Kodak 2005 Annual Report Download - page 92

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Debt Shelf Registration and Convertible Securities
In May 2003, the Company issued Series A fi xed rate medium-term notes under its then existing debt shelf registration totaling $250 million,
as follows:
(in millions)
Type Principal Annual Interest Rate Maturity
Series A fi xed rate $250 3.625% May 2008
Interest on the notes will be paid quarterly, and the Company may not redeem or repay these notes prior to their stated maturities. After this issuance,
the Company had $650 million of remaining unsold debt securities under its then existing debt shelf registration.
On September 5, 2003, the Company fi led a shelf registration statement on Form S-3 (the primary debt shelf registration) for the issuance of up to
$2.0 billion of new debt securities. The primary debt shelf registration became effective on September 19, 2003. Pursuant to Rule 429 under the
Securities Act of 1933, $650 million of remaining unsold debt securities under a prior shelf registration statement were included in the primary
debt shelf registration, thus giving the Company the ability to issue up to $2.65 billion in public debt. After issuance of $500 million in notes in
October 2003, the remaining availability under the primary debt shelf registration was at $2.15 billion. The Company fi led its 2004 Form 10-K on
April 6, 2005, which was late relative to the SEC required fi ling date (including extension) of March 31, 2005. The Company also completed the fi ling
of a Form 8-K/A related to the acquisition of KPG on July 1, 2005, which was late in relation to the SEC required fi ling date of June 17, 2005. As a
result of these late fi lings, the Company’s primary debt shelf registration statement on Form S-3 will not be available until the third quarter of 2006.
In the event the Company wanted to issue registered securities, the Company could use Form S-1 or a Rule 144A transaction to issue securities in the
capital markets.
On October 10, 2003, the Company completed the offering and sale of $500 million aggregate principal amount of Senior Notes due 2013 (the Notes),
which was made pursuant to the Company’s new debt shelf registration. The remaining unused balance under the Company’s new debt shelf is
$2.15 billion. Concurrent with the offering and sale of the Notes, on October 10, 2003, the Company completed the private placement of $575 million
aggregate principal amount of Convertible Senior Notes due 2033 (the Convertible Securities) to qualifi ed institutional buyers pursuant to Rule 144A
under the Securities Act of 1933. Interest on the Convertible Securities will accrue at the rate of 3.375% per annum and is payable semiannually.
The Convertible Securities are unsecured and rank equally with all of the Company’s other unsecured and unsubordinated indebtedness. As a
condition of the private placement, on January 6, 2004 the Company fi led a shelf registration statement under the Securities Act of 1933 relating to
the resale of the Convertible Securities and the common stock to be issued upon conversion of the Convertible Securities pursuant to a registration
rights agreement, and made this shelf registration statement effective on February 6, 2004.
The Convertible Securities contain a number of conversion features that include substantive contingencies. The Convertible Securities are convertible
by the holders at an initial conversion rate of 32.2373 shares of the Company’s common stock for each $1,000 principal amount of the Convertible
Securities, which is equal to an initial conversion price of $31.02 per share. The initial conversion rate of 32.2373 is subject to adjustment for:
(1) stock dividends, (2) subdivisions or combinations of the Company’s common stock, (3) issuance to all holders of the Company’s common stock
of certain rights or warrants to purchase shares of the Company’s common stock at less than the market price, (4) distributions to all holders of the
Company’s common stock of shares of the Company’s capital stock or the Company’s assets or evidences of indebtedness, (5) cash dividends in
excess of the Company’s current cash dividends, or (6) certain payments made by the Company in connection with tender offers and exchange offers.
The holders may convert their Convertible Securities, in whole or in part, into shares of the Company’s common stock under any of the following
circumstances: (1) during any calendar quarter, if the price of the Company’s common stock is greater than or equal to 120% of the applicable
conversion price for at least 20 trading days during a 30 consecutive trading day period ending on the last trading day of the previous calendar quarter;
(2) during any fi ve consecutive trading day period following any 10 consecutive trading day period in which the trading price of the Convertible
Securities for each day of such period is less than 105% of the conversion value, and the conversion value for each day of such period was less
than 95% of the principal amount of the Convertible Securities (the Parity Clause); (3) if the Company has called the Convertible Securities for
redemption; (4) upon the occurrence of specifi ed corporate transactions such as a consolidation, merger or binding share exchange pursuant to
which the Company’s common stock would be converted into cash, property or securities; and (5) if the Senior Unsecured credit rating assigned to
the Convertible Securities by either Moody’s or S&P is lower than Ba2 or BB, respectively, or if the Convertible Securities are no longer rated by at
least one of these services or their successors (the Credit Rating Clause). At the Company’s current credit rating, the Convertible Securities may be
converted by their holders.
The Company may redeem some or all of the Convertible Securities at any time on or after October 15, 2010 at a purchase price equal to 100% of the
principal amount of the Convertible Securities plus any accrued and unpaid interest. Upon a call for redemption by the Company, a conversion trigger
is met whereby the holder of each $1,000 Convertible Senior Note may convert such note to shares of the Company’s common stock.