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): January 30, 2006
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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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
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On January 30, 2006, Eastman Kodak Company issued a press release and a
supplemental financial discussion document describing its financial results for
its fourth fiscal quarter ended December 31, 2005. 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 fourth quarter 2005 press release and financial discussion
document, the Company makes reference to certain non-GAAP financial measures
including "Digital revenue", "Digital revenue growth", "Digital earnings", "Free
cash flow", "Operating cash flow", "Investable cash flow" and "Earnings before
interest, taxes, depreciation and amortization (EBITDA)", which have directly
comparable GAAP financial measures, 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 2.02 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:
Digital revenue / Digital revenue growth / Digital earnings -- In the Company's
earnings release for the second quarter of 2005 that was issued on July 20,
2005, the Company indicated that, due to the ongoing digital transformation,
management would view the Company's performance based on the following three key
metrics: digital revenue growth, digital earnings growth and the generation of
cash. These three key metrics were reemphasized in the Company's investor
presentation on September 28, 2005 and in the attached earnings release for the
fourth quarter of 2005. These digital measures form the basis of internal
management performance expectations and certain incentive compensation.
Accordingly, these digital measures are presented 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 against its key metrics on a year-over-year and quarter-sequential
basis, as the Company undergoes this digital transformation.
Free cash flow / Operating cash flow / Investable cash flow -- The Company
believes that the presentation of free cash flow, operating cash flow and
investable cash flow is useful information to investors as it facilitates 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, capital expenditures, acquisitions and investments. The free
cash flow measure equals net cash provided by operating activities from
continuing operations, as determined under Generally Accepted Accounting
Principles in the U.S. (U.S. GAAP) minus capital expenditures. The operating
cash flow measure equals free cash flow plus proceeds from the sale of assets,
minus 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,
and forms the basis of internal management performance expectations (it is one
of the Company's three key metrics) and certain incentive compensation.
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.
EBITDA / Interest Expense -- Under the Company's senior secured credit
facilities, there are two financial debt covenants that the Company must be in
compliance with on a quarterly basis: (1) debt to EBITDA and (2) EBITDA to
interest expense. Accordingly, the Company believes the presentation of the debt
to EBITDA and EBITDA to interest expense financial measures is useful
information to investors, as it provides information as to how the Company
actually performed against the financial covenant restrictions and requirements,
and how much headroom the Company has within the covenants.
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, as it is more
reflective of the Company's actual inventory performance.
Item 9.01. Financial Statements and Exhibits
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(c) Exhibits
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Exhibit 99.1 Press release issued January 30, Furnished with
2006 regarding financial results this document
for the fourth quarter of 2005
Exhibit 99.2 Financial discussion document issued Furnished with
January 30, 2006 regarding financial this document
results for the fourth quarter of 2005
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTMAN KODAK COMPANY
By: /s/ Richard G. Brown, Jr.
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Name: Richard G. Brown, Jr.
Title: Controller
Date: January 30, 2006
EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press release issued January 30, 2006 regarding financial results for
the fourth quarter 2005
99.2 Financial discussion document issued January 30, 2006 regarding
financial results for the fourth quarter 2005