Kodak 2003 Annual Report Download - page 33

Financials
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charge. During 2002, the Company expended $220 million against the
related restructuring reserves, primarily for the payment of severance
benefits, which were mostly attributable to the 2001 restructuring actions.
The remaining severance-related actions associated with the total 2001
restructuring charge were completed by the end of the first quarter of
2003, and the remaining severance payments of $6 million at December
31, 2003 will be made by the end of 2004. Employees whose positions
were eliminated could elect to receive severance payments for up to two
years following their date of termination.
2001
Net cash provided by operating activities in 2001 was $2,206 million, as
net earnings of $76 million, adjusted for depreciation and amortization,
and restructuring costs, asset impairments and other charges, provided
$1,408 million of operating cash. Also contributing to operating cash was
a decrease in receivables of $254 million and a decrease in inventories of
$465 million. This was partially offset by decreases in liabilities, excluding
borrowings, of $111 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 $1,188 million in
2001 was utilized primarily for capital expenditures of $743 million,
investments in unconsolidated affiliates of $141 million, and business
acquisitions of $306 million. Net cash used in financing activities of $808
million in 2001 was primarily the result of stock repurchases and dividend
payments as discussed below.
The Company declared cash dividends per share of $.44 in each of
the first three quarters and $.89 in the fourth quarter of 2001. Total cash
dividends of $643 million were paid in 2001. In October 2001, the
Company’s Board of Directors approved a change in dividend policy from
quarterly dividend payments to semi-annual dividend payments.
Dividends, when declared, will be paid on the 10th business day of July
and December to shareholders of record on the first business day of the
preceding month. These payment dates serve to better align the dividend
disbursements with the seasonal cash flow pattern of the business, which
is more concentrated in the second half of the year. This action resulted in
the Company making five dividend payments in 2001.
Net working capital, excluding short-term borrowings, decreased to
$797 million from $1,420 million at year-end 2000. This decrease is
mainly attributable to lower receivable and inventory balances, as dis-
cussed above.
Capital additions, excluding equipment purchased for lease, were
$680 million in 2001, with the majority of the spending supporting new
products, manufacturing productivity and quality improvements, infrastruc-
ture improvements, ongoing environmental and safety initiatives, and ren-
ovations due to relocations associated with restructuring actions taken in
1999.
Under the $2,000 million stock repurchase program announced on
April 15, 1999, the Company repurchased $44 million of its shares in
2001. As of March 2, 2001, the Company suspended the stock repurchase
program in a move designed to accelerate debt reduction and increase
financial flexibility. At the time of the suspension of the program, the
Company had repurchased approximately $1,800 million of its shares
under this program.
The net cash cost of the restructuring charge recorded in 2001 was
approximately $182 million after tax, which was recovered through cost
savings in less than two years. The severance-related actions associated
with this charge were completed by the end of the first quarter of 2003,
and the remaining severance payments of $6 million at December 31,
2003 will be made by the end of 2004.
OTHER
Cash expenditures for pollution prevention and waste treatment for the
Company’s current facilities were as follows:
(in millions) 2003 2002 2001
Recurring costs for pollution
prevention and waste treatment $ 74 $ 67 $ 68
Capital expenditures for pollution
prevention and waste treatment 812 27
Site remediation costs 232
Total $ 84 $ 82 $ 97
At December 31, 2003 and 2002, the Company’s undiscounted
accrued liabilities for environmental remediation costs amounted to $141
million and $148 million, respectively. These amounts are reported in other
long-term liabilities in the accompanying Consolidated Statement of
Financial Position.
The Company is currently implementing a Corrective Action Program
required by the Resource Conservation and Recovery Act (RCRA) at the
Kodak Park site in Rochester, NY. As part of this program, the Company
has completed the RCRA Facility Assessment (RFA), a broad-based envi-
ronmental investigation of the site. The Company is currently in the
process of completing, and in some cases has completed, RCRA Facility
Investigations (RFI) and Corrective Measures Studies (CMS) for areas at
the site. The previous estimate for future investigation and remediation
costs was reduced by $8 million for the following reasons: (1) approval of
Final Corrective Measures for four investigation areas, (2) approval for a
single investigation approach for the site’s industrial sewers and building
waste water collection system, and (3) completion with no further action
approvals at seventeen Solid Waste Management Units. At December 31,
2003, estimated future investigation and remediation costs of $57 million
are accrued for this site and are included in the $141 million reported in
other long-term liabilities.
The Company has retained certain obligations for environmental
remediation and Superfund matters related to certain sites associated
with the non-imaging health businesses sold in 1994. At the Ohio site,
agreements reached with the Ohio Environmental Protection Agency in
regard to the calculation of clean-up levels, as well as the long term via-
bility of the facility as an industrial site, allowed the previous estimate to
be reduced by $13 million. At December 31, 2003, estimated future reme-
diation costs of $35 million are accrued for these sites and are included in
the $141 million reported in other long-term liabilities.
The Company has obligations relating to two former manufacturing
sites located outside of the United States. At December 31, 2003, estimat-
ed future investigation, remediation and monitoring costs of $20 million