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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 11, 2005
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))
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ITEM 1.01 Entry into a Material Definitive Agreement
Eastman Kodak Company ("Kodak") and its subsidiary, Kodak Graphics
Holdings, Inc., have entered into a Redemption Agreement (the
"Agreement"), dated as of January 11, 2005, with Sun Chemical
Corporation and Sun Chemical Group B.V. (collectively, "Sun"), pursuant
to which the parties have agreed to consummate certain transactions that
will result in Kodak owning 100% of the equity interests in Kodak
Polychrome Graphics LLC and Kodak Polychrome Graphics Company Ltd.
(collectively, "KPG"). A leading solutions provider to the graphic
communications industry with headquarters in Norwalk, Connecticut, KPG
is currently a 50-50 joint venture between Kodak and Sun, and serves
customers around the globe with subsidiaries and regional offices in the
U.S., Europe, Japan, Asia Pacific and Latin America.
Kodak and its affiliates will pay to Sun and its affiliates an aggregate
consideration of $816.5 million, of which $316.5 million will be paid on
the closing date, $200 million in September 2006 and $50 million in each
of September 2008 through 2013.
The closing of the transactions contemplated by the Agreement is
scheduled to take place on April 1, 2005, subject to satisfaction of the
closing conditions on or prior to that date. Either party may terminate
the Agreement if the closing does not occur by October 11, 2005 (if all
conditions to closing other than certain regulatory approvals have been
satisfied on or prior to July 11, 2005) or otherwise by July 11, 2005.
The closing of the transactions is subject to certain conditions,
including, among other things, the regulatory approvals required under
the U.S. antitrust laws and EU competition laws.
The Agreement includes a non-compete covenant, pursuant to which Sun has
agreed not to engage in the lithographic plate business or the proofing
business for a period of three years following the closing date, with
certain exceptions. Sun has also agreed not to solicit, recruit or hire
any officer, director or employee of KPG for a period of two years
following the closing date, with certain exceptions.
A copy of the January 12, 2005 press release related to this action is
attached as Exhibit (99.1).
ITEM 9.01 Financial Statements and Exhibits
(c) Exhibit
(99.1) Eastman Kodak Company press release dated January 12, 2005
regarding this action.
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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: January 12, 2005
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EASTMAN KODAK COMPANY
INDEX TO EXHIBIT
Exhibit No.
(99.1) Eastman Kodak Company press release dated January 12, 2005.
Exhibit (99.1)
EASTMAN KODAK COMPANY
Kodak to Become Sole Owner of Kodak Polychrome Graphics
Transaction Immediately Accretive to Earnings Both on a GAAP
and Operational Basis; Strengthens Position in Graphic
Communications Market, Expands Distribution
ROCHESTER, N.Y., Jan. 12 -- Eastman Kodak Company today
announced that it will become the sole owner of Kodak
Polychrome Graphics (KPG) through redemption of Sun Chemical
Corporation's 50 percent interest in the joint venture. Kodak
and Sun Chemical each own half of KPG currently, a joint
venture established in 1998. The transaction will increase
immediately Kodak's sales and earnings while expanding the
global distribution network for the digital printing systems
made by its Graphic Communications Group and broadening the
company's solutions portfolio.
"Kodak Polychrome Graphics is an established leader in
supplying products and solutions to the graphic communications
industry," said Daniel A. Carp, Chairman and Chief Executive
Officer, Eastman Kodak Company. "This transaction, which is
immediately accretive to earnings, is another decisive step in
the implementation of our digitally oriented growth strategy
and strengthens Kodak's ability to compete in the fastest-
growing segments of the industry."
Under the terms of the transaction, Kodak 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 of 2006
and $50 million in cash annually from 2008 through 2013, for a
total of $817 million. Kodak will fund the redemption through
internally generated cash flow. The transaction is expected
to close in April 2005.
KPG revenues for 2004 are expected to be $1.7 billion. Kodak
expects this transaction to add approximately $1.1 billion to
Kodak's revenue in 2005, reflecting approximately nine months
of Kodak ownership, and the elimination of inter-company sales
from Kodak to KPG. In 2006, Kodak expects approximately $1.4
billion of incremental revenue, reflecting a full year of
ownership and the elimination of inter-company sales.
Kodak also expects the transaction will add approximately
eight cents to the company's 2005 operational earnings and
approximately 14 cents to its 2006 operational earnings. These
figures are included in Kodak's stated goal of achieving
operational earnings of $3 per share in 2006.
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On a Generally Accepted Accounting Principles (GAAP) basis,
Kodak expects the transaction will add approximately five
cents to the company's 2005 EPS and approximately 14 cents to
its 2006 EPS.
KPG will provide Kodak with an innovative product portfolio,
a strong sales organization, and established relationships in
the commercial printing segment, the largest market
opportunity within the graphic communications industry.
"One of the key elements of our strategy involves smart
acquisitions that complement Kodak's existing capabilities and
enable us to drive profitable digital growth," said Antonio M.
Perez, President and Chief Operating Officer, Eastman Kodak
Company. "Bringing KPG together with Kodak's existing graphic
communications businesses - Kodak Versamark, NexPress and
Encad - will enhance our operations, extend significantly our
coverage worldwide, complement our present portfolio, and
strengthen Kodak's ability to serve our customers in the fast-
growing graphic communications market."
Based in Norwalk, Conn., KPG is one of the world's leading
suppliers of products and services to the graphic
communications market, with operations on six continents and
an extensive global sales force, with nearly 1,000 employees
interacting with customers. In addition to being the world
leader in sales of digital computer-to-plate and monitor and
remote proofing solutions, KPG supplies graphic arts film,
conventional lithographic plates and digital color proofing
products. KPG's customers include commercial printers,
newspapers, publishers and packaging printers. KPG has
approximately 4,000 employees worldwide.
Sole ownership of Kodak Polychrome Graphics will further
establish Kodak as a leading company in the graphic
communications industry and complements Kodak's existing
businesses in this market: Encad, Inc., a leading maker of
wide-format inkjet printers, inks and media; Kodak Versamark,
the world's number one maker of high-speed inkjet printing
systems; and NexPress Solutions, Inc., a leading supplier of
digital color and monochrome presses.
Upon closing of the transaction, Kodak initially plans to
operate KPG as a wholly owned subsidiary, part of the
company's Graphic Communications Group. The KPG management
team will remain intact, with KPG CEO Jeff Jacobson leading
the organization and reporting to James Langley, President,
Graphic Communications Group and Senior Vice President,
Eastman Kodak Company.
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"This transaction is a major step toward delivering on our
intent of presenting one face to the customer," said Langley.
"KPG's innovative products, established customer relationships
and world class sales and service organization will
dramatically increase our solutions portfolio and global
distribution capabilities. Aligning our current and future
products and services with KPG's portfolio and extensive
distribution capabilities will further establish Kodak as a
leading provider of integrated solutions and will strengthen
Kodak's position with customers as a company that can provide
a broad range of offerings from pre-press to finishing."
Kodak is developing plans to integrate various operations
across its subsidiaries in the Graphic Communications Group.
Additionally, Kodak's Document Products and Services (DPS)
operations will be integrated into the Graphic Communications
Group by the end of January 2005. DPS is the world's leading
maker of high-speed document scanners as well as a leading
provider of maintenance services for a range of sophisticated
office equipment.
"We are delighted to become a full partner of Kodak as the
company successfully executes its digital transformation,"
said Jeff Jacobson. "KPG has been aggressively moving down the
digital and business solutions path and this move will enable
us to accelerate that strategy and provide customers with a
total solution that is unmatched in our industry."
The agreement is subject to customary regulatory approvals
and does not require shareholder approval from either Kodak or
Sun Chemical.
Conference Call Information
Kodak will host two conference calls to discuss the
acquisition. The first, hosted by Dan Carp, and featuring key
members of the Kodak management team, will take place on
January 12, 2005 at 11:00am EST and is primarily intended to
serve the interests of the investment community. All
interested parties are invited to participate by calling 913-
981-5542, access code: 0423711. A replay of the call will be
available Thursday, January 13 at 8:00am EST and will be active
until Thursday, January 20 at 5:00pm EST. The replay number
is: 719-457-0820, access code: 0423711.
The second conference call, with James Langley, Barbara
Pellow, Chief Marketing Officer, Kodak Graphic Communications
Group, and Jeff Jacobson will take place on January 12, 2005
at 12:30pm EST and will be intended to serve the interests of
the graphic communications trade. All interested parties
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are invited to participate by calling 904-779-4720 and
referencing KODAK. A replay of the call will be available
Thursday, January 13 at 8:00am EST and will be active until
Friday, February 11 at 5:00pm EST. The replay number is: 402-
220-2491, access code: 35243791.
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 $12.9 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 document scanning, output and
storage products as well as on-demand color printing and
networking publishing systems consisting of three wholly owned
subsidiaries: Encad, Inc., NexPress Solutions, and Kodak
Versamark; 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. For more information visit:
www.kodak.com.
About Sun Chemical
Sun Chemical, the world's largest producer of printing inks
and pigments, is a leading provider of materials to packaging,
publication, coatings, plastics, cosmetics, and other
industrial markets. With annual sales of more than $3 billion,
Sun Chemical has over 12,000 employees supporting customers
around the world. The Sun Chemical Group of companies includes
such well-known names as Coates Lorilleux, Gibbon, Hartmann,
Kohl & Madden, Swale, Usher-Walker, Rycoline and US Ink. In
addition, Sun Chemical has many joint ventures, with the
largest being its $1.5 billion Kodak Polychrome Graphics (KPG)
joint venture with Eastman Kodak.
Sun Chemical Corporation in the U.S. and Sun Chemical Limited
in England are subsidiaries of Sun Chemical Group B.V., the
Netherlands. Sun Chemical has headquarters in Fort Lee, New
Jersey, U.S.A.; Watford, England; and Weesp, the Netherlands.
For more information visit: www.sunchemical.com.
#
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 KPG's projected revenues
and the impact on the Company's revenues and earnings and the
Company's cash generation plans are forward looking
statements.
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Actual results may differ 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 our
estimates as of any subsequent date. While we may elect to
update forward-looking statements at some point in the future,
we specifically disclaim any obligation to do so, even if our
estimates change. The forward-looking statements contained in
these presentations are subject to a number of factors and
uncertainties, including the successful:
- Implementation of our 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 and existing
operations;
- Completion of various portfolio actions;
- Transition from analog to digital imaging;
- Implementation of our recently announced three-year cost
reduction program;
- Reduction of inventories;
- Implementation of our debt reduction plans;
- 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 our business in emerging markets like China,
India, Brazil, Mexico and Russia;
Forward-looking statements contained in this presentation are
subject to the following additional 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 our effective tax
rate in the future;
- General economic, business, geopolitical, regulatory and
public health conditions;
- Market growth predictions; and
- Other factors and uncertainties disclosed from time to time
in our filings with the Securities and Exchange Commission.
Any forward-looking statements in this press release should be
evaluated in light of these important factors and uncertainties.