Kodak 2004 Annual Report Download - page 98

Financials
96
EASTMAN KODAK COMPANY
2003
As Originally Reported 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
Net sales from continuing
operations $3,648 $3,346 $3,259 $2,640
Gross profi t from continuing
operations 1,176 1,105 1,096 801
(Loss) earnings from
continuing operations (10) 115 106 (12)
Earnings from discontinued
operations 29 7 6 24
Net earnings 19 122 112 12
Basic and diluted net (loss)
earnings per share
Continuing operations (.03) .40 .37 (.04)
Discontinued operations .10 .02 .02 .08
Total .07 .42 .39 .04
(1) Includes $78 million ($24 million included in cost of goods sold and $54 million
included in restructuring costs and other) of restructuring charges, which
reduced net earnings by $56 million; and $9 million of purchased R&D, which
reduced net earnings by $6 million.
(2) Includes $168 million ($34 million included in cost of goods sold and $134 mil-
lion included in restructuring costs and other) of restructuring and impairment
charges, which reduced net earnings by $107 million.
(3) Includes $264 million ($37 million included in cost of goods sold and $227 mil-
lion included in restructuring costs and other) of restructuring charges, which
reduced net earnings by $202 million; and $6 million of purchased R&D, which
reduced net earnings by $4 million.
(4) Includes the gain on the sale of RSS to ITT.
(5) Includes $391 million ($111 million included in cost of goods sold and $280
million included in restructuring costs and other) of restructuring and impair-
ment charges, which reduced net earnings by $262 million; and $6 million
(included in SG&A) related to a charge for a legal settlement, which reduced
net earnings by $4 million. Also includes the benefi t of two favorable legal
settlements of $101 million (included in other income (charges), net), which
increased net earnings by $63 million.
(6) Includes $49 million ($14 million included in cost of goods sold and $35
million included in restructuring costs and other) of restructuring charges,
which reduced net earnings by $34 million; $21 million of purchased R&D,
which reduced net earnings by $13 million; $12 million (included in SG&A)
for a charge related to an intellectual property settlement, which reduced net
earnings by $7 million; and an $8 million (included in benefi t for income taxes)
tax benefi t related to the donation of certain patents.
(7) Represents the reversal of a tax reserve resulting from the Company’s repur-
chase of certain properties that were initially sold in connection with the 1994
divestiture of Sterling Winthrop Inc.
(8) Includes $51 million ($10 million included in cost of goods sold and $41 million
included in restructuring costs and other) of restructuring charges, which re-
duced net earnings by $33 million; $14 million (included in SG&A) for a charge
connected with the settlement of a patent infringement claim, which reduced
net earnings by $9 million; $14 million (included in SG&A) for a charge con-
nected with a prior-year acquisition, which reduced net earnings by $9 million;
and $9 million (included in SG&A) for a charge to write down certain assets
held for sale following the acquisition of the Burrell Companies, which reduced
net earnings by $6 million.
(9) Includes $185 million ($33 million included in cost of goods sold and $152 mil-
lion included in restructuring costs and other) of restructuring charges, which
reduced net earnings by $121 million; and $8 million (included in SG&A) for a
donation to a technology enterprise, which reduced net earnings by $5 million.
(10) Includes $267 million ($16 million included in cost of goods sold and $251 mil-
lion included in restructuring costs and other) of restructuring charges, which
reduced net earnings by $208 million; $8 million (included in SG&A) for legal
settlements, which reduced net earnings by $5 million; $3 million (included
in SG&A) for strategic asset impairments, which reduced net earnings by $2
million; $4 million (included in other income (charges), net) for non-strategic
asset write-downs, which reduced net earnings by $3 million; $10 million of
purchased R&D (included in R&D), which reduced net earnings by $6 million;
a $9 million reversal (included in SG&A) for an environmental reserve, which
increased net earnings by $6 million; and a $5 million (included in benefi t for
income taxes) tax benefi t related to the donation of certain patents.
(11) Includes $12 million for the reversal of environmental reserves at a formerly
owned manufacturing site, which increased net earnings by $7 million; and a
$3 million increase to net earnings in relation to the reversal of state income
tax reserves.
(12) Refer to Note 22, “Discontinued Operations” for a discussion regarding earn-
ings (loss) from discontinued operations.
(13) Each quarter is calculated as a discrete period and the sum of the four
quarters may not equal the full year amount. Effective December 15, 2004,
the Company adopted the provisions of EITF 04-8. The consensus reached in
this issue requires the dilutive effect of contingent convertible debt instru-
ments with market price contingencies to be included in diluted earnings per
share, regardless of whether the market price contingency has been met. The
Company currently has contingent convertible debt instruments outstanding
that are convertible if the market price of our common stock exceeds $37.224
per share for a specifi ed period of time. This debt was issued in October 2003.
EITF 04-8 requires restatement of all periods presented for which contingent
convertible debt instruments were outstanding. The Company’s diluted net
earnings per share in the above table includes the effect of EITF 04-8, which
had no material impact on the Company’s diluted earnings per share.
Changes in Estimates Recorded During the Fourth
Quarter Ended December 31, 2003 (Restated)
During the fourth quarter ended December 31, 2003, the Company
recorded approximately $22 million relating to changes in estimates with
respect to certain of its employee benefi t and incentive compensation
accruals. These changes in estimates favorably impacted the results for the
fourth quarter by $.07 per share.
NOTE 25: SUBSEQUENT EVENTS
On January 12, 2005, the Company announced that it would become the
sole owner of Kodak Polychrome Graphics (KPG) through redemption of
Sun Chemical Corporation’s 50 percent interest in the KPG joint venture.
The transaction will further establish the Company as a leader in the
graphic communications industry and will complement the Company’s
existing business in this market. Under the terms of the transaction, the
Company will redeem all of Sun Chemical’s shares in KPG by providing
$317 million in cash at closing, $200 million in cash in the third quarter