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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): April 21, 2004
Eastman Kodak Company
(Exact name of registrant as specified in 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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Item 7. Financial Statements and Exhibits
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(c) Exhibits
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Exhibit 99.1 Press release issued April 21, 2004 Furnished with
regarding financial results for first this document
quarter of 2004
Exhibit 99.2 Financial discussion document issued Furnished with
April 21, 2004 regarding financial this document
results for first quarter of 2004
Item 12. Results of Operations and Financial Condition
- -------------------------------------------------------
On April 21, 2004, Eastman Kodak Company issued a press release and a
supplemental financial discussion document describing its financial results for
its first fiscal quarter ended March 31, 2004. Copies of the press release and
financial discussion document are attached as Exhibits 99.1 and 99.2,
respectively, to this report.
Within the Company's first quarter 2004 press release and financial discussion
document, the Company makes reference to certain non-GAAP financial measures
including "Income from continuing operations, excluding non-operational items",
"Operating cash flow", "Investable cash flow" and "Operating cash flow excluding
acquisitions", which have a directly comparable GAAP financial measure, and to
certain calculations that are based on non-GAAP financial measures, including
"Days sales outstanding" and "Days supply in inventory." The Company believes
that these measures represent important internal measures of performance.
Accordingly, where these non-GAAP measures are provided, it is done so that
investors have the same financial data that management uses with the belief that
it will assist the investment community in properly assessing the underlying
performance of the company on a year-over-year and quarter-sequential basis.
Whenever such information is presented, the Company has complied with the
provisions of the rules under Regulation G and Item 12 of Form 8-K. The specific
reasons, in addition to the reasons described above, why the Company's
management believes that the presentation of the non-GAAP financial measures
provides useful information to investors regarding Kodak's financial condition,
results of operations and cash flows are as follows:
Income from continuing operations, excluding non-operational items - The
Company's management believes that presenting income from continuing operations,
excluding non-operational items, is an important additional measure of
performance that can be used for comparing results between reporting periods.
These operating measures represent the principle internal measures of
performance, and form the basis of internal management performance expectations
and incentive compensation.
Operating cash flow / Investable cash flow / Operating cash flow excluding
acquisitions - The Company believes that the presentation of operating cash
flow, investable cash flow and operating cash flow excluding acquisitions is
useful information to investors as they facilitate the comparison of cash flows
between reporting periods. In addition, management utilizes these measures as
tools to assess the Company's ability to repay debt and repurchase its own
common stock, after it has satisfied its working capital needs, dividends, and
funded capital expenditures, acquisitions and investments. The operating cash
flow measure equals net cash provided by continuing operations, as determined
under Generally Accepted Accounting Principles in the U.S. (U.S. GAAP), plus
proceeds from the sale of assets minus capital expenditures, acquisitions, debt
assumed in acquisitions, investments in unconsolidated affiliates and dividends.
The investable cash flow measure equals operating cash flow excluding the impact
of acquisitions and debt assumed in acquisitions. The operating cash flow
excluding acquisitions measure equals the net cash provided by continuing
operations, as determined under U.S. GAAP, plus proceeds from the sale of assets
minus capital expenditures, investments in unconsolidated affiliates and
dividends, and yields the same result as the investable cash flow measure.
Accordingly, the Company believes that the presentation of this information is
useful to investors as it provides them with the same data as management uses to
facilitate their assessment of the Company's cash position.
Days sales outstanding (DSO) - The Company believes that the presentation of a
DSO result that includes the impact of reclassifying rebates as an offset to
receivables is useful information to investors, as this calculation is more
reflective of the Company's receivables performance and cash collection efforts
due to the fact that most customers reduce their actual cash payment to the
Company by the amount of rebates owed to them.
Days supply in inventory (DSI) - The Company believes that the presentation of a
DSI result that is based on inventory before the LIFO reserve is useful
information to investors, as this calculation is more reflective of the
Company's actual inventory turns due to the fact that the inventory values in
the calculation are based on current cost. The Company also believes that the
presentation of a DSI result that is based on a cost of goods sold amount that
excludes certain manufacturing-related costs that are considered to be unusual,
or that occur infrequently, is useful information to investors.
SIGNATURES
----------
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
------------------------
Name: Richard G. Brown
Title: Controller
Date: April 21, 2004
EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press release issued April 21, 2004 regarding financial results
for first quarter 2004
99.2 Financial discussion document issued April 21, 2004 regarding
financial results for first quarter 2004
Exhibit 99.1
Kodak Has 1st-Quarter Reported Net Income of 10 Cents Per Share; EPS
from Continuing Operations, Excluding Non-Operational Items, Totals 26 Cents
ROCHESTER, N.Y.--(BUSINESS WIRE)--April 21, 2004--Eastman Kodak
Company today said first-quarter reported net income totaled 10 cents
per share and revenue increased 11%, led by increased demand across
the company's portfolio of digital products and services, and
favorable foreign exchange.
Kodak's net income for the quarter included income from
discontinued operations of 4 cents per share and reported net income
from continuing operations of 6 cents per share. Excluding the impact
of previously announced focused cost reductions and other
non-operational items, earnings from continuing operations were 26
cents per share. The operational earnings also include a tax benefit
totaling 11 cents per share, offset in part by an inventory adjustment
related to the acquisition of Scitex Digital Printing (Kodak
Versamark) totaling 3 cents per share. Operational earnings excluding
these two items were 18 cents per share, a 64% increase from the
year-ago quarter. The company's operational earnings guidance for the
quarter was approximately 14 cents per share, which included earnings
from discontinued operations of 2 cents per share.
For the first quarter of 2004:
-- Sales totaled $2.919 billion, an increase of 11% from $2.640
billion in the first quarter of 2003. Excluding foreign
exchange, sales increased 5%.
-- The company reported net income of $28 million, or 10 cents
per share, compared with reported net income of $12 million,
or 4 cents per share, in the first quarter of 2003. The net
income from discontinued operations of 4 cents per share in
the first quarter of 2004 primarily reflects income from the
company's Remote Sensing Systems operation, which Kodak has
agreed to sell to ITT Industries Inc.
-- Earnings from continuing operations, excluding the impact of
focused cost reductions and other non-operational items, were
$74 million, or 26 cents per share. The non-operational items
include a charge of 18 cents per share related to the
previously announced focused cost reductions and a charge of 2
cents per share for purchased in-process R&D. In the first
quarter of 2003, earnings from continuing operations,
excluding restructuring and other non-operational items, were
$31 million, or 11 cents per share.
"The first-quarter results provide more evidence that Kodak is
delivering on its growth strategy," said Kodak Chairman and Chief
Executive Officer Daniel A. Carp. "Sales have increased consistent
with our plan for two consecutive quarters as we strengthen our
position worldwide in both our digital and traditional businesses. In
fact, our digital revenue increased 44% while traditional revenue
declined just 2% -- both better than our expectations. The companies
we have acquired since the beginning of 2003 are performing on, or
ahead of, plan. At the same time, we are continuing our push to reduce
cost throughout the organization, which will help us generate
sufficient cash flow this year to reduce debt while funding our
strategic objectives."
Other first-quarter 2004 details from continuing operations:
-- For the quarter, operating cash flow excluding acquisitions
was a negative $140 million, a decrease of $117 million from
the first quarter of 2003. The decline in cash flow reflects a
smaller decrease in receivables in the first quarter of 2004
relative to the decrease in the same period a year ago, driven
by stronger sales late in the first quarter of 2004. (Kodak
defines operating cash flow excluding acquisitions as net cash
provided by continuing operations, as determined under
Generally Accepted Accounting Principles in the U.S. (U.S.
GAAP), plus proceeds from the sale of assets minus capital
expenditures, investments in unconsolidated affiliates and
dividends.)
-- Debt decreased $282 million from the year-end level to $2.966
billion, consistent with the company's goal of reducing debt,
and the debt-to-capital ratio decreased to 48.0% from 49.9% at
the end of 2003. The company held $510 million in cash on its
balance sheet at the end of the quarter, down from $1.25
billion at the end of 2003, primarily reflecting completed
acquisitions and debt reduction.
-- Gross Profit on an operational basis declined to 28.6%, down
from the year-ago level of 30.9%, in line with the company's
expectations.
-- Selling, General and Administrative expenses on an operational
basis were 18.9% of sales, down from 20.7% in the year-ago
quarter.
"Based on expectations for the balance of the year, we have raised
by $100 million this year's target for operating cash flow excluding
acquisitions," said Robert Brust, Kodak's Chief Financial Officer.
"Excluding the impact of the sale of the Remote Sensing Systems
business, we now expect operating cash flow excluding acquisitions in
2004 to range from $585 million to $715 million, compared with the
earlier forecast of $485 million to $615 million. We also have
increased our debt-reduction estimate for this year. We now expect to
pay down debt by as much as $800 million, compared with the previous
estimate of $600 million."
Separately, to better align the dividend declaration date with the
payment date in July, the board of directors this year and henceforth
will address the declaration of the July dividend at its May meeting.
The segment results from continuing operations for the first
quarter of 2004 are as follows:
-- Digital & Film Imaging segment sales totaled $1.931 billion,
up 7%. Earnings from operations for the segment were $16
million on a GAAP and an operational basis, compared with a
loss on an operational basis of $25 million a year ago. On a
GAAP basis, the loss in the year-ago period was $46 million.
Highlights for the quarter included a 98% increase in consumer
digital capture sales, which includes the KODAK EASYSHARE
cameras, and a 55% increase in the sales of KODAK Picture
Maker kiosks and related media. During the quarter, sales of
EASYSHARE Printer Docks and related media on a full-year basis
exceeded $100 million, consistent with the company's forecast.
For the quarter, the company estimates that U.S. consumer film
industry volume declined about 15% compared with the first
quarter of 2003.
-- Health Imaging sales were $631 million, up 15%. Earnings from
operations for the segment were $93 million on a GAAP and
operational basis, compared with $109 million a year ago.
Highlights included a 24% increase in sales of digital
products and services.
-- Commercial Imaging sales were $196 million, up 5%. Earnings
from operations were $31 million on a GAAP and operational
basis, compared with $20 million a year ago. The segment's
results reflect in part strong sales of aerial films as well
as imaging services.
-- Commercial Printing sales were $133 million, up 51%. The loss
from operations was $16 million on an operational basis,
compared with earnings from operations of $9 million a year
ago. On a GAAP basis, the loss from operations was $25 million
in the first quarter of 2004. The revenue increase largely
reflects sales by Kodak Versamark, and the profit swing
reflects lower earnings from graphics materials and the
inventory adjustment related to the Scitex acquisition.
-- All Other sales were $28 million, up 47% from the year-ago
quarter. Losses from operations totaled $28 million on a GAAP
and an operational basis, compared with losses of $16 million
a year ago. The All Other category includes the Display &
Components operation and other miscellaneous businesses.
Earnings Outlook:
-- Kodak expects second-quarter operational earnings to be in the
range 55 cents to 65 cents per share. For the full year, the
company is raising its guidance for operational earnings to a
range of $2.15 to $2.45 per share, compared with the previous
guidance of $2.05 to $2.35 per share, primarily reflecting the
tax benefits recorded in the first quarter.
"The results of the first quarter reinforce our confidence that we
will demonstrate continued earnings and revenue growth in the quarters
ahead, consistent with our strategy," Carp said. "We will build on our
momentum in the marketplace by introducing exciting new products in
the weeks ahead, supported by a cost structure that will allow us to
become even more competitive in all the markets we serve."
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 can be found in the Financial
Discussion Document attached to this press release.
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 expectations for the Company's growth in sales and
earnings, cash generation, tax rate, and debt are forward-looking
statements.
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 this press release are subject to a number of
factors and uncertainties, including:
-- The successful implementation of our recently announced
digitally-oriented growth strategy;
-- Implementation of product strategies (including category
expansion, digitization, organic light emitting diode (OLED),
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;
-- Completion of various portfolio actions;
-- Reduction of inventories;
-- Integration of newly acquired businesses;
-- 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;
-- Development of our business in emerging markets like China,
India, Brazil, Mexico and Russia;
-- 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;
-- General economic, business, geopolitical and public health
conditions; 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.
Eastman Kodak Company
CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
(in millions, except per share data)
Three Months Ended
March 31
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2004 2003
Net sales $2,919 $2,640
Cost of goods sold 2,107 1,839
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Gross profit 812 801
Selling, general and
administrative expenses 552 558
Research and development costs 197 193
Restructuring costs and other 50 32
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Earnings from continuing
operations before interest,
other charges, net, and
income taxes 13 18
Interest expense 44 37
Other charges, net 1 21
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Loss from continuing
operations before income taxes (32) (40)
Benefit for income taxes (48) (29)
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Earnings (loss) from continuing
operations 16 (11)
Earnings from discontinued
operations, net of income tax
provision (benefit) for the three
months ended March 31, 2004 and
2003 of $8 and $(10),
respectively 12 23
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NET EARNINGS $ 28 $ 12
====== ======
Basic and diluted net earnings
(loss) per share:
Continuing operations $ .06 $ (.04)
Discontinued operations .04 .08
------ ------
Total $ .10 $ .04
====== ======
Number of common shares used in
basic earnings (loss) per share 286.6 286.3
Incremental shares from
assumed conversion of options 0.4 0.3
------ ------
Number of common shares used in
diluted earnings (loss) per share 287.0 286.6
====== ======
SUPPLEMENTAL INFORMATION - UNAUDITED
(in millions)
Three Months Ended
March 31
------------------
2004 2003
Provision for depreciation $ 214 $ 200
After-tax exchange losses
and effect of translation
of net monetary items (2) -
Capital expenditures 91 109
- ----------------------------------------------------------------------
Net Sales from Continuing Operations by Reportable Segment and All
Other - Unaudited
(in millions)
Three Months Ended
March 31
---------------------
2004 2003 Change
Digital & Film Imaging
Systems
Inside the U.S. $ 720 $ 687 + 5
Outside the U.S. 1,211 1,111 + 9
------ ------ ---
Total Digital & Film
Imaging Systems 1,931 1,798 + 7
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Health Imaging
Inside the U.S. 258 238 + 8
Outside the U.S. 373 311 +20
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Total Health Imaging 631 549 +15
------ ------ ---
Commercial Imaging
Inside the U.S. 79 77 + 3
Outside the U.S. 117 109 + 7
------ ------ ---
Total Commercial Imaging 196 186 + 5
------ ------ ---
Commercial Printing
Inside the U.S. 55 37 +49
Outside the U.S. 78 51 +53
------ ------ ---
Total Commercial Printing 133 88 +51
------ ------ ---
All Other
Inside the U.S. 13 11 +18
Outside the U.S. 15 8 +88
------ ------ ---
Total All Other 28 19 +47
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Consolidated total $2,919 $2,640 +11%
====== ====== ===
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Earnings (Loss) from Continuing Operations Before Interest, Other
Charges, Net, and Income Taxes by Reportable Segment and All Other -
Unaudited
(in millions)
Three Months Ended
March 31
---------------------
2004 2003 Change
Digital & Film Imaging $ 16 $ (46) +135%
Systems
Percent of Sales 0.8% (2.6%)
Health Imaging $ 93 $ 109 - 15%
Percent of Sales 14.7% 19.9%
Commercial Imaging $ 31 $ 20 + 55%
Percent of Sales 15.8% 10.8%
Commercial Printing $ (25) $ 9 -378%
Percent of Sales (18.8%) 10.2%
All Other $ (28) $ (16) - 75%
Percent of Sales (100.0%) (84.2%)
------- ------ ----
Total of segments $ 87 $ 76 + 14%
3.0% 2.9%
Restructuring costs
and other (74) (46)
GE settlement - (12)
------- ------ ----
Consolidated total $ 13 $ 18 - 28%
======= ====== ====
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Earnings (Loss) From Continuing Operations by Reportable Segment and
All Other - Unaudited
(in millions)
Three Months Ended
March 31
---------------------
2004 2003 Change
Digital & Film Imaging
Systems $ 15 $ (35) +143%
Percent of Sales 0.8% (1.9%)
Health Imaging $ 78 $ 80 - 3%
Percent of Sales 12.4% 14.6%
Commercial Imaging $ 25 $ 14 + 79%
Percent of Sales 12.8% 7.5%
Commercial Printing $ (22) $ (5) -340%
Percent of Sales (16.5%) (5.7%)
All Other $ (25) $ (14) - 79%
Percent of Sales (89.3%) (73.7%)
------ ------ ----
Total of segments $ 71 $ 40 + 78%
2.4% 1.5%
Restructuring costs
and other (74) (46)
GE settlement - (12)
Interest expense (44) (37)
Other corporate items 2 3
Tax benefit - donation
of patents - 8
Income tax effects on
above items and taxes
not allocated to
segments 61 33
------ ---- ----
Consolidated total $ 16 $(11) +245%
====== ===== =====
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Eastman Kodak Company
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions)
March 31, Dec. 31,
2004 2003
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 510 $ 1,250
Receivables, net 2,259 2,328
Inventories, net 1,207 1,073
Deferred income taxes 624 602
Other current assets 158 130
Assets of discontinued operations 104 72
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Total current assets 4,862 5,455
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Property, plant and equipment, net 4,954 5,051
Goodwill 1,418 1,364
Other long-term assets 3,135 2,883
Assets of discontinued operations 64 65
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TOTAL ASSETS $14,433 $14,818
======= =======
- --------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities $ 3,507 $ 3,614
Short-term borrowings 710 946
Accrued income taxes 615 654
Liabilities of discontinued operations 44 36
------- -------
Total current liabilities 4,876 5,250
OTHER LIABILITIES
Long-term debt, net of current portion 2,256 2,302
Postretirement liabilities 3,378 3,344
Other long-term liabilities 698 650
Liabilities of discontinued operations 7 8
------- -------
Total liabilities 11,215 11,554
SHAREHOLDERS' EQUITY
Common stock at par 978 978
Additional paid in capital 850 850
Retained earnings 7,555 7,527
Accumulated other comprehensive loss (306) (231)
Unearned restricted stock (9) (8)
------- -------
9,068 9,116
Less: Treasury stock at cost 5,850 5,852
------- -------
Total shareholders' equity 3,218 3,264
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $14,433 $14,818
======= =======
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Eastman Kodak Company
CONSOLIDATED STATEMENT OF CASH FLOWS
(in millions)
Three Months Ended
March 31
------------------
2004 2003
Cash flows relating to operating activities:
Net earnings $ 28 $ 12
Adjustments to reconcile to net cash
provided by operating activities:
Gain from discontinued operations (12) (23)
Equity in losses from unconsolidated affiliates 6 23
Depreciation 214 200
Purchased research and development 9 21
Restructuring costs, asset impairments and
other non-cash charges 24 -
(Benefit) provision for deferred taxes (36) 5
Decrease in receivables 111 159
Increase in inventories (95) (122)
Decrease in liabilities excluding borrowings (268) (210)
Other items, net (8) 41
------ ------
Total adjustments (55) 94
------ ------
Net cash (used in) provided by
continuing operations (27) 106
------ ------
Net cash (used in) provided by
discontinued operations (4) 21
------ ------
Net cash (used in) provided by operating
Activities (31) 127
------ ------
Cash flows relating to investing activities:
Additions to properties (91) (109)
Acquisitions, net of cash acquired (305) (84)
Investments in unconsolidated affiliates (22) (20)
Marketable securities - purchases (34) (19)
Marketable securities - sales 26 17
------ ------
Net cash used in investing activities by
continuing operations (426) (215)
------ ------
Net cash used in investing activities by
discontinued operations - (2)
------ ------
Net cash used in investing activities (426) (217)
------ ------
Cash flows relating to financing activities:
Net (decrease) increase in borrowings
with original maturity of 90 days or less (177) 264
Proceeds from other borrowings 60 202
Repayment of other borrowings (165) (365)
Exercise of employee stock options - 12
------ ------
Net cash (used in) provided by financing
activities (282) 113
------ ------
Effect of exchange rate changes on cash (1) 5
------ ------
Net (decrease) increase in cash and cash
equivalents (740) 28
Cash and cash equivalents, beginning of year 1,250 569
------ ------
Cash and cash equivalents, end of quarter $ 510 $ 597
====== ======
Exhibit 99.2
Eastman Kodak Company Financial Discussion Document
First Quarter 2004 Results
New Kodak Operating Model and Change in Reporting Structure:
On August 21, 2003, the Company announced an organizational
realignment, effective January 1, 2004, changing the corporate segment
reporting structure beginning with the current quarter.
Through year-end 2003, Kodak reported financial information for
three reportable segments: Photography, Health Imaging, and Commercial
Imaging, and All Other. The bridge from the previous segment reporting
to the new reporting structure is outlined below:
-- Digital and Film Imaging Systems Segment: correlates to the
former Photography Segment and is composed of Consumer and
Professional Imaging products and services, Entertainment
Imaging products and services, and Digital and Applied Imaging
products and services.
-- Health Imaging Segment: remains unchanged; includes Health
Imaging products, systems and services.
-- Commercial Imaging Segment: composed of Document Imaging
products and services, Commercial and Government Systems
products and services, Services and Support, and Optics.
-- Commercial Printing Segment: The segment includes the
financial results for the Scitex Digital Printing acquisition
(now Kodak Versamark. The segment is also composed of NexPress
(Kodak's 50/50 joint venture with Heidelberg) and Kodak
Polychrome Graphics (Kodak's 50/50 joint venture with Sun
Chemical), for which Kodak records its share of income or
losses in Other income and charges; the sales of graphics
products to KPG, and the Encad subsidiary wide format inkjet
businesses. All of the above, with the exception of Kodak
Versamark, were formerly included in Commercial Imaging.
-- All Other: Kodak's Display and Components business for OLED
(Organic Light Emitting Diode), and sensors as well as other
small, miscellaneous businesses.
This new reporting structure reflects changes to facilitate the
Company's transition to its new business model. This includes an
increased focus on Strategic Product Groups, or SPG's, within each of
the reporting segments. Sales results for key SPG's as well as
traditional and digital products and services are now reflected within
each reportable segment.
The Remote Sensing Systems business, which had been included in
the Commercial Imaging segment, is now in the process of being sold to
ITT Industries. It is accounted for in the current quarter as
discontinued operations. The discussion that follows relates to the
continuing operations portion of the business.
First Quarter
Consolidated Revenues:
Net worldwide sales were $2.919 billion for the first quarter of
2004 as compared with $2.640 billion for the first quarter of 2003,
representing an increase of $279 million or 11% as reported, or an
increase of 5% excluding the favorable impact of exchange. The
increase in net sales was composed of:
-- Volume: increases in volume contributed approximately 4.5
percentage points to first quarter sales driven primarily by
consumer digital capture, Picture Maker kiosks, and the
one-time-use-camera component of the film capture SPG.
-- Price/Mix: declines in price/mix reduced first quarter sales
by approximately 3.5 percentage points, primarily driven by
consumer digital capture and traditional film capture.
-- Exchange: favorable exchange of approximately 5.5 percentage
points offset the negative impacts of price/mix.
-- Acquisitions: PracticeWorks, Scitex Digital Printing (now
Kodak Versamark) and Laser Pacific acquisitions contributed
$106 million or approximately 4.0 percentage points to first
quarter sales.
Net sales in the U.S. were $1.125 billion for the first quarter of
2004 as compared with $1.050 billion for the prior year quarter,
representing an increase of $75 million, or 7%. Net sales outside the
U.S. were $1.794 billion for the current quarter as compared with
$1.590 billion for the first quarter of 2003, representing an increase
of $204 million, or 13% as reported, or an increase of 4% excluding
the favorable impact of exchange.
Kodak's digital product sales were $1.056 billion for the current
quarter as compared with $734 million for the first quarter of 2003,
representing an increase of $322 million, or 44% primarily driven by
the consumer digital capture SPG. Net sales of the Company's
traditional products were $1.863 billion for the current quarter as
compared with $1.906 billion for the first quarter of 2003,
representing a decrease of $43 million or 2%, primarily driven by
declines in the film capture and consumer output SPG's.
Non-U.S. Revenues:
The Company's operations outside the U.S. are reported in three
regions: (1) the Europe, Africa and Middle East region ("EAMER"), (2)
the Asia Pacific region and (3) the Canada and Latin America region.
Net sales in the EAMER region were $910 million for the first
quarter of 2004 as compared with $795 million for the prior year
quarter, representing an increase of $115 million, or 14% as reported,
or an increase of 3% excluding the favorable impact of exchange.
Net sales in the Asia Pacific region were $601 million for the
current quarter as compared with $548 million for the prior year
quarter, representing an increase of $53 million, or 10% as reported,
or an increase of 1% excluding the favorable impact of exchange.
Net sales in the Canada and Latin America region were $283 million
in the current quarter as compared with $247 million for the first
quarter of 2003, representing an increase of $36 million, or 15% as
reported, or an increase of 8% excluding the favorable impact of
exchange.
Emerging Markets:
The Company's major emerging markets include China, Brazil,
Mexico, Russia, India, Korea, Hong Kong and Taiwan. Net sales in
emerging markets were $658 million for the first quarter of 2004 as
compared with $578 million for the prior year quarter, representing an
increase of $80 million, or 14% as reported, or an increase of 11%
excluding the favorable impact of exchange.
The emerging market portfolio accounted for approximately 23% of
Kodak's worldwide sales and 37% of Kodak's non-U.S. sales in the
quarter. Sales growth was recorded for all major emerging markets
including China +21%, Brazil +20%, India +14%, Russia +13%, and Mexico
+3%.
Sales increases in China and India resulted from strong business
performance for all Kodak's operations in those regions. The increase
in sales in Russia is the result of continued success of camera
seeding programs as well as branded retail expansion via the KodaPost
program.
Gross Profit:
GAAP:
Gross profit was $812 million for the first quarter of 2004 as
compared with $801 million for the first quarter of 2003, representing
an increase of $11 million, or 1%. Gross profit includes a one time
operational charge of $9 million, or $.03 per share in the quarter
relating to the impact of the purchase accounting for the inventory
that was acquired with the Scitex Digital Printing acquisition (now
Kodak Versamark) at its fair value, which was sold in the current
quarter.
The gross profit margin was 27.8% in the current quarter as
compared with 30.3% in the prior year quarter. The 2.5 percentage
point decrease was primarily attributable to:
-- Price/Mix: declines attributable to price/mix reduced gross
profit margins by approximately 5.0 percentage points.
Negative price/mix was driven primarily by consumer digital
capture, traditional film capture and traditional Health
Imaging film capture and output.
-- Manufacturing Cost: despite a $10 million net increase in
charges for accelerated depreciation and inventory write-offs
associated with ongoing cost reduction programs, manufacturing
cost reductions favorably impacted gross profit margins by
approximately 1.5 percentage points.
-- Exchange: favorably impacted gross profit margins by
approximately .5 percentage point.
-- Acquisitions: favorably impacted gross profit margins by
approximately .5 percentage point.
Operational:
Excluding charges of $24 million relating to accelerated
depreciation and inventory write-offs, gross profit on an operational
basis was $836 million for the first quarter of 2004 as compared with
$815 million for the first quarter of 2003, representing an increase
of $21 million, or 3%.
Gross profit includes a one time operational charge of $9 million,
or $.03 per share in the quarter relating to the impact of the
purchase accounting for the inventory that was acquired with the
Scitex Digital Printing acquisition (now Kodak Versamark) at its fair
value, which was sold in the current quarter.
The gross profit margin was 28.6% in the current quarter as
compared with 30.9% in the prior year quarter. The 2.3 percentage
point decrease was primarily attributable to:
-- Price/Mix: declines attributable to price/mix reduced gross
profit margins by approximately 5.0 percentage points.
-- Manufacturing Cost: manufacturing cost favorably impacted
gross profit margins by approximately 2.0 percentage points.
-- Exchange: favorably impacted gross profit margins by
approximately .5 percentage point.
-- Acquisitions: acquisitions favorably impacted gross profit
margins by approximately .5 percentage point.
Operational gross profit as a percentage of sales was in-line with
the Company's expectations for a seasonally low quarter.
Selling, General and Administrative Expenses:
GAAP:
Selling, general and administrative expenses (SG&A) were $552
million for the first quarter of 2004 as compared with $558 million
for the prior year quarter (including $12 million relating to an
intellectual property settlement), representing a decrease of $6
million, or 1%. SG&A decreased as a percentage of sales from 21.1% for
the first quarter of 2003 to 18.9% for the current quarter.
Unfavorable exchange of $25 million and acquisition related SG&A of
$35 million were more than offset by cost reduction actions during the
quarter.
Operational:
Excluding a charge relating to an intellectual property settlement
in the prior year's first quarter, SG&A expenses on an operational
basis were $552 million for the first quarter of 2004 as compared with
$546 million for the prior year quarter, representing an increase of
$6 million, or 1%. The increase in SG&A is attributable to unfavorable
exchange of $25 million and acquisition related SG&A of $35 million
partially offset by cost reduction actions during the quarter. As a
percentage of sales, SG&A decreased from 20.7% for the first quarter
of 2003 to 18.9% for the current quarter.
Research and Development Costs:
GAAP:
Research and development costs (R&D) were $197 million for the
first quarter of 2004 (including $9 million for in-process R&D
charges) as compared with $193 million for the first quarter of 2003
(including $21 million for in-process R&D charges), representing an
increase of $4 million, or 2%. R&D as a percentage of sales decreased
from 7.3% in the first quarter of 2003 to 6.7% in the current quarter.
The increase in R&D is primarily attributable to an increase in
investments for digital growth initiatives.
Operational:
Excluding the charges for in-process R&D noted above, R&D expenses
on an operational basis were $188 million for the first quarter of
2004 as compared with $172 million for the prior year quarter,
representing an increase of $16 million, or 9%. The increase in R&D is
primarily attributable to investments in digital growth initiatives.
Cost Reduction Plans:
As announced in the third quarter of 2003, Kodak has implemented a
series of cost reduction actions resulting in pre-tax charges totaling
$74 million or $.18 per share in the first quarter. The components of
restructuring in the first quarter include $43 million for employee
severance relating to the elimination of 2,036 positions and $11
million associated with exit costs and asset write-offs, partially
offset by reserve reversal of $4 million. In addition, the Company
recorded accelerated depreciation and inventory write-offs of $24
million during the quarter.
The total restructuring charge recorded in the first quarter of
2003 was $32 million, which was primarily comprised of severance
charges relating to the elimination of 875 positions. In addition, the
Company recorded accelerated depreciation of $14 million associated
with assets to be disposed of in connection with the relocation of
certain manufacturing operations.
The Company has now completed the remaining actions from the cost
reduction program announced in the third quarter of 2003.
As announced in January 2004, the company plans to develop and
execute a new cost reduction program throughout the 2004 to 2006
timeframe, consistent with the implementation of Kodak's new business
model. The objective of these actions is to achieve a business model
appropriate for Kodak's traditional businesses, sharpen the Company's
competitiveness in digital markets, and create a more variable cost
structure overall. As a result of these actions, the Company expects
cost savings in the range of $800 million to $1 billion for full year
2007.
The program is expected to result in total charges of $1.3 billion
to $1.7 billion over the three-year period, of which $700 million to
$900 million are related to severance, with the remainder relating to
the disposal of buildings and equipment. Overall, Kodak's worldwide
facility square footage will be reduced by approximately one third.
Approximately 12,000 to 15,000 positions worldwide are expected to be
eliminated through these actions primarily in global manufacturing,
selected traditional businesses and corporate administration. Maximum
single year cash usage under the new program is expected to be
approximately $250 million.
Earnings From Operations:
GAAP:
Earnings from operations (EFO) for the first quarter of 2004 were
$13 million as compared with earnings from operations of $18 million
for the first quarter of 2003, representing a decrease of $5 million,
or 28%. This decrease is attributable to the reasons indicated above.
Operational:
EFO on an operational basis for the first quarter of 2004 were $96
million as compared with $97 million for the first quarter of 2003,
representing a decrease of $1 million, or 1%. The decrease in earnings
from operations is attributable to the reasons indicated above.
Below EFO:
Interest expense for the first quarter of 2004 was $44 million as
compared with $37 million for the prior year quarter, representing an
increase of $7 million, or 19%. Higher interest expense is a result of
higher year over year average debt balances.
The "other charges" component includes principally investment
income, income and losses from equity investments, foreign exchange
and gains and losses on the sales of assets and investments. Other
charges for the current quarter were $1 million as compared with other
charges of $21 million for the first quarter of 2003. The improvement
is primarily attributable to increased income from the Company's
equity investment in Kodak Polychrome Graphics, reduced losses from
the Company's equity investment in the NexPress joint venture, and
elimination of losses from the Company's equity investment in the
discontinued Phogenix joint venture.
Corporate Tax Rate:
GAAP:
The Company's tax benefit from continuing operations was $48
million on $32 million of pre-tax losses for the first quarter of
2004. The tax benefit of $48 million for the quarter differs from the
tax benefit of $11 million that results from applying the U.S.
statutory income tax rate of 35% primarily due to:
-- the recording of a $32 million tax benefit relating to the
IRS's concession concerning the taxation of intercompany
royalties.
-- higher expected earnings from operations in certain
lower-taxed jurisdictions outside the U.S. relative to total
consolidated earnings.
The Company's tax benefit from continuing operations was $29
million on $40 million of pre-tax losses for the first quarter of
2003. The tax benefit of $29 million for the quarter differs from the
tax benefit of $14 million that results from applying the U.S.
statutory income tax rate of 35% due to:
-- the recording of an $8 million tax benefit relating to the
donation of intellectual property; and
-- higher expected earnings from operations in certain
lower-taxed jurisdictions outside the U.S. relative to total
consolidated earnings.
Operational:
The Company's estimated annual effective tax rate from continuing
operations for 2004 is 16.5%. The actual tax benefit from continuing
operations on an operational basis was $23 million on $51 million of
pre-tax income in the first quarter of 2004. The tax benefit of $23
million for the current year quarter differs from the tax provision of
$9 million that results from applying the Company's estimated annual
effective tax rate from continuing operations due to the recording of
a $32 million tax benefit relating to the reversal of prior year
income taxes incurred on certain intercompany royalties.
The decrease in the estimated annual effective tax rate from
continuing operations from 20.5% in the first quarter of 2003 to 16.5%
in the current year quarter is primarily attributable to expected
increased earnings from operations in certain lower-taxed
jurisdictions outside the U.S. relative to total consolidated
earnings.
Earnings from Continuing Operations:
GAAP:
Earnings from continuing operations for the first quarter of 2004
were $16 million, or $.06 per diluted share, as compared with a loss
from continuing operations for the first quarter of 2003 of $11
million, or minus $.04 per diluted share, representing an increase of
$27 million year over year. This increase in earnings from continuing
operations is attributable to the reasons described above.
Operational:
Earnings from continuing operations on an operational basis for
the first quarter of 2004 were $74 million, or $.26 per diluted share,
as compared with earnings from continuing operations on an operational
basis for the first quarter of 2003 of $31 million, or $.11 per
diluted share, representing an increase of $43 million, or 139%. First
quarter operational earnings from continuing operations for 2004
exclude the following after-tax items:
-- A charge of $52 million ($74 million pre-tax), or $.18 per
share, resulting from previously announced cost reduction
initiatives. Of the pre-tax charge, $50 million is recorded in
"Restructuring Costs and Other" and $24 million of accelerated
depreciation and inventory write-offs are recorded in "Cost of
Goods Sold" (COGS).
-- A charge $6 million ($9 million pre-tax) or $.02 per share
relating to the Company's purchase of in-process R&D
associated with the acquisition of Scitex Digital Printing
(now Kodak Versamark). The pre-tax charge is recorded in
"Research and development costs" (R&D).
First quarter operational earnings include an $.08 per share net
operational benefit from the following unusual items:
-- A charge of $9 million, or $.03 per share relating to the
impact of the purchase accounting for the inventory that was
acquired with the Scitex Digital Printing acquisition (now
Kodak Versamark) at its fair value, which was sold in the
current quarter.).
-- A tax credit of $32 million, or $.11 per share relating to the
IRS's concession concerning the taxation of intercompany
royalties that could not be legally distributed.
Excluding these items, operational earnings were $.18 per share.
Earnings from Discontinued Operations:
Earnings from discontinued operations for the first quarter of
2004 were $.04 per diluted share primarily relating to the pending
sale of Kodak's Remote Sensing Systems Business. Earnings from
discontinued operations for the first quarter of 2003 were $.08 per
diluted share and were primarily related to the reversal of a tax
reserve resulting from the elimination of the uncertainty surrounding
the realizability of certain tax benefits.
Year-over-Year Comparison of Reported and Operational Earnings
(Amounts in millions of dollars)
- ----------------------------------------------------------------------
1Q 04 as Excluded 1Q 04
Reported Items Operational
----------------------------------------
Sales $2,919 $2,919
COGS 2,107 (24) a 2,083
--------------- ------------
Gross Profit 812 836
SG&A 552 552
R&D 197 (9) b 188
Restructuring costs and other
50 (50) c -
--------------- ------------
Earnings From Operations
13 83 96
Interest Expense 44 44
Other Charges 1 1
--------------- ------------
Below EFO (45) (45)
(Loss) Earnings Before Taxes
(32) 83 51
(Benefit) Provision for Taxes
(48) 25 d (23)
--------------- ------------
Earnings - Cont. Ops.
16 58 74
Earnings (Loss) Disc. Ops.
12 (12) -
Net Earnings $28 $46 $74
Diluted EPS - Cont. Ops.
$0.06 $0.26
Total Diluted EPS $0.10
- ----------------------------------------------------------------------
Year-over-Year Comparison of Reported and Operational Earnings
(Amounts in millions of dollars)
- ----------------------------------------------------------------------
1Q 03 as Excluded 1Q 03
Reported Items Operational
----------------------------------------
Sales $2,640 $2,640
COGS 1,839 (14)e 1,825
--------------- ------------
Gross Profit 801 815
SG&A 558 (12)f 546
R&D 193 (21)g 172
Restructuring costs and other
32 (32)h -
--------------- ------------
Earnings From Operations
18 79 97
Interest Expense 37 37
Other Charges 21 21
--------------- ------------
Below EFO (58) (58)
(Loss) Earnings Before Taxes
(40) 79 39
(Benefit) Provision for Taxes
(29) 37 i 8
--------------- ------------
Earnings - Cont. Ops.
(11) 42 31
Earnings (Loss) Disc. Ops.
23 (23) -
Net Earnings $12 $19 $31
Diluted EPS - Cont. Ops.
$(0.04) $.11
Total Diluted EPS $0.04
- ----------------------------------------------------------------------
Items excluded from Earnings on an operational basis:
a - Accelerated depreciation and inventory writedowns in
connection with focused cost reduction actions.
b - Charge for in-process research and development in connection
with the acquisition of Scitex Digital Printing (renamed Kodak
Versamark).
c - Charge for focused cost reduction actions.
d - Tax impacts associated with the above-mentioned excluded
items.
e - Accelerated depreciation in connection with focused cost
reduction actions.
f - Charge for an intellectual property settlement.
g - Charge for in-process research and development.
h - Charge for focused cost reduction actions.
i - Exclusion of income tax benefit in connection with the
donation of intellectual property and the tax impacts
associated with the above mentioned excluded items.
As Percent of Sales:
1Q 04 as 1Q 04 1Q 03 as 1Q 03
Reported Operational Reported Operational
------------------------------------------------
Gross Profit 27.8% 28.6% 30.3% 30.9%
SG&A 18.9% 18.9% 21.1% 20.7%
SG&A w/o Advertising 16.2% 16.2% 17.2% 16.8%
R&D 6.7% 6.4% 7.3% 6.5%
EFO 0.4% 3.3% 0.7% 3.7%
Net Earnings 0.5% 2.5% -0.4% 1.2%
- ----------------------------------------------------------------------
Segment Results:
Digital and Film Imaging Systems
Revenues:
Net worldwide sales for the Digital and Film Imaging Systems
Segment were $1.931 billion for the first quarter of 2004 as compared
with $1.798 billion for the first quarter of 2003, representing an
increase of $133 million, or 7% as reported, an increase of 1%
excluding the favorable impact of exchange. The increase in net sales
was composed of:
-- Volume: higher volumes increased first quarter sales by
approximately 5.5 percentage points. Volume increases for
consumer digital capture, the one-time-use camera component of
the film capture SPG, and Picture Maker kiosks were partially
offset by volume declines for wholesale photofinishing
services and traditional film products.
-- Price/Mix: declines attributable to price/mix reduced first
quarter sales by approximately 4.0 percentage points driven by
consumer digital capture and traditional film capture.
-- Exchange: favorable exchange of approximately 5.5 percentage
points more than offset the negative impacts of price/mix.
Digital and Film Imaging segment net sales in the U.S. were $720
million for the current quarter as compared with $687 million for the
first quarter of 2003, representing an increase of $33 million, or 5%.
Digital and Film Imaging segment net sales outside the U.S. were
$1.211 billion for the first quarter of 2004 as compared with $1.111
billion for the prior year quarter, representing an increase of $100
million, or 9% as reported, or a decrease of 1% excluding the
favorable impact of exchange.
Digital and Film Imaging Systems segment digital product sales
were $480 million for the current quarter as compared with $294
million for the first quarter of 2003, representing an increase of
$186 million, or 63%, primarily driven by consumer digital capture.
Segment traditional product sales were $1.451 billion for the current
quarter as compared with $1.504 billion for the first quarter of 2003,
representing a decrease of $53 million or 4%, primarily driven by
declines in film capture and consumer output.
Digital Strategic Product Group Revenues
Net worldwide sales of consumer digital capture which includes
consumer digital cameras, accessories, memory products and royalties
increased 98% in the first quarter of 2004 as compared with the prior
year quarter, primarily reflecting strong volume increases and
favorable exchange, partially offset by negative price/mix. Sales
continue to be driven by strong consumer acceptance of the EasyShare
digital camera system and the success of new digital camera product
introductions during the quarter.
While complete data for first quarter market share is not yet
available, all indications are that Kodak gained digital camera market
share in the U.S. year over year. Kodak also gained market share year
over year in 6 out of 9 key markets internationally. For the full
year, the Company expects to be profitable for the consumer digital
capture SPG.
Net worldwide sales of Picture Maker kiosks/media increased 55% in
the first quarter of 2004 as compared with the first quarter of 2003,
as a result of strong volume increases and favorable exchange. Sales
continue to be driven by strong market acceptance of Kodak's new
generation of kiosks.
Net worldwide sales of Home Printing Solutions, which includes
inkjet photo paper and printer docks/media, increased 42% in the
current quarter as compared with the first quarter of 2003. For inkjet
paper, the quarter was marked by increased competition from store
brands and the mix shift associated with consumer's preference for
smaller format papers. Kodak's new Printer Dock product, initially
launched in the spring of 2003, experienced strong sales growth during
the quarter, reaching the goal of becoming more than a $100 million
business in the first full year of sales.
Traditional Strategic Product Group Revenues
Net worldwide sales of film capture products, including consumer
roll film (35mm and APS film), one-time-use cameras (OTUC),
professional films, reloadable traditional film cameras and
batteries/videotape decreased 6% in the first quarter of 2004 as
compared with the first quarter of 2003, primarily reflecting volume
declines for all significant product categories except one-time-use
cameras. Favorable exchange partially offset the negative impact of
price/mix for the film capture SPG.
U.S. consumer film industry sell-through volumes decreased
approximately 15% in the first quarter of 2004 as compared with the
prior year quarter. Kodak's sell-in consumer film volumes declined 10%
as compared with the prior year quarter. U.S. retailers did some
restocking in anticipation of an earlier Easter holiday.
Kodak remains committed to maintaining U.S. consumer film market
share while growing worldwide share on a full year basis. During the
first quarter, market share performance is consistent with that goal.
Net worldwide sales for the retail photofinishing SPG, which
includes color negative paper, minilab equipment and services,
chemistry, and photofinishing services at retail, increased 6% in the
first quarter of 2004 as compared with the first quarter of 2003,
primarily reflecting higher volumes of retail photofinishing equipment
and favorable exchange partially offset by negative price/mix.
Net worldwide sales for the wholesale photofinishing SPG, which
includes color negative paper, equipment, chemistry, and
photofinishing services at Qualex in the U.S. and CIS (Consumer
Imaging Services) outside the U.S., decreased 26% in the first quarter
of 2004 as compared with the first quarter of 2003, primarily
reflecting lower volumes partially offset by favorable exchange.
Net worldwide sales of the origination and print film SPG's to the
entertainment industry increased 7%, primarily reflecting volume
increases and favorable exchange partially offset by negative
price/mix.
Gross profit:
Gross profit for the Digital and Film Imaging Systems segment was
$488 million for the first quarter of 2004 as compared with $502
million for the prior year quarter, representing a decrease of $14
million or 3%. The gross profit margin was 25.3% in the current year
quarter as compared with 27.9% in the prior year quarter. The 2.6
percentage point decline was primarily attributable to:
-- Price/Mix: declines attributable to price/mix reduced gross
profit margins by approximately 6.0 percentage points driven
by consumer digital capture and traditional film capture.
-- Manufacturing Cost: positive manufacturing cost initiatives
improved gross profit margins by approximately 3.0 percentage
points.
-- Exchange: favorably impacted gross profit margins by
approximately .5 percentage point.
SG&A:
In the first quarter, SG&A expenses for the Digital and Film
Imaging Systems segment decreased $46 million or 11%, from $419
million in the first quarter of 2003 to $373 million in the current
quarter, and decreased as a percentage of sales from 23.3% to 19.3%.
Ongoing cost reduction actions more than offset a negative $19 million
impact from exchange.
R&D:
GAAP
First quarter R&D costs for the Digital and Film Imaging Systems
segment decreased $29 million, or 23%, from $128 million in the first
quarter of 2003 to $99 million in the current quarter and decreased as
a percentage of sales from 7.1% to 5.1%. R&D costs for the first
quarter of 2003 included a $21 million charge for the purchase of
in-process R&D. The balance of the decrease in R&D year over year was
primarily attributable to a decline in spending related to traditional
products and services partially offset by an increase in spending for
digital products.
Operational:
Excluding the charge of $21 million for in-process R&D from the
prior year's quarter, first quarter R&D costs for the Digital and Film
Imaging Systems segment decreased $8 million, or 7%, from $107 million
in the first quarter of 2003 to $99 million in the current quarter and
decreased as a percentage of sales from 6.0% to 5.1%, primarily
attributable to a decline in spending related to traditional products
and services partially offset by an increase in spending for digital
products.
EFO
GAAP:
Earnings from operations for the Digital and Film Imaging Systems
segment increased $62 million, from a loss of $46 million in the first
quarter of 2003 to earnings of $16 million in the first quarter of
2004, primarily as a result of the factors described above.
Operational:
Earnings from operations for the Digital and Film Imaging Systems
segment increased $41 million, from a loss of $25 million in the first
quarter of 2003 to earnings of $16 million in the first quarter of
2004, primarily as a result of the factors described above.
Health Imaging
On October 7, 2003, Kodak completed the acquisition of
PracticeWorks, Inc., a leading provider of dental practice management
software and digital radiographic imaging systems. This acquisition is
expected to add approximately $200 million in sales to the Health
Imaging business during 2004. During the first quarter, PracticeWorks
contributed $50 million in sales to Health Imaging's revenues.
This transaction will be slightly dilutive to earnings per share
through 2004, improved from the original forecast of dilution through
2005. This acquisition enables Kodak to offer its customers a full
spectrum of dental imaging products and services from traditional film
to digital radiography and photography and is expected to move Health
Imaging into the leading position in the dental practice management
and dental digital radiographic markets.
Revenues:
Net worldwide sales for the Health Imaging segment were $631
million for the first quarter of 2004 as compared with $549 million
for the prior year quarter, representing an increase of $82 million,
or 15% as reported, an increase of 9% excluding the favorable impact
of exchange. The increase in net sales was composed of:
-- Volume: Increases in volume contributed approximately 4.0
percentage points to first quarter sales, driven primarily by
volumes increases in digital capture equipment, services, and
digital media.
-- Price/Mix: Decrease in price/mix reduced first quarter sales
by approximately 3.0 percentage points, primarily driven by
digital media and analog medical film.
-- Exchange: Favorable exchange impacted sales by approximately
6.0 percentage points.
-- Acquisition: The PracticeWorks acquisition contributed $50
million or approximately 8.0 percentage points to first
quarter sales.
Net sales in the U.S. were $258 million for the current quarter as
compared with $238 million for the first quarter of 2003, representing
an increase of $20 million, or 8%. Net sales outside the U.S. were
$373 million for the first quarter of 2004 as compared with $311
million for the prior year quarter, representing an increase of $62
million, or 20% as reported, or 9% excluding the favorable impact of
exchange.
Health Imaging segment digital product sales were $395 million for
the current quarter as compared with $318 million for the first
quarter of 2003, representing an increase of $77 million, or 24%,
primarily driven by the PracticeWorks acquisition and digital capture
products. Segment traditional product sales were $236 million for the
current quarter as compared with $230 million for the first quarter of
2003, representing an increase of $6 million or 3%. The primary
drivers were an increase in sales of dental systems products.
Digital Strategic Product Group Revenues:
Net worldwide sales of digital products, which include laser
printers (DryView imagers and wet laser printers), digital media
(DryView and wet laser media), digital capture equipment (computed
radiography capture equipment and digital radiography equipment),
services, dental practice management software and Picture Archiving
and Communications Systems ("PACS"), increased 24% in the first
quarter of 2004 as compared with the prior year quarter, reflecting
volume increases, and favorable exchange partially offset by negative
price/mix. The increase in digital product sales was primarily
attributable to the PracticeWorks acquisition and higher volumes of
digital capture equipment, digital media and services.
Traditional Strategic Product Group Revenues:
Net worldwide sales of traditional products, including analog
film, equipment, chemistry and services, increased 3% in the first
quarter of 2004 as compared with the first quarter of 2003 driven
primarily by higher volumes for specialty traditional film and
favorable exchange.
Gross profit:
Gross profit for the Health Imaging segment was $258 million for
the first quarter of 2004 as compared with $229 million in the prior
year quarter, representing an increase of $29 million, or 13%. The
gross profit margin was 40.9% in the current quarter as compared with
41.7% in the first quarter of 2003. The decrease in the gross profit
margin of 0.8 percentage point was principally attributable to:
-- Manufacturing Cost: manufacturing cost decreased gross profit
margins by approximately 2.0 percentage points.
-- Price/Mix: Price/mix negatively impacted gross profit margins
by approximately 2.0 percentage points driven by digital media
and analog medical film.
-- Exchange: favorable exchange added approximately 1.0
percentage point to the gross profit rate.
-- Acquisition: the PracticeWorks acquisition increased gross
profit by approximately 2.0 percentage points.
SG&A:
In the first quarter, SG&A expenses for the Health Imaging segment
increased $36 million, or 45%, from $82 million in the first quarter
of 2003 to $118 million for the current quarter, and increased as a
percentage of sales from 14.9% to 18.7%. The increase in SG&A expenses
is primarily attributable to $22 million associated with the
PracticeWorks acquisition, increased investment for growth
initiatives, and unfavorable exchange of $4 million.
R&D:
First quarter R&D costs increased $7 million from $39 million in
the first quarter of 2003 to $46 million in the current quarter, and
increased as a percentage of sales from 7.1% to 7.3%. The increase in
R&D expenses is primarily attributable to increased spending to drive
growth in selected areas of the product portfolio and $2 million
associated with the PracticeWorks acquisition.
Earnings from Operations:
Earnings from operations for the Health Imaging segment decreased
$16 million, or 15%, from $109 million for the prior year quarter to
$93 million for the first quarter of 2004 while the operating earnings
margin rate decreased 5.2 percentage points to 14.7% from 19.9% for
the prior year quarter. The decrease in earnings from operations is
attributable to the reasons indicated above. Operating earnings are at
the low end of the expected mid to upper teen range, but are expected
to improve as the year proceeds.
Commercial Imaging
On February 9, 2004 Kodak announced its intention to sell the
Remote Sensing Systems operation to ITT Industries for $725 million in
cash. This transaction is expected to close during the second quarter.
The Remote Sensing Systems business is part of Kodak's Commercial and
Government Systems operation. During the first quarter, the Commercial
Imaging Segment excludes the financial performance of Kodak's Remote
Sensing Systems business, which is accounted for in "discontinued
operations" as the Company awaits the closing of the sale.
Revenues:
Net worldwide sales for the Commercial Imaging segment were $196
million for the first quarter of 2004 as compared with $186 million
for the prior year quarter, representing an increase of $10 million,
or 5% as reported, a decrease of 3% excluding the favorable impact of
exchange. The increase in net sales was primarily composed of:
-- Volume: volumes decreased first quarter sales by approximately
1.0 percentage point primarily driven by declines in equipment
and media.
-- Price/Mix: decrease in price/mix reduced first quarter sales
by approximately 2.0 percentage points primarily driven by mix
declines for aerial imaging materials.
-- Exchange: favorable exchange contributed approximately 8.0
percentage points to first quarter sales.
Net sales in the U.S. were $79 million for the current year
quarter as compared with $77 million for the prior year quarter,
representing an increase of $2 million, or 3%. Net sales outside the
U.S. were $117 million in the first quarter of 2004 as compared with
$109 million for the prior year quarter, representing an increase of
$8 million or 7% as reported, or a decrease of 7% excluding the
favorable impact of exchange.
Commercial Imaging segment traditional product sales were $100
million for the current quarter as compared with $98 million for the
first quarter of 2003, representing an increase of $2 million, or 2%.
The primary drivers were an increase in sales of aerial imaging
materials products. Segment digital product sales were $96 million for
the current quarter as compared with $88 million for the first quarter
of 2003, representing an increase of $8 million, or 9% primarily
driven by Imaging Services.
Gross profit:
Gross profit for the Commercial Imaging segment was $66 million
for the first quarter of 2004 as compared with $60 million in the
prior year quarter, representing an increase of $6 million, or 10%.
The gross profit margin was 33.7% in the current quarter as compared
with 32.3% in the prior year quarter. The increase in the gross profit
margin of 1.4 percentage points was primarily attributable to:
-- Price/Mix: declines due to price/mix reduced gross profit
margins by approximately 2.0 percentage points primarily
driven by mix declines for aerial imaging materials.
-- Manufacturing Cost: manufacturing cost favorably impacted
gross profit margins by approximately 2.0 percentage points.
-- Exchange: favorable exchange impacted gross profit margins by
approximately 1.0 percentage point.
SG&A:
SG&A expenses for the Commercial Imaging segment were $32 million
in the current quarter, unchanged from the first quarter of 2003 but
decreased as a percentage of sales from 17.2% to 16.3%.
R&D:
First quarter R&D costs for the Commercial Imaging segment
decreased $5 million, from $8 million in the first quarter of 2003 to
$3 million for the current quarter, and decreased as a percentage of
sales from 4.3% to 1.5% in the current quarter.
EFO:
Earnings from operations for the Commercial Imaging segment
increased $11 million, or 55%, from $20 million for the prior year
quarter to $31 million for the first quarter of 2004 while the
operating earnings margin rate increased 5.0 percentage points to
15.8% from 10.8% for the prior year quarter.
Commercial Printing
On January 5, 2004, Kodak announced the completion of its
acquisition of Scitex Digital Printing, the world leader in
high-speed, variable data inkjet printing systems. Kodak acquired the
business for $239 million in net cash. This acquisition is expected to
contribute approximately $200 million to Commercial Printing segment
sales in 2004, and will be slightly dilutive through the end of the
year. Scitex Digital Printing now operates under the name Kodak
Versamark, Inc. During the first quarter, Kodak Versamark contributed
$46 million in sales to the Commercial Printing segment.
On March 8, 2004, Kodak announced its intention to acquire:
-- Heidelberg's 50% interest in NexPress Solutions LLC (Kodak and
Heidelberg formed the Nexpress 50/50 JV in 1997 to develop
high quality, on-demand, digital color printing systems)
-- 100% of the stock of Heidelberg Digital LLC (Hdi) -
manufacturer of digital black & white printing systems
-- 100% of the stock of Nexpress GMBH - a R&D center located in
Kiel, Germany
-- Certain sales and service people, inventory and related assets
and liabilities of Heidelberg's sales and service units
located throughout the world.
Kodak will pay $1 cash at closing, which is expected to occur on
or about May 1st. Instead, a unit sales based earn-out formula could
result in a maximum payout of $150 million during the next two
calendar years ending December 31, 2005.
Kodak expects the acquired operations to contribute approximately
$175 million to revenues for the remainder of 2004. Incremental
operational dilution for 2004 will be $.15 to $.20 per share with
total operational dilution of $.30 to $.35 per share for full year
2004. Kodak's recorded Nexpress dilution in 2003 was $.15 per share.
The incremental dilution is expected to be largely eliminated in 2005,
with the acquisition becoming accretive in 2007.
Revenues:
Net worldwide sales for the Commercial Printing segment were $133
million for the first quarter of 2004 as compared with $88 million for
the prior year quarter, representing an increase of $45 million, or
51% as reported, or 49% excluding the favorable impact of exchange.
The increase in net sales was entirely due to the acquisition of Kodak
Versamark.
Net sales in the U.S. were $55 million for the current year
quarter as compared with $37 million for the prior year quarter,
representing an increase of $18 million, or 49%. Net sales outside the
U.S. were $78 million in the first quarter of 2004 as compared with
$51 million for the prior year quarter, representing an increase of
$27 million or 53% as reported, or an increase of 49% excluding the
favorable impact of exchange.
Commercial Printing segment traditional product sales are limited
to the sales of traditional graphics products to the KPG joint
venture. Segment digital product sales are composed of Kodak Versamark
and Encad products and services.
Net worldwide sales of graphic arts products to Kodak Polychrome
Graphics ("KPG"), an unconsolidated joint venture affiliate in which
the Company has a 50% ownership interest, remained unchanged in the
current quarter as compared with the first quarter of 2003, primarily
reflecting stable volumes and price/mix for graphic arts products,
despite continued digital technology substitution, which negatively
affects the product portfolio that is sold to KPG.
KPG's earnings performance continued to improve on the strength of
its leading position in digital proofing and digital printing plates,
coupled with favorable operating expense management and foreign
exchange. KPG contributed positively to Kodak's "Other charges" during
the first quarter of 2004 both in absolute terms and in quarterly year
over year comparisons.
NexPress, the unconsolidated joint venture between Kodak and
Heidelberg in which the Company has a 50% ownership interest,
continues to experience good customer acceptance of the NexPress 2100
Digital Production Color Press. Sales continue to be hampered by a
weak-printing market, although average monthly page volumes for these
units are running higher than planned.
Gross profit:
Gross profit for the Commercial Printing segment was $14 million
for the first quarter of 2004 as compared with $22 million in the
prior year quarter, representing a decrease of $8 million, or 36%. The
gross profit margin was 10.5% in the current quarter as compared with
25.0% in the prior year quarter. The decrease in the gross profit
margin of 14.5 percentage points was primarily attributable to:
-- Price/Mix: favorable price/mix increased gross profit margins
by approximately .5 percentage point.
-- Manufacturing Cost: manufacturing cost negatively impacted
gross profit margins by approximately 16.0 percentage points.
-- Exchange: exchange negatively impacted gross profit margins by
approximately 2.5 percentage points.
-- Acquisition: Kodak Versamark favorably impacted gross profit
margins by 3.5 percentage points. Gross profit margins were
negatively impacted by the impact of the purchase accounting
for the inventory that was acquired with the Scitex Digital
Printing acquisition (now Kodak Versamark) at its fair value,
which was sold in the current quarter. Excluding the impact of
these costs, Kodak Versamark would have favorably impacted
gross profit margins by approximately 7 percentage points
during the quarter.
SG&A:
SG&A expenses for the Commercial Printing segment increased $12
million, from $8 million in the first quarter of 2003 to $20 million
for the current quarter, and increased as a percentage of sales from
9.1% to 15.0%. The increase in SG&A is primarily attributable to the
acquisition of Scitex Digital Printing (now Kodak Versamark), which
had $11 million of SG&A expenses in the current quarter.
R&D:
GAAP:
First quarter R&D costs increased $14 million, from $5 million in
the first quarter of 2003 to $19 million in the current quarter and
increased as a percentage of sales from 5.7% for the first quarter of
2003 to 14.3% for the current quarter. R&D expenses increased in the
first quarter primarily due to a $9 million charge for the purchase of
in-process R&D associated with the Scitex Digital Printing acquisition
(now Kodak Versamark).
Operational
Excluding the $9 million charge for purchased in-process R&D,
first quarter R&D costs increased $5 million from $5 million in the
first quarter of 2003 to $10 million in the current quarter and
increased as a percentage of sales from 5.7% to 7.5%. R&D expenses
increased in the first quarter primarily due to the acquisition of
Scitex Digital Printing (now Kodak Versamark).
EFO:
GAAP
Earnings from operations for the Commercial Printing segment
decreased $34 million, from $9 million for the prior year quarter to a
loss of $25 million for the first quarter of 2004 primarily as a
result of the factors described above, inclusive of the one-time
write-off of in-process R&D.
Operational
Earnings from operations for the Commercial Printing segment
decreased $25 million, from $9 million for the prior year quarter to a
loss of $16 million for the first quarter of 2004. Included in the
current quarter results is a $9 million charge relating to the impact
of the purchase accounting for the inventory that was acquired with
the Scitex Digital Printing acquisition (now Kodak Versamark) at its
fair value, which was sold in the current quarter.
All Other
Revenues:
Net worldwide sales for All Other were $28 million for the first
quarter of 2004, as compared with $19 million for the prior year
quarter, representing an increase of $9 million, or 47% as reported.
SK Display Corporation, the OLED manufacturing joint venture
between Kodak and Sanyo, continues to focus on improving manufacturing
yields and process engineering and has created a new generation of
chemistry used for coating OLED displays.
EFO:
The loss from operations for All Other was $28 million in the
current quarter as compared with the loss from operations of $16
million in the first quarter of 2003 primarily driven by increased
levels of investment for Kodak's Display business.
Balance Sheet:
Cash Flow:
Kodak defines free cash flow as net cash provided by continuing
operations, (as determined under generally accepted accounting
principles in the U.S.- U.S. GAAP), plus proceeds from the sale of
assets minus capital expenditures, acquisitions, debt assumed in
acquisitions and investments in unconsolidated affiliates. Kodak's
definition of operating cash flow equals free cash flow less
dividends. Investable cash is operating cash flow excluding
acquisitions and debt assumed in acquisitions.
Operating cash flow during the first quarter of 2004 was negative
$445 million, $338 million lower than the negative $107 million
generated in the year ago quarter. Excluding the impact of
acquisitions of $305 million and $84 million for the first quarter
2004 and 2003, respectively, the first quarter 2004 investable cash
flow of negative $140 million was $117 million lower than the first
quarter of 2003.
Net cash used in continuing operations, investing activities and
financing activities, as determined under GAAP in the first quarter of
2004 was $(27) million, $(426) million and $(282) million,
respectively. The table below reconciles the net cash provided by
continuing operations as determined under U.S. GAAP to Kodak's
definition of operating cash flow for the first quarter of 2004:
($ millions) 2004 2003
- ----------------------------------------------------------------------
Net cash provided by continuing operations: $(27) $106
Additions to Properties (91) (109)
Net proceeds from sales of businesses/assets - -
Investments in unconsolidated affiliates (22) (20)
Acquisitions, net of cash acquired (305) (75)
Debt assumed from acquisitions 0 (9)
Dividends - -
- ----------------------------------------------------------------------
Operating Cash Flow (continuing operations) (445) (107)
Acquisitions, net of cash acquired 305 75
Debt assumed from acquisitions - 9
- ----------------------------------------------------------------------
Investable Cash Flow (continuing operations) $(140) $(23)
- ----------------------------------------------------------------------
The range for investable cash flow for full year 2004, excluding
the proceeds from the Remote Sensing Systems divestiture, will be
increased by $100 million to $585 million to $715 million. This
reflects lower estimates for both capital expenditures and year-end
inventories.
Dividend:
The Company makes semi-annual dividend payments, which, when
declared by the Board of Directors, will be paid on the Company's 10th
business day each July and December to shareholders of record on the
first business day of the preceding month. No such dividends were
declared as of March 31, 2004.
Capital Spending:
Capital additions were $91 million in the first quarter of 2004,
which is $18 million lower than the year ago quarter and $60 million
lower quarter sequentially. The majority of the spending supported new
products, manufacturing productivity and quality improvements,
infrastructure improvements and ongoing environmental and safety
initiatives.
Receivables:
Total receivables of $2.259 billion included gross trade ($1.895
billion) and miscellaneous ($364 million) receivables at the end of
the first quarter, 2004, an increase of $241 million from first
quarter of 2003 and a decrease of $69 million quarter sequentially.
The year over year increase is driven by foreign exchange,
acquisitions, and higher sales.
Accrued customer rebates are classified as miscellaneous payables;
however, the majority of these are cleared through customer
deductions. The effect of offsetting these accrued customer rebates
would reduce the gross trade receivable balance by $415 million to
$1.480 billion at the end of the first quarter of 2004, and would
reduce the trade receivable balance by $324 million to $1.348 billion
at the end of the first quarter of 2003.
Kodak defines days sales outstanding (DSO) as the four quarter
moving average net trade receivables after rebate reclassification,
divided by 12 months of sales, multiplied by 365 days. Due to the fact
that reported sales are net of rebates and a majority of the customer
rebates are cleared through customer deductions, the Company's DSO
calculation includes the impact of reclassifying rebates as an offset
to receivables. By reclassifying the rebates as an offset to
receivables, the Company's DSO calculation is more reflective of the
true number of days the net trade receivables are outstanding.
Based on the Company's DSO definition, DSO from continuing
operations for the first quarter was 43 days, representing a 3-day
decrease from first quarter, 2003 and flat quarter sequentially. If
rebate accrual balances were not offset against receivables, DSO from
continuing operations would have decreased 1-day year over year and
remained unchanged quarter sequentially, due to higher accrual
balances in the first quarter 2004 versus 2003.
Inventory:
Kodak's inventories (after LIFO) increased $12 million year over
year and increased $134 million quarter sequentially. The year over
year increase is primarily due to the impact of exchange and
acquisitions, which were almost entirely offset by operational
reductions in inventory levels. The quarter sequential increase is due
to the seasonality of Kodak's business.
Kodak defines days supply in inventory (DSI) from continuing
operations as four-quarter average inventory before the LIFO reserve
divided by 12 months COGS as reported, multiplied by 365 days. For
purposes of Kodak's definition, COGS excludes certain
manufacturing-related costs that are considered to be unusual or that
occur infrequently. Kodak defines inventory turns as 12 months COGS as
reported divided by four quarter average inventory before the LIFO
reserve.
DSI from continuing operations improved by 7 days from the first
quarter 2003 and by 2 days quarter sequentially. Inventory turns from
continuing operations improved by 0.5 turns to 5.6 turns since the
first quarter 2003, and 0.1 turns quarter sequentially.
Including the impact of the LIFO reserve using COGS as reported on
a GAAP basis, DSI from continuing operations improved by 5 days from
the first quarter of 2003 and improved by 1 day quarter sequentially.
Inventory turns from continuing operations improved 0.7 to 7.8 turns
relative to the first quarter of 2003 and 0.3 turns quarter
sequentially.
Debt:
Debt decreased by $282 million to $2.966 billion and cash
decreased by $740 million to $510 million quarter sequentially. On a
debt less cash basis, net debt was $2.456 billion, an increase of $349
million from the first quarter 2003 and an increase of $458 million
from fourth quarter, 2003 levels of $1.998 billion. Cash decreased as
a result of the acquisition of Scitex Digital Printing, (now Kodak
Versamark) in addition to debt reduction. Kodak expects to reduce
gross debt by as much as $800 million during 2004, an increase of $200
million from the previous forecast of $600 million in debt reduction
for the year.
Equity was $3.218 billion and debt to total capital ratio was
48.0%, decreasing 1.9 percentage points quarter sequentially and 0.6
percentage points year over year.
Foreign Exchange:
Year over year, the impact of foreign exchange on operating
activities during the first quarter was a positive $0.10 per share
whereas foreign exchange activities recorded in "Other Charges" had a
negative $0.01 per share impact. Therefore, the sum of the operational
and reportable exchange impacts increased earnings in the quarter by
$0.09 per share.
Silver:
During the first quarter, the impact of high silver prices was
more than offset by the effect of favorable foreign exchange. The
negative earnings impact from high silver prices will increase
throughout the remainder of the year as product currently in inventory
is sold and unfavorable variances are recognized. However, if the cost
of silver were to hold at the March average rate of $7.23 per ounce
and foreign exchange were to hold at March 31 rates for the remainder
of the year, the net impact would be favorable to earnings. However,
it remains difficult to forecast the net impact of foreign exchange
and silver pricing.
Earnings Outlook:
The Company expects second quarter operational earnings of $.55 to
$.65 per share, and full year operational earnings of $2.15 to $2.45
per share, compared with previous guidance of $2.05 to $2.35 per
share, reflecting the net increase in earnings attributable to the tax
benefit and inventory charge (relating to the acquisition of Kodak
Versamark) recorded during the first quarter.
Upcoming Meetings:
Kodak will host an investor function for members of the investment
community who will be attending the upcoming Drupa, Commercial
Printing trade show in Duesseldorf, Germany. This event will be held
on Friday, May 7, 2004 at the Duesseldorf Fair Grounds. Please contact
Kodak Investor Relations for additional details.
Safe Harbor Statement:
Certain statements in these presentations 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 expectations for the Company's growth in sales and
earnings, cash generation, tax rate, and debt are forward-looking
statements.
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 recently announced digitally-oriented
growth strategy;
-- Implementation of product strategies (including category
expansion, digitization, organic light emitting diode (OLED),
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;
-- Completion of various portfolio actions;
-- Reduction of inventories;
-- Integration of newly acquired businesses;
-- 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.
-- 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;
-- General economic, business, geopolitical and public health
conditions; and
-- Other factors and uncertainties disclosed from time to time in
our filings with the Securities and Exchange Commission.
Any forward-looking statements in these presentations should be
evaluated in light of these important factors and uncertainties.
CONTACT: Eastman Kodak Company
Media Contacts:
Gerard Meuchner, 585-724-4513
gerard.meuchner@kodak.com
Anthony Sanzio, 585-781-5481
anthony.sanzio@kodak.com
or
Investor Relations Contacts:
Don Flick, 585-724-4352
donald.flick@kodak.com
Patty Yahn-Urlaub, 585-724-4683
patty.yahn-urlaub@kodak.com