Kodak 2000 Annual Report Download - page 61

Management plans to continue supporting the viable re m a i n-
ing R&D programs and believes the Company has a re a s o n a b l e
chance of succes sfully completing the remaining R&D pro g r a m s .
H o w e v e r, there is a risk associated with the completion of the
R&D projects and the Company cannot be assured that these
p rojects will result in commercial success.
Without successful completion of the remaining R&D eff o rt s
on the acquired in-process technologies, the end result would be
to fail to fulfill product design specifications and in turn fail to
meet market re q u i rements. As a result, the Company would not
realize the future revenues and profits attributed to the acquire d
R&D. Ultimately, the Company would fail to realize the expected
re t u rn on such investments. The failure of any particular individ-
ual in-proces s R&D project would not materially impact the
C o m p a n y ’s financial position or results of operations. Operating
results are subject to uncertain market events and risks, which
a re beyond the Company’s control, such as trends in technology,
market size and growth, and product introduction or other actions
by competitors.
P i c t u re Vi s i o n The in-proc e s s te chnology acquired fro m
P i c t u re Vision primarily related to two projects: PhotoNet2 and
the PhotoRamp valued at $16 million and $4 million. These pro j-
ects resulted in a total in-process R&D charge of $10 million,
reflecting the Company’s 49% acquisition.
PhotoNet2, or P2, is an enhanced version of Picture Vi s i o n ’s
original PhotoNet system which will allow higher capacity and
activity levels. PhotoNet essentially allows photofinishers to scan
(digitize) rolls of film and upload the images to a branded web site
that stores the images in a database for consumer use. The
PhotoRamp is designed to provide digitization of existing photos
as opposed to digitization of film and will support a variety of film
types including 35mm, Advantix, 110, and 120 films.
The PhotoRamp was completed in 2000 and P2 is expected
to be completed in 2001. The remaining costs to complete P2 are
not anticipated to be material.
Imation Medical Imaging The in-process technology acquire d
f rom Imation consists of eight R&D projects within three bro a d
technology groupings: Dry, Imagesetting, and Analog.
Work on all in-process technology projects related to this
acquisition was concluded in 2000. The imagesetting pro j e c t s
w e re discontinued while cash inflows from the remaining acquire d
technology commenced in 2000. These inflows are expected to
peak in 2001 and steadily decline through 2007.
A c q u i red developed technology of approximately $90 million
was capitalized at acquisition date and is being amortized over
seven years on a straight-line basis.
Note 16: Sales of Assets and Divestiture s
1 9 9 9 In April 1999, the Company sold its digital printer, copier-
d u p l i c a t o r, and roller assembly operations primarily associated
with its Office Imaging business, which included its operations in
R o c h e s t e r, NY, Muehlhausen, Germany and Tijuana, Mexico to
H e i d e l b e rg for approximately $80 million. The transaction did not
have a material effect on the Company’s results of operations or
financial position.
In November 1999, the Company sold The Image Bank, a
wholly-owned subsidiary which markets and licenses image
re p roduction rights, to Getty Images, Inc. for $183 million in cash.
As a result of this transaction, the Company re c o rded a pre - t a x
gain of $95 million in other income (charg e s ) .
In November 1999, the Company sold its Motion Analysis
Systems Division, which manufactures digital cameras and digi-
tal video cameras for the automotive and industrial markets, to
Roper Industries, Inc. for approximately $50 million in cash. As a
result of this transaction, the Company re c o rded a pre-tax gain of
$25 million in other income (charg e s ) .
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