Kodak 2004 Annual Report Download - page 15
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Please find page 15 of the 2004 Kodak annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Financials
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2 0 0 4 S U M M A R Y A N N U A L R E P O R T
2004COMPAREDWITH2003
(2003RESTATED)
ResultsofOperations—ContinuingOperations
Consolidated
WorldwideRevenuesNetworldwidesaleswere$13,517millionfor2004
ascomparedwith$12,909millionfor2003,representinganincreaseof
$608million,or5%asreported,oranincreaseof1%excludingthefavor-
ableimpactfromexchange.Theincreaseinnetsaleswasprimarilydueto
increasedvolumes,acquisitionsandfavorableexchange,whichincreased
salesfor2004by0.8,4.3and3.3percentagepoints,respectively.The
increaseinvolumeswasprimarilydrivenbyconsumerdigitalcameras,
printerdockproducts,andthepicturemakerkioskportionoftheconsumer
outputStrategicProductGroup(SPG)intheDigital&FilmImagingSystems
(D&FIS)segment,digitalproductsintheHealthsegment,partiallyoffset
bydecreasedvolumesfortraditionalconsumerfilmproducts.Favorable
exchangeresultedfromanincreasedlevelofsalesinnon-U.S.countriesas
theU.S.dollarweakenedthroughout2004inrelationtomostforeigncur-
rencies.Inaddition,theacquisitionofPracticeWorks,Inc.(PracticeWorks),
Versamark,Laser-PacificandtheNexPress-relatedentitiesaccountedfor
anadditional4.3percentagepointsoftheincreaseinnetsales.Thesein-
creaseswerepartiallyoffsetbydecreasesattributabletoprice/mix,which
reducedsalesfor2004byapproximately3.5percentagepoints.Thesede-
creasesweredrivenprimarilybyprice/mixdeclinesintraditionalproducts
andservices,andconsumerdigitalcamerasintheD&FISsegmentandfilm
captureandoutputproductsintheHealthsegment.
NetsalesintheU.S.were$5,658millionforthecurrentyearas
comparedwith$5,421millionfortheprioryear,representinganincreaseof
$237million,or4%.NetsalesoutsidetheU.S.were$7,859millionforthe
currentyearascomparedwith$7,488millionfortheprioryear,represent-
inganincreaseof$371million,or5%asreported,oradecreaseof1%
excludingthefavorableimpactofexchange.
DigitalStrategicProductGroups’RevenuesTheCompany’sdigital
productsales,excludingNewTechnologiesproductsales,were$5,303mil-
lionforthecurrentyearascomparedwith$3,736millionfortheprioryear,
representinganincreaseof$1,567million,or42%,primarilydrivenbythe
consumerdigitalcaptureSPG,thekiosks/mediaportionoftheconsumer
outputSPG,thehomeprintingSPGanddigitalacquisitions.
TraditionalStrategicProductGroups’RevenuesNetsalesofthe
Company’straditionalproductswere$8,191millionforthecurrentperiod
ascomparedwith$9,156millionfortheprioryearperiod,representinga
decreaseof$965million,or11%,primarilydrivenbydeclinesinthefilm
captureSPGandthewholesalephotofinishingportionoftheconsumer
outputSPG.
ForeignRevenuesTheCompany’soperationsoutsidetheU.S.are
reportedinthreeregions:(1)theEurope,AfricaandMiddleEastregion
(EAMER),(2)theAsiaPacificregion,and(3)theCanadaandLatinAmerica
region.NetsalesinEAMERfor2004were$4,041millionascomparedwith
$3,880millionfor2003,representinganincreaseof4%asreported,
oradecreaseof3%excludingthefavorableimpactofexchange.Netsales
intheAsiaPacificregionfor2004were$2,546millioncomparedwith
$2,368millionfor2003,representinganincreaseof8%asreported,or
anincreaseof3%excludingthefavorableimpactofexchange.Netsales
intheCanadaandLatinAmericaregionfor2004were$1,272millionas
comparedwith$1,240millionfor2003,representinganincreaseof3%as
reported,oranincreaseof1%excludingthefavorableimpactofexchange.
TheCompany’smajoremergingmarketsincludeChina,Brazil,
Mexico,India,Russia,Korea,HongKongandTaiwan.Netsalesinemerging
marketswere$2,878millionfor2004ascomparedwith$2,591million
for2003,representinganincreaseof$287million,or11%asreported,
oranincreaseof10%excludingthefavorableimpactofexchange.The
emergingmarketportfolioaccountedforapproximately21%and37%of
theCompany’sworldwideandforeignsales,respectively,in2004.
SalesgrowthinChina,India,RussiaandBrazilof28%,9%,7%and
6%,respectively,weretheprimarydriversoftheincreaseinemerging
marketsales,partiallyoffsetbydecreasedsalesinHongKongof9%.Sales
growthinChinaresultedfromstrongbusinessperformanceforKodak’s
Health,GraphicCommunications,andentertainmentimagingproductsand
servicesin2004ascomparedwith2003,whentheSevereAcuteRespira-
torySyndrome(SARS)situationnegativelyimpactedoperationsinthat
country,particularlyforconsumerandprofessionalproductsandservices.
GrossProfitGrossprofitwas$3,969millionfor2004ascompared
with$4,175millionfor2003,representingadecreaseof$206million,or
5%.Thegrossprofitmarginwas29.4%inthecurrentyearascompared
with32.3%intheprioryear.Thedecreaseof2.9percentagepointswas
attributabletodeclinesinprice/mix,whichreducedgrossprofitmarginsby
approximately4.2percentagepoints.Thisdecreasewasdrivenprimarily
byprice/mixdeclinesintraditionalconsumerfilmproducts,photofinishing,
consumerdigitalcameras,andentertainmentprintfilmsintheD&FISseg-
ment,analogmedicalfilmanddigitalcaptureequipmentintheHealthseg-
ment,andgraphicartsproductsintheGraphicCommunicationssegment.
Thedeclineinprice/mixwaspartiallyoffsetbyfavorableexchange,which
increasedgrossmarginsbyapproximately0.5percentagepoints,and
decreasesinmanufacturingcost,whichfavorablyimpactedgrossprofit
marginsbyapproximately0.4percentagepointsyear-over-yearprimarily
duetoreducedlaborexpense.TheacquisitionofPracticeWorks,Versamark
andtheNexPress-relatedentitiesfavorablyimpactedgrossprofitmarginby
0.4percentagepoints.
Selling,GeneralandAdministrativeExpensesSelling,general
andadministrativeexpenses(SG&A)were$2,507millionfor2004as
comparedwith$2,618millionfor2003,representingadecreaseof$111
million,or4%.SG&Adecreasedasapercentageofsalesfrom20%for
theprioryearto19%forthecurrentyear.ThenetdecreaseinSG&Ais
primarilyattributabletocostsavingsinthecurrentyearperiodrealized
frompositioneliminationsresultingfromfocusedcostreductionprograms,
adecreaseinadvertisingexpenseof$83millioncomparedwiththeprior
year,and$58millioninone-timechargesincurredin2003relatingtofour
legalsettlements,anassetimpairment,astrategicinvestmentwrite-down
andatechnologycontribution,offsetbythereversalofanenvironmental
reserve.Suchchargesamountedtoapproximately$6millioninthecurrent