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Original Source: FD (FAIR DISCLOSURE) WIRE
. Don Flick, Eastman Kodak Company, VP & Director - IR . Daniel Carp, Eastman Kodak Company, Chairman & CEO . Antonio Perez, Eastman Kodak Company, President & COO . James Langley, Eastman Kodak Company, President - Commercial Printing . Robert Brust, Eastman Kodak Company, EVP & CFO . Nachum Shamir, Scitex Digital Printing, President & CEO
EK announced the acquisition of Scitex Digital Printing. This acquisition provides EK with a leadership position in variable data printing, which is the growth segment of the market. The deal is expected to be funded from available cash with no incremental borrowing anticipated. The acquisition is subject to regulatory approvals and is expected to close sometime in 1Q04. Q&A Focus: Financials, product portfolio, technology integration, NexPress, and synergies.
S1. Opening Comments (D.C.) 1. Acquisition Advantages: 1. EK announced the acquisition of Scitex Digital Printing. 2. This step moves EK quickly and effectively into a rapidly growing part of the commercial printing space, one that the co. believes it can leverage further with its technology and existing presence in the market. 3. It is an example of the selective investments and acquisitions the co. is making to complement its existing businesses, technologies, and assets. 4. Three key points:
1. This acquisition provides EK with a leadership position in
variable data printing, which is the growth segment of the market.
2. It provides an additional vehicle for the commercialization
of EK's own inkjet technology. 1. EK has unique inkjet technology that it will incorporate into Scitex's digital systems in the future.
3. This is a great fit with EK's existing commercial printing
operations, ENCAD, NexPress, and KPG.
S2. Acquisition Details (J.L.) 1. Market Opportunity: 1. Today marks a clearly visible step in implementing the commercial printing strategy that EK's management discussed with investors on 09/25/03 in New York. 2. At that time, the co. spoke of the significant opportunity it sees in the commercial printing space, particularly as the market shifts from traditional offset printing to digital full color variable printing. 3. This is a large market opportunity with the addressable market for digital printing equipment and supplies at approx. $30b. 4. Currently, with the NexPress joint venture, EK is well represented in the on-demand, short-run, cut sheet, high quality color-printing portion of the market based upon electrophotographic technology. 5. With the acquisition of Scitex Digital Printing, EK establishes itself as a market leader in transactional, longer-run, web printing based upon continuous inkjet technology. 6. Together, these businesses position EK in two fast growing commercial printing market segments. 7. While they each serve distinct markets, there are benefits of a broader product portfolio and worldwide sales and service coverage. 8. Commercial printing space includes essential mail such as billing statements, statements of account, as well as mailing labels, lottery tickets, and direct mail materials. 9. This obviously represents variable data output as each statement is different depending upon the customer.
10. As this market moves to increasing use of color, it requires
high-speed, low cost, variable data color printing where
Scitex is the leader. 11. With this acquisition, Scitex's continuous inkjet intellectual property portfolio is combined with EK's
continuous inkjet IP portfolio, creating the industry leading
patent portfolio for this powerful digital printing technology.
12. Together, EK and Scitex can offer more and better products to the market than either co. could achieve on its own. 2. Revenue Opportunity: 1. Through the first three quarters of 2003, Scitex Digital Printing reported revenues totaling $128m, an increase of 14% YoverY and reported earnings totaling $12m, a significant increase YoverY with positive cash flow. 2. EK expects that Scitex will continue to grow at double-digit rates. 3. EK believes that Scitex Digital Printing is an excellent fit with EK's commercial printing strategy. 4. Scitex operates an effective worldwide sales and support organization, an R&D function, and a manufacturing operation located in Dayton, Ohio.
5. Scitex has an established worldwide customer base with more
than 9000 installations in more than 5000 customer sites.
6. Through this profitable growing business, EK brings expertise
in media, ink, print head technology, workflow management, and
color management science. 7. In combination with Scitex Digital Printing, procurement cost synergies, continuous inkjet synergies, and go-to-market synergies will produce an even more effective force in both the …