Kodak 2004 Annual Report Download - page 47

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Financials
45
2 0 0 4 ฀ S U M M A R Y ฀ A N N U A L ฀ R E P O R T
n฀Financial฀Statements฀and฀Supplementary฀Data
REPORT฀OF฀INDEPENDENT฀REGISTERED฀PUBLIC฀ACCOUNTING฀FIRM฀฀฀฀฀฀฀฀฀฀฀฀
To฀the฀Board฀of฀Directors฀and฀Shareholders฀of฀Eastman฀Kodak฀Company:฀
We฀have฀completed฀an฀integrated฀audit฀of฀Eastman฀Kodak฀Company’s฀2004฀consolidated฀financial฀statements฀and฀of฀its฀internal฀control฀over฀financial฀
reporting฀as฀of฀December฀31,฀2004฀and฀audits฀of฀its฀2003฀and฀2002฀consolidated฀financial฀statements฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀
Company฀Accounting฀Oversight฀Board฀(United฀States).฀Our฀opinions,฀based฀on฀our฀audits฀are฀presented฀below.฀
Consolidated฀financial฀statements฀
In฀our฀opinion,฀the฀consolidated฀financial฀statements฀appearing฀on฀pages฀47฀through฀97฀of฀this฀Annual฀Report฀present฀fairly,฀in฀all฀material฀respects,฀the฀
financial฀position฀of฀Eastman฀Kodak฀Company฀and฀its฀subsidiaries฀at฀December฀31,฀2004฀and฀2003,฀and฀the฀results฀of฀their฀operations฀and฀their฀cash฀
flows฀for฀each฀of฀the฀three฀years฀in฀the฀period฀ended฀December฀31,฀2004฀in฀conformity฀with฀accounting฀principles฀generally฀accepted฀in฀the฀United฀States฀
of฀America.฀These฀financial฀statements฀are฀the฀responsibility฀of฀the฀Company’s฀management.฀Our฀responsibility฀is฀to฀express฀an฀opinion฀on฀these฀financial฀
statements฀based฀on฀our฀audits.฀We฀conducted฀our฀audits฀of฀these฀statements฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀
Oversight฀Board฀(United฀States).฀Those฀standards฀require฀that฀we฀plan฀and฀perform฀the฀audit฀to฀obtain฀reasonable฀assurance฀about฀whether฀the฀financial฀
statements฀are฀free฀of฀material฀misstatement.฀An฀audit฀of฀financial฀statements฀includes฀examining,฀on฀a฀test฀basis,฀evidence฀supporting฀the฀amounts฀and฀
disclosures฀in฀the฀financial฀statements,฀assessing฀the฀accounting฀principles฀used฀and฀significant฀estimates฀made฀by฀management,฀and฀evaluating฀the฀
overall฀financial฀statement฀presentation.฀We฀believe฀that฀our฀audits฀provide฀a฀reasonable฀basis฀for฀our฀opinion.฀
As฀described฀in฀Note฀1฀to฀the฀consolidated฀financial฀statements,฀the฀Company฀has฀restated฀its฀2003฀consolidated฀financial฀statements฀primarily฀for฀certain฀
income฀tax฀and฀pension฀and฀other฀post฀retirement฀benefit฀plans฀matters.฀฀
Internal฀control฀over฀financial฀reporting฀
Also,฀we฀have฀audited฀management’s฀assessment,฀included฀in฀Management’s฀Report฀on฀Internal฀Control฀Over฀Financial฀Reporting฀appearing฀on฀page฀43฀
of฀this฀annual฀report,฀that฀Eastman฀Kodak฀Company฀did฀not฀maintain฀effective฀internal฀control฀over฀financial฀reporting฀as฀of฀December฀31,฀2004,฀because฀
the฀Company฀did฀not฀maintain฀effective฀controls฀over฀the฀accounting฀for฀income฀taxes฀including฀income฀taxes฀payable,฀deferred฀income฀tax฀assets฀and฀
liabilities฀and฀the฀related฀income฀tax฀provision฀and฀the฀valuation฀and฀recording฀of฀its฀pension฀and฀other฀postretirement฀benefit฀obligations฀and฀expenses,฀
based฀on฀criteria฀established฀in฀Internal฀Control-Integrated฀Framework฀issued฀by฀the฀Committee฀of฀Sponsoring฀Organizations฀of฀the฀Treadway฀Commis-
sion฀(COSO).฀The฀Company’s฀management฀is฀responsible฀for฀maintaining฀effective฀internal฀control฀over฀financial฀reporting฀and฀for฀its฀assessment฀of฀the฀
effectiveness฀of฀internal฀control฀over฀financial฀reporting.฀Our฀responsibility฀is฀to฀express฀opinions฀on฀management’s฀assessment฀and฀on฀the฀effectiveness฀of฀
the฀Company’s฀internal฀control฀over฀financial฀reporting฀based฀on฀our฀audit.฀
We฀conducted฀our฀audit฀of฀internal฀control฀over฀financial฀reporting฀in฀accordance฀with฀the฀standards฀of฀the฀Public฀Company฀Accounting฀Oversight฀Board฀
(United฀States).฀Those฀standards฀require฀that฀we฀plan฀and฀perform฀the฀audit฀to฀obtain฀reasonable฀assurance฀about฀whether฀effective฀internal฀control฀over฀
financial฀reporting฀was฀maintained฀in฀all฀material฀respects.฀An฀audit฀of฀internal฀control฀over฀financial฀reporting฀includes฀obtaining฀an฀understanding฀of฀
internal฀control฀over฀financial฀reporting,฀evaluating฀management’s฀assessment,฀testing฀and฀evaluating฀the฀design฀and฀operating฀effectiveness฀of฀internal฀
control,฀and฀performing฀such฀other฀procedures฀as฀we฀consider฀necessary฀in฀the฀circumstances.฀We฀believe฀that฀our฀audit฀provides฀a฀reasonable฀basis฀for฀
our฀opinions.฀
A฀company’s฀internal฀control฀over฀financial฀reporting฀is฀a฀process฀designed฀to฀provide฀reasonable฀assurance฀regarding฀the฀reliability฀of฀financial฀report-
ing฀and฀the฀preparation฀of฀financial฀statements฀for฀external฀purposes฀in฀accordance฀with฀generally฀accepted฀accounting฀principles.฀A฀company’s฀internal฀
control฀over฀financial฀reporting฀includes฀those฀policies฀and฀procedures฀that:฀(i)฀pertain฀to฀the฀maintenance฀of฀records฀that,฀in฀reasonable฀detail,฀accurately฀
and฀fairly฀reflect฀the฀transactions฀and฀dispositions฀of฀the฀assets฀of฀the฀company;฀(ii)฀provide฀reasonable฀assurance฀that฀transactions฀are฀recorded฀as฀
necessary฀to฀permit฀preparation฀of฀financial฀statements฀in฀accordance฀with฀generally฀accepted฀accounting฀principles,฀and฀that฀receipts฀and฀expenditures฀of฀
the฀company฀are฀being฀made฀only฀in฀accordance฀with฀authorizations฀of฀management฀and฀directors฀of฀the฀company;฀and฀(iii)฀provide฀reasonable฀assurance฀
regarding฀prevention฀or฀timely฀detection฀of฀unauthorized฀acquisition,฀use,฀or฀disposition฀of฀the฀company’s฀assets฀that฀could฀have฀a฀material฀effect฀on฀the฀
financial฀statements.฀
Because฀of฀its฀inherent฀limitations,฀internal฀control฀over฀financial฀reporting฀may฀not฀prevent฀or฀detect฀misstatements.฀Also,฀projections฀of฀any฀evaluation฀of฀
effectiveness฀to฀future฀periods฀are฀subject฀to฀the฀risk฀that฀controls฀may฀become฀inadequate฀because฀of฀changes฀in฀conditions,฀or฀that฀the฀degree฀of฀compli-
ance฀with฀the฀policies฀or฀procedures฀may฀deteriorate.฀