Kodak 2006 Annual Report Download - page 119

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The unaudited pro forma combined historical results, as if KPG had been acquired at the beginning of 2005 and 2004, respectively, are estimated to be:
(in millions, except per share data) 2005 2004
Net sales $ 14,707 $ 15,232
(Loss) earnings from continuing operations $ (1,336) $ 86
Basic net (loss) earnings per share
from continuing operations $ (4.64) $ .30
Diluted net (loss) earnings per share
from continuing operations $ (4.64) $ .30
Number of common shares used in:
Basic net (loss) earnings per share 287.9 286.6
Diluted net (loss) earnings per share 287.9 286.8
The pro forma results include amortization of the intangible assets presented above, depreciation related to the fixed asset step-up, and the interest
expense related to acquisition-related debt, and exclude the write-off of research and development assets that were acquired.
Pro-forma Financial Information
The following unaudited pro forma financial information presents the combined results of operations of the Company and the Company’s significant
acquisitions since January 1, 2005, KPG and Creo, as if the acquisitions had occurred as of the beginning of the periods presented. The unaudited pro
forma financial information is not intended to represent or be indicative of the consolidated results of operations or financial condition of the Com-
pany that would have been reported had the acquisitions been completed as of the beginning of the periods presented, and should not be taken as
representative of the future consolidated results of operations or financial condition of the Company. Pro forma results were as follows for years ended
December 31, 2005 and 2004:
(in millions, except per share data) 2005 2004
Net sales $ 14,992 $ 15,987
(Loss) earnings from continuing operations $ (1,391) $ 4
Basic net (loss) earnings per share
from continuing operations $ (4.83) $ .01
Diluted net (loss) earnings per share
from continuing operations $ (4.83) $ .01
Number of common shares used in:
Basic net (loss) earnings per share 287.9 286.6
Diluted net (loss) earnings per share 287.9 286.8
The pro forma results include amortization of the intangible assets, depreciation related to the fixed asset step-up, and the interest expense related to
acquisition-related debt, and exclude the write-off of research and development assets that were acquired.
2004
NexPress-Related Entities
On May 1, 2004, the Company completed the purchase of Heidelberger Druckmaschinen AG’s (Heidelberg) 50 percent interest in NexPress Solutions
LLC, a 50/50 joint venture of Kodak and Heidelberg that makes high-end, on-demand digital color printing systems, and the equity of Heidelberg
Digital LLC, a leading maker of digital black-and-white variable-data printing systems. Kodak also announced the acquisition of NexPress GmbH, a
German subsidiary of Heidelberg that provides engineering and development support, and certain inventory, assets and employees of Heidelberg’s
regional operations or market centers. There was no cash consideration paid to Heidelberg at closing. Under the terms of the acquisition, Kodak and
Heidelberg agreed to use a performance-based earn-out formula whereby Kodak will make periodic payments to Heidelberg over a two-year period, if
certain sales goals are met. If all sales goals are met during the two calendar years ended December 31, 2005, the Company will pay a maximum of
$150 million in cash. None of these sales goals were met during the two calendar years ended December 31, 2005 and therefore, no amounts were
paid. Additional payments may also be made relating to the incremental sales of certain products in excess of a stated minimum number of units
sold during a five-year period following the closing of the transaction. This acquisition advances the Company’s strategy of diversifying its business
portfolio, and accelerates its participation in the digital commercial printing industry.