Kodak 2001 Annual Report Download - page 30

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28
assumptions inherent in these valuations. The Company annually reviews
the assumptions underlying the actuarial calculations and makes
changes to these assumptions, based on current market conditions, as
necessary. Actual changes in the fair market value of plan assets and
differences between the actual return on plan assets and the expected
return on plan assets will affect the amount of pension (income) expense
ultimately recognized. The other postretirement benefits liability is also
determined on an actuarial basis and is affected by assumptions
including the discount rate and expected trends in healthcare costs.
Changes in the discount rate and differences between actual and
expected healthcare costs will affect the recorded amount of other
postretirement benefits expense.
Environmental liabilities are accrued based on estimates of known
environmental remediation exposures. The liabilities include accruals for
sites owned by Kodak, sites formerly owned by Kodak, and other third-
party sites where Kodak was designated as a potentially responsible
party (PRP). The amounts accrued for such sites are based on these
estimates, which may be affected by changing determinations of what
constitutes an environmental liability or an acceptable level of
remediation. To the extent that the current work plans are not effective in
achieving targeted results, the proposals to regulatory agencies for
desired methods and outcomes of remediation are not acceptable, or
additional exposures are identified, Kodak’s estimate of its environmental
liabilities may change.
2001
The Company’s results for the year included the following:
Charges of $830 million ($583 million after tax) related to the
restructuring programs implemented in the second, third and fourth
quarters and other asset impairments. See further discussion in
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (MD&A) and Note 14.
A charge of $41 million ($28 million after tax) for environmental
exposures. See MD&A and Note 10.
A charge of $20 million ($14 million after tax) for the Kmart
bankruptcy. See MD&A and Note 2.
Income tax benefits of $31 million, including a favorable tax
settlement of $11 million and a $20 million benefit representing a
decline in the year-over-year effective tax rate.
Excluding the above items, net earnings were $670 million, or
$2.30 per basic and diluted share.
2000
The Company’s results for the year included the following:
Charges of approximately $50 million ($33 million after tax)
associated with the sale and exit of one of the Company’s equipment
manufacturing facilities. The costs for this effort, which began
in 1999, related to accelerated depreciation of assets still in use
prior to the sale of the facility in the second quarter, and costs for
relocation of the operations.
Excluding the above, net earnings were $1,440 million. Basic
earnings per share were $4.73 and diluted earnings per share were $4.70.
1999
The Company’s results for the year included the following:
A restructuring charge of $350 million ($231 million after tax)
related to worldwide manufacturing and photofinishing consolidation and
reductions in selling, general and administrative positions worldwide. In
addition, the Company incurred charges of $11 million ($7 million after
tax) related to accelerated depreciation of assets still in use during 1999
and sold in 2000, in connection with the exit of one of the Company’s
equipment manufacturing facilities.
Charges totaling approximately $103 million ($68 million after tax)
associated with the exits of the Eastman Software business ($51 million)
and Entertainment Imaging’s sticker print kiosk product line ($32 million)
as well as the write-off of the Company’s Calcomp investment ($20
million), which was determined to be unrecoverable.
Gains of approximately $120 million ($79 million after tax) related
to the sale of The Image Bank ($95 million gain) and the Motion Analysis
Systems Division ($25 million gain).
Excluding the above items, net earnings were $1,619 million. Basic
earnings per share were $5.09 and diluted earnings per share were $5.03.
Summary (in millions, except per share data) 2001 Change 2000 Change 1999
Net sales $13,234 –5% $13,994 –1% $ 14,089
Earnings from operations 345 –84% 2,214 +11% 1,990
Net earnings 76 –95% 1,407 +1% 1,392
Basic earnings per share .26 –94% 4.62 +5% 4.38
Diluted earnings per share .26 –94% 4.59 +6% 4.33