March 8, 2004 -- Heidelberg is handing over its Digital division to Eastman Kodak Co. and will be transferring its Web Offset division to Goss International. These steps contribute to Heidelberg's realignment process, which it had announced in November 2003. "The two portfolio decisions will decisively accelerate the realignment process", said Bernhard Schreier, CEO of Heidelberger Druckmaschinen AG. "From now on, Heidelberg will strengthen its focus on the Sheetfed Offset business in order to optimally serve commercial, packaging and label printers with a comprehensive product portfolio. We are convinced that this strategy will lead Heidelberg back to profitability very quickly." Heidelberg transfers Digital Division to Eastman Kodak Co. Heidelberger Druckmaschinen AG is transferring its Digital Print division to Eastman Kodak Co. The two companies signed a mutual agreement, which yet is to be confirmed by the antitrust organizations. The closing of the transaction will occur after all such approvals have been received. The agreement involves all Heidelberg Digital Print activities. Heidelberg’s Digital b/w business (HDI LLC., Rochester, USA), its 50 percent share in the Heidelberg/Eastman Kodak Co. joint enterprise venture (Nexpress Solutions LLC., Rochester), as well as its 100 percent share of Nexpress GmbH in Kiel, Germany, are all incorporated elements of the agreement. Within the next two years, Heidelberg will not engage in competitive activities related to its digital division to be transferred. Under the terms of the acquisition, the companies agreed to use a performance-based earn-out formula whereby Kodak will make periodic payments to Heidelberg over a two-year period, if certain sales goals are met. If all sales goals are met during the next two calendar years ending Dec. 31, 2005, Kodak will pay a maximum of US$150 million in cash. Additional sales related earn-out payments over a five-year period are agreed, if certain sales targets are achieved. Kodak will not pay any cash at closing for the business being acquired. Further financial details of the transaction were not disclosed. "This is Heidelberg's reaction to the changes in market dynamics within the print media industry. As announced, Heidelberg will reallocate its resources and refocus its efforts, in alignment to its core customer base, on the Offset sector”, said Bernhard Schreier, CEO of the company. “Our global sales organization will continue to work closely together with Kodak in the digital printing area." As part of Heidelberg's new alignment, announced in November 2003, the company will intensify its focus on the Sheetfed Offset, Prepress and Finishing businesses, as well as their attached workflow systems, training and service activities. Integration of digital printing in print shops’ workflows, using Prinect, will remain part of the Heidelberg service offerings and will be intensified. In effect, the Heidelberg location Rochester, NY (USA) will be absorbed by Eastman Kodak Co. Roughly 2.000 people worldwide focus on research, development, production, sales and service for the Heidelberg Digital business. In 1997, Heidelberg and Eastman Kodak Co. had created the Nexpress Solutions LLC joint venture to develop a digital color printing press for the high-end market segment. Heidelberg acquired Eastman Kodak Co.’s Office Imaging black and white digital printing activities in 1999. In fiscal year 2002/2003, Heidelberg’s Digital division achieved Euro 240 million in sales. This accounted for roughly six percent of Heidelberg’s total sales (Euro 4.1 billion). Heidelberg and Goss agree on major issues for the intended transfer of its Web Offset Division to Goss International Heidelberg and Goss International have reached an agreement on major issues for the intended transfer of the Heidelberg Web Offset division to Goss International. After completion of the consultation process with the workers' councils in France and the Netherlands and the agreement of the antitrust organizations, Heidelberg will transfer the Web Offset Division to Goss International Corporation. An outline deal has been agreed in principle but some issues remain to be resolved before definitive documents are expected to be executed over the coming weeks. This transaction includes Heidelberg's Commercial Web and Newspaper presses. The transaction also incorporates the Web Finishing business in the USA. Heidelberg will become a new shareholder at Goss International, holding slightly below 20 percent of the company's shares. The financial details of the agreement were not disclosed. "The market volume for Web Offset printing presses has diminished", explained Bernhard Schreier, CEO of the company. "The weak economy and the corresponding low levels of advertising spending contributed to this development". Both companies expect drastically improved capacity utilization and optimized market penetration from the business combination and restructuring of activities. At closure of the contract, nearly 2,100 employees at sites in the US, France and the Netherlands will be transferred to Goss International. In order to complement its own activities, in 1988 Heidelberg acquired Harris Graphic Corporation, with sites in the US and France marking Heidelberg's entrance to the Web Offset market. The acquisition of Stork Contiweb in the Netherlands allowed Heidelberg to add splicers and dryers to their offerings for this market segment. In fiscal year 2002/2003, Heidelberg's Web Offset division achieved Euro 430 million in sales. This accounted for roughly ten percent of Heidelberg’s total sales (Euro 4.1 billion). No further burdens to financial results in FY 2003/04 In connection to the announced realignment, in the third quarter of FY 2003/2004 Heidelberg had reserved an amount of Euro 525 million, mostly for depreciation of book values. "We expect no further burdens for the current fiscal year," said Chief Financial Officer Dr. Herbert Meyer. "The improved profitability of the Group will become visible by the beginning of next fiscal year."