Kodak’s first quarter results

Earnings from continuing operations were US-$ 9 million or 3 cents per share, included higher-than-expected fixed costs associated with year-end traditional manufacturing slowdowns, expenditures to terminate a consumer photofinishing contract and costs associated with completing the recent accounting review.

The decline in sales was due to a drop of 18 percent in traditional products and services, while sales in the digital portfolio increased 33 percent. Gross profit declined from the year-ago level of 28.5 percent to 28.1 percent.

Kodak‘s Digital & Film Imaging Systems segment recorded sales of US-$ 1.801 billion, down 9 percent. Earnings from operations for the segment were US-$ 4 million, compared with US-$ 25 million a year ago. Sales of Kodak Picture Maker kiosks and related media increased 68 percent, the turnover with Kodak Printer Docks and related media grew 42 percent. The company also announced a 24 percent increase in consumer digital capture sales including Kodak EasyShare cameras. In the traditional segment, Kodak‘s sales of consumer film to dealers fell 29 percent worldwide and 17 percent in U.S., reflecting temporary inventory reductions among retailers, especially in China. On a volume basis, the company expects a decline in film sales of 20 percent worldwide in 2005 and of 30 percent in U.S. “While the first quarter‘s performance was disappointing, such short-term volatility is to expected as we transform Kodak into a digital company”, commented Kodak Chairman and CEO Daniel A. Carp. “We remain committed to increase the value of the company over the long-term by ddelivering on our annual plans.” On April 22, the day the result for the first quarter was announced, Kodak‘s stock dropped 9.37 percent to US-$ 27.55 at the New York Stock Exchange.