Kodak to Sell Remote Sensing Systems to ITT Industries for $725M
Press release from the issuing company
ROCHESTER, N.Y.--Feb. 9, 2004-- Eastman Kodak Company announced that it has agreed to sell its Remote Sensing Systems operation to ITT Industries, Inc., the latest action by Kodak to further align its product portfolio with its business strategy.
Under the terms of the agreement, Kodak will sell the assets and business of the Remote Sensing Systems (RSS) operation, including the stock of Kodak's wholly owned subsidiary, Research Systems, Inc. (RSI), to ITT Industries for $725 million in cash. Net of tax and transaction costs, but subject to post-closing adjustments, Kodak expects to realize approximately $475 million in cash. RSS is a part of Kodak's Commercial & Government Systems' operation within the Commercial Imaging Group and its customers include NASA, other U.S. government agencies, and aerospace and defense companies. The proceeds will further strengthen the company's financial position and flexibility during its business model transition.
Kodak expects that all 1,800 RSS and RSI employees will transfer to ITT Industries and that Rochester will be the headquarters for ITT's new Space Systems Division. James Manchisi, president of RSS, will join the new organization as President and General Manager, ITT Industries Space Systems Division, reporting to Henry J. Driesse, President, ITT Industries Defense Electronics & Services.
"As we sharpen our focus on the commercial, consumer and health imaging markets, we will look to divest lines of business that do not fit tightly with our growth strategy," said Daniel A. Carp, Chairman and Chief Executive Officer, Eastman Kodak Company.
"By selling RSS, we have taken another aggressive step toward remaking Kodak, while the employees of RSS will enjoy the benefits of working for a company whose core business is serving the aerospace and defense market."
"Effective implementation of our growth strategy requires us to make choices," said Antonio Perez, President and Chief Operating Officer, Eastman Kodak Company. "As we said when we discussed our growth strategy in September, we will pursue business transactions in a disciplined manner so that we can build shareholder value."
Kodak's RSS operation, including RSI, had sales last year of approximately $425 million and is a leading provider of specialized imaging solutions to the aerospace and defense community. The company expects that the sale of RSS will dilute operational earnings by approximately $.05 per share in 2004. Kodak's stated 2004 full-year guidance for operational earnings remains unchanged at $2.25 to $2.55 per share. However, as a result of the approximately $430 million earnings gain on the sale of the business, full-year 2004 GAAP earnings guidance will increase to a range of $2.25 to $2.75 per share, from the previous range of $.80 to $1.30 per share.
"Selling RSS to a buyer with a major focus on aerospace and defense will benefit Kodak, ITT, the employees of RSS and the Rochester community," said Carl Marchetto, President, Commercial Imaging, and Senior Vice President, Eastman Kodak Company. "Aerospace and defense--the cornerstone of the RSS operation--are not core to Kodak's strategy of expanding its growth efforts in commercial, consumer and health imaging markets. Now is the right time to divest this business to ITT, which will provide the resources to expand on RSS's capabilities in these markets and which has committed to maintaining and growing operations in Rochester."
Headquartered in White Plains, New York, ITT Industries supplies advanced technology products and services in key markets including: defense communication, opto-electronics, information technology and services; fluid and water management including water treatment; electronic interconnects and switches; and other specialty products. The company generated $5.63 billion in 2003 sales and employs approximately 36,000 people around the world.
"The acquisition of RSS is a key component of ITT Industries' strategy to enhance our space businesses, an area we recognized a number of years ago as an attractive market that has grown in importance to our largest government customers," said ITT's Driesse. "RSS has strong customer relationships, a reputation for quality and many innovative technologies. By combining RSS' offering with our own meteorological and navigational space payloads, we will create a new Space Systems Division, based in Rochester, within our Defense Electronics & Services segment, a world leader in developing and integrating a full spectrum of space-based sensors and data processing products for science, government and commercial applications."
The agreement is subject to customary regulatory approvals. Closing will occur as soon as all required approvals have been obtained.
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