HSE Challenges during the Digital Transition of the Imaging Industry

1. HSE Challenges during the Digital Transition of the Imaging Industry WEC Gold Medal Colloquium May 2004

2. After 30 years with Kodak,… it’s time. Value & benefits of WEC Membership • Excellent venue for networking • IEF meetings are excellent opportunity to meet with senior government officials • Superb connections for benchmarking

3. Eastman Kodak Company Traditional business model: • Multinational corporation • ~$13 billion annual sales • Industry dominated by few major players • High percent market share [>70-80%) • Silver halide based photographic product portfolio for 100+ years • Consumer film and paper • X-ray • Motion Picture • Graphics • Professional Products

4. Imaging Industry Transition “The traditional photographic industry is undergoing fundamental structural change. We are implementing a strategy to adjust to market realities in the traditional consumer film industry and seize the opportunities in the digital age.” Dan Carp, CEO and Chairman October 2003

5. Dan Carp… “When I saw film in secular decline, it was the most empowering moment of my career.” FORTUNE, “Kodak: The CEO vs. the Gadfly,” January 12, 2004

6. Earnings from Operations Digital: Becomes Profitable +$1 Billion 1998 2002 2003 2004 Estimate 2006 Estimate

7. Total: Traditional + Digital Earnings from Operations 1998 2002 2003 2004 Estimate 2006 Estimate

8. 120% Traditional Digital 100% 103% 80% 60% 50% 50% 40% 20% 0% -3% -20% More Diversified Profitability

9. Revenue Sources: ’06 Projections ($M) $20,000 $16 Billion $15,000 $12.8 Billion Approx. +26% $10,000 Digital -7% Traditional $5,000 $0 2002 2003 2004 2005 2006 Kodak: 5% to 6%

10. Market Focuses in Three Groups Commercial Customers Who use integrated imaging systems to communicate and educate Consumers Who take, share, album and print their life experiences in pictures Healthcare Professionals Who manage, diagnose, and treat patients using image-centric technologies Our diversified portfolio, leading cost structure and global presence in these markets will yield potential sales of about $16 billion by 2006 and about $20 billion by 2010 with superior returns for our stakeholders.

11. INFRASTRUCTURE SERVICES & MEDIA DEVICES Info Imaging Key Players

12. Emerging Markets • While there is an overall structural decline in traditional photography, strong growth continues in the Emerging Markets • Steady underlying economic strength • Strengthening market position

13. Challenges to Manage the Future Traditional Film Business Provides cash to support business transition for entire company • Must manage HSE programs in all traditional operations during volume decline • Must be prepared to manage HSE programs with less resources • Must support HSE program needs for growing traditional Emerging Markets business • AND,… MUST provide HSE program support for dynamic digital business

14. Environmental Stewardship Strong “foundation” HSE programs continue… • Senior Management HSE Committee • Corporate Performance Standards & Assessments • Worldwide Environmental Management System [ISO 14001 certified] • External partnerships [EPA, NGOs, etc.] • Investment community ratings • External HSE goals • Etc. ……. while successfully addressing the changing business needs and product portfolio.

15. Environmental Stewardship • Reduce emissions & conserve natural resources • Expand Product End-of-Life Programs • Achieve External Recognition (examples): • EPA WasteWise Hall of Fame • EPA Energy Star award • EPA Ozone Protection Award • Dow Jones Sustainability World Index • World Environmental Center Gold Medal

16. Corporate HSE Management System ISO 14001 Certified HSE Management Council [Sr. Management Team responsible for Policy & Oversight] HSE Coordinating Committee [Sr. HSE Management Team responsible for program development] Key Programs Manufacturing Products Business Units Assessments All major sites 14001 certified Most equipment products Energy Star certified

17. Environmental Goals: 1999-2003

18. Performance Results

19. New 5-Year HSE Goals 2003-2008 Natural Resource Conservation Product & Employee Stewardship Reduced Emissions Metric Metric 2004 -2008 2004 -2008 Metric2004-2008 Priority Chemical Emissions • 15% Mfg Waste • 20% Health & Safety KSIR: 50% improvement Product Stewardship* Heavy metal reduction & EOL Program Methylene Chloride Emissions • 35% Energy Used • 10% Responsible Growth reporting Alignment w/ recognized reporting principles Greenhouse Gas Emissions • 10% Water Used • 20% * Heavy metal goal: 95% of new products won’t use lead solder and chromium (VI) corrosion protection * EOL goal: qualitative progress report on improvement activities KSIR – Kodak Safety Incident Rate

20. Imaging Industry Integration Traditional Imaging Industry • Highly vertically integrated • Relatively few key players • Innovation and technology controlled internally Digital Imaging Industry • Highly horizontally integrated • Suppliers manufacture same product for multiple customers • Products have same HSE features • Individual company HSE specifications not common

21. New Business Model Drives Changes • Faster product cycle times – months not years • Requires enhanced Early Warning System for product evaluation • Involves more active engagement of HSE Teams in six-stage product gate reviews • Goal for HSE issues never to be rate limiting step in product development sequence in more challenging to meet

22. Newer focuses Product Life Cycle Planning Process Traditional focuses Materials Design Manufacturing Distribution Use End-of-Life Environmental Services Chemical Registration Supplier Program Early Warning System Ecolabelling Programs Product Assessment Equipment Compliance End Of Life Program Teams Regulatory Issues Product Approval Product Environmental Impact Strategy Business Issue Teams Material Safety Data Sheets Applied Environmental Technology Life Cycle Analysis

23. New Business Model Drives Changes • Outsourcing: significant increase for both raw materials & finished products with Kodak label • EOL Program: more aggressive to meet voluntary and regulatory-driven goals • Integration of traditional and digital technologies: creates new products & business activities

24. Imaging Industry Integration Digital Imaging Industry • Competitors are directly involved with each other to achieve common HSE standards • HSE features are achieved via partnering, i.e. through Trade Associations • Joint Industry Guide being developed • Kodak intends not to have any Kodak specific HSE standards for digital products

25. Imaging Industry Integration

26. Supply Chain Management – General Directions future present past • Fewer Kodak specifications; more industry solutions • Lead free solder • Heavy metal component reduction/elimination • Choice between Leader versus Fast Follower position • Pros and cons • Improves overall Imaging Industry HSE image • Improves recycling/reuse stream flow due to similarity of product “HSE content”

27. HSE Program for Acquisitions • Acquisitions becoming common part of company business operation • HSE is part of multi-discipline team prior to acquisition • Due Diligence conducted prior to Gate 0 • 1st 6 month focus is “keeping the business running” - transferring permits and other necessary operating licenses • 12-18 month focus is full integration with Kodak’s HSE Policy, Performance Standards, EMS, product programs, etc.

28. Product End-of-Life HSE Program future present past • Fewer Kodak specifications; more industry solutions • Choice between Leader versus Fast Follower position • Pros and cons • Impact of EOL regulatory requirements • WEEE Directive and its expansion worldwide • 1-3% cost impact of sales

29. Digital Camera & Power Supply Chronology Conventional AgX Image Capture Chemical intensive Digital camera launched Less chemical intensive Super Premium AA alkaline battery Increases picture count 3-5X Rechargeable power options Yields 300 pictures per charge Li-ion rechargeable/high energy density Small light DC’s Increased power Smaller/lighter AA form factors Increased energy capacity from single battery (~300 pics) KCRV3 launched Elimination of Cadmium Substitution of NiMH Increased power over alkaline w/ results like NiMH Ni-O-OH Elimination of Hg from std alkaline batteries with Zn electrodes ‘No added mercury’ alkaline battery 1995 2000

30. Product End-of-Life HSE Program – Digital Camera

31. Product End-of-Life HSE Program Going back to the basics with George Eastman starting in 1890s “You push the button. We do the rest.”

32. One Time Use CameraSignature Contribution

33. Recycling: a hundred years later • One Time Use Cameras • Convenient • Stylish • High quality picture-taking • More than FUN • Represent the most successful product recycling and re-use effort WORLDWIDE

34. Full Range of Products for All Occasions

35. Recyclable Camera Disposable Camera Single Use Camera Business

36. Results for a Better Tomorrow • On average, 77% to 90% (by weight) of our single use cameras may be remanufactured. • Initiatives to re-use components that today are recycled for other purposes could push this close to 100% re-use. Buy your Kodak MAX Single Use Camera Shoot Develop Kodak Recycles and Re-uses Kodak Makes New Single Use Cameras

37. Results for a Better Tomorrow • More than 3,000,000 One-Time-Use Cameras Collected Since 1990 • 85 Million Pounds of WasteDiverted from Landfills • More than 15 awards in the past 5 years; including 2003 EPA Energy Star Corporate Commitment Award • Recycling Programs in >20 Countries

38. Recycling Return Rate 80+% in the US 70+% Worldwide

39. Conclusions New focuses Traditional focuses Materials Design Manufacturing Distribution Use End-of-Life • Caused by: • Dynamic transition in the Imaging Industry • Vertical to horizontal business model • Voluntary & regulatory drivers for EOL action • At a time when: • Support of traditional product lines are essential • Digital business is rapidly growing • Resources are being reduced