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EASTMAN KODAK CO
FORM 10-K
(Annual Report)
Filed 03/16/15 for the Period Ending 12/31/14
Address 343 STATE ST
ROCHESTER, NY 14650-0910
Telephone 7167244000
CIK 0000031235
Symbol KODK
SIC Code 3861 - Photographic Equipment and Supplies
Industry Printing Services
Sector Services
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2015, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    EASTMAN KODAK CO FORM 10-K (Annual Report) Filed 03/16/15 for the Period Ending 12/31/14 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 343 STATE ST ROCHESTER, NY 14650-0910 7167244000 0000031235 KODK 3861 - Photographic Equipment and Supplies Printing Services Services 12/31 ...

  • Page 2
    ... Commission File Number 1-87 EASTMAN KODAK COMPANY (Exact name of registrant as specified in its charter) NEW JERSEY (State of incorporation) 343 STATE STREET, ROCHESTER, NEW YORK (Address of principal executive offices) Registrant's telephone number, including area code: _____ Securities registered...

  • Page 3
    Eastman Kodak Company Form 10-K December 31, 2014 Table of Contents Page Part I Item 1 . Item 1A. Item 1B . Item 2. Item 3. Item 4. Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Executive Officers of the Registrant Part II Item 5. Item 6 . Item ...

  • Page 4
    ...the functional printing market. Kodak also offers brand licensing and intellectual property opportunities, provides products and services for motion pictures and other commercial films, and sells ink to its existing installed consumer inkjet printer base. The Company was founded by George Eastman in...

  • Page 5
    ... and profitability. Kodak faces competition from other companies that offer commercial offset and digital printing equipment, production software, consumables and service. Competitiveness is generally focused on a broad range of technology, solutions and price. The motion picture business faces...

  • Page 6
    ... digitization into the flexographic print market. The FLEXCEL NX System uses Kodak's proprietary SQUAREspot laser imaging technology to produce high resolution imaging that reduces waste and ink usage. The FLEXCEL Direct Platform delivers process-less high productivity and the environmental benefits...

  • Page 7
    ... enterprise services and solutions, and workflow software. • Consumer and Film will be comprised of Consumer Inkjet, Entertainment Imaging and Commercial Films, and Brand Licensing. • Intellectual Property Solutions will include licensing and research and development activities not directly...

  • Page 8
    ...; and Columbus, Georgia. Outside the U.S., groups are located in Canada, England, Israel, Germany, Japan and China. These groups work in close cooperation with manufacturing units and marketing organizations to develop new products and applications to serve both existing and new markets. Kodak...

  • Page 9
    ...Kodak, Investor Center, Financial Information and then SEC Filings. ITEM 1A. RISK FACTORS Risks Related to Our Business The Company has significantly restructured its business and adopted a new business plan, including a new segment reporting structure. The restructured Company and new business plan...

  • Page 10
    ... of our target markets, which could have a material adverse effect on our business, operating results and financial position. We are in the process of commercializing technologies for micro 3D printing, one of our target markets. We may not be successful in developing and marketing products in some...

  • Page 11
    ... and manufacturing processes fail to prevent product reliability, yield and quality issues, our product launch plans may be delayed, our financial results may be adversely impacted, and our reputation may be harmed. In developing, commercializing and manufacturing Kodak's products and services, we...

  • Page 12
    .... If our products, services and pricing are not sufficiently competitive with current and future competitors, we could also lose market share, adversely affecting our revenue and gross margins. An inability to provide competitive financing arrangements to Kodak's customers or extension of credit to...

  • Page 13
    ... and develop and market new products to respond to changing customer preferences, our revenue, earnings and cash flow could be adversely affected. We are a technology company serving imaging for business markets, including packaging, micro 3D printing, graphic communications and enterprise services...

  • Page 14
    ... our ability to provide a particular product or service for a period of time. These events could seriously harm our revenue and financial condition, and increase our costs and expenses. If we cannot protect the intellectual property rights on which the Company's business depends, or if third parties...

  • Page 15
    ... sales to both enterprise accounts and customers. Successfully managing the interaction of direct and indirect channels to various potential customer segments for our products and services is a complex process. Moreover, since each distribution method has distinct risks and costs, Kodak's failure...

  • Page 16
    ...contaminated sites, could have a material adverse effect on our business, results of operations and financial condition. In addition, the Company, the New York State Department of Environmental Conservation and the New York State Urban Development Corporation have entered into a settlement agreement...

  • Page 17
    ...An inability to access capital may limit our ability to meet our operating needs and, as a result, may have a material adverse effect on our financial condition, results of operations and cash flows. Our current non-investment grade status may adversely impact our commercial operations, increase our...

  • Page 18
    ...the Company's Stock Ownership Plan ('SOP') and Savings and Investment Plan ("SIP"), and certain former and current executives of the Company. The suits have been consolidated into a single action brought under the Employee Retirement Income Security Act ("ERISA"), styled as In re Eastman Kodak ERISA...

  • Page 19
    ... sales, services, distribution, corporate finance, mergers & acquisitions, information technology, corporate strategy and planning. From 2002 to 2003, Clarke was Executive Vice President of Global Operations at Hewlett Packard ("HP"). In this role, he was responsible for HP's worldwide supply chain...

  • Page 20
    ...responsible for Kodak's financial strategy and all functions within Kodak's Finance organization. Real estate, Eastman Business Park, credit and collections, and internal audit also report to the CFO office under McMullen. McMullen has deep knowledge of the commercial imaging and printing industries...

  • Page 21
    ... effective January 2015. Overman previously served as vice president and global head of brand strategy and marketing creation for Nokia from June 2010 until April 2013. He founded Match & Candle, a consultancy supporting startups and marketing service agencies with brand strategy development...

  • Page 22
    ... stock on February 27, 2015. MARKET PRICE DATA The market price data below reflects the high and low sales price of the Company's stock since September 23, 2013 (the date the Successor Company's common stock commenced trading). 2014 Price per share: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter...

  • Page 23
    ....18 126.94 132.99 139.96 ISSUER PURCHASES OF EQUITY SECURITIES During the third quarter of 2014, the Company purchased 44,911 shares of common stock for approximately $1 million to satisfy tax withholding obligations in connection with the vesting of restricted stock units issued to employees. 22

  • Page 24
    ITEM 6. SELECTED FINANCIAL DATA EASTMAN KODAK COMPANY SUMMARY OF OPERATING DATA - UNAUDITED Successor September 1, 2013 through December 31, 2014 2013 2,102 $ 807 Predecessor January 1, 2013 through August 31, 2013 (6) $ 1,542 $ (in millions, except per share data, shareholders, and employees ) Net...

  • Page 25
    ... August 31, 2013 (6) 2014 Supplemental Information Net sales from continuing operations Graphics, Entertainment and Commercial Films Digital Printing and Enterprise All Other Research and development costs Depreciation Employees as of year end - in the U.S. - worldwide 2012 (6) 2011 (6) 2010...

  • Page 26
    ... resolution of claims against the Company; • our ability to attract and retain key executives, managers and employees; • our ability to maintain product reliability and quality and growth in relevant markets; • our ability to effectively anticipate technology trends and develop and market new...

  • Page 27
    ... in Kodak and other manufacturers' equipment, and film based products), equipment, software, services, integrated solutions, and intellectual property and brand licensing. The timing and the amount of revenue recognized depend upon a variety of factors, including the specific terms of each agreement...

  • Page 28
    ... Imaging and Commercial Films, and Intellectual Property and Brand Licensing. The Digital Printing and Enterprise Segment had four goodwill reporting units: Digital Printing, Packaging and Functional Printing, Enterprise Services and Solutions, and Consumer Inkjet Systems. As part of fresh start...

  • Page 29
    ... or reporting units. Kodak recorded indefinite-lived intangible assets related to the Kodak trade name and in-process research and development in conjunction with fresh start accounting. The carrying values of the indefinite-lived intangible assets are evaluated for potential impairment annually on...

  • Page 30
    ... modeling studies. The weighted average EROA used to determine the 2014 net pension expense for major U.S. and non-U.S. defined benefit pension plans was 7.63% and 4.88%, respectively. Generally, Kodak bases the discount rate assumption for its significant plans on high quality corporate bond...

  • Page 31
    ... the major defined benefit pension plan in the U.S. was $104 million for 2014 and is expected to be approximately $115 million in 2015. Pension income from continuing operations before special termination benefits, curtailments and settlements for the major non-U.S. defined benefit pension plans was...

  • Page 32
    ... OPERATING MODEL AND REPORTING STRUCTURE Kodak has two reportable segments: the Graphics, Entertainment and Commercial Films Segment and the Digital Printing and Enterprise Segment. The balance of Kodak's continuing operations, which do not meet the criteria of a reportable segment, are reported in...

  • Page 33
    ...vs. 2013 (Combined) Graphics, Entertainment and Commercial Films Digital Printing and Enterprise Total segment (loss) earnings All Other Restructuring costs and other Corporate components of pension and OPEB income (expense) (1) Other operating (expense) income, net Legal contingencies, settlements...

  • Page 34
    ..., net of income taxes NET (LOSS) EARNINGS Less: Net income attributable to noncontrolling interests NET (LOSS) EARNINGS ATTRIBUTABLE TO EASTMAN KODAK $ COMPANY Year Ended December 31, 2014 $ 2,102 1,646 456 310 94 59 9 % of Sales (Combined) 21% 17% 4% 3% 21% % Change Year Ended vs. 2013 December...

  • Page 35
    ... and Other Costs -1% 0pp n/a 2pp (in millions) Net Sales Gross profit margin $ 2014 (Successor) 2,102 22% Change vs. 2013 (Combined) -11% 1pp Volume -10% n/a Price/Mix 0% -1pp Foreign Exchange Year Ended December 31, Percent Change vs. 2012 Manufacturing and Other Costs -1% -1pp n/a 3pp (in...

  • Page 36
    ... price/mix in the Graphics, Entertainment and Commercial Films Segment (+4pp) primarily from intellectual property licensing and the Digital Printing and Enterprise Segment (+3pp). Also contributing to the increase was a reduction in pension and other postretirement benefit costs in the current...

  • Page 37
    ... the sale of intellectual property in the combined year to date period ended December 31, 2013, (9) a benefit as a result of Kodak reaching a settlement with a taxing authority in a location outside the U.S. related to withholding taxes in the twelve months ended December 31, 2014 and (10) a benefit...

  • Page 38
    ... taxes on the sale of intellectual property in the twelve months ended December 31, 2013 , (9) a decrease associated with foreign withholding taxes on undistributed earnings, and (10) a benefit as a result of Kodak reaching a settlement with taxing authorities outside the U.S. in the twelve months...

  • Page 39
    ... Imaging & Commercial Films driven by reduced demand for motion picture products (-9%) which was partially offset by increased revenues from third party manufacturing services performed under supply agreements with Kodak Alaris (+3%). Higher revenues within Intellectual Property and Brand...

  • Page 40
    ...and Brand Licensing (+6%) due to non-recurring intellectual property licensing agreements and within Entertainment Imaging and Commercial Films (+3%) due to pricing actions impacting the current year. The impact of the application of fresh start accounting was not material. Included in revenues were...

  • Page 41
    ...1pp Current Year The decrease in the Digital Printing and Enterprise Segment revenues of approximately 17% for the year ended December 31, 2014 was primarily attributable to volume declines within Consumer Inkjet Systems (-9%), driven by lower sales of ink to the existing installed base of printers...

  • Page 42
    ... inventory from the application of fresh start accounting (+4pp). This was offset by consumer ink sales constituting a lower percentage of the segment's gross profit dollars (-4pp). Prior Year The increase in the Digital Printing and Enterprise Segment gross profit percent for year ended December 31...

  • Page 43
    ... 31, 2014 as compared with the prior year primarily due to the $820 million of proceeds from the 2013 sales of the digital imaging patent portfolio and the Personalized Imaging and Document Imaging businesses partially offset by the release of restricted cash accounts funded in 2013. Financing...

  • Page 44
    ... Long-Term Debt," in the Notes to Financial Statements. Purchase obligations include agreements related to raw materials, supplies, production and administrative services, as well as marketing and advertising, that are enforceable and legally binding on Kodak and that specify all significant terms...

  • Page 45
    ...Senior DIP Credit Agreement in 2012. Partially offsetting the increased cash used in financing activities were the proceeds from the Rights Offering of $406 million and $35 million of contingent cash received related to the sale of the Personalized Imaging and Document Imaging businesses in 2013. 43

  • Page 46

  • Page 47
    ... the floor ($688 million face amount of debt times 1% at December 31, 2014). Kodak's financial instrument counterparties are high-quality investment or commercial banks with significant experience with such instruments. Kodak manages exposure to counterparty credit risk by requiring specific minimum...

  • Page 48
    ... of operations, of comprehensive (loss) income, of equity (deficit) and of cash flows for the year ended December 31, 2014 and for the four months ended December 31, 2013 present fairly, in all material respects, the financial position of Eastman Kodak Company and its subsidiaries (Successor...

  • Page 49
    ... of operations, of comprehensive (loss) income, of equity (deficit) and of cash flows for the eight months ended August 31, 2013 and for the year ended December 31, 2012 present fairly, in all material respects, the results of operations and cash flows of Eastman Kodak Company and its subsidiaries...

  • Page 50
    EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF OPERATIONS (in millions, except per share data) Successor Four Months Year Ended Ended December 31, December 31, 2014 2013 Revenues Sales Services Total net revenues Cost of revenues Sales Services Total cost of revenues Gross profit Selling, general ...

  • Page 51
    ... net Pension and other postretirement benefit plan obligation activity, net Other comprehensive (loss) income, net attributable to Eastman Kodak Company COMPREHENSIVE (LOSS) INCOME, NET ATTRIBUTABLE TO EASTMAN KODAK COMPANY The accompanying notes are an integral part of these consolidated financial...

  • Page 52
    EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF FINANCIAL POSITION (in millions) As of December 31, 2014 2013 ASSETS Current Assets Cash and cash equivalents Receivables, net Inventories, net Deferred income taxes Assets held for sale Other current assets Total current assets Property, plant and ...

  • Page 53
    EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF EQUITY (DEFICIT) (in millions, except share data) Eastman Kodak Company Shareholders Retained Accumulated Additional Earnings Other Paid in (Accumulated Comprehensive Treasury Capital Deficit) Income (Loss) Stock $ 1,108 $ 4,071 $ (1,379) (2,666) $ (5,...

  • Page 54
    ... liability adjustments Stock-based compensation Purchases of treasury stock, net (152,746 shares) (3) Equity as of December 31, 2013 (Successor) Equity transactions with noncontrolling interest Net (loss) income Other comprehensive income (net of tax): Currency translation adjustments Pension and...

  • Page 55
    ... debt Non-cash restructuring costs, asset impairments and other charges Stock based compensation Reorganization items: Non-cash reorganization gain Payment of claims Fresh start adjustments, net Other non-cash reorganization items, net Provision (benefit) for deferred income taxes Decrease (increase...

  • Page 56
    EASTMAN KODAK COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) SUPPLEMENTAL CASH FLOW INFORMATION (in millions) Successor Four Months Year Ended Ended December 31, December 31, 2014 2013 Predecessor Eight Months Ended Year Ended August 31, December 31, 2013 2012 Cash paid for interest and ...

  • Page 57
    ... "Non-Filing Entities") were not part of the Chapter 11 Cases, and continued to operate in the ordinary course of business. Upon emergence from bankruptcy on September 3, 2013, Kodak adopted fresh-start accounting which resulted in Kodak becoming a new entity for financial reporting purposes. Kodak...

  • Page 58
    ... derivative instruments. Kodak places its cash and cash equivalents with high-quality financial institutions and limits the amount of credit exposure to any one institution. With respect to receivables, such receivables arise from sales to numerous customers in a variety of industries, markets, and...

  • Page 59
    ... developments or other economic factors. In connection with fresh start accounting, Kodak adjusted the net book value of inventories to their estimated fair value as of September 1, 2013. Refer to Note 25, "Fresh Start Accounting." PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment...

  • Page 60
    ... and film based products); equipment; software; services; integrated solutions; and intellectual property and brand licensing. Kodak recognizes revenue when realized or realizable and earned, which is when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery...

  • Page 61
    ... remaining useful life. Kodak recorded indefinite-lived intangible assets related to the Kodak trade name and in-process research and development in conjunction with fresh start accounting. The carrying values of indefinite-lived intangible assets are evaluated for potential impairment annually on...

  • Page 62
    ... at the date of initial application. Kodak is currently evaluating the adoption alternatives and impact of this ASU. In April 2014, the FASB issued ASU No. 2014-08 ("ASU 2014-08"), "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)." ASU 2014-08 defines...

  • Page 63
    ... the accompanying Consolidated Statement of Financial Position. NOTE 3: INVENTORIES, NET As of December 31, 2014 $ 204 73 72 349 $ As of December 31, 2013 185 94 79 358 (in millions) Finished goods Work in process Raw materials Total $ $ NOTE 4: PROPERTY, PLANT AND EQUIPMENT, NET As of December...

  • Page 64
    ... three goodwill reporting units: Graphics, Entertainment Imaging and Commercial Films and Intellectual Property and Brand Licensing. The Digital Printing and Enterprise Segment had four goodwill reporting units: Digital Printing, Packaging and Functional Printing, Enterprise Services and Solutions...

  • Page 65
    ...year ended December 31, 2014, four months ended December 31, 2013, eight months ended August 31, 2013 and year ended December 31, 2012, respectively. Estimated future amortization expense related to intangible assets as of December 31, 2014 was as follows: (in millions) 2015 2016 2017 2018 2019 2020...

  • Page 66
    ... of Financial Position, and therefore, have been aggregated in accordance with Regulation S-X. NOTE 7: OTHER LONG-TERM LIABILITIES As of December 31, 2014 $ 123 19 53 129 324 $ As of December 31, 2013 125 82 52 162 421 (in millions) Worker's compensation Environmental liabilities Asset retirement...

  • Page 67
    ... at December 31, 2014 and 2013: (in million) WeightedAverage Effective Interest Rate As of December 31, 2014 As of December 31, 2013 Country Current portion: U.S. U.S. Non-current portion: U.S. U.S. Type Maturity Carrying Value Carrying Value Term note Credit line 2015 2015 7.54% $ 2.42...

  • Page 68
    ...subject to, in the case of net proceeds received from asset sales or recovery events, reinvestment rights by the Company in assets used or usable by the business within certain time limits. On an annual basis, starting with the fiscal year ending on December 31, 2014, the Company will prepay on June...

  • Page 69
    ...in millions) 2014 Eastman Business Park site, Rochester, NY Other current operating sites Sites associated with former operations Sites associated with the non-imaging health businesses sold in 1994 Total $ 7 10 11 28 $ As of December 31, 2013 49 8 13 12 82 $ $ These amounts are reported in Other...

  • Page 70
    ...arising from the Company's historical subsurface environmental liabilities in existence prior to the effective date of the Amended EBP Settlement Agreement, (ii) the Company funded the EBP Trust on the effective date with a $49 million cash payment and transferred certain equipment and fixtures used...

  • Page 71
    ... claims, environmental liabilities, legal contingencies, rental payments, and to support various customs, hedging, tax and trade activities. The restricted cash and deposits are recorded in Restricted cash, Other current assets and Other long-term assets in the Consolidated Statement of Financial...

  • Page 72
    ... issued during the year ended December 31, 2014 was not material to Kodak's financial position, results of operations or cash flows. Warranty Costs Kodak has warranty obligations in connection with the sale of its products and equipment. The original warranty period is generally one year or less...

  • Page 73
    ... warranties as of December 31, 2012 (Predecessor) New extended warranty and maintenance arrangements Recognition of extended warranty and maintenance arrangement revenue Deferred revenue on extended warranties as of August 31, 2013 (Predecessor) Impact of fresh start accounting New extended warranty...

  • Page 74
    ... Statement of Financial Position for Kodak's financial instruments: Value Of Items Recorded At Fair Value As of December 31, 2014 Level 1 Level 2 (in millions) Total ASSETS Derivatives Short-term foreign exchange contracts Marketable securities Long-term available-for-sale securities LIABILITIES...

  • Page 75
    ...-term debt Short-term borrowings and current portion of longterm debt Carrying value Fair value Long-term debt, net of current portion Carrying value Fair value $ 4 4 674 687 $ $ 4 4 674 687 $ Level 1 Level 2 Level 3 Long-term debt Kodak does not utilize financial instruments for trading or other...

  • Page 76
    ... 2012 $ (7) $ (14) Kodak, as a result of its global operating and financing activities, is exposed to changes in foreign currency exchange rates, commodity prices, and interest rates, which may adversely affect its results of operations and financial position. Kodak manages such exposures, in part...

  • Page 77
    ... Location of Gain or (Loss) Recognized in Income on Derivatives Gain (Loss) Recognized in Income on Derivative Successor Predecessor For the Year For the Four For the Eight For the Year Ended Months Ended Months Ended Ended December 31, December 31, December 31, August 31, 2014 2012 2013 2013...

  • Page 78
    ... Eight Months Ended Year Ended August 31, December 31, 2013 2012 (in millions) Expense (income) : Gain on sale of digital imaging patent portfolio (1) Goodwill and intangible impairments (2) (3) (4) Supply arrangement termination payment (6) Gains related to the sales of assets and businesses...

  • Page 79
    ... Months Year Ended Ended Ended Year Ended December 31, December 31, August 31, December 31, 2014 2013 2013 2012 (in millions) (Loss) earnings from continuing operations before income taxes: U.S. Outside the U.S. Total U.S. income taxes: Current (benefit) provision Deferred provision (benefit) Income...

  • Page 80
    ... tax provision. During 2013, the KPP Global Settlement provided for the acquisition by the KPP of certain assets, and the assumption by the KPP of certain liabilities of Kodak's Personalized Imaging and Document Imaging businesses (the "Business"). The underfunded position of the U.K. Pension Plan...

  • Page 81
    ... 2011, Kodak filed a Request for Competent Authority Assistance with the United States Internal Revenue Service ("IRS"). The request related to a potential double taxation issue with respect to certain patent licensing royalty payments received by Kodak in 2012 and 2011. In the twelve months ended...

  • Page 82
    ...) are reported in the following components within the Consolidated Statement of Financial Position: (in millions) Deferred income taxes (current) Deferred income taxes (non-current) Other current liabilities Other long-term liabilities Net deferred tax assets $ As of December 31, 2014 2013 31 38...

  • Page 83
    ...). The settlement resulted in a reduction in Other current liabilities and the recognition of a $10 million tax benefit. During 2013, Kodak paid $2 million associated with the resolution of $17 million of various state and local tax claims that were agreed upon through the bankruptcy process. In...

  • Page 84
    ... and settlement losses related to these actions of $1 million. Includes $(100) million of severance related charges for pension plan curtailments, settlements, and special termination benefits, which were reclassified to Pension and other postretirement liabilities and Other long-term assets and...

  • Page 85
    ... Kodak's cost structure as part of its commitment to drive sustainable profitability and included a workforce reduction in France, manufacturing capacity reductions in the U.S., a research and development site consolidation in the U.S., and various targeted reductions in service, sales, research...

  • Page 86
    ...a special election period. In July of 2014 the Company announced an amendment to KRIP, effective January 1, 2015, in which all participants will accrue benefits under a single, revised cash balance formula (the "Cash Balance Plan"). The Cash Balance Plan credits employees' hypothetical accounts with...

  • Page 87
    ... of period Transfers Gain on plan assets Employer contributions Participant contributions Settlements Benefit payments Currency adjustments Fair value of plan assets at end of period Under Funded Status at end of period Accumulated benefit obligation at end of period Year Ended December 31, 2014...

  • Page 88
    ... other comprehensive (loss) income for all major funded and unfunded U.S. and Non-U.S. defined benefit plans consist of: As of December 31, (in millions) U.S. Prior service credit Net actuarial (loss) gain Total $ $ 58 (159) (101) $ $ 2014 Non-U.S. 4 (11) (7) $ $ U.S. 86 86 $ $ 2013 Non-U.S. 6 7 13...

  • Page 89
    ... to settlements Transfers Total Income (loss) recognized in Other comprehensive income before fresh start accounting Effect of application of fresh start accounting $ (187) $ (21) $ 86 $ 13 $ $ 222 1,955 $ $ 1,693 436 The Company expects to recognize $7 million of prior service credits...

  • Page 90
    ... 31, 2014 U.S. Non-U.S. 18 176 (295) (3) $ 4 30 (38) - Major defined benefit plans: Service cost $ Interest cost Expected return on plan assets Amortization of: Prior service credit Actuarial loss Pension (income) expense before special termination benefits, curtailments and settlements Special...

  • Page 91
    ... pension (income) expense for all the major funded and unfunded U.S. and Non-U.S. defined benefit plans were as follows: Successor Year Ended Four Months Ended December 31, 2014 December 31, 2013 U.S. Non-U.S. U.S. Non-U.S. Discount rate Salary increase rate Expected long-term rate of return on plan...

  • Page 92
    ...defined benefit pension plans by asset category, are as follows: As of December 31, 2014 Asset Category Equity securities Debt securities Real estate Cash and cash equivalents Global balanced asset allocation funds Other Total 6% 27% 1% 4% 11% 51% 100% 2013 18% 27% 1% 3% 6% 45% 100% 2014 Target 2-12...

  • Page 93
    ... Plans December 31, 2014 U.S. Quoted Prices in Active Markets for Identical Assets (Level 1) $ (in millions) Cash and cash equivalents Equity Securities Debt Securities: Government Bonds Investment Grade Bonds Real Estate Global Balanced Asset Allocation Funds Other: Absolute Return Private Equity...

  • Page 94
    ... 2,368 $ $ For Kodak's major U.S. defined benefit pension plans, equity investments are invested broadly in U.S. equity, developed international equity, and emerging markets. Fixed income investments are comprised primarily of long duration U.S. Treasuries and global government bonds, U.S. below...

  • Page 95
    Major Non-U.S. Plans December 31, 2014 Non - U.S. Quoted Prices in Active Markets for Identical Assets (Level 1) $ (in millions) Cash and cash equivalents Equity Securities Debt Securities: Government Bonds Inflation-Linked Bonds Investment Grade Bonds Global High Yield & Emerging Market Debt Real ...

  • Page 96
    Major Non-U.S. Plans December 31, 2013 Non - U.S. Quoted Prices in Active Markets for Identical Assets (Level 1) $ (in millions) Cash and cash equivalents Equity Securities Debt Securities: Government Bonds Inflation-Linked Bonds Investment Grade Bonds Global High Yield & Emerging Market Debt Real ...

  • Page 97
    ...and ending balances of level 3 assets of Kodak's major U.S. defined benefit pension plans: (in millions) Successor U.S. Balance at January 1, 2014 Equity Securities Government Bonds Inflation-Linked Bonds Global High Yield & Emerging Market Debt Absolute Return Real Estate Private Equity Total $ 183...

  • Page 98
    ... of level 3 assets of Kodak's major Non-U.S. defined benefit pension plans (in millions): Successor Non-U.S. Balance at January 1, 2014 Equity Securities Government Bonds Real Estate Private Equity Total $ 15 32 5 54 106 Net Realized and Unrealized Gains/(Losses) $ 2 4 9 15 Net Purchases and Sales...

  • Page 99
    ... Gains/(Losses) $ 2 4 21 (5) (26) (4) Net Purchases and Sales $ 19 (272) (32) (241) (526) $ Net Transfer Into/(Out of) Level 3 $ Balance at August 31, 2013 15 30 7 55 107 $ $ $ $ $ Kodak expects to contribute $15 million in 2015 for the major Non-U.S. defined benefit pension plans and...

  • Page 100
    ... net benefit obligation for Kodak's other postretirement benefit plans is December 31. Changes in Kodak's benefit obligation and funded status for the U.S., Canada and U.K. other postretirement benefit plans were as follows: Successor Four Months Year Ended Ended December 31, December 31, 2014 2013...

  • Page 101
    ... income (loss) before fresh start accounting Effect of application of fresh start accounting $ $ $ $ Other postretirement benefit cost for the Company's U.S., Canada and U.K. plans included: Successor Four Months Year Ended Ended December 31, December 31, 2014 2013 Predecessor Eight Months...

  • Page 102
    ... 1% decrease (5) 6.47% 4.65% 2021 2013 6.51% 5.00% 2020 Kodak expects to make $8 million of benefit payments for its U.S., Canada and U.K. unfunded other postretirement benefit plans in 2015. The following other postretirement benefits, which reflect expected future service, are expected to be paid...

  • Page 103
    ... 31, 2012, respectively. As a result of the net loss from continuing operations for the year ended December 31, 2014 and four months ended December 31, 2013, Kodak calculated diluted earnings per share using weighted-average basic shares outstanding for those periods. If Kodak had reported earnings...

  • Page 104
    ... the 2013 Plan may be cash-based or stock-based. Officers, directors and employees of the Company and its consolidated subsidiaries are eligible to receive awards. Stock options are generally non-qualified, are at exercise prices not less than 100% of the per share fair market value on the date of...

  • Page 105
    ..."), all shares, options, restricted shares and other share-based awards that were outstanding on the Effective Date were canceled. Kodak recognized stock-based compensation expense in the amount of $3 million and $7 million for the eight months ended August 31, 2013, and year ended December 31, 2012...

  • Page 106
    ... claims and the retiree settlement unsecured claim, net-share settled warrants to purchase: (i) 2.1 million shares of common stock at an exercise price of $14.93 and (ii) 2.1 million shares of common stock at an exercise price of $16.12. The warrants are classified as equity instruments and reported...

  • Page 107
    ... of prior service credit due to curtailments Recognition of losses due to settlements and curtailments Total reclassification adjustments Tax provision Reclassification adjustments, net of tax Pension and other postretirement benefit plan changes, net of tax Other comprehensive (loss) income...

  • Page 108
    ... direct platforms, Enterprise Services & Solutions, and Consumer Inkjet Systems. On September 28, 2012, Kodak announced a plan, starting in 2013, to focus its Consumer Inkjet business solely on the sale of ink to its installed printer base. All Other: All Other is composed of Kodak's consumer film...

  • Page 109
    ...before income taxes: Graphics, Entertainment and Commercial Films Digital Printing and Enterprise Total segment (loss) earnings All Other Restructuring costs and other Corporate components of pension and OPEB income (expense) (1) Other operating (expense) income, net Legal contingencies, settlements...

  • Page 110
    ... 31, 2014 2013 Predecessor December 31, 2012 Segment total assets: Graphics, Entertainment and Commercial Films Digital Printing and Enterprise Total of reportable segments All Other Cash and cash equivalents Deferred income tax assets Assets held for sale Consolidated total assets $ $ 1,049...

  • Page 111
    ... plant and equipment in 2014, $95 million are located in Brazil and $59 million are located in China. Of the total non U.S. property, plant and equipment in 2013, $113 million are located in Brazil. No other non U.S. country had greater than 10% of property, plant and equipment in 2014, 2013 or 2012...

  • Page 112
    ...or secured claims; and The Debtors resolved claims held by the Kodak Pension Plan of the United Kingdom (the "U.K. Pension Plan") pursuant to the terms of the Global Settlement (as defined below). • • • • • • • Backstop Commitment Agreement and Rights Offering On June 26, 2013, the...

  • Page 113
    ... claim against all Debtors, as financial support direction and contribution notice claims. On April 26, 2013, Eastman Kodak Company, the Trustee, Kodak Limited and certain other Kodak entities entered into a global settlement agreement (the "Global Settlement") that resolved all liabilities of Kodak...

  • Page 114
    ... of the Plan. RETIREES' SETTLEMENT The Debtors' estimated allowed claims for pre-petition obligations for the Kodak Excess Retirement Income Plan (the "KERIP"), the Kodak Unfunded Retirement Income Plan (the "KURIP"), the Kodak Company Global Pension Plan for International Employees, and individual...

  • Page 115
    ... billion. As part of determining the reorganization value, Kodak estimated the enterprise value of the Successor Company to be $1 billion utilizing the guideline public company method and discounted cash flow method. To estimate fair value utilizing the guideline public company method, Kodak applied...

  • Page 116
    ... based on market rents while the fair value of short term debt approximated its carrying value. The fair value of pension and other post retirement obligations was determined based on a discounted cash flow method of expected cash contributions/benefit payments for the period of September 1, 2013 to...

  • Page 117
    ... Receivables, net Inventories, net Assets held for sale Other current assets Total current assets Property, plant & equipment, net Goodwill Intangible assets, net Deferred income taxes Other long-term assets Reorganization Adjustments Fresh Start Adjustments Successor Company $ 1,070 24 492 435...

  • Page 118
    ... Note 14, "Income Taxes" for additional information. the write-off of unamortized debt issuance costs of $1 million related to the Junior DIP Credit Agreement upon repayment in full of all outstanding term loans on the Effective Date. This amount has been included in Reorganization items, net in the...

  • Page 119
    ...Predecessor Company (LSTC) Cash payments at emergence from LSTC Claims expected to be satisfied in cash Liabilities reinstated at emergence: Pension and other postretirement liabilities Environmental obligations Other current liabilities Total liabilities reinstated at emergence Fair value of equity...

  • Page 120
    ...assets and tax liabilities associated with adjustments for fresh start accounting. (23)Represents (24)An adjustment of $220 million was recorded to increase the net book value of property, plant and equipment to estimated fair value. Fair value was determined as follows: • • The market, sales...

  • Page 121
    ... building improvements Machinery and equipment Construction in progress Total For property, plant and equipment owned at September 1, 2013, the depreciable lives were revised to reflect the remaining estimated useful lives. Refer to Note 1, "Basis of Presentation and Significant Accounting Policies...

  • Page 122
    ... revenues and profit margins attributable to the current customer base for the period ranging from September 1, 2013 to December 31, 2024; Attrition rates ranging from 2.5% to 20%; Discount rates ranging from 29% to 38%, based on the after-tax weighted-average cost of capital; and Economic lives...

  • Page 123
    ...to Note 16, "Retirement plans "and Note 17, "Other postretirement benefits" for additional information. Represents the revaluation of deferred revenues to the fair value of Kodak's related future performance obligations. Represents the write-off of unamortized debt discounts related to the Emergence...

  • Page 124
    ... of the Plan are reported as Reorganization items, net. The cash payments for reorganization items for the eight months ended August 31, 2013 includes $84 million of claims related to liabilities subject to compromise paid on the Effective Date. Refer to Note 25, "Fresh Start Accounting" for...

  • Page 125
    ... was also received by Kodak on the Effective Date. The pre-tax loss includes the recognition of approximately $1.5 billion of unamortized pension losses previously reported in Accumulated other comprehensive income. On March 17, 2014, the KPP Purchasing Parties agreed to pay Kodak $20 million of...

  • Page 126
    ... earnings (loss) from discontinued operations, net of income taxes are as follows: Successor Four Months Year Ended Ended December 31, December 31, 2014 2013 (in millions) Revenues from Personalized and Document Imaging Revenues from Digital Capture and Devices operations Revenues from Kodak Gallery...

  • Page 127
    ..., except per share data) 4th Qtr. 2013 Net sales from continuing operations $ 609 Gross profit from continuing operations 98 (Loss) earnings from continuing operations (51) (Loss) earnings from discontinued operations (4) (6) Net (loss) earnings attributable to Eastman Kodak Company (63) Basic...

  • Page 128
    ... pre-tax licensing revenue of $51 million which increased net earnings from continuing operations by $51 million. Includes income of $2,217 million from Reorganization items, net Includes proceeds of $535 million from the sale and licensing of certain intellectual property assets which increased...

  • Page 129
    ... Framework" (2013). Based on management's assessment using the COSO criteria, management has concluded that Kodak's internal control over financial reporting was effective as of December 31, 2014. The effectiveness of Kodak's internal control over financial reporting as of December 31, 2014 has been...

  • Page 130
    ... Reporting Compliance" in the Proxy Statement. We have adopted a Business Conduct Guide that applies to all of our officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions, as well as a Directors' Code...

  • Page 131
    ... Services" in the Proxy Statement. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Page (a) 1. Consolidated financial statements: Report of independent registered public accounting firm Consolidated statement of operations Consolidated statement of comprehensive (loss) income Consolidated...

  • Page 132
    ... New Jason New /s/ William G. Parrett William G. Parrett /s/ Derek Smith Derek Smith March 16, 2015 Title Chief Executive Officer and Director (Principal Executive Officer) Chief Financial Officer (Principal Financial Officer) Chief Accounting Officer and Corporate Controller (Principal Accounting...

  • Page 133
    ...allowance Eight Months ended August 31, 2013 (Predecessor) Deducted in the Statement of Financial Position: From Current Receivables: Reserve for doubtful accounts Reserve for loss on returns and allowances Total From Deferred Tax Assets: Valuation allowance Year ended December 31, 2012 (Predecessor...

  • Page 134
    ... to Exhibit 2.2 of the Company's Current Report on Form 8-K as filed on August 29, 2013). Amended and Restated Stock and Asset Purchase Agreement between Eastman Kodak Company, Qualex, Inc., Kodak (Near East), Inc., KPP Trustees Limited, as Trustee for the Kodak Pension Plan of the United Kingdom...

  • Page 135
    ... quarterly period ended September 30, 2013 as filed on November 12, 2013). Amended and Restated Settlement Agreement (Eastman Business Park) between Eastman Kodak Company, the New York State Department of Environmental Conservation, and the New York State Urban Development Corporation d/b/a Empire...

  • Page 136
    ... year ended December 31, 2013 as filed on March 19, 2014). Settlement Agreement between Eastman Kodak Company, Kodak Limited, Kodak International Finance Limited, Kodak Polychrome Graphics Finance UK Limited, and the KPP Trustees Limited, as trustee for the Kodak Pension Plan of the United Kingdom...

  • Page 137
    ... Extension Scheme Linkbase. XBRL Taxonomy Extension Definition Linkbase. * Management contract or compensatory plan or arrangement. # Eastman Kodak Company was granted confidential treatment for certain information contained in this exhibit. Such information was filed separately with the Securities...

  • Page 138

  • Page 139
    ...Year Ended December 31, 2014 Four Months Ended December 31, 2013 Eight Months Ended August 31, 2013 Years Ended December 31, 2012 2011 2010 Loss from continuing operations before provision for income taxes $ Adjustments: Undistributed (earnings) loss of equity method investees Interest expense...

  • Page 140

  • Page 141
    ...Camera Co., Ltd. Kodak (China) Company Limited Kodak (China) Graphic Communications Company Ltd. Kodak (Xiamen) Digital Imaging Products Company Kodak (Wuxi) Company Limited Kodak (Xiamen) Company Limited Kodak Polychrome Graphics Company Ltd. Organized Under Laws of: New Jersey Canada Canada Canada...

  • Page 142
    ... RPB Marketing Company Yamanashi RPB Supply Co. KPG Finance (Barbados) SRL Kodak Graphics Communications Asia Pacific Pte. Ltd. Kodak Polychrome Graphics China Ltd. Kodak Polychrome Graphics Cono Sur SA Kodak Polychrome Graphics Export SAFI Kodak Polychrome Graphics (Hong Kong) Ltd. Kodak Polychrome...

  • Page 143

  • Page 144
    ... and No. 333-43524) of Eastman Kodak Company of our report dated March 19, 2014 relating to the financial statements and financial statement schedule of Eastman Kodak Company (Predecessor), which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP Rochester, New York March 16...

  • Page 145
    ...our report dated March 16, 2015 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting of Eastman Kodak Company (Successor), which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP Rochester, New...

  • Page 146

  • Page 147
    ... process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/Jeffrey J. Clarke Jeffrey J. Clarke Chief Executive Officer Date...

  • Page 148

  • Page 149
    ..., process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. /s/John N. McMullen John N. McMullen Chief Financial Officer Date...

  • Page 150

  • Page 151
    ... SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of Eastman Kodak Company (the "Company") on Form 10-K for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey J. Clarke, Chief Executive Officer of the...

  • Page 152

  • Page 153
    ...In connection with the Annual Report of Eastman Kodak Company (the "Company") on Form 10-K for the period ended December 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John N. McMullen, Chief Financial Officer of the Company, certify, pursuant to...

  • Page 154

  • Page 155
    ... ended September 30, 2014. Kodak has neither independently verified nor has it participated in the preparation of the disclosure reproduced below: "As part of our global business in the travel industry, we provide certain passenger travel-related GDS and Technology Services to Iran Air. We also...

  • Page 156