##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
 For 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)1 Imation Way
    
    55128Oakdale, Minnesota
    
    (Zip Code)(Address of principal executive offices)
 (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
 o
 (Check one):
 Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act).
Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



IMATION CORP.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2008
 TABLE OF CONTENTS
 PagePART IItem 1
    
    Business
    
    
    2Item 1A
    
    Risk Factors
    
    
    10Item 1B
    
    Unresolved Staff Comments
    
    
    15Item 2
    
    Properties
    
    
    15Item 3
    
    Legal Proceedings
    
    
    16Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    18PART IIItem 5
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    19Item 6
    
    Selected Financial Data
    
    
    20Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    41Item 8
    
    Financial Statements and Supplementary Data
    
    
    42Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    86Item 9A
    
    Controls and Procedures
    
    
    86Item 9B
    
    Other Information
    
    
    87PART IIIItem 10
    
    Directors, Executive Officers and Corporate Governance
    
    
    88Item 11
    
    Executive Compensation
    
    
    89Item 12
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    89Item 13
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    90Item 14
    
    Principal Accountant Fees and Services
    
    
    90PART IVItem 15
    
    Exhibits and Financial Statement Schedules
    
    
    91Signatures
    
    
    94EX-21.1EX-23.1EX-24.1EX-31.1EX-31.2EX-32.1EX-32.2
  1




---



##### Table of Contents



PART I
 
 Item 1. Business.
 General
    Industry Background
 Managements
Discussion and Analysis of Financial Condition and Results of Operations Risk
Factors
 2




---



##### Table of Contents



Data Storage Media Industry
      Managements Discussion and Analysis of Financial Condition and
Results of Operations
 3




---



##### Table of Contents



Audio and Video Consumer Electronics Industry
  ®
 Business Segments
  Data Storage Media Products and Accessories
     4




---



##### Table of Contents



Audio and Video Consumer Electronic Products and Accessories
   
  Description of Business
 Products and Application Areas
  Years Ended December 31,2008
    
    
    2007
    
    
    2006% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(Dollars in millions)
    
    Revenue
    
    
    Total
    
    
    Revenue
    
    
    Total
    
    
    Revenue
    
    
    TotalOptical
    
    $
    1,025.2
    
    
    
    47.6
    %
    
    $
    954.2
    
    
    
    46.3
    %
    
    $
    680.3
    
    
    
    42.9
    %Magnetic
    
    
    644.4
    
    
    
    29.9
    %
    
    
    703.9
    
    
    
    34.1
    %
    
    
    660.8
    
    
    
    41.7
    %Flash
    
    
    99.2
    
    
    
    4.6
    %
    
    
    157.1
    
    
    
    7.6
    %
    
    
    146.6
    
    
    
    9.3
    %Electronic products,
accessories and
other
    
    
    385.8
    
    
    
    17.9
    %
    
    
    246.8
    
    
    
    12.0
    %
    
    
    97.0
    
    
    
    6.1
    %Total
    
    $
    2,154.6
    
    
    
    
    
    
    $
    2,062.0
    
    
    
    
    
    
    $
    1,584.7
  5




---



##### Table of Contents



®
 Customers, Marketing and Distribution
     Competition
   6




---



##### Table of Contents



® ®
 Manufacturing
    Raw Materials and Other Purchased Products
   7




---



##### Table of Contents



Research and Development
  Intellectual Property
   Sourcing, Supply Chain and Distribution
  Employees
  Environmental Matters
  8




---



##### Table of Contents



International Operations
  Risk Factors
 Executive Officers of the Registrant
  Frank P. Russomanno
 James C. Ellis,
 Peter A. Koehn,
 Dr. Subodh Kulkarni
 Mark E. Lucas
 9




---



##### Table of Contents



Scott J. Robinson,
 John L. Sullivan,
 Paul R. Zeller,
 Availability of SEC Reports
  
 Item 1A. Risk Factors .
  Our global business is subject to a number of risks related to the global credit crisis and
economic downturn
  10




---



##### Table of Contents



Significant litigation matters could result in large costs and distraction to our business. Legal Proceedings
 Continued disruption in United States and international credit markets may adversely affect
our ability to draw on our credits lines or obtain financing from alternative sources on reasonable
terms or at all, and may adversely affect our business, financial condition and results of
operation.
  Our financial success depends in part on our ability to profitably grow our business in the
consumer electronics market.
 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
 11




---



##### Table of Contents



If we do not successfully implement our global restructuring plans and realize the benefits
expected from the restructuring, our financial results will be affected.
 If we do not successfully manage our multiple brands on a global basis, it could have a
material impact on our financial results.
 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.
 Because of the rapid technology changes in our industry, we may not be able to compete if we
cannot quickly develop, source and introduce 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.
 12




---



##### Table of Contents



Operating losses in tax jurisdictions with deferred tax assets could hinder our ability to
continue to carry the deferred tax assets, which would result in a valuation allowance negatively
impacting our consolidated results and net worth.
  Impairment in the carrying value of goodwill or other assets could negatively affect our
consolidated results of operations and net worth.
   Our stock price may be subject to significant volatility due to our results or market trends
 Our financial success depends upon our ability to manufacture, source and deliver products to
our customers at acceptable quality, volume and cost levels.
 13




---



##### Table of Contents



If we do not achieve the expected benefits from strategic relationships, our financial results
may be negatively impacted .
 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.
 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, including the Philips patent
cross-license claim. Legal Proceedings
 14




---



##### Table of Contents



If we are unable to attract and retain employees and key talent, we may incur a material
adverse impact on our business and financial results.
 
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
  Facility
    
    FunctionElectronic ProductsKowloon, Hong Kong (leased)
    
    AdministrativeWeston, Florida (leased)
    
    Sales/AdministrativeData Storage MediaAmericasBogota, Columbia (leased)
    
    Sales/AdministrativeBuenos Aires, Argentina (leased)
    
    Sales/AdministrativeLima, Peru (leased)
    
    Sales/AdministrativeLondon, Ontario, Canada (owned)
    
    Sales/AdministrativeMexico City, Mexico (leased)
    
    Sales/AdministrativePanama City, Panama (leased)
    
    Sales/AdministrativeOakdale, Minnesota (owned)
    
    Sales/Administrative/Laboratory facilitySantiago, Chile (owned)
    
    Sales/AdministrativeSao Paulo, Brazil (leased)
    
    Sales/AdministrativeRochester, New York (leased)
    
    Sales/AdministrativeSouthaven, Mississippi (leased)
    
    Distribution CenterWeatherford, Oklahoma (owned)
    
    Magnetic tape manufacturingEuropeBracknell, England (leased)
    
    Sales/AdministrativeCergy, France (leased)
    
    Sales/AdministrativeDubai, United Arab Emirates (leased)
    
    Sales/AdministrativeLangendorf, Switzerland (leased)
    
    Sales/AdministrativeMadrid, Spain (leased)
    
    Sales/AdministrativeNeuss, Germany (leased)
    
    Sales/Administrative/Distribution CenterHoofddorp, Netherlands (leased)
    
    Sales/Administrative/European regional headquartersWarsaw, Poland (leased)
    
    Sales/AdministrativeSegrate, Italy (leased)
    
    Sales/Administrative
 15




---



##### Table of Contents



Facility
    
    FunctionAsia PacificAuckland, New Zealand (leased)
    
    Distribution CenterKings Park, Australia (leased)
    
    Sales/AdministrativeBeijing, China (leased)
    
    Sales/AdministrativeGuangzhou, China (leased)
    
    Sales/AdministrativeNew Delhi, India (leased)
    
    Sales/AdministrativeNorth Point, Hong Kong (leased)
    
    Sales/Administrative/Asia-Pacific regional headquartersSeoul, South Korea (leased)
    
    Sales/AdministrativeShanghai, China (leased)
    
    Sales/AdministrativePetaling Jaya, Malaysia (leased)
    
    Sales/AdministrativeBangkok, Thailand (leased)
    
    Sales/AdministrativeManila, Philippines (leased)
    
    Sales/AdministrativeSingapore (leased)
    
    Sales/AdministrativeTaipei, Taiwan (leased)
    
    Sales/AdministrativeTokyo, Japan (leased)
    
    Sales/AdministrativeNagoya, Japan (leased)
    
    Sales/AdministrativeSendai, Japan (leased)
    
    Sales/AdministrativeSapporo, Japan (leased)
    
    Sales/AdministrativeOsaka, Japan (leased)
    
    Sales/AdministrativeFukuoka, Japan (leased)
    
    Sales/Administrative
 
 Item 3. Legal Proceedings.
 Accounting for Contingencies
  Philips
  16




---



##### Table of Contents



SanDisk
  17




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  18




---



##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
    2008 Sales Prices
    
    2007 Sales PricesHigh
    
    Low
    
    High
    
    LowFirst quarter
    
    $
    27.63
    
    
    $
    17.64
    
    
    $
    49.20
    
    
    $
    38.96Second quarter
    
    $
    27.41
    
    
    $
    22.85
    
    
    $
    41.95
    
    
    $
    35.69Third quarter
    
    $
    25.48
    
    
    $
    18.37
    
    
    $
    37.89
    
    
    $
    23.71Fourth quarter
    
    $
    22.78
    
    
    $
    10.11
    
    
    $
    27.95
    
    
    $
    18.96
 
 (c)
    
    Issuer Purchases of Equity Securities  19




---



##### Table of Contents



Item 6. Selected Financial Data.*
 (Dollars in millions, except per share data)
    
    2008
    
    2007
    
    2006
    
    2005
    
    2004Statement of Operations Data:Net revenue
    
    $
    2,154.6
    
    
    $
    2,062.0
    
    
    $
    1,584.7
    
    
    $
    1,258.1
    
    
    $
    1,173.7Gross profit
    
    
    350.0
    
    
    
    355.9
    
    
    
    344.1
    
    
    
    302.1
    
    
    
    287.8Selling, general and administrative
    
    
    290.6
    
    
    
    223.3
    
    
    
    174.0
    
    
    
    146.3
    
    
    
    161.5Research and development
    
    
    23.6
    
    
    
    38.2
    
    
    
    50.0
    
    
    
    51.3
    
    
    
    56.5Goodwill impairment
    
    
    34.7
    
    
    
    94.1
    
    
    
    
    
    
    
    
    
    
    
    Restructuring and other
    
    
    28.9
    
    
    
    33.3
    
    
    
    11.9
    
    
    
    1.2
    
    
    
    25.2Operating (loss) income
    
    
    (27.8
    )
    
    
    (33.0
    )
    
    
    108.2
    
    
    
    103.3
    
    
    
    44.6(Loss) income from continuing operations
    
    
    (33.3
    )
    
    
    (34.6
    )
    
    
    75.2
    
    
    
    81.8
    
    
    
    36.5Net (loss) income
    
    
    (33.3
    )
    
    
    (50.4
    )
    
    
    76.4
    
    
    
    87.9
    
    
    
    29.9(Loss) earnings per common share from
continuing operations:Basic
    
    
    (0.89
    )
    
    
    (1.36
    )
    
    
    2.17
    
    
    
    2.41
    
    
    
    1.04Diluted
    
    
    (0.89
    )
    
    
    (1.36
    )
    
    
    2.14
    
    
    
    2.36
    
    
    
    1.03Net (loss) earnings per common share:Basic
    
    
    (0.89
    )
    
    
    (1.36
    )
    
    
    2.21
    
    
    
    2.59
    
    
    
    0.85Diluted
    
    
    (0.89
    )
    
    
    (1.36
    )
    
    
    2.17
    
    
    
    2.54
    
    
    
    0.84Balance Sheet Data:Working capital
    
    $
    472.6
    
    
    $
    487.7
    
    
    $
    485.3
    
    
    $
    643.1
    
    
    $
    510.8Cash and cash equivalents (1)
    
    
    96.6
    
    
    
    135.5
    
    
    
    252.5
    
    
    
    483.0
    
    
    
    397.1Inventories, net
    
    
    363.2
    
    
    
    366.1
    
    
    
    258.0
    
    
    
    134.9
    
    
    
    131.3Property, plant and equipment, net
    
    
    122.4
    
    
    
    171.5
    
    
    
    178.0
    
    
    
    195.0
    
    
    
    214.4Total assets
    
    
    1,522.3
    
    
    
    1,751.0
    
    
    
    1,382.9
    
    
    
    1,146.2
    
    
    
    1,110.6Long-term debt
    
    
    
    
    
    
    21.3
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    
    577.7
    
    
    
    697.2
    
    
    
    436.6
    
    
    
    290.9
    
    
    
    323.8Total shareholders equity
    
    
    944.6
    
    
    
    1,053.8
    
    
    
    946.3
    
    
    
    855.3
    
    
    
    786.8Other Information:Current ratio
    
    
    1.9
    
    
    
    1.8
    
    
    
    2.2
    
    
    
    3.6
    
    
    
    2.9Days sales outstanding (2)
    
    
    63
    
    
    
    64
    
    
    
    56
    
    
    
    46
    
    
    
    45Days of inventory supply (2)
    
    
    82
    
    
    
    65
    
    
    
    72
    
    
    
    56
    
    
    
    53Return on average assets (3)
    
    
    (2.0
    )%
    
    
    (3.2
    )%
    
    
    5.9
    %
    
    
    7.2
    %
    
    
    3.2
    %Return on average equity (3)
    
    
    (3.3
    )%
    
    
    (5.0
    )%
    
    
    8.3
    %
    
    
    10.0
    %
    
    
    4.5
    %Dividends per common share
    
    $
    0.56
    
    
    $
    0.62
    
    
    $
    0.54
    
    
    $
    0.46
    
    
    $
    0.38Capital expenditures
    
    $
    13.6
    
    
    $
    14.5
    
    
    $
    16.0
    
    
    $
    21.6
    
    
    $
    35.8Number of employees
    
    
    1,570
    
    
    
    2,250
    
    
    
    2,070
    
    
    
    2,100
    
    
    
    2,550
 
 *
    
    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.N/M  Not meaningful(1)
    
    We invested certain funds in active cash management and classified those investments in other
current assets or other assets depending on remaining maturity. These amounts represented
$24.6 million and $42.5 million as of
December 31, 2005 and 2004, respectively, in addition to cash and equivalents. These investments
have since matured, which resulted in no cash management investment balance for the years ended
December 31, 2008, 2007 and 2006.(2)
    
    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 the average of the inventoriable portion of
cost of goods sold for the previous 12 months, expressed in days.(3)
    
    Return percentages are calculated using income from continuing operations. 20




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Business
 Overview
  Business
 Strategy
  
    
    Optimize our magnetic tape business. The magnetic tape market remains an attractive
market for Imation because of our significant market share, brand and product portfolio,
intellectual property, solid industry reputation and relationships among key original
equipment manufacturers (OEMs), global distribution, and manufacturing capability. There is
growing demand for data storage capacity across a substantial installed base of commercial
information technology users, a relatively small number of competitors, and high barriers
to entry. At the same time, it is highly competitive, and the overall market size, in terms
of revenue, is declining. In May of 2007 we started a major restructuring of our
manufacturing operations to optimize our magnetic tape business and stabilize or reduce our
manufacturing costs. As a result we are concentrating our direct manufacturing investments
on coating operations and outsourcing other parts of manufacturing operations for magnetic
tape. See Note 8 to the Consolidated Financial Statements for further information. We
continue to
invest broadly in tape technology and seek to maintain and extend value-added technology
capabilities in key areas, including precision thin film tape coating and servo-writing.
    
    Grow the data storage media business across the four pillars of storage offering
products under multiple brands. Over the years, we have brought to market recordable media
products beyond magnetic tape, including recordable optical media, removable USB flash
drives and flash cards, solid state drives, and external and removable hard disk products.
We have also acquired additional brands, beyond the Imation brand, and established
distribution agreements for other brands, as described above. The strength of our brands
has allowed us to gain market share in the world wide optical media markets. In addition,
with over half of our revenue coming from outside the United States, we seek to leverage
our global marketing and distribution capability in bringing products to market across
multiple geographies.
 21




---



##### Table of Contents




    
    Extend certain brands selectively across multiple product categories.We sell
accessories and certain consumer electronic products, selectively, under multiple brands in
various regions of the world. With the acquisition of Memcorp we entered into the consumer
electronics market to sell certain products which we did not offer previously. Our product
portfolio includes TVs and digital displays, including flat-panel liquid crystal displays
(LCD) and digital picture frames, iPod® accessories, clock-radios and MP3
players. The portfolio also includes home theater video, portable and fashion DVD players,
karaoke systems and office products such as voice recorders. The XtremeMac acquisition
provided a broader product set and greater distribution presence targeting Apple
iPod®, iPhone and Apple TV® users.
    
    
    We entered into a series of agreements with Moser Baer India Ltd. (MBI) in 2003 that
established MBI as a significant, non-exclusive source for our optical media products and
created a joint venture sales and distribution company, Global Data Media (GDM). We hold a
51 percent interest in GDM. As the controlling shareholder of the subsidiary, GDMs results
are consolidated into our financial statements.
    
    An agreement with IBM in 2004 established us as the exclusive global distributor for IBM
branded tape media products, whether manufactured by Imation or others.
    
    On April 28, 2006, we acquired substantially all of the assets of Memorex International
Inc. (Memorex), including the Memorex brand name and the capital stock of its operating
subsidiaries engaged in the business of the design, development, sourcing, marketing,
distribution and sale of hardware, media and accessories used for the storage of electronic
data under the Memorex brand name. This action strengthened our position in optical
products and accessories, especially in the United States retail channel. See Note 3 to the
Consolidated Financial Statements for further information.
    
    On July 9, 2007, we acquired Memcorp. This action established our foundation in the
consumer electronic products in the mass merchant channel and enabled us to better manage
the Memorex brand name across all retail channels in the United States. See Note 3 to the
Consolidated Financial Statements for further information.
    
    On July 31, 2007, we acquired TDK Recording Media. This action further strengthened our
optical market position, especially in the important consumer markets of Europe and Japan.
See Note 3 to the Consolidated Financial Statements for further information.
    
    An agreement with Sun Microsystems, Inc. in 2007 established us as the exclusive global
distributor for Sun StorageTek branded tape media products, whether manufactured by Imation
or others.
    
    An agreement with Hewlett-Packard Company (HP) in 2007 established us as the exclusive
global distributor for HP branded recordable optical media products.
    
    Other agreements have given us exclusive and non-exclusive distribution rights for
certain brands of recordable media in various regions or product categories. Examples of
other distribution agreements include those with ProStor Systems Inc. and Tandberg Data ASA
(Tandberg).
 22




---



##### Table of Contents




    
    On June 30, 2008 we acquired substantially all of the assets of XtremeMac, a
Florida-based product development and design firm focused on consumer electronic products
and accessories for the iPod®, iPhone and Apple TV® markets. This
action expanded our product portfolio, enhanced our distribution reach and strengthened
product design capabilities, with particular focus on Apple users.
    
    An agreement in 2008 with Mtron, a Korean company, established Imation as a global
distributor (except in Korea and Japan) for certain solid state drive (SSD) products
developed by Mtron for mobile computers and enterprise servers.
 Factors Affecting Comparability of our Financial Results
 Acquisitions
 
    
    On July 31, 2007, we acquired the TDK Recording Media business.
    
    On July 9, 2007, we acquired the Memcorp business.
    
    On April 28, 2006, we acquired the Memorex business.
  Executive Summary
 2008 Consolidated Results of Operations
 
    
    Revenue of $2,154.6 million in 2008 was up 4.5 percent compared with revenue of $2,062.0
million in 2007, due primarily to the acquisitions of the TDK Recording Media and Memcorp
businesses which closed in the third quarter of 2007.
    
    Gross margin of 16.2 percent in 2008 was down from 17.3 percent in 2007, due mainly to
continued changes in product mix and reduced profitability in our Electronic Products
segment.
    
    Selling, general and administrative expense was 13.5 percent of revenue in 2008,
compared with 10.8 percent in 2007 due to incremental TDK Recording Media and Memcorp SG&A
expense, brand investments and additional legal expenses related to the Philips and SanDisk
litigation.
    
    Operating loss was $27.8 million in 2008, compared with $33.0 million in 2007. Operating
loss in 2008 included a goodwill impairment charge of $34.7 million and restructuring and
other charges of $28.9 million. Operating loss in 2007 included a goodwill impairment
charge of $94.1 million and restructuring and other charges of $33.3 million.
 2008 Cash Flow/Financial Condition
 
    
    Cash totaled $96.6 million at year-end.
    
    Cash flow provided by operating activities was $84.7 million for 2008.
    
    We repurchased approximately 1.1 million shares of common stock in 2008 for $26.4
million.
    
    Our Board of Directors declared dividends of $0.16 per share in February, May and August
2008, and $0.08 per share in November 2008, totaling $20.9 million for the year. Effective
January 30, 2009 our Board of Directors suspended the Companys quarterly cash dividend.
 23




---



##### Table of Contents



Results of Operations
 Net Revenue
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Net revenue
    
    $
    2,154.6
    
    
    $
    2,062.0
    
    
    $
    1,584.7
    
    
    
    4.5
    %
    
    
    30.1
    %
   Gross Profit
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Gross profit
    
    $
    350.0
    
    
    $
    355.9
    
    
    $
    344.1
    
    
    
    -1.7
    %
    
    
    3.4
    %Gross margin
    
    
    16.2
    %
    
    
    17.3
    %
    
    
    21.7
    %
   24




---



##### Table of Contents



Selling, General and Administrative (SG&A)
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Selling, general and
administrative
    
    $
    290.6
    
    
    $
    223.3
    
    
    $
    174.0
    
    
    
    30.1
    %
    
    
    28.3
    %As a percent of revenue
    
    
    13.5
    %
    
    
    10.8
    %
    
    
    11.0
    %
   Research and Development (R&D)
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Research and development
    
    $
    23.6
    
    
    $
    38.2
    
    
    $
    50.0
    
    
    
    -38.2
    %
    
    
    -23.6
    %As a percent of revenue
    
    
    1.1
    %
    
    
    1.9
    %
    
    
    3.2
    %
  Goodwill Impairment
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Goodwill impairment
    
    $
    34.7
    
    
    $
    94.1
    
    
    $
    
    
    
    
    N/M
    
    
    
    N/M
 
 N/M  Not meaningful    25




---



##### Table of Contents



Restructuring and Other
  Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006RestructuringSeverance and severance related expense
    
    $
    15.7
    
    
    $
    23.6
    
    
    $
    8.6Lease termination costs
    
    
    4.8
    
    
    
    0.6
    
    
    
    1.4Reversal of severance and severance related
expense from prior
restructuring programs
    
    
    
    
    
    
    
    
    
    
    (0.9
    )Total restructuring
    
    
    20.5
    
    
    
    24.2
    
    
    
    9.1OtherPension settlement/curtailment (Note 10)
    
    
    5.7
    
    
    
    1.4
    
    
    
    Asset impairments
    
    
    5.0
    
    
    
    8.4
    
    
    
    2.8TDK post-closing purchase price adjustment
    
    
    (2.3
    )
    
    
    
    
    
    
    Terminated employment agreement
    
    
    
    
    
    
    (0.7
    )
    
    
    Total
    
    $
    28.9
    
    
    $
    33.3
    
    
    $
    11.9
      26




---



##### Table of Contents



Operating (Loss) Income
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Operating (loss) income
    
    $
    (27.8
    )
    
    $
    (33.0
    )
    
    $
    108.2
    
    
    
    -15.8
    %
    
    
    -130.5
    %As a percent of
revenue
    
    
    -1.3
    %
    
    
    -1.6
    %
    
    
    6.8
    %
  Other (Income) and Expense
 Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Interest expense
    
    $
    1.5
    
    
    $
    2.6
    
    
    $
    1.0Interest income
    
    
    (3.8
    )
    
    
    (7.6
    )
    
    
    (12.6
    )Other expense, net
    
    
    9.8
    
    
    
    6.6
    
    
    
    8.0Other (income) and expense
    
    $
    7.5
    
    
    $
    1.6
    
    
    $
    (3.6
    )As a percent of revenue
    
    
    0.3
    %
    
    
    0.1
    %
    
    
    -0.2
    %
  27




---



##### Table of Contents



Income Tax (Benefit) Provision
 Years Ended December 31,(In millions)
    
    2008
    
    2007
    
    2006Income taxes
    
    $
    (2.0
    )
    
    $
    15.8
    
    
    $
    36.6Effective tax rate
    
    
    N/M
    
    
    
    N/M
    
    
    
    32.7
    %
 
 N/M  Not meaningful    Segment Results
    28




---



##### Table of Contents



Data Storage Media
 Americas
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Net revenue
    
    $
    789.4
    
    
    $
    959.3
    
    
    $
    838.9
    
    
    
    -17.7
    %
    
    
    14.4
    %Operating income
    
    
    73.0
    
    
    
    82.1
    
    
    
    128.9
    
    
    
    -11.1
    %
    
    
    -36.3
    %As a percent of
revenue
    
    
    9.2
    %
    
    
    8.6
    %
    
    
    15.4
    %
    Europe
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Net revenue
    
    $
    685.2
    
    
    $
    655.7
    
    
    $
    524.3
    
    
    
    4.5
    %
    
    
    25.1
    %Operating income
    
    
    22.3
    
    
    
    45.2
    
    
    
    48.1
    
    
    
    -50.7
    %
    
    
    -6.0
    %As a percent of
revenue
    
    
    3.3
    %
    
    
    6.9
    %
    
    
    9.2
    %
    29




---



##### Table of Contents



Asia Pacific
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Net revenue
    
    $
    434.4
    
    
    $
    328.9
    
    
    $
    221.5
    
    
    
    32.1
    %
    
    
    48.5
    %Operating income
    
    
    28.7
    
    
    
    23.5
    
    
    
    17.1
    
    
    
    22.1
    %
    
    
    37.4
    %As a percent of
revenue
    
    
    6.6
    %
    
    
    7.1
    %
    
    
    7.7
    %
   Electronic Products
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Net revenue
    
    $
    245.6
    
    
    $
    118.1
    
    
    $
    
    
    
    
    N/M
    
    
    
    N/MOperating (loss) income
    
    
    (13.4
    )
    
    
    5.5
    
    
    
    
    
    
    
    N/M
    
    
    
    N/MAs a percent of
revenue
    
    
    -5.5
    %
    
    
    4.7
    %
 
 N/M  Not meaningful   Corporate and Unallocated
 Years Ended December 31,
    
    Percent Change2008 vs.
    
    2007 vs.(In millions)
    
    2008
    
    2007
    
    2006
    
    2007
    
    2006Operating loss
    
    $
    (138.4
    )
    
    $
    (189.3
    )
    
    $
    (85.9
    )
    
    
    -26.9
    %
    
    
    120.4
    %
  30




---



##### Table of Contents



Financial Position
       Employers; Accounting for Defined Benefit
Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and
132(R)
 31




---



##### Table of Contents



Liquidity and Capital Resources
 Cash Flows provided by Operating Activities:
 Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Net (loss) income
    
    $
    (33.3
    )
    
    $
    (50.4
    )
    
    $
    76.4Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation
    
    
    25.9
    
    
    
    28.6
    
    
    
    29.1Amortization
    
    
    23.4
    
    
    
    18.3
    
    
    
    9.3Deferred income taxes
    
    
    0.2
    
    
    
    (10.7
    )
    
    
    9.7Goodwill impairment
    
    
    34.7
    
    
    
    94.1
    
    
    
    Asset impairments
    
    
    5.0
    
    
    
    8.4
    
    
    
    7.2Stock-based compensation
    
    
    9.5
    
    
    
    10.2
    
    
    
    11.0Pension settlement / curtailment
    
    
    5.7
    
    
    
    2.4
    
    
    
    1.7Gain on sale of Specialty Papers
    
    
    
    
    
    
    
    
    
    
    (2.1
    )Excess tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (3.3
    )Other
    
    
    4.9
    
    
    
    3.5
    
    
    
    0.6Changes in operating assets and liabilities, net of effects from acquisitions
    
    
    8.7
    
    
    
    (16.9
    )
    
    
    (42.1
    )Net cash provided by operating activities
    
    $
    84.7
    
    
    $
    87.5
    
    
    $
    97.5
  Cash Flows used in Investing Activities:
 Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Capital expenditures
    
    $
    (13.6
    )
    
    $
    (14.5
    )
    
    $
    (16.0
    )Acquisitions, net of cash acquired
    
    
    (15.3
    )
    
    
    (68.3
    )
    
    
    (332.2
    )Acquisition of minority interest
    
    
    (8.0
    )
    
    
    
    
    
    
    Purchase of investments
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.3
    )Proceeds from sale of investments
    
    
    
    
    
    
    
    
    
    
    28.9Proceeds from sale of businesses
    
    
    
    
    
    
    
    
    
    
    2.3Other investing activities
    
    
    0.9
    
    
    
    0.3
    
    
    
    3.2Net cash used in
investing
activities
    
    $
    (36.1
    )
    
    $
    (82.5
    )
    
    $
    (314.1
    )
  32




---



##### Table of Contents



Cash Flows used in Financing Activities:
 Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Purchase of treasury stock
    
    $
    (26.4
    )
    
    $
    (108.2
    )
    
    $
    (35.6
    )Exercise of stock options
    
    
    0.6
    
    
    
    7.7
    
    
    
    31.7Dividend payments
    
    
    (20.9
    )
    
    
    (23.2
    )
    
    
    (18.8
    )Debt repayment
    
    
    (31.3
    )
    
    
    (6.3
    )
    
    
    Excess tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    3.3Net cash used in financing activities
    
    $
    (78.0
    )
    
    $
    (130.0
    )
    
    $
    (19.4
    )
     33




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Summary of Contractual Obligations
 Payments Due by PeriodLess Than
    
    
    
    
    
    
    
    
    
    
    More Than(In millions)
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 YearsOperating lease
obligations
    
    $
    31.2
    
    
    $
    10.3
    
    
    $
    15.3
    
    
    $
    4.8
    
    
    $
    0.8Purchase obligations (1)
    
    
    202.9
    
    
    
    202.9
    
    
    
    
    
    
    
    
    
    
    
    Other liabilities (2)
    
    
    25.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25.1Total
    
    $
    259.2
    
    
    $
    213.2
    
    
    $
    15.3
    
    
    $
    4.8
    
    
    $
    25.9
 
 (1)
    
    The majority of the purchase obligations consist of 90-day rolling estimates. Each month, we
provide various suppliers with rolling forecasts of our demand for products for the next three
months. The forecasted amounts are generally binding on us as follows: 100 percent for the
first month, 75 percent for the second month and 50 percent for the third month.(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.   34




---



##### Table of Contents



Critical Accounting Policies and Estimates
   Income Tax Accruals and Valuation Allowances.
 Accounting for Income Taxes,
    35




---



##### Table of Contents



Accounting
for Uncertainty in Income Taxes
 Litigation. Accounting for Contingencies Legal
Proceedings
 Goodwill and Other Intangibles Business Combinations
 Goodwill and Other Intangible
Assets
 36




---



##### Table of Contents



37




---



##### Table of Contents



Allowance for Doubtful Accounts Receivable.
 Excess Inventory and Obsolescence Accruals.
 38




---



##### Table of Contents



Rebates.
 Other Accrued Liabilities
      Recently Issued Accounting Standards
 Employers Disclosures about Postretirement
Benefit Plan Assets Employers Disclosures about Pensions and Other
Postretirement Benefits,
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 39




---



##### Table of Contents



Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 .
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51 (
  Forward-Looking Statements
  Risk Factors,
 40




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
      41




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated Framework
    /s/ PricewaterhouseCoopers LLPPricewaterhouseCoopers LLPMinneapolis, MN
  42




---



##### Table of Contents



IMATION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,(In millions, except per share amounts)
    
    2008
    
    
    2007
    
    
    2006Net revenue
    
    $
    2,154.6
    
    
    $
    2,062.0
    
    
    $
    1,584.7Cost of goods sold
    
    
    1,804.6
    
    
    
    1,706.1
    
    
    
    1,240.6Gross profit
    
    
    350.0
    
    
    
    355.9
    
    
    
    344.1Operating expense:Selling, general and administrative
    
    
    290.6
    
    
    
    223.3
    
    
    
    174.0Research and development
    
    
    23.6
    
    
    
    38.2
    
    
    
    50.0Goodwill impairment
    
    
    34.7
    
    
    
    94.1
    
    
    
    Restructuring and other
    
    
    28.9
    
    
    
    33.3
    
    
    
    11.9Total
    
    
    377.8
    
    
    
    388.9
    
    
    
    235.9Operating (loss) income
    
    
    (27.8
    )
    
    
    (33.0
    )
    
    
    108.2Other (income) and expense:Interest expense
    
    
    1.5
    
    
    
    2.6
    
    
    
    1.0Interest income
    
    
    (3.8
    )
    
    
    (7.6
    )
    
    
    (12.6
    )Other expense, net
    
    
    9.8
    
    
    
    6.6
    
    
    
    8.0Total
    
    
    7.5
    
    
    
    1.6
    
    
    
    (3.6
    )(Loss) income from continuing operations before income taxes
    
    
    (35.3
    )
    
    
    (34.6
    )
    
    
    111.8Income tax (benefit) provision
    
    
    (2.0
    )
    
    
    15.8
    
    
    
    36.6(Loss) income from continuing operations
    
    
    (33.3
    )
    
    
    (50.4
    )
    
    
    75.2Gain on disposal of discontinued businesses, net of income
taxes
    
    
    
    
    
    
    
    
    
    
    1.2Net (loss) income
    
    $
    (33.3
    )
    
    $
    (50.4
    )
    
    $
    76.4(Loss) earnings per common share  basic:Continuing operations
    
    $
    (0.89
    )
    
    $
    (1.36
    )
    
    $
    2.17Discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    0.03Net (loss) income
    
    $
    (0.89
    )
    
    $
    (1.36
    )
    
    $
    2.21(Loss) earnings per common share  diluted:Continuing operations
    
    $
    (0.89
    )
    
    $
    (1.36
    )
    
    $
    2.14Discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    0.03Net (loss) income
    
    $
    (0.89
    )
    
    $
    (1.36
    )
    
    $
    2.17Weighted average basic shares outstanding
    
    
    37.5
    
    
    
    37.0
    
    
    
    34.6Weighted average diluted shares outstanding
    
    
    37.5
    
    
    
    37.0
    
    
    
    35.2Cash dividends paid per common share
    
    $
    0.56
    
    
    $
    0.62
    
    
    $
    0.54
  43




---



##### Table of Contents



IMATION CORP.
CONSOLIDATED BALANCE SHEETS
 As of December 31,(In millions, except per share amounts)
    
    2008
    
    
    2007AssetsCurrent assets
Cash and cash equivalents
    
    $
    96.6
    
    
    $
    135.5Accounts receivable, net
    
    
    378.3
    
    
    
    507.1Inventories, net
    
    
    363.2
    
    
    
    366.1Other current assets
    
    
    138.1
    
    
    
    109.9Total current assets
    
    
    976.2
    
    
    
    1,118.6Property, plant and equipment, net
    
    
    122.4
    
    
    
    171.5Intangible assets, net
    
    
    357.0
    
    
    
    371.0Goodwill
    
    
    23.5
    
    
    
    55.5Other assets
    
    
    43.2
    
    
    
    34.4Total assets
    
    $
    1,522.3
    
    
    $
    1,751.0Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    296.1
    
    
    $
    350.1Accrued payroll
    
    
    12.5
    
    
    
    13.5Other current liabilities
    
    
    195.0
    
    
    
    257.3Current maturities of long-term debt
    
    
    
    
    
    
    10.0Total current liabilities
    
    
    503.6
    
    
    
    630.9Other liabilities
    
    
    74.1
    
    
    
    45.0Long-term debt, less current maturities
    
    
    
    
    
    
    21.3Commitments and contingenciesShareholders 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
    
    
    1,113.1
    
    
    
    1,109.0Retained earnings
    
    
    47.3
    
    
    
    101.5Accumulated other comprehensive loss
    
    
    (85.0
    )
    
    
    (44.1
    )Treasury stock, at cost, 5.2 million and 4.5 million shares as of December 31, 2008
and 2007, respectively
    
    
    (131.2
    )
    
    
    (113.0
    )Total shareholders equity
    
    
    944.6
    
    
    
    1,053.8Total liabilities and shareholders equity
    
    $
    1,522.3
    
    
    $
    1,751.0
  44




---



##### Table of Contents



IMATION CORP.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
 Unearned ESOPCommon
    
    
    Additional Paid-
    
    
    
    
    
    
    Accumulated Other
    
    
    Shares and Other
    
    
    Treasury
    
    
    Total Shareholders(In millions, except per share amounts)
    
    Stock
    
    
    in Capital
    
    
    Retained Earnings
    
    
    Comprehensive Loss
    
    
    Compensation
    
    
    Stock
    
    
    EquityBalance as of December 31, 2005
    
    
    0.4
    
    
    
    1,046.7
    
    
    
    120.5
    
    
    
    (106.6
    )
    
    
    (4.4
    )
    
    
    (201.3
    )
    
    
    855.3Purchase of treasury stock (865,400 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35.6
    )
    
    
    (35.6
    )Exercise of stock options (1,204,781 shares)
    
    
    
    
    
    
    (8.8
    )
    
    
    (5.5
    )
    
    
    
    
    
    
    
    
    
    
    46.0
    
    
    
    31.7Restricted stock grants (96,960 shares) and other
    
    
    
    
    
    
    (6.1
    )
    
    
    
    
    
    
    
    
    
    
    4.4
    
    
    
    3.5
    
    
    
    1.8401(k) matching contribution (80,501 shares)
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.2
    
    
    
    3.4Stock-based compensation related to options
    
    
    
    
    
    
    8.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.8Tax benefit from shareholder transactions
    
    
    
    
    
    
    8.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.1Dividend payments
    
    
    
    
    
    
    
    
    
    
    (18.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18.8
    )Initial FAS 158 adjustment (net of income tax provision of $1.7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.2
    )
    
    
    
    
    
    
    
    
    
    
    (3.2
    )Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    76.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76.4Net change in cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.4
    
    
    
    
    
    
    
    
    
    
    
    13.4Minimum pension liability adjustments (net of
income tax benefit of $2.6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.6
    
    
    
    
    
    
    
    
    
    
    
    4.6Cash flow hedging (net of income tax provision of $0.3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94.8Balance as of December 31, 2006
    
    
    0.4
    
    
    
    1,048.9
    
    
    
    172.6
    
    
    
    (91.4
    )
    
    
    0.0
    
    
    
    (184.2
    )
    
    
    946.3Purchase of treasury stock (3,816,401 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108.2
    )
    
    
    (108.2
    )Exercise of stock options (293,954 shares)
    
    
    
    
    
    
    (2.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.0
    
    
    
    7.7Restricted stock grants (46,202 shares) and other
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.8
    
    
    
    2.7401(k) matching contribution (104,155 shares)
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.1
    
    
    
    3.4Stock-based compensation related to options
    
    
    
    
    
    
    7.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.9Terminated employment agreement
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.5
    )
    
    
    (0.9
    )TDK Recording Media acquisition (6,825,764 shares)
    
    
    
    
    
    
    51.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    165.0
    
    
    
    216.7FIN 48 adjustment
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5Tax benefit from shareholder transactions
    
    
    
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.0Dividend payments
    
    
    
    
    
    
    
    
    
    
    (23.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23.2
    )Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (50.4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50.4
    )Net change in cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37.5
    
    
    
    
    
    
    
    
    
    
    
    37.5Pension adjustments (net of income tax
benefit of $5.0)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.2
    
    
    
    
    
    
    
    
    
    
    
    9.2Cash flow hedging (net of income tax provision of $0.2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3.1
    )Balance as of December 31, 2007
    
    $
    0.4
    
    
    $
    1,109.0
    
    
    $
    101.5
    
    
    $
    (44.1
    )
    
    $
    0.0
    
    
    $
    (113.0
    )
    
    $
    1,053.8Purchase of treasury stock (1,102,800 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26.4
    )
    
    
    (26.4
    )Exercise of stock options (46,330 shares)
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.1
    
    
    
    0.6Restricted stock grants (164,559 shares) and other
    
    
    
    
    
    
    (1.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.8
    
    
    
    2.6401(k) matching contribution (130,227 shares)
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    2.6Stock-based compensation related to options
    
    
    
    
    
    
    6.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.4Tax benefit from shareholder transactions
    
    
    
    
    
    
    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 provision 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
    )
    
    $
    0.0
    
    
    $
    (131.2
    )
    
    $
    944.6
  45




---



##### Table of Contents



IMATION CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Cash Flows from Operating Activities:Net (loss) income
    
    $
    (33.3
    )
    
    $
    (50.4
    )
    
    $
    76.4Adjustments to reconcile net (loss) income to net cash provided by operating
activities:Depreciation and leasehold amortization
    
    
    25.9
    
    
    
    28.6
    
    
    
    29.1Intangible amortization
    
    
    23.4
    
    
    
    18.3
    
    
    
    9.3Deferred income taxes
    
    
    0.2
    
    
    
    (10.7
    )
    
    
    9.7Goodwill impairment
    
    
    34.7
    
    
    
    94.1
    
    
    
    Asset impairments
    
    
    5.0
    
    
    
    8.4
    
    
    
    7.2Stock-based compensation
    
    
    9.5
    
    
    
    10.2
    
    
    
    11.0Pension settlement / curtailment
    
    
    5.7
    
    
    
    2.4
    
    
    
    1.7Gain on sale of Specialty Papers
    
    
    
    
    
    
    
    
    
    
    (2.1
    )Excess tax benefit from exercise of stock
options
    
    
    
    
    
    
    
    
    
    
    (3.3
    )Other
    
    
    4.9
    
    
    
    3.5
    
    
    
    0.6Changes in operating assets and liabilities, net of effects from
acquisitions:Accounts receivable
    
    
    129.0
    
    
    
    (33.7
    )
    
    
    (37.6
    )Inventories
    
    
    0.2
    
    
    
    7.8
    
    
    
    (49.3
    )Other assets
    
    
    (2.9
    )
    
    
    (9.1
    )
    
    
    1.5Accounts payable
    
    
    (61.5
    )
    
    
    (8.7
    )
    
    
    30.5Accrued payroll and other liabilities
    
    
    (56.1
    )
    
    
    26.8
    
    
    
    12.8Net cash provided
by operating
activities
    
    
    84.7
    
    
    
    87.5
    
    
    
    97.5Cash Flows from Investing Activities:Capital expenditures
    
    
    (13.6
    )
    
    
    (14.5
    )
    
    
    (16.0
    )Acquisitions, net of cash acquired
    
    
    (15.3
    )
    
    
    (68.3
    )
    
    
    (332.2
    )Acquisition of minority interest
    
    
    (8.0
    )
    
    
    
    
    
    
    Purchase of investments
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.3
    )Proceeds from sale of investments
    
    
    
    
    
    
    
    
    
    
    28.9Proceeds from sale of businesses
    
    
    
    
    
    
    
    
    
    
    2.3Other investing activities
    
    
    0.9
    
    
    
    0.3
    
    
    
    3.2Net cash used in
investing
activities
    
    
    (36.1
    )
    
    
    (82.5
    )
    
    
    (314.1
    )Cash Flows from Financing Activities:Purchase of treasury stock
    
    
    (26.4
    )
    
    
    (108.2
    )
    
    
    (35.6
    )Exercise of stock options
    
    
    0.6
    
    
    
    7.7
    
    
    
    31.7Dividend payments
    
    
    (20.9
    )
    
    
    (23.2
    )
    
    
    (18.8
    )Debt repayment
    
    
    (31.3
    )
    
    
    (6.3
    )
    
    
    Excess tax benefit from exercise of stock options
    
    
    
    
    
    
    
    
    
    
    3.3Net cash used in
financing
activities
    
    
    (78.0
    )
    
    
    (130.0
    )
    
    
    (19.4
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (9.5
    )
    
    
    8.0
    
    
    
    5.5Change in cash and equivalents
    
    
    (38.9
    )
    
    
    (117.0
    )
    
    
    (230.5
    )Cash and cash equivalents  beginning of year
    
    
    135.5
    
    
    
    252.5
    
    
    
    483.0Cash and cash equivalents  end of year
    
    $
    96.6
    
    
    $
    135.5
    
    
    $
    252.5
  46




---



##### 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
 47




---



##### Table of Contents



Inventories.
 Derivative Financial Instruments. Accounting for Derivative Instruments and Hedging Activities
 Other Financial Instruments.
 Property, Plant and Equipment
  Intangible Assets.
  Goodwill. Goodwill and Other Intangible Assets
  48




---



##### Table of Contents



Impairment of Long-Lived Assets Accounting for the
Impairment or Disposal of Long-Lived Assets
 Revenue Recognition Revenue Recognition
 Concentrations of Credit Risk.
 Shipping and Handling Costs.
 Research and Development Costs.
 Advertising Costs.
 Rebates. .
 Income Taxes Accounting for
Income Taxes
 49




---



##### Table of Contents



Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109
 Treasury Stock.
 Stock-Based Compensation. Share-Based Payment Accounting for
Stock-Based Compensation
  Comprehensive Income.
 Weighted Average Basic and Diluted Shares Outstanding.
 Years Ended December 31,(In millions)
    
    2008
    
    2007
    
    2006Weighted average number of basic shares outstanding during the year
    
    
    37.5
    
    
    
    37.0
    
    
    
    34.6Dilutive effect of stock-based compensation plans
    
    
    
    
    
    
    
    
    
    
    0.6Weighted average number of dilutive shares outstanding during the year
    
    
    37.5
    
    
    
    37.0
    
    
    
    35.2
  50




---



##### Table of Contents



Recent Accounting Pronouncements
 Employers Disclosures about Postretirement
Benefit Plan Assets Employers Disclosures about Pensions and Other
Postretirement Benefits,
 Determination of the Useful Life of Intangible
Assets Goodwill and Other Intangible Assets
 Disclosures about Derivative Instruments and
Hedging Activities  an amendment of FASB Statement No. 133 .
 Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51 (
  51




---



##### Table of Contents



Note 3  Business Combinations
 2008 Acquisitions
 Xtreme Accessories, LLC
   (In millions)
    
    AmountInventory
    
    $
    1.4Accounts receivable
    
    
    0.1Fixed assets
    
    
    0.2Intangibles
    
    
    4.6Goodwill
    
    
    5.0Accounts payable
    
    
    (4.0
    )$
    7.3
  WeightedAverage(In millions)
    
    Amount
    
    
    LifeTrade 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
 Consolidated Financial Statements
 52




---



##### Table of Contents



(In millions)
    
    AmountCash consideration
    
    $
    8.0Interest acquired in historical book value of ICJ
    
    
    (7.1
    )Excess purchase price over historical book value
    
    $
    0.9
  (In millions)
    
    AmountCustomer relationships
    
    $
    0.8Inventory
    
    
    0.1Goodwill
    
    
    0.4Deferred tax liability
    
    
    (0.4
    )Excess purchase price over historical book value
    
    $
    0.9
  2007 Acquisitions
 TDK Recording Media
     53




---



##### Table of Contents



(In millions)
    
    AmountCash consideration
    
    $
    54.9Cash consideration to minority interest holders
    
    
    3.9Common stock issued
    
    
    216.7Direct acquisition costs
    
    
    8.2Restructuring and other
    
    
    31.2Total purchase price
    
    $
    314.9
  54




---



##### Table of Contents



(In millions)
    
    AmountCash and cash equivalents
    
    $
    25.8Accounts receivable
    
    
    147.9Inventories
    
    
    91.5Other current assets
    
    
    18.8Property, plant and equipment
    
    
    16.3Goodwill
    
    
    55.9Intangibles
    
    
    132.1Other assets
    
    
    2.8Accounts payable
    
    
    (121.6
    )Accrued payroll
    
    
    (2.2
    )Other current liabilities
    
    
    (39.1
    )Deferred tax liability arising on acquisition
    
    
    (3.8
    )Other liabilities
    
    
    (9.5
    )$
    314.9
  WeightedAverage(In millions)
    
    Amount
    
    
    LifeTrade name
    
    $
    115.0
    
    
    30 yearsCustomer relationships
    
    
    16.0
    
    
    6 yearsOther
    
    
    1.1
    
    
    18 monthsIntangible assets acquired
    
    $
    132.1
   Memcorp
  55




---



##### Table of Contents



(In millions)
    
    AmountCash consideration
    
    $
    31.8Promissory notes
    
    
    37.5Direct acquisition costs
    
    
    1.0Total preliminary purchase price
    
    $
    70.3
  (In millions)
    
    AmountInventories
    
    $
    13.9Other current liabilities
    
    
    (2.3
    )Goodwill
    
    
    33.6Intangibles
    
    
    25.1$
    70.3
  WeightedAverage(In millions)
    
    Amount
    
    
    LifeTrade name
    
    
    13.7
    
    
    12 yearsCustomer relationships
    
    
    10.0
    
    
    6 yearsOther
    
    
    1.4
    
    
    3 yearsIntangible assets acquired
    
    $
    25.1
   56




---



##### Table of Contents



2006 Acquisition
 Memorex International Inc.
     (In millions)
    
    AmountCash and cash equivalents
    
    $
    329.3Direct acquisition costs
    
    
    6.4Memorex restructuring costs
    
    
    7.6Present value of minimum additionalpurchase price consideration
    
    
    4.6$
    347.9
  (In millions)
    
    AmountCash and cash equivalents
    
    $
    3.5Accounts receivable
    
    
    68.3Inventories
    
    
    69.1Other current assets
    
    
    20.1Property, plant and equipment
    
    
    1.7Goodwill
    
    
    55.3Intangibles
    
    
    231.0Other assets
    
    
    0.7Accounts payable
    
    
    (61.8
    )Other current liabilities
    
    
    (29.1
    )Other liabilities
    
    
    (10.9
    )$
    347.9
 57




---



##### Table of Contents



WeightedAverage(In millions)
    
    Amount
    
    
    LifeTrade name
    
    $
    200.0
    
    
    35 yearsCustomer relationships (1)
    
    
    28.9
    
    
    7 yearsOther
    
    
    2.1
    
    
    17 monthsIntangible assets acquired
    
    $
    231.0
 
 (1)
    
    Customer relationships represent an asset without United States tax basis. A deferred tax
liability was recorded in the purchase price allocation to reflect this basis difference.  Pro Forma Disclosure
  Years Ended December 31,(In millions, except per share amounts)
    
    2007
    
    2006Net revenue
    
    $
    2,492.5
    
    
    $
    2,523.5(Loss) income from continuing operations
    
    
    (60.7
    )
    
    
    98.1Net (loss) income
    
    
    (60.7
    )
    
    
    99.3(Loss) earnings per common share  basic:Continuing operations
    
    $
    (1.50
    )
    
    $
    2.37Net income
    
    $
    (1.50
    )
    
    $
    2.40(Loss) earnings per common share  diluted:Continuing operations
    
    $
    (1.50
    )
    
    $
    2.34Net income
    
    $
    (1.50
    )
    
    $
    2.36
  58




---



##### Table of Contents



Note 4  Divestiture
 Divestiture Presented as Discontinued Operations
   Note 5  Supplemental Balance Sheet Information
 As of December 31,(In millions)
    
    2008
    
    
    2007Inventories, netFinished goods
    
    $
    337.1
    
    
    $
    308.7Work in process
    
    
    17.1
    
    
    
    34.7Raw materials and supplies
    
    
    9.0
    
    
    
    22.7Total inventories, net
    
    $
    363.2
    
    
    $
    366.1Other Current AssetsDeferred income taxes
    
    $
    51.5
    
    
    $
    53.1Assets held for sale (1)
    
    
    22.5
    
    
    
    Other
    
    
    64.1
    
    
    
    56.8Total other current assets
    
    $
    138.1
    
    
    $
    109.9Property, Plant and EquipmentLand
    
    $
    1.4
    
    
    $
    10.4Buildings and leasehold improvements
    
    
    119.0
    
    
    
    160.8Machinery and equipment
    
    
    305.3
    
    
    
    370.3Construction in progress
    
    
    1.7
    
    
    
    1.1Total
    
    $
    427.4
    
    
    $
    542.6Less accumulated depreciation and leasehold amortization
    
    
    (305.0
    )
    
    
    (371.1
    )Property, plant and equipment, net
    
    $
    122.4
    
    
    $
    171.5Other AssetsDeferred income taxes
    
    $
    31.4
    
    
    $
    14.9Other
    
    
    11.8
    
    
    
    19.5Total other assets
    
    $
    43.2
    
    
    $
    34.4
 59




---



##### Table of Contents



Note 5  Supplemental Balance Sheet Information
 As of December 31,(In millions)
    
    2008
    
    
    2007Other Current LiabilitiesRebates
    
    $
    75.6
    
    
    $
    104.0Employee separation costs
    
    
    14.5
    
    
    
    23.9Income taxes
    
    
    5.5
    
    
    
    18.2Other
    
    
    99.4
    
    
    
    111.2Total other current liabilities
    
    $
    195.0
    
    
    $
    257.3Other LiabilitiesPension
    
    $
    49.0
    
    
    $
    7.7Deferred income taxes
    
    
    4.2
    
    
    
    2.5Other
    
    
    20.9
    
    
    
    34.8Total other liabilities
    
    $
    74.1
    
    
    $
    45.0Accumulated Other Comprehensive LossCumulative translation adjustment
    
    $
    (54.9
    )
    
    $
    (40.0
    )Pension liability adjustments, net of income tax
    
    
    (28.6
    )
    
    
    (4.4
    )Cash flow hedging and other, net of income tax
    
    
    (1.5
    )
    
    
    0.3Total accumulated other
comprehensive loss
    
    $
    (85.0
    )
    
    $
    (44.1
    )
 AccountsInventory
    
    
    Receivable*Reserves and AllowancesBalance, as of December 31, 2005
    
    $
    10.3
    
    
    $
    10.2Additions
    
    
    3.8
    
    
    
    33.3Write-offs, net of
recoveries
    
    
    (3.8
    )
    
    
    (30.7
    )Balance, as of December 31, 2006
    
    
    10.3
    
    
    
    12.8Additions
    
    
    14.5
    
    
    
    57.4Write-offs, net of
recoveries
    
    
    (4.6
    )
    
    
    (41.9
    )Balance, as of December 31, 2007
    
    $
    20.2
    
    
    $
    28.3Additions
    
    
    16.8
    
    
    
    53.9Write-offs, net of
recoveries
    
    
    (6.8
    )
    
    
    (45.6
    )Balance, as of December 31, 2008
    
    $
    30.2
    
    
    $
    36.6
 
 (1)
    
    As part of our restructuring programs, we ended operations and exited our Anaheim,
California distribution center as well as our Camarillo, California plant, which are being actively
marketed for sale. We met the plan of sale criteria in SFAS 144. Accordingly, the book value of the
building and property, which is less than the estimated net realizable value, was transferred into
other current assets, and is no longer being depreciated.*
    
    Accounts receivable reserves and allowances include estimated amounts for customer returns,
terms discounts and the inability of certain customers to make the required payment. 60




---



##### Table of Contents



Note 6  Intangible Assets and Goodwill
 Intangible Assets
  Trade
    
    
    
    
    
    
    Customer(In millions)
    
    Names
    
    
    Software
    
    
    Relationships
    
    
    Other
    
    
    TotalDecember 31, 2008Cost
    
    $
    333.1
    
    
    $
    56.9
    
    
    $
    62.9
    
    
    $
    8.1
    
    
    $
    461.0Accumulated amortization
    
    
    (23.2
    )
    
    
    (51.9
    )
    
    
    (22.7
    )
    
    
    (6.2
    )
    
    
    (104.0
    )Net
    
    $
    309.9
    
    
    $
    5.0
    
    
    $
    40.2
    
    
    $
    1.9
    
    
    $
    357.0December 31, 2007Cost
    
    $
    330.0
    
    
    $
    54.6
    
    
    $
    60.9
    
    
    $
    8.8
    
    
    $
    454.3Accumulated amortization
    
    
    (12.2
    )
    
    
    (52.7
    )
    
    
    (12.8
    )
    
    
    (5.6
    )
    
    
    (83.3
    )Net
    
    $
    317.8
    
    
    $
    1.9
    
    
    $
    48.1
    
    
    $
    3.2
    
    
    $
    371.0
  (In millions)
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013Amortization expense
    
    $
    22.8
    
    
    $
    21.4
    
    
    $
    21.1
    
    
    $
    20.8
    
    
    $
    15.8
 Goodwill
  Asia
    
    
    Electronic(In millions)
    
    Americas
    
    
    Europe
    
    
    Pacific
    
    
    Products
    
    
    TotalBalance as of December 31, 2006
    
    
    63.3
    
    
    
    2.5
    
    
    
    1.8
    
    
    
    
    
    
    
    67.6Memorex post-closing purchase price
adjustments
    
    
    (7.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7.9
    )Memcorp acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33.6
    
    
    
    33.6TDK Recording Media acquisition
    
    
    11.7
    
    
    
    34.1
    
    
    
    10.1
    
    
    
    
    
    
    
    55.9Adjustments of acquisition tax liabilities
    
    
    (2.7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.7
    )Foreign currency translation adjustment
    
    
    
    
    
    
    2.6
    
    
    
    0.5
    
    
    
    
    
    
    
    3.1Goodwill impairment
    
    
    (54.9
    )
    
    
    (39.2
    )
    
    
    
    
    
    
    
    
    
    
    (94.1
    )Balance as of December 31, 2007
    
    $
    9.5
    
    
    $
    
    
    
    $
    12.4
    
    
    $
    33.6
    
    
    $
    55.5TDK
post-closing purchase
price adjustment
    
    
    (0.1
    )
    
    
    
    
    
    
    (1.1
    )
    
    
    
    
    
    
    (1.2
    )ICJ minority interest acquistion
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.4XtremeMac acquistion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    5.0Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    (1.5
    )
    
    
    
    
    
    
    (1.5
    )Goodwill impairment
    
    
    (9.4
    )
    
    
    
    
    
    
    (10.2
    )
    
    
    (15.1
    )
    
    
    (34.7
    )Balance as of December 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23.5
    
    
    $
    23.5
  61




---



##### Table of Contents



62




---



##### Table of Contents



Note 7  Debt
    Note 8  Restructuring and Other Expense
  Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006RestructuringSeverance and severance related expense
    
    $
    15.7
    
    
    $
    23.6
    
    
    $
    8.6Lease termination costs
    
    
    4.8
    
    
    
    0.6
    
    
    
    1.4Reversal of severance and severance related
expense from prior restructuring programs
    
    
    
    
    
    
    
    
    
    
    (0.9
    )Total restructuring
    
    
    20.5
    
    
    
    24.2
    
    
    
    9.1Pension settlement/ curtailment (Note 11)
    
    
    5.7
    
    
    
    1.4
    
    
    
    Asset impairments
    
    
    5.0
    
    
    
    8.4
    
    
    
    2.8TDK post-closing purchase price adjustment
    
    
    (2.3
    )
    
    
    
    
    
    
    Terminated employment agreement
    
    
    
    
    
    
    (0.7
    )
    
    
    Total
    
    $
    28.9
    
    
    $
    33.3
    
    
    $
    11.9
 63




---



##### Table of Contents



2008 Activity
 Restructuring Programs
 2008 Corporate Redesign Restructuring Program
    Initial
    
    
    
    
    
    
    
    
    
    LiabilityPeriod
    
    
    
    
    
    
    
    
    
    as ofProgram
    
    Additional
    
    Cumulative
    
    December 31,(In millions)
    
    Amounts
    
    Charges
    
    Usage
    
    2008Severance and severance related
    
    $
    4.9
    
    
    $
    
    
    
    $
    (1.0
    )
    
    $
    3.9Lease termination costs
    
    
    0.5
    
    
    
    
    
    
    
    
    
    
    
    0.5
 InitialPeriod
    
    
    
    
    
    
    
    
    
    Balance as ofHeadcount
    
    
    
    
    
    Cumulative
    
    December 31,Amounts
    
    Additions
    
    Reductions
    
    2008Total employees affected
    
    
    203
    
    
    
    
    
    
    
    (64
    )
    
    
    139
 2008 Cost Reduction Restructuring Program
    64




---



##### Table of Contents



Initial
    
    
    
    
    
    
    
    
    
    LiabilityPeriod
    
    
    
    
    
    
    
    
    
    as ofProgram
    
    Additional
    
    Cumulative
    
    December 31,(In millions)
    
    Amounts
    
    Charges
    
    Usage
    
    2008Severance and severance related
    
    $
    5.2
    
    
    $
    
    
    
    $
    (1.7
    )
    
    $
    3.5Lease termination costs
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2
 Initial
    
    
    
    
    
    
    
    
    
    BalancePeriod
    
    
    
    
    
    
    
    
    
    as ofHeadcount
    
    
    
    
    
    Cumulative
    
    December 31,Amounts
    
    Additions
    
    Reductions
    
    2008Total employees affected
    
    
    169
    
    
    
    0
    
    
    
    (99
    )
    
    
    70
 TDK Recording Media Restructuring Costs Program
   Balance
    
    
    
    
    
    
    
    
    
    
    
    
    
    Liabilityas of
    
    
    
    
    
    
    
    
    
    
    
    
    
    as ofDecember 31,
    
    Additional
    
    Currency
    
    Cumulative
    
    December 31,(In millions)
    
    2007
    
    Charges
    
    Impacts
    
    Usage
    
    2008Severance and
severance related
    
    $
    9.4
    
    
    $
    4.2
    
    
    $
    1.1
    
    
    $
    (9.6
    )
    
    $
    5.1Lease termination costs
    
    
    
    
    
    
    1.4
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    1.1
  Initial
    
    
    
    
    
    
    
    
    
    
    
    
    
    LiabilityPeriod
    
    
    
    
    
    
    
    
    
    
    
    
    
    as ofProgram
    
    Additional
    
    Currency
    
    Cumulative
    
    December 31,(In millions)
    
    Amounts
    
    Charges
    
    Impacts
    
    Usage
    
    2008Severance and severance related
    
    $
    11.7
    
    
    $
    4.2
    
    
    $
    1.1
    
    
    $
    (11.9
    )
    
    $
    5.1Lease termination costs
    
    
    
    
    
    
    1.4
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    1.1
 Initial
    
    
    
    
    
    
    
    
    
    BalancePeriod
    
    
    
    
    
    
    
    
    
    as ofHeadcount
    
    
    
    
    
    Cumulative
    
    December 31,Amounts
    
    Additions
    
    Reductions
    
    2008Total employees affected
    
    
    172
    
    
    
    50
    
    
    
    (186
    )
    
    
    36
 2007 Cost Reduction Restructuring Program
  65




---



##### Table of Contents



Liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    Liabilityas of
    
    
    
    
    
    
    
    
    
    
    
    
    
    as ofDecember 31,
    
    Additional
    
    Currency
    
    Cumulative
    
    December 31,(In millions)
    
    2007
    
    Charges
    
    Impacts
    
    Usage
    
    2008Severance and severance related
    
    $
    13.6
    
    
    $
    1.1
    
    
    $
    0.1
    
    
    $
    (12.8
    )
    
    $
    2.0Lease termination costs
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4
  Initial
    
    
    
    
    
    
    
    
    
    
    
    
    
    LiabilityPeriod
    
    
    
    
    
    
    
    
    
    
    
    
    
    as ofProgram
    
    Additional
    
    Currency
    
    Cumulative
    
    December 31,(In millions)
    
    Amounts
    
    Charges
    
    Impacts
    
    Usage
    
    2008Severance and severance related
    
    $
    15.1
    
    
    $
    7.3
    
    
    $
    0.1
    
    
    $
    (20.5
    )
    
    $
    2.0Lease termination costs
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    0.4
 Initial
    
    
    
    
    
    
    
    
    
    BalancePeriod
    
    
    
    
    
    
    
    
    
    as ofHeadcount
    
    
    
    
    
    Cumulative
    
    December 31,Amounts
    
    Additions
    
    Reductions
    
    2008Total employees affected
    
    
    675
    
    
    
    160
    
    
    
    (795
    )
    
    
    40
 2006 Imation and Memorex Restructuring Program
   Other
 Pension Settlement / Curtailment
  66




---



##### Table of Contents



Asset Impairments
  TDK Post-Closing Purchase Price Adjustment
  2007 Activity
 Restructuring Programs
 2007 Cost Reduction Restructuring Program
    TDK Recording Media Restructuring Costs
 Recognition of Liabilities in Connection with a Purchase Business Combination
 2006 Imation and Memorex Restructuring Program
  Other
 Asset Impairments
  Pension Curtailment
  67




---



##### Table of Contents



Terminated Employment Agreement
   2006 Activity
 Restructuring Programs
 2006 Imation and Memorex Restructuring Program
     68




---



##### Table of Contents



Prior Restructuring Programs
  Other
 Asset Impairments
  Note 9  Income Taxes
    (In millions)
    
    AmountBalance at January 1, 2007
    
    
    7.3Additions for tax positions of prior years
    
    
    7.0Reductions for tax positions of prior years
    
    
    (0.2
    )Settlements with taxing authorities
    
    
    (3.6
    )Lapse of the statue of limitations
    
    
    (1.0
    )Balance at December 31, 2007
    
    $
    9.5Additions for tax positions of prior years
    
    
    1.1Lapse of the statue of limitations
    
    
    (0.1
    )Balance at December 31, 2008
    
    $
    10.5
    69




---



##### Table of Contents



Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006U.S.
    
    $
    (51.6
    )
    
    $
    (25.9
    )
    
    $
    98.0International
    
    
    16.3
    
    
    
    (8.7
    )
    
    
    13.8Total
    
    $
    (35.3
    )
    
    $
    (34.6
    )
    
    $
    111.8
  Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006CurrentFederal
    
    $
    (9.4
    )
    
    $
    14.4
    
    
    $
    20.9State
    
    
    (1.8
    )
    
    
    1.8
    
    
    
    3.3International
    
    
    9.0
    
    
    
    10.3
    
    
    
    2.7DeferredFederal
    
    
    (5.7
    )
    
    
    (10.1
    )
    
    
    16.5State
    
    
    (0.5
    )
    
    
    (1.5
    )
    
    
    1.2International
    
    
    6.4
    
    
    
    0.9
    
    
    
    (8.0
    )Total
    
    $
    (2.0
    )
    
    $
    15.8
    
    
    $
    36.6
   As of December 31,(In millions)
    
    2008
    
    
    2007Accounts receivable allowances
    
    $
    12.6
    
    
    $
    12.2Inventories
    
    
    14.7
    
    
    
    13.9Payroll, pension and severance (short-term)
    
    
    10.9
    
    
    
    13.7State tax credit carryforwards
    
    
    5.6
    
    
    
    8.2Net operating loss carryforwards
    
    
    23.4
    
    
    
    25.4Accrued liabilities and other reserves
    
    
    21.7
    
    
    
    19.6Pension (long-term)
    
    
    15.9
    
    
    
    Research and Development
    
    
    6.0
    
    
    
    9.7Other, net
    
    
    
    
    
    
    2.5Gross deferred tax assets
    
    
    110.8
    
    
    
    105.2Valuation allowance
    
    
    (18.6
    )
    
    
    (16.5
    )Deferred tax assets
    
    
    92.2
    
    
    
    88.7Property, plant and equipment
    
    
    (8.4
    )
    
    
    (14.6
    )Intangible assets
    
    
    (5.1
    )
    
    
    (7.2
    )Other
    
    
    
    
    
    
    (1.4
    )Deferred tax liabilities
    
    
    (13.5
    )
    
    
    (23.2
    )Net deferred tax assets
    
    $
    78.7
    
    
    $
    65.5
 70




---



##### Table of Contents



Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Tax at statutory U.S. tax rate
    
    $
    (12.3
    )
    
    $
    (12.1
    )
    
    $
    39.1State income taxes, net of federal benefit
    
    
    (1.0
    )
    
    
    1.2
    
    
    
    3.1Net effect of international operations
    
    
    (2.6
    )
    
    
    (0.6
    )
    
    
    1.4Valuation allowances
    
    
    2.1
    
    
    
    (2.5
    )
    
    
    (0.7
    )International audit settlements
    
    
    
    
    
    
    
    
    
    
    (10.4
    )Tax on foreign earnings
    
    
    6.9
    
    
    
    2.4
    
    
    
    8.2Goodwill impairment
    
    
    3.7
    
    
    
    28.9
    
    
    
    Other
    
    
    1.2
    
    
    
    (1.5
    )
    
    
    (4.1
    )Income tax provision
    
    $
    (2.0
    )
    
    $
    15.8
    
    
    $
    36.6
    71




---



##### Table of Contents



Note 10  Retirement Plans
  Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132(R)
  , Employers Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits
  72




---



##### Table of Contents



United States
    
    
    InternationalAs of December 31,
    
    
    As of December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Change in benefit obligationBenefit obligation, beginning of year
    
    $
    117.5
    
    
    $
    131.9
    
    
    $
    70.0
    
    
    $
    73.1Acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.7Service cost
    
    
    5.6
    
    
    
    6.6
    
    
    
    0.6
    
    
    
    0.5Interest cost
    
    
    6.5
    
    
    
    7.4
    
    
    
    3.6
    
    
    
    3.6Actuarial (gain) loss
    
    
    0.5
    
    
    
    0.9
    
    
    
    (5.5
    )
    
    
    (10.2
    )Benefits paid
    
    
    (20.9
    )
    
    
    (30.7
    )
    
    
    (2.4
    )
    
    
    (2.5
    )Foreign exchange rate changes
    
    
    
    
    
    
    
    
    
    
    (9.3
    )
    
    
    4.8Curtailments
    
    
    1.0
    
    
    
    1.4
    
    
    
    
    
    
    
    Projected benefit obligation, end of year
    
    $
    110.2
    
    
    $
    117.5
    
    
    $
    57.0
    
    
    $
    70.0Change in plan assetsFair value of plan assets, beginning of year
    
    $
    111.6
    
    
    $
    128.2
    
    
    $
    76.0
    
    
    $
    68.0Actual return on plan assets
    
    
    (31.6
    )
    
    
    13.1
    
    
    
    (6.0
    )
    
    
    3.2Foreign exchange rate changes
    
    
    
    
    
    
    
    
    
    
    (11.2
    )
    
    
    2.7Company contributions
    
    
    5.0
    
    
    
    1.0
    
    
    
    2.6
    
    
    
    4.6Benefits paid
    
    
    (20.9
    )
    
    
    (30.7
    )
    
    
    (2.4
    )
    
    
    (2.5
    )Fair value of plan assets, end of year
    
    $
    64.1
    
    
    $
    111.6
    
    
    $
    59.0
    
    
    $
    76.0Funded status of the plan, end of year
    
    $
    (46.1
    )
    
    $
    (5.9
    )
    
    $
    2.0
    
    
    $
    6.0Accumulated benefit obligation
    
    $
    108.8
    
    
    $
    116.2
    
    
    $
    54.4
    
    
    $
    67.7
  United States
    
    InternationalAs of December 31,
    
    As of December 31,(In millions)
    
    2008
    
    2007
    
    2008
    
    2007Noncurrent assets
    
    $
    
    
    
    $
    
    
    
    $
    4.9
    
    
    $
    7.8Noncurrent liabilities
    
    
    (46.1
    )
    
    
    (5.9
    )
    
    
    (2.9
    )
    
    
    (1.8
    )Accumulated other
comprehensive loss
(gain)  pre-tax
    
    
    43.2
    
    
    
    8.1
    
    
    
    4.6
    
    
    
    (0.6
    )
  United States
    
    
    InternationalAs of December 31,
    
    
    As of December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Net actuarial loss
    
    $
    42.7
    
    
    $
    7.3
    
    
    $
    6.5
    
    
    $
    0.7Prior service cost (credit)
    
    
    0.5
    
    
    
    0.8
    
    
    
    (4.0
    )
    
    
    (3.6
    )Transition asset obligation
    
    
    
    
    
    
    
    
    
    
    2.1
    
    
    
    2.3Total
    
    $
    43.2
    
    
    $
    8.1
    
    
    $
    4.6
    
    
    $
    (0.6
    )
 73




---



##### Table of Contents



United States
    
    InternationalAs of December 31,
    
    As of December 31,(In millions)
    
    2008
    
    2007
    
    2008
    
    2007Projected benefit obligation, end of year
    
    $
    110.2
    
    
    $
    117.5
    
    
    $
    9.7
    
    
    $
    Accumulated benefit obligation, end of year
    
    
    108.8
    
    
    
    116.2
    
    
    
    7.6
    
    
    
    Plan assets at fair value, end of year
    
    
    64.1
    
    
    
    111.6
    
    
    
    6.7
    
    
    
    
  United States
    
    
    InternationalYears Ended December 31,
    
    
    Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007
    
    
    2006Service cost
    
    $
    5.6
    
    
    $
    6.6
    
    
    $
    8.3
    
    
    $
    0.8
    
    
    $
    0.7
    
    
    $
    0.5Interest cost
    
    
    6.5
    
    
    
    7.4
    
    
    
    7.0
    
    
    
    3.6
    
    
    
    3.6
    
    
    
    3.3Expected return on plan assets
    
    
    (7.9
    )
    
    
    (9.7
    )
    
    
    (9.8
    )
    
    
    (4.5
    )
    
    
    (4.1
    )
    
    
    (3.6
    )Amortization of net actuarial loss
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    0.3
    
    
    
    0.2
    
    
    
    0.3Amortization of prior service cost
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    (0.3
    )
    
    
    
    
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    4.3
    
    
    $
    4.5
    
    
    $
    6.1
    
    
    $
    0.2
    
    
    $
    0.4
    
    
    $
    0.5Settlements and curtailments
    
    
    5.7
    
    
    
    2.4
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    0.5Total pension cost
    
    $
    10.0
    
    
    $
    6.9
    
    
    $
    7.3
    
    
    $
    0.2
    
    
    $
    0.4
    
    
    $
    1.0
   United States
    
    InternationalAs of December 31,
    
    As of December 31,2008
    
    2007
    
    2008
    
    2007Discount rate
    
    
    5.75
    %
    
    
    6.00
    %
    
    
    5.70
    %
    
    
    5.40
    %Rate of compensation increase
    
    
    4.75
    %
    
    
    4.75
    %
    
    
    3.70
    %
    
    
    3.70
    %
  United States
    
    InternationalAs of December 31,
    
    As of December 31,2008
    
    2007
    
    2006
    
    2008
    
    2007
    
    2006Discount rate
    
    
    6.00
    %
    
    
    5.90
    %
    
    
    5.50
    %
    
    
    5.13
    %
    
    
    4.75
    %
    
    
    4.45
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    5.73
    %
    
    
    5.75
    %
    
    
    5.70
    %Rate of compensation increase
    
    
    4.75
    %
    
    
    4.75
    %
    
    
    4.75
    %
    
    
    3.77
    %
    
    
    3.75
    %
    
    
    3.40
    %
  74




---



##### Table of Contents



United States
    
    InternationalAs of December 31,
    
    As of December 31,2008
    
    2007
    
    2008
    
    2007Equity securities
    
    
    59
    %
    
    
    59
    %
    
    
    30
    %
    
    
    38
    %Debt securities
    
    
    22
    %
    
    
    19
    %
    
    
    38
    %
    
    
    36
    %Other
    
    
    19
    %
    
    
    22
    %
    
    
    32
    %
    
    
    26
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   (In millions)
    
    United States
    
    International2009
    
    $
    38.8
    
    
    $
    2.22010
    
    $
    4.2
    
    
    $
    2.52011
    
    $
    4.7
    
    
    $
    2.92012
    
    $
    5.9
    
    
    $
    2.82013
    
    $
    6.4
    
    
    $
    3.02014-2017
    
    $
    37.7
    
    
    $
    16.6
 Note 11  Employee Savings and Stock Ownership Plans
    75




---



##### Table of Contents



Note 12  Stock-Based Compensation
       76




---



##### Table of Contents



Stock Options
  2008
    
    2007
    
    2006Volatility
    
    
    31
    %
    
    
    29
    %
    
    
    33
    %Risk-free interest rate
    
    
    3.04
    %
    
    
    4.60
    %
    
    
    4.99
    %Expected life (months)
    
    
    61
    
    
    
    63
    
    
    
    58Dividend yield
    
    
    2.6
    %
    
    
    1.7
    %
    
    
    1.3
    %
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateStock
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price
    
    
    Life (Years)
    
    
    ValueOutstanding December 31, 2006
    
    
    3,378,979
    
    
    $
    34.48Granted
    
    
    606,312
    
    
    
    37.54Exercised
    
    
    (293,954
    )
    
    
    26.24Canceled
    
    
    (80,385
    )
    
    
    33.08Forfeited
    
    
    (461,191
    )
    
    
    39.34Outstanding December 31, 2007 *
    
    
    3,149,761
    
    
    
    35.16
    
    
    
    6.0
    
    
    $
    Granted
    
    
    1,237,513
    
    
    
    24.39Exercised
    
    
    (46,330
    )
    
    
    18.33Canceled
    
    
    (89,315
    )
    
    
    35.98Forfeited
    
    
    (147,873
    )
    
    
    35.32Outstanding December 31, 2008 *
    
    
    4,103,756
    
    
    $
    32.09
    
    
    
    6.2
    
    
    $
    Exercisable as of December 31,
2008 *
    
    
    2,270,854
    
    
    $
    34.48
    
    
    
    4.2
    
    
    $
    
 
 *
    
    There was no aggregate intrinsic value at December 31, 2008 and 2007 as our stock price of
$13.57 on December 31, 2008 and $21.00 on December 31, 2007 was below the majority of the
outstanding stock options exercise price. 77




---



##### Table of Contents



Outstanding Options
    
    
    Exercisable OptionsWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRemaining
    
    
    Average
    
    
    
    
    
    
    AverageRange of Exercise
    
    Stock
    
    
    Contractual
    
    
    Exercise
    
    
    Stock
    
    
    ExercisePrices
    
    Options
    
    
    Life (Years)
    
    
    Price
    
    
    Options
    
    
    Price$14.16 to $19.20
    
    
    66,084
    
    
    
    0.6
    
    
    $
    17.45
    
    
    
    65,084
    
    
    $
    17.43$19.21 to $23.95
    
    
    217,482
    
    
    
    3.1
    
    
    
    23.04
    
    
    
    194,482
    
    
    
    23.23$23.96 to $28.70
    
    
    1,185,013
    
    
    
    9.2
    
    
    
    24.47
    
    
    
    750
    
    
    
    25.42$28.71 to $39.38
    
    
    1,754,727
    
    
    
    5.4
    
    
    
    34.44
    
    
    
    1,321,313
    
    
    
    33.72$39.39 to $41.75
    
    
    838,550
    
    
    
    4.9
    
    
    
    40.81
    
    
    
    667,200
    
    
    
    40.61$41.76 to $46.97
    
    
    41,900
    
    
    
    7.5
    
    
    
    44.38
    
    
    
    22,025
    
    
    
    44.28$14.16 to $46.97
    
    
    4,103,756
    
    
    
    6.2
    
    
    $
    32.09
    
    
    
    2,270,854
    
    
    $
    34.48
  Restricted Stock
  WeightedAverageGrantDate FairRestricted
    
    
    Value PerStock
    
    
    ShareOutstanding December 31, 2006
    
    
    214,163
    
    
    $
    38.71Granted
    
    
    118,143
    
    
    
    38.08Vested
    
    
    (69,834
    )
    
    
    38.57Forfeited
    
    
    (55,243
    )
    
    
    38.33Outstanding December 31, 2007
    
    
    207,229
    
    
    
    38.52Granted
    
    
    206,261
    
    
    
    24.05Vested
    
    
    (80,219
    )
    
    
    37.85Forfeited
    
    
    (28,760
    )
    
    
    37.61Outstanding December 31, 2008
    
    
    304,511
    
    
    $
    28.98
  78




---



##### Table of Contents



Note 13  Fair Value Measurements
 Fair Value Measurements
 Application of FASB Statement No. 157 to FASB
Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for
Purposes of Lease Classification or Measurement under Statement 13 Effective Date of FASB Statement No. 157 Accounting for Leases
  Fair value of financial instruments
  Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis:
  Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:
    79




---



##### Table of Contents



Cash Flow Hedges
   Other Hedges
    Quoted prices in
    
    
    Significantactive markets
    
    
    otherfor identical
    
    
    observable
    
    
    UnobservableDecember
    
    
    assets
    
    
    inputs
    
    
    inputs(In millions)
    
    31, 2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivative assets
    
    $
    1.9
    
    
    $
    1.9
    
    
    $
    
    
    
    $
    Derivative liabilities
    
    
    (4.7
    )
    
    
    (4.7
    )
    
    
    
    
    
    
    Total
    
    $
    (2.8
    )
    
    $
    (2.8
    )
    
    $
    
    
    
    $
    
   Note 14  Leases
  (In millions)
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    Thereafter
    
    
    TotalMinimum lease
payments
    
    $
    10.3
    
    
    $
    8.6
    
    
    $
    6.7
    
    
    $
    3.3
    
    
    $
    1.5
    
    
    $
    0.8
    
    
    $
    31.2
 80




---



##### Table of Contents



Note 15  Shareholders Equity
      Note 16  Business Segment Information and Geographic Data
   81




---



##### Table of Contents



Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Net RevenueAmericas
    
    $
    789.4
    
    
    $
    959.3
    
    
    $
    838.9Europe
    
    
    685.2
    
    
    
    655.7
    
    
    
    524.3Asia Pacific
    
    
    434.4
    
    
    
    328.9
    
    
    
    221.5Electronic Products
    
    
    245.6
    
    
    
    118.1
    
    
    
    Total
    
    $
    2,154.6
    
    
    $
    2,062.0
    
    
    $
    1,584.7
 Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Operating IncomeAmericas
    
    $
    73.0
    
    
    $
    82.1
    
    
    $
    128.9Europe
    
    
    22.3
    
    
    
    45.2
    
    
    
    48.1Asia Pacific
    
    
    28.7
    
    
    
    23.5
    
    
    
    17.1Electronic Products
    
    
    (13.4
    )
    
    
    5.5
    
    
    
    Corporate and unallocated
    
    
    (138.4
    )
    
    
    (189.3
    )
    
    
    (85.9
    )Total
    
    $
    (27.8
    )
    
    $
    (33.0
    )
    
    $
    108.2
   Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Optical products
    
    $
    1,025.2
    
    
    $
    954.2
    
    
    $
    680.3Magnetic products
    
    
    644.4
    
    
    
    703.9
    
    
    
    660.8Flash media products
    
    
    99.2
    
    
    
    157.1
    
    
    
    146.6Electronic products, accessories and other
    
    
    385.8
    
    
    
    246.8
    
    
    
    97.0Total
    
    $
    2,154.6
    
    
    $
    2,062.0
    
    
    $
    1,584.7
 82




---



##### Table of Contents



Years Ended December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Net RevenueUnited States
    
    $
    905.0
    
    
    $
    958.2
    
    
    $
    722.7International
    
    
    1,249.6
    
    
    
    1,103.8
    
    
    
    862.0Total
    
    $
    2,154.6
    
    
    $
    2,062.0
    
    
    $
    1,584.7
 As of December 31,(In millions)
    
    2008
    
    
    2007
    
    
    2006Long-Lived AssetsUnited States
    
    $
    116.9
    
    
    $
    167.0
    
    
    $
    174.6International
    
    
    5.5
    
    
    
    4.5
    
    
    
    3.4Total
    
    $
    122.4
    
    
    $
    171.5
    
    
    $
    178.0
 Note 17  Commitments and Contingencies
 Accounting for
Contingencies
  Philips
  83




---



##### Table of Contents



SanDisk
   84




---



##### Table of Contents



Environmental Matters
  Note 18  Related Party Transactions
   85




---



##### Table of Contents



Note 19  Quarterly Data (Unaudited)
 (In millions, except per share amounts)
    
    First
    
    Second
    
    Third
    
    Fourth
    
    Total(1)2008Net revenue
    
    $
    530.9
    
    
    $
    547.0
    
    
    $
    527.5
    
    
    $
    549.2
    
    
    $
    2,154.6Gross profit
    
    
    98.7
    
    
    
    94.9
    
    
    
    81.6
    
    
    
    74.8
    
    
    
    350.0Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34.7
    
    
    
    34.7Operating (loss) income
    
    
    19.5
    
    
    
    12.2
    
    
    
    (8.7
    )
    
    
    (50.8
    )
    
    
    (27.8
    )Net income (loss)
    
    
    11.0
    
    
    
    7.2
    
    
    
    (5.9
    )
    
    
    (45.6
    )
    
    
    (33.3
    )Earnings (loss) per common share:Basic
    
    $
    0.29
    
    
    $
    0.19
    
    
    $
    (0.16
    )
    
    $
    (1.22
    )
    
    $
    (0.89
    )Diluted
    
    
    0.29
    
    
    
    0.19
    
    
    
    (0.16
    )
    
    
    (1.22
    )
    
    
    (0.89
    )2007Net revenue
    
    $
    421.9
    
    
    $
    412.8
    
    
    $
    525.5
    
    
    $
    701.8
    
    
    $
    2,062.0Gross profit
    
    
    81.8
    
    
    
    72.5
    
    
    
    85.7
    
    
    
    115.9
    
    
    
    355.9Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94.1
    
    
    
    94.1Operating (loss) income
    
    
    23.6
    
    
    
    (2.6
    )
    
    
    16.3
    
    
    
    (70.3
    )
    
    
    (33.0
    )Net income (loss)
    
    
    15.7
    
    
    
    (1.4
    )
    
    
    9.4
    
    
    
    (74.1
    )
    
    
    (50.4
    )Earnings (loss) per common share:Basic
    
    $
    0.45
    
    
    $
    (0.04
    )
    
    $
    0.24
    
    
    $
    (1.91
    )
    
    $
    (1.36
    )Diluted
    
    
    0.44
    
    
    
    (0.04
    )
    
    
    0.24
    
    
    
    (1.91
    )
    
    
    (1.36
    )
 
 (1)
    
    The sum of the quarterly earnings per share may not equal the annual earnings per share due
to changes in average shares outstanding. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Controls.
 Managements Report on Internal Control over Financial Reporting
  86




---



##### Table of Contents



Attestation Report of Independent Registered Public Accounting Firm.
 
 Item 9B. Other Information.
  87




---



##### Table of Contents



PART III
  
 Item 10. Directors, Executive Officers and Corporate Governance.
 Board of Directors
         Business
    88




---



##### Table of Contents



Item 11. Executive Compensation.
 Form 10-K.
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  Equity Compensation Plan Information
  89




---



##### Table of Contents



Number ofsecuritiesremainingavailable forfuture issuanceunder equityNumber of securities
    
    
    Weighted-average
    
    
    compensationto be issued upon
    
    
    exercise price of
    
    
    plans (excludingexercise of
    
    
    outstanding
    
    
    securitiesEquity compensation plans approved by
    
    outstanding options,
    
    
    options,
    
    
    reflected in theshareholders
    
    warrants and rights
    
    
    warrants and rights
    
    
    first column)2008 Stock Incentive Plan
    
    
    150,555
    (1)
    
    $
    23.90
    
    
    
    3,680,3462005 Stock Incentive Plan
    
    
    2,134,705
    (1)
    
    $
    31.95
    
    
    
    
    (2)2000 Stock Incentive Plan
    
    
    1,444,194
    (1)
    
    $
    33.97
    
    
    
    
    (2)1996 Employee Stock Incentive Program
    
    
    127,709
    
    
    $
    23.48
    
    
    
    
    (2)1996 Directors Stock Compensation Program
    
    
    246,593
    
    
    $
    31.65
    
    
    
    
    (2)Total
    
    
    4,103,756
    
    
    $
    32.09
    
    
    
    3,680,346
 
 (1)
    
    This number does not include restricted stock of 163,661 shares
under our 2008 Stock Incentive Plan, 129,650 shares under our
2005 Stock Incentive Plan and 11,200 shares under our 2000 Stock
Incentive Plan.(2)
    
    No additional awards may be granted under our 2005 Stock
Incentive Plan, 2000 Stock Incentive Plan, 1996 Employee Stock
Incentive Plan or 1996 Directors Stock Compensation Program. 
 Item 13. Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14. Principal Accountant Fees and Services.
  90




---



##### Table of Contents



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
    
    
    42Consolidated Statements of Operations for the Years Ended December
31, 2008, 2007 and 2006
    
    
    43Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    44Consolidated Statements of Shareholders Equity and Comprehensive
Income (Loss) for the Years Ended December 31, 2008, 2007 and 2006
    
    
    45Consolidated Statements of Cash Flows for the Years Ended December
31, 2008, 2007 and 2006
    
    
    46Notes to Consolidated Financial Statements
    
    
    47
 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 (incorporated by reference to Exhibit 3.1 of Imations Form 10-Q
for the quarter ended March 31, 2007)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)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)
 91




---



##### Table of Contents



Number
    
    Description of Exhibit10.2
    
    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)10.3
    
    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)10.7
    
    Credit Agreement between Imation and a Consortium of Lenders dated as of March 29, 2006 (incorporated
by reference to Exhibit 10.1 to Imations Form 8-K Current Report filed on April 5, 2006)10.8
    
    Amendment to the Credit Agreement between Imation Corp. and Consortium of Lenders dated as of July 24,
2007 (incorporated by reference to Exhibit 10.1 to Imations Form 8-K Current Report filed on July 30,
2007)10.9
    
    Second amendment to Credit Agreement between Imation Corp. and a consortium of lenders dated as of
April 25, 2008 (incorporated by reference to Exhibit 10.1 to Imations Form 10-Q for the quarter ended
March 31, 2008)10.10*
    
    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)10.11*
    
    Employment Closure Agreement between Imation Corp. and Mr. Henderson (incorporated by reference to
Exhibit 10.1 to Imations Form 8-K Current Report filed on April 2, 2007)10.12*
    
    Amendment to Mr. Hendersons Performance Option Agreement (incorporated by reference to Exhibit 10.3 to
Imations Form 8-K Current Report filed on February 13, 2006)10.13*
    
    Amendment to Employment Agreement between Imation and Bruce Henderson (incorporated by reference to
Exhibit 10.1 to Imations Form 8-K Current Report filed on March 3, 2006)10.14*
    
    Imation 1996 Employee Stock Incentive Program (incorporated by reference to Exhibit 10.8 to
Registration Statement on Form 10, No. 1-14310)10.15*
    
    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)10.16*
    
    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)10.17*
    
    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)10.18*
    
    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)10.19*
    
    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)10.20*
    
    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)10.21*
    
    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)10.22*
    
    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)10.23*
    
    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)10.24*
    
    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)10.25*
    
    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)10.26*
    
    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)10.27*
    
    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)10.28*
    
    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)10.29*
    
    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)10.30*
    
    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)10.31*
    
    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)
 92




---



##### Table of Contents



Number
    
    Description of Exhibit10.32*
    
    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)10.33*
    
    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)10.34*
    
    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)10.35*
    
    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)10.36*
    
    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)10.37*
    
    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)10.38*
    
    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)10.39*
    
    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)10.40*
    
    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)10.41*
    
    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)10.42*
    
    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)10.43*
    
    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)10.44*
    
    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)10.45*
    
    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)10.46*
    
    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)10.47*
    
    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)10.48*
    
    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)10.49*
    
    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)10.50*
    
    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)10.51*
    
    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)10.52*
    
    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)10.53*
    
    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)10.54*
    
    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)10.55*
    
    Description of 2008 Annual Bonus Plan Target Approval (incorporated by reference to Imations Form 8-K
Current Report filed on January 25, 2008)10.56*
    
    Description of 2009 Annual Bonus Plan Target Approval (incorporated by reference to Imations Form 8-K
Current Report filed on February 17, 2008)10.57*
    
    Form of Amended and Restated Severance Agreement with Executive Officers (incorporated by reference to
Imations Form 10-K for the year ended December 31, 2007)10.58*
    
    Directors Compensation Program, as amended (incorporated by reference to Imations Form 10-K for the
year ended December 31, 2007)10.59*
    
    Imation Excess Benefit Plan (incorporated by reference to Exhibit 10.10 to Registration Statement on
Form 10, No. 1-14310)10.60*
    
    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, 2008)
 93




---



##### Table of Contents



Number
    
    Description of Exhibit21.1
    
    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. 
 SIGNATURES
  IMATION CORP.By:
    /s/ FRANK P. RUSSOMANNOFrank P. RussomannoPresident and Chief Executive Officer  94




---



##### Table of Contents



Signature
    
    Title
    
    Date/s/ FRANK P. RUSSOMANNO
    
    President and Chief Executive Officer
    
    February 27, 2009Frank P. Russomanno
    
    (Principal
Executive Officer)/s/ PAUL R. ZELLER
    
    Vice President and Chief Financial Officer
    
    February 27, 2009Paul R. Zeller
    
    (Principal
Financial Officer)/s/ SCOTT J. ROBINSON
    
    Corporate Controller and Chief Accounting Officer
    
    February 27, 2009Scott J. Robinson
    
    (Principal
Accounting Officer)*
    
    Director
    
    February 27, 2009Michael S. Fields*
    
    Director
    
    February 27, 2009Charles A. Haggerty*
    
    Director
    
    February 27, 2009Linda W. Hart*
    
    Director
    
    February 27, 2009Ronald T. LeMay*
    
    Director
    
    February 27, 2009Raymond Leung*
    
    Director
    
    February 27, 2009L. White Matthews, III*
    
    Director
    
    February 27, 2009Charles Reich*
    
    Director
    
    February 27, 2009Glen A. Taylor*
    
    Director
    
    February 27, 2009Daryl J. White
 *By:
    
    /s/ JOHN L. SULLIVANJohn L. SullivanAttorney-in-fact
 95




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibit21.1
    
    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
 96