UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 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 WayOakdale, Minnesota
    
    55128(Address of principal executive offices)
    
    (Zip Code)
 (651) 704-4000  (Registrants telephone number, including area code)
 
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 per share
    
    New York Stock Exchange, Inc.;Chicago Stock Exchange, IncorporatedPreferred Stock Purchase Rights
    
    New York Stock Exchange, Inc.;Chicago Stock Exchange, Incorporated
 
 Securities registered pursuant to Section 12(g) of the Act: None
 
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  Large accelerated filer o
    
    Accelerated filer þ
    
    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).
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   DOCUMENTS INCORPORATED BY REFERENCE




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IMATION CORP.
 FORM 10-K
 FOR THE YEAR ENDED DECEMBER 31, 2009
 TABLE OF CONTENTS
 PagePART IItem 1
    
    Business
    
    
    3Item 1A
    
    Risk Factors
    
    
    11Item 1B
    
    Unresolved Staff Comments
    
    
    15Item 2
    
    Properties
    
    
    16Item 3
    
    Legal Proceedings
    
    
    17Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    19PART IIItem 5
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    20Item 6
    
    Selected Financial Data
    
    
    21Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    22Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 8
    
    Financial Statements and Supplementary Data
    
    
    44Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    88Item 9A
    
    Controls and Procedures
    
    
    88Item 9B
    
    Other Information
    
    
    89PART IIIItem 10
    
    Directors, Executive Officers and Corporate Governance
    
    
    90Item 11
    
    Executive Compensation
    
    
    91Item 12
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    91Item 13
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    92Item 14
    
    Principal Accountant Fees and Services
    
    
    92PART IVItem 15
    
    Exhibits and Financial Statement Schedules
    
    
    93Signatures
    
    
    97
  2




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PART I
 
 Item 1.
    
    Business.
 General
    Our Products
 Data Storage Products
   3




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Consumer Electronic Products, Accessories and Other
 ® ®
   Years Ended December 31,2009
    
    
    2008
    
    
    2007% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of(Dollars in millions)
    
    Revenue
    
    
    Total
    
    
    Revenue
    
    
    Total
    
    
    Revenue
    
    
    TotalOptical
    
    $
    738.0
    
    
    
    44.7
    %
    
    $
    851.6
    
    
    
    43.0
    %
    
    $
    788.0
    
    
    
    41.6
    %Magnetic
    
    
    474.2
    
    
    
    28.7
    %
    
    
    644.4
    
    
    
    32.5
    %
    
    
    703.9
    
    
    
    37.1
    %Flash
    
    
    90.0
    
    
    
    5.5
    %
    
    
    99.2
    
    
    
    5.0
    %
    
    
    157.1
    
    
    
    8.3
    %Electronic products, accessories and other
    
    
    347.3
    
    
    
    21.1
    %
    
    
    385.8
    
    
    
    19.5
    %
    
    
    246.8
    
    
    
    13.0
    %Total
    
    $
    1,649.5
    
    
    
    
    
    
    $
    1,981.0
    
    
    
    
    
    
    $
    1,895.8
 Our Brands
   4




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Business Segments
  Data Storage Products and Accessories
     Consumer Electronic Products and Accessories
  5




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Customers, Marketing and Distribution
    Market and Competition
  6




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Manufacturing
   7




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Raw Materials and Other Purchased Products
    Research, Development and Engineering
  8




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Intellectual Property
   Employees
  Environmental Matters
  International Operations
  Risk Factors
 Executive Officers of the Registrant
  Frank P. Russomanno
 9




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James C. Ellis,
 Mark E. Lucas
 Scott J. Robinson,
 John L. Sullivan,
 Paul R. Zeller,
 Availability of SEC Reports
   10




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Item 1A.
    
    Risk Factors.
  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.
 Our financial success depends in part on our ability to profitably grow our new product
offerings.
 We report our results of operations based on our determinations of the amount of taxes owed in
the various tax jurisdictions in which we operate and are subject to changes in tax laws,
regulations, and subject to inspection by various tax authorities.
 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.
   11




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Impairment in the carrying value of goodwill or other assets could negatively affect our
consolidated results of operations and net worth.
   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.
 Global economic conditions and uncertainty could adversely affect our revenue and gross
margin.
 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 .
 12




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If we do not successfully manage our multiple brands on a global basis, it could have a
material impact on our financial results.
 If we do not achieve the expected benefits from strategic relationships, our financial results
may be negatively impacted .
 Our financial success depends upon our ability to manufacture, source and deliver products to
our customers at acceptable quality, volume and cost levels.
 Significant changes in discount rates, rates of return on pension assets, mortality tables and
other factors could affect our future earnings, equity and pension funding requirements.
 We use a variety of raw materials, supplier-provided parts, components, sub-systems and third
party contract manufacturing services in our businesses and significant shortages, supplier
capacity constraints, supplier production disruptions or price increases could increase
 13




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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.
   Significant litigation matters could result in large costs and distraction to our business.
 Our stock price may be subject to significant volatility due to our results or market trends .
 We may be affected by  legal, regulatory, or market responses to actual or perceived global
climate change.
 14




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If we are unable to attract and retain employees and key talent our business and financial
results may be materially impacted.
 
 Item 1B.
    
    Unresolved Staff Comments.
  15




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Item 2.
    
    Properties.
  Facility
    
    FunctionData Storage MediaAmericasBogota, Columbia (leased)
    
    Sales/AdministrativeBuenos Aires, Argentina (leased)
    
    Sales/AdministrativeLima, Peru (leased)
    
    Sales/AdministrativeLondon, Ontario, Canada (owned)
    
    Sales/AdministrativeMexico City, Mexico (leased)
    
    Sales/AdministrativeOakdale, Minnesota (owned)
    
    Sales/Administrative/Laboratory facility/Corporate headquartersPanama City, Panama (leased)
    
    Sales/AdministrativeSantiago, Chile (owned)
    
    Sales/AdministrativeSao Paulo, Brazil (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/AdministrativeHoofddorp, Netherlands (leased)
    
    Sales/Administrative/European regional headquartersLangendorf, Switzerland (leased)
    
    Sales/AdministrativeMadrid, Spain (leased)
    
    Sales/AdministrativeNeuss, Germany (leased)
    
    Sales/Administrative/Distribution CenterSegrate, Italy (leased)
    
    Sales/AdministrativeWarsaw, Poland (leased)
    
    Sales/AdministrativeAsia PacificAuckland, NewZealand (leased)
    
    Sales/AdministrativeBangkok, Thailand (leased)
    
    Sales/AdministrativeBeijing, China (leased)
    
    Sales/AdministrativeFukuoka, Japan (leased)
    
    Sales/AdministrativeGuangzhou, China (leased)
    
    Sales/AdministrativeKings Park, Australia (leased)
    
    Sales/Administrative/Distribution CenterManila, Philippines (leased)
    
    Sales/AdministrativeNagoya, Japan (leased)
    
    Sales/AdministrativeNew Delhi, India (leased)
    
    Sales/AdministrativeNorth Point, Hong Kong (leased)
    
    Sales/AdministrativeOsaka, Japan (leased)
    
    Sales/AdministrativePetaling Jaya, Malaysia (leased)
    
    Sales/AdministrativeSapporo, Japan (leased)
    
    Sales/AdministrativeSeoul, South Korea (leased)
    
    Sales/AdministrativeShanghai, China (leased)
    
    Sales/AdministrativeSingapore (leased)
    
    Sales/AdministrativeTaipei, Taiwan (leased)
    
    Sales/AdministrativeTokyo, Japan (leased)
    
    Sales/AdministrativeElectronic ProductsKowloon, Hong Kong (leased)
    
    AdministrativeWeston, Florida (leased)
    
    Sales/Administrative
 16




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Item 3.
    
    Legal Proceedings.
   Philips
    17




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18




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SanDisk
      
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
  19




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
    2009 Sales Prices
    
    
    2008 Sales PricesHigh
    
    
    Low
    
    
    High
    
    
    LowFirst quarter
    
    $
    14.44
    
    
    $
    6.94
    
    
    $
    27.63
    
    
    $
    17.64Second quarter
    
    $
    11.14
    
    
    $
    7.19
    
    
    $
    27.41
    
    
    $
    22.85Third quarter
    
    $
    10.17
    
    
    $
    7.34
    
    
    $
    25.48
    
    
    $
    18.37Fourth quarter
    
    $
    10.30
    
    
    $
    7.95
    
    
    $
    22.78
    
    
    $
    10.11
 
 (c)
    
    Issuer Purchases of Equity Securities  20




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Item 6.
    
    Selected Financial Data.*
 (Dollars in millions, except per share data)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Statement of Operations Data:Net revenue
    
    $
    1,649.5
    
    
    $
    1,981.0
    
    
    $
    1,895.8
    
    
    $
    1,373.0
    
    
    $
    1,089.7Gross profit
    
    
    264.0
    
    
    
    338.8
    
    
    
    345.8
    
    
    
    327.4
    
    
    
    284.7Selling, general and administrative
    
    
    229.7
    
    
    
    287.6
    
    
    
    218.9
    
    
    
    170.0
    
    
    
    143.1Research and development
    
    
    20.4
    
    
    
    23.6
    
    
    
    38.2
    
    
    
    50.0
    
    
    
    51.3Litigation settlement
    
    
    49.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    32.4
    
    
    
    94.1
    
    
    
    
    
    
    
    Restructuring and other
    
    
    26.6
    
    
    
    28.9
    
    
    
    33.3
    
    
    
    11.9
    
    
    
    1.2Operating (loss) income
    
    
    (61.7
    )
    
    
    (33.7
    )
    
    
    (38.7
    )
    
    
    95.5
    
    
    
    89.1(Loss) income from continuing operations
    
    
    (44.0
    )
    
    
    (37.8
    )
    
    
    (56.4
    )
    
    
    62.0
    
    
    
    68.3Net (loss) income
    
    
    (42.2
    )
    
    
    (33.3
    )
    
    
    (50.4
    )
    
    
    76.4
    
    
    
    87.9(Loss) earnings per common share from continuing operations:Basic
    
    
    (1.17
    )
    
    
    (1.01
    )
    
    
    (1.52
    )
    
    
    1.79
    
    
    
    2.02Diluted
    
    
    (1.17
    )
    
    
    (1.01
    )
    
    
    (1.52
    )
    
    
    1.76
    
    
    
    1.97Net (loss) earnings per common share:Basic
    
    
    (1.13
    )
    
    
    (0.89
    )
    
    
    (1.36
    )
    
    
    2.21
    
    
    
    2.59Diluted
    
    
    (1.13
    )
    
    
    (0.89
    )
    
    
    (1.36
    )
    
    
    2.17
    
    
    
    2.54Balance Sheet Data:Working capital (1)
    
    $
    349.2
    
    
    $
    445.4
    
    
    $
    523.1
    
    
    $
    338.8
    
    
    $
    197.8Cash and cash equivalents (2)
    
    
    163.4
    
    
    
    96.6
    
    
    
    135.5
    
    
    
    252.5
    
    
    
    483.0Inventories
    
    
    235.7
    
    
    
    363.2
    
    
    
    366.1
    
    
    
    258.0
    
    
    
    134.9Property, plant and equipment, net
    
    
    109.8
    
    
    
    122.4
    
    
    
    171.5
    
    
    
    178.0
    
    
    
    195.0Total assets
    
    
    1,393.8
    
    
    
    1,540.0
    
    
    
    1,751.0
    
    
    
    1,382.9
    
    
    
    1,146.2Long-term debt
    
    
    
    
    
    
    
    
    
    
    21.3
    
    
    
    
    
    
    
    Total liabilities
    
    
    466.6
    
    
    
    595.4
    
    
    
    697.2
    
    
    
    436.6
    
    
    
    290.9Total shareholders equity
    
    
    927.2
    
    
    
    944.6
    
    
    
    1,053.8
    
    
    
    946.3
    
    
    
    855.3Other Information:Current ratio
    
    
    2.4
    
    
    
    2.0
    
    
    
    1.8
    
    
    
    2.2
    
    
    
    3.6Days sales outstanding (3)
    
    
    60
    
    
    
    63
    
    
    
    64
    
    
    
    56
    
    
    
    46Days of inventory supply (3)
    
    
    75
    
    
    
    112
    
    
    
    94
    
    
    
    90
    
    
    
    66Return on average assets (4)
    
    
    (3.1
    )%
    
    
    (2.4
    )%
    
    
    (3.6
    )%
    
    
    4.8
    %
    
    
    6.1
    %Return on average equity (4)
    
    
    (4.8
    )%
    
    
    (3.7
    )%
    
    
    (5.4
    )%
    
    
    6.8
    %
    
    
    8.2
    %Dividends per common share
    
    $
    
    
    
    $
    0.56
    
    
    $
    0.62
    
    
    $
    0.54
    
    
    $
    0.46Capital expenditures
    
    $
    11.0
    
    
    $
    13.6
    
    
    $
    14.5
    
    
    $
    16.0
    
    
    $
    21.6Number of employees
    
    
    1,210
    
    
    
    1,570
    
    
    
    2,250
    
    
    
    2,070
    
    
    
    2,100
 
 *
    
    See Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations, for additional information regarding the financial information presented in this
table. The acquisitions of Xtreme Accessories, LLC on June 30, 2008, TDK Recording Media on
July 31, 2007, Memcorp, Inc., on July 9, 2007, and Memorex International Inc. on April 28,
2006 may affect the comparability of financial information in this table. See Note 3 in the
Consolidated Financial Statements for further information.(1)
    
    Working capital is calculated as the sum of accounts receivable and inventory less accounts
payable for the years ended December 31, 2009, 2008, 2007, 2006 and 2005.(2)
    
    We invested certain funds in active cash management and classified those investments in other
current assets or 21




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other assets depending on remaining maturity. These amounts represented $24.6 million as of December 31, 2005, 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, 2009, 2008, 2007 and 2006.(3)
    
    These operational measures, which we regularly use, are provided to assist in the investors
further understanding of our operations. Days sales outstanding is calculated using the
count-back method, which calculates the number of days of most recent revenue that are
reflected in the net accounts receivable balance. Days of inventory supply is calculated using
the current period inventory balance divided by an estimate of the inventoriable portion of
cost of goods sold expressed in days. The prior period amount of days of inventory supply have
been adjusted to reflect the current year calculation for comparative purposes.(4)
    
    Return percentages are calculated using (loss) income from continuing operations. 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Business
 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. The magnetic tape business has a relatively small number of
competitors and high barriers to entry. At the same time, it is highly competitive as 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 have concentrated our direct
manufacturing investments on coating operations and have outsourced 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.
    
    Grow the data storage media business, 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 have established distribution agreements for other brands, as
described above. The strength of our brands has allowed us to gain market share in 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 by
bringing products to market across multiple geographies.
 22




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
    
    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 CD and DVD players, alarm clocks, portable boom boxes, MP3 players, iPod
and iPhone accessories, flat panel televisions, headphones, speakers, karaoke machines and
gaming accessories sold under the Memorex, TDK Life on Record and XtremeMac brands. The
portfolio continues to evolve with consumer demand and with development of our brands.
  
    
    In April 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 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.
    
    In February 2007, we entered into agreements that established us as the exclusive global
distributor for HP branded recordable optical media products and as a master distributor
for Sun StorageTek branded tape media products, whether manufactured by Imation or others.
    
    In July 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.
    
    In July 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.
    
    In June 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 was taken
to expand our product portfolio, enhance our distribution reach and strengthen product
design capabilities, with particular focus on Apple users.
    
    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).
 Factors Affecting Comparability of our Financial Results
 Discontinued Operations
 23




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Acquisitions
 
    
    On June 30, 2008, we acquired the XtremeMac business.
    
    On July 9, 2007, we acquired the Memcorp business.
    
    On July 31, 2007, we acquired the TDK Recording Media business.
  Executive Summary
 2009 Consolidated Results of Operations
 
    
    Revenue of $1,649.5 million in 2009 was down 16.7 percent compared with revenue of
$1,981.0 million in 2008 due mainly to the continuing soft economy.
    
    Gross margin of 16.0 percent in 2009 was down from 17.1 percent in 2008, due mainly to
changes in product mix driven by declining sales of our higher margin legacy tape products.
    
    Selling, general and administrative expense was 13.9 percent of revenue in 2009,
compared with 14.5 percent of revenue in 2008, due primarily to ongoing restructuring and
cost control actions along with reduced litigation expense related to the Philips
settlement.
    
    Operating loss was $61.7 million in 2009, compared with $33.7 million in 2008. Operating
loss in 2009 included litigation settlement charges of $49.0 million and restructuring and
other charges of $26.6 million. Operating loss in 2008 included a goodwill impairment
charge of $32.4 million and restructuring and other charges of $28.9 million.
 2009 Cash Flow/Financial Condition
 
    
    Cash and cash equivalents totaled $163.4 million as of December 31, 2009 compared to
$96.6 million as of December 31, 2008.
    
    Cash flow provided by operating activities was $67.5 million for 2009 compared to $84.7
million for 2008.
 24




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Results of Operations
 Net Revenue
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Net revenue
    
    $
    1,649.5
    
    
    $
    1,981.0
    
    
    $
    1,895.8
    
    
    
    -16.7
    %
    
    
    4.5
    %
   Gross Profit
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Gross profit
    
    $
    264.0
    
    
    $
    338.8
    
    
    $
    345.8
    
    
    
    -22.1
    %
    
    
    -2.0
    %Gross margin
    
    
    16.0
    %
    
    
    17.1
    %
    
    
    18.2
    %
   Selling, General and Administrative (SG&A)
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Selling, general and administrative
    
    $
    229.7
    
    
    $
    287.6
    
    
    $
    218.9
    
    
    
    -20.1
    %
    
    
    31.4
    %As a percent of revenue
    
    
    13.9
    %
    
    
    14.5
    %
    
    
    11.5
    %
  25




---



##### 



Research and Development (R&D)
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Research and development
    
    $
    20.4
    
    
    $
    23.6
    
    
    $
    38.2
    
    
    
    -13.6
    %
    
    
    -38.2
    %As a percent of revenue
    
    
    1.2
    %
    
    
    1.2
    %
    
    
    2.0
    %
  Litigation Settlement
   Goodwill Impairment
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Goodwill impairment
    
    $
    
    
    
    $
    32.4
    
    
    $
    94.1
    
    
    
    -100.0
    %
    
    
    -65.6
    %
  26




---



##### 



Restructuring and Other
  Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007RestructuringSeverance and severance related expense
    
    $
    11.2
    
    
    $
    15.7
    
    
    $
    23.6Lease termination costs
    
    
    0.7
    
    
    
    4.8
    
    
    
    0.6Total restructuring
    
    
    11.9
    
    
    
    20.5
    
    
    
    24.2OtherPension settlement/curtailment (Note 10)
    
    
    11.7
    
    
    
    5.7
    
    
    
    1.4Asset impairments
    
    
    2.7
    
    
    
    5.0
    
    
    
    8.4TDK post-closing purchase price adjustment
    
    
    
    
    
    
    (2.3
    )
    
    
    Terminated employment agreement
    
    
    
    
    
    
    
    
    
    
    (0.7
    )Other
    
    
    0.3
    
    
    
    
    
    
    
    Total
    
    $
    26.6
    
    
    $
    28.9
    
    
    $
    33.3
      27




---



##### 



Operating (Loss) Income
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Operating (loss) income
    
    $
    (61.7
    )
    
    $
    (33.7
    )
    
    $
    (38.7
    )
    
    
    83.1
    %
    
    
    -12.9
    %As a percent of revenue
    
    
    -3.7
    %
    
    
    -1.7
    %
    
    
    -2.0
    %
   Other (Income) and Expense
 Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Interest income
    
    $
    (0.7
    )
    
    $
    (3.8
    )
    
    $
    (7.6
    )Interest expense
    
    
    2.9
    
    
    
    1.5
    
    
    
    2.6Other expense, net
    
    
    12.8
    
    
    
    10.3
    
    
    
    7.1Other (income) and expense
    
    $
    15.0
    
    
    $
    8.0
    
    
    $
    2.1As a percent of revenue
    
    
    0.9
    %
    
    
    0.4
    %
    
    
    0.1
    %
 28




---



##### 



Income Tax (Benefit) Provision
 Years Ended December 31,(In millions)
    
    2009
    
    2008
    
    2007Income taxes
    
    $
    (32.7
    )
    
    $
    (3.9
    )
    
    $
    15.6Effective tax rate
    
    
    42.6
    %
    
    
    9.4
    %
    
    
    38.2
    %
   Segment Results
    29




---



##### 



Data Storage Products
 Americas
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Net revenue
    
    $
    649.2
    
    
    $
    757.3
    
    
    $
    928.6
    
    
    
    -14.3
    %
    
    
    -18.4
    %Operating income
    
    
    55.4
    
    
    
    71.5
    
    
    
    82.9
    
    
    
    -22.5
    %
    
    
    -13.8
    %As a percent of revenue
    
    
    8.5
    %
    
    
    9.4
    %
    
    
    8.9
    %
   Europe
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Net revenue
    
    $
    415.2
    
    
    $
    543.7
    
    
    $
    520.2
    
    
    
    -23.6
    %
    
    
    4.5
    %Operating income
    
    
    1.7
    
    
    
    17.0
    
    
    
    40.9
    
    
    
    -90.0
    %
    
    
    -58.4
    %As a percent of revenue
    
    
    0.4
    %
    
    
    3.1
    %
    
    
    7.9
    %
   30




---



##### 



Asia Pacific
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Net revenue
    
    $
    400.1
    
    
    $
    434.4
    
    
    $
    328.9
    
    
    
    -7.9
    %
    
    
    32.1
    %Operating income
    
    
    18.7
    
    
    
    28.7
    
    
    
    23.5
    
    
    
    -34.8
    %
    
    
    22.1
    %As a percent of revenue
    
    
    4.7
    %
    
    
    6.6
    %
    
    
    7.1
    %
   Electronic Products
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Net revenue
    
    $
    185.0
    
    
    $
    245.6
    
    
    $
    118.1
    
    
    
    -24.7
    %
    
    NMOperating (loss) income
    
    
    (7.2
    )
    
    
    (13.4
    )
    
    
    5.5
    
    
    
    -46.3
    %
    
    NMAs a percent of revenue
    
    
    -3.9
    %
    
    
    -5.5
    %
    
    
    4.7
    %
   Corporate and Unallocated
 Years Ended December 31,
    
    Percent Change2009 vs.
    
    2008 vs.(In millions)
    
    2009
    
    2008
    
    2007
    
    2008
    
    2007Operating loss
    
    $
    (130.3
    )
    
    $
    (137.5
    )
    
    $
    (191.5
    )
    
    
    -5.2
    %
    
    
    -28.2
    %
  31




---



##### 



Financial Position
        32




---



##### 



Liquidity and Capital Resources
 Cash Flows provided by Operating Activities:
 Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Net (loss) income
    
    $
    (42.2
    )
    
    $
    (33.3
    )
    
    $
    (50.4
    )Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation
    
    
    19.7
    
    
    
    25.9
    
    
    
    28.6Amortization
    
    
    23.3
    
    
    
    23.4
    
    
    
    18.3Deferred income taxes
    
    
    (2.0
    )
    
    
    0.2
    
    
    
    (10.7
    )Goodwill impairment
    
    
    
    
    
    
    32.4
    
    
    
    94.1Asset impairments
    
    
    2.7
    
    
    
    5.0
    
    
    
    8.4Stock-based compensation
    
    
    7.5
    
    
    
    9.5
    
    
    
    10.2Pension settlement / curtailment
    
    
    11.7
    
    
    
    5.7
    
    
    
    2.4Note receivable reserve
    
    
    3.0
    
    
    
    
    
    
    
    Litigation settlement
    
    
    49.0
    
    
    
    
    
    
    
    Other
    
    
    6.2
    
    
    
    7.2
    
    
    
    3.5Litigation settlement payment
    
    
    (20.0
    )
    
    
    
    
    
    
    Changes in operating assets and liabilities, net of effects from acquisitions
    
    
    8.6
    
    
    
    8.7
    
    
    
    (16.9
    )Net cash provided by operating activities
    
    $
    67.5
    
    
    $
    84.7
    
    
    $
    87.5
  Cash Flows provided by (used in) Investing Activities:
 Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Capital expenditures
    
    $
    (11.0
    )
    
    $
    (13.6
    )
    
    $
    (14.5
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    (15.3
    )
    
    
    (68.3
    )Acquisition of minority interest
    
    
    
    
    
    
    (8.0
    )
    
    
    Proceeds from sale of assets
    
    
    13.0
    
    
    
    0.8
    
    
    
    Other investing activities
    
    
    
    
    
    
    
    
    
    
    0.3Net cash provided by (used in) investing activities
    
    $
    2.0
    
    
    $
    (36.1
    )
    
    $
    (82.5
    )
   33




---



##### 



Cash Flows used in Financing Activities:
 Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Purchase of treasury stock
    
    $
    
    
    
    $
    (26.4
    )
    
    $
    (108.2
    )Exercise of stock options
    
    
    
    
    
    
    0.6
    
    
    
    7.7Dividend payments
    
    
    
    
    
    
    (20.9
    )
    
    
    (23.2
    )Debt repayment
    
    
    
    
    
    
    (31.3
    )
    
    
    (6.3
    )Debt issuance costs
    
    
    (3.2
    )
    
    
    
    
    
    
    Net cash used in financing activities
    
    $
    (3.2
    )
    
    $
    (78.0
    )
    
    $
    (130.0
    )
      34




---



##### 




    
    up to 85 percent of eligible accounts receivable; plus
    
    up to the lesser of 65 percent of eligible inventory or 85
percent of the appraised net orderly liquidation value of
eligible inventory; plus
    
    up to 60 percent of the appraised fair market value of
eligible real estate (the Original Real Estate Value), such
Original Real Estate Value to be reduced each calendar
month by 1/84th, provided, that the Original Real Estate
Value shall not exceed $40,000,000; plus
    
    such other classes of collateral as may be mutually agreed
upon and at advance rates as may be determined by the
Agent; minus
    
    such reserves as the Agent may establish in good faith.
    Off-Balance Sheet Arrangements
  35




---



##### 



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
    
    $
    43.3
    
    
    $
    12.7
    
    
    $
    19.6
    
    
    $
    9.5
    
    
    $
    1.5Purchase obligations (1)
    
    
    175.8
    
    
    
    175.8
    
    
    
    
    
    
    
    
    
    
    
    Litigation settlement
    
    
    33.0
    
    
    
    8.2
    
    
    
    24.8
    
    
    
    
    
    
    
    Other liabilities (2)
    
    
    20.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20.6Total
    
    $
    272.7
    
    
    $
    196.7
    
    
    $
    44.4
    
    
    $
    9.5
    
    
    $
    22.1
 
 (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.    Critical Accounting Policies and Estimates
   Income Tax Accruals and Valuation Allowances.
 36




---



##### 



Litigation.
 37




---



##### 



Goodwill and Other Intangibles
       38




---



##### 



Percentage ofexcess of fairExcess of fair value over
    
    value over carrying(In millions)
    
    Goodwill
    
    Carrying value
    
    carrying value
    
    valueElectronic Products
    
    $
    23.5
    
    
    $
    74.3
    
    
    $
    3.7
    
    
    
    5.0
    %
  Allowance for Doubtful Accounts Receivable.
 39




---



##### 



Excess
Inventory and Obsolescence.
 Rebates.
 Other Reserves including Restructuring
 Other Accrued Liabilities
      40




---



##### 



Recently Issued Accounting Standards
      Forward-Looking Statements
  41




---



##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
     42




---



##### 



43




---



##### 



Item 8. Financial Statements and Supplementary Data.
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal Control  Integrated
Framework
     
 44




---



##### 



IMATION CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31,(In millions, except per share amounts)
    
    2009
    
    
    2008
    
    
    2007Net revenue
    
    $
    1,649.5
    
    
    $
    1,981.0
    
    
    $
    1,895.8Cost of goods sold
    
    
    1,385.5
    
    
    
    1,642.2
    
    
    
    1,550.0Gross profit
    
    
    264.0
    
    
    
    338.8
    
    
    
    345.8Selling, general and administrative expense
    
    
    229.7
    
    
    
    287.6
    
    
    
    218.9Research and development expense
    
    
    20.4
    
    
    
    23.6
    
    
    
    38.2Litigation settlement expense
    
    
    49.0
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    32.4
    
    
    
    94.1Restructuring and other expense
    
    
    26.6
    
    
    
    28.9
    
    
    
    33.3Total
    
    
    325.7
    
    
    
    372.5
    
    
    
    384.5Operating loss
    
    
    (61.7
    )
    
    
    (33.7
    )
    
    
    (38.7
    )Other (income) and expenseInterest income
    
    
    (0.7
    )
    
    
    (3.8
    )
    
    
    (7.6
    )Interest expense
    
    
    2.9
    
    
    
    1.5
    
    
    
    2.6Other expense, net
    
    
    12.8
    
    
    
    10.3
    
    
    
    7.1Total
    
    
    15.0
    
    
    
    8.0
    
    
    
    2.1Loss from continuing operations before income taxes
    
    
    (76.7
    )
    
    
    (41.7
    )
    
    
    (40.8
    )Income tax (benefit) provision
    
    
    (32.7
    )
    
    
    (3.9
    )
    
    
    15.6Loss from continuing operations
    
    
    (44.0
    )
    
    
    (37.8
    )
    
    
    (56.4
    )Discontinued operations:Income from operations of discontinued
businesses, net of income taxes
    
    
    1.8
    
    
    
    4.5
    
    
    
    6.0Income from discontinued operations
    
    
    1.8
    
    
    
    4.5
    
    
    
    6.0Net loss
    
    $
    (42.2
    )
    
    $
    (33.3
    )
    
    $
    (50.4
    )(Loss) earnings per common share  basic:Continuing operations
    
    $
    (1.17
    )
    
    $
    (1.01
    )
    
    $
    (1.52
    )Discontinued operations
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.16Net loss
    
    
    (1.13
    )
    
    
    (0.89
    )
    
    
    (1.36
    )(Loss) earnings per common share  diluted:Continuing operations
    
    $
    (1.17
    )
    
    $
    (1.01
    )
    
    $
    (1.52
    )Discontinued operations
    
    
    0.05
    
    
    
    0.12
    
    
    
    0.16Net loss
    
    
    (1.13
    )
    
    
    (0.89
    )
    
    
    (1.36
    )Weighted average shares outstanding:Basic
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.0Diluted
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.0Cash dividend paid per common share
    
    $
    
    
    
    $
    0.56
    
    
    $
    0.62
  45




---



##### 



IMATION CORP.
 
 CONSOLIDATED BALANCE SHEETS
 As of December 31,(In millions, except per share amounts)
    
    2009
    
    
    2008AssetsCurrent assetsCash and cash equivalents
    
    $
    163.4
    
    
    $
    96.6Accounts receivable, net
    
    
    314.9
    
    
    
    378.3Inventories
    
    
    235.7
    
    
    
    363.2Other current assets
    
    
    164.4
    
    
    
    155.8Total current assets
    
    
    878.4
    
    
    
    993.9Property, plant and equipment, net
    
    
    109.8
    
    
    
    122.4Intangible assets, net
    
    
    337.3
    
    
    
    357.0Goodwill
    
    
    23.5
    
    
    
    23.5Other assets
    
    
    44.8
    
    
    
    43.2Total assets
    
    $
    1,393.8
    
    
    $
    1,540.0Liabilities and Shareholders EquityCurrent liabilitiesAccounts payable
    
    $
    201.4
    
    
    $
    296.1Accrued payroll
    
    
    19.7
    
    
    
    12.5Other current liabilities
    
    
    150.8
    
    
    
    200.5Total current liabilities
    
    
    371.9
    
    
    
    509.1Other liabilities
    
    
    94.7
    
    
    
    86.3Total liabilities
    
    
    466.6
    
    
    
    595.4Shareholders 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
    
    
    1,112.3
    
    
    
    1,113.1Retained earnings
    
    
    5.1
    
    
    
    47.3Accumulated other comprehensive loss
    
    
    (68.9
    )
    
    
    (85.0
    )Treasury stock, at cost, 4.8 million and 5.2 million shares as of December 31, 2009
and 2008, respectively
    
    
    (121.7
    )
    
    
    (131.2
    )Total shareholders equity
    
    
    927.2
    
    
    
    944.6Total liabilities and shareholders equity
    
    $
    1,393.8
    
    
    $
    1,540.0
  46




---



##### 



IMATION CORP.  
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Shareholders(In millions, except per share amounts)
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    EquityBalance as of December 31, 2006
    
    $
    0.4
    
    
    $
    1,048.9
    
    
    $
    172.6
    
    
    $
    (91.4
    )
    
    $
    (184.2
    )
    
    $
    946.3Purchase of treasury stock (3,816,401 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (108.2
    )
    
    
    (108.2
    )Exercise of stock options
    
    
    
    
    
    
    (2.3
    )
    
    
    
    
    
    
    
    
    
    
    10.0
    
    
    
    7.7Restricted stock grants 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 provision 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
    )
    
    $
    (113.0
    )
    
    $
    1,053.8Purchase of treasury stock (1,102,800 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26.4
    )
    
    
    (26.4
    )Exercise of stock options
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    1.1
    
    
    
    0.6Restricted stock grants and other
    
    
    
    
    
    
    (1.2
    )
    
    
    
    
    
    
    
    
    
    
    3.8
    
    
    
    2.6401(k) matching contribution (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 benefit of $0.6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.8
    )
    
    
    
    
    
    
    (1.8
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74.2
    )Balance as of December 31, 2008
    
    $
    0.4
    
    
    $
    1,113.1
    
    
    $
    47.3
    
    
    $
    (85.0
    )
    
    $
    (131.2
    )
    
    $
    944.6Restricted stock grants and other
    
    
    
    
    
    
    (3.8
    )
    
    
    
    
    
    
    
    
    
    
    6.3
    
    
    
    2.5401(k) matching contribution (113,970 shares)
    
    
    
    
    
    
    (1.9
    )
    
    
    
    
    
    
    
    
    
    
    3.2
    
    
    
    1.3Stock-based compensation related to options
    
    
    
    
    
    
    4.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.9Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    (42.2
    )
    
    
    
    
    
    
    
    
    
    
    (42.2
    )Net change in cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.5
    
    
    
    
    
    
    
    4.5Pension adjustments (net of income tax provision of $5.1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.8
    
    
    
    
    
    
    
    9.8Cash flow hedging (net of income tax provision of $0.9)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    1.8Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26.1
    )Balance as of December 31, 2009
    
    $
    0.4
    
    
    $
    1,112.3
    
    
    $
    5.1
    
    
    $
    (68.9
    )
    
    $
    (121.7
    )
    
    $
    927.2
  47




---



##### 



IMATION CORP.  
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Cash Flows from Operating Activities:Net loss
    
    $
    (42.2
    )
    
    $
    (33.3
    )
    
    $
    (50.4
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation
    
    
    19.7
    
    
    
    25.9
    
    
    
    28.6Intangible amortization
    
    
    23.3
    
    
    
    23.4
    
    
    
    18.3Deferred income taxes
    
    
    (2.0
    )
    
    
    0.2
    
    
    
    (10.7
    )Goodwill impairment
    
    
    
    
    
    
    32.4
    
    
    
    94.1Asset impairments
    
    
    2.7
    
    
    
    5.0
    
    
    
    8.4Stock-based compensation
    
    
    7.5
    
    
    
    9.5
    
    
    
    10.2Pension settlement / curtailment
    
    
    11.7
    
    
    
    5.7
    
    
    
    2.4Note receivable reserve
    
    
    3.0
    
    
    
    
    
    
    
    Litigation settlement
    
    
    49.0
    
    
    
    
    
    
    
    Other
    
    
    6.2
    
    
    
    7.2
    
    
    
    3.5Changes in operating assets and liabilities, net of effects from acquisitions:Litigation settlement payment
    
    
    (20.0
    )
    
    
    
    
    
    
    Accounts receivable
    
    
    67.6
    
    
    
    129.0
    
    
    
    (33.7
    )Inventories
    
    
    132.9
    
    
    
    0.2
    
    
    
    7.8Other assets
    
    
    (19.4
    )
    
    
    (20.8
    )
    
    
    (9.1
    )Accounts payable
    
    
    (98.4
    )
    
    
    (61.5
    )
    
    
    (8.7
    )Accrued payroll and other liabilities
    
    
    (54.9
    )
    
    
    (38.2
    )
    
    
    26.8Restricted cash
    
    
    (19.2
    )
    
    
    
    
    
    
    Net cash provided by operating activities
    
    
    67.5
    
    
    
    84.7
    
    
    
    87.5Cash Flows from Investing Activities:Capital expenditures
    
    
    (11.0
    )
    
    
    (13.6
    )
    
    
    (14.5
    )Acquisitions, net of cash acquired
    
    
    
    
    
    
    (15.3
    )
    
    
    (68.3
    )Acquisition of minority interest
    
    
    
    
    
    
    (8.0
    )
    
    
    Proceeds from sale of assets
    
    
    13.0
    
    
    
    0.8
    
    
    
    Other investing activities
    
    
    
    
    
    
    
    
    
    
    0.3Net cash provided by (used in) investing
activities
    
    
    2.0
    
    
    
    (36.1
    )
    
    
    (82.5
    )Cash Flows from Financing Activities:Purchase of treasury stock
    
    
    
    
    
    
    (26.4
    )
    
    
    (108.2
    )Exercise of stock options
    
    
    
    
    
    
    0.6
    
    
    
    7.7Dividend payments
    
    
    
    
    
    
    (20.9
    )
    
    
    (23.2
    )Debt repayment
    
    
    
    
    
    
    (31.3
    )
    
    
    (6.3
    )Debt issuance costs
    
    
    (3.2
    )
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (3.2
    )
    
    
    (78.0
    )
    
    
    (130.0
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    0.5
    
    
    
    (9.5
    )
    
    
    8.0Change in cash and equivalents
    
    
    66.8
    
    
    
    (38.9
    )
    
    
    (117.0
    )Cash and cash equivalents  beginning of year
    
    
    96.6
    
    
    
    135.5
    
    
    
    252.5Cash and cash equivalents  end of year
    
    $
    163.4
    
    
    $
    96.6
    
    
    $
    135.5
  48




---



##### 



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
 49




---



##### 



Inventories.
 Derivative Financial Instruments.
 Property, Plant and Equipment
  Intangible Assets.
  Goodwill.
  50




---



##### 



Impairment of Long-Lived Assets
 Revenue Recognition
 Concentrations of Credit Risk.
 Shipping and Handling Costs.
 Research and Development Costs.
 Advertising Costs.
 51




---



##### 



Rebates. .
 Income Taxes
  Treasury Stock.
 Stock-Based Compensation.
  Comprehensive Income.
 Weighted Average Basic and Diluted Shares Outstanding.
 52




---



##### 



Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Weighted average number of basic shares outstanding during the year
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.0Dilutive effect of stock-based compensation plans
    
    
    
    
    
    
    
    
    
    
    Weighted average number of dilutive shares outstanding during the
year
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.0
  Recent Accounting Pronouncements
      53




---



##### 



Note 3  Business Combinations
 2009 Acquisitions
  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
  54




---



##### 



(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
     55




---



##### 



(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
  56




---



##### 



(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
  57




---



##### 



(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
   Weighted Average(In millions)
    
    Amount
    
    
    LifeTrade name
    
    $
    13.7
    
    
    12 yearsCustomer relationships
    
    
    10.0
    
    
    6 yearsOther
    
    
    1.4
    
    
    3 yearsIntangible assets acquired
    
    $
    25.1
   58




---



##### 



Pro Forma Disclosure
  Year EndedDecember 31,(In millions, except per share amounts)
    
    2007Net revenue
    
    $
    2,326.3(Loss) income from continuing operations
    
    
    (66.7
    )(Loss) income from discontinued operations
    
    
    6.0Net (loss) income
    
    
    (60.7
    )(Loss) earnings per common share  basic:Continuing operations
    
    $
    (1.65
    )Discontinued operations
    
    $
    0.15Net (loss) income
    
    $
    (1.50
    )(Loss) earnings per common share  diluted:Continuing operations
    
    $
    (1.65
    )Discontinued operations
    
    $
    0.15Net (loss) income
    
    $
    (1.50
    )
  Note 4  Divestiture
 Divestiture Presented as Discontinued Operations
   Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Net revenue
    
    $
    74.5
    
    
    $
    173.6
    
    
    $
    166.2Income before income taxes
    
  $
    2.1
    
    
$
    6.4
    
    
$
    6.2Income tax provision
    
    
    0.3
    
    
    
    1.9
    
    
    
    0.2Total discontinued operations
    
    $
    1.8
    
    
    $
    4.5
    
    
    $
    6.0
 59




---



##### 



Note 5  Supplemental Balance Sheet Information
 As of December 31,(In millions)
    
    2009
    
    
    2008InventoriesFinished goods
    
    $
    210.4
    
    
    $
    337.1Work in process
    
    
    8.9
    
    
    
    9.0Raw materials and supplies
    
    
    16.4
    
    
    
    17.1Total inventories
    
    $
    235.7
    
    
    $
    363.2Other Current AssetsDeferred income taxes
    
    $
    42.7
    
    
    $
    51.5Restricted cash (1)
    
    
    19.1
    
    
    
    Assets held for sale (2) (3)
    
    
    7.2
    
    
    
    22.5Taxes receivable
    
    
    35.1
    
    
    
    17.7Other
    
    
    60.3
    
    
    
    64.1Total other current assets
    
    $
    164.4
    
    
    $
    155.8Property, Plant and EquipmentLand
    
    $
    1.4
    
    
    $
    1.4Buildings and leasehold improvements
    
    
    121.3
    
    
    
    119.0Machinery and equipment
    
    
    227.7
    
    
    
    305.3Construction in progress
    
    
    0.4
    
    
    
    1.7Total
    
    $
    350.8
    
    
    $
    427.4Less accumulated depreciation and leasehold amortization
    
    
    (241.0
    )
    
    
    (305.0
    )Property, plant and equipment, net
    
    $
    109.8
    
    
    $
    122.4Other AssetsDeferred income taxes
    
    $
    35.5
    
    
    $
    31.4Other
    
    
    9.3
    
    
    
    11.8Total other assets
    
    $
    44.8
    
    
    $
    43.2Other Current LiabilitiesRebates
    
    $
    66.1
    
    
    $
    75.6Litigation settlement  current
    
    
    7.9
    
    
    
    Employee separation costs
    
    
    4.3
    
    
    
    14.5Value added tax
    
    
    12.0
    
    
    
    11.4Other
    
    
    60.5
    
    
    
    99.0Total other current liabilities
    
    $
    150.8
    
    
    $
    200.5Other LiabilitiesPension
    
    $
    36.3
    
    
    $
    49.0Litigation settlement  long-term
    
    
    21.8
    
    
    
    Deferred income taxes
    
    
    3.3
    
    
    
    4.2Unrecognized tax benefits
    
    
    16.0
    
    
    
    12.2Other
    
    
    17.3
    
    
    
    20.9Total other liabilities
    
    $
    94.7
    
    
    $
    86.3
 60




---



##### 



As of December 31,(In millions)
    
    2009
    
    
    2008Accumulated Other Comprehensive LossCumulative translation adjustment
    
    $
    (50.4
    )
    
    $
    (54.9
    )Pension liability adjustments, net of income tax
    
    
    (18.8
    )
    
    
    (28.6
    )Cash flow hedging and other, net of income tax
    
    
    0.3
    
    
    
    (1.5
    )Total accumulated other comprehensive loss
    
    $
    (68.9
    )
    
    $
    (85.0
    )
 AccountsReceivable*Reserves and AllowancesBalance, as of December 31, 2006
    
    $
    12.8Additions
    
    
    57.4Write-offs,
net of recoveries
    
    
    (41.9
    )Balance, as of December 31, 2007
    
    $
    28.3Additions
    
    
    53.9Write-offs, net of recoveries
    
    
    (45.6
    )Balance, as of December 31, 2008
    
    $
    36.6Additions
    
    
    40.1Write-offs, net of recoveries
    
    
    (48.1
    )Balance, as of December 31, 2009
    
    $
    28.6
    
  Note 6  Intangible Assets and Goodwill
 Intangible Assets
  61




---



##### 



Trade
    
    
    
    
    
    
    Customer(In millions)
    
    Names
    
    
    Software
    
    
    Relationships
    
    
    Other
    
    
    TotalDecember 31, 2009Cost
    
    $
    333.2
    
    
    $
    62.3
    
    
    $
    65.5
    
    
    $
    6.6
    
    
    $
    467.6Accumulated amortization
    
    
    (34.4
    )
    
    
    (56.8
    )
    
    
    (33.9
    )
    
    
    (5.2
    )
    
    
    (130.3
    )Net
    
    $
    298.8
    
    
    $
    5.5
    
    
    $
    31.6
    
    
    $
    1.4
    
    
    $
    337.3December 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
    
    
    $
    357.0
  (In millions)
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014Amortization expense
    
    $
    19.7
    
    
    $
    19.3
    
    
    $
    19.0
    
    
    $
    14.1
    
    
    $
    9.9
 Goodwill
  Asia
    
    
    Electronic(In millions)
    
    Americas
    
    
    Europe
    
    
    Pacific
    
    
    Products
    
    
    TotalGoodwill as of December 31, 2007
    
    $
    64.4
    
    
    $
    39.2
    
    
    $
    12.4
    
    
    $
    33.6
    
    
    $
    149.6Accumulated impairment losses as of December 31, 2007
    
    
    (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
    )Imation Corporation Japan minority interest acquistion
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.4XtremeMac acquistion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.0
    
    
    
    5.0Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    (1.5
    )
    
    
    
    
    
    
    (1.5
    )Goodwill impairment ($2.3 million of Americas recorded in discontinued operations)
    
    
    (9.4
    )
    
    
    
    
    
    
    (10.2
    )
    
    
    (15.1
    )
    
    
    (34.7
    )Goodwill as of December 31, 2008
    
    $
    64.3
    
    
    $
    39.2
    
    
    $
    10.2
    
    
    $
    38.6
    
    
    $
    152.3Accumulated impairment losses as of December 31, 2008
    
    
    (64.3
    )
    
    
    (39.2
    )
    
    
    (10.2
    )
    
    
    (15.1
    )
    
    
    (128.8
    )Balance as of December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23.5
    
    
    
    23.5Goodwill as of December 31, 2009
    
    $
    64.3
    
    
    $
    39.2
    
    
    $
    10.2
    
    
    $
    38.6
    
    
    $
    152.3Accumulated impairment losses as of December 31, 2009
    
    
    (64.3
    )
    
    
    (39.2
    )
    
    
    (10.2
    )
    
    
    (15.1
    )
    
    
    (128.8
    )Balance as of December 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    23.5
    
    
    $
    23.5
  62




---



##### 



63




---



##### 



Percentage ofExcess of fair
    
    
    excess of fairvalue over
    
    
    value over(In millions)
    
    Goodwill
    
    
    Carrying value
    
    
    carrying value
    
    
    carrying  valueElectronic Products
    
    $
    23.5
    
    
    $
    74.3
    
    
    $
    3.7
    
    
    
    5.0
    %
  Note 7  Debt
   
    
    up to 85 percent of eligible accounts receivable; plus
    
    up to the lesser of 65 percent of eligible inventory or 85
percent of the appraised net orderly liquidation value of
eligible inventory; plus
    
    up to 60 percent of the appraised fair market value of
eligible real estate (the Original Real Estate Value), such
Original Real Estate Value to be reduced each calendar
month by 1/84th, provided, that the Original Real Estate
Value shall not exceed $40,000,000; plus
    
    such other classes of collateral as may be mutually agreed
upon and at advance rates as may be determined by the
Agent; minus
    
    such reserves as the Agent may establish in good faith.
  64




---



##### 



Note 8  Restructuring and Other Expense
  Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007RestructuringSeverance and severance related expense
    
    $
    11.2
    
    
    $
    15.7
    
    
    $
    23.6Lease termination costs
    
    
    0.7
    
    
    
    4.8
    
    
    
    0.6Total restructuring
    
    
    11.9
    
    
    
    20.5
    
    
    
    24.2Pension settlement/curtailment (Note 10)
    
    
    11.7
    
    
    
    5.7
    
    
    
    1.4Asset impairments
    
    
    2.7
    
    
    
    5.0
    
    
    
    8.4TDK post-closing purchase price adjustment
    
    
    
    
    
    
    (2.3
    )
    
    
    Terminated employment agreement
    
    
    
    
    
    
    
    
    
    
    (0.7
    )Other
    
    
    0.3
    
    
    
    
    
    
    
    Total
    
    $
    26.6
    
    
    $
    28.9
    
    
    $
    33.3
 2009 Activity
 Restructuring Programs
   65




---



##### 



Liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Liabilityas of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    as ofDecember 31,
    
    
    
    
    
    
    Currency
    
    
    Cumulative
    
    
    December 31,(In millions)
    
    2008
    
    
    Additional Charges
    
    
    Impacts
    
    
    Usage
    
    
    2009Severance and severance related
    
    $
    3.9
    
    
    $
    11.2
    
    
    $
    0.5
    
    
    $
    (11.3
    )
    
    $
    4.3Lease termination costs
    
    
    0.5
    
    
    
    1.0
    
    
    
    
    
    
    
    (1.5
    )
    
    
    
  LiabilityInitial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    as ofPeriod Program
    
    
    
    
    
    
    Currency
    
    
Cumulative
    
    
    December 31,(In millions)
    
    Amounts
    
    
    Additional Charges
    
    
    Impacts
    
    
    Usage
    
    
    2009Severance and severance related
    
    $
    4.9
    
    
    $
    11.2
    
    
    $
    0.5
    
    
    $
    (12.3
    )
    
    $
    4.3Lease termination costs
    
    
    0.5
    
    
    
    1.0
    
    
    

    
    
    
    


    (1.5
    )

    
    
    
 InitialPeriod
    
    
    
    
    
    
    
    
    
    
    Balance as ofHeadcount
    
    
    
    
    
    
    Cumulative
    
    
    December 31,Amounts
    
    
    Additions
    
    
    Reductions
    
    
    2009Total employees affected
    
    
    203
    
    
    
    88
    
    
    
    (232
    )
    
    
    59
 Other
  2008 Activity
 Restructuring Programs
    66




---



##### 



Other
   2007 Activity
 Restructuring Programs
    Other
   67




---



##### 



Note 9  Income Taxes
  Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007U.S.
    
    $
    (116.0
    )
    
    $
    (51.6
    )
    
    $
    (25.9
    )International
    
    
    39.3
    
    
    
    9.9
    
    
    
    (14.9
    )Total
    
    $
    (76.7
    )
    
    $
    (41.7
    )
    
    $
    (40.8
    )
  Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007CurrentFederal
    
    $
    (27.0
    )
    
    $
    (9.4
    )
    
    $
    14.4State
    
    
    (6.4
    )
    
    
    (1.8
    )
    
    
    1.8International
    
    
    2.7
    
    
    
    7.1
    
    
    
    10.1DeferredFederal
    
    
    (6.6
    )
    
    
    (5.7
    )
    
    
    (10.1
    )State
    
    
    (0.9
    )
    
    
    (0.5
    )
    
    
    (1.5
    )International
    
    
    5.5
    
    
    
    6.4
    
    
    
    0.9Total
    
    $
    (32.7
    )
    
    $
    (3.9
    )
    
    $
    15.6
  68




---



##### 



As of December 31,(In millions)
    
    2009
    
    
    2008Accounts receivable allowances
    
    $
    9.3
    
    
    $
    12.6Inventories
    
    
    11.1
    
    
    
    14.7Payroll, pension and severance (short-term)
    
    
    5.5
    
    
    
    10.9State tax credit carryforwards
    
    
    6.9
    
    
    
    5.6Operating loss carryforwards
    
    
    22.7
    
    
    
    23.4Accrued liabilities and other reserves
    
    
    31.7
    
    
    
    21.7Pension (long-term)
    
    
    10.9
    
    
    
    15.9Research and development credits
    
    
    2.3
    
    
    
    6.0Other, net
    
    
    7.5
    
    
    
    Gross deferred tax assets
    
    
    107.9
    
    
    
    110.8Valuation allowance
    
    
    (22.9
    )
    
    
    (18.6
    )Deferred tax assets
    
    
    85.0
    
    
    
    92.2Property, plant and equipment
    
    
    (7.5
    )
    
    
    (8.4
    )Intangible assets
    
    
    (2.6
    )
    
    
    (5.1
    )Deferred tax liabilities
    
    
    (10.1
    )
    
    
    (13.5
    )Net deferred tax assets
    
    $
    74.9
    
    
    $
    78.7
     69




---



##### 



Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Tax at statutory U.S. tax rate
    
    $
    (26.9
    )
    
    $
    (14.2
    )
    
    $
    (12.3
    )State income taxes, net of federal benefit
    
    
    (5.6
    )
    
    
    (1.0
    )
    
    
    1.2Foreign rate differential
    
    
    (7.2
    )
    
    
    (2.6
    )
    
    
    (0.6
    )Valuation allowances
    
    
    1.4
    
    
    
    2.1
    
    
    
    (2.5
    )Foreign earnings at other than U.S. rates
    
    
    0.6
    
    
    
    6.9
    
    
    
    2.4Goodwill impairment
    
    
    
    
    
    
    3.7
    
    
    
    28.9Uncertain tax positions
    
    
    3.5
    
    
    
    1.0
    
    
    
    Other
    
    
    1.5
    
    
    
    0.2
    
    
    
    (1.5
    )Income tax (benefit) provision
    
    $
    (32.7
    )
    
    $
    (3.9
    )
    
    $
    15.6
        70




---



##### 



(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
statute of limitations
    
    
    (1.0
    )Balance at December 31, 2007
    
    $
    9.5Additions for tax positions of prior years
    
    
    1.1Lapse of the
statute of limitations
    
    
    (0.1
    )Balance at December 31, 2008
    
    $
    10.5Additions for tax positions of prior years
    
    
    4.4Reductions for tax positions of prior years
    
    
    (0.6
    )Settlements with taxing authorities
    
    
    (0.2
    )Lapse of the statue of limitations
    
    
    (0.3
    )Balance at December 31, 2009
    
    $
    13.8
     Note 10  Retirement Plans
   71




---



##### 



72




---



##### 



United States
    
    
    InternationalAs of  December 31,
    
    
    As of December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Change in benefit obligationBenefit obligation, beginning of year
    
    $
    110.2
    
    
    $
    117.5
    
    
    $
    57.0
    
    
    $
    70.0Service cost
    
    
    2.8
    
    
    
    5.6
    
    
    
    0.7
    
    
    
    0.6Interest cost
    
    
    5.4
    
    
    
    6.5
    
    
    
    3.2
    
    
    
    3.6Actuarial (gain) loss
    
    
    0.9
    
    
    
    0.5
    
    
    
    4.6
    
    
    
    (5.5
    )Benefits paid
    
    
    (1.7
    )
    
    
    (1.4
    )
    
    
    (3.4
    )
    
    
    (2.4
    )Settlements
    
    
    (20.9
    )
    
    
    (19.5
    )
    
    
    
    
    
    
    Foreign exchange rate changes
    
    
    
    
    
    
    
    
    
    
    3.7
    
    
    
    (9.3
    )Plan amendments (Canada)
    
    
    
    
    
    
    
    
    
    
    2.4
    
    
    
    Curtailments
    
    
    
    
    
    
    1.0
    
    
    
    
    
    
    
    Special termination benefits (Canada)
    
    
    
    
    
    
    
    
    
    
    (9.0
    )
    
    
    Projected benefit obligation, end of year
    
    $
    96.7
    
    
    $
    110.2
    
    
    $
    59.2
    
    
    $
    57.0Change in plan assetsFair value of plan assets, beginning of
year
    
    $
    64.1
    
    
    $
    111.6
    
    
    $
    59.0
    
    
    $
    76.0Actual return on plan assets
    
    
    15.8
    
    
    
    (31.6
    )
    
    
    4.6
    
    
    
    (6.0
    )Foreign exchange rate changes
    
    
    
    
    
    
    
    
    
    
    4.4
    
    
    
    (11.2
    )Company contributions
    
    
    6.8
    
    
    
    5.0
    
    
    
    3.4
    
    
    
    2.6Benefits paid
    
    
    (1.7
    )
    
    
    (1.4
    )
    
    
    (3.4
    )
    
    
    (2.4
    )Settlements
    
    
    (20.9
    )
    
    
    (19.5
    )
    
    
    
    
    
    
    Special termination benefits (Canada)
    
    
    
    
    
    
    
    
    
    
    (9.0
    )
    
    
    Fair value of plan assets, end of year
    
    $
    64.1
    
    
    $
    64.1
    
    
    $
    59.0
    
    
    $
    59.0Funded status of the plan, end of year
    
    $
    (32.6
    )
    
    $
    (46.1
    )
    
    $
    (0.2
    )
    
    $
    2.0
  United States
    
    
    InternationalAs of  December 31,
    
    
    As of December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Noncurrent assets
    
    
    
    
    
    
    
    
    
    
    3.5
    
    
    
    4.9Noncurrent liabilities
    
    
    (32.6
    )
    
    
    (46.1
    )
    
    
    (3.7
    )
    
    
    (2.9
    )Accumulated other comprehensive loss  pre-tax
    
    
    27.4
    
    
    
    43.2
    
    
    
    6.2
    
    
    
    4.6
  United States
    
    
    InternationalAs of  December 31,
    
    
    As of December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net actuarial loss
    
    $
    27.0
    
    
    $
    42.7
    
    
    $
    8.0
    
    
    $
    6.5Prior service cost (credit)
    
    
    0.4
    
    
    
    0.5
    
    
    
    (3.7
    )
    
    
    (4.0
    )Transition asset obligation
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    2.1Total
    
    $
    27.4
    
    
    $
    43.2
    
    
    $
    6.2
    
    
    $
    4.6
  73




---



##### 



United States
    
    
    InternationalAs of  December 31,
    
    
    As of December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Projected benefit obligation, end of year
    
    $
    96.7
    
    
    $
    110.2
    
    
    $
    28.7
    
    
    $
    9.7Accumulated benefit obligation, end of year
    
    
    95.9
    
    
    
    108.8
    
    
    
    26.8
    
    
    
    7.6Plan assets at fair value, end of year
    
    
    64.1
    
    
    
    64.1
    
    
    
    25.3
    
    
    
    6.7
  United States
    
    
    InternationalYears Ended December 31,
    
    
    Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Service cost
    
    $
    2.8
    
    
    $
    5.6
    
    
    $
    6.6
    
    
    $
    0.7
    
    
    $
    0.8
    
    
    $
    0.7Interest cost
    
    
    5.4
    
    
    
    6.5
    
    
    
    7.4
    
    
    
    3.2
    
    
    
    3.6
    
    
    
    3.6Expected return on plan assets
    
    
    (6.5
    )
    
    
    (7.9
    )
    
    
    (9.7
    )
    
    
    (3.0
    )
    
    
    (4.5
    )
    
    
    (4.1
    )Amortization of net actuarial loss
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    0.3
    
    
    
    0.2Amortization of prior service cost
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    Amortization of transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    Net periodic benefit cost
    
    $
    2.0
    
    
    $
    4.3
    
    
    $
    4.5
    
    
    $
    1.4
    
    
    $
    0.2
    
    
    $
    0.4Settlements and curtailments
    
    
    7.1
    
    
    
    5.7
    
    
    
    2.4
    
    
    
    4.6
    
    
    
    
    
    
    
    Total pension cost
    
    $
    9.1
    
    
    $
    10.0
    
    
    $
    6.9
    
    
    $
    6.0
    
    
    $
    0.2
    
    
    $
    0.4
   United States
    
    
    InternationalAs of December 31,
    
    
    As of December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Discount rate
    
    
    5.50
    %
    
    
    5.75
    %
    
    
    5.12
    %
    
    
    5.70
    %Rate of compensation increase
    
    
    4.75
    %
    
    
    4.75
    %
    
    
    3.51
    %
    
    
    3.70
    %
  United States
    
    
    InternationalAs of December 31,
    
    
    As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2009
    
    
    2008
    
    
    2007Discount rate
    
    
    5.60
    %
    
    
    6.00
    %
    
    
    5.90
    %
    
    
    5.79
    %
    
    
    5.13
    %
    
    
    4.75
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    5.07
    %
    
    
    5.73
    %
    
    
    5.75
    %Rate of compensation increase
    
    
    4.75
    %
    
    
    4.75
    %
    
    
    4.75
    %
    
    
    3.56
    %
    
    
    3.77
    %
    
    
    3.75
    %
  74




---



##### 



United States
    
    
    InternationalAs of  December 31,
    
    
    As of  December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Short-term investments
    
    
    5
    %
    
    
    3
    %
    
    
    4
    %
    
    
    5
    %Fixed income securities
    
    
    16
    %
    
    
    27
    %
    
    
    31
    %
    
    
    36
    %Equity securities
    
    
    72
    %
    
    
    55
    %
    
    
    31
    %
    
    
    27
    %Absolute return strategy equity funds
    
    
    7
    %
    
    
    15
    %
    
    
    0
    %
    
    
    0
    %Insurance contracts
    
    
    0
    %
    
    
    0
    %
    
    
    34
    %
    
    
    32
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   United(In millions)
    
    States
    
    International2010
    
    $
    15.5
    
    
    $
    2.12011
    
    $
    4.3
    
    
    $
    2.42012
    
    $
    4.9
    
    
    $
    2.42013
    
    $
    6.0
    
    
    $
    2.52014
    
    $
    6.4
    
    
    $
    2.62015-2019
    
    $
    33.1
    
    
    $
    15.9
 75




---



##### 



Quoted prices inactive markets for
    
    
    Significant other
    
    
    UnobservableDecember 31,
    
    
    identical assets
    
    
    observable inputs
    
    
    inputs(In millions)
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Short-term
investments:Money markets
    
    $
    3.5
    
    
    $
    3.5
    
    
    $
    
    
    
    $
    Commingled trust funds
    
    
    1.9
    
    
    
    1.9
    
    
    
    
    
    
    
    Mutual funds
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    Other short-term investments
    
    
    0.3
    
    
    
    0.3
    
    
    
    
    
    
    
    Fixed income
securities:Mutual funds
    
    
    28.7
    
    
    
    13.2
    
    
    
    15.5
    
    
    
    Equity securities:Blended mutual funds
    
    
    23.4
    
    
    
    6.6
    
    
    
    16.8
    
    
    
    Large-cap growth funds
    
    
    18.3
    
    
    
    
    
    
    
    
    
    
    
    18.3Small-cap growth funds
    
    
    7.9
    
    
    
    7.9
    
    
    
    
    
    
    
    Small-cap value funds
    
    
    7.2
    
    
    
    7.2
    
    
    
    
    
    
    
    Commingled trust funds
    
    
    6.2
    
    
    
    
    
    
    
    
    
    
    
    6.2Growth mutual funds
    
    
    1.2
    
    
    
    1.2
    
    
    
    
    
    
    
    Other investments:Insurance contracts
    
    
    19.9
    
    
    
    
    
    
    
    19.9
    
    
    
    Absolute
return strategy funds
    
    
    4.4
    
    
    
    
    
    
    
    4.4
    
    
    
    Total
    
    $
    123.1
    
    
    $
    41.8
    
    
    $
    56.8
    
    
    $
    24.5
   FixedIncome -
    
    
    Equity -
    
    
    Equity -
    
    
    Equity -Corporate
    
    
    Large-cap
    
    
    Small-cap
    
    
    ComingledBond
    
    
    Growth
    
    
    Value
    
    
    Trust(In millions)
    
    Funds
    
    
    Funds
    
    
    Funds
    
    
    Funds
    
    
    TotalBalance, beginning of year
    
    $
    0.1
    
    
    $
    
    
    
    $
    0.2
    
    
    $
    7.2
    
    
    $
    7.5Realized gains (losses)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.1
    
    
    
    1.1Unrealized gains (losses) relating to
instruments still held at the reporting date
    
    
    
    
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.1Pruchases/ issuances
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.2Sales/ settlements
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    (2.1
    )
    
    
    (2.3
    )Transfer into level 3
    
    
    
    
    
    
    18.3
    
    
    
    
    
    
    
    
    
    
    
    18.3Transfer (out) of level 3
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )Balance, end of year
    
    $
    
    
    
    $
    18.3
    
    
    $
    
    
    
    $
    6.2
    
    
    $
    24.5
 76




---



##### 



Note 11  Employee Savings and Stock Ownership Plans
    Note 12  Stock-Based Compensation
     77




---



##### 



Stock Options
   2009
    
    
    2008
    
    
    2007Volatility
    
    
    41
    %
    
    
    31
    %
    
    
    29
    %Risk-free interest rate
    
    
    2.13
    %
    
    
    3.04
    %
    
    
    4.60
    %Expected life (months)
    
    
    65
    
    
    
    61
    
    
    
    63Dividend yield
    
    
    0.0
    %
    
    
    2.6
    %
    
    
    1.7
    %
  78




---



##### 



WeightedAverage
    
    AggregateWeighted
    
    
    Remaining
    
    IntrinsicAverage
    
    
    Contractual Life
    
    ValueStock Options
    
    
    Exercise Price
    
    
    (Years)
    
    (millions)Outstanding December 31, 2006
    
    
    3,378,979
    
    
    $
    34.48
    
    
    6.1
    
    $
    40.4Granted
    
    
    606,312
    
    
    
    37.54Exercised
    
    
    (293,954
    )
    
    
    26.24Cancelled
    
    
    (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
    )
    
    
    18.33Cancelled
    
    
    (89,315
    )
    
    
    35.98Forfeited
    
    
    (147,873
    )
    
    
    35.32Outstanding December 31, 2008
    
    
    4,103,756
    
    
    $
    32.09
    
    
    6.2
    
    $
    Granted
    
    
    1,054,599
    
    
    
    9.71Exercised
    
    
    
    
    
    
    Cancelled
    
    
    (341,850
    )
    
    
    31.25Forfeited
    
    
    (221,667
    )
    
    
    28.32Outstanding December 31, 2009
    
    
    4,594,838
    
    
    $
    27.19
    
    
    6.2
    
    $
    0.1
   Exercisable Options
    
    Options Expected to VestWeighted
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    Weighted
    
    
    
    
    
    Remaining
    
    WeightedContractual
    
    Average
    
    
    
    
    
    Contractual
    
    AverageLife
    
    Exercise
    
    Stock
    
    Life
    
    ExerciseRange of Exercise Prices
    
    Stock Options
    
    (Years)
    
    Price
    
    Options
    
    (Years)
    
    Price$6.95 to $14.15
    
    
    -
    
    
    
    0.0
    
    
    $
    -
    
    
    
    857,034
    
    
    
    9.3
    
    
    $
    9.69$14.16 to $19.20
    
    
    3,500
    
    
    
    1.0
    
    
    
    14.94
    
    
    
    -
    
    
    
    9.3
    
    
    
    9.69$19.21 to $23.95
    
    
    159,444
    
    
    
    2.0
    
    
    
    23.09
    
    
    
    12,918
    
    
    
    8.5
    
    
    
    21.58$23.96 to $28.70
    
    
    350,767
    
    
    
    8.1
    
    
    
    24.36
    
    
    
    599,442
    
    
    
    8.2
    
    
    
    24.52$28.71 to $39.38
    
    
    1,415,892
    
    
    
    4.0
    
    
    
    33.96
    
    
    
    163,734
    
    
    
    7.2
    
    
    
    37.44$39.39 to $41.75
    
    
    649,544
    
    
    
    3.7
    
    
    
    40.71
    
    
    
    67,860
    
    
    
    6.1
    
    
    
    41.62$41.76 to $46.97
    
    
    32,150
    
    
    
    6.4
    
    
    
    44.33
    
    
    
    9,289
    
    
    
    6.7
    
    
    
    44.53$6.95 to $46.97
    
    
    2,611,297
    
    
    
    4.4
    
    
    $
    33.79
    
    
    
    1,710,277
    
    
    
    7.2
    
    
    $
    19.09
  79




---



##### 



Restricted Stock
  WeightedAverage GrantDate Fair ValueRestricted Stock
    
    
    Per ShareNonvested as of December 31, 2006
    
    
    214,163
    
    
    $
    38.71Granted
    
    
    118,143
    
    
    
    38.08Vested
    
    
    (69,834
    )
    
    
    38.57Forfeited
    
    
    (55,243
    )
    
    
    38.33Nonvested as of December 31, 2007
    
    
    207,229
    
    
    $
    38.52Granted
    
    
    206,261
    
    
    
    24.05Vested
    
    
    (80,219
    )
    
    
    37.85Forfeited
    
    
    (28,760
    )
    
    
    37.61Nonvested as of December 31, 2008
    
    
    304,511
    
    
    $
    28.98Granted
    
    
    327,654
    
    
    
    9.38Vested
    
    
    (119,074
    )
    
    
    29.44Forfeited
    
    
    (51,389
    )
    
    
    30.04Nonvested as of December 31, 2009
    
    
    461,702
    
    
    $
    14.84
   Note 13  Fair Value Measurements
  80




---



##### 



Fair value of financial instruments
  Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
    Cash Flow Hedges
   Other Hedges
    81




---



##### 



Quoted prices inactive markets for
    
    
    Significant other
    
    
    UnobservableDecember 31,
    
    
    identical assets
    
    
    observable inputs
    
    
    inputs(In millions)
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Derivative assets
    
    $
    1.0
    
    
    $
    
    
    
    $
    1.0
    
    
    $
    Derivative liabilities
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    Total
    
    $
    0.7
    
    
    $
    
    
    
    $
    0.7
    
    
    $
    
  Fair ValueOther
    
    
    OtherNotional
    
    
    current
    
    
    current(In millions)
    
    amount
    
    
    assets
    
    
    liabilitiesCash flow hedges designated as hedging instruments
    
    $
    48.0
    
    
    $
    0.8
    
    
    $
    Other hedges not receiving hedge accounting
    
    
    88.8
    
    
    
    0.2
    
    
    
    (0.3
    )Total
    
    $
    136.8
    
    
    $
    1.0
    
    
    $
    (0.3
    )
  Pretax gain/(loss) onPretax gain/(loss)
    
    
    effective portion ofrecognized in
    
    
    derivativeother
    
    
    reclassification from
    
    
    Pretax gain/(loss)comprehensive
    
    
    accumulated other
    
    
    recognized in theincome on
    
    
    comprehensive income
    
    
    Condensed Statement ofeffective portion
    
    
    to cost of goods
    
    
    Operations in other(In millions)
    
    of derivative
    
    
    sold, net
    
    
    expense, netCash flow hedges designated as hedging instruments
    
    $
    1.1
    
    
    $
    (3.8
    )
    
    $
    Other hedges not receiving hedge accounting
    
    
    
    
    
    
    
    
    
    
    (24.1
    )Total
    
    $
    1.1
    
    
    $
    (3.8
    )
    
    $
    (24.1
    )
 Note 14  Leases
  82




---



##### 



(In millions)
    
    2009
    
    
    2008
    
    
    2007Minimum lease payments*
    
    $
    10.3
    
    
    $
    16.7
    
    
    $
    12.0Contingent rentals*
    
    
    18.0
    
    
    
    13.7
    
    
    
    18.9Rental income
    
    
    (2.8
    )
    
    
    (2.4
    )
    
    
    (2.9
    )Sublease income
    
    
    (0.3
    )
    
    
    (0.5
    )
    
    
    (0.4
    )Total rental expense
recognized in income
    
    $
    25.2
    
    
    $
    27.5
    
    
    $
    27.6
 
 *
    
    Minimum lease payments and contingent rental expenses incurred due to agreements with
warehouse providers are included as a component of cost of goods sold in the Consolidated
Statements of Operations. The minimum lease payments under such arrangements were $2.2 million,
$3.9 million and $3.3 million in 2009, 2008 and 2007, respectively. The contingent rental expenses
under such arrangements were $5.8 million, $0.7 million and $1.1 million in 2009, 2008 and 2007,
respectively.  (In millions)
    
    2010
    
    2011
    
    2012
    
    2013
    
    2014
    
    Thereafter
    
    TotalMinimum lease payments**
    
    $
    12.7
    
    
    $
    11.4
    
    
    $
    8.2
    
    
    $
    5.3
    
    
    $
    4.2
    
    
    $
    1.5
    
    
    $
    43.3
 
 **
    
    Minimum payments have not been reduced by minimum sublease rentals of approximately $2.1 due
in the future under non-cancelable lease agreements. Note 15  Shareholders Equity
     83




---



##### 



Note 16  Business Segment Information and Geographic Data
     Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Net RevenueAmericas
    
    $
    649.2
    
    
    $
    757.3
    
    
    $
    928.6Europe
    
    
    415.2
    
    
    
    543.7
    
    
    
    520.2Asia Pacific
    
    
    400.1
    
    
    
    434.4
    
    
    
    328.9Electronic Products
    
    
    185.0
    
    
    
    245.6
    
    
    
    118.1Total
    
    $
    1,649.5
    
    
    $
    1,981.0
    
    
    $
    1,895.8
 Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Operating Income (Loss)Americas
    
    $
    55.4
    
    
    $
    71.5
    
    
    $
    82.9Europe
    
    
    1.7
    
    
    
    17.0
    
    
    
    40.9Asia Pacific
    
    
    18.7
    
    
    
    28.7
    
    
    
    23.5Electronic Products
    
    
    (7.2
    )
    
    
    (13.4
    )
    
    
    5.5Corporate and unallocated
    
    
    (130.3
    )
    
    
    (137.5
    )
    
    
    (191.5
    )Total
    
    $
    (61.7
    )
    
    $
    (33.7
    )
    
    $
    (38.7
    )
  84




---



##### 



Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Optical products
    
    $
    738.0
    
    
    $
    851.6
    
    
    $
    788.0Magnetic products
    
    
    474.2
    
    
    
    644.4
    
    
    
    703.9Flash media products
    
    
    90.0
    
    
    
    99.2
    
    
    
    157.1Electronic products, accessories and other
    
    
    347.3
    
    
    
    385.8
    
    
    
    246.8Total
    
    $
    1,649.5
    
    
    $
    1,981.0
    
    
    $
    1,895.8
  Years Ended December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Net RevenueUnited States
    
    $
    726.9
    
    
    $
    840.6
    
    
    $
    896.9International
    
    
    922.6
    
    
    
    1,140.4
    
    
    
    998.9Total
    
    $
    1,649.5
    
    
    $
    1,981.0
    
    
    $
    1,895.8
 As of December 31,(In millions)
    
    2009
    
    
    2008
    
    
    2007Long-Lived AssetsUnited States
    
    $
    105.1
    
    
    $
    116.9
    
    
    $
    167.0International
    
    
    4.7
    
    
    
    5.5
    
    
    
    4.5Total
    
    $
    109.8
    
    
    $
    122.4
    
    
    $
    171.5
 Note 17  Commitments and Contingencies
   85




---



##### 



Philips
    Future(In millions)
    
    PaymentsYear2010
    
    $
    8.22011
    
    
    8.32012
    
    
    16.5Total undiscounted payments
    
    $
    33.0Adjustment for present value using 6% discount rate
    
    
    (3.3
    )Total liability recognized in the Condensed Consolidated Balance
Sheet as of December 31, 2009
    
    $
    29.7
  SanDisk
    86




---



##### 



Environmental Matters
  Note 18  Related Party Transactions
   87




---



##### 



Note 19  Quarterly Data (Unaudited)
 (In millions, except per share amounts)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    Total(1)2008Net revenue
    
    $
    494.7
    
    
    $
    496.5
    
    
    $
    475.9
    
    
    $
    513.9
    
    
    $
    1,981.0Gross profit
    
    
    96.3
    
    
    
    91.4
    
    
    
    78.5
    
    
    
    72.6
    
    
    
    338.8Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32.4
    
    
    
    32.4Operating income (loss)
    
    
    17.6
    
    
    
    9.7
    
    
    
    (11.0
    )
    
    
    (50.0
    )
    
    
    (33.7
    )Income from continuing operations
    
    
    10.4
    
    
    
    5.6
    
    
    
    (7.4
    )
    
    
    (46.4
    )
    
    
    (37.8
    )Discontinued operations
    
    
    0.6
    
    
    
    1.6
    
    
    
    1.5
    
    
    
    0.8
    
    
    
    4.5Net income (loss)
    
    
    11.0
    
    
    
    7.2
    
    
    
    (5.9
    )
    
    
    (45.6
    )
    
    
    (33.3
    )Earnings (loss) per common share, continuing operations:Basic
    
    $
    0.28
    
    
    $
    0.15
    
    
    $
    (0.20
    )
    
    $
    (1.24
    )
    
    $
    (1.01
    )Diluted
    
    
    0.28
    
    
    
    0.15
    
    
    
    (0.20
    )
    
    
    (1.24
    )
    
    
    (1.01
    )Earnings per common share, discontinued operations:Basic
    
    $
    0.02
    
    
    $
    0.04
    
    
    $
    0.04
    
    
    $
    0.02
    
    
    $
    0.12Diluted
    
    
    0.02
    
    
    
    0.04
    
    
    
    0.04
    
    
    
    0.02
    
    
    
    0.12Earnings (loss) per common share, net income:Basic
    
    $
    0.29
    
    
    $
    0.19
    
    
    $
    (0.16
    )
    
    $
    (1.22
    )
    
    $
    (0.89
    )Diluted
    
    
    0.29
    
    
    
    0.19
    
    
    
    (0.16
    )
    
    
    (1.22
    )
    
    
    (0.89
    )2009Net revenue
    
    $
    396.5
    
    
    $
    400.0
    
    
    $
    401.3
    
    
    $
    451.7
    
    
    $
    1,649.5Gross profit
    
    
    66.9
    
    
    
    63.4
    
    
    
    64.5
    
    
    
    69.2
    
    
    
    264.0Operating (loss) income
    
    
    (8.6
    )
    
    
    (59.3
    )
    
    
    1.7
    
    
    
    4.5
    
    
    
    (61.7
    )(Loss) income from continuing operations
    
    
    (12.7
    )
    
    
    (38.3
    )
    
    
    (0.3
    )
    
    
    7.3
    
    
    
    (44.0
    )Discontinued operations
    
    
    1.1
    
    
    
    1.4
    
    
    
    (0.1
    )
    
    
    (0.6
    )
    
    
    1.8Net (loss) income
    
    
    (11.6
    )
    
    
    (36.9
    )
    
    
    (0.4
    )
    
    
    6.7
    
    
    
    (42.2
    )(Loss) earnings per common share, continuing operations:Basic
    
    $
    (0.34
    )
    
    $
    (1.02
    )
    
    $
    (0.01
    )
    
    $
    0.19
    
    
    $
    (1.17
    )Diluted
    
    
    (0.34
    )
    
    
    (1.02
    )
    
    
    (0.01
    )
    
    
    0.19
    
    
    
    (1.17
    )Earnings (loss) per common share, discontinued operations:Basic
    
    $
    0.03
    
    
    $
    0.04
    
    
    $
    
    
    
    $
    (0.02
    )
    
    $
    0.05Diluted
    
    
    0.03
    
    
    
    0.04
    
    
    
    
    
    
    
    (0.02
    )
    
    
    0.05(Loss) earnings per common share, net income:Basic
    
    $
    (0.31
    )
    
    $
    (0.98
    )
    
    $
    (0.01
    )
    
    $
    0.18
    
    
    $
    (1.12
    )Diluted
    
    
    (0.31
    )
    
    
    (0.98
    )
    
    
    (0.01
    )
    
    
    0.18
    
    
    
    (1.12
    )
 
 (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
 88




---



##### 



Changes in Internal Controls.
 Managements Report on Internal Control over Financial Reporting
   
 Item 9B. Other Information.
  89




---



##### 



PART III
  
 Item 10. Directors, Executive Officers and Corporate Governance.
 Board of Directors
        Business
    90




---



##### 



Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  Equity Compensation Plan Information
  Number of securitiesWeighted-
    
    
    remaining availableaverage
    
    
    for future issuanceNumber of securities
    
    
    exercise price
    
    
    under equityto be issued upon
    
    
    of outstanding
    
    
    compensation plansexercise of
    
    
    options,
    
    
    (excluding securitiesEquity compensation plans approved by
    
    outstanding options,
    
    
    warrants and
    
    
    reflected in the firstshareholders
    
    warrants and rights
    
    
    rights
    
    
    column)2008 Stock Incentive Plan
    
    
    1,191,562
    (1)
    
    $
    11.46
    
    
    
    2,330,3862005 Stock Incentive Plan
    
    
    1,838,805
    (1)
    
    
    32.06
    
    
    
    
    (2)2000 Stock Incentive Plan
    
    
    1,287,878
    
    
    
    33.81
    
    
    
    
    (2)1996 Employee Stock Incentive Program
    
    
    60,000
    
    
    
    28.75
    
    
    
    
    (2)1996 Directors Stock Compensation Program
    
    
    216,593
    
    
    
    32.73
    
    
    
    
    (2)Total
    
    
    4,594,838
    
    
    $
    27.19
    
    
    
    2,330,386
 
 (1)
    
    This number does not include restricted stock of 403,216 shares under our 2008 Stock
Incentive Plan and 58,486 shares under our 2005 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. 91




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Item 13. Certain Relationships and Related Transactions and Director Independence.
  
 Item 14. Principal Accountant Fees and Services.
  92




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##### 



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
    
    
    44Consolidated Statements of Operations for the Years Ended December 31, 2009, 2008 and 2007
    
    
    45Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    46Consolidated Statements of Shareholders Equity and Comprehensive Income (Loss) for the
Years Ended December 31, 2009, 2008 and 2007
    
    
    47Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007
    
    
    48Notes to Consolidated Financial Statements
    
    
    49
 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)10.2
    
    
    Amendment Agreement to Shareholders Agreement in relation to Global Data Media FZ-LLC (incorporated by
reference to Exhibit 10.1 to Imations Form 8-K Current Report filed on January 26, 2006)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)
 93




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##### 



Number
    
    Description of Exhibit10.4
    
    
    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
    
    
    Third amdendment to Credit Agreement among Imation Corp. and Imatin Enterprises Corp. as borrowers,
Bank of America, N.A. as administrative agent and 1/c issuer, and a Consortium of Lenders, dated as of
June 3, 2009 (incorporated by reference to Exhibit 10.2 to Imations Form 10-Q for the quarter ended
June 30, 2009)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 Emplyment 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*
    
    
    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)10.15*
    
    
    Imation 1996 Employee Stock Incentive Program (incorporated by reference to Exhibit 10.8 to
Registration Statement on Form 10, No. 1-14310)10.16*
    
    
    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)10.17*
    
    
    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)10.18*
    
    
    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)10.19*
    
    
    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)10.20*
    
    
    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)10.21*
    
    
    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)10.22*
    
    
    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)10.23*
    
    
    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)10.24*
    
    
    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)10.25*
    
    
    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)10.26*
    
    
    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)10.27*
    
    
    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)10.28*
    
    
    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)10.29*
    
    
    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)10.30*
    
    
    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)
 94




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##### 



Number
    
    Description of Exhibit10.31*
    
    
    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)10.32*
    
    
    Form of Amendment to 2005 Stock Incentive Plan Option Agreements -
Executive Officer (incorporated by reference to Exhibit 10.5 to
Imations Form 8-K Current Report filed on February 13, 2006)10.33*
    
    
    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)10.34*
    
    
    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)10.35*
    
    
    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)10.36*
    
    
    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)10.37*
    
    
    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)10.38*
    
    
    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)10.39*
    
    
    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)10.40*
    
    
    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)10.41*
    
    
    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)10.42*
    
    
    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)10.43*
    
    
    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)10.44*
    
    
    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)10.45*
    
    
    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)10.46*
    
    
    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)10.47*
    
    
    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)10.48*
    
    
    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)10.49*
    
    
    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)10.50*
    
    
    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)10.51*
    
    
    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)10.52*
    
    
    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)10.53*
    
    
    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)10.54*
    
    
    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)10.55*
    
    
    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)10.56*
    
    
    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*
    
    
    Imation Excess Benefit Plan (incorporated by reference to Exhibit
10.10 to Registration Statement on Form 10, No. 1-14310)10.58*
    
    
    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 Februaury 17, 2009)
 95




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##### 



Number
    
    Description of Exhibit10.59*
    
    
    Directors Compensation Program Effective May 4, 2005 (As amended May
6, 2009) (incorporated by reference to Exhibit 10.2 to Imations Form
10-Q ffor the quarter ended March 31, 2009)10.60*
    
    
    Form of amended and restated Severence Agreement with Executive
Officers (incorporated by reference to Exhibit 10.1 to Imations Form
10-Q for the quarter ended June 30, 2009)10.61*
    
    
    Description of 2010 Annual Bonus Plan Target Approval (incorporated by
reference to Imations Form 8-K Current Report filed on November 9,
2009)21.1
    
    
    Subsidiaries of Imation Corp.23.1
    
    
    Consent of Independent Registered Public Accounting Firm24.1
    
    
    Power of Attorney31.1
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Items that are management contracts or compensatory plans or arrangements required to be
filed as an exhibit pursuant to Item 15(b) of Form 10-K. 96




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##### 



SIGNATURES
  IMATION CORP.By:
    /s/ FRANK P. RUSSOMANNOFrank P. RussomannoVice Chairman and Chief Executive Officer  97




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##### 



Signature
    
    Title
    
    Date/s/ FRANK P. RUSSOMANNO
    
    Vice Chairman and Chief Executive Officer
    
    February 26, 2010Frank P. Russomanno
    
    (Principal Executive Officer)/s/ PAUL R. ZELLER
    
    Senior Vice President and Chief Financial Officer
    
    February 26, 2010Paul R. Zeller
    
    (Principal Financial Officer)/s/ SCOTT J. ROBINSON
    
    Vice President, Corporate Controller and Chief
Accounting Officer
    
    February 26, 2010Scott J. Robinson
    
    (Principal Accounting Officer)*
    
    Director
    
    February 26, 2010Michael S. Fields*
    
    Director
    
    February 26, 2010Charles A. Haggerty*
    
    Director
    
    February 26, 2010Linda W. Hart*
    
    Director
    
    February 26, 2010Ronald T. LeMay*
    
    Director
    
    February 26, 2010Raymond Leung*
    
    Director
    
    February 26, 2010L. White Matthews, III*
    
    Director
    
    February 26, 2010Glen A. Taylor*
    
    Director
    
    February 26, 2010Daryl J. White*By: /s/ JOHN L. SULLIVANJohn L. SullivanAttorney-in-fact
 98




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##### 



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
 99