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Kodak Completes Acquisition of KPG

Press release from the issuing company

ROCHESTER, N.Y.--April 1, 2005-- Eastman Kodak Company today announced that it has completed its acquisition of Kodak Polychrome Graphics (KPG) through redemption of Sun Chemical Corporation's 50 percent interest in the joint venture. KPG is now part of Kodak's Graphic Communications Group (GCG). The acquisition further establishes Kodak as a leading company in the graphic communications industry and complements Kodak's existing businesses in this market. "The addition of the people, products and distribution capabilities of KPG makes Kodak the company to turn to for the broadest solutions portfolio in the industry," said James Langley, President, Graphic Communications Group, and Senior Vice President, Eastman Kodak Company. "We are uniquely positioned to be the preferred partner for our customers and help them improve efficiency and expand their business offerings." As planned, with the completion of the KPG acquisition, Kodak will implement a new GCG organization structure, consisting of two operating units, a strong regional structure and integrated sales and service forces. The GCG organization includes the following two operating units: Graphic Solutions & Services (GS&S), led by Jeff Jacobson, President, consists of the following strategic product groups (SPGs): Workflow & Prepress includes computer-to-plate equipment, workflow solutions, color, storage, professional services, inkjet proofing and digital halftone proofing. Digital Printing includes Kodak's electrophotographic (EP) and direct imaging portfolio, professional services, device controls and publishing services. Consumables includes printing plates, film, flexographic plates and digital halftone media. Once Kodak's planned acquisition of Creo, Inc., which was announced on January 31, 2005, is completed, Kodak intends to include Creo's operations in the GS&S portfolio. As President of GS&S, Jacobson is responsible for R&D, commercialization, manufacturing, product marketing and administrative functions, including finance, information technology and human resources. Jacobson also will serve as the Graphic Communications Group's Chief Operating Officer, with responsibility for key strategic functions, including global services and global customer operations that will support the regions (Americas, EAMER, Greater Asia and Japan) and their integrated sales forces. Transaction & Industrial Solutions (T&IS), led by Nachum "Homi" Shamir, President, consists of the following strategic product groups: Continuous inkjet (CIJ) includes Kodak's high-speed, high-volume CIJ portfolio. Industrial inkjet includes CIJ technology and drop-on-demand inkjet solutions designed for industrial and packaging applications. Wide-format inkjet includes wide-format printers, inks and media. Document scanners includes Kodak's market-leading document scanning technology. Business process services operations. Shamir is responsible for the R&D, manufacturing and commercialization of advanced inkjet and scanning technologies for GCG, and administrative functions, including finance, information technology and human resources for T&IS; he also manages product and sales specialists within the regions for the T&IS portfolio. Key Functional Units Functional units within GCG will operate as shared service organizations. These functional units report to Langley and include: Chief Technology Office, Finance, Human Resources, Marketing, Operations, Special Projects and Strategy & Business Planning. "Kodak has assembled the right businesses, technologies and people to enable customers to become leaders in the transformation of the industry," said Langley. "We are committed to a seamless transition and to providing uninterrupted customer service throughout the integration process." Kodak purchased KPG for $817 million, with $317 million paid in cash at closing; $200 million in cash in the third quarter 2006 and $50 million in cash annually from 2008 through 2013. Kodak will fund the transaction through internally generated cash flow. KPG revenues for 2004 were approximately $1.7 billion. Kodak expects this transaction to add approximately $1.1 billion to Kodak's revenue in 2005, reflecting approximately nine months of Kodak ownership, and the elimination of inter-company sales from Kodak to KPG. In 2006, Kodak expects approximately $1.4 billion of incremental revenue, reflecting a full year of ownership and the elimination of inter-company sales. Kodak also expects the transaction will add approximately eight cents to the company's 2005 operational earnings and approximately 14 cents to its 2006 operational earnings. These figures are included in Kodak's stated goal of achieving operational earnings of $3 per share in 2006. On a Generally Accepted Accounting Principles (GAAP) basis, Kodak expects the transaction will add approximately five cents to the company's 2005 EPS and approximately 14 cents to its 2006 EPS.