Company Plans to Link Rapid Process Technology to Photo Kiosks to Create
Widespread Availability of Automatic Picture Machines for Film and Digital Cameras

ROCHESTER, N.Y., May 12 - Eastman Kodak Company today announced a definitive agreement to acquire Applied Science Fiction's proprietary rapid film processing technology, Digital PIC™, and other key assets, the company's latest effort to make photography in all its forms easy and ubiquitous in a digital age.

Terms of the agreement were not disclosed.

Applied Science Fiction is the creator of the award-winning Digital ICE™ and Digital ICE3™ technologies, the leader of automatic photo restoration applications, as well as the inventor of the cutting-edge digital dry film processing system Digital PIC. Digital PIC rapidly develops standard color negative film without chemical mixing or plumbing. The process simultaneously renders a digital image file that can be used to print photographs and write images on a CD.

Applied Science Fiction, based in Austin, Texas, has external trade tests of this innovative technology underway in the U.S. and Europe.

"Our goal is to give consumers greater flexibility, capability and access to their pictures taken with photographic film or digital cameras," said Dan Palumbo, president, consumer imaging products and services, and senior vice president, Kodak. "It's a fact that virtually every picture taken can be improved for color, brightness, and composition. We are putting all of that power, including innovative film processing, in the hands of consumers. All of our research tells us that's exactly what consumers want. For this reason, Kodak is pleased to acquire Applied Science Fiction's assets, especially its intellectual property portfolio including the innovative Digital PIC technology, and combine it with Kodak's own world-class expertise in kiosks. As a result, Kodak's will be the first and only kiosks capable of taking any input, including film, and giving the consumer exactly the prints they want, in minutes, not hours or days."

"Applied Science Fiction was formed in 1995 by a group of scientists and engineers who shared a common vision about digital imaging. Now, nearly eight years later, many of Applied Science Fiction's image enhancement technologies have become widely used by OEMs and consumers throughout the world," said Dan Sullivan, president and CEO of Applied Science Fiction. "Combining the Kodak brand name and Kodak's extensive expertise in distribution, sales, service and support with the revolutionary Digital PIC technology, Kodak and Applied Science Fiction are in the best position to market with this new technology."

Kodak sees a generation of Picture Maker kiosks that function much like automatic picture machines, available everywhere and providing processing and printing for either film or digital camera users. Since these machines will accept film or digital camera input, as well as prints, consumers will be able to preview and select, edit and print their pictures in a matter of minutes. These kiosks will appeal both to existing photo retailers who want to give consumers greater access to their pictures as well as to the expanding channels for picture-taking activities such as vacation and entertainment venues.

"Preview and select is a concept that has proven to offer strong consumer benefits," Palumbo said. "By linking it to kiosks, we take the benefit to a whole new dimension in terms of accessibility and ease of use."

Kodak will maintain operations in Austin, Texas, but will integrate Applied Science Fiction's technologies and key personnel into its Consumer Imaging business. Specific details about product plans are currently under development and will be disclosed at a later date.

Closing of the transaction is subject to customary reviews and approvals.

Eastman Kodak Company and infoimaging
Kodak is the leader in helping people take, share, enhance, preserve, print and enjoy pictures-for memories, for information, for entertainment. The company is a major participant in infoimaging, a $385 billion industry composed of devices (digital cameras and PDAs), infrastructure (online networks and delivery systems for images) and services & media (software, film and paper enabling people to access, analyze and print images). Kodak harnesses its technology, market reach and a host of industry partnerships to provide innovative products and services for customers who need the information-rich content that images contain. The company, with sales last year of $12.8 billion, is organized into four major businesses: Photography, providing consumers, professionals and cinematographers with digital and traditional products and services; Commercial Imaging, offering image capture, output and storage products and services to businesses and government; Components, delivering flat-panel displays, optics and sensors to original equipment manufacturers; and Health, supplying the healthcare industry with traditional and digital image capture and output products and services.

About Applied Science Fiction
Applied Science Fiction develops proprietary technologies for the imaging industry that link traditional photography with the digital age. Applied Science Fiction licenses its branded technologies through Original Equipment Manufacturers (OEMs) that provide products for the professional and consumer imaging markets. Additionally, Applied Science Fiction directly distributes Adobe Photoshop compatible plug-ins for automatic image correction and enhancement.

Applied Science Fiction's product portfolio consists of the Digital ICE3 film scanner suite, Digital ICE, Digital ROC™ and Digital GEM™, the individual components of the suite, Digital ICE for Photo Prints, Digital ROC plug-in for color restoration, Digital SHO™ plug-in for revealing details of dark image-areas, and Digital GEM plug-in for noise and grain reduction. Applied Science Fiction is also the innovator in digital dry film processing, with its environmentally friendly Digital PIC technology. Digital PIC develops exposed film directly into a high-resolution RGB digital format file in minutes. Digital PIC produces a DigiPIX™ Digital Negative on CD that contains the image files from which photographic quality images can be easily printed and distributed electronically. More information can be found on Applied Science Fiction's Web site at www.asf.com.