Exhibit (99.1)
Eastman Kodak Company
Unaudited Pro Forma Consolidated Financial Statements
The unaudited pro forma consolidated financial statements present
financial information to give effect to the sale of the Eastman Kodak
Company's (the "Company") Health Group business. The unaudited pro
forma consolidated statements of operations present the consolidated
results of continuing operations of the Company, assuming the sale
occurred as of January 1, 2004. The unaudited pro forma consolidated
statement of financial position as of December 31, 2006 presents the
consolidated financial position of the Company, assuming the sale
occurred on that date.
The unaudited pro forma consolidated financial statements include
specific assumptions and adjustments related to the sale of the Health
Group business as described in the accompanying notes. The adjustments
are based upon presently available information and assumptions that
management believes are reasonable under the circumstances as of the
date of this filing. However, actual adjustments may differ materially
from the information presented.
The unaudited pro forma consolidated financial statements presented are
for informational purposes only. They are not intended to represent or
be indicative of the consolidated results of operations or financial
position that would have occurred had the sale been completed as of the
dates presented nor are they intended to be indicative of future results
of operations or financial position. Furthermore, these unaudited pro
forma consolidated financial statements do not reflect changes that may
occur as a result of activities after the sale of the Health Group. The
unaudited pro forma consolidated financial statements, including notes
thereto, should be read in conjunction with the historical financial
statements of the Company included in its Annual Report on Form 10-K for
the year ended December 31, 2006.
2
Eastman Kodak Company
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2006
(in millions, except per share data)
As Pro Forma Pro Forma
Reported Adjustments Adjusted
Net sales $ 13,274 $ (2,551)(A) $ 10,723
Cost of goods sold 9,906 (1,629)(A) 8,277
-------- -------- --------
Gross profit 3,368 (922)(A) 2,446
Selling, general and administrative
expenses 2,389 (421)(A) 1,968
Research and development costs 710 (132)(A) 578
Restructuring costs and other 471 (54)(A) 417
-------- -------- --------
Loss from continuing operations before
interest, other income (charges), net
and income taxes (202) (315)(A) (517)
Interest expense 262 (90)(A) 172
Other income(charges), net 118 - (A) 118
-------- -------- --------
Loss from continuing operations before
income taxes (346) (225)(A) (571)
Provision for income taxes 254 (28)(A) 226
-------- -------- --------
Loss from continuing operations $ (600) $ (197)(A) $ (797)
======== ======== ========
Basic and diluted loss per share
from continuing operations $ (2.09) $ (2.77)
======== ========
Number of common shares used in
basic loss per share 287.3 287.3
Effect of dilutive securities:
Employee stock options - -
-------- --------
Number of common shares used in
Diluted loss per share 287.3 287.3
======== ========
See Notes to Pro Forma Consolidated Financial Statements
3
Eastman Kodak Company
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2005
(in millions, except per share data)
As Pro Forma Pro Forma
Reported Adjusments Adjusted
Net sales $ 14,268 $ (2,708)(A) $ 11,560
Cost of goods sold 10,650 (1,658)(A) 8,992
-------- -------- --------
Gross profit 3,618 (1,050)(A) 2,568
Selling, general and administrative
expenses 2,668 (410)(A) 2,258
Research and development costs 892 (153)(A) 739
Restructuring costs and other 690 (25)(A) 665
-------- -------- --------
Loss from continuing operations before
interest, other income (charges), net
and income taxes (632) (462)(A) (1,094)
Interest expense 211 (72)(A) 139
Other income(charges), net 44 (7)(A) 37
-------- -------- --------
Loss from continuing operations before
income taxes (799) (397)(A) (1,196)
Provision for income taxes 555 (100)(A) 455
-------- -------- --------
Loss from continuing operations $ (1,354) $ (297)(A) $ (1,651)
======== ======== ========
Basic and diluted loss per share
from continuing operations $ (4.70) $ (5.73)
======== ========
Number of common shares used in
basic loss per share 287.9 287.9
Effect of dilutive securities:
Employee stock options - -
-------- --------
Number of common shares used in
Diluted loss per share 287.9 287.9
======== ========
See Notes to Pro Forma Consolidated Financial Statements
4
Eastman Kodak Company
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2004
(in millions, except per share data)
As Pro Forma Pro Forma
Reported Adjustments Adjusted
Net sales $ 13,517 $ (2,731)(A) $ 10,786
Cost of goods sold 9,601 (1,574)(A) 8,027
-------- -------- --------
Gross profit 3,916 (1,157)(A) 2,759
Selling, general and administrative
expenses 2,491 (409)(A) 2,082
Research and development costs 836 (169)(A) 667
Restructuring costs and other 695 (16)(A) 679
-------- -------- --------
Loss from continuing operations before
interest, other income (charges), net
and income taxes (106) (563)(A) (669)
Interest expense 168 (57)(A) 111
Other income(charges), net 161 5 (A) 166
-------- -------- --------
Loss from continuing operations before
income taxes (113) (501)(A) (614)
Benefit for income taxes (182) 70 (A) (252)
-------- -------- --------
Earnings (loss) from continuing
operations $ 69 $ (431)(A) $ (362)
======== ======== ========
Basic and diluted earnings (loss) per
share from continuing operations $ .24 $ (1.26)
======== ========
Number of common shares used in
basic earnings per share 286.6 286.6
Effect of dilutive securities:
Employee stock options 0.2 0.2
-------- --------
Number of common shares used in
diluted earnings per share 286.8 286.8
======== ========
See Notes to Pro Forma Consolidated Financial Statements
5
Eastman Kodak Company
Unaudited Pro Forma Consolidated Statement of Financial Position
At December 31, 2006
(in millions)
As Pro Forma Pro Forma
Reported Adjustments Adjusted
ASSETS
Current Assets
Cash and cash equivalents $ 1,469 $ 1,157 (B) $ 2,626
Receivables, net 2,669 (597)(C) 2,072
Inventories, net 1,202 (201)(C) 1,001
Deferred income taxes 108 (8)(C) 100
Other current assets 109 (13)(C) 96
------- ------- -------
Total current assets 5,557 338 5,895
------- ------- -------
Property, plant and equipment,
net 2,842 (240)(C) 2,602
Goodwill 2,196 (612)(C) 1,584
Other long-term assets 3,725 (187)(C) 3,538
------- ------- -------
TOTAL ASSETS $14,320 $ (701) $13,619
======= ======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current Liabilities
Accounts payable and other
current liabilities $ 4,143 $ (457)(C) $ 3,686
Short-term borrowings 64 (10)(B) 54
Accrued income and other taxes 764 35 (D) 799
------- ------- -------
Total current liabilities 4,971 (432) 4,539
------- ------- -------
Long-term debt, net of current
portion 2,714 (1,138)(B) 1,576
Pension and other
postretirement liabilities 3,964 (56)(C) 3,908
Other long-term liabilities 1,283 (86)(C) 1,197
------- ------- -------
Total liabilities 12,932 (1,712) 11,220
------- ------- -------
Commitments and Contingencies
SHAREHOLDERS' EQUITY
Common stock, at par value 978 - 978
Additional paid in capital 881 - 881
Retained earnings 5,967 1,015 (E) 6,982
Accumulated other comprehensive
loss (635) (4)(C) (639)
------- ------- -------
7,191 1,011 8,202
Treasury stock, at cost 5,803 - 5,803
------- ------- -------
Total shareholders' equity 1,388 1,011 2,399
------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $14,320 $ (701) $13,619
======= ======= =======
See Notes to Pro Forma Consolidated Financial Statements
6
Notes to the Unaudited Pro Forma Consolidated Financial Statements
The unaudited pro forma consolidated financial statements give effect to
the sale of the Company's Health Group business. The unaudited pro
forma consolidated statements of operations are presented as if the sale
occurred as of January 1, 2004. The anticipated nonrecurring after-tax
gain on the sale is not reflected in the pro forma consolidated
statements of operations. The unaudited pro forma consolidated
statement of financial position is presented as if the sale occurred on
December 31, 2006 and is based on the historical statement of financial
position as of that date.
(A) The Pro Forma Adjustments represent the results of the Health
Group's operations previously consolidated in the Company's
historical financial statements as adjusted to reflect discontinued
operations. In addition, interest on the Company's outstanding debt
that was required to be repaid as a result of the sale of the Health
Group has been included in the Pro Forma Adjustments.
(B) The Pro Forma Adjustment represents the gross cash proceeds from
the sale of $2,350 million, net of the following items:
- Approximately $20 million of transaction costs and expenses
associated with selling the business.
- $1,148 million of outstanding debt that was required to be
repaid with the net proceeds from the sale.
- Approximately $25 million paid to the buyer for pension
liabilities assumed in excess of the related pension assets
transferred.
(C) The Pro Forma Adjustments represent the elimination of the assets,
liabilities, and equity items associated with the discontinued
operations.
(D) The Pro Forma adjustment represents the estimated tax expense
associated with the gain on the sale.
(E) The after-tax gain on the sale is estimated as if the Health Group
were sold on December 31, 2006.