Eastman Kodak Company (Rochester, NY, U.S.) is shedding its Remote Sensing Systems (RSS) operation to ITT Industries, Inc. (White Plains, NY, U.S.) in an attempt further align its product portfolio with its business strategy, according to a Kodak written statement.
Under the terms of the agreement, Kodak will sell the assets and business of the Remote Sensing Systems (RSS) operation, including the stock of Kodak's wholly owned subsidiary, Research Systems, Inc. (RSI), to ITT for U.S. $725 million in cash.
Kodak expects to earn approximately $475 million in cash. RSS is a part of Kodak's Commercial & Government Systems' operation within the Commercial Imaging Group and its customers include NASA, other U.S. government agencies, and aerospace and defense companies. The sale earnings are net of tax and transaction costs and also subject to post-closing adjustments.
The company says the proceeds will further strengthen the Kodak's financial position and flexibility during its business model transition.
Kodak expects that all 1,800 RSS and RSI employees will transfer to ITT Industries and that Rochester, NY, U.S. location will be the headquarters for ITT's new Space Systems Division.
James Manchisi, president of RSS, will join the new organization as president and general manager, ITT Industries Space Systems Division, reporting to Henry J. Driesse, president, ITT Industries Defense Electronics & Services.
"As we sharpen our focus on the commercial, consumer and health imaging markets, we will look to divest lines of business that do not fit tightly with our growth strategy," Daniel A. Carp, chairman and CEO, Eastman Kodak Company, said in a written announcement of the deal. Mr. Carp added that by selling RSS, Kodak has taken "another aggressive step" toward reinventing itself."
Kodak's RSS operation, including RSI, had sales last year of approximately $425 million.
The company expects that the sale of RSS will dilute operational earnings by approximately $.05 per share in 2004. Kodak's stated 2004 full-year guidance for operational earnings remains unchanged at $2.25 to $2.55 per share. However, as a result of the approximately $430 million earnings gain on the sale of the business, full-year 2004 GAAP earnings guidance will increase to a range of $2.25 to $2.75 per share, from the previous range of $0.80 to $1.30 per share.
ITT Industries supplies advanced technology products and services in key markets including the following: defense communication, optoelectronics, information technology and services; fluid and water management including water treatment; electronic interconnects, switches, and other specialty products.
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