Exhibit 99.1
Kodak Has 4th-Quarter Reported Net Income of 7 Cents Per Share;
EPS from Continuing Operations, Excluding Non-Operational Items, Totals 70 Cents
ROCHESTER, N.Y.--(BUSINESS WIRE)--Jan. 22, 2004--Eastman Kodak
Company today said fourth-quarter reported net income totaled 7 cents
per share and operating cash flow excluding acquisitions was in line
with the company's expectations, reflecting the improving financial
performance in Kodak's digital products and services.
Kodak's net income for the quarter included a gain from
discontinued operations of 4 cents per share and net income from
continuing operations of 3 cents per share. Excluding the impact of
previously announced focused cost reductions and other one-time items,
earnings from continuing operations were 70 cents per share. The
earnings include the positive impact of changes in estimates, totaling
11 cents per share, relating to employee-benefit and
incentive-compensation accruals reported in prior quarters. The
company's earnings guidance for 2003 was a range of $2.10 per share to
$2.20 per share, implying fourth-quarter 2003 guidance of 48 cents per
share to 58 cents per share.
For the fourth quarter of 2003:
-- Sales totaled $3.778 billion, an increase of 10% from $3.441
billion in the fourth quarter of 2002. Excluding foreign
exchange, sales increased 4%.
-- The company reported net income of $19 million, or 7 cents per
share, compared with reported net income of $113 million, or
39 cents per share, in the fourth quarter of 2002. The net
gain from discontinued operations of 4 cents per share
reflects the reversal of certain environmental and tax
reserves that are no longer required.
-- Earnings from continuing operations, excluding the impact of
focused cost reductions and other one-time items, were $199
million, or 70 cents per share. The adjustments include a
charge of 66 cents per share related to the previously
announced focused cost reductions; a charge of 2 cents per
share for purchased R&D; a charge of 2 cents per share related
to legal settlements; and a one-cent per share charge related
to the write-down of venture investments. These charges were
offset in part by a reversal of an environmental reserve and a
tax benefit related to the donation of certain patents
totaling 4 cents per share. In the fourth quarter of 2002,
earnings from continuing operations, excluding restructuring
and other one-time items, were $191 million, or 65 cents per
share.
"Kodak continues to deliver on its strategy by growing our digital
businesses and managing smartly our traditional businesses," said
Kodak Chairman and Chief Executive Officer, Daniel A. Carp. "We expect
the economics of our digital businesses to continue to improve in
2004, and we will continue our effort to reduce costs across all of
our operations. We also anticipate generating enough cash flow in 2004
to pay down debt while maintaining the required level of investment to
pursue our strategic objectives."
Other fourth-quarter 2003 highlights from continuing operations:
-- Kodak recorded solid cash flow for the quarter and for the
year.
-- For the quarter, operating cash flow excluding acquisitions
was $525 million, an increase of $112 million from the fourth
quarter of 2002. The increase reflects the previously
announced change to the dividend payout, offset in part by a
smaller decline in receivables than occurred in the year-ago
quarter. (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.)
-- For the year, operating cash flow excluding acquisitions was
$727 million, compared with $1.020 billion in 2002.
-- Debt increased $642 million from the year-ago level to $3.248
billion, and the company's debt-to-capital ratio increased to
49.9% from 48.4% a year ago. The company held $1.250 billion
in cash on its balance sheet at the end of the year, up from
$569 million at the end of 2002. Net debt, or total debt minus
cash, totaled $1.998 billion at the end of 2003, compared with
$2.037 billion at the end of 2002.
-- Gross Profit on an operational basis declined to 32.6%, down
from the year-ago level of 35.5%.
-- Selling, General and Administrative expenses on an operational
basis were 19.2% of sales, down from 20.2% in the year-ago
quarter.
The segment results from continuing operations for the fourth
quarter of 2003 are as follows:
-- Photography segment sales totaled $2.618 billion, up 9%.
Earnings from operations for the segment were $141 million on
a GAAP and an operational basis, down from $174 million a year
ago. Highlights for the quarter included an 87% increase in
sales of KODAK EASYSHARE consumer digital cameras; strong
sales of the KODAK EASYSHARE Printer Docks; a 55% increase in
online photofinishing sales by Ofoto; an 11% increase in sales
of photo-quality inkjet paper; and a 7% increase in the sales
of KODAK Picture Maker kiosks and related media. For the
full-year 2003, the company estimates that worldwide consumer
film industry volumes declined about 8%.
-- Health Imaging sales were $704 million, up 14%. Earnings from
operations for the segment were $134 million on an operational
basis, up from $117 million a year ago. On a GAAP basis,
earnings from operations were $124 million in the fourth
quarter of 2003. The exclusion of $10 million for in-process
R&D charges accounts for the difference in the operational and
GAAP earnings from operations for the segment. Highlights
included a 26% increase in sales of digital products and
services, among them the KODAK DIRECTVIEW PACS System 5 for
radiologists.
-- Commercial Imaging sales were $432 million, up 9%. Earnings
from operations were unchanged at $49 million on a GAAP and an
operational basis. The segment's results reflect in part
strong sales of document scanners, and a positive sales and
earnings contribution from the modification of a long-term
contract.
-- All Other sales were $24 million, down 4% from the year-ago
quarter. Losses from operations totaled $20 million on a GAAP
and an operational basis, compared with losses of $7 million.
The All Other category includes Sensors, Optics and
miscellaneous businesses, as well as the Kodak Display
business.
Full-year results:
-- For the year, sales were $13.317 billion, up 4% compared with
$12.835 billion in 2002. Excluding the impact of currency,
sales were down 1% compared with a year ago.
-- Net earnings for the year totaled $265 million, or 92 cents a
share, compared with $770 million, or $2.64 per share, in
2002. Excluding the discontinued operations, earnings from
continuing operations totaled $238 million, or 83 cents per
share. Excluding the impact of focused cost reductions and
other one-time items, earnings from continuing operations in
2003 were $662 million, or $2.31 per share. In 2002, earnings
from continuing operations, excluding focused cost reductions
and other one-time items, were $787 million, or $2.70 per
share.
Earnings Outlook:
-- For 2004, Kodak expects operational per-share earnings to
range between $2.25 and $2.55, and GAAP earnings to range
between 80 cents and $1.30. The company also expects operating
cash flow excluding acquisitions of $485 million to $615
million, based on sales of $13.8 billion to $14.2 billion. For
the first quarter, the company expects operational earnings
per share to approximate those of the year-ago period.
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.
Editor's Note: For additional information about Kodak, visit our web
site on the Internet at:
www.kodak.com
2004
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS - UNAUDITED
(in millions, except per share data)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------ ------------------
2003 2002 2003 2002
Net sales $3,778 $3,441 $13,317 $12,835
Cost of goods sold 2,561 2,235 9,033 8,225
------ ------ ------- -------
Gross profit 1,217 1,206 4,284 4,610
Selling, general and
administrative expenses 727 703 2,648 2,530
Research and development costs 214 195 781 762
Restructuring costs and other 256 107 484 98
------ ------ ------- -------
Earnings from continuing
operations before interest,
other charges, and income
taxes 20 201 371 1,220
Interest expense 44 45 148 173
Other charges 12 27 51 101
------ ------ ------- -------
(Loss) earnings from
continuing operations
before income taxes (36) 129 172 946
(Benefit) provision for income
taxes (43) (1) (66) 153
------ ------ ------- -------
Earnings from continuing
operations 7 130 238 793
Earnings (loss) from
discontinued
operations, net of
provision for
income taxes for
the three and
twelve months ended
Dec. 31, 2003
of $5, and net of
income tax
benefits for the
three and twelve
months ended
Dec. 31, 2002 of $11
and $15, respectively 12 (17) 27 (23)
------ ------ ------- -------
NET EARNINGS $ 19 $ 113 $ 265 $ 770
====== ====== ======= =======
Basic and diluted earnings
(loss) per share:
Continuing operations $ .03 $ .45 $ .83 $ 2.72
Discontinued operations .04 (.06) .09 (.08)
------ ------ ------- -------
Total $ .07 $ .39 $ .92 $ 2.64
====== ====== ======= =======
Number of common shares
used in
basic earnings (loss)
per share 286.6 291.0 286.5 291.5
Incremental shares from
assumed conversion of
options 0.0 0.9 0.1 0.2
------ ------ ------- -------
Number of common shares
used in
diluted earnings (loss)
per share 286.6 291.9 286.6 291.7
====== ====== ======= =======
Cash dividends per share $ .00 $ .90 $ 1.15 $ 1.80
====== ====== ======= =======
SUPPLEMENTAL INFORMATION - UNAUDITED
(in millions)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------ -------------------
2003 2002 2003 2002
Provision for depreciation $ 210 $ 217 $ 830 $ 818
After-tax exchange (losses)
gains and effect of
translation
of net monetary items (6) 2 (17) (14)
Cash dividends declared - 264 330 525
Capital expenditures 153 215 506 577
Net Sales from Continuing Operations by Reportable Segment and All
Other - Unaudited
(in millions)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------- --------------------
2003 2002 Change 2003 2002 Change
Photography
Inside the U.S. $1,144 $1,101 + 4% $ 3,812 $ 4,034 - 6%
Outside the U.S. 1,474 1,300 +13 5,420 4,968 + 9
------ ------ --- ------- ------- ---
Total Photography 2,618 2,401 + 9 9,232 9,002 + 3
------ ------ --- ------- ------- ---
Health Imaging
Inside the U.S. 306 297 + 3 1,061 1,088 - 2
Outside the U.S. 398 322 +24 1,370 1,186 +16
------ ------ --- ------- ------- ---
Total Health Imaging 704 619 +14 2,431 2,274 + 7
------ ------ --- ------- ------- ---
Commercial Imaging
Inside the U.S. 255 226 +13 912 818 +11
Outside the U.S. 177 170 + 4 647 638 + 1
------ ------ --- ------- ------- ---
Total Commercial
Imaging 432 396 + 9 1,559 1,456 + 7
------ ------ --- ------- ------- ---
All Other
Inside the U.S. 9 13 -31 44 53 -17
Outside the U.S. 15 12 +25 51 50 + 2
------ ------ --- ------- ------- ---
Total All Other 24 25 - 4 95 103 - 8
------ ------ --- ------- ------- ---
Consolidated total $3,778 $3,441 +10% $13,317 $12,835 + 4%
====== ====== === ======= ======= ===
---------------------------------------------------------------------
Earnings (Loss) from Continuing Operations Before Interest, Other
Charges, and Income Taxes by Reportable Segment and All Other -
Unaudited
(in millions)
Three Months Ended Twelve Months Ended
December 31 December 31
--------------------- ---------------------
2003 2002 Change 2003 2002 Change
Photography $ 141 $ 174 - 19% $ 418 $ 771 - 46%
Percent of Sales 5.4% 7.2% 4.5% 8.6%
Health Imaging $ 124 $ 117 + 6% $ 481 $ 431 + 12%
Percent of Sales 17.6% 18.9% 19.8% 19.0%
Commercial Imaging $ 49 $ 49 0% $ 166 $ 192 - 14%
Percent of Sales 11.3% 12.4% 10.6% 13.2%
All Other $ (20) $ (7) -186% $ (78) $ (28) -179%
Percent of Sales (83.3%)(28.0%) (82.1%) (27.2%)
------- ------ ---- ------ ------ ----
Total of segments $ 294 $ 333 - 12% $ 987 $1,366 - 28%
Percent of Sales 7.8% 9.7% 7.4% 10.6%
Strategic asset
impairments (3) (9) (3) (32)
Impairment of Burrell
Companies' net assets
held for sale - - (9) -
Restructuring costs
and other (272) (123) (557) (114)
Donation to technology
enterprise - - (8) -
GE settlement - - (12) -
Patent infringement
claim settlement - - (14) -
Prior year acquisition
settlement - - (14) -
Legal settlements (8) - (8) -
Environmental reserve
reversal 9 - 9 -
------ ------ ---- ------ ------ ----
Consolidated total $ 20 $ 201 - 90% $ 371 $1,220 - 70%
======= ====== ==== ====== ====== ====
Percent of Sales 1.0% 5.8% 2.8% 9.5%
---------------------------------------------------------------------
Earnings (Loss) From Continuing Operations by Reportable Segment and
All Other - Unaudited
(in millions)
Three Months Ended Twelve Months Ended
December 31 December 31
------------------- -------------------
2003 2002 Change 2003 2002 Change
Photography $ 123 $ 140 - 12% $ 347 $ 550 - 37%
Percent of Sales 4.7% 5.8% 3.8% 6.1%
Health Imaging $ 95 $ 92 + 3% $ 382 $ 313 + 22%
Percent of Sales 13.5% 14.9% 15.7% 13.8%
Commercial Imaging $ 32 $ 11 +191% $ 99 $ 83 + 19%
Percent of Sales 7.4% 2.8% 6.4% 5.7%
All Other $ (21) $ (4)-425% $ (73)$ (23) -217%
Percent of Sales (87.5%)(16.0%) (76.8%) (22.3%)
------- ------ ---- ------ ------ ----
Total of segments $ 229 $ 239 - 4% $ 755 $ 923 - 18%
Percent of Sales 6.1% 6.9% 5.7% 7.2%
Strategic asset &
venture investment
impairments (7) (16) (7) (50)
Impairment of Burrell
Companies' net assets
held for sale - - (9) -
Restructuring costs
and other (272) (123) (557) (114)
Donation to technology
enterprise - - (8) -
GE settlement - - (12) -
Patent infringement
claim settlement - - (14) -
Prior year acquisition
settlement - - (14) -
Legal settlements (8) - (8) -
Environmental reserve
reversal 9 - 9 -
Interest expense (44) (45) (148) (173)
Other corporate items 3 5 11 14
Tax benefit - contribution
of patents 5 - 13 -
Tax benefit -
PictureVision
subsidiary closure - - - 45
Tax benefit - Kodak
Imagex Japan - - - 46
Income tax effects on
above items and taxes
not allocated to
segments 92 70 227 102
------ ------ ---- ------ ----- ----
Consolidated total $ 7 $ 130 - 95% $ 238 $ 793 - 70%
====== ====== ==== ====== ===== ====
Percent of Sales 0.2% 3.8% 1.8% 6.2%
--------------------------------------------------------------------
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in millions)
Dec. 31, Dec. 31,
2003 2002
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,250 $ 569
Receivables, net 2,389 2,234
Inventories, net 1,075 1,062
Deferred income taxes 610 512
Other current assets 131 157
------- -------
Total current assets 5,455 4,534
------- -------
Property, plant and
equipment, net 5,094 5,420
Goodwill, net 1,384 981
Other long-term assets 2,826 2,559
------- -------
TOTAL ASSETS $14,759 $13,494
======= =======
- ---------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current
liabilities $ 3,707 $ 3,351
Short-term borrowings 946 1,442
Accrued income taxes 595 709
------- -------
Total current liabilities 5,248 5,502
OTHER LIABILITIES
Long-term debt, net of
current portion 2,302 1,164
Postretirement liabilities 3,344 3,412
Other long-term liabilities 601 639
------- -------
Total liabilities 11,495 10,717
SHAREHOLDERS' EQUITY
Common stock at par 978 978
Additional paid in capital 850 849
Retained earnings 7,527 7,611
Accumulated other comprehensive
loss (231) (771)
Unearned restricted stock (8) -
------- -------
9,116 8,667
Less: Treasury stock at cost 5,852 5,890
------- -------
Total shareholders' equity 3,264 2,777
------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $14,759 $13,494
======= =======
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED
(in millions)
Twelve Months Ended
December 31
------------------
2003 2002
Cash flows relating to operating activities:
Net earnings $ 265 $ 770
Adjustments to reconcile to net cash
provided by operating activities:
(Gain) loss from discontinued
operations (27) 23
Equity in losses from
unconsolidated affiliates 52 105
Gain on sale of assets (11) (24)
Depreciation and amortization 830 818
Purchased research and development 32 -
Restructuring costs, asset
impairments and
other non-cash charges 156 85
Provision (benefit) for deferred taxes 43 (224)
(Increase) decrease in receivables (9) 263
Decrease in inventories 128 88
Increase in liabilities excluding
borrowings 18 29
Other items, net 149 285
------ ------
Total adjustments 1,361 1,448
------ ------
Net cash provided by continuing
operations 1,626 2,218
------ ------
Net cash provided by (used in)
discontinued operations 19 (14)
------ ------
Net cash provided by
operating activities 1,645 2,204
------ ------
Cash flows relating to investing activities:
Additions to properties (506) (577)
Net proceeds from sales of
businesses/assets 26 27
Acquisitions, net of cash acquired (697) (72)
Investments in unconsolidated
affiliates (89) (123)
Marketable securities - purchases (87) (101)
Marketable securities - sales 86 88
------ ------
Net cash used in investing
activities (1,267) (758)
------ ------
Cash flows relating to financing activities:
Net decrease in borrowings with original
maturity of 90 days or less (574) (210)
Proceeds from other borrowings 1,693 759
Repayment of other borrowings (531) (1,146)
Dividend payments (330) (525)
Exercise of employee stock options 12 51
Stock repurchase programs - (260)
------ ------
Net cash provided by (used in) financing
activities 270 (1,331)
------ ------
Effect of exchange rate changes on cash 33 6
------ ------
Net increase in cash and cash
equivalents 681 121
Cash and cash equivalents,
beginning of year 569 448
------ ------
Cash and cash equivalents,
end of year $1,250 $ 569
====== ======
- ----------------------------------------------------------------------