Required:
Prepare forecasts of its income statement, balance sheet, and statement of cash flows for 20×7 under the following assumptions:
a. All financial ratios remain at 20×6 levels.
b. Kodak will not record restructuring costs for 20×7.
c. Taxes payable are at the 20×6 level of $544 million.
d. Depreciation expense charged to SG&A is $765 million and $738 million for 20×6 and 20×5, respectively.
e. Gross PPE is $12,982 million and $12,963 million for 20×6 and 20×5, respectively.
f. Projected current maturities of long-term debt are $13 million for 20×7.
g. Capital expenditures for 20×6 and 20×5 are $1,047 and $783, respectively.Kodak
Refer to the following financial statements for Kodak:
CASE 9-1
Forecasting Pro Forma Financial Statements
INCOME STATEMENT
20×6
20×5
20×4
For Year Ended December 31 (in millions)
Net sales ….
Cost of goods sold..
Gross profit…..
Selling, general, and administrative expenses
Research and development costs ….
Restructuring costs (credits) and other..
Earnings from operations ….
Interest expense
Other income (charges)
Earnings before income taxes.
Provision for income taxes..
Net earnings…
$13.234
8,670
4,564
2,781
779
659
345
219
(18)
108
32
$ 76
$13.994
8,375
5,619
2,665
784
(44)
2,214
178
96
2,132
725
$ 1,407
$14,089
8,086
6,003
2,846
817
350
1,990
142
261
2,109
717
$ 1,392
BALANCE SHEET
20×6
20×5
At December 31 (in millions, except share and per share data)
Assets
Current assets
Cash and cash equivalents..
Receivables, net..
Inventories, net …
Deferred income taxes..
Other current assets
Total current assets ..
Property, plant, and equipment, net
Goodwill, net…..
Other long-term assets
Total assets….
$ 448
2,337
1,137
521
240
4,683
5,659
948
2,072
$13,362
$ 246
2,653
1,718
575
299
5,491
5,919
947
1,855
$14,212
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and other current liabilities
Short-term borrowings…..
Current portion of long-term debt.
Accrued income taxes …
Total current liabilities
Long-term debt, net of current portion
Postemployment liabilities …
Other long-term liabilities.
Total liabilities
Shareholders’ equity
Common stock, $2.50 par value
950,000,000 shares authorized: issued 391,292,760 shares in 20×6 and 20×5;
290,929,701 and 290,484,266 shares outstanding in 20×6 and 20×5 .
Additional paid in capital…..
Retained earnings ….
Accumulated other comprehensive loss.
… $ 3,276 $ 3,403
1,378 2,058
156 148
544
606
5.354 6,215
1,666 1,166
2,728 2,722
720 681
10,468 10,784
978 978
849 871
7,431 7,869
(597) (482)
8,661 9,236
(5,767) (5,808)
2,894 3,428
$13,362 $14,212
Treasury stock, at cost; 100,363,059 shares in 20×6 and 100,808,494 shares in 20×5 …..
Total shareholders’ equity …
Total liabilities and shareholders’ equity.
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