Investing for the Long Term
At the same time we were managing cash and costs, we continued to invest in our long-term future. We invested in fundamental research and development (R&D), and made strategic acquisitions that will position us well going forward. In a very cash-efficient way, we invested in a business venture for the manufacture of flat-panel displays for consumer devices such as cameras and personal data assistants (PDAs). We acquired a number of wholesale photofinishing laboratories in Europe, which will allow us to offer more pan-European services. We acquired Ofoto, Inc., a leading online photography service that will accelerate our growth in that desirable market. We also acquired the imaging services business of Bell & Howell Company to expand the existing services portfolio in document imaging, and made selective, smaller acquisitions in certain strategic areas.

Sharpening Our Focus
In November, we introduced a new operating model that is centered around strategic product groups—enabling a sharper focus on the customers and markets we serve. Our new alignment will reduce complexity, provide key managers with more decision-making authority and enable business groups and product managers to concentrate on processes and decisions that have the greatest influence on generating profitable growth.

As part of this effort, we integrated strategic product groups from our existing businesses and geographic regions into units that share common technology and product platforms and customer sets.

• The Photography Group, our largest business, includes Consumer Imaging, Digital & Applied Imaging, the photography portion of our Kodak Professional business and Entertainment Imaging.
• Health Imaging, our second-largest business, remains a stand-alone business.
• Commercial Imaging consists of Document Imaging, Commercial & Government Systems, Graphics and Wide-Format Inkjet. Included in the group are two joint venture operations, Kodak Polychrome Graphics and NexPress. The Wide-Format Inkjet business has been consolidated into our recent acquisition of ENCAD, Inc.
• The Components Group includes Kodak’s Display Products, Image Sensor Solutions, and the Optics business, which was formerly part of Commercial & Government Systems. These businesses will spearhead our diversification into high-growth product areas consistent with our historical strengths in image and materials science.