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Kodak employment falls below 5,200 here as sales slide, net loss rises in '11

Rochester Business Journal
March 1, 2012

In a year where its sales fell and losses mounted, Eastman Kodak Co. finished 2011 with 5,129 Rochester-area employees, down 780 from a year ago. That decline puts the onetime local giant below Xerox Corp. and out of the top five largest private-sector area employers.

At the end of 2011, Kodak employed the full-time equivalent of some 17,081 people, including 8,341 in the United States. A year earlier, the company employed 18,800 people worldwide, with 9,600 in the United States.

Kodak had reported having 7,100 Rochester employees a year ago, but the apparent big drop reflects a change in its classification system, Kodak spokesman Christopher Veronda said. Its system previously counted as Rochester employees a number of non-local staffers—1,200 in 2011—who report to Rochester-based supervisors. Kodak employed 5,909 locally in 2010 using the new methodology.

Kodak reported the employment numbers with its 2011 results late Wednesday in a filing with the U.S. Securities and Exchange Commission. The annual report shows Kodak struggled mightily in the year leading up to its bankruptcy.
 
In 2011, the company burned through more than $763 million in cash as sales dropped sharply and it suffered a bigger loss.

Kodak posted of a net loss of $764 million, or $2.84 a share, compared with a loss of $687 million, or $2.56 a share, in 2010. Net sales totaled $6.02 billion, down 16 percent from $7.17 billion in 2010.

The company finished the year with $861 million in cash, down from $1.6 billion a year earlier.

Chairman and CEO Antonio Perez had said in November the company expected to finish the year with $1.3 billion to $1.4 billion in cash. Kodak had finished the third quarter with $862 million in cash. Hitting the full-year cash forecast depended on the company executing its operational plans and assumed full-year sales of non-strategic assets totaling some $200 million and intellectual property licensing transactions of $250 million to $350 million, Perez said in November.

Prior to Kodak’s Jan. 19 bankruptcy filing, analysts had expected the company’s revenues to decline 13 percent to $6.2 billion. That was below Kodak’s guidance of $6.3 billion to $6.4 billion.

A big hit for Kodak came on the intellectual property front where revenues from non-recurring IP licensing agreements tumbled in 2011. The agreements contributed $82 million in 2011, down from $838 million in 2010 and $435 million in 2009.

In addition to the IP revenue drop, the company’s top and bottom lines were hurt by industry-related volume declines and increased commodity costs, particularly silver, the company states in the filing. Revenue declines also resulted from competitive pricing pressures and participation choices made by Kodak in digital cameras.

Kodak last month announced plans to phase out its dedicated capture devices business—including digital cameras, pocket video cameras and digital picture frames—in the first half of 2012.

Some revenue decline was offset by sales growth in consumer inkjet and the graphic communications group, but profitability was hurt by Kodak’s ongoing investment in the consumer and commercial inkjet businesses, the company said.

Kodak reported net sales from continuing operations for its consumer digital imaging group of $1.74 billion, down 36 percent from $2.73 billion in 2010. The graphic communications group saw an uptick of 2 percent—including a 3 percent foreign currency impact—to $2.74 billion. The film, photofinishing and entertainment group saw revenues fall 12 percent to $1.55 billion for the year.

Consumer digital imaging group reported a loss from continuing operations of $349 million, compared with income a year ago of $278 million. The graphic communications group loss grew 101 percent to $191 million, compared with $95 million in 2010. The film, photofinishing and entertainment group posted the only segment income, at $34 million, down 63 percent.

(c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.
 


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