On the other hand, currency exchange and hedging costs will be reduced; lower prices and pan-European buying will benefit the Company in its purchasing endeavors; the number of banks and suppliers needed will be reduced; there will be less variation in payment terms; and it will be easier for the Company to expand into new marketing channels such as mail order and Internet marketing.

The Company is in the process of making changes in areas such as marketing and pricing, purchasing, contracts, payroll, taxes, cash management and treasury operations. Under the ‘no compulsion no prohibition’ rules, billing systems have been modified so that the Company is now able to show total gross, value added tax, and net in Euros on national currency invoices. This enables customers to pay in the new Euro currency if they wish to do so. Countries that have installed ERP/SAP software in connection with the Company’s enterprise resource planning project are able to invoice and receive payments in Euros as well as in other currencies. Systems for pricing, payroll and expense reimbursements will continue to use national currencies until year-end 2001. The functional currencies of the Company’s operations in affected countries will remain the national currencies until approximately May 2001 (except Germany and Austria (November 2001)), when they will change to the Euro. Systems changes for countries not on SAP (Finland and Greece) are also being implemented in 2001.

Liquidity and Capital Resources

Net cash provided by operating activities in 2000 was $982 million, as net earnings of $1,407 million, adjusted for depreciation and amortization, provided $2,296 million of operating cash. This was partially offset by increases in receivables of $247 million, largely due to the timing of sales late in the fourth quarter; increases in inventories of $282 million, reflecting lower than expected sales performance in the second half of the year particularly consumer films and paper and consumer digital camera sales; and decreases in liabilities (excluding borrowings) of $755 million related primarily to severance payments for restructuring programs and reductions in accounts payable and accrued benefit costs. Net cash used in investing activities of $783 million in 2000 was utilized primarily for capital expenditures of $945 million and business acquisitions of $130 million, partially offset by proceeds of $276 million from sales of businesses/assets. Net cash used in financing activities of $314 million in 2000 was the result of stock repurchases and dividend payments, largely funded by net increases in borrowings of $1,313 million.

Cash dividends per share of $1.76, payable quarterly, were declared in each of the years 2000, 1999 and 1998. Total cash dividends of approximately $545 million, $563 million and $569 million were paid in 2000, 1999 and 1998, respectively.

Net working capital (excluding short-term borrowings) increased to $1,482 million from $838 million at year-end 1999. This increase is mainly attributable to lower payable levels and higher receivable and inventory balances, as discussed above.

Capital additions were $945 million in 2000, with the majority of the spending supporting manufacturing productivity and quality improvements, new products including e-Commerce initiatives, digital photofinishing and digital cameras, and ongoing environmental and safety spending. In 2001, the Company expects to reduce its capital spending (excluding acquisitions) from its 2000 spending levels. Capital additions by segment are included in Note 17, Segment Information.

Under its stock repurchase programs, the Company repurchased $1,099 million, $925 million and $258 million of its shares in 2000, 1999 and 1998, respectively. During the second quarter of 1999, the Company completed stock repurchases under its 1996 $2 billion authorization. That program, initiated in May 1996, resulted in 26.8 million shares being repurchased. Under the $2 billion program announced on April 15, 1999, the Company repurchased an additional 21.6 million shares for $1,099 million in 2000 and 9.8 million shares for $656 million in 1999. On December 7, 2000, Kodak’s board of directors authorized the repurchase of up to an additional $2 billion of the Company’s stock over the next 4 years.