IMAGING INNOVATOR
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EASTMAN KODAK COMPANY* |
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For the Year Ended December 31, |
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(In millions, except per share data) |
2008 |
2007 |
2006 |
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Net sales |
$9,416 |
$10,301 |
$10,568 |
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Cost of goods sold |
7,247 |
7,757 |
8,122 |
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Gross profit |
2,169 |
2,544 |
2,446 |
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Selling, general, and administrative expenses |
1,583 |
1,778 |
1,969 |
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Research and development costs |
501 |
549 |
596 |
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Restructuring costs, rationalization, and other |
140 |
543 |
416 |
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Loss from continuing operations before interest expense, other income (charges), net and income taxes |
821 |
230 |
476 |
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Interest expense |
108 |
113 |
172 |
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Other income (charges), net |
55 |
87 |
65 |
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Loss from continuing operations before income taxes |
874 |
256 |
583 |
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(Benefit) provision for income taxes |
147 |
51 |
221 |
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Loss from continuing operations |
($727) |
($205) |
($804) |
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Earnings from discontinued operations, net of income taxes |
$285 |
$881 |
$203 |
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NET (LOSS) EARNINGS |
($442) |
$676 |
($601) |
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Basic and diluted net (loss) earnings per share: |
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Continuing operations |
($2.58) |
($0.71) |
($2.80) |
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Discontinued operations |
1.01 |
3.06 |
0.71 |
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Total |
($1.57) |
$2.35 |
($2.09) |
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Cash dividends per share |
$0.50 |
$0.50 |
$0.50 |
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EASTMAN KODAK COMPANY |
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At December 31, |
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(In millions, except share and per share data) |
2008 |
2007 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
$2,145 |
$2,947 |
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Receivables, net |
1,716 |
1,939 |
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Inventories, net |
948 |
943 |
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Other current assets |
195 |
224 |
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Total current assets |
5,004 |
6,053 |
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Property, plant, and equipment, net |
1,551 |
1,811 |
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Goodwill |
896 |
1,657 |
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Other long-term assets |
1,728 |
4,138 |
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Total assets |
$9,179 |
$13,659 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable and other current liabilities |
$3,267 |
$3,794 |
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Short-term borrowings and current portion of long-term debt |
51 |
308 |
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Accrued income and other taxes |
144 |
344 |
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Total current liabilities |
3,462 |
4,446 |
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Long-term debt, net of current portion |
1,252 |
1,289 |
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Pension and other postretirement liabilities |
2,382 |
3,444 |
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Other long-term liabilities |
1,122 |
1,451 |
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Total liabilities |
8,218 |
10,630 |
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Commitments and Contingencies (Note 10) |
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SHAREHOLDERS’ EQUITY |
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Common stock, $2.50 par value, 950,000,000 shares authorized; |
978 |
978 |
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Additional paid in capital |
901 |
889 |
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Retained earnings |
5,879 |
6,474 |
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Accumulated other comprehensive (loss) income |
749 |
452 |
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7,009 |
8,793 |
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Treasury stock, at cost; 123,123,705 shares as of December 31, 2008 and 103,292,930 shares as of December 31, 2007 |
6,048 |
5,764 |
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Total shareholders’ equity |
961 |
3,029 |
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Total liabilities and shareholders’ equity |
$9,179 |
$13,659 |
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EASTMAN KODAK COMPANY |
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NOTE 2: RECEIVABLES, NET |
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As of December 31, |
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(In millions) |
2008 |
2007 |
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Trade receivables |
$1,330 |
$1,697 |
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Miscellaneous receivables |
386 |
242 |
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Total (net of allowances of $113 and $114 as of December 31, 2008 and 2007, respectively) |
$1,716 |
$1,939 |
Of the total trade receivables amounts of $1,330 million and $1,697 million as of December 31, 2008 and 2007, respectively, approximately $218 million and $266 million, respectively, are expected to be settled through customer deductions in lieu of cash payments. Such deductions represent rebates owed to the customer and are included in accounts payable and other current liabilities in the accompanying Consolidated Statement of Financial Position at each respective balance sheet date.
The increase in miscellaneous receivables is primarily due to an amendment to an intellectual property licensing agreement with an existing licensee executed during the third quarter of 2008. Under the terms of this amendment, cash consideration is to be received in 2009. ‘‘Other Long-Term Liabilities.’’
Required
a. Based on these data, calculate the following for 2008 and 2007:
1. Days’ sales in receivables (use trade receivables)
2. Accounts receivable turnover (use gross trade receivables at year-end)
3. Days’ sales in inventory
4. Inventory turnover (use year-end inventory)
5. Working capital
6. Current ratio
7. Acid-test ratio
b. Comment on each ratio individually.
c. Why are portions of long-term debt included in short-term borrowings?
d. Prepare a vertical common-size analysis for the balance sheets using 2008 and 2007 (use total assets as the base).
e. Comment on the vertical common-size analysis.