Kodak 2007 Annual Report Download - page 89
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88
Kodak Polychrome Graphics
Through April 1, 2005, the Company held a 50% interest in Kodak Polychrome Graphics (KPG). This joint venture between the Company and Sun Chemi-
cal Corporation was accounted for using the equity method of accounting. Summarized unaudited income statement information for KPG for the three
months ended March 31, 2005 is as follows:
(in millions)
Net sales $ 439
Gross profit 149
Income from continuing operations 34
Net income 34
On April 1, 2005, the Company completed its acquisition of Kodak Polychrome Graphics (KPG) through the redemption of Sun Chemical Corporation’s 50
percent interest in the joint venture by providing $317 million in cash (excluding $8 million in transaction costs) at closing and by entering into two notes
payable arrangements that required principal and interest payments of $200 million in the third quarter of 2006 and $50 million annually from 2008 through
2013. The total payments due under these notes are $500 million. The aggregate fair value of these note payable arrangements of approximately $395
million was recorded in the Consolidated Statement of Financial Position as of the acquisition date and was presented as a non-cash investing activity in
the Consolidated Statement of Cash Flows. KPG now operates within the Company’s Graphic Communications Group segment.
The following represents the total purchase price of the acquisition:
(in millions)
Cash paid at closing $ 317
Transaction costs 8
Notes payable 395
Total purchase price $ 720
Upon closing of an acquisition, the Company estimates the fair values of assets and liabilities acquired in order to consolidate the acquired balance sheet.
The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition, and represents the final
allocation of the purchase price.
As of April 1, 2005 — (in millions):
Current assets $ 487
Intangible assets (including in-process R&D) 160
Other non-current assets (including PP&E) 179
Goodwill 237
Total assets acquired $ 1,063
Current liabilities $ 262
Non-current liabilities 81
Total liabilities assumed $ 343
Net assets acquired $ 720