• Developing new businesses in new markets. In the fourth quarter, we announced a new Display Group to oversee the growth of our organic light-emitting diode (OLED) flat-panel display business and nurture new display technologies emerging from our R&D laboratories into future business opportunities.

Pursuing these growth strategies strengthened Kodak's current — and future — position as the world's premier imaging company. Highlighted below are some of the accomplishments that we are leveraging to extend our worldwide brand strength, unparalleled technical know-how and global manufacturing and product distribution prowess.

BUSINESS/MARKET HIGHLIGHTS

Photography Group
Kodak's U.S. consumer color negative film share held steady for the fifth consecutive year in the face of economic weakness and an industry-wide decline in U.S. consumer film sales. Unemployment and decreased vacation travel hurt the film industry in the U.S. and Western Europe. Our experience suggests that economic recovery will drive increased picture taking. Kodak one-time-use cameras continue to be a major factor in film photography, helped by innovations such as the Kodak Ultra compact model introduced in Europe and a new underwater model now available in world markets.

The worldwide introduction of second-generation Kodak EasyShare digital cameras drove solid sales and firmly established Kodak as the leading ease-of-use innovator in digital picture taking. Sales grew at double-digit rates in the fourth quarter, and we are closer than ever to profitability for this product line. The system makes it easy to capture and produce hard-copy digital images, whether with home printing or through online and retail services.

Online photo fulfillment business grew as Kodak implemented its retail strategy through the Kodak picture center online network initiative. More than 20,000 retail outlets in the U.S. and 5,400 in Western Europe comprise the world's largest infrastructure for online photo processing. Sales from our Ofoto Internet service doubled in 2002. Ofoto is the leading online picture service, with more than six million registered members. Kodak picture center online and Ofoto are fundamental to our image output strategy.

Another component of our output strategy involves more than 39,000 Kodak picture maker kiosks in place worldwide, the primary source of double-digit growth for thermal print media in 2002. We are also testing non-traditional venues for this service —such as hotels and office products stores—to determine the potential for wider placements of our kiosks. Meanwhile, Kodak inkjet photo paper for home printing had very strong double-digit growth in the fourth quarter, maintaining its position as the second-leading seller for the worldwide home printer market.