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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): January 30, 2005
Eastman Kodak Company
(Exact name of registrant as specified in its charter)
New Jersey 1-87 16-0417150
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(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
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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))
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ITEM 1.01 Entry into a Material Definitive Agreement
Eastman Kodak Company, a New Jersey corporation ("Kodak") has entered
into an Arrangement Agreement dated January 30, 2005 (the "Agreement"),
with Creo Inc., a Canada Business Corporations Act corporation
("Creo"), pursuant to which Kodak, through an acquisition subsidiary,
will acquire all of the outstanding common shares of Creo pursuant to a
statutory plan of arrangement (the "Arrangement"). Under the terms of
the Agreement, which has been approved by Kodak's and Creo's respective
boards of directors, Kodak will pay approximately U.S. $980 million in
cash, or U.S. $16.50 per common share, for all the outstanding shares
of Creo, on a fully diluted basis. Creo is a global company and
leading provider of workflow software used by printers to manage
efficiently the movement of text, graphics and images from the computer
screen to the printing press. Based in Vancouver, Canada, Creo trades
on NASDAQ (CREO) and the TSX (CRE).
Kodak and Creo have made customary representations, warranties and
covenants in the Agreement, including, among others, covenants by Creo
to conduct its business in the ordinary course consistent with past
practice during the interim period between the execution of the
Agreement and consummation of the Arrangement. In addition, Creo has
made certain additional customary covenants, including, among others,
covenants not to: (i) solicit proposals relating to alternative
acquisition proposals, or (ii) subject to certain exceptions, enter
into discussions concerning or provide confidential information in
connection with alternative acquisition proposals. Consummation of the
transactions contemplated by the Agreement is conditioned upon, among
other things, (1) performance of covenants, (2) accuracy of
representations and warranties, (3) receipt of all required regulatory
approvals, (4) absence of any law or order making the Arrangement
illegal or prohibiting the consummation of the Arrangement,
(5) exercise of dissent rights with respect to not more than 12.5% of
the common shares of Creo in connection with the Arrangement, (6) the
approval of Creo's shareholders, and (7) approval from the Ontario
Superior Court of Justice (Commercial List).
The closing of the transactions contemplated by the Agreement is
scheduled to take place three business days following the satisfaction
or waiver of the closing conditions. Either party may terminate the
Agreement if the closing does not occur on or before September 30,
2005. The Agreement contains certain additional termination rights for
both Kodak and Creo and further provides that, upon termination of the
Agreement under specified circumstances, Creo must pay Kodak a
termination fee equal to $31.5 million plus reimbursement of certain
transaction expenses incurred by Kodak.
A copy of the January 31, 2005 press release related to this agreement
is attached hereto as Exhibit (99.1).
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ITEM 9.01 Financial Statements and Exhibits
(c) Exhibit
(99.1) Eastman Kodak Company press release dated January 31, 2005.
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.
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Richard G. Brown, Jr.
Controller
Date: February 1, 2005
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EASTMAN KODAK COMPANY
INDEX TO EXHIBIT
Exhibit No.
(99.1) Eastman Kodak Company press release dated January 31, 2005.
Exhibit (99.1)
EASTMAN KODAK COMPANY
Media Contacts:
Financial
Gerard Meuchner 585-724-4513 gerard.meuchner@kodak.com
David Lanzillo 585-781-5481 david.lanzillo@kodak.com
Trade
Anthony Sanzio 585-724-0423 anthony.sanzio@kodak.com
Ken Kadet 612-573-3108 kadetk@fleishman.com
Investor Relations Contacts:
Don Flick 585-724-4352 donald.flick@kodak.com
Carol Wilke 585-724-6791 carol.wilke@kodak.com
Patty Yahn-Urlaub 585-724-4683 patty.yahn-urlaub@kodak.com
Kodak Announces Agreement to Acquire Creo Inc.
Transaction Accretive to Earnings in 2006; Strengthens
Position in Graphic Communications Market
ROCHESTER, N.Y., Jan. 31 - Eastman Kodak Company (NYSE: EK)
today announced that it has entered into a definitive
agreement to acquire Creo Inc. (NASDAQ: CREO, TSX: CRE), a
premier supplier of prepress systems used by commercial
printers worldwide.
Based in Vancouver, Canada, Creo is the world's No. 1
provider of workflow software used by printers to manage
efficiently the movement of text, graphics and images from the
computer screen to the printing press. By adding Creo to its
already impressive line-up of digital and traditional printing
products and solutions, Kodak's Graphic Communications Group
(GCG) reinforces its status as a leading industry participant
able to provide customers with all the products and services
they need to be successful in a blended production
environment, where digital, traditional and hybrid print jobs
are converging.
Under the terms of the agreement, Kodak will pay
approximately $980 million in cash, or $16.50 per share, for
all the outstanding shares of Creo, on a fully diluted basis.
Creo presently has approximately $85 million of cash on its
balance sheet and no debt. The transaction, which has been
approved by Kodak's and Creo's respective boards of directors,
is to be carried out by statutory plan of arrangement under
Canadian law and is subject to regulatory approvals, the
approval of Creo's shareholders, and court approval.
"Graphic Communications represents one of the three pillars
of Kodak's digitally oriented growth strategy," said Daniel A.
Carp, Kodak's Chairman and Chief Executive Officer. "The
purchase of Creo strengthens that pillar, and essentially
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concludes the company's acquisition plan, announced in
September 2003."
"While this acquisition will result in some modest earnings
dilution for the remainder of 2005, we remain committed to our
operational earnings guidance range of $2.60 to $2.90 per
share for 2005," Carp said. "We believe we have opportunities
to achieve cost and revenue synergies by combining Creo with
our existing businesses. We have every intention of building
on this acquisition to increase shareholder value."
2006 Commitments Reinforced
For 2006, Kodak expects that Creo will add at least 5 cents
to per-share operational earnings, driven by cost savings and
revenue growth available to the combined entity. In 2006,
Kodak also expects approximately $700 million of incremental
revenue from Creo, whose sales in the 2004 fiscal year totaled
$636 million and whose gross margins exceed 40%.
"While we are very pleased with the assets that currently
comprise our Graphic Communications Group, the Creo
acquisition offers us the opportunity to strengthen our
position in the market," said Antonio M. Perez, Kodak's
President and Chief Operating Officer. "As the pioneer of
digital prepress systems and the leader in workflow, Creo will
accelerate our effort to bring more products to market sooner,
for the benefit of our customers and our shareholders. With
this move, we are more confident than ever in our ability to
meet or exceed our operational earnings guidance of $3.00 per
share in 2006."
"Creo will benefit from this transaction because Kodak
brings them the size and scale necessary to increase their
presence in the market," Perez said. "Kodak will benefit
because we will be able to offer end-to-end solutions with a
broader suite of products from Creo, and to capitalize on the
synergies this creates across GCG."
Strategic Benefits
Creo will provide Kodak with an innovative digital pre-press
product portfolio and established relationships in the
commercial printing segment, the largest market opportunity
within the graphic communications industry. Creo has more than
25,000 customers and offices in 30 countries worldwide.
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The proposed transaction follows the announcement on January
12 that Kodak has entered into an agreement to become the sole
owner of Kodak Polychrome Graphics (KPG), its joint venture
with Sun Chemical Corporation. KPG is the world's leading
supplier of digital and conventional lithographic plates,
digital color proofing products, and graphic arts films, with
strong worldwide distribution.
"Creo's product line complements the work already underway
at Kodak," said James Langley, President of Graphic
Communications Group and Senior Vice President, Eastman Kodak
Company. "Commercial printers use Creo's products in tandem
with those sold by KPG; combining Kodak's, KPG's and Creo's
portfolios will give customers what they want - a single
supplier for their graphic communications needs. We will be
able to marry our digital presses with Creo's prepress
offerings, including their market-leading workflow, to
accelerate growth."
"Creo is highly respected in its industry, and its
customers, especially users of its leading workflow software,
are loyal to its products because printers prefer to remain
with software programs once they are installed and work
successfully," Langley said.
Upon the closing of the transaction and the completion of
the organizational structure of Kodak's Graphic Communications
Group (GCG), Creo's operations will become part of the
Graphics Solutions & Services operating unit of GCG.
Financing
Kodak ended 2004 with $1.255 billion in cash on its balance
sheet and a debt-to-capital ratio of 37.9%. The company's debt
decreased by $927 million in 2004, to $2.321 billion. Based on
the strength of its balance sheet, Kodak intends to pay for
the acquisition by issuing debt.
"We have every confidence that we will have ready access to
the debt markets to finance this acquisition," said Robert
Brust, Kodak's Chief Financial Officer. "The debt incurred for
this purchase will keep us well within our financial covenants
with our commercial banks, and we intend to return to our
current debt levels in 2007 as other debt outstanding matures.
What's more, we have already factored into our earnings
guidance the associated financing cost."
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Conference Call Information
Kodak has scheduled a conference call to discuss the
acquisition. Hosted by Dan Carp and key members of Kodak
management, the call will take place on January 31, 2005, at
11:00 a.m. EST. All interested parties are invited to
participate by calling 913-981-4910, access code: 6987402. A
replay of the call will be available on Monday, January 31, at
1:00 p.m. EST and will be active until Monday, February 7, at
1:00 p.m. EST. The replay number is: 719-457-0820, access
code: 6987402.
Participants also may listen via webcast by accessing the
Kodak.com investor's page at: http://www.kodak.com/go/invest.
The webcast will be archived and available for replay on
this site approximately 1 hour following the live broadcast.
About Eastman Kodak Company
Kodak is the leader in helping people take, share, print and
view images - for memories, for information, for
entertainment. With sales of $13.5 billion in 2004, the
company is committed to a digitally oriented growth strategy
focused on the following businesses: Health - supplying the
healthcare industry with traditional and digital image capture
and output products and services; Graphic Communications -
offering on-demand color and black and white printing, wide-
format inkjet printing, high-speed, high-volume continuous
inkjet printing, as well as document scanning, output and
storage products and services; Digital & Film Imaging Systems
- - providing consumers, professionals and cinematographers with
digital and traditional products and services; and 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. More information about Kodak (NYSE:
EK) is available at www.kodak.com.
About Creo Inc.
Creo Inc. is a global company with key strengths in imaging,
software, and digital printing plate technology. The leading
provider of prepress systems, Creo helps over 25,000 customers
worldwide adopt digital production methods which reduce costs,
increase print quality and allow them to serve their customers
more efficiently. Based on a solid foundation of intellectual
property, Creo has an unmatched range of technology solutions
that address the needs of commercial, publication, on demand,
packaging, and newspaper printers, and creative professionals.
Creo product lines include software and hardware for computer-
to-plate imaging, systems for digital photography, scanning,
and proofing, as well as printing plates and proofing media.
Creo also supplies on-press imaging technology, components for
digital presses, color servers and high-speed digital
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printers. Based in Vancouver, Canada, Creo trades on
NASDAQ (CREO) and the TSX (CRE). www.creo.com
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Operational items are non-GAAP financial measures as defined
by the Securities and Exchange Commission's final rules under
"Conditions for Use of Non-GAAP Financial Measures."
Reconciliations of operational items included in this press
release to the most directly comparable GAAP financial
measures are set forth below.
For 2005, earnings per share from continuing operations is
expected to range from $1.25 to $1.55. The primary difference
between the operational and as-reported measures is
management's estimate of restructuring costs to be incurred in
2005 under the three-year cost-reduction program.
The company has not provided 2006 U.S. GAAP earnings guidance
as such forward-looking information cannot be reasonably
estimated, as it is not practicable nor possible to determine
future non-operational items.
_______________________
Certain statements in this press release may be forward
looking in nature, or "forward-looking statements" as defined
in the United States Private Securities Litigation Reform Act
of 1995. For example, references to Creo's projected revenues
and the impact on Kodak's revenues and earnings and Kodak's
cash generation plans are forward looking statements.
Actual results may differ materially from those expressed or
implied in forward-looking statements. In addition, any
forward-looking statements represent our estimates only as of
the date they are made, and should not be relied upon as
representing Kodak's estimates as of any subsequent date.
While Kodak may elect to update forward-looking statements at
some point in the future, it specifically disclaims any
obligation to do so, even if its estimates change.
Kodak's results may be adversely affected if it is unable to
realize the expected benefits of the acquisition of Creo,
including because of:
- The possibility that the transaction may not close;
- Difficulty in combining the operations of Creo with those of
Kodak, resulting in failure to achieve the projected cost
savings, synergies, efficiencies and revenue growth;
- Any loss of employees, customers or suppliers that Creo or
Kodak may suffer as a result of the acquisition, and;
- The possibility that Kodak may not obtain the financing
necessary to complete the transaction on the terms and
conditions it desires.
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The forward-looking statements contained in this news release
are subject to a number of factors and uncertainties,
including Kodak's successful:
- Implementation of its digitally oriented growth strategy;
- Implementation of product strategies (including category
expansion, digitization, organic light emitting diode (OLED)
displays, and digital products);
- Implementation of intellectual property licensing
strategies;
- Development and implementation of e-commerce strategies;
- Completion of information systems upgrades, including SAP,
our enterprise system software;
- Integration of newly acquired businesses;
- Completion of various portfolio actions;
- Transition from analog to digital imaging;
- Implementation of our three-year cost reduction program;
- Reduction of inventories;
- Implementation of its debt management program;
- Improvement in manufacturing productivity and techniques;
- Improvement in receivables performance;
- Reduction in capital expenditures;
- Improvement in supply chain efficiency;
- Implementation of future focused cost reductions, including
personnel reductions; and
- Development of its business in emerging markets like China,
India, Brazil, Mexico and Russia;
Forward-looking statements contained in this news release are
subject to the following additional Kodak risk factors and
uncertainties:
- Inherent unpredictability of currency fluctuations and raw
material costs;
- Competitive actions, including pricing;
- The nature and pace of technology evolution, including the
analog-to-digital transition;
- Continuing customer consolidation and buying power;
- Current and future proposed changes to tax laws, as well as
other factors which could adversely impact Kodak's effective
tax rate in the future;
- General economic, business, geopolitical, regulatory and
public health conditions;
- Market growth predictions;
- Other factors and uncertainties disclosed from time to time
in Kodak's filings with the Securities and Exchange Commission,
and;
- The results of Kodak's ongoing investigation regarding the
income tax accounting errors recently announced.
Any forward-looking statements in this press release should be
evaluated in light of these important factors and
uncertainties.
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2005