EX-99.3 102 exhibit99-3.htm EXHIBIT (99.3)

APPENDIX
Reconciliation of Non-GAAP Financial Measures
to the Most Directly Comparable GAAP Measures

In its February 7, 2008 Investor Meeting presentation, Eastman Kodak Company (“The Company”) referenced certain non-GAAP financial measures, "Digital Revenue Growth", “Digital Earnings”, “Digital EFO", “Digital EFO Improvement”, “Gross Profit excluding Restructuring”, “ Pro Forma Revenue Change”, “EFO excluding Restructuring”, “EBITDA”, Total Company and Segment: “Pro Forma Revenue”, “Pro Forma Gross Profit”, “Pro Forma SG&A” as a percent of sales, “Pro Forma R&D” as a percent of sales, and “Pro Forma Earnings from Operations excluding Restructuring” as a percent of sales. Additional non-GAAP financial measures presented include “CDG and GCG Segment Digital Revenue Growth", “CDG Pro Forma EFO Improvement”, “GCG Pro Forma EFO”, “Pro Forma Digital EFO”, “Pro Forma Digital Revenue”, “Net Cash Generation”, “Cash Generation before Dividends”, and "Cash Generation Excluding Carryover Restructuring/Rationalization".

The Company believes that these non-GAAP measures represent important internal measures of performance. Accordingly, where they are provided, it is to give investors the same financial data management uses with the belief that this information will assist the investment community in properly assessing the underlying performance of the Company, its financial condition, results of operations and cash flow on a year-over-year basis.

The following reconciliations are provided with respect to terms used in the February 7, 2008 presentations of Kodak’s Chief Executive Officer Antonio Perez, Chief Financial Officer Frank Sklarsky and other Company Officers.

1. The following table reconciles 2007 net cash generation to the most directly comparable GAAP measure of net cash provided by continuing operations from operating activities (amounts in millions):

  2007 2007
  Goal        Actual
Net cash generation, as presented     ~$100    $         333
Additions to properties, net proceeds from the sales of         
businesses/assets, distributions from (investments in)       
unconsolidated affiliates and dividends, net     150-300      19
Net cash provided by continuing operations from       
   operating activities (GAAP basis)     $250-$400    $ 352

2. The following table reconciles the 2007 digital revenue growth for CDG, GCG and Total Company to the most directly comparable GAAP measure of consolidated total revenue decline:

  2007 2007
  Goal       Actuals
CDG Digital revenue growth, as presented     2%-4%           8%     
GCG Digital revenue growth, as presented     6%-9%         7%     
   Total Digital revenue growth, as presented     3%-5%         8%     
   Total Traditional and New Technologies revenue decline     (18)%         (15)%     
      Total Company revenue decline (GAAP basis)     (7)%-(4)%         (3)%     

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3. The following table reconciles 2007 digital earnings to the most directly comparable GAAP measure of loss from continuing operations before interest, other income (charges), net and income taxes (amounts in millions):

  2007 2007
  Goal      Actual
Digital earnings, as presented    $150-$250  $          176  
Traditional earnings and New Technologies loss    ~$150    167  
Total EFO, as presented    $300-$400  $  343  
Restructuring and items of comparability    $(725)-$(925)    (573 )
Loss from continuing operations before interest, other         
   income (charges), net and income taxes (GAAP basis)    $(425)-$(525)  $  (230 )

4. The following table reconciles 2006 and 2007 digital earnings from operations to the most directly comparable GAAP measure of loss from continuing operations before interest, other income (charges), net and income taxes (amounts in millions):

  2007 2006 Increase
  Actual      Actual      (Decrease)
Digital Earnings from Operations, as presented  $  176   $  (13 ) $              189
Traditional earnings, New Technologies loss, restructuring               
costs and items of comparability                (406 )                 (463 ) $  57
Loss from continuing operations before interest, other             
income (charges), net and income taxes (GAAP basis)  $  (230 ) $  (476 ) $  246

5. The following table reconciles 2008 EBITDA goal to the most directly comparable GAAP measure of earnings from continuing operations before interest, other income (charges), net and income taxes (amounts in millions):

  2008
  Goal
EBITDA, as presented  $1,000-$1,100
Depreciation and Amortization  ~$(675)
 
Earnings from continuing operations before interest, other income   
(charges), net and income taxes (GAAP basis)  $360-$400

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6. The following table reconciles 2008 cash generation excluding carryover restructuring/rationalization to the most directly comparable GAAP measure of net cash provided by continuing operations from operating activities (amounts in millions):

  2008
  Goal
Cash generation excluding carryover restructuring/rationalization, as   
presented  $550-$650
Projected restructuring payments  ~$150
Cash generation before dividend payments  $400-$500
Additions to properties, net proceeds from the sales of businesses/assets,   
distributions from (investments in) unconsolidated affiliates and dividends  $125-$175
Net cash provided by continuing operations from operating activities   
(GAAP basis), as presented  $575-$625

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7. The following table reconciles 2006 and 2007 Pro Forma Revenue, Gross Profit and SG&A, R&D, and EFO segment as a percent of sales for CDG, GCG and FPEG to the most directly comparable GAAP measures based on previously reported 2006 and 2007 actual segment results:

($ in millions)   Impact of 2008 GAAP basis     Impact of 2008 GAAP basis
  2006 structure realignment 2006 2007   structure realignment 2007
FPEG (previously FPG)       Pro Forma     and cost reallocations     Actual      Pro Forma       and cost reallocations     Actual
Revenue $               4,271   $                                    (1,959 ) $               2,312   $               3,638   $                                    (1,670 ) $               1,968  
Gross Profit  25 %   12 %   37 %     24 %     13 %     37 %
SG&A     15 %     5 % 20 % 14 %   3 % 17 %
R&D 2 %   (1 )%   1 % 2 %   (1 )% 1 %
EFO 8 %   8 % 16 % 8 %   11 % 19 %
   
     Impact of 2008 GAAP basis     Impact of 2008 GAAP basis
  2006 structure realignment 2006 2007   structure realignment 2007
CDG  Pro Forma   and cost reallocations   Actual Pro Forma     and cost reallocations   Actual
Revenue $ 2,995   $ 1,716   $ 4,711   $ 3,241   $ 1,390   $ 4,631  
Gross Profit  21 %   (3 )% 18 % 26 %   (6 )% 20 %
SG&A 19 %   (2 )% 17 % 18 %   (1 )% 17 %
R&D 10 %   (4 )% 6 % 8 %   (3 )% 5 %
EFO (7 )%   2 % (5 )% 0 %   (2 )% (2 )%
   
    Impact of 2008 GAAP basis     Impact of 2008 GAAP basis
  2006 structure realignment 2006 2007   structure realignment 2007
GCG  Pro Forma   and cost reallocations   Actual Pro Forma     and cost reallocations   Actual
Revenue $ 3,287   $ 190   $ 3,477   $ 3,413   $ 177   $ 3,590  
Gross Profit  31 %   (2 )% 29 % 28 %   (1 )% 27 %
SG&A 23 %   (3 )% 20 % 19 %   (1 )% 18 %
R&D 6 %   0 % 6 % 6 %   0 % 6 %
EFO 2 %   1 % 3 % 3 %   0 % 3 %

8. The following table reconciles 2006 and 2007 total company Pro Forma Gross Profit excluding restructuring and SG&A, R&D, and EFO excluding restructuring as a percent of sales to the most directly comparable GAAP measures of Gross Profit, SG&A as a percent of sales, R&D as a percent of sales, and loss from continuing operations before interest, other income (charges), net and income taxes as a percent of sales (“GAAP basis”), as previously reported:

    Impacts of 2008     Impacts of 2008  
($ in millions)   structure realignment     structure realignment  
    cost reallocations, GAAP basis   cost reallocations, GAAP basis
  2006 restructuring and items 2006 2007 restructuring and items 2007
Total Company       Pro Forma     of comparability     Actual      Pro Forma     of comparability     Actual
Revenue $               10,568   $                                    -     $               10,568   $               10,301   $                                    -   $               10,301  
Gross Profit    26 %*     (3 )% 23 %   26 %*     (2 )% 24 %
SG&A   19 %   (1 )% 18 % 17 %   0 %   17 %
R&D 6 %   (1 )% 5 % 5 %   0 % 5 %
EFO 2 %*   (7 )% (5 )% 3 %*   (5 )% (2 )% 

* excluding restructuring and items of comparability

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9. The following table reconciles 2007 CDG Pro Forma EFO improvement to the most directly comparable GAAP measure of CDG improvement in loss from continuing operations before interest, other income (charges), net and income taxes:

  2007
(in millions)  Actual
CDG Pro Forma EFO improvement, as presented  $           198  
Impact of 2008 structure realignment and cost     
reallocations  $  (50 )
CDG improvement in loss from continuing     
operations before interest, other income     
(charges), net and income taxes (GAAP basis)  $  148  
 

10. The following table reconciles 2006 and 2007 Pro Forma digital revenue to the most directly comparable GAAP measures of total revenue:

  2007 2006 Growth/
($ in billions)  Actual       Actual       (Decline)
Pro Forma digital revenue, as presented  $  6.6   $  6.3   6 %
Impact of 2008 structure realignment     (0.2 )            (0.4 )           -50 %
Digital Revenue as previously reported  $  6.4   $  5.9   8 %
Traditional and New Technologies revenue    3.9     4.7   -17 %
Total revenue (GAAP basis), as presented  $           10.3   $  10.6   -3 %

11. The following table reconciles 2006 and 2007 Pro Forma digital EFO to the most directly comparable GAAP measures of loss from continuing operations before interest, other income (charges), net and income taxes:

  2007 2006 Growth/
($ in millions)  Actual       Actual       (Decline)
Pro Forma digital EFO, as presented  $  83     $  (152 ) -155 %
Impact of 2008 structure realignment    93              139             -33 %
Digital EFO as previously reported  $  176   $  (13 ) 100 %
Traditional and New Technologies earnings, restructuring             
costs and items of comparability             (406 )   (463 ) -12 %
Loss from continuing operations before interest, other           
income (charges), net and income taxes (GAAP basis)  $  (230 ) $  (476 ) -52 %

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12. The following table reconciles 2006 and 2007 GCG Pro Forma EFO to the most directly comparable GAAP measure of GCG earnings from continuing operations before interest, other income (charges), net and income taxes:

  2007 2006    
        Actual       Actual       Improvement
GCG Pro Forma EFO, as presented   $        100 $        64   $ 36  
Impact of 2008 structure realignment and cost reallocations   16     36                (20 )
2007 GCG earnings from continuing operations before            
interest, other income (charges), net and income taxes            
(GAAP basis)  $ 116 $ 100 $ 16  

13. The following table reconciles 2007 total company Gross Profit excluding restructuring costs to total company Gross Profit on a GAAP basis:

  2007 2007
  Goal          Actual
Gross Profit excluding restructuring, as presented 25%-26% 26%
Restructuring and items of comparability (1)%   (2)%
Gross Profit (GAAP basis) 24%-25%   24%

14. The following table reconciles 2007 earnings from operations excluding restructuring as a percent of sales to the most directly comparable GAAP measure of loss from continuing operations before interest, other income (charges), net and income taxes as a percent of sales:

  2007 2007
           Goal          Actual
Earnings from operations excluding restructuring as a percent of sales, as presented  3%-4% 3%
Restructuring costs and items of comparability (7)%-(9)%   (5)%
 
Loss from continuing operations before interest, other income (charges), net and     
income taxes as a percent of sales (GAAP basis) (4)%-(5)%   (2)%

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