Kodak 2011 Annual Report Download - page 9

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. The distribution of motion
pictures to theaters is another important element of the Entertainment Imaging business, one in which the Company continues to be widely recognized as a
market leader. Price competition is a bigger factor in this segment of the motion picture market, but the Company continues to maintain leading share
position. As the industry continues to move to digital cinema formats, the Company anticipates that it will face new competitors, including some of its
current customers and other electronics manufacturers.
FINANCIAL INFORMATION BY GEOGRAPHIC AREA
Financial information by geographic area for the past three years is shown in Note 25, “Segment Information,” in the Notes to Financial Statements.
RAW MATERIALS
The raw materials used by the Company are many and varied, and are generally readily available. Lithographic aluminum is the primary material used in
the manufacture of offset printing plates. The Company procures lithographic aluminum coils from several suppliers on a spot basis or under contracts
generally in place over the next one to two years. Silver is one of the essential materials used in the manufacture of films and photographic papers. The
Company purchases silver from numerous suppliers under annual agreements or on a spot basis. Paper base is an essential material in the manufacture of
photographic papers. The Company has a contract to acquire paper base from a certified photographic paper supplier through the end of 2012. Electronic
components are used in the manufacture of digital cameras and devices, consumer and commercial printers, and other electronic devices. Although most
electronic components are generally available from multiple sources, certain key electronic components included in the finished goods manufactured by and
purchased from the Company’s third party suppliers are obtained from single or limited sources, which may subject the Company to supply risks.
SEASONALITY OF BUSINESS
Sales and earnings of the CDG segment are linked to the timing of holidays, vacations and other leisure or gifting seasons. Digital capture and consumer
inkjet printing products have experienced peak sales during the last four months of the year as a result of the December holidays. Sales are normally lowest
in the first quarter due to the absence of holidays and fewer picture-taking and gift-giving opportunities during that time.
Sales and earnings of the GCG segment generally exhibit modestly higher levels in the fourth quarter, due to seasonal customer demand linked to
commercial year-end advertising processes.
Sales and earnings of the FPEG segment are linked to the timing of holidays, vacations and other leisure activities. Sales and earnings of traditional film
and photofinishing products are normally strongest in the second and third quarters as demand is high due to heavy vacation activity and events such as
weddings and graduations. Sales of entertainment imaging film are typically strongest in the second quarter reflecting demand due to the summer motion
picture season.
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 three reportable segments and All Other were as follows:
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