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Kodak’s Fourth-Quarter Revenues Increase 6%, Profits Surge

January 28, 2010

For full-year 2009, the company reported a loss from continuing operations of $232 million, or $0.87 per share. This compares to a loss of $727 million, or $2.58 per share, in 2008. Full-year revenue totaled $7.606 billion, a 19% decline from 2008. Full-year digital revenue totaled $5.345 billion, a 17% decline from 2008, and traditional revenue totaled $2.257billion, a 24% decline. These results reflect the recession’s impact on demand, especially in the first half of 2009. The company expects that customer demand for its digital products will continue to grow, as the economy recovers.

Other 2009 details:

• In the fourth quarter of 2009, Gross Profit margin was 34.4% of sales, an increase from 20.4% in the year-ago period. Approximately six percentage points of this increase was driven by productivity improvements and higher demand for digital plates and kiosk media, productivity gains for digital cameras and devices, consumer inkjet, electrophotographic printing and traditional photofinishing, and favorable foreign exchange. The balance of the increase was driven by non-recurring intellectual property licensing agreements.

• Selling, General and Administrative (SG&A) expenses, on a GAAP basis, were $347 million in the fourth quarter, down 15%, or $61 million, from $408 million in the year-ago quarter, as a result of company-wide efficiency gains.

• Research and Development expenses, on a GAAP basis, were $86 million in the fourth quarter, down 25%, or $28 million, from $114 million in the year-ago quarter, reflecting the continued focusing of resources to core growth businesses, which require lower research and development investment versus a year ago.

• Fourth-quarter cash generation, before restructuring payments, was $909 million, compared with $508 million in the year-ago quarter. This corresponds to net cash provided by continuing operations from operating activities of $822 million for the fourth quarter of 2009 and $520 million for the year-ago period. For full-year 2009, cash generation, before restructuring payments, was $45 million, compared with cash usage on the same basis of $147 million for 2008. This corresponds to net cash used in continuing operations from operating activities of $136 million for 2009, compared with a net cash usage of $128 million for 2008.

• Kodak held $2.024 billion in cash and cash equivalents as of December 31, 2009, up from $1.147 billion on September 30, 2009.

• The carrying value of the company’s debt, on a GAAP basis, stood at $1.191 billion as of December 31, 2009.

Segment sales and earnings from continuing operations before interest, taxes, and other income and charges (segment earnings from operations), are as follows:

• Consumer Digital Imaging Group fourth-quarter sales were $1.212 billion, a 27% increase from the prior-year quarter. Fourth-quarter earnings from operations for the segment were $380 million, compared with a loss of $41 million in the year-ago quarter. The year-over-year improvement was driven by a combination of higher non-recurring intellectual property licensing revenue; improved profitability in consumer inkjet systems, including an 81% revenue increase in consumer inkjet printer hardware and ink; improved operating performance in Digital Capture & Devices and Retail Systems Solutions; and reduced SG&A expenses across the segment. Excluding the impact of non-recurring intellectual property royalties, segment earnings improved by more than $100 million.

• Film, Photofinishing and Entertainment Group fourth-quarter sales were $589 million, a 10% decline from the year-ago quarter. Fourth-quarter earnings from operations for the segment were $53 million, compared with earnings of $39 million in the year-ago period. The increase in earnings was driven by significant operational improvements in Traditional Photofinishing, cost reductions across the segment, favorable foreign exchange, and improvement in raw material costs, partially offset by industry-related volume declines in Film Capture, and negative price/mix.

“In the second half of 2009 we began to see some improvement in the economy, and that helped to highlight the true strength of our digital portfolio,” said Perez. “During 2009, we doubled the installed base for our consumer inkjet printers while maintaining our price premium. In the fourth quarter, we grew sales of commercial inkjet products, including a 33% increase in sales of our VL2000 printing system and enjoyed continued strong customer orders for our PROSPER product line. We delivered positive cash performance before restructuring for the past two quarters and for all of 2009, and our cost structure is providing us with significant operating leverage as the economic recovery continues. We enter the new year with the most competitive digital portfolio ever, strong presence in key markets, and a significant amount of positive momentum. All of this positions us well for improved performance in 2010.”

Conference Call Information

Antonio Perez and Kodak Chief Financial Officer Frank Sklarsky will host a conference call with investors at 11:00 a.m. Eastern Time today. To access the call, please use the direct dial-in number:  +1 480-629-9645, conference ID 4198561#. There is no need to pre-register.

The call will be recorded and available for playback by 2:00 p.m. Eastern Time on Thursday, January 28, by dialing +1 303-590-3030, access code 4198561#. The playback number will be active until Thursday, February 4, at 5:00 p.m. Eastern Time.

For those wishing to participate via the webcast, please access our Investor Relations webpage at: The webcast audio will be archived and available for replay on this site approximately one hour following the live broadcast.

Outlook/Investor Meeting

Kodak will provide a detailed outlook for 2010 at its annual strategy meeting with the investment community on Thursday, February 4, in New York City.

The meeting will be held at the New York Stock Exchange, located at 2 Broad Street. Registration will begin at 8:15 a.m. Eastern Time. The formal program will begin promptly at 9:00 a.m. and is expected to conclude by 11:30 a.m. Prior to admittance, guests must check in at the external checkpoint, which is located at the corner of Wall and Broad Streets. Guests must have valid government-issued photo ID and be included on the RSVP guest list in order to gain access to the building. In addition, please note business attire is a requirement for all visitors to the New York Stock Exchange.

The program will include presentations by Antonio M. Perez, Chairman and Chief Executive Officer, Philip Faraci, President & Chief Operating Officer, Brad Kruchten, President, Film, Photofinishing and Entertainment Group, and Frank Sklarsky, Chief Financial Officer, and will conclude with a question-and-answer session.

If you wish to attend, please RSVP by Monday, February 1, 2010, by contacting Alicia Zona at 585-724-5955, or by e-mail at

For those unable to attend in person, the meeting will be available via a live webcast. To access the webcast, please go to:

Companies Mentioned:


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