Kodak 2002 Annual Report Download - page 73

Financials
73
NOTE 20: ACQUISITIONS, JOINT VENTURES
AND BUSINESS VENTURES
2002
On January 24, 2002, the Company completed the acquisition of
100% of the voting common stock of ENCAD, Inc., (ENCAD) for a
total purchase price of approximately $25 million. The purchase
price was paid almost entirely in Kodak common stock. The
purchase price in excess of the fair value of the net assets
acquired of approximately $6 million has been allocated to
goodwill. On December 17, 2002, it was announced that ENCAD
will become part of the newly formed components group along
with the document scanner and microfilm businesses. The
formation of the components group will build a stronger
equipment and consumables business within the Commercial
Imaging segment by consolidating those product lines that utilize
a two tier, indirect sales and distribution channel. Earnings from
continuing operations for 2002 include the results of ENCAD from
the date of acquisition.
On September 11, 2002, the Company initiated an offer to
acquire all of the outstanding minority equity interests in Kodak
India Ltd., (Kodak India) a majority owned subsidiary of the
Company. The voluntary offer to the minority equity interest
holders of Kodak India was for the acquisition of approximately
2.8 million shares representing the full 25.24% minority
ownership in the subsidiary. In the fourth quarter of 2002, the
Company purchased the 2.1 million shares that had been
tendered to date for approximately $16 million in cash. Due to
the timing of this acquisition, the purchase price allocation was
not complete as of December 31, 2002. Accordingly, the purchase
price in excess of the fair value of the net assets acquired of
approximately $8 million has been recorded in other long-term
assets. The purchase price allocation will be completed in the
first quarter of 2003 at which time the excess purchase price
will be allocated to goodwill and other identifiable intangible
assets. In December 2002, the Company made an offer to
purchase the remaining 6.04% outstanding minority interest in
Kodak India for approximately $4.9 million. Kodak India operated
in each of the Company’s reportable segments and is engaged in
the manufacture, trading and marketing of cameras, films, photo
chemicals and other imaging products.
On December 31, 2002, an unaffiliated investor in one of
Kodak’s China subsidiaries exercised its rights under a put option
arrangement, which required Kodak to repurchase a 10%
outstanding minority equity interest in this subsidiary for
approximately $44 million in cash. Due to the timing of this
acquisition, the purchase price allocation was not complete as of
December 31, 2002. Accordingly, the purchase price in excess of
the fair value of the net assets acquired of approximately $18
million has been recorded in other long-term assets. The
purchase price allocation will be completed in the first quarter of
2003 at which time the excess purchase price will be allocated to
goodwill and other identifiable intangible assets.
During 2002, the Company completed a number of additional
acquisitions with an aggregate purchase price of approximately
$14 million, which were individually immaterial to the Company’s
financial position, results of operations or cash flows.
2001
On December 4, 2001, the Company and SANYO Electric Co., Ltd.
announced the formation of a global business venture, the SK
Display Corporation, to manufacture organic light emitting diode
(OLED) displays for consumer devices such as cameras, personal
data assistants (PDAs), and portable entertainment machines.
Kodak has a 34% interest in the business venture and will
contribute approximately $16 million in cash in 2003 and is
committed to contribute $100 million in loan guarantees.
However, the Company was not required to make these loan
guarantees as of December 31, 2002. SANYO holds a 66%
interest in the business venture and is committed to contribute
approximately $36 million in cash and $195 million in loan
guarantees.
On June 4, 2001, the Company completed its acquisition of
Ofoto, Inc. The purchase price of this stock acquisition was
approximately $58 million in cash. The acquisition was accounted
for as a purchase with $10 million allocated to tangible net
assets, $37 million allocated to goodwill and $11 million allocated
to other intangible assets. The acquisition of Ofoto will accelerate
Kodak’s growth in the online photography market and help drive
more rapid adoption of digital and online services. Ofoto offers
digital processing of digital images and traditional film, top-quality
prints, private online image storage, sharing, editing and creative
tools, frames, cards and other merchandise.
On February 7, 2001, the Company completed its acquisition
of substantially all of the imaging services operations of Bell &
Howell Company. The purchase price of this stock and asset
acquisition was $141 million in cash, including acquisition and
other costs of $6 million. The acquisition was accounted for as a
purchase with $15 million allocated to tangible net assets, $70
million allocated to goodwill, and $56 million allocated to other
intangible assets, primarily customer contracts. The acquired
units provide customers worldwide with maintenance for
document imaging components, micrographic-related equipment,
supplies, parts and service.
During 2001, the Company also completed additional
acquisitions with an aggregate purchase price of approximately
$122 million in cash and stock, none of which were individually
material to the Company’s financial position, results of operations
or cash flows.