Eastman Kodak announces progress in 2nd quarter

On the basis of GAAP, the company reported a net loss of US$ 299 million, compared to US$ 179 million in the second quarter of 2011. Before reorganization items, the second quarter net loss was US$ 139 million, an improvement of US$ 40 million over the prior-year quarter. Second quarter reorganization items totaled US$160 million, primarily reflecting second quarter non-cash provisions for allowed reorganization claims.

Second quarter segment earnings improved for its Commercial and Consumer segments by a combined total of US$ 82 million year on year, the company said, as operating expenses were reduced ahead of revenue declines. The gross profit margin increased by two percentage points due to an enhanced mix of higher-margin consumables. Second quarter loss from continuing operations before interest expense, other income (charges), net, reorganization items, net and income taxes improved by US$ 79 million compared to the prior-year quarter. The cash balance at the end of the quarter stood at US$ 1.257 billion.

“I am pleased with our progress, and our operating results are both improved from last year and also ahead of our plan,” said Antonio M. Perez, Chairman and Chief Executive Officer. “We are committed to sustaining the progress required to successfully emerge from Chapter 11.”

In the Consumer Segment, Kodak recorded sales of US$ 393 million, down 36.6 % year on year, mainly due to to volume declines (-23%) and unfavorable price/mix (-4%) within Digital Capture and Devices, reflecting the Company’s exit from its dedicated capture devices business. Also contributing to the decline were volume declines within Traditional Photofinishing (-7%), due to secular declines within the industry, and volume declines in Consumer Inkjet Systems (-2%) due to reduced printer sales as the Company balances its investment in growth businesses with the need to increase liquidity. Additionally, the revenue decline was partially attributable to unfavorable price/mix for Intellectual Property (-7%) due to the $61 million licensing revenue reduction reflecting sharing, with licensees, of the withholding tax refund received (refer to Note 8 “Income Taxes” for additional information). Partially offsetting these declines were favorable price/mix within Traditional Photofinishing (+3%) due to the results of pricing actions. The operational result improved from a loss of US$ 96 million in the 2nd quarter 2011 to a loss of US$ 27 million this year.

“The improvement in the operating performance of our businesses reflects the dedication of our people to serving customers and in turn, the positive response we are seeing from our customers,” Perez said. “Across our businesses, we continue to offer unique technologies and strong value propositions. We will continue improving our operating performance while balancing liquidity and growth. We are on the right path to complete our successful reorganization.”