<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
For the year ended December 31, 1993 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from to
Commission File Number 1-87
EASTMAN KODAK COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 16-0417150
(State of incorporation) (IRS Employer
Identification No.)
343 STATE STREET, ROCHESTER, NEW YORK 14650
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 716-724-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $2.50 Par Value New York Stock Exchange
Zero Coupon Convertible Subordinated
Debentures Due 2011 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
At December 31, 1993, 330,566,433 shares of Common Stock of the registrant
were outstanding. The aggregate market value (based upon the closing price
of these shares on the New York Stock Exchange at February 1, 1994) of the
voting stock held by nonaffiliates was approximately $14.6 billion.
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PART I
ITEM 1. BUSINESS
Eastman Kodak Company (Kodak or the Company) is engaged primarily in
developing, manufacturing, and marketing imaging, information systems and
health products.
Kodak's sales, earnings and identifiable assets by industry segment for the
past three years are shown in Segment Information on page 38.
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IMAGING SEGMENT
Sales of imaging segment products, including intersegment sales, for the past
three years were:
1993 1992 1991
(in millions)
$7,257 $7,415 $7,075
The products of the imaging segment are used for capturing, recording or
displaying an image. For example, traditional amateur photography requires,
at a minimum, a camera, film, and photofinishing. Photofinishing requires
equipment and supplies, including chemicals and paper for prints.
Kodak manufactures and markets various components of imaging systems. For
amateur photography, Kodak supplies films, photographic papers, processing
services, photographic chemicals, cameras and projectors. Kodak products for
nonamateur photography include films, photographic papers, photographic
plates, chemicals, processing equipment and audiovisual equipment.
Nonamateur products serve professional photofinishers, professional
photographers and customers in motion picture, television, and government
markets. Recent imaging products developed by Kodak include new generations
of single use cameras and commercial applications for the recently introduced
photo CD system. New traditional silver halide photographic products
continue to be introduced to the professional and consumer markets.
Marketing and Competition. Kodak's imaging products and services are
distributed through a variety of channels. Individual products are often
used in substantial quantities in more than one market. Most sales of the
imaging segment are made through dealers. Independent retail outlets
handling Kodak amateur products total many thousands. In a few areas abroad,
Kodak products are marketed by independent national distributors.
Kodak's advertising programs actively promote its products and services in
its various markets, and its principal trademarks, trade dress, and corporate
symbol are widely used and recognized.
Kodak's imaging products and services compete with similar products and
services of others. Competition in traditional imaging markets is strong
throughout the world. Many large and small companies offer similar products
and services that compete with Kodak's business. Kodak's products are
continually improved to meet the changing needs and preferences of its
customers.
Raw Materials. The raw materials used by the imaging segment are many and
varied and generally available. Silver is one of the essential materials in
photographic film and paper manufacturing.
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INFORMATION SEGMENT
Sales of information segment products for the past three years were:
1993 1992 1991
(in millions)
$3,862 $4,063 $3,968
The information segment consists of businesses that serve the imaging and
information needs of business, industry and government. Products in this
segment are used to capture, store, process and display images and
information in a variety of forms.
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Kodak purchases, manufactures and markets various components of information
products and provides service agreements to support these products.
Information products include graphic arts films, microfilm products,
applications software, copiers, printers and other business equipment. These
products serve the needs of customers in the commercial printing and
publishing, office automation and government markets.
Marketing and Competition. Kodak's information products are distributed
through a variety of channels. The Company also sells and leases business
equipment directly to users. Independent national distributors market
information products in some overseas areas.
The products in the information segment compete on a worldwide basis with
similar products offered by both small and large companies. Strong
competition exists throughout the world.
Raw Materials. The raw materials used by the information segment are many
and varied and generally available. Electronic components represent a
significant portion of the cost of the materials used in the manufacture of
business equipment.
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HEALTH SEGMENT
Sales of health segment products for the past three years were:
1993 1992 1991
(in millions)
$5,249 $5,081 $4,917
Kodak manufactures and markets various health products. Pharmaceutical
products include medicines prescribed by physicians or made specifically for
use in hospitals. Pharmaceutical products also include bulk pharmaceuticals,
intermediates and other life-science chemicals sold primarily to other
manufacturers. Sterling Winthrop Inc., a subsidiary of Kodak, and Elf
Sanofi, a company within the Elf Aquitaine Group, have formed an alliance of
joint ventures for the development and marketing of pharmaceutical and
over-the-counter medicines. Consumer health products include medicines sold
without prescription and promoted directly to the consumer. Kodak supplies
X-ray films, processors, image management systems, laser printers and
chemicals for radiography markets and also supplies clinical diagnostics
equipment and consumables. This segment also includes household,
do-it-yourself and personal care products such as disinfectants, all purpose
cleaners, floor-care products, rodenticides, septicides, wood stains,
concrete and wood protectors, deodorants and hair-care products.
Marketing and Competition. Products of the health segment are distributed
through a variety of channels including dealers, independent distributors,
wholesalers, jobbers, hospitals, retail drug stores, mass merchandisers,
variety outlets, department stores, and food stores. The health care markets
in the U.S. and in some countries outside the U.S. are experiencing changes
resulting from concerns for escalating costs for health care, leading to
competitor and customer consolidation. The segment's products are subject to
competition from both large and small companies, many of which are highly
regarded and well established, with substantial resources for research,
product development and promotional activities.
Competition in the health segment, particularly with respect to
pharmaceutical, consumer health and household products, is characterized by
the effort to develop and introduce new or improved products. Many of
Kodak's competitors are engaged in research activities which may lead to the
development of new products constituting additional competition for Kodak's
products.
Raw materials. Raw materials essential to the health segment business are
purchased for the most part in the open market and are generally available.
Silver is one of the essential materials in manufacturing radiography film.
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DISCONTINUED OPERATIONS - CHEMICALS SEGMENT
On December 31, 1993, the Company distributed all of the outstanding shares
of common stock of Eastman Chemical Company (Eastman), which represents
substantially all of the Company's worldwide chemical business, as a dividend
to the Company's shareowners (the "spin-off") in a ratio of one share of
Eastman common stock for every four shares of Kodak common stock. As a
result of the spin-off, Eastman became an independent publicly held company
listed on the New York Stock Exchange and its operation ceased to be owned by
the Company. In connection with the spin-off, Eastman assumed $1.8 billion
of new borrowings, the proceeds from which will be used by the Company as
part of a plan to retire certain of its indebtedness. The chemicals segment
has been reported as a discontinued operation and results for prior periods
have been restated.
Sales of chemicals segment products, including intersegment sales, for the
past three years were:
1993 1992 1991
(in millions)
$3,976 $3,927 $3,740
The products of the chemicals segment include a wide variety of chemicals,
plastics, and fibers. The manufacturing processes are diverse and highly
integrated with intermediate products being sold to the trade, as well as
being used in further internal manufacturing. The segment is also a major
supplier of chemicals and plastics used in the manufacture of Kodak
photographic products. Subsequent to the spin-off, it is expected that the
Company will continue to purchase products from Eastman. The prices, terms
and conditions of future sales have been negotiated between the Company and
Eastman and are intended to reflect current market conditions.
The major sales products of the chemicals segment include:
- - acids, alcohols, solvents, and plasticizers used by paint, chemical, and
plastic manufacturers,
- - polyethylene and polypropylene plastics used in applications such as
plastic film and automotive parts,
- - cellulose-based plastics used by molders of plastic tool handles, brushes,
eyeglass frames, and toys,
- - cellulose-based fibers, such as acetate yarn and filter materials,
- - polyester plastics used in food and beverage packaging, and
- - specialty and fine chemicals used in health, nutrition, pharmaceutical, and
photographic applications.
Marketing and Competition. The chemicals segment markets products through a
worldwide sales organization. The majority of the sales are direct, however,
some are through other channels. Products are shipped to customers directly
from the chemicals segment plants as well as from distribution centers.
The chemicals segment products are marketed and categorized as industrial or
performance. The performance products include chemicals and plastics sold to
customers in growth markets, as well as products sold on the basis of unique
performance attributes. The industrial products are chemical, plastic and
fiber products sold to industrial customers, usually in large volumes,
primarily on the basis of price, product quality and consistency, and
reliability of supply.
In the chemicals segment, competition is present from a number of large
chemical manufacturers with similar products; however, the competitive
environment varies among the various product markets.
Raw Materials. The raw materials used by the chemicals segment are many and
varied and generally available. The major raw materials are propane, ethane,
chemical wood pulp, paraxylene and coal. Many are derived from petroleum
products, the prices of which have fluctuated in recent years.
The chemicals segment engages in research and development, located
principally in United States locations in Kingsport, Tennessee and Longview,
Texas. In 1993, $180 million (1992 - $168 million; 1991 - $157 million) was
expended for research and development.
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- -
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RESEARCH AND DEVELOPMENT
Through the years, Kodak has engaged in extensive and productive efforts
in research and development. In 1993, $1,301 million (1992 -
$1,419 million; 1991 - $1,337 million) was expended for research and
development in continuing operations. Research and development groups are
located principally in United States locations in Rochester, New York;
Montvale, New Jersey; and Upper Providence Township, Pennsylvania; outside
the U.S., research and development groups are located in England, France,
Japan and Germany. These groups, in close cooperation with manufacturing
units and marketing organizations, are constantly developing new products
and applications to serve both existing and new markets.
It has been Kodak's general practice to protect its investment in research
and development and its freedom to use its inventions by obtaining patents
where feasible. The ownership of these patents contributes to Kodak's
ability to use its inventions but at the same time is accompanied by a
liberal patent-licensing policy. While in the aggregate Kodak's patents
are considered to be of material importance in the operation of its
business, it does not consider that the patents relating to any single
product or process are of material significance when judged from the
standpoint of its total business.
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ENVIRONMENTAL PROTECTION
Kodak is subject to various laws and governmental regulations concerning
environmental matters. Some of the U.S. federal environmental legislation
having an impact on Kodak includes the Toxic Substances Control Act, the
Resource Conservation and Recovery Act (RCRA), the Clean Air Act, and the
Comprehensive Environmental Response, Compensation and Liability Act (the
"Superfund" law).
Kodak continues to engage in a program for environmental protection and
control. During 1993, expenditures for pollution prevention and waste
treatment for continuing operations at various manufacturing facilities
totaled $154 million. These costs included $107 million of recurring costs
associated with managing hazardous substances and pollution in on-going
operations, $38 million of capital expenditures to limit or monitor
hazardous substances or pollutants, and $8 million of mandated expenditures
to remediate previously contaminated sites. These expenditures have been
accounted for in accordance with the Company's accounting policy for
environmental costs. The Company expects these recurring and remediation
costs to increase slightly and capital to increase significantly in the
near future. While these costs will continue to be significant cash
outflows for the Company, it is not expected that these costs will have a
materially different impact on the Company's financial position, results
of operations or competitive position.
The Company has reviewed a draft RCRA Facility Assessment (RFA) pertaining
to the Company's Kodak Park site in Rochester, New York. The Company has
completed a broad-based assessment of the site in response to the RFA.
While future expenditures associated with any remediation activities could
be significant, it is not possible to reasonably estimate those
expenditures until additional studies are performed.
The Company accrues for remediation costs that relate to an existing
condition caused by past operations when it is probable that these costs
will be incurred and can be reasonably estimated. The Company has accrued
for remediation costs of $84 million in its financial statements at
December 31, 1993, compared with $90 million at December 31, 1992.
Also see Item 3 Legal Proceedings.
The Clean Air Act Amendments were enacted in 1990. The Company may be
required to incur significant costs, primarily capital in nature, over a
period of several years to comply with the provisions of this Act. The
expenditures that may be required cannot be currently reasonably estimated
since either implementing regulations have not been issued or compliance
plans have not been finalized.
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EMPLOYMENT
At the end of 1993, Kodak's continuing operations employed 110,400 people,
of whom 57,200 were employed in the United States.
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Financial information by geographic areas for the past three years is
shown in Segment Information on page 39.
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ITEM 2. PROPERTIES
The imaging segment of Kodak's business in the United States is centered in
and near Rochester, New York, where photographic goods are manufactured.
Another manufacturing facility near Windsor, Colorado, also produces
sensitized photographic goods. Regional distribution centers are located in
various places within the United States.
Imaging manufacturing facilities outside the United States are located in
Australia, Brazil, Canada, France, Mexico and the United Kingdom. Kodak
maintains marketing and distribution facilities in many parts of the world.
The Company also owns processing laboratories in numerous locations outside
the United States, and has an equity position in a company that provides
processing services in the United States.
Products in the information segment are manufactured primarily in Rochester,
New York and Windsor, Colorado. Manufacturing facilities outside the United
States are located in Germany, Mexico and the United Kingdom.
Health segment products are manufactured in several locations in the United
States including Rochester, New York; Windsor, Colorado; Lincoln, Illinois;
Belle Mead, New Jersey; Myerstown, Pennsylvania; McPherson, Kansas; and
Rensselaer, New York. Other manufacturing facilities and distribution
centers are located in various places in the United States. The principal
manufacturing facilities outside the United States are in Argentina,
Australia, Brazil, Canada, France, Germany, Ireland, Mexico, Puerto Rico and
the United Kingdom. In addition, the health segment has manufacturing,
marketing, and distribution facilities in many other parts of the world.
The Company owns or leases administrative, manufacturing, marketing, and
processing facilities in various parts of the world. The leases are for
various periods and are generally renewable.
The manufacturing and marketing facilities are adequate and suitable, in
relation to prevailing conditions, to serve the needs of their marketing
areas.
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ITEM 3. LEGAL PROCEEDINGS
The Company is in discussion with the Environmental Protection Agency (EPA)
and the Environment and Natural Resources Division of the U.S. Department of
Justice concerning the EPA/NEIC (National Enforcement Investigations Center)
investigation of the Company's Kodak Park site in Rochester, New York. As a
result of the investigation, the Company expects to incur a civil fine of at
least $100,000 for violations of federal environmental laws and regulations.
The Company is participating in the EPA's Toxic Substances Control Act (TSCA)
Section 8(e) Compliance Audit Program. As a participant, the Company has
agreed to audit its files for materials which under current EPA guidelines
would be subject to notification under Section 8(e) of TSCA and to pay
stipulated penalties for each report submitted under this program. The
Company anticipates that its liability under the Program will be $1,000,000.
In addition to the foregoing environmental actions, the Company has been
designated as a potentially responsible party (PRP) under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
(the "Superfund" law), or under similar state laws, for environmental
assessment and cleanup costs as the result of the Company's alleged
arrangements for disposal of hazardous substances at fewer than twenty
Superfund sites. With respect to each of these sites, the Company's actual
or potential allocated share of responsibility is small. Furthermore,
numerous other PRPs have similarly been designated at these sites and,
although the law imposes joint and several liability on PRPs, as a practical
matter costs are shared with other PRPs. Settlements and costs paid by the
Company in Superfund matters to date have not been material. Future costs
are also not expected to be material to the Company's financial condition or
results of operations.
The Company and its subsidiary companies are involved in lawsuits, claims,
investigations, and proceedings, including product liability, commercial,
environmental, and health and safety matters, which are being handled and
defended in the ordinary course of business. There are no such matters
pending that the Company and its General Counsel expect to be material in
relation to the Company's business, financial condition or results of
operations.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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<PAGE> 7
Executive Officers of the Registrant
(as of December 31, 1993)
Date First Elected
an to
Executive Present
Name Age Positions Held Officer Office
George M. C. Fisher 53 Chairman of the Board,
President and Chief
Executive Officer 1993 1993
Richard T. Bourns 59 Senior Vice President 1988 1990
C. Michael Hamilton 49 General Comptroller 1993 1993
John R. McCarthy 62 Senior Vice President 1982 1989
Wilbur J. Prezzano 53 Group Vice President,
Director 1980 1992
Leo J. Thomas 57 Group Vice President,
Director 1977 1992
Gary P.
Van Graafeiland 47 Senior Vice President
and Secretary 1992 1992
Executive officers are elected annually in February.
All of the executive officers have been employed by Kodak in various
executive and managerial positions for more than five years, except for Mr.
Fisher, who joined the Company on December 1, 1993, and Mr. Van Graafeiland.
For the prior five years, Mr. Fisher held executive positions with Motorola,
Inc., most recently as Chairman and Chief Executive Officer. Mr. Van
Graafeiland, who joined the Company in 1979, was elected Secretary in 1990,
and was elected to his current position in February 1992.
There have been no events under any bankruptcy act, no criminal proceedings,
and no judgments or injunctions material to the evaluation of the ability and
integrity of any executive officer during the past five years.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Eastman Kodak Company common stock is principally traded on the New York
Stock Exchange. There were 157,797 shareholders of record of common stock as
of December 31, 1993. See Cash Dividends and Market Price Data on pages 16 and
17.
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<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
Eastman Kodak Company and Subsidiary Companies
Selected Consolidated Financial Data
For the Year Ended in December
(amounts in millions, 1993 (1) 1992 (2) 1991 (3) 1990 (4) 1989 (5)
except per share data)
<S> <C> <C> <C> <C> <C>
Sales from continuing
operations $16,364 $16,545 $15,951 $15,611 $15,194
Earnings (loss) from
continuing operations
before extraordinary item
and cumulative effect
of changes in
accounting principle 475 727 (302) 368 146
Earnings from discontinued
operations before cumulative
effect of changes in
accounting principle 192 267 319 335 383
------- ------- ------- ------- -------
Earnings before
extraordinary item
and cumulative effect
of changes in
accounting principle 667 994 17 703 529
Extraordinary item (14) - - - -
------- ------- ------- ------- -------
Earnings before cumulative
effect of changes in
accounting principle 653 994 17 703 529
------- ------- ------- ------- -------
Cumulative effect of changes
in accounting principle
from continuing
operations (1,723) 71 - - -
Cumulative effect of changes
in accounting principle
from discontinued
operations (445) 81 - - -
------- ------- ------- ------- -------
Total cumulative effect of
changes in accounting
principle (2,168) 152 - - -
- ------- ------- ------- ------- -------
Net earnings (loss) $(1,515) $ 1,146 $ 17 $ 703 $ 529
======= ======= ======= ======= =======
</TABLE>
<PAGE>
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<TABLE>
SELECTED FINANCIAL DATA (continued)
<CAPTION>
Eastman Kodak Company and Subsidiary Companies
Selected Consolidated Financial Data
For the Year Ended in December
1993 (1) 1992 (2) 1991 (3) 1990 (4) 1989 (5)
<S> <C> <C> <C> <C> <C>
Primary earnings (loss) per
share from continuing
operations before
extraordinary item and
cumulative effect of
changes in accounting
principle $ 1.44 $ 2.24 $ (.93) $ 1.14 $ .45
Primary earnings per
share from discontinued
operations before
cumulative effect of
changes in accounting
principle .58 .82 .98 1.03 1.18
------- ------- ------- ------- -------
Primary earnings per share
before extraordinary item
and cumulative effect
of changes in accounting
principle 2.02 3.06 .05 2.17 1.63
Extraordinary item (.04) - - - -
------- ------- ------- ------- -------
Primary earnings per share
before cumulative effect of
changes in accounting
principle 1.98 3.06 .05 2.17 1.63
------- ------- ------- ------- -------
Cumulative effect of changes
in accounting principle
from continuing
operations (5.25) .22 - - -
Cumulative effect of changes
in accounting principle
from discontinued
operations (1.35) .25 - - -
------- ------- ------- ------- -------
Total cumulative effect of
changes in accounting
principle (6.60) .47 - - -
------- ------- ------- ------- -------
Primary earnings (loss)
per share $ (4.62) $ 3.53 $ .05 $ 2.17 $ 1.63
======= ======= ======= ======= =======
</TABLE>
<PAGE>
<PAGE> 10
<TABLE>
SELECTED FINANCIAL DATA (continued)
<CAPTION>
Eastman Kodak Company and Subsidiary Companies
Selected Consolidated Financial Data
For the Year Ended in December
1993 (1) 1992 (2) 1991 (3) 1990 (4) 1989 (5)
<S> <C> <C> <C> <C> <C>
Fully diluted earnings
(loss) per share from
continuing operations
before extraordinary item
and cumulative effect of
changes in accounting
principle $ 1.44 $ 2.22 $ (.93) $ 1.15 $ .45
Fully diluted earnings per
share from discontinued
operations before
cumulative effect of
changes in accounting
principle .58 .76 .98 1.01 1.18
------- ------- ------- ------- -------
Fully diluted earnings
per share before
extraordinary item and
cumulative effect of
changes in accounting
principle 2.02 2.98 .05 2.16 1.63
Extraordinary item (.04) - - - -
------- ------- ------- ------- -------
Fully diluted earnings
per share before
cumulative effect of
changes in accounting
principle 1.98 2.98 .05 2.16 1.63
------- ------- ------- ------- -------
Cumulative effect of changes
in accounting principle
from continuing
operations (5.25) .20 - - -
Cumulative effect of changes
in accounting principle
from discontinued
operations (1.35) .23 - - -
------- ------- ------- ------- -------
Total cumulative effect of
changes in accounting
principle (6.60) .43 - - -
------- ------- ------- ------- -------
Fully diluted earnings
(loss) per share $ (4.62) $ 3.41 $ .05 $ 2.16 $ 1.63
======= ======= ======= ======= =======
Cash dividends declared
per common share $ 2.00 $ 2.00 $ 2.00 $ 2.00 $ 2.00
Total assets 20,325 20,341 21,294 21,273 20,904
Long-term borrowings 6,853 5,402 5,797 5,189 5,576
<FN>
(1) Net earnings were reduced by the $387 million after-tax effect of
restructuring costs and also by $2,168 million from the cumulative
effect of the changes in accounting principle.
(2) Net earnings were reduced by the $141 million after-tax effect of
restructuring costs and benefited by $152 million from the cumulative
effect of the change in accounting for income taxes.
(3) Net earnings were reduced by the $1,032 million after-tax effect of
restructuring costs.
(4) Net earnings were reduced by the $564 million after-tax effect of the
litigation judgment including post-judgment interest.
(5) Net earnings were reduced by the $549 million after-tax effect of
restructuring costs.
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</TABLE>
<PAGE>
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
<TABLE>
SUMMARY
<CAPTION>
(in millions, except earnings per share) 1993 Change 1992 Change 1991
<S> <C> <C> <C> <C> <C>
Sales from continuing operations $16,364 - 1% $16,545 + 4% $15,951
Earnings (loss) from operations before
extraordinary item and
cumulative effect of changes in
accounting principle:
Continuing 475 727 (302)
Discontinued 192 267 319
Net earnings (loss) (1,515) 1,146 17
Primary earnings (loss) per share (4.62) 3.53 .05
Fully diluted earnings (loss) per share (4.62) 3.41 .05
</TABLE>
The Company posted sales from continuing operations of $16,364 million in
1993. Earnings from continuing operations before extraordinary item and
cumulative effect of changes in accounting principle for the year were $475
million ($1.44 per share) compared with earnings of $727 million ($2.24 per
share) in 1992. Earnings from continuing operations before extraordinary
item and the cumulative effect of changes in accounting principle were
significantly reduced by restructuring costs in both years. The
restructuring costs for 1993 continuing operations were $538 million ($379
million or $1.16 per share after-tax) compared with restructuring costs for
1992 continuing operations of $220 million ($141 million or $.43 per share
after-tax). Earnings from continuing operations, before deducting
restructuring costs in both years, declined slightly in 1993 when compared
with 1992. Earnings benefited from increased unit volumes, lower marketing
and administrative activity, lower research and development activity and
manufacturing productivity gains; but were adversely affected by cost
escalation, lower effective selling prices, higher retiree health care costs
associated with the change in accounting for certain postretirement benefits,
smaller gains from the sales of investments, and the unfavorable effects of
foreign currency rate changes. Net earnings for 1993 were reduced by an
extraordinary charge of $14 million after-tax ($.04 per share) related to the
early extinguishment of debt.
Net earnings for 1993 benefited by $192 million ($.58 per share) from
discontinued operations compared with a benefit of $267 million ($.82 per
share) in 1992. Earnings from continuing operations for the fourth quarter
of 1993 were $204 million compared with earnings of $251 million in the fourth
quarter of 1992, which benefited by approximately $75 million ($.23 per share)
from gains on the sales of investments including the sale of Eastman Kodak
Credit Corporation (EKCC). Earnings from discontinued operations for 1993
were lower when compared with 1992, as the benefits from higher unit volumes
were more than offset by cost escalation, higher retiree health care costs
associated with the change in accounting for certain postretirement benefits,
a provision for environmental costs, transaction costs associated with the
spin-off of the Company's worldwide chemicals business, and restructuring
costs of $12 million ($8 million or $.02 per share after-tax). The loss from
discontinued operations of $2 million in the fourth quarter of 1993 compared
with earnings of $48 million in the fourth quarter of 1992 was primarily
attributable to the provision for environmental costs and the transaction
costs associated with the spin-off.
The 1993 net loss was due to an after-tax charge of $2.17 billion ($6.60 per
share) associated with the adoption of Statement of Financial Accounting
Standards (SFAS) No. 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions, and SFAS No. 112, Employers' Accounting for
Postemployment Benefits effective as of January 1, 1993. Net earnings for
1992 benefited by $152 million ($.47 per share) from the adoption of SFAS No.
109, Accounting for Income Taxes, effective as of January 1, 1992.
On December 31, 1993, the Company spun-off its worldwide chemical business,
which consisted of Eastman Chemical Company operations. Results for Eastman
Chemical Company operations are being reported as a discontinued operation
and results for prior periods have been restated. Earnings from discontinued
operations before cumulative effect of changes in accounting principle
represents the Chemicals segment earnings from operations reduced by
allocations of interest, taxes and the transaction costs associated with the
spin-off.
The Company posted record sales from continuing operations of $16,545 million
in 1992. Earnings from continuing operations for the year were $727 million
($2.24 per share) compared with a loss of $302 million ($.93 per share) in
1991. Net earnings for 1992 included $267 million ($.82 per share) from
discontinued operations compared with $319 million ($.98 per share) in 1991.
Net earnings for 1992 also benefited by $152 million ($.47 per share) from
the cumulative effect of adopting SFAS No. 109, Accounting for Income Taxes,
and were adversely affected by the effects of restructuring costs of $220
million ($141 million or $.43 per share after-tax). Net earnings for 1991
were significantly reduced by the effects of restructuring costs of $1,605
million ($1,032 million or $3.18 per share after-tax). Excluding the effects
of restructuring costs from both 1992 and 1991, earnings from continuing
operations for 1992 increased from the prior
<PAGE>
<PAGE> 12
year as the favorable effects of manufacturing productivity, higher volumes,
gains from the sales of investments including the sale of EKCC, and the
favorable effects of foreign currency rate changes more than offset cost
escalation and higher marketing and administrative costs. Earnings from
continuing operations for the fourth quarter of 1992 were $251 million
compared with a net loss of $474 million in the fourth quarter of 1991.
Earnings for the fourth quarter of 1992 benefited by approximately $75 million
($.23 per share) from gains on the sales of investments including the sale of
EKCC. The net loss in the fourth quarter of 1991 was due to the effects of
restructuring costs of $914 million ($597 million or $1.84 per share
after-tax). Earnings from discontinued operations were lower in 1992, when
compared with 1991, as higher manufacturing costs and higher administrative
costs more than offset the benefits of higher unit volumes and higher
effective selling prices.
- -----------------------------------------------------------------------------
<TABLE>
Sales by Segment
(in millions)
<CAPTION>
1993 Change 1992 Change 1991
<S> <C> <C> <C> <C> <C>
Sales from Continuing Operations:
Imaging
Inside the U.S. $ 2,969 0% $ 2,971 + 4% $ 2,847
Outside the U.S. 4,288 -4 4,444 + 5 4,228
------- --- ------- --- -------
Total Imaging 7,257 -2 7,415 + 5 7,075
------- --- ------- --- -------
Information
Inside the U.S. 2,249 -5 2,375 0 2,380
Outside the U.S. 1,613 -4 1,688 + 6 1,588
------- --- ------- --- -------
Total Information 3,862 -5 4,063 + 2 3,968
------- --- ------- --- -------
Health
Inside the U.S. 3,069 +1 3,027 +10 2,760
Outside the U.S. 2,180 +6 2,054 - 5 2,157
------- --- ------- --- -------
Total Health 5,249 +3 5,081 + 3 4,917
------- --- ------- --- -------
Deduct: Intersegment Sales (4) (14) (9)
------- --- ------- --- -------
Total Sales from Continuing
Operations 16,364 -1 16,545 + 4 15,951
------- --- ------- --- -------
Sales from Discontinued Operations:
Chemicals
Inside the U.S. 2,693 +3 2,602 + 6 2,449
Outside the U.S. 1,283 -3 1,325 + 3 1,291
------- --- ------- --- -------
Total Chemicals 3,976 +1 3,927 + 5 3,740
------- --- ------- --- -------
Deduct: Intersegment Chemical Sales (281) (289) (272)
------- --- ------- --- -------
Total Sales from Discontinued
Operations 3,695 +2 3,638 + 5 3,468
------- --- ------- --- -------
Total Worldwide Sales Including
Discontinued Operations $20,059 -1% $20,183 + 4% $19,419
======= === ======= === =======
</TABLE>
<PAGE>
<PAGE> 13
SALES
Worldwide sales from continuing operations for 1993 were down one percent
when compared with 1992, as slight increases in unit volumes were offset by
the unfavorable effects of foreign currency rate changes and lower effective
selling prices. Sales of the Health segment increased slightly, the Imaging
segment recorded a slight decline and the Information segment was down when
compared with last year. Currency changes against the U.S. dollar
unfavorably affected 1993 sales from continuing operations by approximately
$550 million before reflecting the impact of the Company's hedging program.
Sales from continuing operations for 1992 were up slightly compared with 1991
as all segments posted sales increases primarily as the result of higher unit
volumes. Imaging achieved moderate gains while slight increases were
reported for Information and Health. Currency changes against the U.S.
dollar favorably affected 1992 sales by approximately $150 million before
reflecting the impact of the Company's hedging program.
In the Imaging segment, sales to customers inside the U.S. in 1993 were
essentially level when compared with sales for 1992, as slight increases in
unit volumes were offset by lower effective selling prices. Outside the
U.S., sales showed a slight decrease in 1993, as moderate increases in unit
volumes were more than offset by the unfavorable effects of foreign currency
rate changes and lower effective selling prices. Worldwide volume gains were
led by Kodacolor 35mm films, single-use cameras and Ektacolor papers.
For the Imaging segment, 1992 sales to customers inside the U.S. increased
slightly when compared with sales for 1991 due to higher unit volumes and
higher effective selling prices. Outside the U.S., sales registered a
moderate increase in 1992, as higher unit volumes and the favorable effects
of foreign currency rate changes were partially offset by lower effective
selling prices. Worldwide sales increases in 1992 were led by Kodacolor
films and Ektacolor papers.
In the Information segment, 1993 sales comparisons for customers in the U.S.
and outside the U.S. were adversely affected by the inclusion in 1992 of
revenues from divested units. In addition, outside the U.S., the benefits
from increased unit volumes from ongoing businesses were more than offset by
the unfavorable effects of foreign currency rate changes and slightly lower
selling prices.
Information segment sales in 1992 to customers in the U.S. were essentially
level with 1991. Outside the U.S., sales recorded a moderate increase when
compared with 1991, primarily due to higher unit volumes and the favorable
effects of foreign currency rate changes.
In the Health segment, 1993 sales to customers inside the U.S. were up one
percent when compared with 1992. Outside the U.S., moderate increases for
the year resulted from significant increases in unit volumes, partially
offset by the effects of unfavorable foreign currency rate changes. All
business units posted worldwide volume gains for the year.
Health segment sales in 1992 to customers inside the U.S. recorded good
increases when compared with 1991, primarily due to volume gains. Sales
comparisons between 1992 and 1991 for customers outside the U.S. were
adversely affected by the inclusion of two additional months of Sterling
Winthrop Inc. sales in 1991 to align company reporting periods. In addition,
certain sales by former Sterling Winthrop Inc. units are no longer
consolidated because of the alliance with Elf Sanofi. On a comparable basis,
sales outside the U.S. in 1992 would have registered solid gains when
compared with 1991 results. Worldwide sales increases in 1992 were led by
consumer health and pharmaceutical products and x-ray films.
In the Chemicals segment, whose results are now being reported as
discontinued operations, slight increases in 1993 sales to customers in the
U.S. when compared with 1992 were due to higher unit volumes. Outside the
U.S., a slight decline in 1993 sales when compared with 1992 resulted from
the unfavorable effects of foreign currency rate changes and lower effective
selling prices, partially offset by higher unit volumes. Worldwide sales of
specialty chemicals recorded a moderate increase while industrial chemicals
declined slightly when compared with 1992.
For the Chemicals segment, moderate increases in 1992 sales to customers in
the U.S. and slight increases in sales outside the U.S. when compared with
1991 were due to higher unit volumes. Worldwide sales of specialty chemicals
recorded a solid increase in 1992, while industrial chemicals were level.
<PAGE>
<PAGE> 14
<TABLE>
- -----------------------------------------------------------------------------------------
Earnings (Loss) from Operations by Industry Segment
(in millions)
<CAPTION>
1993 Change 1992 Change 1991
Earnings (Loss) from Operations
from Continuing Operations:
<S> <C> <C> <C> <C> <C>
Imaging $1,109 -9% $1,216 +149% $ 489
Percent of segment sales 15.3% 16.4% 6.9%
Information $ (137) $ (151) $ (688)
Percent of segment sales (3.5%) (3.7%) (17.3%)
Health $ 560 -5% $ 588 + 36% $ 433
Percent of segment sales 10.7% 11.6% 8.8%
------ --- ------ ------ ------
Total Earnings from Operations $1,532 -7% $1,653 >+200% $ 234
from Continuing Operations ------ --- ------ ------ ------
Earnings from Operations from
Discontinued Operations:
Chemicals $ 392 -21% $ 494 - 8% $ 538
Percent of segment sales 9.9% 12.6% 14.4%
------ --- ------ ------ ------
Total Earnings from Operations
including Discontinued Operations $1,924 -10% $2,147 +178% $ 772
====== === ====== ====== ======
</TABLE>
Earnings (loss) from operations for 1993 are shown after deducting
restructuring costs of $202 million for Imaging, $278 million for
Information, $58 million for Health and $12 million for Chemicals. Earnings
(loss) from operations for 1992 are shown after deducting restructuring costs
of $83 million for Imaging, $123 million for Information and $14 million for
Health. Earnings (loss) from operations for 1991 are shown after deducting
restructuring costs of $792 million for Imaging, $623 million for Information
and $190 million for Health.
Segment information is reported on pages 37 through 39, Notes to Financial
Statements.
- -----------------------------------------------------------------------------
EARNINGS
Operating earnings from continuing operations for the Imaging, Information
and Health segments were adversely affected by restructuring costs of $538
million in 1993, $220 million in 1992 and $1,605 million in 1991. The
operating earnings for the Chemicals segment, whose results are now being
reported as discontinued operations, were adversely affected by restructuring
costs of $12 million in 1993. In addition, operating earnings for all
segments were adversely affected by higher retiree health care costs
associated with the change in accounting for certain postretirement benefits.
The 1993 restructuring costs represent the cost of separation benefits for a
cost reduction program expected to reduce worldwide employment by 10,000 and
the cost of closing a facility in Germany that manufactures a component for
the Company's ink jet printing business. The restructuring costs in 1992 and
1991 included costs of an early retirement plan, the restructuring of
non-U.S. sensitized manufacturing and photofinishing operations and worldwide
pharmaceutical businesses, and the Company's exit from non-strategic
businesses.
Imaging segment operating earnings were adversely affected by restructuring
costs in 1993 and 1992 of $202 million and $83 million, respectively.
Imaging segment operating earnings, before deducting restructuring costs in
both years, were essentially level in 1993 when compared with 1992, as the
benefits from increased unit volumes, lower marketing and administrative
activity, manufacturing productivity gains and lower research and development
activity offset lower effective selling prices, cost escalation and the
unfavorable effects of foreign currency rate changes.
Imaging segment operating earnings were adversely affected by restructuring
costs in 1992 and 1991 of $83 million and $792 million, respectively.
Imaging segment operating earnings, before deducting restructuring costs in
both years, increased in 1992 when compared with 1991, as the favorable
effects of manufacturing productivity gains and increased unit volumes were
partially offset by cost escalation, lower effective selling prices,
increased marketing and administrative costs and higher research and
development expenditures.
The Information segment operating losses were adversely affected by
restructuring costs in 1993 and 1992 of $278 and $123 million, respectively.
Information segment operating earnings, before deducting restructuring costs
in both years, improved significantly in 1993 when compared with 1992, as the
benefits of lower marketing and administrative activity and lower research
and development activity were only partially offset by cost escalation.
<PAGE>
<PAGE> 15
The Information segment operating losses were adversely affected by
restructuring costs in 1992 and 1991 of $123 million and $623 million,
respectively. The 1992 Information segment operating loss was less than the
loss for 1991, before deducting restructuring costs in both years, as lower
marketing and administrative costs and lower research and development costs
more than offset cost escalation.
Health segment operating earnings were adversely affected by restructuring
costs in 1993 and 1992 of $58 million and $14 million, respectively. Health
segment operating earnings, before deducting restructuring costs in both
years, increased slightly in 1993 when compared with 1992, as the benefits of
increased unit volumes, manufacturing productivity gains, lower marketing and
administrative activity and lower research and development activity more than
offset cost escalation and the unfavorable effects of foreign currency rate
changes.
Health segment operating earnings were adversely affected by restructuring
costs in 1992 and 1991 of $14 million and $190 million, respectively. On a
fully comparable basis and before deducting the effects of restructuring
costs in both years, Health segment operating earnings were up slightly in
1992 when compared with 1991, as the favorable effects of increased unit
volumes more than offset higher marketing costs and increased research and
development expenditures.
Chemicals segment operating earnings, which are now being reported as
discontinued operations, were adversely affected by restructuring costs in
1993 of $12 million. Chemicals segment operating earnings, before deducting
the 1993 restructuring costs, decreased when compared with 1992, as the
benefits from increased unit volumes were more than offset by cost
escalation, provision for the estimated cost of environmental remediation and
plant closure costs, lower effective selling prices, charges for the planned
exit from the Kodel polyester staple fiber business and the unfavorable
effects of foreign currency rate changes.
Chemicals segment operating earnings decreased for 1992 when compared with
1991, as higher manufacturing costs and increased administrative costs were
only partially offset by increased unit volumes and higher effective selling
prices.
Research and development expenditures amounted to $1,301 million in 1993,
compared with $1,419 million in 1992 and $1,337 million in 1991. Research and
development expenditures in 1993 were significantly below 1992 as the
benefits from lower activity levels were only partially offset by cost
escalation. Cost escalation and increased activity levels were the primary
reasons for the higher research and development expenditures in 1992 when
compared with 1991. Amortization of goodwill amounted to $153 million in
1993, $145 million in 1992 and $147 million in 1991. Advertising and sales
promotion expenses were $1,292 million in 1993, $1,339 million in 1992 and
$1,199 million in 1991. Other marketing and administrative expenses totaled
$3,697 million in 1993, $3,941 million in 1992 and $3,850 million in 1991.
Decreases in advertising and sales promotion, and other marketing and
administrative expenses in 1993 resulted from the benefit of lower activity
levels and the favorable effects of foreign currency rate changes on locally
incurred international costs, partially offset by cost escalation. Increases
in advertising and sales promotion, and other marketing and administrative
expenses for 1992 when compared with 1991 resulted from cost escalation,
increased activity and the unfavorable effects of foreign currency rate
changes. The comparison with 1991 benefited from divestitures in 1992 and
the inclusion of two additional months of Sterling Winthrop Inc. expenditures
from units outside the U.S. in 1991 to align company reporting periods.
Earnings from equity interests and other revenues were $277 million in 1993,
$404 million in 1992 and $259 million in 1991. The results for 1992 included
gains from the sales of investments, including the sale of EKCC.
Interest expense of $635 million in 1993 was lower than the $713 million
incurred in 1992 and $754 million incurred in 1991 as a result of lower
effective interest rates. The Company has a program in place to manage
interest rate risk associated with its current and anticipated borrowings.
In connection with this program, the Company has entered into various
combinations of interest rate swaps, options, currency swaps and similar
arrangements. The effect of this program has been to reduce the aggregate
average interest rate on the Company's borrowings.
The Company has a program in place to manage foreign currency risk. The
Company has entered into foreign currency contracts to hedge transactions in
non-U.S. dollar denominated receivables and payables. The Company has also
entered into foreign currency contracts to hedge sales from foreign units
denominated in currencies other than local currencies and probable
anticipated export sales. The net effect of this program was a gain of
$65 million in 1993, a loss of $66 million in 1992 and a loss of $7 million in
1991.
Other charges increased in 1993 when compared with 1992, as the net loss in
1993 from foreign exchange transactions and the translation of net monetary
items in highly inflationary economies was greater than in 1992. Other
charges decreased in 1992 when compared with 1991 as the net loss in 1992
from foreign exchange transactions and the translation of net monetary items
in highly inflationary economies was less than the net loss in 1991 from
foreign exchange transactions and the translation of net monetary assets and
liabilities.
<PAGE>
<PAGE> 16
- -----------------------------------------------------------------------------
Net Earnings (Loss) 1993 1992 1991
(in millions)
Amount $(1,515) $1,146 $ 17
Percent of sales (9.3%) 6.9% 0.1%
- -----------------------------------------------------------------------------
CASH DIVIDENDS
Total cash dividends of approximately $650 million ($.50 per share each
quarter) were declared in each of the past three years.
- -----------------------------------------------------------------------------
FINANCIAL POSITION
Cash, cash equivalents and marketable securities increased to $1,966 million
at year-end 1993 from $547 million at year-end 1992. In connection with the
spin-off of the worldwide chemical business, the Company borrowed $1.8 billion
in December 1993, which subsequently was assumed by the worldwide chemical
business on December 31, 1993. The proceeds from the borrowings, which were
retained by Kodak, are invested primarly in United States Government
securities and time deposits and will eventually be used to retire other
borrowings. At December 31, 1992, $1.8 billion of the Company's long-term
borrowings were included in the net assets of discontinued operations.
Interest expense and capitalized interest in 1993 related to such debt of
$126 million and $23 million, respectively, were allocated to discontinued
operations in 1993.
The Company announced on March 2, 1994 that it has elected to redeem the zero
coupon convertible subordinated debentures due 2011 on April 1, 1994. The
redemption price is $312.14 per debenture. Each debenture may be converted
into the Company's common stock at a conversion rate of 6.944 shares per
debenture at any time before the close of business on April 1, 1994.
Approximately $1.15 billion would be required to redeem all of the
outstanding debentures. This redemption will not have a material impact on
the Company's results of operations for 1994.
Approximately three-fourths of the restructuring costs recorded by the
Company in 1993 represented the cost of separation benefits for personnel
leaving under a workforce reduction program. Most of these benefits will be
paid during 1994 from operating cash flows. The remainder of the 1993
restructuring costs is associated with the closure of a facility in Germany.
Most of these costs represent non-cash write-offs of assets. Most of the
costs associated with the early retirement plan announced in 1991 are being
funded from the Company's pension plan assets and, therefore, did not
significantly affect the Company's cash flows during the past three years.
The Company does not anticipate that such costs will affect its cash flows in
the near future.
The Company has access to a $2.5 billion revolving credit facility expiring
in October 1995, which it has not used.
Projected operating cash flows are expected to be adequate to support normal
business operations, planned capital expenditures and dividend payments in
1994.
- -----------------------------------------------------------------------------
ENVIRONMENTAL PROTECTION
During 1993, expenditures for pollution prevention and waste treatment for
continuing operations at various manufacturing facilities totaled
$154 million. These costs included $107 million of recurring costs associated
with managing hazardous substances and pollution in on-going operations,
$38 million of capital expenditures to limit or monitor hazardous substances
or pollutants, and $8 million of mandated expenditures to remediate previously
contaminated sites. The Company expects these recurring and remediation
costs to increase slightly and capital to increase significantly in the near
future. While these costs will continue to be significant cash outflows for
the Company, it is not expected that these costs will have a materially
different impact on the Company's financial position, results of operations
or cash flows.
The Company has reviewed a draft Resource Conservation and Recovery Act
(RCRA) Facility Assessment (RFA) pertaining to the Company's Kodak Park site
in Rochester, New York. The Company has completed a broad-based assessment
of the site in response to the RFA. While future expenditures associated
with any remediation activities could be significant, it is not possible to
reasonably estimate those expenditures until additional studies are
performed.
The Clean Air Act Amendments were enacted in 1990. The Company may be
required to incur significant costs, primarily capital in nature, over a
period of several years to comply with the provisions of this Act. The
expenditures that may be required cannot currently be reasonably estimated
since either implementing regulations have not been issued or compliance
plans have not been finalized.
<PAGE>
<PAGE> 17
<TABLE>
CAPITAL ADDITIONS BY INDUSTRY SEGMENT
(in millions)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Capital Additions for Continuing Operations:
Imaging $ 471 $ 631 $ 606
Information 301 552 537
Health 310 442 390
------ ------ ------
Total Capital Additions for Continuing Operations $1,082 $1,625 $1,533
====== ====== ======
</TABLE>
- -----------------------------------------------------------------------------
<TABLE>
MARKET PRICE DATA
<CAPTION>
1993 1992
4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Price per share:
High $64-3/4 $62-3/4 $56-3/8 $56-3/4 $45-1/4 $45-3/4 $41-3/4 $50-3/4
Low 54 49-7/8 45-7/8 40-3/8 39-7/8 39-7/8 37-3/4 39-3/4
</TABLE>
- -----------------------------------------------------------------------------
NEW ACCOUNTING STANDARDS
SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, must be adopted in the first quarter of 1994. This standard
requires that companies classify securities that it holds as held-to-maturity
securities, trading securities or available-for-sale securities. Debt
securities classified as held-to-maturity will be reported at amortized cost.
Debt and equity securities classified as trading will be reported at fair
value, with unrealized holding gains and losses included in earnings. Debt
and equity securities classified as available-for-sale will be reported at
fair value, with unrealized holding gains and losses excluded from earnings
and reported in a separate component of shareowners' equity until realized.
The Company does not believe that this standard will have a material effect
on the Company's financial position or results of operations when adopted.
- -----------------------------------------------------------------------------
SUMMARY OF OPERATING DATA
A summary of operating data for 1993 and for the 4 years prior is shown on
page 44.
<PAGE>
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
Management is responsible for the preparation and integrity of the
consolidated financial statements and related notes which appear on pages 19
through 43. These financial statements have been prepared in accordance with
generally accepted accounting principles and of necessity include some
amounts that are based on management's best estimates and judgments.
The Company's accounting systems include extensive internal controls
designed to provide reasonable assurance of the reliability of its financial
records and the proper safeguarding and use of its assets. Such controls are
based on established policies and procedures, are implemented by trained,
skilled personnel with an appropriate segregation of duties, and are
monitored through a comprehensive internal audit program. The Company's
policies and procedures prescribe that the Company and all employees are to
maintain the highest ethical standards and that its business practices
throughout the world are to be conducted in a manner which is above reproach.
The consolidated financial statements have been audited by Price
Waterhouse, independent accountants, who were responsible for conducting
their audits in accordance with generally accepted auditing standards. Their
resulting report is shown below.
The Board of Directors exercises its responsibility for these financial
statements through its Audit Committee, which consists entirely of
non-management Board members. The independent accountants and internal
auditors have full and free access to the Audit Committee. The Audit
Committee meets periodically with the independent accountants and the
Director of Corporate Auditing of the Company, both privately and with
management present, to discuss accounting, auditing and financial reporting
matters.
George M. C. Fisher C. Michael Hamilton
Chairman of the Board, President and General Comptroller and
Chief Executive Officer Acting Chief Financial
Officer
January 31, 1994 January 31, 1994
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareowners of
Eastman Kodak Company
In our opinion, the accompanying consolidated financial statements listed in
the index appearing under Item 14(a)(1) and (2) on page 54 of this Annual
Report on Form 10-K present fairly, in all material respects, the financial
position of Eastman Kodak Company and subsidiary companies at December 31,
1993 and 1992, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1993, in conformity
with generally accepted accounting principles. 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 generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit 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 the opinion expressed
above.
As discussed in the Other Postemployment Costs note, the Company changed its
method of accounting for certain postretirement benefits and other
postemployment benefits in 1993. As discussed in the Income Taxes note, the
Company changed its method of accounting for income taxes in 1992.
PRICE WATERHOUSE
New York, New York
January 31, 1994, except as to the Subsequent Event note, which is as of
March 2, 1994
<PAGE>
<PAGE> 19
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
REVENUES
Sales $16,364 $16,545 $15,951
Earnings from equity interests and
other revenues 277 404 259
------- ------- -------
TOTAL REVENUES 16,641 16,949 16,210
------- ------- -------
COSTS
Cost of goods sold 8,063 8,018 7,729
Marketing and administrative expenses 4,989 5,280 5,049
Research and development costs 1,301 1,419 1,337
Interest expense 635 713 754
Restructuring costs 538 220 1,605
Other charges 259 81 170
------- ------- -------
TOTAL COSTS 15,785 15,731 16,644
------- ------- -------
Earnings (loss) from continuing operations
before income taxes 856 1,218 (434)
Provision (benefit) for income taxes from
continuing operations 381 491 (132)
------- ------- -------
Earnings (loss) from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle 475 727 (302)
Earnings from discontinued operations
before cumulative effect of changes in
accounting principle 192 267 319
------- ------- -------
Earnings before extraordinary item and
cumulative effect of changes in
accounting principle 667 994 17
Extraordinary item (14) - -
------- ------- -------
Earnings before cumulative effect of changes
in accounting principle 653 994 17
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (1,723) 71 -
Cumulative effect of changes in accounting
principle from discontinued operations (445) 81 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (2,168) 152 -
------- ------- -------
NET EARNINGS (LOSS) $(1,515) $ 1,146 $ 17
======= ======= =======
</TABLE>
<PAGE>
<PAGE> 20
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS (continued)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Primary earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes
in accounting principle $ 1.44 $ 2.24 $ (.93)
Primary earnings per share from discontinued
operations before cumulative effect of changes
in accounting principle .58 .82 .98
------- ------- -------
Primary earnings per share before extraordinary
item and cumulative effect of changes in
accounting principle 2.02 3.06 .05
Extraordinary item (.04) - -
------- ------- -------
Primary earnings per share before cumulative
effect of changes in accounting principle 1.98 3.06 .05
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (5.25) .22 -
Cumulative effect of changes in accounting
principle from discontinued operations (1.35) .25 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (6.60) .47 -
------- ------- -------
Primary earnings (loss) per share $ (4.62) $ 3.53 $ .05
======= ======= =======
</TABLE>
<PAGE>
<PAGE> 21
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF EARNINGS (continued)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Fully diluted earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle $ 1.44 $ 2.22 $ (.93)
Fully diluted earnings per share from
discontinued operations before cumulative effect
of changes in accounting principle .58 .76 .98
------- ------- -------
Fully diluted earnings per share before
extraordinary item and cumulative effect
of changes in accounting principle 2.02 2.98 .05
Extraordinary item (.04) - -
------- ------- -------
Fully diluted earnings per share before
cumulative effect of changes in accounting
principle 1.98 2.98 .05
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (5.25) .20 -
Cumulative effect of changes in accounting
principle from discontinued operations (1.35) .23 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (6.60) .43 -
------- ------- -------
Fully diluted earnings (loss) per share $ (4.62) $ 3.41 $ .05
======= ======= =======
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
1993 1992 1991
(in millions)
RETAINED EARNINGS
Retained earnings at beginning of year $ 7,721 $ 7,225 $ 7,859
Net earnings (loss) (1,515) 1,146 17
Cash dividends declared ($2.00 per share) (657) (650) (649)
Spin-off of worldwide chemical business (1,080) - -
Other changes - - (2)
------- ------- -------
Retained earnings at end of year $ 4,469 $ 7,721 $ 7,225
======= ======= =======
(See notes on pages 24 through 43)
</TABLE>
<PAGE>
<PAGE> 22
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
<CAPTION>
(in millions) December 31,
1993 1992
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,635 $ 361
Marketable securities 331 186
Receivables (net of allowances of $141 and $191) 3,463 3,433
Inventories 1,913 1,991
Deferred income tax charges 435 247
Other 244 219
------- -------
Total current assets 8,021 6,437
------- -------
PROPERTIES
Land, buildings and equipment at cost 13,311 13,607
Less: Accumulated depreciation 6,945 6,843
------- -------
Net properties 6,366 6,764
OTHER ASSETS
Unamortized goodwill (net of accumulated
amortization of $846 and $693) 4,186 4,261
Long-term receivables and other noncurrent assets 1,271 1,473
Deferred income tax charges 481 -
Net assets of discontinued operations - 1,406
------- -------
TOTAL ASSETS $20,325 $20,341
======= =======
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES
Payables $ 3,630 $ 3,127
Short-term borrowings 655 1,732
Taxes-income and other 420 490
Dividends payable 165 163
Deferred income tax credits 40 34
------- -------
Total current liabilities 4,910 5,546
OTHER LIABILITIES
Long-term borrowings 6,853 5,402
Postemployment liabilities 3,678 760
Other long-term liabilities 1,449 1,508
Deferred income tax credits 79 568
------- -------
Total liabilities 16,969 13,784
------- -------
SHAREOWNERS' EQUITY
Common stock, par value $2.50 per share 948 936
950,000,000 shares authorized; issued
379,079,777 in 1993 and 374,479,114 in 1992
Additional capital paid in or transferred
from retained earnings 213 26
Retained earnings 4,469 7,721
Accumulated translation adjustment (235) (85)
------- -------
5,395 8,598
Less: Treasury stock, at cost 2,039 2,041
48,513,344 shares in 1993 and 48,562,835
shares in 1992
------- -------
Total shareowners' equity 3,356 6,557
------- -------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY $20,325 $20,341
======= =======
(See notes on pages 24 through 43)
</TABLE>
<PAGE>
<PAGE> 23
<TABLE>
Eastman Kodak Company and Subsidiary Companies
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
1993 1992 1991
(in millions)
<S> <C> <C> <C>
Cash flows from operating activities:
Earnings (loss) from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle $ 475 $ 727 $ (302)
Adjustments to reconcile above earnings to net
cash provided by operating activities:
Depreciation and amortization 1,111 1,202 1,142
Benefit for deferred taxes (130) (34) (201)
Loss on sale and retirement of properties 199 159 125
(Increase) decrease in receivables (120) 251 (19)
Decrease (increase) in inventories 269 (147) 88
Increase in liabilities excluding borrowings 243 251 771
Other items, net 567 614 310
------ ------ ------
Total adjustments 2,139 2,296 2,216
------ ------ ------
Net cash provided by operating activities 2,614 3,023 1,914
------ ------ ------
Cash flows from investing activities:
Additions to properties (1,082) (1,625) (1,533)
Proceeds from sale of investments 48 189 33
Proceeds from sale of properties 30 30 52
Marketable securities - purchases (391) (159) (60)
Marketable securities - sales 245 114 102
------ ------ ------
Net cash used in investing activities (1,150) (1,451) (1,406)
------ ------ ------
Cash flows from financing activities:
Net decrease in commercial paper
borrowings of 90 days or less (1,438) (629) (111)
Proceeds from borrowings assumed by
discontinued operations 1,800 - -
Proceeds from other borrowings 527 476 1,518
Repayment of other borrowings (592) (1,184) (1,207)
Dividends to shareowners (657) (650) (649)
Exercise of employee stock options 175 17 -
Other items 2 2 2
------ ------ ------
Net cash used in financing activities (183) (1,968) (447)
------ ------ ------
Effect of exchange rate changes on cash (7) (17) (2)
------ ------ ------
Net increase (decrease) in cash and cash
equivalents 1,274 (413) 59
Cash and cash equivalents, beginning
of year 361 774 715
------ ------ ------
Cash and cash equivalents, end of year $1,635 $ 361 $ 774
====== ====== ======
(See notes on pages 24 through 43)
</TABLE>
<PAGE>
<PAGE> 24
Eastman Kodak Company and Subsidiary Companies
NOTES TO FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of Eastman Kodak
Company and its majority owned subsidiary companies. Intercompany
transactions are eliminated and net earnings are reduced by the portion of
the earnings of subsidiaries applicable to minority interests.
TRANSLATION OF NON-U.S. CURRENCIES
Effective January 1, 1992, the local currency is the "functional currency" of
most subsidiary companies outside the U.S., however, the U.S. dollar will
continue to be used for reporting operations in highly inflationary
economies. This change did not have a material effect on the Company's
statement of financial position as of January 1, 1992.
INVENTORIES
Inventories are valued at cost, which is not in excess of market. The cost
of most U.S. inventories is determined by the last-in, first-out (LIFO)
method. The cost of other inventories is determined by the first-in,
first-out (FIFO), or average cost method.
GOODWILL
The excess of the Company's costs of its consolidated investments over the
value ascribed to the equity in such companies at the time of acquisition is
amortized over appropriate future periods benefited not exceeding 40 years.
INVESTMENTS
Included in long-term receivables and other noncurrent assets are investments
in joint ventures which are managed as integral parts of the Company's
segment operations and are accounted for on an equity basis. The Company's
share of the earnings of these joint ventures is included in the earnings
from operations for the related segments.
SALES
Sales represent revenue from sales of products and services, equipment
rentals, and other operating fees.
DEPRECIATION
Depreciation expense is provided based on historical cost and the estimated
useful lives of the assets. The Company generally uses the straight-line
method for calculating the provision for depreciation. For assets in the
United States acquired prior to January 1, 1992, the provision for
depreciation is generally calculated using accelerated methods.
ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Remediation costs that relate to an existing
condition caused by past operations are accrued when it is probable that
these costs will be incurred and can be reasonably estimated.
PROPERTY RETIREMENTS
Properties are recorded at historical cost, reduced by accumulated
depreciation. When assets are retired or otherwise disposed of, the cost of
such assets and the related accumulated depreciation are removed from the
accounts. Any profit or loss on retirement, or other disposition, is
reflected in earnings.
INCOME TAXES
Effective January 1, 1992, deferred income taxes reflect the impact of
temporary differences between the assets and liabilities recognized for
financial reporting purposes and amounts recognized for tax purposes.
Deferred taxes are based on tax laws as currently enacted.
RECLASSIFICATIONS
Certain 1992 and 1991 financial statement and related footnote amounts have
been reclassified to conform to the 1993 presentation.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 25
DISCONTINUED OPERATIONS
On December 31, 1993, the Company spun-off its worldwide chemical business
through a dividend to its shareowners, following receipt of a ruling from the
Internal Revenue Service that the transaction will be tax-free to Kodak and
its U. S. shareowners. The Chemicals segment has been reported as a
discontinued operation and results for prior periods have been restated.
Summarized results of the Chemicals segment, including allocations of
interest expense, income taxes and transaction costs associated with the
spin-off are as follows:
(in millions) 1993 1992 1991
Sales $3,695 $3,638 $3,468
====== ====== ======
Earnings before income taxes $ 267 $ 383 $ 445
Provision for income taxes 75 116 126
------ ------ ------
Earnings before cumulative
effect of changes in
accounting principle $ 192 $ 267 $ 319
====== ====== ======
Net assets of the Chemicals segment at December 31, 1992 are presented below.
As a result of the spin-off, these assets are not included in the Company's
1993 consolidated statement of financial position.
December 31,
1992
(in millions)
Current assets $1,002
Land, buildings and equipment, net 3,071
Other assets 164
------
Total assets 4,237
------
Current liabilities 486
Long-term borrowings 1,800
Other liabilities 545
------
Total liabilities 2,831
------
Net assets of discontinued
operations $1,406
======
Total net assets of the Chemicals segment at December 31, 1992 reflects the
expected settlement of intercompany balances and an allocation of long-term
borrowings as of the date of the spin-off.
The effective tax rates for discontinued operations were 28%, 30% and 28% for
1993, 1992 and 1991, respectively. The differences between the provision for
income taxes and income taxes computed using the U.S. federal statutory
income tax rate of 35% in 1993 and 34% in 1992 and 1991 were primarily due to
the allocation of foreign and state tax benefits to discontinued operations.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 26
CASH FLOW INFORMATION
For purposes of the consolidated statement of cash flows, the Company
considers marketable securities with maturities of three months or less at
the time of purchase to be cash equivalents.
Cash paid for interest and income taxes, including amounts paid attributable
to discontinued operations, is as follows:
(in millions) 1993 1992 1991
Interest, net of portion capitalized
of $86, $94 and $112 $792 $766 $869
Income taxes 497 388 434
Certain assets have been acquired through non-cash acquisitions and are not
reflected in the consolidated statement of cash flows. Except for
$157 million of cash transferred with the Chemicals segment, the spin-off of
the worldwide chemical business was a non-cash transaction and is not
reflected in the consolidated statement of cash flows.
- -----------------------------------------------------------------------------
MARKETABLE SECURITIES
Marketable securities (principally U.S. Government securities and time
deposits) are shown at cost which approximates market value.
- -----------------------------------------------------------------------------
RECEIVABLES
The Company has entered into an agreement whereby it sells an undivided
interest in a designated pool of trade accounts receivable up to a maximum of
$100 million. As collections reduce accounts receivable balances in the pool,
the Company may sell participating interests in new receivables to bring the
amount sold up to the $100 million maximum. The uncollected balance of
receivables sold amounted to $100 million at each balance sheet date. The
Company retains collection and administrative responsibilities on the
participating interests sold as agent for the purchaser.
During 1993 the Company sold $75 million of lease receivables for
approximately $85 million.
- -----------------------------------------------------------------------------
<TABLE>
INVENTORIES
(in millions)
<CAPTION>
1993 1992
<S> <C> <C>
At FIFO or average cost (approximates current cost)
Finished goods $1,331 $1,328
Work in process 702 685
Raw materials and supplies 580 665
------ ------
2,613 2,678
Reduction to LIFO value (700) (687)
------ ------
$1,913 $1,991
====== ======
Inventories valued on the LIFO method are about 50 percent of total inventories in each of the
years.
</TABLE>
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 27
<TABLE>
PROPERTIES AND ACCUMULATED DEPRECIATION
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
PROPERTIES
Balance at beginning of year $13,607 $13,121 $12,268
Additions 1,082 1,625 1,533
Deductions (1,378) (1,139) (680)
------- ------- -------
Balance at end of year $13,311 $13,607 $13,121
======= ======= =======
Made up of:
Land $ 267 $ 278 $ 263
Buildings and building equipment 3,154 3,047 3,033
Machinery and equipment 9,405 9,508 9,096
Construction in progress 485 774 729
------- ------- -------
Total as above $13,311 $13,607 $13,121
======= ======= =======
ACCUMULATED DEPRECIATION
Balance at beginning of year $ 6,843 $ 6,500 $ 6,009
Provision for depreciation 958 1,057 995
Deductions (856) (714) (504)
------- ------- -------
Balance at end of year $ 6,945 $ 6,843 $ 6,500
======= ======= =======
</TABLE>
- -----------------------------------------------------------------------------
<TABLE>
LONG-TERM RECEIVABLES AND OTHER NONCURRENT ASSETS
<CAPTION>
(in millions) 1993 1992
<S> <C> <C>
Long-term receivables $ 187 $ 214
Other noncurrent assets 1,084 1,259
------ ------
Total (net of allowances of $24 and $28) $1,271 $1,473
====== ======
</TABLE>
- -----------------------------------------------------------------------------
<TABLE>
PAYABLES AND SHORT-TERM BORROWINGS
<CAPTION>
(in millions) 1993 1992
<S> <C> <C>
Trade creditors $ 737 $ 719
Commercial paper - 596
Accrued payrolls 176 208
Accrued vacation pay 264 272
Short-term bank borrowings by subsidiaries
outside the U.S. 305 1,136
Wage dividend and Company payments under
Employees' Savings and Investment Plan 169 193
Current maturities of long-term borrowings 350 -
Restructuring reserves 389 256
Interest rate swap and option agreements 210 96
Other 1,685 1,383
------ ------
Total $4,285 $4,859
====== ======
</TABLE>
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 28
<TABLE>
LONG-TERM BORROWINGS
(in millions)
<CAPTION>
1993 1992
<S> <C> <C>
Eastman Kodak Company
10.05% notes due 1994 $ 350 $ 350
9.20% notes due 1995 750 750
10 3/8% Eurobonds due 1995 111 111
7 7/8% notes due 1997 135 135
8.55% notes due 1997 200 200
9 1/8% notes due 1998 1,100 1,100
7 1/4% notes due 1999 275 275
9 5/8% notes due 1999 275 275
9 1/2% notes due 2000 400 400
6 3/8% convertible subordinated debentures due 2001 278 300
10% notes due 2001 300 300
9 3/8% notes due 2003 400 400
9 7/8% notes due 2004 300 300
9 3/4% notes due 2004 300 300
Zero coupon exchangeable senior debentures due 2006 - 118
9 1/2% notes due 2008 300 -
Zero coupon convertible subordinated debentures due 2011 1,127 1,056
8 5/8% debentures due 2016 - 300
9.95% debentures due 2018 125 125
9.20% debentures due 2021 200 200
Sterling Winthrop Inc.
8 7/8% notes due 1996 100 100
Industria Fotografica Interamericana S.A. de C.V.
7.36% notes due 2003 110 -
Other 67 107
------ ------
7,203 7,202
Less: Current maturities 350 -
------ ------
6,853 7,202
Less: Amounts expected to be assumed by
discontinued operations - 1,800
------ ------
Total $6,853 $5,402
====== ======
</TABLE>
The 6 3/8% debentures due in 2001 are convertible at the option of the holder
at any time prior to maturity for the Company's common stock at $41.52 per
share.
The zero coupon convertible subordinated debentures due in 2011 ($3,680
million face value, 6.75% yield to maturity) are convertible at the option of
the holder at any time prior to maturity for the Company's common stock at a
conversion rate of 6.944 shares per debenture. At the option of the holder,
the debentures must be purchased by the Company on October 15, 1994, 1995,
1996, 2001 and 2006, at a price equal to the issue price plus accrued
original issue discount.
The Company has an unused $2.5 billion revolving credit facility expiring in
October 1995 which is available to support the Company's commercial paper
borrowings. If unused, it has a commitment fee of $6.3 million per year.
Interest on amounts borrowed under this facility is at rates based on spreads
above certain reference rates.
The amount of long-term borrowings maturing in the four years after 1994 are
$861 million in 1995, $100 million in 1996, $335 million in 1997 and
$1,100 million in 1998.
The Company has swapped $135 million of the 7 7/8% notes into yen denominated
debt and $46 million of the Sterling Winthrop Inc. 8 7/8% notes into deutsche
mark denominated debt. As a result of these agreements, the effective
interest rates on the 7 7/8% notes and 8 7/8% notes have been reduced.
The Company has a program in place to manage interest rate risk associated
with its current and anticipated borrowings. In connection with this
program, the Company has entered into various combinations of interest rate
swaps, options, currency swaps and similar arrangements. At December 31,
1993 and 1992, the Company had the following interest rate swap agreements
with aggregate notional principal amounts of $4.7 billion and $4.1 billion,
respectively.
<PAGE>
<PAGE> 29
LONG-TERM BORROWINGS (continued)
Notional Amounts Maturities
at December 31, Through
1993 1992
Pay fixed rate (9.5% - 11.5%) and
receive LIBOR or commercial paper
based variable rate $ .6 $ .9 2018
Pay LIBOR or commercial paper based
variable rate and receive fixed rate (9.5%) .4 .4 2000
Zero coupon swaps 3.7 2.8 1999
In addition, the Company has entered into interest rate options linked to
$2.5 billion of its fixed rate callable debt at each balance sheet date. The
notional principal amounts associated with these options were $2.8 billion and
$3.1 billion at December 31, 1993 and 1992, respectively. The effect of these
options, which are exercisable through 1998, is to change the underlying debt
from callable to non-callable and to reduce the aggregate average effective
interest rate on this debt.
During 1988, the Company issued debt warrants that give the holders the
option between 1995 and 2004 to require the Company to issue an additional
$300 million of 9.5% debt maturing in 2018. The premium received for these
warrants is being amortized as a reduction of interest expense.
The Company is exposed to credit loss in the event of nonperformance by the
counterparties to these agreements. However, the Company does not anticipate
nonperformance. Also, while these agreements are part of the Company's
overall interest rate management program, the fair value of these instruments
will vary with changes in prevailing interest rates. The fair value of these
interest rate agreements are presented in the note on Fair Values of
Financial Instruments.
The Company has issued letters of credit in lieu of making security deposits
to insure the payment of possible Workers' Compensation claims.
- -----------------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES
(in millions)
1993 1992
Interest rate swap and option
agreements $ 654 $ 789
Deferred compensation 115 101
Other 680 618
------ ------
Total $1,449 $1,508
====== ======
- -----------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
The Company has entered into agreements with several companies to provide the
Company with products and services to be used in its normal operations. The
minimum payments for these agreements are approximately $132 million in 1994,
$110 million in 1995, $101 million in 1996, $103 million in 1997, $98 million in
1998 and $155 million in 1999 and beyond.
The Company has also guaranteed debt and other obligations under agreements
with certain affiliated companies and customers. At December 31, 1993, these
guarantees totaled approximately $230 million. The Company does not expect
that these guarantees will have a material impact on the Company's future
financial position or results of operations.
The Company has entered into a Master Lease agreement whereby the Company
leases equipment with the right to buy the equipment anytime at fair market
value. The lease term is one year and is renewable annually. The total
amount of assets under this lease is approximately $300 million at each
balance sheet date.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 30
FAIR VALUES OF FINANCIAL INSTRUMENTS
The recorded amounts of other investments as of December 31, 1993 and 1992
shown below include $81 million and $70 million, respectively, of equity
investments in a number of entities for which it is not practicable to
estimate fair value, since quoted market prices do not exist for any of these
investments.
The fair values of long-term borrowings were estimated based on quoted market
prices or by obtaining quotes from brokers.
As discussed above, the Company is a party to various interest rate option
and swap agreements and foreign currency contracts which are included in
other instruments below. The fair values of other instruments were estimated
by obtaining quotes from brokers, where practicable, or by estimating the
amounts the Company would receive or pay to terminate the instruments at the
reporting date.
The recorded amounts of certain financial instruments, such as cash and
marketable securities and short-term borrowings, approximate their fair
values and are excluded from the amounts below. The recorded amounts and
estimated fair values of the Company's long-term borrowings and other
financial instruments as of December 31, 1993 and 1992 were as follows:
December 31, 1993 December 31, 1992
(in millions)
Recorded Fair Recorded Fair
Amount Value Amount Value
Other investments $ 93 $ 93 $ 124 $ 127
Long-term borrowings (6,853) (7,513) (7,202)* (7,661)*
Other instruments (816) (1,308) (689) (936)
*Includes borrowings expected to be assumed by discontinued operations.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 31
<TABLE>
SHAREOWNERS' EQUITY
(in millions)
<CAPTION>
1993 1992 1991
<S> <C> <C> <C>
Common stock at par value
Balance at beginning of year $ 936 $ 934 $ 934
Additions 12 2 -
------ ------ ------
Balance at end of year 948 936 934
------ ------ ------
Additional capital paid in or transferred
from retained earnings
Balance at beginning of year 26 9 7
Additions 187 17 2
------ ------ ------
Balance at end of year 213 26 9
------ ------ ------
Retained earnings
Parent company and subsidiaries inside the U.S. 2,067 5,124 4,169
Subsidiaries outside the U.S. 2,402 2,597 3,056
------ ------ ------
Total retained earnings 4,469 7,721 7,225
------ ------ ------
Accumulated translation adjustment
Balance at beginning of year (85) (12) 7
Currency translation adjustment (150) (73)* (19)
------ ------ ------
Balance at end of year (235) (85) (12)
------ ------ ------
Total before deducting treasury stock 5,395 8,598 8,156
------ ------ ------
Less: Treasury stock, at cost
Balance at beginning of year 2,041 2,052 2,059
Reissuance of treasury shares (2) (11) (7)
------ ------ ------
Balance at end of year 2,039 2,041 2,052
------ ------ ------
Total shareowners' equity $3,356 $6,557 $6,104
====== ====== ======
<FN>
* Includes the effect of the change to local currency as the functional currency for most
subsidiary companies outside the U.S. on January 1, 1992.
</TABLE>
There are approximately 27 million shares reserved for the conversion of the
6 3/8% convertible subordinated debentures and zero coupon convertible
subordinated debentures issued by the Company. There are also 100 million
shares of $10 par value preferred stock authorized, none of which has been
issued.
Retained earnings of subsidiary companies outside the U.S. are considered to
be reinvested indefinitely. If remitted, they would be substantially free of
additional tax. It is not practicable to determine the deferred tax
liability for temporary differences related to these retained earnings.
- -----------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Fully diluted earnings per share is computed by dividing net earnings
adjusted for after-tax interest expense associated with convertible
securities by the average number of common shares outstanding, common stock
equivalents related to dilutive stock options, and common shares issuable
upon conversion of such convertible securities. The effects of such
potentially dilutive convertible securities were not dilutive in 1993 and
1991. The number of common shares used to compute earnings per share amounts
was as follows:
(in millions) 1993 1992 1991
Primary 328.3 325.1 324.7
Fully diluted 331.2 352.2 326.4
- -----------------------------------------------------------------------------
OTHER REVENUES
Other revenues include $55 million of interest income for 1993, $81 million for
1992 and $109 million for 1991.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 32
INCOME TAXES
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. The
adoption of this standard changed the Company's method of accounting for
income taxes from the deferred method to the liability method. The standard
was adopted on a prospective basis and amounts presented for prior years were
not restated. The cumulative effect of adopting the standard as of January
1, 1992 was a $71 million credit to earnings from continuing operations and a
$81 million credit to earnings from discontinued operations.
The components of earnings (loss) from continuing operations before income
taxes and the related provision (benefit) for United States and other income
taxes were as follows:
<TABLE>
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
Earnings (loss) before income taxes
United States $ 479 $ 618 $ (872)
Outside the U.S. 377 600 438
------ ------ ------
Total $ 856 $1,218 $ (434)
====== ====== ======
United States income taxes
Current provision (benefit) $ 244 $ 281 $ (177)
Deferred benefit (73) (16) (158)
Non-U.S. income taxes
Current provision 231 168 275
Deferred benefit (51) (9) (37)
State and other income taxes
Current provision (benefit) 36 76 (29)
Deferred benefit (6) (9) (6)
------ ------ ------
Total $ 381 $ 491 $ (132)
====== ====== ======
</TABLE>
The components of earnings (loss) from consolidated operations before income
taxes and the related provision (benefit) for United States and other income
taxes were as follows:
<TABLE>
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
Earnings (loss) before income taxes
United States $(2,762) $ 999 $ (461)
Outside the U.S. 389 602 472
------- ------ ------
Total $(2,373) $1,601 $ 11
======= ====== ======
United States income taxes
Current provision (benefit) $ 307 $ 349 $ (111)
Deferred benefit (1,190) (189) (112)
Non-U.S. income taxes
Current provision 237 182 286
Deferred benefit (51) (30) (35)
State and other income taxes
Current provision (benefit) 34 75 (28)
Deferred provision (benefit) (195) 68 (6)
------- ------ ------
Total $ (858) $ 455 $ (6)
======= ====== ======
The components of consolidated income
taxes are as follows:
Continuing operations $ 381 $ 491 $ (132)
Discontinued operations 75 116 126
Extraordinary item (8) - -
Cumulative effect of changes
in accounting principle (1,306) (152) -
------- ------ ------
Total income taxes (benefit) $ (858) $ 455 $ (6)
======= ====== ======
</TABLE>
<PAGE>
<PAGE> 33
The differences between the provision (benefit) for income taxes and income
taxes computed using the U.S. federal income tax rate for continuing
operations were as follows:
<TABLE>
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
Amount computed using the statutory rate $ 300 $ 414 $ (148)
Increase (reduction) in taxes resulting from
State and other income taxes 20 44 (23)
Goodwill amortization 54 50 50
Export sales and manufacturing credits (51) (52) (61)
Operations outside the U.S. 100 42 92
Other, net (42) (7) (42)
------ ------ ------
Provision (benefit) for income taxes $ 381 $ 491 $ (132)
====== ====== ======
</TABLE>
The significant components of deferred tax assets and liabilities were as
follows:
<TABLE>
<CAPTION>
(in millions) 1993 1992
<S> <C> <C>
Deferred tax assets
Postemployment obligations $1,185 $ -
Restructuring costs and
separation programs 627 517
Inventories 72 60
Tax loss carryforwards 196 92
Other 560 519
------ ------
2,640 1,188
Valuation allowance (196) (92)
------ ------
Total $2,444 $1,096
====== ======
Deferred tax liabilities
Depreciation $ 644 $ 675
U.S. pension income 131 157
Leasing 443 426
Other 429 193
------ ------
Total $1,647 $1,451
====== ======
</TABLE>
The valuation allowance is primarily attributable to certain net operating
loss carryforwards outside the U.S. A majority of the net operating loss
carryforwards are available indefinitely.
The 1991 deferred tax benefit for both continuing and consolidated operations
was primarily attributable to differences related to restructuring costs of
$526 million, which was partially offset by the settlement of a litigation
judgement of $324 million.
<PAGE>
<PAGE> 34
CURRENCY TRANSACTIONS AND TRANSLATION ADJUSTMENTS
The Company has entered into foreign currency forward and option contracts.
The notional amounts for these contracts were $615 million at December 31,
1993 and $783 million at December 31, 1992. Most of these contracts hedge
transactions in non-U.S. dollar denominated receivables and payables.
Exchange gains and losses on these hedge contracts are offset against losses
and gains on the underlying receivables and payables.
The Company has entered into foreign currency options and option combinations
to hedge probable anticipated export sales transactions during the next two
years. Realized and unrealized gains and losses on those options and option
combinations that are designated and effective as hedges of such probable
anticipated, but not firmly committed, foreign currency transactions are
deferred and recognized in income in the same periods as the hedged
transactions. The net unrealized loss deferred on such options as of
December 31, 1993 totaled $69 million compared with a net unrealized gain of
$11 million for 1992. These amounts represent the gain or loss that would
have been recognized had these options been liquidated at market value in
their respective years.
The Company is exposed to credit loss in the event of nonperformance by the
other parties to the foreign currency option contracts. However, the Company
does not anticipate nonperformance.
The net effect from foreign exchange transactions was a gain of $6 million
for 1993 compared with a loss of $33 million for 1992 and a gain of
$55 million for 1991.
- -----------------------------------------------------------------------------
RESTRUCTURING COSTS
The Company recorded restructuring costs for continuing operations in 1993 of
$538 million. Approximately three-fourths of these costs represented the cost
of separation benefits for a cost reduction program expected to reduce
worldwide employment by 10,000 personnel, most of whom are expected to leave
by the end of 1994. The remainder of the restructuring costs is associated
with closing a facility in Germany that manufactures a component for the
Company's ink jet printer business. This closure is expected to be completed
during 1994. The accrual balance for these programs is
$387 million at December 31, 1993.
The Company recorded restructuring costs for continuing operations of
$220 million in 1992 and $1,605 million in 1991. Approximately three-fourths
of these costs were for an early retirement program. The balance for this
program is $375 million at December 31, 1993, which will be paid out to early
retirees and their survivors over time. Most of the costs associated with
this program are being funded from the Company's pension plan assets and,
therefore, did not affect the Company's cash flows during the past three
years. The Company does not anticipate that such costs will significantly
affect the cash flows in the near future.
The remainder of the 1992 and 1991 restructuring costs is related to the
Company's exit from non-strategic businesses and the restructuring of the
Company's non-U.S. sensitized manufacturing and photofinishing businesses,
and worldwide pharmaceutical business. The accrual balance remaining at
December 31, 1993 for these programs is $52 million, which relates primarily
to noncancelable lease commitments and other contractual obligations
associated with divested operations to be paid out over the remaining terms
of the contracts.
- -----------------------------------------------------------------------------
RENTAL AND LEASE COMMITMENTS
Rental expense consists of: 1993 1992 1991
(in millions)
Gross rentals $226 $226 $239
Deduct: Sublease income 11 5 4
---- ---- ----
Total $215 $221 $235
==== ==== ====
The approximate amounts of noncancelable lease commitments with terms of more
than one year, principally for the rental of real property, reduced by minor
sublease income, are $107 million in 1994, $88 million in 1995, $74 million in
1996, $66 million in 1997, $49 million in 1998 and $392 million in 1999 and
beyond.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 35
RETIREMENT PLANS
Total worldwide pension expense, including discontinued operations, was
$104 million in 1993. This compares with pension expense of $56 million in
1992 and pension income of $8 million in 1991. Discontinued operations was
allocated pension expense of $10 million and $6 million in 1993 and 1992,
respectively, and pension income of $7 million in 1991.
The Company has defined benefit pension plans which cover substantially all
of its U.S. employees. The benefits are based on years of service and
generally on the employees' final average compensation as defined in the
plans. The Company makes contributions to the plans as permitted by
government laws and regulations. Retirement plan benefits are paid to
eligible employees by insurance companies or from trust funds. The Company
has retained the obligation for pension benefits for personnel who retired
from Eastman Chemical Company through December 31, 1993.
Pension expense for the principal U.S. plan, including discontinued
operations, includes the following components:
<TABLE>
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 160 $ 143 $ 135
Interest cost on projected benefit obligation 575 560 517
Return on plan assets (1,124) (514) (1,368)
Net amortization 436 (190) 650
------ ------ ------
Net pension expense (income) $ 47 $ (1) $ (66)
====== ====== ======
</TABLE>
The funded status of the principal U.S. plan was as follows:
<TABLE>
<CAPTION>
December 31,
(in millions) 1993 1992*
<S> <C> <C>
Pension benefit obligations
Vested benefits $5,693 $5,404
====== ======
Accumulated benefits $5,900 $5,701
====== ======
Projected benefits $6,755 $6,778
Market value of assets (primarily listed stocks) 6,278 6,526
------ ------
Projected benefits in excess of plan assets 477 252
Unrecognized net loss (366) (189)
Unrecognized net transition asset 632 793
Unrecognized prior service cost (312) (364)
------ ------
Accrued pension expense $ 431 $ 492
====== ======
<FN>
*The funded status at December 31, 1992 includes discontinued operations.
</TABLE>
The assumptions used to develop the projected benefit obligation for U.S.
plans were as follows:
December 31,
1993 1992
Discount rate 7 1/4% 8 1/2%
Salary increase rate 4 5
Long-term rate of return on plan assets 9 1/2 10 1/2
The Company also sponsors other U.S. plans. At December 31, 1993, the
projected benefit obligations for these plans totaled $217 million (1992 -
$208 million) of which $145 million (1992 - $144 million) was included as a
liability in the consolidated statement of financial position.
The obligation for the Company's unfunded plans of $126 million in 1993 and
$132 million in 1992 has been recorded as a long-term liability.
Calculations indicate that the total of the pension funds and accruals for
non-U.S. plans less pension prepayments and deferred charges exceeds the
actuarially computed value of vested benefits under such plans as of the
beginning of 1993 and 1992.
<PAGE>
<PAGE> 36
OTHER POSTEMPLOYMENT COSTS
The Company provides life insurance and health care benefits for eligible
retirees and health care benefits for eligible survivors of retirees. In
general, these benefits are provided to retirees eligible to retire under the
Company's principal U.S. pension plan. Prior to January 1, 1993, the Company
has recognized expense for the cost of such plans when it paid premiums,
claims and other costs. The expense for such plans for continuing operations
was $244 million in 1993, $100 million in 1992 and $78 million in 1991.
The Company adopted SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions on January 1, 1993. As a result, the Company
now accrues, during the years employees render service, the expected costs of
providing postretirement health and life insurance benefits to such
employees. The obligation owed to current and retired employees, including
discontinued operations, as of January 1, 1993 was recognized on that date as
a cumulative effect of a change in accounting principle of $2.1 billion
after-tax. The Company has retained the obligation for other postretirement
benefits for personnel who retired from Eastman Chemical Company through
December 31, 1993. The annual after-tax effect of the expense recognized for
continuing operations using the accrual method required by SFAS No. 106 is
approximately $108 million ($.33 per share) higher than the annual expense
that would be recognized on a cash basis. Since the Company plans to
continue to fund these benefit costs on a pay-as-you-go-basis, the adoption
of SFAS No. 106 will not affect cash flows.
The 1993 net periodic postretirement benefit cost for the principal U.S.
plans for continuing operations includes the following components:
(in millions)
Service cost $ 29
Interest cost 215
------
Net periodic postretirement
benefit cost $ 244
======
Presented below are the total obligation and amount recognized in the
consolidated statement of financial position for the principal U.S. plans at
December 31, 1993:
(in millions)
Accumulated postretirement
benefit obligation
Retirees $2,677
Fully eligible active plan
participants 61
Other active plan participants 826
------
3,564
Unrecognized net loss (548)
------
Accrued postretirement benefit cost $3,016
======
To estimate these costs, health care costs were assumed to increase 11% in
1994 with the rate of increase declining ratably to 5% by 2002 and
thereafter. The discount rate and salary increase rate were assumed to be
8.5% and 5.0%, respectively, as of January 1, 1993. The discount rate and
salary increase rate are assumed to be 7.25% and 4.0%, respectively, as of
December 31, 1993. If the health care cost trend rates were increased by one
percentage point, the accumulated postretirement benefit health care
obligation from continuing operations as of December 31, 1993 would increase
by approximately $265 million while the net periodic postretirement health
care benefit cost for the year then ended would increase by approximately
$20 million.
A few of the Company's non-U.S. subsidiaries have supplemental health benefit
plans for certain retirees. The cost of these programs is not significant to
the Company.
Effective January 1, 1993, the Company adopted SFAS No. 112, Employers'
Accounting for Postemployment Benefits. Adoption of SFAS No. 112 requires
the Company to recognize the obligation to provide certain benefits to former
or inactive employees before retirement. The obligation including
discontinued operations as of January 1, 1993 has been recognized as a
cumulative charge of $190 million ($117 million after-tax). The amount
applicable to discontinued operations was $47 million ($29 million after-tax).
Adoption of SFAS No. 112 did not have a material effect on the Company's
earnings before cumulative effect of changes in accounting principle.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 37
SEGMENT INFORMATION
The products of each segment are manufactured and marketed in the U.S. and in
other parts of the world. The Imaging segment includes amateur, motion
picture and professional films, photographic papers, chemicals and equipment
for photographic imaging. The Information segment includes graphic arts
films, microfilms, copiers, printers and other equipment for information
management. The Health segment includes pharmaceutical specialty products,
proprietary products, medical radiography and clinical diagnostic materials
and equipment, and household and other products. Sales between segments are
made on a basis intended to reflect the market value of the products.
Sales are reported in the geographic area where they originate. Transfers
among geographic areas are made on a basis intended to reflect the market
value of the products, recognizing prevailing market prices and distributor
discounts. The parent company's equity in the net assets of subsidiaries
outside the U.S. was as follows:
(in millions) 1993 1992 1991
Net assets $3,436 $3,196 $3,639
====== ====== ======
<PAGE>
<PAGE> 38
<TABLE>
SEGMENT INFORMATION (continued)
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
Sales from continuing operations,
including intersegment sales
Imaging $ 7,257 $ 7,415 $ 7,075
Information 3,862 4,063 3,968
Health 5,249 5,081 4,917
Intersegment sales
Imaging (4) (14) (9)
------- ------- -------
Total sales from continuing operations $16,364 $16,545 $15,951
======= ======= =======
Earnings (loss) from operations from
continuing operations (1)
Imaging $ 1,109 $ 1,216 $ 489
Information (137) (151) (688)
Health 560 588 433
------- ------- -------
Total earnings from operations
from continuing operations 1,532 1,653 234
Other revenues and charges
Imaging 18 21 (3)
Information 15 (8) (8)
Health (67) - 6
Corporate (7) 265 91
Interest expense 635 713 754
------- ------- -------
Earnings (loss) before income taxes $ 856 $ 1,218 $ (434)
======= ======= =======
Assets
Imaging $ 6,482 $ 6,425 $ 6,586
Information 3,669 3,808 3,844
Health 8,402 8,227 8,260
Net assets of discontinued operations - 1,406 1,246
Corporate (2) 1,973 715 1,739
Intersegment receivables (201) (240) (381)
------- ------- -------
Total assets at year end $20,325 $20,341 $21,294
======= ======= =======
Depreciation expense
Imaging $ 503 $ 531 $ 505
Information 273 356 308
Health 182 170 182
------- ------- -------
Total depreciation expense $ 958 $ 1,057 $ 995
======= ======= =======
Amortization of goodwill
Imaging $ 23 $ 26 $ 22
Information 2 - 3
Health 128 119 122
------- ------- -------
Total amortization of goodwill $ 153 $ 145 $ 147
======= ======= =======
Capital additions
Imaging $ 471 $ 631 $ 606
Information 301 552 537
Health 310 442 390
------- ------- -------
Total capital additions $ 1,082 $ 1,625 $ 1,533
======= ======= =======
<FN>
(1) Earnings (loss) from operations for 1993 are shown after deducting restructuring costs
of $202 million for Imaging, $278 million for Information and $58 million for Health.
Earnings (loss) from operations for 1992 are shown after deducting restructuring costs
of $83 million for Imaging, $123 million for Information and $14 million for Health.
Earnings (loss) from operations for 1991 are shown after deducting restructuring costs
of $792 million for Imaging, $623 million for Information and $190 million for Health.
(2) Includes EKCC assets in 1991. EKCC was sold to General Electric Capital on December
31, 1992.
</TABLE>
<PAGE>
<PAGE> 39
<TABLE>
SEGMENT INFORMATION (continued)
<CAPTION>
Financial information by geographic areas is as follows:
Canada
and Asia,
United Latin Africa, Elimi- Consoli-
(in millions) States America Europe Australia nations dated
<S> <C> <C> <C> <C> <C> <C>
1993
Sales to customers $ 8,384 $1,640 $4,076 $2,264 $16,364
Transfers among geographic areas 2,145 414 337 46 $(2,942) -
------- ------ ------ ------ ------- -------
Total sales $10,529 $2,054 $4,413 $2,310 $(2,942) $16,364
======= ====== ====== ====== ======= =======
Earnings from operations
from continuing operations $ 1,066 $ 236 $ 135 $ 102 $ (7) $ 1,532
======= ====== ====== ====== ======= =======
Assets by geographic areas $14,483 $1,585 $3,321 $1,682 $ (746) $20,325
======= ====== ====== ====== ======= =======
1992
Sales to customers $ 8,458 $1,536 $4,594 $1,957 $16,545
Transfers among geographic areas 2,261 360 320 36 $(2,977) -
------- ------ ------ ------ ------- -------
Total sales $10,719 $1,896 $4,914 $1,993 $(2,977) $16,545
======= ====== ====== ====== ======= =======
Earnings from operations
from continuing operations $ 991 $ 263 $ 282 $ 127 $ (10) $ 1,653
======= ====== ====== ====== ======= =======
Assets by geographic areas $14,379 $1,383 $3,675 $1,518 $ (614) $20,341
======= ====== ====== ====== ======= =======
1991
Sales to customers $ 8,067 $1,467 $4,584 $1,833 $15,951
Transfers among geographic areas 2,081 283 249 35 $(2,648) -
------- ------ ------ ------ ------- -------
Total sales $10,148 $1,750 $4,833 $1,868 $(2,648) $15,951
======= ====== ====== ====== ======= =======
Earnings (loss) from operations
from continuing operations $ (399) $ 265 $ 200 $ 176 $ (8) $ 234
======= ====== ====== ====== ======= =======
Assets by geographic areas $14,913 $1,231 $4,101 $1,401 $ (352) $21,294
======= ====== ====== ====== ======= =======
</TABLE>
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 40
STOCK OPTION AND COMPENSATION PLANS
The 1990 Omnibus Long-Term Compensation Plan provides for a variety of awards
to key employees. Some of these awards are based upon performance criteria
relating to the Company established by the Executive Compensation and
Development Committee of the Board of Directors.
The 1990 Omnibus Long-Term Compensation Plan provides that options can be
granted through January 31, 1995, to key employees for the purchase of up to
16,000,000 shares of Kodak common stock at an option price not less than 50
percent of the per share fair market value on the date of the stock option's
grant. No options below fair market value have been granted to date.
Options with dividend equivalents were awarded during 1993, 1992 and 1991
under the 1990 Omnibus Long-Term Compensation Plan. Accruals under this plan
amounted to $5 million in 1993, $5 million in 1992 and $4 million in 1991.
The 1990 Plan also provides for the granting of Stock Appreciation Rights
(SARs) either in tandem with options or freestanding. SARs allow optionees
to receive a payment equal to the appreciation in market value of a stated
number of shares of Kodak common stock from the SARs exercise price to the
market value on the date of its exercise. Exercise of a tandem SAR requires
the optionee to surrender the related option. At December 31, 1993, there
were 195,750 tandem SARs and 344,539 freestanding SARs outstanding at option
prices ranging from $30.25 to $43.18.
The 1985 Stock Option Plan provided that options could be granted through
1989 to key employees for the purchase of up to 6,000,000 (prior to giving
effect to the 3-for-2 partial stock split in 1987) shares of Kodak common
stock at an option price not less than the per share fair market value at the
time the option was granted. Options granted have maximum durations of 7 or
10 years from the date of grant but may expire sooner if the optionee's
employment terminates. The 1985 Plan also provided for the granting of SARs
either in tandem with options or freestanding. At December 31, 1993, there
were 610,975 tandem SARs and 69,050 freestanding SARs outstanding at option
prices ranging from $33.79 to $39.53.
Summarized option data as of December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Shares Range of Price
Under Option Per Share
------------ ---------------
<S> <C> <C>
Options Outstanding December 31, 1992 16,516,169 $32.45 - $49.50
Options Granted 4,053,755 $40.69 - $63.19
Options Exercised 4,177,442 $32.45 - $54.06
Options Cancelled 139,658 $32.45 - $54.06
Options Surrendered 94,423 $39.38 - $49.50
Options Outstanding December 31, 1993 20,231,934 $25.92 - $50.47
</TABLE>
As a result of the spin-off of the Company's worldwide chemical business all
outstanding stock options were adjusted as to option price and number of
shares granted.
At December 31, 1993, 13,512,298 of the options outstanding were exercisable.
- -----------------------------------------------------------------------------
<PAGE>
<PAGE> 41
EASTMAN KODAK CREDIT CORPORATION
The primary business purpose of Eastman Kodak Credit Corporation (EKCC),
formerly a wholly-owned subsidiary of the Company, was to enhance the
marketing capabilities of the Company by providing long-term product
financing to Kodak customers.
Summarized financial information for EKCC is as follows:
(in millions)
1992 1991
Results of operations
Revenues $159 $154
Earnings before taxes 25 21
Net earnings 18 14
The Company sold its investment in EKCC on December 31, 1992 to General
Electric Capital. The divestiture was the primary reason for the decrease in
consolidated assets and liabilities from year-end 1991, when EKCC had total
assets of $951 million and total indebtedness of $865 million.
- -----------------------------------------------------------------------------
LEGAL MATTERS
The Company is in discussion with the Environmental Protection Agency (EPA)
and the Environment and Natural Resources Division of the U.S. Department of
Justice concerning the EPA/NEIC (National Enforcement Investigations Center)
investigation of the Company's Kodak Park site in Rochester, New York. As a
result of the investigation, the Company expects to incur a civil fine of at
least $100,000 for violations of federal environmental laws and regulations.
The Company is participating in the EPA's Toxic Substances Control Act (TSCA)
Section 8(e) Compliance Audit Program. As a participant, the Company has
agreed to audit its files for materials which under current EPA guidelines
would be subject to notification under Section 8(e) of TSCA and to pay
stipulated penalties for each report submitted under this program. The
Company anticipates that its liability under the Program will be $1,000,000.
In addition to the foregoing environmental actions, the Company has been
designated as a potentially responsible party (PRP) under the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
(the "Superfund" law), or under similar state laws, for environmental
assessment and cleanup costs as the result of the Company's alleged
arrangements for disposal of hazardous substances at fewer than twenty
Superfund sites. With respect to each of these sites, the Company's actual
or potential allocated share of responsibility is small. Furthermore,
numerous other PRPs have similarly been designated at these sites and,
although the law imposes joint and several liability on PRPs, as a practical
matter costs are shared with other PRPs. Settlements and costs paid by the
Company in Superfund matters to date have not been material. Future costs
are also not expected to be material to the Company's financial condition or
results of operations.
The Company and its subsidiary companies are involved in lawsuits, claims,
investigations, and proceedings, including product liability, commercial,
environmental, and health and safety matters, which are being handled and
defended in the ordinary course of business. There are no such matters
pending that the Company and its General Counsel expect to be material in
relation to the Company's business, financial condition or results of
operations.
- -----------------------------------------------------------------------------
SUBSEQUENT EVENT
The Company announced on March 2, 1994 that it has elected to redeem the zero
coupon convertible subordinated debentures due 2011 on April 1, 1994. The
redemption price is $312.14 per debenture. Each debenture may be converted
into the Company's common stock at a conversion rate of 6.944 shares per
debenture at any time before the close of business on April 1, 1994.
<PAGE>
<PAGE> 42
- -----------------------------------------------------------------------------
<TABLE>
QUARTERLY SALES AND EARNINGS DATA - UNAUDITED
<CAPTION>
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(in millions, except per share data)
<S> <C> <C> <C> <C>
1993
Sales from continuing operations $4,480 $4,077 $4,265 $3,542
Gross profit from continuing operations 2,137 2,092 2,282 1,790
Earnings (loss) from continuing
operations before extraordinary item
and cumulative effect of changes in
accounting principle 204 (127)(1) 304 94
Earnings (loss) from discontinued
operations before cumulative effect
of changes in accounting principle (2) 60 (2) 79 55
Extraordinary item (1) (1) (12) -
Cumulative effect of changes in
accounting principle from continuing
operations - - - (1,723)(3)
Cumulative effect of changes in
accounting principle from
discontinued operations - - - (445)(3)
Net earnings (loss) 201 (68)(1)(2) 371 (2,019)
Primary earnings (loss) per share from
continuing operations before
extraordinary item and cumulative
effect of changes in accounting
principle (4) .62 (.39) .93 .29
Primary earnings (loss) per share
from discontinued operations before
cumulative effect of changes in
accounting principle (.01) .18 .24 .17
Extraordinary item - - (.04) -
Cumulative effect of changes in
accounting principle from continuing
operations (4) - - - (5.28)(3)
Cumulative effect of changes in
accounting principle from
discontinued operations (4) - - - (1.36)(3)
Primary earnings (loss) per share (4) .61 (.21) 1.13 (6.18)
Fully diluted earnings (loss) per
share (4) .60 (.15) 1.08 (6.18)
<FN>
(1) After deducting $538 million of restructuring costs which reduced net earnings
by $379 million.
(2) After deducting $12 million of restructuring costs which reduced net earnings by
$8 million.
(3) Cumulative effect of the change in accounting for certain postretirement and
other postemployment benefits, adopted in the 1st and 2nd quarter, effective
January 1, 1993.
(4) Each quarter is calculated as a discrete period and the sum of the four quarters
does not equal the full year amount.
</TABLE>
<PAGE>
<PAGE> 43
<TABLE>
QUARTERLY SALES AND EARNINGS DATA - UNAUDITED (continued)
<CAPTION>
4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.
(in millions, except per share data)
<S> <C> <C> <C> <C>
1992
Sales from continuing operations $4,483 $4,251 $4,287 $3,524
Gross profit from continuing
operations 2,263 2,223 2,231 1,810
Earnings from continuing operations
before cumulative effect of change
in accounting principle 251 (1) 121 (2) 279 76
Earnings from discontinued operations
before cumulative effect of change
in accounting principle 48 68 82 69
Cumulative effect of change in
accounting principle from continuing
operations - - - 71 (3)
Cumulative effect of change in
accounting principle from
discontinued operations - - - 81 (3)
Net earnings 299 (1) 189 (2) 361 297
Primary earnings per share from
continuing operations before
cumulative effect of change in
accounting principle .77 .37 .86 .24
Primary earnings per share from
discontinued operations before
cumulative effect of change in
accounting principle .15 .21 .25 .21
Cumulative effect of change in
accounting principle from
continuing operations - - - .22 (3)
Cumulative effect of change in
accounting principle from
discontinued operations - - - .25 (3)
Primary earnings per share .92 .58 1.11 .92
Fully diluted earnings per share .89 .58 1.06 .88
<FN>
(1) Includes gains from the sale of EKCC and other investments which increased net
earnings by $75 million.
(2) After deducting $220 million of restructuring costs which reduced net earnings by
$141 million.
(3) Cumulative effect of the change in accounting for income taxes adopted in the 3rd
quarter, effective January 1, 1992.
</TABLE>
<PAGE>
<PAGE> 44
<TABLE>
SUMMARY OF OPERATING DATA
<CAPTION>
Eastman Kodak Company and Subsidiary Companies
(Dollar amounts and shares in millions, except per share data)
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Sales from continuing operations $16,364 $16,545 $15,951 $15,611 $15,194
Earnings (loss) from operations before
cumulative effect of changes in
accounting principle:
Continuing 475 (1) 727(3) (302)(5) 368(6) 146(7)
Discontinued 192 (1) 267 319 335 383(7)
Net earnings (loss) (1,515)(1) 1,146(3) 17 (5) 703(6) 529(7)
(2) (4)
EARNINGS AND DIVIDENDS
Net earnings - percent of sales (9.3%) 6.9% 0.1% 4.5% 3.5%
- percent return on average
shareowners' equity (30.6%) 18.1% 0.3% 10.5% 7.9%
Primary earnings (loss) per share (8) (4.62) 3.53 .05 2.17 1.63
Cash dividends declared - on common shares 657 650 649 649 649
- per common share 2.00 2.00 2.00 2.00 2.00
Common shares outstanding at close of year 330.6 325.9 324.9 324.6 324.4
Shareowners at close of year 157,797 166,532 169,164 168,935 171,954
STATEMENT OF FINANCIAL POSITION DATA
Current assets $ 8,021 $ 6,437 $ 7,252 $ 7,553 $ 7,709
Properties at cost 13,311 13,607 13,121 12,268 11,960
Accumulated depreciation 6,945 6,843 6,500 6,009 5,736
Total assets 20,325 20,341 21,294 21,273 20,904
Current liabilities 4,910 5,546 6,411 6,648 6,124
Long-term borrowings 6,853 5,402 5,797 5,189 5,576
Total net assets (shareowners' equity) 3,356 6,557 6,104 6,748 6,642
SUPPLEMENTAL INFORMATION
Sales - Imaging $ 7,257 $ 7,415 $ 7,075 $ 7,128 $ 6,998
- Information 3,862 4,063 3,968 4,140 4,200
- Health 5,249 5,081 4,917 4,349 4,009
Research and development costs 1,301 1,419 1,337 1,178 1,117
Depreciation 958 1,057 995 879 917
Taxes (excludes payroll, sales, and excise
taxes) 518 555 (74) 458 267
Wages, salaries, and employee benefits 5,323 5,344 5,235 4,942 5,068
Employees at close of year - in the U.S. 57,200 59,355 59,600 63,300 65,925
- worldwide 110,400 114,100 115,350 116,950 120,400
SUBSIDIARY COMPANIES OUTSIDE THE U.S.
Sales $ 8,604 $ 8,087 $ 7,884 $ 7,552 $ 7,311
Earnings from operations 471 672 641 1,111 745
<FN>
(1) After deducting $538 million of restructuring costs from continuing operations which
reduced net earnings by $379 million and after deducting $12 million from discontinued
operations which reduced net earnings by $8 million.
(2) The net loss for 1993 was due to an after-tax charge of $2.17 billion from the cumulative
effect of adopting SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions, and SFAS No. 112, Employers' Accounting for Postemployment Benefits.
(3) After deducting $220 million of restructuring costs which reduced net earnings by
$141 million.
(4) Net earnings for 1992 benefited by $152 million from the cumulative effect of adopting
SFAS No. 109, Accounting for Income Taxes.
(5) After deducting $1,605 million of restructuring costs which reduced net earnings by
$1,032 million.
(6) After deducting $888 million for the litigation judgment including post-judgment interest
which reduced net earnings by $564 million.
(7) After deducting $858 million of restructuring costs from continuing operations which
reduced net earnings by $538 million and after deducting $17 million of restructuring costs
from discontinued operations which reduced net earnings by $11 million.
(8) Based on average number of shares outstanding.
</TABLE>
<PAGE>
<PAGE> 45
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
- -----------------------------------------------------------------------------
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Nominees to Serve as Directors for a Three-Year Term Expiring at the 1997
Annual Meeting (Class I Directors)
MARTHA LAYNE COLLINS
Governor Collins, 57, was elected to the Board of Directors in May 1988. She
is President of Martha Layne Collins and Associates, a consulting firm, and
is also President of St. Catharine College in Springfield, Kentucky, a
position she assumed in July 1990. Following her receipt of a B.S. from the
University of Kentucky, Governor Collins taught from 1959 to 1970. After
acting as Coordinator of Women's Activities in a number of political
campaigns, she served as Clerk of the Supreme Court of the Commonwealth of
Kentucky from 1975 to 1979. She was elected to a four-year term as Governor
of the Commonwealth of Kentucky in 1983 after having served as Lieutenant
Governor from 1979 to 1983. Governor Collins, who has served as a Fellow at
the Institute of Politics, Harvard University, is a director of R. R.
Donnelley & Sons Company and Bank of Louisville.
CHARLES T. DUNCAN
Mr. Duncan, 69, who was elected to the Board of Directors in August 1977, has
had a career that includes private practice with law firms in New York and
Washington, D.C., as well as public service. Following service as Principal
Assistant United States Attorney for the District of Columbia, General
Counsel for the U.S. Equal Employment Opportunity Commission, and Corporation
Counsel for the District of Columbia, Mr. Duncan joined the faculty of Howard
Law School, where he served as Dean and Professor of Law from 1974 to 1978.
Named a partner in the law firm of Reid & Priest in 1984, he became senior
counsel in January 1990. Prior to joining Reid & Priest, Mr. Duncan was a
partner in Peabody, Lambert & Meyers. Mr. Duncan, who was graduated from
Dartmouth College in 1947 and from Harvard Law School in 1950, is a director
of TRW, Inc.
GEORGE M. C. FISHER
Mr. Fisher, 53, became Chairman, President and Chief Executive Officer of
Eastman Kodak Company effective December 1, 1993. Mr. Fisher most recently
served as Chairman and Chief Executive Officer of Motorola, Inc., after
having served as President and Chief Executive Officer between 1988 and 1990
and Senior Executive Vice President and Deputy to the Chief Executive Officer
between 1986 and 1988. Mr. Fisher holds a bachelor's degree in engineering
from the University of Illinois and a masters in engineering and doctorate in
applied mathematics from Brown University. He is a member of the board of
directors of the American Express Company.
PAUL E. GRAY
Dr. Gray, 62, was elected to the Board of Directors in September 1990.
Chairman of the Corporation of the Massachusetts Institute of Technology
(M.I.T.) since October 1990, Dr. Gray served for the ten preceding years as
President of M.I.T. He has also served on the M.I.T. faculty and in the
academic administration, including responsibilities as Associate Provost,
Dean of Engineering, and Chancellor. Dr. Gray earned his bachelor's,
master's, and doctorate degrees in electrical engineering from M.I.T. He is
a director of Arthur D. Little, Inc., The Boeing Co., and The New England.
JOHN J. PHELAN, JR.
Mr. Phelan, 62, who joined the Kodak Board of Directors in December 1987, is
the retired Chairman and Chief Executive Officer of the New York Stock
Exchange, a position which he held from 1984 until 1990. He is President of
the International Federation of Stock Exchanges, a member of the Council on
Foreign Relations, and a Senior Advisor to the Boston Consulting Group. Mr.
Phelan, a graduate of Adelphi University, is active in educational and
philanthropic organizations and is also a director of Avon Products, Inc.,
Merrill Lynch & Co., Inc., Metropolitan Life Insurance Company and SONAT Inc.
<PAGE>
<PAGE> 46
Directors Serving a Term Expiring at the 1995 Annual Meeting (Class II
Directors)
ALICE F. EMERSON
Dr. Emerson, 62, is a Fellow of The Andrew W. Mellon Foundation, a position
she assumed in 1991 after having served as President of Wheaton College in
Massachusetts since 1975. Prior to 1975, Dr. Emerson served the University
of Pennsylvania, first as Dean of Women from 1966 to 1969 and subsequently as
Dean of Students. Elected to the Kodak Board of Directors in May 1992, Dr.
Emerson received her bachelor's degree from Vassar College and her Ph.D.
degree from Bryn Mawr College. She is a member of the boards of directors of
AES Corporation, Bank of Boston Corporation and Champion International Corp.
ROBERTO C. GOIZUETA
Mr. Goizueta, 62, is Chairman and Chief Executive Officer of The Coca-Cola
Company. He was elected to this position in March 1981, having served as
President from May 1980 to March 1981. Prior to becoming President, he was a
Vice Chairman and Executive Vice President. Mr. Goizueta, who was elected to
the Kodak Board of Directors in May 1989, received a B.S. degree in chemical
engineering from Yale University. He is a member of the boards of directors
of Ford Motor Company, SONAT Inc. and SunTrust Banks, Inc.
WILBUR J. PREZZANO
Mr. Prezzano, 53, who joined the Kodak Board of Directors in May 1992, is a
Group Vice President of Eastman Kodak Company and President of Kodak's Health
Group. Mr. Prezzano joined the Company in 1965 in the statistical department
and has held positions in Treasurer's, Business Systems Markets, Customer
Equipment Services Division, Copy Products, Marketing Division, International
Photographic Operations and Photographic Products. He served as Group Vice
President and General Manager, International, from January 1990 to September
1991, when he became President of Kodak's Health Group. Mr. Prezzano
received B.S. and M.B.A. degrees from the University of Pennsylvania's
Wharton School.
LEO J. THOMAS
Dr. Thomas, 57, who joined the Kodak Board of Directors in May 1992, is a
Group Vice President of Eastman Kodak Company and President of Kodak's
Imaging Group. Dr. Thomas began his Kodak career in 1961, and held various
positions in the Research Laboratories before being named Director of
Research and elected a Vice President in 1977. In December 1978, he was
elected a Senior Vice President and in 1984, he was appointed General
Manager, Life Sciences. Following the acquisition of Sterling Drug Inc. in
1988, Dr. Thomas was named Sterling Vice Chairman, and was elected the
subsidiary's Chairman in September 1988. He became General Manager of the
Health Group in 1989 and was elected a Group Vice President in November 1989.
In September 1991, Dr. Thomas became President of the Imaging Group, which
was formed to consolidate Kodak's photographic and commercial imaging
businesses. Dr. Thomas holds a B.S. degree from the University of Minnesota
and M.S. and Ph.D. degrees from the University of Illinois. He is a member
of the boards of directors of Rochester Telephone Corporation and John Wiley
& Sons, Inc.
Directors Serving a Term Expiring at the 1996 Annual Meeting (Class III
Directors)
RICHARD S. BRADDOCK
Mr. Braddock, 52, was elected to the Kodak Board of Directors in May 1987.
He was Chief Executive Officer of Medco Containment Services, Inc. from
January 1993 until October 1993, after having served as President and Chief
Operating Officer of Citicorp and its principal subsidiary, Citibank, N.A.
from January 1990 through October 1992. Prior to that, he served for
approximately five years as Sector Executive in charge of Citicorp's
Individual Bank, one of the financial services company's three core
businesses. Mr. Braddock was graduated from Dartmouth College in 1963 with a
degree in history, and received his M.B.A. from the Harvard School of
Business Administration in 1965. He is a director of Duty Free Shops, Lotus
Development and VISX Inc.
<PAGE>
<PAGE> 47
KARLHEINZ KASKE
Dr. Kaske, 65, served as President and Chief Executive Officer of Siemens AG
from 1981 until his retirement in September 1992. Dr. Kaske joined Siemens
in 1960 and held a variety of positions with Siemens AG, including head of
Process Engineering and head of the Power Engineering Group. He holds a
diploma in physics from the Technical University of Aachen and a Doctorate of
Engineering from the Technical University of Brunswick. Dr. Kaske is
Chairman of the supervisory board of MAN Aktiengesellschaft and a member of
the supervisory boards of Philipp Holzmann AG and Linde AG.
RICHARD A. ZIMMERMAN
Mr. Zimmerman, 62, who joined the Kodak Board of Directors in July 1989, is
the retired Chairman and Chief Executive Officer of Hershey Foods
Corporation. Mr. Zimmerman joined Hershey in 1958 and was named Vice
President in 1971. Appointed a Group Vice President later in 1971, he became
President and Chief Operating Officer in 1976. He was named Chief Executive
Officer in January 1984 and Chairman of the Board in March 1985. Mr.
Zimmerman was graduated from Pennsylvania State University. He is a member
of the boards of directors of Hershey Trust Company and Westvaco Corporation.
<PAGE>
<PAGE> 48
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS Directors who are compensated as employees of
the Company receive no additional compensation as directors. Each director who
is not an employee of the Company receives an annual retainer of $38,000,
payable $12,000 in common stock of the Company and $26,000 in cash. In
addition, each such director receives a fee of $900 for each Board meeting
attended and $750 for each Board committee and special meeting attended,
except the Corporate Directions Committee and the Special Search Committee
(which was in existence for a few months during 1993 to lead the search for a
new chief executive officer) whose members received $1,500 for each meeting.
There is a deferred compensation plan available to all such directors for the
cash portion of their compensation, in which two
directors participated in 1993. Each director who is not an employee of the
Company is eligible to participate in a retirement plan for directors which
provides an annual retirement benefit equal to the then-current annual
retainer, if the director has served at least five years. Directors who have
served fewer than five years are entitled to a prorata retirement benefit.
Each director who is not an employee of the Company is covered by group term
life insurance in the amount of $100,000, which decreases to $50,000 at the
later of retirement from the Board under the retirement plan described above
or age 65. In the event of a change in control (as defined in the applicable
plans) each account under the deferred compensation plan will be paid in a
single lump sum cash payment and all retirement benefit payments will be paid
in a single lump sum cash payment equal to the present value of the remaining
retirement benefits.
Each non-employee director is eligible to participate in the Company's
Directors' Charitable Award Program, which provides for a contribution by the
Company of $1,000,000 following the director's death to up to four charitable
institutions recommended by the director. The individual directors derive no
financial benefits from this Program, which is funded by joint life insurance
policies purchased by the Company and self insurance. The purposes of the
Program are to further the Company's philanthropic endeavors, with particular
emphasis on education, acknowledge the service of the Company's directors,
recognize the interest of the Company and the directors in supporting worthy
charitable and educational institutions and to enable the Company to attract
and retain directors of the highest caliber. Directors who are participating
in the Program are Messrs. Braddock, Duncan, Phelan, and Zimmerman, Drs.
Emerson, Gray, and Kaske, and Gov. Collins.
COMPENSATION OF EXECUTIVE OFFICERS The individuals named in the following
table were the Company's Chief Executive Officers and the four highest paid
executive officers during 1993.
<PAGE>
<PAGE> 49
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------- -------------------------------------------------
Awards Payouts
------ -------
Other
Annual Restricted Securities All other
Name and Compen- Stock Underlying LTIP Compensa-
Principal Position Year Salary (a) Bonus (b) sation Award(s) Options(c) Payouts tion
- ------------------ ---- ---------- -------- ---------- ---------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 1993 $330,769 $154,000 $ 0 $1,270,000(d) 1,323,529 $ 0 $5,000,000(e)
Chairman, President,
and Chief Executive
Officer (eff. 12/1/93)
K. R. Whitmore 1993 930,769 374,255 96,154(f) 0 35,685 0 1,666,667(g)
Chairman, President, 1992 1,000,000 461,014 50(h) 0 62,230 0 0
and Chief Executive 1991 957,693 188,510 0 0 62,230 0 0
Officer (until 12/1/93)
R. T. Bourns 1993 400,000 227,563 0 0 10,017 0 0
Senior Vice 1992 343,462 127,873 0 0 17,530 0 0
President 1991 279,038 150,489 0 0 16,278 0 0
E. W. 1993 500,000 276,028 0 0 15,026 50,118(i) 0
Deavenport, Jr. 1992 483,333 270,128 850(h) 0 24,542 0 0
Group Vice 1991 423,333 184,354 50(h) 0 22,664 0 0
President
W. J. Prezzano 1993 536,000 259,752 306,298(j) 0 15,026 0 0
Group Vice 1992 536,000 291,146 391,865(j) 0 25,795 0 0
President 1991 501,961 114,806 50(h) 0 25,795 0 0
L. J. Thomas 1993 592,308 301,008 0 0 19,158 0 0
Group Vice 1992 580,000 267,306 0 0 33,182 0 0
President 1991 495,769 264,296 50(h) 0 28,674 0 0
<FN>
(a) Includes amounts paid and deferred
(b) Includes both Wage Dividend (WD) and Management Annual Performance Plan (MAPP) paid in the year following for
services rendered in the year indicated, in the following amounts for 1993: G. M. C. Fisher- $154,000 WD, $0 MAPP;
K.R. Whitmore - $107,255 WD, $267,000 MAPP; R.T. Bourns - $37,563 WD, $190,000 MAPP; E. W. Deavenport, Jr. -
$55,209 WD, $220,819 MAPP; W. J. Prezzano - $59,752 WD, $200,000 MAPP; L. J. Thomas - $61,008 WD, $240,000 MAPP.
(c) Pursuant to the operation of the 1990 Omnibus Long-Term Compensation Plan, outstanding options were adjusted by a
factor of 1.2521 as a result of the spin-off of Eastman Chemical Company effective December 31, 1993.
(d) This amount represents 20,000 shares of restricted stock valued at $63.50 per share, which was the closing price of
Kodak stock on the date of grant, November 11, 1993, on the New York Stock Exchange. These shares are restricted
until October 26, 1998 and receipt of these shares by Mr. Fisher is conditioned upon his continued employment with
the Company until such date. Dividends are paid on these shares as and when dividends are paid on Kodak common
stock.
(e) This represents a hiring bonus, including amounts paid to reimburse Mr. Fisher for compensation and benefits he
forfeited upon termination of employment with his previous employer.
(f) The amount shown is a payment in lieu of vacation.
(g) This represents the total severance payment to be made to K. R. Whitmore in installments. See Termination of
Employment on page 53.
(h) The amounts shown for 1991 and 1992 include the cost of certain medical benefits which, when aggregated with other
perquisites, is less than the required disclosure threshold for 1993.
(i) Paid in 1993 in a combination of cash and common stock for the 1987-89 award cycle under the 1985 Long-Term
Performance Award Plan, with the fair market value of the stock on the date of payment of $40.8125 per share. This
Plan is no longer in operation; this is a delayed distribution from an earlier cycle.
(j) This amount represents tax reimbursement for overseas assignments in 1990 and 1991.
</TABLE>
<PAGE>
<PAGE> 50
<TABLE>
OPTION/SAR GRANTS IN 1993
<CAPTION>
Individual Grants
- --------------------------------------------------------------------------------------
Number of Percentage Market Potential Realizable Value at Assumed
Securities of Total Price Annual Rate of Stock Price Appreciation
Underlying Options/SARs Per for Option Term (a)
Options/ Granted to Exercise Share --------------------------------------
SARs Employees in Base Price On Date Expiration
Name Granted(b) 1993 Per Share(b) of Grant(c) Date 0% (d) 5% (e) 10% (f)
- ---------------- -------- ------------ ---------- ---------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G. M. C. Fisher 1,323,539(g) 24.54% $50.467 $50.467 11/10/03 $ 0 $42,013,098 $106,456,212
K. R. Whitmore 35,685(h) 0.66 43.175 43.175 3/10/03 0 969,026 2,455,306
R. T. Bourns 10,017(h) 0.19 43.175 43.175 3/10/03 0 272,012 689,220
E. W.
Deavenport, Jr. 15,026(h) 0.28 43.175 43.175 3/10/03 0 408,031 1,033,864
W. J. Prezzano 15,026(h) 0.28 43.175 43.175 3/10/03 0 408,031 1,033,864
L. J. Thomas 19,158(h) 0.36 43.175 43.175 3/10/03 0 520,235 1,318,166
All Shareholders
at $43.175 N/A N/A N/A N/A N/A 0 9 billion 23 billion
at $50.467 10 billion 27 billion
Gain of named N/A N/A N/A N/A N/A N/A .005 .005
officers as
portion of all .004 .004
shareholder gain
<FN>
(a) The dollar amounts under these columns are the result of calculations at 0% and at the 5% and 10% rates set by the
Securities and Exchange Commission and therefore are not intended to forecast possible future appreciation, if any, of the
Company's stock price.
(b) Pursuant to the operation of the 1990 Omnibus Long-Term Compensation Plan, outstanding options were adjusted by a factor
of 1.2521 as a result of the spin-off of Eastman Chemical Company effective December 31, 1993.
(c) The market price per share on November 11, 1993 was $63.19 and the market price per share on March 11, 1993 was $54.06.
These are equivalent to market prices per share of $50.467 and $43.175, respectively, after giving effect to the spin-off
of Eastman Chemical Company.
(d) No gain to the optionees is possible without an increase in stock price, which will benefit all shareholders
commensurately. A zero percent increase in stock price will result in zero dollars for the optionee.
(e) A 5% per year appreciation in stock price from $50.467 per share and 43.175 per share yields $82.21 and $70.33
respectively.
(f) A 10% per year appreciation in stock price from $50.467 per share and $43.175 per share yields $130.90 and $111.98
respectively.
(g) 20% of these options vest on each anniversary of the grant date. Vesting accelerates upon retirement, death, disability
or termination for an approved reason. No options will be granted to Mr. Fisher in 1994.
(h) 50% of these options vest on the first anniversary of the grant date and 50% vest on the second anniversary of the grant
date. Vesting accelerates upon retirement, death, disability or termination for an approved reason.
</TABLE>
<PAGE>
<PAGE> 51
<TABLE>
AGGREGATE OPTION/SAR EXERCISES IN 1993
and 1993 YEAR-END OPTION/SAR VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-money
Options/SARs at Options/SARs at
Number December 31, 1993(a) December 31, 1993(b)
of Shares -------------------------- --------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------- ---------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G.M.C. Fisher 0 $ 0 0 1,323,539 $ 0 $ 0
K. R. Whitmore 3,405 82,268 409,607 0 4,328,100 0
R. T. Bourns 450 27,563 48,459 28,799 548,918 175,825
E.W.
Deavenport, Jr. 755 39,838 0(c) 0(c) 0(c) 0(c)
W. J. Prezzano 3,970 218,721 121,136 44,077 1,477,245 272,526
L. J. Thomas 550 29,764 98,270 52,277 1,130,657 312,641
<FN>
Footnotes to the Option Exercise Table
(a) Pursuant to the operation of the stock option plans, outstanding options were adjusted by a
factor of 1.2521 to reflect the spin-off of Eastman Chemical Company effective
December 31, 1993.
(b) Based on the closing price on the New York Stock Exchange - Composite Transactions of the
Company's Common Stock on a when-issued basis on that date of $44.37 per share.
(c) E. W. Deavenport, Jr. surrendered all of his 124,898 Kodak stock options in connection with
the spin-off of Eastman Chemical Company in exchange for options on shares of Eastman
Chemical Company stock to be granted by Eastman Chemical Company.
</TABLE>
<PAGE>
<PAGE>
52
Long-Term Incentive Plan
In March 1993, the 1993-1995 Restricted Stock Program, a performance share
unit arrangement under the 1990 Omnibus Long-Term Compensation Plan, was
approved by the Executive Compensation and Development Committee. Payouts of
awards, if any, are tied to achieving specified levels of stock price, return
on assets, and total shareholder return relative to the Standard & Poor's 500
Index, over the period 1993-1995. The target amount will be earned if the
target level for each of these three criteria is achieved. The target stock
price must be achieved to trigger a payment of 100% of target. The threshold
stock price must be achieved to trigger a payment of 50% of target. If the
threshold stock price is not achieved, no payment is made. The Committee
will determine the payout based upon its review of Company performance at the
end of the performance period. Awards, if any, will be paid in the form of
restricted stock, which restrictions will lapse upon the participant's
attainment of age 60. Participants who terminate employment for reasons of
death, disability, retirement or an approved reason, prior to the completion
of the performance cycle, will receive their award, if any, at the conclusion
of the performance period in the form of shares of Kodak common stock with no
restrictions.
<TABLE>
<CAPTION>
Estimated Future Payouts Under Non-Stock
Number of Performance Price-Based Plans
Share Units or Other Period ----------------------------------------------
or Other Until Maturation Threshold Target Maximum
Name Rights (#) or Payout # of shares(a) # of shares(a) # of shares(b)
- ----------------- ----------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
G. M. C. Fisher 65,214(c) 1/1/93-12/31/95 32,607(c) 65,214(c)
K. R. Whitmore 31,303(c) 1/1/93-12/31/95 15,652(c) 31,303(c)
R. T. Bourns 25,042 1/1/93-12/31/95 12,521 25,042
E. W. Deavenport,
Jr. 12,521(c) 1/1/93-12/31/95 6,261(c) 12,521(c)
W. J. Prezzano 37,563 1/1/93-12/31/95 18,782 37,563
L. J. Thomas 50,084 1/1/93-12/31/95 25,042 50,084
<FN>
Footnotes to Long-Term Incentive Plan Table
(a) Pursuant to the operation of the the 1990 Omnibus Long-Term Compensation Plan, the number of
shares has been adjusted by a factor of 1.2521 to reflect the spin-off of Eastman Chemical
Company.
(b) Under the terms of the Restricted Stock Program, should performance exceed the targeted
performance, a greater number of shares than the target could be paid and there is no
maximum stated in the program.
(c) Individuals who participate for less than the full performance period will receive a
prorated amount of the award, if any, determined at the end of the performance period based
upon the duration of their participation during the performance period.
</TABLE>
EMPLOYMENT CONTRACTS
On October 27, 1993, the Company entered into an Agreement covering a
period of five years, for the employment of George M. C. Fisher as Chairman,
President and Chief Executive Officer of the Company. Upon execution of the
Agreement, Mr. Fisher received $5,000,000 as an inducement for entering into
the Agreement and as reimbursement for compensation and benefits that he
would forfeit upon termination of his employment with his previous employer.
Mr. Fisher's base salary is $2,000,000, subject to review on an annual basis.
Mr. Fisher will participate in MAPP and will have an annual target award
opportunity of at least $1,000,000, with that amount guaranteed for services
rendered in each of 1994 and 1995. Mr. Fisher was granted 20,000 shares of
restricted stock with the restrictions lapsing at the end of five years. The
contract provided for the grant to Mr. Fisher in 1993 of 1,057,055 stock
options (1,323,539 after adjustment for the ECC spin-off) and no stock
options are to be granted to Mr. Fisher in 1994. The contract provided for
the Company to make two loans to Mr. Fisher in the total amount of $8,284,400
for five years with interest at the rate of 4.86% (which is the most recently
announced rate under Section 1274(d) of the Internal Revenue Code, prior to
October 27, 1993). $4,284,400 of this amount was loaned to Mr. Fisher due to
his forfeiture of 80,000 stock options from his prior employer which resulted
from his accepting employment with the Company. Mr. Fisher was required to
use all of the loan proceeds except $1,500,000 to purchase Kodak stock. The
shares he purchased are reflected in the security ownership table. Twenty
percent of the principal and all of the accrued interest on each of these
loans are to be forgiven on each of the first five anniversaries of such
loans provided Mr. Fisher is still employed by the Company.
<PAGE>
<PAGE> 53
In addition, where necessary, Mr. Fisher has been given credit for a
period of service sufficient to allow him to obtain the maximum benefit
available under Kodak's benefit plans. In particular, Mr. Fisher was
credited with five years of service for purposes of the Wage Dividend and
seventeen years of service for purposes of calculating a retirement benefit.
The Company is providing Mr. Fisher with an apartment until he purchases a
permanent residence in the Rochester area. The Company has agreed to
purchase Mr. Fisher's current residence in Barrington Hills, Illinois. In
addition, the Company has agreed to reimburse Mr. Fisher for all closing
costs associated with a previous residence, which was sold after he accepted
employment with the Company. The Company is providing Mr. Fisher with term
life insurance equal to 3.5 times his base salary and a disability benefit
equal to 60% of base salary. In the event of Mr. Fisher's death prior to the
termination of this Agreement, the Agreement provides for salary continuation
for ninety days, the payment of all annual and long-term incentives, vesting
of all stock options and awards and the forgiveness of the loans. If
Mr. Fisher's employment is terminated by the Company without cause or in the
event of a change in control, Mr. Fisher is entitled to the greater of the
remaining term of his employment contract or 36 months of salary
continuation, immediate vesting of stock options, the lapsing of any
restrictions on any restricted stock award and the payment of any incentive
awards. Mr. Fisher is entitled to reimbursement for taxes paid on certain of
the foregoing payments, including any amounts constituting "parachute
payments" under the Internal Revenue Code. If Mr. Fisher dies prior to
retirement, his spouse is entitled to a 50% survivor annuity.
TERMINATION OF EMPLOYMENT
The Company has a general severance arrangement available to
substantially all employees. This Termination Allowance Plan provides two
weeks of compensation for every year of service with a maximum of fifty-two
weeks of salary. Mr. Whitmore received fifty-two weeks of termination
allowance computed using the formula in the Termination Allowance Plan.
The Company has entered into a retention arrangement with Mr. Prezzano.
The Agreement provides that if Mr. Prezzano's employment is terminated prior
to September 30, 1995 by the Company other than for cause, or by Mr. Prezzano
as a result of a diminution in duties or base salary, he shall be entitled to
an unreduced retirement annuity and a termination allowance equal to two
weeks of pay for each year of service up to a maximum of 52 weeks of pay.
The Agreement also prohibits Mr. Prezzano from working for a competitor for a
period of three years following termination of employment.
CHANGE IN CONTROL ARRANGEMENTS
In the event of a change in control, the following would occur: (i) each
participant in the Executive Deferred Compensation Plan would receive the
balance in his/her account in a single lump sum cash payment; (ii) each
participant in the Management Annual Performance Plan would be paid his/her
target award for such year and any other year for which payment of awards had
not been made as of such date; and (iii) all outstanding stock options and
stock appreciation rights would become fully vested and each holder would be
paid in a lump sum cash payment the difference between the exercise price and
market price of Kodak common stock on the date of such event; each of the
foregoing payments would be made in a single lump sum cash payment as soon as
possible but no later than the 90th day following such event.
RETIREMENT PLAN
The Company funds a tax-qualified, defined benefit pension plan for
virtually all U.S. employees. Retirement income benefits are based upon the
individual's "average participating compensation," which is the average of
three years of those earnings described in the Plan as "participating
compensation." "Participating compensation," in the case of the executive
officers included in the Summary Compensation Table, is annual compensation
(salary and Management Annual Performance Plan payments), including
allowances in lieu of salary for authorized periods of absence, such as
illness, vacation or holidays.
For an employee with up to 35 years of accrued service, the annual normal
retirement income benefit is computed by multiplying the number of years of
accrued service by the sum of (a) 1.3% of "average participating
compensation" ("APC") for the employee's final three years, plus (b) .3% of
APC in excess of the average Social Security wage base for the employee's
final three years. For an employee with more than 35 years of accrued
service, the amount computed above is increased by 1% for each year in excess
of 35 years.
The retirement income benefit is not subject to any deductions for Social
Security benefits or other offsets. Officers are entitled to benefits on the
same basis as other employees. The normal form of benefit is an annuity, but
a lump sum payment is available as an option.
<PAGE>
<PAGE> 54
Pension Plan Table
Annual Retirement Income Benefits
Straight Life Annuity Beginning at Age 65
"Average Years of Service
Participating -----------------------------------------------------------
Compensation" 15 20 25 30 35 40
- ------------- -------- -------- -------- ---------- ---------- ----------
$ 400,000 $ 96,000 $128,000 $160,000 $ 192,000 $ 224,000 $ 235,200
600,000 144,000 192,000 240,000 288,000 336,000 352,800
800,000 192,000 256,000 320,000 384,000 448,000 470,400
1,000,000 240,000 320,000 400,000 480,000 560,000 588,000
1,200,000 288,000 384,000 480,000 576,000 672,000 705,600
1,400,000 336,000 448,000 560,000 672,000 784,000 823,200
1,600,000 384,000 512,000 640,000 768,000 896,000 940,800
1,800,000 432,000 576,000 720,000 864,000 1,008,000 1,058,400
2,000,000 480,000 640,000 800,000 960,000 1,120,000 1,176,000
2,200,000 528,000 704,000 880,000 1,056,000 1,232,000 1,293,600
2,400,000 576,000 768,000 960,000 1,152,000 1,344,000 1,411,200
NOTE: To the extent that any individual's annual retirement income benefit
exceeds the amount payable from the Company's funded Plan, it is paid from
one or more unfunded supplementary plans.
The following table shows the years of accrued service credited to each of
the six individuals named in the Summary Compensation Table. This table also
shows for each named individual the amount of his "average participating
compensation" at the end of 1993.
"Average
Years of Participating
Service Compensation"
G. M. C. Fisher 17* $1,999,998
K. R. Whitmore 36 1,278,325
R. T. Bourns 35 446,429
E. W. Deavenport, Jr. 33 644,265
W. J. Prezzano 28 706,940
L. J. Thomas 32 770,558
*Under the terms of his employment contract, Mr. Fisher has been credited
with seventeen years of service for purposes of calculating his retirement
benefit. However, any pension benefit payable to Mr. Fisher by the Company
will be offset by any pension benefit paid to Mr. Fisher by his prior
employer.
In the event of a change in control (as defined in the Retirement Plan),
a participant whose employment is terminated, for a reason other than death,
disability, cause or voluntary resignation, within 5 years of the date of
such event would be credited with up to 5 additional years of service and,
where the participant is age 50 or over on the date of such event, up to 5
additional years of age, for the following plan purposes: (i) to determine
eligibility for early and normal retirement; (ii) to determine eligibility
for a vested right; and (iii) to calculate the amount of retirement benefit.
The actual number of years of service and years of age that would be granted
to such a participant would decrease proportionately depending upon the
number of years that elapse between the date of a change in control and the
date of the participant's termination of employment. Further, if the Plan is
terminated within 5 years after a change in control, the benefit for each
plan participant will be calculated as indicated above.
<PAGE>
<PAGE> 55
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
Directors, Nominees
and Executive Number of Common Shares
Officers Owned on Jan. 4, 1994
- ------------------- -----------------------
Richard T. Bourns 64,311*+
Richard S. Braddock 2,120
Martha Layne Collins 1,925
Earnest W. Deavenport, Jr. 4,929~
Charles T. Duncan 2,177
Alice F. Emerson 977
George M. C. Fisher 127,400=
Roberto C. Goizueta 4,084
Paul E. Gray 1,444
C. Michael Hamilton 21,127*
Karlheinz Kaske 938
John R. McCarthy 84,823*
John J. Phelan, Jr. 2,283
Wilbur J. Prezzano 150,648*
Leo J. Thomas 128,154*
Gary P. Van Graafeiland 20,992*
Kay R. Whitmore 436,059*
Richard A. Zimmerman 2,504
All Directors, Nominees and 1,056,895*#
Executive Officers as a
Group (18), including the above
NOTES: * Includes shares which may be acquired in the following amounts by
exercise of stock options: R. T. Bourns - 59,729; C. M. Hamilton - 19,723;
J. R. McCarthy - 83,901; W. J. Prezzano - 139,418; L. J. Thomas - 117,365; G.
P. Van Graafeiland - 18,440; K. R. Whitmore - 409,607; and all directors,
nominees and executive officers as a group - 848,183. The number of stock
options has been adjusted to reflect the spin-off of Eastman Chemical
Company.
=Includes 20,000 shares of restricted stock.
+The shares shown do not include 1,969 Eastman Kodak Company common stock
equivalents which are held in Kodak's Executive Deferred Compensation Plan
for R. T. Bourns.
~Mr. Deavenport surrendered all of his 124,898 Kodak stock options in
connection with the spin-off of Eastman Chemical Company.
# The total number of shares beneficially owned by all directors,
nominees and executive officers as a group is less than one percent of the
Company's outstanding shares.
Beneficial security ownership as reported in the above table has been
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934. Accordingly, except as noted below, all Company securities over which
the directors, nominees and executive officers directly or indirectly have or
share voting or investment power have been deemed beneficially owned. The
figures above include shares held for the account of the above persons in the
Automatic Dividend Reinvestment Service for Shareholders of Eastman Kodak
Company, in the Kodak Employee Stock Ownership Plan, and the interests, if
any, of those of the above persons in Fund A of the Eastman Kodak Employees'
Savings and Investment Plan, stated in terms of Kodak shares.
The table does not include approximately 5,712,994 shares of the
Company's stock (less than 2 percent of the outstanding shares) held in the
Kodak Stock Fund of the Eastman Kodak Employees' Savings and Investment Plan
for the benefit of some 25,195 employees and former employees, over which a
committee consisting of five individuals, including four Company officers,
has discretionary voting power.
<PAGE>
<PAGE> 56
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
Page No.
(a) 1. Consolidated financial statements:
Report of independent accountants 18
Consolidated statement of earnings 19
Consolidated statement of retained earnings 21
Consolidated statement of financial position 22
Consolidated statement of cash flows 23
Notes to financial statements 24-43
2. Financial statement schedules:
I - Marketable securities 59
II - Amounts receivable from employees 60
V - Properties 61
VI - Accumulated depreciation of properties 62
VIII - Valuation and qualifying accounts 63
IX - Short-term borrowings 64
X - Supplementary consolidated statement of earnings
information 65
All other schedules have been omitted because they are not applicable
or the information required is shown in the financial statements or
notes thereto.
3. Additional data required to be furnished:
Exhibits required as part of this report are listed in the index
appearing on pages 66 through 68. The management contracts and
compensatory plans and arrangements required to be filed as exhibits
to this form pursuant to Item 14(c) of this report are listed on
pages 66 through 67, Exhibit Numbers (10)A - (10)R.
(b) Report on Form 8-K.
No reports on Form 8-K were filed or required to be filed during the
quarter ended December 31, 1993.
<PAGE>
<PAGE> 57
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
EASTMAN KODAK COMPANY
(Registrant)
By:
George M. C. Fisher, Chairman of
the Board, President and Chief
Executive Officer
Date: March 11, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Harry L. Kavetas, Senior Roberto C. Goizueta, Director
Vice President and Chief Financial Officer
C. Michael Hamilton, General Comptroller Paul E. Gray, Director
Richard S. Braddock, Director Karlheinz Kaske, Director
Martha Layne Collins, Director John J. Phelan, Jr., Director
Charles T. Duncan, Director Wilber J. Prezzano, Director
Alice F. Emerson, Director Leo J. Thomas, Director
George M. C. Fisher, Director Richard A. Zimmerman, Director
Date: March 11, 1994
<PAGE>
<PAGE> 58
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-3 (No. 33-48258,
No. 33-48955, and No. 33-49285), Form S-4 (No. 33-48891) and Form S-8
(No. 2-77145, No. 33-5803, No. 33-36731, No. 33-38631, No. 33-38632,
No. 33-38633, No. 33-38634, and No. 33-35214) of Eastman Kodak Company of our
report dated January 31, 1994, except for the Subsequent Event note, which is
as of March 2, 1994, appearing on page 18 of this Annual Report on Form 10-K.
PRICE WATERHOUSE
New York, New York
March 11, 1994
<PAGE>
<PAGE> 59
<TABLE>
Schedule I
Eastman Kodak Company and Subsidiary Companies
Marketable Securities as of December 31, 1993
(in millions)
<CAPTION>
Amount Shown in
Principal Statement of
Name of Issuer or Title of Issue Amount Cost Market Financial Position
<S> <C> <C> <C> <C>
U. S. Govt. Securities $200 $200 $200 $200
Certificates of deposit 122 122 122 122
Other securities 9 9 9 9
---- ---- ---- ----
Totals $331 $331 $331 $331
==== ==== ==== ====
</TABLE>
<PAGE>
<PAGE> 60
Schedule II
Eastman Kodak Company and Subsidiary Companies
Amounts Receivable From Employees
(in millions)
Balance 1993 1993 Balance
Name of Debtor 1/1/93 Additions Collections 12/31/93
George M. C. Fisher* $ - $8.4 $ - $8.4
Other employees with loans
greater than $100,000** 2.1 0.5 0.7 1.9
* Interest rate on Mr. Fisher's loan is 4.86% compounded semi-annually.
Twenty percent of the principal and all accrued interest shall be forgiven on
each of the first five anniversaries of the date of the loan, provided that
Mr. Fisher shall not be entitled to forgiveness on any such anniversary date
if he has terminated his employment through voluntary termination, as defined
in his employment agreement, on or prior to such anniversary date.
** Amounts each year represent housing loans for approximately ten to fifteen
employees located outside the United States, primarily in Japan.
<PAGE>
<PAGE> 61
<TABLE>
Schedule V
Eastman Kodak Company and Subsidiary Companies
Properties
(in millions)
<CAPTION>
Sales,
Balance at Additions Retirements Balance at
Beginning at and Other End of
of Period Cost Changes Period
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Land $ 278 $ 1 $ 12 $ 267
Buildings & Building Equipment 3,047 95 (12) 3,154
Machinery & Equipment 9,508 900 1,003 9,405
Construction in Progress 774 86 375 485
------- ------ ------ -------
TOTAL $13,607 $1,082 $1,378 $13,311
======= ====== ====== =======
Year ended December 31, 1992
Land $ 263 $ 8 $ (7) $ 278
Buildings & Building Equipment 3,033 105 91 3,047
Machinery & Equipment 9,096 1,207 795 9,508
Construction in Progress 729 305 260 774
------- ------ ------ -------
TOTAL $13,121 $1,625 $1,139 $13,607
======= ====== ====== =======
Year ended December 31, 1991
Land $ 259 $ 6 $ 2 $ 263
Buildings & Building Equipment 2,867 152 (14) 3,033
Machinery & Equipment 8,304 1,272 480 9,096
Construction in Progress 838 103 212 729
------- ------ ------ -------
TOTAL $12,268 $1,533 $ 680 $13,121
======= ====== ====== =======
</TABLE>
<PAGE>
<PAGE> 62
<TABLE>
Schedule VI
Eastman Kodak Company and Subsidiary Companies
Accumulated Depreciation of Properties
(in millions)
<CAPTION>
Sales,
Balance at Additions Retirements Balance at
Beginning Charged and Other End of
of Period to Earnings Changes Period
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Buildings & Building Equipment $1,492 $ 126 $ 63 $1,555
Machinery & Equipment 5,351 832 793 5,390
------ ------ ---- ------
TOTAL $6,843 $ 958 $856 $6,945
====== ====== ==== ======
Year ended December 31, 1992
Buildings & Building Equipment $1,469 $ 132 $109 $1,492
Machinery & Equipment 5,031 925 605 5,351
------ ------ ---- ------
TOTAL $6,500 $1,057 $714 $6,843
====== ====== ==== ======
Year ended December 31, 1991
Buildings & Building Equipment $1,384 $ 127 $ 42 $1,469
Machinery & Equipment 4,625 868 462 5,031
------ ------ ---- ------
TOTAL $6,009 $ 995 $504 $6,500
====== ====== ==== ======
</TABLE>
<PAGE>
<PAGE> 63
<TABLE>
Schedule VIII
Eastman Kodak Company and Subsidiary Companies
Valuation and Qualifying Accounts
(in millions)
<CAPTION>
Balance at Additions Deductions Balance
Beginning Charged to Amounts at End of
of Period Earnings Written Off Period
<S> <C> <C> <C> <C>
Year ended December 31, 1993
Deducted in the Statement of
Financial Position:
From Current Receivables
Reserve for doubtful accounts $104 $ 53 $ 63 $ 94
Reserve for loss on returns
and allowances 87 187 227 47
---- ---- ---- ----
TOTAL $191 $240 $290 $141
==== ==== ==== ====
From Long-Term Receivables and
Other Noncurrent Assets;
Reserve for doubtful accounts $ 28 $ 6 $ 10 $ 24
==== ==== ==== ====
Year ended December 31, 1992
Deducted in the Statement of
Financial Position:
From Current Receivables
Reserve for doubtful accounts $118 $ 58 $ 72 $104
Reserve for loss on returns
and allowances 74 152 139 87
---- ---- ---- ----
TOTAL $192 $210 $211 $191
==== ==== ==== ====
From Long-Term Receivables and
Other Noncurrent Assets;
Reserve for doubtful accounts $ 21 $ 9 $ 2 $ 28
==== ==== ==== ====
Year ended December 31, 1991
Deducted in the Statement of
Financial Position:
From Current Receivables
Reserve for doubtful accounts $111 $ 81 $ 74 $118
Reserve for loss on returns
and allowances 52 132 110 74
---- ---- ---- ----
TOTAL $163 $213 $184 $192
==== ==== ==== ====
From Long-Term Receivables and
Other Noncurrent Assets;
Reserve for doubtful accounts $ 20 $ 5 $ 4 $ 21
==== ==== ==== ====
</TABLE>
<PAGE>
<PAGE> 64
<TABLE>
Schedule IX
Eastman Kodak Company and Subsidiary Companies
Short-Term Borrowings
(in millions)
<CAPTION>
Weighted
Maximum Average Average
Weighted Amount Amount Interest
Balance at Average Outstanding Outstanding Rate
End of Interest During the During the During the
Category of Borrowing Year Rate Year Year Year (3)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1993:
Bank Loans of Subsidiaries
Outside the U.S.(1) $ 305 6.3% $ 919 $ 697 11.2%
Commercial Paper (2) - - 1,544 998 3.5
Year Ended December 31, 1992:
Bank Loans of Subsidiaries
Outside the U.S.(1) 1,136 9.1 1,136 901 11.1
Commercial Paper (2) 596 3.9 2,506 1,795 4.2
Year Ended December 31, 1991:
Bank Loans of Subsidiaries
Outside the U.S.(1) 551 10.2 551 467 13.0
Commercial Paper (2) 1,829 5.1 3,287 2,523 6.4
<FN>
(1) The average amount outstanding during the year was calculated by averaging the quarterly
balances.
(2) The average amount outstanding during the year was calculated by averaging the monthly
balances.
(3) The weighted average interest rate during the year was calculated by dividing short-term
interest expense for the year by the average amount outstanding during the year.
</TABLE>
<PAGE>
<PAGE> 65
<TABLE>
Schedule X
Eastman Kodak Company and Subsidiary Companies
Supplementary Consolidated Statement of Earnings Information
(in millions)
<CAPTION>
Charged to Earnings
1993 1992 1991
<S> <C> <C> <C>
Maintenance and repairs $ 473 $ 511 $ 482
Advertising and sales promotion 1,292 1,339 1,199
</TABLE>
<PAGE>
<PAGE> 66
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits
Exhibit
Number
Page
(3) A. Certificate of Incorporation.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 25, 1988, Exhibit 3.)
B. By-laws, as amended through September 11, 1992.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992,Exhibit 3.)
(4) A. Indenture dated as of June 15, 1986 between Eastman Kodak
Company as issuer of (i) 8.55% Notes due 1997, and (ii)
9 5/8% Notes Due 1999, and The Bank of New York as
Trustee.
(Incorporated by reference to the Eastman Kodak
Company Annual Report on Form 10-K for the fiscal year
ended December 28, 1986, Exhibit 4.)
B. Indenture dated as of January 1, 1988 between Eastman Kodak
Company as issuer of (i) 9 1/8% Notes due 1998, (ii)
9 3/8% Notes Due 2003, (iii) 9 1/2% Notes Due 2000, (iv)
10% Notes Due 2001, (v) 9.95% Debentures Due 2018, (vi)
9 7/8% Notes Due 2004, (vii) 10.05% Notes Due 1994, (viii)
9 3/4% Notes Due 2004, (ix) 9.20% Notes Due 1995, (x)
9 1/2% Notes Due 2008, (xi) 9.20% Debentures Due 2021, and
(xii) 7 1/4% Notes Due 1999, and The Bank of New York
as Trustee.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 25, 1988, Exhibit 4.)
C. First Supplemental Indenture dated as of September 6, 1991
and Second Supplemental Indenture dated as of September
20, 1991, each between Eastman Kodak Company as issuer of
Zero Coupon Exchangeable Senior Debentures Due 2006 and
The Bank of New York as Trustee, supplementing the
Indenture described in B.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Exhibit 4.)
D. Third Supplemental Indenture dated as of January 26, 1993,
between Eastman Kodak Company as issuer of Zero Coupon
Exchangeable Senior Debentures Due 2006 and The Bank of
New York as Trustee, supplementing the Indenture described
in B.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, Exhibit 4.)
E. Fourth Supplemental Indenture dated as of March 1, 1993,
between Eastman Kodak Company and The Bank of New York as
Trustee, supplementing the Indenture described in B. 69
F. Indenture dated as of October 1, 1991 between Eastman Kodak
Company as issuer of Zero Coupon Convertible Subordinated
Debentures Due 2011 and The Bank of New York as Trustee.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Exhibit 4.)
Eastman Kodak Company and certain subsidiaries are parties to
instruments defining the rights of holders of long-term debt
that was not registered under the Securities Act of 1933.
Eastman Kodak Company has undertaken to furnish a copy of
these instruments to the Securities and Exchange Commission
upon request.
(10) A. Eastman Kodak Company Retirement Plan for Directors, as
amended effective March 1, 1990.
B. Eastman Kodak Company 1985 Long Term Performance Award Plan,
as amended effective December 31, 1993. 78
C. 1982 Eastman Kodak Company Executive Deferred Compensation
Plan, as amended effective December 31, 1993. 83
D. Kodak Unfunded Retirement Income Plan, amended effective
January 1, 1992.
<PAGE>
<PAGE> 67
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits (continued)
Exhibit
Number
Page
E. Eastman Kodak Company Management Annual Performance Plan, as
amended effective April 1, 1993. 94
F. Eastman Kodak Company 1956 Deferred Compensation Plan, as
amended effective January 1, 1990.
G. Eastman Kodak Company 1981 Incentive Stock Option Plan, as
amended effective December 31, 1993. 97
H. Eastman Kodak Company Insurance Plan for Directors.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 29, 1988, Exhibit 10.)
I. Eastman Kodak Company Deferred Compensation Plan for
Directors, as amended effective March 1, 1990.
J. Eastman Kodak Company 1985 Stock Option Plan, as amended
effective December 31, 1993. 101
K. Kodak Supplementary Group Life Insurance Plan, as amended
effective July 1, 1991.
L. Eastman Kodak Company 1990 Omnibus Long-Term Compensation
Plan, effective December 31, 1993. 106
M. Kodak Excess Retirement Income Plan, as amended effective
December 1, 1991.
N. Kodak Executive Financial Counseling Program.
O. Umbrella Insurance Coverage.
(Incorporated by reference to the Eastman Kodak Company
Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Exhibit 10.)
P. Kodak Executive Health Management Plan, as amended effective
December 7, 1990.
Q. Wilbur J. Prezzano Retention Agreement dated September 3,
1993. 118
R. George M. C. Fisher Employment Agreement dated October 27,
1993. 121
Exhibits (10) A, F, and I are incorporated by reference to the
Eastman Kodak Company Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, Exhibit 10.
Exhibits (10) D, K, M, N, and P are incorporated by reference to the
Eastman Kodak Company Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, Exhibit 10.
(11) Statement Re Computation of Earnings Per Common Share. 138
(12) Statement Re Computation of Ratio of Earnings to Fixed Charges. 141
(22) Subsidiaries of Eastman Kodak Company. 142
(24) Consent of Independent Accountants. 58
(28) A. Eastman Kodak Employees' Savings and Investment Plan
Annual Report on Form 11-K for the fiscal year ended
December 30, 1993 (to be filed by amendment).
B. Sterling Winthrop Inc. Salaried Employees' Savings Plan
Annual Report on Form 11-K for the fiscal year ended
December 30, 1993 (to be filed by amendment).
C. Sterling Winthrop Inc. Hourly Employees' Savings Plan
Annual Report on Form 11-K for the fiscal year ended
December 30, 1993 (to be filed by amendment).
<PAGE>
<PAGE> 68
Eastman Kodak Company and Subsidiary Companies
Index to Exhibits (continued)
Exhibit
Number
Page
D. L & F Products Employees' Savings Plan I Annual Report on
Form 11-K for the fiscal year ended December 30, 1993
(to be filed by amendment).
E. L & F Products Employees' Savings Plan II Annual Report on
Form 11-K for the fiscal year ended December 30, 1993 (to be
filed by amendment).
<PAGE>
<PAGE> 69
Exhibit (4) E
EASTMAN KODAK COMPANY
TO
THE BANK OF NEW YORK
Trustee
FOURTH SUPPLEMENTAL INDENTURE
Dated as of March 1, 1993
TO
INDENTURE
Dated as of January 1, 1988
<PAGE>
<PAGE> 70
FOURTH SUPPLEMENTAL INDENTURE, dated as of March 1, 1993, between
EASTMAN KODAK COMPANY, a corporation duly organized and existing under the
laws of the State of New Jersey (the "Company"), having its principal office
at 343 State Street, Rochester, New York 14650, and THE BANK OF NEW YORK, a
corporation duly organized and existing under the laws of the State of New
York, as trustee (the "Trustee").
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture, dated as of January 1, 1988, as supplemented by First
Supplemental Indenture thereto, dated as of September 6, 1991, Second
Supplemental Indenture thereto, dated as of September 20, 1991 and Third
Supplemental Indenture thereto, dated as of January 26, 1993 (as so
supplemented, the "Indenture"), providing for the issuance from time to time
of its unsecured debentures, notes or other evidences of indebtedness (herein
and therein called the "Securities"), to be issued in one or more series as
in the Indenture provided;
WHEREAS, Section 901(9) of the Indenture provides that, without the
consent of any Holders, the Company, when authorized by a Board Resolution,
and the Trustee, at any time and from time to time, may enter into one or
more indentures supplemental to the Indenture for the purpose of curing any
ambiguity, correcting or supplementing any provision in the Indenture which
may be inconsistent with any other provision therein, or making any other
provisions with respect to matters or questions arising under the Indenture,
provided such action shall not adversely affect the interests of the Holders
of Securities of any series in any material respect;
WHEREAS, the Company, pursuant to the foregoing authority, proposes
in and by this Fourth Supplemental Indenture to amend and supplement the
Indenture in certain respects as set forth herein; and
WHEREAS, all things necessary to make this Fourth Supplemental
Indenture a valid agreement of the Company, and a valid amendment of and
supplement to the Indenture, have been done.
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
any series thereof, as follows:
ARTICLE ONE
Relation To Indenture; Definitions
SECTION 1.01. This Fourth Supplemental Indenture constitutes an
integral part of the Indenture and shall be construed in connection with and
as part of the Indenture.
SECTION 1.02. For all purposes of this Fourth Supplemental
Indenture, capitalized terms used herein without definition shall have the
meanings specified in the Indenture.
SECTION 1.03. The definition of "Trust Indenture Act" provided in
Section 101 of the Indenture shall be amended to read in its entirety as
follows:
"'Trust Indenture Act' means the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of
1990 as in effect at the date of the Fourth Supplemental
Indenture to this Indenture."
SECTION 1.04. Section 104 of the Indenture is amended to add at
the end thereof new subsections (e) and (f) as follows:
"(e) If any Security of a series is issuable in the
form of a Global Security or Securities, the Depositary
therefor may grant proxies and otherwise authorize
participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or
other action which the Holder of such Security is entitled
to grant or take under this Indenture.
(f) The Company may set a record date for purposes
of determining the identity of Holders entitled to vote
or consent to any action by vote or consent authorized
or permitted by the second paragraph of Section 502 or
Section 512. Such record date shall be the later of 30
days prior to the first solicitation of such consent or
the date of the most recent list of Holders furnished to
the Trustee pursuant to Section 701 prior to such solicitation."
<PAGE>
<PAGE> 71
ARTICLE TWO
The Securities
SECTION 2.01. The Indenture is amended to add a new Section 205 as
follows:
"SECTION 205. Securities in Global Form.
If any Security of a series is issuable in the form of a
Global Security or Securities, each such Global Security
may provide that it shall represent the aggregate amount
of Outstanding Securities from time to time endorsed
thereon and may also provide that the aggregate amount
of Outstanding Securities represented thereby may from
time to time be reduced to reflect exchanges. Any
endorsement of a Global Security to reflect the amount of
Outstanding Debt Securities represented thereby shall be
made by the Trustee and in such manner as shall be
specified on such Global Security. Any instructions by
the Company with respect to a Global Security, after its
initial issuance, shall be in writing but need not comply
with Section 102."
SECTION 2.02. Section 304 of the Indenture is amended by adding
the phrase "a permanent Global Security or Securities or" before the words
"definitive Securities" in the first line thereof; by adding the phrase "or
one or more temporary Global Securities" before the words "which are printed"
in the third line thereof; and by adding the phrase "or permanent Global
Security or Securities, as the case may be", before the words "in lieu of" in
the fifth line thereof.
SECTION 2.03. Section 308 of the Indenture is amended by inserting
the following paragraph at the end thereof:
"None of the Company, any Paying Agent, or the Security
Registrar will have any responsibility or liability for any
aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security or for
maintaining, supervising or reviewing any records relating to
such beneficial ownership interests."
ARTICLE THREE
The Trustee
SECTION 3.01. Section 608(a) of the Indenture is amended by
inserting directly before the word "either" appearing in the third line
thereof the following:
"and if the default (exclusive of any period of grace
or requirement of notice) to which such conflicting
interest relates has not been cured or waived or otherwise
eliminated within 90 days after ascertaining that it has
such conflicting interest,";
Section 608(a) is further amended by inserting directly before the word
"resign" in the fourth line thereof the phrase "except as otherwise provided
below in this Section".
SECTION 3.02. Section 608(c) of the Indenture is hereby amended by
inserting directly after the phrase "of any series" appearing in the second
line thereof the following:
"if such Securities are in default (exclusive of any period
of grace or requirement of notice) and".
SECTION 3.03. Section 608(c)(8) of the Indenture is amended by
deleting the word "or" appearing in the last line thereof.
SECTION 3.04. Section 608(c)(9) of the Indenture is amended by
deleting the words and punctuation "on May 15 in any calendar year,"
appearing in the first line thereof and inserting in their place the
following:
"on the date of default upon Securities of any series
(exclusive of any period of grace or requirement of notice)
or any anniversary of such default while such default upon
such Securities remains outstanding,";
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Section 608(c)(9) is further amended by deleting the words and punctuation
"May 15 in each calendar year," appearing in line thirteen thereof and
inserting in their place the following:
"the dates of any such default upon a series of Securities
and annually in each succeeding year that such series of
Securities remains in default,";
Section 608(c)(9) is further amended by deleting the phrase "May 15"
appearing in line fifteen thereof and inserting in its place the word
"dates";
and Section 608(c)(9) is further amended by deleting the period appearing in
the last line thereof and inserting in its place the following:
"; or
(10) the Trustee, except under the circumstances described
in paragraphs (1), (3), (4), (5) or (6) of this Section
608(c), shall be or shall become a creditor of the Company
For purposes of paragraph (1) of this subsection the term
'series of securities' or 'series' means a series, class or group
of securities issuable under an indenture pursuant to the terms
of which holders of one such series may vote to direct the
Trustee, or otherwise take action pursuant to a vote of
holders, separately from holders of another such series;
provided that 'series of securities' or 'series' shall not
include any series of securities issuable under an indenture
if all such series rank equally and are wholly unsecured."
SECTION 3.05. Section 608(d)(1) of the Indenture is amended
by deleting the phrase "three years" appearing in the second line thereof and
inserting in its place the words "one year".
SECTION 3.06. Section 608 of the Indenture is amended by
inserting at the end thereof the following:
"(f) Except in the case of a default in the
payment of the principal of or interest on any series
of Securities, or in the payment of any sinking or
purchase fund installment, the Trustee shall not be
required to resign as provided by Section 608(c) hereof
if the Trustee shall have sustained the burden of proving,
on application to the Commission and after opportunity
for hearing thereon and in accordance with any applicable
regulations of the Commission, that--
(i) the default under the Indenture may be cured
or waived during a reasonable period and under the
procedures described in such application, and
(ii) a stay of the Trustee's duty to resign will
not be inconsistent with the interests of holders of such
series of Securities. The filing of such an application
shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
Any resignation of the Trustee shall become effective only
upon the appointment of a successor trustee and such successor's
acceptance of such an appointment."
SECTION 3.07. Section 609 of the Indenture is amended by
inserting directly after the second sentence thereof the following:
"Neither the Company, nor any Person directly or indirectly
controlling, controlled by or under common control with the Company
shall serve as Trustee for the Securities of any series."
SECTION 3.08. Section 610(d)(1) of the Indenture is amended
by inserting directly after the word and punctuation "months," in the third
line thereof the following:
"unless the Trustee's duty to resign is stayed in accordance with
the provisions of Section 608(f),"
SECTION 3.09. Section 613 of the Indenture is amended by
deleting the phrases "four months" and "four-month" each place they appear
therein and inserting in place thereof the phrases "three months" and
"three-month", respectively.
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ARTICLE FOUR
Holders' Lists and Reports by
Trustee and Company
SECTION 4.01. Section 703(a) of the Indenture is amended by
inserting directly after the phrase "with respect to" appearing in the fourth
line thereof the following:
"any of the following events which may have occurred
within the previous twelve months (but if no such event
has occurred within such period no report need be transmitted)".
SECTION 4.02. Section 703(a)(1) of the Indenture is amended
by deleting the same in its entirety and inserting in its place the
following: "any change to its eligibility under Section 609 and its
qualifications under Section 608;".
SECTION 4.03. Section 703(a) of the Indenture is amended by
adding a new subsection (2) as follows and by redesignating subsections (2),
(3), (4), (5) and (6) as subsections (3), (4), (5), (6) and (7),
respectively:
"(2) the creation of any material change to a relationship
specified in paragraph (1) through (10) of Section 608(c);".
SECTION 4.04. Section 703(a)(5) (as redesignated pursuant to
Section 4.03 of this Fourth Supplemental Indenture) of the Indenture is
amended by inserting at the beginning thereof the phrase "any change to".
SECTION 4.05. Section 704 of the Indenture is amended
by adding a new subsection (4) at the end thereof as follows:
"(4) furnish to the Trustee, not less often than
annually, a brief certificate from the principal executive
officer, the principal financial officer or principal
accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this
Indenture. For purposes of this subsection (4), such
compliance shall be determined without regard to any period
of grace or requirement of notice provided under this Indenture."
ARTICLE FIVE
Covenants
SECTION 5.01. Section 1001 of the Indenture is amended by
inserting the following paragraph at the end thereof:
"The interest, if any, due in respect of any Global
Security, together with any additional amounts payable in
respect thereof, as provided in the terms and conditions of
the Securities represented thereby, shall be payable only
upon presentation of such Global Security to the Trustee for
notation thereon of the payment of such interest."
ARTICLE SIX
Redemption of Securities
SECTION 6.01. Section 1103 of the Indenture is amended by
deleting the first word "If" and inserting in place thereof the words "Except
as otherwise specified as contemplated by Section 301 for Securities of any
series, if".
SECTION 6.02. Section 1107 is amended by inserting at the end
thereof the words "; except that if a Global Security is so surrendered, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Depositary for such Global Security, without service charge, a new Global
Security in a denomination equal to and in exchange for the unredeemed
portion of the principal of the Global Security so surrendered."
ARTICLE SEVEN
Securityholders' Meetings
SECTION 7.01. The Indenture is hereby amended by adding after
Article Thirteen the following new Article:
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<PAGE> 74
"ARTICLE FOURTEEN
SECURITYHOLDERS' MEETINGS"
Section 14.01. Purposes for Which Meetings May be Called.
A meeting of Holders of Securities of any or all series may be
called at any time and from time to time pursuant to the provisions
of this Article for any of the following purposes:
(1) to give any notice to the Company or to the Trustee, or
to give any directions to the Trustee, or to consent to the waiving
of any default hereunder and its consequences, or to take any other
action authorized to be taken by Holders of Securities of any or
all Series, as the case may be, pursuant to any of the provisions
of Article Five;
(2) to remove the Trustee and appoint a successor trustee
pursuant to the provisions of Article Six;
(3) to consent to the execution of a Supplemental Indenture
pursuant to the provisions of Section 902; or
(4) to take any other action authorized to be taken by or on
behalf of the Holders of any specified principal amount of the
Securities of any or all series, as the case may be, under any
other provision of this Indenture or under applicable law.
Section 14.02. Manner of Calling Meetings.
The Trustee may at any time call a meeting of Holders of
Securities to take any action specified in Section 1401, to be held
at such time and at such place in The City of New York, State of
New York, as the Trustee shall determine. Notice of every meeting
of Holders of Securities, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed not less than 20 nor more than 60
days prior to the date fixed for the meeting.
Section 14.03. Call of Meetings by Company or Securityholders.
In case at any time the Company, pursuant to a resolution of
its Board of Directors, or the Holders of not less than ten percent
in principal amount of the Securities of any or all series, as the
case may be, then Outstanding, shall have requested the Trustee to
call a meeting of Holders of Securities of any or all series, as
the case may be, to take any action authorized in Section 1401 by
written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have
mailed notice of such meeting within 20 days after receipt of such
request, then the Company or such Holders of Securities in the
amount above specified may determine the time and place in The City
of New York, New York for such meeting and may call such meeting to
take any action authorized in Section 1401, by mailing notice
thereof as provided in Section 1402.
Section 14.04. Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Holders, a Person
shall (a) be a Holder of one or more Outstanding Securities with
respect to which the meeting is being held; or (b) be a Person
appointed by an instrument in writing as proxy by such Holder of
one or more Securities. The only Persons who shall be entitled to
be present or to speak at any meeting of Holders shall be the
Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any
representatives of the Company or its counsel.
Section 14.05. Regulations May be Made by Trustee; Conduct of the
Meeting; Voting Rights - Adjournment.
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders, in regard to proof of the
holding of Securities and of the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall think fit. Except as
otherwise permitted or required by any such regulations, the
holding of Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the
manner specified in said Section 104; provided, however, that such
regulations may provide that written instruments appointing proxies
regular on their face, may be presumed valid and genuine without
the proof hereinabove or in said Section 104 specified.
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<PAGE> 75
The Trustee shall by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have
been called by the Company or by Holders as provided in Section
1403, in which case the Company or the Holders calling the meeting,
as the case may be, shall in like manner appoint a temporary
chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by majority vote of the meeting.
At any meeting each Holder of an Outstanding Security or
proxy therefor shall be entitled to one vote for each $250,000
principal amount (in the case of Original Issue Discount
Securities, such principal amount shall be equal to such portion of
the principal amount as may be specified in the terms of such
series) of Securities held or represented by such Holder; provided,
however, that no vote shall be cast or counted at any meeting in
respect of any Security challenged as not Outstanding and ruled by
the chairman of the meeting to be not Outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of
Securities held by such Person or instruments in writing as
aforesaid duly designating such Person as the Person to vote on
behalf of other Holders. Any meeting of Holders duly called
pursuant to the provisions of Section 1402 or 1403 may be adjourned
from time to time and the meeting may be held so adjourned
without further notice.
At any meeting of Holders, the presence of Persons holding
or representing Securities in principal amount sufficient to take
action on the business for the transaction of which such meeting
was called shall constitute a quorum, but, if less than a quorum is
present, the Persons holding or representing a majority in
principal amount of the Securities represented at the meeting may
adjourn such meeting with the same effect for all intents and
purposes, as though a quorum had been present.
Section 1406. Manner of Voting at Meetings and Records to be Kept.
The vote upon any resolution submitted to any meeting of
Holders shall be by written ballots on which shall be subscribed
the signatures of the Holders of Securities or of their
representatives by proxy and the principal amount or principal
amounts of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of
the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Holders shall be prepared by the
secretary of the meeting and there shall be attached to said record
the original reports of the inspectors of votes on any vote by
ballot taken thereat and affidavits by one or more Persons having
knowledge of the facts setting forth a copy of the notice of the
meeting and showing that said notice was mailed as provided in
Section 1402. The record shall show the principal amount or
principal amounts of the Securities voting in favor of or against
any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting
and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee.
Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
Section 1407. Exercise of Rights to Trustee and Securityholders Not
to be Hindered or Delayed.
Nothing in this Article contained shall be deemed or
construed to authorize or permit, by reason of any call of a
meeting of Holders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrances or delay in the
exercise of any right or rights conferred upon or reserved to the
Trustee or to the Holders under any of the provisions of this
Indenture or of the Securities.
ARTICLE EIGHT
Miscellaneous
SECTION 8.01. The Trustee accepts the trusts created by the
Indenture, as supplemented by this Fourth Supplemental Indenture,
and agrees to perform the same upon the terms and conditions of the
Indenture, as supplemented by this Fourth Supplemental Indenture.
SECTION 8.02. The recitals contained herein shall be taken
as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Fourth
Supplemental Indenture.
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<PAGE> 76
SECTION 8.03. Each of the Company and the Trustee makes and
reaffirms as of the date of execution of this Fourth Supplemental
Indenture all of its respective representations, warranties,
covenants and agreements set forth in the Indenture.
SECTION 8.04. All covenants and agreements in this Fourth
Supplemental Indenture by the Company or the Trustee shall bind its
respective successors and assigns, whether so expressed or not.
SECTION 8.05. In case any provision in this Fourth
Supplemental Indenture shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 8.06. Nothing in this Fourth Supplemental
Indenture, express or implied, shall give to any Person, other than
the parties hereto and their successors under the Indenture and the
Holders, any benefit or any legal or equitable right, remedy or
claim under the Indenture.
SECTION 8.07. If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act, as it may be
amended from time to time, that is required under such Act to be a
part of and govern this Fourth Supplemental Indenture, the latter
provision shall control. If any provision hereof modifies or
excludes any provision of such Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this
Fourth Supplemental Indenture as so modified or excluded, as the
case may be.
SECTION 8.08. THIS FOURTH SUPPLEMENTAL INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
SECTION 8.09. All provisions of this Fourth Supplemental
Indenture shall be deemed to be incorporated in, and made a part
of, the Indenture; and the Indenture, as supplemented by this
Fourth Supplemental Indenture, shall be read, taken and construed
as one and the same instrument.
* * * * *
This Fourth Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed
to be an original, but all such counterparts shall together
constitute but one and the same instrument.
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<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Supplemental Indenture to be duly executed, and their respective corporate
seals (where applicable) to be hereunto affixed and attested, all as of the
day and year first above written.
[Corporate Seal] EASTMAN KODAK COMPANY
Attest: By: David L. Vigren
Gary P. Van Graafeiland Title: Treasurer
Title: Secretary
[Corporate Seal] THE BANK OF NEW YORK
Attest: By: Salvatore D. Mineo
Title: Vice President
Title: Assistant Treasurer
STATE OF NEW YORK)
) ss.:
COUNTY OF MONROE )
On the day of , 1993, before me personally came , to
me known, who being duly sworn, did depose and say that he is of
EASTMAN KODAK COMPANY, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said
corporation; that it was so affixed by authority of the Board of Directors
of said corporation, and that he signed his name thereto by like authority.
Notary Public
State of New York
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the day of March, 1994, before me personally came , to
me known, who being duly sworn, did depose and say that he is of THE BANK OF
NEW YORK, one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that it was
so affixed by authority of the Board of Directors of said corporation, and
that he signed his name thereto by like authority.
<PAGE>
<PAGE> 78
Exhibit (10)B
As Amended December 30, 1993
Effective December 31, 1993
1985 EASTMAN KODAK COMPANY
LONG-TERM PERFORMANCE AWARD PLAN
1. Purpose. The purpose of the Plan is to provide motivation to key
employees of the Company to put forth maximum efforts for the long-term
success of the business, and to encourage ownership of the Common Stock by
such employees.
2. Definitions.
2.1 "Board" means the Board of Directors of the Company.
2.2 "Committee" means the Compensation Committee of the Board,
consisting of not less than three members of the Board. A member of the
Committee shall not be, and shall not within one year prior to appointment to
the Committee have been, eligible to participate in the Plan or any other
plan of the Company or any of its affiliates entitling participants to
acquire stock, stock options or stock appreciation rights of the Company or
its affiliates.
2.3 "Common Stock" means common stock of the Company.
2.4 "Company" means Eastman Kodak Company.
2.5 "Participant" means an employee of the Company or any Subsidiary,
who has been selected by the Committee to participate in the Plan for one or
more award cycles.
2.6 "Performance Share Unit ("PSU")" means a unit granted to a
Participant in accordance with this Plan which is equivalent to one share of
Common Stock.
2.7 "Plan" means the Eastman Kodak Company 1985 Long Term Performance
Award Plan.
2.8 "Subsidiary" means a corporation or other business entity in which
the Company directly or indirectly has an ownership interest of fifty percent
or more.
2.9 "Change In Control" means a change in control of the Company of a
nature that would be required to be reported (assuming such event has not
been "previously reported") in response to Item l(a) of the Current Report of
Form 8-K, as in effect on August 1, 1989, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act");
provided that, without limitation, a Change In Control shall be deemed to
have occurred at such time as (i) any "person" within the meaning of Section
14(d) of the Exchange Act is or has become the "beneficial owner" as defined
in Rule 13d-3 under the Exchange Act, directly or indirectly, of 25% or more
of the combined voting power of the outstanding securities of the Company
ordinarily having the right to vote at the election of directors ("Voting
Securities"), or (ii) individuals who constitute the Board of Directors of
the Company on August 1, 1989 (the "Incumbent Board") have ceased for any
reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to August 1, 1989 whose election, or
nomination for election by the Company's stockholders, was approved by a vote
of at least three-quarters (3/4) of the directors comprising the Incumbent
Board (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director without
objection to such nomination) shall be, for purposes of this clause (ii),
considered as though such person were a member of the Incumbent Board.
3. Administration. The Plan shall be administered by the Committee. The
Committee is authorized to interpret, construe and implement the Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to
make all other determinations necessary for its administration. All
determinations of the Committee shall be by a majority of its members and its
determinations shall be final.
4. Participation.
4.1 The Committee shall select, from time to time, Participants, from
those employees of the Company and any Subsidiary who, in the opinion of the
Committee, have the capacity to make a substantial contribution to the
success of the Company. Directors of the Company or any Subsidiary, who are
not full-time employees of the Company or any Subsidiary, shall not be
eligible to participate in the Plan.
4.2 If an employee becomes a participant after commencement of an award
cycle, the number of PSUs granted may be prorated for the length of time
remaining in the award cycle; provided, however, that notwithstanding any
Plan provision, other than Section 20.9 hereof, to the contrary, a person
must participate for one full year to be eligible to earn an award.
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<PAGE> 79
4.3 The Committee shall grant PSUs to Participants at any time prior to
or as soon after the start of an award cycle as practicable. In making such
grants, the Committee may take into account the Participant's level of
responsibility, rate of compensation and such other criteria as it deems
appropriate.
4.4 During each award cycle, on each payment date for cash dividends on
the Company's common stock each Participant shall be credited with dividend
equivalents in the amount of the cash dividend declared per share for each
PSU credited to him on the record date for such dividend. Each Participant
shall also be credited with interest, compounded monthly, on such dividend
equivalents computed at the monthly average of the lending rate as stated by
Morgan Guaranty Trust Company, or its successors, to its most favored
corporate customers (currently known as the bank's "Prime Rate"), such
average to be determined as of the last day of each month.
5. Shares Available. The aggregate number of shares which may be issued
under this Plan is 2,625,000 (par value $2.50), subject to adjustment as
provided in Section 13. Such shares may be authorized and unissued shares or
may be treasury shares.
6. Award Cycles. Each award cycle shall encompass three fiscal years of the
Company; provided, however, that the Committee may declare a cycle completed
earlier if it deems it appropriate to do so. The first award cycle shall
commence at the beginning of fiscal 1986. Subsequent award cycles shall
commence each fiscal year thereafter, with the last award cycle commencing at
the beginning of fiscal 1990.
7. Performance Criteria.
7.1 The Committee shall establish performance criteria for each award
cycle ("Criteria") relating to Company earnings, return on assets,
productivity or such other factors as the Committee shall identify.
7.2 Upon the completion of each award cycle, the Committee shall review
the performance of the Company and compare this performance with the Criteria
for that award cycle. The relationship between such performance and the
Criteria shall be used to determine the portion, if any, of the PSUs that
have been earned. The Committee may consider other factors, including
individual performance, in determining the portion of PSUs that have been
earned. Such portion may range from 0 to 150 percent as the Committee shall
determine and shall be termed the "award percentage".
8. Payment.
8.1 Payment of PSUs that have been earned shall be made in Common Stock,
cash or a combination thereof as determined by the Committee. For each PSU
earned, the Participant shall be entitled to one share of Common Stock or the
value thereof, subject to such terms, conditions, or restrictions, including
restrictions on transferability and continued employment, as the Committee
may deem appropriate.
8.2 After the completion of each award cycle, each Participant shall be
paid in Common Stock, cash, or a combination thereof, as determined by the
Committee, an amount equal to the "award percentage" for that cycle
multiplied by the dividend equivalents (together with the interest credited
with respect thereto) credited during and for that cycle.
8.3 Following the payment made pursuant to Section 8.2, each Participant
shall continue to be credited with dividend equivalents and interest as
described in Section 4.4 for each PSU earned, but not yet paid. Together
with the payment of such earned PSUs, there shall also be paid in Common
Stock, cash, or a combination thereof, as determined by the Committee, an
amount equal to the dividend equivalents and interest credited to the
Participant with respect to such earned PSUs.
8.4 Receipt of any payment or any portion thereof, may be deferred until
termination of employment by delivery of a written, irrevocable election,
prior to the time such payment would otherwise be made, on a form provided by
the Company. Such election shall indicate the percentage of the earned PSUs
and the accompanying dividend equivalents (with interest) to be deferred.
8.5 PSUs which are deferred will continue to be credited with dividend
equivalents and interest as described in Section 4.4.
8.6 Deferred payments shall be made in a single payment or in annual
installments, at the sole discretion of the Committee. The maximum number of
installments shall be ten. The amount of each installment payment shall be
equal to the value of the deferred amount, divided by the number of
installments remaining to be paid with respect to that deferral.
<PAGE>
<PAGE> 80
8.7 Anything herein to the contrary notwithstanding, Participants who
cease to be employed by the Company or a Subsidiary and are employed by
Eastman Chemical Company or one of its subsidiaries in connection with the
distribution of the common stock of Eastman Chemical Company to the
shareholders of the Company, shall not be deemed to have terminated
employment for purposes of this Plan and all performance share units and
restricted stock units outstanding on the date of such distribution.
9. Termination of Employment.
9.1 If a Participant's employment terminates during an award cycle for
any reason other than death, disability, retirement, or for any unapproved
reason, he shall not be entitled to payment with respect to any PSUs for that
award cycle.
9.2 If a Participant's employment terminates during an award cycle by
reason of retirement or disability or any approved reason, he shall continue
to be entitled to dividend equivalents in accordance with Section 4.4, but he
shall be entitled to only a fraction of any payment with respect to the PSUs
earned at the end of the award cycle, based upon the number of months of
participating employment during the award cycle. Such payment shall be made
following the end of the award cycle in accordance with Section 8.
9.3 If a Participant dies during an award cycle, whether employed,
retired or disabled at the time of death, his legal representative shall be
entitled to receive, as soon as practicable, a fraction of the PSUs that
would have been earned based upon the number of months of participating
employment during the award cycle and assuming 100% of the Criteria for that
award cycle had been met. Such payment shall be made in cash, with the PSUs
valued as of the date of death.
9.4 If an individual is a Participant in more than one award cycle at
the time of his termination, his entitlement, if any, for each such award
cycle shall be determined as provided in this Section 9.
9.5 In the event of death, disability, retirement, or approved
termination of employment, after the completion of an award cycle, any terms,
conditions or restrictions in effect on any PSUs previously earned by the
Participant shall lapse as of the date of such event.
9.6 Anything herein to the contrary notwithstanding, Participants who
cease to be employed by the Company or a Subsidiary and are employed by
Eastman Chemical Company or one of its subsidiaries in connection with the
distribution of the common stock of Eastman Chemical Company to the
shareholders of the Company, shall not be deemed to have terminated
employment for purposes of this Plan and all performance share units and
restricted stock units outstanding on the date of such distribution.
10. Non-Competitive Provision. Notwithstanding any Plan provision, other
than Section 20.10 hereof, to the contrary, if a Participant, without the
written consent of the Company, engages either directly or indirectly, in any
manner or capacity, as principal, agent, partner, officer, director,
employee, or otherwise, in any business or activity competitive with the
business conducted by the Company or any Subsidiaries, or performs any act or
engages in any activity which in the opinion of the Chief Executive Officer,
is inimical to the best interests of the Company, prior to the completion of
any award cycles in which he is participating, he shall not receive an award
for any such award cycles.
11. Stock Awards. The Committee may, in addition, award restricted stock
units and/or shares of Common Stock to such employees of the Company and any
Subsidiary, and in such numbers and at such times during the term of the Plan
as it shall determine. Such employee may, but need not be, participating in
an award cycle. The Committee shall determine the terms, conditions, or
restrictions, including restrictions on transferability and continued
employment, relating to the awards as it may deem appropriate. The authority
of the Committee under this section may also be fully exercised by the
Chairman of the Committee alone, and whenever so exercised by him, he shall
report annually to the Committee all awards made hereunder. One restricted
stock unit is equivalent to one share of Common Stock. For every restricted
stock unit credited to an employee on the record date, the employee shall be
entitled to receive in cash on the payment date an amount equal to the
dividend per share of Common Stock declared by the Company, until such
restricted stock unit is paid in Common Stock, cash or a combination thereof,
as determined by the Committee.
12. Non-Assignability. No grants or awards under this Plan shall be subject
in any manner to alienation, anticipation, sale, transfer, assignment,
pledge, or encumbrance.
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13. Adjustment of Units and Shares Available. If there is any change in the
number of outstanding shares of Common Stock of the Company through the
declaration of stock dividends or through stock splits, the number of PSUs
and restricted stock units granted to Participants and the maximum number of
shares which may be issued under this Plan shall be automatically adjusted.
If there is any change in the number of outstanding shares of Common Stock of
the Company, through any change in the capital account of the Company or
through any other transaction referred to in Section 425(a) of the Internal
Revenue Code, the number of PSUs and restricted stock units granted to
Participants and the maximum number of shares which may be issued under this
Plan shall be appropriately adjusted by the Committee.
14. No Right to Continued Employment. Participation in the Plan shall not
give any employee any right to remain in the employ of the Company. The
Company reserves the right to terminate any Participant at any time.
15. Rights as a Shareholder. No Participant shall have any rights as a
shareholder as a result of participation in this Plan until the date of
issuance of a stock certificate in his name, whether or not such certificate
is subject to restrictions.
16. Amendment. The Board may, from time to time, amend the Plan in any
manner, but may not without shareholder approval, adopt any amendment which
would (a) materially increase the benefits accruing to Participants under the
Plan, (b) materially increase the number of shares which may be issued under
the Plan (except as provided in Section 13), or (c) materially modify the
requirements for eligibility for participation in the Plan.
17. Effective Date. The Plan shall become effective on November 8, 1985 and
shall be submitted to the shareholders at the Company's 1986 Annual Meeting
for approval. Notwithstanding any other provision of this Plan, no PSUs
shall be earned, nor shall restrictions lapse on stock awards, prior to
shareholder approval of the Plan.
18. Governing Law. The Plan shall be construed and enforced in accordance
with the law of New York State.
19. Taxes. The Company will withhold, to the extent required by law, all
applicable income and employment taxes from amounts paid under the Plan.
20. Change In Control.
20.1 Background. The terms of this Section 20 shall immediately become
operative, without further action or consent by any person or entity, upon a
Change In Control, and once operative shall supersede and control over any
other provisions of this Plan and its Administrative Guide.
20.2 Award Percentage for Incomplete Award Cycles. If a Change In
Control occurs during the term of one or more award cycles, each such award
cycle shall immediately terminate upon the occurrence of such event. For each
award cycle which is so terminated, the award percentage shall be one hundred
percent (100%).
20.3 Award Percentage for Completed Award Cycles. Upon the occurrence
of a Change In Control, for each completed award cycle for which the
Committee has not on or before such date determined an award percentage, the
award percentage shall be one hundred percent (100%).
20.4 Payment of PSUs and Dividend Equivalents. Each Participant of an
award cycle for which the award percentage is deemed one hundred percent
(100%) under Section 20.2 above shall be considered to have earned, and,
therefore, be entitled to receive, a prorated portion of the PSUs previously
granted to him for such award cycle and a prorated portion of the dividend
equivalents (together with the interest credited with respect thereto)
credited to him during that cycle. With regard to a Participant's PSUs, such
prorated portion shall be determined by multiplying the number of PSUs
granted to the Participant by a fraction, the numerator of which is the total
number of whole and partial years (with each partial year being treated as a
whole year) that have elapsed since the beginning of the award cycle, and the
denominator of which is three (3). With regard to a Participant's dividend
equivalents (together with the interest credited with respect thereto), such
prorated portion shall be determined by multiplying the Participant's
dividend equivalents (together with the interest credited with respect
thereto) by the same fraction.
Each Participant of an award cycle for which the award percentage is deemed
one hundred percent (100%) under Section 20.3 above shall be considered to
have earned and, therefore, be entitled to receive, all of the PSUs
previously granted to him during such award cycle, as well as all the
dividend equivalents (together with the interest credited with respect
thereto) credited during and for that cycle.
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20.5 Form and Time of Payment. Upon the occurrence of a Change In
Control, a Participant, whether or not he is still employed by the Company or
a Subsidiary, shall be paid in a single lump-sum cash payment as soon as
practicable, but in no event later than 90 days after the date of the Change
In Control: (a) all the PSUs and dividend equivalents (together with the
interest credited with respect thereto) earned by him or her as a result of
the application of Section 20.4; (b) all PSUs and dividend equivalents
(together with interest credited with respect thereto) deferred by him or her
under Section 8.4, but for which he or she has not received payment; and (c)
all other PSUs and dividend equivalents (together with interest credited with
respect thereto) earned by him or her on or before the date of the Change In
Control, but for which he or she has not received payment. For purposes of
making this payment, the value of a Participant's PSUs shall be determined by
averaging the mean between the high and low at which Kodak common stock is
traded on the New York Stock Exchange for each of the twenty (20) trading
days preceding the date of the Change In Control.
20.6 Lapse of Restrictions. Upon a Change In Control, all terms,
conditions or restrictions in effect on outstanding PSUs, restricted stock or
restricted stock units shall immediately lapse as of the date of such event.
In addition, no other terms, conditions or restrictions shall be imposed upon
any PSUs, restricted stock or restricted stock units on or after such date.
20.7 Vesting of Restricted Stock Units. Upon a Change In Control, all
outstanding restricted stock units shall automatically become one hundred
percent (100%) vested immediately upon the occurrence of such event.
20.8 Payment of Restricted Stock Units. Upon the occurrence of a Change
In Control, any person, whether or not he is still employed by the Company or
a Subsidiary, then holding restricted stock units shall be paid all his or
her outstanding restricted stock units in a single lump-sum cash payment as
soon as practicable, but in no event later than 90 days after the date of the
Change In Control. For purposes of making this payment, the value of a
person's restricted stock units shall be determined by averaging the mean
between the high and low at which Kodak common stock is traded on the New
York Stock Exchange for each of the twenty (20) trading days preceding the
date of the Change In Control.
20.9 Year of Participation. Upon a Change In Control, each Participant
who has not completed one (1) full year of participation under the Plan as of
the date of such event shall be considered to have completed a full year of
participation in order to satisfy the requirements of Section 4.2 of the
Plan.
20.10 Section 10. Upon a Change In Control, the terms and provisions in
Section 10 of the Plan shall become null and void and shall have no further
force and effect.
20.11 Amendment on or After Change In Control. On or after a Change In
Control, no action, including, but not by way of limitation, the amendment,
suspension or termination of the Plan, shall be taken which would affect the
rights of any Participant or the operation of this Plan with respect to any
PSUs to which the Participant may have become entitled hereunder on or prior
to the date of such action or as a result of such Change In Control.
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Exhibit (10)C
1982 EASTMAN KODAK COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated
Effective as of December 31, 1993
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1982 Eastman Kodak Company
Executive Deferred Compensation Plan
Table of Contents
Section Page
Preamble 86
Section 1. Definitions 86
Section 2. Compensation Level 87
Section 3. Deferral of Compensation 87
Section 4. Time of Election Deferral 87
Section 5. Hypothetical Investments 87
Section 5.1 Deferred Compensation Account 87
Section 5.2 Stock Account 87
Section 6. Manner of Electing Deferral 87
Section 7. Elections to Defer for A Fixed Period During Employment 88
Section 8. Investment in Stock Account 88
Section 8.1 Elections 88
Section 8.2 Election into the Stock Account 88
Section 8.3 Election out of the Stock Account 88
Section 8.4 Dividend Equivalents 88
Section 8.5 Stock Dividends 89
Section 8.6 Recapitalization 89
Section 8.7 Distributions 89
Section 8.8 Liquidation of Stock Account 89
Section 9. Payment of Deferred Compensation 89
Section 9.1 Background 89
Section 9.2 Manner of Payment 89
Section 9.3 Timing of Payments 89
Section 9.4 Valuation 89
Section 9.5 Termination of Employment 90
Section 10. Payment of Deferred Compensation After Death 90
Section 10.1 Stock Account 90
Section 10.2 Distribution 90
Section 11. Acceleration of Payment for Hardship 90
Section 12. Non-Competition Provision 90
Section 13. Participant's Rights Unsecured 90
Section 14. No Right to Continued Employment 90
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1982 Eastman Kodak Company
Executive Deferred Compensation Plan
Table of Contents Continued
Section Page
Section 15. Statement of Account 90
Section 16. Assignability 90
Section 17. Deductions 90
Section 18. Administration 91
Section 18.1 Responsibility 91
Section 18.2 Authority of the Compensation Committee 91
Section 18.3 Discretionary Authority 91
Section 18.4 Delegation of Authority 91
Section 19. Amendment 91
Section 20. Governing Law 91
Section 21. Diconix Deferred Compensation 91
Section 22. Change in Control 91
Section 22.1 Background 91
Section 22.2 Acceleration of Payment Upon Change In Control 91
Section 22.3 Amendment On or After Change In Control 91
Section 23. Severance Payments 91
Section 24. Compliance With Securities Laws 92
Schedule A 93
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1982 EASTMAN KODAK COMPANY
EXECUTIVE DEFERRED COMPENSATION PLAN
Preamble. The 1982 Eastman Kodak Company Executive Deferred Compensation
Plan is an unfunded non-qualified deferred compensation arrangement for
eligible executives of Eastman Kodak Company and certain of its subsidiaries
effective for compensation earned in 1982 and later years. Under the Plan,
each Eligible Employee is annually given an opportunity to elect to defer
payment of part of his or her compensation earned during the year following
his or her election.
Section 1. Definitions.
Section 1.1. "Account" means the Deferred Compensation Account or the
Stock Account.
Section 1.2. "Board" means Board of Directors of Kodak.
Section 1.3. "Change in Control" means a change in control of Kodak of a
nature that would be required to be reported (assuming such event has not
been "previously reported") in response to Item 1(a) of the Current
Report of Form 8-K, as in effect on August 1, 1989, pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, a Change in Control
shall be deemed to have occurred at such time as (i) any "person" within
the meaning of Section 14(d) of the Exchange Act is or has become the
"beneficial owner" as defined in Rule 13d-3 under the Exchange Act,
directly or indirectly, of 25% or more of the combined voting power of
the outstanding securities of Kodak ordinarily having the right to vote
at the election of directors ("Voting Securities"), or (ii) individuals
who constitute the Board of Directors of Kodak on August 1, 1989 (the
"Incumbent Board") have ceased for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent
to August 1, 1989 whose election, or nomination for election by Kodak's
stockholders, was approved by a vote of at least three-quarters (3/4) of
the directors comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such person
is named as a nominee for director without objection to such nomination)
shall be, for purposes of this clause (ii), considered as though such
person were a member of the Incumbent Board.
Section 1.4. "Common Stock" means the common stock of Kodak.
Section 1.5. "Company" means Kodak and its United States subsidiaries
listed on Schedule A.
Section 1.6. "Compensation Committee" shall mean the Compensation
Committee of the Board.
Section 1.7. "Deferrable Amount" means an amount equal to the excess of
the Eligible Employee's individual annual salary rate as of August 1 of
any year over the minimum compensation level established by the
Compensation Committee of the Board.
Section 1.8. "Deferred Compensation Account" means the account
established by the Company for each Participant for compensation deferred
pursuant to this Plan. The maintenance of individual Deferred
Compensation Accounts is for bookkeeping purposes only.
Section 1.9. "Eligible Employee" means an employee of the Company
employed in the United States whose individual annual salary rate as of
August 1 is equal to or greater than the eligibility compensation level
established by the Compensation Committee. Eligible Employee shall also
include an employee of Kodak or any subsidiary of Kodak selected annually
by the Compensation Committee whose individual annual salary rate as of
August 1 is equal to or greater than the eligibility compensation level
established by the Compensation Committee. However, in no event shall a
non-resident alien be eligible to participate in this Plan. Any employee
who becomes eligible to participate in this Plan and in a future year
does not qualify as an Eligible Employee solely because his or her
individual annual salary rate as of August 1 is less than the eligibility
compensation level, shall nevertheless be eligible to participate in such
year.
Section 1.10. "Enrollment Period" means the period designated by the
Compensation Committee each year, provided however, that such period
shall not commence prior to August 1 and shall end on or before the last
business day before the last Sunday in December of each year.
Section 1.11. "Interest Rate" means the monthly average of the lending
rate as stated by Morgan Guaranty Trust Company, or its successors, to
its most favored corporate customers (currently known as the bank's
"Prime Rate"), such average to be determined as of the last day of each
month.
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Section 1.12. "Kodak" means Eastman Kodak Company.
Section 1.13. "Market Value" means the mean between the high and low at
which the Common Stock trades on the New York Stock Exchange as quoted in
the New York Stock Exchange Composite Transactions as published in the
Wall Street Journal on the day for which the determination is to be made,
or if such day is not a trading day, the immediately preceding day.
Section 1.14. "Plan" means the 1982 Eastman Kodak Company Executive
Deferred Compensation Plan as adopted by the Board and amended.
Section 1.15. "Participant" means an Eligible Employee who elects for
one or more years to defer compensation pursuant to this Plan. All SOG
Participants are Participants.
Section 1.16. "SOG Participant" means a Participant who is, or was
formerly, subject to the Guidelines for Senior Management Ownership of
Eastman Kodak Company Stock as approved by the Compensation Committee.
Section 1.17. "Stock Account" means the account established by the
Company for each SOG Participant, the performance of which shall be
measured by reference to the Market Value of Common Stock. The
maintenance of individual Stock Accounts is for bookkeeping purposes
only.
Section 1.18. "Valuation Date" means the last business day of each
calendar month.
Section 2. Compensation Level. Each year the Compensation Committee shall
select an eligibility compensation level and a minimum compensation level
prior to the commencement of the Enrollment Period.
Section 3. Deferral of Compensation. An Eligible Employee may elect to
defer receipt of one or more of the following to his or her Deferred
Compensation Account:
1) all or any portion of his or her Deferrable Amount to be earned
during the year;
2) all of his or her wage dividend, if any, payable in the year,
which is not eligible for contribution to the Eastman Kodak
Employees' Savings and Investment Plan; and
3) all or any portion of any other compensation identified by the
Compensation Committee.
An Eligible Employee may not defer the receipt of any amounts to his or her
Stock Account.
A Participant in this Plan need not participate in the Eastman Kodak
Employees' Savings and Investment Plan. No deferral shall be made of any
compensation payable after termination of employment.
Section 4. Time of Election of Deferral. An Eligible Employee who wishes to
defer compensation must irrevocably elect to do so during the Enrollment
Period immediately preceding the calendar year during which such compensation
is paid. Elections shall be made annually.
Section 5. Hypothetical Investments.
Section 5.1. Deferred Compensation Account. Amounts in a Participant's
Deferred Compensation Account are hypothetically invested in an interest
bearing account which bears interest computed at the Interest Rate,
compounded monthly.
Section 5.2. Stock Account. Amounts in a SOG Participant's Stock
Account are hypothetically invested in units of Common Stock. Amounts
transferred to a Stock Account are recorded as units of Common Stock, and
fractions thereof, with one unit equating to a single share of Common
Stock. Thus, the value of one unit shall be the Market Value of a single
share of Common Stock. The use of units is merely a bookkeeping
convenience; the units are not actual shares of Common Stock. The
Company will not reserve or otherwise set aside any Common Stock for or
to any Stock Account.
Section 6. Manner of Electing Deferral. An Eligible Employee may elect to
defer compensation by executing and returning to the Compensation Committee a
deferred compensation form provided by Kodak. The form shall indicate: (1)
the amount of the Deferrable Amount to be deferred; (2) whether the deferral
is to be at the same rate throughout the year, or at one rate for part of the
year and at a second rate for the remainder of the year; (3) whether or not
the wage dividend eligible to be deferred is to be deferred; and (4) the
portion of any other compensation identified by the Compensation Committee to
be deferred.
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Amounts to be deferred shall be credited to the Participant's Deferred
Compensation Account as follows:
1) Deferrable Amount shall be credited each pay period on the date
such amount is otherwise payable;
2) wage dividend shall be credited on the date such amount is
otherwise payable; and
3) any other compensation shall be credited on the date such amount
is otherwise payable.
Section 7. Elections to Defer For a Fixed Period During Employment. A
Participant may elect to defer receipt of his or her compensation for a fixed
number of years, no less than 5, provided he or she continues as an employee
of the Company during the period of deferral. Any such election shall be
made during the Enrollment Period on the deferred compensation form
referenced in Section 6 above. If such Participant ceases to be an employee
of the Company prior to the end of the fixed period, Section 9 shall govern
the payment of his or her Accounts.
If a Participant has elected to defer receipt of his or her compensation for
a fixed number of years, payment of such amount shall be made in cash in a
single lump-sum on the fifth business day in March in the year following the
termination of the deferral period. The amount of the lump-sum due the
Participant shall be valued as of the Valuation Date in February in the year
following the termination of the deferral period.
Section 8. Investment in the Stock Account.
Section 8.1. Elections. A SOG Participant may direct that all or any
portion, designated as a whole dollar amount, of the existing balance of
one of his or her Accounts be transferred to his or her other Account,
effective as of the first day of any calendar month (hereinafter the
election's "Effective Date"), by filing a written election with the
Compensation Committee on or prior to the last business day of the
immediately preceding calendar month.
Notwithstanding the preceding sentence of this Section 8.1, a SOG
Participant may not transfer to his or her Stock Account any amount
subject to an election to defer for a fixed number of years pursuant to
Section 7, nor may he or she transfer to his or her Stock Account any
interest that has accrued on such amount.
Section 8.2. Election into the Stock Account. If a SOG Participant
elects pursuant to Section 8.1 to transfer an amount from his or her
Deferred Compensation Account to his or her Stock Account, effective as
of the election's Effective Date, (i) his or her Stock Account shall be
credited with that number of units of Common Stock, and fractions
thereof, obtained by dividing the dollar amount elected to be transferred
by the Market Value of the Common Stock on the Valuation Date immediately
preceding the election's Effective Date; and (ii) his or her Deferred
Compensation Account shall be reduced by the amount elected to be
transferred.
Section 8.3. Election out of the Stock Account. If a SOG Participant
elects pursuant to Section 8.1 to transfer an amount from his or her
Stock Account to his or her Deferred Compensation Account, effective as
of the election's Effective Date, (i) his or her Deferred Compensation
Account shall be credited with a dollar amount equal to the amount
obtained by multiplying the number of units to be transferred by the
Market Value of the Common Stock on the Valuation Date immediately
preceding the election's Effective Date; and (ii) his or her Stock
account shall be reduced by the number of units elected to be
transferred.
Section 8.4. Dividend Equivalents. Effective as of the payment date for
each cash dividend on the Common Stock, additional units of Common Stock
shall be credited to the Stock Account of each SOG Participant who had a
balance in his or her Stock Account on the record date for such dividend.
The number of units that shall be credited to the Stock Account of such a
SOG Participant shall be computed by multiplying the dollar value of the
dividend paid upon a single share of Common Stock by the number of units
of Common Stock held in the SOG Participant's Stock Account on the record
date for such dividend and dividing the product thereof by the Market
Value of the Common Stock on the payment date for such dividend.
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Section 8.5. Stock Dividends. Effective as of the payment date for each
stock dividend (as defined in Section 305 of the Internal Revenue Code of
1986) on the Common Stock, additional units of Common Stock shall be
credited to the Stock Account of each SOG Participant who had a balance
in his or her Stock Account on the record date for such dividend. The
number of units that shall be credited to the Stock Account of such a SOG
Participant shall equal the number of shares of Common Stock which the
SOG Participant would have received as stock dividends had he or she been
the owner on the record date for such stock dividend of the number of
shares of Common Stock equal to the number of units credited to his or
her Stock Account on such record date. To the extent the SOG Participant
would have also received cash, in lieu of fractional shares of Common
Stock, had he or she been the record owner of such shares for such stock
dividend, then his or her Stock Account shall also be credited with that
number of units, or fractions thereof, equal to such cash amount divided
by the Market Value of the Common Stock on the payment date for such
dividend.
Section 8.6. Recapitalization. If Kodak undergoes a reorganization as
defined in Section 368 (a) of the Internal Revenue Code of 1986, the
Compensation Committee may, in its sole and absolute discretion, take
whatever action it deems necessary, advisable or appropriate with respect
to the Stock Accounts in order to reflect such transaction, including,
but not limited to, adjusting the number of units credited to a SOG
Participant's Stock Account.
Section 8.7. Distributions. Amounts in respect of units of Common Stock
shall be distributed in cash in accordance with Sections 7, 9, 10, 11 and
22. For purposes of a distribution pursuant to Section 7, 9, 10, 11 or
22, the number of units to be distributed from a SOG Participant's Stock
Account shall be valued by multiplying the number of such units by the
Market Value of the Common Stock as of the Valuation Date immediately
preceding the date such distribution is to occur. Pending the complete
distribution under Section 9.2 or liquidation under Section 8.8 of the
Stock Account of a SOG Participant who has terminated his or her
employment with the Company, the SOG Participant shall continue to be
able to make elections pursuant to Sections 8.2 and 8.3 and his or her
Stock Account shall continue to be credited with additional units of
Common Stock pursuant to Sections 8.4, 8.5, and 8.6.
Section 8.8. Liquidation of Stock Account. The provisions of this
Section 8.8 shall be applicable if on the second anniversary of the SOG
Participant's retirement or, if earlier, termination of employment from
the Company, the SOG Participant has a balance remaining in his or her
Stock Account. In such case, effective as of the first day of the first
calendar month immediately following the date of such second anniversary,
the entire balance of the SOG Participant's Stock Account shall
automatically be transferred to his or her Deferred Compensation Account
and, he or she shall thereafter be ineligible to transfer any amounts to
his or her Stock Account. For purposes of valuing the units of Common
Stock subject to such a transfer, the method described in Section 8.3
shall be used.
Section 9. Payment of Deferred Compensation.
Section 9.1. Background. No withdrawal may be made from a Participant's
Accounts except as provided in this Section 9 and Sections 7, 10, 11, and
22.
Section 9.2. Manner of Payment. Payment of a Participant's Accounts
shall be made at the sole discretion of the Committee in a single sum or
in annual installments. The maximum number of installments is ten. All
payments from the Plan shall be made in cash.
Section 9.3. Timing of Payments. Payments shall be made on the fifth
business day in March and shall commence in any year designated by the
Compensation Committee up through the tenth year following the year in
which the Participant retires, becomes disabled, or for any other reason,
ceases to be an employee of Kodak or any subsidiary of Kodak, but in no
event later than the year the Participant reaches age 71.
Section 9.4. Valuation. The amount of each payment shall be equal to
the value, as of the immediately preceding Valuation Date, of the
Participant's Accounts, divided by the number of installments remaining
to be paid. If payment of a Participant's Accounts is determined by the
Compensation Committee to be paid in installments and the Participant has
a balance in his or her Stock Account at the time of the payment of an
installment, the amount that shall be distributed from his or her Stock
Account shall be the amount obtained by multiplying the total amount of
the installment determined in accordance with the immediately preceding
sentence by the percentage obtained by dividing the balance in the Stock
Account as of the immediately preceding Valuation Date by the total value
of the Participant's Accounts as of such date. Similarly, in such case,
the amount that shall be distributed from the Participant's Deferred
Compensation Account shall be the amount obtained by multiplying the
total amount of the installment determined in accordance with the first
sentence of this Section 9.4 by the percentage obtained by dividing the
balance in the Deferred Compensation Account as of the immediately
preceding Valuation Date by the total value of the Participant's Accounts
as of such date.
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Section 9.5. Termination of Employment. Anything herein to the contrary
notwithstanding, Participants who cease to be employed by Kodak or any
Subsidiary of Kodak and are employed by Eastman Chemical Company or one
of its subsidiaries in connection with the distribution of the common
stock of Eastman Chemical Company to the shareholders of Kodak, shall not
be deemed to have terminated employment for purposes of this Plan.
Section 10. Payment of Deferred Compensation After Death. If a Participant
dies prior to complete payment of his or her Accounts, the provisions of this
Section 10 shall become operative.
Section 10.1. Stock Account. Effective as of the date of a SOG
Participant's death, the entire balance of his or her Stock Account shall
be transferred to his or her Deferred Compensation Account. For purposes
of valuing the units of Common Stock subject to such a transfer, the
deceased SOG Participant's Deferred Compensation Account shall be
credited with a dollar amount equal to the amount obtained by multiplying
the number of units in the deceased SOG Participant's Stock Account at
the time of his or her death by the Market Value of the Common Stock on
the date of his or her death. Thereafter, no amounts in the deceased SOG
Participant's Deferred Compensation Account shall be eligible for
transfer to the deceased SOG Participant's Stock Account by any person,
including, but not by way of limitation, the deceased SOG Participant's
beneficiary or legal representative.
Section 10.2. Distribution. The balance of the Participant's Accounts,
valued as of the Valuation Date immediately preceding the date payment is
made, shall be paid in a single, lump-sum payment to: (1) the beneficiary
or contingent beneficiary designated by the Participant on forms supplied
by the Compensation Committee; or, in the absence of a valid designation
of a beneficiary or contingent beneficiary, (2) the Participant's estate
within 30 days after appointment of a legal representative of the
deceased Participant.
Section 11. Acceleration of Payment for Hardship. Upon written approval
from Kodak's Chairman of the Board (the Compensation Committee, in the case
of a request from the Chairman of the Board) a Participant, whether or not he
or she is still employed by Kodak or any subsidiary of Kodak, may be
permitted to receive all or part of his or her Accounts if the Chairman of
the Board (or the Compensation Committee, when applicable) determines that an
emergency event beyond the Participant's control exists which would cause
such Participant severe financial hardship if the payment of his or her
Accounts were not approved. Any such distribution for hardship shall be
limited to the amount needed to meet such emergency. If such a distribution
occurs while the Participant is employed by Kodak or any subsidiary of Kodak,
any election to defer compensation for the year in which the Participant
receives a hardship withdrawal shall be ineffective as to compensation earned
for the pay period following the pay period during which the withdrawal is
made and thereafter for the remainder of such year and shall be ineffective
as to any wage dividend or any other compensation elected to be deferred for
such year.
Section 12. Non-Competition Provision. If a Participant, without the
written consent of Kodak, engages either directly or indirectly, in any
manner or capacity, as principal, agent, partner, officer, director,
employee, or otherwise, in any business or activity competitive with the
business conducted by Kodak or any subsidiary of Kodak, while a balance
remains credited to his or her Account, the Company may, in its sole
discretion, pay to the Participant the balance credited to his or her
Deferred Compensation Account and/or Stock Account.
Section 13. Participant's Rights Unsecured. The amounts payable under the
Plan shall be unfunded, and the right of any Participant or his or her estate
to receive any payment under the Plan shall be an unsecured claim against the
general assets of the Company. No Participant shall have the right to
exercise any of the rights or privileges of a shareholder with respect to the
units credited to his or her Stock Account.
Section 14. No Right to Continued Employment. Participation in the Plan
shall not give any employee any right to remain in the employ of the Company.
The Company reserves the right to terminate any Participant at any time.
Section 15. Statement of Account. Statements will be sent no less
frequently than annually to each Participant or his or her estate showing the
value of the Participant's Accounts.
Section 16. Assignability. Neither the Participant nor the Company shall
have the right to assign any rights or obligations under the Plan. However,
the Plan shall inure to the benefit of and be binding upon the successors of
the Company.
Section 17. Deductions. The Company will withhold to the extent required by
law all applicable income and employment taxes from amounts paid under the
Plan.
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Section 18. Administration.
Section 18.1. Responsibility. The Compensation Committee shall have
total and exclusive responsibility to control, operate, manage and
administer the plan in accordance with its terms.
Section 18.2. Authority of the Compensation Committee. The Compensation
Committee shall have all the authority that may be necessary or helpful
to enable it to discharge its responsibilities with respect to the Plan.
Without limiting the generality of the preceding sentence, the
Compensation Committee shall have the exclusive right: to interpret the
Plan, to determine eligibility for participation in the Plan, to decide
all question concerning eligibility for and the amount of benefits
payable under the Plan, to construe any ambiguous provision of the Plan,
to correct any default, to supply any omission, to reconcile any
inconsistency, and to decide any and all questions arising in the
administration, interpretation, and application of the Plan.
Section 18.3. Discretionary Authority. The Compensation Committee shall
have full discretionary authority in all matters related to the discharge
of its responsibilities and the exercise of its authority under the Plan
including, without limitation, its construction of the terms of the Plan
and its determination of eligibility for participation and benefits under
the Plan. It is the intent of Plan that the decisions of the
Compensation Committee and its action with respect to the Plan shall be
final and binding upon all persons having or claiming to have any right
or interest in or under the Plan and that no such decision or action
shall be modified upon judicial review unless such decision or action is
proven to be arbitrary or capricious.
Section 18.4. Delegation of Authority. The Compensation Committee may
delegate some or all of its authority under the Plan to any person or
persons provided that any such delegation be in writing.
Section 19. Amendment. The Plan may at any time or from time to time be
amended, modified, or terminated by the Board or by the Benefit Plans
Committee of Kodak. However, no amendment, modification, or termination
shall, without the consent of a Participant, adversely affect such
Participant's accruals in his or her Accounts.
Section 20. Governing Law. The Plan shall be construed, governed and
enforced in accordance with the law of New York State, except as such laws
are preempted by applicable federal law.
Section 21. Diconix Deferred Compensation. The deferred compensation
accounts maintained by Research Boulevard Realty Co., Inc. (formerly Diconix,
Inc.) pursuant to the Diconix, Inc. Deferred Compensation Plan shall be
treated as Deferred Compensation Accounts under this Plan and shall be
subject to all the terms and conditions of this Plan.
Section 22. Change in Control.
Section 22.1. Background. The terms of this Section 22 shall
immediately become operative, without further action or consent by any
person or entity, upon a Change in Control, and once operative shall
supersede and control over any other provisions of this Plan.
Section 22.2. Acceleration of Payment Upon Change In Control. Upon the
occurrence of a Change in Control, each Participant, whether or not he or
she is still employed by Kodak or any subsidiary of Kodak, shall be paid
in a single, lump-sum cash payment the balance of his or her Accounts as
of the Valuation Date immediately preceding the date payment is made.
Such payment shall be made as soon as practicable, but in no event later
than 90 days after the date of the Change in Control.
Section 22.3. Amendment On or After Change In Control. On or after a
Change in Control, no action, including, but not by way of limitation,
the amendment, suspension or termination of the Plan, shall be taken
which would affect the rights of any Participant or the operation of this
Plan with respect to the balance in the Participant's Accounts.
Section 23. Severance Payments.
With the exception of Sections 1, 13, 14, 16, 17, 18, 19 and 20 hereof, the
provisions of this Section 23 shall operate independent of any other Sections
of this Plan.
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Subject to the terms and conditions established in this Section 23, the Chief
Executive Officer of the Company may award severance payments under the Plan
to certain Eligible Employees who terminate their employment from the
Company. The classification of Eligible Employees who are eligible for such
severance payments shall be limited to those Eligible Employees who are
officers of the Company. The amount of any such severance payment shall be
determined by the Chief Executive Officer with reference to the Eligible
Employee's base salary at the time of his or her termination of employment.
The Chief Executive Officer shall have the sole discretion to determine the
timing, manner of payment (e.g., lump sum or installments) and terms,
conditions and limitations of any such severance payment, except that all
such payments shall be made in cash. Any award made by the Chief Executive
Officer pursuant to the provisions of this paragraph shall be evidenced by a
written agreement signed by the Chief Executive Officer.
Section 24. Compliance with Securities Laws. The Compensation Committee
may, from time to time, impose additional, or modify or eliminate existing,
Plan restrictions and requirements, including, but not by way of limitation,
the restrictions regarding a SOG Participant's ability to elect into and out
of his or her Stock Account under Sections 8.2 and 8.3 or the requirement of
an automatic transfer pursuant to Section 10.1, as it deems necessary,
advisable or appropriate in order to comply with applicable federal and state
securities laws. All such restrictions shall be accomplished by way of
written administrative guidelines adopted by the Compensation Committee.
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Schedule A
Eastman Chemical Products, Inc.
Eastman Chemical International Ltd.
Eastman Gelatine Corporation
Eastman Kodak International Capital Company, Inc.
Holston Defense Corporation
Kodak Processing Laboratory, Inc.
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Exhibit (10)E
Management Annual Performance Plan
SUMMARY:
The Management Annual Performance Plan (MAPP) is a compensation plan for
Kodak management-level individuals which delivers a portion of compensation
according to business performance. The compensation of each participant
consists of a base salary and an annual performance award from MAPP. Expected
financial performance is considered a "C" level of performance and yields a
target award. MAPP awards vary from zero, if financial goals are not met, to
a maximum of two times the target award. Target awards range from 15% for
lower level positions to 40% for the CEO. Payments are made to plan
participants in a lump sum in April of the year following the year for which
performance was measured. (i.e., MAPP payments for 1993 performance will be
paid out in April, 1994).
PLAN ADMINISTRATION:
The Compensation Committee of the Board of Directors is responsible for:
policy setting and interpretation, approving performance goals at the company
and Group levels, evaluation of company and Group performance against the
goals, and the determination of company and Group level performance awards.
The Chief Executive Officer provides advice and counsel to the Compensation
Committee. Management is responsible for administering the Plan.
PARTICIPATION:
The Plan is intended for management-level individuals in key roles which
impact the financial performance of the organization. Participation is
determined by Group Presidents and Senior Vice Presidents. The Chief
Executive Officer is the final approval level for participation.
Individuals who become participants as a result of a job change begin
participation on the first day of the month of their appointment to the new
job, or on the following January 1 if the job change occurs late in the year.
Participants who retire, become disabled under the Kodak Long-Term
Disability Plan, or leave the company as part of an approved early separation
program, receive a pro rata award at the normal time of payout based on base
salary at the time of separation and financial performance at the end of the
performance cycle (year-end).
The estates of participants who die receive a pro rata award based on
base salary at the time of death and financial performance at the end of the
performance cycle (year-end).
Participants who resign or are terminated for cause only receive an
award if they worked until the end of a performance cycle (complete calendar
year).
Participants who change jobs during a performance cycle receive a pro
rata award for the interval of time spent in each job. Pro rata awards are
calculated using the base salary at year-end and are based on the financial
performance of the full performance cycle (complete calendar year).
GOAL SETTING:
The Compensahon Committee, in consultation with the Chief Executive
Officer, establishes in December of each year the next year's financial goals
for each performance level (A-E) for: total Company, Imaging Group, Chemicals
Group, and the Health Group. Financial goals are expressed in terms of
revenue, earnings and cash flow. Each goal is weighted for importance in
determining final awards.
Within each Group, goals may be established at organizational levels
below the Group. They may be financial or non-financial in nature. The Group
President is responsible for approving them. There are no individual or
personal goals.
GOAL WEIGHTING:
Goals are weighted not only by specific financial performance measure
but also by organization as follows:
Position Corporate Group
Chief Executive Officer 100% 0
Corporate Staffs 100% 0
Group Presidents 20% 80%
Corporate Officers in The Groups 10% *90%
Other 0 *100%
*Group President determines the weighting of these goals within the
Group.
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AWARDS
Award Pools:
MAPP award pools are determined at the Group and Corporate Staffs level.
An award pool is the amount of money required to pay all the participants in
a Group in relation to meeting specific levels [A through E) of financial
performance in that Group. For example, Imaging, Chemicals, Health and
Corporate Staffs each has a target level of financial performance set by the
Compensation Committee of the Board for each MAPP performance level (A
through E). A corresponding award pool is determined for each performance
level. The award pools are calculated based on; 1) the number of MAPP
participants in the Group; 2) their grade and salary levels at year-end; and
3) their target MAPP award (15% to 40%). The award pool amounts are
calculated and presented to the Compensation Committee at its February
meeting, following the conclusion of the performance cycle, at which time the
Committee conducts its evaluation of performance against goals.
Award Determination:
The Compensation Committee, in consultation with the CEO, evaluates
financial performance against agreed upon goals for the corporation as a
whole and for each Group. In making its evaluation, the Committee takes into
consideration unanticipated influences (e.g., economic downturn) impacting
the difficulty of achieving the results as well as performance relative to
peer companies. Peer company comparisons may be made at the Group level and
for the corporation as a whole. The Compensation Committee decides, based on
the recommendation of the CEO, the appropriate peer company comparisons for
each Group and the corporation as a whole. In addition, the Compensation
Committee judges results in relation to its expectations for improving
overall shareowner return. Extraordinary gains and losses are included in
financial performance evaluation both at corporate and, where appropriate, at
Group levels. Major adjustments may be considered separately at the request
of the CEO. Treatment of extraordinary gains and losses is the same for MAPP
as for the calculation of wage Dividend. Taking into account these various
considerations, the Compensation Committee determines the performance award
level for the corporation and each Group. Group Presidents and the CEO decide
how the award pool amounts are distributed within the Group.
The "E" performance level established for each Group is the minimum
hurdle for a MAPP award. If "E" performance level at the Group is not
exceeded, there is no MAPP award for any unit within the Group, regardless of
that unit's performance. The "E" performance level for the corporation
applies only to those participants who have their MAPP award based on
corporate results.
Awards are based on unit performance as follows:
Eligibility Performance Unit
CEO, Corporate Staffs Total Corporation
Chemicals Group President, Group Chemicals Group (Eastman Chemical
Company)
Staff & all units
Imaging Group President, Group Imaging Group
Staff & all units
Health Group President & Health Group
Group Staff
Health Sciences Division & Health Group less Sterling Winthrop
and L&F
Clinical Diagnostics Division
The Compensation Committee approves actual MAPP award amounts for the
following: Chief Executive Officer, Group Presidents, Chief Financial
Officer, Senior Vice President-Legal, Senior Vice President-Human Resources
and the five highest paid officers listed in the proxy, if they are different
from individuals in the positions identified above.
Unacceptable individual performance, as determined by management, may
result in no performance award, regardless of company, Group or unit
performance. Management has discretion to override the established guidelines
to avoid inappropriate or inequitable results. Final approval for such an
override resides at the Group President or equivalent level. The Chief
Executive Officer may recommend to the Compensation Committee that no awards
be paid through this plan should the company's overall financial performance
warrant such action.
Award Calculation:
Achievement Level Award Factor
A 2X
B 1.5X
C (Expected Performance) 1X
D .5X
E 0
X=Target Award %
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<PAGE> 96
Awards are paid in April, for performance in the previous year, based on
goal achievement. In the example below, the participant has three goals, one
with a weighting of 50% and each of the other two weighted 25%. The weighted
performance is calculated on a scale of zero (0) to 200, with C (target)
equal to 100. In this way, regardless of their target award percentage (15%
to 40%), the performance for all participants can be calculated using the
same scale. In the example, the performance for goal 1 was 125, resulting in
a weighted performance (50% times l25) of 62.5. Goal 2 performance was 94 on
the 200 scale (weighted performance was 23.5 [94 times 25%]). Goal 3
performance was 116 (weighted performance was 29 [116 times 25%]). This
resulted in a total weighted performance of 115.
Performance Levels
A B C D E
200 150 100 50 0
Goals Weight % Weighted Performance
1 50%X 125 62.5%
2 25%X 94 23.5%
3 25%X 116 29%
Total = 115%
In this example, consider that the participant had a year-end base salary
of $90,000 and a target award of 15%. To calculate this participant's award,
the Total Target Annual Compensation is calculated as described below. Then,
the Target Award for the year is determined. Knowing the Target Award and the
Total Weighted Performance (115% from above), the Performance Award can be
calculated.
Total Targeted Annual Compensation = Base Salary divided by 1 minus the
Target Award %.
In this example: $90,000/1-.15 = $105,882 = Total Targeted Annual
Compensation
Target Award = Total Targeted Annual Compensation times Target Award Percent
Target Award = $105,882 X 15% = $15,882
Performance Award = Target Award times Total Weighted Performance
Performance Award = $15,882 X 115.0% = $18,264
RELATIONSHIP BETWEEN
MAPP AND PERFORMANCE APPRAISALS:
MAPP is intended to reward participants for the achievement of a few
focused financial goals. Performance appraisals and rate reviews determine an
individual's base salary with consideration for overall performance relative
to the expectations for the job. MAPP is financially and organizationally
oriented while performance appraisals are more individually oriented.
SALARY ADJUSTMENT UPON ENTRY INTO MAPP:
MAPP is a variable compensation, or pay at risk, program. Participants
have their base salary administered on reduced rate ranges. New participants
to MAPP are immediately administered on the reduced rate range for their
assigned grade. This may reduce or eliminate promotional increases, depending
upon the person's pay position in the rate range for their new grade.
Subsequent salary treatment will depend upon pay/performance relationships in
the reduced rate range for their assigned grade.
SALARY CONVERSION UPON WITHDRAWAL FROM MAPP:
In unusual circumstances when it is necessary for management to remove an
individual from MAPP, the following method will be used to calculate that
person's new salary on the non-MAPP rate schedule:
1) Divide the individual's current salary in his or her MAPP- reduced
rate range by the midpoint of that rate range, and
2) Multiply that percentage times the midpoint of the non-MAPP
schedule for the same wage grade. This is the person's new salary.
3) Should the removal from MAPP involve a reduction in grade, select
an appropriate rate in the new rate range based upon applicable
training and experience.
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<PAGE> 97
Exhibit (10)G
As amended December 30, 1993
Effective December 31, 1993
EASTMAN KODAK COMPANY
1981 INCENTIVE STOCK OPTION PLAN
1. Purposes
The purposes of this Plan are to encourage ownership of the Company's
stock by eligible key employees and to provide increased incentive for
such employees to put forth maximum effort for the success of the
business.
2. Administration
This Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"). A member of the
Committee shall not be, and shall not within one year prior to
appointment to the Committee have been, eligible to participate in the
Plan or any other plan of the Company or any of its affiliates entitling
participants to acquire stock, stock options or stock appreciation rights
of the Company or its affiliates. The Committee is authorized to
establish such rules and regulations as it deems necessary for the proper
administration of the Plan, and to make such determinations and
interpretations and to take such action in connection with the Plan and
any options granted under the Plan as it deems necessary or advisable.
All determinations of the Committee shall be by a majority of its
members, and its determinations shall be final.
3. Eligibility
Key employees of the Company and its subsidiaries shall be eligible to
receive options under the Plan. Directors of the Company who are not
full-time employees of the Company or of any of its subsidiaries shall
not be eligible to receive options.
4. Shares Available
An aggregate of 6,075,000 shares of common stock (par value $2.50) of the
Company shall be available for grant of options under the Plan (subject
to adjustment as provided in paragraph 8). Such shares may be authorized
and unissued shares or may be treasury shares. Upon the expiration or
termination in whole or in part of any unexercised options, shares of
common stock covered by such unexercised options shall be available again
for new options under the Plan.
5. Grant of Options
Subject to the provisions of paragraph 6, options may be granted to such
eligible employees in such numbers and at such times during the term of
the Plan as the Committee shall determine. Each option shall be
evidenced by a duly executed written agreement by and between the Company
and the optionee. Option agreements may contain dissimilar provisions
provided that all such provisions are consistent with the Plan.
6. Terms and Conditions of Options
All options under the Plan shall be granted subject to the following
terms and conditions:
(a) Option Price -- The option price per share shall be not less than
100% of its fair market value, as determined by the Committee, on the
date the option is granted.
(b) Maximum Value of Shares -- The aggregate fair market value
(determined as of the time the option is granted) of the shares for
which any eligible employee may be granted options in any calendar
year (under all stock option plans of the Company and its
subsidiaries) shall not exceed $100,000 plus any unused limit
carryover to such year. The carryover amount from any calendar year
after 1980 shall be one-half of the amount by which $100,000 exceeds
the value at the time of grant of the shares for which options were
granted to an eligible employee in such year. Unused amounts may be
carried forward three years. Options granted in any year shall first
use up the $100,000 current year limitation and then unused
carryovers in the chronological order of the calendar years in which
the carryovers arose.
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<PAGE> 98
(c) Duration of Options -- Unless sooner terminated, each option shall
expire not later than ten years from the date of grant.
(d) Exercise of An Option -- No option may be exercised within six months
of the date on which the option is granted except that any optionee
whose actual retirement date shall occur during the six calendar
months following the month of grant may exercise the option at any
time between the date of retirement and the date of termination of
the option indicated by its terms. No option may be exercised while
there is outstanding any option previously granted to the optionee
which has not been exercised in full or has not expired by reason of
lapse of time. Options may be exercised from time to time by written
notice to the Company stating the number of shares with respect to
which the option is being exercised.
(e) Payment -- No shares shall be issued or delivered until full payment
for the shares has been made, with cash, with Company shares valued
as of the date of exercise, or with a combination of both.
(f) Nontransferability of Options -- An option shall not be transferable
by an optionee except by will or the laws of descent and distribution
and shall be exercisable, during his lifetime, only by him.
(g) Termination of Employment -- Upon termination of an optionee's
employment, each option previously granted to him shall expire if not
exercised before the earliest of (i) the expiration date provided in
the option agreement applicable to each such option; (ii) the date
one year after the date of termination if employment is terminated by
reason of death or disability (within the meaning of section
105(d)(4) of the Internal Revenue Code); (iii) the date three months
after the date of termination if employment is terminated by reason
of retirement; or (iv) the date of termination if employment is
terminated for any reason other than death, disability or retirement.
Anything herein to the contrary notwithstanding, optionees who cease
to be employed by the Company or one of its subsidiaries and are
employed by Eastman Chemical Company or one of its subsidiaries in
connection with the distribution of common stock of Eastman Chemical
Company to the shareholders of the Company, shall not be deemed to
have terminated employment for purposes of this Plan and all options
outstanding on the date of such distribution.
(h) Non-Competition Provision -- Anything herein to the contrary
notwithstanding, if an optionee, without the written consent of the
Company, engages either directly or indirectly, in any manner or
capacity, as principal, agent, partner, officer, director, employee,
or otherwise, in any business or activity competitive with the
business conducted by the Company or any subsidiary of the Company,
each option previously granted to him shall expire forthwith.
7. Regulatory Approvals and Listing
The Company shall not be required to issue any certificate or
certificates for shares of common stock upon the exercise of an option
prior to (a) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be
necessary or advisable, (b) the admission of such shares to listing on
any stock exchange on which the stock may then be listed, and (c) the
completion of any registration or other qualification of such shares
under any state or Federal law or rulings or regulations of any
governmental body which the Company shall, in its sole discretion,
determine to be necessary or advisable.
8. Adjustment of Shares Available
If there is any change in the common stock of the Company through the
declaration of stock dividends, or through recapitalization resulting in
stock splits, or combinations or exchanges of shares, or otherwise, the
number of shares available for option and the shares subject to any
option and the option prices shall be appropriately adjusted by the
Committee.
9. Prohibition of Loans to Optionees
Neither the Company nor any subsidiary shall directly or indirectly lend
money to an optionee for the purpose of assisting him to exercise any
option granted under the Plan.
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<PAGE> 99
10. Amendment
The Board of Directors of the Company may from time to time amend the
Plan in any manner which it deems in the best interest of the Company,
but may not, without the approval of the Company's shareholders, adopt
any amendment which would (a) materially increase the benefits accruing
to participants under the Plan, (b) materially increase the maximum
number of shares which may be issued under the Plan (other than pursuant
to paragraph 8), or (c) materially modify the requirements as to
eligibility for participation in the Plan.
11. Term
The Plan shall become effective on November 13, 1981, and shall be
submitted for approval by the Company's shareholders at the 1982 annual
meeting. No option shall be granted pursuant to the Plan subsequent to
the fifth anniversary of the effective date of the Plan.
12. Change In Control.
12.01 Background. The terms of this Paragraph 12 shall immediately become
operative, without further action or consent by any person or
entity, upon a Change In Control, and once operative shall
supersede and control over any other provisions of this Plan.
12.02 "Change In Control" means a change in control of the Company of a
nature that would be required to be reported (assuming such event
has not been "previously reported") in response to Item l(a) of the
Current Report of Form 8-K, as in effect on August 1, 1989,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act') provided that, without
limitation, a Change In Control shall be deemed to have occurred at
such time as (i) any "person" within the meaning of Section 14(d)
of the Exchange Act is or has become the "beneficial owner" as
defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of 25% or more of the combined voting power of the
outstanding securities of the Company ordinarily having the right
to vote at the election of directors ("Voting Securities"), or (ii)
individuals who constitute the Board of Directors of the Company on
August 1, 1989 (the "Incumbent Board") have ceased for any reason
to constitute at least a majority thereof, provided that any person
becoming a director subsequent to August 1, 1989 whose election, or
nomination for election by the Company's stockholders, was approved
by a vote of at least three-quarters (3/4) of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for director without objection to such
nomination) shall be, for purposes of this clause (ii), considered
as though such person were a member of the Incumbent Board.
12.03 Lapse of Restrictions. Upon a Change In Control, all terms,
conditions or restrictions in effect on any outstanding stock
options or SARs, regardless of whether such SARs are Tandem SARs or
Freestanding SARs, shall immediately lapse as of the date of the
event. In addition, no other terms, conditions, or restrictions
shall be imposed on any stock options or SARs on or after such
date.
12.04 Vesting of Stock Options and SARs. Upon a Change In Control, all
outstanding stock options and SARs shall automatically become one
hundred percent (100%) vested immediately upon the occurrence of
such event.
12.05 Exercise and Payment of Freestanding SARs. Upon a Change In
Control, all outstanding Freestanding SARs, i.e., SARs which are
granted separately from stock options, shall automatically be
exercised, without further action by the Committee or any
Participant, immediately upon the occurrence of such event. As a
result, any Participant, whether or not he is still employed by the
Company or any Subsidiary, then holding any outstanding
Freestanding SARs shall be paid the value of his or her
Freestanding SARs in a single lump-sum cash payment as soon as
practicable, but in no event later than 90 days after the date of
the Change In Control. For purposes of making this payment, the
value of such Participant's Freestanding SARs shall be determined
by averaging the mean between the high and low at which Kodak
common stock is traded on the New York Stock Exchange on the date
of the Change In Control.
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<PAGE> 100
12.06 Cash Surrender of Stock Options. Upon the occurrence of a Change
In Control, any Participant, whether or not he is still employed by
the Company or a Subsidiary, then holding any stock options shall
be paid in a single lump-sum cash payment the "Change In Control
Value," as that term is hereafter defined, of such stock options as
soon as practicable, but in no event later than 90 days after the
date of the Change In Control. Notwithstanding the foregoing, any
such Participant who, on the date of the Change In Control, holds
stock options that have not been outstanding for a period of at
least six months from their date of grant and who on such date is
required to report under Section 16 of the Exchange Act shall not
be paid the "Change In Control Value" of such stock options until
the first day next following the end of such six-month period. For
purposes of this Paragraph 12, the "Change In Control Value" of a
given stock option shall be determined by multiplying the total
number of shares of common stock the Participant would then be
entitled to purchase under such option (assuming the application of
Paragraphs 12.03 and 12.04 hereof) by the amount resulting from
subtracting the option price of such stock option from the stock
value obtained by averaging the mean between the high and low at
which Kodak common stock is traded on the New York Stock Exchange
on the date of the Change In Control.
Upon receipt of the foregoing lump-sum cash payment by a
Participant, the outstanding stock options for which such payment
is being made, as well as the Tandem SARs related to such stock
options, shall be automatically cancelled.
12.07 Amendment on or After Change In Control. On or after a Change in
Control, no action, including, but not by way of limitation, the
amendment, suspension or termination of the Plan, shall be taken
which would affect the rights of any Participant or the operation
of this Plan with respect to any stock options or SARs to which the
Participant may have become entitled hereunder on or prior to the
date of such action or as a result of such Change In Control.
12.08 Paragraph 6(g). Upon a Change In Control, the terms and provisions
of Paragraph 6(g) of the Plan shall become null and void and shall
have no further force and effect.
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Exhibit (10)J
As Amended December 30, 1993
Effective December 31, 1993
EASTMAN KODAK COMPANY 1985 STOCK OPTION PLAN
1. Purposes
The purposes of this Plan are to encourage ownership of the Company's stock
by eligible key employees and to provide increased incentive for such
employees to put forth maximum effort for the success of the business.
2. Definitions.
2.01 "Board" means the Board of Directors of Eastman Kodak Company.
2.02 "Committee" means the Compensation Committee of the Board,
consisting of not less than three members of the Board. A member of
the Committee shall not be and shall not within one year prior to
appointment to the Committee have been, eligible to be selected to
participate in the Plan or any other plan of the Company or any of
its affiliates entitling participants to acquire stock, stock
options or stock appreciation rights of the Company or its
affiliates.
2.03 "Common Stock" means Common Stock of Eastman Kodak Company.
2.04 "Company" means Eastman Kodak Company.
2.05 "Participant" means an employee of the Company or a Subsidiary to
whom a grant has been made by the Committee.
2.06 "Plan" means the Eastman Kodak Company 1985 Stock Option Plan.
2.07 "Subsidiary" means a corporation or other business entity in which
the Company directly or indirectly has an ownership interest of
fifty percent or more.
2.08 "Change In Control" means a change in control of the Company of a
nature that would be required to be reported (assuming such event
has not been "previously reported") in response to Item l(a) of the
Current Report of Form 8-K, as in effect on August 1, 1989, pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); provided that, without limitation, a
Change In Control shall be deemed to have occurred at such time as
(i) any "person" within the meaning of Section 14(d) of the Exchange
Act is or has become the "beneficial owner" as defined in Rule 13d-3
under the Exchange Act, directly or indirectly, of 25% or more of
the combined voting power of the outstanding securities of the
Company ordinarily having the right to vote at the election of
director ("Voting Securities"), or (ii) individuals who constitute
the Board of Directors of the Company on August 1, 1989 (the
"Incumbent Board") have ceased for any reason to constitute at least
a majority thereof, provided that any person becoming a director
subsequent to August 1, 1989 whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at
least three-quarters (3/4) of the directors comprising the Incumbent
Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee
for director without objection to such nomination) shall be, for
purposes of this clause (ii), considered as though such person were
a member of the Incumbent Board.
3. Administration
This Plan shall be administered by the Committee. The Committee is
authorized to establish such rules and regulations as it deems necessary for
the proper administration of the Plan, and to make such determinations and
interpretations and to take such action in connection with the Plan and any
options or stock appreciation rights granted under the Plan as it deems
necessary or advisable. All determinations of the Committee shall be by a
majority of its members, and its determinations shall be final.
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4. Eligibility
Key employees of the Company and its Subsidiaries shall be eligible to
receive grants under the Plan. Directors of the Company or any Subsidiary
who are not full-time employees of the Company or Subsidiary shall not be
eligible to receive grants.
5. Shares Available
An aggregate of 9,000,000 shares of common stock (par value $2.50) of the
Company shall be available for grant under the Plan (subject to adjustment as
provided in paragraph 10). Such shares may be authorized and unissued shares
or may be treasury shares. Upon the expiration or termination in whole or in
part of any unexercised grant, shares of common stock covered by such
unexercised grant shall be available again for grant under the Plan.
6. Grant of Options
Subject to the provisions of paragraphs 7 and 8, options may be granted to
such eligible employees in such numbers, at such times during the term of the
Plan, and for such durations as the Committee shall determine. These stock
options may be incentive stock options within the meaning of Section 422A of
the Internal Revenue Code or non-qualified stock options (i.e., stock options
which are not incentive stock options), or a combination of both. Options
may contain dissimilar provisions provided that all such provisions are
consistent with the Plan.
7. Terms and Conditions of Grants
(a) All options granted under the Plan shall be subject to the following
terms and conditions:
(i) Option Price -- The option price shall be not less than 100% of
the fair market value of the Common Stock, as determined by the
Committee, on the date of grant.
(ii) Duration of Options -- Each option shall expire not later than
ten years from the date of grant, unless sooner exercised or
terminated in accordance with subparagraph (vi) or (vii) below.
(iii) Exercise of An Option -- No option may be exercised within
one year of the date on which the option is granted. One half (50%)
of an option shall become exercisable on the first anniversary of
the date of grant of such option and the remaining half shall become
exercisable on the second anniversary of the date of grant.
Notwithstanding the preceding two sentences, if any Participant
dies, becomes disabled, retires or terminates employment for any
approved reason, prior to the second anniversary of the date of
grant of any options to him, such options may be exercised at any
time between the date of the event and the date of termination of
the option indicated by its terms. Options may be exercised from
time to time by written notice to the Company stating the number of
shares with respect to which the option is being exercised.
(iv) Payment -- No shares shall be issued or delivered until full
payment for the shares has been made, with cash, with Company shares
valued as of the date of exercise (including shares previously
acquired pursuant to the exercise of an option), or with a
combination of both.
(v) Nontransferability of Options -- An option shall not be
transferable by a Participant except by will or the laws of descent
and distribution and shall be exercisable, during his lifetime, only
by him.
(vi) Termination of Employment -- On the sixtieth (60th) day after
termination of a Participant's employment, each option previously
granted to him shall expire; provided, however, if employment is
terminated by reason of death, disability, retirement or any
approved reason, the option shall terminate at such time as
determined by the Committee. Transfers between the Company and a
Subsidiary shall not be a termination of employment. Anything
herein to the contrary notwithstanding, Participants who cease to be
employed by the Company or a Subsidiary and are employed by Eastman
Chemical Company or one of its subsidiaries in connection with the
distribution of the common stock of Eastman Chemical Company to the
shareholders of the Company, shall not be deemed to have terminated
employment for purposes of this Plan and all options and SARs
outstanding on the date of such distribution.
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(vii) Non-Competitive Provision -- Notwithstanding any Plan
provision, other than Paragraph 18.07 hereof, to the contrary, if
a Participant, without the written consent of the Company, engages
either directly or indirectly, in any manner or capacity, as
principal, agent, partner, officer, director, employee, or
otherwise, in any business or activity competitive with the
business conducted by the Company or any Subsidiary, or performs
any act or engages in any activity which, in the opinion of the
Chief Executive Officer, is inimical to the best interests of the
Company, either during or after employment with the Company or
Subsidiary, all options previously granted to him shall expire
forthwith.
(b) In addition to the terms and conditions of paragraph (a) above,
incentive stock options granted under the Plan shall also be subject to
the following: If a Participant disposes of shares acquired pursuant to
the exercise of an incentive stock option in a disqualifying disposition
within the time periods identified in Section 422A(a)(l) of the Internal
Revenue Code, such Participant is required to notify the Company of such
disposition and provide information as to the date of disposition, sale
price, quantity disposed of and any other information about such
disposition which the Company may reasonably request.
8. Stock Appreciation Rights
Stock appreciation rights covering shares of Common Stock ("SARs") may be
granted to such eligible employees in such numbers and at such times during
the term of the Plan as the Committee shall determine. An SAR may be granted
in tandem with all or a portion of a related stock option under the Plan
("Tandem SARs"), or may be granted separately ("Freestanding SAR"). Tandem
SARs shall be granted concurrently with the grant of the stock option. A
Tandem SAR shall be exercisable only to the extent that the related stock
option is exercisable, and the "exercise price" of such an SAR (the base from
which the value of the SAR is measured at its exercise) shall be the option
price under the related stock option. The exercise price of a Freestanding
SAR shall be not less than 100% of the fair market value of the Common Stock,
as determined by the Committee, on the date of grant of the Freestanding SAR.
A Tandem SAR and a Freestanding SAR shall entitle the recipient to receive a
payment equal to the excess of the fair market value of the shares of Common
Stock covered by the SAR on the date of exercise over the exercise price of
the SAR. Such payment may be made in cash or in shares of Common Stock or a
combination of both, as the Committee shall determine. The Committee may
cancel or place a limit on the term of, or the amount payable for, any SAR at
any time. The Committee shall determine all other terms and conditions of
any SAR grant. An SAR shall not be transferable by a Participant except by
will or the laws of descent- and distribution and shall be exercisable,
during his lifetime, only by him. Unless the Committee shall otherwise
determine, to the extent a Freestanding SAR is exercisable, it will be
exercised automatically for a cash settlement on its expiration date. Upon
exercise of a Tandem SAR as to some or all of the shares covered by the
grant, the related stock option shall be cancelled automatically to the
extent of the number of shares covered by such exercise, and such shares
shall no longer be available for grant under Section 5. Conversely, if the
related stock option is exercised as to some or all of the shares covered by
the grant, the related Tandem SAR, if any, shall be cancelled automatically
to the extent of the number of shares covered by the stock option exercise.
9. Regulatory Approvals and Listing
The Company shall not be required to issue any certificate or certificates
for shares of Common Stock upon the exercise of an option or SAR prior to (a)
the obtaining of any approval from any governmental agency which the Company
shall, in its sole discretion, determine to be necessary or advisable, (b)
the admission of such shares to listing on any stock exchange on which the
Common Stock may then be listed, and (c) the completion of any registration
or other qualification of such shares under any state or Federal law or
rulings or regulations of any governmental body which the Company shall, in
its sole discretion, determine to be necessary or advisable.
10. Adjustment of Shares Available
If there is any change in the number of outstanding shares of Common Stock of
the Company through the declaration of stock dividends, or through stock
splits, the number of shares available for options and SARs and the shares
subject to any option or SAR and the option prices or exercise prices shall
be automatically adjusted. If there is any change in the number of
outstanding shares of Common Stock of the Company through any change in the
capital account of the Company or through any other transaction referred to
in Section 425(a) of the Internal Revenue Code, the number of shares
available for options and SARs and the shares subject to any option or SAR
and the option prices or exercise prices shall be appropriately adjusted by
the Committee.
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11. Prohibition of Loans to Participants
Neither the Company nor any Subsidiary shall directly or indirectly lend
money to a Participant for the purpose of assisting him to exercise any
option granted under the Plan.
12. Amendment
The Board may from time to time amend the Plan in any manner which it deems
in the best interest of the Company, but may not, without the approval of the
Company's shareholders, adopt any amendment which would (a) materially
increase the benefits accruing to participants under the Plan, (b) materially
increase the maximum number of shares which may be issued under the Plan
(other than pursuant to paragraph 10), or (c) materially modify the
requirements as to eligibility for participation in the Plan.
13. Term
The Plan shall become effective on November 8, 1985, and shall be submitted
for approval by the Company's shareholders at the 1986 annual meeting. No
option or SARs shall be exercisable before shareholder approval of the Plan.
No option or SAR shall be granted pursuant to the Plan after December 31,
1989.
14. Rights as a Shareholder
A Participant shall possess no rights as a shareholder with respect to the
shares covered by an option or SAR granted to him until the issuance to the
Participant of the stock certificate for the shares purchased.
15. Governing Law
The Plan shall be construed and enforced in accordance with the law of New
York State.
16. Taxes
The Company will withhold, to the extent required by law, all applicable
income and employment taxes due as a result of transactions under this Plan
and the Company may require the Participant to pay to it such tax as a
condition of exercise of an option or SAR.
17. No Right to Continued Employment
Participation in the Plan shall not give any employee any right to remain in
the employ of the Company. The Company reserves the right to terminate any
Participant at any time.
18. Change In Control
18.01 Background. The terms of this Paragraph 18 shall immediately
become operative, without further action or consent by any person
or entity, upon a Change In Control, and once operative shall
supersede and control over any other provisions of this Plan and
its Administrative Guide.
18.02 Lapse of Restrictions. Upon a Change In Control, all terms,
conditions or restrictions in effect on any outstanding stock
options, regardless of whether such stock options are incentive
stock options or non-qualified stock options, or SARs, regardless
of whether such SARs are Tandem SARs or Freestanding SARs, shall
immediately lapse as of the date of the event.
In addition, no other terms, conditions, or restrictions shall be
imposed on any stock options or SARs on or after such date.
18.03 Vesting of Stock Options and SARs. Upon a Change In Control, all
outstanding stock options and SARs shall automatically become one
hundred percent (100%) vested immediately upon the occurrence of
such event.
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18.04 Exercise and Payment of Freestanding SARs. Upon a Change In
Control, all outstanding -Freestanding SARs shall automatically be
exercised, without further action by the Committee or any
Participant, immediately upon the occurrence of such event. As a
result, any Participant, whether or not he is still employed by
the Company or any Subsidiary, then holding any outstanding
Freestanding SARs shall be paid the value of his or her
Freestanding SARs in a single lump-sum cash payment as soon as
practicable, but in no event later than 90 days after the date of
the Change In Control. For purposes of making this payment, the
value of such Participant's Freestanding SARs shall be determined
by averaging the mean between the high and low at which Kodak
common stock is traded on the New York Stock Exchange on the day
of the Change In Control.
18.05 Cash Surrender of Stock Options. Upon the occurrence of a Change
In Control, any Participant, whether or not he is still employed
by the Company or a Subsidiary, then holding any stock options,
regardless of whether they are incentive stock options or
non-qualified stock options, shall be paid in a single lump-sum
cash payment the "Change In Control Value," as that term is
hereafter defined, of such stock options as soon as practicable,
but in no event later than 90 days after the date of the Change In
Control. Notwithstanding the foregoing, any such Participant who,
on the date of the Change In Control, holds stock options that
have not been outstanding for a period of at least six months from
their date of grant and who on such date is required to report
under Section 16 of the Exchange Act shall not be paid the "Change
In Control Value" of such stock options until the first day next
following the end of such six-month period. For purposes of this
Paragraph 18, the "Change In Control Value" of a given stock
option shall be determined by multiplying the total number of
shares of common stock the Participant would then be entitled to
purchase under such option (assuming the application of
Subparagraphs 18.02 and 18.03 hereof) by the amount resulting from
subtracting the option price of such stock option from the stock
value obtained by averaging the mean between the high and low at
which Kodak common stock is traded on the New York Stock Exchange
on the date of the Change In Control.
Upon receipt of the foregoing lump sum cash payment by a
Participant, the outstanding stock options for which such payment
is being made, as well as the Tandem SARs related to such stock
options, shall be automatically cancelled.
18.06 Amendment on or After Change In Control. On or after a Change in
Control, no action, including, but not by way of limitation, the
amendment, suspension or termination of the Plan, shall be taken
which would affect the rights of any Participant or the operation
of this Plan with respect to any stock options or SARs to which
the Participant may have become entitled hereunder on or prior to
the date of such action or as a result of such Change In Control.
18.07 Subparagraphs 7(a)(vi) and 7(a)(vii). Upon a Change In Control,
the terms and provisions of Subparagraphs 7(a)(vi) and 7(a)(vii)
shall become null and void and shall have no further force and
effect.
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Exhibit (10)L
1990 OMNIBUS LONG-TERM COMPENSATION PLAN
EASTMAN KODAK COMPANY
Effective December 31, 1993
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1990 OMNIBUS LONG-TERM COMPENSATION PLAN
December 31, 1993
TABLE OF CONTENTS
Paragraph Title Page
1 Purpose 108
2 Definitions 108
3 Administration 109
4 Eligibility 110
5 Shares Available 110
6 Term 110
7 Participation 110
8 Stock Options 110
9 Stock Appreciation Rights 111
10 Stock Awards 111
11 Performance Units 112
12 Performance Shares 112
13 Payment of Awards 112
14 Dividends and Dividend Equivalents 113
15 Deferral of Awards 113
16 Termination of Employment 113
17 Nonassignability 113
18 Adjustment of Shares Availability 113
19 Withholding Taxes 114
20 Noncompetition Provision 114
21 Amendments to Awards 114
22 Regulatory Approvals and Listings 114
23 No Right to Continued Employment
or Grants 114
24 Amendment 114
25 Governing Law 114
26 Change in Ownership 115
27 Change in Control 116
28 No Right, Title, or Interest in
Company Assets 117
29 Gender 117
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EASTMAN KODAK COMPANY
1990 OMNIBUS LONG-TERM COMPENSATION PLAN
1. Purpose
The purpose of the Plan is to provide motivation to Key Employees of the
Company and its subsidiaries to put forth maximum efforts toward the
continued growth, profitability, and success of the Company and its
Subsidiaries by providing incentives to such Key Employees through the
ownership and performance of the Common Stock of the Company. Toward his
objective, the Committee may grant stock options, stock appreciation rights,
Stock Awards, performance units, performance shares, and/or other incentive
awards to Key Employees of the Company and its Subsidiaries on the terms and
subject to the conditions set forth in the Plan.
2. Definitions
2.1 "Award" means any form of stock option, stock appreciation right,
Stock Award, performance unit, performance shares, or other incentive
award granted under the Plan, whether singly, in combination, or in
tandem, to a Participant by the Committee pursuant to such terms,
conditions, restrictions and/or limitations, if any, as the Committee
may establish by the Award Notice or otherwise.
2.2 "Award Notice" means a written notice from the Company to a
Participant that establishes the terms, conditions, restrictions,
and/or limitations applicable to an Award in addition to those
established by this Plan and by the Committee's exercise of its
administrative powers.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means (a) the willful and continued failure by a Key Employee
to substantially perform his duties with his employer after written
warnings identifying the lack of substantial performance are
delivered to the Key Employee by his employer to specifically
identify the manner in which the employer believes that the Key
Employee has not substantially performed his duties, or (b) the
willful engaging by a Key Employee in illegal conduct which is
materially and demonstrably injurious to the Company or a Subsidiary.
2.5 "Change In Control" means a change in control of the Company of a
nature that would be required to be reported (assuming such event has
not been "previously reported") in response to Item 1(a) of the
Current Report on Form 8-K, as in effect on August 1, 1989, pursuant
to Section 13 or 15(d) of the Exchange Act; provided that, without
limitation, a Change In Control shall be deemed to have occurred at
such time as (i) any "person" within the meaning of Section 14(d) of
the Exchange Act, other than the Company, a subsidiary of the
Company, or any employee benefit plan(s) sponsored by the Company or
any subsidiary of the Company, is or has become the "beneficial
owner," as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of 25% or more of the combined voting power of the
outstanding securities of the Company ordinarily having the right to
vote at the election of directors, or (ii) individuals who constitute
the Board on February 1, 1990 (the "Incumbent Board") have ceased for
any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to February 1, 1990 whose
election, or nomination for election by the Company's shareholders,
was approved by a vote of at least three-quarters (3/4) of the
directors comprising the Incumbent Board (either by a specific vote
or by approval of the proxy statement of the Company in which such
person is named as a nominee for director without objection to such
nomination) shall be, for purposes of this Plan, considered as though
such person were a member of the Incumbent Board.
2.6 "Change In Control Price" means the highest closing price per share
paid for the purchase of Common Stock on the New York Stock Exchange
during the ninety (90) day period ending on the date the Change In
Control occurs.
2.7 "Change In Ownership" means a Change In Control which results
directly or indirectly in the Company's Common Stock ceasing to be
actively traded on the New York Stock Exchange.
2.8 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
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2.9 "Committee" means the Compensation Committee of the Board or such
other committee designated by the Board, authorized to administer the
Plan under paragraph 3 hereof. The Committee shall consist of not
less than three members. A member of the Committee shall not be, and
shall not within one year prior to appointment to the Committee have
been, eligible to be selected to participate in the Plan or any other
plan of the Company or any of its affiliates entitling participants
to acquire stock, stock options, or stock appreciation rights of the
Company or its affiliates.
2.10 "Common Stock" means common stock of the Company.
2.11 "Company" means Eastman Kodak Company.
2.12 "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
2.13 "Key Employee" means an employee of the Company or a Subsidiary who
holds a position of responsibility in a managerial, administrative,
or professional capacity, and whose performance, as determined by the
Committee in the exercise of its sole and absolute discretion, can
have a significant effect on the growth, profitability, and success
of the Company.
2.14 "Participant" means any individual to whom an Award has been granted
by the Committee under this Plan.
2.15 "Plan" means the Eastman Kodak Company 1990 Omnibus Long-Term
Compensation Plan.
2.16 "Stock Award" means an award granted pursuant to paragraph 10 hereof
in the form of shares of Common Stock, restricted shares of Common
Stock, and/or Units of Common Stock.
2.17 "Subsidiary" means a corporation or other business entity in which
the Company directly or indirectly has an ownership interest of 80
percent or more.
2.18 "Unit" means a bookkeeping entry used by the Company to record and
account for the grant of the following Awards until such time as the
Award is paid, cancelled, forfeited or terminated, as the case may
be; Units of Common Stock, performance units, and performance shares
which are expressed in terms of Units of Common Stock.
3. Administration
The Plan shall be administered by the Committee. The Committee shall have
the authority to: (a) interpret the Plan; (b) establish such rules and
regulations as it deems necessary for the proper operation and administration
of the Plan; (c) select Key Employees to receive Awards under the Plan; (d)
determine the form of an Award, whether a stock option, stock appreciation
right, Stock Award, performance unit, performance share, or other incentive
award established by the Committee in accordance with (h) below, the number
of shares or Units subject to the Award, all the terms, conditions,
restrictions and/or limitations, if any, of an Award, including the time and
conditions of exercise or vesting, and the terms of any Award Notice; (e)
determine whether Awards should be granted singly, in combination or in
tandem; (f) grant waivers of Plan terms, conditions, restrictions, and
limitations; (g) accelerate the vesting, exercise, or payment of an Award or
the performance period of an Award when such action or actions would be in
the best interest of the Company; (h) establish such other types of Awards,
besides those specifically enumerated in paragraph 2.1 hereof, which the
Committee determines are consistent with the Plan's purpose; and (i) take any
and all other action it deems necessary or advisable for the proper operation
or administration of the Plan. In addition, in order to enable Key Employees
who are foreign nationals or are employed outside the United States or both
to receive Awards under the Plan, the Committee may adopt such amendments,
procedures, regulations, subplans and the like as are necessary or advisable,
in the opinion of the Committee, to effectuate the purposes of the Plan. The
Committee shall also have the authority to grant Awards in replacement of
Awards previously granted under this Plan or any other executive compensation
plan of the Company or a Subsidiary. All determinations of the Committee
shall be made by a majority of its members, and its determinations shall be
final, binding and conclusive.
The Committee, in its discretion, may delegate its authority and duties under
the Plan to the Chief Executive Officer and/or to other senior officers of
the Company under such conditions and/or limitations as the Committee may
establish; provided, however, that only the Committee may select and grant
Awards to Participants who are subject to Section 16 of the Exchange Act.
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4. Eligibility
Any Key Employee is eligible to become a Participant of the Plan.
In addition, any individual who on the effective date of the Plan is both (i)
a former Key Employee of the Company or a Subsidiary, and (ii) a participant
under the Eastman Kodak Company 1985 Long-Term Performance Award Plan (the
"1985 Plan"), shall be eligible to become a Participant of the Plan.
However, the participation of any such individual under the Plan shall be
limited solely to receiving Awards granted by the Committee under this Plan
in replacement of any unpaid or unearned award under the 1985 Plan on the
effective date of the Plan.
5. Shares Available
The maximum number of shares of Common Stock, $2.50 par value per share, of
the Company which shall be available for grant of Awards under the Plan
(including incentive stock options) during its term shall not exceed
16,000,000. (Such amount shall be subject to adjustment as provided in
paragraph 18.) Any shares of Common Stock related to Awards which terminate
by expiration, forfeiture, cancellation or otherwise without the issuance of
such shares, are settled in cash in lieu of Common Stock, or are exchanged
with the Committee's permission for Awards not involving Common Stock, shall
be available again for grant under the Plan. Further, any shares of Common
Stock which are used by a Participant for the full or partial payment to the
Company of the purchase price of shares of Common Stock upon exercise of a
stock option, or for any withholding taxes due as a result of such exercise,
shall again be available for Awards under the Plan. Similarly, shares of
Common Stock with respect to which an SAR has been exercised and paid in cash
shall again be available for grant under the Plan. The shares of Common
Stock available for issuance under the Plan may be authorized and unissued
shares or treasury shares.
6. Term
The Plan shall become effective as of February 1, 1990, subject to its
approval by the Company's shareholders at the 1990 annual meeting. No awards
shall be exercisable or payable before approval of the Plan has been obtained
from the Company's shareholders. Awards shall not be granted pursuant to the
Plan after January 31, 1995.
7. Participation
The Committee shall select, from time to time, Participants from those Key
Employees who, in the opinion of the Committee, can further the Plan's
purposes. Once a Participant is so selected, the Committee shall determine
the type or types of Awards to be made to the Participant and shall establish
in the related Award Notices the terms, conditions, restrictions and/or
limitations, if any, applicable to the Awards in addition to those set forth
in this Plan and the administrative rules and regulations issued by the
Committee.
8. Stock Options
(a) Grants. Awards may be granted in the form of stock options.
These stock options may be incentive stock options within the
meaning of Section 422A of the Code or non-qualified stock
options (i.e., stock options which are not incentive stock
options), or a combination of both.
(b) Terms and Conditions of Options. An option shall be
exercisable in whole or in such installments and at such times
as may be determined by the Committee. The price at which
Common Stock may be purchased upon exercise of a stock option
shall be established by the Committee, but such price shall not
be less than 50 percent of the fair market value of the Common
Stock, as determined by the Committee, on the date of the stock
option's grant.
(c) Restrictions Relating to Incentive Stock Options. Stock
options issued in the form of incentive stock options shall, in
addition to being subject to all applicable terms, conditions,
restrictions and/or limitations established by the Committee,
comply with Section 422A of the Code. Accordingly, the
aggregate fair market value (determined at the time the option
was granted) of the Common Stock with respect to which
incentive stock options are exercisable for the first time by a
Participant during any calendar year (under this Plan or any
other plan of the Company or any of its Subsidiaries) shall not
exceed $100,000 (or such other limit as may be required by the
Code). Further, the per-share option price of an incentive
stock option shall not be less than 100 percent of the fair
market value of the Common Stock, as determined by the
Committee, on the date of grant. Also, each option shall expire
not later than ten years from its date of grant. The number of
shares of Common Stock that shall be available for incentive
stock options granted under the Plan is 16,000,000.
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(d) Additional Terms and Conditions. The Committee may, by way of
the Award Notice or otherwise, establish such other terms,
conditions, restrictions and/or limitations, if any, of any
stock option Award, provided they are not inconsistent with the
Plan.
(e) Exercise. Upon exercise, the option price of a stock option
may be paid in cash, shares of Common Stock, shares of
restricted Common Stock, a combination of the foregoing, or
such other consideration as the Committee may deem appropriate.
The Committee shall establish appropriate methods for accepting
Common Stock, whether restricted or unrestricted, and may
impose such conditions as it deems appropriate on the use of
such Common Stock to exercise a stock option.
9. Stock Appreciation Rights
` (a) Grants. Awards may be granted in the form of stock
appreciation rights ("SARs"). An SAR may be granted in tandem
with all or a portion of a related stock option under the Plan
("Tandem SARs"), or may be granted separately ("Freestanding
SARs"). A Tandem SAR may be granted either at the time of the
grant of the related stock option or at any time thereafter
during the term of the stock option. SARs shall entitle the
recipient to receive a payment equal to the appreciation in
market value of a stated number of shares of Common Stock from
the exercise price to the market value on the date of exercise.
In the case of SARs granted in tandem with stock options
granted prior to the grant of such SARs, the appreciation in
value is from the option price of such related stock option to
the market value on the date of exercise.
(b) Terms and Conditions of Tandem SARs. A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the
related stock option is exercisable, and the "exercise price"
of such an SAR (the base from which the value of the SAR is
measured at its exercise) shall be the option price under the
related stock option. However, at no time shall a Tandem SAR be
issued if the option price of its related stock option is less
than 50 percent of the fair market value of the Common Stock,
as determined by the Committee, on the date of the Tandem SAR's
grant. If a related stock option is exercised as to some or
all of the shares covered by the Award, the related Tandem SAR,
if any, shall be cancelled automatically to the extent of the
number of shares covered by the stock option exercise. Upon
exercise of a Tandem SAR as to some or all of the shares
covered by the Award, the related stock option shall be
cancelled automatically to the extent of the number of shares
covered by such exercise, and such shares shall again be
eligible for grant in accordance with paragraph 5 hereof,
except to the extent any shares of Common Stock are issued to
settle the SAR.
(c) Terms and Conditions of Freestanding SARs. Freestanding SARs
shall be exercisable in whole or in such installments and at
such times as may be determined by the Committee. The exercise
price of a Freestanding SAR shall also be determined by the
Committee; provided, however, that such price shall not be less
than 50 percent of the fair market value of the Common Stock,
as determined by the Committee, on the date of the Freestanding
SAR's grant.
(d) Deemed Exercise. The Committee may provide that an SAR shall
be deemed to be exercised at the close of business on the
scheduled expiration date of such SAR if at such time the SAR
by its terms remains exercisable and, if so exercised, would
result in a payment to the holder of such SAR.
(e) Additional Terms and Conditions. The Committee may, by way of
the Award Notice or otherwise, determine such other terms,
conditions, restrictions and/or limitations, if any, of any SAR
Award, provided they are not inconsistent with the Plan.
10. Stock Awards
(a) Grants. Awards may be granted in the form of Stock Awards.
Stock Awards shall be awarded in such numbers and at such times
during the term of the Plan as the Committee shall determine.
(b) Award Restrictions. Stock Awards shall be subject to such
terms, conditions, restrictions, and/or limitations, if any, as
the Committee deems appropriate including, but not by way of
limitation, restrictions on transferability and continued
employment. The Committee may modify or accelerate the
delivery of a Stock Award under such circumstances as it deems
appropriate.
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(c) Rights as Shareholders. During the period in which any
restricted shares of Common Stock are subject to the
restrictions imposed under paragraph 10(b), the Committee may,
in its discretion, grant to the Participant to whom such
restricted shares have been awarded all or any of the rights of
a shareholder with respect to such shares, including, but not
by way of limitation, the right to vote such shares and to
receive dividends.
(d) Evidence of Award. Any stock award granted under the Plan may
be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book-entry registration or
issuance of a stock certificate or certificates.
11. Performance Units
(a) Grants. Awards may be granted in the form of performance
units. Performance units, as that term is used in this Plan,
shall refer to Units valued by reference to designated criteria
established by the Committee, other than Common Stock.
(b) Performance Criteria. Performance units shall be contingent on
the attainment during a performance period of certain
performance objectives. The length of the performance period,
the performance objectives to be achieved during the
performance period, and the measure of whether and to what
degree such objectives have been attained shall be conclusively
determined by the Committee in the exercise of its absolute
discretion. Performance objectives may be revised by the
Committee, at such times as it deems appropriate during the
performance period, in order to take into consideration any
unforeseen events or changes in circumstances.
(c) Additional Terms and Conditions. The Committee may, by way of
the Award Notice or otherwise, determine such other terms,
conditions, restrictions, and/or limitations, if any, of any
Award of performance units, provided they are not inconsistent
with the Plan.
12. Performance Shares
(a) Grants. Awards may be granted in the form of performance
shares. Performance shares, as that term is used in this Plan,
shall refer to shares of Common Stock or Units which are
expressed in terms of Common Stock.
(b) Performance Criteria. Performance shares shall be contingent
upon the attainment during a performance period of certain
performance objectives. The length of the performance period,
the performance objectives to be achieved during the
performance period, and the measure of whether and to what
degree such objectives have been attained shall be conclusively
determined by the Committee in the exercise of its absolute
discretion. Performance objectives may be revised by the
Committee, at such times as it deems appropriate during the
performance period, in order to take into consideration any
unforeseen events or changes in circumstances.
(c) Additional Terms and Conditions. The Committee may, by way of
the Award Notice or otherwise, determine such other terms,
conditions, restrictions and/or limitations, if any, of any
Award of performance shares, provided they are not inconsistent
with the Plan.
13. Payment of Awards
At the discretion of the Committee, payment of Awards may be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of
property as the Committee shall determine. In addition, payment of Awards
may include such terms, conditions, restrictions and/or limitations, if any,
as the Committee deems appropriate, including, in the case of Awards paid in
the form of Common Stock, restrictions on transfer and forfeiture provisions.
Further, payment of Awards may be made in the form of a lump sum or
installments, as determined by the Committee.
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14. Dividends and Dividend Equivalents
If an Award is granted in the form of a Stock Award, stock option, or
performance share, or in the form of any other stock-based grant, the
Committee may choose, at the time of the grant of the Award or any time
thereafter up to the time of the Award's payment, to include as part of such
Award an entitlement to receive dividends or dividend equivalents, subject to
such terms, conditions, restrictions and/or limitations, if any, as the
Committee may establish. Dividends and dividend equivalents shall be paid in
such form and manner (i.e., lump sum or installments), and at such time as
the Committee shall determine. All dividends or dividend equivalents which
are not paid currently may, at the Committee's discretion, accrue interest,
be reinvested into additional shares of Common Stock or, in the case of
dividends or dividend equivalents credited in connection with performance
shares, be credited as additional performance shares and paid to the
Participant if and when, and to the extent that, payment is made pursuant to
such Award.
15. Deferral of Awards
At the discretion of the Committee, payment of a Stock Award, performance
share, performance unit, dividend, dividend equivalent, or any portion
thereof may be deferred by a Participant until such time as the Committee may
establish. All such deferrals shall be accomplished by the delivery of a
written, irrevocable election by the Participant prior to the time such
payment would otherwise be made, on a form provided by the Company. Further,
all deferrals shall be made in accordance with administrative guidelines
established by the Committee to ensure that such deferrals comply with all
applicable requirements of the Code and its regulations. Deferred payments
shall be paid in a lump sum or installments, as determined by the Committee.
The Committee may also credit interest, at such rates to be determined by the
Committee, on cash payments that are deferred and credit dividends or
dividend equivalents on deferred payments denominated in the form of Common
Stock.
16. Termination of Employment
If a Participant's employment with the Company or a Subsidiary terminates for
a reason other than death, disability, retirement, or any approved reason,
all unexercised, unearned, and/or unpaid Awards, including, but not by way of
limitation, Awards earned but not yet paid, all unpaid dividends and dividend
equivalents, and all interest accrued on the foregoing shall be cancelled or
forfeited, as the case may be, unless the Participant's Award Notice provides
otherwise. The Committee shall have the authority to promulgate rules and
regulations to (i) determine what events constitute disability, retirement,
or termination for an approved reason for purposes of the Plan, and (ii)
determine the treatment of a Participant under the Plan in the event of his
death, disability, retirement or termination for an approved reason.
Anything herein to the contrary notwithstanding, Participants who cease to be
employed by the Company or a Subsidiary and are employed by Eastman Chemical
Company or one of its subsidiaries in connection with the distribution of the
common stock of Eastman Chemical Company to the shareholders of the Company,
shall not be deemed to have terminated employment for purposes of this Plan
and all Awards outstanding on the date of such distribution.
17. Nonassignability
No Awards or any other payment under the Plan shall be subject in any manner
to alienation, anticipation, sale, transfer (except by will or the laws of
descent and distribution), assignment, pledge, or encumbrance, nor shall any
Award be payable to or exercisable by anyone other than the Participant to
whom it was granted.
18. Adjustment of Shares Available
If there is any change in the number of outstanding shares of Common Stock
through the declaration of stock dividends, stock splits or the like, the
number of shares available for Awards, the shares subject to any Award and
the option prices or exercise prices of Awards shall be automatically
adjusted. If there is any change in the number of outstanding shares of
Common Stock through any change in the capital account of the Company, or
through any other transaction referred to in Section 425(a) of the Code, the
Committee shall make appropriate adjustments in the maximum number of shares
of Common Stock which may be issued under the Plan and any adjustments and/or
modifications to outstanding Awards as it deems appropriate. In the event of
any other change in the capital structure or in the Common Stock of the
Company, the Committee shall also be authorized to make such appropriate
adjustments in the maximum number of shares of Common Stock available for
issuance under the Plan and any adjustments and/or modifications to
outstanding Awards as it deems appropriate.
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<PAGE> 114
19. Withholding Taxes
The Company shall be entitled to deduct from any payment under the Plan,
regardless of the form of such payment, the amount of all applicable income
and employment taxes required by law to be withheld with respect to such
payment or may require the Participant to pay to it such tax prior to and as
a condition of the making of such payment. In accordance with any applicable
administrative guidelines it establishes, the Committee may allow a
Participant to pay the amount of taxes required by law to be withheld from an
Award by withholding from any payment of Common Stock due as a result of such
Award, or by permitting the Participant to deliver to the Company, shares of
Common Stock having a fair market value, as determined by the Committee,
equal to the amount of such required withholding taxes.
20. Noncompetition Provision
Unless the Award Notice specifies otherwise, a Participant shall forfeit all
unexercised, unearned, and/or unpaid Awards, including, but not by way of
limitation, Awards earned but not yet paid, all unpaid dividends and dividend
equivalents, and all interest, if any, accrued on the foregoing if, (i) in
the opinion of the Committee, the Participant, without the written consent of
the Company, engages directly or indirectly in any manner or capacity as
principal, agent, partner, officer, director, employee, or otherwise, in any
business or activity competitive with the business conducted by the Company
or any Subsidiary; or (ii) the Participant performs any act or engages in any
activity which in the opinion of the Chief Executive Officer of the Company
is inimical to the best interests of the Company. In addition, the Committee
may, in its discretion, condition the deferral of any Award, dividend, or
dividend equivalent under paragraph 15 hereof on a Participant's compliance
with the terms of this paragraph 20, and cause such a Participant to forfeit
any payment which is so deferred if the Participant fails to comply with the
terms hereof.
21. Amendments to Awards
The Committee may at any time unilaterally amend any unexercised, unearned,
or unpaid Award, including, but not by way of limitation, Awards earned but
not yet paid, to the extent it deems appropriate; provided, however, that any
such amendment which, in the opinion of the Committee, is adverse to the
Participant shall require the Participant's consent.
22. Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the Company
shall have no obligation to issue or deliver certificates of Common Stock
evidencing Stock Awards or any other Award resulting in the payment of Common
Stock prior to (a) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be necessary or
advisable, (b) the admission of such shares to listing on the stock exchange
on which the Common Stock may be listed, and (c) the completion of any
registration or other qualification of said shares under any state or federal
law or ruling of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable.
23. No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right to remain
in the employ of the Company or any Subsidiary. The Company or, in the case
of employment with a Subsidiary, the Subsidiary, reserves the right to
terminate any Key Employee at any time. Further, the adoption of this Plan
shall not be deemed to give any Key Employee or any other individual any
right to be selected as a Participant or to be granted an Award.
24. Amendment
The Benefit Plans Committee of the Company may suspend or terminate the Plan
at any time. In addition, the Benefit Plans Committee of the Company may,
from time to time, amend the Plan in any manner, but may not without
shareholder approval adopt any amendment which would (a) materially increase
the benefits accruing to Participants under the Plan, (b) materially increase
the number of shares of Common Stock which may be issued under the Plan
(except as specified in paragraph 18), or (c) materially modify the
requirements as to eligibility for participation in the Plan.
25. Governing Law
The Plan shall be governed by and construed in accordance with the laws of
the State of New York, except as superseded by applicable Federal Law.
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<PAGE> 115
26. Change In Ownership
(a) Background. Upon a Change In Ownership: (i) the terms of
this paragraph 26 shall immediately become operative,
without further action or consent by any person or entity;
(ii) all terms, conditions, restrictions, and limitations in
effect on any unexercised, unearned, unpaid, and/or deferred
Award, or any other outstanding Award, shall immediately
lapse as of the date of such event; (iii) no other terms,
conditions, restrictions and/or limitations shall be imposed
upon any Awards on or after such date, and in no
circumstance shall an Award be forfeited on or after such
date; (iv) all unexercised, unvested, unearned, and/or
unpaid Awards or any other outstanding Awards shall
automatically become one hundred percent (100%) vested
immediately.
(b) Dividends and Dividend Equivalents. Upon a Change In
Ownership, all unpaid dividends and dividend equivalents and
all interest accrued thereon, if any, shall be treated and
paid under this paragraph 26 in the identical manner and
time as the Award under which such dividends or dividend
equivalents have been credited. For example, if upon a
Change In Ownership, an Award under this paragraph 26 is to
be paid in a prorated fashion, all unpaid dividends and
dividend equivalents with respect to such Award shall be
paid according to the same formula used to determine the
amount of such prorated Award.
(c) Treatment of Performance Units and Performance Shares. If a
Change In Ownership occurs during the term of one or more
performance periods for which the Committee has granted
performance units and/or performance shares (hereinafter a
"current performance period"), the term of each such
performance period shall immediately terminate upon the
occurrence of such event. Upon a Change In Ownership, for
each "current performance period" and each completed
performance period for which the Committee has not on or
before such date made a determination as to whether and to
what degree the performance objectives for such period have
been attained (hereinafter a "completed performance
period"), it shall be assumed that the performance
objectives have been attained at a level of one hundred
percent (100%) or the equivalent thereof.
A Participant in one or more "current performance periods"
shall be considered to have earned and, therefore, be
entitled to receive, a prorated portion of the Awards
previously granted to him for each such performance period.
Such prorated portion shall be determined by multiplying the
number of performance shares or performance units, as the
case may be, granted to the Participant by a fraction, the
numerator of which is the total number of whole and partial
years (with each partial year being treated as a whole year)
that have elapsed since the beginning of the performance
period, and the denominator of which is the total number of
years in such performance period.
A Participant in one or more "completed performance periods"
shall be considered to have earned and, therefore, be
entitled to receive all the performance shares or
performance units, as the case may be, previously granted to
him during each such performance period.
(d) Valuation of Awards. Upon a Change In Ownership, all
outstanding Units of Common Stock, Freestanding SARs, stock
options (including incentive stock options), and performance
shares (including those earned as a result of the
application of paragraph 26(c) above) and all other
outstanding stock-based Awards, including those granted by
the Committee pursuant to its authority under paragraph 3(h)
hereof, shall be valued and cashed out on the basis of the
Change In Control Price.
(e) Payment of Awards. Upon a Change In Ownership, any
Participant, whether or not he is still employed by the
Company or a Subsidiary, shall be paid, in a single lump-
sum cash payment, as soon as practicable but in no event
later than 90 days after the Change In Ownership, all of his
outstanding Units of Common Stock, Freestanding SARs, stock
options (including incentive stock options), performance
units (including those earned as a result of the application
of paragraph 26(c) above), and performance shares (including
those earned as a result of paragraph 26(c) above), and all
other outstanding Awards, including those granted by the
Committee pursuant to its authority under paragraph 3(h)
hereof.
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<PAGE> 116
(f) Deferred Awards. Upon a Change In Ownership, all Awards
deferred by a Participant under paragraph 15 hereof, but for
which he has not received payment as of such date, shall be
paid to him in a single lump-sum cash payment as soon as
practicable, but in no event later than 90 days after the
Change In Ownership. For purposes of making such payment,
the value of all Awards which are stock based shall be
determined by the Change In Control Price.
(g) Section 16 of Exchange Act. Notwithstanding anything
contained in this paragraph 26 to the contrary, any
Participant who, on the date of the Change In Ownership,
holds any stock options or Freestanding SARs that have not
been outstanding for a period of at least six months from
their date of grant and who on such date is required to
report under Section 16 of the Exchange Act shall not be
paid such Award until the first day next following the end
of such six-month period.
(h) Miscellaneous. Upon a Change In Ownership, (i) the
provisions of paragraphs 16, 20 and 21 hereof shall become
null and void and of no further force and effect; and (ii)
no action, including, but not by way of limitation, the
amendment, suspension, or termination of the Plan, shall be
taken which would affect the rights of any Participant or
the operation of the Plan with respect to any Award to which
the Participant may have become entitled hereunder on or
prior to the date of such action or as a result of such
Change In Ownership.
27. Change In Control.
(a) Background. All Participants shall be eligible for the
treatment afforded by this Paragraph 27 if their employment
terminates within two years following a Change In Control,
unless the termination is due to (i) death, (ii) disability
entitling the Participant to benefits under his employer's
long-term disability plan, (iii) Cause, (iv) resignation
other than (A) resignation from a declined reassignment to a
job that is not reasonably equivalent in responsibility or
compensation (as defined in the Company's Termination
Allowance Plan), or that is not in the same geographic area
(as defined in the Company's Termination Allowance Plan), or
(B) resignation within thirty days following a reduction in
base pay, or (v) retirement entitling the Participant to
benefits under his employer's retirement plan.
(b) Vesting and Lapse of Restrictions. If a Participant is
eligible for treatment under this paragraph 27, (i) all of
the terms, conditions, restrictions, and limitations in
effect on any of his unexercised, unearned, unpaid and/or
deferred Awards shall immediately lapse as of the date of
his termination of employment; (ii) no other terms,
conditions, restrictions and/or limitations shall be imposed
upon any of his Awards on or after such date, and in no
event shall any of his Awards be forfeited on or after such
date; and (iii) all of his unexercised, unvested, unearned
and/or unpaid Awards shall automatically become one hundred
percent (100%) vested immediately upon his termination of
employment.
(c) Dividends and Dividend Equivalents. If a Participant is
eligible for treatment under this paragraph 27, all of his unpaid
dividends and dividend equivalents and all interest accrued
thereon, if any, shall be treated and paid under this Paragraph 27
in the identical manner and time as the Award under which such
dividends or dividend equivalents have been credited.
(d) Treatment of Performance Units and Performance Shares. If a
Participant holding either performance units or performance
shares is terminated under the conditions described in (a)
above, the provisions of this paragraph (d) shall determine
the manner in which such performance units and/or
performance shares shall be paid to him. For purposes of
making such payment, each "current performance period," as
that term is defined in paragraph 26(c) hereof, shall be
treated as terminating upon the date of the Participant's
termination of employment, and for each such "current
performance period" and each "completed performance period,"
as that term is defined in paragraph 26(c) hereof, it shall
be assumed that the performance objectives have been
attained at a level of one hundred percent (100%) or the
equivalent thereof. If the Participant is participating in
one or more "current performance periods," he shall be
considered to have earned and, therefore, be entitled to
receive that prorated portion of the Awards previously
granted to him for each such performance period, as
determined in accordance with the formula established in
paragraph 26(c) hereof. A Participant in one or more
"completed performance periods" shall be considered to have
earned and, therefore, be entitled to receive all the
performance shares and performance units previously granted
to him during each performance period.
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<PAGE> 117
(e) Valuation of Awards. If a Participant is eligible for
treatment under this paragraph 27, his Awards shall be
valued and cashed out in accordance with the provisions of
paragraph 26(d) hereof.
(f) Payment of Awards. If a Participant is eligible for
treatment under this paragraph 27, he shall be paid, in a
single lump-sum cash payment, as soon as practicable but in
no event later than 90 days after the date of his
termination of employment, all of his outstanding Units of
Common Stock, Freestanding SARs, stock options (including
incentive stock options), performance units (including those
earned as a result of the application of paragraph 27(d)
above), and performance shares (including those earned as a
result of paragraph 27(d) above), and all of his other
outstanding Awards, including those granted by the Committee
pursuant to its authority under paragraph 3(h) hereof.
(g) Deferred Awards. If a Participant is eligible for treatment
under this paragraph 27, all of his deferred Awards for which he
has not received payment as of the date of his termination of
employment shall be paid to him in a single lump-sum cash payment
as soon as practicable, but in no event later than 90 days after
the date of his termination. For purposes of making such payment,
the value of all Awards which are stock based shall be determined
by the Change In Control Price.
(h) Section 16 of Exchange Act. Notwithstanding anything
contained in this paragraph 27 to the contrary, any Participant
who, on the date of his termination of employment under the
conditions described in subparagraph (a) above, holds any stock
options or Freestanding SARs that have not been outstanding for a
period of at least six months from their date of grant and who on
the date of such termination is required to report under Section 16
of the Exchange Act shall not be paid such Award until the first
day next following the end of such six-month period.
(i) Miscellaneous. Upon a Change In Control, (i) the provisions
of paragraphs 16, 20 and 21 hereof shall become null and
void and of no force and effect insofar as they apply to a
Participant who has been terminated under the conditions
described in (a) above; and (ii) no action, including, but
not by way of limitation, the amendment, suspension or
termination of the Plan, shall be taken which would affect
the rights of any Participant or the operation of the Plan
with respect to any Award to which the Participant may have
become entitled hereunder on or prior to the date of the
Change In Control or to which he may become entitled as a
result of such Change In Control.
(j) Legal Fees. The Company shall pay all legal fees and related
expenses incurred by a Participant in seeking to obtain or enforce
any payment, benefit or right he may be entitled to under the Plan
after a Change In Control; provided, however, the Participant shall
be required to repay any such amounts to the Company to the extent
a court of competent jurisdiction issues a final and non-
appealable order setting forth the determination that the position
taken by the Participant was frivolous or advanced in bad faith.
28. No Right, Title, or Interest in Company Assets
No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of a stock certificate
in his name, and, in the case of restricted shares of Common Stock, such
rights are granted to the Participant under paragraph 10(c) hereof. To the
extent any person acquires a right to receive payments from the Company under
this Plan, such rights shall be no greater than the rights of an unsecured
creditor of the Company.
29. Gender
Throughout this Plan, the masculine gender shall include the feminine.
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Exhibit (10)Q
September 3, 1993
TO: Wilbur J. Prezzano
Dear Bill:
This letter will constitute an Agreement between Eastman Kodak Company
(Kodak) and yourself. Once signed by both parties, this Agreement will be
deemed effective as of October 1, 1993 and will continue in effect until
either (i) September 30, 1995 or (ii) the date your employment by Kodak
terminates pursuant to the terms of this Agreement, whichever occurs first.
This Agreement supersedes, in all respects, any prior written or oral special
separation, termination or retirement enhancement agreement between you and
Kodak and specifically the agreement dated July 20, 1992.
The purpose of this Agreement is to encourage you to remain employed by
Kodak, particularly during the period of time when Kodak's Board of Directors
will be selecting a new Chairman and Chief Executive Officer (CEO) and
allowing time for that individual to become familiar with Kodak, its
employees and its future course. Your continued efforts and enthusiastic
cooperation during this period will be important to a successful transition.
Although your employment with Kodak may be terminated at any time, for any or
no reason, if your employment is terminated during the term of this Agreement
either (i) by Kodak other than for "Cause," or (ii) by you for "Good Reason,"
you will be eligible to receive either of the benefits described in
Subparagraphs A and B below, depending upon whether you are "retirement
eligible" at the time of your termination. If you receive either of the
benefits described in Subparagraphs A or B below, you will be eligible for
the benefit described in Subparagraph C below.
A. Retirement Eliqible. If you are "retirement eligible" under the terms
of the Kodak Retirement Income Plan ("KRIP") at the time of your
termination and elect to retire under KRIP at such time, you will receive
an "unreduced retirement income benefit." For purposes of this Agreement,
an "unreduced retirement income benefit" shall consist of the annual rate
of retirement income benefit determined according to the formula in
Section 4.02 of KRIP without taking into account the provisions of
Article 5 of KRIP for early retirement. The unreduced retirement income
benefit will be paid from, and under the terms of, KRIP, its supplements
and this Agreement. You may elect to receive the difference in benefits,
if any, between the "unreduced retirement income benefit" and the
retirement income benefit you would otherwise receive under KRIP and its
Supplements if this Agreement were not in effect (such difference
hereafter being referred to as the "Delta") in any form permitted under
Article 11 of KRIP. Once you elect the form of payment in which to
receive the Delta, the provisions of such Article 11 relating to such
form of payment shall be used to determine the amount of your payment(s).
It is not necessary, however, that you elect to receive the Delta in the
same form as your retirement income benefit is paid under KRIP.
B. Not Retirement Eligible. In the event you are not "retirement
eligible" under KRIP at the time of your termination of employment, you
will receive a gross payment equal to eighteen (18) months of
compensation calculated at your Total Target Annual Compensation using
your salary and target annual incentive award as of the date of your
termination. You may receive this amount in a lump sum payable within
forty-five (45) days after the date of termination or in annual
installments the first to be paid within forty-five (45) days after the
date of termination and the remainder to be paid on each anniversary of
the date of termination over a period of years not to exceed five (5)
years.
C. Severance Benefits. If (i) your termination does not entitle you to a
Termination Allowance Benefit under the Termination Allowance Plan
("TAP"), and (ii) you receive either of the benefits described in
Subparagraph A or B above, you will receive a severance benefit equal in
amount to the Termination Allowance Benefit you would have received if
you qualified for such a benefit. You may receive such severance benefit
in any of the forms permitted under the terms of TAP.
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Any amount payable under Subparagraph A, B or C above shall be unfunded and
your rights or the rights of your estate to receive any such payment shall be
an unsecured claim against the general assets of Kodak. Regardless of the
form in which you elect to receive such amounts, they will not be grossed up
or be given any other special tax treatment by Kodak and Kodak shall be
entitled to deduct from any and all such payments all applicable income,
payroll and employment taxes required by law to be withheld.
To the extent this Agreement constitutes an "employee benefit plan" under
Section 3 (3) of the Employee Retirement Income Security Act of 1974
("ERISA"), the Kodak Director of Benefits shall be the plan administrator of
the plan. The plan administrator shall have total and exclusive
responsibility to control, operate, manage and administer the plan in
accordance with its terms and all the authority that may be necessary or
helpful to enable him/her to discharge his/her responsibilities with respect
to the plan. Without limiting the generality of the preceding sentence, the
plan administrator shall have the exclusive right: to interpret the plan, to
decide all questions concerning eligibility for and the amount of benefits
payable under the plan, to construe any ambiguous provision of the plan, to
correct any default, to supply any omission, to reconcile any inconsistency,
and to decide any and all questions arising in the administration,
interpretation, and application of the plan. The plan administrator shall
have full discretionary authority in all matters related to the discharge of
his/her responsibilities and the exercise of his/her authority under the plan
including, without limitation, his/her construction of the terms of the plan
and his/her determination of eligibility for benefits under the plan. It is
the intent of plan, as well as both parties hereto, that the decisions of the
plan administrator and his/her action with respect to the plan shall be final
and binding upon all persons having or claiming to have any right or interest
in or under the plan and that no such decision or action shall be modified
upon judicial review unless such decision or action is proven to be arbitrary
or capricious.
Termination for "Cause" shall mean (i) termination due to your willful and
continued failure substantially to perform your duties, other than failure
due to illness, (ii) termination for gross misconduct injurious to Kodak, or
(iii) your failure to fully support and cooperate in the transition to the
new CEO in the manner decided upon by, and in the sole discretion of, Kodak.
In the event that you should die or become permanently disabled during the
term of this Agreement, all obligations under this Agreement shall be
terminated, except as to salary or benefits earned or accrued prior to the
date of death or termination by reason of permanent disability. For purposes
of this Agreement "Good Reason" shall mean the occurrence of any of the
following without your consent:
(a) the assignment to you of demonstrably onerous or significantly demeaning
on-going duties inconsistent with your status, duties or responsibilities
as of the date this Agreement become effective;
(b) your reassignment to a position that is not reasonably commensurate with
your abilities, experience and employment history within Kodak; or
(c) a reduction in your base salary and commensurate annual incentive award
opportunity below the base salary you were receiving on the date this
Agreement becomes effective if that reduction is not offset by some
different form of compensation, such as, but not limited to, a bonus,
stock, or dividend payment.
Recognizing that there may be disagreement with respect to the interpretation
of (a) or (b) above, If you believe that either, or both (a) or (b) has been
violated you should first request the CEO to review the circumstances and
make a determination. The CEO may designate someone else to act in his/her
stead. This request should be made within thirty (30) calendar days after you
become aware of the facts and circumstances that give rise to your concern.
In conducting such a review the CEO, or his/her designee, may consult with
others to assist in making an informed decision. The decision shall be made
known to you within thirty (30) calendar days after the issue is presented to
the CEO.
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In the event you do not agree with that decision, you may ask the Kodak
Senior Vice President for Human Resources, within thirty (30) calendar days
after the CEO's, or his/her designee's decision, to arrange for a mediator,
acceptable to both you and Kodak to assist in the resolution of the issue.
The mediator shall be selected by alternate striking of names from a list of
seven (7) to be provided by either the American Arbitration Association or
the Federal Mediation and Conciliation Service, the choice of agency to be at
the discretion of the Senior Vice President for Human Resources, until one
name remains who will be the mediator. The fees and expenses of the mediator
will be shared equally by you and Kodak. The mediator will assist the parties
in an effort to reach a mutually satisfactory resolution but will have no
authority to issue a binding decision. Such efforts by the mediator shall be
treated as private and confidential and no releases shall be made to anyone
by any party to, or participant in, such proceedings. The selection and
activity of the mediator must be completed within sixty (60) calendar days
after notification to the Senior Vice President for Human Resources. If that
mediation effort does not result in a satisfactory resolution, you may
commence an action in court.
It is recognized that in such a court proceeding, proprietary or trade secret
information of Kodak may be revealed to the court. The parties hereby agree
to a protective order that will protect such information from disclosure.
If Kodak terminates your employment, other than for "Cause", you will be
provided at least thirty (30) calendar days advance written notice. If you
choose to terminate your employment from Kodak, for any reason, you will
provide Kodak at least thirty (30) calendar days advance written notice.
During the period of your continued employment by Kodak, you will be treated
in all respects as a regular Kodak employee with entitlement to those
compensation and benefit plans appropriate for your length of service and
wage grade.
In exchange for the consideration provided in this Agreement you agree that
for the period from the effective date of this Agreement through and
including three (3) years following the termination of your employment you
will not accept employment with, provide services to, nor in any manner or in
any capacity become affiliated, directly or indirectly, with any entity which
is in competition with, Kodak, including any subsidiary of Kodak or any joint
venture or partnership in which Kodak has at least a 49% interest. This
limitation shall apply on a worldwide basis. During this non-competition
period, if you are otherwise unemployed and wish to be employed, you will
diligently seek non-competing employment. In the event you are unsuccessful
in obtaining such non-competing employment and you have provided Kodak with
evidence, on a monthly basis, of your diligent search for non-competing
employment, Kodak will pay you an amount equal to your base monthly salary as
of the date your employment by Kodak terminated for each month during which
you have been unable to obtain such non-competing employment. Kodak may elect
not to enforce this non-competition provision at its sole discretion or may
discontinue the enforcement of this non-competition provision at any point
during its term. In addition, you will continue to be bound by the terms of
the Employee's Agreement which is currently in effect between you and Kodak.
You will keep the existence of this Agreement confidential except that you
may review this document with your attorney, with me, or my designee.
This Agreement, its interpretation and application will be governed and
controlled by the laws of the State of New York.
Please indicate your acceptance of the terms and conditions set forth in this
Agreement by signing the attached duplicate original and returning it to me
by not later than September 24, 1993.
Eastman Kodak Company
- ------------------- -------------------------
Date John R. McCarthy
- ------------------- -------------------------
Date Wilbur J. Prezzano
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Exhibit (10)R
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of the 27th day of October, 1993 by
and between Eastman Kodak Company, a New Jersey corporation (together with
its successors and assigns permitted under this Agreement, the "Company"),
and George M. C. Fisher (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt
of which is mutually acknowledged, the Company and the Executive
(individually a "Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person or
other entity that directly or indirectly controls, is controlled by, or is
under common control with the person or other entity specified.
(b) "Base Salary" shall mean the salary provided for in Section 4
below or any increased salary granted to the Executive pursuant to Section 4.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean:
(i) the Executive is convicted of a felony involving
moral turpitude; or
(ii) the Executive engages in conduct that constitutes
willful gross neglect or willful gross misconduct in carrying out his duties
under this Agreement, resulting, in either case, in material economic harm to
the Company, unless the Executive believed in good faith that such act or
nonact was in the best interests of the Company.
(e) A "Change in Control" shall mean the occurrence of any one of
the following events:
(i) any "person," as such term is used in Sections 3(a)(9)
and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under that act, of 25%
or more of the Voting Stock of the Company;
(ii) the majority of the Board consists of individuals
other than Incumbent Directors, which term means the members of the Board on
the date of this Agreement; provided that any person becoming a director
subsequent to such date whose election or nomination for election was
supported by three-quarters of the directors who then comprised the Incumbent
Directors shall be considered to be an Incumbent Director;
(iii) the Company adopts any plan of liquidation providing
for the distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or business of
the Company is disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Company immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the Voting
Stock of the Company, all of the Voting Stock or other ownership interests of
the entity or entities, if any, that succeed to the business of the Company);
or
(v) the Company combines with another company and is the
surviving corporation but, immediately after the combination, the
shareholders of the Company immediately prior to the combination hold,
directly or indirectly, 50% or less of the Voting Stock of the combined
company (there being excluded from the number of shares held by such
shareholders, but not from the Voting Stock of the combined company, any
shares received by Affiliates of such other company in exchange for stock of
such other company).
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(f) "Competition" shall mean engaging in any activities
competitive with the Company or any Subsidiary, whether as an employee,
consultant, partner, principal, agent, officer, director, partner or
shareholder (except as a less than one percent shareholder of a publicly
traded company or a less than five percent shareholder of a privately held
company). A competitive activity shall mean a business that (i) is being
conducted by the Company or any Subsidiary at the time in question and (ii)
was being conducted at the date of the termination of the Executive's
employment, provided that competitive activities shall not include any
non-imaging business contributing less than 5% of the Company's revenues on a
consolidated basis for the fiscal year in question. Notwithstanding anything
to the contrary in this Section 1(f), an activity shall not be deemed to be a
competitive activity (x) solely as a result of the Executive's being employed
by or otherwise associated with a business of which a unit is in competition
with the Company or any Subsidiary but as to which unit he does not have
direct or indirect responsibilities for the products or product lines
involved or (y) if the activity contributes less than 5% of the revenues for
the fiscal year in question of the business by which the Executive is
employed or with which he is otherwise associated.
(g) "Constructive Termination Without Cause" shall mean a
termination of the Executive's employment at his initiative as provided in
Section 11(d) below following the occurrence, without the Executive's written
consent, of one or more of the following events (except in consequence of a
prior termination):
(i) a reduction in the Executive's then current Base
Salary or target award opportunity under the Company's Management Annual
Performance Plan or long-term performance incentive or the termination or
material reduction of any employee benefit or perquisite enjoyed by him
(other than as part of an across-the-board reduction applicable to all
executive officers of the Company);
(ii) the failure to elect or reelect the Executive to any
of the positions described in Section 3 below or removal of him from any such
position;
(iii) a material diminution in the Executive's duties or the
assignment to the Executive of duties which are materially inconsistent with
his duties or which materially impair the Executive's ability to function as
the Chairman, President and Chief Executive Officer of the Company;
(iv) the failure to continue the Executive's participation
in any incentive compensation plan unless a plan providing a substantially
similar opportunity is substituted;
(v) the relocation of the Company's principal office, or
the Executive's own office location as assigned to him by the Company, to a
location more than 50 miles from Rochester, New York; or
(vi) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all
or substantially all of the assets of the Company within 15 days after a
merger, consolidation, sale or similar transaction.
(h) "Disability" shall mean the Executive's inability to
substantially perform his duties and responsibilities under this Agreement
for a period of 180 consecutive days as determined by an approved medical
doctor. For this purpose an approved medical doctor shall mean a medical
doctor selected by the Company and the Executive. If the Parties cannot
agree on a medical doctor, each Party shall select a medical doctor and the
two doctors shall select a third who shall be the approved medical doctor for
this purpose.
(i) "Stock" shall mean the Common Stock of the Company
(j) "Subsidiary" of the Company shall mean any corporation of
which the Company owns, directly or indirectly, more than 50% of the Voting
Stock.
(k) "Term of Employment" shall mean the period specified in
Section 2 below.
(l) "Trading Day" is a day on which the Stock is traded on the New
York Stock Exchange.
(m) "Voting Stock" shall mean capital stock of any class or classes
having general voting power under ordinary circumstances, in the absence of
contingencies, to elect the directors of a corporation.
2. Term of Employment.
The Company hereby employs the Executive, and the Executive
hereby accepts such employment, for the period commencing October 27, 1993
and ending at the close of business on October 26, 1998, subject to earlier
termination of the Term of Employment in accordance with the terms of this
Agreement.
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<PAGE> 123
3. Position, Duties and Responsibilities.
(a) Commencing December 1, 1993 and continuing for the remainder
of the Term of Employment, the Executive shall be employed as the President
and Chief Executive Officer of the Company and be responsible for the general
management of the affairs of the Company. It is also the intention of the
Parties that effective December 1, 1993 and continuing for the remainder of
the Term of Employment the Executive shall be elected and serve as Chairman
of the Board. The Executive, in carrying out his duties under this
Agreement, shall report to the Board.
(b) Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving on the boards of directors of a
reasonable number of other corporations or the boards of a reasonable number
of trade associations and/or charitable organizations, (ii) engaging in
charitable activities and community affairs, and (iii) managing his personal
investments and affairs, provided that such activities do not materially
interfere with the proper performance of his duties and responsibilities as
the Company's Chairman, President and Chief Executive Officer.
4. Base Salary.
The Executive shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of $2,000,000.
The Base Salary shall be reviewed no less frequently than annually for
increase in the discretion of the Board and its Executive Compensation and
Development Committee.
5. Annual Incentive Awards.
The Executive shall participate in all annual incentive award
programs, including, without limitation, the following:
(a) The Company's Management Annual Performance Plan. He shall
have an annual target award opportunity under such plan of at least
$l,000,000 and a minimum guaranteed payment of $1,000,000 for each of 1994
and 1995.
(b) The Company's Wage Dividend. For the purposes of the Wage
Dividend, he shall be deemed to have at least five years of service
Payment of annual incentive awards shall be made at the same time
that other senior-level executives receive their incentive awards.
6. Long-Term Incentive Programs.
(a) General. The Executive shall be eligible to participate in
the long-term incentive programs of the Company on the same basis as other
senior-level executives of the Company, provided that he shall be entitled to
the awards described in Sections 6(b) and 6(c) below, but shall not be
eligible for additional restricted stock awards or additional stock option
awards until 1995.
(b) Restricted Stock Award. As soon as practicable after
commencement of the Executive's employment, the Company shall grant the
Executive 20,000 shares of Stock substantially in the form attached to the
Agreement as Exhibit A, such Stock to be subject to forfeiture if the
Executive's employment terminates pursuant to Section 11(c) or 11(f) below
prior to the end of the Term of Employment.
(c) Stock Option Award. As soon as practicable after commencement
of the Executive's employment, the Company shall grant the Executive a
10-year option, substantially in the form attached to this Agreement as
Exhibit B, to purchase 750,000 shares of Stock (the "Option"). The exercise
price of the Option shall be the average of (i) the average closing market
price for the Stock for the six-month period ending October 26, 1993 and (ii)
the average closing market price for the Stock on October 26, 27 and 28,
1993.
7. Special Payments. Loans and Stock Purchases.
(a) Promptly after the execution of this Agreement, the Company
shall pay the Executive $5,000,000, the purpose of which is to (i) serve as
an inducement for the Executive's entering into the Agreement and undertaking
to perform the services referred to in the Agreement and (ii) keep the
Executive whole in respect of compensation and benefits that he will forfeit
upon termination of his employment with his present employer.
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(b) Promptly after execution of this Agreement, the Company shall
loan the Executive $4,000,000 for five years with interest at the Applicable
Federal Rate as provided by the Internal Revenue Service under Section
1274(d) of the Internal Revenue Code of 1986 (the "Internal Revenue Code") in
the most recent announcement preceding such loan and the Executive shall
deliver to the Company a note for such loan in the form of Exhibit C. Twenty
percent of the principal of and all accrued interest on such note shall be
forgiven on each of the first five anniversaries of such loan, provided that
the Executive shall not be entitled to forgiveness on any such anniversary
date if he has terminated his employment under Section 11(f) on or prior to
such anniversary date. At the time of such loan, the Executive shall
purchase the number of shares of Stock having a value of $2,500,000, based on
the closing price on the last Trading Day preceding such purchase.
(c) In addition, if as a result of his accepting employment
hereunder the Executive forfeits a currently unexercisable stock option in
respect of 80,000 shares of his prior employer's common stock held by the
Executive, the Company shall promptly loan to the Executive an amount equal
to the spread in the above 80,000-share option on the date of the execution
of this Agreement (based on closing price on that date). The Executive shall
promptly use all the proceeds of such loan to purchase shares of Stock and
the company shall reimburse the Executive (on an after-tax basis) for any
commissions incurred by him in such purchase. At the time of such loan, the
Executive shall deliver to the Company a five-year recourse note in the form
of Exhibit D, with interest at the Applicable Federal Rate provided by the
Internal Revenue Service in the most recent announcement preceding such
purchase. Twenty percent of the principal of and all accrued interest on
such note shall be forgiven on each of the first five anniversaries of the
date of such loan, provided that he shall not be entitled to forgiveness on
any such anniversary date if he has entered into Competition with the Company
on or prior to such anniversary date.
(d) Payments under this Section 7 shall not be deemed to be
compensation for the purpose of determining the pension benefit under Section
9.
8. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled to
participate in all employee pension and welfare benefit plans and programs
made available to the Company's senior level executives or to its employees
generally, as such plans or programs may be in effect from time to time,
including, without limitation, pension, profit sharing, savings and other
retirement plans or programs, medical, dental, hospitalization, short-term
and long-term disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any other pension or
retirement plans or programs and any other employee welfare benefit plans or
programs that may be sponsored by the Company from time to time, including
any plans that supplement the above-listed types of plans or programs,
whether funded or unfunded. The Executive shall be entitled to
post-retirement welfare benefits on the same basis as other senior executives
similarly situated, provided that for this purpose the Executive's period of
employment shall, in accordance with the last sentence of this Section 9, be
deemed to be the period necessary to obtain the maximum level of such
benefits. The Executive shall, in all events, be entitled during the Term of
Employment to term life insurance which, together with other life insurance
under the Company's term life insurance program, shall provide face amount
coverage of no less than 3.5 times Base Salary. To the extent there is a
period of employment required as a condition for full benefit coverage under
any employee benefit program, the Executive shall be deemed to have met such
requirement.
9. Supplemental Pension.
(a) The Executive shall be entitled to a pension benefit to be
determined in accordance with the formula under the Company's Retirement
Income Plan as in effect on the date of this Agreement (the "Plan") (without
regard to any limitations that may be applicable under the Internal Revenue
Code), subject to adjustment for any future enhancements in that formula.
For purposes of determining his benefit under this Section 9(a), the
Executive shall be deemed credited with 17 years of service under the Plan on
the commencement of his employment, such 17 years of service to be in
addition to credited service for actual employment with the Company. The
Executive shall also be provided with credited service following certain
terminations of employment as described in Section 11 below. The pension
benefit provided under this Section 9(a) shall be offset by any other pension
benefit provided to the Executive under any other Company pension plan or any
pension plan of his prior employer.
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(b) If the Executive dies while employed by the Company, or during
a period in which or in respect of which he is being provided salary
continuation payments as provided in Section 11 below, his spouse shall be
entitled to a life annuity under this Section 9 equal to 50% of the pension
to which the Executive would have been entitled (less any amounts due
alternate payees under any qualified domestic relations orders) assuming he
had retired and had been receiving retirement payments at the time of his
death based on his credited service to that date. Such survivor's benefit
shall be offset by any other survivor's pension benefit provided to the
Executive's spouse under any other Company pension plan or any pension plan
of his prior employer.
(c) Except as otherwise provided in this Section 9, the
Executive's entitlements to the pension benefit under this Section 9,
including without limitation any survivor benefit, claims procedures, methods
of payment, etc. shall be determined in accordance with the provisions of the
Plan.
(d) Notwithstanding anything herein to the contrary, the Company
agrees that in any event it will provide the Executive with a pension benefit
under this Section 9 in an amount that shall be no less than what the
Executive would have received from his prior employer's pension plan
(including its supplemental plan) based on his age and years of service (both
with his prior employer and with the Company), as such plans are in effect on
the date of this Agreement, at the time of his retirement and assuming an
annual increase in his covered compensation under his prior employer's
pension plan, at the covered compensation level in effect at the time of his
termination of employment with his prior employer, at the rate of 6% each
year (compounded), less any pension benefit provided to the Executive under
any other Company pension plan or any pension plan of his prior employer.
The pension benefit guaranteed under this Section 9(d) shall be fully vested
upon commencement of his employment with the Company. The Company shall keep
the Executive whole to the extent of any tax incurred under 3121(a)(l) of the
Internal Revenue Code in respect of pension accruals under this Section 9(d)
to the extent the amounts so accrued already had been accrued at his prior
employer.
(e) In determining the amount of any offset under this Section 9,
such amount shall be calculated assuming the same frequency of payment, the
same form of annuity and the same commencement date of payment as the
benefits to be paid under this Section 9.
(f) Upon termination of the Executive's employment, the Company
shall fund that portion, if any, of the pension obligation that is then
unfunded by establishing a trust. Such trust shall be in a form that
provides the Executive with the most favorable tax position that reasonably
can be determined at the time it is established and funded. The formation of
such trust or funding thereof shall not cause the pension obligation, if it
is deemed to be a plan under ERISA, to lose its status as a "top hat plan"
thereunder. The trust shall provide for distribution of amounts to the
Executive in order to pay taxes, if any, that become due prior to payment of
pension amounts pursuant to the trust. The amount of such fund shall equal
the then present value of the pension due as determined by a nationally
recognized firm qualified to provide actuarial services which has not
rendered services to the Company during the two years preceding such
determination. The establishment and funding of such trust shall not affect
the obligation of the Company to provide the pension hereunder.
10. Reimbursement of Business and Other Expenses; Perquisites;
Vacations.
(a) The Executive is authorized to incur reasonable expenses in
carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all business expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy.
(b) During the Term of Employment, the Executive shall be entitled
to participate in any of the Company's executive fringe benefits in
accordance with the terms and conditions of such arrangements as are in
effect from time to time for the Company's senior-level executives.
(c) The Company shall provide the Executive with an appropriately
furnished apartment in the Rochester, New York area for a period of time
ending (i) when the Executive has established a permanent residence in the
Rochester, New York area or (ii) September 30, 1994, whichever occurs first.
The Executive agrees that he will make a good faith effort to find a
satisfactory permanent residence in the Rochester, New York area as soon as
he reasonably can after the commencement of his employment with the Company.
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(d) The Company shall promptly reimburse the Executive for the
reasonable expenses he incurs in relocating his household and family from
their present location to the Rochester, New York area, including, without
limitation, all expenses associated with selling his residences referred to
below and all closing costs relating to his acquisition of a residence in the
Rochester, New York area, such as legal fees. In the event that the
Executive does not sell his former residence located at 18 West County Line
Rd., Barrington, Illinois within three months after becoming Chairman,
President and Chief Executive Officer of the Company, the Company shall
promptly purchase such residence from him at a price of $860,000. In
addition, in the event that the Executive does not sell his present residence
located at 4 Mid Oak Lane, Barrington, Illinois within three months after the
Executive's wife ceases to use it as a residence, the Company shall promptly
purchase such residence from him at a price of $2,5OO,O0O.
(e) The Company shall, at Company expense, make available to the
Executive Company aircraft for business and personal use at his discretion,
such use to be subject to income imputation rules pursuant to applicable
Internal Revenue Service regulations. During the period in which the
Executive is locating a permanent residence in the Rochester, New York area,
the company shall provide him with tax gross-up payments so that after taxes
incurred on any commutation between a business location and his residence in
either Barrington, Illinois or Phoenix, Arizona the Executive shall be kept
whole. It is recognized that some of the Executive's travel by Company
aircraft may be required for security purposes and, as such, will constitute
business use of the aircraft.
(f) In all events, during the Term of Employment, the
Company shall:
(i) pay for the membership fees (including any bond
requirement) and dues at one country club in the Rochester, New York area
plus one or more luncheon clubs as the Executive determines are appropriate
to his carrying out his duties hereunder;
(ii) provide the Executive with a car and driver
appropriate for his use;
(iii) provide the Executive with personal financial
(including tax) counseling by a firm to be chosen by the Executive from one
of three providers available through the Company; and
(iv) provide the Executive with a residential security
system in his permanent residence in the Rochester, New York area and pay the
maintenance of such system including the monthly service charges.
(g) It is the intention of the Company that the Executive shall,
after taking into account any taxes on reimbursements or other benefits under
this Section 10, be kept whole with respect to such reimbursement or other
benefit except this sentence shall not apply to fringe benefits described in
Section 10(b), purchase payments to the Executive in respect of either
residence in Barrington, Illinois described in Section 10(d), the use of
Company aircraft described in Section 10(e) (except as otherwise expressly
provided therein) or the tax, if any, attributable to any reimbursement or
benefit provided under Section 10(f). Accordingly, except to the extent
otherwise provided in the preceding sentence, to the extent the Executive is
taxable on any such reimbursements or benefits, the Company shall pay the
Executive in connection therewith an amount which after all taxes incurred by
the Executive on such amount shall equal the amount of the reimbursement or
benefit being provided
(h) The Executive shall be entitled to one week paid vacation in
1993 and six weeks paid vacation per year thereafter.
11. Termination of Employment.
(a) Termination Due to Death. In the event the Executive's
employment is terminated due to his death, his estate or his beneficiaries as
the case may be, shall be entitled to:
(i) Base Salary for a period of 90 days following the date
of death;
(ii) annual incentive award for the year in which the
Executive's death occurs based on the target award opportunity for such year,
payable in a single installment promptly after his death;
(iii) any restricted stock award outstanding at the time of
his death, such award to vest fully at that time;
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(iv) the balance of any incentive awards earned (but not
yet paid);
(v) the continued right to exercise any stock option for
the remainder of its term, such option to become fully exercisable at the
date of his death;
(vi) any pension survivor benefit that may become due
pursuant to Section 9 above;
(vii) any amounts earned, accrued or owing to the Executive
but not yet paid under Section 7, 8 or 10 above and forgiveness of any
amounts owing by the Executive under Section 7; and
(viii) other or additional benefits in accordance with
applicable plans and programs of the Company.
(b) Termination Due to Disability. In the event the Executive's
employment is terminated due to his Disability, he shall be entitled in such
case to the following (but in no event less than the benefits due him under
the then current disability program of the Company):
(i) an amount equal to the sum of 60% of Base Salary,
at the annual rate in effect at termination of his employment, for a period
ending with the end of the month in which he becomes 65, less the amount of
any disability benefits provided to the Executive by the Company (other than
benefits attributable to the Executive's own contributions) under any
disability plan;
(ii) annual incentive award for the year in which
termination due to Disability occurs based on the target award opportunity
for such year, payable in a single installment promptly following termination
due to Disability;
(iii) any restricted stock award outstanding at the time of
his termination due to Disability, such award to vest fully at such time;
(iv) the balance of any incentive awards earned (but not
yet paid);
(v) the continued right to exercise any stock option for
the remainder of its term, such option to become fully exercisable on the
date of his termination due to Disability;
(vi) any pension benefit that may become due pursuant to
Section 9 above, offset by any payment in respect of the same period made
pursuant to Section 11(b)(i);
(vii) any amounts earned, accrued or owing to the Executive
but not yet paid under Section 7, 8 or 10 above;
(viii) continued accrual of credited service for the purpose
of the pension benefit provided under Section 9 above during the period of
the Executive's Disability or, if sooner, until the earlier of the
Executive's election to commence receiving his pension under Section 9 above
or his attainment of age 65;
(ix) continued participation in medical, dental,
hospitalization and life insurance coverage and in all other employee plans
and programs in which he was participating on the date of termination of his
employment due to Disability until he attains age 65; and
(x) other or additional benefits in accordance with
applicable plans and programs of the Company.
If the Executive is precluded from continuing his participation in
any employee benefit plan or program as provided in clause (ix) above, he
shall be provided the after-tax economic equivalent of the benefits provided
under the plan or program in which he is unable to participate. The economic
equivalent of any benefit foregone shall be deemed to be the lowest cost that
would be incurred by the Executive in obtaining such benefit himself on an
individual basis.
In no event shall a termination of the Executive's employment for
Disability occur unless the Party terminating his employment gives written
notice to the other Party in accordance with Section 24 below.
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(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect unless
the provisions of this paragraph (i) are complied with. The Executive shall
be given written notice by the Board of the intention to terminate him for
Cause, such notice (A) to state in detail the particular act or acts or
failure or failures to act that constitute the grounds on which the proposed
termination for Cause is based and (B) to be given within six months of the
Board learning of such act or acts or failure or failures to act. The
Executive shall have 10 days after the date that such written notice has been
given to the Executive in which to cure such conduct, to the extent such cure
is possible. If he fails to cure such conduct, the Executive shall then be
entitled to a hearing before the Board. Such hearing shall be held within 15
days of such notice to the Executive, provided he requests such hearing
within 10 days of the written notice from the Board of the intention to
terminate him for Cause. If, within five days following such hearing, the
Executive is furnished written notice by the Board confirming that, in its
judgment, grounds for Cause on the basis of the original notice exist, he
shall thereupon be terminated for Cause.
(ii) In the event the Company terminates the Executive's
employment for Cause, he shall be entitled to:
(A) the Base Salary through the date of the
termination of his employment for Cause;
(B) any incentive awards earned (but not yet paid);
(C) any pension benefit that may become due pursuant
to Section 9 above, determined as of the date of such termination;
(D) any amounts earned, accrued or owing to the
Executive but not yet paid under Section 7, 8 or 10 above; and
(E) other or additional benefits in accordance with
applicable plans or programs of the Company.
(iii) Anything herein to the contrary notwithstanding, if
following a termination of the Executive's employment by the Company for
Cause based upon the conviction of the Executive for a felony involving moral
turpitude, such conviction is overturned in a final determination on appeal,
the Executive shall be entitled to the payments and the economic equivalent
of the benefits the Executive would have received if his employment had been
terminated by the Company without Cause.
(d) Termination Without Cause or Constructive Termination Without
Cause. In the event the Executive's employment is terminated without Cause,
other than due to Disability or death, or in the event there is a
Constructive Termination Without Cause, the Executive shall be entitled to:
(i) the Base Salary through the date of termination of the
Executive's employment;
(ii) the Base Salary, at the annualized rate in effect on
the date of termination of the Executive's employment (or in the event a
reduction in Base Salary is the basis for a Constructive Termination Without
Cause, then the Base Salary in effect immediately prior to such reduction),
for a period of 36 months following such termination or until the end of the
Term of Employment, whichever is longer; provided that at the Executive's
option the Company shall pay him the present value of such salary
continuation payments in a lump sum (using as the discount rate the
Applicable Federal Rate for short-term Treasury obligations as published by
the Internal Revenue Service for the month in which such termination occurs)
and provided further that the salary continuation payment under this Section
11(d)(ii) shall be in lieu of any salary continuation arrangements under any
other severance program of the Company;
(iii) any restricted stock award outstanding at the time of
such termination of employment, such award to become fully vested upon such
termination;
(iv) the balance of any incentive awards earned (but not
yet paid);
(v) the right to exercise any stock option in full,
whether or not fully exercisable at the date of his termination without Cause
or Constructive Termination Without Cause, for the remainder of the original
term of such option;
(vi) any pension benefit that may become due pursuant to
Section 9 above;
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(vii) any amounts earned, accrued or owing to the Executive
but not yet paid under Section 7, 8 or 10 above;
(viii) continued accrual of credited service for the purpose
of the pension benefit provided under Section 9 above during the period he is
receiving salary continuation payments (or in respect of which a lump-sum
severance payment is made);
(ix) continued participation in all medical, dental,
hospitalization and life insurance coverage and in other employee benefit
plans or programs in which he was participating on the date of the
termination of his employment until the earlier of:
(A) the end of the period during which he is receiving
salary continuation payments (or in respect of which a lump-sum severance
payment is made);
(B) the date, or dates, he receives equivalent coverage
and benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage, or
benefit-by-benefit, basis); provided that (x) if the Executive is precluded
from continuing his participation in any employee benefit plan or program as
provided in this clause (ix) of this Section 11(d), he shall be provided with
the after-tax economic equivalent of the benefits provided under the plan or
program in which he is unable to participate for the period specified in this
clause (ix) of this Section 11(d), (y) the economic equivalent of any benefit
foregone shall be deemed to be the lowest cost that would be incurred by the
Executive in obtaining such benefit himself on an individual basis, and (z)
payment of such after-tax economic equivalent shall be made quarterly in
advance; and
(x) other or additional benefits in accordance with
applicable plans and programs of the Company.
(e) Termination of Employment Following a Change in Control. If,
following a Change in Control, the Executive's employment is terminated
without Cause or there is a Constructive Termination Without Cause, the
Executive shall be entitled to the payments and benefits provided in Section
11(d) above, provided that the salary continuation payments shall be paid in
a lump sum without any discount and provided further that the salary
continuation payments under this Section 11(e) shall be in lieu of any salary
continuation arrangements under any other severance program of the Company.
Also, immediately following a Change in Control, all amounts, entitlements or
benefits in which he is not yet vested shall become fully vested except to
the extent such vesting would be inconsistent with the terms of the relevant
plan.
(f) Voluntary Termination. In the event of a termination of
employment by the Executive on his own initiative other than a termination
due to death or Disability or a Constructive Termination without Cause, the
Executive shall have the same entitlements as provided in Section 11(c)(ii)
above for a termination for Cause. A voluntary termination under this
Section 11(f) shall be effective upon 30 days prior written notice to the
Company and shall not be deemed a breach of this Agreement.
(g) Payment Following a Change in Control. In the event that the
termination of the Executive's employment is for one of the reasons set forth
in Section 11(e) above and the aggregate of all payments or benefits made or
provided to the Executive under Section 11(e) above and under all other plans
and programs of the Company (the "Aggregate Payment") is determined to
constitute a Parachute Payment, as such term is defined in Section 280G(b)(2)
of the Internal Revenue Code, the Company shall pay to the Executive, prior
to the time any excise tax imposed by Section 4999 of the Internal Revenue
Code ("Excise Tax") is payable with respect to such Aggregate Payment, an
additional amount which, after the imposition of all income and excise taxes
thereon, is equal to the Excise Tax on the Aggregate Payment. The
determination of whether the Aggregate Payment constitutes a Parachute
Payment and, if so, the amount to be paid to the Executive and the time of
payment pursuant to this Section 11(g) shall be made by an independent
auditor (the "Auditor") jointly selected by the Company and the Executive and
paid by the Company. The Auditor shall be a nationally recognized United
States public accounting firm which has not, during the two years preceding
the date of its selection, acted in any way on behalf of the Company or any
Affiliate thereof. If the Executive and the Company cannot agree on the firm
to serve as the Auditor, then the Executive and the Company shall each select
one accounting firm and those two firms shall jointly select the accounting
firm to serve as the Auditor.
(h) No Mitigation: No Offset. In the event of any termination of
employment under this Section 11, the Executive shall be under no obligation
to seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain except as specifically provided
in this Section 11.
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(i) Nature of Payments. Any amounts due under this Section 11 are
in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty.
12. Confidentiality: Assignment of Rights.
(a) During the Term of Employment and thereafter, the Executive
shall not disclose to anyone or make use of any trade secret or proprietary
or confidential information of the Company, including such trade secret or
proprietary or confidential information of any customer or other entity to
which the Company owes an obligation not to disclose such information, which
he acquires during the Term of Employment, including but not limited to
records kept in the ordinary course of business, except (i) as such
disclosure or use may be required or appropriate in connection with his work
as an employee of the Company or (ii) when required to do so by a court of
law, by any governmental agency having supervisory authority over the
business of the Company or by any administrative or legislative body
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information.
(b) The Executive hereby sells, assigns and transfers to the
Company all of his right, title and interest in and to all inventions,
discoveries, improvements and copyrightable subject matter (the "rights")
which during the Term of Employment are made or conceived by him, alone or
with others and which are within or arise out of any general field of the
Company's business or arise out of any work he performs or information he
receives regarding the business of the Company while employed by the Company.
The Executive shall fully disclose to the Company as promptly as available
all information known or possessed by him concerning the rights referred to
in the preceding sentence, and upon request by the Company and without any
further remuneration in any form to him by the Company, but at the expense of
the Company, execute all applications for patents and for copyright
registration, assignments thereof and other instruments and do all things
which the Company may deem necessary to vest and maintain in it the entire
right, title and interest in and to all such rights.
13. Indemnification.
(a) The Company agrees that if the Executive is made a party, or
is threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason
of the fact that he is or was a director, officer or employee of the Company
or is or was serving at the request of the Company as a director, officer,
member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is the Executive's alleged
action in an official capacity while serving as a director, officer, member,
employee or agent, the Executive shall be indemnified and held harmless by
the Company to the fullest extent legally permitted or authorized by the
Company's certificate of incorporation or bylaws or resolutions of the
Company's Board of Directors or, if greater, by the laws of the State of New
Jersey, against all cost, expense, liability and loss (including, without
limitation, attorney's fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred
or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if he has ceased to
be a director, member, employee or agent of the Company or other entity and
shall inure to the benefit of the Executive's heirs, executors and
administrators. The Company shall advance to the Executive all reasonable
costs and expenses incurred by him in connection with a Proceeding within 20
days after receipt by the Company of a written request for such advance.
Such request shall include an undertaking by the Executive to repay the
amount of such advance if it shall ultimately be determined that he is not
entitled to be indemnified against such costs and expenses.
(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment
of amounts claimed by the Executive under Section 12(a) above that
indemnification of the Executive is proper because he has met the applicable
standard of conduct, nor a determination by the Company (including its board
of directors, independent legal counsel or stockholders) that the Executive
has not met such applicable standard of conduct, shall create a presumption
that the Executive has not met the applicable standard of conduct.
(c) The Company also agrees that if the Executive is made a party,
or is threatened to be made a party, to any action, suit or proceeding by
reason of the termination of his employment with his prior employer or his
accepting employment with the Company, he shall be indemnified and held
harmless by the Company against all cost, expense, liability and loss
(including, without limitation, attorney's fees) reasonably incurred or
suffered by the Executive in connection therewith.
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<PAGE> 131
(d) The Company agrees to continue and maintain a directors and
officers' liability insurance policy covering the Executive to the extent the
Company provides such coverage for its other executive officers.
14. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence of
this Agreement shall not prohibit or restrict the Executive's entitlement to
full participation in the employee benefit and other plans or programs in
which senior executives of the Company are eligible to participate.
15. Assignability: Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. No rights or obligations of the Company under this Agreement
may be assigned or transferred by the Company except that such rights or
obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale
or liquidation of all or substantially all of the assets of the Company,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or
transferee assumes the liabilities, obligations and duties of the Company, as
contained in this Agreement, either contractually or as a matter of law. The
Company further agrees that, in the event of a sale of assets or liquidation
as described in the preceding sentence, it shall take whatever action it
legally can in order to cause such assignee or transferee to expressly assume
the liabilities, obligations and duties of the Company hereunder. No rights
or obligations of the Executive under this Agreement may be assigned or
transferred by the Executive other than his rights to compensation and
benefits, which may be transferred only by will or operation of law, except
as provided in Section 21 below.
16. Representation.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it or
him and any other person, firm or organization. The Executive represents that
he knows of no agreement between him and any other person, firm or
organization that would be violated by the performance of his obligations
under this Agreement.
17. Entire Agreement.
This Agreement contains the entire understanding and agreement
between the Parties concerning the subject matter hereof and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties with respect thereto.
18. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment
is agreed to in writing and signed by the Executive and an authorized officer
of the Company. No waiver by either Party of any breach by the other Party
of any condition or provision contained in this Agreement to be performed by
such other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any
waiver must be in writing and signed by the Executive or an authorized
officer of the Company, as the case may be.
19. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in
part, the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
20. Survivorship.
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment the extent necessary to
the intended preservation of such rights and obligations.
21. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to
receive any compensation or benefit payable hereunder following the
Executive's death by giving the Company written notice thereof. In the event
of the Executive's death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where
appropriate, to refer to his beneficiary, estate or other legal
representative.
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<PAGE> 132
22. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of New York without reference to principles of
conflict of laws.
23. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
shall, at the election of the Executive or the Company, be resolved by
binding arbitration, to be held in Rochester, New York in accordance with the
rules and procedures of the American Arbitration Association. Judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Costs of the arbitration or litigation, including,
without limitation, reasonable attorneys' fees of both Parties, shall be
borne by the Company. Pending the resolution of any arbitration or court
proceeding, the Company shall continue payment of all amounts due the
Executive under this Agreement and all benefits to which the Executive is
entitled at the time the dispute arises.
24. Notices.
Any notice given to a Party shall be in writing and shall be deemed
to have been given when delivered personally or sent by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to
the Party concerned at the address indicated below or to such changed address
as such Party may subsequently give such notice of:
If to the Company: Eastman Kodak Company
343 State Street
Rochester, New York 14650
Attention: Senior Vice President and General Counsel
If to the Executive: Mr. George M. C. Fisher
c/o Eastman Kodak Company
343 State Street
Rochester, New York 14650
25. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
26. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
Eastman Kodak Company
By:
Senior Vice President
George M.C. Fisher
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Exhibit A
NOTICE OF RESTRICTED STOCK
GRANTED [date]
PURSUANT TO
EASTMAN KODAK COMPANY 1990 OMNIBUS LONG-TERM
COMPENSATION PLAN
("Grant Notice")
To: George M.C. Fisher
You are granted 20,000 shares of Eastman Kodak Company Common Stock (the
"Restricted Shares"). The Restricted Shares are granted under the Eastman
Kodak Company 1990 Omnibus Long-Term Compensation Plan (the "Plan") and are
subject to the terms of the Plan and the following conditions:
1. The Restricted Shares awarded hereunder shall be promptly issued
and a certificate(s) for such shares shall be issued in your name. You shall
thereupon be a shareholder of all the shares represented by the
certificate(s). As such, you shall have all the rights of a shareholder with
respect to such shares, including, but not limited to, the right to vote such
shares and to receive all dividends and other distributions (subject to
Paragraph 2 below) paid with respect to them, provided, however, that the
shares shall be subject to the restrictions in Paragraph 4 below. The stock
certificates representing such shares shall be imprinted with a legend
stating that the shares represented thereby are restricted shares subject to
the terms and conditions of this Grant Notice and, as such, may not be sold,
exchanged, transferred, pledged, hypothecated or otherwise disposed of except
in accordance with the terms of this Grant Notice. Each transfer agent for
the Common Stock shall be instructed to like effect in respect of such
shares. In aid of such restrictions, you shall immediately upon receipt of
the certificate(s) therefor, deposit such certificate(s) together with a
stock power or other like instrument of transfer, appropriately endorsed in
blank, with an escrow agent designated by the Committee, which may be the
Company, under a deposit agreement containing such terms and conditions as
the Committee shall approve, the expenses of such escrow to be borne by the
Company.
2. If under Section 18 of the Plan, entitled "Adjustment of Available
Shares," you, as the owner of the Restricted Shares, shall be entitled to
new, additional or different shares of stock or securities, the certificate
or certificates for, or other evidences of, such new, additional or different
shares or securities, together with a stock power or other instrument of
transfer appropriately endorsed, shall be imprinted with a legend as provided
in Paragraph 1 above, deposited by you under the deposit agreement provided
for therein, and subject to the restrictions provided for in Paragraph 4
below.
3. The term "Restricted Period" with respect to the Restricted Shares
shall mean the period beginning on October 27, 1993 and ending on October 26,
1998.
4. During the Restricted Period, none of the Restricted Shares shall
be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed
of except by will or the laws of descent and distribution. Any attempt by
you to dispose of your shares in any such manner shall result in the
immediate forfeiture of such shares and any other shares then held by the
designated escrow agent on your behalf.
5. Subject to Paragraph 6 below, if your employment is terminated
pursuant to Section 11(c) or 11(f) of the Employment Agreement between you
and the Company dated October 27, 1993 (the "Employment Agreement") at any
time before the Restriction Period ends, you shall immediately forfeit all of
the Restricted Shares then held on your behalf by the designated escrow
agent.
6. The restrictions set forth in Paragraph 4 above, with respect to
the Restricted Shares held by the designated escrow agent on your behalf,
will lapse upon the earlier of:
(i) the expiration of the Restricted Period; or
(ii) the termination of your employment under Section 11(a),
11(b), 11(d) or 11(e) of the Employment Agreement.
7. Section 20 of the Plan (noncompetition) shall not apply to this
grant.
8. The Company, or the designated escrow agent at the request of the
Company, shall be entitled to deduct from the Restricted Shares the amount of
all applicable income and employment taxes required to be withheld unless you
make other arrangements with the Company for the timely payment of such
taxes.
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<PAGE> 134
Exhibit B
NOTICE OF STOCK OPTION
GRANTED [date]
PURSUANT TO
EASTMAN KODAK COMPANY 1990 OMNIBUS LONG-TERM
COMPENSATION PLAN
("Grant Notice")
To: George M.C. Fisher
You are granted a Nonqualified Stock Option to purchase 750,000 shares*
of Eastman Kodak Company Common Stock at $ per share. This option is
granted under the Eastman Kodak Company 1990 Omnibus Long-Term Compensation
Plan (the "Plan") subject to the terms of this Grant Notice.
1. This option shall become exercisable (vested) in 20% cumulative
annual installments starting one year after grant.
2 This option, unless sooner terminated or exercised in full, shall
expire on , 2003.
3. If your employment is terminated due to death, Disability,
Retirement or termination for an Approved Reason, this option shall
immediately become exercisable and vested in full and shall continue to be
exercisable until its scheduled expiration date under Paragraph 2 above or,
if sooner, its exercise in full. If your employment is terminated for any
reason other than death, Disability, Retirement or an Approved Reason, any
portion of the option exercisable at the time of such termination shall not
be exercisable beyond the 60th day following the date of your termination of
employment and any portion of the option not exercisable at the time of your
termination shall be immediately forfeited.
4. You may exercise this option regardless of whether any other option
you have been granted by the Company remains unexercised.
5. The option price for the shares for which this option is exercised
by you shall be paid by you, on the date the option is exercised, in cash, in
shares of Common Stock owned by you or a combination of the foregoing. Any
share of Common Stock delivered in payment of the option price shall be
valued at its "fair market value." For purposes of this paragraph, "fair
market value" shall mean the opening price of the Common Stock on the New
York Stock Exchange on the date of exercise; provided, however, if the Common
Stock is not traded on such date, then the opening price on the immediately
preceding date on which Common Stock is traded shall be used.
6. You may pay the amount of taxes required to be withheld upon
exercise of the option by (i) delivering a check made payable to the Company
or (ii) delivering to the Company at the time of such exercise shares of
Common Stock having a "fair market value," as determined in accordance with
Paragraph 5 above, equal to the amount of such withholding taxes.
7. You shall not have any of the rights of a shareholder with respect
to the shares of Common Stock covered by this option except to the extent one
or more certficates for such shares shall be delivered to you upon the
exercise of the option.
8. Notwithstanding Paragraphs 6 and 7 above to the contrary, you may
exercise this option by way of the Company's broker-assisted stock option
exercise program, to the extent such program is available at the time of such
exercise. Pursuant to the terms of such program, the amount of any taxes
required to be withheld upon exercise of any options under the program shall
be paid in cash directly to the Company.
9. "Termination for an Approved Reason" shall include, without
limitation, a Termination Without Cause or Constructive Termination Without
Cause under Section 11 Cd) of the Employment Agreement between you and the
Company dated as of October 27, 1993 (the "Employment Agreement") or a
Termination of Employment Following a Change in Control under Section 11(e)
of the Employment Agreement.
10. "Disability" shall have the same meaning as ascribed to it under
Section 1(h) of the Employment Agreement.
11. "Retirement" shall mean the occurrence of your retirement as
determined in accordance with the terms of the Kodak Retirement Income Plan
("KRIP").
12. Section 20 of the Plan (noncompetition) shall not apply to this
grant.
* Actual grant shall be for 750,000 shares less the number of shares that
shall be granted concurrently under a stock option intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code. Such
option grant shall be in substantially the same form as this grant except to
the extent necessary to constitute an incentive stock option under Section
422.
<PAGE>
<PAGE> 135
Exhibit C
Promissory Note
$4,000,000
October , 1993
For value received, the undersigned George M.C. Fisher (the "Borrower')
promises to pay to the order of Eastman Kodak Company (the "Lender") the
principal amount of $4,000,000 on October , 1998, and to pay interest on
the unpaid balance of such principal amount at the rate of % per year
[the Applicable Federal Rate] until paid in full, such interest to be payable
on October , 1998.
This note may be prepaid in whole or in part at any time, together with
accrued and unpaid interest on the amount being prepaid, without premium or
penalty.
This note is being delivered pursuant to the provisions of an employment
agreement dated October 27, 1993 among the Borrower and the Lender and shall
be forgiven as provided in Section 7(b) of such agreement, subject to the
conditions of such section.
This note shall be governed by and construed in accordance with the laws
of the State of New York without reference to principles of conflict of laws.
The Borrower hereby waives presentment, demand, protest and notice of
dishonor.
George M.C. Fisher
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<PAGE> 136
Exhibit D
Promissory Note
$
,1993
For value received, the undersigned George M.C. Fisher (the "Borrower')
promises to pay to the order of Eastman Kodak Company (the "Lender") the
principal amount of $ on , 1998, and to pay interest on
the unpaid balance of such principal amount at the rate of % per year
[the Applicable Federal Rate] until paid in full, such interest to be payable
on , 1998.
This note may be prepaid in whole or in part at any time, together with
accrued and unpaid interest on the amount being prepaid, without premium or
penalty.
This note is being delivered pursuant to the provisions of an employment
agreement dated October 27, 1993 among the Borrower and the Lender and shall
be forgiven as provided in Section 7(c) of such agreement, subject to the
conditions of such section.
This note shall be governed by and construed in accordance with the laws
of the State of New York without reference to principles of conflict of laws.
The Borrower hereby waives presentment, demand, protest and notice of
dishonor.
George M.C. Fisher
<PAGE>
<PAGE> 137
October 27, 1993
Mr. George M.C. Fisher
4 Mid Oak Lane
Barrington, IL 60010
Dear Mr. Fisher:
This is to confirm that you are on the payroll of Eastman Kodak
Company effective October 27, 1993. You will be immediately covered by all
employee welfare benefit programs, including any supplemental programs
applicable to senior level executives, except that to the extent that you are
not covered by a particular plan because of a waiting period or other
precondition to your participation, the Company shall provide you such
benefit pursuant to this letter.
In addition, you shall be provided with life insurance coverage,
effective October 27, 1993, equal to 3.5 times your Base Salary (as described
in Section 4 of the Employment Agreement between the Company and you
effective October 27, 1993) to the extent not provided under the regular term
life insurance program of the Company as applicable to senior level
executives.
Sincerely yours,
Eastman Kodak Company
By:
Senior Vice President
<PAGE>
<PAGE> 138
<TABLE>
Eastman Kodak Company and Subsidiary Companies
Exhibit (11)
Computation of Earnings Per Common Share
<CAPTION>
1993 1992 1991
(in millions except
per share data)
PRIMARY:
<S> <C> <C> <C>
Earnings (loss) from continuing operations
before income taxes $ 856 $ 1,218 $ (434)
Provision (benefit) for income taxes from
continuing operations 381 491 (132)
------- ------- -------
Earnings (loss) from continuing operations
before extraordinary item and cumulative
effect of changes in accounting principle 475 727 (302)
Earnings from discontinued operations before
cumulative effect of changes in accounting
principle 192 267 319
------- ------- -------
Earnings before extraordinary item and
cumulative effect of changes in accounting
principle 667 994 17
Extraordinary item (14) - -
------- ------- -------
Earnings before cumulative effect of changes
in accounting principle 653 994 17
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (1,723) 71 -
Cumulative effect of changes in accounting
principle from discontinued operations (445) 81 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (2,168) 152 -
------- ------- -------
NET EARNINGS (LOSS) $(1,515) $ 1,146 $ 17
======= ======= =======
Average number of common shares
outstanding 328.3 325.1 324.7
------- ------- -------
Primary earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes
in accounting principle $ 1.44 $ 2.24 $ (.93)
Primary earnings per share from discontinued
operations before cumulative effect of changes
in accounting principle .58 .82 .98
------- ------- -------
Primary earnings per share before extraordinary
item and cumulative effect of changes in
accounting principle 2.02 3.06 .05
Extraordinary item (.04) - -
------- ------- -------
Primary earnings per share before cumulative
effect of changes in accounting principle 1.98 3.06 .05
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (5.25) .22 -
Cumulative effect of changes in accounting
principle from discontinued operations (1.35) .25 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (6.60) .47 -
------- ------- -------
Primary earnings (loss) per share $ (4.62) $ 3.53 $ .05
======= ======= =======
</TABLE>
<PAGE>
<PAGE> 139
<TABLE>
Eastman Kodak Company and Subsidiary Companies
COMPUTATION OF EARNINGS PER COMMON SHARE (continued)
<CAPTION>
1993 1992 1991
(in millions except
per share data)
FULLY DILUTED:
<S> <C> <C> <C>
Earnings (loss) from continuing
operations before extraordinary item
and cumulative effect of changes in
accounting principle $ 475 $ 727 $ (302)
Add after-tax interest expense
applicable to:
6 3/8% convertible debentures (1) - 12 -
Zero coupon convertible debentures (1) - 42 -
------- ------- -------
Adjusted earnings (loss) from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle 475 781 (302)
Earnings from discontinued operations
before cumulative effect of changes
in accounting principle 192 267 319
------- ------- -------
Adjusted earnings before extraordinary
item and cumulative effect of changes
in accounting principle 667 1,048 17
Extraordinary item (14) - -
------- ------- -------
Adjusted earnings before cumulative
effect of changes in accounting principle 653 1,048 17
------- ------- -------
Cumulative effect of changes in
accounting principle from
continuing operations (1,723) 71 -
Cumulative effect of changes in
accounting principle from
discontinued operations (445) 81 -
------- ------- -------
Total cumulative effect of changes
in accounting principle (2,168) 152 -
------- ------- -------
Adjusted Net Earnings (Loss) $(1,515) $ 1,200 $ 17
======= ======= =======
Average number of common shares outstanding 328.3 325.1 324.7
Add-incremental shares under option 2.9 .5 1.7
Add-incremental shares applicable to:
6 3/8% convertible debentures (1) - 5.9 -
Zero coupon convertible debentures (1) - 20.7 -
------- ------- -------
Adj'd avg. number of shares outstanding 331.2 352.2 326.4
------- ------- -------
</TABLE>
<PAGE>
<PAGE> 140
<TABLE>
Eastman Kodak Company and Subsidiary Companies
COMPUTATION OF EARNINGS PER COMMON SHARE (continued)
<CAPTION>
1993 1992 1991
(in millions except
per share data)
<S> <C> <C> <C>
Fully diluted earnings (loss) per share from
continuing operations before extraordinary
item and cumulative effect of changes in
accounting principle $ 1.44 $ 2.22 $ (.93)
Fully diluted earnings per share from
discontinued operations before cumulative
effect of changes in accounting principle .58 .76 .98
------- ------- -------
Fully diluted earnings per share before
extraordinary item and cumulative effect
of changes in accounting principle 2.02 2.98 .05
Extraordinary item (.04) - -
------- ------- -------
Fully diluted earnings per share
before cumulative effect of changes in
accounting principle 1.98 2.98 .05
------- ------- -------
Cumulative effect of changes in accounting
principle from continuing operations (5.25) .20 -
Cumulative effect of changes in accounting
principle from discontinued operations (1.35) .23 -
------- ------- -------
Total cumulative effect of changes in
accounting principle (6.60) .43 -
------- ------- -------
Fully diluted earnings (loss) per share $ (4.62) $ 3.41 $ .05
======= ======= =======
<FN>
(1) 6 3/8% convertible debentures and Zero coupon convertible debentures were
anti-dilutive in 1993 and 1991.
</TABLE>
<PAGE>
<PAGE> 141
<TABLE>
Exhibit (12)
Eastman Kodak Company and Subsidiary Companies
Computation of Ratio of Earnings to Fixed Charges
(in millions except for ratios)
<CAPTION>
Year Ended in December
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C>
Earnings (loss) from
continuing operations
before provision for
income taxes $ 856 $1,218 $ (434) $ 764 $ 357
Add:
Interest expense 753 825 848 859 935
Interest component of
rental expense (1) 80 76 80 71 50
Amortization of
capitalized interest 40 37 38 29 19
------ ------ ------ ------ ------
Earnings as adjusted $1,729 $2,156 $ 532 $1,723 $1,361
====== ====== ====== ====== ======
Fixed charges
Interest expense $ 753 $ 825 $ 848 $ 859 $ 935
Interest component of
rental expense (1) 80 76 80 71 50
Capitalized interest 87 95 112 113 68
------ ------ ------ ------ ------
Total fixed charges $ 920 $ 996 $1,040 $1,043 $1,053
====== ====== ====== ====== ======
Ratio of earnings to
fixed charges 1.9x (2) 2.2x (3) - (4) 1.7x (5) 1.3x (6)
<FN>
(1)Interest component of rental expense is estimated to equal 1/3 of such expense.
(2)The ratio is 2.5x before deducting restructuring costs of $538 million.
(3)The ratio is 2.4x before deducting restructuring costs of $220 million.
(4)Earnings are insufficient to cover fixed charges by $508 million due to the restructuring
costs of $1,605 million. The ratio is 2.1x before deducting the restructuring
costs.
(5)The ratio is 2.5x before deducting litigation judgment of $888 million.
(6)The ratio is 2.1x before deducting restructuring costs of $858 million.
</TABLE>
<PAGE>
<PAGE> 142
Exhibit (22)
Subsidiaries of Eastman Kodak Company
Organized
Companies Consolidated Under Laws of
Eastman Kodak Company New Jersey
Eastman Kodak International
Finance B.V. Netherlands
Eastman Kodak International
Sales Corporation Barbados
Eastman Technology, Inc. New York
Torrey Pines Realty Company, Inc. Delaware
Datatape Incorporated Delaware
The Image Bank, Inc. New York
Northfield Pharmaceuticals Limited Delaware
Kodak Health Imaging Systems, Inc. Delaware
Jamieson Film Company Delaware
Eastman Gelatine Corporation Massachusetts
Eastman Canada, Inc. Canada
Kodak Canada, Inc. Canada
Kodak (Export Sales) Ltd. Hong Kong
Kodak Argentina, Ltd. New York
Kodak Brasileira C.I.L. Brazil
Kodak Chilena S.A.F. Chile
Kodak Colombiana, Ltd. New York
Kodak Panama, Ltd. New York
Foto Interamericana de Peru, Ltd. New York
Kodak Caribbean, Limited New York
Kodak Uruguaya, Ltd. New York
Kodak Venezuela, S.A. Venezuela
Kodak (Near East), Inc. New York
Kodak (Singapore) Pte. Limited Singapore
Kodak Philippines, Ltd. New York
Kodak Limited England
Kodak Ireland Limited Ireland
Kodak-Pathe France
Kodak A.G. Germany
International Biotechnologies Inc. Delaware
Kodak Korea Ltd. South Korea
Kodak Far East Purchasing, Inc. New York
Kodak New Zealand Limited New Zealand
Kodak (Australasia) Proprietary Limited Australia
Kodak (Kenya) Limited Kenya
Kodak (Egypt) S.A. Egypt
Kodak (Malaysia) S.B. Malaysia
Kodak Taiwan Limited Taiwan
Eastman Kodak International Capital
Company, Inc. Delaware
Industria Fotografica Interamericana,
S.A. de C.V. Mexico
N.V. Kodak S.A. Belgium
Kodak a.s. Denmark
Kodak Norge A/S Norway
Kodak SA Switzerland
Kodak (Far East) Limited Hong Kong
Kodak (Thailand) Limited Thailand
Eastman Kodak De Mexico, S.A. de C.V. Mexico
Kodak Mexicana S.A. de C.V. Mexico
Industria Mexicana de Foto Copiadoras,
S.A. de C.V. Mexico
Kodak G.m.b.H. Austria
Kodak G.m.b.H. Germany
Kodak Oy Finland
Kodak Nederland B.V. Netherlands
Kodak Clinical Diagnostics Ltd. United Kingdom
<PAGE>
<PAGE> 143
Exhibit (22)
(Continued)
Organized
Companies Consolidated Under Laws of
Kodak S.p.A. Italy
Kodak Portuguesa Limited New York
Kodak S.A. Spain
Kodak AB Sweden
Eastman Kodak (Japan) Ltd. Japan
K.K. Kodak Information Systems Japan
Kodak Japan Ltd. Japan
Kodak Imagica K.K. Japan
Kodak Japan Industries Ltd. Japan
Sterling Winthrop Inc. Delaware
Sterling Products Argentina S.A. Argentina
Sterling Winthrop Pty. Limited Australia
The Sydney Ross Co. New Jersey
Sterling-Winthrop, Inc. Canada
Sterling-Winthrop, S.A. France
Schulke & Mayr G.m.b.H. Germany
Sterling-Winthrop K.K. Japan
Sterling Health de Mexico, S.A. de C.V. Mexico
Sterling Products (Nigeria) Ltd. Nigeria
Sterling-Winthrop Products Inc. Panama
Sterwin A.G. Switzerland
Gamma Chemikalien A.G. Switzerland
Saxet (U.K.) Ltd. United Kingdom
Sterling-Winthrop Group Ltd. England
Sterling Products Int'l, Inc. Delaware
Sterling Winthrop Ireland
Cook-Waite Laboratories, Inc. Delaware
The d-Con Company, Inc. Delaware
Minwax Company, Inc. New Jersey
Thompson & Formby Inc. Florida
Sterling Pharmaceuticals Inc. Arkansas
The SDI Divestiture Corp. Ohio
Maggioni - Winthrop S.p.A. Italy
Hinds G.m.b.H. Germany
Sterling Winthrop S.A. Spain
Sterling Health Produtos Farmaceuticos, Lda. Portugal
Winthrop Products Inc. Delaware
Sanofi Winthrop Pharmaceuticals Inc. Delaware
Sterling Health Europe S.A. France
Sanofi Winthrop L.P. Delaware
Sanofi Winthrop S.A. Argentina
Sanofi Winthrop Farmaceutica Ltda. Brazil
Sanofi Winthrop Canada
Sanofi Winthrop S.A. de C. V. Mexico
Sterling Health Belgium
Sterling Health Europe S.A. and Co. OHG Germany
Sterling Midy S.p.A. Italy
Sterling Health v.o.f. Netherlands
Sterling Health A.G. Switzerland
Sterling Health Corporation y CIA S.R.C. Spain
Sterling Health A/S Denmark
Sterling Health OY Finland
Sterling Health A/S Norway
Sterling Health AB Sweden
L & F Products (UK) Limited England
L & F Canada Inc. Canada
L & F Products International, Inc. Delaware
L & F Products, Inc. Delaware
L & F Products, Inc. New Jersey
L & F Products Caribbean, Inc. Delaware
L & F Personal Products, Inc. Delaware
S & M France SARL France
Note: Subsidiary Company names are indented under the name of the parent
company.
