SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 31, 2006
Eastman Kodak Company
(Exact name of registrant as specified in charter)
New Jersey 1-87 16-0417150
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
343 State Street,
Rochester, New York 14650
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code (585) 724-4000
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition
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On October 31, 2006, Eastman Kodak Company issued a press release describing its
financial results for its third fiscal quarter ended September 30, 2006. Copies
of the press release and financial discussion document are attached as Exhibits
99.1 and 99.2, respectively, to this report.
Within the Company's third quarter 2006 press release and financial discussion
document, the Company makes reference to certain non-GAAP financial measures
including "Digital revenue", "Traditional revenue", "New Technologies revenue",
"Digital revenue growth", "Digital earnings", "Digital earnings from
operations", "Digital earnings by segment", "Free cash flow", "Operating cash
flow", "Investable cash flow", and "Earnings before interest, taxes,
depreciation and amortization (EBITDA)", which have directly comparable GAAP
financial measures. The Company believes that these measures represent important
internal measures of performance. Accordingly, where these non-GAAP measures are
provided, it is done so that investors have the same financial data that
management uses with the belief that it will assist the investment community in
properly assessing the underlying performance of the Company on a year-over-year
basis. Whenever such information is presented, the Company has complied with the
provisions of the rules under Regulation G and Item 2.02 of Form 8-K. The
specific reasons, in addition to the reasons described above, why the Company's
management believes that the presentation of the non-GAAP financial measures
provides useful information to investors regarding Kodak's financial condition,
results of operations and cash flows are as follows:
Digital revenue / Traditional revenue / New Technologies revenue / Digital
revenue growth / Digital earnings from operations / Digital earnings / Digital
earnings by segment -
The Company believes that the presentation of digital revenue, traditional
revenue, new technologies revenue, digital revenue growth, digital earnings from
operations, digital earnings, and digital earnings by segment information is
useful to investors while its transformation from a traditional products and
services company to a digital products and services company is ongoing, and
management utilizes this information, to assess the Company's progress in
supplementing declining revenues from traditional products with revenues from
digital and other new technologies and in introducing a lower cost business
model consistent with the realities of a digital business. The Company has tied
both short-term and long-term incentive programs to certain of these measures.
Management views the Company's performance based on the following three key
metrics: digital revenue growth, digital earnings growth and the generation of
cash. These three key metrics are emphasized in the Company's attached earnings
release for the third quarter of 2006. The digital measures form the basis of
internal management performance expectations and certain incentive compensation.
Net sales from continuing operations and earnings (loss) from continuing
operations before interest, other income (charges), net and income taxes are
measures used in making decisions about allocating resources and assessing the
performance of each segment and are therefore the segment performance measures
presented in the segment footnotes of the Company's financial statements.
Digital revenue and digital earnings represent additional measures of
performance used by management to assess the Company's performance against its
objectives during the digital transformation period. These measures differ from
those presented in the Company's Form 10-Q as the primary measures of segment
performance.
Free cash flow / Operating cash flow / Investable cash flow - The Company
believes that the presentation of free cash flow, operating cash flow and
investable cash flow is useful information to investors as it facilitates the
comparison of cash flows between reporting periods. In addition, management
utilizes these measures as tools to assess the Company's ability to repay debt
and repurchase its own common stock, after it has satisfied its working capital
needs (including restructuring-related payments), dividends, capital
expenditures, acquisitions and investments. The free cash flow measure equals
net cash provided by operating activities from continuing operations, as
determined under Generally Accepted Accounting Principles in the U.S. (U.S.
GAAP) minus capital expenditures. The operating cash flow measure equals free
cash flow plus proceeds from the sale of assets, minus acquisitions, debt
assumed in acquisitions, investments in unconsolidated affiliates, and
dividends. The investable cash flow measure equals operating cash flow excluding
the impact of acquisitions and debt assumed in acquisitions, and forms the basis
of internal management performance expectations (it is one of the Company's
three key metrics) and certain incentive compensation. Accordingly, the Company
believes that the presentation of this information is useful to investors as it
provides them with the same data as management uses to facilitate their
assessment of the Company's cash position.
EBITDA / Interest Expense - Under the Company's senior secured credit
facilities, there are two financial debt covenants that the Company must be in
compliance with on a quarterly basis: (1) debt to EBITDA and (2) EBITDA to
interest expense. Accordingly, the Company believes the presentation of the debt
to EBITDA and EBITDA to interest expense financial measures is useful
information to investors, as it provides information as to how the Company
actually performed against the financial covenant restrictions and requirements,
and how much headroom the Company has within the covenants.
Item 9.01. Financial Statements and Exhibits
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(c) Exhibits
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Exhibit 99.1 Press release issued October 31, Furnished with
2006 regarding financial results this document
for the third quarter of 2006
Exhibit 99.2 Financial discussion document issued Furnished with
October 31, 2006 regarding financial this document
results for the third quarter of
2006
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTMAN KODAK COMPANY
By: /s/ Diane E. Wilfong
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Name: Diane E. Wilfong
Title: Controller
Date: October 31, 2006
EXHIBIT INDEX
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Exhibit No. Description
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99.1 Press release issued October 31, 2006 regarding financial results
for the third quarter of 2006
99.2 Financial discussion document issued October 31, 2006 regarding
financial results for the third quarter of 2006