Kodak 2005 Annual Report Download - page 31

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The Company previously accounted for its employee stock incentive plans under Accounting Principles Board (APB) Opinion No. 25, “Accounting for
Stock Issued to Employees” and the related interpretations under FASB Interpretation No. 44, “Accounting for Certain Transactions Involving Stock
Compensation.” Accordingly, no stock-based employee compensation cost was refl ected in net earnings for the years ended December 31, 2004 and
2003, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant.
Kodak Operating Model and Reporting Structure
As of and for the year ended December 31, 2005, the Company had three reportable segments: Digital & Film Imaging Systems (D&FIS), Health
Group, and Graphic Communications Group. The balance of the Company’s operations, which individually and in the aggregate do not meet the criteria
of a reportable segment, are reported in All Other. A description of the segments is as follows:
Digital & Film Imaging Systems Segment: The D&FIS segment provides consumers, professionals and cinematographers with digital and
traditional products and services. D&FIS digital products and services include digital capture, kiosks, home printing systems and digital imaging
services. D&FIS traditional products and services include consumer and professional fi lm, photographic paper and photofi nishing, aerial and industrial
fi lm, and entertainment products and services.
Health Group Segment : The Health Group segment provides digital medical imaging and information products, and systems and solutions, which are
key components of sales and earnings growth. These include laser imagers, digital print fi lms, computed and digital radiography systems, dental
radiographic imaging systems, dental practice management software, advanced picture-archiving and communications systems (PACS), and
healthcare information systems (HCIS). Products of the Health Group segment also include traditional analog medical fi lms, chemicals, and
processing equipment. Kodak’s history in traditional analog imaging has made it a leader in this area and has served as the foundation for building its
important digital imaging business. The Health Group segment serves the general radiology market and specialty health markets, including dental,
mammography, orthopedics and oncology. The segment also provides molecular imaging for the biotechnology research market.
Graphic Communications Group Segment: The Graphic Communications Group segment is composed of the Company’s equity investments in KPG
(Kodak’s 50/50 joint venture with Sun Chemical) prior to its acquisition in April 2005; the results of KPG subsequent to the acquisition in April 2005;
the results of Creo Inc., a premier supplier of prepress and workfl ow systems used by commercial printers worldwide, which was acquired in
June 2005; NexPress Solutions, Inc., a leader in on-demand digital color and monochrome image printing systems, which was acquired in May 2004;
the Company’s equity investment in NexPress Solutions LLC (Kodak’s 50/50 joint venture with Heidelberger Druckmaschinen AG) prior to its
acquisition in May 2004; the results of Scitex Digital Printing, a provider of continuous inkjet technology, which was acquired in January 2004 and
has since been renamed Kodak Versamark; and the results of Encad, Inc., a maker of wide-format inkjet printers, inks and media. Kodak’s Document
Product and Services organization, which includes market-leading production and desktop document scanners, microfi lm, worldwide service and
support and business process services operations, is also part of this segment.
The Graphic Communications Group segment serves a variety of customers in the creative, in-plant, data center, commercial printing and digital
service bureau market segments with a variety of solutions for prepress equipment, workfl ow software, digital and traditional printing, and document
scanning and multi-vendor IT services.
All Other: All Other is composed of Kodak’s display and components business for image sensors and other small, miscellaneous businesses. It also
includes development initiatives in consumer inkjet technologies.
Prior period segment results have been restated to conform to the current period segment reporting structure.