On Jan. 31, 2005, Standard&Poor's Ratings Services said that its ratings for Eastman Kodak Co. (BBB-/Watch Neg/A-3) remain on CreditWatch with negative implications following the company's planned purchase of Creo Inc. The purchase price of $980 million is very expensive, at about 30x Creo's 2004 EBITDA adjusted for restructuring and impairment charges. The pending Creo and Kodak Polychrome Graphics acquisitions will together add up to $1.5 billion in incremental debt, for a pro forma debt level of about $3.8 billion at Dec. 31, 2004, outweighing Kodak's 2004 debt reduction and boosting pro forma lease-adjusted debt to EBITDA to about 2.3x. This is somewhat high for the rating, given Kodak's elevated business risk as its markets transition to digital
