.2


$
2.2


$
0.9


$
0.3


$



$
17.6     Environmental
    Matters
    Note 16 
    Related Party
    Transactions       83




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##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17
    
    Quarterly Data  (Unaudited)  First


Second


Third


Fourth


Total(1)(In millions, except per share amounts)2009Net revenue

$
396.5


$
400.0


$
401.3


$
451.7


$
1,649.5Gross profit


66.9



63.4



64.5



69.2



264.0Operating (loss) income


(8.6
)


(59.3
)


1.7



4.5



(61.7
)(Loss) income from continuing operations


(12.7
)


(38.3
)


(0.3
)


7.3



(44.0
)Discontinued operations


1.1



1.4



(0.1
)


(0.6
)


1.8Net (loss) income


(11.6
)


(36.9
)


(0.4
)


6.7



(42.2
)(Loss) earnings per common share, continuing operations:Basic

$
(0.34
)

$
(1.02
)

$
(0.01
)

$
0.19


$
(1.17
)Diluted


(0.34
)


(1.02
)


(0.01
)


0.19



(1.17
)Earnings (loss) per common share, discontinued operations:Basic

$
0.03


$
0.04


$



$
(0.02
)

$
0.05Diluted


0.03



0.04







(0.02
)


0.05(Loss) earnings per common share, net income:Basic

$
(0.31
)

$
(0.98
)

$
(0.01
)

$
0.18


$
(1.12
)Diluted


(0.31
)


(0.98
)


(0.01
)


0.18



(1.12
)2010Net revenue

$
365.8


$
354.4


$
342.3


$
398.4


$
1,460.9Gross profit


61.7



58.5



55.6



50.6



226.4Operating (loss) income


0.2



(23.8
)


(2.3
)


(43.8
)


(69.7
)Loss from continuing operations


(2.5
)


(15.7
)


(2.3
)


(137.8
)


(158.3
)Discontinued operations


(0.1
)






(0.1
)






(0.2
)Net loss


(2.6
)


(15.7
)


(2.4
)


(137.8
)


(158.5
)(Loss) earnings per common share, continuing operations:Basic

$
(0.07
)

$
(0.42
)

$
(0.06
)

$
(3.63
)

$
(4.19
)Diluted


(0.07
)


(0.42
)


(0.06
)


(3.63
)


(4.19
)Earnings (loss) per common share, discontinued operations:Basic

$



$



$



$



$
(0.01
)Diluted


















(0.01
)(Loss) earnings per common share, net income:Basic

$
(0.07
)

$
(0.42
)

$
(0.06
)

$
(3.63
)

$
(4.19
)Diluted


(0.07
)


(0.42
)


(0.06
)


(3.63
)


(4.19
)     (1)
    
    The sum of the quarterly earnings per share may not equal the
    annual earnings per share due to changes in average shares
    outstanding. 84




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation of Disclosure Controls and
    Procedures. Rule 13a-15(e)
  Changes in Internal Controls. Rule 13a-15(f)
  Managements Report on Internal Control over Financial
    Reporting.
      Item 9B.
    Other
    Information.   85




---



##### Table of Contents



PART III  Form 10-K, Form 10-K.
  Item 10.
    Directors,
    Executive Officers and Corporate Governance.  Board of
    Directors
              Business
          Form 10-K, Directors-Director Item No. 1-Election Form 10-K.
   86




---



##### Table of Contents



http://www.imation.com Form 8-K
  Form 10-K.
  Item 11.
    Executive
    Compensation.  Form 10-K.
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.  Item No. 2-Approval Form 10-K.
  Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence.  Form 10-K.
  Item 14.
    Principal
    Accountant Fees and Services.  Form 10-K.
 87




---



##### 



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.  List of
    Documents Filed as Part of this Report
  Financial Statements
   
 PageReport of Independent Registered Public
    Accounting Firm


37Consolidated Statements of Operations for the
    Years Ended December 31, 2010, 2009 and 2008


38Consolidated Balance Sheets as of
    December 31, 2010 and 2009


39Consolidated Statements of Shareholders
    Equity and Comprehensive Income (Loss) for the Years Ended
    December 31, 2010, 2009 and 2008


40Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2010, 2009 and 2008


41Notes to Consolidated Financial Statements


42EX-10.59EX-21.1EX-23.1EX-24.1EX-31.1EX-31.2EX-32.1EX-32.2    Financial Statement Schedules
    Exhibits
    Number

Description of Exhibit2
.1

Asset Purchase Agreement, dated May 7, 2007, among Hopper
    Radio of Florida, Inc., Memcorp, Inc., Memcorp Asia Limited and
    Imation Corp. (incorporated by reference to Exhibit 2.1 of
    Imations
    Form 10-Q
    for the quarter ended March 31, 2007)2
.2

Acquisition Agreement, dated April 19, 2007, by and between
    Imation Corp. and TDK Corporation (incorporated by reference to
    Exhibit 2.1 to Imations
    Form 8-K
    Current Report filed on April 25, 2007)2
.3

Acquisition Agreement, dated January 19, 2006, by and
    between Imation Corp. and Memorex International Inc.
    (incorporated by reference to Exhibit 2.1 to Imations
    Form 8-K
    Current Report filed on January 25, 2006)2
.4

Inducement Agreement, dated January 19, 2006, among Hanny
    Holding Limited, Hanny Magnetics (B.V.I.) Limited, Investor
    Capital Management Asia Limited, Investor Capital
    Partners  Asia Fund L.P, Global Media Limited,
    Memorex Holdings Limited and Imation Corp. (incorporated by
    reference to Exhibit 2.2 to Imations
    Form 8-K
    Current Report filed on January 25, 2006)3
.1

Restated Certificate of Incorporation of Imation (incorporated
    by reference to Exhibit 3.1 to Registration Statement on
    Form 10,
    No. 1-14310)3
.2

Amended and Restated Bylaws of Imation Corp., effective
    May 5, 2010 (incorporated by reference to Exhibit 3.1
    to Imations
    Form 8-K
    Current Report filed on May 7, 2010)4
.1

Rights Agreement between Imation and The Bank of New York, as
    Rights Agent, dated as of June 21, 2006 (incorporated by
    reference to Exhibit 4.1 to Imations Registration
    Statement on
    Form 8-A
    filed on June 23, 2006)4
.2

First Amendment to Rights Agreement, dated as of July 30,
    2007 (incorporated by reference to Exhibit 4.3 to
    Imations Registration Statement on
    Form 8-A/A
    filed on August 1, 2007)4
.3

Amended and Restated Certificate of Designation, Preferences and
    Rights of Series A Junior Participating Preferred Stock
    (incorporated by reference to Exhibit 4.2 to Imations
    Registration Statement on
    Form 8-A
    filed on June 23, 2006)4
.4

Second Amendment to Rights Agreement, dated as of
    November 12, 2010 (incorporated by reference to
    Exhibit 4.4 to Imations Registration Statement on
    Form 8-A
    filed on November 12, 2010)10
.1

Shareholders Agreement in relation to Global Data Media FZ-LLC
    (incorporated by reference to Exhibit 10.11 to Annual
    Report on
    Form 10-K
    for the year ended December 31, 2003)10
.2

Amendment Agreement to Shareholders Agreement in relation to
    Global Data Media FZ-LLC (incorporated by reference to
    Exhibit 10.1 to Imations
    Form 8-K
    Current Report filed on January 26, 2006) 88




---



##### Table of Contents



Number

Description of Exhibit10
.3

Trademark License Agreement, dated July 31, 2007, by and
    between Imation Corp. and TDK Corporation (incorporated by
    reference to Exhibit 10.2 to Imations
    Form 8-K
    Current Report filed on August 3, 2007)10
.4

IMN Trademark License Agreement, dated July 31, 2007, by
    and between IMN Data Storage Holdings C.V. and TDK Corporation
    (incorporated by reference to Exhibit 10.3 to
    Imations
    Form 8-K
    Current Report filed on August 3, 2007)10
.5

Supply Agreement, dated July 31, 2007, by and between
    Imation Corp. and TDK Corporation (incorporated by reference to
    Exhibit 10.4 to Imations
    Form 8-K
    Current Report filed on August 3, 2007)10
.6

Investor Rights Agreement, dated July 31, 2007, by and
    between Imation Corp. and TDK Corporation (incorporated by
    reference to Exhibit 10.1 to Imations
    Form 8-K
    Current Report filed on August 3, 2007)10
.07

Amended and Restated Credit Agreement among Imation Corp.,
    Imation Enterprises Corp. and Imation Europe B.V., as borrowers,
    Bank of America, N.A., as administrative agent and l/c issuer,
    and a Consortium of Lenders, dated as of August 3, 2010
    (incorporated by reference to Exhibit 10.1 to
    Imations
    Form 8-K
    Current Report filed on August 6, 2010)10
.08*

Form of Indemnity Agreement between Imation and each of its
    directors (incorporated by reference to Exhibit 10.13 to
    Annual Report on
    Form 10-K
    for the year ended December 31, 1996)10
.09*

Imation 1996 Employee Stock Incentive Program (incorporated by
    reference to Exhibit 10.8 to Registration Statement on
    Form 10,
    No. 1-14310)10
.10*

1996 Directors Stock Compensation Program, as amended
    May 8, 2002 (incorporated by reference to Exhibit 10.1
    of Imations
    Form 10-Q
    for the quarter ended June 30, 2002)10
.11*

Imation 2000 Stock Incentive Plan, as amended (incorporated by
    reference to Exhibit 10.7 to Annual Report on
    Form 10-K
    for the year ended December 31, 2003)10
.12*

Form of Restricted Stock Award Agreement between Imation and
    Frank Russomanno (incorporated by reference to
    Exhibit 10.12 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.13*

Description of Compensatory arrangement between Imation and
    Frank Russomanno (incorporated by reference to Imations
    Form 8-K
    Current Report filed on November 14, 2006)10
.14*

Form of 2000 Stock Incentive Plan Restricted Stock Award
    Agreement  Executive Officers (incorporated by
    reference to Exhibit 10.9 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.15*

Amendment to 2000 Stock Incentive Plan Restricted Stock Award
    Agreement  Executive Officers (incorporated by
    reference to Exhibit 10.8 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.16*

Form of Amendment to 2000 Employee Stock Incentive Plan
    Restricted Stock Award Agreements  Executive Officer
    (incorporated by reference to Exhibit 10.2 to
    Imations
    Form 8-
    K Current Report filed on February 13, 2006)10
.17*

Form of 2000 Stock Incentive Plan Stock Option
    Agreement  Executive Officers (incorporated by
    reference to Exhibit 10.11 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.18*

Form of 2000 Stock Incentive Plan Stock Option
    Agreement  Employees (incorporated by reference to
    Exhibit 10.10 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.19*

Form of Restricted Stock Award Agreement  Employees
    2004 (incorporated by reference to Exhibit 10.1 of
    Imations
    Form 10-Q
    for the quarter ended September 30, 2004)10
.20*

Form of Restricted Stock Award Agreement  Executive
    Officers 2004 (incorporated by reference to Exhibit 10.2 of
    Imations
    Form 10-Q
    for the quarter ended September 30, 2004)10
.21*

Form of Stock Option Agreement  Employees 2004
    (incorporated by reference to Exhibit 10.3 of
    Imations
    Form 10-Q
    for the quarter ended September 30, 2004)10
.22*

Form of Stock Option Agreement  Executive Officers
    2004 (incorporated by reference to Exhibit 10.4 of
    Imations
    Form 10-Q
    for the quarter ended September 30, 2004)10
.23*

Imation 2005 Stock Incentive Plan, as amended November 9,
    2005 (incorporated by reference to Exhibit 10.1 to
    Imations
    Form 8-K
    Current Report filed on November 16, 2005)10
.24*

Imation 2005 Stock Incentive Plan Stock Option
    Agreement  Employees (incorporated by reference to
    Exhibit 10.2 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.25*

Imation 2005 Stock Incentive Plan Stock Option
    Agreement  Executive Officers (incorporated by
    reference to Exhibit 10.3 to Imations
    Form 8-K
    Current Report filed on May 9, 2005) 89




---



##### Table of Contents



Number

Description of Exhibit10
.26*

Form of Amendment to 2005 Stock Incentive Plan Option
    Agreements  Executive Officer (incorporated by
    reference to Exhibit 10.5 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.27*

Imation 2005 Stock Incentive Plan Stock Option
    Agreement  Directors (incorporated by reference to
    Exhibit 10.4 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.28*

Amendment to 2005 Stock Incentive Plan Stock Option
    Agreement  Directors (incorporated by reference to
    Exhibit 10.2 to Imations
    Form 8-K
    Current Report filed on November 16, 2005)10
.29*

Imation 2005 Stock Incentive Plan Restricted Stock Award
    Agreement  Employees (incorporated by reference to
    Exhibit 10.5 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.30*

Imation 2005 Stock Incentive Plan Restricted Stock Award
    Agreement  Executive Officers (incorporated by
    reference to Exhibit 10.6 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.31*

Form of Amendment to 2005 Stock Incentive Plan Restricted Stock
    Award Agreements  Executive Officer (incorporated by
    reference to Exhibit 10.6 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.32*

Imation 2005 Stock Incentive Plan Restricted Stock Award
    Agreement  Directors (incorporated by reference to
    Exhibit 10.7 to Imations
    Form 8-K
    Current Report filed on May 9, 2005)10
.33*

Amendment to 2005 Stock Incentive Plan Restricted Stock Award
    Agreement  Directors (incorporated by reference to
    Exhibit 10.3 to Imations
    Form 8-K
    Current Report filed on November 16, 2005)10
.34*

Form of Amendment to 2004 and 2005 Executive Officer Option
    Agreements under the 2000 Employee Stock Incentive Plan
    (incorporated by reference to Exhibit 10.1 to
    Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.35*

Form of Amendment to 2005 Stock Option Agreements 
    Non-Employee Directors (incorporated by reference to
    Exhibit 10.7 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.36*

Form of Non-Employee Director Option Agreement (incorporated by
    reference to Exhibit 10.12 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.37*

Form of Amendment to 2005 Restricted Stock Award
    Agreements  Non-Employee Directors (incorporated by
    reference to Exhibit 10.8 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.38*

Form of Non-Qualified Stock Option Agreement for Executive
    Officers under the Imation Corp. 2005 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.2 to
    Imations
    Form 8-K
    Current Report filed on May 12, 2008)10
.39*

Form of Non-Employee Director Restricted Stock Award Agreement
    (incorporated by reference to Exhibit 10.13 to
    Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.40*

Form of Executive Officer Option Agreement (incorporated by
    reference to Exhibit 10.10 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.41*

Form of Executive Officer Restricted Stock Award Agreement
    (incorporated by reference to Exhibit 10.11 to
    Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.42*

Form of Non-Employee Director Restricted Stock Award Agreement
    (incorporated by reference to Exhibit 10.13 to
    Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.43*

Form of Executive Officer Option Agreement (incorporated by
    reference to Exhibit 10.10 to Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.44*

Form of Executive Officer Restricted Stock Award Agreement
    (incorporated by reference to Exhibit 10.11 to
    Imations
    Form 8-K
    Current Report filed on February 13, 2006)10
.45*

Imation Corp. 2008 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.1 to Imations
    Form 8-K
    Current Report filed on May 12, 2008)10
.46*

Form of Non-Qualified Stock Option Agreement for Executive
    Officers under the Imation Corp. 2008 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.3 to
    Imations
    Form 8-K
    Current Report filed on May 12, 2008)10
.47*

Form of Non-Qualified Stock Option Agreement for Directors under
    the Imation Corp. 2008 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.4 to Imations
    Form 8-K
    Current Report filed on May 12, 2008)10
.48*

Form of Restricted Stock Agreement for Executive Officers under
    the Imation Corp. 2008 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.5 to Imations
    Form 8-K
    Current Report filed on May 12, 2008) 90




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##### Table of Contents



Number

Description of Exhibit10
.49*

Form of Restricted Stock Agreement for Directors under the
    Imation Corp. 2008 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.6 to Imations
    Form 8-K
    Current Report filed on May 12, 2008)10
.50*

Description of 2009 Annual Bonus Plan Target Approval
    (incorporated by reference to Imations
    Form 8-K
    Current Report filed on February 17, 2008)10
.51*

Imation Excess Benefit Plan (incorporated by reference to
    Exhibit 10.10 to Registration Statement on Form 10,
    No. 1-14310)10
.52*

Employment Offer Letter from Imation Corp. to Mark E. Lucas
    (incorporated by reference to Exhibit 10.1 to
    Imations
    Form 8-K
    Current Report filed on February 17, 2009)10
.53*

Description of 2010 Annual Bonus Plan Target Approval
    (incorporated by reference to Imations
    Form 8-K
    Current Report filed on November 9, 2009)10
.54*

Description of 2011 Annual Bonus Plan Target Approval
    (incorporated by reference to Imations
    Form 8-K
    Current Report filed on November 10, 2010)10
.55*

Director Compensation Program Effective May 4, 2005 (As
    amended on February 10, 2011)10
.56*

Performance based option award (incorporated by reference to
    Exhibit 10.2 to Imations
    10-Q for the
    quarter ended June 30, 2010)10
.57*

Performance based restricted stock award (incorporated by
    reference to Exhibit 10.2 to Imations
    10-Q for the
    quarter ended June 30, 2010)10
.58*

Amended and Restated Severance Agreement (incorporated by
    reference to Exhibit 10.2 to Imations
    Form 8-K
    Current Report filed on August 6, 2010)21
.1

Subsidiaries of Imation Corp.23
.1

Consent of Independent Registered Public Accounting Firm24
.1

Power of Attorney31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 200232
.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002     *
    
    Items that are management contracts or compensatory plans or
    arrangements required to be filed as an exhibit pursuant to
    Item 15(b) of
    Form 10-K. 91




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##### Table of Contents



SIGNATURES    Imation
    Corp.
  By:
    /s/  Mark
    E. Lucas   President and Chief Executive Officer
   92




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##### Table of Contents



Signature

Title

Date/s/  Mark
    E. LucasMark
    E. Lucas

President, Chief Executive Officer and Director (Principal
    Executive Officer)

March 2, 2011/s/  Paul
    R. ZellerPaul
    R. Zeller

Senior Vice President and Chief Financial Officer (Principal
    Financial Officer)

March 2, 2011/s/  Scott
    J. RobinsonScott
    J. Robinson

Vice President, Corporate Controller and Chief Accounting
    Officer (Principal Accounting Officer)

March 2, 2011*David
    P. Berg

Director

March 2, 2011*Charles
    A. Haggerty

Director

March 2, 2011*Linda
    W. Hart

Director

March 2, 2011*Ronald
    T. LeMay

Director

March 2, 2011*Raymond
    Leung

Director

March 2, 2011*L.
    White Matthews, III

Director

March 2, 2011*Trudy
    A. Rautio

Director

March 2, 2011*Glen
    A. Taylor

Director

March 2, 2011*Daryl
    J. White

Director

March 2, 2011   *By:

/s/  John
    L. SullivanJohn
    L. Sullivan
    Attorney-in-fact  93




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of Exhibit10
.59

Director Compensation Program Effective May 4, 2005 (As
    amended on February 10, 2011)21
.1

Subsidiaries of Imation Corp.23
.1

Consent of Independent Registered Public Accounting Firm24
.1

Power of Attorney31
.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200231
.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley
    Act of 200232
.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 200232
.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002  94