(Operator Instructions) Ladies and gentlemen, please stand by we are about to begin. Good day everyone, and welcome to the Eastman Kodak Fourth Quarter Sales and Earnings conference call. Today's call is being recorded. At this time for opening remarks and introductions, I'd like to turn the conference over to the director and Vice President of Investor Relations, Ms. Ann McCorvey. Ms. McCorvey, please go ahead now. Ann McCorvey – Vice President of Investor Relations: Thank you. Good morning and welcome to our discussion of the fourth quarter sales and earnings. I am here this morning with Antonio Perez, Kodak's Chairman and Chief Executive officer as well as Chief Financial officer, Frank Sklarsky. Antonio will begin this morning with his observations on the quarter and then Frank will provide a review of the quarterly financial performance. As usual, before we get started I have some housekeeping activities to complete. Certain statements in this press release may be forward looking in nature or forward looking statements. As defined by the United States Security Litigation Reform Act of 1995, for example, references to the company's expectations regarding the following are forward looking statements. It's ability to address the impact of the economic downturn, its employment reduction, cost cash payments, and savings under restructuring programs and other rationalization activities, new intellectual properties licensing arrangement, the seasonality of its earnings. If expectations regarding the completion of its good will and long live assets impairment requirements analysis. New product introduction to a secure credit facility. These forward-looking statements are subject to a number of important risk factors and uncertainties, which are fully enumerated in our press release, issued this morning. Listeners are advised to read these important cautionary statements in their entirety as any forward-looking statements may need to be evaluated in light of these important factors and uncertainties. Now I'd like to turn the call over to Antonio Perez.

Thanks Ann and good morning everyone. The second half of 2008 will go down in the history books as one of the most challenging periods we have seen in decades. The rapid deterioration of the global economy has impacted all industries. Like many companies, the fourth quarter results were negatively impacted. Despite the turmoil in the economy, we were able to generate a considerable amount of cash during the fourth quarter. Following our transformation, we have created significant momentum in our digital portfolio and until that momentum returns, we are taking the necessary steps to respond aggressively to current conditions. Maintaining a large portfolio of digital business opportunities was the right thing to do when Kodak digital portfolio was in growth mode, which began in the second quarter of 2007. In fact, our digital revenues grew by double digits for four consecutive quarters, from the third quarter of 2007 through the second quarter of 2008. The unprecedented rapid decline in the global economy still isn't showing signs of improvement, so we must now revise our approach. We must limit our investments to only those core ones that are at the heart of our strategy. We are convinced these investments will provide access to a very large market with sustainable, profitable growth. Our current investments include products at the intersection of material science and digital imaging science where we have a strong intellection property and know-how in a large market opportunity where we can leverage our strong brand. We are committed to these core investments and understand that we have to make pragmatic decisions about all other opportunities. Quite simply, we have to rationalize our product portfolio and focus our resources on the core opportunities while looking for other business models and other alternatives for the rest. We'll describe all of…

(Operator Instructions) Thank you, sir. Ladies and gentlemen, our question and answer session will be conducted electronically. If you would like to ask a question, please firmly press the * key, followed by the digit 1 on your touchtone telephone. We will take you in the order that you signal, and if you find that your question has been asked and answered before you could ask it, and if you would like to remove yourself from the question roster, please firmly press the # key. Also, if you are on a speakerphone, please make sure your mute button is disengaged so your signal can reach our equipment. Again, that is *1 to ask a question. We will pause, for just a moment, to assemble the question roster. For our first question, we go to Chris Whitmore, with Deutsche Bank. Chris Whitmore – Deutsche Bank: Thanks very much, my first question is for Frank, on free cash flow and your outlook for cash generation in 2009. Just looking at 2008, if we exclude the $580 million tax benefit from cash from operations, it looks like you used about $400 million in cash flow. Given the restructuring charges, and the deterioration you're seeing in the business, it looks like you're on pace to have a significant usage of cash this year, perhaps in the $600 million, $700 million range. What are your thoughts around that, around those numbers? What are your expectations, etcetera? Frank Sklarsky – CFO: Thanks Chris, we're going to give a lot more transparency around 2009 income statement, earnings from operations from cash flow, when we meet with the investment community, next week, in New York City. I don't want to go too much in depth with that. While we do have a significant restructuring charges and payments that…

For our next question, we go to Richard Gardner, with Citigroup.

Thank you, it's just a follow-up to Chris's question. I was hoping, Frank, that you could give us a little bit of – you could help us understand some of the line items on the balance sheet. First of all, can you talk about why post-retirement liabilities were up? I had thought they might be actually down, given the rise in corporate bond yields during the past year. Secondly, can you talk about the sharp decline, sequentially, in other income, other comprehensive income in the shareholders equity line? I then have a follow-up. Frank Sklarsky – CFO: Okay, the first question was around – I assume you are talking about a sequential change?

Yes, the sequential increase in post-retirement liability. Frank Sklarsky – CFO: Those were mainly on the pension side. That was some adjustments for some pension plans outside the U.S. FEZ-158 adjustments to the pension plans outside of the United States. The other question around OCI? Any specific item you are referring to, there?

Within the shareholders equity line of the balance sheet, the accumulated other comprehensive income line went from $1.6 billion, at the end of September 2008, to a negative $750 million, at the end of December 2008. Frank Sklarsky – CFO: Okay, a lot of that is going to have to do with the change in the funding levels in the pension portfolios. We can get some more details on that and get back to you. A lot of that detail will be in the 10K. We're still working through some of that, but the general answer is that it relates, again, to the same issue, FEZ-158, in terms of the over/under funding in the various pension plans around the world. That really, represents what that is.

Okay, just the reason I asked is because the book value was cut, almost in half, sequentially, as a result of these swings in balance sheet items. I also was hoping you might be able to give us a little bit more color on the short fall in IP royalties during the quarter. Maybe give us some sense of magnitude and whether this is a temporary thing or a permanent change? Antonio Perez – Chairman and CEO: There is no short fall. There was no short fall in the quarter. You mean that this was lower than last year's?

Yes, just to be clear; it was in line with your expectations during the quarter, then? Antonio Perez – Chairman and CEO: Yes, it was in line.

Okay, and you remain comfortable with the 250 to 350 that you talked about, annually? Antonio Perez – Chairman and CEO: Yes, very much, for next year and for the next few years.

All right, and if I could just squeeze one more question in. Frank, I was hoping to ask you about commodities prices. When the hedges are going to start to come off on silver and aluminum, and if we were to assume that commodity prices were to stay where they are today, at spot levels, once those hedges come off in 2009, what type of benefit could we see on the cost side, related to commodities? Frank Sklarsky – CFO: We don't want to get into too much detail around how much hedge we have in individual commodities, or when they might roll off because the businesses they apply to are very competitive. For competitive reasons, we want to protect that information. We do have some hedging on our key, major commodities. We don't hedge oil; we've mentioned that in the past. As we go through the year, we will continue, as you can imagine, we will continue to benefit from the change in commodity prices. We disclosed that we got hit by about $14 million in this Q4, versus Q4 of the prior year. You can see that if you look at the commodity prices in our major items, silver was a little higher in Q4, in a weighted average basis, than it was in the prior year. It has pretty much stabilized. It's in the $11.50 to $12 range, right now. That one has leveled out. I think on that one, if silver stays where it is, it will be roughly in line with our planning horizon. Aluminum has come down, precipitously, and I don't want to get into how much we might or might not have hedged on that commodity, for competitive reasons. I think, as we go through time, we will continue to benefit from the reduction in the price of aluminum.

Okay, thank you.

For our next question, we go to Sonny [Sagron], with J.P. Morgan Sonny [Sagron] - J.P. Morgan: Thank you, Frank. I had a quick question on the amendments that you are seeking on financial covenants. According to my calculations, you are on 2.5 and they’ve leveraged. A required ratio is 3.5. You have a fair bit of headroom there. Why go out, right now, and seek that covenant amendment? Frank Sklarsky – CFO: The way the covenants were, there are two primary covenants. One is debt to EBITDA and one is EBITDA to interest, as you know. Like you said, at the end of the fourth quarter, very comfortably, within the covenants, these covenants both operate on a four-quarter average. The debt is taken as of a point in time, but EBITDA interest are computed on a four-quarter average. What we're trying to do is look out into 2009 and recognize the fact that, again, we have a significant economic downturn, number one. We have our typical seasonality in the first half, number two. And number three; we have a significant amount of restructuring charges. Because we had a lot of restructuring charge in Q4 and are expecting a big chunk in the first half of the year, that puts stress on that calculation. We were trying to just plan ahead and get ahead of the game. In the event that we were to trigger anything, in the first half of the year, we are approaching our bank group now, which by the way, they're very appreciative of; in making sure we have continued access to a credit agreement. We are not drawing on cash, other than the letters of credit I referred to. We're not drawing on cash. This is to provide financial flexibility. We just want to maintain…

For our next question we go to Joan Lappin, with Gramercy Capital

Good morning, everybody. Antonio, you said in your opening comments that you will invest where you should invest and you are going to pull back where you think that's the better idea. As I understand it, what's on your plate are all these new printing press-type things and also the cell phone cameras that were hopefully going to become a significant factor in the second half of 2009. Unfortunately, you teamed with the company that's now slipped to fifth. Can you talk about that and OLED? Are you going to not invest in OLED, now, or what? Antonio Perez – Chairman and CEO: Really, that is the conversation for the fourth. Let me answer it this way. Our portfolio has three elements. We have $6 billion of revenue from businesses that are cash-innovating businesses. Obviously, we will continue with those very much, managing them the way we are now. We have about $1 billion of revenue in what we call the core investments, the ones that are more at the heart of our strategy. Those are things like consumer ink jet, continuous ink jet, workflow. Then, we have $2 billion of all the investments. They are obviously good investments but we have to qualify how many of those we can continue to invest, and how many we have to transform. When I say transform, it might be in the shape or form of partnerships or something like that. That is a discussion, really, for the fourth. I really don't want to go further than that. When you look at our portfolio, you can do this by yourself; you will find $6 billion of businesses that are doing very well. They produce cash year-on-year. We feel very good about those. They have low single-digit growth, but very solid, very solid position. We have a leading marketing position in those. That is the base of the company, obviously, at this time. They are all digital except VI, there. The second is that those three big investments, that we believe they have a very significant return. Obviously, we are going to continue to push as hard as we are now; we are not going to slow down. We are making a tremendous amount of progress, even in a contraction in the market. That gives us even more confidence in that. Then, obviously, we have to think hard. Out of the other $2 billion, which one we can do by ourselves, and which one we might have to do with someone else. With the markets like this, we just can't do it all by ourselves. We'll talk more, on the fourth

Let me state the other question in a different way. Should we still be expecting that camera phones are going to help us in the second half of the year? Antonio Perez – Chairman and CEO: Camera phones – I'm going to tell you information that you have, from some of our colleagues, with which we have excellent relationships, not just with Motorola by the way. We have excellent relationship with Nokia, and many others. They are obviously projecting a difficult year, for next year. Obviously we're going to take that into account, as well as what is the right business plan for that business, at this time.

But if you haven't been selling any of those, and you start selling some, it's incremental. Antonio Perez – Chairman and CEO: We are very happy with that. The question is the level of investment. The whole question, here, is if the market is contracting and we don't have the 10% growth that we enjoy in the digital portfolio for more than a year, obviously we're not going to have the revenues, cash, and earnings that we had before. We are going to have less. We have to make sure that we realize that and peak where we are going to put that money. That's the exercise, portfolio management.

I guess you'll talk more about that, next week? Antonio Perez – Chairman and CEO: Yes, Joan.

Okay, thank you.

For our next question, we go to Arun Seshadri, with Credit Suisse.

Hello, gentlemen. I appreciate you taking my question. Just the first one, I wanted to go back to the covenants. Against the 3.5 times test, what are you at, as of the end of the fourth quarter? Frank Sklarsky – CFO: We are well within the covenants of the end of the fourth quarter, so the 3.5 – we're under 3 and the EBITDA to interest, which has to be at least 3.0, we're well over 4.

Can you tell us what the ratio computes to, at the end of the fourth quarter? Frank Sklarsky – CFO: Let me call you back on that.

Okay, and just to follow-up on the restricting charges, I presume that the restructuring charge, as of the income statement – that you don't get credit for. Or, is that cash restructuring? Frank Sklarsky – CFO: It's typically cash restructuring. You don't get … for.

Okay, and then on the covenants, I just wanted to clarify; they apply even regardless, or only during the time that you have something drawn against the revolver, or LC's? Frank Sklarsky – CFO: The covenants apply to access to the revolver. If you trip a covenant, you no longer have access to the revolver. Whether we have it – if you're drawn, it triggers a repayment, which of course, is not necessarily in our case, because we don't have any drawn nor do we anticipate having to draw any this year. It really, relates to the access to the revolver.

Okay, and then your revolver matures in a year and a half, or a little bit over that. Is that on the table to extend that maturity, as well? Frank Sklarsky – CFO: We're looking at a variety of options to give us maximum flexibility over the next few years.

Okay, one last question, if I could sneak it in. Interest expense to calculate your fixed charge coverage, test of three times, is that generally the same as the interest expense reported on your income statement? Frank Sklarsky – CFO: Generally.

Okay, generally close. I appreciate it, thanks. Frank Sklarsky – CFO: Remember that is not one of our covenants. Our covenants are really debt to EBITDA and EBITDA to interest. Yes, it's interest expense.

We go next to Shannon Cross, with Cross Research

Hi, thank you, my question is with regard to variable versus fixed costs. I don't know if Antonio, or Frank, you want to take this. I'm just curious as you look at your cost structure, where do you think you have the most flexibility? You made so many changes over the years, I'm curious as to where you're at, now. Frank Sklarsky – CFO: It really varies by segment, Shannon. On the CDG side, as you know, we have virtually no manufacturing facilities. In CDG, it's easier, much easier to lower the cost structure as revenue comes down. I'm thinking of on the COG side. GNA, obviously, is "fixed" but we're obviously going after that very aggressively. On the COG side, it's more variable in CDG. In FPEG, a little less so because we still have a Kodak Park and Harrow, the paper facility and so on, and some other smaller facilities. Again, that business unit has been very successful in reducing costs consistent with revenue, particularly as evidenced in the fourth quarter. GCG is somewhere in between, as we have some categories of product – we have contract manufacturing, and we have some products like the large pre-press business, which is 2/3 of the revenue, where we largely have inside manufacturing. That doesn't take away from the fact that we still have ample opportunities to reduce our "fixed" costs. Everything is variable, in the medium and long term, whether it's productivity, working with our supply base in which we've been very successful in recent years, skew rationalization, or whatever. We think there is ample opportunity to continue to reduce the cost structure. We're going to continue to do that, very aggressively so that when the environment improves, we have really good operating leverage.

Okay, I'm trying to figure out the 3,500 to 4,500 is obviously a pretty big amount of people. If you're going to go through the rationalization through the first half, it seems as if most must be in sort of the U.S. or easier geographies. I'm curious, if you want to discuss how long you've been looking at where to cut and how far you are along in the process, just to give us an idea of how much you have really worked through this, at this point in time, given that everything fell apart in fourth quarter for many companies. Frank Sklarsky – CFO: Let me go back to the announcement this morning. 3,500 to 4,500, during 2009, including 2,000 to 3,000 of charges associated with the 2009 program, plus the difference where actions were taken in the fourth quarter, charges were taken in the fourth quarter of 2008, and will be implemented very early in 2009. So, the difference between the 3,500 to 4,500 and the 2,000 and 3,000, those plans are complete and will be executed very quickly. The remainder we will be executing as quickly as we possibly can, the vast majority in the first half of the year. As I said in my remarks this morning, it was very clear as we got to the tail end of third quarter, and we messaged on last quarter's call, that we saw some clouds in the horizon and we were going to be intensifying our efforts around cost. We think we got after this very early. We were able to keep, for instance, SGNA's percent of revenue flat versus the prior year in the fourth quarter. We are very well along, significantly along on getting these plans in place and getting them executed as soon as we can. Antonio Perez – Chairman and CEO: If you remember the third call, we already announced to investors that we were going to reduce by hundreds of millions of dollars our manufacturing volumes because we didn't see the fourth quarter the way we were planning before. We got ahead of this with time. Another issue that nobody asked is how is the inventory in the channel. Since you don't ask, I'm going to give you the answer, anyway. We've done relatively well because we prepared ourselves for that, in the third quarter, as you probably remember, because of my comments at that time.

Okay, so you mean inventory, in general, or … Antonio Perez – Chairman and CEO: Yes, of course, we don't know how bad the first quarter and the second quarter is going to be. In spite of that, I'm incredibly happy we took the $400 million of product out of manufacturing when we did that. We guessed that the fourth quarter was going to be very bad.

Okay and Frank, one last question on the revolver. Is it your intention to try to keep a similar amount in the revolver or how are you thinking about the amount of liquidity or … liquidity you're going to need as you go through what's probably going to be a choppy 2009, and who knows about 2010? Frank Sklarsky – CFO: Let me start by saying it's a good question. We're really comfortable with the liquidity position, for at least 2009. When you see, next week, what our projections are for cash flow for 2009, I think you will see that we're in very good shape there and even well into 2010. No issues there, really, this is for financial flexibility. I think, ironically, one of the factor that's going to come into consideration, in terms of the ultimate size of the revolver, is going to be the capability of the financial sector and what they're looking to do. It's all a balance in terms of the costs. The administrative costs in maintaining financial flexibility, and getting the right amount of revolver, given the size of our company. As you know, the one that exists, today, is $1 billion. That's a really hefty size revolver. That said; we'd like to have as much flexibility as we possibly can. Again, we've never drawn on the revolver. We're not drawing on it now, other than the minor amount of LC's and we don't anticipate having to draw on it, in minimum, 2009.

Okay great, thank you.

Ladies and gentlemen, due to time constraints, that will be the last of our questions. Mr. Perez, I will turn the conference back over to you, for any closing remarks. Antonio Perez – Chairman and CEO: Thank you again for joining us, today. 2009 will no doubt be a challenging year. We are taking the difficult actions we think area necessary to address this current environment, as I said before. Before the dramatic shift, during the last four months of 2008, we had created significant momentum in our digital product portfolio. We were in a very strong growth mode. I'm confident that when the economy recovers, although unfortunately, I can't tell you when, we will be able to create that momentum once again. We plan to do just that. Thank you very much.

Ladies and gentlemen, this does conclude the Eastman Kodak Fourth Quarter Sales and Earnings conference call. We do appreciate your participation and you may disconnect, at this time.