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Financials
34
E A S T M A N฀ K OD A K ฀ C O M PA N Y
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 2004฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 2003
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Weighted-Average฀฀฀฀฀฀฀฀฀฀฀฀ Amount฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Weighted-Average฀฀฀฀฀฀฀฀฀฀฀ Amount
Country฀ Type฀ Maturity฀ Interest฀Rate฀ Outstanding฀ Interest฀Rate฀฀ Outstanding
U.S.฀ Medium-term฀฀฀฀฀฀฀฀฀฀ 2004฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ $฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 1.72%*฀฀฀฀฀฀฀฀฀฀฀฀ $฀ 200฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Medium-term฀฀฀฀฀฀฀฀฀฀ 2005฀ 2.84%*฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 100฀ 1.73%*฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 100฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Medium-term฀฀฀฀฀ 2005฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 7.25%฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 200฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 7.25%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 200฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Medium-term฀฀฀฀฀ 2006฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 6.38%฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 500฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 6.38%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 500฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Medium-term฀฀฀฀฀฀฀฀฀฀ 2008฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 3.63%฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 249฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 3.63%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 249฀฀฀฀฀฀฀฀฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Term฀note฀฀฀฀฀฀฀฀฀฀ 2008฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀—฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.50%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 34฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Term฀note฀฀฀฀฀฀฀฀฀฀ 2013฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 7.25%฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 500฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 7.25%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 500฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Term฀note฀฀฀฀฀฀฀฀฀฀ 2018฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.95%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 3฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.95%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 3฀฀฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Term฀note฀฀฀฀฀฀฀฀฀฀ 2021฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.20%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 10฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 9.20%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 10฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
U.S.฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Convertible฀฀฀฀฀฀฀฀ 2033฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 3.38%฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 575฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 3.38%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 575฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
China฀฀฀฀฀฀฀฀฀฀฀฀ Bank฀loans฀฀฀฀฀฀฀฀ 2004฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ —฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 5.50%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 225฀฀฀฀
China฀฀฀฀฀฀฀฀฀฀฀฀ Bank฀loans฀฀฀฀฀฀฀฀ 2005฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 5.45%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 88฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 5.45%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 106฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
Qualex฀฀฀฀฀฀฀฀฀฀ Notes฀฀฀฀฀ 2004-2010฀ 5.08%฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 20฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ 5.53%฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 49฀฀฀฀฀฀฀฀฀฀
Other฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ 7฀ ฀ ฀ 8฀ ฀฀฀฀฀฀฀
฀ ฀ ฀ ฀ $฀2,252฀ ฀ $฀2,759฀฀฀฀฀฀฀฀฀฀฀฀฀
Current฀portion฀of฀long-term฀debt฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ ฀ ฀ (400)฀ ฀ ฀ (457)
Long-term฀debt,฀net฀of฀current฀portion฀ ฀ ฀ $฀1,852฀ ฀ $฀2,302฀
*฀Represents฀debt฀with฀a฀variable฀interest฀rate.
The฀Company’s฀debt฀ratings฀from฀each฀of฀the฀two฀major฀rating฀agen-
cies฀did฀not฀change฀during฀the฀year฀ended฀December฀31,฀2004.฀Moody’s฀
and฀Standard฀&฀Poors฀(S&P)฀ratings฀for฀the฀Company’s฀long-term฀debt฀
(L/T)฀and฀short-term฀debt฀(S/T),฀including฀their฀outlooks,฀as฀of฀December฀
31,฀2004฀were฀as฀follows:฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀
฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ L/T฀฀฀฀฀฀฀฀฀ S/T฀฀฀฀฀฀ Outlook
Moody’s฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ Baa3฀฀฀฀฀฀฀฀ P-3฀฀฀฀฀฀฀ Negative
S&P฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀ BBB-฀฀฀฀฀฀฀ A-3฀฀฀฀฀฀฀ Negative
On฀January฀31,฀2005,฀Moody’s฀placed฀its฀Baa3฀long-term฀and฀P-3฀
short-term฀credit฀ratings฀on฀Kodak฀on฀review฀for฀possible฀downgrade,฀
prompted฀by฀the฀Company’s฀announcement฀of฀its฀intention฀to฀acquire฀
Creo฀Inc.฀Moody’s฀met฀with฀the฀Company฀in฀March฀2005฀and฀is฀still฀in฀the฀
process฀of฀completing฀their฀credit฀review,฀which฀may฀include฀a฀revision฀to฀
their฀ratings฀for฀the฀Company.฀฀
On฀October฀21,฀2004,฀S&P฀placed฀its฀BBB-฀long-term฀and฀A-3฀short-
term฀credit฀ratings฀on฀Kodak฀on฀CreditWatch฀with฀negative฀implications.฀฀
This฀reflects฀S&P’s฀heightened฀concern฀about฀the฀Company’s฀profit฀outlook฀
given฀the฀rapid฀decline฀of฀the฀Company’s฀traditional฀photography฀sales฀and฀
an฀uncertain฀near-term฀profit฀potential฀for฀the฀consumer฀digital฀and฀graphic฀
communications฀businesses฀and฀the฀impact฀of฀the฀Company’s฀unfunded฀
postretirement฀obligations.฀S&P฀met฀with฀the฀Company฀in฀March฀2005฀and฀
is฀still฀in฀the฀process฀of฀completing฀their฀credit฀review,฀which฀may฀include฀a฀
revision฀to฀their฀ratings฀for฀the฀Company.฀฀
The฀Company฀no฀longer฀retains฀Fitch฀Ratings฀to฀provide฀credit฀ratings฀
on฀the฀Company’s฀debt.฀Subsequently,฀on฀February฀1,฀2005,฀Fitch฀Ratings฀
downgraded฀the฀Company’s฀ratings฀to฀BB+฀for฀long-term฀debt฀and฀with-
drew฀their฀short-term฀debt฀rating.฀Their฀rating฀outlook฀remains฀negative.฀
฀The฀Company฀is฀in฀compliance฀with฀all฀covenants฀or฀other฀require-
ments฀set฀forth฀in฀its฀credit฀agreements฀and฀indentures.฀Further,฀the฀
Company฀does฀not฀have฀any฀rating฀downgrade฀triggers฀that฀would฀acceler-
ate฀the฀maturity฀dates฀of฀its฀debt,฀with฀the฀exception฀of฀the฀following:฀the฀
outstanding฀borrowings,฀if฀any,฀under฀the฀accounts฀receivable฀securitization฀
program฀if฀the฀Company’s฀credit฀ratings฀from฀Moody’s฀or฀S&P฀were฀to฀fall฀
below฀Ba2฀and฀BB,฀respectively,฀and฀such฀condition฀continued฀for฀a฀period฀
of฀30฀days.฀Additionally,฀the฀Company฀could฀be฀required฀to฀increase฀the฀
dollar฀amount฀of฀its฀letters฀of฀credit฀or฀other฀financial฀support฀up฀to฀an฀ad-
and฀any฀specified฀corporate฀transaction฀outside฀of฀the฀Company’s฀control฀
such฀as฀a฀hostile฀takeover.฀Based฀on฀an฀external฀valuation,฀these฀embedded฀
derivatives฀were฀not฀material฀to฀the฀Company’s฀financial฀position,฀results฀of฀
operations฀or฀cash฀flows.฀฀฀
In฀November฀2004,฀the฀Emerging฀Issues฀Task฀Force฀finalized฀the฀con-
sensus฀in฀Issue฀No.฀04-8,฀“The฀Effect฀of฀Contingently฀Convertible฀Debt฀on฀
Diluted฀Earnings฀per฀Share”฀(EITF฀04-8).฀EITF฀04-8฀requires฀that฀contingent฀
convertible฀instruments฀be฀included฀in฀diluted฀earnings฀per฀share฀regard-
less฀of฀whether฀a฀market฀price฀trigger฀or฀other฀contingent฀feature฀has฀been฀
met.฀฀EITF฀04-8฀is฀effective฀for฀reporting฀periods฀ending฀after฀December฀15,฀
2004฀and฀requires฀restatement฀of฀prior฀periods.฀See฀Note฀1,฀“Significant฀
Accounting฀Policies,”฀“Earnings฀Per฀Share”฀for฀further฀discussion.
Long-term฀debt฀and฀related฀maturities฀and฀interest฀rates฀were฀as฀
follows฀at฀December฀31,฀2004฀and฀2003฀(in฀millions):