Kodak Says Reorganization on Track as Net Loss Increases
ROCHESTER, NY—April 27, 2012—Eastman Kodak reported that its strategy of focusing on its most profitable businesses and strengthened cost controls resulted in profitability improvements in both of its business segments during the quarter and an increased cash balance at the end of the quarter.
Kodak’s revenue of $965 million in the quarter represented a decline of 27 percent from the same period in the prior year, reflecting the exit of digital cameras, continued secular decline of the traditional businesses, and a $61 million reduction in revenue associated with a tax refund sharing agreement with intellectual property licensees. This reduction is the result of a refund of Korean withholding taxes recorded in the quarter as a $122 million income tax benefit.
On the basis of GAAP, the company reported a first-quarter net loss of $366 million vs. a net loss of $246 million from the prior-year quarter. The results reflect the improvement in segment profitability discussed below, reorganization costs associated with the Chapter 11 case, the absence of a gain from an asset sale in the prior-year quarter, and higher restructuring charges, partially offset by the tax benefit from the net impact of the Korean tax refund.
Selling, general and administrative (SG&A) expenses decreased by $84 million compared to the first quarter of 2011, as Kodak reduced its investment in unprofitable business lines and consolidated into two business segments—Commercial and Consumer. Kodak’s liquidity improved, ending the first quarter with a cash balance of $1.4 billion, up $500 million from year-end 2011, as a result of $600 million in net new financing, utilization of the Chapter 11 process, and reduced year-over-year cash usage for continuing operations.
“During the quarter, we took decisive steps—including filing for Chapter 11 and exiting unprofitable businesses—to accelerate our transformation and emerge in 2013 as a profitable, sustainable business,” said Antonio M. Perez, chairman and CEO. “As a result, during the quarter we saw improved profitability of our Commercial and Consumer business segments. We will continue to exploit our competitive advantage at the intersection of materials science, digital imaging, and deposition technologies. Our commercial and consumer products and services continue to offer unique technologies and market-leading value propositions.