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Financials
31
2 0 0 4 ฀ S U M M A R Y ฀ A N N U A L ฀ R E P O R T
฀ ฀ ฀ ฀ ฀ Long-lived฀Asset
฀ ฀ ฀ Exit฀ ฀ Impairments
฀ Number฀of฀ Severance฀ Costs฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ and฀Inventory฀฀฀฀฀฀ Accelerated
(dollars฀in฀millions)฀ Employees฀ Reserve฀ Reserve฀ Total฀ Write-downs฀ Depreciation
Q1,฀2003฀charges฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 425฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ $฀ 31฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ $฀ —฀฀฀฀฀฀฀฀฀฀฀ $฀ 31฀฀฀฀฀ $฀ —฀ $฀ —
Q1,฀2003฀utilization฀฀฀฀฀฀฀฀฀฀฀฀ (150)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (2)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ —฀ ฀ (2)฀฀฀฀ ฀ —฀ ฀ —
Balance฀at฀3/31/03฀ 275฀ ฀ 29฀ ฀ —฀ ฀ 29฀฀ ฀ —฀ ฀ —฀฀฀
Q2,฀2003฀charges฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 500฀ ฀ 17฀ ฀ 4฀ ฀ 21฀ ฀ 5฀ ฀ —฀฀฀฀
Q2,฀2003฀utilization฀฀฀฀฀฀฀฀฀฀฀฀ (500)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (13)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ —฀ ฀ (13)฀฀฀ ฀ (5)฀ ฀ —฀
Balance฀at฀6/30/03฀ 275฀฀ ฀ 33฀ ฀ 4฀ ฀ 37฀ ฀ —฀ ฀ —
Q3,฀2003฀charges฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 925฀ ฀ 19฀ ฀ 4฀ ฀ 23฀฀ ฀ 1฀ ฀ 16
Q3,฀2003฀utilization฀฀฀฀฀฀฀฀฀฀฀ ฀(400)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (12)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ ฀(1)฀ ฀ (13)฀ ฀ (1)฀ ฀ (16)฀ ฀
Balance฀at฀9/30/03฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 800฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 40฀ ฀ 7฀ ฀ 47฀ ฀ —฀ ฀ —
Q4,฀2003฀charges฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ 8
Q4,฀2003฀utilization฀฀฀฀฀฀฀฀฀฀฀฀ (625)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (17)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (3)฀฀฀฀฀฀฀฀฀฀฀ ฀ (20)฀ ฀ —฀ ฀ (8)฀฀฀฀
Balance฀at฀12/31/03฀฀฀฀฀฀฀฀฀฀฀฀฀ 175฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 23฀ ฀ 4฀ ฀ 27฀ ฀ —฀ ฀ —
Q1,฀2004฀charges฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ 6
Q1,฀2004฀reversal฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ —฀ ฀ (1)฀ ฀ —฀ ฀ (1)฀ ฀ —฀ ฀ —
Q1,฀2004฀utilization฀฀฀฀฀฀฀฀฀฀฀ (150)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (11)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (3)฀฀฀฀฀฀฀฀฀฀ ฀ ฀(14)฀฀฀ ฀ —฀ ฀ (6)
Balance฀at฀3/31/04฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 25฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 11฀฀ ฀ 1฀ ฀ 12฀ ฀ —฀ ฀ —
Q2,฀2004฀charges฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ —฀ ฀ 1
Q2,฀2004฀utilization฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (2)฀ ฀ —฀ ฀ (2)฀฀฀฀฀฀ ฀ —฀ ฀ (1)฀฀฀฀฀฀฀
Balance฀at฀6/30/04฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 25฀ ฀ 9฀ ฀ 1฀ ฀ 10฀ ฀ —฀ ฀ —
Q3,฀2004฀utilization฀฀฀฀฀฀฀฀฀฀฀฀฀฀ (25)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (1)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (1)฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (2)฀฀฀฀฀ ฀ —฀ ฀ —฀ ฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
Balance฀at฀9/30/04฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 8฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 8฀ ฀ —฀ ฀ —
Q4,฀2004฀utilization฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (1)฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ (1)฀฀฀ ฀ —฀ ฀ —
Balance฀at฀12/31/04฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ $฀ 7฀ $฀ —฀ $฀ 7฀฀ $฀ —฀ $฀ —
equipment฀and฀$7฀million฀of฀photofinishing฀facilities฀and฀equipment฀that฀will฀
be฀used฀until฀their฀abandonment.฀
The฀year-to-date฀charges฀of฀$82฀million฀included฀$45฀million฀ap-
plicable฀to฀the฀D&FIS฀segment,฀$6฀million฀applicable฀to฀the฀Health฀segment฀
and฀$1฀million฀applicable฀to฀the฀Commercial฀Imaging฀segment.฀The฀balance฀
of฀$30฀million฀was฀applicable฀to฀manufacturing,฀research฀and฀development,฀
and฀administrative฀functions,฀which฀are฀shared฀across฀segments.฀The฀
program-to-date฀charges฀of฀$479฀million฀included฀$253฀million฀applicable฀
to฀the฀D&FIS฀segment,฀$26฀million฀applicable฀to฀the฀Health฀segment฀and฀
$10฀million฀applicable฀to฀the฀Commercial฀Imaging฀segment.฀The฀balance฀of฀
$190฀million฀was฀applicable฀to฀manufacturing,฀research฀and฀development,฀
and฀administrative฀functions,฀which฀are฀shared฀across฀segments.
As฀of฀the฀end฀of฀the฀first฀quarter฀of฀2004,฀the฀Company฀had฀commit-
ted฀to฀all฀of฀the฀initiatives฀originally฀contemplated฀under฀the฀Third฀Quarter,฀
2003฀Restructuring฀Program.฀The฀Company฀committed฀to฀the฀elimination฀
of฀a฀total฀of฀5,850฀positions฀under฀the฀Third฀Quarter,฀2003฀Restructuring฀
Program.฀The฀remaining฀25฀positions฀to฀be฀eliminated฀under฀the฀Third฀
Quarter,฀2003฀Restructuring฀Program฀are฀expected฀to฀be฀completed฀during฀
2005.฀The฀Company’s฀expected฀cost฀savings฀as฀a฀result฀of฀all฀actions฀
contemplated฀under฀the฀Third฀Quarter,฀2003฀Restructuring฀Program฀were฀
approximately฀$275฀million฀in฀2004,฀with฀annual฀savings฀of฀$325฀million฀to฀
$350฀million฀expected฀thereafter.฀฀฀฀
First฀Quarter,฀2003฀Restructuring฀Program
In฀the฀early฀part฀of฀the฀first฀quarter฀of฀2003,฀as฀part฀of฀its฀continuing฀
focused฀cost฀reduction฀efforts฀and฀in฀addition฀to฀the฀remaining฀initiatives฀
under฀the฀Fourth฀Quarter,฀2002฀Restructuring฀Program,฀the฀Company฀an-
nounced฀its฀First฀Quarter,฀2003฀Restructuring฀Program฀that฀included฀new฀
initiatives฀to฀further฀reduce฀employment฀within฀a฀range฀of฀1,800฀to฀2,200฀
employees.฀A฀significant฀portion฀of฀these฀new฀initiatives฀related฀to฀the฀
rationalization฀of฀the฀Company’s฀photofinishing฀operations฀in฀the฀U.S.฀and฀
Europe.฀Specifically,฀as฀a฀result฀of฀declining฀film฀and฀photofinishing฀volumes฀
and฀in฀response฀to฀global฀economic฀and฀political฀conditions,฀the฀Company฀
began฀to฀implement฀initiatives฀to:฀(1)฀close฀certain฀photofinishing฀operations฀
in฀the฀U.S.฀and฀EAMER,฀(2)฀rationalize฀manufacturing฀capacity฀by฀eliminat-
ing฀manufacturing฀positions฀on฀a฀worldwide฀basis฀and฀(3)฀eliminate฀selling,฀
general฀and฀administrative฀positions,฀particularly฀in฀the฀D&FIS฀segment.
The฀following฀table฀summarizes฀the฀activity฀with฀respect฀to฀the฀
charges฀recorded฀in฀connection฀with฀the฀focused฀cost฀reduction฀ac-
tions฀that฀the฀Company฀has฀committed฀to฀under฀the฀First฀Quarter,฀2003฀
Restructuring฀Program฀and฀the฀remaining฀balances฀in฀the฀related฀reserves฀
at฀December฀31,฀2004: