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Imation Ekes Out Q1 Profit

4/27/2010 04:20:57 PM Eastern

Oakdale, Minn. - Imation today reported a slight
operating profit in the fiscal first quarter, the last of retiring CEO Frank
Russomanno's career, while revenue was down compared with the same period last
year.

The storage company reported revenue of $365.8 million, down 7.7
percent compared with Q1 2009 revenue of $396.5 million, though that is a
substantially lower rate of decline from recent quarters. The company cited
price erosion of approximately 10 percent and overall volume declines of approximately
1 percent, partially offset by favorable currency impact.

From a product perspective, the overall revenue decrease was
driven primarily by declines in optical and magnetic products, partially offset
by increases in flash products and removable and external hard drives.

Operating income moved into the black, at $200,000 in Q1,
compared with an operating loss of $8.6 million in Q1 2009. Gross margin, at
16.9 percent, was flat compared with the previous year's period.

Revenue in Imation's Americas segment, which represented
37.2 percent of total revenue in the quarter, decreased 10.7 percent from last
year's quarter, driven mainly by declines in magnetic and optical products, the
company said.

Commenting on the results, Russomanno, who
will be succeeded as CEO
by Imation president/COO Mark Lucas on May 5,
said, "We are pleased with the solid start we have had to the year, continuing
the momentum we saw in the second half of 2009. Our emerging storage formats of
flash and removable and external hard disk drives had significant revenue
growth in the quarter. Also, we saw lower revenue declines in our larger
traditional storage areas of magnetic and optical compared to 2009. Our revenue
in electronics and accessories declined, reflecting our more selective
participation in this category, especially in video products."

He continued,
"We have weathered what we expect to be the worst of the recession and are
emerging with a strong financial foundation in place. We have returned to
operating profitability, have dramatically improved our cash flow generation,
and remain debt free. I am optimistic as I retire from Imation and our current
president and COO Mark Lucas assumes responsibility as the company's new CEO
next month, that our strong financial foundation provides an excellent platform
upon which to build for the future."