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| Annual Report 1996 | ||
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| Annual Report 1996 | ||
Factors That May Affect Future Results
From time to time, information and statements provided by the Company may contain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995 (the "Act"). The Company desires to take advantage of the "safe harbor" provisions of the Act. The Company therefore cautions shareholders and investors that actual results may differ materially from those projected or suggested in any forward-looking statement as the result of a wide variety of factors, which include but are not limited to the factors and conditions set forth below. Many of the important factors below have been discussed in prior Securities and Exchange Commission filings by the Company.
The Company sells and markets its products worldwide. A major risk associated with such worldwide operations is the fluctuation of foreign exchange rates, particularly the Japanese yen and German mark. The worldwide market for imaging products, particularly products in electronic and medical imaging, is highly competitive in price, quality, service and product performance. The Company has competitors worldwide, ranging from large corporations to smaller and more specialized companies. The most significant competitors, Eastman Kodak Company and Fuji Photo Film Co., Ltd., are considerably larger than the Company and thus have more resources. The impact of these factors can cause varied results.
The Company is affected by retail demand for its products, particularly in the United States and Europe. Additional factors including economic conditions, political activity, changes in laws and regulations, particularly in the environmental arena, could affect the Company's results from operations. The Company believes that developing markets, such as Russia and China, in total present particularly attractive opportunities. However, such markets tend to be considerably less stable than more established markets and there can be no assurance that developing markets will produce favorable results for the Company. Sales in Russia in 1996 compared to 1995 have declined over 40% and cannot be predicted with any certainty.
The Company anticipates that price competition from conventional film and other imaging technologies will place continued pressure on instant products. Furthermore, the profit of the Company's instant photography business has been generally derived from the sale of instant film, not from the sale of instant cameras.
The Company is continuing to develop digital imaging products for medical, graphic arts and other applications. The profit of the Company's basic instant photography business has been higher than the Company's total profit from operations due to the operating losses of these digital imaging businesses. Markets for digital imaging products are increasing rapidly and over time may erode either the growth or the absolute size of the Company's instant photography business. The markets for digital imaging products are highly competitive and there is no assurance that the Company will attain the level of success in these markets that it has achieved with respect to instant photography. Included in the digital imaging losses are costs associated with the Company's new coating facility which was brought on-line in 1994 and is operating at low levels of production capacity. The Company is consolidating its coating facilities, shifting capacity from some of its oldest to its newer, more efficient facilities. The timing and impact of this consolidation are uncertain.
The future prospects of the Company's digital imaging businesses are uncertain and they are likely to continue to affect the Company's financial results adversely for the next few years. The Company's ability to reduce its digital imaging losses is also dependent on its ability to develop new products in a timely manner and to market them effectively. The Company continues to study the different areas of its businesses, including their cost structures, and is exploring prospects for aligning itself in various business relationships to improve financial results.
