Kodak 2003 Annual Report Download - page 73

Financials
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been completed as of the beginning of each fiscal period presented, nor
are they necessarily indicative of future consolidated results.
On October 31, 2003, the Company announced that it had completed
the acquisition of Laser-Pacific Media Corporation (Laser-Pacific), a lead-
ing Hollywood-based post-production company for approximately $31 mil-
lion or $4.22 per share. At the time of the closing, Laser-Pacific had
approximately $6 million of net debt. The acquisition will allow the
Company to establish a major presence in television post-production and
further extends Kodak’s current digital services capabilities in the feature
film market. Approximately $2 million of the purchase price was allocated
to customer-related intangible assets that have a useful life of four years.
Approximately $10 million of the purchase price was allocated to goodwill,
which is reported in the Company’s Photography segment. The goodwill is
not expected to be deductible for tax purposes. Earnings from continuing
operations for 2003 include the results of Laser-Pacific from the date of
acquisition.
On November 26, 2003, the Company announced that it had com-
pleted the acquisition of Algotec Systems Ltd. (Algotec), a leading develop-
er of advanced picture-archiving-and-communications systems (PACS) in
Raanana, Israel, for approximately $43 million in cash. The acquisition
improves the Company’s position in the growing market for Healthcare
Information Systems (HCIS), which enable radiology departments world-
wide to digitally manage and store medical images and information. The
Company is currently in the process of valuing the acquired assets and
liabilities and completing the purchase price allocation.
On December 26, 2003, an unaffiliated investor in Kodak Wuxi China
Limited (KWCL) exercised its rights under a put option arrangement, which
required Kodak to repurchase a 30% outstanding minority equity interest
in this subsidiary for approximately $15 million in cash. Due to the timing
of this acquisition, the purchase price allocation was not complete as of
December 31, 2003. Accordingly, the purchase price in excess of the fair
value of the net assets acquired of approximately $3 million has been
recorded in other long-term assets in the accompanying Consolidated
Statement of Financial Position. The purchase price allocation will be com-
pleted in the first quarter of 2004, at which time the excess purchase
price will be allocated to goodwill and other identifiable assets.
On December 31, 2003, an unaffiliated investor in Kodak China
Company Limited (KCCL) exercised its rights under a put option arrange-
ment, which required Kodak to repurchase a 10% outstanding minority
equity interest in this subsidiary for approximately $42 million in cash.
Due to the timing of this acquisition, the purchase price allocation was not
complete as of December 31, 2003. Accordingly, the purchase price in
excess of the fair value of the net assets acquired of approximately $3
million has been recorded in other long-term assets in the accompanying
Consolidated Statement of Financial Position. The purchase price alloca-
tion will be completed in the first quarter of 2004, at which time the
excess purchase price will be allocated to goodwill and other identifiable
assets.
During 2003, the Company completed a number of additional acqui-
sitions with an aggregate purchase price of approximately $3 million,
which were individually immaterial to the Company’s financial position,
results of operations or cash flows.
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 allo-
cated to goodwill. 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 2.1 million shares for approximately $16 million in cash.
Because the purchase price allocation was not complete as of December
31, 2002, the excess purchase price of approximately $8 million was
recorded in other long-term assets in the Company’s 2002 Consolidated
Statement of Financial Position. Upon completion of the purchase price
allocation in 2003, the Company reclassified essentially all of the excess
purchase price to goodwill. In December 2002, the Company also made an
offer to purchase the remaining 6.04% outstanding minority interest in
Kodak India for approximately $4.9 million. This additional repurchase was
mostly completed before the end of 2003. Kodak India operates in each of
the Company’s reportable segments and is engaged in the manufacture,
trading and marketing of cameras, films, photo chemicals and other imag-
ing products.
On December 31, 2002, an unaffiliated investor in KCCL exercised its
rights under a put option arrangement, which required Kodak to repur-
chase 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 was recorded in other long-
term assets in the Company’s 2002 Consolidated Statement of Financial
Position. During 2003, the Company completed the purchase price alloca-
tion. As a result of this allocation, the Company recorded goodwill of
approximately $13 million and recognized approximately $5 million in
amortizable intangible assets.
During 2002, the Company completed a number of additional acqui-
sitions 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 contributed approximately $17 million in cash to this
venture during 2003. Kodak is also committed to contribute $100 million
in loan guarantees. However, the Company was not required to make
these loan guarantees as of December 31, 2003. SANYO, which holds a
66% interest in the business venture, contributed approximately $33 mil-
lion in cash during 2003 and is committed to contribute $194 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