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Running start for new firm

Rochester Business Journal
September 6, 2013

It's not every day or decade that a $1.3 billion company with 4,700 employees in some 30 countries launches in Rochester.
 
Kodak Alaris hit the ground running this week, bringing with it the Kodak name and brand power, two profitable divisions and a great deal of optimism.
 
"Rochester is a very critical location for us, the heart of our R&D," said Dolores Kruchten, a veteran of 30-plus years at Eastman Kodak Co., who serves as president of Kodak Alaris Document Imaging.
 
"The divisions will be headquartered here," she said in an interview Wednesday, after a celebration of the firm's start. "Rochester as a base for us is very important.
 
"We believe it will give us long-term a talent pool to draw from," she added.
 
Kodak Alaris is likely to employ 700 to 1,000 people in Rochester, company officials said. And they expect the company to deliver a profit from the start.
 
"We are starting up as a company with no legacy liabilities and both businesses are profitable, and we are in a very strong financial position," Kruchten said.
 
Dennis Olbrich, president of Kodak Alaris' Personalized Imaging business, added there are many costs that go with starting a new company.
 
"But the core businesses have been profitable for a long period of time," he said. "They are very profitable businesses."
 
When it announced plans to sell the two businesses last year, Eastman Kodak projected that they would account for more than one-third of its 2012 revenues.
 
KPP Trustees Ltd., trustee of the Kodak Pension Plan of the United Kingdom, is the privately held U.K. company that owns Kodak Alaris. Personalized Imaging and Document Imaging are divisions of it. The pension plan has roughly 15,000 members and assets in excess of $1.5 billion.
 
The agreement that took effect Tuesday settled $2.8 billion in U.K. Kodak Pension Plan claims.
 
The combination of the two Kodak businesses, Document Imaging and Personalized Imaging, into Kodak Alaris does not have a lot of marketplace synergies, the leaders said, though they expect some benefits from the combined back office and corporate functions such accounting, treasury and purchasing.
 
In customers, the two units have little overlap. Document Imaging is focused on commercial customers; for Personalized Imaging, the focus is consumers.
 
The company leaders expect to run the businesses as separate units, along with a small corporate team. Kodak Alaris has begun a search for a CEO and will have a chief financial officer as well, plus a board.
 
"We will have a pretty lean structure, one focused on our two businesses," Kruchten said. "We are very excited.
 
"Today has been a fun day for us," she added. "We come out of the shadows of the broader Kodak. We have the opportunity to focus on these two businesses and are looking to have long-term growth."
 
Both Olbrich and Kruchten are on the board of the holding company. Eastman Kodak has licensed the Kodak trademark for use on Personalized Imaging and Document Imaging products as well as in the Kodak Alaris name.
 
Kruchten described Kodak Alaris' Document Imaging as a growth business, driven by the explosion of information and complexity in big data. It focuses on "intelligent information management" and enables customers-particularly in fields such as government, health care, real estate and finance-to effectively collect data from information flows, route it to the right people, understand its meaning and extract more value from its contents.
 
The division's offerings include scanners and capture software, information management platforms, an expanding range of professional services, and service and support. The business is chiefly organized for channel sales through added resellers and distributors. But it is starting to add strategic account managers going in to work with customers, though they still will work with partners.
 
Its customer base consists of large companies and nearly every level of government.
 
The Personalized Imaging business consists of Retail Systems Solutions, described as the world leader in retail photo kiosks and dry lab systems; Paper & Output Systems, offering photo specialty retailers, professional and wholesale labs, and photographers traditional photographic paper and workflow solutions; Film Capture, offering consumers and professionals a range of still-camera film products; and Event Imaging Solutions, providing digital souvenir photography services and solutions at theme parks, iconic destinations, resorts and other markets worldwide.
 
Olbrich said the traditional photographic paper business still has a long future ahead of it, even as the business is in transition. The Film Capture business has declined in volume but remains an important and profitable segment.
 
"In every category, the company is No. 1 or No. 2 (in the industry)," he said.
 
He sees the biggest opportunities for growth in Retail Systems Solutions, in the conversion from "wet" processing to dry processing, and in the area of mobile devices, which have been seen previously as a threat.
 
"Mobile devices and tablets (are) ubiquitous around the world," he said. "More and more people have image-capturing capabilities; the number of images being captured is growing exponentially."
 
There are many more opportunities for consumers to do more with the images, he added, including printing, sharing and using them in photo books or other products.
 
A second growth area is event imaging, Olbrich said. As developing markets are becoming more affluent, travel and development of theme parks and other destinations are growing, particularly in Latin America and Asia. And there is potential for more growth, he said.
 
The transition to Kodak Alaris is ongoing. The information technology, for example, likely will be tightly connected with Kodak for 12 to 18 months, Kruchten said. The deal with Kodak included each division's research and development and intellectual property, as well as other areas.
 
"There is no long-term supply agreement with Kodak; we will be completely independent," Kruchten said.
 
Olbrich said the Alaris name was chosen because it conveyed speed, quickness and agility, and it has a futuristic appeal that meshes with the company's aims to convey its technological focus. The development of branding and collateral materials has not yet been completed.
 
Both presidents view the separation from the larger Kodak as an opportunity.
 
"We really get to focus on our businesses," Olbrich said. "We were not, by definition, ... the focus of Eastman Kodak Co. Now Document Imaging and Personalized Imaging are the company."
 
Both the leaders and their teams have a lot of freedom to make them strong, he added.
 
"There is a willingness to invest as necessary to ensure these businesses are in a position to grow and be sustainable long-term." he said. "These are long-term investments by the Kodak Pension Plan."
 
Kruchten said that before the sale she had multiple other businesses she was running so she could not focus solely on Document Imaging. Focus is an important advantage now for Kodak Alaris.
 
"We are a private company, so we don't have the pressures of Wall Street and the quarterly reporting that can make expectations that are not always realistic," she said.

9/6/13 (c) 2013 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


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