Kodak Unveils Reorganization Plan, Enjoys Strong Q1
ROCHESTER, NY—Eastman Kodak filed its Plan of Reorganization and Disclosure Statement with the U.S. Bankruptcy Court for the Southern District of New York on Tuesday.
The plan contains a detailed description of Kodak’s post emergence business plan which it hopes maintains and extends its position in the commercial imaging industry. The Disclosure Statement also includes a historical profile of the company, a description of the proposal of distributions to the company’s creditors and financial forecasts.
The documents also describe the comprehensive settlement reached with Kodak’s largest creditor, the U.K. Kodak Pension Plan, which includes the spin-off of Kodak’s Personalized Imaging and Document Imaging and settles $2.8 billion in claims. That transaction was announced Monday.
The company expects the court to schedule a hearing in mid-June to determine the adequacy of the disclosures contained in the documents to provide creditors the ability to evaluate the company’s Plan of Reorganization. The company will then schedule a vote on the plan by creditors. In the interim, Kodak will work with its creditors’ committees to obtain their support of the plan and may, from time to time, file amendments and supplements to the documents. The company expects to emerge from Chapter 11 restructuring in the third quarter.
“The filing of the Plan of Reorganization and Disclosure Statement represents a major milestone in our reorganization: this initiates our emergence process,” said Antonio Perez, Kodak’s chairman and CEO. “We now have a clear path forward for Kodak, and we are positioning the company for a profitable and sustainable future.
The company also released its quarterly results, registering $283 million in consolidated net earnings in the first quarter of 2013, compared to a $366 million loss in the prior-year quarter. The profitable quarter reflects improved results of the Commercial Imaging segments and includes a $535 million gain recorded on the sale of Kodak’s digital imaging patent portfolio, partially offset by a $77 million non-cash goodwill impairment charge related to the patent sale.
Both of the company’s Commercial Imaging segments recorded significant improvements in segment earnings. The Digital Printing and Enterprise (DPE) segment reported a segment loss of $8 million for the quarter, an improvement of $81 million from the $89 million segment loss in the prior year quarter. The improvement was driven primarily by the previously announced strategic decision to focus the consumer inkjet business on ink sales, as well as improved operating costs. The DPE segment had a 21 percentage point increase in gross profit margin in the quarter.
The Graphics, Entertainment and Commercial Films (GECF) segment reported $38 million in segment earnings for the quarter, compared to a segment loss of $84 million in the prior year, an improvement of $122 million. The current quarter earnings reflected $31 million in non-recurring brand licensing revenue, which combined with the $61 million reduction in revenue from intellectual property in the prior year resulting from a withholding tax refund, contributed $92 million of the year-over-year improvement. The remaining improvement was driven by pricing actions and operating cost reductions. The GECF segment had a 24 percentage point increase in gross profit margin in the quarter versus the prior year.
“These results demonstrate that we are on track with our strategy to focus on Commercial Imaging, and that we are making operational improvements as Kodak takes the right steps to emerge as a profitable and sustainable company,” Perez remarked. “We have the right strategy and the right technology and products to extend our leadership in the industry.”
Kodak’s cash balance at the end of the first quarter stood at $1.17 billion, an increase from the $1.14 billion reported at the end of 2012. Sales from continuing operations totaled $849 million in the quarter, a 9 percent decrease from the $928 million in the previous year’s quarter.