Kodak 2001 Annual Report Download - page 44

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The current RPA arrangement expires on July 23, 2002, at which time
the RPA can be extended or terminated. If the RPA is terminated, Qualex
will no longer be able to sell its lease receivables to ESF and will need to
find an alternative financing solution for future sales of its photofinishing
equipment. Under the partnership agreement between Qualex and DCC,
subject to certain conditions, ESF has exclusivity rights to purchase
Qualex’s long-term lease receivables. The term of the partnership
agreement continues through October 6, 2003. In light of the Termination
Event referred to above and the timing of the partnership termination,
Qualex is currently considering alternative financing solutions for
prospective leasing activity with its customers.
At December 31, 2001, the Company had outstanding letters of
credit totaling $42 million and surety bonds in the amount of $94 million
to ensure the completion of environmental remediations and payment of
possible casualty and workers’ compensation claims. See Note 10 for
other commitments of the Company.
2000 Net cash provided by operating activities in 2000 was $982
million, as net earnings of $1,407 million, adjusted for depreciation and
amortization, provided $2,296 million of operating cash. This was
partially offset by increases in receivables of $247 million, largely due to
the timing of sales late in the fourth quarter; increases in inventories of
$282 million, reflecting lower than expected sales performance in the
second half of the year, particularly for consumer films, paper and digital
cameras; and decreases in liabilities, excluding borrowings, of $755
million related primarily to severance payments for restructuring
programs and reductions in accounts payable and accrued benefit costs.
Net cash used in investing activities of $783 million in 2000 was utilized
primarily for capital expenditures of $945 million and business
acquisitions of $130 million, partially offset by proceeds of $277 million
from sales of businesses and assets. Net cash used in financing
activities of $314 million in 2000 was the result of stock repurchases
and dividend payments, largely funded by net increases in borrowings
of $1,313 million.
Cash dividends per share of $1.76, payable quarterly, were
declared in 2000. Total cash dividends of approximately $545 million
were paid in 2000.
Net working capital, excluding short-term borrowings and the
current portion of long-term debt, increased to $1,482 million from
$838 million at year-end 1999. This increase is mainly attributable to
lower payable levels and higher receivable and inventory balances, as
discussed above.
Capital additions were $945 million in 2000, with the majority of
the spending supporting manufacturing productivity and quality
improvements, new products including e-commerce initiatives, digital
photofinishing and digital cameras, and ongoing environmental and
safety initiatives.
Under the $2 billion stock repurchase program announced on
April 15, 1999, the Company repurchased 21.6 million shares for
$1,099 million in 2000. On December 7, 2000, Kodak’s board of
directors authorized the repurchase of up to an additional $2 billion
of the Company’s stock over the next 4 years.
1999 Net cash provided by operating activities in 1999 was $1,933
million, as net earnings of $1,392 million, adjusted for depreciation and
amortization, and restructuring, asset impairments, and other charges
provided $2,763 million of operating cash. This was partially offset by
decreases in liabilities, excluding borrowings, of $478 million relating
primarily to severance payments for restructuring programs, and other
changes in working capital. Net cash used in investing activities of $685
million in 1999 was utilized primarily for capital expenditures of $1,127
million, offset by proceeds of $422 million from sales of assets and
businesses. Net cash used in financing activities of $1,327 million in
1999 was the result of stock repurchases and dividend payments,
partially offset by net increases in borrowings of $89 million.
Cash dividends per share of $1.76, payable quarterly, were
declared in 1999. Total cash dividends of approximately $563 million
were paid in 1999.
Net working capital, excluding short-term borrowings and the
current portion of long-term debt, decreased to $838 million from $939
million at year-end 1998. This decrease is primarily attributable to lower
cash balances at December 31, 1999.
Capital additions were $1,127 million in 1999, with the majority of
the spending relating to the Company’s China manufacturing operations,
productivity improvements and ongoing environmental and safety spending.
Under its stock repurchase programs, the Company repurchased
$925 million of its shares in 1999. During the second quarter of 1999,
the Company completed stock repurchases under its 1996 $2 billion
authorization. That program, initiated in May 1996, resulted in 26.8
million shares being repurchased. Under the $2 billion program
announced on April 15, 1999, the Company repurchased an additional
9.8 million shares for $656 million in 1999. Completion of the $2 billion
stock repurchase program will be funded by available cash reserves and
cash from operations.
On April 14, 1999, the Company announced a series of worldwide
environmental goals to provide for greater reductions in emissions, waste
generated, water usage and energy consumption, preservation of natural
resources and improvements to the Company’s environmental
management system. These goals will result in spending, primarily
capital in nature, of approximately $100 million over the next five years.
The net cash cost of the restructuring charge recorded in the third
quarter of 1999 was approximately $140 million after tax, which was
recovered through cost savings in less than two years. Severance-related
actions associated with this charge were completed by the end of the
third quarter of 2000. See Note 14.