1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 25, 2004 Eastman Kodak Company (Exact name of registrant as specified in its charter) New Jersey 1-87 16-0417150 - ---------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 343 State Street, Rochester, New York 14650 (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (585) 724-4000 ------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Securities Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c)under the Exchange Act (17 CFR 240.13e-4(c))
2 ITEM 2.05 Costs Associated with Exit or Disposal Activities On October 25, 2004, Eastman Kodak Company committed to a plan to close three overnight photofinishing labs located in Spain and Norway and to downsize a lab located in Switzerland. These actions, which are expected to be completed by March 31, 2005, reflect the Company's plan to deal effectively with the continued worldwide volume decline in traditional products driven by the increasing popularity of digital products worldwide. In conjunction with the lab closures, the Company will pay approximately $26 million in severance costs to employees and will incur other exit and disposal costs amounting to approximately $4 million. In addition, the Company will record a charge in cost of goods sold of approximately $2 million in 2004 for inventory write-downs and $13 million for accelerated depreciation on the related long-lived assets during the remainder of 2004 and the first quarter of 2005. The severance and shut down costs require the outlay of cash, while the accelerated depreciation and inventory write-downs represent a non-cash charge. These lab closures are part of the Company's restructuring program that was announced on January 22, 2004. The Company expects that it will continue to consolidate its worldwide overnight photofinishing operations in order to eliminate excess capacity. A copy of the October 27, 2004 press releases related to the lab closures in Europe are attached hereto as Exhibits (99.1), (99.2) and (99.3). ITEM 9.01 Financial Statements and Exhibits (c) Exhibits (99.1) Eastman Kodak Company press release dated October 27, 2004 regarding photofinishing lab closures in Spain. (99.2) Eastman Kodak Company press release dated October 27, 2004 regarding a photofinishing lab closure in Norway. (99.3) Eastman Kodak Company press release dated October 27, 2004 regarding the downsize of a photofinishing lab in Switzerland.
3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EASTMAN KODAK COMPANY By: /s/ Richard G. Brown,Jr. ---------------------------- Richard G. Brown, Jr. Controller Date: October 27, 2004
4 EASTMAN KODAK COMPANY INDEX TO EXHIBITS Exhibit No. (99.1) Eastman Kodak Company press release dated October 27, 2004 regarding photofinishing lab closures in Spain. (99.2) Eastman Kodak Company press release dated October 27, 2004 regarding a photofinishing lab closure in Norway. (99.3) Eastman Kodak Company press release dated October 27, 2004 regarding the downsize of a photofinishing lab in Switzerland.
Exhibit (99.1)
EASTMAN KODAK COMPANY
LABORATORIOS KODAK, S.A. TO STOP PRODUCTION AT ITS TWO
WHOLESALE LABORATORIES IN SPAIN
Madrid, October 27th, 2004 - Laboratorios Kodak, S.A., a
company offering a wholesale photography processing
service, has decided to stop production at its two work
centers in Spain, an industrial laboratory in Sabadell
(Barcelona) and another in Massalfassar (Valencia). Talks
are already underway with workers' representatives.
Once contact has been made with trades union
representatives, Laboratorios Kodak, S.A. will set in
motion the necessary procedure with the appropriate
authority to wind up production at these two work centers
where a total of 141 people work, 81 at the Sabadell
laboratory and 60 at the Massalfassar one.
This decision is part of the broader transformation of
Kodak as the company accelerates is digital imaging
strategy while smartly managing its traditional film
business. As more consumers shift to digital imaging,
Kodak is repositioning the company for continued leadership
in all forms of consumer photography, digital and film.
The decline in film demand, and consequently fewer rolls of
film for processing has resulted in cumulated financial
losses at these two industrial laboratories in 2003.
These losses were caused by:
1. The rapid change in Spanish consumer tastes, showing a
clear preference for digital photography, a market that is
growing enormously each year. It is estimated that during
2004 a total of 2,750,000 digital cameras were sold in
Spain, which represents a huge increase on 2003 when
1,300,000 cameras were sold.
2. The Spanish consumer has always preferred quick
processing, which means wholesale laboratories develop
about 25% of traditional films.
3. Moreover, new digital photography users also prefer
quick processing, either in a shop, at home or online,
rather than wholesale printing that take longer delivery
services.
Laboratorios Kodak, S.A. - In recent years it has sought
to put in place other alternatives to stopping production
at its two industrial laboratories, and it has even made
investments in them with a view to making them more
competitive.
This closure falls in the framework of the three-year
program, announced by Eastman Kodak Company last January,
whereby between 12,000 and 15,000 jobs will be cut
worldwide, as part of the company's strategy to accelerate
investment in digital technologies.
For more information:
Agencia KETCHUM
91 788 32 00
Exhibit (99.2) EASTMAN KODAK COMPANY Press contact: Frank Young-Halvorsen, Kodak A/S Norway: +47 90 54 18 13 Kodak Nordic Takes Step to Full Digital Focus and Closes Lab at Mastemyr, Oslo Oslo 27 October 2004 - Kodak Nordic announces today its intention to close the wholesale lab operations at Mastemyr outside Oslo. 75 permanent employees will be affected immediately. The background is a steep decline in the analogue market, which started already in early 2003. - - The skilled employees at Mastemyr have done a great job and for many years they have secured high quality and production levels, despite the market turndown. We will now concentrate on supporting them as much as possible, says sier Frank Young-Halvorsen, General Manager of Kodak AS in Norway. In the latter part of 2003 and in 2004 (analogue) markets have declined much more steeply than anyone expected. The total Nordic market decline in the analog business is 29% so far this year. At the same time sales of digital cameras exceed all estimates. 94% of all new cameras sold in Norway today are digital. Only Japan sells more digital cameras per capita than Norway. Already in early 2003 Eastman Kodak redefined its strategy due to a rapidly declining (analogue) volume in wholesale labs and eroding margins, and a number of European labs have been closed in all European countries since then. Today's announcement in Oslo is in the framework of the corporate digital strategy announced by Eastman Kodak Company in September 2003 to accelerate investments in digital imaging and concentrate resources to areas with strong growth potential. - - The company is accelerating its consumer digital imaging strategy, responding to changing consumer preferences regarding digital output solutions, says Frank Young- Halvorsen. The objective with this strategic decision is to allow complete focus on the variety of offerings to the digital consumer photographer. We choose to exit the processing business in order to fully focus on all digital output solutions where Kodak has leading technology in Picture Maker-kiosks, printing docks and online solutions. In 2005 more than half of Eastman Kodak's revenue will come from digital products, and with rising profit. All volumes and orders will be transferred to Vastsvenska Fotolaboratoriet (VSFL) in Sweden as soon at is possible to do it safely and effectively from a customer point of view.2 - - All our customers will be able to continue with the popular Kodak Pictures program, and our customers can still buy Kodak film and paper where they are used to do so. VSFL that takes over the processing have a high reputation and "state of the art" processors to deliver high quality prints on Kodak paper. About Eastman Kodak Company and Infoimaging Kodak is the leader in helping people take, share, print and view images - for memories, for information, for entertainment. The company is a major participant in infoimaging, a $385 billion industry composed of devices (digital cameras and flat-panel displays), infrastructure (online networks and delivery systems for images) and services & media (software, film and paper enabling people to access, analyze and print images). With sales of $13.3 billion in 2003, the company comprises several businesses: Health, supplying the healthcare industry with traditional and digital image capture and output products and services; Graphic Communications Group, offering on-demand color printing and networking publishing systems consisting of three wholly owned subsidiaries: Encad, Inc., NexPress Solutions, and Kodak Versamark; Commercial Imaging, offering image capture, output and storage products and services to businesses and government; Display & Components, which designs and manufactures state-of-the-art organic light-emitting diode displays as well as other specialty materials, and delivers imaging sensors to original equipment manufacturers; and Digital & Film Imaging Systems, providing consumers, professionals and cinematographers with digital and traditional products and services.
Exhibit (99.3)
EASTMAN KODAK COMPANY
Media contact: Beatrice Neff
Tel 1: 021 631 06 56
Tel 2: 021 631 06 57
E.Mail: beatrice.neff@kodak.com
KODAK NEWS RELEASE : ENGLISH VERSION
Kodak Focuses More Strongly on Digital Photography
Production To Be Cut at Renens Laboratory
RENENS, 27 October 2004 - Kodak is focusing more strongly on
digital photography, taking advantage of changes in consumer
preferences, and has announced its intention to end most of
its film development at its Renens laboratory at the end of
2004. This action does not affect the development of
Kodachrome slide and motion-picture film.
The management will consult employee representatives before
taking a definite decision. These measures will result in
the reduction of 97 jobs. Kodak will pay redundancy
compensation and offer outplacement facilities to those
concerned.
Changes in Consumer Preferences
In an effort to retain its leading position with consumers
and professional photographers in the face of fundamental,
structural changes in the market, Kodak is moving more
strongly into digital photography for the consumer and
professional markets, and is successfully focusing its
investment on these sectors. The decline in sales of analogue
films and cameras has particularly accelerated in Switzerland
this year, and further declines are expected in 2005. The
photographic processing services carried out by the Kodak
laboratory in Renens for the whole of Switzerland has also
markedly decreased. These trends, together with the fact
that laboratory processing of digital photographs does not
compensate the decline in the traditional photography market,
means that film development apart from Kodachrome cannot be
continued. The General Manager for Kodak Switzerland, Pierre
Kipfer, informed the whole staff at a meeting this morning
that the company intends to cease most of its film
development activity at the end of 2004.
2
"Kodak is accelerating its digital imaging strategy as we
transform the company to remain the trusted supplier to
consumers and professionals for both digital and traditional
photographic products," said Kipfer. "Our strategy is to
focus on growth opportunities in digital imaging while
smartly managing our traditional businesses. We will
continue to offer consumers the best in traditional film
products."
Kodak Switzerland's New Strategic Direction
Following Eastman Kodak Company's announcement in September
2003 that it would devote more resources to digital
photography, Kodak Switzerland, which will continue to employ
124 people, will in the future focus its activities mainly on
digital photography for the consumer and professional
markets, medical imaging, the commercial market and graphics.
Kodak will continue to market all its traditional products
such as films, re-usable cameras, batteries, paper and
chemicals, providing the same quality for which the company
has been renowned for decades. Kodak's strategy for
processing images at the point of sale will be reinforced
through digital kiosks and mini-labs.
The Renens site will continue processing Kodachrome films for
the whole world except the United States, as well as selling
and servicing mini-labs.
The company is in negotiation with several partners to find
the best solution for users of the direct mail film
development service marketed under labels such as Kodak Gold
Club. It also expects to reach a license agreement with a
third party to process films for specialised shops and
supermarkets according to Kodak quality standards.
A Painful Measure
"The measure we are planning is very painful, since it
affects fellow-workers who have offered their skills to our
company for many years. However, the evolution of the
analogue market obliges us to act without further delay.
Strategic redeployment towards digital photography enables
Kodak to continue to satisfy its customers' image
requirements," said Pierre Kipfer.