Kodak 2006 Annual Report Download - page 17

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Research and Development
Through the years, the Company has engaged in extensive and productive efforts in research and development.
Research and development expenditures for the Company’s four reportable segments and All Other for 2006, 2005 and 2004 were as follows:
(in millions) 2006 2005 2004
Consumer Digital Imaging Group $ 171 $ 179 $ 164
Film & Photofinishing Systems Group 40 89 155
Graphic Communications Group 198 278 145
Health Group 138 162 180
All Other 163 184 192
Total $ 710 $ 892 $ 836
For an explanation of the trends in research and development expenditures in each of the segments and All Other see the discussion for each segment
in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Research and development is headquartered in Rochester, New York. Other U.S. groups are located in Boston, Massachusetts; Dallas, Texas; Oakdale,
Minnesota; New Haven, Connecticut; and San Jose and San Diego, California. Outside the U.S., groups are located in England, France, Iceland, Israel,
Germany, Japan, China, Singapore and Canada. These groups work in close cooperation with manufacturing units and marketing organizations to
develop new products and applications to serve both existing and new markets.
It has been the Company’s general practice to protect its investment in research and development and its freedom to use its inventions by obtaining
patents. The ownership of these patents contributes to the Company’s ability to provide leadership products and to generate revenue from licensing.
The Company holds portfolios of patents in several areas important to its business, including digital cameras and image sensors; network photo shar-
ing and fulfillment; flexographic and lithographic printing plates and systems, digital printing workflow and color management, proofing systems; color
and black & white electrophotographic printing systems; wide-format, continuous, and home inkjet printers; inkjet inks, media and printing systems;
thermal dye transfer and dye sublimation printing systems; digital cinema; color negative films, processing and papers; x-ray films, mammography
systems, computed radiography, digital radiography, photothermographic dry printing, medical and dental image and information systems; and organic
light-emitting diodes. Each of these areas is important to existing and emerging business opportunities that bear directly on the Company’s overall
business performance.
The Company’s major products are not dependent upon one single, material patent. Rather, the technologies that underlie the Company’s products
are supported by an aggregation of patents having various remaining lives and expiration dates. There is no individual patent or group of patents the
expiration of which is expected to have a material impact on the Company’s results of operations.
Environmental Protection
The Company is subject to various laws and governmental regulations concerning environmental matters. The U.S. federal environmental legislation
and state regulatory programs having an impact on the Company include the Toxic Substances Control Act, the Resource Conservation and Recovery
Act (RCRA), the Clean Air Act, the Clean Water Act, the NY State Chemical Bulk Storage Regulations and the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (the Superfund Law).
It is the Company’s policy to carry out its business activities in a manner consistent with sound health, safety and environmental management
practices, and to comply with applicable health, safety and environmental laws and regulations. The Company continues to engage in a program for
environmental protection and control.
Based upon information presently available, future costs associated with environmental compliance are not expected to have a material effect on the
Company’s capital expenditures, earnings or competitive position. However, such costs could be material to results of operations in a particular future
quarter or year.
Environmental protection is further discussed in the Notes to Financial Statements, Note 11, “Commitments and Contingencies.”