And its overall transition to a digital business has also progressed with digital sales growing 39% in the third quarter while analogue sales declined 13%.

Overall sales for the quarter rose 1% to 1.86bn ($3.364m). Net income rose to 265m compared to 67.4m in 2003, but included a 240m gain from the sale of its remote sensing business.

The firm also reduced its debt in the quarter by 322m to 1.47bn.

"Our third-quarter results demonstrate yet again the company's success in managing our digital transformation," said president and chief operating officer Antonio Perez. "We continue to post strong revenue gains in our digital portfolio."

In its printing division Graphic Communications sales rose 138% to 108m, largely due to the acquisitions. During the period NexPress began shipping the latest version of the 2100 colour press with the fifth unit and Versamark sold several high volume full-colour machines.

But along with increased sales the expanded division also brought increased costs including a 540% increase in R&D spending to 17.7m, which resulted in a loss of 22.1m primarily due to NexPress.

Sales to KPG increased 3%, which was driven by increased demand for digital plates and proofing, but was offset by price pressure. Kodak's earnings from KPG also improved.

Kodak also announced that Perez, who joined the firm in April 2003 to spearhead its digital strategy, has been elected to the board.

Story by Barney Cox