Eastman Kodak Company


Kodak and Lexar Join Forces In Drive For Removable Digital Memory Market Leadership

ROCHESTER, NY and FREMONT, CA, May 17 -- Eastman Kodak Company (NYSE: EK) and Lexar Media, Inc. (Nasdaq: LEXR) today announced they have formed a long-term agreement to gain a larger share of the market for removable digital memory products, driven by surging demand from the mass-market adoption of digital cameras, mobile phone cameras, portable music players and other consumer electronics devices. 

As part of the exclusive multi-year agreement, Lexar Media will manufacture and distribute a full range of KODAK branded memory cards and will work with Kodak to provide consumers with a wide variety of reliable, high quality, mass-market memory cards worldwide.  Kodak will contribute to the partnership its brand power and global distribution network, while Lexar Media will contribute removable memory products known for their quality, reliability and speed, and its demonstrated retail category management.  Both companies will market the products worldwide.

“This agreement is ideal for both parties,” said Bernard Masson, president, Digital & Film Imaging Systems, and senior vice president, Eastman Kodak Company.  “For Kodak, it represents another step in our effort to accelerate the growth of our digital businesses by providing customers and our retail partners a full suite of KODAK branded memory cards that will work with virtually any product and system.  Lexar will benefit from Kodak’s worldwide brand presence and massive global distribution network.” 

“We recognize the power of the KODAK brand across photography and imaging fields and we are pleased that they have selected Lexar to help drive the KODAK brand into this fast-growing category,” said Eric Stang, chairman, president and CEO, Lexar Media, Inc.  “Lexar’s superior controller technology and retail focus combined with Kodak’s brand strength and worldwide distribution network will enable us to deliver memory cards with the quality and performance that consumers have come to expect from Kodak.”

With this agreement Lexar and Kodak will develop strategies for each segment of the memory card market and drive the KODAK branded memory cards into a broad range of channels worldwide.  According to IDC, worldwide digital camera sales are expected to top 68 million units in 2004, a 39% growth over 2003, and grow to over 87 million units in 2007.  In addition, worldwide camera phone unit shipments are expected to reach 186 million in 2004 and grow to more than 422 million units in 2007.  This year alone, digital camera sales will drive retail sales of more than 100 million memory cards with an expected retail sales value of over $4 billion.

“With the rapid and consistent adoption of digital technology in cameras and cell phones and with ever increasing resolutions, we expect digital memory cards to become one of the primary storage devices for most consumers worldwide,” said Chris Chute, senior analyst for Worldwide Digital Imaging Program of IDC.

Consumers can expect to see a full suite of KODAK branded memory cards on store shelves in the fourth quarter of 2004.  The product line-up will include Secure Digital (SD), Mini-SD, Multimedia Cards (MMC), CompactFlash™, and additional media formats will be offered in the future.  The companies did not disclose the financial terms of the agreement. 

About Eastman Kodak Company and infoimaging

Kodak is the leader in helping people take, share, print and view images – for memories, for information, for entertainment.  The company is a major participant in infoimaging, a $385 billion industry composed of devices (digital cameras and flat-panel displays), infrastructure (online networks and delivery systems for images) and services & media (software, film and paper enabling people to access, analyze and print images).  With sales of $13.3 billion in 2003, the company comprises several businesses: Health, supplying the healthcare industry with traditional and digital image capture and output products and services; Graphic Communications Group, offering on-demand color printing and networking publishing systems consisting of three wholly owned subsidiaries:  Encad, Inc., NexPress Solutions, and Kodak Versamark; Commercial Imaging, offering image capture, output and storage products and services to businesses and government; Display & Components, which designs and manufactures state-of-the-art organic light-emitting diode displays as well as other specialty materials, and delivers optics and imaging sensors to original equipment manufacturers; and Digital & Film Imaging Systems, providing consumers, professionals and cinematographers with digital and traditional products and services.  For more information visit www.kodak.com.

About Lexar Media, Inc.

Lexar Media is a leading marketer and manufacturer of flash memory cards, USB flash drives, card readers and ATA controller technology for the digital photography, consumer electronics, industrial and communications markets.  The company holds over 70 controller and system patents, and licenses its technology to companies including Olympus, Samsung Electronics, SanDisk Corporation and Sony.  For more information, please call 1-800-789-9418 or visit www.lexarmedia.com.

Cautionary Statement of Eastman Kodak Company.  Certain statements in this press release may be forward looking in nature, or "forward-looking statements" as defined in the United States Private Securities Litigation Reform Act of 1995. For example, references to expectations for the potential size of the market for memory cards and the number of phone cameras and digital cameras projected to be sold in future years are forward-looking statements.

Actual results may differ from those expressed or implied in forward-looking statements. In addition, any forward-looking statements represent our estimates only as of the date they are made, and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. The forward-looking statements contained in this press release are subject to a number of factors and uncertainties, including:

The overall demand in the worldwide market for digital cameras, phone cameras, and other devices requiring memory cards. Lexar Media’s ability to properly manage the use of Kodak’s brand and to plan for anticipated changes in demand; to manage capacity and supply constraints in order to obtain sufficient quantities of flash memory in a timely manner; to anticipate demand and pricing of its products and effectively manage distributor channels, relationships and inventory levels; to effectively manage overall cost structure to allow it to sell products at competitive prices; to achieve and maintain technology leadership and strategic relationships necessary to sell and market products that are commercially accepted; to manufacture and deliver flash memory products to satisfy customers’ requirements and develop and introduce new products and services on a timely basis that are accepted by customers and consumers; and to manage current economic conditions and commercialization and technological difficulties. Readers should also refer to the risk factors described in Eastman Kodak Company’s filings with the SEC, including its most recently filed Form 10-K and Form 10-Q.

Any forward-looking statements in this press release should be evaluated in light of these important factors and uncertainties.

Cautionary Note of Lexar Regarding Forward-Looking Statements

This release contains forward-looking statements, which are subject to the safe harbor provisions of the Private Litigation Reform Act of 1995. These statements include statements related to the benefits of and consumer demand for Lexar Media's products and the growth opportunities available to Lexar Media. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those anticipated by these forward-looking statements. These risks include that our growth and success depends on our ability to properly manage the transition to Kodak’s business and plan for anticipated changes in demand; to manage capacity and supply constraints in order to obtain sufficient quantities of flash memory in a timely manner ; to anticipate demand and pricing of our products and effectively manage our distributor channels, relationships and inventory levels; to effectively manage our overall cost structure to allow us to sell our products at competitive prices; to achieve and maintain technology leadership and strategic relationships necessary to sell and market products that are commercially accepted; to manufacture and deliver flash memory products to satisfy our customers’ requirements and develop and introduce new products and services on a timely basis that are accepted by our customers and consumers; and to manage current economic conditions and commercialization and technological difficulties. Readers should also refer to the risk factors described in our filings with the SEC, including its most recently filed Form 10-K and Form 10-Q. We assume no obligation to update the information in this release.
Lexar Media and the Lexar Media logo are trademarks of Lexar Media, Inc. KODAK and the Kodak logo are trademarks of Eastman Kodak Company. All other brand or product names are trademarks or registered trademarks of their respective holders.
2004