Kodak rep imp

Fall

, 2009

Inte

gra

ted

Com

pan

y A

naly

sis

For over one hundred years, Eastman Kodak Company has provided imaging

products to consumers, earning brand equity through innovation. Today, Kodak

struggles with declining revenue and steep restructuring costs as it transitions to

the digital imaging market.

Wisconsin School of Business

975 University Ave

Madison, WI 53706

608-262-1550

Alejandro Castano

Joe Czechowicz

Troy Golden

Matt Johnson Lindsay Kruger

2

Contents

Contents .................................................................................................................................................................................. 2

Executive Summary ................................................................................................................................................................ 4

Company Analysis .................................................................................................................................................................. 5

Organizational Structure ..................................................................................................................................................... 5

Financial Analysis ............................................................................................................................................................... 5

Performance Indicators ................................................................................................................................................... 5

Quality of Financial Statements ...................................................................................................................................... 6

Financing and Capital Structure ...................................................................................................................................... 7

Valuation ......................................................................................................................................................................... 7

Kodak‘s Current Marketing Strategy .................................................................................................................................. 8

Consumer ........................................................................................................................................................................ 8

Positioning ...................................................................................................................................................................... 8

Product ............................................................................................................................................................................ 9

Price ................................................................................................................................................................................ 9

Placement ...................................................................................................................................................................... 10

Promotion ...................................................................................................................................................................... 10

Recommendations ................................................................................................................................................................. 12

Appendix ............................................................................................................................................................................... 14

Exhibit 1 – Products Analysis ........................................................................................................................................... 14

Digital Cameras............................................................................................................................................................. 14

Printers .......................................................................................................................................................................... 15

Digital Picture Frames .................................................................................................................................................. 16

Photo Storage ................................................................................................................................................................ 16

Exhibit 2 – ―It‘s time to smile‖ Campaign ........................................................................................................................ 18

Exhibit 3 – Competitor Endorsements .............................................................................................................................. 22

Exhibit 4 – Economic Value Pricing ................................................................................................................................. 22

Exhibit 5 – Kodak Product Pricing ................................................................................................................................... 22

Exhibit 6 ............................................................................................................................................................................ 23

Point And Shoot Models: Rankings And Price ............................................................................................................. 23

Compiled from ConsumerReports.org .......................................................................................................................... 23

Exhibit 7 – Competitor Business Descriptions ................................................................................................................. 25

Canon Inc. ..................................................................................................................................................................... 25

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Fujifilm Holdings Corp. ................................................................................................................................................ 25

Hewlett-Packard Co. ..................................................................................................................................................... 25

Ricoh Co. Ltd. ............................................................................................................................................................... 25

Sony Corp. .................................................................................................................................................................... 26

Xerox Corp. ................................................................................................................................................................... 26

Nikon Corp. ................................................................................................................................................................... 26

Olympus Corp. .............................................................................................................................................................. 27

Lexmark International Inc. ............................................................................................................................................ 27

Seiko Epson Corp.......................................................................................................................................................... 27

Exhibit 8 – Profitability Scenario Analysis ....................................................................................................................... 28

Exhibit 9: Comparison of accounting methods ................................................................................................................. 30

Exhibit 10: Operating cost breakdown ............................................................................................................................. 31

Exhibit 11 - Cash Conversion Cycle ................................................................................................................................ 32

Exhibit 12 – EK Pro Forma Financial Statements ............................................................................................................ 34

Exhibit 13 – CDG Pro Forma Financial Statements ......................................................................................................... 35

Exhibit 14 – FPEG Pro Forma Financial Statements ........................................................................................................ 36

Exhibit 15 – GCG Pro Forma Financial Statements ......................................................................................................... 37

Exhibit 16 – Segment Valuations and Key Assumptions ................................................................................................. 38

Exhibit 17 – Regression Analysis of Traditional Sales Lines ........................................................................................... 39

Exhibit 18 – Sensitivity Analysis of Stock Price .............................................................................................................. 43

Exhibit 19 – Cash Benefit of Financing Transactions ...................................................................................................... 44

Works Cited .......................................................................................................................................................................... 45

4

Executive Summary Eastman Kodak Co. was founded in 1892 by George Eastman and offers imaging products for leisure,

commercial, entertainment, and scientific purposes. Traded on the New York Stock Exchange (symbol: EK), the

company reported over $9 billion in revenue and $9 billion in assets in FY08. Kodak is organized along three segments:

the Graphic Communications Group (GCG); the Film, Photofinishing, and Entertainment Group (FPEG); and the

Consumer Digital Imaging Group (CDG). Kodak‘s history is one of innovation, but the company was slow to react to the

digital revolution. Kodak has struggled to overcome this legacy ever since.

Through our due diligence, we have uncovered that Kodak must improve gross margins to become profitable in

2010. Our sensitivity analysis shows that sales growth alone will not lead to profitability. We have identified a target

gross margin of 27.5% to become profitable in 2010.

Kodak entered into two financing transactions over the past two months involving convertible debt and warrants.

These transactions allowed Kodak to raise almost $700 million in cash, while saving around $35 million per year in

interest. In exchange for the savings, existing shareholders will potentially give up 25% of the equity value. Kodak also

continues to sell significant assets and intellectual property rights, including its OLED business, a potential next-

generation flat-panel display technology that Kodak pioneered over the last couple of decades (Kodak, 2009).

Kodak positions itself as the user-friendly choice for amateur users of imaging products. The company‘s product

attributes detract from this position. In general, Kodak products are priced below the competition. Kodak‘s lower price,

though offering a benefit to some consumers, signals inferior quality to the market. Kodak‘s placement strategy employs

wide market coverage, ensuring easy access for consumers. Presently, Kodak does not direct consumers to preferred

channels. Kodak recently launched an integrated, multi-media marketing campaign. The campaign touches on multiple

product lines, rather than emphasizing an ‗energizer‘ product.

The following are our key recommendations: (1) redesign Kodak‘s marketing communication message to position

it as the premier provider of imaging solutions that connects the consumer with their loved ones; (2) through marketing

communications, walk the consumer from image capturing, through storage, to sharing, allowing them to process each of

Kodak‘s product offerings; (3) increase marketing focus on digital cameras to leverage brand equity (reposition); (4)

increase prices on digital cameras.

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Company Analysis

Organizational Structure

Eastman Kodak is an international corporation with over 24,000 employees, over $9 billion in annual sales

(FY08), and over $9 billion in assets (FY08).

The company is organized along three segments: the Graphic Communications Group (GCG); the Film,

Photofinishing, Entertainment Group (FPEG); and the Consumer Digital Imaging Group (CDG). Thirty-nine percent of

Kodak‘s revenue comes from the GCG segment, which provides products and services to businesses with large scale

printing operations. Thirty-one percent of Kodak‘s revenue comes from the FPEG segment, which provides traditional

photographic products and services to consumer, professional, and industrial markets. Thirty percent of Kodak‘s revenue

comes from the CDG segment, which provides digital consumer products.

Kodak began in the late nineteenth century with George Eastman‘s advance in dry plate technology, which

allowed photography to become an amateur pursuit. Since then, Kodak has continued to excel in technological

innovation. The company issued over 19,000 U.S. patents between 1900 and 1999. In 1935, Kodak introduced

Kodachrome film, the first commercially successful amateur color film. NASA relied on a Kodak camera to take photos

on the moon and transmit them to earth. Also, Kodak invented the first digital camera in 1975 (Kodak, 2009).

Kodak reacted slowly to the digital revolution. Since the takeoff of digital cameras, Kodak has seen revenues

plummet from $15 billion to $9.4 billion (Butcher, 2009). Kodak has cut 40,000 jobs over the last five years, and plans to

eliminate 3,500 to 4,500 in 2009 (Dobbin, 2009). Since 2003, Kodak has sought to meet this challenge with robust

restructuring programs. Approximately 80% of Kodak revenue is from new products and services developed within the

last five years (Butcher, 2009). Approximately 60% of Kodak employees have been there less than four years (Butcher,

2009).

Financial Analysis

Performance Indicators

Kodak faces the challenge of high restructuring costs and declining demand for its digital products, while trying

to redefine its organizational structure and brand name. On top of company-specific problems, Kodak faces a stiff macro-

economic headwind, as consumers continue to watch their spending on luxury items. To combat these problems, Kodak

has cut costs via layoffs and reductions in R&D expenditures, removed dividend payments to common stockholders and

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targeted its cash conversion cycle. In the near term, Kodak appears to be poorly positioned to handle an extended

economic contraction, and must act immediately to generate additional revenues and profits.

Negatives for FY08 vs. Competitors

Revenues: Kodak experienced revenue growth (pro-forma) of -2.5% and -8.6% in FY07 and FY08, respectively.

The median competitor revenue growth was 6.7% and -8.6% in FY07 and FY08, respectively. We attribute the quicker

revenue decline to the company‘s inability to resonate with consumers.

Rapidly declining gross margins. Since Kodak introduced its ―digital plan‖ in 2003, gross margins have declined

sharply from a high of 36% to the current low of around 20% (23% FY08 vs. competitor median of 36%). The decline in

margins is a pressing issue. We believe our marketing recommendations give Kodak the best chance of survival.

Return-on-Equity (Dupont): Kodak has seen its ROE go from 24.5% in FY02 (vs. 6.6% for competitors) to -

44.4% in FY05 (vs. 10.4% for competitors), to -36.4% (vs. 0.6% for competitors) in FY08. One of the distinguishing

detractors comes from Kodak‘s above median equity multiplier at 5.4x (vs. 2.7x for competitors). As the industry and

economy deteriorated, Kodak suffered from higher financial leverage relative to its peers (3-yr average of 6.4x vs. 2.7x

for competitors) that accelerated the decline of profitability.

Positives for FY08 vs. Competitors

Cash Conversion Cycle (CCC): Kodak has reduced its cash conversion cycle to -5 days for FY08, versus a

competitor median of 82 days (FactSet Research Systems, 2009). Kodak accomplished the improvement in CCC through

extensions of terms on accounts payable, while maintaining steady inventory and days of sales outstanding.

Lean operating costs: Kodak has been successful in cutting SG&A costs as a percentage of sales. By reducing its

workforce, Kodak expects future cost savings of over $300 million. Current operating costs (ex-restructuring and goodwill

write-offs) of 22% are well below Canon (35%), Fujifilm (35%) and Nikon (31%). If Kodak can survive the economic

contraction and continue to operate at current levels in comparison to its competitors, we believe the company can survive

and return to profitability.

Quality of Financial Statements

Kodak reports under US GAAP (Exhibit 9). Inconsistency in Kodak‘s financial reports inhibits the ability to

serially compare and forecast financial performance. Through our due diligence process, we discovered that Kodak is

more aggressive (8%) than Canon in respect to estimating expected returns on assets (6.5%) of pension plan obligations.

7

Restatements: Kodak restated financial statements in 2003 and 2004 due to mistakes in reporting income taxes,

accruals for pensions and other post-retirement benefits due to the rapid turnover (firing) of 15,000 workers. The

restatement reduced reported earnings by $85 million (effect from income tax error - $56 million, effect from pension

errors – $29 million), decreased retained earnings and decreased cash flow from operations.

Reclassifications: Continuous restructuring of the company prevents proper historical comparisons beyond three

years. The reclassifications also introduce discrepancies between segment breakdowns and total firm numbers.

Change in useful life of assets: In the first quarter of 2008, the company performed an updated analysis of

expected useful lives on its traditional film and paper business. This analysis resulted in an increase in useful lives, which

in turn will result in decreasing depreciation expenses ($107 million), increasing net income, increasing retained earnings

and increasing assets in the future.

Impairment of goodwill: In 4Q08, Kodak re-evaluated all of its business segments with an increased WACC

between 18.5% and 23.0% to reflect the rapidly deteriorating environment. Due to the estimated future cash flows being

less than the overall cost of the GCG segment, Kodak reported a pre-tax, non-cash $785 million impairment charge.

Financing and Capital Structure

Many of Kodak‘s financing decisions are being dictated by its weak financial position. The company is relying on

convertible securities and warrants in order to secure debt financing at bearable costs (around 8.5%, Exhibit 19) while

giving up significant upside of around 25% of common stock if the company recovers. Equity financing is not an option

due to the low market value of Kodak‘s common stock relative to its operating and financing cash needs. It has decided to

cut its dividend and discontinue stock repurchases after spending over $450 million of needed cash in 2008.

Valuation

Discounted Cash Flow Analysis

We valuate Kodak‘s stock at $5.32. This makes the share price of $4.40 as of 12/11/09 slightly undervalued. The

DCF analysis was performed using a two-stage model in which we estimated the cash flows for Kodak‘s three business

segments, CDG, FPEG and GCG, through 2018, and then calculated a terminal value based on assumed long-term growth

rates (Exhibits 15).

Kodak has re-organized its business segments repeatedly, making it difficult to compare revenues and costs over a

long period and establish any significant trend at the segment level. Second, the business is undergoing rapid changes as a

result of the technological shift to digital products, which has increased volatility and made it very difficult to establish

8

any kind of even a short-term trend. We ended up using a regression model of Kodak‘s overall revenues with several

factors related to their traditional business segments to predict revenues going forward for GCG and FPEG, which most

closely resemble Kodak‘s traditional combined business lines since 1990 (Exhibit 16). Finally, we believe that our WACC

calculation could be undervaluing Kodak‘s risk based on management expectations for the cost of capital (Kodak, 2009).

Exhibit 17 contains a sensitivity table of the stock value based on WACC and long-term growth rates.

WACC

We estimated a weighted average cost of capital (WACC) of 15.1% for the overall company based on a risk-free

rate of 3.2%, and a market risk premium of 7.4%1 (Kavajecz, 2009, p. 19). We calculated Kodak‘s equity beta of 1.68

from September 2002 through November 2009. We chose this time period to accurately reflect the increased volatility of

Kodak‘s share price relative to the market based on the company‘s digital transition. We also used industry comparables

to estimate the cost of capital for each of Kodak‘s business units, and then increased them by a factor based on the

company WACC, which we assume reflects significant additional risk of bankruptcy as indicated by the stock volatility

relative to the S&P 500 (Exhibit 15).

Kodak’s Current Marketing Strategy

Consumer

Kodak is likely targeting a segment of the consumer market that meets the following criteria: (1) adult, post-

baccalaureate, 25-40 years old; (2) active/ involved; (3) caring about relationships (friends & family); (4) non-

professional, sub-standard skills in photography; (5) high interest in capturing images of life (freeze in time) and sharing

those images in digital or printed form.

Positioning

Kodak‘s marketing decisions (explained below) imply the following positioning statement: Kodak is preferred by

adults who are active, busy and care about meaningful relationships and want to encapsulate and share important

moments in their lives, because Kodak’s products enable them to capture, share, display, and store pictures and create

keepsakes, with more ease than competitors like Canon, Nikon, and Fujifilm.

1 Risk premium over government bonds: 13.0% - 5.6% = 7.4%

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Product

Kodak fails to offer clear, distinguishing benefits to consumers. The company attempts to position itself as a

provider of ‗user-friendly‘ products, typically offering products whose names include the word ‗easy‘. However, some of

Kodak‘s product attributes detract from the credibility of this position (Exhibit 2). Other than a long battery life, the

Kodak EasyShare M1033 digital camera features few differentiating attributes that appeal to the user-friendly consumer.

The Kodak EasyShare 5300 printer has a cumbersome interface and PC Loader tray that lacks built-in networking

capability. Kodak‘s ‗user-friendly‘ position is undermined with products that do not deliver the promised benefit.

Kodak develops products quickly due to its competitive environment. A comprehensive program designed to

include all desirable features is nearly impossible due to the speed at which the industry evolves.

Product types face different risk scenarios depending on their newness to the company and their newness to the

market. Digital cameras are familiar to the market and to Kodak. Thus, a line extension of Kodak‘s digital cameras

creates a risk of cannibalization and a lack of incremental sales. Kodak‘s new approach to printers, with higher upfront

costs and lower ink costs, presents different risks. The product type is new to the market and new to the company,

representing a new to the world concept. Thus, the product introduction is at risk of a lack of company-market fit.

Price

Using the economic pricing model (Exhibit 5), a firm strives to deliver products that demand a price premium

over its competitors. Based on this, we compared the pricing of Kodak‘s core consumer products (digital cameras and

inkjet printers), and its secondary consumer products (digital picture frames and Kodak Gallery), to the pricing of its

direct competitors in each category. In the compact digital camera segment, Kodak‘s products are generally priced below

the products of its most direct competitors of Canon, Nikon, and Fujifilm. For example, Kodak cameras sell in the range

of $80 to $160, while cameras offered by the competitors sell in the range of $110 to $500 (Consumers Union of U.S.,

2009). This price differential implies that Kodak is suffering from negative price differentiation. While a lower price

may offer the benefit of capturing a large portion of the price sensitive consumer, we believe that the lower price signals

lower quality to the consumer, when in actuality Kodak‘s cameras deliver comparable quality to that of its competitors.

According to ConsumerReports.org, Kodak holds four of the top twenty-six spots in the point and shoot digital camera

category, only behind Canon, which dominates the rankings with nine of the top spots—Fujifilm has two cameras ranked

in the top twenty-six, while Nikon has zero (Consumers Union of U.S., 2009). As a result, we believe that there is an

opportunity for Kodak to raise its prices in this segment. The other consumer products do not suffer from negative price

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differentiation, and thus we do not believe an opportunity exists to change the pricing of these products (see Exhibit 6 for

further discussion on pricing of printers, digital frames, and Kodak Gallery products).

Placement

Overall, Kodak‘s placement strategy is similar to that of its competitors, in each of the main consumer product

categories. Digital cameras, inkjet printers, and digital picture frames, are typically sold through each company‘s website,

and through all major retailers such as Best Buy, Target, and Wal-Mart, both in stores and online. The photo storage

products are all offered exclusively online. Kodak‘s placement employs wide market coverage because its products are

easily accessible to all consumers. It is difficult for Kodak to differentiate itself within the placement component of the

marketing framework; however, it is important that it monitors the retailers to ensure both consistency across channels

and alignment of objectives between itself and the retailers.

Promotion

Understanding the consumer

Kodak‘s target consumers have lower levels of expertise than an amateur photographer. They are typically more

concerned about the moments captured in pictures and video rather than the art or technical skills required to do so. These

consumers will likely look to an expert (or perceived expert) in the field of photography for advice if any questions arise.

Thus, the level of involvement of Kodak‘s consumer tends to be low. While in some cases, consumers may do some

research to learn about the product they‘re seeking, this type of research is typically shallow in technicalities or details.

Once these consumers have learned what brands are reliable, where the best deals are, and how to obtain the product, they

are ready to purchase. This is when Kodak must be ready to sell.

Marketing objectives

Increased sales is the ultimate marketing objective for Kodak. At the same time, Kodak‘s promotional strategy

seems to have more specific goals depending on where the consumer is within the buying process. Prior to purchasing,

Kodak wants to represent ‗peace of mind‘, fun, and overall inspiration (Exhibit 3, figure 8). The following historic tag-

lines are indicative of such intentions: ―you press the button, we do the rest‖ in 1888 (Kodak, 2009), ―the Kodak

moment‖, ―Share Moments, Share Life‖ in 2001, and its most recent campaign ―It‘s time to smile‖ (Exhibit 3), which will

run for at least one year. These campaigns fit Kodak‘s aim to offer an easy way for consumers to capture the best

moments of their lives. Kodak also appeals to creative consumers who are interested in creating picture books, cards, t-

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shirts, and the like. These additional, creative options entice the consumer to invest more in Kodak products (Exhibit 3,

figure 3). Hence, after the first purchase, Kodak‘s goal is to create a repeat customer.

Reseller Analysis

The availability of products is vital to Kodak‘s success. Therefore, Kodak must ensure the consumer is directly

connected to preferred retailers whenever they are ready to buy. Unfortunately, that is not always the case in Kodak‘s

current marketing campaign. While Kodak is improving its presence amongst consumers by using several digital

initiatives, it is not always clear what is the best way to obtain the products. There is not always a link or message that

directs consumers to retailers Kodak prefers. Consequently, consumers interested in purchasing Kodak products may find

inconsistent messages while searching for a channel (e.g. prices far lower than Kodak recommends, Exhibit 3, fig. 9).

Marketing Communications

Kodak‘s marketing communications today are focused on triggering emotions and presenting an argument in

favor of some of its product attributes. The company‘s latest campaign, ―It‘s time to smile,‖ stems from the consumer

insight that today‘s work-life balance and the economic situation have negatively impacted relationships (Exhibit 3); even

though, consumers perceive it is easier to connect with friends and family today than it was 5 years ago (thanks to e-mail,

cell phones, and social networks) (Kodak, 2009). Kodak seeks to connect with the consumer at an emotional level and

encourage them to smile and make others smile – all while capturing and sharing their newfound happy moments with

Kodak products. However, the company fails to deliver a clear and differentiating promise that resonates with a

meaningful number of consumers.

Even though Kodak‘s new integrated marketing campaign is present in all major social media channels

(Facebook, Twitter, YouTube) the company‘s number of followers is significantly lower when compared with those of

competitors and other successful brands. On Facebook, as of December 12, 2009, Kodak has 47,342 fans, while Canon

and Nikon have 119,165 and 117,574 respectively. The #1 brand on Facebook, Coca-Cola, dwarfs these numbers with

over four million fans. Kodak cannot afford to lose in the digital space as social media has the powerful effect of creating

communities of ever-growing fans who evangelize the brand – all at a relatively low and fixed cost.

Without fans, the success of the social media initiative is in danger. For example, assume aggressively that the

ideal Kodak consumer spends $200 per year for 20 years in a variety of products totaling $4,000. Also, assume Kodak‘s

contribution margin stays at nearly 25% so each customer is worth $1000 to the company. If an integrated digital

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campaign of the magnitude that Kodak is implementing costs nearly $10 million per year to maintain, the company will

need 10,000 of these consumers to break even (Charlene Li., 2008). At less than 50,000 fans, the conversion rate needed

(20%) is quite high, considering that Facebook claims a conversion rate of only 10% for its advertising (Facebook, 2009).

Even at a more aggressive conversion rate of 15%, Kodak needs much higher numbers to succeed and be profitable.

Currently Kodak does not utilize the services of a celebrity spokesperson. This reduces any risks of brand

confusion or poor representation, commonly associated with endorsements. However, Kodak is betting too much on the

strength of its brand alone, while competitors enlist the help of famous characters like Ashton Kutcher (Nikon), and Maria

Sharapova (Canon) to energize its brand.

Promotion Conclusion

Overall, there seems to be a lack of buzz, energy, top-of-mind awareness, or fuel behind the Kodak brand. The

current marketing campaigns are not driving the number of customers necessary to create the sense of community that

Kodak is expecting, nor generating the revenues the company needs to survive.

Recommendations Kodak fails to position itself as the indisputable solution between today‘s consumers and their need for

connection. Therefore, Kodak must focus on delivering a clearer message, a differentiating promise, and products that

meet such a promise. For example: Kodak is the premier provider of imaging solutions that bring your loved ones within

arm’s reach.

Additionally, Kodak‘s marketing campaign should present one path within the imaging process that allows the

consumer to process the company‘s offerings. For instance, prioritize marketing efforts according to the following process

(1 = highest priority): (1) take great pictures with Kodak digital cameras, (2) print quality pictures for less with Kodak

photo printers (3) store your pictures at the KodakGallery, where you can create unique keepsakes (4) display your

pictures in our industry-leading Kodak digital frames. Instead of overwhelming the consumer with all the options Kodak

has to offer, focusing the message on one product at a time can be more effective for Kodak‘s target consumer.

We feel that additional emphasis should be placed on digital cameras, with the other products—printers, frames,

and Kodak Gallery—supporting digital cameras as complementary products that round-out the digital imaging experience.

Kodak‘s 120-year history as the premier provider of photography products lends itself to this strategy of emphasizing

digital cameras. This focused strategy can be accomplished through changes in each of the components of the marketing

framework, while keeping in mind the desired positioning for Kodak‘s product-line.

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Because Kodak is targeting the novice photographer segment, it is important that its products incorporate easy-to-

use attributes and automatic features that deliver high-quality photos. Currently, Kodak‘s digital cameras compete well

on the number of functions offered yet do not necessarily differentiate themselves. The same holds true for the printer

category with complaints of complicated interfaces, cumbersome loader trays, and a lack of built-in networking

capabilities. Kodak should strive to simplify its products across its entire product line and further educate customers of

the easy-to-use features through its marketing campaign.

Kodak prices its camera products well below the products of its main competitors. On average, Kodak cameras

cost 31%, 132%, and 80% less than products of similar quality in the super-zoom, compact, and subcompact categories,

respectively (Exhibit 6) (Consumers Union of U.S., 2009). Kodak‘s products are consistently ranked comparably to those

of the competition. Thus, Kodak should demand similar prices for its products. Kodak should be able to increase its

prices by at least 20% on the competitively ranked cameras to signal quality to the consumer without decreasing volumes,

thus increasing profitability. This price increase will address the problem Kodak faces with poor gross margins in the

CDG segment, and lead this segment towards profitability in the future. Success with an increased pricing strategy is

dependent on Kodak effectively communicating the brand quality to the consumer.

Kodak is dependent on its resellers to increase awareness and educate the consumers about its products. Kodak

should work closely with its main retailers to encourage promotion of its digital product suite consisting of cameras,

printers, frames, and Kodak Gallery. Kodak must first educate the retail sales representatives on the features of its

products, namely the differentiating features that will focus on the ease-of-use theme. In addition, the products should be

placed strategically within the stores, to encourage bundling of the Kodak product-line.

In promotions, Kodak needs to improve the level of energy behind the Kodak brand. For this purpose, a celebrity

spokesperson could be highly effective. Because Kodak‘s consumer is relatively low involvement and the market is

already cluttered with many reasonable options (Canon, Nikon, Sony, Casio, etc.), a credible spokesperson should serve to

hold the consumer‘s hand and guide them to buy Kodak products.

The current advertising budget may need to be revised, but an increase is not automatically necessary. Kodak

should continue leveraging and improving its presence on the Internet through various digital initiatives.

Kodak implementing these recommendations will lead to increased sales and margins and ultimately allow the

company to regain its position as a world leader in its industry.

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Appendix

Exhibit 1 – Products Analysis

Digital Cameras

Key

Attributes

Kodak

EasyShare

M1033

Canon

Powershot

A1100 IS

Meaningfulness to

Market/Consumer

Point of

Differentiation

Price $140 $140 Consumers value quality

products at an affordable price

n/a

Mega

Pixels

10 12 Consumers value digital cameras

which capture quality images

Negative

Zoom 3x 4x Consumers value digital cameras


Negative

Video Yes, with sound Yes, with

sound

Consumers value digital cameras

which capture quality video

n/a

Battery

Life

220 140 shots Longer battery life lowers cost

and adds convenience, creating

value for the consumer

Positive

Image

Stabilizer

Yes Yes Consumers value digital cameras


n/a

Face

Detection

Yes Yes Consumers value digital cameras

which are easy to use

n/a

Wide

Angle

No No Consumers value digital cameras


n/a

Manual

Controls



n/a

Manual

Focus



n/a

15

Printers

Key

Attributes

Kodak

EasyShare

5300

HP

Photosmart

C6180

Meaningfulness to

Market/Consumer

Point of

Differentiation

Price $199.99 300 Consumers value printers which

are affordable

Positive

Cheaper

Ink

$9.99 for black,

$14.99 for

color

Presently,

ink costs

double or

more;

newly

introduced

ink costs

$14.99 for

black,

$17.99 for

color

Consumers value affordable

printer ink

Positive

Printing

Speed

Marginally

Faster

Consumers value fast printers Negative

Built in

Networking

No Yes Consumers value printers which

are easy to use

Negative

User

Interface

Better Consumers value printers which

are easy to use

Negative

Paper

printing

quality

Consumers value high quality

printers

n/a

Photo

printing

quality

newer photos

better

older

photos

better

Consumers value high quality

printers

n/a

Hardware-

paper tray

worse Consumers value printers which

are easy to use

Negative

16

Digital Picture Frames

Products Compared: Kodak Easyshare 10‖ W1020 Wireless Digital Frame vs. Sony 10.2‖ Widescreen LCD Digital Frame

Attribute: Kodak Sony Meaningfulness to

Market/Consumer

Point of

Differentiation

Does Kodak

have

Credibility?

Built-In

Wi-Fi

Technology

Included Not

included

Important because makes the

product more functional and

easier to use

Positive

Yes, because

Kodak is

known for its

innovation and

excellence in

technology.

Resolution 800x480 1024 x 600

(better)

Higher resolution is perceived as

higher quality Negative

This is an

important

attribute of

digital frames,

and therefore,

Kodak should

likely address

the deficiency

vs. the

competition

Source: www.Kodak.com; www.bestbuy.com

Photo Storage

Key Attributes Kodak

Gallery

Flickr Meaningfulness to

Market/Consumer

Point of

Differentiation

Credibility

Price Purchase of

services

necessary

Free Customers value the ability to

store photos in a safe and

secure way, with ease and at

minimum or no cost.

Negative

Requirements yearly

purchase

None " " Negative

http://www.kodak.com/

http://www.bestbuy.com/

17

Storage Limit No Yes Customers want the ability to

store as many pictures as

possible so they don't have to

delete or move photos

Positive Kodak is a

trusted

company so

customers

believe that

they have the

ability to offer

unlimited

storage with no

problems

Join

Clubs/Groups

No Yes Consumers enjoy connecting

with others whom share

similar interests; provides a

sense of community

Negative

Video Clips Yes No Consumers increasingly use

digital camera devices to take

videos in addition to photos,

so the ability to store videos

is valued

Positive Kodak is

known for its

excellence in

photography

so customers

have

confidence in

its ability to

deliver on

these

attributes.

Albums/Flipbooks Yes No This allows customers to

creatively store and share

their photos as keepsakes

Positive

Prints and Editing Yes No This feature delivers

convenience by allowing

users to store, edit, and print

photos in one central place

Positive

Source: www.kodakgallery.com;

http://www.kodakgallery.com/

18

Exhibit 2 – “It’s time to smile” Campaign

Figure 1 - Reason for campaign. Source: Kodak.com

Figure 2 - Consumer Insight. Source: Kodak.com

19

Figure 3 - Product Portfolio. Source: Kodak.com

Figure 4 - People in need to connect. Source: Kodak.com

20

Figure 5 - Connecting with digital camera. Source: Kodak.com

Figure 6 – Use of social media

Figure 7 – Viral Campaign

21

Figure 8 - Video ads for YouTube and TV. Source: YouTube/Kodak

Figure 9 – sample banner, no link to purchase. Source: tweetPhoto.com

Figure 10 – price advertised on Kodak.com

Figure 11 - Prices of other online retailers

22

Exhibit 3 – Competitor Endorsements

Figure 12 – Ashton Kutche, Nikon

Figure 13 – Maria Sharapova

Exhibit 4 – Economic Value Pricing

According to the economic value-pricing model, a firm‘s product price is a sum of its reference value and its

differentiation value. As such, the reference value for Kodak‘s products is the price of its competitor‘s comparable

products, while differentiation value is the price premium (or discount) captured by Kodak‘s products due to additional

(or fewer) benefits offered, as perceived by the consumer.

Figure 14 - Economic Value Pricing

Exhibit 5 – Kodak Product Pricing

Within the all-in-one inkjet printer category, Kodak‘s prices are slightly higher than those of Hewlett Packard (HP) and

Canon, which is consistent with its current campaign to charge a small premium for the printer, while offering the ink at

significantly lower prices. In addition, to offset the price premium, Kodak is partnering with retailers such as Best Buy to

offer a $50 discount on a printer, when a customer recycles an old printer. The digital picture frame market is highly

fragmented with 15 different brands ranked in the top 20 by Consumer Reports (add works cited). Kodak‘s price range of

$60-$230 is consistent with the pricing of other brands. An exception to this is the pricing of Kodak‘s recently released

wireless OLED frame, which demands an extreme price premium, at a price of $999, because it is the only frame offered

23

to the consumer market, using this advanced technology. Kodak‘s position in the high-end digital frame market is a

significant opportunity for the company going forward. Finally, within the photo storage product market, Kodak‘s prices

are consistent with competitors such as Shutterfly and Flickr, with all three offering unlimited storage and 4x6 prints in

the $.10-$.15 range. However, Kodak is unique in requiring members to make a minimum annual purchase, depending on

the size of their photo storage.

Exhibit 6

Point And Shoot Models: Rankings And Price

Compiled from ConsumerReports.org

Super Zoom Models

Overall

Rank Brand Line Model Family Price Score

Price

Relative

to Kodak

1 Canon PowerShot SX10 IS Super zoom 390 78 56.00%

2 Canon PowerShot SX1 IS Super zoom 550 75 120.00%

4 Casio Exilim EX-H10 Super zoom 300 73 20.00%

5 Casio Exilim EX-FH20 Super zoom 400 73 60.00%

6 Fujifilm Finepix F70 EXR Super zoom 240 72 -4.00%

7 Kodak EasyShare Z950 Super zoom 250 72 0.00%

8 Sony Cyber-shot DSC-H20 Super zoom 280 72 12.00%

16 Samsung HZ10W Super zoom 230 69 -8.00%

21 Olympus Stylus 9000 Super zoom 230 68 -8.00%

Max -8.00%

Min 120.00%

Range 128.00%

Avg 31.00%

Compact Models

Overall


Price

Relative

to Kodak

3 Canon PowerShot G10 Compact 480 74 242.86%

9 Canon PowerShot A1000 IS Compact 170 71 21.43%

13 Panasonic Lumix DMC-TS1 Compact 350 70 150.00%

18 Kodak EasyShare M1033 Compact 140 68 0.00%

20 Canon PowerShot D10 Compact 300 68 114.29%

Min 21.43%

Max 242.86%

Range 221.43%

Avg 132.14%

24

Subcompact Models

Overall


Price

Relative

to Kodak

10 Canon PowerShot

SD1200 IS

ELPH Subcompact 200 71 53.85%

11 Panasonic Lumix DMC-ZR1 Subcompact 240 71 84.62%

12 Fujifilm Finepix F200EXR Subcompact 320 70 146.15%

14 Casio

Exilim

Card EX-S12 Subcompact 200 69 53.85%

15 Canon PowerShot SX110 IS Subcompact 250 69 0.00%

17 Sony Cyber-shot DSC-G3 Subcompact 420 68 223.08%

19 Canon PowerShot SD780 IS ELPH Subcompact 220 68 69.23%

22 Canon PowerShot SD980 IS ELPH Subcompact 330 68 153.85%

23 Sony Cyber-shot DSC-T90 Subcompact 250 67 92.31%

24 Samsung SL102 Subcompact 100 67 -23.08%

25 Kodak EasyShare C160 Subcompact 90 65 -30.77%

26 GE E1250TW Subcompact 160 65 23.08%

27 Kodak EasyShare M320 Subcompact 130 65 0.00%

Min -23.08%

Max 223.08%

Range 246.15%

Avg 79.72%

25

Exhibit 7 – Competitor Business Descriptions2

We chose the following companies as competitors because of the similarities in product type and customer focus. The

following ten companies make up the ―competitor median‖ referenced in the analysis section.

Canon Inc.

Canon Inc. is a manufacturer of business machines, cameras, and optical and other products. Canon offers business

machines including office imaging products, such as office network digital multifunction devices (MFDs), color network

digital MFDs, office copying machines and personal-use copying machines; computer peripherals, including laser beam

printers, inkjet printers and scanners and business information products, such as personal computers, servers, document

scanners, calculators and micrographic equipment. Canon also manufactures and markets digital cameras, film cameras,

digital video camcorders, lenses and various camera accessories. Canon's optical and other products mainly include

semiconductor production equipment, mirror projection mask aligners for liquid crystal display (LCD) panels,

broadcasting equipment, medical equipment, large format printers, and electronic components. On March 31, 2008, it

acquired a 24.9% stake in Hitachi Displays, Ltd. For the nine months ended 30 September 2009, CANON INC.'s revenues

decreased 27% to Y2.255T. The Company's net income decreased 76% to Y70.08B. Revenues reflect lower sales volume

from business machines, cameras and optical & other products business segments. Lower net income also suffers from

higher percentage of cost of sales and SGA expense, as well as significantly decreased interest & dividend income.

Fujifilm Holdings Corp.

FUJIFILM Holdings Corporation is a Japan-based company mainly engaged in the provision of imaging, information and

document solutions. The Company operates in three business segments. The Imaging Solution segment offers color films,

digital cameras, photo-finishing machines, and color papers, chemical and services for instant printing. The information

Solution segment offers medical systems, life-science machinery, graphic system machinery, front panel display

materials, recording media, optical devices, electronic components and inkjet materials. The Document Solution segment

offers printers, copy machines, production service-related products, paper, consumer goods and others. For the six months

ended 30 September 2009, FUJIFILM Holdings Corp.'s revenues decreased 22% to Y1.043T. Net loss totaled Y5.41B, vs.

an income of Y45.38B. Revenues reflect decreased sales from all its business segments. The company's net loss also

suffers from higher percentage of cost of sales and selling, general & administrative expense, decreases interest &

dividend income as well as higher exchange loss.

Hewlett-Packard Co.

Hewlett-Packard Company is a provider of products, technologies, software, solutions and services to individual

consumers, small- and medium-sized businesses (SMBs) and large enterprises, including the public and education sectors.

Its offerings span personal computing and other access devices; imaging and printing-related products and services;

enterprise information technology infrastructure, including enterprise storage and server technology and software that

optimizes business technology investments, and multi-vendor customer services, including technology support and

maintenance, consulting and integration and outsourcing services, as well as application services and business process

outsourcing. During the fiscal year ended October 31, 2008, its operations were organized into seven business segments:

Enterprise Storage and Servers, HP Services, HP Software, the Personal Systems Group, the Imaging and Printing Group,

HP Financial Services and Corporate Investments. For the fiscal year ended 31 October 2009, Hewlett- Packard

Company's revenues fell 3% to $114.40B. Revenues reflect a decrease in income from Company's Products & Services.

Hewlett-Packard Company is a provider of Products, technologies, software, solutions & services to individual

consumers, small & medium-sized businesses & large enterprises, including the public and education sectors.

Ricoh Co. Ltd.

Ricoh Company, Ltd. (Ricoh) is engaged in the manufacturing of office automation equipment. Ricoh's principal products

include copiers (such as plain paper copiers (PPCs)), printers (multi-functional printers (MFPs), laser printers and

2 Source: Reuters

26

GELJET printers), production printing products and facsimile machines. Ricoh is also a manufacturer of digital and

advanced electronic devices such as semiconductor devices. Ricoh supports its office and production printing equipment

businesses by offering customers various solution systems that work with personal computers (PC) and servers, and

related product support and after-sales services to assist customers in utilizing the Ricoh products that they purchase.

Ricoh also offers various supplies and peripheral products to be used with its products and systems. Ricoh operates in

three segments: Imaging and Solutions, Industrial Products and Other. In August 2008, Ricoh Elemex Corporation

becomes a wholly owned subsidiary of the Company. For the six months ended 30 September 2009, RICOH

COMPANY,LTD.'s revenues decreased 7% to Y988.79B. The Company's net income decreased 95% to Y1.81B.

Revenues reflect lower sales from image & solution, industrial and other business segments due to unfavorable business

environment. Net income also suffers from higher percentage of selling, general & admin expenses, as well as increased

interest expenses.

Sony Corp.

Sony Corporation (Sony) is engaged in the development, design, manufacture and sale of various kinds of electronic

equipment, instruments and devices. Sony operates in five segments: Electronics, which develops, designs, manufactures

and sells electronic equipment, instruments and devices for consumer and professional markets; Games, in which Sony

Computer Entertainment Inc. (SCEI) develops, produces, markets and distributes PlayStation 2 (PS2), PSP (PlayStation

Portable) (PSP) and PLAYSTATION 3 (PS3) hardware and related software; Pictures, which encompasses motion picture

production and distribution, television production and distribution, and digital content creation and distribution; Financial

Services, which includes the activities of Sony Financial Holdings Inc. (SFH), and All Other, which comprises Sony

Music Entertainment (SME) and Sony Music Entertainment (Japan) Inc. (SMEJ). On October 1, 2008, it acquired

Bertelsmann's 50% interest in SONY BMG MUSIC ENTERTAINMENT (SONY BMG). For the six months ended 30

September 2009, SONY CORPORATION's revenues decreased 20% to Y3.261T. Net loss totaled Y63.40B, vs. an

income of Y55.79B. Revenues reflect decreased sales volume from United States and Europe markets. The Company's net

loss also suffers from higher percentage of selling, general and administration expenses, increased interest expenses, as

well as decreased interest & dividend income.

Xerox Corp.

Xerox Corporation (Xerox) is engaged in developing, manufacturing, marketing, servicing and financing a range of

document equipments, software, solutions and services. Digital systems include printing and publishing systems; digital

presses, advanced and basic multifunctional devices (MFD's), which can print, copy, scan and fax; digital copiers; laser

and solid ink printers, and fax machines. The Company provides software and workflow solutions with which businesses

can print books, create personalized documents for their customers, and scan and route digital information. Xerox also

offers software, support and supplies, such as toner, paper and ink. The Company operates in three business segments:

production, office and other. During the year ended December 31, 2008, the Company completed the acquisition of

Veenman B.V. (Veenman) and Global Imaging Systems, Inc. (GIS). For the nine months ended 30 September 2009,

Xerox Corporation's revenues decreased 17% to $10.96B. Net income increased 33% to $305M. Revenue reflects a

decrease in revenues from production, office and other segments. Net income reflects a decrease in cost of sales &

services, lower equipment financing interest, a decrease in selling, administrative & general expenses and lower litigation

charges.

Nikon Corp.

NIKON CORPORATION is a Japan-based company mainly engaged in the manufacture and sale of optical products. The

Company is active in four business segments. The Precision Apparatus segment offers semiconductor exposure apparatus

and liquid crystal (LC) exposure apparatus. The image segment provides digital cameras, film cameras and

interchangeable lens. The Instruments segment offers microscopes, measuring machines and semiconductor inspection

equipment. The Others segment provides glass materials, telescopes, glasses and survey airplanes. The Company has 65

subsidiaries and 10 associated companies in the country and overseas markets. As of August 19, 2009, the Company held

27

a 92.17% stake in Metis NV. For the six months ended 30 September 2009, NIKON CORPORATION's revenues

decreased 24% to Y368.09B. The Company's net loss totaled Y17.67B, vs. an income of Y33.62B. Revenues reflect lower

sales from precision equipment business and imaging product business. Net loss also suffers from higher percentage of

cost of sales and SGA expense, significantly increased exchange loss, as well as the presence of Y1.35B loss on business

reorganization.

Olympus Corp.

OLYMPUS CORPORATION is a Japan-based manufacturer engaged in five main business segments. Its Imaging

segment offers digital cameras, film cameras and voice recorders. The Medical segment offers medical endoscopes,

surgical endoscopes, endoscope disposal equipment and ultrasonic endoscopes. The Life Science segment offers clinical

hemanalysis systems, biological microscopes and industrial microscopes. The Information Communication segment sells

semiconductor-related equipment, electronic machines, network systems an d mobile terminals, such as cellular phones,

as well as provides mobile solutions and mobile contents services. The Others segment offers industrial endoscopes,

nondestructive inspection equipment, printers and bar code scanners, as well as develops systems. In August 2009, the

Company transferred its analytical instrumentation business to its wholly owned subsidiary, which has been engaged in

the manufacturing and sale of clinical laboratory examination equipment. For the six months ended 30 September 2009,

OLYMPUS CORPORATION's revenues decreased 19% to Y435.42B. The Company's net income totaled Y36.19B, up

from Y3.60B. Revenues reflect lower sales from imaging, medical and life science business segments. Net income

benefits from a lower percentage of SG&A expenses, decreased foreign exchange losses, and the presence of Y46.27B

gains on transfer of business.

Lexmark International Inc.

Lexmark International, Inc.(Lexmark) is engaged in developing, manufacturing and supplying printing and imaging

solutions for offices and homes. Its products include laser printers, inkjet printers, multifunction devices, and associated

supplies, services and solutions. Lexmark develops and owns the technology for its laser and inkjet products and related

solutions. Lexmark also sells dot matrix printers for printing single and multi-part forms by business users. The Company

operates in the office products industry. The Company is primarily managed along divisional lines: the Printing Solutions

and Services Division and the Imaging Solutions Division. Lexmark's products are sold in more than 150 countries in

North and South America, Europe, the Middle East, Africa, Asia, the Pacific Rim and the Caribbean. For the nine months

ended 30 September 2009, Lexmark International, Inc.'s revenues decreased 19% to $2.81B. Net income decreased 61%

to $86.2M. Revenues reflect a decrease in income from sales volume of the Company. Net income also reflects decreased

operating margin, an increase in restructuring & related charges, the presence of net impairment losses on securities and

the presence of interest expense net vs. an interest income net.

Seiko Epson Corp.

SEIKO EPSON CORPORATION is a Japan-based company primarily involved in the development, manufacture and sale

of information equipment, electronic devices and precision equipment. The Company operates in four business segments.

The Information Equipment segment offers printers, liquid crystal display (LCD) projectors and personal computers,

among others. The Electronic Devices segment provides thin-film transistor (TFT) LCD panels, crystal devices and

semiconductors. The Precision Equipment segment offers watches and plastic lens under the brand name Seiko, as well as

factory automation (FA) equipment. The Others segment is engaged in the distribution and transportation services, the

provision of maintenance services for facilities, as well as the insurance agency and travel agency businesses. For the six

months ended 30 September 2009, Seiko Epson Corporation's revenues decreased 27% to Y449.63B. The Company's net

loss totaled Y29.19B, vs. an income of Y11.72B. Revenues reflect lower sales especially from electronic device business

segment. Net loss also suffers from a higher percentage of selling, general & administrative expenses, as well as the

presence of Y2.42B impairment losses.

28

Exhibit 8 – Profitability Scenario Analysis

29

30

Exhibit 9: Comparison of accounting methods

International Comparison of Accounting Standards-Overview of Major Japanese GAAP, IAS/IFRS, and US GAAP

Accounting Standards Items Japanese GAAP IAS/IFRS US GAAP

Financial Instruments

Measurement of securities Fair value or amortized cost (bonds)

depending on category

Fair value or amortized cost (bonds)


Fair value or amortized cost (bonds)


Estimating potential credit

losses/impairment Discounted future cash flows Discounted future cash flows Discounted future cash flows

Derecognition of financial assets Legal isolation required (financial-

component approach)

Legal isolation not required (primarily risks

and rewards approach)

Legal isolation required (financial-

component approach)

Measurement of derivatives Fair value Fair value Fair value

Hedge accounting When hedging criteria are met When hedging criteria are met When hedging criteria are met

Business Combinations

Basic method Purchase method Purchase method Purchase method

Pooling of interests method Exceptionally used only when strict criteria

are met Purchase method only Purchase method only

Goodwill Strictly amortized with impairment Not amortized, impairment only Not amortized, impairment only

Impairment of Assets

Grouping

Lowest level (smallest identifiable group of

assets) for which cash flows are largely

independent of cash flows of other assets







Indication of impairment Assessed Assessed Assessed

Recognition test Undiscounted future cash flows Recoverable amount (higher of net selling

price and value in use) Undiscounted future cash flows

Measurement Recoverable amount (higher of net selling

price and value in use)

Recoverable amount (higher of net selling

price and value in use) Fair value

Reversal of impairment losses Prohibited Reversed (excluding goodwill) Prohibited

Retirement benefits

Recognition of liability

Retirement benefit obligation adjusted for

unrecognized actuarial gains/losses and past

service cost, minus plan assets







Actuarial gains/losses Strictly amortized without corridor Corridor amortization Corridor amortization

Recognition of additional minimum

liability Not recognized Not recognized Unfunded accumulated benefit obligations

Income Taxes Basic method Asset liability method Asset liability method Asset liability method

Recording of deferred tax assets Based on recoverability/realizability Based on recoverability/realizability Based on recoverability/realizability

Research & Development Development costs Expensed when incurred Capitalized Expensed when incurred

Consolidated Financial

Statements

Scope of subsidiaries Based on control Based on control Based on majority voting interest

Presentation of minority interests Between liability and equity Equity Between liability and equity (under

deliberation to change to equity

Investment Property Measurement Cost Fair value or cost Generally cost

Indicates inconsistency

Source: IASplus.com

31

Exhibit 10: Operating cost breakdown

Operating costs as % of sales (ex-restructuring/other)

FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01

Kodak 22% 22% 23% 24% 25% 25% 25% 25%

Canon 35% 33% 33% 33% 34% 36% 36% 34%

FujiFilm 35% 32% 32% 33% 32% 33% 33% 32%

Nikon 31% 28% 27% 27% 28% 31% 34%

SG&A (ex-advertising) as % of sales


Kodak 13.1% 13.3% 15.0% 15.1% 14.7% 14.9% 14.5% 14.5%

Canon 23.3% 22.1% 22.3% 22.5% 22.6% 24.9% 25.5% 24.5%

FujiFilm 26.6% 24.7% 24.8% 24.6% 23.6% 24.0% 24.3% 24.2%

Nikon 15.2% 14.2% 14.7% 15.3% 16.1% 18.7% 20.6%

Advertising costs as % of sales


Kodak 3.7% 3.8% 3.0% 3.4% 3.8% 4.5% 4.9% 4.8%

Canon 2.8% 3.0% 2.8% 2.8% 3.2% 3.1% 2.4% 2.3%

FujiFilm 1.0% 1.0% 1.3% 1.5% 1.9% 1.8% 2.1% 2.2%

Nikon 8.5% 7.9% 7.0% 6.4% 6.7% 6.1% 7.1%

R/D costs as % of sales


Kodak 5.3% 5.2% 5.3% 5.9% 6.3% 5.6% 5.9% 5.9%

Canon 9.1% 8.2% 7.4% 7.6% 7.9% 8.1% 7.9% 7.5%

FujiFilm 7.9% 6.6% 6.4% 6.8% 6.6% 6.8% 6.3% 6.1%

Nikon 7.0% 6.1% 5.7% 5.1% 5.3% 6.0% 5.9%

Restructuring costs as % of sales


Kodak 1.5% 5.3% 3.5% 4.8% 5.1% 3.6% 0.8% 5.0%

Canon 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

FujiFilm 0.0% 0.0% 3.4% 3.2% 0.0% 0.0% 0.0% 0.0%

Nikon 0.0% 0.1% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0%

Source: Company reports, Factset Fundamentals

32

Exhibit 11 - Cash Conversion Cycle Days of Sales Outstanding (DSO) 3 Yr Avg FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01

Eastman Kodak Co. 72 days 71 days 82 days 75 days 68 days 67 days 63 days 65 days 69 days

Canon Inc. 63 days 62 days 64 days 62 days 63 days 62 days 61 days 59 days 59 days

FUJIFILM Holdings Corp. 77 days 80 days 77 days 77 days 75 days 77 days 75 days 77 days 85 days

Hewlett-Packard Co. 73 days 72 days 70 days 72 days 74 days 78 days 70 days 60 days 61 days

Ricoh Co. Ltd. 115 days 120 days 114 days 117 days 120 days 105 days 86 days 90 days 93 days

Sony Corp. 51 days 48 days 53 days 51 days 50 days 53 days 50 days 53 days 59 days

Xerox Corp. 117 days 108 days 112 days 116 days 120 days 128 days 132 days 133 days 142 days

Nikon Corp. 62 days 56 days 58 days 62 days 64 days 69 days 79 days 79 days 90 days

Olympus Corp. 61 days 64 days 61 days 61 days 58 days 59 days 62 days 63 days 62 days

Lexmark International Inc. 45 days 41 days 43 days 44 days 49 days 47 days 47 days 55 days 57 days

Seiko Epson Corp. 56 days 51 days 54 days 59 days 58 days 57 days 54 days 62 days -

Mean 72 days 70 days 72 days 72 days 73 days 73 days 71 days 72 days 78 days

EK (+/-) 0 days 0 days 10 days 2 days -5 days -6 days -7 days -7 days -9 days

Median 63 days 64 days 64 days 62 days 64 days 67 days 63 days 63 days 66 days

EK (+/-) 10 days 6 days 17 days 12 days 4 days 0 days 0 days 2 days 3 days

Days of Inventory on Hand (DIO) 3 Yr Avg FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01













EK (+/-) -23 days -24 days -19 days -19 days -23 days -29 days -35 days -35 days -32 days


EK (+/-) -7 days -12 days -9 days -3 days -8 days -10 days -9 days -8 days -8 days

Days of Payables Outstanding (DPO) 3 Yr Avg FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01













EK (+/-) -7 days 47 days 30 days -34 days -39 days -41 days -42 days -38 days -42 days


EK (+/-) 0 days 50 days 35 days -24 days -30 days -28 days -45 days -43 days -43 days

Cash Conversion Cycle 3 Yr Avg FY08 FY07 FY06 FY05 FY04 FY03 FY02 FY01

Eastman Kodak Co. 53 days -5 days 24 days 87 days 81 days 77 days 75 days 83 days 98 days





33

Sony Corp. -11 days -4 days -7 days -12 days -14 days -16 days -17 days -14 days 1 days





Seiko Epson Corp. 76 days 83 days 78 days 81 days 73 days 67 days 69 days 83 days


EK (+/-) -15 days -71 days -39 days 17 days 11 days 6 days 0 days -4 days 1 days


EK (+/-) -15 days -86 days -42 days 20 days 15 days 10 days 5 days 0 days 12 days

34

Exhibit 12 – EK Pro Forma Financial Statements EK Financial Statement projections - Continuing Operations

(Fiscal year ends 12/31) 2006 2007 2008 2009E* 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Revenue $10,568.0 $10,301.0 $9,416.0 $7,434.2 $8,125.1 $8,133.3 $7,912.6 $7,622.6 $7,314.5 $7,001.6 $6,706.0 $6,430.5 $6,179.0

COGS 7,825.0 7,628.0 7,275.0 6,037.3 6,221.7 6,128.4 5,964.2 5,725.9 5,470.4 5,207.4 4,953.4 4,709.9 4,479.6

Gross Profit 2,743.0 2,673.0 2,141.0 1,396.8 1,903.4 2,005.0 1,948.4 1,896.7 1,844.1 1,794.2 1,752.6 1,720.6 1,699.4

SG&A (excl. Advertising) 1,567.0 1,378.0 1,236.0 970.3 1,063.0 1,059.4 1,023.3 977.2 928.5 879.1 831.9 787.3 745.9

Advertising 366.0 394.0 350.0 254.8 273.9 283.1 289.2 294.7 300.1 305.3 311.4 318.2 325.8

R&D 578.0 549.0 501.0 364.0 395.2 400.7 397.9 392.5 386.7 380.6 375.4 371.3 368.4

EBIT 232.0 352.0 54.0 (192.3) 171.3 261.8 238.0 232.3 228.9 229.1 233.9 243.8 259.4

D&A 1,195.0 785.0 500.0 470.2 448.1 430.2 416.2 407.2 399.7 393.5 388.5 384.6 381.7

EBITDA 1,427.0 1,137.0 554.0 277.9 619.4 692.0 654.2 639.5 628.6 622.6 622.4 628.3 641.1

NOPAT (EBIT * (1-tax)) 191.4 290.4 44.6 (158.6) 141.3 216.0 196.4 191.6 188.8 189.0 193.0 201.1 214.0

D&A 1,195.0 785.0 500.0 470.2 448.1 430.2 416.2 407.2 399.7 393.5 388.5 384.6 381.7

Restructuring (after tax) 618.8 547.0 122.9 133.4 121.9 116.7 114.2 113.0 112.4 112.1 112.0 111.9 111.9

Cap-Ex 335.0 259.0 254.0 254.0 254.0 254.0 254.0 254.0 254.0 254.0 254.0 254.0 254.0

Free Cash Flow (excl dividends) $432.7 $269.4 $167.6 ($75.8) $213.5 $275.5 $244.3 $231.8 $222.1 $216.4 $215.5 $219.8 $229.8

Margin Analysis

Gross Margin 26.0% 25.9% 22.7% 18.8% 23.4% 24.7% 24.6% 24.9% 25.2% 25.6% 26.1% 26.8% 27.5%

SG&A margin 18.3% 17.2% 16.8% 16.5% 16.5% 16.5% 16.6% 16.7% 16.8% 16.9% 17.0% 17.2% 17.3%

R&D margin 5.5% 5.3% 5.3% 4.9% 4.9% 4.9% 5.0% 5.1% 5.3% 5.4% 5.6% 5.8% 6.0%

EBIT margin 2.2% 3.4% 0.6% -2.6% 2.1% 3.2% 3.0% 3.0% 3.1% 3.3% 3.5% 3.8% 4.2%

EBITDA margin 11.3% 7.6% 5.3% 6.3% 5.5% 5.3% 5.3% 5.3% 5.5% 5.6% 5.8% 6.0% 6.2%

Key Assumptions:

* 2009 assumptions are based on results through Q3 2009 with a seasonality uptick for the fourth quarter.

Key cash flow assumptions stated for segments below. Note that these are pro forma numbers and there might be immaterial differences with the aggregated

segments due to slightly different treatment of ―Other‖ income and expense items.

35

Exhibit 13 – CDG Pro Forma Financial Statements Consumer Digital Imaging Group (CDG) - Continuing Operations


Revenue 3,013.0 3,247.0 3,088.0 2,390.1 2,525.1 2,695.9 2,886.2 3,085.4 3,289.9 3,493.0 3,705.3 3,926.4 4,153.6

COGS 2,491.2 2,419.0 2,495.0 2,007.7 2,020.1 2,048.8 2,193.5 2,322.7 2,452.2 2,576.9 2,704.4 2,834.0 2,963.3

Gross Profit 521.8 828.0 593.0 382.4 505.0 647.0 692.7 762.7 837.7 916.0 1,000.9 1,092.4 1,190.3

SG&A (excl. Advertising) 378.8 358.6 345.0 267.0 282.1 301.2 322.5 344.7 367.6 390.2 414.0 438.7 464.1

Advertising 219.6 236.4 210.0 167.3 176.8 188.7 202.0 216.0 230.3 244.5 259.4 274.9 290.8

R&D 281.0 250.0 215.0 166.4 175.8 187.7 200.9 214.8 229.1 243.2 258.0 273.4 289.2

EBIT (357.6) (17.0) (177.0) (218.3) (129.7) (30.6) (32.8) (12.8) 10.8 38.1 69.6 105.5 146.3

D&A 188.0 92.0 105.0 94.5 89.8 87.5 87.5 91.3 95.1 99.2 103.4 107.8 112.4

EBITDA (169.6) 75.0 (72.0) (123.8) (39.9) 56.9 54.8 78.5 105.9 137.3 173.0 213.3 258.7

NOPAT (EBIT * (1-tax)) (295.1) (14.0) (146.0) (180.1) (107.0) (25.2) (27.0) (10.6) 8.9 31.4 57.4 87.1 120.7

D&A 188.0 92.0 105.0 94.5 89.8 87.5 87.5 91.3 95.1 99.2 103.4 107.8 112.4


Cap-Ex 102.0 94.0 96.0 100.1 104.3 108.8 113.4 118.2 123.3 128.5 134.0 139.7 145.6

Free Cash Flow (291.7) (69.7) (171.7) (223.8) (155.8) (79.1) (84.7) (68.9) (50.4) (29.0) (4.2) 24.2 56.5

Margin Analysis

Gross Margin 17.3% 25.5% 19.2% 16.0% 20.0% 24.0% 24.0% 24.7% 25.5% 26.2% 27.0% 27.8% 28.7%

SG&A margin (incl. Advertising) 19.9% 18.3% 18.0% 18.2% 18.2% 18.2% 18.2% 18.2% 18.2% 18.2% 18.2% 18.2% 18.2%

R&D margin 9.3% 7.7% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0%

EBIT margin -11.9% -0.5% -5.7% -9.1% -5.1% -1.1% -1.1% -0.4% 0.3% 1.1% 1.9% 2.7% 3.5%

EBITDA margin -5.6% 2.3% -2.3% -5.2% -1.6% 2.1% 1.9% 2.5% 3.2% 3.9% 4.7% 5.4% 6.2%

Key Assumptions:

Sales for CDG follow are 1.5x CBO GDP projections. (Congressional Budget Office)

36

Exhibit 14 – FPEG Pro Forma Financial Statements Film, Photofinishing and Entertainment Group (FPEG) - Continuing Operations


Revenue 4,254.0 3,632.0 2,987.0 2,456.5 2,727.7 2,648.4 2,448.0 2,209.3 1,959.4 1,707.7 1,460.0 1,217.8 984.4

COGS 2,853.8 2,771.0 2,335.0 1,965.2 2,100.3 2,039.3 1,884.9 1,701.2 1,508.7 1,314.9 1,124.2 937.7 758.0

Gross Profit 1,400.2 861.0 652.0 491.3 627.4 609.1 563.0 508.1 450.7 392.8 335.8 280.1 226.4


Advertising 128.1 137.9 122.5 74.0 82.1 79.8 73.7 66.5 59.0 51.4 44.0 36.7 29.6

R&D 33.0 60.0 52.0 42.8 47.5 46.1 42.6 38.5 34.1 29.7 25.4 21.2 17.1

EBIT 729.6 281.0 196.0 143.1 240.7 233.7 216.0 194.9 172.9 150.7 128.8 107.5 86.9

D&A 498.0 379.0 193.0 173.7 156.3 140.7 126.6 114.0 102.6 92.3 83.1 74.8 67.3

EBITDA 1,227.6 660.0 389.0 316.8 397.0 374.4 342.6 308.9 275.5 243.0 211.9 182.2 154.2

NOPAT (EBIT * (1-tax)) 602.0 231.8 161.7 118.0 198.6 192.8 178.2 160.8 142.6 124.3 106.3 88.7 71.7

D&A 1,195.0 785.0 500.0 470.2 448.1 430.2 416.2 407.2 399.7 393.5 388.5 384.6 381.7


Cap-Ex 56.0 65.0 40.0 36.4 38.5 37.9 36.5 34.7 32.7 30.6 28.4 26.0 23.6

FCF 974.0 500.5 285.0 222.6 287.0 267.7 241.1 213.2 185.7 159.4 134.4 110.8 88.8

Margin Analysis

Gross Margin 32.9% 23.7% 21.8% 20.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0% 23.0%


R&D margin 0.8% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7% 1.7%

EBIT margin 17.2% 7.7% 6.6% 5.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8%

EBITDA margin 28.9% 18.2% 13.0% 12.9% 14.6% 14.1% 14.0% 14.0% 14.1% 14.2% 14.5% 15.0% 15.7%

37

Exhibit 15 – GCG Pro Forma Financial Statements Graphic Communications Group (GCG) - Continuing Operations


Revenue 3,287.0 3,413.0 3,334.0 2,580.5 2,865.3 2,782.1 2,571.5 2,320.8 2,058.3 1,793.9 1,533.7 1,279.3 1,034.0

COGS 2,480.0 2,438.0 2,445.0 2,064.4 2,101.3 2,040.2 1,885.8 1,702.0 1,509.4 1,315.6 1,124.7 938.2 758.3

Gross Profit 807.0 975.0 889.0 516.1 764.0 741.8 685.7 618.8 548.8 478.3 409.0 341.1 275.7


Advertising 18.3 19.7 17.5 13.5 15.0 14.6 13.5 12.2 10.8 9.4 8.1 6.7 5.4

R&D 200.0 214.0 231.0 154.8 171.9 166.9 154.3 139.2 123.5 107.6 92.0 76.8 62.0

EBIT (90.0) 104.0 31.0 (124.0) 53.2 51.7 47.8 43.1 38.3 33.3 28.5 23.8 19.2

D&A 221.0 195.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0

EBITDA 131.0 299.0 224.0 69.0 246.2 244.7 240.8 236.1 231.3 226.3 221.5 216.8 212.2

NOPAT (EBIT * (1-tax)) (74.3) 85.8 25.6 (102.3) 43.9 42.7 39.4 35.6 31.6 27.5 23.5 19.6 15.9

D&A 221.0 195.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0 193.0


Cap-Ex 142.0 98.0 118.0 104.7 104.7 104.7 100.7 95.8 90.4 84.6 78.4 71.9 65.0

FCF (26.6) 135.0 60.2 (58.5) 92.2 93.0 94.7 96.2 97.8 99.7 101.9 104.5 107.7

Margin Analysis

Gross Margin 24.6% 28.6% 26.7% 20.0% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7% 26.7%


R&D margin 6.1% 6.3% 6.9% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0% 6.0%

EBIT margin -2.7% 3.0% 0.9% -4.8% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9% 1.9%

EBITDA margin 4.0% 8.8% 6.7% 2.7% 8.6% 8.8% 9.4% 10.2% 11.2% 12.6% 14.4% 16.9% 20.5%

38

Exhibit 16 – Segment Valuations and Key Assumptions

Business Segment CDG FPEG GCG Combined

Long-term growth rate 2.5% 0.0% 2.5% 1.50%

Reasoning

Grows slightly less than overall economy. Reflects transition to digital

products and increased adoption of

cell phones as primary cameras.

Traditional business slowly being replaced by digital filming

techniques. Kodak is involved in these

business lines because they make sensors for cameras, but long-term we

do not believe there will be any

growth in this business.

There will always be a need for commercial printing, but the business

should grow at a slower rate than the

overall economy, which we are assuming to grow at a long-term rate

of 3%

Weighted average based on current assets.

Total Shares Outstanding for EK 268.19 268.19 268.19 268.19

Scenario 1 - No restructuring, gross debt

WACC (levered) 15.8% 12.5% 12.8% 13.5%

Value (148.0) 1,508.1 952.2 2,312.3

Value per Share ($0.55) $5.62 $3.55 $8.62

Scenario 2 - No restructuring, net debt

WACC (levered) 17.7% 14.0% 14.4% 15.1%

Value (149.9) 1,392.4 847.7 2,090.2

Value per Share ($0.56) $5.19 $3.16 $7.79

Scenario 3 - Restructuring, gross debt

WACC (levered) 15.8% 12.5% 12.8% 13.5%

Value (324.9) 1,265.9 649.2 1,590.2

Value per Share ($1.21) $4.72 $2.42 $5.93

Scenario 4 - Restructuring, net debt

WACC (levered) 17.7% 14.0% 14.4% 15.1%

Value (312.5) 1,167.3 571.7 1,426.5

Value per Share ($1.17) $4.35 $2.13 $5.32

Scenario 5 - Management Guidance WACC

WACC (levered) 23.0% 18.2% 18.7% 19.6%

Value (293.8) 959.2 423.0 1,088.4

Value per Share ($1.10) $3.58 $1.58 $4.06

A5 stock valuation

39

Exhibit 17 – Regression Analysis of Traditional Sales Lines

We performed a regression analysis of Kodak using data on magazine and newspaper circulation, internet users, and GDP. We were not able to generate any

meaningful regression results by looking at individual segments because of Kodak‘s continuous reorganizations. The data sets were chosen because they show

clear trends that can be projected forward and relate directly to Kodak‘s customers, except for internet users, which we picked as a general proxy for the transition

from traditional imaging and media to digital. People do not buy printers and digital cameras unless they have a computer.

(Magazine Publishers of America)

0

50

100

150

200

250

300

350

400

1985 1990 1995 2000 2005 2010

Mill

ion

s

Year

Magazines

Subscription

Single Copy

Total

40

(Newspaper Association of America)

(Newspaper Association of America)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1990 1995 2000 2005

U.S. Newspaper Circulation (000's)

900

902

904

906

908

910

912

914

916

918

920

1998 2000 2002 2004 2006 2008 2010

Total Newspapers

41

(Miniwatts Marketing Group)

The regression output shows that Newspapers, Circulation, and the natural log of Internet users are all significant predictors of Kodak‘s consolidated revenues.

Sales should roughly follow the following equation:

113566.3 - 159.535 *(Newspapers) + 666.5 *(Circulation) + 977.8 *LN(Internet_Users)

We used this along with simple projections based on newspaper circulation and internet user data to predict revenues going forward.

SUMMARY

OUTPUT

Regression Statistics

Multiple R 0.93

R Square 0.86

Adjusted R Square 0.83

Standard Error 913.95

Observations 19

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1800.0

1994 1996 1998 2000 2002 2004 2006 2008 2010

Mill

ion

s

Year

Internet Users

42

ANOVA

df SS MS F Significance F

Regression 3 74772215.47 24924071.82 29.83807635 1.43957E-06

Residual 15 12529664.21 835310.9475

Total 18 87301879.68

Coefficients

Standard

Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

Intercept 113,566.3 26,499.0 4.2857 0.0007 57,085.1 170,047.5 57,085.1 170,047.5

Newspapers -159.5 32.7 -4.8780 0.0002 -229.2 -89.8 -229.2 -89.8

Circulation 666.5 97.1 6.8663 0.0000 459.6 873.4 459.6 873.4

LN(Internet users) 977.8 231.8 4.2180 0.0007 483.7 1,471.9 483.7 1,471.9

43

Exhibit 18 – Sensitivity Analysis of Stock Price

We performed multiple sensitivity analyses to give an idea of what the company is worth under different assumptions. The first one looks at the WACC sensitivity

with and without estimated restructuring charges reflected in free cash flows. Diluted Values reflect complete conversion of KKR warrants and convertible debt

even though effective strike prices are $5.50 and $7.41, respectively.

With Restructuring Charges

WACC 13% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0%

Stock Value $6.06 $5.69 $5.34 $5.03 $4.73 $4.46 $4.20 $3.97 $3.74 $3.54 $3.35

Diluted Value $4.54 $4.27 $4.01 $3.77 $3.55 $3.34 $3.15 $2.97 $2.81 $2.65 $2.51

Without Restructuring Charges

WACC 13% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0%

Stock Value $8.81 $8.30 $7.83 $7.39 $6.99 $6.61 $6.26 $5.94 $5.64 $5.35 $5.09

Diluted Value $6.61 $6.23 $5.87 $5.54 $5.24 $4.96 $4.70 $4.45 $4.23 $4.01 $3.82

This second sensitivity analysis looks at the weighted-average terminal growth rate of the three business segments vs. the company WACC.

WACC

$5.32 13% 14.0% 15.0% 16.0% 17.0% 18.0% 19.0% 20.0% 21.0% 22.0% 23.0%

Growth 0.50% $5.88 $5.52 $5.19 $4.89 $4.60 $4.34 $4.09 $3.86 $3.65 $3.45 $3.27

1.00% $5.96 $5.60 $5.26 $4.95 $4.66 $4.39 $4.14 $3.91 $3.70 $3.49 $3.30

1.50% $6.06 $5.69 $5.34 $5.03 $4.73 $4.46 $4.20 $3.96 $3.74 $3.54 $3.35

2.00% $6.17 $5.79 $5.43 $5.11 $4.81 $4.53 $4.27 $4.02 $3.80 $3.59 $3.39

2.50% $6.29 $5.90 $5.54 $5.20 $4.90 $4.61 $4.34 $4.09 $3.86 $3.65 $3.45

3.00% $6.43 $6.03 $5.66 $5.31 $5.00 $4.70 $4.43 $4.17 $3.93 $3.71 $3.51

3.50% $6.60 $6.18 $5.80 $5.44 $5.11 $4.81 $4.53 $4.26 $4.02 $3.79 $3.58

4.00% $6.80 $6.36 $5.96 $5.60 $5.25 $4.94 $4.64 $4.37 $4.12 $3.88 $3.66

WACC using gross debt

(not conservative)

WACC using net debt

(A5’s choice)

WACC using management

guidance

Current Stock Price $4.40 (12/11/09) A5 Valuation

44

Exhibit 19 – Cash Benefit of Financing Transactions

Kodak cost of debt 13.85%

Private Placement of Convertible Debt

Face Value

$400.0

Discount

0%

Coupon

7% Principle Accrual

0.00%

Due Date

2017

KKR Debt w/ Warrants

Face Value

$300.0

KKR Fee from EK

$15.0

Discount

4%

Coupon

10% Principle Accrual

0.50%

Due Date

2017

Year

2010 2011 2012 2013 2014 2015 2016 2017

KKR transaction

Interest

30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

Interest payments at cost of debt

41.5 41.5 41.5 41.5 41.5 41.5 41.5 41.5

$ Saved

11.5 11.5 11.5 11.5 11.5 11.5 11.5 11.5

PV

10.1 8.9 7.8 6.9 6.0 5.3 4.7 4.1

NPV of Savings 53.8

PP of Convertible Debt

Interest

28.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0

Interest payments at cost of debt

55.4 55.4 55.4 55.4 55.4 55.4 55.4 55.4

$ Saved

27.4 27.4 27.4 27.4 27.4 27.4 27.4 27.4

PV

24.1 21.1 18.6 16.3 14.3 12.6 11.0 9.7

NPV of Savings 127.7

Cash payments saved

38.9 38.9 38.9 38.9 38.9 38.9 38.9 38.9

Combined NPV 181.5

Works Cited Bureau of Economic Analysis. (n.d.). National Economic Accounts. Retrieved November 30, 2009, from bea.gov:

http://www.bea.gov/national/index.htm#gdp

Butcher, D. (2009, June 3). Retrieved December 12, 2009, from Mobile Marketer:

http://www.mobilemarketer.com/cms/news/advertising/3393.html

Charlene Li., J. B. (2008). Talking with the Groundswell. In J. B. Charlene Li., Groundswell. Boston, MA: Harvard

Business School Publishing Corporation.

Congressional Budget Office. (n.d.). Appendix A - CBO's Economic Projections for 2009 to 2019. Retrieved November

30, 2009, from cbo.gov: http://www.cbo.gov/ftpdocs/100xx/doc10014/AppendixA.7.2.shtml

Consumers Union of U.S., I. (2009). Retrieved December 12, 2009, from ConsumerReports.org:

http://www.consumerreports.org

Dobbin, B. (2009, January 29). Retrieved December 12, 2009, from The Huffington Post:

http://www.huffingtonpost.com/2009/01/29/kodak-to-slash-up-to-4500_n_162133.html

Eastman Kodak. (2009, February 27). Filings and Annual Reports. Retrieved October 6, 2009, from Capital IQ:

https://www.capitaliq.com

Facebook. (2009). Facebook. Retrieved December 12, 2009, from http://www.facebook.com

FactSet Research Systems. (2009). FactSet Fundamentals 2009.4A.

Google. (n.d.). Eastman Kodak Company Financials. Retrieved November 3, 2009, from Google Finance:

http://www.google.com/finance?q=NYSE:EK&fstype=ii

Kavajecz, K. (2009). Module 5, Risk, Returns and the Capital Asset Pricing Model. Madison, WI.

Kodak, E. (2009, December). About Kodak. Retrieved October 20, 2009, from Kodak.com: www.kodak.com

Magazine Publishers of America. (n.d.). Retrieved November 30, 2009, from magazine.org:

http://www.magazine.org/consumer_marketing/circ_trends/1318.aspx

Miniwatts Marketing Group. (n.d.). Internet World Stats. Retrieved November 30, 2009, from Internet Growth Statistics:

http://www.internetworldstats.com/emarketing.htm

Newspaper Association of America. (n.d.). Total Paid Circulation. Retrieved November 30, 2009, from Newspaper

Association of America: http://www.naa.org/TrendsandNumbers/Total-Paid-Circulation.aspx

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