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World's Largest Direct-to-Consumer Photo Processor Acquires Snapfish, the Nation's Leading Online Photo Service

Snapfish to become part of the District Photo family of brands and strengthen the company's position as a leader in traditional and online photography

BELTSVILLE, MD - October 30, 2001 - District Photo announced today that Snapfish, the nation's leading online photo service, will be joining the District Photo family as an independent business unit. The move will solidify District's dominant position as the world's largest direct-to-consumer photography company. Snapfish was a closely held company in San Francisco backed by Kodak, Compaq, BellSouth, the Mayfield Fund, and other private investors. Terms of the deal were not disclosed.

"We are very excited to welcome Snapfish to the District Photo family," says Neil Cohen, District's CEO. "This acquisition will help us bridge the gap between traditional and online photography. We look forward to combining their award-winning service and technology with our own resources and expertise to further cement the leadership positions of both companies."

Having attracted over 2 million users since its launch in April 2000, Snapfish has achieved the largest user base, industry-leading revenues and growth, highest customer loyalty (97% customer satisfaction), lowest operating cost structure, and most sophisticated technology in its space. By focusing on the customer experience and serving all imaging consumers with a strong value proposition, Snapfish has increased its revenues nearly 4x year over year and 33% quarter over quarter, despite a downturn in the overall economy and imaging industry.

District, which operates its own mail-order film business, under the York, Clark, Truprint and other private label brands, also provides wholesale processing services to Kodak and has been Snapfish's processor since inception. Snapfish will operate as an independent business unit in San Francisco, maintain the Snapfish brand, and be led by its existing management team and employees. The Snapfish service, quality and pricing will remain unchanged as a result of the acquisition.

According to Raj Kapoor, Snapfish's President and co-founder, "we couldn't be more pleased with the acquisition and I'm excited to continue to lead Snapfish and grow the brand. Since day one, the Snapfish strategy has been to partner with the leaders in the photo industry to deliver the best combination of online photo services with traditional processing and printing. This combination is a natural evolution that will accelerate our path to profitability. As a strategic move, it will allow us to aggressively grow both our digital and film businesses, while also expanding globally."

He added, "We look forward to continuing to provide our 2 million+ users with the exceptional quality and value they've come to expect, while enhancing the service with District's 50+ years of experience and substantial resources."

About District Photo
District Photo is the largest mail-order film processor in the world. Started in 1949, District holds the dominant mail-order position in the U.S. and U.K. with its York, Clark and Truprint brands, and also operates in parts of Europe and Canada. District is a privately held company based in Beltsville, Maryland.

About Snapfish
Founded in 1999, the award-winning Snapfish is the leading online photo service offering digitization, printing, processing, editing, sharing, and storage services. Snapfish was rated the top online photo service in a recent survey from PC Data and received top quality ratings from Popular Photography. Snapfish targets the majority of the population owning film cameras, in addition to the growing number of digital camera users. When customers send film into Snapfish, they get a full set of prints on Kodak paper and a password-protected online album they can then use to edit, organize and share their photos. Digital camera users can also take advantage of online services for free and order Kodak prints. Additional information is available at http://www.snapfish.com.

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