Kodak 2006 Annual Report Download - page 49


All Other
Worldwide Revenues
Net worldwide sales for All Other were $83 million for 2005 as compared with $70 million for 2004, representing an increase of $13 million, or 19%.
Net sales in the U.S. were $47 million for 2005 as compared with $41 million for 2004, representing an increase of $6 million, or 15%. Net sales
outside the U.S. were $36 million in 2005 as compared with $29 million in the prior year, representing an increase of $7 million, or 24%.
Loss From Continuing Operations Before Interest, Other Income (Charges), Net and Income Taxes
The loss from continuing operations before interest, other income (charges), net and income taxes for All Other was $231 million in 2005 as compared
with a loss of $257 million in 2004, representing an improvement in earnings of $26 million or 10%.
Earnings from Discontinued Operations, Net of Income Taxes
Earnings from discontinued operations for 2005 were $150 million, or $.52 per basic and diluted share and were primarily related to a $203 million
reversal of certain tax accruals as a result of a settlement between the Company and the Internal Revenue Service on the audit of the tax years 1993
through 1998. These accruals had been established in 1994 in connection with the Company’s sale of its pharmaceutical, consumer health and house-
hold products businesses during that year. The tax accrual reversals were partially offset by a pension settlement charge of $54 million resulting from
the finalization of the transfer of pension assets to ITT Industries, Inc. (ITT) in connection with the sale of the Company’s Remote Sensing Systems
business (RSS) in August 2004. Earnings from discontinued operations for 2004 were $475 million or $1.66 per basic and diluted share and were
primarily related to the gain on the sale of RSS to ITT in August 2004.
Loss from Cumulative Effect of Accounting Change, Net of Income Taxes
The loss from cumulative effect of an accounting change, net of income taxes, of $57 million or $.20 per basic and diluted share is the result of the
Company’s adoption of Financial Accounting Standards Board Interpretation No. (FIN) 47, “Accounting for Conditional Asset Retirement Obligations,”
as of December 31, 2005. Under FIN 47, the Company is required to record an obligation and an asset for the present value of the estimated cost of
fulfilling its legal obligation with respect to the retirement of an asset when the timing or method of settling that obligation is conditional upon a future
event (for example, the sale of, exiting from or disposal of an asset - the “settlement date”). The primary application of FIN 47 to the Company is with
respect to asbestos remediation. The $57 million charge represents the present value of the Company’s asset retirement obligations (net of the related
unamortized asset) relating to facilities with estimated settlement dates. Refer to further discussion in the “New Accounting Pronouncements” section
of Item 7 for further information.
Net (Loss) Earnings
The net loss for 2005 was $1,261 million, or a loss of $4.38 per basic and diluted share, as compared with net earnings for 2004 of $544 million, or
$1.90 per basic and diluted share, representing a decrease of $1,805 million, or 332%. This decrease is attributable to the reasons outlined above.
Summary
(in millions, except per share data) 2006 Change 2005 Change 2004
Net sales from continuing operations $ 13,274 -7% $ 14,268 + 6% $ 13,517
Loss from continuing operations before interest,
other income (charges), net, and income taxes (202) +68 (632) -496 (106)
(Loss) earnings from continuing operations (600) +56 (1,354) -2,062 69
(Loss) earnings from discontinued operations (1) -101 150 -68 475
Cumulative effect of accounting change — (57) —
Net (loss) earnings $ (601) +52% $ (1,261) -332% $ 544
Basic and diluted net (loss) earnings per share:
Continuing operations $ (2.09) +55% $ (4.70) -2,058% $ .24
Discontinued operations — -100 .52 -69 1.66
Cumulative effect of accounting change — (.20) —
Total $ (2.09) +52% $ (4.38) -331% $ 1.90
The Company’s results as noted above include certain one-time items, such as charges associated with focused cost reductions and other special
charges. These items, which are described below, should be considered to better understand the Company’s results of operations that were generated
from normal operational activities.