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Eastman Kodak Co. on Friday reported its first-quarter loss widened by nearly 50 percent as its revenues dropped sharply. Still, the company said it has reduced costs and improved its liquidity since filing bankruptcy in January.
Kodak posted a net loss of $366 million, or $1.35 a share, compared with $246 million, or 91 cents a share, a year ago. The results reflect the improvement in segment profitability, reorganization costs associated with its Chapter 11 bankruptcy 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 a Korean tax refund.
Kodak ended the first quarter—historically its worst quarter in terms of cash generation—with a cash balance of $1.4 billion, up $500 million from year-end 2011. The increase is the result of $600 million in net new financing, use of the Chapter 11 process and reduced year-over-year cash usage for continuing operations, Kodak said.
Kodak logged revenue of $965 million in the quarter, a decline of 27 percent from $1.3 billion a year ago. The decrease reflects its exit from the digital cameras business, continued secular decline of its traditional film businesses and a $61 million reduction in revenue associated with a tax refund sharing agreement with intellectual property licensees. The reduction is the result of a refund of Korean withholding taxes recorded in the quarter as a $122 million income tax benefit.
Kodak this year reorganized its business into two segments. The consumer segment’s loss improved by $23 million to $164 million from $187 million. Excluding the impact of the Korean tax refund, the consumer segment generated an $84 million year-over-year improvement in profitability, Kodak said. The improvement was driven by several factors, including enhanced cost controls, solid revenue growth in the retail systems solutions business driven by higher demand for consumables, a 34 percent increase in consumer inkjet ink revenues, and the decision to phase out of the digital capture business.
The profitability of the commercial segment modestly improved, the company said, driven by a reduction in operating expenses, with a segment loss of $64 million compared with $67 million a year ago. The improvement was offset partially 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, the company said.
Sales in the commercial segment totaled $672 million, down from $808 million. Consumer segment sales reached $293 million, down from $514 million.
Kodak said its strategy of focusing on its most profitable businesses and strengthened cost controls resulted in profitability improvements in both business segments. Selling, general and administrative expenses decreased by $84 million compared with a year ago.
“Kodak’s reorganization is proceeding according to plan,” said Chairman and CEO Antonio Perez, in a statement.
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,” he said.
Kodak noted that as of March 31 it was in compliance with all covenants under its lender agreements.
Kodak reported severance costs related to the elimination of some 1,700 positions, including approximately 1,200 manufacturing/service positions, 250 research and development positions and 250 administrative positions. Roughly 1,025 of the positions were in the United States and Canada, and 675 throughout the rest of the world, the company said in a filing with the Securities and Exchange Commission.
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