Kodak 2008 Annual Report Download - page 9

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Throughout the world, most Entertainment Imaging products are sold directly to studios, laboratories, independent filmmakers or
production companies. Quality and availability are important factors for these products, which are sold in a price competitive
environment. As the industry moves to digital formats, the Company anticipates that it will face new competitors, including some of
its current customers and other electronics manufacturers.
Film products and services for the consumer and professional markets and traditional photofinishing are sold throughout the world,
both directly to retailers and, increasingly, through distributors. Price competition continues to exist in all marketplaces. To be more
cost competitive with its traditional photofinishing and film offerings and to shift towards a variable cost model, the Company has
rationalized capacity and restructured its go-to-market model. The Company will continue to manage this business to focus on cash
flow and earnings performance in this period of continuing revenue decline.
Graphic Communications Group (“GCG”) Segment
Sales from continuing operations of the Graphic Communications Group segment for 2008, 2007 and 2006 were (in millions) $3,334,
$3,413, and $3,287, respectively.
The Graphic Communications Group segment serves a variety of customers in the creative, in-plant, data center, commercial
printing, packaging, newspaper, and digital service bureau market segments with a range of software, media, and hardware products
that provide customers with a variety of solutions for prepress equipment, workflow software, digital and traditional printing,
document scanning, and multi-vendor services. Products include digital and traditional prepress equipment and consumables,
including plates, chemistry, and media; workflow software and digital controller development; color and black-and-white
electrophotographic equipment and consumables; high-speed, high-volume commercial inkjet printing systems; wide-format inkjet
inks and media; high-speed production and workgroup document scanners; and micrographic peripherals and media (including
micrographic films). GCG also provides maintenance and professional services for Kodak and other manufacturers' products, as well
as providing imaging services to customers.
On January 13, 2009, the Company announced its agreement to acquire the scanner division of BOWE BELL + HOWELL, which
markets a portfolio of production document scanners that complements the products currently offered within the GCG segment.
Through this acquisition, Kodak expects to expand customer value by providing a wider choice of production scanners. Since Kodak
has provided field service to BOWE BELL + HOWELL Scanners since 2001, this acquisition is also expected to enhance global
access to service and support for channel partners and end-user customers worldwide.
Marketing and Competition: Throughout the world, graphic communications products are sold through a variety of direct and
indirect channels. The end users of these products include businesses in the commercial printing, data center, in-plant and digital
service provider market segments. While there is price competition, the Company has generally been able to maintain price by
adding more attractive features to its products through technological advances. The Company has developed a wide-ranging
portfolio of digital products - workflow, equipment, media, and services - that combine to create a value-added complete solution to
customers. Maintenance and professional services for the Company's products are sold either through product distribution channels
or directly to the end users. In addition, a range of inkjet products for digital printing and proofing are sold through direct and indirect
means. Document scanners are sold primarily through a two-tiered distribution channel to a number of different industries.
All Other
Sales from continuing operations comprising All Other for 2008, 2007 and 2006 were (in millions) $7, $9, and $14, respectively.
All Other is composed of the Company's display business and other small, miscellaneous businesses.
Discontinued Operations
Health Group
On April 30, 2007 the Company closed on the sale of its Health Group to Onex Healthcare Holdings, Inc., a subsidiary of Onex
Corporation. Approximately 8,100 employees of the Company associated with the Health Group transitioned to Carestream Health
Inc. as part of the transaction. Also included in the sale were manufacturing operations focused on the production of health imaging
products, as well as an office building in Rochester, NY.
HPA
On October 17, 2007, the shareholders of Hermes Precisa Pty. Ltd. (“HPA”), a majority owned subsidiary of Kodak (Australasia) Pty.
Ltd., a wholly owned subsidiary of the Company, approved an agreement to sell all of the shares of HPA to Salmat Limited. The sale
was approved by the Federal Court of Australia on October 18, 2007, and closed on November 2, 2007. HPA, a publicly traded
Australian company, is a provider of outsourced services in business communication and data processes and was formerly reported
within the Company’s Graphic Communications Group segment.