Kodak announces 1st quarter results

According to Kodak, the decline in sales reflect the termination of the digital camera business, 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.

The Consumer Segment’s loss improved by US$ 23 million (Euro 17.4 million) in the first quarter of 2012 to $164 million (Euro 124 million) from $187 million in the same period in the prior year. Excluding the impact of the Korean tax refund, the Consumer Segment generated an $84 million (Euro 63.6 million)year-over-year improvement in profitability. This improvement were driven by enhanced cost controls, solid revenue growth in the retail systems solutions business driven by higher demand for consumables, a 34% increase in consumer inkjet ink revenues, and the decision to phase out of the digital capture business, the company said.

The profitability of the Commercial Segment modestly improved, driven by a reduction in operating expenses, with a segment loss of $64 million (Euro 48.5 million). The improvement in operating expenses was partially offset by continued decline in the traditional business, price erosion on plates due to industry overcapacity, and the slowdown in industry activity prior to the start of the drupa trade show. At the drupa trade show, opening next week in Duesseldorf, Germany, Kodak will present a comprehensive integrated portfolios for the graphic communications industry. Among the new products are the 1,000 fpm Kodak Prosper 6000XL Press, the 3,000 fpm Kodak Prosper S30 Imprinting System, the Kodak Flexcel Direct Platemaking System, and KodakK Sonora XP Process-Free Plates.

Kodak noted that as of March 31, 2012, it was in compliance with all covenants under its lender agreements, adding its liquidity improved, ending the first quarter with a cash balance of $1.4 billion (Euro 1.06 billion), up $500 million (Euro 378.8 million) from year-end 2011, as a result of $600 million (Euro 454.5 million) in net new financing, utilization of the Chapter 11 process, and reduced year-over-year cash usage for continuing operations. Selling, General and Administrative (SG&A) expenses decreased by $84 million (Euro 63.6 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.

“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 Chief Executive Officer. “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.”

Kodak noted that since filing for Chapter 11 reorganization in January, the company has bolstered its liquidity, and made good progress in the process of monetizing its non-strategic intellectual property, right-sizing its legacy liabilities, and focusing the company on a core set of businesses that most profitably leverage Kodak’s exceptional technology and brand strengths.