To Shareholders:

For Kodak, the year 2000 marked continued, diligent attention to world-class principles and practices in the Health, Safety and Environment (HSE) arena.

It also was a year in which we:

1. recycled our 427 millionth one-time-use camera;
2. advanced our worldwide manufacturing systems to the brink of complete International Standards Organization 14001 Environmental Management System registration;
3. partnered with the U.S. Environmental Protection Agency (EPA) on a project promoting computer-based screening of new chemicals;
4. extended even further our support for environmental education and outreach initiatives;
5. conducted a rigorous external audit of our HSE Assessment Program.

Here’s a bit more information on each of these achievements:

1.   One-Time-Use Camera Recycling  In 2000, Kodak recycled 116 million one-time-use cameras, which meant we diverted 19 million pounds of material from landfills. Since 1990, Kodak has recycled 427 million one-time-use cameras and diverted 71 million pounds from landfills.

As a point of comparison, the recycling rate for aluminum cans in the United States is approximately 63 percent. For Kodak one-time-use cameras in the United States, the recycling rate is 74 percent.

2.   ISO 14001 Environmental Management System Registration  Four more Kodak manufacturing sites—two in China, one in India, and one in Oregon—attained ISO 14001 registration in the year 2000. To date, 23 manufacturing sites worldwide have achieved this registration by adhering to the stringent environmental requirements set by the ISO. In addition, the Corporate HSE program has attained ISO 14001 registration. By year end 2001, it is expected that every Kodak major manufacturing site worldwide will have achieved this certification.

3.   EPA Project   Kodak and the U.S. EPA signed an innovative agreement that will lead to significant reduction in waste, improvements in cycle time, and savings in R&D costs while enabling Kodak to produce more environmentally friendly products.

Kodak will use a series of pollution-prevention, computerized tools developed by EPA to screen chemicals while they are in early stages of development. The agreement is part of the EPA’s Project XL (eXcellence and Leadership).