Accounting Woes Prompt Kodak Restatement

The errors concern income taxes, accruals for pensions and other post-retirement benefits, and other miscellaneous items that the announcement described as ''immaterial in the aggregate.''

Eastman Kodak Co. announced that it will report revised results for the fourth quarter of 2004 and will restate results for the first three quarters of 2004 and all of 2003.

The restatements reflect “inadvertent” accounting errors, according to a statement by chief financial officer Robert H. Brust. The errors concern income taxes, accruals for pensions and other post-retirement benefits, and other miscellaneous items that the announcement described as “immaterial in the aggregate.”

Kodak also said it will seek an extension for filing its 2004 annual report. The company added that it expects the impact of the errors will have no material impact on revenue or cash flow, and no impact on its ability to pay retirement benefits.

In January, Kodak first warned that it may need to restate its results after company officials found errors related to its 2004 income taxes during the year-end closing process. At the time, the official confirmed the existence of an internal-control deficiency that constituted a “material weakness”; consequently, management stated that it would be unable to confirm that its internal controls over financial reporting were effective as of December 31, 2004.

According to Kodak, the income-tax accounting issues are expected to reduce 2004 earnings by about $35 million on an operational basis and $21 million on the basis of generally accepted accounting principles. The difference between the two figures is primarily attributable to the accounting for income taxes relating to restructuring charges and discontinued operations, the company added.

The pension and other post-retirement accounting issues will result in a pre-tax charge to 2004 earnings of approximately $29 million on both an operational and GAAP basis.

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