Digital & Film Imaging Systems Sept 04

1

Digital & Film Imaging SystemsEastman Kodak Company

Adapted from Kodak Investor’s Meeting PresentationNew York City, September 22, 2004

Strategy Summary

2

Digital & Film Imaging Systems

RETAIL & WHOLESALE PRINTING

FILM PRODUCTS

DIGITAL CAMERAS & MEMORY

ONLINE PRINTING & SERVICES

HOME PRINTERS & MEDIA

PROFESSIONAL PRINTING & SERVICES

ENTERTAINMENT IMAGING

YE 2003 Revenue

$9.2 B

3

Agenda

Ø The Digital Photography Opportunity

Ø Kodak Strategies

Ø Traditional Business

Ø Digital Business

4

Ø The Digital Photography Opportunity

Ø Kodak Strategies

Ø Traditional Business

Ø Digital Business

Agenda

5

Digital Creates Opportunity

Digital technology drives growth through quality, personalization and control.

“My _____ , Anytime, Anywhere”.

US MarketSourceKodakInternal0

10

20

30

40

50

60

70

97 98 99 00 01 02 03 04 05 06 07 08 09

INDUSTRY EXPOSURE VOLUMEB

illio

ns o

f Exp

osur

esTOTAL

EXPOSURES

DSCEXPOSURES

PHONE-CAMEXPOSURES US Market

SourceKodakInternal0

10

20

30

40

50

60

70

97 98 99 00 01 02 03 04 05 06 07 08 09

INDUSTRY EXPOSURE VOLUMEB

illio

ns o

f Exp

osur

esTOTAL

EXPOSURES

DSCEXPOSURES

PHONE-CAMEXPOSURES

6

“Anytime, Anywhere” Delivers

My Office.Anytime, Anywhere.

My Pictures.Anytime, Anywhere.

and…

iPod and the Apple logo are trademarks of Apple Computer Inc.Blackberry and the RIM logo are trademarks of Research in Motion Limited.

My Music.Anytime, Anywhere.

iPod

7

“I press the button” and my personal collection…

“My Pictures Anytime, Anywhere”

…is available anywhere

I am… …includingat retail

…reminds me of homeduring a long flight

…keeps my mom’sRefrigerator ‘fresh’

…comes tomy daughter onher viewing device

…is printer formy best friend

8

Agenda

Ø The Digital Photography Opportunity

Ø Kodak Strategies

Ø Traditional Business

Ø Digital Business

9

Actions:

• Capture Incremental Volume and Share

• Reduce Manufacturing Cost Structure

• Optimize Price, Mix, SKU Structure

Result:

2003 2004e

+32%

CASH CONTRIBUTION

2003 2004e

WW INDUSTRY DECLINE

Traditional Consumer BusinessØ Manage Consumer Film Business For Cash

RO

LL

S

$Down

10-12%

10

-32%

Traditional Consumer BusinessØ Rationalize Worldwide Wholesale Photofinishing

Operation

• Market:

$

Revenue2004e/2003

Operating LabsJune ‘03 Sept. ‘04

-54%80 37

• Results:

Cost & Expense2004e/2003

-35%

$

11

• Reduce overall expense• Capture synergies from consolidation

Traditional Consumer BusinessØ Restructure Go-To-Market Structure for Digital Model

DFIS SG&A

1H 03 1H 04

• Results:

-20%$

12

Entertainment Imaging Business

• Industry condition is healthy• Normal growth in screens and releases, plus• Trend to larger, simultaneous global releases

• Kodak’s position remains strong• Innovation: Vision 2• Customer Satisfaction & Loyalty: 93%

• Effect of digital substitution is beyond planning period.

13

Ø The Digital Photography Opportunity

Ø Kodak Strategies

Ø Traditional Business

Ø Digital Business

Agenda

14

Kodak’s Digital Strategy

Ø System linkages drive customer satisfaction

Ø Ease of Use, Quality, Trust drive market growth

Consumer

Professional

15

Professional

DEVICESDEVICES

SERVICESSERVICES

CONTENTCONTENT

Consumer

Kodak’s Digital Strategy

Ø Devices-Content linked with Printing-Services drives Kodak’s profitability model.

PRINTINGPRINTING

16

Kodak’s Digital Portfolio

CAPTURE DEVICES

SERVICES

DIGITAL PRINTING

PROFITABLE

2004

2006

LONG TERMGROSS PROFIT

vs. CORPORATETARGET MODEL

Below Model

Above Model

Above Model2006

AcceleratorCONTENT for service andprinting profitability

17

• Strategic Focus• Focus on digital cameras

• Easy linkage to printing and services

• Improve profitability

• ResultsRevenue growth: +94%(1H’04 vs. 1H ’03)

Worldwide share: #4, growing.

U.S. share: #2, growing.

CAPTURE DEVICE STRATEGY

TOUCH

SHOOT

SHARE

TOUCH

SHOOT

SHARE(sources: NPD, Gfk)

18

Ø September 22:

J. D. Power and Associates names Kodak #1 in Customer Satisfactionin 2 of 4 Digital Camera categories

Digital Camera Price Category

Category Leadership

0%

10%

20%

30%

40%

50%

< $200 $200 - $399 $400 - $599 > $600

Indu

stry

Rev

enue

Sha

re (

YT

D ’0

4)

Core of Market60% of Industry Value

SourceNPD

J.D. Power and Associates 2004 Digital Camera Satisfaction Study SM

19

THE DIGITAL PRINTING MARKET

MINILABPRINTS60-70%CAGR

KIOSKPRINTS>100%CAGR

HOMEPRINTS30-40%CAGR

‘03-’07 INDUSTRY GROWTH RATES

Digital printing growthwill be healthy.

Kodak iswell positioned

in all segments…

…focused on growthwherever consumers

choose to print.

SourceKodakInternal

0

10

20

30

40

50

60

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

WORLDWIDE DIGITAL PRINT INDUSTRY

’03-’07 CAGR = 50%

Bill

ions

ONLINEPRINTS>100%CAGR

20

• Strategic Focus• Leadership in retail locations

» Lead in Kiosks» Competitive in Minilabs

• Drive digital print demand• Innovate in quality & connectivity• Total category retail partnership

RETAIL PRINTING

Kiosks & Minilabs

• ResultsKiosk revenue growth: +77%(1H’04 vs. 1H ’03)

Kiosk print demand: 4X(’04 vs. ’03)

Minilabs: New 32 seriesDIMA award

21

• Strategic Focus§ Lead snapshot printer category§ Innovate in quality & connectivity

• All DSCs & phone cams

§ Lead photo paper category

• ResultsRevenue growth: +51%(1H’04 vs. 1H ’03)

Snapshot printer share:(1 year after market entry)

U.S.: 57%U.K.: 55%

Australia: 65%

HOME PRINTING

(source: NPD, Gfk)

22

SERVICES• Strategic Focus

• Customer Acquisition & Margin Growth• Global Expansion• Lead On-line Imaging Services• Lead Mobile Imaging Services

– Superior Ease of Use

• Results(1H’04 vs. 1H ’03)

• Revenue growth: +60%• Membership: +43%• New purchasing customers: +64%• Repeat customers: +87%

• Expanded industry partnerships • New innovative products

23

$3,000

$6,000

$9,000

$12,000

$15,000

2001 2002 2003 2004 2005 2006 2007

Traditional ≈ -19%

Digital

≈ +33%

Estimated

($ in Millions)

’03 – ’07 Revenue CAGR*: Essentially Flat

Value Transition: From Film to Digital

* compound annual growth rate

Rev

enue

24

Value Transition: From Film to Digital

2003 - 2007 CAGR

Revenue: -1% to +1%

EFO: -1% to +1%

Kodak’s digital growth strategy

fully compensates

for decline in traditional business.

Kodak’s digital growth strategy

fully compensates

for decline in traditional business.